How Investors Are Reacting To Encompass Health (EHC) Expanding Texas Rehab Network and Raising 2025 Guidance

• In August 2025, Encompass Health Corporation announced a joint venture with BSA Health System to own and operate a new 50-bed inpatient rehabilitation hospital in Amarillo, Texas, and separately revealed plans to build a similar facility in Haslet, Texas, while also reporting improved second quarter financial results and raising its full-year guidance.
• These moves highlight the company’s commitment to expanding inpatient rehabilitation capacity in Texas and reflect increased management confidence, supported by higher revenues and net income reported for the quarter ended June 30, 2025.
• Given the raised annual earnings guidance, we'll explore how this update could influence analyst assumptions around Encompass Health's future earnings growth.

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Encompass Health Investment Narrative Recap

To be a shareholder in Encompass Health, you must believe in the continued growth of inpatient rehabilitation driven by demographic trends and unmet demand for specialized post-acute care. The recent joint venture and new hospital announcements in Texas may reinforce optimism around capacity expansion, but the biggest short-term catalyst, volume and revenue growth from new openings, remains largely unchanged. The most important current risk continues to be staffing challenges, with labor market pressures still posing a threat to margin expansion.

Among the recent announcements, the raised full-year guidance following the second quarter earnings report stands out. This update, supported by rising revenues and net income, is directly relevant as it both signals management's confidence in growth prospects and may factor into how analysts interpret the financial impact of expansion initiatives like the new Texas hospitals.

But with ongoing labor shortages and potential wage pressures still looming, it's worth knowing that investors should also pay close attention to how…

Read the full narrative on Encompass Health (it's free!)

Encompass Health's outlook anticipates $7.2 billion in revenue and $711.6 million in earnings by 2028. This implies a yearly revenue growth rate of 8.1% and a $189.2 million increase in earnings from the current level of $522.4 million.

Uncover how Encompass Health's forecasts yield a $135.33 fair value, a 12% upside to its current price.

Exploring Other Perspectives

All ten recent fair value estimates from the Simply Wall St Community converge at US$135.33 per share. While this signals alignment among these retail investors, the company's renewed focus on hospital expansion raises important questions for future earnings and capital deployment that are worth exploring from varied viewpoints.

Explore another fair value estimate on Encompass Health - why the stock might be worth as much as 12% more than the current price!

Build Your Own Encompass Health Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Encompass Health research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Encompass Health research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Encompass Health's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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