Encompass Health Corporation EHC Faces Securities Investigation Over Compliance

Shamis & Gentile P.A., one of the nation's premier class action law firms specializing in securities fraud cases, is investigating potential claims against Encompass Health Corporation (EHC).

If you purchased or held Encompass Health Corporation securities and suffered losses, you may be eligible to join this securities investigation and seek compensation.

About Encompass Health Corporation

Encompass Health Corporation is a leading provider of post-acute healthcare services in the United States. The company operates a large network of inpatient rehabilitation hospitals, offering specialized care for patients recovering from serious illnesses or injuries. Encompass Health is listed on the New York Stock Exchange under the ticker EHC.

The company has reported significant growth in recent years, often highlighting its expanding footprint and rising revenues. With a focus on inpatient rehabilitation, Encompass Health is affected by changes in Medicare and other reimbursement policies, which play a major role in its financial performance.

The Allegations

The investigation centers on whether Encompass Health Corporation made materially false or misleading statements and failed to disclose important information to investors during the period from Aug. 5, 2024, to July 15, 2025.

One of the key issues involves the company’s public statements about its financial health and outlook. In its Q4 2024 earnings release on Feb. 6, 2025, CEO Mark Tarr described a “very strong finish” to the year, noting that fiscal year 2024 revenue rose 11.9%. He stated that the company’s strategy was “validated” and expressed that he remained “bullish on the long-term prospects” of the business (Encompass Health Q4 2024 Press Release). Similarly, the Q1 2025 release on April 24, 2025, highlighted a 10.6% revenue growth, with management again claiming the value proposition was “validated” and that they were “highly optimistic” about the future (Encompass Health Q1 2025 Press Release). The company also raised its 2025 guidance, projecting earnings per share of $4.85 to $5.10 (Encompass Health Q1 2025 Guidance).

The investigation will examine whether these statements were misleading because they allegedly omitted critical information about regulatory headwinds and internal data that pointed to potential declines in patient mix and reimbursement rates. Notably, none of the company’s public reports addressed the impact of significant policy changes from the Centers for Medicare & Medicaid Services (CMS), such as new site-neutral payment proposals and the phasing out of “inpatient-only” requirements (Axios CMS Policy Report). These changes, reported by the media on July 16, 2025, may directly threatened Encompass Health’s core inpatient-rehab business.

A significant event occurred on July 15, 2025, when Encompass Health’s stock price plunged approximately 9.95% (about a $12 drop per share), closing near $107 after trading around $119.67 shortly before the drop (MarketBeat Stock Price Report). This one-day loss erased roughly $1.2 billion in market capitalization, impacting large institutional holders and individual investors alike. The timing of the stock drop, which far exceeded the broader market’s modest decline that day, points to company-specific news as the primary cause (AP News Market Context).

Another area of focus is insider trading activity. During the class period, several top executives sold significant amounts of stock. For example, CFO Douglas Coltharp sold 43,575 shares on April 29, 2025, for about $5 million at prices near $115–$116 per share, simultaneously exercising options for those shares at around $30 per share (Investing.com Insider Trading Report). Executive Vice President John Darby sold 10,000 shares on the same date (MarketBeat Insider Sales), and other officers, including Elissa Charbonneau, also sold stock (MarketBeat Insider News). In total, insiders sold approximately 132,663 shares (about $16 million) in the second quarter of 2025, a notable increase compared to prior periods (MarketBeat Insider Sales Summary).

The potential class period for affected investors is Aug. 5, 2024, through July 15, 2025. Damages are estimated at roughly $12 per share for those holding through the end, with total class-wide losses potentially reaching hundreds of millions of dollars.

Your Rights and Next Steps

This is an active investigation into potential securities fraud at Encompass Health Corporation. If the investigation uncovers sufficient evidence, it may lead to a securities class action lawsuit on behalf of investors who purchased Encompass Health securities during the class period and suffered losses.

Investors have important rights in these situations. Those who purchased or held Encompass Health securities between Aug. 5, 2024, and July 15, 2025, and experienced financial losses may be eligible to participate in any future class action. By joining the investigation, investors can help ensure that their interests are represented and that any potential recovery is distributed fairly among those harmed.

Lawyers are ready to help investors understand their options, gather the necessary documentation, and guide them through the process if a lawsuit is filed. It is important for investors to act promptly, as securities investigations and potential lawsuits are subject to strict deadlines.

You May Be Entitled to Compensation

If you purchased or held Encompass Health Corporation securities and suffered losses during the class period, you may be eligible to join this investigation and seek compensation for your losses. Securities investigations are time-sensitive, and acting quickly can help protect your rights.

To find out if you qualify and to participate in the investigation, complete the below form. Lawyers are ready to help you every step of the way.