Encompass Health is examining all possibilities for its home health and hospice division, even a potential sale, said President and CEO Mark Tarr, who raised the possibility during an earnings call Wednesday.
“We are following a rigorous and disciplined process and continue to evaluate and prepare for all scenarios including a full or partial separation of the segment through an initial public offering, spin-off, merger, sale or other transaction,” Tarr said.
Tarr’s comments come just two days after Birmingham, AL-based Encompass Health announced the $36 million purchase of Frontier Home Health and Hospice assets in five states and one day after the company disclosed first quarter earnings.
Encompass is in the midst of an ongoing strategic review of its home health and hospice division that began late last year. Earlier this month, the company said division CEO April Anthony would be leaving her post in June. Despite the uncertainty over the division’s future, Tarr said Encompass is still searching for an executive to head the division and Anthony said Encompass continues to look for potential home health and hospice acquisitions.
“I anticipate there are going to be good opportunities for us throughout the balance of the year to pursue some home health acquisitions, while continuing to look at hospice acquisitions to help us build scale, density and market overlap,” Anthony said.
Encompass Health operates rehabilitation hospitals, along with home health and hospice agencies in 39 states and Puerto Rico. On Tuesday, the company reported first quarter adjusted earnings of $1.07 a share on $1.23 billion in revenues.
The company said the moratorium on Medicare’s 2% cut to providers helped offset declines in home health and hospital admissions during the quarter. But Tarr predicted both segments should benefit in the coming months from patients resuming elective surgeries postponed during the pandemic.
“There is a certain amount of uncertainty on when that will happen, but we do think that will be in the latter part or second part of the year. We expect it to happen, we just don’t have a lot of insight in terms of exactly when,” Tarr said.
Tarr said Encompass Health would provide an update on the review of the home health and hospice division in its second quarter earnings report in July.