Enhabit Home Health & Hospice to Split from Encompass in July, Names Board – Hospice News

Courtesy Encompass Health
Courtesy Encompass Health
Encompass Health’s forthcoming spin off of Enhabit Home Health & Hospice is expected to complete July 1. In preparation, the fledgling company has appointed its board and is laying the groundwork for trading on the New York Stock Exchange (NYSE).
Enhabit filed a Form 10 registration with the U.S. Securities and Exchange Commission, a necessary step to trade on an exchange. The spin off remains subject to customary regulatory conditions, but upon completion Enhabit will be an independent, publicly traded company.
“This announcement is another exciting step as Enhabit embarks on our next chapter as an independent, public company,” Enhabit CEO Barbara Jacobsmeyer said in a statement. “We have a comprehensive transition plan in place and are confident that the board’s diverse background and experience will help guide us into the future as we work to expand what’s possible for patient care at home.”
In addition to Jacobsmeyer herself, eight professionals from the health care, technology and financial fields comprise the board. Of these, five were former Encompass Health board members.
These five legacy members will gradually transition off the board during the next two years, the company indicated. Enhabit is currently recruiting replacement members.
Leo I. Higdon Jr., will be chairman. Until earlier this month, Higdon held that same role at Encompass Health.
Encompass announced the strategic repositioning in December 2020. Current Encompass shareholders will own stock in both companies, tax free. Transition-related expenses will include development of the business infrastructure within Enhabit, expected to total an estimated $26 million to $28 million.
“The board has considered an array of alternative strategies and structures and dynamic market environment with the advice of our financial advisors and legal counsel and with input from shareholders and taking into account various factors including execution risk, tax efficiency, and capital structure,” Encompass CEO Mark Tarr said in an Q1 2022 earnings call.
The Encompass Health home health and hospice segment, soon to be Enhabit, operates 99 hospice locations as well as 252 home health sites. Encompass will retain its in-patient rehabilitation facilities (IRFs), the largest such network in the United States.
Encompass Health’s hospice business saw net operating revenues fall 2.4% in Q1 2022 to $49.4 million, down from $50.6 million in the prior year’s quarter. Home health revenues rose 2.3% to $224.9 million.
The dip in revenues corresponded with a 3.7% drop in hospice admissions during Q4 2021, which the company attributed to reduced capacity at some of their larger locations due to staff shortages.
Despite the industry-wide labor concerns, the spin off is expected to be a boon for Encompass. The move will reduce the company’s operating expenses by approximately $10 million and will likely benefit shareholders.
“Separation of the company’s two segments should unlock value, especially as the higher-growth, higher-multiple home health business is separated from [Encompass] and sees higher growth as it pursues a more aggressive, accretive M&A strategy,” Brian Tanquilut, equity analyst for Jeffries Financial Group, indicated in a note.
Encompass Health Corp., Enhabit Home Health & Hospice, Jeffries Financial Group
Jim Parker is a subculture of one. Swashbuckling feats of high adventure bring a joyful tear to his salty eye. A Chicago-based journalist who has covered health care and public policy since 2000, his personal interests include fire performance, the culinary arts, literature, and general geekery.

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