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Encompass Health (EHC) Forms JV, Boosts Presence in Idaho

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Encompass Health Corporation (EHC - Free Report) recently unveiled a joint venture (“JV”) with Idaho-based healthcare provider Saint Alphonsus Health System. The deal involves utilization of EHC’s proven home health and hospice operational expertise and providing better health outcomes across the state.

The transaction, which was closed in the beginning of 2022, is expected to minimize hospital readmissions of patients, which seems to be time opportune as newer variants of the virus keep putting pressure on healthcare systems.

The latest agreement is likely to bolster Encompass Health’s presence in Idaho. Saint Alphonsus with a well-established history of serving the state seems to be the apt partner for complementing EHC’s endeavor. Encompass Health already boasts of a well-established presence in Idaho as its JV with Saint Alphonsus for offering inpatient rehabilitative services has been in place since 2019.

Encompass Health remains the trusted partner for several healthcare providers with regard to offering home health and hospice services. This is substantiated by the fact that EHC remains the fourth largest Medicare-certified skilled home health services provider in the United States. Meanwhile, it can be counted within the top 10 hospice providers of the country on the basis of 2019 Medicare reimbursements. Encompass Health has been pursuing acquisitions of home health and hospice agencies in a bid to enter new markets and delve deeper into underserved areas.

In June 2021, EHC bought nine home health and 11 hospice locations of Frontier Home Health and Hospice, which were subsequently added to the company’s network. Encompass Health’s portfolio comprises 249 home health hubs and 95 hospice centers across 42 states and Puerto Rico.

In addition to the inpatient rehabilitation services, the home health and hospice services offered by EHC are of utmost importance and the COVID-19 pandemic has only reinforced the importance of these services. After being subject to comprehensive rehabilitation services at an inpatient rehabilitation hospital or even without a record of inpatient stay, patients are often referred to home health agencies. Consequently, they provide a wide range of Medicare-certified home-based patient care. Meanwhile, the hospice services intend to offer in-home services to address pain control and symptom management of terminally ill patients and their families.

Despite the well-earned reputation, EHC is seeking strategic alternatives aimed at partial or complete separation of the home health and hospice business in relation to which management is eyeing a transaction in the first half of 2022. The spin-off is likely to strengthen Encompass Health’s focus on growing its core business — inpatient rehabilitation.

The healthcare provider continues to pursue back-to-back expansion plans, which encompass initiatives for constructing numerous inpatient rehabilitation hospitals across the nation. Encompass Health has a robust nationwide presence comprising 145 such hospitals. It has entered into JVs with renowned healthcare systems and followed a collaborative approach for facilitating improved health outcomes across various markets.

Apart from Encompass Health, healthcare providers like Tenet Healthcare Corporation (THC - Free Report) , HCA Healthcare, Inc. (HCA - Free Report) and Community Health Systems, Inc. (CYH - Free Report) offer high-quality rehabilitation services and pursue expansion plans for capitalizing on solid demand for these services.

Tenet Healthcare operates a network of hospitals and related healthcare facilities for offering high-quality rehabilitation services and other healthcare-related services. THC continuously undertakes numerous acquisitions, partnerships and strategic alliances for driving scale of business, operating capacity and expanding geographical presence.

HCA Healthcare operates as one of the leading U.S. healthcare services providers, with a portfolio comprising 185 hospitals, five psychiatric hospitals and two rehabilitation hospitals at 2020-end. HCA is focused on acquisitions, which have bolstered its portfolio, led to network expansion and boosted patient volumes.

Being a well-established operator of general acute care hospitals and outpatient facilities across U.S. communities, Community Health either owned or leased 87 general acute care hospitals and two stand-alone rehabilitation or psychiatric hospitals at the end of 2020. CYH aims to add facilities and pursue buyouts for bolstering its capabilities and nationwide network.

Shares of Encompass Health have lost 18.5% in the past six months compared with the industry’s decline of 22.1%.

Zacks Investment ResearchImage Source: Zacks Investment Research

EHC currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

While shares of Tenet Healthcare and HCA Healthcare have gained 14% and 18.8%, respectively, in the past six months, Community Health stock has lost 17.1% in the same time frame.

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