U.S. markets close in 6 hours 1 minute
  • S&P 500

    3,835.15
    +3.76 (+0.10%)
     
  • Dow 30

    30,991.51
    +23.69 (+0.08%)
     
  • Nasdaq

    11,351.50
    +29.26 (+0.26%)
     
  • Russell 2000

    1,743.20
    +1.87 (+0.11%)
     
  • Crude Oil

    98.18
    -1.32 (-1.33%)
     
  • Gold

    1,758.60
    -5.30 (-0.30%)
     
  • Silver

    19.18
    +0.06 (+0.33%)
     
  • EUR/USD

    1.0182
    -0.0088 (-0.86%)
     
  • 10-Yr Bond

    2.7950
    -0.0140 (-0.50%)
     
  • GBP/USD

    1.1913
    -0.0039 (-0.33%)
     
  • USD/JPY

    135.3280
    -0.5140 (-0.38%)
     
  • BTC-USD

    20,173.83
    +772.24 (+3.98%)
     
  • CMC Crypto 200

    436.60
    +1.07 (+0.25%)
     
  • FTSE 100

    7,142.61
    +117.14 (+1.67%)
     
  • Nikkei 225

    26,107.65
    -315.82 (-1.20%)
     

Encompass Health (EHC) Plans to Distribute Enhabit Shares

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Encompass Health Corporation EHC recently announced that its board has approved a distribution of Enhabit, Inc.’s (its home health and hospice business) common stocks for the EHC stockholders, related to the upcoming spin-off. The distribution is scheduled on Jun 24, 2022.

Following the spin-off, Enhabit, EHC’s wholly-owned subsidiary, will become an independent public company. Per the company, every Encompass Health shareholder will receive one Enhabit common share for every two EHC common shares held. There will be no fractional shares remaining and cash will be given in lieu of the fractional shares to the stockholders.

The distribution is expected to qualify as a tax-free transaction, excluding the cash received instead of fractional shares. Following the completion of the distribution, Encompass Health will retain its ticker EHC, while Enhabit is expected to trade under EHAB. Encompass Health expects "regular-way" trading of EHAB stocks to commence on Jul 5.

EHC announced the spin-off plan for Enhabit in January. With this move, Encompass Health plans to focus on and grow its core business comprising inpatient rehabilitation, which is set to witness consistent growth, backed by its planned bed additions in a number of existing hospitals, acquisitions and construction of new hospitals.

Recently, Encompass Health provided a comprehensive picture of its guidance. Following the separation, EHC’s 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. Adjusted EBITDA is likely to lie in the $820-$840 million bracket in 2022, indicating a decline from $956.8 million a year ago.

Net service revenues of Enhabit are expected within $1,080-$1,120 million for 2022. Adjusted EBITDA will likely be in the range of $165-$185 million, down from $211.5 million in 2021. Moreover, Encompass Health expects to continue with its cash dividend payout but the amount might decrease to reflect the splitting of its home health and hospice business. Enhabit is not expected to pay cash dividends yet.

Price Performance

Shares of Encompass Health have declined 32.9% in the past year compared with the 50.3% fall of the industry it belongs to.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Zacks Rank and Key Picks

Encompass Health currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the medical space are Select Medical Holdings Corporation SEM, Omega Therapeutics, Inc. OMGA and Progyny, Inc. PGNY, each carrying a Zacks Rank #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 Select Medical’s earnings is currently pegged at $2.19 per share. SEM has witnessed one upward estimate revision in the past 60 days against none in the opposite direction.

Select Medical’s earnings beat estimates in each of the last four quarters, the average being 42%.

The Zacks Consensus Estimate for Omega Therapeutics’ earnings indicates a 28.9% increase from the prior-year reported number. OMGA has witnessed three upward estimate revisions and no downward movement in the past 60 days.

Omega Therapeutics’ earnings beat estimates twice in the last four quarters and missed the mark on the other two occasions.

The Zacks Consensus Estimate for Progyny’s 2022 bottom line has improved 4.5 times in the past 60 days. PGNY has witnessed three upward estimate revisions during the same time against none in the opposite direction.

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


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research