[Updated] Encompass Health Moving Forward with Spinoff Plans, to Rebrand New Home Health Business ‘Enhabit’

In December 2020, Encompass Health Corporation (NYSE: EHC) announced that it was “exploring strategic alternatives” for its home health and hospice segment.

The company doubled down on its preferred option on Wednesday. The Birmingham, Alabama-based company announced it intends to spin off the segment into a new publicly traded company under the name “Enhabit Home Health & Hospice.”

“The Encompass Health Board of Directors believes that the separation of its inpatient rehabilitation business and the [home health and hospice] business into two independent, publicly traded companies will provide significant benefits to both businesses and their stakeholders,” the announcement said.


The spinoff is expected to take place in the first half of this year, subject to various regulatory conditions.

Broadly, Encompass Health believes that a spinoff improves the strategic and operational flexibility of its core business segments while increasing the focus of its different management teams. It will also allow each business to adopt a capital structure and investment policy best suited to its financial profile and needs, according to the company.

Encompass Health shareholders are expected to gain tax-free shares of the new company.


Encompass Health’s current footprint includes 145 hospitals, 251 home health locations and 96 hospice locations. The home health and hospice segment posted revenues of about $273.9 million in the third quarter of 2021.

The company already revealed on its last earnings call in October that it would be pursuing a spinoff over a merger or sale. In late December, however, it received some pushback from an activist investor.

Specifically, the investment firm Jana Partners – which owns more than 2% of Encompass Health stock – was urging the company to re-engage with other parties that could make a merger viable.

“Jana Partners and other shareholders believe combining the home health and hospice business with another industry player would better position the company to manage more challenging conditions in the health care industry, including a shortage of nurses,” a Reuters report noted.

The uncertainty surrounding the spinoff – and when it would materialize – made investors wary. Today should ease those concerns, however.

“Today’s announcement, particularly management’s reiteration of their intent to complete the spin-off sometime in [the first half of 2022], should address these lingering concerns and prompt investors to revisit and re-run their sum-of-the-parts analyses, which, given where comparable companies are trading, point to potential stock upside to $90 per share,” Jefferies analysts wrote in a note.

Enhabit will be led by CEO Barb Jacobsmeyer, who previously ran Encompass Health’s in-patient rehab business and replaced longtime leader April Anthony. Crissy Carlisle, the former head of investor relations for Encompass Health, will be the new company’s CFO. 

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