Based on our performance during the first quarter of the year, we’re encouraged about what lays ahead for Encompass Health the remainder of this year and to come.
As reported on our Q1 earnings call, we experienced promising volume trends that contributed to solid revenue growth.
The past 12 months have proven the resiliency of our business, and as you’ve heard me say many times, we are confident the fundamentals of our business are intact and strong. The following is the short version of what you need to know from our Q1 earnings report and what’s in store for the remainder of the year.
The following are four things to know from our Q1 earnings:
2021 is off to an encouraging start
Our average daily census was generally above fourth quarter 2020 levels throughout the first quarter, and we saw the return to discharge growth in March. For the second quarter of 2021, we expect to report strong discharge growth, since volumes were most significantly impacted by COVID-19 in the second quarter of 2020. In addition, with the continued rollout of the vaccine, we have fewer hospitals experiencing census caps due to staffing constraints related to quarantines.
In our home health and hospice segment, we are encouraged by the strong start to the new United Healthcare national contract. Non-Medicare admissions for our home health segment were at an all-time high in March 2021, primarily due to this contract. We’re also very pleased with the over 3,000 new referral sources we added during the quarter. These new referral sources along with the return of the former market leave us very encouraged about the strong organic growth opportunities for this segment beginning in the back half of the year.
Attractive business development pipelines in both segments
The aging demographic continues to drive increased demand for our services, and we’re investing to meet that demand. So far this year, we have opened two new hospitals and added 15 beds to an existing hospital. We plan to open six additional hospitals in 2021 and add over 100 more beds to existing hospitals. For 2022, we plan to open at least 12 new hospitals, and we already have three new hospitals announced for 2023.
We also are seeing a resumption of home health acquisition activity and have a solid pipeline of development opportunities. We recently announced a definitive agreement to acquire assets from Frontier Home Health and Hospice. This business is a $36 million revenue home health and hospice provider with nine home health and 11 hospice locations across five states. We expect to close this transaction in the second quarter of this year.
Increased full-year 2021 guidance
Our full-year 2021 guidance has been increased to reflect our first quarter results and the recent legislative action by Congress to extend the Medicare sequestration suspension through the end of the year. Guidance now includes the following:
- Consolidated net operating revenues of $5.06 billion to $5.23 billion
- Consolidated Adjusted EBITDA of $1 billion to $1.03 billion
- And, adjusted earnings per share of $3.94 to $4.16
Steady progress on the strategic alternatives review for home health and hospice segment
The strategic alternatives review for our home health and hospice segment is well underway. We are following a rigorous and disciplined process and continue to evaluate and prepare for all scenarios, including the full or partial separation of the segment through an initial public offering, spin-off, merger, sale or other transaction. We anticipate being able to provide an update on the status of this process with our Q2 earnings report at the end of July. While we actively pursue these strategic alternatives, we will maintain our focus on operational excellence.
We’ve had a great start to the year, and I look forward to seeing what we can accomplish in 2021 and beyond.