Encompass Health Corporation EHC is expanding its inpatient rehabilitation footprint in Montgomery County, TX, through two projects aimed at the greater Houston market. The company plans a 24-bed hospital in Conroe, its first small-format inpatient rehabilitation facility, which will operate as a satellite of the existing hospital in The Woodlands and is expected to open in late 2027.
EHC will also build a new 60-bed replacement hospital on its current Woodlands campus, with an opening targeted for 2029. The replacement facility will have private rooms and upgraded amenities, while construction is designed to keep the existing hospital operating without interruption over time.
A small-format hospital is a smaller inpatient rehabilitation facility linked operationally to an existing Encompass Health hospital. Rather than building another full-scale site, EHC can use the parent hospital’s management, referral relationships, payer contracts and other infrastructure to reach nearby growth markets. The model can extend EHC’s reach with a lighter footprint, support a hub-and-spoke strategy and bring services closer to patients as demand grows.
The Texas projects add to a broader capacity buildout. Through the first half of 2026, Encompass Health opened three hospitals totaling 139 beds and added 54 beds at existing facilities. It expects eight new hospitals totaling 389 beds in 2026, plus 150 to 200 beds at existing sites.
The expansion requires meaningful spending. EHC expects 2026 capital expenditures of roughly $920 million to $995 million, including $695 million to $755 million for growth capacity and replacement hospitals. Near term, that weighs on free cash flow and creates ramp-up costs, but added beds should eventually support patient volumes and revenue growth.
Price Performance
Shares of Encompass Health have gained 14.9% in the year-to-date period compared with the 20% growth of the industry.
Zacks Rank and Key Picks
Encompass Health currently has a Zacks Rank #3 (Hold).
Enhancing the array of healthcare options, promising stocks in the broader Medical sector include Tenet Healthcare Corporation THC, UnitedHealth Group Incorporated UNH and Aveanna Healthcare Holdings Inc. AVAH. While Tenet Healthcare sports a Zacks Rank #1 (Strong Buy) now, UnitedHealth and Aveanna Healthcare carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Tenet Healthcare’s 2026 bottom line suggests 25.4% year-over-year growth. THC has witnessed seven upward estimate revisions over the past 60 days against no movement in the opposite direction. Its earnings beat estimates in each of the past four quarters, with an average surprise of 22.7%.
The Zacks Consensus Estimate for UnitedHealth’s full-year 2026 earnings indicates a 21.4% year-over-year increase. UNH’s earnings beat estimates in each of the past four quarters, with an average surprise of 12.1%. The consensus mark for 2026 revenues is pegged at $446.78 billion.
The Zacks Consensus Estimate for Aveanna Healthcare’s 2026 full-year earnings implies a 36.7% jump from the year-ago reported figure. AVAH’s earnings beat estimates in each of the past four quarters, with an average surprise of 49.3%. The consensus mark for its current-year revenues is pegged at $2.69 billion, which indicates a 10.6% year-over-year increase.
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Encompass Health Corporation (EHC): Free Stock Analysis Report
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