Encompass Health (EHC) AI Stock Analysis

• Market Cap: $12.15B
• Dividend Yield: 0.57%
• Average Volume (3M): 641.31K
• Price to Earnings (P/E): 24.9
• Beta (1Y): 0.62
• Revenue Growth: 11.21%
• EPS Growth: 30.38%
• Country: US
• Employees: 28,572
• Sector: Healthcare
• Sector Strength: 48
• Industry: Medical - Care Facilities
• EPS (TTM): 1.37
• Shares Outstanding: 100,796,930
• 10 Day Avg. Volume: 566,577
• 30 Day Avg. Volume: 641,311
• PEG Ratio: 0.68
• Price to Book (P/B): 3.99
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 23.35
• Enterprise Value/Market Cap: 0.71
• Enterprise Value/Revenue: 0.41
• Enterprise Value/Gross Profit: 4.30
• Enterprise Value/Ebitda: 1.87
• 1Y Price Target: $131.56
• Price Target Upside: 9.86% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 10

• Rating: 68 Neutral
• Price Target: ―

Encompass Health's overall stock score reflects strong financial results and strategic growth plans, bolstered by positive earnings call outcomes and strategic corporate events. However, the stock's high valuation and technical indicators suggest investors should remain cautious of overbought conditions. While the company shows robust growth prospects, particularly with its expansion initiatives, the valuation poses a balanced risk-reward scenario.

Positive Factors

Financial Performance

Encompass Health's first quarter results demonstrated broad-based strength across all categories with revenues up 11%, EBITDA up 15%, and adjusted EPS up 22%.

Management Strategy

Management modestly raised guidance across all key metrics, including a 1% raise in revenue guidance and a 2% increase in the adjusted EBITDA outlook.

Negative Factors

Medicare Policy

Uncertainty remains about potential cuts to Medicare Advantage, which could affect future spending and benefits.

Volume Trends

Same-store volumes decelerated due to tougher comparisons, though they still exceeded consensus estimates.

Encompass Health Business Overview & Revenue Model

Company Description

Encompass Health Corporation provides facility-based and home-based post-acute healthcare services in the United States. The company operates in two segments, Inpatient Rehabilitation, and Home Health and Hospice. The Inpatient Rehabilitation segment provides specialized rehabilitative treatment on an inpatient and outpatient basis to patients who are recovering from conditions, such as stroke and other neurological disorders, cardiac and pulmonary conditions, brain and spinal cord injuries, complex orthopedic conditions, and amputations. The Home Health and Hospice segment provides home health and hospice services primarily in the Southeast and Texas. Its home health services include a range of Medicare-certified home nursing services to adult patients in need of care comprising skilled nursing, medical social work, and home health aide services, as well as physical, occupational, speech therapy, and others. This segment's hospice services comprise in-home services to terminally ill patients and their families. As of June 1, 2022, it operated 149 hospitals, 252 home health locations, and 99 hospice locations in 42 states and Puerto Rico. The company was formerly known as HealthSouth Corporation and changed its name to Encompass Health Corporation in January 2018. Encompass Health Corporation was founded in 1983 and is based in Birmingham, Alabama.

How the Company Makes Money

Encompass Health generates revenue primarily through its network of inpatient rehabilitation hospitals. The company earns money by providing specialized healthcare services to patients admitted to these facilities. Revenue is largely derived from payments made by Medicare, Medicaid, and private insurance for the rehabilitative care provided to patients. Additionally, Encompass Health benefits from strategic partnerships with healthcare systems, which help to expand its market reach and patient base. The company also focuses on optimizing operational efficiencies and patient outcomes to enhance its profitability and maintain a leading position in the rehabilitation sector.

Encompass Health Financial Statement Overview

Summary

Encompass Health demonstrates a solid financial performance with consistent revenue growth and strong operational margins. While the balance sheet indicates moderate leverage, the company maintains a healthy equity position and generates strong returns on equity. The cash flow statement reflects improved cash management, although there is potential to enhance free cash flow relative to net income. Overall, the company is on a positive trajectory with sound financial health, but should continue to monitor debt levels and cash flow efficiency.

Income Statement

Encompass Health shows a robust income statement with a strong TTM revenue growth rate of approximately 2.6%, driven by increasing total revenue. The gross profit margin for TTM stands at 36.5%, indicating efficient cost management. However, the net profit margin for TTM is moderate at 9%, suggesting potential areas for improvement in managing expenses. The EBIT margin is healthy at 15.5%, and the EBITDA margin is solid at 21.8%, reflecting good operational efficiency. Overall, the company demonstrates consistent revenue growth and solid profitability metrics.

Balance Sheet

The balance sheet of Encompass Health reveals a stable financial position with a debt-to-equity ratio of 0.13, indicating moderate leverage. The return on equity (ROE) is strong at 17.2%, showcasing effective use of equity capital. The equity ratio is 43.4%, implying a healthy proportion of equity in the capital structure. While the company exhibits strong equity returns, the presence of significant debt warrants careful monitoring to avoid potential financial risks.

Cash Flow

Encompass Health's cash flow is characterized by a significant improvement in free cash flow, transitioning from a negative position in the previous period to a positive $97.1 million in TTM, indicating better cash management. The operating cash flow to net income ratio is strong at 1.54, highlighting efficient conversion of income to cash. However, the free cash flow to net income ratio is lower at 0.20, suggesting room for improvement in free cash flow generation relative to net income.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
5.51B	5.37B	4.80B	4.35B	5.12B	4.64B
	Gross Profit
2.01B	2.47B	933.50M	4.15B	4.91B	4.44B
	EBIT
924.00M	864.50M	731.80M	627.90M	822.80M	661.90M
	EBITDA
1.25B	1.19B	1.02B	873.80M	879.00M	815.20M
	Net Income Common Stockholders
494.70M	455.70M	352.00M	271.00M	412.20M	284.20M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
95.80M	85.40M	69.10M	21.80M	54.80M	224.00M
	Total Assets
6.64B	6.53B	6.10B	5.64B	6.86B	6.45B
	Total Debt
2.70B	2.71B	2.93B	2.99B	3.54B	3.54B
	Net Debt
2.61B	2.63B	2.86B	2.97B	3.48B	3.32B
	Total Liabilities
3.70B	3.69B	3.81B	3.77B	4.47B	4.44B
	Stockholders Equity
2.16B	2.07B	1.65B	1.31B	1.91B	1.59B
Cash Flow		Free Cash Flow
386.40M	360.30M	267.70M	121.70M	164.60M	296.50M
	Operating Cash Flow
1.05B	1.00B	850.80M	705.80M	715.80M	704.70M
	Investing Cash Flow
-700.50M	-512.90M	-602.80M	-627.00M	-666.30M	-407.50M
	Financing Cash Flow
-541.70M	-330.60M	-197.20M	-145.70M	-240.10M	-145.90M

Encompass Health Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 119.75
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EHC, the sentiment is Neutral. The current price of 119.75 is below the 20-day moving average (MA) of 120.24, above the 50-day MA of 114.68, and above the 200-day MA of 101.48, indicating a neutral trend. The MACD of 1.23 indicates Positive momentum. The RSI at 54.73 is Neutral, neither overbought nor oversold. The STOCH value of 47.82 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for EHC.

Encompass Health Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FMS	77 Outperform	$15.89B	25.02	4.36%	2.91%	―	―
CHE	75 Outperform	$8.04B	26.77	26.11%	0.36%	8.52%	10.36%
THC	71 Outperform	$15.55B	11.08	38.12%	―	-1.79%	-41.85%
EHC	68 Neutral	$12.15B	24.88	25.33%	0.57%	11.21%	30.38%
UHS	64 Neutral	$10.98B	9.57	18.35%	0.47%	9.73%	51.87%
DVA	64 Neutral	$10.41B	13.51	260.92%	―	5.11%	14.28%
Sector *	54 Neutral	$5.25B	3.27	-44.35%	6.27%	16.79%	-0.10%

Encompass Health Corporate Events

Encompass Health Updates on 2025 Financial Projections

Encompass Health has provided a financial update regarding its inability to predict certain non-GAAP financial measures due to factors outside its control, such as government settlements and market conditions. The company has estimated specific GAAP measures for 2025, including interest expense and amortization of debt-related items, which will be part of a reconciliation for Adjusted EBITDA.

The most recent analyst rating on (EHC) stock is a Buy with a $105.00 price target. To see the full list of analyst forecasts on Encompass Health stock, see the EHC Stock Forecast page.

Encompass Health Shareholders Approve 2025 Incentive Plan

On May 1, 2025, Encompass Health Corporation’s stockholders approved the 2025 Omnibus Performance Incentive Plan during the annual meeting. The meeting also saw the election of ten directors, ratification of PricewaterhouseCoopers LLP as the independent auditor, and approval of executive compensation, reflecting strong shareholder support for the company’s strategic direction.

Encompass Health Appoints New COO Patrick W. Tuer

On April 24, 2025, Encompass Health announced the appointment of Patrick W. Tuer as Executive Vice President and Chief Operating Officer. Mr. Tuer has been with the company since 2018, holding various leadership roles, and his promotion reflects his significant contributions to the company’s operations. In the first quarter of 2025, Encompass Health reported a 10.6% increase in revenue, driven by higher discharges and pricing, and a 14.9% rise in Adjusted EBITDA. The company also raised its full-year guidance, indicating strong performance and positive future prospects.