Encompass Health Withdraws 2020 Guidance as COVID-19 Impacts Performance

The Birmingham, Alabama-based post-acute care provider saw lower volume trends emerge in mid-March.

Encompass Health has withdrawn its financial guidance for 2020, the company announced Thursday afternoon, due to uncertainties related to the ongoing coronavirus disease 2019 (COVID-19) pandemic.

In a filing with the Securities and Exchange Commission, the Birmingham, Alabama-based post-acute care provider stated that lower volume trends began to emerge in mid-March as the coronavirus spread throughout the United States.

During the month of March, inpatient rehabilitation (IRF) total discharges fell 1%, home health total admissions fell 0.5%, and hospice total admissions increased almost 14%, year-over-year. All three metrics were lower than the year-over-year growth achieved in January and February.

The company also reported an increase in operating expenses related to "higher utilization and cost of personal protective equipment" and increased purchasing of " medical supplies, cleaning, and sanitization materials."

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As a result of the uncertain future surrounding the COVID-19 outbreak and its potential impact on Encompass' business operations, the company has withdrawn its 2020 guidance five-year growth targets. The decision comes less than two weeks before the company is scheduled to release its Q1 2020 earnings report.

In its most recently available financials released in early February, Encompass ended Q4 2019 with net operating revenues of $1.1 billion, an increase of 8.1% year-over-year, along with an adjusted EBITDA of $238.2 million, up 7.4% year-over-year.

In the company's original 2020 forecast, Encompass projected its net operating revenues in a range between $4.85 billion to $4.95 billion, with an adjusted EBITDA between $935 million to $965 million.

Related: Quarterly Financials Up, Yearly Financials Down for Encompass

Encompass did note that it has received $213 million in relief fund payments from the federal government as part of the Coronavirus Aid, Relief, and Economic Security Act of 2020, the $2.2 trillion economic stimulus package signed in late March by President Donald Trump.

The company also established a paid time off program earlier this month to recognize "eligible frontline employees" for their efforts combating the coronavirus outbreak. The company estimates that the investment will hit $50 million and benefit more than 21,000 employees.