ENCOMPASS HEALTH CORP, 10-K filed on 2/26/2026
Annual Report
v3.25.4
Cover Page - USD ($)
$ in Billions
 12 Months Ended
Dec. 31, 2025
Feb. 12, 2026
Jun. 30, 2025
Cover [Abstract]      
Document Type 10-K    
Document Annual Report true    
Document Period End Date Dec. 31, 2025    
Current Fiscal Year End Date --12-31    
Document Transition Report false    
Entity File Number 001-10315    
Entity Registrant Name Encompass Health Corporation    
Entity Incorporation, State or Country Code DE    
Entity Tax Identification Number 63-0860407    
Entity Address, Address Line One 9001 Liberty Parkway    
Entity Address, City or Town Birmingham    
Entity Address, State or Province AL    
Entity Address, Postal Zip Code 35242    
City Area Code 205    
Local Phone Number 967-7116    
Title of 12(b) Security Common Stock, $0.01 par value    
Trading Symbol EHC    
Security Exchange Name NYSE    
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Interactive Data Current Yes    
Entity Filer Category Large Accelerated Filer    
Entity Emerging Growth Company false    
Entity Small Business false    
ICFR Auditor Attestation Flag true    
Document Financial Statement Error Correction false    
Entity Shell Company false    
Entity Public Float     $ 12.2
Entity Common Stock, Shares Outstanding   99,416,162  
Documents Incorporated by Reference
The definitive proxy statement relating to the registrant’s 2026 annual meeting of stockholders is incorporated by reference in Part III to the extent described therein.
    
Entity Central Index Key 0000785161    
Document Fiscal Year Focus 2025    
Document Fiscal Period Focus FY    
Amendment Flag false    
v3.25.4
Audit Information
 12 Months Ended
Dec. 31, 2025
Audit Information [Abstract]  
Auditor Firm ID 238
Auditor Name PricewaterhouseCoopers LLP
Auditor Location Birmingham, Alabama
v3.25.4
Consolidated Statements of Operations - USD ($)
shares in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Income Statement [Abstract]      
Net operating revenues $ 5,935.2 $ 5,373.2 $ 4,801.2
Operating expenses:      
Salaries and benefits 3,115.9 2,901.0 2,600.1
Other operating expenses 888.7 802.6 719.1
Occupancy costs 59.0 57.3 56.3
Supplies 254.4 239.0 218.3
General and administrative expenses 236.2 209.2 201.7
Depreciation and amortization 327.9 299.6 273.9
Total operating expenses 4,882.1 4,508.7 4,069.4
Loss on early extinguishment of debt 0.0 0.6 0.0
Interest expense and amortization of debt discounts and fees 123.2 137.4 143.5
Other income (18.8) (20.1) (15.7)
Equity in net income of nonconsolidated affiliates (4.3) (3.0) (3.2)
Income from continuing operations before income tax expense 953.0 749.6 607.2
Provision for income tax expense 192.9 150.2 132.2
Income from continuing operations 760.1 599.4 475.0
Loss from discontinued operations, net of tax (1.0) (2.8) (12.0)
Net income 759.1 596.6 463.0
Less: Net income attributable to noncontrolling interests (192.9) (140.9) (111.0)
Net income attributable to Encompass Health $ 566.2 $ 455.7 $ 352.0
Weighted average common shares outstanding:      
Basic (in shares) 100.5 99.9 99.5
Diluted (in shares) 102.2 102.2 101.3
Basic earnings per share attributable to Encompass Health common shareholders:      
Continuing operations (in dollars per share) $ 5.63 $ 4.56 $ 3.63
Discontinued operations (in dollars per share) (0.01) (0.03) (0.12)
Net income (in dollars per share) 5.62 4.53 3.51
Diluted earnings per share attributable to Encompass Health common shareholders:      
Continuing operations (in dollars per share) 5.55 4.49 3.59
Discontinued operations (in dollars per share) (0.01) (0.03) (0.12)
Net income (in dollars per share) $ 5.54 $ 4.46 $ 3.47
Amounts attributable to Encompass Health:      
Income from continuing operations $ 567.2 $ 458.5 $ 364.0
Loss from discontinued operations, net of tax (1.0) (2.8) (12.0)
Net income attributable to Encompass Health $ 566.2 $ 455.7 $ 352.0
v3.25.4
Consolidated Statements of Comprehensive Income - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]      
Net income $ 759.1 $ 596.6 $ 463.0
Net change in unrealized gain on available-for-sale securities:      
Unrealized net holding gain arising during the period 0.7 0.0 0.0
Reclassifications to net income (0.1) 0.0 0.0
Other comprehensive gain before income taxes 0.6 0.0 0.0
Provision for income tax expense related to other comprehensive loss items (0.1) 0.0 0.0
Other comprehensive income, net of tax: 0.5 0.0 0.0
Comprehensive income 759.6 596.6 463.0
Comprehensive income attributable to noncontrolling interests (192.9) (140.9) (111.0)
Comprehensive income attributable to Encompass Health $ 566.7 $ 455.7 $ 352.0
v3.25.4
Consolidated Balance Sheets - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Current assets:    
Cash and cash equivalents $ 72.2 $ 85.4
Restricted cash 30.7 37.7
Accounts receivable 619.2 598.8
Prepaid expenses 53.9 42.3
Other current assets 129.9 122.7
Total current assets 905.9 886.9
Property and equipment, net 4,101.6 3,643.1
Operating lease right-of-use assets 212.6 203.7
Goodwill 1,317.6 1,284.0
Intangible assets, net 308.3 297.8
Other long-term assets 243.7 219.2
Total assets [1] 7,089.7 6,534.7
Current liabilities:    
Current portion of long-term debt 43.6 138.6
Current operating lease liabilities 26.5 26.3
Accounts payable 178.2 171.0
Accrued payroll 243.7 227.9
Accrued distributions 54.8 31.4
Other current liabilities 289.6 245.8
Total current liabilities 836.4 841.0
Long-term debt, net of current portion 2,447.2 2,359.2
Long-term operating lease liabilities 196.6 189.7
Self-insured risks 153.1 138.6
Deferred income tax liabilities 126.8 105.2
Other long-term liabilities 53.8 51.8
Total liabilities [1] 3,813.9 3,685.5
Commitments and contingencies
Redeemable noncontrolling interests 58.3 56.5
Encompass Health shareholders’ equity:    
Common stock, $.01 par value; 200,000,000 shares authorized; issued: 116,036,500 in 2025; 116,036,500 in 2024 1.2 1.2
Capital in excess of par value 1,869.6 1,847.0
Accumulated income 1,289.4 796.7
Accumulated other comprehensive income 0.5 0.0
Treasury stock, at cost (16,039,648 shares in 2025 and 15,261,136 shares in 2024) (722.5) (577.9)
Total Encompass Health shareholders’ equity 2,438.2 2,067.0
Noncontrolling interests 779.3 725.7
Total shareholders’ equity 3,217.5 2,792.7
Total liabilities and shareholders’ equity [1] $ 7,089.7 $ 6,534.7
[1] Our consolidated assets as of December 31, 2025 and December 31, 2024 include total assets of variable interest entities of $203.8 million and $208.1 million, respectively, which cannot be used by us to settle the obligations of other entities. Our consolidated liabilities as of December 31, 2025 and December 31, 2024 include total liabilities of the variable interest entities of $50.5 million and $45.0 million, respectively. See Note 2, Variable Interest Entities.
v3.25.4
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 200,000,000 200,000,000
Common stock, shares issued (in shares) 116,036,500 116,036,500
Treasury stock, shares (in shares) 16,039,648 15,261,136
Total assets [1] $ 7,089.7 $ 6,534.7
Total liabilities [1] 3,813.9 3,685.5
Variable Interest Entity, Primary Beneficiary    
Total assets 203.8 208.1
Total liabilities $ 50.5 $ 45.0
[1] Our consolidated assets as of December 31, 2025 and December 31, 2024 include total assets of variable interest entities of $203.8 million and $208.1 million, respectively, which cannot be used by us to settle the obligations of other entities. Our consolidated liabilities as of December 31, 2025 and December 31, 2024 include total liabilities of the variable interest entities of $50.5 million and $45.0 million, respectively. See Note 2, Variable Interest Entities.
v3.25.4
Consolidated Statements of Shareholders' Equity - USD ($)
shares in Millions, $ in Millions
Total
Common Stock
Capital in Excess of Par Value
Accumulated Income
Accumulated Other Comprehensive Income
Treasury Stock
Noncontrolling Interests
Balance at beginning of period (in shares) at Dec. 31, 2022   99.8          
Balance at beginning of period at Dec. 31, 2022 $ 1,826.3 $ 1.1 $ 1,730.2 $ 115.7 $ 0.0 $ (536.7) $ 516.0
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net income 454.7     352.0     102.7
Receipt of treasury stock (in shares)   (0.1)          
Receipt of treasury stock (8.2)         (8.2)  
Dividends declared (60.7)   0.5 (61.2)      
Stock-based compensation 50.6   50.6        
Distributions declared (110.0)           (110.0)
Capital contributions from consolidated affiliates 100.5           100.5
Other (in shares)   0.6          
Other 2.0 $ 0.1 5.7     (2.3) (1.5)
Balance at end of period (in shares) at Dec. 31, 2023   100.3          
Balance at end of period at Dec. 31, 2023 2,255.2 $ 1.2 1,787.0 406.5 0.0 (547.2) 607.7
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net income 591.5     455.7     135.8
Receipt of treasury stock (in shares)   (0.2)          
Receipt of treasury stock (12.1)         (12.1)  
Dividends declared (65.1)   0.4 (65.5)      
Stock-based compensation 48.3   48.3        
Distributions declared (121.3)           (121.3)
Repurchases of common stock in open market (in shares)   (0.4)          
Repurchases of common stock in open market (31.1)         (31.1)  
Capital contributions from consolidated affiliates 134.2           134.2
Contribution of our hospital to consolidated joint venture (7.6)   23.2       (30.8)
Other (in shares)   1.1          
Other 0.7   (11.9)     12.5 0.1
Balance at end of period (in shares) at Dec. 31, 2024   100.8          
Balance at end of period at Dec. 31, 2024 2,792.7 $ 1.2 1,847.0 796.7 0.0 (577.9) 725.7
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net income 749.7     566.2     183.5
Issuance of restricted stock (in shares)   0.7          
Issuance of restricted stock 0.0   (28.8)     28.8  
Receipt of treasury stock (in shares)   (0.2)          
Receipt of treasury stock (20.0)         (20.0)  
Dividends declared (73.3)   0.2 (73.5)      
Stock-based compensation 56.5   56.5        
Distributions declared (164.1)           (164.1)
Repurchases of common stock in open market (in shares)   (1.5)          
Repurchases of common stock in open market (158.6)         (158.6)  
Capital contributions from consolidated affiliates 36.6           36.6
Other (in shares)   0.2          
Other (2.0)   (5.3)   0.5 5.2 (2.4)
Balance at end of period (in shares) at Dec. 31, 2025   100.0          
Balance at end of period at Dec. 31, 2025 $ 3,217.5 $ 1.2 $ 1,869.6 $ 1,289.4 $ 0.5 $ (722.5) $ 779.3
v3.25.4
Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares
 3 Months Ended 12 Months Ended 13 Months Ended 25 Months Ended
Sep. 30, 2025
Sep. 30, 2024
Sep. 30, 2022
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Jul. 31, 2025
Jul. 31, 2024
Statement of Stockholders' Equity [Abstract]                
Dividends declared on common stock (in dollars per share) $ 0.19 $ 0.17 $ 0.15 $ 0.72 $ 0.64 $ 0.60 $ 0.17 $ 0.15
v3.25.4
Consolidated Statements of Cash Flows - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Cash flows from operating activities:      
Net income $ 759.1 $ 596.6 $ 463.0
Loss from discontinued operations, net of tax 1.0 2.8 12.0
Adjustments to reconcile net income to net cash provided by operating activities —      
Depreciation and amortization 327.9 299.6 273.9
Amortization of debt-related items 9.6 9.7 9.5
Equity in net income of nonconsolidated affiliates (4.3) (3.0) (3.2)
Distributions from nonconsolidated affiliates 4.1 4.0 1.6
Stock-based compensation 56.5 48.3 50.6
Deferred tax expense 22.3 10.7 3.9
Other, net (3.5) 15.3 5.2
Changes in assets and liabilities, net of acquisitions —      
Accounts receivable (15.2) 3.0 (22.4)
Prepaid expenses and other assets (31.2) (57.3) 6.1
Accounts payable (22.6) 3.0 11.8
Accrued payroll 15.9 20.4 39.2
Other liabilities 57.4 52.8 15.6
Net cash used in operating activities of discontinued operations (1.4) (3.1) (16.0)
Total adjustments 415.5 403.4 375.8
Net cash provided by operating activities 1,175.6 1,002.8 850.8
Cash flows from investing activities:      
Purchases of property, equipment, and intangible assets (736.4) (642.5) (583.1)
Proceeds from sale of restricted investments 172.8 18.9 7.4
Purchases of restricted investments (184.4) (22.5) (23.0)
Other, net (16.6) (7.2) (4.1)
Net cash used in investing activities (764.6) (653.3) (602.8)
Cash flows from financing activities:      
Principal payments on debt, including pre-payments (115.1) (255.2) (7.2)
Principal borrowings on notes 0.0 15.0 20.0
Borrowings on revolving credit facility 210.0 80.0 60.0
Payments on revolving credit facility (100.0) (60.0) (115.0)
Principal payments under finance lease obligations (23.9) (21.8) (41.1)
Repurchases of common stock, including fees and expenses (158.0) (31.1) 0.0
Dividends paid on common stock (71.1) (62.8) (60.4)
Distributions paid to noncontrolling interests of consolidated affiliates (152.1) (125.0) (114.7)
Taxes paid on behalf of employees for shares withheld (20.0) (12.1) (8.2)
Contributions from noncontrolling interests of consolidated affiliates 1.8 140.4 68.3
Other, net (2.8) 2.0 1.1
Net cash used in financing activities (431.2) (330.6) (197.2)
(Decrease) increase in cash, cash equivalents, and restricted cash (20.2) 18.9 50.8
Cash, cash equivalents, and restricted cash at beginning of year 123.1 104.2 53.4
Cash, cash equivalents, and restricted cash at end of year 102.9 123.1 104.2
Reconciliation of Cash, Cash Equivalents, and Restricted Cash      
Cash and cash equivalents at beginning of period 85.4 69.1 21.8
Restricted cash at beginning of period 37.7 35.1 31.6
Cash, cash equivalents, and restricted cash at beginning of year 123.1 104.2 53.4
Cash and cash equivalents at end of period 72.2 85.4 69.1
Restricted cash at end of period 30.7 37.7 35.1
Cash, cash equivalents, and restricted cash at end of year 102.9 123.1 104.2
Supplemental cash flow information:      
Interest (133.1) (146.8) (147.7)
Supplemental schedule of noncash investing and financing activities:      
Accrued purchases of property, equipment, and intangible assets 29.7 1.9 26.7
Joint venture contributions $ 34.8 $ 11.8 $ 32.2
v3.25.4
Summary of Significant Accounting Policies
 12 Months Ended
Dec. 31, 2025
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies Summary of Significant Accounting Policies:
Organization and Description of Business—
Encompass Health Corporation, incorporated in Delaware in 1984, including its subsidiaries, is a provider of inpatient rehabilitation services. We operate hospitals in 39 states and Puerto Rico, with concentrations in Florida and Texas. As of December 31, 2025, we operated 173 inpatient rehabilitation hospitals. We are the sole owner of 106 of these hospitals. We retain 50.0% to 97.5% ownership in the remaining 67 jointly owned hospitals.
Basis of Presentation and Consolidation—
The accompanying consolidated financial statements of Encompass Health and its subsidiaries were prepared in accordance with generally accepted accounting principles in the United States of America and include the assets, liabilities, revenues, and expenses of all wholly-owned subsidiaries, majority-owned subsidiaries over which we exercise control, and, when applicable, entities in which we have a controlling financial interest. Certain prior year amounts may have been reclassified for comparative purposes to conform to the current-year financial statement presentation.
We use the equity method to account for our investments in entities we do not control, but where we have the ability to exercise significant influence over operating and financial policies. Consolidated Net income attributable to Encompass Health includes our share of the net earnings of these entities. The difference between consolidation and the equity method impacts certain of our financial ratios because of the presentation of the detailed line items reported in the consolidated financial statements for consolidated entities compared to a one line presentation of equity method investments.
On December 31, 2025, we entered into an agreement to sell our 50% membership interest in Gamma Knife Center at Barnes-Jewish Hospital, LLC (“Gamma Knife”) to our existing joint venture partner, Barnes-Jewish Hospital, LLC, for $17.9 million effective January 1, 2026. We account for Gamma Knife as an equity method investment. As a result of this transaction, we expect to record an approximate $13 million post-tax gain in Other income on our condensed consolidated statement of operations during the three months ended March 31, 2026 and expect the $17.9 million proceeds to be classified as an investing activity within our condensed consolidated statement of cash flows during the three months ended March 31, 2026.
We eliminate all significant intercompany accounts and transactions from our financial results.
Variable Interest Entities—
Any entity considered a variable interest entity (“VIE”) is evaluated to determine which party is the primary beneficiary and thus should consolidate the VIE. This analysis is complex, involves uncertainties, and requires significant judgment on various matters. In order to determine if we are the primary beneficiary of a VIE, we must determine what activities most significantly impact the economic performance of the entity, whether we have the power to direct those activities, and if our obligation to absorb losses or receive benefits from the VIE could potentially be significant to the VIE.
Use of Estimates and Assumptions—
The preparation of our consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and assumptions are used for, but not limited to: (1) revenue reserves for contractual adjustments and uncollectible amounts; (2) fair value of acquired assets and assumed liabilities in business combinations; (3) asset impairments, including goodwill; (4) depreciable lives of assets; (5) useful lives of intangible assets; (6) economic lives and fair value of leased assets; (7) income tax valuation allowances; (8) uncertain tax positions; (9) fair value of stock options and restricted stock containing a market condition; (10) fair value of redeemable noncontrolling interests; (11) reserves for self-insured healthcare plans; (12) reserves for professional, workers’ compensation, and comprehensive general insurance liability risks; and (13) contingency and litigation reserves. Future events and their effects cannot be predicted with certainty; accordingly, our accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of our consolidated financial statements will change as new events occur, as more experience is acquired, as additional information is obtained, and
as our operating environment changes. We evaluate and update our assumptions and estimates on an ongoing basis and may employ outside experts to assist in our evaluation, as considered necessary. Actual results could differ from those estimates.
Risks and Uncertainties—
As a healthcare provider, we are required to comply with extensive and complex laws and regulations at the federal, state, and local government levels. These laws and regulations relate to, among other things:
•licensure, certification, and accreditation;
•policies, either at the national or local level, delineating what conditions must be met to qualify for reimbursement under Medicare (also referred to as coverage requirements);
•coding and billing for services;
•requirements of the 60% compliance threshold under The Medicare, Medicaid and State Children’s Health Insurance Program (SCHIP) Extension Act of 2007;
•relationships with physicians and other referral sources, including physician self-referral and anti-kickback laws;
•quality of medical care;
•use and maintenance of medical supplies and equipment;
•maintenance and security of patient information and medical records;
• minimum staffing;
•acquisition and dispensing of pharmaceuticals and controlled substances;
•pricing transparency and similar consumer protection rules; and
•disposal of medical and hazardous waste.
In the future, changes in these laws or regulations or the manner in which they are enforced could subject our current or past practices to allegations of impropriety or illegality or could require us to make changes in our hospitals, equipment, personnel, services, capital expenditure programs, operating procedures, and contractual arrangements. Those changes could also affect reimbursement as well as future compliance, training, and staffing costs.
If we fail to comply with applicable laws and regulations, we could be required to return portions of reimbursements deemed after the fact to have not been appropriate. We could also be subjected to liabilities, including (1) criminal penalties, (2) civil penalties, including monetary penalties and the loss of our licenses to operate one or more of our hospitals, and (3) exclusion or suspension of one or more of our hospitals from participation in the Medicare, Medicaid, and other federal and state healthcare programs which, if lengthy in duration and material to us, could potentially trigger a default under our credit agreement. Because Medicare comprises a significant portion of our Net operating revenues, failure to comply with the laws and regulations governing the Medicare program and related matters, including anti-kickback and anti-fraud requirements, could materially and adversely affect us. Specifically, reductions in reimbursements, substantial damages, and other remedies assessed against us could have a material adverse effect on our business, financial position, results of operation, and cash flows. Even the assertion of a violation, depending on its nature, could have a material adverse effect upon our stock price or reputation and could cost us significant time and expense to defend.
Historically, the United States Congress and some state legislatures have periodically proposed significant changes in regulations governing the healthcare system. Many of these changes have resulted in limitations on the increases in and, in some cases, significant roll-backs or reductions in the levels of payments to healthcare providers for services under many government reimbursement programs. There can be no assurance that future governmental initiatives will not result in reimbursement freezes and reductions, or reimbursement increases that are less than the increases we experience in our costs of
operation. Because we receive a significant percentage of our revenues from federal and state payors, such changes in legislation might have a material adverse effect on our financial position, results of operations, and cash flows.
In addition, there are increasing pressures from many third-party payors to control healthcare costs and to reduce or limit increases in reimbursement rates for medical services. Our relationships with managed care and nongovernmental third-party payors are generally governed by negotiated agreements. These agreements set forth the amounts we are entitled to receive for our services. We could be adversely affected in some of the markets where we operate if we are unable to negotiate and maintain favorable agreements with third-party payors.
Our third-party payors may also, from time to time, request audits of the amounts paid, or to be paid, to us. We could be adversely affected in some of the markets where we operate if the auditing payor alleges substantial overpayments were made to us due to coding errors or lack of documentation to support medical necessity determinations.
Net Operating Revenues—
Our Net operating revenues disaggregated by payor source are as follows (in millions):
Year Ended December 31,
202520242023
Medicare$3,886.9 $3,495.3 $3,126.1 
Medicare Advantage
974.4 903.7 776.1 
Managed care
634.0 579.2 531.4 
Medicaid184.2 179.4 190.7 
Other third-party payors39.7 41.7 41.8 
Workers’ compensation29.6 27.8 25.8 
Patients17.2 15.9 14.9 
Other income169.2 130.2 94.4 
Total$5,935.2 $5,373.2 $4,801.2 
We record Net operating revenues on an accrual basis using our best estimate of the transaction price for the type of service provided to the patient. Our estimate of the transaction price includes estimates of price concessions for such items as contractual allowances, potential adjustments that may arise from payment and other reviews, and uncollectible amounts. Our accounting systems calculate contractual allowances on a patient-by-patient basis based on the rates in effect for each primary third-party payor. Adjustments related to payment reviews by third-party payors or their agents are based on our historical experience and success rates in the claims adjudication process. Estimates for uncollectible amounts are based on the aging of our accounts receivable, our historical collection experience for each type of payor, and other relevant factors.
Management continually reviews the revenue transaction price estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms that result from contract renegotiations and renewals. Due to complexities involved in determining amounts ultimately due under reimbursement arrangements with third-party payors, which are often subject to interpretation, we may receive reimbursement for healthcare services authorized and provided that is different from our estimates, and such differences could be material. In addition, laws and regulations governing the Medicare and Medicaid programs, are complex, subject to interpretation, and are routinely modified for provider reimbursement. All healthcare providers participating in the Medicare and Medicaid programs are required to meet certain financial reporting requirements. Federal regulations require submission of annual cost reports covering medical costs and expenses associated with the services provided under each hospital provider number to program beneficiaries. Annual cost reports required under the Medicare and Medicaid programs are subject to routine audits, which may result in adjustments to the amounts ultimately determined to be due to Encompass Health under these reimbursement programs. These audits often require several years to reach the final determination of amounts earned under the programs. If actual results are not consistent with our assumptions and judgments, we may be exposed to gains or losses that could be material.
The Centers for Medicare & Medicaid Services (“CMS”) has been granted authority to suspend payments, in whole or in part, to Medicare providers if CMS possesses reliable information an overpayment, fraud, or willful misrepresentation exists. If CMS suspects payments are being made as the result of fraud or misrepresentation, CMS may suspend payment at any time without providing prior notice to us. The initial suspension period is limited to 180 days. However, the payment suspension period can be extended almost indefinitely if the matter is under investigation by the United States Department of Health and Human Services Office of Inspector General (the “HHS-OIG”) or the United States Department of Justice (the “DOJ”). Therefore, we are unable to predict if or when we may be subject to a suspension of payments by the Medicare and/or Medicaid programs, the possible length of the suspension period, or the potential cash flow impact of a payment suspension. Any such suspension would adversely impact our financial position, results of operations, and cash flows.
Pursuant to legislative directives and authorizations from Congress, CMS has developed and instituted various Medicare audit programs under which CMS contracts with private companies to conduct claims and medical record audits. As a matter of course, we undertake significant efforts through training and education to ensure compliance with Medicare requirements. However, past audits have led, and future audits may lead, to assertions we have been underpaid or overpaid by Medicare or submitted improper claims in some instances. Ultimately, audits may require us to refund any amounts determined to have been overpaid. Audits also require us to incur additional costs to respond to requests for records and defend the validity of payments and claims. In some circumstances auditors assert the authority to extrapolate denial rationales to large pools of claims not actually audited, which could increase the impact of the audit. We cannot predict when or how these audit programs will affect us.
Medicare Administrative Contractors (“MACs”), under programs known as “widespread probes,” have conducted pre-payment claim reviews of our Medicare billings and in some cases denied payment for certain diagnosis codes. We dispute, or “appeal,” most of these denials. As discussed above, our historical experience and success in the adjudication of these appeals is a component of our estimate of transaction price. The Medicare appeals adjudication process is administered by the Office of Medicare Hearings and Appeals (“OMHA”) and has been subject to significant delay resulting in a backlog of claims awaiting adjudication. Beginning in March 2020, OMHA increased the frequency of hearings and the number of claims set at each hearing, which we believe adds to the substantive and procedural deficiencies in the appeals process. During 2022, the backlog of “widespread probe” claims adjudicated by the administrative law judge (“ALJ”) continued and were substantially resolved. This OMHA practice resulted in a reduction in our success in the adjudication of these appeals, but have increased the pace of recovery of these claims. We have appealed certain adverse ALJ rulings to the Department Appeals Board (“DAB”), the final level of administrative review. As of December 31, 2025, approximately $12 million and $21 million in denied claims are awaiting review at the ALJ and DAB levels, respectively. In addition, we have appealed approximately $6 million in claims denied by the DAB pending review by the United States district courts as of December 31, 2025. Reserves against appeals pending before the ALJ, DAB, and the United States district courts totaled $7.0 million, $12.3 million, and $4.6 million, respectively, as of December 31, 2025.
During the fourth quarter of 2023, we recorded an additional reserve totaling $21.9 million related to appeals pending before the DAB and several federal district courts. The increase in reserve was driven primarily by an increase in unfavorable adjudication outcomes experienced at the DAB during the second half of 2023 and largely offsets the remaining net carrying value of these claims. These appeals related primarily to claims denied prior to 2018. This adjustment did not impact our reserve methodology for ongoing claims audit programs, including TPE and RCD (defined and discussed below). We will continue to pursue ongoing appeals before the DAB and federal district courts where economically beneficial.
Under CMS’s Targeted Probe and Educate (“TPE”) program, MACs use data analysis to identify healthcare providers with unusual billing practices, high claim error rates, and items and services that have high national error rates. Once a MAC selects a provider for claims review, the initial volume of claims review is limited to 20 to 40 claims. The TPE program includes up to three rounds of claims review if necessary with corresponding provider education and a subsequent period to allow for improvement. If results do not improve sufficiently after three rounds, the MAC may refer the provider to CMS for further action, which may include extrapolation of error rates to a broader universe of claims or referral to a UPIC or RAC (defined below). We cannot predict the impact of the TPE program on our ability to collect claims on a timely basis.
On December 14, 2020, CMS announced a five-year review choice demonstration for inpatient rehabilitation services (the “RCD”), under which Medicare reimbursement claims are assessed for compliance with applicable coverage and clinical documentation requirements. In August 2023, inpatient rehabilitation facilities (“IRFs”) located in Alabama began participation in RCD. On June 17, 2024, CMS expanded RCD to include IRFs located in Pennsylvania and billing to a certain MAC. We do
not bill to that MAC, so we are not subject to the program in Pennsylvania at this time. In December 2025, CMS announced the expansion of RCD to Texas and California, effective March 2, 2026 and May 1, 2026, respectively. With the expansion to those two states, we expect 33 of our current inpatient rehabilitation hospitals (representing approximately 11.9% of our IRF Medicare claims) to be subject to RCD. After the initial four states, CMS intends to expand the demonstration to include additional IRFs based on the MAC to which those IRFs submit claims. There are no details of that expansion at this time.
Under the RCD, participating IRFs have an initial choice between pre-claim or post-payment review of 100% of Medicare claims submitted to demonstrate compliance with applicable requirements. We elected the pre-claim review option for our IRFs in Alabama for the first cycle. Under the pre-claim review choice, services can begin prior to the submission of the review request and continue while the decision is being made. The pre-claim review request with required documentation must be submitted, reviewed, and approved before the final claim is paid. If a certain percentage of the claims reviewed are found to be valid, the IRF may then opt out of the 100% review. The opt-out validation percentages for the first, second, and third cycles were 80% or greater, 85% or greater and 90% or greater, respectively. In opting out, the IRF may elect spot prepayment reviews of samples consisting of 5% of total claims or selective post-payment review of a statistically valid random sample. Our claim validation rate for the first cycle ending in February 2024 exceeded the 80% threshold at all participating hospitals. For the second cycle, which began on May 1, 2024, we elected not to opt out, so our hospitals in Alabama remained subject to the 100% pre-claim review. None of our hospitals in Alabama achieved the opt-out claim validation rate for the second or third cycles ending in October 2024 and June 2025, respectively. In the third cycle, we again submitted 100% of review requests pre-claim. None of our IRFs in Alabama achieved the 90% claim validation rate for the third cycle ending in June 2025. We believe many of the non-affirmations in these cycles were based on application of improper standards or requirements that directly conflict with the Medicare coverage criteria for IRFs. We have engaged, and will continue to engage, with the MAC and CMS to ensure the review process is consistent with existing rules, regulations and statutes. In the fourth cycle which began September 1, 2025, the affirmation rate required to opt-out remains 90% or greater. Given the inconsistent review process applied by the MAC across the previous cycles, we cannot predict the impact, if any, RCD may have on the collectability of our Medicare claims over the program’s term and ultimately on our financial position, results of operations, and cash flows.
In connection with CMS approved and announced Recovery Audit Contractors (“RACs”) audits related to IRFs, we received requests from 2013 to 2025 to review certain patient files for discharges occurring from 2010 to 2025. These RAC audits are focused on identifying Medicare claims that may contain improper payments. RAC contractors must have CMS approval before conducting these focused reviews which cover issues ranging from billing documentation to medical necessity. Medical necessity is an assessment by an independent physician of a patient’s ability to tolerate and benefit from intensive multi-disciplinary therapy provided in an IRF setting.
CMS has also established other types of contractors, including the Unified Program Integrity Contractors (“UPICs”) and the Supplemental Medical Review Contractor (“SMRC”). The UPICs conduct audits with a focus on potential fraud and abuse issues. Like the RACs, the UPICs conduct audits and have the ability to refer matters to the HHS-OIG or the DOJ. Unlike RACs, UPICs do not receive a specific financial incentive based on the amount of the error as a result of UPIC audits. We have, from time to time, received UPIC record requests which have resulted in claim denials on paid claims. We have appealed substantially all UPIC denials arising from these audits using the same process we follow for appealing other denials by contractors. As of December 31, 2025, we have appealed $18.0 million of overpayment determination related to one UPIC audit to the DAB, challenging both the denials and the improper use of extrapolation. It is not possible to predict when this matter will be resolved or the ultimate outcome. The SMRC conducts nationwide medical reviews of Medicare claims to determine compliance with coverage, coding, payment, and billing requirements.
To date, the Medicare claims that are subject to these post-payment audit requests represent less than 1% of our Medicare patient discharges from 2010 to 2025. Because we have confidence in the medical judgment of both the referring and admitting physicians who assess the treatment needs of their patients, we have appealed substantially all claim denials arising from these audits using the same process we follow for appealing denials by MACs. Due to the delays announced by CMS in the related adjudication process discussed above, we believe the resolution of any claims that are subsequently denied as a result of these claim audits could take several years. In addition, because we have limited experience with UPICs and RACs in the context of claims reviews of this nature, we cannot provide assurance as to the timing or outcomes of these disputes. As such, we make estimates for these claims based on our historical experience and success rates in the claims adjudication process, which is the same process we follow for denials by MACs. During 2025, 2024, and 2023, our adjustment to Net operating revenues for claims that are part of these post-payment claims review process was not material.
Our performance obligations relate to contracts with a duration of less than one year. Therefore, we elected to apply the optional exemption to not disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period. These unsatisfied or partially unsatisfied performance obligations primarily relate to services provided at the end of the reporting period.
We are subject to changes in government legislation that could impact Medicare payment levels and changes in payor patterns that may impact the level and timing of payments for services rendered.
Net operating revenues are recognized over time as the services are provided to the patient. The performance obligation is the rendering of services to the patient during the term of their inpatient stay. Revenues are recognized (or measured) using the input method as therapy, nursing, and auxiliary services are provided based on our estimate of the respective transaction price. Revenues recognized are subject to a number of elements which impact both the overall amount of revenue realized as well as the timing of the collection of the related accounts receivable. Factors considered in determining the estimated transaction price include the patient’s total length of stay for in-house patients, each patient’s discharge destination, the proportion of patients with secondary insurance coverage and the level of reimbursement under that secondary coverage, and the amount of charges that will be disallowed by payors. Such additional factors are assumed to remain consistent with the experience for patients discharged in similar time periods for the same payor classes.
Cash and Cash Equivalents—
Cash and cash equivalents include highly liquid investments with maturities of three months or less when purchased. Carrying values of Cash and cash equivalents approximate fair value due to the short-term nature of these instruments.
We maintain amounts on deposit with various financial institutions, which may, at times, exceed federally insured limits. However, management periodically evaluates the credit-worthiness of those institutions, and we have not experienced any losses on such deposits.
Marketable Securities—
We record all equity securities with readily determinable fair values and for which we do not exercise significant influence at fair value and record the change in fair value for the reporting period in our consolidated statements of operations.
We record debt securities with readily determinable fair values and for which we do not exercise significant influence as available-for-sale securities. We carry the available-for-sale securities at fair value and report unrealized holding gains or losses, net of income taxes, in Accumulated other comprehensive income, which is a separate component of shareholders’ equity. We recognize realized gains and losses in our consolidated statements of operations using the specific identification method. Unrealized losses are charged against earnings when a decline in fair value was determined to be other than temporary. Management reviews several factors to determine whether a loss is other than temporary, such as the length of time a security is in an unrealized loss position, the extent to which fair value is less than cost, the financial condition and near term prospects of the issuer, industry, or geographic area and our ability and intent to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value.
Accounts Receivable—
We report accounts receivable from services rendered at their estimated transaction price which takes into account price concessions from federal and state agencies (under the Medicare and Medicaid programs), managed care health plans, commercial insurance companies, workers’ compensation programs, employers, and patients. Our accounts receivable are concentrated by type of payor. The concentration of patient service accounts receivable by payor class, as a percentage of total patient service accounts receivable, is as follows:
 As of December 31,
 20252024
Medicare54.9 %55.5 %
Managed care and other discount plans, including Medicare Advantage35.6 %34.3 %
Medicaid3.6 %4.0 %
Other third-party payors2.8 %2.8 %
Workers' compensation2.5 %2.6 %
Patients0.6 %0.8 %
Total100.0 %100.0 %
While revenues and accounts receivable from the Medicare program are significant to our operations, we do not believe there are significant credit risks associated with this government agency. We do not believe there are any other significant concentrations of revenues from any particular payor that would subject us to any significant credit risks in the collection of our accounts receivable.
Accounts requiring collection efforts are reviewed via system-generated work queues that automatically stage (based on age and size of outstanding balance) accounts requiring collection efforts for patient account representatives. Collection efforts include contacting the applicable party (both in writing and by telephone), providing information (both financial and clinical) to allow for payment or to overturn payor decisions to deny payment, and arranging payment plans with self-pay patients, among other techniques. When we determine all in-house efforts have been exhausted or it is a more prudent use of resources, accounts may be turned over to a collection agency.
The collection of outstanding receivables from Medicare, managed care payors, other third-party payors, and patients is our primary source of cash and is critical to our operating performance. While it is our policy to verify insurance prior to a patient being admitted, there are various exceptions that can occur. Such exceptions include instances where we are (1) unable to obtain verification because the patient’s insurance company was unable to be reached or contacted, (2) a determination is made that a patient may be eligible for benefits under various government programs, such as Medicaid, and it takes several days, weeks, or months before qualification for such benefits is confirmed or denied, and (3) the patient is transferred to our hospital from an acute care hospital without having access to a credit card, cash, or check to pay the applicable patient responsibility amounts (i.e., deductibles and co-payments).
Our primary collection risks relate to patient responsibility amounts and claims reviews conducted by MACs or other contractors. Patient responsibility amounts include accounts for which the patient was the primary payor or the primary insurance carrier has paid the amounts covered by the applicable agreement, but patient co-payment amounts remain outstanding. Changes in the economy, such as increased unemployment rates or periods of recession, can further exacerbate our ability to collect patient responsibility amounts.
If actual results are not consistent with our assumptions and judgments, we may be exposed to gains or losses that could be material. Changes in general economic conditions, business office operations, payor mix, or trends in federal or state governmental and private employer healthcare coverage could affect our collection of accounts receivable, financial position, results of operations, and cash flows.
Property and Equipment—
We report land, buildings, improvements, vehicles, and equipment at cost, net of accumulated depreciation and amortization and any asset impairments. We depreciate our assets using the straight-line method over the shorter of the estimated useful life of the assets or life of the underlying leases. Useful lives are generally as follows:
 Years
Buildings
10 to 30
Leasehold improvements
2 to 15
Vehicles
5
Furniture, fixtures, and equipment
3 to 10
Maintenance and repairs of property and equipment are expensed as incurred. We capitalize replacements and betterments that increase the estimated useful life of an asset. We capitalize pre-acquisition costs when they are directly identifiable with a specific property, the costs would be capitalizable if the property were already acquired, and acquisition of the property is probable. We capitalize interest expense on major construction and development projects while in progress.
We retain fully depreciated assets in property and accumulated depreciation accounts until we remove them from service. In the case of sale, retirement, or disposal, the asset cost and related accumulated depreciation balances are removed from the respective accounts, and the resulting net amount, less any proceeds, is included as a component of income from continuing operations in the consolidated statements of operations. However, if the sale, retirement, or disposal involves a discontinued operation, the resulting net amount, less any proceeds, is included in the results of discontinued operations.
Leases—
We determine if an arrangement is a lease or contains a lease at inception and perform an analysis to determine whether the lease is an operating lease or a finance lease. We measure right-of-use assets and lease liabilities at the lease commencement date based on the present value of the remaining lease payments. As most of our leases do not provide a readily determinable implicit rate, we estimate an incremental borrowing rate based on the credit quality of the Company and by comparing interest rates available in the market for similar borrowings, and adjusting this amount based on the impact of collateral over the term of each lease. We use this rate to discount the remaining lease payments in measuring the right-of-use asset and lease liability. We use the implicit rate when readily determinable. We recognize lease expense for operating leases on a straight-line basis over the lease term. For our finance leases, we recognize amortization expense from the amortization of the right-of-use asset and interest expense on the related lease liability. Certain of our lease agreements contain annual escalation clauses based on changes in the Consumer Price Index. The changes to the Consumer Price Index, as compared to our initial estimate at the lease commencement date, are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. In general, we do not account for lease and non-lease components separately for purposes of establishing right-of-use assets and lease liabilities.
Leases with an initial term of twelve months or less are not recorded on the consolidated balance sheets. We recognize lease expense for these leases on a straight-line basis over the lease term.
Goodwill and Other Intangible Assets—
We are required to test our goodwill and indefinite-lived intangible asset for impairment at least annually, absent some triggering event that would accelerate an impairment assessment. Absent any impairment indicators, we perform this impairment testing as of October 1st of each year. We recognize an impairment charge for any amount by which the carrying amount of the asset exceeds its implied fair value. We present an impairment charge as a separate line item within income from continuing operations in the consolidated statements of operations, unless the impairment is associated with a discontinued operation. In that case, we include the impairment charge, on a net-of-tax basis, within the results of discontinued operations.
We assess qualitative factors in our single reporting unit to determine whether it is necessary to perform the quantitative impairment test. If, based on this qualitative assessment, we were to believe we must perform the quantitative impairment test, we would determine the fair value of our reporting unit using generally accepted valuation techniques
including the income approach and the market approach. The income approach includes the use of our reporting unit’s discounted projected operating results and cash flows. This approach includes many assumptions related to pricing and volume, operating expenses, capital expenditures, discount factors, tax rates, etc. Changes in economic and operating conditions impacting these assumptions could result in goodwill impairment in future periods. We reconcile the estimated fair value of our reporting unit to our market capitalization. When we dispose of a hospital, goodwill is allocated to the gain or loss on disposition using the relative fair value methodology.
We assess qualitative factors related to our indefinite-lived intangible asset to determine whether it is necessary to perform the quantitative impairment test. If, based on this qualitative assessment, we were to believe we must perform the quantitative impairment test, we would determine the fair value of our indefinite-lived intangible asset using generally accepted valuation techniques including the relief-from-royalty method. This method is a form of the income approach in which value is equated to a series of cash flows and discounted at a risk-adjusted rate. It is based on a hypothetical royalty, calculated as a percentage of forecasted revenue, that we would otherwise be willing to pay to use the asset, assuming it were not already owned. This approach includes assumptions related to pricing and volume, as well as a royalty rate a hypothetical third party would be willing to pay for use of the asset. When making our royalty rate assumption, we consider rates paid in arms-length licensing transactions for assets comparable to our asset.
We amortize the cost of intangible assets with finite useful lives over their respective estimated useful lives to their estimated residual value. As of December 31, 2025, none of our finite useful lived intangible assets has an estimated residual value. We also review these assets for impairment whenever events or changes in circumstances indicate we may not be able to recover the asset’s carrying amount.
The range of estimated useful lives and the amortization basis for our intangible assets, excluding goodwill, are generally as follows:
 Estimated Useful Life
and Amortization Basis
Certificates of need
10 to 30 years using straight-line basis
Licenses
10 to 20 years using straight-line basis
Noncompete agreements
1 to 18 years using straight-line basis
Trade names:
Encompassindefinite-lived asset
All other
10 to 20 years using straight-line basis
Internal-use software
3 to 7 years using straight-line basis
Market access assets
20 years using accelerated basis
We capitalize the costs of obtaining or developing internal-use software, including external direct costs of material and services and certain directly related payroll costs. Amortization begins when the internal-use software is ready for its intended use. Costs incurred during the preliminary project and post-implementation stages, as well as maintenance and training costs, are expensed as incurred.
Impairment of Long-Lived Assets and Other Intangible Assets—
We assess the recoverability of long-lived assets (excluding goodwill and our indefinite-lived asset) and identifiable acquired intangible assets with finite useful lives, whenever events or changes in circumstances indicate we may not be able to recover the asset’s carrying amount. We measure the recoverability of assets to be held and used by a comparison of the carrying amount of the asset to the expected net future cash flows to be generated by that asset, or, for identifiable intangibles with finite useful lives, by determining whether the amortization of the intangible asset balance over its remaining life can be recovered through undiscounted future cash flows. The amount of impairment of identifiable intangible assets with finite useful lives, if any, to be recognized is measured based on projected discounted future cash flows. We measure the amount of impairment of other long-lived assets (excluding goodwill) as the amount by which the carrying value of the asset exceeds the fair market value of the asset, which is generally determined based on projected discounted future cash flows or appraised
values. We classify long-lived assets to be disposed of other than by sale as held and used until they are disposed. We report long-lived assets to be disposed of by sale as held for sale and recognize those assets in the balance sheet at the lower of carrying amount or fair value less cost to sell, and we cease depreciation.
Financing Costs—
We amortize financing costs using the effective interest method over the expected life of the related debt. Excluding financing costs related to our revolving line of credit (which are included in Other long-term assets), financing costs are presented as a direct deduction from the face amount of the financings. The related expense is included in Interest expense and amortization of debt discounts and fees in our consolidated statements of operations.
We accrete discounts and amortize premiums using the effective interest method over the expected life of the related debt, and we report discounts or premiums as a direct deduction from, or addition to, the face amount of the financing. The related income or expense is included in Interest expense and amortization of debt discounts and fees in our consolidated statements of operations.
Fair Value Measurements—
Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions market participants would use in pricing an asset or liability.
The basis for these assumptions establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
•Level 1 – Observable inputs such as quoted prices in active markets;
•Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
•Level 3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
Assets and liabilities measured at fair value are based on one or more of three valuation techniques. The three valuation techniques are as follows:
•Market approach – Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities;
•Cost approach – Amount that would be required to replace the service capacity of an asset (i.e., replacement cost); and
•Income approach – Techniques to convert future cash flows to a single present amount based on market expectations (including present value techniques, option-pricing models, and lattice models).
Our financial instruments consist mainly of cash and cash equivalents, restricted cash, restricted marketable securities, accounts receivable, accounts payable, letters of credit, and long-term debt. The carrying amounts of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable approximate fair value because of the short-term maturity of these instruments. The fair value of our letters of credit is deemed to be the amount of payment guaranteed on our behalf by third-party financial institutions. We determine the fair value of our long-term debt using quoted market prices, when available, or discounted cash flows based on various factors, including maturity schedules, call features, and current market rates.
On a recurring basis, we are required to report our restricted marketable securities at fair value. The fair values of our restricted marketable securities are determined based on quoted market prices in active markets or quoted prices, dealer quotations, or alternative pricing sources supported by observable inputs in markets that are not considered to be active.
In addition, there are assets and liabilities that are not required to be reported at fair value on a recurring basis. However, these assets may be recorded at fair value as a result of impairment charges or other adjustments made to the carrying value of the applicable assets. The fair value of our property and equipment is determined using discounted cash flows and significant unobservable inputs, unless there is an offer to purchase such assets, which could be the basis for determining fair value. The fair value of our intangible assets, excluding goodwill, is determined using discounted cash flows and significant unobservable inputs. The fair value of our goodwill is determined using discounted projected operating results and cash flows, which involve significant unobservable inputs.
See also the “Redeemable Noncontrolling Interests” section of this note.
Noncontrolling Interests in Consolidated Affiliates—
The consolidated financial statements include all assets, liabilities, revenues, and expenses of less-than-100%-owned affiliates we control. Accordingly, we have recorded noncontrolling interests in the earnings and equity of such entities. We record adjustments to noncontrolling interests for the allocable portion of income or loss to which the noncontrolling interests holders are entitled based upon their portion of the subsidiaries they own. Distributions to holders of noncontrolling interests are adjusted to the respective noncontrolling interests holders’ balance.
Effective July 1, 2024, we expanded our existing joint venture with Piedmont Healthcare (“Piedmont”), which we control, by contributing the assets and operations of our previously wholly-owned 70-bed hospital in Augusta, Georgia. Piedmont contributed approximately $90 million on July 1, 2024, which indirectly resulted in Piedmont obtaining a 50% ownership interest in the hospital. As a result of this transaction, we recorded a post-tax gain of $23.2 million increasing Capital in excess of par value on the consolidated statement of shareholders’ equity for the year ended December 31, 2024. The contribution from Piedmont is included in Contributions from noncontrolling interests of consolidated affiliates on the consolidated statement of cash flows for the year ended December 31, 2024.
Redeemable Noncontrolling Interests—
Certain of our joint venture agreements contain provisions that allow our partners to require us to purchase their interests in the joint venture at fair value at certain points in the future. Because these noncontrolling interests provide for redemption features that are not solely within our control, we classify them as Redeemable noncontrolling interests outside of permanent equity in our consolidated balance sheets. At the end of each reporting period, we compare the carrying value of the Redeemable noncontrolling interests to their estimated redemption value. If the estimated redemption value is greater than the current carrying value, the carrying value is adjusted to the estimated redemption value, with the adjustments recorded through equity in the line item Capital in excess of par value.
The fair value of our Redeemable noncontrolling interests in our joint venture entities is determined primarily using the income approach. The income approach includes the use of the joint venture entities’ projected operating results and cash flows discounted using a rate that reflects market participant assumptions for the applicable joint venture entity, or Level 3 inputs. The projected operating results use management’s best estimates of economic and market conditions over the forecasted periods including assumptions for pricing and volume, operating expenses, and capital expenditures.
Share-Based Payments—
Encompass Health has shareholder-approved stock-based compensation plans that provide for the granting of stock-based compensation to certain employees and directors. All share-based payments to employees are recognized in the financial statements based on their estimated grant-date fair value and amortized on a straight-line basis over the applicable requisite service period.
Litigation Reserves—
We accrue for loss contingencies associated with outstanding litigation for which management has determined it is probable a loss contingency exists and the amount of loss can be reasonably estimated. If the accrued amount associated with a loss contingency is greater than $5.0 million, we also accrue estimated future legal fees associated with the loss contingency. This requires management to estimate the amount of legal fees that will be incurred in the defense of the litigation. These estimates are based on our expectations of the scope, length to complete, and complexity of the claims. In the future, additional adjustments may be recorded as the scope, length to complete, or complexity of outstanding litigation changes.
Advertising Costs—
We expense costs of print, radio, television, and other advertisements as incurred. Advertising expenses, primarily included in Other operating expenses within the accompanying consolidated statements of operations, were $5.3 million, $5.8 million, and $6.1 million in each of the years ended December 31, 2025, 2024, and 2023, respectively.
Income Taxes—
We provide for income taxes using the asset and liability method. This approach recognizes the amount of income taxes payable or refundable for the current year, as well as deferred tax assets and liabilities for the future tax consequence of events recognized in the consolidated financial statements and income tax returns. Deferred income tax assets and liabilities are adjusted to recognize the effects of changes in tax laws or enacted tax rates.
A valuation allowance is required when it is more likely than not some portion of the deferred tax assets will not be realized. Realization is dependent on generating sufficient future taxable income in the applicable tax jurisdiction. On a quarterly basis, we assess the likelihood of realization of our deferred tax assets considering all available evidence, both positive and negative. Our most recent operating performance, the scheduled reversal of temporary differences, our forecast of taxable income in future periods by jurisdiction, our ability to sustain a core level of earnings, and the availability of prudent tax planning strategies are important considerations in our assessment.
We evaluate our tax positions and establish assets and liabilities in accordance with the applicable accounting guidance on uncertainty in income taxes. We review these tax uncertainties in light of changing facts and circumstances, such as the progress of tax audits, and adjust them accordingly. We have used the with-and-without method to determine when we will recognize excess tax benefits from stock-based compensation.
Encompass Health and its corporate subsidiaries file a consolidated federal income tax return. Some subsidiaries consolidated for financial reporting purposes are not part of the consolidated group for federal income tax purposes and file separate federal income tax returns. State income tax returns are filed on a separate, combined, or consolidated basis in accordance with relevant state laws and regulations. Partnerships, limited liability companies, and other pass-through entities we consolidate or account for using the equity method of accounting may file separate federal, state, and local income tax returns. We include the allocable portion of each pass-through entity’s income or loss in our federal income tax return. We allocate the remaining income or loss of each pass-through entity to the other partners or members who are responsible for their portion of the taxes.
Assets and Liabilities in and Results of Discontinued Operations—
We report the disposal of the component, or group of components, as discontinued operations only when it represents a strategic shift that has, or will have, a major effect on our operations and financial results. In the period a component of an entity has been disposed of or classified as held for sale, we reclassify the results of operations for current and prior periods into a single caption titled Loss from discontinued operations, net of tax. In addition, we classify the assets and liabilities of those components as current and noncurrent assets and liabilities within Other current assets, Other long-term assets, Other current liabilities, and Other long-term liabilities in our consolidated balance sheets. We also classify cash flows related to discontinued operations as one line item within each category of cash flows in our consolidated statements of cash flows.
During 2025, 2024 and 2023, we incurred legal costs of $1.2 million, $2.9 million, and $15.8 million, respectively, related to ongoing litigation against former executive officers of our home health and hospice business, which was spun off on July 1, 2022. These costs are included in Loss from discontinued operations, net of tax, in the consolidated statements of operations. In January 2026, we reached an agreement with certain defendants of this litigation on our claims for attorneys’ fees and mitigation damages previously awarded to us. In February 2026, we collected approximately $22 million in full satisfaction of our claims. As a result, we expect to record an approximate $16 million after tax gain in Income (loss) from discontinued operations, net of tax, in the condensed consolidated statements of operations during the three months ended March 31, 2026.
Earnings per Common Share—
The calculation of earnings per common share is based on the weighted-average number of our common shares outstanding during the applicable period. The calculation for diluted earnings per common share recognizes the effect of all potential dilutive common shares that were outstanding during the respective periods, unless their impact would be antidilutive. The calculation of earnings per common share also considers the effect of participating securities. Stock-based compensation awards that contain nonforfeitable rights to dividends and dividend equivalents, such as our restricted stock units, are considered participating securities and are included in the computation of earnings per common share pursuant to the two-class method. In applying the two-class method, earnings are allocated to both common stock shares and participating securities based on their respective weighted-average shares outstanding for the period.
Treasury Stock—
Shares of common stock repurchased by us are recorded at cost, including direct incremental costs, as treasury stock. When shares are reissued, we use an average cost method to determine cost. The difference between the cost of the shares and the re-issuance price is added to or deducted from Capital in excess of par value. We account for the retirement of treasury stock as a reduction of retained earnings.
Comprehensive Income—
Comprehensive income is comprised of Net income and changes in unrealized gains or losses on available-for-sale securities and is included in the consolidated statements of comprehensive income.
Recently Adopted Accounting Pronouncements—
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which intends to improve the transparency of income tax disclosures by requiring companies to (1) disclose consistent categories and greater disaggregation of information in the effective rate reconciliation and (2) provide information on income taxes paid disaggregated by jurisdiction. We adopted ASU 2023-09 prospectively with an effective date as of January 1, 2025. The disclosures required are presented in Note 14, Income Taxes.
Recent Accounting Pronouncements Not Yet Adopted—
In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires disaggregation of certain expense captions into specified categories within the notes to the financial statements for both interim and annual reporting periods. ASU 2024-03 is effective for our annual periods beginning January 1, 2027 and interim periods beginning January 1, 2028. Early adoption is permitted. We are currently evaluating the requirements of this standard and any potential impact it may have on our consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software,” which intends to modernize the guidance related to internal-use software costs to reflect current software development methods. ASU 2025-06 requires entities to begin capitalizing software costs when management authorizes and commits to funding the software project, and it is probable the project will be completed and the software will be used for its intended purpose. ASU 2025-06 is effective for our annual and interim periods beginning January 1, 2028. Early adoption is permitted. The guidance can be applied on a prospective basis, a modified basis for in-process projects, or on a retrospective basis. We are currently evaluating the requirements of this standard and any potential impact it may have on our consolidated financial statements.
We do not believe any other recently issued, but not yet effective, accounting standards will have a material effect on our consolidated financial position, results of operations, or cash flows.
v3.25.4
Variable Interest Entities
 12 Months Ended
Dec. 31, 2025
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Variable Interest Entities Variable Interest Entities:
As of December 31, 2025 and December 31, 2024, we consolidated eight limited partnership-like entities that are VIEs and of which we are the primary beneficiary. Our ownership percentages in these entities range from 50.0% to 75.0% as of December 31, 2025. Through partnership and management agreements with or governing each of these entities, we manage all of these entities and handle all day-to-day operating decisions. Accordingly, we have the decision-making power over the activities that most significantly impact the economic performance of our VIEs and an obligation to absorb losses or receive benefits from the VIE that could potentially be significant to the VIE. These decisions and significant activities include, but are not limited to, marketing efforts, oversight of patient admissions, medical training, nurse and therapist scheduling, provision of healthcare services, billing, collections and creation and maintenance of medical records. The terms of the agreements governing each of our VIEs prohibit us from using the assets of each VIE to satisfy the obligations of other entities.
The carrying amounts and classifications of the consolidated VIEs’ assets and liabilities, which are included in our consolidated balance sheets, are as follows (in millions):
As of December 31,
20252024
Assets 
Current assets: 
Cash and cash equivalents$1.6 $0.4 
Accounts receivable
34.9 34.5 
Other current assets4.7 9.6 
Total current assets41.2 44.5 
Property and equipment, net135.0 135.7 
Operating lease right-of-use assets1.3 1.3 
Goodwill15.9 15.9 
Intangible assets, net0.8 1.0 
Other long-term assets9.6 9.7 
Total assets$203.8 $208.1 
Liabilities
Current liabilities:
Current portion of long-term debt$1.0 $1.0 
Accounts payable6.6 6.2 
Accrued payroll10.9 11.0 
Other current liabilities19.0 12.7 
Total current liabilities37.5 30.9 
Long-term debt, net of current portion11.6 12.7 
Long-term operating lease liabilities1.4 1.4 
Total liabilities$50.5 $45.0 
v3.25.4
Cash and Marketable Securities
 12 Months Ended
Dec. 31, 2025
Cash and Cash Equivalents [Abstract]  
Cash and Marketable Securities Cash and Marketable Securities:
The components of our investments as of December 31, 2025 are as follows (in millions):
 Cash & Cash EquivalentsRestricted CashRestricted Marketable SecuritiesTotal
Cash$72.2 $30.7 $— $102.9 
Equity securities— — 36.3 36.3 
Available-for-sale debt securities:
U.S. government and agency securities— — 40.4 40.4 
Corporate bonds and notes— — 69.1 69.1 
Total
$72.2 $30.7 $145.8 $248.7 
The components of our investments as of December 31, 2024 are as follows (in millions):
 Cash & Cash EquivalentsRestricted CashRestricted Marketable SecuritiesTotal
Cash$85.4 $37.7 $— $123.1 
Equity securities— — 130.9 130.9 
Total
$85.4 $37.7 $130.9 $254.0 
Restricted Cash—
Restricted cash consisted of the following (in millions):
 As of December 31,
 20252024
Current:
Affiliate cash
$12.1 $17.9 
Self-insured captive funds
18.6 19.8 
Total restricted cash$30.7 $37.7 
Affiliate cash represents cash accounts maintained by joint ventures in which we participate where one or more of our external partners requested, and we agreed, that the joint venture’s cash not be commingled with other corporate cash accounts and be used only to fund the operations of those joint ventures. Self-insured captive funds represent cash held at our wholly owned insurance captive, HCS, Ltd., as discussed in Note 9, Self-Insured Risks. These funds are committed to pay third-party administrators for claims incurred and are restricted by insurance regulations and requirements. These funds cannot be used for purposes outside HCS without the permission of the Cayman Islands Monetary Authority.
The classification of restricted cash held by HCS as current or noncurrent depends on the classification of the corresponding claims liability.
Marketable Securities—
Restricted marketable securities at both balance sheet dates represent restricted assets held at HCS. HCS insures a substantial portion of Encompass Health’s professional liability, workers’ compensation, and other insurance claims. These funds are committed for payment of claims incurred, and the classification of these marketable securities as current or noncurrent depends on the classification of the corresponding claims liability. As of December 31, 2025, $42.2 million of restricted marketable securities are included in Other current assets and $103.6 million are included in Other long-term assets
in the consolidated balance sheet. As of December 31, 2024, $39.0 million of restricted marketable securities are included in Other current assets and $91.9 million are included in Other long-term assets in the consolidated balance sheet. During the years ended December 31, 2025, December 31, 2024, and December 31, 2023, $2.1 million, $1.0 million, and $1.3 million, respectively, of unrealized net gains were recognized in our consolidated statements of operations on marketable securities still held at the reporting date.
A summary of our debt securities as of December 31, 2025 is as follows (in millions):
Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
Available-for-sale debt securities:
U.S. government and agency securities$40.2 $0.2 $— $40.4 
Corporate bonds and notes68.7 0.5 (0.1)69.1 
During the year ended December 31, 2025, we did not record any impairment charges related to our debt securities. We did not have any debt securities during the years ended December 31, 2024 and December 31, 2023.
Investing information related to our available-for-sale debt securities is as follows (in millions):
For the Year Ended December 31,
202520242023
Proceeds from sales and maturities$32.3 $— $— 
The contractual maturities of our available-for-sale debt securities as of December 31, 2025 are as follows (in millions):
Amortized CostFair Value
Due in one year or less$24.3 $24.4 
Due after one year through five years74.2 74.6 
Due after five years through ten years4.9 4.9 
Due after ten years5.5 5.6 
Total$108.9 $109.5 
v3.25.4
Accounts Receivable
 12 Months Ended
Dec. 31, 2025
Receivables [Abstract]  
Accounts Receivable Accounts Receivable:
Accounts receivable consists of the following (in millions):
 As of December 31,
 20252024
Current:
Patient accounts receivable
$613.4 $593.0 
Other accounts receivable5.8 5.8 
619.2 598.8 
Noncurrent patient accounts receivable
25.5 30.6 
Accounts receivable$644.7 $629.4 
Because the resolution of claims that are part of Medicare audit programs can take several years, we review the patient receivables that are part of this adjudication process to determine their appropriate classification as either current or noncurrent. Amounts considered noncurrent are included in Other long-term assets in our consolidated balance sheets. See Note 1, Summary of Significant Accounting Policies, “Net Operating Revenues,” for additional information.
v3.25.4
Property and Equipment
 12 Months Ended
Dec. 31, 2025
Property, Plant and Equipment [Abstract]  
Property and Equipment Property and Equipment:
Property and equipment consists of the following (in millions):
 As of December 31,
 20252024
Land$339.7 $302.6 
Buildings4,325.7 3,859.3 
Leasehold improvements388.3 372.8 
Vehicles6.1 5.6 
Furniture, fixtures, and equipment897.0 808.8 
 5,956.8 5,349.1 
Less: Accumulated depreciation and amortization(2,372.8)(2,111.9)
 3,584.0 3,237.2 
Construction in progress517.6 405.9 
Property and equipment, net$4,101.6 $3,643.1 
As of December 31, 2025, approximately 68% of our consolidated Property and equipment, net held by Encompass Health Corporation and its guarantor subsidiaries was pledged to the lenders under our credit agreement. See Note 8, Long-term Debt, for additional information on our credit agreement.
Depreciation expense was $273.9 million, $245.1 million, and $215.7 million for the years ended December 31, 2025, December 31, 2024 and December 31, 2023, respectively. Interest capitalized was $17.6 million, $15.2 million, and $13.5 million for the years ended December 31, 2025, December 31, 2024 and December 31, 2023, respectively.
v3.25.4
Leases
 12 Months Ended
Dec. 31, 2025
Leases [Abstract]  
Leases Leases:
We lease real estate, vehicles, and equipment under operating and finance leases with non-cancelable terms generally expiring at various dates through 2039. Our operating and finance leases generally have 1- to 25-year terms, with one or more renewal options, primarily relating to our real estate leases, with terms to be determined at the time of renewal. The exercise of such lease renewal options is at our sole discretion, and to the extent we are reasonably certain we will exercise a renewal option, the years related to that option are included in our determination of the lease term for purposes of classifying and measuring a given lease. Certain leases also include options to purchase the leased property.
The components of lease costs are as follows (in millions):
For the Year Ended December 31,
202520242023
Operating lease cost $43.4 $41.7 $40.9 
Finance lease cost:
Amortization of right-of-use assets25.7 25.7 25.7 
Interest on lease liabilities23.0 24.7 26.2 
Total finance lease cost48.7 50.4 51.9 
Short-term and variable lease cost1.7 2.3 2.9 
Sublease income(3.2)(3.1)(3.3)
Total lease cost$90.6 $91.3 $92.4 
Supplemental consolidated balance sheet information related to leases is as follows (in millions):
As of December 31,
Classification20252024
Assets
Operating leaseOperating lease right-of-use assets$212.6 $203.7 
Finance lease (1)
Property and equipment, net195.9 221.5 
Total leased assets$408.5 $425.2 
Liabilities
Current liabilities:
Operating leaseCurrent operating lease liabilities$26.5 $26.3 
Finance leaseCurrent portion of long-term debt26.5 23.7 
Noncurrent liabilities:
Operating leaseLong-term operating lease liabilities196.6 189.7 
Finance leaseLong-term debt, net of current portion268.1 294.7 
Total leased liabilities$517.7 $534.4 
(1)    Finance lease assets are recorded net of accumulated amortization of $222.9 million and $197.3 million as of December 31, 2025 and December 31, 2024, respectively.
As of December 31,
20252024
Weighted Average Remaining Lease Term
Operating lease9.7 years9.7 years
Finance lease8.9 years9.8 years
Weighted Average Discount Rate
Operating lease6.3 %6.4 %
Finance lease7.7 %7.7 %
Maturities of lease liabilities as of December 31, 2025 are as follows (in millions):
Year Ending December 31,Operating LeasesFinance
Leases
2026$39.5 $47.6 
202742.9 47.4 
202841.9 46.4 
202927.5 47.3 
203021.0 47.4 
2031 and thereafter132.4 175.3 
Total lease payments305.2 411.4 
Less: Interest portion(82.1)(116.8)
Total lease liabilities$223.1 $294.6 
Supplemental cash flow information related to our leases is as follows (in millions):
For the Year Ended December 31,
202520242023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$42.6 $40.7 $39.0 
Operating cash flows from finance leases23.6 25.5 27.1 
Financing cash flows from finance leases23.9 21.8 41.1 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$38.2 $26.7 $26.2 
Finance leases0.2 — 21.4 
Leases Leases:
We lease real estate, vehicles, and equipment under operating and finance leases with non-cancelable terms generally expiring at various dates through 2039. Our operating and finance leases generally have 1- to 25-year terms, with one or more renewal options, primarily relating to our real estate leases, with terms to be determined at the time of renewal. The exercise of such lease renewal options is at our sole discretion, and to the extent we are reasonably certain we will exercise a renewal option, the years related to that option are included in our determination of the lease term for purposes of classifying and measuring a given lease. Certain leases also include options to purchase the leased property.
The components of lease costs are as follows (in millions):
For the Year Ended December 31,
202520242023
Operating lease cost $43.4 $41.7 $40.9 
Finance lease cost:
Amortization of right-of-use assets25.7 25.7 25.7 
Interest on lease liabilities23.0 24.7 26.2 
Total finance lease cost48.7 50.4 51.9 
Short-term and variable lease cost1.7 2.3 2.9 
Sublease income(3.2)(3.1)(3.3)
Total lease cost$90.6 $91.3 $92.4 
Supplemental consolidated balance sheet information related to leases is as follows (in millions):
As of December 31,
Classification20252024
Assets
Operating leaseOperating lease right-of-use assets$212.6 $203.7 
Finance lease (1)
Property and equipment, net195.9 221.5 
Total leased assets$408.5 $425.2 
Liabilities
Current liabilities:
Operating leaseCurrent operating lease liabilities$26.5 $26.3 
Finance leaseCurrent portion of long-term debt26.5 23.7 
Noncurrent liabilities:
Operating leaseLong-term operating lease liabilities196.6 189.7 
Finance leaseLong-term debt, net of current portion268.1 294.7 
Total leased liabilities$517.7 $534.4 
(1)    Finance lease assets are recorded net of accumulated amortization of $222.9 million and $197.3 million as of December 31, 2025 and December 31, 2024, respectively.
As of December 31,
20252024
Weighted Average Remaining Lease Term
Operating lease9.7 years9.7 years
Finance lease8.9 years9.8 years
Weighted Average Discount Rate
Operating lease6.3 %6.4 %
Finance lease7.7 %7.7 %
Maturities of lease liabilities as of December 31, 2025 are as follows (in millions):
Year Ending December 31,Operating LeasesFinance
Leases
2026$39.5 $47.6 
202742.9 47.4 
202841.9 46.4 
202927.5 47.3 
203021.0 47.4 
2031 and thereafter132.4 175.3 
Total lease payments305.2 411.4 
Less: Interest portion(82.1)(116.8)
Total lease liabilities$223.1 $294.6 
Supplemental cash flow information related to our leases is as follows (in millions):
For the Year Ended December 31,
202520242023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$42.6 $40.7 $39.0 
Operating cash flows from finance leases23.6 25.5 27.1 
Financing cash flows from finance leases23.9 21.8 41.1 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$38.2 $26.7 $26.2 
Finance leases0.2 — 21.4 
v3.25.4
Goodwill and Other Intangible Assets
 12 Months Ended
Dec. 31, 2025
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets Goodwill and Other Intangible Assets:
The following table shows changes in the carrying amount of Goodwill (in millions):
 Amount
Goodwill as of December 31, 2022$1,263.2 
Acquisitions18.1 
Goodwill as of December 31, 20231,281.3 
Acquisitions2.7 
Goodwill as of December 31, 20241,284.0 
Acquisitions33.6 
Goodwill as of December 31, 2025$1,317.6 
Goodwill increased in 2023, 2024, and 2025 as a result of our acquisitions of inpatient rehabilitation operations.
We performed impairment reviews as of October 1, 2025, 2024, and 2023 and concluded no Goodwill impairment existed. As of December 31, 2025, we had no accumulated impairment losses related to Goodwill.
The following table provides information regarding our other intangible assets (in millions):
 Gross Carrying AmountAccumulated AmortizationNet
Certificates of need:   
2025$137.0 $(54.9)$82.1 
2024131.4 (49.0)82.4 
Licenses:   
2025$65.6 $(57.5)$8.1 
202465.7 (56.4)9.3 
Noncompete agreements:   
2025$64.9 $(61.7)$3.2 
202466.5 (63.4)3.1 
Trade name - Encompass:
2025$135.2 $— $135.2 
2024135.2 — 135.2 
Trade names - all other:   
2025$38.9 $(24.5)$14.4 
202439.6 (23.6)16.0 
Internal-use software:   
2025$245.7 $(180.9)$64.8 
2024214.4 (163.3)51.1 
Market access assets:
2025$13.2 $(12.7)$0.5 
202413.2 (12.5)0.7 
Total intangible assets:   
2025$700.5 $(392.2)$308.3 
2024666.0 (368.2)297.8 
Amortization expense for other intangible assets is as follows (in millions):
 For the Year Ended December 31,
 202520242023
Amortization expense$28.3 $28.8 $32.5 
Total estimated amortization expense for our other intangible assets for the next five years is as follows (in millions):
Year Ending December 31,Estimated
Amortization Expense
2026$27.4 
202720.2 
202813.6 
202911.6 
203010.6 
v3.25.4
Long-term Debt
 12 Months Ended
Dec. 31, 2025
Debt Disclosure [Abstract]  
Long-term Debt Long-term Debt:
Our long-term debt outstanding consists of the following (in millions):
 As of December 31,
 20252024
Credit Agreement—
Advances under revolving credit facility$130.0 $20.0 
Bonds payable—
5.75% Senior Notes due 2025
— 99.8 
4.50% Senior Notes due 2028
792.0 788.4 
4.75% Senior Notes due 2030
787.0 784.2 
4.625% Senior Notes due 2031
393.6 392.5 
Other notes payable93.6 94.5 
Finance lease obligations294.6 318.4 
 2,490.8 2,497.8 
Less: Current portion(43.6)(138.6)
Long-term debt, net of current portion$2,447.2 $2,359.2 
The following chart shows scheduled principal payments due on long-term debt for the next five years and thereafter (in millions):
Year Ending December 31,Face AmountNet Amount
2026$43.6 $43.6 
2027177.2 177.2 
2028835.9 827.8 
202944.7 44.6 
2030850.2 837.1 
Thereafter566.9 560.5 
Total$2,518.5 $2,490.8 
Senior Secured Credit Agreement—
The credit agreement provides for a $1 billion revolving credit facility, with a $260 million letter of credit subfacility and a swingline loan subfacility, all of which mature in October 2027.
Amounts drawn on the revolving credit facility bear interest at a rate per annum of, at our option, (1) secured overnight financing rate (“SOFR”) or (2) the higher of (a) Barclays Bank PLC’s prime rate and (b) the federal funds rate plus 0.5%, in each case, plus, in each case, an applicable margin that varies depending upon our leverage ratio. We are also subject to a commitment fee of 0.25% or 0.30%, depending on our leverage ratio, per annum on the daily amount of the unutilized commitments under the revolving credit facility. The current interest rate on SOFR borrowings under the credit agreement includes a credit spread of 1.25%.
The credit agreement contains affirmative and negative covenants and default and acceleration provisions, including a minimum interest coverage ratio and a maximum leverage ratio. Under one such negative covenant, we are restricted from paying common stock dividends, prepaying certain senior notes, making certain investments, and repurchasing preferred and common equity unless (1) we are not in default under the terms of the credit agreement and (2) our senior secured leverage ratio, as defined in the credit agreement, does not exceed 2x. In the event the senior secured leverage ratio exceeds 2x, these payments are subject to a limit of $200 million plus the Available Amount, as defined in the credit agreement. Our obligations
under the credit agreement are secured by the current and future personal property of the Company and its subsidiary guarantors. The maximum leverage ratio in the financial covenants is 4.50x as of December 31, 2025.
As of December 31, 2025, $130 million was drawn under the revolving credit facility with an interest rate of 5.9%. As of December 31, 2024, $20 million was drawn under the revolving credit facility with an interest rate of 7.8%. As of December 31, 2025 and 2024, $46.3 million and $36.3 million, respectively, was being utilized under the letter of credit subfacility, which were being used in the ordinary course of business to secure workers’ compensation and other insurance coverages and for general corporate purposes.
Bonds Payable—
Senior Notes
The Company’s 5.75% Senior Notes due 2025 (the “2025 Notes”), 4.50% Senior Notes due 2028 (the “2028 Notes”), 4.75% Senior Notes due 2030 (the “2030 Notes”), and 4.625% Senior Notes due 2031 (the “2031 Notes” and collectively the “Senior Notes”) were issued pursuant to an indenture (the “Base Indenture”) dated as of December 1, 2009, as supplemented by each Senior Notes’ respective supplemental indenture (together with the Base Indenture, the “Indenture”). Pursuant to the terms of the Indenture, the Senior Notes are jointly and severally guaranteed on a senior, unsecured basis by all of our existing and future subsidiaries that guarantee borrowings under our credit agreement and other capital markets debt. The Senior Notes are senior, unsecured obligations of Encompass Health and rank equally with our other senior indebtedness, senior to any of our subordinated indebtedness, and effectively junior to our secured indebtedness to the extent of the value of the collateral securing such indebtedness.
Upon the occurrence of a change in control (as defined in the Indenture), each holder of the Senior Notes may require us to repurchase all or a portion of the notes in cash at a price equal to 101% of the principal amount of the Senior Notes to be repurchased, plus accrued and unpaid interest.
The Senior Notes contain covenants and default and acceleration provisions, that, among other things, limit our and certain of our subsidiaries’ ability to (1) incur additional debt, (2) make certain restricted payments, (3) consummate specified asset sales, (4) incur liens, and (5) merge or consolidate with another person.
2025 Notes
In September 2015, we issued $350 million of the 2025 Notes at par. In August and November 2024, we redeemed $150 million and $100 million, respectively, of the outstanding principal balance of our 2025 Notes using cash on hand. Pursuant to the terms of the 2025 Notes, these optional redemptions were made at a price of par. In September 2025, we redeemed the remaining $100 million of the outstanding principal balance of our 2025 Notes at maturity using cash on hand and capacity under our revolving credit facility. Inclusive of financing costs, the effective interest rate on the 2025 Notes was 6.0%. Interest on the 2025 Notes was payable semiannually in arrears on March 15 and September 15.
2028 and 2030 Notes
In September 2019, we issued $500 million of the 2028 Notes at par and $500 million of the 2030 Notes at par. Certain of the proceeds from this offering were used to fund the purchase of equity rights from management investors of our former home health and hospice business.
In May 2020, we issued an additional $300 million of the 2028 Notes at a price of 99.0% of the principal amount and an additional $300 million of the 2030 Notes at a price of 98.5% of the principal amount, which resulted in approximately $583 million in net proceeds. We used a portion of the net proceeds from this borrowing, together with cash on hand, to repay borrowings under our revolving credit facility.
The 2028 Notes mature on February 1, 2028 and bear interest at a per annum rate of 4.50%. Inclusive of financing costs, the effective interest rate on the 2028 Notes is 5.0%. Interest on the 2028 Notes is payable semiannually in arrears on February 1 and August 1. We may redeem the 2028 Notes at par, in whole or in part, at any time on or after February 1, 2025.
The 2030 Notes mature on February 1, 2030 and bear interest at a per annum rate of 4.75%. Inclusive of financing costs, the effective interest rate on the 2030 Notes is 5.2%. Interest on the 2030 Notes is payable semiannually in arrears on February 1 and August 1. We may redeem the 2030 Notes, in whole or in part, at any time on or after February 1, 2025 at the redemption prices set forth below:
PeriodRedemption
Price*
2025102.375 %
2026101.583 %
2027100.792 %
2028 and thereafter100.000 %
* Expressed in percentage of principal amount
2031 Notes
In October 2020, we issued $400 million of the 2031 Notes at par. The 2031 Notes mature on April 1, 2031 and bear interest at a per annum rate of 4.625%. Inclusive of financing costs, the effective interest rate on the 2031 Notes is 5.0%. Interest is payable semiannually in arrears on April 1 and October 1 of each year. We may redeem the 2031 Notes, in whole or in part, at any time on or after April 1, 2026 at the redemption prices set forth below:
PeriodRedemption
Price*
2026102.313 %
2027101.542 %
2028100.771 %
2029 and thereafter100.000 %
* Expressed in percentage of principal amount
Other Notes Payable—
Our notes payable consist of the following (in millions):
As of December 31,
20252024Current Interest Rates
Sale/leaseback transactions involving real estate accounted for as financings
$28.0 $28.0 
9.2% to 13.4%
Construction of new hospitals41.0 47.6 
5.0% to 6.3%
Software contracts24.6 18.9 
4.7% to 6.5%
Other notes payable$93.6 $94.5 
v3.25.4
Self-Insured Risks
 12 Months Ended
Dec. 31, 2025
Insurance [Abstract]  
Self-Insured Risks Self-Insured Risks:
We insure a substantial portion of our professional liability, general liability, and workers’ compensation risks through a self-insured retention program (“SIR”) underwritten by our consolidated wholly owned offshore captive insurance subsidiary, HCS, Ltd., which we fund via regularly scheduled premium payments. HCS is an insurance company licensed by the Cayman Island Monetary Authority. For 2025, 2024, and 2023, HCS insured the first $6 million per claim and $45 million of annual aggregate losses associated with general and professional liability risks. Workers’ compensation exposures are capped on a per claim basis. Risks in excess of specified limits per claim and in excess of our aggregate SIR amount are covered by unrelated commercial carriers.
The following table presents the changes in our self-insurance reserves (in millions):
202520242023
Balance at beginning of period, gross$194.8 $184.5 $175.1 
Less: Reinsurance receivables
(37.6)(36.4)(32.3)
Balance at beginning of period, net157.2 148.1 142.8 
Increase for the provision of current year claims67.5 59.1 54.7 
Decrease for the provision of prior year claims(6.2)(10.9)(10.5)
Payments related to current year claims(8.9)(6.9)(8.1)
Payments related to prior year claims(31.7)(32.2)(30.8)
Balance at end of period, net177.9 157.2 148.1 
Add: Reinsurance receivables
33.1 37.6 36.4 
Balance at end of period, gross$211.0 $194.8 $184.5 
As of December 31, 2025 and 2024, $57.9 million and $56.2 million, respectively, of these reserves are included in Other current liabilities in our consolidated balance sheets.
Provisions for these risks are based primarily upon actuarially determined estimates. These reserves represent the unpaid portion of the estimated ultimate cost of all reported and unreported losses incurred through the respective consolidated balance sheet dates. The reserves are estimated using individual case-basis valuations and actuarial analyses. Those estimates are subject to the effects of trends in loss severity and frequency. The estimates are continually reviewed and adjustments are recorded as experience develops or new information becomes known. The changes to the estimated ultimate loss amounts are included in current operating results.
The reserves for these self-insured risks cover approximately 1,100 individual claims at December 31, 2025 and 2024, and estimates for potential unreported claims. The time period required to resolve these claims can vary depending upon the jurisdiction, the nature, and the form of resolution of the claims. The estimation of the timing of payments beyond a year can vary significantly. Although considerable variability is inherent in reserve estimates, management believes the reserves for losses and loss expenses are adequate; however, there can be no assurance the ultimate liability will not exceed management’s estimates.
v3.25.4
Redeemable Noncontrolling Interests
 12 Months Ended
Dec. 31, 2025
Noncontrolling Interest [Abstract]  
Redeemable Noncontrolling Interests Redeemable Noncontrolling Interests:
The following is a summary of the activity related to our Redeemable noncontrolling interests (in millions):
For the Year Ended December 31,
202520242023
Balance at beginning of period$56.5 $42.0 $35.6 
Net income attributable to noncontrolling interests
9.4 5.1 8.3 
Distributions declared(11.2)(10.2)(1.1)
Contribution to joint ventures— 18.0 — 
Change in fair value3.6 1.6 (0.8)
Balance at end of period$58.3 $56.5 $42.0 
The following table reconciles the net income attributable to nonredeemable Noncontrolling interests, as recorded in the shareholders’ equity section of the consolidated balance sheets, and the net income attributable to Redeemable noncontrolling interests, as recorded in the mezzanine section of the consolidated balance sheets, to the Net income attributable to noncontrolling interests presented in the consolidated statements of operations (in millions):
For the Year Ended December 31,
202520242023
Net income attributable to nonredeemable noncontrolling interests$183.5 $135.8 $102.7 
Net income attributable to redeemable noncontrolling interests9.4 5.1 8.3 
Net income attributable to noncontrolling interests$192.9 $140.9 $111.0 
v3.25.4
Fair Value Measurements
 12 Months Ended
Dec. 31, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements:
Our financial assets and liabilities that are measured at fair value on a recurring basis are as follows (in millions):
  Fair Value Measurements at Reporting Date Using
As of December 31, 2025Fair ValueQuoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)
Valuation Technique (1)
Equity securities$36.3 $20.3 $16.0 $— M
Available for sale debt securities:
U.S. government and agency securities40.4 40.4 — — M
Corporate bonds and notes69.1 — 69.1 — M
Redeemable noncontrolling interests58.3 — — 58.3 I
As of December 31, 2024     
Equity securities$130.9 $4.2 $126.7 $— M
Redeemable noncontrolling interests56.5 — — 56.5 I
(1)The two valuation techniques are: market approach (M) and income approach (I).
There are assets and liabilities that are not required to be measured at fair value on a recurring basis. However, these assets may be recorded at fair value as a result of impairment charges or other adjustments made to the carrying value of the applicable assets. During the years ended December 31, 2025, 2024, and 2023, we did not record any material gains or losses related to these assets.
As discussed in Note 1, Summary of Significant Accounting Policies, “Fair Value Measurements,” the carrying value equals fair value for our financial instruments that are not included in the table below and are classified as current in our consolidated balance sheets. The carrying amounts and estimated fair values for our other financial instruments are presented in the following table (in millions):
 As of December 31, 2025As of December 31, 2024
 Carrying AmountEstimated Fair ValueCarrying AmountEstimated Fair Value
Long-term debt:    
Advances under revolving credit facility$130.0 $130.0 $20.0 $20.0 
5.75% Senior Notes due 2025
— — 99.8 99.7 
4.50% Senior Notes due 2028
792.0 799.6 788.4 772.3 
4.75% Senior Notes due 2030
787.0 796.6 784.2 759.0 
4.625% Senior Notes due 2031
393.6 392.7 392.5 369.9 
Other notes payable93.6 93.6 94.5 94.5 
Financial commitments:    
Letters of credit— 46.3 — 36.3 
Fair values for our long-term debt and financial commitments are determined using inputs, including quoted prices in nonactive markets, that are observable either directly or indirectly, or Level 2 inputs within the fair value hierarchy. See Note 1, Summary of Significant Accounting Policies, “Fair Value Measurements” and “Redeemable Noncontrolling Interests.”
v3.25.4
Share-Based Payments
 12 Months Ended
Dec. 31, 2025
Share-Based Payment Arrangement [Abstract]  
Share-Based Payments Share-Based Payments:
The Company has awarded employee stock-based compensation in the form of stock options and restricted stock awards (“RSAs”) under the terms of share-based incentive plans designed to align employee and executive interests to those of its stockholders. All employee stock-based compensation awarded between January 1, 2023 and May 1, 2025 was issued under the 2016 Omnibus Performance Incentive Plan (the “2016 Plan”), a stockholder-approved plan that reserved and provided for the grant of up to 16,860,765 shares of common stock after adjustment for the effect of the spin off of our home health and hospice business in 2022. This plan allowed for the grants of nonqualified stock options, incentive stock options, restricted stock, stock appreciate rights, performance shares, performance share units, dividend equivalents, restricted stock units (“RSUs”), and/or other stock-based awards. No additional stock-based compensation will be awarded from the 2016 Plan.
On May 1, 2025, our stockholders approved the 2025 Omnibus Performance Incentive Plan, which reserves and provides for the grant of up to 12,000,000 shares of common stock. All employee stock-based compensation awarded after May 1, 2025 was issued under this plan. This plan allows for the same types of equity grants as the 2016 Plan.
Stock-based compensation expense recognized in continuing operations was $56.5 million, $48.3 million, and $50.6 million during the years ended December 31, 2025, 2024, and 2023, respectively.
Stock Options—
Under our share-based incentive plans, officers and employees are given the right to purchase shares of Encompass Health common stock at a fixed grant price determined on the day the options are granted. The terms and conditions of the options, including exercise prices and the periods in which options are exercisable, are generally at the discretion of the compensation and human capital committee of our board of directors. However, no options are exercisable beyond ten years from the date of grant. Granted options vest over the awards’ requisite service periods, which are generally three years.
The fair values of the options granted during the years ended December 31, 2025, 2024, and 2023 have been estimated at the grant date using the Black-Scholes option-pricing model with the following weighted-average assumptions:
 For the Year Ended December 31,
 202520242023
Expected volatility28.0 %27.9 %28.5 %
Risk-free interest rate4.1 %4.2 %4.2 %
Expected life (years)7.37.26.9
Dividend yield0.9 %1.0 %1.1 %
The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, the Black-Scholes option-pricing model requires the input of highly subjective assumptions, including the expected stock price volatility. We estimate our expected term through an analysis of actual, historical post-vesting exercise, cancellation, and expiration behavior by our officers and projected post-vesting activity of outstanding options. We calculate volatility based on the historical volatility of our common stock over the period commensurate with the expected term of the options. The risk-free interest rate is the implied daily yield currently available on U.S. Treasury issues with a remaining term closely approximating the expected term used as the input to the Black-Scholes option-pricing model. We estimated our dividend yield based on our annual dividend rate and our stock price on the dividend payment dates. Under the Black-Scholes option-pricing model, the weighted-average grant date fair value per share of employee stock options granted during the years ended December 31, 2025, 2024, and 2023 was $35.22, $26.14, and $19.23, respectively.
A summary of our stock option activity and related information is as follows:
 Shares
(In Thousands)		Weighted- Average Exercise Price per ShareWeighted- Average Remaining Life (Years)Aggregate Intrinsic Value
(In Millions)
Outstanding, December 31, 2024840$53.05   
Granted5198.45   
Exercised(180)37.55   
Outstanding, December 31, 202571160.27 5.2$32.6 
Exercisable, December 31, 202559156.11 4.529.6 
We recognized approximately $1.8 million, $1.9 million, and $2.5 million of compensation expense related to our stock options for the years ended December 31, 2025, 2024, and 2023, respectively. As of December 31, 2025, there was $0.2 million of unrecognized compensation cost related to unvested stock options. This cost is expected to be recognized over a weighted-average period of 21 months. The total intrinsic value of options exercised during the years ended December 31, 2025, 2024, and 2023 was $14.6 million, $4.0 million, and $2.5 million, respectively.
Restricted Stock—
The RSAs granted in 2025, 2024, and 2023 included service-based awards and performance-based awards (that also included a service requirement). These awards generally vest over a three-year requisite service period. For RSAs with a service and/or performance requirement, the fair value of the RSA is determined by the closing price of our common stock on the grant date. A portion of the RSAs granted also includes a market condition for certain members of management. For awards with a market condition, the fair value of the market condition component of the RSAs is determined using a lattice model. Inputs into the model include the historical price volatility of our common stock, the historical volatility of the common stock of the companies in the defined peer group, and the risk-free interest rate. Utilizing these inputs and potential future changes in stock prices, multiple trials are run to determine the fair value.
A summary of our issued restricted stock awards is as follows (share information in thousands):
 SharesWeighted-Average Grant Date Fair Value
Nonvested shares at December 31, 2024804$61.14 
Granted46773.92 
Vested(587)58.15 
Forfeited(16)74.85 
Nonvested shares at December 31, 202566872.38 
The weighted-average grant-date fair value of restricted stock granted during the years ended December 31, 2024 and 2023 was $61.67 and $65.20 per share, respectively. We recognized approximately $53.2 million, $44.9 million, and $46.6 million of compensation expense related to our restricted stock awards for the years ended December 31, 2025, 2024, and 2023, respectively. As of December 31, 2025, there was $40.2 million of unrecognized compensation expense related to unvested restricted stock. This cost is expected to be recognized over a weighted-average period of 21 months. The remaining unrecognized compensation expense for the performance-based awards may vary each reporting period based on changes in the expected achievement of performance measures. The total fair value of shares vested during the years ended December 31, 2025, 2024, and 2023 was $55.7 million, $33.7 million, and $24.3 million, respectively. We accrue dividends on outstanding RSAs, which are paid upon vesting.
Nonemployee Stock-Based Compensation Plans—
During the years ended December 31, 2025, 2024, and 2023, we provided incentives to the nonemployee members of our board of directors through the issuance of RSUs out of our share-based incentive plans. RSUs are fully vested when awarded and receive dividend equivalents in the form of additional RSUs upon the payment of a cash dividend on our common stock. We issued 15,060, 23,509, and 32,365 RSUs, inclusive of dividend equivalents, during the years ended December 31, 2025, 2024, and 2023, respectively. The non-dividend equivalent RSUs had a fair value of $115.94, $83.42, and $63.00 per unit during the years ended December 31, 2025, 2024, and 2023, respectively, and we recognized approximately $1.5 million of compensation expense upon their issuance in 2025, 2024, and 2023. There was no unrecognized compensation related to unvested shares as of December 31, 2025. We issued 3,569, 5,707, and 7,518 of RSUs as dividend equivalents during the years ended December 31, 2025, 2024, and 2023, respectively. During the years ended December 31, 2025 and 2024, 269,020 and 314,988 RSUs, respectively, were released following the retirement of certain former members of our board of directors. The total fair value of shares released during the years ended December 31, 2025 and 2024 was $26.2 million and $29.1 million, respectively. As of December 31, 2025, 262,238 RSUs were outstanding.
v3.25.4
Employee Benefit Plans
 12 Months Ended
Dec. 31, 2025
Retirement Benefits [Abstract]  
Employee Benefit Plans Employee Benefit Plans:
Substantially all Encompass Health employees are eligible to enroll in Encompass Health-sponsored healthcare plans, including coverage for medical and dental benefits. Our primary healthcare plans are national plans administered by third-party administrators. We are self-insured for these plans. During 2025, 2024, and 2023, costs associated with these plans, net of amounts paid by employees, approximated $252.2 million, $227.4 million, and $186.2 million, respectively.
The Encompass Health Corporation 401(k) Retirement Plan (the “401(k) Plan”) is a qualified 401(k) savings plan. The 401(k) Plan allows eligible employees to contribute up to 100% of their pay on a pre-tax basis into their individual retirement account in the plan subject to the normal maximum limits set annually by the Internal Revenue Service. Encompass Health employees who are at least 21 years of age are eligible to participate in the 401(k) Plan and all contributions to the plan are in the form of cash. Encompass Health’s employer matching contribution under the 401(k) Plan is 50% of the first 6% of each participant’s elective deferrals, which vest 100% after three years of service. Participants are always fully vested in their own contributions.
Employer contributions to the 401(k) Plan approximated $35.6 million, $32.1 million, and $31.3 million in 2025, 2024, and 2023, respectively. In 2025, 2024, and 2023, approximately $2.7 million, $2.9 million, and $1.1 million, respectively, from forfeited accounts were used to fund the matching contributions in accordance with the terms of the 401(k) Plan.
Senior Management Bonus Program—
We maintain a Senior Management Bonus Program to reward senior management for performance based on a combination of corporate or regional goals for all periods presented. The corporate and regional goals are approved on an annual basis by our board of directors as part of our routine budgeting and financial planning process. The program applies to persons who join the Company in, or are promoted to, senior management positions. In 2026, we expect to pay approximately $30.6 million under the program for the year ended December 31, 2025. In February 2025 and March 2024, we paid $28.3 million and $27.9 million, respectively, under the program for the years ended December 31, 2024 and 2023.
v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes:
The domestic and foreign components of Income from continuing operations before income tax expense are as follows (in millions):
 For the Year Ended December 31, 2025
United States$944.8 
Foreign8.2 
Income from continuing operations before income tax expense$953.0 
The significant components of the Provision for income tax expense related to continuing operations are as follows (in millions):
 For the Year Ended December 31, 2025
Current: 
Federal$132.3 
State and local35.7 
Foreign2.6 
Total current expense170.6 
Deferred: 
Federal20.0 
State and local2.3 
Foreign— 
Total deferred expense22.3 
Total income tax expense related to continuing operations$192.9 
A reconciliation of differences between the federal income tax at statutory rates and our actual income tax expense on our income from continuing operations, is presented below (in millions, except for percentages):
 For the Year Ended December 31, 2025
 Amount%
Tax expense at statutory rate$200.1 21.0 %
State and other income taxes, net of federal tax effect(1)
31.6 3.3 %
Changes in valuation allowance2.9 0.3 %
Noncontrolling interests(40.5)(4.2)%
Nontaxable or nondeductible items:
Share-based windfall tax benefits(12.5)(1.3)%
Nondeductible executive compensation10.1 1.0 %
Other1.9 0.2 %
Tax credits(2.5)(0.3)%
Foreign tax effects2.6 0.3 %
Other, net(0.8)(0.1)%
Income tax expense$192.9 20.2 %
(1) In 2025, state taxes in Florida, Tennessee, Pennsylvania, Massachusetts, California, and Virginia made up the majority (greater than 50 percent) of the tax effect of this category.
The Provision for income tax expense in 2025 was less than the federal statutory rate primarily due to the impact of noncontrolling interests offset by state and other income tax expense. See Note 1, Summary of Significant Accounting Policies, “Income Taxes,” for a discussion of the allocation of income or loss related to pass-through entities, which is referred to as the impact of noncontrolling interests in this discussion.
Deferred income taxes recognize the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes and the impact of available NOLs. The significant components of our deferred tax assets and liabilities are presented in the following table (in millions):
 As of December 31,
 20252024
Deferred income tax assets:  
Net operating loss$5.5 $8.8 
Insurance reserve21.2 20.9 
Stock-based compensation22.2 24.0 
Revenue reserves8.5 8.0 
Operating lease liabilities21.3 22.5 
Other accruals28.8 29.4 
Tax credits19.5 17.0 
Total deferred income tax assets127.0 130.6 
Less: Valuation allowance(21.4)(21.0)
Net deferred income tax assets105.6 109.6 
Deferred income tax liabilities:  
Intangibles(66.4)(63.4)
Operating lease right-of-use assets(20.5)(21.1)
Property, net(27.1)(18.8)
Carrying value of partnerships(117.9)(111.2)
Other(0.5)(0.3)
Total deferred income tax liabilities(232.4)(214.8)
Net deferred income tax liabilities$(126.8)$(105.2)
We have state NOLs of $4.2 million that expire in various amounts at varying times through 2036. For the years ended December 31, 2025 and 2024, the net increase (decrease) in our valuation allowance was $0.4 million and $(7.4) million, respectively. The net increase in our valuation allowance in 2025 related primarily to utilization and expiration of state net operating losses, primarily offset by increases to foreign tax credits that we do not anticipate we will be able to utilize. The decrease in our valuation allowance in 2024 related primarily to the utilization and expiration of state NOLs.
As of December 31, 2025, we have a remaining valuation allowance of $21.4 million. This valuation allowance remains recorded primarily due to foreign tax credits generated by our operations in Puerto Rico. We determined it was necessary to maintain a valuation allowance on our foreign tax credits due to uncertainties related to our ability to utilize a portion of these credits before they expire. The amount of the valuation allowance has been determined based on the weight of all available evidence, as described above, including management’s estimates of taxable income over the periods in which the related deferred tax assets will be recoverable.
Our continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. Interest recorded as part of our income tax provision during 2025, 2024, and 2023 was not material. Accrued interest income related to income taxes as of December 31, 2025 and 2024 was not material.
In December 2016, we signed an agreement with the IRS to participate in their Compliance Assurance Process (“CAP”) for the 2017 tax year and have renewed this agreement each year since. CAP is a program in which we and the IRS endeavor to agree on the treatment of significant tax positions prior to the filing of our federal income tax returns. In April 2025, the IRS issued a no change letter effectively closing our 2023 tax year audit. Thus, the statute of limitations has expired, or we have settled, federal income tax examinations with the IRS for all tax years through 2023.
The IRS offered, and we accepted, admission into the IRS Bridge Plus Pilot program (“CAP Bridge”) for the years 2024, 2025, and 2026. Under this program, we are required to provide additional documentation (including a draft return) to the IRS prior to filing our return. The IRS performs a risk assessment review of this documentation and provides recommendations to us. We then file our return and submit a post-filing representation that our return was filed consistent with the documentation provided and any IRS recommendations. After further review, the IRS then issues either a full or partial acceptance letter. We are currently under audit by the IRS under the CAP Bridge program for tax years 2024, 2025, and 2026. Our state income tax returns are also periodically examined by various regulatory taxing authorities; however, there are no current state audits at this time.
For the tax years that remain open under the applicable statutes of limitations, management considered potential unrecognized tax benefits and determined there are no material unrecognized tax benefits that would impact prior years’ income taxes.
Income taxes paid (net of refunds) consisted of the following (in millions):
 For the Year Ended December 31, 2025
Federal$91.8 
State and local29.1 
Foreign3.1 
Income taxes paid (net of refunds)$124.0 
On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“OBBBA”). The OBBBA contained a broad range of tax reform provisions affecting businesses. While tax changes in the OBBBA did not have a material impact on our effective tax rate, certain tax provisions in the OBBBA, namely the provision that permanently extended bonus depreciation for assets placed in service after January 19, 2025 and the provision allowing for immediate expensing of certain research and development costs, resulted in current deductions that yielded lower cash income tax for 2025. We currently estimate these provisions produced an additional approximately $84 million in current deductions resulting in approximately $22 million in cash tax savings in 2025. We continue to evaluate the tax and other provisions of the OBBBA and the potential effects on our financial position, results of operations, and cash flows.
Information prior to the adoption of ASU 2023-09—
As described in Note 1, Summary of Significant Accounting Policies, “Recent Accounting Pronouncements,” we elected to prospectively adopt the guidance in ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The information below is in accordance with the guidance prior to the adoption of ASU 2023-09.
The significant components of the Provision for income tax expense related to continuing operations are as follows (in millions):
 For the Year Ended December 31,
 20242023
Current:
Federal$111.0 $101.7 
State and other28.5 26.6 
Total current expense139.5 128.3 
Deferred:
Federal8.6 (0.7)
State and other2.1 4.6 
Total deferred expense10.7 3.9 
Total income tax expense related to continuing operations$150.2 $132.2 
A reconciliation of differences between the federal income tax at statutory rates and our actual income tax expense on our income from continuing operations, which include federal, state, and other income taxes, is presented below:
 For the Year Ended December 31,
 20242023
Tax expense at statutory rate21.0 %21.0 %
Increase (decrease) in tax rate resulting from:
State and other income taxes, net of federal tax benefit3.9 %4.1 %
Increase in valuation allowance— %0.3 %
Noncontrolling interests(3.8)%(4.0)%
Share-based windfall tax benefits(1.0)%— %
Other, net(0.1)%0.4 %
Income tax expense20.0 %21.8 %
The Provision for income tax expense in 2024 was less than the federal statutory rate primarily due to the impact of noncontrolling interests and share-based windfall tax benefits, offset by state and other income tax expense. The Provision for income tax expense in 2023 was greater than the federal statutory rate primarily due to state and other income tax expense and a gross increase in valuation allowance, offset by the impact of noncontrolling interests. See Note 1, Summary of Significant Accounting Policies, “Income Taxes,” for a discussion of the allocation of income or loss related to pass-through entities, which is referred to as the impact of noncontrolling interests in this discussion.
The amount of income tax payments and refunds are as follows (in millions):
 For the Year Ended December 31,
20242023
Income tax payments$164.5 $109.3 
Income tax refunds0.7 2.7 
v3.25.4
Earnings per Common Share
 12 Months Ended
Dec. 31, 2025
Earnings Per Share [Abstract]  
Earnings per Common Share Earnings per Common Share:
The following table sets forth the computation of basic and diluted earnings per common share (in millions, except per share amounts):
 For the Year Ended December 31,
 202520242023
Basic:
Numerator:   
Income from continuing operations$760.1 $599.4 $475.0 
Less: Net income attributable to noncontrolling interests included in continuing operations(192.9)(140.9)(111.0)
Less: Income from continuing operations allocated to participating securities(1.5)(2.8)(2.4)
Income from continuing operations attributable to Encompass Health common shareholders565.7 455.7 361.6 
Loss from discontinued operations, net of tax, attributable to Encompass Health common shareholders(1.0)(2.8)(12.0)
Net income attributable to Encompass Health common shareholders$564.7 $452.9 $349.6 
Denominator:   
Basic weighted average common shares outstanding100.5 99.9 99.5 
Basic earnings per share attributable to Encompass Health common shareholders:
   
Continuing operations
$5.63 $4.56 $3.63 
Discontinued operations
(0.01)(0.03)(0.12)
Net income$5.62 $4.53 $3.51 
Diluted:
Numerator:
Income from continuing operations$760.1 $599.4 $475.0 
Less: Net income attributable to noncontrolling interests included in continuing operations(192.9)(140.9)(111.0)
Income from continuing operations attributable to Encompass Health common shareholders567.2 458.5 364.0 
Loss from discontinued operations, net of tax, attributable to Encompass Health common shareholders(1.0)(2.8)(12.0)
Net income attributable to Encompass Health common shareholders$566.2 $455.7 $352.0 
Denominator:   
Diluted weighted average common shares outstanding
102.2 102.2 101.3 
Diluted earnings per share attributable to Encompass Health common shareholders:
   
Continuing operations
$5.55 $4.49 $3.59 
Discontinued operations
(0.01)(0.03)(0.12)
Net income
$5.54 $4.46 $3.47 
The following table sets forth the reconciliation between basic weighted average common shares outstanding and diluted weighted average common shares outstanding (in millions):
For the Year Ended December 31,
202520242023
Basic weighted average common shares outstanding100.5 99.9 99.5 
Restricted stock awards, dilutive stock options, and restricted stock units
1.7 2.3 1.8 
Diluted weighted average common shares outstanding102.2 102.2 101.3 
Options to purchase shares of common stock outstanding during 2025 and 2024 were immaterial. Options to purchase approximately 0.3 million shares of common stock were outstanding during 2023 but were not included in the computation of diluted weighted-average shares because to do so would have been antidilutive.
On October 28, 2013, we announced our board of directors authorized the repurchase of up to $200 million of our common stock, which has been amended from time to time. Most recently, on July 24, 2024, our board of directors approved resetting the aggregate common stock repurchase authorization to $500 million. As of December 31, 2025, approximately $332 million remained under this authorization. The repurchase authorization does not require the repurchase of a specific number of shares, has an indefinite term, and is subject to termination at any time by our board of directors. During 2025 and 2024, we repurchased 1.5 million and 0.4 million shares of our common stock in the open market for $158.0 million and $31.1 million, respectively. There were no repurchases of our common stock during 2023.
In July 2022, our board of directors declared a cash dividend of $0.15 per share. The cash dividend of $0.15 per common share was declared and paid in each quarter through July 2024. In July 2024, our board of directors approved an increase in our quarterly dividend and declared a cash dividend of $0.17 per share. The cash dividend of $0.17 per common share was declared and paid in each quarter through July 2025. In July 2025, our board of directors approved an increase in our quarterly dividend and declared a cash dividend of $0.19 per share. Subsequent to July 2025, the cash dividend of $0.19 per common share was declared and paid in each quarter through January 2026. Future dividend payments are subject to declaration by our board of directors.
v3.25.4
Contingencies and Other Commitments
 12 Months Ended
Dec. 31, 2025
Commitments and Contingencies Disclosure [Abstract]  
Contingencies and Other Commitments Contingencies and Other Commitments:
We provide services in the highly regulated healthcare industry. Furthermore, operating inpatient rehabilitation hospitals requires significant staffing and involves intensive therapy for individuals suffering from significant physical or cognitive disabilities or injuries. As a result, various lawsuits, claims, and legal and regulatory proceedings have been and can be expected to be instituted or asserted against us. The resolution of any such lawsuits, claims, or legal and regulatory proceedings could materially and adversely affect our financial position, results of operations, and cash flows in a given period.
The False Claims Act allows private citizens, called “relators,” to institute civil proceedings on behalf of the United States alleging violations of the False Claims Act. These lawsuits, also known as “whistleblower” or “qui tam” actions, can involve significant monetary damages, fines, attorneys’ fees and the award of bounties to the relators who successfully prosecute or bring these suits to the government. Qui tam cases are sealed at the time of filing, which means knowledge of the information contained in the complaint typically is limited to the relator, the federal government, and the presiding court. The defendant in a qui tam action may remain unaware of the existence of a sealed complaint for years. While the complaint is under seal, the government reviews the merits of the case and may conduct a broad investigation and seek discovery from the defendant and other parties before deciding whether to intervene in the case and take the lead on litigating the claims. The court lifts the seal when the government makes its decision on whether to intervene. If the government decides not to intervene, the relator may elect to continue to pursue the lawsuit individually on behalf of the government. It is possible that qui tam lawsuits have been filed against us, which suits remain under seal, or that we are unaware of such filings or precluded by existing law or court order from discussing or disclosing the filing of such suits. We may be subject to liability under one or more undisclosed qui tam cases brought pursuant to the False Claims Act.
It is our obligation as a participant in Medicare and other federal healthcare programs to routinely conduct audits and reviews of the accuracy of our billing systems and other regulatory compliance matters. As a result of these reviews, we have made, and will continue to make, disclosures to the HHS-OIG and CMS relating to amounts we suspect represent over-
payments from these programs, whether due to inaccurate billing or otherwise. Some of these disclosures have resulted in, or may result in, Encompass Health refunding amounts to Medicare or other federal healthcare programs.
Other Commitments—
We are a party to service and other contracts in connection with conducting our business. Minimum amounts due under these agreements are $62.9 million in 2026, $38.9 million in 2027, $35.8 million in 2028, $30.3 million in 2029, $27.4 million in 2030, and $37.3 million thereafter. These contracts primarily relate to software licensing and support and medical equipment.
v3.25.4
Segment Reporting
 12 Months Ended
Dec. 31, 2025
Segment Reporting [Abstract]  
Segment Reporting Segment Reporting:
We manage our operations using one operating segment which is also our reportable segment: inpatient rehabilitation. Our national network of inpatient rehabilitation hospitals provide specialized rehabilitative treatment on an inpatient basis. Our inpatient rehabilitation hospitals provide a higher level of rehabilitative care to patients who are recovering from conditions such as stroke and other neurological disorders, cardiac and pulmonary conditions, brain and spinal cord injuries, complex orthopedic conditions, and amputations.
The accounting policies of our reportable segment are the same as those described in Note 1, Summary of Significant Accounting Policies. All revenues for our services are generated through external customers. See Note 1, Summary of Significant Accounting Policies, “Net Operating Revenues,” for the disaggregation of our revenues. Our chief operating decision maker (“CODM”) is the chief executive officer. Our CODM evaluates the performance and allocates resources based on adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”). Our CODM primarily considers forecast-to-budget variances and current year actuals to prior year actuals variances to assess performance and to help inform operating decisions, including allocating resources.
Selected financial information, including significant segment expenses, for our reportable segment is as follows (in millions):
For the Year Ended December 31,
202520242023
Net operating revenues$5,935.2 $5,373.2 $4,801.2 
Less:
Salaries and benefits3,115.9 2,901.0 2,600.1 
Other operating expenses886.0 785.2 709.3 
Supplies254.4 239.0 218.3 
Occupancy costs59.0 57.3 56.3 
General and administrative expenses173.8 156.1 146.5 
Net income attributable to noncontrolling interests192.9 148.2 113.2 
Other segment items(1)
(14.7)(17.3)(13.6)
Adjusted EBITDA$1,267.9 $1,103.7 $971.1 
(1)Includes interest income, investment gain or loss, and equity in net income of nonconsolidated affiliates.
Segment reconciliation (in millions):
For the Year Ended December 31,
202520242023
Adjusted EBITDA$1,267.9 $1,103.7 $971.1 
Stock-based compensation(56.5)(48.3)(50.6)
Depreciation and amortization(327.9)(299.6)(273.9)
Loss on disposal or impairment of assets(2.7)(17.4)(9.8)
Loss on early extinguishment of debt— (0.6)— 
Interest expense and amortization of debt discounts and fees(123.2)(137.4)(143.5)
Net income attributable to noncontrolling interests192.9 140.9 111.0 
Change in fair market value of marketable securities2.5 1.0 0.7 
Asset impairment impact on noncontrolling interests— 7.3 — 
State regulatory change impact on noncontrolling interests— — 2.2 
Income from continuing operations before income tax expense$953.0 $749.6 $607.2 
Additional detail regarding the revenues of our operating segment by service line follows (in millions):
For the Year Ended December 31,
202520242023
Net operating revenues:
Inpatient$5,756.3 $5,230.5 $4,693.8 
Other178.9 142.7 107.4 
Net operating revenues$5,935.2 $5,373.2 $4,801.2 
Equity in net income of nonconsolidated affiliates and the Provision for income tax expense are reported on our consolidated statements of operations. Segment assets are reported on our consolidated balance sheets as Total assets. Segment capital expenditures are reported on our consolidated statements of cash flows as Purchases of property, equipment, and intangible assets.
v3.25.4
Insider Trading Arrangements
 3 Months Ended
Dec. 31, 2025
Trading Arrangements, by Individual  
Rule 10b5-1 Arrangement Adopted false
Non-Rule 10b5-1 Arrangement Adopted false
Rule 10b5-1 Arrangement Terminated false
Non-Rule 10b5-1 Arrangement Terminated false
v3.25.4
Insider Trading Policies and Procedures
 12 Months Ended
Dec. 31, 2025
Insider Trading Policies and Procedures [Line Items]  
Insider Trading Policies and Procedures Adopted true
v3.25.4
Cybersecurity Risk Management and Strategy Disclosure
 12 Months Ended
Dec. 31, 2025
Cybersecurity Risk Management, Strategy, and Governance [Line Items]  
Cybersecurity Risk Management Processes for Assessing, Identifying, and Managing Threats [Text Block]
The proper function, availability, and security of our and third-party information systems are critical to our business. We have attempted to structure our cybersecurity program and its incident response policies and procedures, including an incident response plan (the “IRP”), around the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework, which provides best practices to identify, protect from, respond to, and recover from cyber attacks. The cybersecurity program, led by our chief security officer (“CSO”), consists of dedicated internal IT security employees, including the staff of a security operations center, and long-term third-party security service providers. Our IT security staff, led by our CSO, is responsible for our overall information security strategy, policy, security engineering, operations, and cyber threat detection and response. In furtherance of our cybersecurity program, members of our internal security staff participate in industry and governmental cybersecurity cooperative groups, including the Health Information Sharing and Analysis Center (“H-ISAC”) and the FBI’s InfraGard.
Our CSO, who assumed his current role in 2022, has over 12 years of cybersecurity experience with us and over 29 total years of cybersecurity and IT experience across various industries, including telecom, engineering, and finance. He also holds several cybersecurity certifications: GIAC Certified Incident Handler, GIAC Certified Penetration Tester, GIAC Certified Project Manager, and Certified Healthcare Information Security Leader. Our CSO reports directly to our chief information officer (“CIO”). Our CIO, who assumed his current role in 2011, has 36 total years of cybersecurity and IT experience. Prior to assuming the role of CIO, he served in senior IT and security roles for us beginning in 2001. As a highly decorated United States Air Force officer, he served as a CIO, regional CIO, and chief technology officer responsible for the USAF health system’s IT worldwide operations. He also served as a senior staff advisor to various levels of the United States Department of Defense’s military health system on strategic matters related to IT policy, procedures, procurement, solutions, and is a subject matter expert on cybersecurity. He has numerous professional certifications and affiliations, including a CERT Certificate in Cybersecurity Oversight from National Association of Corporate Directors’ Cyber-Risk Oversight Program; Certified Information Systems Security Professional; lifetime member, fellow, and previous board member of the College of Health Information Management Executives.
We maintain an inter-departmental privacy and security committee that oversees our programs and initiatives that seek to protect and secure patient information as well as our data and information systems. This committee is responsible for, among other things, administering our incident response policies and procedures and various training and awareness programs that promote good system security practices by employees. This committee consists of our CSO, CIO, deputy CIO, chief privacy officer, and director of information security and compliance as well as in house attorneys responsible for cybersecurity and securities matters. It meets monthly and as warranted by privacy and security events.
The IRP sets forth the strategy to prepare for cybersecurity threats and incidents and the processes and procedures to detect, analyze, contain, and recover after any actual or suspected cybersecurity incidents. The IRP also sets forth the internal reporting process for cybersecurity incidents. In the event of the detection of an actual or suspected cybersecurity incident, the IRP provides that our IT security staff score the incident based on established criteria and manage the incident pursuant to the standard operating procedures. Depending on the assessed criticality of the incident and the systems affected, the staff will report an incident to a security triage team, consisting of the security operations incident response lead and several members of the privacy and security committee. Working with our third-party security vendors and under the direction of outside legal counsel as needed, the triage team investigates the incident, manages the response, and reports threats and incidents deemed significant to securities counsel. Securities counsel then works with the executive team to assess materiality for the Company. A member of the executive team would inform our board of directors as warranted.
In general terms, under our cybersecurity program, we undertake measures to protect the safety and security of our information systems and the data maintained within those systems. We have implemented administrative, technical and physical controls on our systems and devices in an attempt to prevent unauthorized access and to promote business resilience in the event of that access. Core elements of our program include the real-time monitoring of both our network and external cybersecurity activity by our internal security operations center and our third-party service providers and the procedures for backing up and recovering our systems. We periodically test the adequacy of our security, business continuity, and disaster recovery measures, including an annual tabletop exercise involving representatives from all key functional departments within the Company, our outside cybersecurity legal counsel, and our primary forensic services firm. In our annual tabletop exercise, our legal and technical advisors direct the exercise and provide feedback on our performance, which is shared with management and our board of directors. We provide our employees annual training and regular reminders on measures they can take to prevent breaches and other cyber threats, including phishing schemes. We participate in the vulnerability scanning service offered by the Cybersecurity and Infrastructure Security Agency on our internet facing systems and engage external security consultants to perform an annual penetration test of our network. Our systems that process electronic protected health
information are risk assessed on a quarterly basis against NIST security controls. Additionally, we maintain insurance coverage for cybersecurity incidents.
Third-party Engagement in Connection with our Cybersecurity Program
We maintain ongoing engagements with our cybersecurity legal counsel and forensic services firms, each of which has visibility into current events through its client base. We engage throughout the year with not only our security vendors but also H-ISAC, the FBI’s InfraGard, and other communities dedicated to sharing information regarding developing cybersecurity threats.
Third-party IT Vendor Risk Management
Our IT security staff also maintains a third-party IT vendor risk management process. The staff identifies the third parties with whom we contract or otherwise have a relationship involving our network or digital assets that represent an elevated risk based on a detailed rating process. The IT vendor risk management process involves input from various departments, including the affected internal business constituencies, legal, and compliance.
Using a platform endorsed by the H-ISAC, the IT security staff performs risk assessments of third parties that appear to represent the greatest risk to our systems and data. Annually, the privacy and security committee reviews and approves our listing of tier one vendors subject to the assessment. The IT security staff then works with the internal points of contact responsible for the applications, software or systems and the vendors to gather the information necessary to assess the associated risks using common cybersecurity standards and frameworks. Any significant risks identified are shared with the vendors and the compensating controls for those risks are documented in collaboration with the vendors. The internal points of contact and other constituencies then review the results of the assessment process in order to assess the associated value of the product or service against the risk.
To date, we are not aware of having experienced a material compromise of our systems or networks from a cybersecurity incident. However, we routinely identify attempts to gain unauthorized access to our systems. Additionally, some of our vendors and business partners have experienced compromises of their information systems, including systems that we use. On February 21, 2024, Change Healthcare, a subsidiary of UnitedHealth Group that acted as an intermediary for processing
of our payment claims for all payors, notified us of a cybersecurity incident affecting some of its systems. In response to the incident, both we and Change Healthcare severed those business service connections between our systems and Change Healthcare’s. We promptly conducted forensics on our systems based on the shared information regarding this Change Healthcare incident and did not identify any compromise or unauthorized access of our systems or networks. However, the incident did affect our ability to submit any claims for payment for a period of time until we implemented alternative modes for submissions. We have not identified any compromise or unauthorized access of our systems or networks, and the temporary disruption to our submission of claims did not materially affect our business strategy, results of operation or financial condition.
Given the increasing cybersecurity threats in the healthcare industry, there can be no assurance we will not experience business interruptions; data loss, ransom, misappropriation or corruption, theft, or misuse of proprietary data, patient or other personally identifiable information; or litigation, investigation, or regulatory action related to any of those, any of which could have a material adverse effect on our patient care, ability to admit patients and to bill and collect for services provided on a timely basis, financial position, and results of operations and could harm our business reputation.
We expend significant capital to protect against cybersecurity threats, including denial of service attacks, email phishing schemes, hacking, advanced persistent threats, malware, and ransomware. Substantial additional expenditures may be required to respond to and remediate any problems caused by cybersecurity incidents, including the unauthorized access to or theft of patient data and protected health information stored in our information systems, the inoperability of our electronic clinical and business systems, and the infiltration or disruption of the information systems of our business vendors and partners. In the case of a material cybersecurity incident, the associated expenses and losses and lost revenue may exceed our current insurance coverage for such events. Some adverse consequences may not be insurable, such as reputational harm and third-party business interruption.
Cybersecurity Risk Management Processes Integrated [Flag] true
Cybersecurity Risk Management Processes Integrated [Text Block] Assessing, identifying, and managing cybersecurity related risks are integrated into our overall enterprise risk management (the “ERM”) process. Cybersecurity risks are included in the risk universe that the ERM function evaluates to assess the most significant risks to the Company as a whole. To the extent the ERM process identifies a heightened cybersecurity related risk, risk owners are assigned to develop risk mitigation plans, which are then tracked to completion. Management presents quarterly the ERM risk assessment, including key risk indicators, to our board of directors.
Cybersecurity Risk Management Third Party Engaged [Flag] true
Cybersecurity Risk Third Party Oversight and Identification Processes [Flag] true
Cybersecurity Risk Materially Affected or Reasonably Likely to Materially Affect Registrant [Flag] false
Cybersecurity Risk Board of Directors Oversight [Text Block]
Our board of directors has actively sought out experience and expertise among its members to further its oversight of cybersecurity risk. We believe that Messrs. Carmichael and Reidy and Ms. Herman have extensive knowledge and experience to support cybersecurity oversight. Mr. Carmichael previously served as chief information officer at multiple companies, and Mr. Reidy directly supervised and oversaw the information security programs at two companies. Ms. Herman has completed the National Association of Corporate Directors’ Cyber-Risk Oversight Program, which is designed to enhance cybersecurity literacy and strengthen cyber-risk oversight practices, and holds a CERT Certificate in Cybersecurity Oversight.
The Compliance and Quality of Care Committee of our board of directors has primary responsibility for oversight of our cybersecurity risk management program. Our CIO provides quarterly reports on our cybersecurity program to that committee and at least annually to our full board. The reports to the committee and the full board include details and metrics on, among other things, our routine vulnerability assessments, internal and external threat intelligence, quarterly NIST framework assessments, quarterly Company-wide phishing exercises and training, device encryption, routine resilience efforts including quarterly disaster recovery exercises, third-party vendor risk management, annual tabletop incident response exercise, annual business continuity exercise, cyber penetration tests, and 106 NIST cyber hygiene controls. Similarly, our chief compliance officer provides quarterly reports to the Compliance and Quality of Care Committee on patient privacy compliance efforts and related matters. The Compliance and Quality of Care Committee and the full board review, and the committee approves, the annual cybersecurity plan that sets out the primary initiatives and internal audits of the IT security function for the upcoming year. Historically, one or more board members have observed and participated in our tabletop incident response exercises.
Cybersecurity Risk Board Committee or Subcommittee Responsible for Oversight [Text Block] The Compliance and Quality of Care Committee of our board of directors has primary responsibility for oversight of our cybersecurity risk management program.
Cybersecurity Risk Process for Informing Board Committee or Subcommittee Responsible for Oversight [Text Block] Our CIO provides quarterly reports on our cybersecurity program to that committee and at least annually to our full board.
Cybersecurity Risk Role of Management [Text Block] The cybersecurity program, led by our chief security officer (“CSO”), consists of dedicated internal IT security employees, including the staff of a security operations center, and long-term third-party security service providers. Our IT security staff, led by our CSO, is responsible for our overall information security strategy, policy, security engineering, operations, and cyber threat detection and response. In furtherance of our cybersecurity program, members of our internal security staff participate in industry and governmental cybersecurity cooperative groups, including the Health Information Sharing and Analysis Center (“H-ISAC”) and the FBI’s InfraGard.
Our CSO, who assumed his current role in 2022, has over 12 years of cybersecurity experience with us and over 29 total years of cybersecurity and IT experience across various industries, including telecom, engineering, and finance. He also holds several cybersecurity certifications: GIAC Certified Incident Handler, GIAC Certified Penetration Tester, GIAC Certified Project Manager, and Certified Healthcare Information Security Leader. Our CSO reports directly to our chief information officer (“CIO”). Our CIO, who assumed his current role in 2011, has 36 total years of cybersecurity and IT experience. Prior to assuming the role of CIO, he served in senior IT and security roles for us beginning in 2001. As a highly decorated United States Air Force officer, he served as a CIO, regional CIO, and chief technology officer responsible for the USAF health system’s IT worldwide operations. He also served as a senior staff advisor to various levels of the United States Department of Defense’s military health system on strategic matters related to IT policy, procedures, procurement, solutions, and is a subject matter expert on cybersecurity. He has numerous professional certifications and affiliations, including a CERT Certificate in Cybersecurity Oversight from National Association of Corporate Directors’ Cyber-Risk Oversight Program; Certified Information Systems Security Professional; lifetime member, fellow, and previous board member of the College of Health Information Management Executives.
We maintain an inter-departmental privacy and security committee that oversees our programs and initiatives that seek to protect and secure patient information as well as our data and information systems. This committee is responsible for, among other things, administering our incident response policies and procedures and various training and awareness programs that promote good system security practices by employees. This committee consists of our CSO, CIO, deputy CIO, chief privacy officer, and director of information security and compliance as well as in house attorneys responsible for cybersecurity and securities matters. It meets monthly and as warranted by privacy and security events.
The IRP sets forth the strategy to prepare for cybersecurity threats and incidents and the processes and procedures to detect, analyze, contain, and recover after any actual or suspected cybersecurity incidents. The IRP also sets forth the internal reporting process for cybersecurity incidents. In the event of the detection of an actual or suspected cybersecurity incident, the IRP provides that our IT security staff score the incident based on established criteria and manage the incident pursuant to the standard operating procedures. Depending on the assessed criticality of the incident and the systems affected, the staff will report an incident to a security triage team, consisting of the security operations incident response lead and several members of the privacy and security committee. Working with our third-party security vendors and under the direction of outside legal counsel as needed, the triage team investigates the incident, manages the response, and reports threats and incidents deemed significant to securities counsel. Securities counsel then works with the executive team to assess materiality for the Company. A member of the executive team would inform our board of directors as warranted.
In general terms, under our cybersecurity program, we undertake measures to protect the safety and security of our information systems and the data maintained within those systems. We have implemented administrative, technical and physical controls on our systems and devices in an attempt to prevent unauthorized access and to promote business resilience in the event of that access. Core elements of our program include the real-time monitoring of both our network and external cybersecurity activity by our internal security operations center and our third-party service providers and the procedures for backing up and recovering our systems. We periodically test the adequacy of our security, business continuity, and disaster recovery measures, including an annual tabletop exercise involving representatives from all key functional departments within the Company, our outside cybersecurity legal counsel, and our primary forensic services firm. In our annual tabletop exercise, our legal and technical advisors direct the exercise and provide feedback on our performance, which is shared with management and our board of directors. We provide our employees annual training and regular reminders on measures they can take to prevent breaches and other cyber threats, including phishing schemes. We participate in the vulnerability scanning service offered by the Cybersecurity and Infrastructure Security Agency on our internet facing systems and engage external security consultants to perform an annual penetration test of our network. Our systems that process electronic protected health
information are risk assessed on a quarterly basis against NIST security controls. Additionally, we maintain insurance coverage for cybersecurity incidents.
Cybersecurity Risk Management Positions or Committees Responsible [Flag] true
Cybersecurity Risk Management Positions or Committees Responsible [Text Block] The cybersecurity program, led by our chief security officer (“CSO”), consists of dedicated internal IT security employees, including the staff of a security operations center, and long-term third-party security service providers. Our IT security staff, led by our CSO, is responsible for our overall information security strategy, policy, security engineering, operations, and cyber threat detection and response.
Cybersecurity Risk Management Expertise of Management Responsible [Text Block]
Our CSO, who assumed his current role in 2022, has over 12 years of cybersecurity experience with us and over 29 total years of cybersecurity and IT experience across various industries, including telecom, engineering, and finance. He also holds several cybersecurity certifications: GIAC Certified Incident Handler, GIAC Certified Penetration Tester, GIAC Certified Project Manager, and Certified Healthcare Information Security Leader. Our CSO reports directly to our chief information officer (“CIO”). Our CIO, who assumed his current role in 2011, has 36 total years of cybersecurity and IT experience. Prior to assuming the role of CIO, he served in senior IT and security roles for us beginning in 2001. As a highly decorated United States Air Force officer, he served as a CIO, regional CIO, and chief technology officer responsible for the USAF health system’s IT worldwide operations. He also served as a senior staff advisor to various levels of the United States Department of Defense’s military health system on strategic matters related to IT policy, procedures, procurement, solutions, and is a subject matter expert on cybersecurity. He has numerous professional certifications and affiliations, including a CERT Certificate in Cybersecurity Oversight from National Association of Corporate Directors’ Cyber-Risk Oversight Program; Certified Information Systems Security Professional; lifetime member, fellow, and previous board member of the College of Health Information Management Executives.
Cybersecurity Risk Process for Informing Management or Committees Responsible [Text Block] The cybersecurity program, led by our chief security officer (“CSO”), consists of dedicated internal IT security employees, including the staff of a security operations center, and long-term third-party security service providers. Our IT security staff, led by our CSO, is responsible for our overall information security strategy, policy, security engineering, operations, and cyber threat detection and response. In furtherance of our cybersecurity program, members of our internal security staff participate in industry and governmental cybersecurity cooperative groups, including the Health Information Sharing and Analysis Center (“H-ISAC”) and the FBI’s InfraGard.
Our CSO, who assumed his current role in 2022, has over 12 years of cybersecurity experience with us and over 29 total years of cybersecurity and IT experience across various industries, including telecom, engineering, and finance. He also holds several cybersecurity certifications: GIAC Certified Incident Handler, GIAC Certified Penetration Tester, GIAC Certified Project Manager, and Certified Healthcare Information Security Leader. Our CSO reports directly to our chief information officer (“CIO”). Our CIO, who assumed his current role in 2011, has 36 total years of cybersecurity and IT experience. Prior to assuming the role of CIO, he served in senior IT and security roles for us beginning in 2001. As a highly decorated United States Air Force officer, he served as a CIO, regional CIO, and chief technology officer responsible for the USAF health system’s IT worldwide operations. He also served as a senior staff advisor to various levels of the United States Department of Defense’s military health system on strategic matters related to IT policy, procedures, procurement, solutions, and is a subject matter expert on cybersecurity. He has numerous professional certifications and affiliations, including a CERT Certificate in Cybersecurity Oversight from National Association of Corporate Directors’ Cyber-Risk Oversight Program; Certified Information Systems Security Professional; lifetime member, fellow, and previous board member of the College of Health Information Management Executives.
We maintain an inter-departmental privacy and security committee that oversees our programs and initiatives that seek to protect and secure patient information as well as our data and information systems. This committee is responsible for, among other things, administering our incident response policies and procedures and various training and awareness programs that promote good system security practices by employees. This committee consists of our CSO, CIO, deputy CIO, chief privacy officer, and director of information security and compliance as well as in house attorneys responsible for cybersecurity and securities matters. It meets monthly and as warranted by privacy and security events.
The IRP sets forth the strategy to prepare for cybersecurity threats and incidents and the processes and procedures to detect, analyze, contain, and recover after any actual or suspected cybersecurity incidents. The IRP also sets forth the internal reporting process for cybersecurity incidents. In the event of the detection of an actual or suspected cybersecurity incident, the IRP provides that our IT security staff score the incident based on established criteria and manage the incident pursuant to the standard operating procedures. Depending on the assessed criticality of the incident and the systems affected, the staff will report an incident to a security triage team, consisting of the security operations incident response lead and several members of the privacy and security committee. Working with our third-party security vendors and under the direction of outside legal counsel as needed, the triage team investigates the incident, manages the response, and reports threats and incidents deemed significant to securities counsel. Securities counsel then works with the executive team to assess materiality for the Company. A member of the executive team would inform our board of directors as warranted.
In general terms, under our cybersecurity program, we undertake measures to protect the safety and security of our information systems and the data maintained within those systems. We have implemented administrative, technical and physical controls on our systems and devices in an attempt to prevent unauthorized access and to promote business resilience in the event of that access. Core elements of our program include the real-time monitoring of both our network and external cybersecurity activity by our internal security operations center and our third-party service providers and the procedures for backing up and recovering our systems. We periodically test the adequacy of our security, business continuity, and disaster recovery measures, including an annual tabletop exercise involving representatives from all key functional departments within the Company, our outside cybersecurity legal counsel, and our primary forensic services firm. In our annual tabletop exercise, our legal and technical advisors direct the exercise and provide feedback on our performance, which is shared with management and our board of directors. We provide our employees annual training and regular reminders on measures they can take to prevent breaches and other cyber threats, including phishing schemes. We participate in the vulnerability scanning service offered by the Cybersecurity and Infrastructure Security Agency on our internet facing systems and engage external security consultants to perform an annual penetration test of our network. Our systems that process electronic protected health
information are risk assessed on a quarterly basis against NIST security controls. Additionally, we maintain insurance coverage for cybersecurity incidents.
Cybersecurity Risk Management Positions or Committees Responsible Report to Board [Flag] true
v3.25.4
Summary of Significant Accounting Policies (Policies)
 12 Months Ended
Dec. 31, 2025
Accounting Policies [Abstract]  
Basis of Presentation
Basis of Presentation and Consolidation—
The accompanying consolidated financial statements of Encompass Health and its subsidiaries were prepared in accordance with generally accepted accounting principles in the United States of America and include the assets, liabilities, revenues, and expenses of all wholly-owned subsidiaries, majority-owned subsidiaries over which we exercise control, and, when applicable, entities in which we have a controlling financial interest. Certain prior year amounts may have been reclassified for comparative purposes to conform to the current-year financial statement presentation.
We use the equity method to account for our investments in entities we do not control, but where we have the ability to exercise significant influence over operating and financial policies. Consolidated Net income attributable to Encompass Health includes our share of the net earnings of these entities. The difference between consolidation and the equity method impacts certain of our financial ratios because of the presentation of the detailed line items reported in the consolidated financial statements for consolidated entities compared to a one line presentation of equity method investments.
On December 31, 2025, we entered into an agreement to sell our 50% membership interest in Gamma Knife Center at Barnes-Jewish Hospital, LLC (“Gamma Knife”) to our existing joint venture partner, Barnes-Jewish Hospital, LLC, for $17.9 million effective January 1, 2026. We account for Gamma Knife as an equity method investment. As a result of this transaction, we expect to record an approximate $13 million post-tax gain in Other income on our condensed consolidated statement of operations during the three months ended March 31, 2026 and expect the $17.9 million proceeds to be classified as an investing activity within our condensed consolidated statement of cash flows during the three months ended March 31, 2026.
We eliminate all significant intercompany accounts and transactions from our financial results.
Consolidation
Basis of Presentation and Consolidation—
The accompanying consolidated financial statements of Encompass Health and its subsidiaries were prepared in accordance with generally accepted accounting principles in the United States of America and include the assets, liabilities, revenues, and expenses of all wholly-owned subsidiaries, majority-owned subsidiaries over which we exercise control, and, when applicable, entities in which we have a controlling financial interest. Certain prior year amounts may have been reclassified for comparative purposes to conform to the current-year financial statement presentation.
We use the equity method to account for our investments in entities we do not control, but where we have the ability to exercise significant influence over operating and financial policies. Consolidated Net income attributable to Encompass Health includes our share of the net earnings of these entities. The difference between consolidation and the equity method impacts certain of our financial ratios because of the presentation of the detailed line items reported in the consolidated financial statements for consolidated entities compared to a one line presentation of equity method investments.
On December 31, 2025, we entered into an agreement to sell our 50% membership interest in Gamma Knife Center at Barnes-Jewish Hospital, LLC (“Gamma Knife”) to our existing joint venture partner, Barnes-Jewish Hospital, LLC, for $17.9 million effective January 1, 2026. We account for Gamma Knife as an equity method investment. As a result of this transaction, we expect to record an approximate $13 million post-tax gain in Other income on our condensed consolidated statement of operations during the three months ended March 31, 2026 and expect the $17.9 million proceeds to be classified as an investing activity within our condensed consolidated statement of cash flows during the three months ended March 31, 2026.
We eliminate all significant intercompany accounts and transactions from our financial results.
Variable Interest Entities
Variable Interest Entities—
Any entity considered a variable interest entity (“VIE”) is evaluated to determine which party is the primary beneficiary and thus should consolidate the VIE. This analysis is complex, involves uncertainties, and requires significant judgment on various matters. In order to determine if we are the primary beneficiary of a VIE, we must determine what activities most significantly impact the economic performance of the entity, whether we have the power to direct those activities, and if our obligation to absorb losses or receive benefits from the VIE could potentially be significant to the VIE.
Use of Estimates and Assumptions
Use of Estimates and Assumptions—
The preparation of our consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and assumptions are used for, but not limited to: (1) revenue reserves for contractual adjustments and uncollectible amounts; (2) fair value of acquired assets and assumed liabilities in business combinations; (3) asset impairments, including goodwill; (4) depreciable lives of assets; (5) useful lives of intangible assets; (6) economic lives and fair value of leased assets; (7) income tax valuation allowances; (8) uncertain tax positions; (9) fair value of stock options and restricted stock containing a market condition; (10) fair value of redeemable noncontrolling interests; (11) reserves for self-insured healthcare plans; (12) reserves for professional, workers’ compensation, and comprehensive general insurance liability risks; and (13) contingency and litigation reserves. Future events and their effects cannot be predicted with certainty; accordingly, our accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of our consolidated financial statements will change as new events occur, as more experience is acquired, as additional information is obtained, and
as our operating environment changes. We evaluate and update our assumptions and estimates on an ongoing basis and may employ outside experts to assist in our evaluation, as considered necessary. Actual results could differ from those estimates.
Net Operating Revenues
We record Net operating revenues on an accrual basis using our best estimate of the transaction price for the type of service provided to the patient. Our estimate of the transaction price includes estimates of price concessions for such items as contractual allowances, potential adjustments that may arise from payment and other reviews, and uncollectible amounts. Our accounting systems calculate contractual allowances on a patient-by-patient basis based on the rates in effect for each primary third-party payor. Adjustments related to payment reviews by third-party payors or their agents are based on our historical experience and success rates in the claims adjudication process. Estimates for uncollectible amounts are based on the aging of our accounts receivable, our historical collection experience for each type of payor, and other relevant factors.
Management continually reviews the revenue transaction price estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms that result from contract renegotiations and renewals. Due to complexities involved in determining amounts ultimately due under reimbursement arrangements with third-party payors, which are often subject to interpretation, we may receive reimbursement for healthcare services authorized and provided that is different from our estimates, and such differences could be material. In addition, laws and regulations governing the Medicare and Medicaid programs, are complex, subject to interpretation, and are routinely modified for provider reimbursement. All healthcare providers participating in the Medicare and Medicaid programs are required to meet certain financial reporting requirements. Federal regulations require submission of annual cost reports covering medical costs and expenses associated with the services provided under each hospital provider number to program beneficiaries. Annual cost reports required under the Medicare and Medicaid programs are subject to routine audits, which may result in adjustments to the amounts ultimately determined to be due to Encompass Health under these reimbursement programs. These audits often require several years to reach the final determination of amounts earned under the programs. If actual results are not consistent with our assumptions and judgments, we may be exposed to gains or losses that could be material.
The Centers for Medicare & Medicaid Services (“CMS”) has been granted authority to suspend payments, in whole or in part, to Medicare providers if CMS possesses reliable information an overpayment, fraud, or willful misrepresentation exists. If CMS suspects payments are being made as the result of fraud or misrepresentation, CMS may suspend payment at any time without providing prior notice to us. The initial suspension period is limited to 180 days. However, the payment suspension period can be extended almost indefinitely if the matter is under investigation by the United States Department of Health and Human Services Office of Inspector General (the “HHS-OIG”) or the United States Department of Justice (the “DOJ”). Therefore, we are unable to predict if or when we may be subject to a suspension of payments by the Medicare and/or Medicaid programs, the possible length of the suspension period, or the potential cash flow impact of a payment suspension. Any such suspension would adversely impact our financial position, results of operations, and cash flows.
Pursuant to legislative directives and authorizations from Congress, CMS has developed and instituted various Medicare audit programs under which CMS contracts with private companies to conduct claims and medical record audits. As a matter of course, we undertake significant efforts through training and education to ensure compliance with Medicare requirements. However, past audits have led, and future audits may lead, to assertions we have been underpaid or overpaid by Medicare or submitted improper claims in some instances. Ultimately, audits may require us to refund any amounts determined to have been overpaid. Audits also require us to incur additional costs to respond to requests for records and defend the validity of payments and claims. In some circumstances auditors assert the authority to extrapolate denial rationales to large pools of claims not actually audited, which could increase the impact of the audit. We cannot predict when or how these audit programs will affect us.
Medicare Administrative Contractors (“MACs”), under programs known as “widespread probes,” have conducted pre-payment claim reviews of our Medicare billings and in some cases denied payment for certain diagnosis codes. We dispute, or “appeal,” most of these denials. As discussed above, our historical experience and success in the adjudication of these appeals is a component of our estimate of transaction price. The Medicare appeals adjudication process is administered by the Office of Medicare Hearings and Appeals (“OMHA”) and has been subject to significant delay resulting in a backlog of claims awaiting adjudication. Beginning in March 2020, OMHA increased the frequency of hearings and the number of claims set at each hearing, which we believe adds to the substantive and procedural deficiencies in the appeals process. During 2022, the backlog of “widespread probe” claims adjudicated by the administrative law judge (“ALJ”) continued and were substantially resolved. This OMHA practice resulted in a reduction in our success in the adjudication of these appeals, but have increased the pace of recovery of these claims. We have appealed certain adverse ALJ rulings to the Department Appeals Board (“DAB”), the final level of administrative review. As of December 31, 2025, approximately $12 million and $21 million in denied claims are awaiting review at the ALJ and DAB levels, respectively. In addition, we have appealed approximately $6 million in claims denied by the DAB pending review by the United States district courts as of December 31, 2025. Reserves against appeals pending before the ALJ, DAB, and the United States district courts totaled $7.0 million, $12.3 million, and $4.6 million, respectively, as of December 31, 2025.
During the fourth quarter of 2023, we recorded an additional reserve totaling $21.9 million related to appeals pending before the DAB and several federal district courts. The increase in reserve was driven primarily by an increase in unfavorable adjudication outcomes experienced at the DAB during the second half of 2023 and largely offsets the remaining net carrying value of these claims. These appeals related primarily to claims denied prior to 2018. This adjustment did not impact our reserve methodology for ongoing claims audit programs, including TPE and RCD (defined and discussed below). We will continue to pursue ongoing appeals before the DAB and federal district courts where economically beneficial.
Under CMS’s Targeted Probe and Educate (“TPE”) program, MACs use data analysis to identify healthcare providers with unusual billing practices, high claim error rates, and items and services that have high national error rates. Once a MAC selects a provider for claims review, the initial volume of claims review is limited to 20 to 40 claims. The TPE program includes up to three rounds of claims review if necessary with corresponding provider education and a subsequent period to allow for improvement. If results do not improve sufficiently after three rounds, the MAC may refer the provider to CMS for further action, which may include extrapolation of error rates to a broader universe of claims or referral to a UPIC or RAC (defined below). We cannot predict the impact of the TPE program on our ability to collect claims on a timely basis.
On December 14, 2020, CMS announced a five-year review choice demonstration for inpatient rehabilitation services (the “RCD”), under which Medicare reimbursement claims are assessed for compliance with applicable coverage and clinical documentation requirements. In August 2023, inpatient rehabilitation facilities (“IRFs”) located in Alabama began participation in RCD. On June 17, 2024, CMS expanded RCD to include IRFs located in Pennsylvania and billing to a certain MAC. We do
not bill to that MAC, so we are not subject to the program in Pennsylvania at this time. In December 2025, CMS announced the expansion of RCD to Texas and California, effective March 2, 2026 and May 1, 2026, respectively. With the expansion to those two states, we expect 33 of our current inpatient rehabilitation hospitals (representing approximately 11.9% of our IRF Medicare claims) to be subject to RCD. After the initial four states, CMS intends to expand the demonstration to include additional IRFs based on the MAC to which those IRFs submit claims. There are no details of that expansion at this time.
Under the RCD, participating IRFs have an initial choice between pre-claim or post-payment review of 100% of Medicare claims submitted to demonstrate compliance with applicable requirements. We elected the pre-claim review option for our IRFs in Alabama for the first cycle. Under the pre-claim review choice, services can begin prior to the submission of the review request and continue while the decision is being made. The pre-claim review request with required documentation must be submitted, reviewed, and approved before the final claim is paid. If a certain percentage of the claims reviewed are found to be valid, the IRF may then opt out of the 100% review. The opt-out validation percentages for the first, second, and third cycles were 80% or greater, 85% or greater and 90% or greater, respectively. In opting out, the IRF may elect spot prepayment reviews of samples consisting of 5% of total claims or selective post-payment review of a statistically valid random sample. Our claim validation rate for the first cycle ending in February 2024 exceeded the 80% threshold at all participating hospitals. For the second cycle, which began on May 1, 2024, we elected not to opt out, so our hospitals in Alabama remained subject to the 100% pre-claim review. None of our hospitals in Alabama achieved the opt-out claim validation rate for the second or third cycles ending in October 2024 and June 2025, respectively. In the third cycle, we again submitted 100% of review requests pre-claim. None of our IRFs in Alabama achieved the 90% claim validation rate for the third cycle ending in June 2025. We believe many of the non-affirmations in these cycles were based on application of improper standards or requirements that directly conflict with the Medicare coverage criteria for IRFs. We have engaged, and will continue to engage, with the MAC and CMS to ensure the review process is consistent with existing rules, regulations and statutes. In the fourth cycle which began September 1, 2025, the affirmation rate required to opt-out remains 90% or greater. Given the inconsistent review process applied by the MAC across the previous cycles, we cannot predict the impact, if any, RCD may have on the collectability of our Medicare claims over the program’s term and ultimately on our financial position, results of operations, and cash flows.
In connection with CMS approved and announced Recovery Audit Contractors (“RACs”) audits related to IRFs, we received requests from 2013 to 2025 to review certain patient files for discharges occurring from 2010 to 2025. These RAC audits are focused on identifying Medicare claims that may contain improper payments. RAC contractors must have CMS approval before conducting these focused reviews which cover issues ranging from billing documentation to medical necessity. Medical necessity is an assessment by an independent physician of a patient’s ability to tolerate and benefit from intensive multi-disciplinary therapy provided in an IRF setting.
CMS has also established other types of contractors, including the Unified Program Integrity Contractors (“UPICs”) and the Supplemental Medical Review Contractor (“SMRC”). The UPICs conduct audits with a focus on potential fraud and abuse issues. Like the RACs, the UPICs conduct audits and have the ability to refer matters to the HHS-OIG or the DOJ. Unlike RACs, UPICs do not receive a specific financial incentive based on the amount of the error as a result of UPIC audits. We have, from time to time, received UPIC record requests which have resulted in claim denials on paid claims. We have appealed substantially all UPIC denials arising from these audits using the same process we follow for appealing other denials by contractors. As of December 31, 2025, we have appealed $18.0 million of overpayment determination related to one UPIC audit to the DAB, challenging both the denials and the improper use of extrapolation. It is not possible to predict when this matter will be resolved or the ultimate outcome. The SMRC conducts nationwide medical reviews of Medicare claims to determine compliance with coverage, coding, payment, and billing requirements.
To date, the Medicare claims that are subject to these post-payment audit requests represent less than 1% of our Medicare patient discharges from 2010 to 2025. Because we have confidence in the medical judgment of both the referring and admitting physicians who assess the treatment needs of their patients, we have appealed substantially all claim denials arising from these audits using the same process we follow for appealing denials by MACs. Due to the delays announced by CMS in the related adjudication process discussed above, we believe the resolution of any claims that are subsequently denied as a result of these claim audits could take several years. In addition, because we have limited experience with UPICs and RACs in the context of claims reviews of this nature, we cannot provide assurance as to the timing or outcomes of these disputes. As such, we make estimates for these claims based on our historical experience and success rates in the claims adjudication process, which is the same process we follow for denials by MACs. During 2025, 2024, and 2023, our adjustment to Net operating revenues for claims that are part of these post-payment claims review process was not material.
Our performance obligations relate to contracts with a duration of less than one year. Therefore, we elected to apply the optional exemption to not disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period. These unsatisfied or partially unsatisfied performance obligations primarily relate to services provided at the end of the reporting period.
We are subject to changes in government legislation that could impact Medicare payment levels and changes in payor patterns that may impact the level and timing of payments for services rendered.
Net operating revenues are recognized over time as the services are provided to the patient. The performance obligation is the rendering of services to the patient during the term of their inpatient stay. Revenues are recognized (or measured) using the input method as therapy, nursing, and auxiliary services are provided based on our estimate of the respective transaction price. Revenues recognized are subject to a number of elements which impact both the overall amount of revenue realized as well as the timing of the collection of the related accounts receivable. Factors considered in determining the estimated transaction price include the patient’s total length of stay for in-house patients, each patient’s discharge destination, the proportion of patients with secondary insurance coverage and the level of reimbursement under that secondary coverage, and the amount of charges that will be disallowed by payors. Such additional factors are assumed to remain consistent with the experience for patients discharged in similar time periods for the same payor classes.
Cash and Cash Equivalents
Cash and Cash Equivalents—
Cash and cash equivalents include highly liquid investments with maturities of three months or less when purchased. Carrying values of Cash and cash equivalents approximate fair value due to the short-term nature of these instruments.
We maintain amounts on deposit with various financial institutions, which may, at times, exceed federally insured limits. However, management periodically evaluates the credit-worthiness of those institutions, and we have not experienced any losses on such deposits.
Marketable Securities
Marketable Securities—
We record all equity securities with readily determinable fair values and for which we do not exercise significant influence at fair value and record the change in fair value for the reporting period in our consolidated statements of operations.
We record debt securities with readily determinable fair values and for which we do not exercise significant influence as available-for-sale securities. We carry the available-for-sale securities at fair value and report unrealized holding gains or losses, net of income taxes, in Accumulated other comprehensive income, which is a separate component of shareholders’ equity. We recognize realized gains and losses in our consolidated statements of operations using the specific identification method. Unrealized losses are charged against earnings when a decline in fair value was determined to be other than temporary. Management reviews several factors to determine whether a loss is other than temporary, such as the length of time a security is in an unrealized loss position, the extent to which fair value is less than cost, the financial condition and near term prospects of the issuer, industry, or geographic area and our ability and intent to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value.
Accounts Receivable
Accounts Receivable—
We report accounts receivable from services rendered at their estimated transaction price which takes into account price concessions from federal and state agencies (under the Medicare and Medicaid programs), managed care health plans, commercial insurance companies, workers’ compensation programs, employers, and patients. Our accounts receivable are concentrated by type of payor. The concentration of patient service accounts receivable by payor class, as a percentage of total patient service accounts receivable, is as follows:
 As of December 31,
 20252024
Medicare54.9 %55.5 %
Managed care and other discount plans, including Medicare Advantage35.6 %34.3 %
Medicaid3.6 %4.0 %
Other third-party payors2.8 %2.8 %
Workers' compensation2.5 %2.6 %
Patients0.6 %0.8 %
Total100.0 %100.0 %
While revenues and accounts receivable from the Medicare program are significant to our operations, we do not believe there are significant credit risks associated with this government agency. We do not believe there are any other significant concentrations of revenues from any particular payor that would subject us to any significant credit risks in the collection of our accounts receivable.
Accounts requiring collection efforts are reviewed via system-generated work queues that automatically stage (based on age and size of outstanding balance) accounts requiring collection efforts for patient account representatives. Collection efforts include contacting the applicable party (both in writing and by telephone), providing information (both financial and clinical) to allow for payment or to overturn payor decisions to deny payment, and arranging payment plans with self-pay patients, among other techniques. When we determine all in-house efforts have been exhausted or it is a more prudent use of resources, accounts may be turned over to a collection agency.
The collection of outstanding receivables from Medicare, managed care payors, other third-party payors, and patients is our primary source of cash and is critical to our operating performance. While it is our policy to verify insurance prior to a patient being admitted, there are various exceptions that can occur. Such exceptions include instances where we are (1) unable to obtain verification because the patient’s insurance company was unable to be reached or contacted, (2) a determination is made that a patient may be eligible for benefits under various government programs, such as Medicaid, and it takes several days, weeks, or months before qualification for such benefits is confirmed or denied, and (3) the patient is transferred to our hospital from an acute care hospital without having access to a credit card, cash, or check to pay the applicable patient responsibility amounts (i.e., deductibles and co-payments).
Our primary collection risks relate to patient responsibility amounts and claims reviews conducted by MACs or other contractors. Patient responsibility amounts include accounts for which the patient was the primary payor or the primary insurance carrier has paid the amounts covered by the applicable agreement, but patient co-payment amounts remain outstanding. Changes in the economy, such as increased unemployment rates or periods of recession, can further exacerbate our ability to collect patient responsibility amounts.
If actual results are not consistent with our assumptions and judgments, we may be exposed to gains or losses that could be material. Changes in general economic conditions, business office operations, payor mix, or trends in federal or state governmental and private employer healthcare coverage could affect our collection of accounts receivable, financial position, results of operations, and cash flows.
Property and Equipment
Property and Equipment—
We report land, buildings, improvements, vehicles, and equipment at cost, net of accumulated depreciation and amortization and any asset impairments. We depreciate our assets using the straight-line method over the shorter of the estimated useful life of the assets or life of the underlying leases. Useful lives are generally as follows:
 Years
Buildings
10 to 30
Leasehold improvements
2 to 15
Vehicles
5
Furniture, fixtures, and equipment
3 to 10
Maintenance and repairs of property and equipment are expensed as incurred. We capitalize replacements and betterments that increase the estimated useful life of an asset. We capitalize pre-acquisition costs when they are directly identifiable with a specific property, the costs would be capitalizable if the property were already acquired, and acquisition of the property is probable. We capitalize interest expense on major construction and development projects while in progress.
We retain fully depreciated assets in property and accumulated depreciation accounts until we remove them from service. In the case of sale, retirement, or disposal, the asset cost and related accumulated depreciation balances are removed from the respective accounts, and the resulting net amount, less any proceeds, is included as a component of income from continuing operations in the consolidated statements of operations. However, if the sale, retirement, or disposal involves a discontinued operation, the resulting net amount, less any proceeds, is included in the results of discontinued operations.
Leases
Leases—
We determine if an arrangement is a lease or contains a lease at inception and perform an analysis to determine whether the lease is an operating lease or a finance lease. We measure right-of-use assets and lease liabilities at the lease commencement date based on the present value of the remaining lease payments. As most of our leases do not provide a readily determinable implicit rate, we estimate an incremental borrowing rate based on the credit quality of the Company and by comparing interest rates available in the market for similar borrowings, and adjusting this amount based on the impact of collateral over the term of each lease. We use this rate to discount the remaining lease payments in measuring the right-of-use asset and lease liability. We use the implicit rate when readily determinable. We recognize lease expense for operating leases on a straight-line basis over the lease term. For our finance leases, we recognize amortization expense from the amortization of the right-of-use asset and interest expense on the related lease liability. Certain of our lease agreements contain annual escalation clauses based on changes in the Consumer Price Index. The changes to the Consumer Price Index, as compared to our initial estimate at the lease commencement date, are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. In general, we do not account for lease and non-lease components separately for purposes of establishing right-of-use assets and lease liabilities.
Leases with an initial term of twelve months or less are not recorded on the consolidated balance sheets. We recognize lease expense for these leases on a straight-line basis over the lease term.
Goodwill and Other Intangible Assets
Goodwill and Other Intangible Assets—
We are required to test our goodwill and indefinite-lived intangible asset for impairment at least annually, absent some triggering event that would accelerate an impairment assessment. Absent any impairment indicators, we perform this impairment testing as of October 1st of each year. We recognize an impairment charge for any amount by which the carrying amount of the asset exceeds its implied fair value. We present an impairment charge as a separate line item within income from continuing operations in the consolidated statements of operations, unless the impairment is associated with a discontinued operation. In that case, we include the impairment charge, on a net-of-tax basis, within the results of discontinued operations.
We assess qualitative factors in our single reporting unit to determine whether it is necessary to perform the quantitative impairment test. If, based on this qualitative assessment, we were to believe we must perform the quantitative impairment test, we would determine the fair value of our reporting unit using generally accepted valuation techniques
including the income approach and the market approach. The income approach includes the use of our reporting unit’s discounted projected operating results and cash flows. This approach includes many assumptions related to pricing and volume, operating expenses, capital expenditures, discount factors, tax rates, etc. Changes in economic and operating conditions impacting these assumptions could result in goodwill impairment in future periods. We reconcile the estimated fair value of our reporting unit to our market capitalization. When we dispose of a hospital, goodwill is allocated to the gain or loss on disposition using the relative fair value methodology.
We assess qualitative factors related to our indefinite-lived intangible asset to determine whether it is necessary to perform the quantitative impairment test. If, based on this qualitative assessment, we were to believe we must perform the quantitative impairment test, we would determine the fair value of our indefinite-lived intangible asset using generally accepted valuation techniques including the relief-from-royalty method. This method is a form of the income approach in which value is equated to a series of cash flows and discounted at a risk-adjusted rate. It is based on a hypothetical royalty, calculated as a percentage of forecasted revenue, that we would otherwise be willing to pay to use the asset, assuming it were not already owned. This approach includes assumptions related to pricing and volume, as well as a royalty rate a hypothetical third party would be willing to pay for use of the asset. When making our royalty rate assumption, we consider rates paid in arms-length licensing transactions for assets comparable to our asset.
We amortize the cost of intangible assets with finite useful lives over their respective estimated useful lives to their estimated residual value. As of December 31, 2025, none of our finite useful lived intangible assets has an estimated residual value. We also review these assets for impairment whenever events or changes in circumstances indicate we may not be able to recover the asset’s carrying amount.
The range of estimated useful lives and the amortization basis for our intangible assets, excluding goodwill, are generally as follows:
 Estimated Useful Life
and Amortization Basis
Certificates of need
10 to 30 years using straight-line basis
Licenses
10 to 20 years using straight-line basis
Noncompete agreements
1 to 18 years using straight-line basis
Trade names:
Encompassindefinite-lived asset
All other
10 to 20 years using straight-line basis
Internal-use software
3 to 7 years using straight-line basis
Market access assets
20 years using accelerated basis
We capitalize the costs of obtaining or developing internal-use software, including external direct costs of material and services and certain directly related payroll costs. Amortization begins when the internal-use software is ready for its intended use. Costs incurred during the preliminary project and post-implementation stages, as well as maintenance and training costs, are expensed as incurred.
Impairment of Long-Lived Assets and Other Intangible Assets
Impairment of Long-Lived Assets and Other Intangible Assets—
We assess the recoverability of long-lived assets (excluding goodwill and our indefinite-lived asset) and identifiable acquired intangible assets with finite useful lives, whenever events or changes in circumstances indicate we may not be able to recover the asset’s carrying amount. We measure the recoverability of assets to be held and used by a comparison of the carrying amount of the asset to the expected net future cash flows to be generated by that asset, or, for identifiable intangibles with finite useful lives, by determining whether the amortization of the intangible asset balance over its remaining life can be recovered through undiscounted future cash flows. The amount of impairment of identifiable intangible assets with finite useful lives, if any, to be recognized is measured based on projected discounted future cash flows. We measure the amount of impairment of other long-lived assets (excluding goodwill) as the amount by which the carrying value of the asset exceeds the fair market value of the asset, which is generally determined based on projected discounted future cash flows or appraised
values. We classify long-lived assets to be disposed of other than by sale as held and used until they are disposed. We report long-lived assets to be disposed of by sale as held for sale and recognize those assets in the balance sheet at the lower of carrying amount or fair value less cost to sell, and we cease depreciation.
Financing Costs
Financing Costs—
We amortize financing costs using the effective interest method over the expected life of the related debt. Excluding financing costs related to our revolving line of credit (which are included in Other long-term assets), financing costs are presented as a direct deduction from the face amount of the financings. The related expense is included in Interest expense and amortization of debt discounts and fees in our consolidated statements of operations.
We accrete discounts and amortize premiums using the effective interest method over the expected life of the related debt, and we report discounts or premiums as a direct deduction from, or addition to, the face amount of the financing. The related income or expense is included in Interest expense and amortization of debt discounts and fees in our consolidated statements of operations.
Fair Value Measurements
Fair Value Measurements—
Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions market participants would use in pricing an asset or liability.
The basis for these assumptions establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
•Level 1 – Observable inputs such as quoted prices in active markets;
•Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
•Level 3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
Assets and liabilities measured at fair value are based on one or more of three valuation techniques. The three valuation techniques are as follows:
•Market approach – Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities;
•Cost approach – Amount that would be required to replace the service capacity of an asset (i.e., replacement cost); and
•Income approach – Techniques to convert future cash flows to a single present amount based on market expectations (including present value techniques, option-pricing models, and lattice models).
Our financial instruments consist mainly of cash and cash equivalents, restricted cash, restricted marketable securities, accounts receivable, accounts payable, letters of credit, and long-term debt. The carrying amounts of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable approximate fair value because of the short-term maturity of these instruments. The fair value of our letters of credit is deemed to be the amount of payment guaranteed on our behalf by third-party financial institutions. We determine the fair value of our long-term debt using quoted market prices, when available, or discounted cash flows based on various factors, including maturity schedules, call features, and current market rates.
On a recurring basis, we are required to report our restricted marketable securities at fair value. The fair values of our restricted marketable securities are determined based on quoted market prices in active markets or quoted prices, dealer quotations, or alternative pricing sources supported by observable inputs in markets that are not considered to be active.
In addition, there are assets and liabilities that are not required to be reported at fair value on a recurring basis. However, these assets may be recorded at fair value as a result of impairment charges or other adjustments made to the carrying value of the applicable assets. The fair value of our property and equipment is determined using discounted cash flows and significant unobservable inputs, unless there is an offer to purchase such assets, which could be the basis for determining fair value. The fair value of our intangible assets, excluding goodwill, is determined using discounted cash flows and significant unobservable inputs. The fair value of our goodwill is determined using discounted projected operating results and cash flows, which involve significant unobservable inputs.
Noncontrolling Interests in Consolidated Affiliates and Redeemable Noncontrolling Interests
Noncontrolling Interests in Consolidated Affiliates—
The consolidated financial statements include all assets, liabilities, revenues, and expenses of less-than-100%-owned affiliates we control. Accordingly, we have recorded noncontrolling interests in the earnings and equity of such entities. We record adjustments to noncontrolling interests for the allocable portion of income or loss to which the noncontrolling interests holders are entitled based upon their portion of the subsidiaries they own. Distributions to holders of noncontrolling interests are adjusted to the respective noncontrolling interests holders’ balance.
Effective July 1, 2024, we expanded our existing joint venture with Piedmont Healthcare (“Piedmont”), which we control, by contributing the assets and operations of our previously wholly-owned 70-bed hospital in Augusta, Georgia. Piedmont contributed approximately $90 million on July 1, 2024, which indirectly resulted in Piedmont obtaining a 50% ownership interest in the hospital. As a result of this transaction, we recorded a post-tax gain of $23.2 million increasing Capital in excess of par value on the consolidated statement of shareholders’ equity for the year ended December 31, 2024. The contribution from Piedmont is included in Contributions from noncontrolling interests of consolidated affiliates on the consolidated statement of cash flows for the year ended December 31, 2024.
Redeemable Noncontrolling Interests—
Certain of our joint venture agreements contain provisions that allow our partners to require us to purchase their interests in the joint venture at fair value at certain points in the future. Because these noncontrolling interests provide for redemption features that are not solely within our control, we classify them as Redeemable noncontrolling interests outside of permanent equity in our consolidated balance sheets. At the end of each reporting period, we compare the carrying value of the Redeemable noncontrolling interests to their estimated redemption value. If the estimated redemption value is greater than the current carrying value, the carrying value is adjusted to the estimated redemption value, with the adjustments recorded through equity in the line item Capital in excess of par value.
The fair value of our Redeemable noncontrolling interests in our joint venture entities is determined primarily using the income approach. The income approach includes the use of the joint venture entities’ projected operating results and cash flows discounted using a rate that reflects market participant assumptions for the applicable joint venture entity, or Level 3 inputs. The projected operating results use management’s best estimates of economic and market conditions over the forecasted periods including assumptions for pricing and volume, operating expenses, and capital expenditures.
Share-Based Payments
Share-Based Payments—
Encompass Health has shareholder-approved stock-based compensation plans that provide for the granting of stock-based compensation to certain employees and directors. All share-based payments to employees are recognized in the financial statements based on their estimated grant-date fair value and amortized on a straight-line basis over the applicable requisite service period.
Litigation Reserves
Litigation Reserves—
We accrue for loss contingencies associated with outstanding litigation for which management has determined it is probable a loss contingency exists and the amount of loss can be reasonably estimated. If the accrued amount associated with a loss contingency is greater than $5.0 million, we also accrue estimated future legal fees associated with the loss contingency. This requires management to estimate the amount of legal fees that will be incurred in the defense of the litigation. These estimates are based on our expectations of the scope, length to complete, and complexity of the claims. In the future, additional adjustments may be recorded as the scope, length to complete, or complexity of outstanding litigation changes.
Advertising Costs
Advertising Costs—
We expense costs of print, radio, television, and other advertisements as incurred. Advertising expenses, primarily included in Other operating expenses within the accompanying consolidated statements of operations, were $5.3 million, $5.8 million, and $6.1 million in each of the years ended December 31, 2025, 2024, and 2023, respectively.
Income Taxes
Income Taxes—
We provide for income taxes using the asset and liability method. This approach recognizes the amount of income taxes payable or refundable for the current year, as well as deferred tax assets and liabilities for the future tax consequence of events recognized in the consolidated financial statements and income tax returns. Deferred income tax assets and liabilities are adjusted to recognize the effects of changes in tax laws or enacted tax rates.
A valuation allowance is required when it is more likely than not some portion of the deferred tax assets will not be realized. Realization is dependent on generating sufficient future taxable income in the applicable tax jurisdiction. On a quarterly basis, we assess the likelihood of realization of our deferred tax assets considering all available evidence, both positive and negative. Our most recent operating performance, the scheduled reversal of temporary differences, our forecast of taxable income in future periods by jurisdiction, our ability to sustain a core level of earnings, and the availability of prudent tax planning strategies are important considerations in our assessment.
We evaluate our tax positions and establish assets and liabilities in accordance with the applicable accounting guidance on uncertainty in income taxes. We review these tax uncertainties in light of changing facts and circumstances, such as the progress of tax audits, and adjust them accordingly. We have used the with-and-without method to determine when we will recognize excess tax benefits from stock-based compensation.
Encompass Health and its corporate subsidiaries file a consolidated federal income tax return. Some subsidiaries consolidated for financial reporting purposes are not part of the consolidated group for federal income tax purposes and file separate federal income tax returns. State income tax returns are filed on a separate, combined, or consolidated basis in accordance with relevant state laws and regulations. Partnerships, limited liability companies, and other pass-through entities we consolidate or account for using the equity method of accounting may file separate federal, state, and local income tax returns. We include the allocable portion of each pass-through entity’s income or loss in our federal income tax return. We allocate the remaining income or loss of each pass-through entity to the other partners or members who are responsible for their portion of the taxes.
Assets and Liabilities in and Results of Discontinued Operations
Assets and Liabilities in and Results of Discontinued Operations—
We report the disposal of the component, or group of components, as discontinued operations only when it represents a strategic shift that has, or will have, a major effect on our operations and financial results. In the period a component of an entity has been disposed of or classified as held for sale, we reclassify the results of operations for current and prior periods into a single caption titled Loss from discontinued operations, net of tax. In addition, we classify the assets and liabilities of those components as current and noncurrent assets and liabilities within Other current assets, Other long-term assets, Other current liabilities, and Other long-term liabilities in our consolidated balance sheets. We also classify cash flows related to discontinued operations as one line item within each category of cash flows in our consolidated statements of cash flows.
Earnings per Common Share
Earnings per Common Share—
The calculation of earnings per common share is based on the weighted-average number of our common shares outstanding during the applicable period. The calculation for diluted earnings per common share recognizes the effect of all potential dilutive common shares that were outstanding during the respective periods, unless their impact would be antidilutive. The calculation of earnings per common share also considers the effect of participating securities. Stock-based compensation awards that contain nonforfeitable rights to dividends and dividend equivalents, such as our restricted stock units, are considered participating securities and are included in the computation of earnings per common share pursuant to the two-class method. In applying the two-class method, earnings are allocated to both common stock shares and participating securities based on their respective weighted-average shares outstanding for the period.
Treasury Stock
Treasury Stock—
Shares of common stock repurchased by us are recorded at cost, including direct incremental costs, as treasury stock. When shares are reissued, we use an average cost method to determine cost. The difference between the cost of the shares and the re-issuance price is added to or deducted from Capital in excess of par value. We account for the retirement of treasury stock as a reduction of retained earnings.
Comprehensive Income
Comprehensive Income—
Comprehensive income is comprised of Net income and changes in unrealized gains or losses on available-for-sale securities and is included in the consolidated statements of comprehensive income.
Recently Adopted Accounting Pronouncements/Recent Accounting Pronouncements Not Yet Adopted
Recently Adopted Accounting Pronouncements—
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which intends to improve the transparency of income tax disclosures by requiring companies to (1) disclose consistent categories and greater disaggregation of information in the effective rate reconciliation and (2) provide information on income taxes paid disaggregated by jurisdiction. We adopted ASU 2023-09 prospectively with an effective date as of January 1, 2025. The disclosures required are presented in Note 14, Income Taxes.
Recent Accounting Pronouncements Not Yet Adopted—
In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires disaggregation of certain expense captions into specified categories within the notes to the financial statements for both interim and annual reporting periods. ASU 2024-03 is effective for our annual periods beginning January 1, 2027 and interim periods beginning January 1, 2028. Early adoption is permitted. We are currently evaluating the requirements of this standard and any potential impact it may have on our consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software,” which intends to modernize the guidance related to internal-use software costs to reflect current software development methods. ASU 2025-06 requires entities to begin capitalizing software costs when management authorizes and commits to funding the software project, and it is probable the project will be completed and the software will be used for its intended purpose. ASU 2025-06 is effective for our annual and interim periods beginning January 1, 2028. Early adoption is permitted. The guidance can be applied on a prospective basis, a modified basis for in-process projects, or on a retrospective basis. We are currently evaluating the requirements of this standard and any potential impact it may have on our consolidated financial statements.
We do not believe any other recently issued, but not yet effective, accounting standards will have a material effect on our consolidated financial position, results of operations, or cash flows.
v3.25.4
Summary of Significant Accounting Policies (Tables)
 12 Months Ended
Dec. 31, 2025
Accounting Policies [Abstract]  
Schedule of Concentration of Net Operating Revenues by Payor
Our Net operating revenues disaggregated by payor source are as follows (in millions):
Year Ended December 31,
202520242023
Medicare$3,886.9 $3,495.3 $3,126.1 
Medicare Advantage
974.4 903.7 776.1 
Managed care
634.0 579.2 531.4 
Medicaid184.2 179.4 190.7 
Other third-party payors39.7 41.7 41.8 
Workers’ compensation29.6 27.8 25.8 
Patients17.2 15.9 14.9 
Other income169.2 130.2 94.4 
Total$5,935.2 $5,373.2 $4,801.2 
Schedule of Concentration of Net Operating Revenues and Net Patient Service Accounts Receivable by Payor and Payor Class The concentration of patient service accounts receivable by payor class, as a percentage of total patient service accounts receivable, is as follows:
 As of December 31,
 20252024
Medicare54.9 %55.5 %
Managed care and other discount plans, including Medicare Advantage35.6 %34.3 %
Medicaid3.6 %4.0 %
Other third-party payors2.8 %2.8 %
Workers' compensation2.5 %2.6 %
Patients0.6 %0.8 %
Total100.0 %100.0 %
Schedule of Useful Lives of Property and Equipment Useful lives are generally as follows:
 Years
Buildings
10 to 30
Leasehold improvements
2 to 15
Vehicles
5
Furniture, fixtures, and equipment
3 to 10
Property and equipment consists of the following (in millions):
 As of December 31,
 20252024
Land$339.7 $302.6 
Buildings4,325.7 3,859.3 
Leasehold improvements388.3 372.8 
Vehicles6.1 5.6 
Furniture, fixtures, and equipment897.0 808.8 
 5,956.8 5,349.1 
Less: Accumulated depreciation and amortization(2,372.8)(2,111.9)
 3,584.0 3,237.2 
Construction in progress517.6 405.9 
Property and equipment, net$4,101.6 $3,643.1 
Schedule of Estimated Useful Lives and Amortization Basis of Other Finite-lived Intangible Assets
The range of estimated useful lives and the amortization basis for our intangible assets, excluding goodwill, are generally as follows:
 Estimated Useful Life
and Amortization Basis
Certificates of need
10 to 30 years using straight-line basis
Licenses
10 to 20 years using straight-line basis
Noncompete agreements
1 to 18 years using straight-line basis
Trade names:
Encompassindefinite-lived asset
All other
10 to 20 years using straight-line basis
Internal-use software
3 to 7 years using straight-line basis
Market access assets
20 years using accelerated basis
The following table provides information regarding our other intangible assets (in millions):
 Gross Carrying AmountAccumulated AmortizationNet
Certificates of need:   
2025$137.0 $(54.9)$82.1 
2024131.4 (49.0)82.4 
Licenses:   
2025$65.6 $(57.5)$8.1 
202465.7 (56.4)9.3 
Noncompete agreements:   
2025$64.9 $(61.7)$3.2 
202466.5 (63.4)3.1 
Trade name - Encompass:
2025$135.2 $— $135.2 
2024135.2 — 135.2 
Trade names - all other:   
2025$38.9 $(24.5)$14.4 
202439.6 (23.6)16.0 
Internal-use software:   
2025$245.7 $(180.9)$64.8 
2024214.4 (163.3)51.1 
Market access assets:
2025$13.2 $(12.7)$0.5 
202413.2 (12.5)0.7 
Total intangible assets:   
2025$700.5 $(392.2)$308.3 
2024666.0 (368.2)297.8 
Schedule of Estimated Basis of Other Indefinite-lived Intangible Assets
The range of estimated useful lives and the amortization basis for our intangible assets, excluding goodwill, are generally as follows:
 Estimated Useful Life
and Amortization Basis
Certificates of need
10 to 30 years using straight-line basis
Licenses
10 to 20 years using straight-line basis
Noncompete agreements
1 to 18 years using straight-line basis
Trade names:
Encompassindefinite-lived asset
All other
10 to 20 years using straight-line basis
Internal-use software
3 to 7 years using straight-line basis
Market access assets
20 years using accelerated basis
v3.25.4
Variable Interest Entities (Tables)
 12 Months Ended
Dec. 31, 2025
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Schedule of Variable Interest Entities
The carrying amounts and classifications of the consolidated VIEs’ assets and liabilities, which are included in our consolidated balance sheets, are as follows (in millions):
As of December 31,
20252024
Assets 
Current assets: 
Cash and cash equivalents$1.6 $0.4 
Accounts receivable
34.9 34.5 
Other current assets4.7 9.6 
Total current assets41.2 44.5 
Property and equipment, net135.0 135.7 
Operating lease right-of-use assets1.3 1.3 
Goodwill15.9 15.9 
Intangible assets, net0.8 1.0 
Other long-term assets9.6 9.7 
Total assets$203.8 $208.1 
Liabilities
Current liabilities:
Current portion of long-term debt$1.0 $1.0 
Accounts payable6.6 6.2 
Accrued payroll10.9 11.0 
Other current liabilities19.0 12.7 
Total current liabilities37.5 30.9 
Long-term debt, net of current portion11.6 12.7 
Long-term operating lease liabilities1.4 1.4 
Total liabilities$50.5 $45.0 
v3.25.4
Cash and Marketable Securities (Tables)
 12 Months Ended
Dec. 31, 2025
Cash and Cash Equivalents [Abstract]  
Schedule of Investment Components
The components of our investments as of December 31, 2025 are as follows (in millions):
 Cash & Cash EquivalentsRestricted CashRestricted Marketable SecuritiesTotal
Cash$72.2 $30.7 $— $102.9 
Equity securities— — 36.3 36.3 
Available-for-sale debt securities:
U.S. government and agency securities— — 40.4 40.4 
Corporate bonds and notes— — 69.1 69.1 
Total
$72.2 $30.7 $145.8 $248.7 
The components of our investments as of December 31, 2024 are as follows (in millions):
 Cash & Cash EquivalentsRestricted CashRestricted Marketable SecuritiesTotal
Cash$85.4 $37.7 $— $123.1 
Equity securities— — 130.9 130.9 
Total
$85.4 $37.7 $130.9 $254.0 
Schedule of Restricted Cash
Restricted cash consisted of the following (in millions):
 As of December 31,
 20252024
Current:
Affiliate cash
$12.1 $17.9 
Self-insured captive funds
18.6 19.8 
Total restricted cash$30.7 $37.7 
Schedule of Debt Securities, Available-for-Sale
A summary of our debt securities as of December 31, 2025 is as follows (in millions):
Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
Available-for-sale debt securities:
U.S. government and agency securities$40.2 $0.2 $— $40.4 
Corporate bonds and notes68.7 0.5 (0.1)69.1 
Investing information related to our available-for-sale debt securities is as follows (in millions):
For the Year Ended December 31,
202520242023
Proceeds from sales and maturities$32.3 $— $— 
The contractual maturities of our available-for-sale debt securities as of December 31, 2025 are as follows (in millions):
Amortized CostFair Value
Due in one year or less$24.3 $24.4 
Due after one year through five years74.2 74.6 
Due after five years through ten years4.9 4.9 
Due after ten years5.5 5.6 
Total$108.9 $109.5 
v3.25.4
Accounts Receivable (Tables)
 12 Months Ended
Dec. 31, 2025
Receivables [Abstract]  
Schedule of Accounts Receivable
Accounts receivable consists of the following (in millions):
 As of December 31,
 20252024
Current:
Patient accounts receivable
$613.4 $593.0 
Other accounts receivable5.8 5.8 
619.2 598.8 
Noncurrent patient accounts receivable
25.5 30.6 
Accounts receivable$644.7 $629.4 
v3.25.4
Property and Equipment (Tables)
 12 Months Ended
Dec. 31, 2025
Property, Plant and Equipment [Abstract]  
Schedule of Components of Property and Equipment Useful lives are generally as follows:
 Years
Buildings
10 to 30
Leasehold improvements
2 to 15
Vehicles
5
Furniture, fixtures, and equipment
3 to 10
Property and equipment consists of the following (in millions):
 As of December 31,
 20252024
Land$339.7 $302.6 
Buildings4,325.7 3,859.3 
Leasehold improvements388.3 372.8 
Vehicles6.1 5.6 
Furniture, fixtures, and equipment897.0 808.8 
 5,956.8 5,349.1 
Less: Accumulated depreciation and amortization(2,372.8)(2,111.9)
 3,584.0 3,237.2 
Construction in progress517.6 405.9 
Property and equipment, net$4,101.6 $3,643.1 
v3.25.4
Leases (Tables)
 12 Months Ended
Dec. 31, 2025
Leases [Abstract]  
Schedule of Components of Least Costs
The components of lease costs are as follows (in millions):
For the Year Ended December 31,
202520242023
Operating lease cost $43.4 $41.7 $40.9 
Finance lease cost:
Amortization of right-of-use assets25.7 25.7 25.7 
Interest on lease liabilities23.0 24.7 26.2 
Total finance lease cost48.7 50.4 51.9 
Short-term and variable lease cost1.7 2.3 2.9 
Sublease income(3.2)(3.1)(3.3)
Total lease cost$90.6 $91.3 $92.4 
Schedule of Supplemental Balance Sheet Information Related to Leases
Supplemental consolidated balance sheet information related to leases is as follows (in millions):
As of December 31,
Classification20252024
Assets
Operating leaseOperating lease right-of-use assets$212.6 $203.7 
Finance lease (1)
Property and equipment, net195.9 221.5 
Total leased assets$408.5 $425.2 
Liabilities
Current liabilities:
Operating leaseCurrent operating lease liabilities$26.5 $26.3 
Finance leaseCurrent portion of long-term debt26.5 23.7 
Noncurrent liabilities:
Operating leaseLong-term operating lease liabilities196.6 189.7 
Finance leaseLong-term debt, net of current portion268.1 294.7 
Total leased liabilities$517.7 $534.4 
(1)    Finance lease assets are recorded net of accumulated amortization of $222.9 million and $197.3 million as of December 31, 2025 and December 31, 2024, respectively.
Schedule of Weighted Average Remaining Lease Term and Discount Rate
As of December 31,
20252024
Weighted Average Remaining Lease Term
Operating lease9.7 years9.7 years
Finance lease8.9 years9.8 years
Weighted Average Discount Rate
Operating lease6.3 %6.4 %
Finance lease7.7 %7.7 %
Schedule of Operating Lease, Liability, Maturity
Maturities of lease liabilities as of December 31, 2025 are as follows (in millions):
Year Ending December 31,Operating LeasesFinance
Leases
2026$39.5 $47.6 
202742.9 47.4 
202841.9 46.4 
202927.5 47.3 
203021.0 47.4 
2031 and thereafter132.4 175.3 
Total lease payments305.2 411.4 
Less: Interest portion(82.1)(116.8)
Total lease liabilities$223.1 $294.6 
Schedule of Finance Lease, Liability, Maturity
Maturities of lease liabilities as of December 31, 2025 are as follows (in millions):
Year Ending December 31,Operating LeasesFinance
Leases
2026$39.5 $47.6 
202742.9 47.4 
202841.9 46.4 
202927.5 47.3 
203021.0 47.4 
2031 and thereafter132.4 175.3 
Total lease payments305.2 411.4 
Less: Interest portion(82.1)(116.8)
Total lease liabilities$223.1 $294.6 
Schedule of Supplemental Cash Flow Information
Supplemental cash flow information related to our leases is as follows (in millions):
For the Year Ended December 31,
202520242023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$42.6 $40.7 $39.0 
Operating cash flows from finance leases23.6 25.5 27.1 
Financing cash flows from finance leases23.9 21.8 41.1 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$38.2 $26.7 $26.2 
Finance leases0.2 — 21.4 
v3.25.4
Goodwill and Other Intangible Assets (Tables)
 12 Months Ended
Dec. 31, 2025
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Changes in the Carrying Amount of Goodwill
The following table shows changes in the carrying amount of Goodwill (in millions):
 Amount
Goodwill as of December 31, 2022$1,263.2 
Acquisitions18.1 
Goodwill as of December 31, 20231,281.3 
Acquisitions2.7 
Goodwill as of December 31, 20241,284.0 
Acquisitions33.6 
Goodwill as of December 31, 2025$1,317.6 
Schedule of Intangible Assets by Major Class
The range of estimated useful lives and the amortization basis for our intangible assets, excluding goodwill, are generally as follows:
 Estimated Useful Life
and Amortization Basis
Certificates of need
10 to 30 years using straight-line basis
Licenses
10 to 20 years using straight-line basis
Noncompete agreements
1 to 18 years using straight-line basis
Trade names:
Encompassindefinite-lived asset
All other
10 to 20 years using straight-line basis
Internal-use software
3 to 7 years using straight-line basis
Market access assets
20 years using accelerated basis
The following table provides information regarding our other intangible assets (in millions):
 Gross Carrying AmountAccumulated AmortizationNet
Certificates of need:   
2025$137.0 $(54.9)$82.1 
2024131.4 (49.0)82.4 
Licenses:   
2025$65.6 $(57.5)$8.1 
202465.7 (56.4)9.3 
Noncompete agreements:   
2025$64.9 $(61.7)$3.2 
202466.5 (63.4)3.1 
Trade name - Encompass:
2025$135.2 $— $135.2 
2024135.2 — 135.2 
Trade names - all other:   
2025$38.9 $(24.5)$14.4 
202439.6 (23.6)16.0 
Internal-use software:   
2025$245.7 $(180.9)$64.8 
2024214.4 (163.3)51.1 
Market access assets:
2025$13.2 $(12.7)$0.5 
202413.2 (12.5)0.7 
Total intangible assets:   
2025$700.5 $(392.2)$308.3 
2024666.0 (368.2)297.8 
Schedule of Amortization Expense, Intangible Assets
Amortization expense for other intangible assets is as follows (in millions):
 For the Year Ended December 31,
 202520242023
Amortization expense$28.3 $28.8 $32.5 
Schedule of Future Estimated Amortization Expense, Intangible Assets
Total estimated amortization expense for our other intangible assets for the next five years is as follows (in millions):
Year Ending December 31,Estimated
Amortization Expense
2026$27.4 
202720.2 
202813.6 
202911.6 
203010.6 
v3.25.4
Long-term Debt (Tables)
 12 Months Ended
Dec. 31, 2025
Debt Disclosure [Abstract]  
Schedule of Outstanding Long-term Debt
Our long-term debt outstanding consists of the following (in millions):
 As of December 31,
 20252024
Credit Agreement—
Advances under revolving credit facility$130.0 $20.0 
Bonds payable—
5.75% Senior Notes due 2025
— 99.8 
4.50% Senior Notes due 2028
792.0 788.4 
4.75% Senior Notes due 2030
787.0 784.2 
4.625% Senior Notes due 2031
393.6 392.5 
Other notes payable93.6 94.5 
Finance lease obligations294.6 318.4 
 2,490.8 2,497.8 
Less: Current portion(43.6)(138.6)
Long-term debt, net of current portion$2,447.2 $2,359.2 
Our notes payable consist of the following (in millions):
As of December 31,
20252024Current Interest Rates
Sale/leaseback transactions involving real estate accounted for as financings
$28.0 $28.0 
9.2% to 13.4%
Construction of new hospitals41.0 47.6 
5.0% to 6.3%
Software contracts24.6 18.9 
4.7% to 6.5%
Other notes payable$93.6 $94.5 
Schedule of Debt Maturities
The following chart shows scheduled principal payments due on long-term debt for the next five years and thereafter (in millions):
Year Ending December 31,Face AmountNet Amount
2026$43.6 $43.6 
2027177.2 177.2 
2028835.9 827.8 
202944.7 44.6 
2030850.2 837.1 
Thereafter566.9 560.5 
Total$2,518.5 $2,490.8 
Schedule of Redemption Prices for Senior Notes We may redeem the 2030 Notes, in whole or in part, at any time on or after February 1, 2025 at the redemption prices set forth below:
PeriodRedemption
Price*
2025102.375 %
2026101.583 %
2027100.792 %
2028 and thereafter100.000 %
* Expressed in percentage of principal amount
We may redeem the 2031 Notes, in whole or in part, at any time on or after April 1, 2026 at the redemption prices set forth below:
PeriodRedemption
Price*
2026102.313 %
2027101.542 %
2028100.771 %
2029 and thereafter100.000 %
* Expressed in percentage of principal amount
v3.25.4
Self-Insured Risks (Tables)
 12 Months Ended
Dec. 31, 2025
Insurance [Abstract]  
Schedule of Self-Insurance Reserves
The following table presents the changes in our self-insurance reserves (in millions):
202520242023
Balance at beginning of period, gross$194.8 $184.5 $175.1 
Less: Reinsurance receivables
(37.6)(36.4)(32.3)
Balance at beginning of period, net157.2 148.1 142.8 
Increase for the provision of current year claims67.5 59.1 54.7 
Decrease for the provision of prior year claims(6.2)(10.9)(10.5)
Payments related to current year claims(8.9)(6.9)(8.1)
Payments related to prior year claims(31.7)(32.2)(30.8)
Balance at end of period, net177.9 157.2 148.1 
Add: Reinsurance receivables
33.1 37.6 36.4 
Balance at end of period, gross$211.0 $194.8 $184.5 
v3.25.4
Redeemable Noncontrolling Interests (Tables)
 12 Months Ended
Dec. 31, 2025
Noncontrolling Interest [Abstract]  
Schedule of Redeemable Noncontrolling Interest
The following is a summary of the activity related to our Redeemable noncontrolling interests (in millions):
For the Year Ended December 31,
202520242023
Balance at beginning of period$56.5 $42.0 $35.6 
Net income attributable to noncontrolling interests
9.4 5.1 8.3 
Distributions declared(11.2)(10.2)(1.1)
Contribution to joint ventures— 18.0 — 
Change in fair value3.6 1.6 (0.8)
Balance at end of period$58.3 $56.5 $42.0 
Schedule of Reconciliation of Net Income Attributable to Noncontrolling Interests
The following table reconciles the net income attributable to nonredeemable Noncontrolling interests, as recorded in the shareholders’ equity section of the consolidated balance sheets, and the net income attributable to Redeemable noncontrolling interests, as recorded in the mezzanine section of the consolidated balance sheets, to the Net income attributable to noncontrolling interests presented in the consolidated statements of operations (in millions):
For the Year Ended December 31,
202520242023
Net income attributable to nonredeemable noncontrolling interests$183.5 $135.8 $102.7 
Net income attributable to redeemable noncontrolling interests9.4 5.1 8.3 
Net income attributable to noncontrolling interests$192.9 $140.9 $111.0 
v3.25.4
Fair Value Measurements (Tables)
 12 Months Ended
Dec. 31, 2025
Fair Value Disclosures [Abstract]  
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis
Our financial assets and liabilities that are measured at fair value on a recurring basis are as follows (in millions):
  Fair Value Measurements at Reporting Date Using
As of December 31, 2025Fair ValueQuoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)
Valuation Technique (1)
Equity securities$36.3 $20.3 $16.0 $— M
Available for sale debt securities:
U.S. government and agency securities40.4 40.4 — — M
Corporate bonds and notes69.1 — 69.1 — M
Redeemable noncontrolling interests58.3 — — 58.3 I
As of December 31, 2024     
Equity securities$130.9 $4.2 $126.7 $— M
Redeemable noncontrolling interests56.5 — — 56.5 I
(1)The two valuation techniques are: market approach (M) and income approach (I).
Schedule of Carrying Amounts and Estimated Fair Values, Financial Instruments The carrying amounts and estimated fair values for our other financial instruments are presented in the following table (in millions):
 As of December 31, 2025As of December 31, 2024
 Carrying AmountEstimated Fair ValueCarrying AmountEstimated Fair Value
Long-term debt:    
Advances under revolving credit facility$130.0 $130.0 $20.0 $20.0 
5.75% Senior Notes due 2025
— — 99.8 99.7 
4.50% Senior Notes due 2028
792.0 799.6 788.4 772.3 
4.75% Senior Notes due 2030
787.0 796.6 784.2 759.0 
4.625% Senior Notes due 2031
393.6 392.7 392.5 369.9 
Other notes payable93.6 93.6 94.5 94.5 
Financial commitments:    
Letters of credit— 46.3 — 36.3 
v3.25.4
Share-Based Payments (Tables)
 12 Months Ended
Dec. 31, 2025
Share-Based Payment Arrangement [Abstract]  
Schedule of Weighted-Average Assumptions Used to Determine Fair Value of Stock Options
The fair values of the options granted during the years ended December 31, 2025, 2024, and 2023 have been estimated at the grant date using the Black-Scholes option-pricing model with the following weighted-average assumptions:
 For the Year Ended December 31,
 202520242023
Expected volatility28.0 %27.9 %28.5 %
Risk-free interest rate4.1 %4.2 %4.2 %
Expected life (years)7.37.26.9
Dividend yield0.9 %1.0 %1.1 %
Schedule of Stock Option Activity
A summary of our stock option activity and related information is as follows:
 Shares
(In Thousands)		Weighted- Average Exercise Price per ShareWeighted- Average Remaining Life (Years)Aggregate Intrinsic Value
(In Millions)
Outstanding, December 31, 2024840$53.05   
Granted5198.45   
Exercised(180)37.55   
Outstanding, December 31, 202571160.27 5.2$32.6 
Exercisable, December 31, 202559156.11 4.529.6 
Schedule of Restricted Stock Activity
A summary of our issued restricted stock awards is as follows (share information in thousands):
 SharesWeighted-Average Grant Date Fair Value
Nonvested shares at December 31, 2024804$61.14 
Granted46773.92 
Vested(587)58.15 
Forfeited(16)74.85 
Nonvested shares at December 31, 202566872.38 
v3.25.4
Income Taxes (Tables)
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Schedule of Income Before Income Tax, Domestic and Foreign
The domestic and foreign components of Income from continuing operations before income tax expense are as follows (in millions):
 For the Year Ended December 31, 2025
United States$944.8 
Foreign8.2 
Income from continuing operations before income tax expense$953.0 
Schedule of Components of Income Tax Expense (Benefit)
The significant components of the Provision for income tax expense related to continuing operations are as follows (in millions):
 For the Year Ended December 31, 2025
Current: 
Federal$132.3 
State and local35.7 
Foreign2.6 
Total current expense170.6 
Deferred: 
Federal20.0 
State and local2.3 
Foreign— 
Total deferred expense22.3 
Total income tax expense related to continuing operations$192.9 
The significant components of the Provision for income tax expense related to continuing operations are as follows (in millions):
 For the Year Ended December 31,
 20242023
Current:
Federal$111.0 $101.7 
State and other28.5 26.6 
Total current expense139.5 128.3 
Deferred:
Federal8.6 (0.7)
State and other2.1 4.6 
Total deferred expense10.7 3.9 
Total income tax expense related to continuing operations$150.2 $132.2 
Schedule of Effective Income Tax Rate Reconciliation
A reconciliation of differences between the federal income tax at statutory rates and our actual income tax expense on our income from continuing operations, is presented below (in millions, except for percentages):
 For the Year Ended December 31, 2025
 Amount%
Tax expense at statutory rate$200.1 21.0 %
State and other income taxes, net of federal tax effect(1)
31.6 3.3 %
Changes in valuation allowance2.9 0.3 %
Noncontrolling interests(40.5)(4.2)%
Nontaxable or nondeductible items:
Share-based windfall tax benefits(12.5)(1.3)%
Nondeductible executive compensation10.1 1.0 %
Other1.9 0.2 %
Tax credits(2.5)(0.3)%
Foreign tax effects2.6 0.3 %
Other, net(0.8)(0.1)%
Income tax expense$192.9 20.2 %
(1) In 2025, state taxes in Florida, Tennessee, Pennsylvania, Massachusetts, California, and Virginia made up the majority (greater than 50 percent) of the tax effect of this category.
A reconciliation of differences between the federal income tax at statutory rates and our actual income tax expense on our income from continuing operations, which include federal, state, and other income taxes, is presented below:
 For the Year Ended December 31,
 20242023
Tax expense at statutory rate21.0 %21.0 %
Increase (decrease) in tax rate resulting from:
State and other income taxes, net of federal tax benefit3.9 %4.1 %
Increase in valuation allowance— %0.3 %
Noncontrolling interests(3.8)%(4.0)%
Share-based windfall tax benefits(1.0)%— %
Other, net(0.1)%0.4 %
Income tax expense20.0 %21.8 %
Schedule of Components of Deferred Tax Assets and Liabilities The significant components of our deferred tax assets and liabilities are presented in the following table (in millions):
 As of December 31,
 20252024
Deferred income tax assets:  
Net operating loss$5.5 $8.8 
Insurance reserve21.2 20.9 
Stock-based compensation22.2 24.0 
Revenue reserves8.5 8.0 
Operating lease liabilities21.3 22.5 
Other accruals28.8 29.4 
Tax credits19.5 17.0 
Total deferred income tax assets127.0 130.6 
Less: Valuation allowance(21.4)(21.0)
Net deferred income tax assets105.6 109.6 
Deferred income tax liabilities:  
Intangibles(66.4)(63.4)
Operating lease right-of-use assets(20.5)(21.1)
Property, net(27.1)(18.8)
Carrying value of partnerships(117.9)(111.2)
Other(0.5)(0.3)
Total deferred income tax liabilities(232.4)(214.8)
Net deferred income tax liabilities$(126.8)$(105.2)
Schedule of Income Tax Paid (Net of Refunds)
Income taxes paid (net of refunds) consisted of the following (in millions):
 For the Year Ended December 31, 2025
Federal$91.8 
State and local29.1 
Foreign3.1 
Income taxes paid (net of refunds)$124.0 
The amount of income tax payments and refunds are as follows (in millions):
 For the Year Ended December 31,
20242023
Income tax payments$164.5 $109.3 
Income tax refunds0.7 2.7 
v3.25.4
Earnings Per Common Share (Tables)
 12 Months Ended
Dec. 31, 2025
Earnings Per Share [Abstract]  
Schedule of Computation of Basic and Diluted Earnings per Common Share
The following table sets forth the computation of basic and diluted earnings per common share (in millions, except per share amounts):
 For the Year Ended December 31,
 202520242023
Basic:
Numerator:   
Income from continuing operations$760.1 $599.4 $475.0 
Less: Net income attributable to noncontrolling interests included in continuing operations(192.9)(140.9)(111.0)
Less: Income from continuing operations allocated to participating securities(1.5)(2.8)(2.4)
Income from continuing operations attributable to Encompass Health common shareholders565.7 455.7 361.6 
Loss from discontinued operations, net of tax, attributable to Encompass Health common shareholders(1.0)(2.8)(12.0)
Net income attributable to Encompass Health common shareholders$564.7 $452.9 $349.6 
Denominator:   
Basic weighted average common shares outstanding100.5 99.9 99.5 
Basic earnings per share attributable to Encompass Health common shareholders:
   
Continuing operations
$5.63 $4.56 $3.63 
Discontinued operations
(0.01)(0.03)(0.12)
Net income$5.62 $4.53 $3.51 
Diluted:
Numerator:
Income from continuing operations$760.1 $599.4 $475.0 
Less: Net income attributable to noncontrolling interests included in continuing operations(192.9)(140.9)(111.0)
Income from continuing operations attributable to Encompass Health common shareholders567.2 458.5 364.0 
Loss from discontinued operations, net of tax, attributable to Encompass Health common shareholders(1.0)(2.8)(12.0)
Net income attributable to Encompass Health common shareholders$566.2 $455.7 $352.0 
Denominator:   
Diluted weighted average common shares outstanding
102.2 102.2 101.3 
Diluted earnings per share attributable to Encompass Health common shareholders:
   
Continuing operations
$5.55 $4.49 $3.59 
Discontinued operations
(0.01)(0.03)(0.12)
Net income
$5.54 $4.46 $3.47 
Schedule of Reconciliation of Weighted Average Number of Shares Outstanding
The following table sets forth the reconciliation between basic weighted average common shares outstanding and diluted weighted average common shares outstanding (in millions):
For the Year Ended December 31,
202520242023
Basic weighted average common shares outstanding100.5 99.9 99.5 
Restricted stock awards, dilutive stock options, and restricted stock units
1.7 2.3 1.8 
Diluted weighted average common shares outstanding102.2 102.2 101.3 
v3.25.4
Segment Reporting (Tables)
 12 Months Ended
Dec. 31, 2025
Segment Reporting [Abstract]  
Schedule of Selected Financial Information of Reportable Segments
Selected financial information, including significant segment expenses, for our reportable segment is as follows (in millions):
For the Year Ended December 31,
202520242023
Net operating revenues$5,935.2 $5,373.2 $4,801.2 
Less:
Salaries and benefits3,115.9 2,901.0 2,600.1 
Other operating expenses886.0 785.2 709.3 
Supplies254.4 239.0 218.3 
Occupancy costs59.0 57.3 56.3 
General and administrative expenses173.8 156.1 146.5 
Net income attributable to noncontrolling interests192.9 148.2 113.2 
Other segment items(1)
(14.7)(17.3)(13.6)
Adjusted EBITDA$1,267.9 $1,103.7 $971.1 
(1)Includes interest income, investment gain or loss, and equity in net income of nonconsolidated affiliates.
Schedule of Reconciliation of Segment Adjusted EBITDA to Income from Continuing Operations Before Income Tax Expense
Segment reconciliation (in millions):
For the Year Ended December 31,
202520242023
Adjusted EBITDA$1,267.9 $1,103.7 $971.1 
Stock-based compensation(56.5)(48.3)(50.6)
Depreciation and amortization(327.9)(299.6)(273.9)
Loss on disposal or impairment of assets(2.7)(17.4)(9.8)
Loss on early extinguishment of debt— (0.6)— 
Interest expense and amortization of debt discounts and fees(123.2)(137.4)(143.5)
Net income attributable to noncontrolling interests192.9 140.9 111.0 
Change in fair market value of marketable securities2.5 1.0 0.7 
Asset impairment impact on noncontrolling interests— 7.3 — 
State regulatory change impact on noncontrolling interests— — 2.2 
Income from continuing operations before income tax expense$953.0 $749.6 $607.2 
Schedule of Reconciliation of Revenue from Segments to Consolidated
Additional detail regarding the revenues of our operating segment by service line follows (in millions):
For the Year Ended December 31,
202520242023
Net operating revenues:
Inpatient$5,756.3 $5,230.5 $4,693.8 
Other178.9 142.7 107.4 
Net operating revenues$5,935.2 $5,373.2 $4,801.2 
v3.25.4
Summary of Significant Accounting Policies - Additional Information (Details)
$ in Millions
 1 Months Ended 3 Months Ended 12 Months Ended
Dec. 31, 2025
USD ($)
hospital
state
Jul. 01, 2024
USD ($)
bed
Feb. 26, 2026
USD ($)
Mar. 31, 2026
USD ($)
Dec. 31, 2023
USD ($)
Dec. 31, 2025
USD ($)
hospital
state
Dec. 31, 2024
USD ($)
Dec. 31, 2023
USD ($)
Finite-Lived Intangible Assets [Line Items]                
Number of states in which entity operates | state 39         39    
Number of inpatient rehabilitation hospitals | hospital 173         173    
Number of inpatient rehabilitation hospitals, sole ownership | hospital 106         106    
Number of jointly owned inpatient rehabilitation hospitals | hospital 67         67    
Contributions from noncontrolling interests of consolidated affiliates           $ 1.8 $ 140.4 $ 68.3
Minimum accrual of loss contingency needed to accrue for related legal fees $ 5.0         5.0    
Advertising expense           $ 5.3 5.8 6.1
Gamma Knife                
Finite-Lived Intangible Assets [Line Items]                
Ownership percentage 50.00%         50.00%    
Proceeds from sale of equity method investments $ 17.9              
Forecast | Gamma Knife                
Finite-Lived Intangible Assets [Line Items]                
Proceeds from sale of equity method investments       $ 17.9        
Post tax gain       13.0        
Discontinued Operations, Disposed of by Means Other than Sale, Spinoff | Enhabit                
Finite-Lived Intangible Assets [Line Items]                
Legal costs           $ 1.2 2.9 $ 15.8
Discontinued Operations, Disposed of by Means Other than Sale, Spinoff | Enhabit | Subsequent Event                
Finite-Lived Intangible Assets [Line Items]                
Amount collected in full satisfaction of claims     $ 22.0          
Discontinued Operations, Disposed of by Means Other than Sale, Spinoff | Enhabit | Forecast                
Finite-Lived Intangible Assets [Line Items]                
After tax gain       $ 16.0        
Hospital in Augusta, Georgia | Corporate Joint Venture                
Finite-Lived Intangible Assets [Line Items]                
Number of beds | bed   70            
Contributions from noncontrolling interests of consolidated affiliates   $ 90.0            
Remaining noncontrolling interest (in percent)   50.00%            
Post-tax gain increasing capital in excess of par             $ 23.2  
ALJ, Adverse Ruling                
Finite-Lived Intangible Assets [Line Items]                
Amount of claims pending review 12.0         12.0    
Pending appeals additional reserve           7.0    
DAB, Adverse Ruling                
Finite-Lived Intangible Assets [Line Items]                
Amount of claims pending review 21.0         21.0    
Appealed claims denied 6.0         6.0    
Pending appeals additional reserve         $ 21.9 12.3    
United States District Court , Adverse Ruling                
Finite-Lived Intangible Assets [Line Items]                
Pending appeals additional reserve           4.6    
UPICs Audits                
Finite-Lived Intangible Assets [Line Items]                
Alleged overpayment amount $ 18.0         $ 18.0    
Payor Source | Revenue from Contract with Customer Benchmark | Medicare | RAC Audits                
Finite-Lived Intangible Assets [Line Items]                
Percentage of Medicare patient discharges (in percent)           1.00%    
Minimum                
Finite-Lived Intangible Assets [Line Items]                
Joint venture ownership percentage 50.00%         50.00%    
Maximum                
Finite-Lived Intangible Assets [Line Items]                
Joint venture ownership percentage 97.50%         97.50%    
v3.25.4
Summary of Significant Accounting Policies - Net Operating Revenues (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Disaggregation of Revenue [Line Items]      
Net operating revenues $ 5,935.2 $ 5,373.2 $ 4,801.2
Medicare      
Disaggregation of Revenue [Line Items]      
Net operating revenues 3,886.9 3,495.3 3,126.1
Medicare Advantage      
Disaggregation of Revenue [Line Items]      
Net operating revenues 974.4 903.7 776.1
Managed care      
Disaggregation of Revenue [Line Items]      
Net operating revenues 634.0 579.2 531.4
Medicaid      
Disaggregation of Revenue [Line Items]      
Net operating revenues 184.2 179.4 190.7
Other third-party payors      
Disaggregation of Revenue [Line Items]      
Net operating revenues 39.7 41.7 41.8
Workers’ compensation      
Disaggregation of Revenue [Line Items]      
Net operating revenues 29.6 27.8 25.8
Patients      
Disaggregation of Revenue [Line Items]      
Net operating revenues 17.2 15.9 14.9
Other income      
Disaggregation of Revenue [Line Items]      
Net operating revenues $ 169.2 $ 130.2 $ 94.4
v3.25.4
Summary of Significant Accounting Policies - Accounts Receivable (Details) - Payor Source - Accounts Receivable
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Concentration Risk [Line Items]    
Net operating revenues by payor source (percent) 100.00% 100.00%
Medicare | Third-Party Payor    
Concentration Risk [Line Items]    
Net operating revenues by payor source (percent) 54.90% 55.50%
Managed care and other discount plans, including Medicare Advantage | Third-Party Payor    
Concentration Risk [Line Items]    
Net operating revenues by payor source (percent) 35.60% 34.30%
Medicaid | Third-Party Payor    
Concentration Risk [Line Items]    
Net operating revenues by payor source (percent) 3.60% 4.00%
Other third-party payors | Third-Party Payor    
Concentration Risk [Line Items]    
Net operating revenues by payor source (percent) 2.80% 2.80%
Workers’ compensation | Third-Party Payor    
Concentration Risk [Line Items]    
Net operating revenues by payor source (percent) 2.50% 2.60%
Patients | Self-Pay    
Concentration Risk [Line Items]    
Net operating revenues by payor source (percent) 0.60% 0.80%
v3.25.4
Summary of Significant Accounting Policies - PP&E Useful Lives (Details)
Dec. 31, 2025
Buildings | Minimum  
Property, Plant and Equipment [Line Items]  
Useful life 10 years
Buildings | Maximum  
Property, Plant and Equipment [Line Items]  
Useful life 30 years
Leasehold improvements | Minimum  
Property, Plant and Equipment [Line Items]  
Useful life 2 years
Leasehold improvements | Maximum  
Property, Plant and Equipment [Line Items]  
Useful life 15 years
Vehicles  
Property, Plant and Equipment [Line Items]  
Useful life 5 years
Furniture, fixtures, and equipment | Minimum  
Property, Plant and Equipment [Line Items]  
Useful life 3 years
Furniture, fixtures, and equipment | Maximum  
Property, Plant and Equipment [Line Items]  
Useful life 10 years
v3.25.4
Summary of Significant Accounting Policies - Intangible Asset Useful Lives (Details)
Dec. 31, 2025
Certificates of need | Minimum  
Finite-Lived Intangible Assets [Line Items]  
Finite-lived intangible asset useful life 10 years
Certificates of need | Maximum  
Finite-Lived Intangible Assets [Line Items]  
Finite-lived intangible asset useful life 30 years
Licenses | Minimum  
Finite-Lived Intangible Assets [Line Items]  
Finite-lived intangible asset useful life 10 years
Licenses | Maximum  
Finite-Lived Intangible Assets [Line Items]  
Finite-lived intangible asset useful life 20 years
Noncompete agreements | Minimum  
Finite-Lived Intangible Assets [Line Items]  
Finite-lived intangible asset useful life 1 year
Noncompete agreements | Maximum  
Finite-Lived Intangible Assets [Line Items]  
Finite-lived intangible asset useful life 18 years
Trade Names | Minimum  
Finite-Lived Intangible Assets [Line Items]  
Finite-lived intangible asset useful life 10 years
Trade Names | Maximum  
Finite-Lived Intangible Assets [Line Items]  
Finite-lived intangible asset useful life 20 years
Internal-use software | Minimum  
Finite-Lived Intangible Assets [Line Items]  
Finite-lived intangible asset useful life 3 years
Internal-use software | Maximum  
Finite-Lived Intangible Assets [Line Items]  
Finite-lived intangible asset useful life 7 years
Market access assets  
Finite-Lived Intangible Assets [Line Items]  
Finite-lived intangible asset useful life 20 years
v3.25.4
Variable Interest Entities - Additional Information (Details) - Variable Interest Entity, Primary Beneficiary - entity
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Variable Interest Entity [Line Items]    
Number of consolidated limited partnership-like entities 8 8
Minimum    
Variable Interest Entity [Line Items]    
Ownership interest in the consolidated entities (percent) 50.00%  
Maximum    
Variable Interest Entity [Line Items]    
Ownership interest in the consolidated entities (percent) 75.00%  
v3.25.4
Variable Interest Entities - Carrying Amounts and Classification of Consolidated VIEs (Details) - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Dec. 31, 2022
Current assets:        
Cash and cash equivalents $ 72.2 $ 85.4 $ 69.1 $ 21.8
Accounts receivable 619.2 598.8    
Other current assets 129.9 122.7    
Total current assets 905.9 886.9    
Property and equipment, net 4,101.6 3,643.1    
Operating lease right-of-use assets 212.6 203.7    
Goodwill 1,317.6 1,284.0 $ 1,281.3 $ 1,263.2
Intangible assets, net 308.3 297.8    
Other long-term assets 243.7 219.2    
Total assets [1] 7,089.7 6,534.7    
Current liabilities:        
Current portion of long-term debt 43.6 138.6    
Accounts payable 178.2 171.0    
Accrued payroll 243.7 227.9    
Other current liabilities 289.6 245.8    
Total current liabilities 836.4 841.0    
Long-term debt, net of current portion 2,447.2 2,359.2    
Long-term operating lease liabilities 196.6 189.7    
Total liabilities [1] 3,813.9 3,685.5    
Variable Interest Entity, Primary Beneficiary        
Current assets:        
Cash and cash equivalents 1.6 0.4    
Accounts receivable 34.9 34.5    
Other current assets 4.7 9.6    
Total current assets 41.2 44.5    
Property and equipment, net 135.0 135.7    
Operating lease right-of-use assets 1.3 1.3    
Goodwill 15.9 15.9    
Intangible assets, net 0.8 1.0    
Other long-term assets 9.6 9.7    
Total assets 203.8 208.1    
Current liabilities:        
Current portion of long-term debt 1.0 1.0    
Accounts payable 6.6 6.2    
Accrued payroll 10.9 11.0    
Other current liabilities 19.0 12.7    
Total current liabilities 37.5 30.9    
Long-term debt, net of current portion 11.6 12.7    
Long-term operating lease liabilities 1.4 1.4    
Total liabilities $ 50.5 $ 45.0    
[1] Our consolidated assets as of December 31, 2025 and December 31, 2024 include total assets of variable interest entities of $203.8 million and $208.1 million, respectively, which cannot be used by us to settle the obligations of other entities. Our consolidated liabilities as of December 31, 2025 and December 31, 2024 include total liabilities of the variable interest entities of $50.5 million and $45.0 million, respectively. See Note 2, Variable Interest Entities.
v3.25.4
Cash and Marketable Securities - Components of Investments (Details) - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Dec. 31, 2022
Cash and Cash Equivalents [Line Items]        
Cash & Cash Equivalents $ 72.2 $ 85.4 $ 69.1 $ 21.8
Restricted Cash 30.7 37.7    
Restricted Marketable Securities 145.8 130.9    
Total 248.7 254.0    
Cash        
Cash and Cash Equivalents [Line Items]        
Cash & Cash Equivalents 72.2 85.4    
Restricted Cash 30.7 37.7    
Restricted Marketable Securities 0.0 0.0    
Total 102.9 123.1    
Equity securities        
Cash and Cash Equivalents [Line Items]        
Cash & Cash Equivalents 0.0 0.0    
Restricted Cash 0.0 0.0    
Restricted Marketable Securities 36.3 130.9    
Total 36.3 $ 130.9    
Available-for-sale debt securities: | U.S. government and agency securities        
Cash and Cash Equivalents [Line Items]        
Cash & Cash Equivalents 0.0      
Restricted Cash 0.0      
Restricted Marketable Securities 40.4      
Total 40.4      
Available-for-sale debt securities: | Corporate bonds and notes        
Cash and Cash Equivalents [Line Items]        
Cash & Cash Equivalents 0.0      
Restricted Cash 0.0      
Restricted Marketable Securities 69.1      
Total $ 69.1      
v3.25.4
Cash and Marketable Securities - Restricted Cash (Details) - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Restricted Cash and Cash Equivalent Item [Line Items]    
Restricted cash $ 30.7 $ 37.7
Affiliate cash    
Restricted Cash and Cash Equivalent Item [Line Items]    
Restricted cash 12.1 17.9
Self-insured captive funds    
Restricted Cash and Cash Equivalent Item [Line Items]    
Restricted cash $ 18.6 $ 19.8
v3.25.4
Cash and Marketable Securities - Additional Information (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Cash and Cash Equivalents [Line Items]      
Equity securities $ 36.3 $ 130.9  
Unrealized net gain on marketable securities 2.1 1.0 $ 1.3
Other Current Assets      
Cash and Cash Equivalents [Line Items]      
Equity securities 42.2 39.0  
Other Noncurrent Assets      
Cash and Cash Equivalents [Line Items]      
Equity securities $ 103.6 $ 91.9  
v3.25.4
Cash and Marketable Securities - Available-for-sale Debt Securities (Details)
$ in Millions
Dec. 31, 2025
USD ($)
Debt Securities, Available-for-Sale [Line Items]  
Total $ 108.9
Fair Value 109.5
U.S. government and agency securities  
Debt Securities, Available-for-Sale [Line Items]  
Total 40.2
Gross Unrealized Gains 0.2
Gross Unrealized Losses 0.0
Fair Value 40.4
Corporate bonds and notes  
Debt Securities, Available-for-Sale [Line Items]  
Total 68.7
Gross Unrealized Gains 0.5
Gross Unrealized Losses (0.1)
Fair Value $ 69.1
v3.25.4
Cash and Marketable Securities - Investing Information Related to Marketable Securities (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Investment information related to restricted marketable securities      
Proceeds from sales and maturities $ 32.3 $ 0.0 $ 0.0
v3.25.4
Cash and Marketable Securities - Scheduled Maturities of Investments in Debt Securities (Details)
$ in Millions
Dec. 31, 2025
USD ($)
Amortized Cost  
Due in one year or less $ 24.3
Due after one year through five years 74.2
Due after five years through ten years 4.9
Due after ten years 5.5
Total 108.9
Fair Value  
Due in one year or less 24.4
Due after one year through five years 74.6
Due after five years through ten years 4.9
Due after ten years 5.6
Total $ 109.5
v3.25.4
Accounts Receivable (Details) - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Current:    
Patient accounts receivable $ 613.4 $ 593.0
Other accounts receivable 5.8 5.8
Accounts receivable, current 619.2 598.8
Noncurrent patient accounts receivable 25.5 30.6
Accounts receivable $ 644.7 $ 629.4
v3.25.4
Property and Equipment - Components of Property and Equipment (Details) - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Components of Property and Equipment    
Property and equipment, net $ 4,101.6 $ 3,643.1
Land, Building, Improvements, Equipment, Vehicles and Furniture    
Components of Property and Equipment    
Property, plant, and equipment and finance lease right-of-use asset, before accumulated depreciation and amortization 5,956.8 5,349.1
Less: Accumulated depreciation and amortization (2,372.8) (2,111.9)
Property and equipment, net 3,584.0 3,237.2
Land    
Components of Property and Equipment    
Property, plant, and equipment and finance lease right-of-use asset, before accumulated depreciation and amortization 339.7 302.6
Buildings    
Components of Property and Equipment    
Property, plant, and equipment and finance lease right-of-use asset, before accumulated depreciation and amortization 4,325.7 3,859.3
Leasehold improvements    
Components of Property and Equipment    
Property, plant, and equipment and finance lease right-of-use asset, before accumulated depreciation and amortization 388.3 372.8
Vehicles    
Components of Property and Equipment    
Property, plant, and equipment and finance lease right-of-use asset, before accumulated depreciation and amortization 6.1 5.6
Furniture, fixtures, and equipment    
Components of Property and Equipment    
Property, plant, and equipment and finance lease right-of-use asset, before accumulated depreciation and amortization 897.0 808.8
Construction in progress    
Components of Property and Equipment    
Property and equipment, net $ 517.6 $ 405.9
v3.25.4
Property and Equipment - Additional Information (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Property, Plant and Equipment [Abstract]      
Percentage of property and equipment, net pledged to lenders under credit agreement (in percent) 68.00%    
Depreciation $ 273.9 $ 245.1 $ 215.7
Interest capitalized $ 17.6 $ 15.2 $ 13.5
v3.25.4
Leases - Additional Information (Details)
 12 Months Ended
Dec. 31, 2025
option
Lessee, Lease, Description [Line Items]  
Number of renewal options (or more) 1
Minimum  
Lessee, Lease, Description [Line Items]  
Operating and finance lease contract term 1 year
Maximum  
Lessee, Lease, Description [Line Items]  
Operating and finance lease contract term 25 years
v3.25.4
Leases - Components of Lease Costs (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Leases [Abstract]      
Operating lease cost $ 43.4 $ 41.7 $ 40.9
Finance lease cost:      
Amortization of right-of-use assets 25.7 25.7 25.7
Interest on lease liabilities 23.0 24.7 26.2
Total finance lease cost 48.7 50.4 51.9
Short-term and variable lease cost 1.7 2.3 2.9
Sublease income (3.2) (3.1) (3.3)
Total lease cost $ 90.6 $ 91.3 $ 92.4
v3.25.4
Leases - Schedule of Supplemental Balance Sheet Information Related to Leases (Details) - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Assets    
Operating lease $ 212.6 $ 203.7
Finance lease 195.9 221.5
Total leased assets 408.5 425.2
Current liabilities:    
Operating lease 26.5 26.3
Finance lease 26.5 23.7
Noncurrent liabilities:    
Operating lease 196.6 189.7
Finance lease 268.1 294.7
Total lease liabilities $ 517.7 $ 534.4
Finance lease, right-of-use asset, statement of financial position [Extensible List] Property and equipment, net Property and equipment, net
Finance lease, liability, current, statement of financial position [Extensible List] Current portion of long-term debt Current portion of long-term debt
Finance lease, liability, noncurrent, statement of financial position [Extensible List] Long-term debt, net of current portion Long-term debt, net of current portion
Finance lease right-of-use asset accumulated amortization $ 222.9 $ 197.3
v3.25.4
Leases - Schedule of Weighted Average Remaining Lease Term and Discount Rate (Details)
Dec. 31, 2025
Dec. 31, 2024
Weighted Average Remaining Lease Term    
Operating lease (in years) 9 years 8 months 12 days 9 years 8 months 12 days
Finance lease (in years) 8 years 10 months 24 days 9 years 9 months 18 days
Weighted Average Discount Rate    
Operating lease (in percent) 6.30% 6.40%
Finance lease (in percent) 7.70% 7.70%
v3.25.4
Leases - Maturities of Lease Liabilities (Details) - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Operating Leases    
2026 $ 39.5  
2027 42.9  
2028 41.9  
2029 27.5  
2030 21.0  
2031 and thereafter 132.4  
Total lease payments 305.2  
Less: Interest portion (82.1)  
Total lease liabilities 223.1  
Finance Leases    
2026 47.6  
2027 47.4  
2028 46.4  
2029 47.3  
2030 47.4  
2031 and thereafter 175.3  
Total lease payments 411.4  
Less: Interest portion (116.8)  
Total lease liabilities $ 294.6 $ 318.4
v3.25.4
Leases - Supplemental Cash Flow Information (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Cash paid for amounts included in the measurement of lease liabilities:      
Operating cash flows from operating leases $ 42.6 $ 40.7 $ 39.0
Operating cash flows from finance leases 23.6 25.5 27.1
Financing cash flows from finance leases 23.9 21.8 41.1
Right-of-use assets obtained in exchange for lease obligations:      
Operating leases 38.2 26.7 26.2
Finance leases $ 0.2 $ 0.0 $ 21.4
v3.25.4
Goodwill and Other Intangible Assets - Carrying Amounts of Goodwill (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Goodwill [Roll Forward]      
Goodwill, beginning balance $ 1,284.0 $ 1,281.3 $ 1,263.2
Acquisitions 33.6 2.7 18.1
Goodwill, ending balance $ 1,317.6 $ 1,284.0 $ 1,281.3
v3.25.4
Goodwill and Other Intangible Assets - Additional Information (Details) - USD ($)
Oct. 01, 2025
Oct. 01, 2024
Oct. 01, 2023
Dec. 31, 2025
Goodwill and Intangible Assets Disclosure [Abstract]        
Goodwill impairment loss $ 0 $ 0 $ 0  
Accumulated goodwill impairment       $ 0
v3.25.4
Goodwill and Other Intangible Assets - Other Intangible Assets (Details) - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Schedule of Intangible Assets by Major Class    
Gross Carrying Amount $ 700.5 $ 666.0
Accumulated Amortization (392.2) (368.2)
Net 308.3 297.8
Certificates of need    
Schedule of Intangible Assets by Major Class    
Gross Carrying Amount 137.0 131.4
Accumulated Amortization (54.9) (49.0)
Net 82.1 82.4
Licenses    
Schedule of Intangible Assets by Major Class    
Gross Carrying Amount 65.6 65.7
Accumulated Amortization (57.5) (56.4)
Net 8.1 9.3
Noncompete agreements    
Schedule of Intangible Assets by Major Class    
Gross Carrying Amount 64.9 66.5
Accumulated Amortization (61.7) (63.4)
Net 3.2 3.1
Trade name - Encompass    
Schedule of Intangible Assets by Major Class    
Gross Carrying Amount 135.2 135.2
Accumulated Amortization 0.0 0.0
Net 135.2 135.2
Trade Names    
Schedule of Intangible Assets by Major Class    
Gross Carrying Amount 38.9 39.6
Accumulated Amortization (24.5) (23.6)
Net 14.4 16.0
Internal-use Software    
Schedule of Intangible Assets by Major Class    
Gross Carrying Amount 245.7 214.4
Accumulated Amortization (180.9) (163.3)
Net 64.8 51.1
Market access assets    
Schedule of Intangible Assets by Major Class    
Gross Carrying Amount 13.2 13.2
Accumulated Amortization (12.7) (12.5)
Net $ 0.5 $ 0.7
v3.25.4
Goodwill and Other Intangible Assets - Amortization Expense (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]      
Amortization expense $ 28.3 $ 28.8 $ 32.5
v3.25.4
Goodwill and Other Intangible Assets - Estimated Future Amortization Expense (Details)
$ in Millions
Dec. 31, 2025
USD ($)
Schedule of Future Estimated Amortization Expense, Other Intangible Assets  
2026 $ 27.4
2027 20.2
2028 13.6
2029 11.6
2030 $ 10.6
v3.25.4
Long-term Debt - Long-term Debt Outstanding (Details) - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Oct. 31, 2020
Schedule of Outstanding Long-term Debt      
Finance lease obligations $ 294.6 $ 318.4  
Total debt and capital lease obligations 2,490.8 2,497.8  
Less: Current portion (43.6) (138.6)  
Long-term debt, net of current portion $ 2,447.2 $ 2,359.2  
Senior Notes | 5.75% Senior Notes due 2025      
Schedule of Outstanding Long-term Debt      
Debt instrument interest rate (in percent) 5.75% 5.75%  
Total debt $ 0.0 $ 99.8  
Senior Notes | 4.50% Senior Notes due 2028      
Schedule of Outstanding Long-term Debt      
Debt instrument interest rate (in percent) 4.50% 4.50%  
Total debt $ 792.0 $ 788.4  
Senior Notes | 4.75% Senior Notes due 2030      
Schedule of Outstanding Long-term Debt      
Debt instrument interest rate (in percent) 4.75% 4.75%  
Total debt $ 787.0 $ 784.2  
Senior Notes | 4.625% Senior Notes due 2031      
Schedule of Outstanding Long-term Debt      
Debt instrument interest rate (in percent) 4.625% 4.625% 4.625%
Total debt $ 393.6 $ 392.5  
Other notes payable      
Schedule of Outstanding Long-term Debt      
Total debt 93.6 94.5  
Advances under revolving credit facility      
Schedule of Outstanding Long-term Debt      
Total debt 130.0 20.0  
Advances under revolving credit facility | Line of Credit | The Credit Agreement      
Schedule of Outstanding Long-term Debt      
Total debt $ 130.0 $ 20.0  
v3.25.4
Long-term Debt - Scheduled Principal Payments Due on Long-term Debt (Details)
$ in Millions
Dec. 31, 2025
USD ($)
Face Amount  
Long-term Debt by Maturity  
2026 $ 43.6
2027 177.2
2028 835.9
2029 44.7
2030 850.2
Thereafter 566.9
Total 2,518.5
Net Amount  
Long-term Debt by Maturity  
2026 43.6
2027 177.2
2028 827.8
2029 44.6
2030 837.1
Thereafter 560.5
Total $ 2,490.8
v3.25.4
Long-term Debt - Additional Information (Details)
 1 Months Ended 12 Months Ended
Nov. 30, 2024
USD ($)
Aug. 31, 2024
USD ($)
May 31, 2020
USD ($)
Dec. 31, 2025
USD ($)
Sep. 30, 2025
USD ($)
Dec. 31, 2024
USD ($)
Oct. 31, 2020
USD ($)
Sep. 30, 2019
USD ($)
Sep. 30, 2015
USD ($)
Senior Notes                  
Debt Instrument [Line Items]                  
Redemption price, (in percent)       101.00%          
Proceeds from debt, net of issuance costs     $ 583,000,000            
Advances under revolving credit facility                  
Debt Instrument [Line Items]                  
Other notes payable       $ 130,000,000   $ 20,000,000      
The Credit Agreement                  
Debt Instrument [Line Items]                  
Amounts outstanding under letter of credit facility       $ 46,300,000   $ 36,300,000      
The Credit Agreement | Term loan facilities                  
Debt Instrument [Line Items]                  
Spread on variable rate (in percent)       0.50%          
Debt instrument, covenant, leverage ratio       2          
Available limit amount       $ 200,000,000          
The Credit Agreement | Term loan facilities | Minimum                  
Debt Instrument [Line Items]                  
Commitment fee (in percent)       0.25%          
The Credit Agreement | Term loan facilities | Maximum                  
Debt Instrument [Line Items]                  
Commitment fee (in percent)       0.30%          
Debt instrument, covenant, leverage ratio       4.50          
The Credit Agreement | Variable Rate Component One | Term loan facilities                  
Debt Instrument [Line Items]                  
Spread on variable rate (in percent)       1.25%          
The Credit Agreement | Advances under revolving credit facility                  
Debt Instrument [Line Items]                  
Credit facility borrowing capacity       $ 1,000,000,000          
Applicable interest rate under credit facility (in percent)       5.90%   7.80%      
The Credit Agreement | Advances under revolving credit facility | Line of Credit                  
Debt Instrument [Line Items]                  
Other notes payable       $ 130,000,000.0   $ 20,000,000.0      
The Credit Agreement | Letter of Credit                  
Debt Instrument [Line Items]                  
Credit facility borrowing capacity       $ 260,000,000          
5.75% Senior Notes due 2025 | Senior Notes                  
Debt Instrument [Line Items]                  
Debt instrument interest rate (in percent)       5.75%          
Aggregate principal amount                 $ 350,000,000
Debt redeemed $ 100,000,000 $ 150,000,000              
Effective interest rate (in percent)       6.00%          
4.50% Senior Notes due 2028 | Senior Notes                  
Debt Instrument [Line Items]                  
Other notes payable       $ 792,000,000.0   $ 788,400,000      
Debt instrument interest rate (in percent)       4.50%   4.50%      
Aggregate principal amount     $ 300,000,000         $ 500,000,000  
Effective interest rate (in percent)       5.00%          
Issuance of face value (in percent)     99.00%            
4.75% Senior Notes due 2030 | Senior Notes                  
Debt Instrument [Line Items]                  
Other notes payable       $ 787,000,000.0   $ 784,200,000      
Debt instrument interest rate (in percent)       4.75%   4.75%      
Aggregate principal amount     $ 300,000,000         $ 500,000,000  
Effective interest rate (in percent)       5.20%          
Issuance of face value (in percent)     98.50%            
4.625% Senior Notes due 2031 | Senior Notes                  
Debt Instrument [Line Items]                  
Other notes payable       $ 393,600,000   $ 392,500,000      
Debt instrument interest rate (in percent)       4.625%   4.625% 4.625%    
Aggregate principal amount             $ 400,000,000    
Effective interest rate (in percent)       5.00%          
5.75% Senior Notes due 2025 | Senior Notes                  
Debt Instrument [Line Items]                  
Other notes payable       $ 0   $ 99,800,000      
Debt instrument interest rate (in percent)       5.75%   5.75%      
Aggregate principal amount         $ 100,000,000        
v3.25.4
Long-term Debt - Senior Notes Redemption Prices (Details) - Senior Notes
 1 Months Ended 9 Months Ended 12 Months Ended
Oct. 31, 2020
May 31, 2020
Dec. 31, 2025
Debt Instrument, Redemption [Line Items]      
Redemption price, (in percent)     101.00%
4.75% Senior Notes due 2030 | Debt Instrument, Redemption, Period One      
Debt Instrument, Redemption [Line Items]      
Redemption price, (in percent)   102.375%  
4.75% Senior Notes due 2030 | Debt Instrument, Redemption, Period Two      
Debt Instrument, Redemption [Line Items]      
Redemption price, (in percent)   101.583%  
4.75% Senior Notes due 2030 | Debt Instrument, Redemption, Period Three      
Debt Instrument, Redemption [Line Items]      
Redemption price, (in percent)   100.792%  
4.75% Senior Notes due 2030 | Debt Instrument, Redemption, Period Four      
Debt Instrument, Redemption [Line Items]      
Redemption price, (in percent)   100.00%  
4.625% Senior Notes due 2031 | Debt Instrument, Redemption, Period One      
Debt Instrument, Redemption [Line Items]      
Redemption price, (in percent) 102.313%    
4.625% Senior Notes due 2031 | Debt Instrument, Redemption, Period Two      
Debt Instrument, Redemption [Line Items]      
Redemption price, (in percent) 101.542%    
4.625% Senior Notes due 2031 | Debt Instrument, Redemption, Period Three      
Debt Instrument, Redemption [Line Items]      
Redemption price, (in percent) 100.771%    
4.625% Senior Notes due 2031 | Debt Instrument, Redemption, Period Four      
Debt Instrument, Redemption [Line Items]      
Redemption price, (in percent) 100.00%    
v3.25.4
Long-term Debt - Schedule of Notes Payable (Details) - Other notes payable - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Debt Instrument [Line Items]    
Other notes payable $ 93.6 $ 94.5
Sale/leaseback transactions involving real estate accounted for as financings    
Debt Instrument [Line Items]    
Other notes payable $ 28.0 28.0
Sale/leaseback transactions involving real estate accounted for as financings | Minimum    
Debt Instrument [Line Items]    
Effective interest rate (in percent) 9.20%  
Sale/leaseback transactions involving real estate accounted for as financings | Maximum    
Debt Instrument [Line Items]    
Effective interest rate (in percent) 13.40%  
Construction of new hospitals    
Debt Instrument [Line Items]    
Other notes payable $ 41.0 47.6
Construction of new hospitals | Minimum    
Debt Instrument [Line Items]    
Effective interest rate (in percent) 5.00%  
Construction of new hospitals | Maximum    
Debt Instrument [Line Items]    
Effective interest rate (in percent) 6.30%  
Software contracts    
Debt Instrument [Line Items]    
Other notes payable $ 24.6 $ 18.9
Software contracts | Minimum    
Debt Instrument [Line Items]    
Effective interest rate (in percent) 4.70%  
Software contracts | Maximum    
Debt Instrument [Line Items]    
Effective interest rate (in percent) 6.50%  
v3.25.4
Self-Insured Risks - Additional Information (Details)
$ in Millions
 12 Months Ended
Dec. 31, 2025
USD ($)
claim
Dec. 31, 2024
USD ($)
claim
Dec. 31, 2023
USD ($)
Insurance [Abstract]      
Self-insured amount, per claim $ 6.0 $ 6.0 $ 6.0
Self-insured amount 45.0 45.0 $ 45.0
Self-insurance reserves included in other current liabilities $ 57.9 $ 56.2  
Number of individual claims covered by reserves | claim 1,100 1,100  
v3.25.4
Self-Insured Risks - Schedule of Changes in Self-insurance Reserves (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward]      
Balance at beginning of period, gross $ 194.8 $ 184.5 $ 175.1
Less: Reinsurance receivables (37.6) (36.4) (32.3)
Balance at beginning of period, net 157.2 148.1 142.8
Increase for the provision of current year claims 67.5 59.1 54.7
Decrease for the provision of prior year claims (6.2) (10.9) (10.5)
Payments related to current year claims (8.9) (6.9) (8.1)
Payments related to prior year claims (31.7) (32.2) (30.8)
Balance at end of period, net 177.9 157.2 148.1
Add: Reinsurance receivables 33.1 37.6 36.4
Balance at end of period, gross $ 211.0 $ 194.8 $ 184.5
v3.25.4
Redeemable Noncontrolling Interests - Redeemable Noncontrolling Interests Activity (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Redeemable Noncontrolling Interest, Equity, Carrying Amount [Roll Forward]      
Balance at beginning of period $ 56.5    
Net income attributable to noncontrolling interests 9.4 $ 5.1 $ 8.3
Distributions declared (164.1) (121.3) (110.0)
Balance at end of period 58.3 56.5  
Redeemable Noncontrolling Interest      
Redeemable Noncontrolling Interest, Equity, Carrying Amount [Roll Forward]      
Balance at beginning of period 56.5 42.0 35.6
Net income attributable to noncontrolling interests 9.4 5.1 8.3
Distributions declared (11.2) (10.2) (1.1)
Contribution to joint ventures 0.0 18.0 0.0
Change in fair value 3.6 1.6 (0.8)
Balance at end of period $ 58.3 $ 56.5 $ 42.0
v3.25.4
Redeemable Noncontrolling Interests - Reconciliation of Noncontrolling Interests (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Noncontrolling Interest [Abstract]      
Net income attributable to nonredeemable noncontrolling interests $ 183.5 $ 135.8 $ 102.7
Net income attributable to redeemable noncontrolling interests 9.4 5.1 8.3
Net income attributable to noncontrolling interests $ 192.9 $ 140.9 $ 111.0
v3.25.4
Fair Value Measurements - Schedule of Financial Assets and Liabilities Measured on a Recurring Basis (Details) - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Equity securities $ 36.3 $ 130.9
Fair Value 109.5  
Redeemable noncontrolling interests 58.3 56.5
U.S. government and agency securities    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Fair Value 40.4  
Corporate bonds and notes    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Fair Value 69.1  
Quoted Prices in Active Markets for Identical Assets (Level 1)    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Equity securities 20.3 4.2
Redeemable noncontrolling interests 0.0 0.0
Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. government and agency securities    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Fair Value 40.4  
Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate bonds and notes    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Fair Value 0.0  
Significant Other Observable Inputs (Level 2)    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Equity securities 16.0 126.7
Redeemable noncontrolling interests 0.0 0.0
Significant Other Observable Inputs (Level 2) | U.S. government and agency securities    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Fair Value 0.0  
Significant Other Observable Inputs (Level 2) | Corporate bonds and notes    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Fair Value 69.1  
Significant Unobservable Inputs (Level 3)    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Equity securities 0.0 0.0
Redeemable noncontrolling interests 58.3 $ 56.5
Significant Unobservable Inputs (Level 3) | U.S. government and agency securities    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Fair Value 0.0  
Significant Unobservable Inputs (Level 3) | Corporate bonds and notes    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Fair Value $ 0.0  
v3.25.4
Fair Value Measurements - Schedule of Carrying Amounts and Estimated Fair Values of Financial Instruments (Details) - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Oct. 31, 2020
Carrying Amount | Other notes payable      
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]      
Carrying amounts and estimated fair values of financial instruments $ 93.6 $ 94.5  
Estimated Fair Value | Other notes payable      
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]      
Carrying amounts and estimated fair values of financial instruments $ 93.6 $ 94.5  
5.75% Senior Notes due 2025 | Senior Notes      
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]      
Debt instrument interest rate (in percent) 5.75% 5.75%  
5.75% Senior Notes due 2025 | Carrying Amount | Senior Notes      
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]      
Carrying amounts and estimated fair values of financial instruments $ 0.0 $ 99.8  
5.75% Senior Notes due 2025 | Estimated Fair Value | Senior Notes      
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]      
Carrying amounts and estimated fair values of financial instruments $ 0.0 $ 99.7  
4.50% Senior Notes due 2028 | Senior Notes      
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]      
Debt instrument interest rate (in percent) 4.50% 4.50%  
4.50% Senior Notes due 2028 | Carrying Amount | Senior Notes      
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]      
Carrying amounts and estimated fair values of financial instruments $ 792.0 $ 788.4  
4.50% Senior Notes due 2028 | Estimated Fair Value | Senior Notes      
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]      
Carrying amounts and estimated fair values of financial instruments $ 799.6 $ 772.3  
4.75% Senior Notes due 2030 | Senior Notes      
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]      
Debt instrument interest rate (in percent) 4.75% 4.75%  
4.75% Senior Notes due 2030 | Carrying Amount | Senior Notes      
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]      
Carrying amounts and estimated fair values of financial instruments $ 787.0 $ 784.2  
4.75% Senior Notes due 2030 | Estimated Fair Value | Senior Notes      
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]      
Carrying amounts and estimated fair values of financial instruments $ 796.6 $ 759.0  
4.625% Senior Notes due 2031 | Senior Notes      
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]      
Debt instrument interest rate (in percent) 4.625% 4.625% 4.625%
4.625% Senior Notes due 2031 | Carrying Amount | Senior Notes      
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]      
Carrying amounts and estimated fair values of financial instruments $ 393.6 $ 392.5  
4.625% Senior Notes due 2031 | Estimated Fair Value | Senior Notes      
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]      
Carrying amounts and estimated fair values of financial instruments 392.7 369.9  
Advances under revolving credit facility | Carrying Amount      
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]      
Carrying amounts and estimated fair values of financial instruments 130.0 20.0  
Advances under revolving credit facility | Estimated Fair Value      
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]      
Carrying amounts and estimated fair values of financial instruments 130.0 20.0  
Letter of Credit | Carrying Amount      
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]      
Carrying amounts and estimated fair values of financial instruments 0.0 0.0  
Letter of Credit | Estimated Fair Value      
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]      
Carrying amounts and estimated fair values of financial instruments $ 46.3 $ 36.3  
v3.25.4
Share-Based Payments - Additional Information (Details) - USD ($)
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
May 01, 2025
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Share-based compensation expense $ 56,500,000 $ 48,300,000 $ 50,600,000  
Weighted-average fair value per share (in dollars per share) $ 35.22 $ 26.14 $ 19.23  
Unrecognized compensation cost $ 200,000      
Intrinsic value of stock options exercised 14,600,000 $ 4,000,000.0 $ 2,500,000  
Stock Options        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Share-based compensation expense $ 1,800,000 1,900,000 2,500,000  
Expiration period 10 years      
Vesting period 3 years      
Weighted-average recognition period for unrecognized compensation cost 21 months      
Restricted Stock        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Share-based compensation expense $ 53,200,000 $ 44,900,000 $ 46,600,000  
Weighted-average recognition period for unrecognized compensation cost 21 months      
Award requisite service period 3 years      
Weighted-average fair value per share of awards granted (in dollars per share) $ 73.92 $ 61.67 $ 65.20  
Unrecognized compensation cost related to unvested restricted stock $ 40,200,000      
Fair value of vested shares $ 55,700,000 $ 33,700,000 $ 24,300,000  
Awards issued during period (in shares) 467,000      
Restricted Stock Units (RSUs) | Non-employee Board Of Directors        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Weighted-average fair value per share of awards granted (in dollars per share) $ 115.94 $ 83.42 $ 63.00  
Awards issued during period (in shares) 15,060 23,509 32,365  
Compensation expense $ 1,500,000 $ 1,500,000 $ 1,500,000  
Unrecognized compensation cost $ 0      
Restricted Stock Units (RSUs) | Former non-employee Directors        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Awards issued during period (in shares) 262,238      
Dividend Equivalent, RSU | Non-employee Board Of Directors        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Awards issued during period (in shares) 3,569 5,707 7,518  
Dividend Equivalent, RSU | Former non-employee Directors        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Awards issued during period (in shares) 269,020 314,988    
Fair value of shares issued $ 26,200,000 $ 29,100,000    
2016 Omnibus Performance Incentive Plan        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Shares authorized for grant under the plan (in shares) 16,860,765      
2025 Omnibus Performance Incentive Plan        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Shares authorized for grant under the plan (in shares)       12,000,000
Continuing Operations        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Share-based compensation expense $ 56,500,000 $ 48,300,000 $ 50,600,000  
v3.25.4
Share-Based Payments - Weighted-average Assumptions (Details) - Stock Options
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Schedule of Weighted Average Assumptions Used to Determine Fair Value of Stock Options      
Expected volatility 28.00% 27.90% 28.50%
Risk-free interest rate 4.10% 4.20% 4.20%
Expected life (years) 7 years 3 months 18 days 7 years 2 months 12 days 6 years 10 months 24 days
Dividend yield 0.90% 1.00% 1.10%
v3.25.4
Share-Based Payments - Stock Option Activity (Details)
$ / shares in Units, shares in Thousands, $ in Millions
 12 Months Ended
Dec. 31, 2025
USD ($)
$ / shares
shares
Shares  
Outstanding, beginning (in shares) | shares 840
Granted (in shares) | shares 51
Exercised (in shares) | shares (180)
Outstanding, ending (in shares) | shares 711
Exercisable, ending (in shares) | shares 591
Weighted- Average Exercise Price per Share  
Outstanding, beginning (in dollars per share) | $ / shares $ 53.05
Granted (in dollars per share) | $ / shares 98.45
Exercised (in dollars per share) | $ / shares 37.55
Outstanding, ending (in dollars per share) | $ / shares 60.27
Exercisable, ending (in dollars per share) | $ / shares $ 56.11
Weighted- Average Remaining Life (Years)  
Outstanding, weighted-average remaining life (years) 5 years 2 months 12 days
Exercisable, weighted-average remaining life (years), 4 years 6 months
Aggregate Intrinsic Value  
Outstanding, aggregate intrinsic value | $ $ 32.6
Exercisable, aggregate intrinsic value | $ $ 29.6
v3.25.4
Share-Based Payments - Summary of Restricted Stock Awards (Details) - Restricted Stock - $ / shares
shares in Thousands
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Shares      
Nonvested shares, beginning balance (in shares) 804    
Granted (in shares) 467    
Vested (in shares) (587)    
Forfeited (in shares) (16)    
Nonvested shares, ending balance (in shares) 668 804  
Weighted-Average Grant Date Fair Value      
Nonvested shares, beginning balance (in dollar per share) $ 61.14    
Granted (in dollar per share) 73.92 $ 61.67 $ 65.20
Vested (in dollar per share) 58.15    
Forfeited (in dollar per share) 74.85    
Nonvested shares, ending balance (in dollar per share) $ 72.38 $ 61.14  
v3.25.4
Employee Benefit Plans (Details)
$ in Millions
 12 Months Ended
Dec. 31, 2025
USD ($)
yr
Dec. 31, 2024
USD ($)
Dec. 31, 2023
USD ($)
Defined Contribution Plan Disclosure [Line Items]      
Company healthcare plan costs, net of employee payments $ 252.2 $ 227.4 $ 186.2
Employer contributions 35.6 32.1 31.3
Employer contributions funded by forfeited accounts 2.7 2.9 1.1
Payments under the senior management bonus program $ 30.6 $ 28.3 $ 27.9
Encompass Health Retirement Investment Plan      
Defined Contribution Plan Disclosure [Line Items]      
Contribution as percentage of salary allowed under the plan (in percent) 100.00%    
Age requirement to participate in the Plan | yr 21    
Employer matching contribution (in percent) 50.00%    
Vesting percentage in employer contributions (in percent) 6.00%    
Vesting percentage 100.00%    
Vesting period 3 years    
v3.25.4
Income Taxes - Schedule of Income Before Income Tax, Domestic and Foreign (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Income Tax Disclosure [Abstract]      
United States $ 944.8    
Foreign 8.2    
Income from continuing operations before income tax expense $ 953.0 $ 749.6 $ 607.2
v3.25.4
Income Taxes - Components of Provision for Income Tax Expense (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Current:      
Federal $ 132.3 $ 111.0 $ 101.7
State and local 35.7 28.5 26.6
Foreign 2.6    
Total current expense 170.6 139.5 128.3
Deferred:      
Federal 20.0 8.6 (0.7)
State and local 2.3 2.1 4.6
Foreign 0.0    
Total deferred expense 22.3 10.7 3.9
Total income tax expense related to continuing operations $ 192.9 $ 150.2 $ 132.2
v3.25.4
Income Taxes - Reconciliation of Effective Income Tax Rate (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Amount      
Tax expense at statutory rate $ 200.1    
State and other income taxes, net of federal tax effect 31.6    
Changes in valuation allowance 2.9    
Noncontrolling interests (40.5)    
Share-based windfall tax benefits (12.5)    
Nondeductible executive compensation 10.1    
Other 1.9    
Tax credits (2.5)    
Foreign tax effects 2.6    
Other, net (0.8)    
Total income tax expense related to continuing operations $ 192.9 $ 150.2 $ 132.2
Percent      
Tax expense at statutory rate 21.00% 21.00% 21.00%
State and other income taxes, net of federal tax effect 3.30% 3.90% 4.10%
Changes in valuation allowance 0.30% 0.00% 0.30%
Noncontrolling interests (4.20%) (3.80%) (4.00%)
Share-based windfall tax benefits (1.30%) (1.00%) 0.00%
Nondeductible executive compensation 1.00%    
Other 0.20%    
Tax credits (0.30%)    
Foreign tax effects 0.30%    
Other, net (0.10%) (0.10%) 0.40%
Income tax expense 20.20% 20.00% 21.80%
v3.25.4
Income Taxes - Deferred Tax Asset and Liabilities (Details) - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Deferred income tax assets:    
Net operating loss $ 5.5 $ 8.8
Insurance reserve 21.2 20.9
Stock-based compensation 22.2 24.0
Revenue reserves 8.5 8.0
Operating lease liabilities 21.3 22.5
Other accruals 28.8 29.4
Tax credits 19.5 17.0
Total deferred income tax assets 127.0 130.6
Less: Valuation allowance (21.4) (21.0)
Net deferred income tax assets 105.6 109.6
Deferred income tax liabilities:    
Intangibles (66.4) (63.4)
Operating lease right-of-use assets (20.5) (21.1)
Property, net (27.1) (18.8)
Carrying value of partnerships (117.9) (111.2)
Other (0.5) (0.3)
Total deferred income tax liabilities (232.4) (214.8)
Net deferred income tax liabilities $ (126.8) $ (105.2)
v3.25.4
Income Taxes - Additional Information (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Valuation Allowance [Line Items]    
Changes to valuation allowance during the period $ 0.4 $ (7.4)
Remaining valuation allowance 21.4 $ 21.0
Additional current deductions 84.0  
Cash tax savings 22.0  
State    
Valuation Allowance [Line Items]    
Net operating loss $ 4.2  
v3.25.4
Income Taxes - Schedule of Income Tax Paid (Details)
$ in Millions
 12 Months Ended
Dec. 31, 2025
USD ($)
Income Tax Disclosure [Abstract]  
Federal $ 91.8
State and local 29.1
Foreign 3.1
Income taxes paid (net of refunds) $ 124.0
v3.25.4
Income Taxes - Differences Between the Federal Income Tax at Statutory Rates and Income Tax Expense (Details)
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Income Tax Disclosure [Abstract]      
Tax expense at statutory rate 21.00% 21.00% 21.00%
State and other income taxes, net of federal tax effect 3.30% 3.90% 4.10%
Increase in valuation allowance 0.30% 0.00% 0.30%
Noncontrolling interests (4.20%) (3.80%) (4.00%)
Share-based windfall tax benefits (1.30%) (1.00%) 0.00%
Other, net (0.10%) (0.10%) 0.40%
Income tax expense 20.20% 20.00% 21.80%
v3.25.4
Income Taxes - Schedule of Amount of Income Tax Payments and Refunds (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2024
Dec. 31, 2023
Income Tax Disclosure [Abstract]    
Income tax payments $ 164.5 $ 109.3
Income tax refunds $ 0.7 $ 2.7
v3.25.4
Earnings Per Common Share - Schedule of Computation of Basic and Diluted Earnings per Common Share (Details) - USD ($)
$ / shares in Units, shares in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Numerator:      
Income from continuing operations $ 760.1 $ 599.4 $ 475.0
Less: Net income attributable to noncontrolling interests included in continuing operations (192.9) (140.9) (111.0)
Less: Income from continuing operations allocated to participating securities (1.5) (2.8) (2.4)
Income from continuing operations attributable to Encompass Health common shareholders 565.7 455.7 361.6
Loss from discontinued operations, net of tax, attributable to Encompass Health common shareholders (1.0) (2.8) (12.0)
Net income attributable to Encompass Health common shareholders $ 564.7 $ 452.9 $ 349.6
Denominator:      
Basic weighted average common shares outstanding (in shares) 100.5 99.9 99.5
Basic earnings per share attributable to Encompass Health common shareholders:      
Continuing operations (in dollars per share) $ 5.63 $ 4.56 $ 3.63
Discontinued operations (in dollars per share) (0.01) (0.03) (0.12)
Net income (in dollars per share) $ 5.62 $ 4.53 $ 3.51
Numerator:      
Income from continuing operations $ 760.1 $ 599.4 $ 475.0
Less: Net income attributable to noncontrolling interests included in continuing operations (192.9) (140.9) (111.0)
Income from continuing operations attributable to Encompass Health common shareholders 567.2 458.5 364.0
Loss from discontinued operations, net of tax, attributable to Encompass Health common shareholders (1.0) (2.8) (12.0)
Net income attributable to Encompass Health common shareholders $ 566.2 $ 455.7 $ 352.0
Denominator:      
Diluted weighted average common shares outstanding (in shares) 102.2 102.2 101.3
Diluted earnings per share attributable to Encompass Health common shareholders:      
Continuing operations (in dollars per share) $ 5.55 $ 4.49 $ 3.59
Discontinued operations (in dollars per share) (0.01) (0.03) (0.12)
Net income (in dollars per share) $ 5.54 $ 4.46 $ 3.47
v3.25.4
Earnings per Common Share - Reconciliation Between Basic and Diluted Weighted-average Common Shares Outstanding (Details) - shares
shares in Millions
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Earnings Per Share [Abstract]      
Basic weighted average common shares outstanding (in shares) 100.5 99.9 99.5
Restricted stock awards, dilutive stock options, and restricted stock units (in shares) 1.7 2.3 1.8
Diluted weighted average common shares outstanding (in shares) 102.2 102.2 101.3
v3.25.4
Earnings Per Common Share - Additional Information (Details) - USD ($)
 3 Months Ended 7 Months Ended 12 Months Ended 13 Months Ended 25 Months Ended
Sep. 30, 2025
Sep. 30, 2024
Sep. 30, 2022
Jan. 31, 2026
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Jul. 31, 2025
Jul. 31, 2024
Jul. 24, 2024
Oct. 28, 2013
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]                      
Antidilutive shares excluded from computation of diluted weighted-average shares (in shares)         0 0 300,000        
Dividends declared on common stock (in dollars per share) $ 0.19 $ 0.17 $ 0.15   $ 0.72 $ 0.64 $ 0.60 $ 0.17 $ 0.15    
Cash dividends paid per common share (in dollars per share)               $ 0.17 $ 0.15    
Subsequent Event                      
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]                      
Dividends declared on common stock (in dollars per share)       $ 0.19              
Cash dividends paid per common share (in dollars per share)       $ 0.19              
Common Stock                      
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]                      
Common stock repurchase authorization                   $ 500,000,000 $ 200,000,000
Common stock remaining of stock repurchase authorized         $ 332,000,000            
Stock repurchased (in shares)         1,500,000 400,000          
Stock repurchased         $ 158,000,000.0 $ 31,100,000          
Common stock repurchased (in shares)             0        
v3.25.4
Contingencies and Other Commitments (Details)
$ in Millions
Dec. 31, 2025
USD ($)
Commitments and Contingencies Disclosure [Abstract]  
2026 $ 62.9
2027 38.9
2028 35.8
2029 30.3
2030 27.4
Thereafter $ 37.3
v3.25.4
Segment Reporting - Additional Information (Details)
 12 Months Ended
Dec. 31, 2025
segment
Segment Reporting [Abstract]  
Number of operating segments 1
Number of reportable segments 1
v3.25.4
Segment Reporting - Selected Financial Information of Reportable Segments (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Segment Reporting Information [Line Items]      
Net operating revenues $ 5,935.2 $ 5,373.2 $ 4,801.2
Less:      
Salaries and benefits 3,115.9 2,901.0 2,600.1
Other operating expenses 888.7 802.6 719.1
Supplies 254.4 239.0 218.3
Occupancy costs 59.0 57.3 56.3
General and administrative expenses 236.2 209.2 201.7
Net income attributable to noncontrolling interests 192.9 140.9 111.0
Adjusted EBITDA 1,267.9 1,103.7 971.1
Inpatient Rehabilitation      
Segment Reporting Information [Line Items]      
Net operating revenues 5,935.2 5,373.2 4,801.2
Less:      
Salaries and benefits 3,115.9 2,901.0 2,600.1
Other operating expenses 886.0 785.2 709.3
Supplies 254.4 239.0 218.3
Occupancy costs 59.0 57.3 56.3
General and administrative expenses 173.8 156.1 146.5
Net income attributable to noncontrolling interests 192.9 148.2 113.2
Other segment items (14.7) (17.3) (13.6)
Adjusted EBITDA $ 1,267.9 $ 1,103.7 $ 971.1
v3.25.4
Segment Reporting - Reconciliation of Adjusted EBITDA (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Segment Reporting [Abstract]      
Adjusted EBITDA $ 1,267.9 $ 1,103.7 $ 971.1
Stock-based compensation (56.5) (48.3) (50.6)
Depreciation and amortization (327.9) (299.6) (273.9)
Loss on disposal or impairment of assets (2.7) (17.4) (9.8)
Loss on early extinguishment of debt 0.0 (0.6) 0.0
Interest expense and amortization of debt discounts and fees (123.2) (137.4) (143.5)
Net income attributable to noncontrolling interests 192.9 140.9 111.0
Change in fair market value of marketable securities 2.5 1.0 0.7
Asset impairment impact on noncontrolling interests 0.0 7.3 0.0
State regulatory change impact on noncontrolling interests 0.0 0.0 2.2
Income from continuing operations before income tax expense $ 953.0 $ 749.6 $ 607.2
v3.25.4
Segment Reporting - Revenues of Operating Segments by Service Line (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Segment Reporting, Revenue Reconciling Item [Line Items]      
Net operating revenues $ 5,935.2 $ 5,373.2 $ 4,801.2
Inpatient      
Segment Reporting, Revenue Reconciling Item [Line Items]      
Net operating revenues 5,756.3 5,230.5 4,693.8
Other      
Segment Reporting, Revenue Reconciling Item [Line Items]      
Net operating revenues $ 178.9 $ 142.7 $ 107.4