The Medical Services sector is evolving rapidly, driven by digital health advances, wider adoption of value-based care and heightened focus on patient-centric and precision medicine solutions. Demand for remote treatment continues to accelerate growth in telemedicine and AI-powered analytics, with providers using these tools to improve diagnostics, streamline operations and deliver more personalized, preventive care. According to Roots Analysis, the global healthcare analytics market was estimated at $56.64 ...

Core Insights - The session is part of a virtual home care conference hosted by BofA Securities, featuring Enhabit, a major player in the home health and hospice sector in the U.S. [2] Company Overview - Enhabit is recognized as one of the largest home health and hospice providers in the United States [2]. Leadership - The session includes insights from Barb Jacobsmeyer, the President and CEO of Enhabit, and Ryan Solomon, the CFO [2]. Audience Engagement - The audience is encouraged to participate by submitting questions through a designated window during the Q&A session [3].

Enhabit (NYSE: EHAB) Conference Call Summary Company Overview - Enhabit is one of the largest home health and hospice providers in the U.S. [2] Key Industry Insights - The final home health rate update from CMS resulted in a better outcome than initially proposed, although it still represents a cut [2][3] - Enhabit anticipates organic profitability growth in 2026 at a similar rate to 2025, despite the negative reimbursement rate [3][5] - The final rule indicates a potential end to permanent behavior adjustments by CMS, which is viewed positively by the company [7][8] Financial Performance and Projections - The company expects to target increased investments in 2026, including de novo openings and strategic M&A, due to improved balance sheet flexibility [4][12] - Temporary adjustments from CMS are projected to recoup approximately $460 million in 2026, with a total over-reimbursement of $4.76 billion anticipated over ten years [10][11] - Approximately 20% of Enhabit's Medicare Advantage (MA) census is linked to Medicare fee-for-service [16] M&A and Investment Strategy - Enhabit plans to be disciplined in M&A, focusing on accretive transactions, particularly in home health, while hospice acquisitions may be more challenging due to high multiples [12][13] - The company is looking to increase de novo investments in hospice, particularly in overlapping markets with home health [13][57] Payer Innovation and Contract Negotiations - 57% of Enhabit's non-Medicare admissions are in payer innovation contracts, up from 52% year-over-year [19] - The company is successfully renegotiating contracts, achieving low double-digit rate increases without significant disruption [21][22] - Enhabit is focusing on moving per-visit contracts towards episodic contracts to better manage patient care [25][26] Market Dynamics and Challenges - Medicare fee-for-service admissions declined by about 3% in Q3, with Enhabit maintaining a mix of 47% Medicare and 53% MA [32][33] - The company is actively working to improve its fee-for-service mix through partnerships and community care initiatives [34][36] Cost Management and Labor - Enhabit expects a decline in cost per day due to increased volume and fixed salary costs [37] - Wage inflation is projected to remain around 3% for both home health and hospice [38][46] Growth Projections - Long-term growth for both home health and hospice is expected to be in the mid to high single digits [43][49] - The hospice segment has seen robust growth, with 25% of hospice admissions coming from home health [59] Corporate Financial Health - Enhabit exited the quarter with a leverage ratio of 3.9, with plans to maintain flexibility while pursuing targeted acquisitions [60][61] - The company aims to balance free cash flow deployment with deleveraging efforts [62] Conclusion - Enhabit is positioned for growth through strategic investments, disciplined M&A, and a focus on improving profitability despite regulatory challenges in the home health and hospice sectors [4][12][60]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Strategy - Momentum investors often face challenges in determining the right entry point for fast-moving stocks, which can lead to investments with limited upside or potential downside [2] - A safer approach involves investing in bargain stocks that exhibit recent price momentum, utilizing tools like the Zacks Momentum Style Score to identify promising candidates [3] Group 2: Case Study - Enhabit (EHAB) - Enhabit (EHAB) has shown a price increase of 1.6% over the past four weeks, indicating growing investor interest [4] - The stock has gained 10.7% over the past 12 weeks, demonstrating its ability to deliver positive returns over a longer timeframe [5] - EHAB has a beta of 1.69, suggesting it moves 69% more than the market in either direction, indicating fast-paced momentum [5] Group 3: Valuation and Earnings Estimates - EHAB has a Momentum Score of B, suggesting it is an opportune time to invest in the stock [6] - The stock has a Zacks Rank 2 (Buy) due to upward revisions in earnings estimates, which typically attract more investor interest [7] - EHAB is trading at a Price-to-Sales ratio of 0.42, indicating it is relatively undervalued, as investors pay only 42 cents for each dollar of sales [7] Group 4: Additional Opportunities - Besides EHAB, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting further investment opportunities [8] - The Zacks Premium Screens offer over 45 different strategies to help identify potential winning stock picks based on various investing styles [9]

Core Insights - The company has seen success in its strategies implemented over the past few years, particularly in hospice care, which continues to outperform expectations [1] - The payer strategy in home health is beginning to yield positive results, especially in negotiations with various payers [1] - The company has focused on reducing leverage, which has contributed to improved free cash flow [1] - Overall performance for 2025 is viewed positively, with a strong start to the fourth quarter [1]

Enhabit (NYSE: EHAB) 2025 Conference Summary Company Overview - Enhabit operates in the home health and hospice industry, focusing on providing care services to patients in their homes. Key Points Industry Performance - The hospice segment has continued to outperform expectations, reinforcing the effectiveness of strategies implemented over the past few years [2][4] - Home health payer strategies are beginning to yield positive results, particularly in negotiations with various payers [2][4] Financial Performance - The company reported strong performance in 2025, with a focus on reducing leverage and improving free cash flow [2][5] - Hospice revenues increased by 20% in the quarter, driven by admissions and revenue per patient day [29] - The company anticipates low to mid-single-digit growth for home health and mid to high single-digit growth for hospice in the coming years [4] Proposed Rule Impact - The final rule from CMS is expected to be released by the end of November or early December, with expectations that it will be better than the proposed rule [6][8] - The proposed rule includes a potential 6.4% rate cut, which could create a headwind of $35 million to $40 million for the company [9][14] - Clarity on the final rule is critical for the company to strategize effectively and mitigate potential impacts [10][12] Margin and Cost Management - Hospice margins have benefited from increased volume on fixed costs, indicating durable margin profiles [5] - The company is implementing a pilot program to reduce visits per episode from 15 to 13, which could result in significant cost savings without compromising quality [11][39] Payer Relationships - The company has successfully renegotiated contracts with national payers, resulting in low double-digit increases in rates [17] - Most payer agreements are three-year contracts, with a preference for episodic arrangements to manage patient visits effectively [18] Labor Market and Workforce - The clinical workforce situation has improved compared to the pandemic years, with turnover rates returning to pre-pandemic levels [21][55] - Wage trends are stabilizing at a normal increase of 2.5% to 3% [52] Growth Strategy - Enhabit aims to open 10 new locations each year, with a focus on hospice services [37] - The company is prioritizing de novo strategies and expanding its footprint in markets where it already has home health services [34][36] Market Dynamics - The company has not observed significant changes in market dynamics despite the presence of larger competitors like Humana and UnitedHealth [22] - There is ongoing interest in the Medicare Advantage market, with potential stabilization in the transition back to fee-for-service models [23] M&A Opportunities - The company is exploring strategic M&A opportunities, particularly in smaller and medium-sized assets that do not command high multiples [60][61] - Clarity from the final rule is expected to facilitate better alignment between buyer and seller expectations in the market [62][63] Summary Outlook - Enhabit is positioned well for the end of 2025 and the start of 2026, with strong execution in hospice and improving metrics in home health [78][80] - The company is confident in its ability to navigate the proposed rule changes and maintain operational effectiveness [80]

Core Viewpoint - Enhabit (EHAB) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is influenced by changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling actions that affect stock prices [4]. Company Performance and Outlook - The upgrade for Enhabit reflects an improvement in the company's underlying business, suggesting that investors may push the stock price higher due to this positive trend [5]. - For the fiscal year ending December 2025, Enhabit is expected to earn $0.50 per share, with a 9.3% increase in the Zacks Consensus Estimate over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong track record of performance, particularly for Zacks Rank 1 stocks, which have generated an average annual return of +25% since 1988 [7]. - Enhabit’s upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].

Financial Data and Key Metrics Changes - Consolidated net revenue totaled $263.6 million, an increase of $10 million or 3.9% year over year [17] - Consolidated adjusted EBITDA was $27 million, reflecting a sequential increase of $0.1 million or 0.4% and a year-over-year increase of $2.5 million or 10.2% [18] - Net debt to adjusted EBITDA leverage ratio improved to 3.9 times, down from 5.4 times in Q4 2023 [15][26] Business Line Data and Key Metrics Changes - Home Health total admissions increased by 3.6% year over year, with a census increase of 3.7% [7] - Hospice segment revenue reached $63.1 million, reflecting a year-over-year growth of 20% [22] - Home health adjusted EBITDA totaled $33.9 million, a decrease of 7.1% year over year [20] Market Data and Key Metrics Changes - Fee-for-Service Medicare census stabilized with a decline of only 1.4% year over year, compared to a 14.1% decline in Q3 2024 [8] - Non-Medicare admissions increased by 10.4%, contributing to a 2.8% increase in non-Medicare revenue per visit year over year [8] Company Strategy and Development Direction - The company is focused on mitigating pricing headwinds from the CMS 2026 Home Health Final Rule through various strategies [29] - The de novo strategy is positively impacting total growth, with plans to open a total of 10 de novos in 2025 [11] - The company aims to improve operational efficiency and reduce costs to strategically invest in people and technology [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning within the industry, citing experienced leaders and innovative technology [13] - The company anticipates continued growth momentum into Q4 and has updated full-year guidance for revenue and adjusted EBITDA [27][28] - Management highlighted the importance of maintaining staffing productivity to offset wage inflation [44] Other Important Information - The company has successfully reduced overall bank debt by $15.5 million during the quarter, with a total reduction of $100 million since Q4 2023 [26] - Home office expenses improved to 9.1% of revenues, down from 9.9% in the prior quarter, reflecting effective cost management initiatives [25] Q&A Session Summary Question: Can you provide some color on the rate increase from the new payer innovation contract in November? - Management indicated that they cannot disclose specific updates but mentioned that more regional agreements will be coming up for renewal in the next year [33] Question: Can you provide details on the G&A expense reduction? - Management noted that the reduction came from headcount adjustments and efficiencies gained by insourcing capabilities, estimating that $1 million-$1.5 million of the improvement is durable [34] Question: What seasonal factors drive hospice performance at the end of the year? - Management acknowledged that holiday times can be unpredictable, with patients often delaying decisions until after the holidays [38] Question: How long is the typical recontracting cycle for payer innovation contracts? - Management stated that most contracts are typically three years, with some being two years [40] Question: How is the company managing labor costs and wage inflation? - Management reported an uptick in the applicant pool for nursing and therapy, with wage inflation expected to normalize around 3% [44]

Q3 2025 Performance Highlights - Consolidated net service revenue increased by 3.9% year-over-year to $263.6 million[19, 20] - Adjusted EBITDA grew by 10.2% year-over-year to $27.0 million, with an Adjusted EBITDA margin of 10.2%[19, 20] - Net income attributable to Enhabit, Inc was $11.1 million, a 110.1% increase compared to the previous year[19, 20] - Adjusted diluted EPS was $0.17, a 466.7% increase compared to the previous year[19, 20] Home Health Segment - Home health net service revenue was $200.5 million, a decrease of 0.2% year-over-year[19, 20] - Total admissions increased 3.6% year-over-year[18, 68] - Medicare admissions decreased by 5.1% year-over-year, while non-Medicare admissions increased by 10.4%[19, 68] - Cost per patient day improved by 2.1% year-over-year[19, 68] Hospice Segment - Hospice net service revenue increased by 20.0% year-over-year to $63.1 million[19, 20] - Adjusted EBITDA increased 72.0% year-over-year[19] - Average daily census grew by 12.6% year-over-year[18, 38] - Cost per patient day improved by 3.1% year-over-year[19, 44] Balance Sheet and Guidance - Reduced bank debt by $15.0 million in Q3, exiting with a 3.9x leverage ratio[19] - Total debt reduced by $100 million since Q4 2023[51] - Updated 2025 net service revenue guidance to $1.058 billion to $1.063 billion[56]

Core Insights - Enhabit reported quarterly earnings of $0.17 per share, exceeding the Zacks Consensus Estimate of $0.12 per share, and showing significant growth from $0.03 per share a year ago, resulting in an earnings surprise of +41.67% [1] - The company generated revenues of $263.6 million for the quarter ended September 2025, slightly missing the Zacks Consensus Estimate by 0.74%, but up from $253.6 million year-over-year [2] - Enhabit has surpassed consensus EPS estimates three times over the last four quarters, but has only topped revenue estimates once in the same period [2] Financial Performance - The earnings surprise of +41.67% indicates strong performance relative to expectations, while the revenue miss suggests challenges in meeting market forecasts [1][2] - The current consensus EPS estimate for the upcoming quarter is $0.13, with projected revenues of $271.08 million, and for the current fiscal year, the EPS estimate is $0.49 on revenues of $1.06 billion [7] Market Position - Enhabit shares have increased by approximately 4.4% since the beginning of the year, underperforming compared to the S&P 500's gain of 15.1% [3] - The Zacks Rank for Enhabit is currently 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Outlook - The Medical Services industry, to which Enhabit belongs, is currently ranked in the bottom 41% of over 250 Zacks industries, suggesting potential headwinds for stock performance [8] - The performance of Enhabit may be influenced by the overall outlook for the industry, as historical data shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]