Encompass Health Stock Earnings Reports

Encompass Health delivered a strong Q3 2025: revenue rose 9.4% and adjusted EBITDA increased 11.4%, driving year-to-date revenue growth of 10.6% and adjusted EBITDA growth of 14.5%. The company raised full-year 2025 guidance (net operating revenue $5.905B–$5.955B; adjusted EBITDA $1.235B–$1.255B; adjusted EPS $5.22–$5.37) and increased its expected bed-addition cadence — now ~127 beds to existing hospitals in 2025 and ~150–200 beds in each of 2026 and 2027 — reflecting strong, underserved demand for inpatient rehabilitation. Q3 operational highlights: same-store discharge growth remained healthy, RN and therapist turnover stayed low (annualized RN turnover 20.2%, therapist 7.8%), 3 new hospitals opened (Danbury CT, Daytona Beach FL, Wildwood/The Villages FL) plus bed adds and additional openings planned in Q4. Adjusted EBITDA included some one-time/period items (net provider tax retro payments, a retroactive CA property tax, and ~$3M accelerated supplies purchases tied to the October Oracle Fusion ERP conversion). The ERP conversion was completed on Oct 3 with no material operational disruption, though post-implementation refinements and incremental costs are expected. Adjusted free cash flow guidance was increased to $730M–$810M; net leverage at quarter end was 2.0x. Management emphasized disciplined labor/cost control (premium labor down year-over-year) and reiterated a multi-year growth strategy focused more on high-return bed additions to existing hospitals while maintaining the de novo pipeline (active pipeline of ~40 projects; 14 announced beyond 2025 totaling 690 beds). Key modeling items: growth CapEx midpoint ~ $580M in 2025 (avg. cost per bed-addition ~ $800k), ongoing variability from timing of openings/holidays, potential net provider tax volatility, and expected continued normalization of accounts payable after Fusion conversion.