Encompass Health Corporation

Good morning, everyone, and welcome to Encompass Health's third quarter 2026 earnings conference call. At this time, I would like to inform all participants that their lines will be in a listen-only mode. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, please press star 1 on your telephone keypad. Thank you, Operator, and good morning, everyone.

Thank you for joining Encompass Health's third quarter 2026 earnings call. Before we begin, if you do not already have a copy, the third quarter earnings release, supplemental information, and related form 8K filed with the SEC are available on our website at encompasshealth.com. On page two of the supplemental information, you will find the safe harbor statements which are also set forth in greater detail on the last page of the earnings release. During the poll, we will make forward-looking statements such as guidance and growth projections which are subject to risks and uncertainties, many of which are beyond our control. Certain risks and uncertainties, like those relating to regulatory developments as well as volume, bad debt, and cost trends, that could cause actual results to differ materially from our projections, estimates, and expectations are discussed in the company's SEC filings, including the earnings release and related Form 8K. The Form 10K for the year ended December 31st, 2025. And the Form 10Q for the quarters ended March 31st, 2026, June 30th, 2026. and September 30th, 2026 when filed. We encourage you to read them. Your caution not to place undue reliance on the estimates, projections, guidance and other forward-looking information presented, which are based on current estimates of future events and speak only as of today. We do not undertake a duty to update these forward-looking statements. Our supplemental information and discussion on this call will include certain non-GAAP financial measures. For such measures, reconciliation to the most directly comparable GAAP measure is available at the end of the supplemental information, at the end of the earnings release, and as part of the Form 8K filed yesterday with the SEC, all of which are available on our website. I would like to remind everyone that we will adhere to the one question and one follow-up question rule to allow everyone to submit a question. If you have additional questions, please feel free to put yourself back in the queue. With that, I'll turn the call over to President and Chief Executive Officer Mark Tarr. Mark, thank you, and good morning, everyone.

We're very pleased with our third quarter results. As revenue grew 8.9%, Adjusted EBITDA increased 15.5%, and Adjusted EPS increased 23.6%. For the first nine months of 2026, revenue rose 9.2%, Adjusted EBITDA increased 11.9%, and Adjusted EPS was up 17%. Based primarily on our Q3 results, We are again raising our guidance for 2026. We achieved these results while once again delivering outstanding patient outcomes. Our Q3 discharge to community rate was 84.7%, discharge to acute rate was 8.4%, and discharge to SNF rate was 6.2%. Our performance on each of these quality metrics continues to exceed industry averages. Our hospitals continue to be recognized for the outstanding clinical care we provide. Newsweek, recently named Encompass Health as America's most awarded leader in inpatient rehabilitation for the seventh consecutive year. Also, NRC Health a leading provider of patient experience data recognized in Compass Health with the 2026 NRC Health Excellence in Patient Experience Award for the second consecutive year, placing us among the top three large health systems nationwide for patient experience. Our investments in professional growth and development programs for our clinicians continue to enhance Our abilities to serve high acuity, medically complex patients. Incubus Health holds 408 Joint Commission Disease Specific Certifications, including 150 Joint Commission Stroke Certifications. This represents approximately 65% of total stroke certifications among all providers. In August 2026, the American Heart Association and American Stroke Association reaffirmed the importance of inpatient rehabilitation facilities in their updated 2026 Stroke Rehabilitation Guideline, recommending ERP care over skilled nursing facilities for eligible stroke patients when both settings are available. The recommendation is supported by evidence showing greater functional improvement and higher rates of discharge back to the community following IRF care. We treat more stroke patients than any other inpatient rehabilitation provider. Through the first three quarters of 2026, we treated 37,620 patients recovering from a stroke. comprising approximately 18% of our patient mix. We will continue to put our resources to work to help stroke and other vulnerable patients regain their independence and return to the activities that matter most to them. Demand for inpatient rehabilitation services remains strong and is growing. We continue to invest in capacity additions to help address This underserved market. In Q3, we opened a new 50-bed hospital in Norristown, Pennsylvania and added 31 beds to existing hospitals. Through the third quarter, we opened four hospitals with a total of 189 beds and added 85 beds to existing hospitals. Earlier this month, we opened two additional 50-bed hospitals. one in Bangor, Maine, and one in San Antonio, Texas, and added 60 beds to existing hospitals. Over the balance of the year, we intend to open two more hospitals with a total of 100 beds and add up to 45 beds to existing hospitals. We maintain an active pipeline of new hospital development projects while also executing on bed expansion opportunities as warranted by occupancy trends and market dynamics. Our pipeline of announced new hospital projects with opening date beyond 2026 currently consists of 15 hospitals with 654 beds. This includes our first two small format hospitals, Conroe, Texas and Richmond, Texas, both of which will be additive to our Houston market presence and serve as an exemplar of the hub and spoke strategy we have previously discussed. We anticipate additional projects will be announced over the balance of the year. We also continue to expect to add 150 to 200 beds to existing hospitals in 2027. On October 1st, North Carolina's repeal of its Certificate of Need law became effective. As we have previously discussed, North Carolina has highly favorable population growth and demographic characteristics, and our assessment indicates a large underserved market for earth services. We currently operate one hospital in North Carolina and have thus far prioritized 15 markets for development. We currently have six real estate parcels under contract. Now I'll turn it over to Doug.