Encompass Health Corporation (EHC): History, Ownership, Mission, How It Works & Makes Money

As a seasoned investor, have you truly mapped the growth trajectory of Encompass Health Corporation (EHC), the nation's largest inpatient rehabilitation provider, and its dominant market position?

The company's concentrated focus on post-acute care is clearly paying off, with its full-year 2025 net operating revenue guidance recently raised to between $5.91 billion and $5.96 billion, signaling strong underlying demand and operational efficiency. With approximately one in three U.S. patients receiving their rehabilitative care at one of its 170 hospitals, EHC dominates a critical healthcare niche; so, understanding its history, ownership structure (including major holders like BlackRock, Inc.), and how it generates that revenue is defintely a necessary step for any serious portfolio analysis.

Encompass Health Corporation (EHC) History

You're looking at Encompass Health Corporation (EHC) because its focused strategy in inpatient rehabilitation has driven solid performance, especially with the aging US population. To understand their current position-the largest owner and operator of inpatient rehabilitation hospitals-you have to look past the current ticker symbol and back to its origin as HealthSouth Corporation.

Honestly, the company's history is a masterclass in strategic refocusing after a major crisis. It started as a rapid-growth machine, nearly collapsed, and then rebuilt itself into a specialized, high-quality provider. The journey from a small outpatient provider to a national leader operating 170 hospitals as of September 30, 2025, is quite a story.

Given Company's Founding Timeline

Year established

1984, originally incorporated as Amcare, Inc., but quickly renamed HealthSouth Corporation.

Original location

Birmingham, Alabama, which remains the company's headquarters today.

Founding team members

Primarily founded by Richard M. Scrushy and four co-founders. Scrushy served as chairman and CEO until 2003.

Initial capital/funding

The five co-founders put in $50,000 of their own money, with Scrushy contributing the largest portion at $25,000. This seed money was immediately supplemented by an additional $1 million in funding from Citicorp Venture Capital.

Given Company's Evolution Milestones

Given Company's Transformative Moments

The biggest pivot wasn't a product launch; it was surviving the 2003 accounting scandal. That event forced a complete operational and ethical overhaul, which is why the company you see today is so different from its predecessor. It was a defintely a crucible moment.

The subsequent decades were all about shedding non-core assets and doubling down on what they do best: complex inpatient rehabilitation. This is where the real value is now, as evidenced by their 2025 performance.

• Post-Scandal Restructuring: The company spent years stabilizing operations and rebuilding trust, a slow but crucial process that paved the way for the later rebranding and strategic focus.
• Inpatient Rehabilitation Focus: The deliberate strategy to build and acquire new inpatient rehabilitation hospitals, accelerating through 2024 and 2025, has solidified Encompass Health Corporation's market leadership.
• 2025 Capacity Expansion: The company is scheduled to open seven new hospitals and add approximately 100 beds to existing facilities in 2025 alone, directly addressing rising demand from an aging demographic.
• Strong 2025 Financials: This focused strategy is paying off; the company raised its full-year 2025 revenue guidance to a range of $5.88 billion-$5.98 billion, demonstrating solid growth and effective execution.

The spin-off of the home health and hospice segment in July 2022 was the final step in this transformation, creating a pure-play inpatient rehabilitation leader. They are now operating 170 hospitals across 39 states and Puerto Rico as of late 2025. If you want to dig into the guiding principles behind this focused entity, you can review the Mission Statement, Vision, & Core Values of Encompass Health Corporation (EHC).

Encompass Health Corporation (EHC) Ownership Structure

Encompass Health Corporation operates as a publicly traded company on the New York Stock Exchange (NYSE: EHC), meaning its ownership is widely distributed among institutional investors, company insiders, and the public.

The governance structure is typical for a large public entity, with a Board of Directors providing oversight to the executive management team, but the sheer volume of institutional holdings means major asset managers wield significant voting power.

Encompass Health Corporation's Current Status

Encompass Health Corporation is a public company, trading under the ticker symbol EHC on the New York Stock Exchange. This status requires rigorous financial transparency and adherence to Securities and Exchange Commission (SEC) regulations, giving you a clear window into its operations.

For the 2025 fiscal year, the company has shown strong performance, raising its adjusted earnings per share (EPS) view to a range of $5.22 to $5.37, which is a clear signal of confidence in their inpatient rehabilitation focus. The stock price reflects this momentum, trading around $113.46 per share as of mid-November 2025. If you want to dive deeper into the metrics behind this, you can check out Breaking Down Encompass Health Corporation (EHC) Financial Health: Key Insights for Investors.

Encompass Health Corporation's Ownership Breakdown

The ownership structure is heavily weighted toward institutional investors-the large mutual funds, pension funds, and asset managers like BlackRock, Inc. and Vanguard Group Inc. This means the company's stock price is defintely sensitive to the buy/sell decisions of a relatively small number of large players. Insider ownership, while small, still ensures the executive team's interests are aligned with shareholders.

Here's the quick math: With approximately 100.72 million shares outstanding, the institutional stake represents a powerful block of capital. That level of institutional control means you need to pay close attention to 13F filings, which track these large investors' quarterly moves.

Encompass Health Corporation's Leadership

The company is steered by a seasoned executive team with deep experience in the healthcare sector, ensuring operational precision in a highly regulated industry. The Board of Directors, led by Chairman Greg D. Carmichael, provides strategic oversight and accountability.

• Mark J. Tarr serves as the President and Chief Executive Officer (CEO), a role he has held since late 2016.
• Douglas E. Coltharp is the Executive Vice President and Chief Financial Officer (CFO), providing stability in financial strategy.
• Pat Tuer stepped into the critical role of Executive Vice President and Chief Operating Officer (COO) in April 2025, overseeing the company's extensive network of inpatient rehabilitation hospitals.
• Dr. Elissa Charbonneau is the Chief Medical Officer, ensuring clinical standards drive the company's care model.

These leaders are responsible for managing a company with total assets of roughly $6.5 billion and long-term debt of $2.7 billion, so their capital allocation decisions are crucial for future growth and risk management. Their focus on organic growth, aiming to open 6 to 10 new hospitals each year through 2027, is the key action to watch.

Encompass Health Corporation (EHC) Mission and Values

Encompass Health Corporation (EHC)'s mission and values reveal a clear focus beyond just revenue: they are built on providing high-quality, integrated post-acute care to maximize patient independence. This cultural DNA, called The Encompass Health Way, centers on a commitment to superior clinical outcomes and empathetic service across its extensive network.

Encompass Health Corporation's Core Purpose

You're looking at a company's purpose to understand its long-term stability, and honestly, EHC's foundation is solid. Their core purpose is to help patients recover and return to what matters most, and they back that up with a massive operational footprint. They serve over 155,000 patients annually, which is a huge number of lives impacted.

Official Mission Statement

The mission statement is precise; it's about integration and results. They know decision-makers want confidence, so they focus on outcomes that are both unparalleled and cost-effective. It's a smart, two-pronged approach.

• Connected Care, Superior Outcomes: Deliver the highest quality integrated inpatient and home-based care.
• Seamlessly connect with other providers across the healthcare continuum.
• Inspire confidence in achieving unparalleled outcomes, more quickly and cost-effectively, for decision-makers committed to higher-quality patient care.

Vision Statement

The vision is all about being the better way to care, which means challenging the status quo in post-acute services. They see integrated care-connecting hospital to home-as the critical factor for success. This focus is why they operate 167 hospitals across 38 states and Puerto Rico as of 2025. You can dig into the financial implications of this scale in Breaking Down Encompass Health Corporation (EHC) Financial Health: Key Insights for Investors.

• Believe integrated care delivery across the healthcare continuum is critical to achieving the best outcomes for patients.
• Exist to provide a better way to care that elevates expectations and outcomes.

Encompass Health Corporation Tagline

While a single slogan isn't always pushed, the clearest, most action-oriented phrase that captures their promise is the one leading their mission. It's a defintely a clean one-liner.

• Connected Care, Superior Outcomes.

Their core values, known as The Encompass Health Way, are the real operational guide for their roughly 33,000 employees. For example, their commitment to 'Set the standard' is reflected in maintaining an 87% patient recovery rate, which is a crucial metric in the inpatient rehabilitation facility (IRF) space. They also employ 1,495 veterans, showing their 'Stronger together' value in action by investing in a diverse workforce.

• Set the standard.
• Lead with empathy.
• Do what's right.
• Focus on the positive.
• Stronger together.

Encompass Health Corporation (EHC) How It Works

Encompass Health Corporation operates as the largest owner and operator of inpatient rehabilitation hospitals (IRFs) in the United States, providing intensive, facility-based post-acute care for patients recovering from complex medical events like stroke or major injury. The company creates value by strategically expanding its network to meet the growing demand for high-acuity rehabilitative services, driving a projected 2025 net operating revenue of between $5.91 billion and $5.96 billion.

Encompass Health Corporation's Product/Service Portfolio

The company's core business, following the 2022 spin-off of its home health and hospice segment, is entirely focused on delivering specialized, integrated rehabilitation services across its extensive hospital network.

Encompass Health Corporation's Operational Framework

The operational framework is built on a model of standardization, capacity expansion, and clinical excellence, which is how Encompass Health consistently delivers strong results, like the Q3 2025 Adjusted EBITDA of $300.1 million. Honestly, this is a volume and quality game.

• Capacity Expansion: Drive growth by adding new facilities, primarily through de novo (new) hospital construction and adding beds to existing locations. In Q3 2025 alone, the company opened three new hospitals and added 39 beds to existing sites.
• Clinical Standardization: Use proprietary clinical protocols and data-driven management systems to ensure consistent, high-quality patient outcomes across all 172+ hospitals.
• Value-Based Care Focus: Engage actively with payors (insurers), especially Medicare Advantage (MA) plans, by demonstrating superior outcomes and cost-effectiveness compared to lower-acuity settings.
• Technology Integration: Leverage innovation tools like predictive models and real-time reporting to optimize patient care plans and operating efficiencies.

You can see the Mission Statement, Vision, & Core Values of Encompass Health Corporation (EHC) for a deeper dive into their guiding principles.

Encompass Health Corporation's Strategic Advantages

The company's success isn't just about building hospitals; it's about the regulatory environment, scale, and proven clinical results. What this estimate hides, however, is the ongoing pressure from labor shortages, which is a defintely real risk.

• Regulatory Barrier to Entry: Inpatient Rehabilitation Facilities operate under strict Medicare rules, including the 60% Rule, which creates a significant barrier for new competitors. This protects Encompass Health's market share.
• Unmatched Scale and Footprint: As the largest IRF operator, the company benefits from purchasing power, shared best practices, and a national referral network across 38 states and Puerto Rico.
• Proven Clinical Outcomes: Consistently recognized for high-quality care, which is crucial for attracting patient referrals and securing favorable contracts with payors. The company was named America's Most Awarded Leader in Inpatient Rehabilitation for the sixth consecutive year.
• De Novo Growth Pipeline: A clear, executable strategy to invest free cash flow in opening 6 to 10 new hospitals and adding 80 to 120 beds annually through 2027, capitalizing on underserved markets.

Encompass Health Corporation (EHC) How It Makes Money

Encompass Health Corporation generates virtually all its revenue by providing intensive, facility-based post-acute care through its network of Inpatient Rehabilitation Facilities (IRFs). Simply put, the company makes money by treating patients who need complex, high-acuity rehabilitation following major medical events like stroke, neurological disorders, or serious surgeries, with payment primarily coming from government programs and commercial insurers.

For the full 2025 fiscal year, EHC has raised its net operating revenue guidance to a midpoint of approximately $5.93 billion, which is a strong signal of continued demand and successful capacity expansion. [cite: 8, 12 from step 1]

Encompass Health Corporation's Revenue Breakdown

Following the spin-off of its Home Health and Hospice segment into Enhabit, Inc. (EHAB) in July 2022, Encompass Health Corporation now operates as a pure-play Inpatient Rehabilitation Facility business. This means the company's financial engine is entirely focused on its hospital-based services.

Business Economics

The core economics of Encompass Health are driven by three fundamental factors: demographics, regulatory structure, and capacity management. The company operates a vast network of approximately 171 inpatient rehabilitation hospitals across 39 states and Puerto Rico, making it the dominant market leader.

• Pricing Power & Payor Mix: Revenue per discharge is the key metric here. In Q3 2025, net patient revenue per discharge rose 3.3% year-over-year to $21,679. The business is heavily reliant on Medicare and Medicare Advantage (MA) payments, which are subject to annual federal rate updates. For example, Medicare Advantage pricing saw an increase of around 5% in Q1 2025, which helped revenue per discharge grow faster than anticipated. [cite: 16 from step 1]
• Demographic Tailwinds: The aging US population (the 65-plus demographic) is the primary, long-term demand driver. This group has a higher incidence of the complex conditions-like stroke and hip fractures-that require intensive inpatient rehabilitation, creating a persistent and growing need for EHC's services. [cite: 14 from step 1, 15 from step 1]
• Capacity as a Growth Lever: Management is actively expanding capacity to capture this demand. In Q3 2025 alone, the company opened three new hospitals and added 39 beds to existing facilities. This strategy is why same-store discharge growth was a solid 2.9% in Q3 2025. The plan is to add up to 127 new beds across existing hospitals in 2025. [cite: 8 from step 1]

The business model is highly regulated, so government policy is a defintely a major risk, but the high-quality outcomes-like a Q3 2025 discharge-to-community rate of 84.6%-help validate their value proposition with payors. [cite: 12 from step 1]

Encompass Health Corporation's Financial Performance

Looking at the 2025 guidance, the company is demonstrating strong financial health, with growth in both the top and bottom lines, indicating effective cost management and successful capacity expansion.

• Revenue and Profitability: Full-year 2025 net operating revenue is projected at a midpoint of approximately $5.93 billion. [cite: 8 from step 1] This is translating into healthy profitability, with Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) expected to hit a midpoint of $1.245 billion for the year. [cite: 8 from step 1]
• Margin Strength: The operating margin for Q3 2025 was 17.5%, an increase from 15.7% in the same quarter last year. [cite: 1 from step 1] This demonstrates the company's ability to manage costs and achieve expense leverage, even with ongoing labor market pressures.
• Per-Share Earnings: The full-year 2025 Adjusted Earnings Per Share (EPS) is guided to a midpoint of $5.30, reflecting a strong growth trajectory. [cite: 1 from step 1] This EPS growth is a good indicator that revenue increases are flowing through to shareholder value.
• Cash Flow and Capital Allocation: The company is highly cash-generative. Management raised the full-year adjusted free cash flow estimate to a range of $730 million to $810 million. [cite: 8 from step 1] The primary use of this cash is capacity expansion, which fuels future growth, plus a modest quarterly dividend of $0.19 per share.

Here's the quick math: with a projected Adjusted EBITDA margin of about 21% (calculated from the guidance midpoints), the business model is not only growing but is also highly efficient, which is what you want to see in a capital-intensive healthcare provider. You can read more about their strategic direction here: Mission Statement, Vision, & Core Values of Encompass Health Corporation (EHC).

Encompass Health Corporation (EHC) Market Position & Future Outlook

Encompass Health Corporation is a clear market leader in the U.S. inpatient rehabilitation sector, and its strategic focus on high-return de novo (newly built) hospitals is set to drive continued growth, projecting 2025 revenue to hit the range of $5.85 billion to $5.925 billion. The company's future trajectory hinges on its ability to execute this expansion while navigating the complex regulatory and payer landscape.

You need to see Encompass Health not just as a hospital operator, but as the dominant platform for post-acute care, specifically intensive rehabilitation, which is a high-demand service in an aging population. That $5.925 billion top-line guidance, raised after strong Q3 2025 results showing net operating revenue of $1,477.5 million, shows management's confidence in their growth strategy.

Competitive Landscape

Encompass Health's primary competition comes from diversified healthcare services companies and other specialty providers. The key difference is EHC's singular focus on Inpatient Rehabilitation Facilities (IRF), giving it scale and specialized expertise, but also concentrating its regulatory risk.

Here's the quick math: Encompass Health holds an estimated 8.3% of the total Specialty Hospitals industry revenue, making it a disruptor with medium-to-lower market share that's rising fast. Select Medical Holdings Corporation is a close second, but its revenue base of around $5.3 billion to $5.5 billion for 2025 is spread across three distinct segments: IRF, Long-Term Acute Care Hospitals (LTACH), and outpatient clinics. Tenet Healthcare Corporation, while a much larger company overall, competes in the specialty space mainly through its diversified hospital network and its massive ambulatory platform, United Surgical Partners International (USPI).

Opportunities & Challenges

The near-term outlook is bullish, but you defintely need to keep an eye on payer dynamics and capital allocation. The biggest opportunity is simply demographic-more people need rehab. Still, regulatory changes can turn a tailwind into a headwind fast.

Industry Position

Encompass Health is positioned as the undisputed leader in the Inpatient Rehabilitation Facility (IRF) sub-segment, not the broader Specialty Hospitals category. This is a crucial distinction. The company's network includes 168 hospitals across 38 states and Puerto Rico as of Q3 2025, meaning roughly one in three patients receiving inpatient rehabilitative care in the U.S. is treated at an EHC facility.

Their strategy is simple: expand capacity where demand is highest. In Q3 2025 alone, they opened three new hospitals and added 39 beds to existing facilities. This aggressive, capital-intensive expansion is the core driver of their projected 11.13% revenue growth for the twelve months ending September 30, 2025.

• Dominant Scale: Largest IRF operator, providing a cost advantage and strong negotiating power with payers.
• Clinical Focus: Recognized as America's Most Awarded Leader in Inpatient Rehabilitation for six consecutive years, validating their clinical model.
• Financial Health: Strong adjusted EBITDA of $300.1 million in Q3 2025 supports their growth investments.

To fully grasp the company's long-term vision, you should review their foundational principles: Mission Statement, Vision, & Core Values of Encompass Health Corporation (EHC).

Next Step: Analyze the Q4 2025 guidance for any shifts in capital expenditure plans, as that will signal the pace of their de novo strategy.