Inpatient rehabilitation hospital and home health operator Encompass Health is looking at options for its home health and hospice segment.
The company on Wednesday said "a range of options are under consideration," including a separation of the home health and hospice business through an initial public offering, spin-off, merger or sale.
"Since joining together with Encompass Home Health and Hospice in 2015, we have generated substantial growth in both our business segments," Encompass Health President and CEO Mark Tarr said in a prepared statement.
There is not yet a timetable for a strategic review, and the company doesn't plan to share updates on the process until its board of directors either makes a decision or completes the strategic review, according to a news release.
"Our primary focus this year has been to ensure Encompass Health's best possible response to this unprecedented global pandemic," Encompass Health Board of Directors Chairman Lee Higdon said in a prepared statement. "This notwithstanding, the U.S. healthcare delivery system continues to change, and we believe the time is appropriate for us to further reassess the corporate structure that may optimize the strategic positioning and growth of our businesses."
Encompass Health saw a slight 1% uptick in its third quarter net operating revenue, following a 5% loss in net operating revenue during the second quarter.
The company attributed revenue growth to inpatient rehabilitation pricing but said those gains were partially offset by lower volumes in both inpatient rehabilitation and home health and hospice operations, as well as lower pricing in the home health and hospice segment.
In the third quarter, the company announced plans for seven new inpatient rehabilitation hospitals. Encompass Health plans to open eight inpatient rehabilitation hospitals in both 2021 and 2022.
Encompass also on Sept. 30 issued $400 million in bonds that will mature in 2031 as part of a $700 million refinancing. The company said it would use the money from the offering, as well as $300 million in cash, to pay off at face value $700 million in 5.75% coupon senior notes due in 2024.
Encompass Health operates 137 hospitals, 242 home health locations and 83 hospice locations in 39 states and Puerto Rico.