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Encompass Health Corporation: Can Hospital Expansions and Reimbursement Tailwinds Sustain the Momentum?

Encompass Health Corporation reported solid operational and financial results for the first quarter of 2026, highlighted by a 9% increase in revenue to $1.59 billion and an 11.2% rise in adjusted EBITDA to $348.8 million. The company attributed the revenue growth to both a 4.3% increase in patient discharges and a 3.7% rise in net revenue per discharge, benefiting partially from patient mix and a favorable Medicare SSI adjustment. Despite closing four rehabilitation units that impacted discharge growth by approximately 85 basis points, Encompass Health noted that these closures were breakeven from an EBITDA standpoint and expected consolidation efforts, coupled with additional bed expansions, to mitigate volume effects. Clinically, Encompass Health emphasized strong patient outcomes, exceeding industry averages for discharge rates to community, acute care, and skilled nursing facilities. Improvements in staff retention were a notable positive, with annualized RN turnover declining to 17.