April Anthony tried to buy back Encompass for $ 3.6 billion before leaving

A year ago Encompass Health Corp. The subsidiary’s founder tried to buy it back for $ 3.6 billion.

That’s according to new documents filed by April Anthony, who founded the business in 1998, against the company’s lawsuit against her. The suit accused her of violating an agreement she’d not signed to recruit away employees for two years after leaving Encompass or engaging with a competitor for a year.

A Dallas County judge ruled last week that Anthony had breached her contract and ordered her to agree to the agreement. But the court declined to extend the non-compete and nonsolicitation restrictions, as Encompass requested, and narrowed the language restrictions to the grounds that they were overly broad.

The judge also held that Anthony had not violated trade secrets law.

The court has not yet issued a full explanation of its decision or the findings of fact in the case. But documents filed by Anthony and Encompass shed further light on the deterioration of her relationship with the company – including the offer she made to buy back the home health care business she’d founded.

Encompass’ deal to spin off the home health care business, now known as Enhabit, is expected to close next week. The home health division had $ 1.1 billion of net revenue in 2021.

Timothy Farrell, a partner at Ropes & Gray who represented Anthony, called Encompass’ lawsuit a “scorched earth” attempt to sideline her from the home health care industry longer than her employment contract required.

“That gambit has failed by this decision,” said Farrell, who described Encompass’ suit as a “shoot first, ask questions later” approach.

Encompass lawyer Dick Sayles said in an email that the company is “very pleased” the judge found Anthony breached his contract.

“Ms. Anthony went to extreme lengths to hide her misconduct, “Sayles wrote. “After a full week of hearing evidence, the court determined that Ms. Anthony breached the contract. That ‘s the only reason there was a lawsuit, and the only reason there was a trial because she wouldn’t admit it. “

April Anthony (fifth from left) was an award recipient in 2018 in The Dallas Morning News' ...
April Anthony (fifth from left) was an award recipient in 2018 at The Dallas Morning News’ annual top workplaces competition. (Smiley N. Pool / Staff Photographer)

Anthony sold Dallas-based Encompass Health to Birmingham, Ala.-based HealthSouth in 2014 for $ 750 million in cash and rollover equity. After the sale, Anthony stayed on as CEO of the subsidiary home health business, and HealthSouth changed its name to Encompass Health Corp. in 2018.

But in September 2020, Anthony raised the possibility of buying back a majority stake in the home health business she’d founded. In December, the company announced that it would explore a sale or spinoff for the subsidiary, which Anthony saw as a way to put her proposal into “more concrete terms,” ​​she said in court documents.

In January 2021, she made a $ 3.6 billion offer in partnership with private equity firms Vistria Group and Nautic Partners, she said in the document, which would have involved her putting in $ 250 million in capital.

That deal never went through. Anthony said Encompass would let the offer expire “without any response or engagement whatsoever.” The Encompass lawsuit said Anthony and his partners would never submit a formal bid through a sale exploring the company’s process.

The offer also raised eyebrows at Encompass, according to its lawsuit. Encompass said it hired outside attorneys to determine if the bidders had used confidential information to formulate an offer or engage in self-dealing to promote the deal.

Anthony and the president of the home health company declined to be interviewed with those lawyers who said anything untoward happened, according to the lawsuit.

Anthony kept talking to Vistria and Nautic, telling them she was interested in investing in a “potential collaboration in home health and hospice care apart from Encompass,” she said in court documents, as well as “possibly serving as a CEO again.” Those conversations also included an understanding that she had no role at a competing company or making a prohibited investment in one until the restrictions expired on her contract, the document said.

But Encompass’ original lawsuit, filed in October, accused Anthony of hiring employees to promote new business ventures by giving them equity interest, then working to cover his tracks. Vistria and Nautic would go on to invest in Chicago-based Homecare Holdings, which says the lawsuit says competes directly with Encompass.

Anthony denied in court documents having violated her nonsolicitation agreement. She said she encouraged employees to stay at Encompass and those who left for their own reasons. Anthony left Encompass in June 2021.

In the later filings, Encompass accused Anthony of “secretly calling the shots” for a vacation home from Homecare Holdings in Coeur d’Alene, Idaho. The lawsuit said she had Chris Walker, a former CFO of Encompass who resigned to become Homecare’s chief operating officer, run the company on her.

Anthony used a thumb drive to exchange documents with Walker, according to the lawsuit. That included a list of business priorities during the two drew up during a secret meeting in Coeur d’Alene, the suit said.

People involved in the plan took steps to hide Anthony’s involvement, according to the lawsuit, including leaving his name out of documents and referring to his draft presentation as “Voldemort,” from the villain. Harry Potter whose book is a taboo

Vistria and Nautic declined to comment. Walker did not respond to a request for comment in time for publication.

Anthony said in court filings that Idaho was meeting Walker about Homecare Holdings’ use of Homecare Homebase, a software platform produced by Anthony founded in 2001. Anthony was allowed to work for Homecare Homebase under the terms of his employment contract.

Anthony’s contract of non-solicit provision is in force until June 18, 2023. The restriction on his working with a competitor was effective until last Saturday – the day after the court’s ruling in the case.

Encompass Health details spinoff of $ 1 billion Dallas home health care business Enhabit

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button

Adblock Detected

Please consider supporting us by disabling your ad blocker