Encompass Building Hospice Market Share While Mulling Spin Off, Sale

Encompass Health (NYSE: EHC) is poised for continued expansion in its hospice segment both through same-store admissions and acquisitions. A promising trend that could support that growth is improved access to patients in nursing homes and assisted living facilities as more vaccine become available.

These growth plans come at a time when the company is considering a strategic repositioning of its hospice and home health business. Encompass announced in December that its leadership was pondering a spin off, merger, sale, initial public offering or other transaction for hospice and home health.

“This be another active year for home health and hospice as well. This is a year where we would say that the reimbursement landscape has greater visibility in recent history,” said Encompass CEO Mark Tarr in a presentation at Barclay’s Global Healthcare Conference. “We’ll continue to focus on capturing market share, both organically and through industry consolidation.”


Encompass provides both facility-based and home-based patient care through inpatient rehabilitation hospitals, home health agencies and hospice. The company operates 137 hospitals, 242 home health locations, and 83 hospice locations in 39 states and Puerto Rico.

Until a decision on a sale or spin off is reached, Encompass is moving forward with its established growth targets, seeking to boost admissions as the pandemic drives more care into the home and away from institutional settings. Encompass is also seeking acquisitions of both hospice and home health organizations.

For the company’s hospice business, same-store admissions growth of 16.1% resulted in a 5.5% increase in revenue during the fourth quarter of 2020.. The rate of growth was tempered somewhat by decreased length of stay, partially attributable to the COVID-19 pandemic.


The Encompass hospice segment brought in $53.6 million in the fourth quarter of 2020, up from $50.8 million in the prior year’s quarter. Adjusted EBITDA rose 11% to $55.5 million, exceeding Q4 2019’s $49.6 million.

One trend that is looking up for Encompass is improved access to patients located in facilities. Accessing patients in facilities has been a top concern for hospice leaders during 2020 and 2021, as nursing homes have imposed strict limitations as to who may enter due to fears of spreading the virus. While in many cases hospice nurses have been allowed to come in, many patients have not been able to receive the full benefit of the interdisciplinary care model.

Recent data from the U.S. Centers for Medicare & Medicaid Services (CMS) show that numbers are starting to come down as more residents become vaccinated. During the week of Jan. 17, about 17,500 new infections occurred in nursing homes. Just one month earlier around Dec. 20, weekly cases exceeded 32,000.

“We’re very encouraged by what we’re seeing in the assisted living facilities. They’ve been pretty proactive,” April Anthony, CEO of Home Health & Hospice at Encompass, said at the conference. “We’ve still got a few more weeks before we’ll be at a place where we’ll be fully back in, but we’re getting awfully close to that, and we’re seeing steady improvements in our percentage of residents that are being cared for in those assisted living facilities.”

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