Encompass Health Reports 9.6% Revenue Growth to $1.6 Billion in Q2 2026

Encompass Health Corporation reported a significant increase in its financial performance for the second quarter of 2026, with net operating revenues reaching $1.6 billion, a 9.6% increase from $1.46 billion in the same period of 2025. For the first half of 2026, revenues totaled $3.18 billion, up 9.3% from $2.91 billion year-over-year. The company attributed this growth primarily to increased patient volumes and favorable pricing, with a notable rise in Medicare revenues, which accounted for 65.8% of total revenues in the second quarter.

Operating expenses also rose, totaling $1.31 billion for the second quarter, a 9.2% increase compared to $1.20 billion in the prior year. Salaries and benefits, which comprised a significant portion of operating costs, increased by 6.9% to $820.3 million, reflecting higher staffing levels due to increased patient volumes. Other operating expenses surged by 19.2%, driven by higher provider taxes and costs associated with development activities. Despite these rising costs, the company reported a net income of $207.4 million for the quarter, up 12.2% from $184.9 million in the previous year.

Strategically, Encompass Health has continued to expand its operations, opening new inpatient rehabilitation hospitals in South Carolina, Pennsylvania, and Georgia during the first half of 2026. The company also announced plans for additional facilities in various states, including Texas and Florida, as part of its ongoing growth strategy. As of June 30, 2026, Encompass Health operated 176 inpatient rehabilitation hospitals across 39 states and Puerto Rico, with a focus on enhancing its capacity and service offerings.

Operationally, the company reported a 5.6% increase in discharges year-over-year, totaling 68,895 for the second quarter. The average length of stay for patients remained stable at 11.9 days, while occupancy rates improved to 77.4%. The total number of full-time equivalent employees increased to 30,133, reflecting the company's commitment to maintaining high-quality care amid staffing challenges in the healthcare sector.

Looking ahead, Encompass Health remains optimistic about its growth prospects, driven by demographic trends such as an aging population and increasing demand for rehabilitation services. The company is focused on delivering high-quality, cost-effective care while navigating regulatory challenges and adapting to changes in the healthcare landscape. Encompass Health's strong financial position, characterized by a well-capitalized balance sheet and significant liquidity, positions it well to capitalize on future opportunities and sustain its growth trajectory.