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Encompass Health’s 600-Bed Expansion: Can New Hospitals Unlock The Next Growth Engine?

Encompass Health reported solid financial results in the second quarter of 2026, reflecting continued revenue growth and operational expansion. Revenue increased by 9.6% compared to the same quarter a year prior, driven by a 5.6% rise in patient discharges and a 3.9% growth in net revenue per discharge, the latter attributable to higher patient acuity and growth in medically complex cases such as stroke and brain injury. Adjusted EBITDA rose by 9.2% to $348 million, and adjusted earnings per share grew by 10.7%, underscoring moderate operational leverage despite pressures from labor costs and lower net provider tax benefits. The provider tax impact on operating results declined by $11.5 million year-over-year due to retroactive adjustments related to Florida Medicaid programs. Labor costs per full-time equivalent increased by 3.4% but were partially offset by a reduction in premium labor spending, particularly contract labor and bonuses.