Encompass Health Corporation EHC recently unveiled plans to construct an inpatient rehabilitation hospital containing 40 beds in Florida. To this effect, the company has purchased land in St. Augustine, FL. However, it has not yet disclosed any outline for the hospital’s construction in Florida.
Once operational, the new inpatient rehabilitation hospital will facilitate physical, occupational and speech therapies that will aid patients in recovering from debilitating illnesses and injuries. This, in turn, is likely to enable Encompass Health in resolving health issues of residents in St. Augustine area more efficiently.
This is not the first time that Encompass Health is making an effort to expand its presence in Florida. Presently, it has 12 inpatient rehabilitation hospitals and 19 home health locations in Florida.
Apart from these hospitals, the healthcare provider had also announced plans regarding construction of another inpatient rehabilitation hospital in Pensacola, FL in February. The hospital, whose construction timeline has not yet been revealed, remains as the most recent endeavor of the company in the state before the St. Augustine one. Notably, it already has one hospital under construction in Tampa Bay, FL, which is anticipated to start operations in second-quarter 2021.
Notably, shares of this Zacks Rank #3 (Hold) healthcare provider have lost 4.8% in a year against the industry’s rise of 6.6%.
Encompass Health’s Efforts Bode Well
It is to be noted that this healthcare provider seeks to address the hugely unmet demand for facility-based and home-based post acute-care services by constructing or acquiring new hospitals and purchasing or opening home health and hospice agencies in the extremely fragmented industries. With a nationwide presence and strong portfolio of 136 hospitals, 245 home health hubs, and 83 hospice centers in 39 states and Puerto Rico, Encompass Health has been striving to offer improved healthcare services across the United States.
This month itself, Encompass Health formed a joint venture (JV) with Knoxville-based Covenant Health. The JV will result in development of inpatient rehabilitation hospitals, which is likely to resolve health issues of Knoxville residents more efficiently.
Prior to this, Encompass Health entered into a JV with an established healthcare system. Last month, the University of Iowa Health Network Rehabilitation Hospital — a JV between Encompass Health and University of Iowa Health Systems announced in January this year — started operating. Additionally, it opened Encompass Health Rehabilitation Hospital of Sioux Falls last month, which is intended to offer improved healthcare services in South Dakota.
The healthcare provider has also unveiled plans in June to inaugurate Encompass Health Rehabilitation Hospital of Libertyville that is expected to start operations in spring 2022. These initiatives bode well and certainly provide a sigh of relief to several people across the United States, who are already grappling with the COVID-19 pandemic.
Notably, several initiatives have also bolstered revenues at Encompass Health, which have witnessed a CAGR of 14.2% in the past five years (2014-2019). The uptrend has been driven by the rising contribution from its inpatient rehabilitation plus home health and hospice segment. An aging population across the United States and the current pandemic situation definitely calls for greater access to healthcare services, which positions Encompass Health well for growth in the long term.
Stocks to Consider
Some better-ranked stocks in the medical space include Acadia Healthcare Company, Inc. ACHC, BioCryst Pharmaceuticals, Inc. BCRX and Akebia Therapeutics, Inc. AKBA, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Acadia Healthcare, BioCryst Pharmaceuticals and Akebia Therapeutics have a trailing four-quarter positive earnings surprise of 4.77%, 20.08% and 7.11%, on average, respectively.
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