Health care services provider Encompass Health (NYSE: EHC) reported Q3 2026 results topping the market’s revenue expectations, with revenue up 8.9% year on year to $1.61 billion. The company expects the full year’s revenue to be around $6.48 billion, close to analysts’ consensus estimates. Its non-GAAP profit of $1.52 per share was 11.9% above analysts’ consensus estimates.
For more on Encompass Health, read our free full research report.
Encompass Health (EHC) Q3 2026 highlights:
- Revenue $1.61 billion vs S&P analysts’ consensus estimates of $1.60 billion (8.9% year-on-year growth, 0.5% beat)
- Adjusted EPS $1.52 vs S&P analysts’ consensus estimates of $1.36 (11.9% beat)
- Adjusted EBITDA $346.6 million vs analysts’ consensus estimates of $325.9 million (21.5% margin, 6.3% beat)
- Revenue guidance The company slightly lifted its revenue guidance for the full year to $6.48 billion at the midpoint from $6.45 billion
- Adjusted EPS guidance Management raised its full-year adjusted EPS guidance to $6.30 at the midpoint, a 2.7% increase
- EBITDA guidance $1.41 billion at the midpoint for the full year, above analysts’ consensus estimates of $1.38 billion
- Free cash flow margin 16.4%, up from 11.8% in the same quarter last year
- Same-store sales rose 3% year on year, in line with the same quarter last year
- Market capitalization $11.99 billion
"We are very pleased with our performance for the third quarter, with revenue increasing 8.9% and Adjusted EBITDA growing 15.5%," said Mark Tarr, President and Chief Executive Officer. "During the first nine months of 2026, we opened four hospitals totaling 189 beds and added 85 beds to existing hospitals, reflecting our commitment to meeting the growing demand for high-quality inpatient rehabilitation services. Our value proposition and disciplined operating strategy continue to be validated, and we remain highly optimistic about the long-term prospects of our business."
Revenue growth
Reviewing a company’s long-term revenue performance reveals insights into its quality. Any business can deliver a good quarter or two, but many enduring ones grow for years. Encompass Health’s revenue grew at a decent 8.6% compounded annual growth rate over the last five years. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.
Long-term growth matters the most, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Encompass Health’s annualized revenue growth of 10.2% over the last two years is above its five-year trend, suggesting some bright spots. 
Same-store sales offer a closer look at the company’s revenue dynamics by showing how much revenue its established locations generate. Over the last two years, Encompass Health’s same-store sales averaged 3.6% year-on-year growth. Revenue growth outpaced this metric, indicating that new locations are boosting the company’s revenue. 
This quarter, Encompass Health reported year-on-year revenue growth of 8.9%, and its $1.61 billion of revenue exceeded Wall Street’s consensus estimates by 0.5%.
Looking ahead, sell-side analysts expect revenue to grow 8.3% over the next 12 months, according to S&P, a slight deceleration versus the last two years. Still, this is a favorable outlook and suggests the market sees success for its products and services.
Operating margin
Encompass Health has managed its cost base well over the last five years. It demonstrated solid profitability for a healthcare business, producing an average operating margin of 16.3%.
Encompass Health’s operating margin rose by 4.1 percentage points over the last five years, as its revenue growth provided operating leverage. More recently, the company’s trajectory has remained intact as its margin has also increased by 2.6 percentage points on a two-year basis. These gains show continued momentum in profitability.
in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.
Earnings per share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Encompass Health’s solid 8% annual EPS growth over the last five years aligns with its revenue performance. This indicates its incremental revenue was profitable.
In Q3, Encompass Health reported adjusted EPS of $1.52, up from $1.23 in the same quarter last year. This result came in well above analysts’ consensus estimates. Over the next 12 months, Wall Street expects Encompass Health’s full-year EPS to grow 6.2% from $6.13 to $6.51, according to S&P.
Key takeaways from Encompass Health’s Q3 results
Encompass Health delivered some key positives in Q3: EPS topped Wall Street’s consensus estimates, and its full-year EPS guidance also came in above analysts’ consensus expectations. The market seemed to be hoping for more, however, as shares fell 2.9% to $118.65 immediately after the report.
To assess Encompass Health as an investment, consider its valuation, business quality and results from the latest quarter. For more on those factors, read our full research report here (it’s free).
