Encompass Health offered earnings guidance on home health and hospice unit Enhabit Tuesday, just weeks before it is set to spin off the business. The company estimated Enhabit will earn between $1.64 and $2.01 a share for 2022 on projected revenues of $165 million to $185 million.
Encompass also admitted that capacity constraints in its hospice division due to staffing challenges have not improved as quickly as the company had anticipated.
The spin-off of Enhabit is expected to be completed by July 1, pending regulatory approval from the Internal Revenue Service. Encompass announced in mid-January that it would separate its home health and hospice division from its rehabilitation hospitals, following a yearlong review of the business. The company said the spin-off would benefit shareholders and provide Enhabit more operational flexibility as a stand-alone company.
“We believe the establishment of Enhabit Home Health and Hospice as an independent company will provide a number of significant benefits, including enhanced management focus, separate capital structures and allocation of financial resources, better alignment of management incentives and the establishment of independent equity currencies,” Encompass President and CEO Mark Tarr said in April during a briefing with analysts.
In late May, Encompass disclosed that Barb Jacobsmeyer will serve as Enhabit CEO and Encompass Board Chairman would move over to Enhabit as board chairman. The company has also tapped seven other executives from the technology, healthcare and financial services sector to sit on Enhabit’s board of directors.
