Encompass Health Corp 8-K

What Happened
Encompass Health Corporation announced it entered into a new Credit Agreement dated March 9, 2026 (the “2026 Credit Agreement”), replacing and paying off its prior credit facility (the 2022 Credit Agreement). The new facility provides a $1.0 billion revolving credit commitment (including a $260 million letter-of-credit subfacility and a $40 million swingline subfacility). As of the closing, the company drew $250.0 million on the revolving facility to repay the prior facility and had $53.6 million outstanding under the new letter of credit subfacility.

Key Details

• New facility maturity: March 9, 2031 (prior maturity was October 7, 2027).
• Facility size and sublimits: $1.0B revolving; $260M letter of credit subfacility; $40M swingline (increased from $25M).
• Draws at closing: $250.0M revolver draw; $53.6M letters of credit outstanding.
• Covenant changes: minimum Interest Coverage Ratio of 3.00:1.00; maximum Leverage Ratio (after netting cash) of 4.50:1.00 except for Significant Acquisitions; accordion feature to increase commitments by greater of $1.4B or 100% of trailing four-quarter Adjusted Consolidated EBITDA, subject to a Senior Secured Leverage Ratio cap of 3.50:1.00.
• Other changes: 5 basis point reduction in unused revolving fee, elimination of a 0.10% adjustment to Term SOFR borrowings, and relaxed limits on certain investments, indebtedness and restricted payments.
• Security and agents: obligations secured by current and future personal property of the company and subsidiary guarantors; Truist Bank serves as administrative and collateral agent (replacing Barclays).

Why It Matters
This filing shows Encompass Health has extended and refinanced its bank facility, securing longer-dated committed liquidity through March 2031 and improving several economic and structural terms (lower fees, higher swingline, relaxed restrictions). The drawn amount at close ($250M) eliminated the prior facility balance, and the new covenants (Interest Coverage and Leverage ratios) and collateral package define the company’s near-term debt constraints. For investors, the agreement affects the company’s liquidity profile, borrowing capacity (including the large accordion option), and the covenants that can influence financing flexibility and strategic actions.