Encompass Health (EHC) Stock: a Quiet Winner in Healthcare

If you think of “rehab,” your mind probably goes to drug treatment centers. But in the investing world, rehab usually means something very different: inpatient rehabilitation hospitals. 

This is where Encompass Health (NYSE: EHC) shines.

EHC is a B rated stock in our Zen Ratings system and a top pick in the medical facilities space, which itself has an A rating right now, making it one of the strongest sectors. With several factors on its side like demographics and a business model built around recurring demand, here’s why EHC looks well-positioned for 2025 and beyond.

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What Exactly Does EHC Do?

Encompass Health is the largest provider of inpatient rehabilitation hospitals across the U.S. These aren’t nursing homes, and they aren’t acute-care hospitals either. They’re the middle step for patients recovering from strokes, surgeries, or serious injuries.

• Hospitals stabilize patients.
• Rehab hospitals restore independence through intensive therapy and medical oversight.
• Nursing homes support daily living when independence isn’t possible.

EHC dominates that “recovery” category right in the middle. It’s a niche that’s only getting more important as Americans live longer and survive conditions that used to be fatal.

Why the Tailwinds Are Strong

Aging Population = Rising Demand

Every year, more patients are entering the age range most likely to need rehab care. With the Baby Boomers aging, demand for inpatient rehab is virtually locked in for decades.

Insurance Incentives Line Up

Medicare and private insurers actually prefer rehab hospitals in many cases. Why? They’re cheaper than keeping patients in acute-care hospitals, but they deliver better outcomes than sending patients straight home. That keeps costs down while improving recovery … a win-win.

A Resilient Business Model

Rehab isn’t discretionary. If someone has a stroke, they need therapy … regardless of the economy. That makes EHC’s business more recession-resistant than many other corners of healthcare, which is already a recession-resistant sector to begin with. 

Strong Sentiment, Safety, Financials, and More. 

Despite healthcare’s resilient nature, it’s been a weak performer this year, which has caused many investors to give up on it. The potential for a surprise against that sentiment might be one reason that EHC is scoring an A in our Sentiment Component Grade right now, which measures earnings surprises, short interest, upward and downward earnings revisions, and more. 

The stock is also scoring well in Safety, Financials, and Artificial Intelligence. Click here to see how EHC scores across all its Component Grades.

Top Wall Street analysts we track also rate the stock a Strong Buy:

To see their price targets, click here.

Bottom Line

If you’re looking for exposure to healthcare infrastructure with secular momentum, and more upside potential in 2025, Encompass Health could be a top pick.

It won’t get the headlines that flashy biotech or AI plays do. But with demographics, insurers, and policy all pulling in the same direction, EHC looks like one of the quiet winners in healthcare’s future.

If you’re looking for other stock ideas off the beaten path, make sure to check out Zen Strategies. Our proprietary quant trading strategies identify portfolios of the very best 7 stocks to maximize performance across many different themes, including income, small caps, growth, and more. Click here to learn more. 

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