Encompass Health Corporation · NYSE:EHC
Encompass Health — Q3 2026 Earnings Presentation
35 slides from Encompass Health's earnings presentation, Oct 29, 2026
Slide 1: 2026 Third Quarter Earnings Call
2026 Third Quarter Earnings Call October 29, 2026 Supplemental information
Slide 2: Forward-looking statements
Forward-looking statements The information contained in this presentation includes certain assumptions, estimates, projections and other forward- looking statements that reflect Encompass Health’s current outlook, views and plans with respect to future events, including the business outlook, guidanc
Slide 3: Table of contents
Table of contents Summary ................................................................................................................................................................................ 4 Revenue .......................................................................................
Slide 4: Summary
Summary Q3 9 Months ($ in millions, except per share data) 2026 2025 %△ 2026 2025 %△ Encompass Health Net operating revenue $ 1,609.5 $ 1,477.5 8.9 % $ 4,793.5 $ 4,390.6 9.2 % Adjusted EBITDA $ 346.6 $ 300.1 15.5 % $ 1,043.4 $ 932.3 11.9 % Adjusted EPS $ 1.52 $ 1.23 23.6 % $ 4.67 $ 3.99 17.0 % Adjus
Slide 5: Revenue
Revenue Q3 Q3 % Change* ($ in millions) 2026 2025 Net operating revenue: Inpatient $ 1,569.1 $ 1,427.3 9.9% Other(1) 40.4 50.2 (19.5%) Total revenue $ 1,609.5 $ 1,477.5 8.9% (Actual Amounts) Discharges 69,605 65,839 5.7% New-store discharge growth 2.7% Same-store discharge growth 3.0% Net patient re
Slide 6: Adjusted EBITDA
Adjusted EBITDA(3) Q3 % of Q3 % of ($ in millions) 2026 Revenue 2025 Revenue Net operating revenue $ 1,609.5 $ 1,477.5 Operating expenses: Salaries and benefits (840.7) 52.2 % (784.8) 53.1 % Other operating expenses(a) (244.4) 15.2 % (229.2) 15.5 % Supplies (65.0) 4.0 % (64.6) 4.4 % Occupancy costs
Slide 7: Earnings per share - as reported
Earnings per share - as reported Q3 9 Months ($ in millions, except per share data) 2026 2025 2026 2025 Adjusted EBITDA $ 346.6 $ 300.1 $ 1,043.4 $ 932.3 Depreciation and amortization(4) (95.7) (82.4) (273.4) (241.5) Interest expense and amortization of debt discounts and fees (32.2) (30.8) (96.8) (
Slide 8: Adjusted earnings per share
Adjusted earnings per share(6) 9 Months Q3 2026 2025 2026 2025 Diluted earnings per share, as reported $ 1.51 $ 1.24 $ 4.83 $ 4.13 Adjustments, net of tax: State regulatory change impact(4) 0.01 — 0.01 — Income tax adjustments (7) — — (0.05) (0.12) Loss on early extinguishment of debt(8) — — 0.02 —
Slide 9: Adjusted free cash flow
Adjusted free cash flow(9) ($ in millions) $57.8 $111.1 $(4.4) $(87.3) $(25.5) $634.2 $582.5 Adjusted free cash Adjusted Working capital Cash interest Cash tax payments, Maintenance capital Adjusted free cash flow 9 mos. 2025 EBITDA and other expense net of refunds expenditures flow 9 mos. 2026 Reco
Slide 10: 2026 Guidance (as of October 28, 2026)
2026 Guidance (as of October 28, 2026) Previous Guidance Updated Guidance ($ in millions, except per share data) Net Operating Revenue $6,410 to $6,490 $6,450 to $6,500 Adjusted EBITDA(3) $1,365 to $1,395 $1,395 to $1,415 Adjusted earnings per share from continuing operations attributable $6.02 to $
Slide 11: 2026 Guidance considerations
2026 Guidance considerations (as of October 28, 2026) u Pricing Medicare pricing increase of approximately 2.3% for Q4 Managed Care pricing increase of 3.5% to 4.0% Bad debt reserves of 2.0% to 2.5% of revenue for Q4 u Labor SWB per FTE increase of 3.5% to 4.0% u Capacity additions 8 new h
Slide 12: Adjusted free cash flow assumptions
Adjusted free cash flow(9) assumptions (as of October 28, 2026) 9 Months 2025 2026 Certain cash flow items 2026 ($ in millions) Actuals Actuals Assumptions Cash interest payments (net of amortization of debt $90.2 $113.6 $115 to $125 discounts and fees) Increase in cash tax payments primarily due to
Slide 13: Uses of free cash flow
Uses of free cash flow (as of October 28, 2026) 9 Months 2026 2025 2026 ($ in millions) Actuals Actuals Assumptions Capacity expansions $441.0 $526.4 $675 to $725 Growth Replacement IRFs 10.2 0.5 20 to 30 $451.2 $526.9 $695 to $755 Debt Reduction (increase) in total debt(11) ($108.3) $7.0 TBD reduct
Slide 14: Appendix
Appendix
Slide 15: Encompass Health: Largest owner and operator of rehabilitation hospitals
Encompass Health Largest owner and operator of rehabilitation hospitals Company profile as of 09/30/26 177 Rehabilitation hospitals “IRFs” 67 are joint ventures 17 IRFs under development** Inpatient Rehabilitation Hospitals Future Inpatient Rehabilitation Hospitals 39 Future Small Format Inpatient S
Slide 16: Growth targets, fundamentals and value drivers
Growth targets, fundamentals and value drivers u 2023 - 2027 Growth targets 6 to 10 de novos per year 80 to 120 bed additions per year 6% to 8% discharge CAGR u Large, under penetrated, and growing inpatient rehabilitation market Large addressable market indicated by low conversion rate of p
Slide 17: Multiple modalities for capacity expansion
Multiple modalities for capacity expansion De novos Bed additions Small format hospitals • 300-500 beds per year • 150-200 beds per year • 25-100 beds per year 6-10 hospitals per year Addresses high 1-4 hospitals per year Freestanding hospitals occupancy levels at First opening to occur in
Slide 18: Development activity
Development activity Inpatient Rehabilitation Hospitals opened or under development Joint Expected venture open date Number of beds 17 2026 2027 De novos IRF development projects Irmo, SC 49 — announced and underway** Concordville, PA 50 — Loganville, GA ü 40 — Norristown, PA 50 — 3Q 2026 Developmen
Slide 19: RCD and TEAM
RCD and TEAM Review Choice Demonstration (“RCD”) RCD is a five-year demonstration project initiated by the Centers for Medicare & Medicaid Services (“CMS”) providing either pre-claim or post-payment claim review to demonstrate compliance with Medicare IRF rules. This demonstration is only applicable
Slide 20: Debt maturity profile - face value
Debt maturity profile - face value As of September 30, 2026* ($ in millions) $871 Available Callable at 101.583 $75 Drawn + Callable $54 reserved for LCs beginning June 2029 Callable Revolver Callable at par capacity at 102.313 $800 Senior Notes $600 4.75% Senior $400 $400 Senior Notes Senior 5.875%
Slide 21: Debt schedule
Debt schedule Change in September 30, December 31, Debt vs. ($ in millions) 2026 2025 YE 2025 Advances under $1 billion revolving credit facility $ 75.0 $ 130.0 $ (55.0) Bonds Payable: 4.50% Senior Notes due 2028 397.4 792.0 (394.6) 4.75% Senior Notes due 2030 789.2 787.0 2.2 4.625% Senior Notes due
Slide 22: New-store/same-store growth
New-store/same-store growth Kissimmee, FL (50 beds) Atlanta, GA (40 beds) Louisville, KY (40 beds) St. Petersburg, FL (50 beds) Amarillo, TX (50 beds) Houston, TX Lake Worth, FL (50 beds) (61 beds) Concordville, PA Prosper, TX (40 beds) Fort Myers, FL Fitchburg, WI (56 beds) (50 beds) Johnston, RI (
Slide 23: Payment sources (percent of revenues)
Payment sources (percent of revenues) Q3 9 Months Full Year 2026 2025 2026 2025 2025 Medicare 66.3 % 64.1 % 65.7 % 65.2 % 65.4 % Medicare Advantage 15.7 % 16.6 % 16.1 % 16.7 % 16.4 % Managed care 10.8 % 11.1 % 10.7 % 10.8 % 10.7 % Medicaid 3.1 % 3.4 % 3.0 % 3.1 % 3.1 % Other third-party payors 0.7 %
Slide 24: Operational metrics
Operational metrics Q3 Q2 Q1 Q4 Q3 Q2 Q1 Full Year 2026 2026 2026 2025 2025 2025 2025 2025 Net operating revenues: (In Millions) Inpatient $ 1,569.1 $ 1,551.6 $ 1,533.7 $ 1,497.6 $ 1,427.3 $ 1,413.7 $ 1,417.7 $ 5,756.3 Other 40.4 45.8 52.9 47.0 50.2 44.0 37.7 178.9 Net operating revenues $ 1,609.5 $
Slide 25: Share information
Share information Weighted Average for the Period Q3 9 Months Full Year (in millions) 2026 2025 2026 2025 2025 2024 2023 Basic shares outstanding 98.3 100.5 98.8 100.5 100.5 99.9 99.5 Restricted stock awards, dilutive stock options, and restricted stock units 1.4 1.8 1.4 1.8 1.7 2.3 1.8 Diluted shar
Slide 26: Net cash provided by operating activities reconciled to Adjusted EBITDA
Net cash provided by operating activities reconciled to Adjusted EBITDA(3) Q3 9 Months Full Year ($ in millions) 2026 2025 2026 2025 2025 Net cash provided by operating activities $ 362.0 $ 270.8 $ 957.7 $ 829.6 $ 1,175.6 Interest expense and amortization of debt discounts and fees 32.2 30.8 96.8 93
Slide 27: Reconciliation of net income to Adjusted EBITDA
Reconciliation of net income to Adjusted EBITDA(3) Q3 9 Months Full Year ($ in millions) 2026 2025 2026 2025 2025 Net income $ 203.6 $ 174.6 $ 659.2 $ 556.0 $ 759.1 Loss (income) from discontinued operations, net of tax, attributable to Encompass Health 0.8 0.4 (14.5) 1.8 1.0 Net income attributable
Slide 28: Reconciliation of net cash from operating activities to adjusted free cash flow
Reconciliation of net cash provided by operating activities to adjusted free cash flow(9) Q3 9 Months Full Year ($ in millions) 2026 2025 2026 2025 2025 Net cash provided by operating activities $ 362.0 $ 270.8 $ 957.7 $ 829.6 $ 1,175.6 Impact of discontinued operations 1.1 0.6 (19.2) 2.5 1.4 Net ca
Slide 29: Adjusted EPS - Q3 2026
Adjusted EPS(6) - Q3 2026 For the Three Months Ended September 30, 2026 Adjustments State Change in Fair Regulatory Market Value of As Change Marketable As Reported Impact Securities Adjusted ($ in millions, except per share amounts) Adjusted EBITDA $ 346.6 $ — $ — $ 346.6 Depreciation and amortizat
Slide 30: Adjusted EPS - Q3 2025
Adjusted EPS(6) - Q3 2025 For the Three Months Ended September 30, 2025 Adjustments Change in Fair Market Value of As Income Tax Marketable As Reported Adjustments Securities Adjusted ($ in millions, except per share amounts) Adjusted EBITDA $ 300.1 $ — $ — $ 300.1 Depreciation and amortization (82.
Slide 31: Adjusted EPS - YTD Q3 2026
Adjusted EPS(6) - YTD Q3 2026 For the Nine Months Ended September 30, 2026 Adjustments State Loss on Change in Fair Regulatory Early Market Value of As Change Exting. Income Tax Marketable Gain on As Reported Impact of Debt Adjustments(7) Securities Sale(5) Adjusted ($ in millions, except per share
Slide 32: Adjusted EPS - YTD Q3 2025
Adjusted EPS(6) - YTD Q3 2025 For the Nine Months Ended September 30, 2025 Adjustments Change in Fair Market Value of As Income Tax Marketable As Reported Adjustments(7) Securities Adjusted ($ in millions, except per share amounts) Adjusted EBITDA $ 932.3 $ — $ — $ 932.3 Depreciation and amortizatio
Slide 33: Adjusted EPS - 2025
Adjusted EPS(6) - 2025 For the Year Ended December 31, 2025 Adjustments Change in Fair Market Value of As Income Tax Marketable As Reported Adjustments(7) Securities Adjusted ($ in millions, except per share amounts) Adjusted EBITDA $1,267.9 $ — $ — $1,267.9 Depreciation and amortization (327.9) — —
Slide 34: End notes
End notes (1) Historically, we used the term “Outpatient and other” revenue to report revenue related to our outpatient business and other revenue sources. As we have decreased our outpatient business, the associated revenues do not represent the primary source of “Outpatient and other” revenue. As
Slide 35: End notes (continued)
End notes (continued) (8) In the second quarter of 2026, the Company redeemed $400 million of its 4.50% Senior Notes due 2028. The redemption was completed at 100% of par using cash on hand. As a result of the redemption, the Company recorded a $3.2 million loss on early extinguishment of debt in th