Enhabit Home Health & Hospice to Hit Ground Running on Expansion

Enhabit Home Health & Hospice will be pursuing geographic expansion from the moment it gets off the ground. 

The forthcoming spinoff from Encompass Health (NYSE: EHC) has allocated $2 million to $3 million to fund de novo locations for the remainder of the year, according to 2022 guidance released today.

Enhabit has also put aside $50 million to $100 million per year for acquisitions, with the goal of co-locating its home health and hospice operations.


“We believe the establishment of Enhabit Home Health & Hospice as an independent company will provide a number of significant benefits, including enhanced management focus, separate capital structures and allocation of financial resources,” CEO and President Mark Tarr said during a Q1 earnings call.

Currently set for July 1, the spinoff remains subject to customary regulatory conditions. Upon completion Enhabit will be an independent, publicly traded corporation.

The fledgling company expects to earn nearly $1.08 billion to $1.12 billion this year, with an adjusted EBITDA of $197 million.


Enhabit also has set its sights on increasing hospice admissions by 10% to 15% during 2022, as well as 10% for home health.

Like most providers, Enhabit will have the workforce shortage top of mind from the get-go.

Hospice referrals dropped during the first half of the year due to staffing constraints, according to the guidance. The company also expects a 3% to 4% increase in the cost per patient day. 

During the first quarter the Encompass home health and hospice segment — soon to be Enhabit — was hit hard by the Omicron COVID variant. The segment at one point had close to 1,300 staff members in quarantine.

“We were just undermanned,” Tarr continued. “And now we’ve been in the process of hiring new nursing staff, and adding to that has helped to accommodate the [growing patient] volume.”

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.

As of April, the home health and hospice segment had about 650 open nursing positions. That’s about 100 to 150 more than the normal baseline, according to Enhabit CEO Barb Jacobsmeyer during the Q1 earnings report. 

Hospice hiring lagged behind its home health business.

“We’ve not seen that same progress on retention on the hospice side,” Jacobsmeyer said. “We are piloting some new staffing models in a few of our markets.”

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