Encompass Health Corp. recently released its latest 10-Q report. The company operates inpatient rehabilitation hospitals in the United States and Puerto Rico, providing inpatient rehabilitation treatment, medical and nursing care, therapy, and related ancillary services for patients recovering from stroke, neurological disorders, cardiac and pulmonary conditions, brain and spinal cord injuries, complex orthopedic conditions, and amputations. Formerly known as HealthSouth Corporation, the company changed its name in January 2018 and is based in Birmingham, Alabama.
In Item 2, Management’s Discussion and Analysis, Encompass Health said it remained the nation’s largest owner and operator of inpatient rehabilitation hospitals, measured by patients treated, revenue, and number of hospitals. As of June 30, 2026, it operated 176 inpatient rehabilitation facilities across 39 states and Puerto Rico, with concentrations in Florida and Texas.
For the three months ended June 30, 2026, net operating revenues rose 9.6% from the same period in 2025, and for the six months ended June 30, 2026, they increased 9.3%. The company said the gains were driven primarily by higher volume and improved pricing.
During the first half of 2026, Encompass Health opened a 49-bed hospital in Irmo, South Carolina in March, a 50-bed hospital in Concordville, Pennsylvania in May, and a 40-bed hospital in Loganville, Georgia in June through a joint venture with Piedmont. It also added 54 beds at existing hospitals.
The company said it announced or continued development on several additional projects, including de novo hospitals in Norristown, Pennsylvania; Bangor, Maine; San Antonio, Texas; and Avondale, Arizona, all expected in 2026, plus projects planned for Wesley Chapel, Florida; Apollo Beach, Florida; St. George, Utah; Fishers, Indiana; Haslet, Texas; Flowood, Mississippi; and Cookeville, Tennessee. It also listed a remote and satellite hospital in Cleveland, Tennessee expected in the fourth quarter of 2026, along with 150 to 200 additional bed additions.
Encompass Health also said it continued shareholder distributions through common stock repurchases and a quarterly cash dividend during the six months ended June 30, 2026.
On reimbursement, the company said CMS released the final 2027 IRF rule on July 30, 2026, calling for a net 2.3% market basket increase effective for discharges between Oct. 1, 2026 and Sept. 30, 2027. Encompass Health said it expects the rule to raise its Medicare payment rates by about 2.3% based on its analysis of patient acuity, outlier payments, and other factors.
The company also said 33 of its IRFs, representing about 11.9% of its IRF Medicare claims, were subject to CMS’s review choice demonstration as of June 30, 2026. It noted that the program had expanded to Alabama, Pennsylvania, Texas, and California, and that beginning in January 2027 it expects two newly opened Pennsylvania hospitals to submit claims under the demonstration. As a result of these announcements, the company's shares have moved 1.3% on the market, and are now trading at a price of $126.445. Check out the company's full 10-Q submission here.
