Post-acute healthcare services provider Encompass Health Corp. (EHC) is facing pressure from its activist investment firm Jana Partners to spin off and divest its home health and hospice business, Reuters said, citing people familiar with the matter.
New York-based investment management firm Jana Partners, which holds over 2% stake in Encompass Health, is privately pushing the Alabama-based company to spin off the unit before selling or merging with interested third parties.
Jana is working with healthcare industry executive Edwin Crawford while urging Encompass Health’s management to make the change. It believes private firms are interested in combining with the home health and hospice business, the sources said.
Some of Encompass’ shareholders, including Jana, are of the view that selling off the home health and hospice unit will better position the healthcare provider to focus on other challenges in the industry like the shortage of nurses as well as address the company’s recent performance issues.
About Encompass Health
Encompass Health offers facility- and home-based post-acute care services in 36 U.S. states and Puerto Rico through its network of inpatient rehabilitation hospitals, home health agencies, and hospice agencies.
The company’s shares gained 3.1% on Tuesday to close at $66.69.
Overall, the stock has a Strong Buy consensus rating based on 5 unanimous Buys. The average EHC stock forecast of $83.60 implies 25.4% upside potential. Shares have lost nearly 18% over the past year.
Risk Analysis
According to TipRanks’ Risk Factors tool, Encompass Health is at risk mainly from three factors: Legal & Regulatory, Ability to Sell and Finance & Corporate. Each of the first two accounts for 29% of the total 24 risks identified for the stock, while the third stands at 25%.
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