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Encompass Health (EHC) to Build New Rehab Unit in Missouri

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Encompass Health Corporation EHC recently announced that the company has won a certificate of need to develop an inpatient rehabilitation facility in Town and Country, MO. EHC won the deal to build a 40-bed hospital with BJC HealthCare, a non-profit health care organization.

The new facility will be marked as a satellite location of Encompass Health’s The Rehabilitation Institute of St. Louis. The hospital is expected to come online in 2024, following which, BJC HealthCare is expected to relocate its 20-bed rehabilitation facility from Missouri Baptist Medical Center to the new building. The move is likely to extend a joint venture partnership between EHC and BJC HealthCare.

Currently, the two companies have an existing partnership incorporating three rehabilitation facilities. The new hospital is expected to complement acute care services in the region with multiple care services, including neurological disorders, amputations, brain injuries, spinal cord injuries and others. It will likely offer various amenities like private patient rooms, cafeteria, dining room, therapy gym, pharmacy, etc.

The certificate of need is expected to boost EHC’s footprint in the region. The move is in line with Encompass Health’s strategy to expand and focus on its inpatient rehabilitation business.

To double down on inpatient rehabilitation, EHC streamlined its overall business through a spin-off of its home health and hospice business on Jul 1, 2022. Following the spin-off, the new entity was named Enhabit, Inc. EHAB and has two reportable segments, namely home health and hospice.

Since the separation, Encompass Health has a single reportable segment, which is inpatient rehabilitation. Its net operating revenues for 2022 are expected within $4,250-$4,300 million. This unit reported net operating revenues of $4,015 million in 2021.

However, the company is facing rising costs and expenses, which is affecting its margin. Notably, the net service revenues of Enhabit for 2022 are expected within $1,080-$1,120 million.

Price Performance

Shares of Encompass Health have declined 39.9% in the past year compared with the 38.6% fall of the industry.

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Zacks Rank and Key Picks

Encompass Health currently has a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the medical space are Altimmune, Inc. ALT and Progyny, Inc. PGNY, each carrying a Zacks Rank of #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Altimmune’s 2022 bottom line indicates an 8.2% improvement from the 2021 levels. ALT has witnessed one upward estimate revision in the past 60 days against none in the opposite direction.

Altimmune’s earnings beat estimates in three of the last four quarters and missed on the remaining occasion.

The Zacks Consensus Estimate for Progyny’s 2022 bottom line has improved 11.8% in the past 60 days. PGNY has witnessed one upward estimate revision during the same period against none in the opposite direction.

Progyny’s earnings beat estimates in each of the last four quarters, the average being 169.7%.

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Altimmune, Inc. (ALT) : Free Stock Analysis Report
Encompass Health Corporation (EHC) : Free Stock Analysis Report
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Enhabit, Inc. (EHAB): Free Stock Analysis Report
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