Encompass Health Stock Plummets 10.35% Amid Safety Concerns, Trading Volume Soars to 241st Position

On July 15, 2025, Encompass Health (EHC) experienced a significant drop in its stock price, falling by 10.35%. The trading volume for the day was 4.19 billion, marking a 332.03% increase from the previous day and placing it at the 241st position in terms of trading volume for the day.

The decline in Encompass Health's stock price can be attributed to a report published by the New York Times, which highlighted safety concerns at some of the company's rehabilitation centers. The report detailed incidents of fatal carbon monoxide poisoning, medication errors, and bed alarm failures, raising questions about the quality of care provided by Encompass Health.

Despite the negative coverage, some analysts see the selloff as a buying opportunity. KeyBanc, for instance, maintains an Overweight rating for Encompass Health with a price target of $135. The analysts at KeyBanc believe that the issues raised in the report were based on selective data analysis and do not reflect the overall quality of care provided by the company. They expect Encompass Health's second-quarter performance to surpass expectations.

Encompass Health's first-quarter financial results showed strong performance, with revenues increasing by 10.6% and adjusted EBITDA rising by 14.9%. The company also reported a total discharge growth of 6.3% and same-store discharges growing by 4.4%. However, the company faces challenges such as increased benefits expense per FTE and elevated group medical expense growth, which could impact future profitability.

Encompass Health's strategic expansion efforts include the opening of a new 40-bed joint venture hospital in Athens, Georgia, and plans to open six De Novos with a total of 300 beds. The company also reported a decrease in contract labor costs, which could help improve labor efficiency and manage staffing levels. However, the company's exposure to regulatory developments and potential changes in Medicare and Medicaid reimbursement rates pose risks to future financial performance.