Inpatient rehabilitation hospital and home health operator Encompass Health saw a slight uptick in its third quarter net operating revenue, the company said Wednesday.
The Birmingham, Ala.-based company reported net operating revenue of $1.2 billion during the third quarter that ended Sept. 30, up 1% from the previous year. That compares to a 5% loss in net operating revenue during the second quarter.
"Our teams are doing an extraordinary job in managing through the COVID-19 pandemic," Encompass Health President and CEO Mark Tarr said in a statement. "Our volumes recovered substantially in the third quarter, and we remain confident in the longer-term outlook for our company."
Encompass Health attributed revenue growth to inpatient rehabilitation pricing but noted that 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.
During an investors' call Thursday, Tarr said that while volumes for inpatient rehabilitation "recovered substantially" from the second quarter when the company experienced an 11% decrease in total discharges, total discharges are still down less than 2% compared to last year.
"Many of our markets continue to have limited elected surgeries, particularly with elderly patients with complex medical conditions. These patients are the ones that tend to need inpatient rehabilitative services post surgery," Tarr said.
The company is facing COVID-19-related challenges in specific geographic markets like Florida, Tarr said.
In Florida, where Encompass Health operates 12 inpatient rehabilitative hospitals, there was a 13% year-over-year decline in patient discharges during the third quarter. Tarr attributed that to limitations on elective surgeries and restrictions on when COVID-19-positive patients could be transferred to post-acute care settings.
"It's important to remember that these factors are temporary responses to the pandemic and are not indicative of structural shifts in the market," Tarr said.
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 136 hospitals, 242 home health locations and 83 hospice locations in 39 states and Puerto Rico.