Encompass Health (EHC) AI Stock Analysis

• Market Cap: $11.60B
• Dividend Yield: 0.55%
• Average Volume (3M): 825.62K
• Price to Earnings (P/E): 21.8
• Beta (1Y): 0.59
• Revenue Growth: 11.13%
• EPS Growth: 27.53%
• Country: US
• Employees: 28,572
• Sector: Healthcare
• Sector Strength: 45
• Industry: Medical - Care Facilities
• EPS (TTM): 1.23
• Shares Outstanding: 100,615,974
• 10 Day Avg. Volume: 1,266,931
• 30 Day Avg. Volume: 825,615
• PEG Ratio: 0.72
• Price to Book (P/B): 4.46
• Price to Sales (P/S): 1.72
• P/FCF Ratio: 25.61
• Enterprise Value/Market Cap: 1.41
• Enterprise Value/Revenue: 2.82
• Enterprise Value/Gross Profit: 6.44
• Enterprise Value/Ebitda: 12.17
• 1Y Price Target: $145.67
• Price Target Upside: 26.44% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 7
• EPS Forecast (FY): 5.31
• Revenue Forecast (FY): $5.93B

• Rating: 62 Neutral
• Price Target: $124.00 ▲(7.63% Upside)

Encompass Health's overall stock score reflects strong financial performance and positive earnings call sentiment, offset by technical analysis indicating bearish momentum and valuation concerns. The company's strategic growth initiatives and increased guidance are positive, but cash flow management and valuation metrics warrant caution.

Positive Factors

Revenue Growth

The consistent revenue growth indicates strong market demand and effective business strategies, supporting long-term financial health.

Expansion and New Hospital Openings

Strategic expansion into new locations enhances service capacity and market reach, positioning the company for sustained growth.

Strong Free Cash Flow Growth

Improved cash flow supports financial flexibility and investment in growth initiatives, bolstering long-term operational stability.

Negative Factors

Negative Free Cash Flow

Persistent negative free cash flow poses liquidity challenges, potentially limiting the company's ability to fund operations and growth.

Increased Benefits Expense

Rising benefit expenses can pressure margins and profitability, affecting long-term financial performance if not managed effectively.

Labor Retention Challenges

High turnover rates can disrupt operations and increase costs, impacting service quality and long-term operational efficiency.

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 inpatient rehabilitation hospitals, home health services, and hospice care. The company is reimbursed by Medicare, Medicaid, and private insurance for the services provided to patients, with a significant portion of revenue coming from Medicare reimbursements for rehabilitation services. The revenue model is based on the number of patients treated, length of stay, and the complexity of care provided. Additionally, Encompass Health has established strategic partnerships with various healthcare organizations and payers, which contribute to its earnings by enhancing service offerings and increasing patient referrals. The company also focuses on operational efficiency and quality care, which can lead to improved reimbursement rates and patient satisfaction, further bolstering its financial performance.

Encompass Health Financial Statement Overview

Summary

Encompass Health shows strong revenue growth and profitability metrics, with improvements in leverage and equity utilization. However, the negative free cash flow in the TTM period raises concerns about cash management.

Income Statement

Encompass Health shows a solid performance in its income statement with a consistent revenue growth rate of 2.23% in the TTM period. The company maintains healthy gross and net profit margins, with a notable improvement in EBIT and EBITDA margins over the years. However, the gross profit margin has slightly decreased from previous years, indicating potential cost pressures.

Balance Sheet

The balance sheet reflects a strong equity position with a low debt-to-equity ratio of 0.12 in the TTM period, showing significant improvement from previous years. Return on equity remains robust at 22.68%, indicating effective use of equity capital. However, the equity ratio is moderate, suggesting a balanced asset structure.

Cash Flow

Cash flow analysis reveals challenges with a negative free cash flow growth rate of -197.79% in the TTM period, indicating potential liquidity issues. The operating cash flow to net income ratio is healthy, but the negative free cash flow is a concern. The company needs to address cash flow management to improve financial flexibility.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	5.80B	5.37B	4.80B	4.35B	4.01B	3.57B
Gross Profit	2.54B	2.23B	1.98B	1.75B	1.70B	3.40B
EBITDA	1.34B	1.19B	1.01B	870.10M	888.90M	739.60M
Net Income	541.00M	455.70M	352.00M	271.00M	412.20M	284.20M
Balance Sheet
Total Assets	6.87B	6.53B	6.10B	5.64B	6.86B	6.45B
Cash, Cash Equivalents and Short-Term Investments	48.70M	85.40M	69.10M	21.80M	54.80M	224.00M
Total Debt	267.70M	2.71B	2.93B	2.99B	3.54B	3.54B
Total Liabilities	3.68B	3.69B	3.81B	3.77B	4.47B	4.44B
Stockholders Equity	3.13B	2.07B	1.65B	1.31B	1.91B	1.59B
Cash Flow
Free Cash Flow	402.60M	360.30M	267.70M	121.70M	164.60M	296.50M
Operating Cash Flow	1.11B	1.00B	850.80M	705.80M	715.80M	704.70M
Investing Cash Flow	-728.90M	-653.30M	-602.80M	-627.00M	-666.30M	-407.50M
Financing Cash Flow	-484.70M	-330.60M	-197.20M	-145.70M	-240.10M	-145.90M

Encompass Health Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 115.21
• 50DMA: Negative
• 100DMA: Negative
• 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 Negative. The current price of 115.21 is below the 20-day moving average (MA) of 121.34, below the 50-day MA of 123.32, and above the 200-day MA of 113.22, indicating a neutral trend. The MACD of -2.42 indicates Positive momentum. The RSI at 33.98 is Neutral, neither overbought nor oversold. The STOCH value of 38.09 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for EHC.

Encompass Health Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ENSG	78 Outperform	$10.42B	32.03	16.98%	0.14%	18.61%	35.76%
UHS	78 Outperform	$14.59B	10.89	19.97%	0.36%	10.21%	39.58%
THC	73 Outperform	$18.04B	13.35	34.51%	―	-0.56%	-53.50%
FMS	65 Neutral	$13.90B	17.42	5.31%	3.32%	4.09%	13.17%
EHC	62 Neutral	$11.60B	21.78	24.94%	0.55%	11.13%	27.53%
DVA	58 Neutral	$8.73B	12.74	―	―	5.14%	4.37%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%

Encompass Health Corporate Events

Encompass Health Reports Strong Q3 2025 Earnings

Encompass Health Corporation, the largest owner and operator of inpatient rehabilitation hospitals in the United States, specializes in providing high-quality rehabilitative care for patients recovering from major injuries or illnesses across its extensive network of facilities.

Encompass Health Reports Strong Q3 2025 Results

Encompass Health reported its third-quarter 2025 results, showing a 9.4% increase in net operating revenue to $1,477.5 million compared to the same period last year. The company opened three new hospitals and added 39 beds to existing facilities, reflecting its commitment to expanding capacity and improving patient care. Additionally, Encompass Health increased its full-year guidance, demonstrating confidence in its operational strategy and long-term business prospects.

The most recent analyst rating on (EHC) stock is a Buy with a $150.00 price target. To see the full list of analyst forecasts on Encompass Health stock, see the EHC Stock Forecast page.

Patricia Maryland Retires from Encompass Health Board

On September 17, 2025, Patricia Maryland retired from Encompass Health Corporation’s board of directors due to health reasons, effective immediately. Greg Carmichael, chairman of the board, expressed gratitude for her contributions and wished her well.

The most recent analyst rating on (EHC) stock is a Buy with a $140.00 price target. To see the full list of analyst forecasts on Encompass Health stock, see the EHC Stock Forecast page.

Encompass Health Updates Guidance on GAAP Measures

Encompass Health has announced that it does not provide guidance on a GAAP basis due to the unpredictability of certain items outside its control that are not indicative of its ongoing operations. The company has outlined that these items include government settlements, professional fees, and adjustments related to corporate restructurings, among others. For 2025, Encompass Health has provided estimable GAAP measures for interest expense and amortization of debt, which will be included in the reconciliation for Adjusted EBITDA.

The most recent analyst rating on (EHC) stock is a Buy with a $160.00 price target. To see the full list of analyst forecasts on Encompass Health stock, see the EHC Stock Forecast page.

Encompass Health Reports Strong Q2 2025 Results

Encompass Health Corporation is the largest owner and operator of inpatient rehabilitation hospitals in the United States, providing high-quality rehabilitative care using advanced technology and innovative treatments.

Encompass Health Reports Strong Q2 Earnings Growth

Encompass Health’s recent earnings call revealed a robust financial performance, marked by significant revenue and EBITDA growth. The company showcased successful expansion plans and effective management of labor costs, although concerns about rising benefit expenses and preopening costs were noted. Overall, the positive developments significantly overshadowed the challenges, reflecting a strong sentiment throughout the call.

Encompass Health Reports Strong Q2 2025 Financial Results

Encompass Health reported its financial results for the second quarter of 2025, showing a 12% increase in net operating revenue compared to the previous year, driven by a 7.2% growth in total discharges and a 4.2% increase in net patient revenue per discharge. The company also reported a 24.3% increase in cash flows from operating activities and a 17.2% rise in Adjusted EBITDA, reflecting improved revenue and expense leverage. Additionally, Encompass Health increased its full-year guidance for 2025, indicating strong operational performance and future growth prospects.

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.