Encompass Health

Encompass Health Corporation is a Birmingham, Alabama-based healthcare company focused primarily on inpatient rehabilitation. Through a nationwide network of rehabilitation hospitals, it treats patients recovering from stroke and other neurological disorders, cardiac and pulmonary conditions, brain and spinal-cord injuries, complex orthopedic conditions, amputations, and other disabling illnesses or injuries. Its clinical model generally combines medical oversight with physical, occupational, and speech therapy, with the objective of helping patients regain function and return to daily life or community settings. The company was incorporated in 1984 as Amcare, Inc. by Richard M. Scrushy and four co-founders. It initially operated outpatient rehabilitation facilities, reflecting Scrushy's view that therapy could often be delivered more efficiently outside acute-care hospitals. The company adopted the HealthSouth name in 1985, acquired its first inpatient rehabilitation hospital in 1986, and completed an initial public offering later that year. During the 1990s, HealthSouth expanded rapidly through acquisitions into inpatient and outpatient rehabilitation, ambulatory surgery, diagnostic imaging, occupational health, and acute-care hospitals. Its 1997 purchase of Horizon/CMS Healthcare significantly enlarged the rehabilitation platform, while other transactions made the company one of the largest providers in several healthcare categories. That expansion was followed by one of the most serious accounting scandals in the history of a United States public company. Between 1996 and 2003, senior executives falsified financial results on a large scale to meet market expectations. The misconduct became public in 2003 after federal investigations and disclosures by executives. The company replaced its senior leadership, restated its accounts, was temporarily delisted from the New York Stock Exchange, and undertook a major financial and operational restructuring. The fraud was later estimated at approximately $2.7 billion. HealthSouth avoided bankruptcy and gradually rebuilt its reporting systems, governance, and operating model. Under chief executive Jay Grinney, appointed in 2004, the company narrowed its focus. It sold or exited its outpatient rehabilitation, surgery-center, diagnostic-imaging, and most acute-care hospital businesses between 2006 and 2008. The resulting company concentrated on inpatient rehabilitation while continuing to develop a smaller home-health and hospice platform. It acquired Encompass Home Health & Hospice in 2014 and subsequently expanded through transactions involving CareSouth, Camellia Healthcare, Alacare, and Frontier Home Health and Hospice. The 2015 acquisition of Reliant Hospital Partners added 11 inpatient rehabilitation hospitals. In 2018, HealthSouth changed its corporate name to Encompass Health Corporation, aligning the corporate identity with its inpatient rehabilitation and home-based care businesses. In 2022, the home health and hospice operation was separated into Enhabit, Inc., leaving Encompass Health principally focused on inpatient rehabilitation hospitals. The company continues to operate in the United States and Puerto Rico and is publicly traded under the symbol EHC.

Encompass Health began as Amcare, Inc. in Birmingham, Alabama, in 1984. Richard M. Scrushy and four co-founders established the business to provide outpatient rehabilitation services, supported by founder investment and venture financing. The first facility opened in Little Rock, Arkansas, followed by a Birmingham site. In 1985, the company became HealthSouth Rehabilitation Corporation and entered inpatient rehabilitation through the purchase of its first hospital in 1986. It went public on Nasdaq in August 1986 and moved to the New York Stock Exchange in 1989. During the early and mid-1990s, HealthSouth expanded through facility development and acquisitions. The purchase of rehabilitation assets from National Medical Enterprise in 1993 made it the largest United States provider of inpatient and outpatient rehabilitation at that time. The company later acquired ReLife, entered diagnostic imaging and ambulatory surgery, and purchased additional rehabilitation, surgery, occupational-health, and imaging businesses. Its 1997 acquisition of Horizon/CMS Healthcare further increased its presence in rehabilitation and long-term care, although some acquired long-term-care assets were subsequently sold. By the end of the decade, HealthSouth had become a highly diversified healthcare operator with thousands of facilities and international operations. The company's growth model and financial reporting collapsed in the early 2000s. Executives had inflated reported results from 1996 through 2003, with the misconduct eventually estimated at roughly $2.7 billion. The crisis intensified after a 2002 earnings shortfall and stock sales by Scrushy prompted regulatory scrutiny. In 2003, executive disclosures and federal investigations exposed the accounting scheme. Scrushy and other senior executives were removed or replaced, the company cooperated with investigators, and HealthSouth was delisted from the NYSE. It hired Alvarez & Marsal to support financial restatements and negotiations with lenders. Despite fears of insolvency, the company secured financing and continued operating. The recovery involved a fundamental change in strategy. Jay Grinney became president and chief executive officer in 2004, joined by new finance and operations leaders. The company closed or sold underperforming operations, reduced corporate overhead, and disposed of assets associated with its former expansion strategy. It sold its Southside medical center to the University of Alabama at Birmingham in 2006 and divested outpatient rehabilitation, surgery-center, and diagnostic-imaging divisions during 2007. HealthSouth also sold its headquarters campus and unfinished Digital Hospital project in 2008, retaining a residual interest in part of the property. After the restructuring, the company concentrated on inpatient rehabilitation. It expanded by constructing hospitals and purchasing rehabilitation assets from other hospital systems. In 2014 it acquired Encompass Home Health & Hospice, adding a larger home health and hospice platform, and followed with acquisitions including CareSouth, Camellia Healthcare, Alacare, and Frontier Home Health and Hospice. The 2015 Reliant Hospital Partners transaction added 11 inpatient rehabilitation hospitals. The corporate name changed from HealthSouth to Encompass Health in 2018. In 2022, the home health and hospice business was separated as Enhabit, Inc. Encompass Health thereafter remained primarily a hospital-based rehabilitation company, serving patients with neurological, cardiac, pulmonary, orthopedic, spinal-cord, brain-injury, and amputation-related conditions through facilities in the United States and Puerto Rico.

1. 2022Enhabit separation

   The home health and hospice segment is spun off as Enhabit, Inc.

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2. 2018Corporate rebranding as Encompass Health

   HealthSouth Corporation adopts the Encompass Health name.

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3. 2015Reliant Hospital Partners acquired

   Eleven inpatient rehabilitation hospitals are added to the network.

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4. 2014Encompass Home Health & Hospice acquired

   The acquisition expands the company's home-based care activities.

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5. 2006Restructuring reaches major reporting milestone

   HealthSouth files its first delayed quarterly report since 2002 and is later relisted on the NYSE.

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6. 2003Accounting scandal revealed

   Investigations expose extensive financial fraud and trigger leadership replacement and restructuring.

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7. 1997Horizon/CMS Healthcare acquisition announced

   The large acquisition strengthens HealthSouth's rehabilitation and long-term-care portfolio.

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8. 1993National Medical Enterprise rehabilitation assets acquired

   The transaction substantially expands HealthSouth's inpatient and outpatient rehabilitation network.

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9. 1986First inpatient rehabilitation hospital acquired

   HealthSouth enters hospital-based inpatient rehabilitation and completes its initial public offering.

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10. 1985HealthSouth name adopted

    The company changes its name to HealthSouth Rehabilitation Corporation.

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11. 1984Amcare is incorporated

    Amcare, Inc. is founded in Birmingham as an outpatient rehabilitation provider.

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A specialized, large-scale post-acute healthcare provider centered on hospital-based rehabilitation and functional recovery.

• Inpatient rehabilitation hospitalsHospital-based rehabilitation1986

  The company's principal offering is medically supervised inpatient rehabilitation for patients who are stable enough to leave acute care but still require intensive therapy and nursing support. Hospitals commonly serve people recovering from stroke, neurological disease, brain or spinal-cord injury, cardiac or pulmonary illness, complex orthopedic procedures, and amputations. Care typically integrates physician oversight with physical, occupational, and speech-language therapy.

• Home health and hospiceHome-based care2014

  HealthSouth developed home health and hospice operations through acquisitions, including Encompass Home Health & Hospice. This business provided clinical care and support in patients' homes, but it was separated from Encompass Health in 2022 and became Enhabit, Inc.

• 2022Separation of EnhabitM&A

  The company evaluated its portfolio and sought a clearer strategic focus for hospital-based rehabilitation.

  What changed. Encompass Health separated its home health and hospice business into Enhabit, Inc.

  Aftermath. Encompass Health became principally focused on inpatient rehabilitation hospitals.

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• 2018Adoption of the Encompass Health identityStrategy

  The HealthSouth name remained associated with the company's earlier diversified model and accounting crisis.

  What changed. The corporation changed its name to Encompass Health Corporation.

  Aftermath. The new identity became the principal brand for its rehabilitation and home-based care businesses.

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• 2014Expansion into home health and hospiceM&A

  The company sought to complement hospital-based rehabilitation with post-acute care delivered in patients' homes.

  What changed. HealthSouth acquired Encompass Home Health & Hospice and subsequently expanded the platform through additional acquisitions.

  Aftermath. Home health and hospice became a significant operating segment until its 2022 separation as Enhabit.

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• 2006Refocus on inpatient rehabilitationStrategy

  The company needed to simplify its business and restore financial credibility after the accounting scandal.

  What changed. HealthSouth announced plans to sell, spin off, or otherwise dispose of its surgery, outpatient, and diagnostic divisions and used a reverse stock split in connection with its return to the NYSE.

  Aftermath. The divestitures transformed HealthSouth into a more focused inpatient rehabilitation operator.

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• 2003HealthSouth accounting fraud scandalControversy

  Senior executives were accused of directing employees to falsify earnings and financial statements between 1996 and 2003. The fraud was uncovered through executive disclosures and federal investigations, led to the removal of the executive team, and resulted in extensive restatements and restructuring. The misconduct was later estimated at approximately $2.7 billion.

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• 2022Home health and hospice business separates as Enhabit

  Encompass Health separated its home health and hospice business into the independently traded company Enhabit, sharpening the remaining company's focus on inpatient rehabilitation.

  M&A
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• 2018HealthSouth changes its name to Encompass Health

  The company adopted the Encompass Health name to represent its integrated rehabilitation and home-based care businesses.

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• 2015HealthSouth acquires Reliant Hospital Partners

  The acquisition added 11 inpatient rehabilitation hospitals in Texas, Massachusetts, and Ohio.

  M&A
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• 2006HealthSouth returns to New York Stock Exchange listing

  After completing financial reporting and restructuring work, the company was relisted on the New York Stock Exchange.

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1. Encompass Health
2. Encompass Health corporate website