Summary of Enhabit Conference Call Company Overview - Enhabit is a significant operator of home nursing services in the United States, having spun out from Encompass on July 1, 2022, with 249 home health locations and 114 hospice locations across 34 states [4][5] Core Industry Insights - The company is focusing on recruitment and retention post-pandemic, with a shift towards implementing a payer strategy, particularly in Medicare Advantage (MA) [4][6] - Enhabit has been negotiating contracts with Medicare Advantage plans to ensure fair compensation for services, which has been a two-and-a-half-year effort [6][7] Financial Performance and Projections - The company anticipates a potential $35 to $40 million headwind due to proposed cuts from the Centers for Medicare & Medicaid Services (CMS), which includes a significant 9% cut offset by market basket adjustments [7][10] - Enhabit is piloting a strategy to increase visits per episode (VPE), which could yield an annual benefit of $5 million to $8 million for each half visit reduced [13][14] Legislative and Regulatory Environment - There is a proposed legislative bill for a two-year pause on cuts to home health services, citing flawed methodologies and fraudulent data in CMS's proposals [8][9] - The company is preparing for potential disruptions in the industry due to these proposed cuts, focusing on optimizing costs and enhancing growth opportunities in hospice services [11][20] Operational Strategies - Enhabit is enhancing its operational efficiency by focusing on general and administrative (G&A) cost reductions without compromising capability [18][19] - The company is also exploring technology investments to improve clinician efficiency and documentation processes [47][48] Market Position and Competitive Landscape - Enhabit has successfully negotiated contracts with major payers, positioning itself as a full-service provider, which is crucial for maintaining market share [25][27] - The company is experiencing improved cash flows and is considering strategic M&A opportunities in light of potential industry disruptions [21][23] Growth in Hospice Services - Enhabit has seen substantial growth in its hospice platform due to improved care management and business development strategies [48][49] - The company has focused on diversifying referral sources and enhancing response times for patient admissions [49] Future Outlook - The next leadership will have opportunities to leverage technology and innovation to differentiate Enhabit in the market, particularly in attracting more clinicians and increasing market share [53][54] - The company is optimistic about its positioning and growth potential, despite the challenges posed by regulatory changes [54][55]

Company Overview - Enhabit operates nationally across 34 states with approximately 10,600 employees[5] - As of June 30, 2025, Enhabit has 249 Home Health locations and 114 Hospice locations[6] - As of June 30, 2025, 108 Hospice locations are co-located with Home Health locations[7] Industry Trends and Advocacy - The 2028 Medicare skilled home health expenditures are projected to be approximately $41 billion[9] - The 2028 Medicare Hospice expenditures are projected to be approximately $32 billion[9] - Without home health access, mortality rate increases by 41%[19] - Without home health access, episodes with readmissions increase by 34%[19] - Without home health access, episodes with emergency room visits increase 16%[19] - Without home health access, total cost of care increases by approximately $2,500[19] Financial Performance and Debt Management - Home health non-Medicare admissions increased 5.2%[38] - Hospice average daily census grew 12.3% year over year[38] - Since Q1 2024, bank debt has been reduced by $70 million[39] - Leverage ratio decreased from Q4 2023, largely due to $75 million in bank debt reduction during this period[28]

Group 1 - Enhabit, Inc. is a leading national home health and hospice provider [1] - The company will participate in the Jefferies 2025 Healthcare Services Conference [1] - Enhabit's President and CEO Barb Jacobsmeyer and CFO Ryan Solomon will engage in a fireside chat on September 30 at 10:55 a.m. CT [1] Group 2 - The fireside chat will be webcast live and available for replay on Enhabit's investor website [1]

[CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=3&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section highlights that the report contains forward-looking statements subject to risks and uncertainties, where actual results may differ materially - The report contains forward-looking statements that are subject to known and unknown risks and uncertainties, and actual results may differ materially[9](index=9&type=chunk) - Factors that could cause actual results to differ include regulatory developments, changes in reimbursement rates, general economic conditions, ability to attract and retain personnel, and potential disruptions to information systems[9](index=9&type=chunk) [PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) This section presents Enhabit, Inc.'s unaudited condensed consolidated financial statements, including income, comprehensive income, balance sheets, equity, and cash flows [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This section provides the unaudited condensed consolidated statements of income, detailing net service revenue, operating income, and net income Condensed Consolidated Statements of Income (in millions, except per share data) | Metric | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net service revenue | $266.1 | $260.6 | $526.0 | $523.0 | | Operating income | $16.7 | $11.2 | $32.6 | $24.1 | | Net income | $5.7 | $0.4 | $24.1 | $1.3 | | Net income (loss) attributable to Enhabit, Inc. | $5.2 | $(0.2) | $23.0 | $— | | Basic earnings per share attributable to Enhabit, Inc. common stockholders | $0.10 | $— | $0.45 | $— | | Diluted earnings per share attributable to Enhabit, Inc. common stockholders | $0.10 | $— | $0.45 | $— | - Net income attributable to Enhabit, Inc. significantly increased to **$5.2 million** for the three months ended June 30, 2025, from a loss of **$(0.2) million** in the prior year, and to **$23.0 million** for the six months ended June 30, 2025, from **$0 million** in the prior year[13](index=13&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the unaudited condensed consolidated statements of comprehensive income, showing net income and other comprehensive income Condensed Consolidated Statements of Comprehensive Income (in millions) | Metric | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income | $5.7 | $0.4 | $24.1 | $1.3 | | Total other comprehensive income | $0.2 | $0.1 | $0.2 | $1.4 | | Comprehensive income (loss) attributable to Enhabit, Inc. | $5.4 | $(0.1) | $23.2 | $1.4 | - Comprehensive income attributable to Enhabit, Inc. improved from a loss of **$(0.1) million** to a gain of **$5.4 million** for the three months ended June 30, 2025, and from **$1.4 million** to **$23.2 million** for the six months ended June 30, 2025[15](index=15&type=chunk) [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section details the unaudited condensed consolidated balance sheets, including assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheets (in millions) | Metric | Jun 30, 2025 | Dec 31, 2024 | | :-------------------------- | :----------- | :----------- | | Total assets | $1,225.4 | $1,226.0 | | Total liabilities | $642.5 | $672.1 | | Total stockholders' equity | $577.9 | $548.9 | | Cash and cash equivalents | $37.1 | $28.4 | | Long-term debt, net of current portion | $456.9 | $492.6 | - Cash and cash equivalents increased to **$37.1 million** at June 30, 2025, from **$28.4 million** at December 31, 2024[17](index=17&type=chunk) - Long-term debt, net of current portion, decreased to **$456.9 million** at June 30, 2025, from **$492.6 million** at December 31, 2024[17](index=17&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section outlines the unaudited condensed consolidated statements of stockholders' equity, showing changes from net income and stock-based compensation Condensed Consolidated Statements of Stockholders' Equity (in millions) | Metric | Balance at Dec 31, 2024 | Net income (6 months) | Stock-based compensation expense (6 months) | Balance at Jun 30, 2025 | | :---------------------- | :---------------------- | :-------------------- | :------------------------------------------ | :---------------------- | | Total stockholders' equity | $548.9 | $24.1 | $7.0 | $577.9 | - Net income contributed **$24.1 million** to stockholders' equity for the six months ended June 30, 2025[20](index=20&type=chunk) - Stock-based compensation expense added **$7.0 million** to stockholders' equity for the six months ended June 30, 2025[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the unaudited condensed consolidated statements of cash flows, detailing operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in millions) | Metric | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :------------------------------------------ | :-------------------------- | :-------------------------- | | Net cash provided by operating activities | $28.5 | $26.9 | | Net cash provided by (used in) investing activities | $19.0 | $(1.7) | | Net cash used in financing activities | $(38.9) | $(24.8) | | Increase in cash, cash equivalents, and restricted cash | $8.6 | $0.4 | | Cash, cash equivalents, and restricted cash at end of period | $38.9 | $30.3 | - Net cash provided by investing activities significantly improved to **$19.0 million** in 2025 from a use of **$(1.7) million** in 2024, driven by proceeds from the sale of an investment[23](index=23&type=chunk)[130](index=130&type=chunk) [1. Summary of Significant Accounting Policies](index=10&type=section&id=1.%20Summary%20of%20Significant%20Accounting%20Policies) This section details Enhabit's significant accounting policies, including its business segments and the impact of its separation from Encompass Health - Enhabit provides Medicare-certified skilled home health and hospice services in **34 states**, managed through two reportable segments: Home Health and Hospice[26](index=26&type=chunk) - The company became an independent public company on July 1, 2022, after separating from Encompass Health Corporation[27](index=27&type=chunk) Net Service Revenue by Payer Source and Segment (Three Months Ended June 30, in millions) | Payer Source | Home Health 2025 | Home Health 2024 | Hospice 2025 | Hospice 2024 | Consolidated 2025 | Consolidated 2024 | | :----------- | :--------------- | :--------------- | :----------- | :----------- | :---------------- | :---------------- | | Medicare | $116.0 | $121.7 | $59.7 | $49.5 | $175.7 | $171.2 | | Medicare Advantage | $63.7 | $61.3 | — | — | $63.7 | $61.3 | | Managed Care | $23.1 | $24.2 | $0.5 | $0.9 | $23.6 | $25.1 | | Medicaid | $1.9 | $2.4 | — | — | $1.9 | $2.4 | | Other | $1.2 | $0.6 | — | — | $1.2 | $0.6 | | Total | $205.9 | $210.2 | $60.2 | $50.4 | $266.1 | $260.6 | [2. Variable Interest Entities ("VIEs")](index=12&type=section&id=2.%20Variable%20Interest%20Entities%20(%22VIEs%22)) This section discusses Enhabit's consolidation of joint venture Variable Interest Entities (VIEs) and its role as primary beneficiary - Enhabit consolidates two joint venture VIEs, with ownership ranging from **60%** to **90%**, and acts as the primary beneficiary by managing operations and making key economic decisions[41](index=41&type=chunk) - The terms of the agreements governing the VIEs prohibit the Company from using the assets of the VIEs to satisfy the obligations of other entities[41](index=41&type=chunk) Consolidated VIEs' Assets and Liabilities (in millions) | Metric | Jun 30, 2025 | Dec 31, 2024 | | :-------------------------- | :----------- | :----------- | | Total assets | $16.7 | $16.7 | | Total liabilities | $1.0 | $1.3 | [3. Long‑Term Debt](index=13&type=section&id=3.%20Long%E2%80%91Term%20Debt) This section details Enhabit's long-term debt, including term loan facilities, revolving credit, and compliance with financial covenants Long-Term Debt Outstanding (in millions) | Metric | Jun 30, 2025 | Dec 31, 2024 | | :------------------------------------ | :----------- | :----------- | | Term loan A facility | $338.3 | $348.0 | | Advances under revolving credit facility | $135.0 | $160.0 | | Finance lease obligations | $6.0 | $7.4 | | Total debt | $479.3 | $515.4 | | Long-term debt, net of current portion | $456.9 | $492.6 | - The Covenant Adjustment Period ended on May 9, 2025, leading to a maximum permitted Total Net Leverage Ratio of **4.5 to 1.0** and a minimum Interest Coverage Ratio of **2.5 to 1.0**[53](index=53&type=chunk) - As of June 30, 2025, Enhabit was in compliance with all financial covenants under the Credit Facilities, with amounts drawn under the Term Loan A Facility and Revolving Credit Facility having an interest rate of **6.7%**[55](index=55&type=chunk)[56](index=56&type=chunk) [4. Income Taxes](index=16&type=section&id=4.%20Income%20Taxes) This section provides information on Enhabit's effective income tax rates and the anticipated impact of new tax legislation Effective Income Tax Rates | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Three Months Ended June 30 | 28.8% | (33.3)% | | Six Months Ended June 30 | 28.7% | 38.1% | - The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, is expected to affect current and deferred tax balances, with the company currently evaluating its impact[60](index=60&type=chunk) [5. Derivative Instrument](index=16&type=section&id=5.%20Derivative%20Instrument) This section describes Enhabit's interest rate swap, used to hedge interest rate exposure on its Term Loan A Facility - An interest rate swap with a **$200.0 million** notional value and October 20, 2025, maturity is used to hedge interest rate exposure on the Term Loan A Facility, where the company receives one-month SOFR and pays a fixed rate of **4.3%**[56](index=56&type=chunk)[61](index=61&type=chunk) Cash Flow Hedge Activities (in millions) | Metric | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Balance at beginning of period | $(0.2) | $0.8 | $(0.2) | $(0.5) | | Unrealized gain recognized in other comprehensive income, net of tax | $0.2 | $0.5 | $0.2 | $2.1 | | Reclassified to interest expense, net of tax | — | $(0.4) | — | $(0.7) | | Balance at end of period | $— | $0.9 | $— | $0.9 | [6. Contingencies and Other Commitments](index=17&type=section&id=6.%20Contingencies%20and%20Other%20Commitments) This section addresses Enhabit's exposure to litigation, claims, regulatory proceedings, and outlines minimum amounts due under service contracts - The company is routinely subject to litigation, claims, and regulatory proceedings in the highly regulated healthcare industry, which could materially and adversely affect its financial position[64](index=64&type=chunk) - No claims were deemed probable of loss and reasonably estimable as liabilities as of June 30, 2025, or December 31, 2024[65](index=65&type=chunk) - Minimum amounts due under service and other contracts are **$16.3 million** in 2025, **$8.0 million** in 2026, and **$3.7 million** thereafter[66](index=66&type=chunk) [7. Segment Reporting](index=17&type=section&id=7.%20Segment%20Reporting) This section details Enhabit's two reportable segments, Home Health and Hospice, and the primary measure used to evaluate their performance - Enhabit operates two reportable segments: Home Health (**249 agencies** in **33 states**) and Hospice (**114 locations** in **24 states**), both concentrated in the southern U.S[67](index=67&type=chunk) - Segment Adjusted EBITDA is the primary measure used by the Chief Operating Decision Maker to evaluate performance and allocate resources[67](index=67&type=chunk) Segment Adjusted EBITDA (in millions) | Segment | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :---------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Home Health | $39.3 | $44.2 | $77.6 | $87.4 | | Hospice | $14.0 | $9.1 | $29.0 | $18.2 | | Total Segment Adjusted EBITDA | $53.3 | $53.3 | $106.6 | $105.6 | [8. Related Party Transactions](index=19&type=section&id=8.%20Related%20Party%20Transactions) This section covers Enhabit's related party transactions, including the expiration of the Transition Services Agreement and a recent investment sale - The Transition Services Agreement (TSA) with Encompass Health, which provided certain services, expired on March 31, 2024[73](index=73&type=chunk) - On March 19, 2025, Enhabit sold its investment interest in TVG Holdings, LLC, for approximately **$21 million**, resulting in a **$19.3 million** gain on sale of investment[76](index=76&type=chunk) - **$20.0 million** of the proceeds from the investment sale were used to reduce debt under the Credit Agreement[76](index=76&type=chunk) [9. Supplemental Cash Flow Information](index=21&type=section&id=9.%20Supplemental%20Cash%20Flow%20Information) This section provides supplemental cash flow disclosures, including cash paid for income taxes and interest, and non-cash investing and financing activities Supplemental Cash Flow Disclosures (in millions) | Metric | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :------------------------------------------ | :-------------------------- | :-------------------------- | | Cash paid for income taxes, net | $0.6 | $(0.3) | | Cash paid for interest | $17.4 | $22.4 | Non-Cash Investing and Financing Activities (in millions) | Metric | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :------------------------------------------ | :-------------------------- | :-------------------------- | | Property and equipment additions through finance leases | $0.1 | $4.5 | | Operating lease additions | $6.6 | $5.3 | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=22&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on Enhabit's financial condition, operational results, liquidity, capital resources, and critical accounting estimates [Overview](index=22&type=section&id=Overview) This section provides an overview of Enhabit's business as a leading provider of home health and hospice services across the U.S - Enhabit is a leading provider of home health and hospice services in the U.S., operating **249 home health** and **114 hospice locations** across **34 states** as of June 30, 2025[80](index=80&type=chunk) - The company's operations are principally managed through two operating segments: Home Health and Hospice[81](index=81&type=chunk) [Recent Developments](index=22&type=section&id=Recent%20Developments) This section highlights recent developments, including the end of the Covenant Adjustment Period and branch closures or consolidations - The Covenant Adjustment Period for the Credit Agreement ended on May 9, 2025, providing improved pricing and operational flexibility, including for acquisitions[82](index=82&type=chunk) - Seven Home Health and four Hospice branches were closed or consolidated in the first half of 2025 due to performance[83](index=83&type=chunk) [Factors Affecting Our Performance](index=22&type=section&id=Factors%20Affecting%20Our%20Performance) This section discusses key factors influencing Enhabit's performance, primarily focusing on Medicare reimbursement rates and regulatory changes - Medicare reimbursement rates significantly impact net service revenue and are subject to annual changes[84](index=84&type=chunk) - CMS proposed a **6.4%** estimated decrease in home health payments for fiscal year 2026, which Enhabit is actively advocating against[86](index=86&type=chunk)[88](index=88&type=chunk) - CMS finalized a **2.6%** net increase to hospice payments for fiscal year 2026, effective October 1, 2025[85](index=85&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of Enhabit's consolidated results of operations, including net service revenue, operating income, and net income Consolidated Results of Operations (in millions, except percentages) | Metric | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | % Change | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | % Change | | :------------------------------------------ | :-------------------------- | :-------------------------- | :------- | :-------------------------- | :-------------------------- | :------- | | Net service revenue | $266.1 | $260.6 | 2.1% | $526.0 | $523.0 | 0.6% | | Operating income | $16.7 | $11.2 | 49.1% | $32.6 | $24.1 | 35.3% | | Net income | $5.7 | $0.4 | 1,325.0% | $24.1 | $1.3 | 1,753.8% | | Net income (loss) attributable to Enhabit, Inc. | $5.2 | $(0.2) | 2,700.0% | $23.0 | $— | N/A | - Net service revenue growth was driven by a **19.4%** increase in the Hospice segment for the three months, partially offset by a **2.0%** decrease in Home Health[94](index=94&type=chunk) - Adjusted EBITDA increased to **$26.9 million** (YoY **6.7%**) for the three months and **$53.5 million** (YoY **5.9%**) for the six months ended June 30, 2025[105](index=105&type=chunk) [Segment Results of Operations](index=26&type=section&id=Segment%20Results%20of%20Operations) This section analyzes the financial performance of Enhabit's Home Health and Hospice segments, detailing revenue changes and contributing factors Segment Net Service Revenue (in millions) | Segment | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :---------- | :--------------- | :--------------- | :--------------- | :--------------- | | Home Health | $205.9 | $210.2 | $406.5 | $423.4 | | Hospice | $60.2 | $50.4 | $119.5 | $99.6 | - Home Health net service revenue decreased by **2.0%** (3 months) and **4.0%** (6 months) due to a decrease in unit revenue per patient day, primarily from growth in non-Medicare patients[114](index=114&type=chunk)[115](index=115&type=chunk) - Hospice net service revenue increased by **19.4%** (3 months) and **20.0%** (6 months), driven by a **12.3%** increase in average daily census and improved unit revenue per patient day[120](index=120&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses Enhabit's liquidity position, including cash, credit facility availability, and cash flows from operating and investing activities - As of June 30, 2025, Enhabit had **$37.1 million** in cash and cash equivalents and **$76.4 million** available under its Revolving Credit Facility[126](index=126&type=chunk) - Net cash provided by operating activities was **$28.5 million** for the six months ended June 30, 2025, an increase from the prior year[128](index=128&type=chunk)[129](index=129&type=chunk) - Net cash provided by investing activities was **$19.0 million**, primarily from the **$21 million** sale of an investment[128](index=128&type=chunk)[130](index=130&type=chunk) [Contractual Obligations](index=32&type=section&id=Contractual%20Obligations) This section details Enhabit's consolidated contractual obligations, including long-term debt, interest, lease obligations, and purchase commitments Consolidated Contractual Obligations as of June 30, 2025 (in millions) | Obligation Type | Total | Current (Jul 1 - Dec 31, 2025) | Long-Term (2026 and thereafter) | | :---------------------------------------------------------------- | :---- | :----------------------------- | :------------------------------ | | Long-term debt, excluding revolving credit facility, finance lease obligations and unamortized debt issuance costs | $339.9 | $11.2 | $328.7 | | Revolving credit facility | $135.0 | $— | $135.0 | | Interest on long-term debt | $91.2 | $30.4 | $60.8 | | Finance lease obligations | $6.4 | $2.7 | $3.7 | | Operating lease obligations | $64.8 | $16.0 | $48.8 | | Purchase obligations | $28.0 | $22.3 | $5.7 | | **Total** | **$665.3** | **$91.4** | **$573.9** | - Expected capital expenditures for maintenance in 2025 are between **$4 million** and **$5 million**[135](index=135&type=chunk) [Critical Accounting Estimates](index=32&type=section&id=Critical%20Accounting%20Estimates) This section confirms that there have been no material changes to Enhabit's critical accounting estimates since the last annual report - There have been no material changes to critical accounting estimates from those disclosed in the Annual Report on Form 10-K for the period ended December 31, 2024[136](index=136&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=33&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Enhabit's primary market risk is interest rate exposure on variable rate debt, partially mitigated by an interest rate swap, with a 1% rate change impacting cash flow by $2.8 million - Primary market risk is exposure to interest rate changes on variable rate debt (**$135.0 million** Revolving Credit Facility, **$340.0 million** Term Loan A Facility)[138](index=138&type=chunk) - An interest rate swap with a **$200.0 million** notional value helps manage interest rate exposure[139](index=139&type=chunk) - A **1%** increase in interest rates would result in an incremental negative cash flow of **$2.8 million** over the next 12 months, while a **1%** decrease would result in an incremental positive cash flow of **$2.8 million**[140](index=140&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=33&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Enhabit's management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - Disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level as of June 30, 2025[143](index=143&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[144](index=144&type=chunk) [PART II - OTHER INFORMATION](index=34&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This part covers legal proceedings, risk factors, equity sales, other information, and a list of exhibits [ITEM 1. LEGAL PROCEEDINGS](index=34&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Enhabit is routinely involved in legal actions and regulatory proceedings, though no pending cases are currently deemed material, with potential for undisclosed "qui tam" lawsuits - Enhabit is routinely subject to legal actions, claims, and regulatory proceedings in the highly regulated healthcare industry[146](index=146&type=chunk) - The company does not believe any pending legal proceedings are currently material, but this assessment could change[146](index=146&type=chunk) - The company may be party to undisclosed "qui tam" lawsuits under the False Claims Act[147](index=147&type=chunk) [ITEM 1A. RISK FACTORS](index=34&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section confirms that there have been no material changes to the risk factors previously disclosed in Enhabit's Annual Report on Form 10-K - No material changes to risk factors were reported since the December 31, 2024 Form 10-K[148](index=148&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=34&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section reports that there were no unregistered sales of equity securities or use of proceeds during the period - No unregistered sales of equity securities or use of proceeds occurred[149](index=149&type=chunk) [ITEM 5. OTHER INFORMATION](index=34&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section states that no Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted, modified, or terminated by directors or officers - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted, modified, or terminated by directors or officers during the quarter[150](index=150&type=chunk) [ITEM 6. EXHIBITS](index=35&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed as part of the Form 10-Q, including various agreements, corporate documents, and certifications - The exhibit index includes the Separation and Distribution Agreement, Amended and Restated Certificate of Incorporation and Bylaws, the 2025 Equity and Incentive Plan, and various certifications[154](index=154&type=chunk) [SIGNATURE](index=36&type=section&id=SIGNATURE) This section confirms the official signing of the report on behalf of Enhabit, Inc. by its Chief Financial Officer - The report was signed on behalf of Enhabit, Inc. by Ryan Solomon, Chief Financial Officer, on August 7, 2025[157](index=157&type=chunk)

Financial Data and Key Metrics Changes - Consolidated net service revenue for Q2 2025 was $266.1 million, reflecting a sequential increase of $6.2 million or 2.4% and a year-over-year growth of $5.5 million or 2.1% [21] - Consolidated adjusted EBITDA was $26.9 million, an increase of $300,000 or 0.7% sequentially and $1.7 million or 6.7% year-over-year, with an adjusted EBITDA margin of 10.1%, up 40 basis points from the prior year [21][20] - Adjusted free cash flow year-to-date totaled $27.8 million, representing a 51.9% free cash flow conversion rate [26] Business Line Data and Key Metrics Changes - Home Health revenue was $205.9 million, showing sequential growth of $5.3 million or 2.6%, but down $4.3 million or 2% year-over-year [21] - Home Health adjusted EBITDA totaled $39.3 million, reflecting a sequential increase of $1 million or 2.6% [22] - Hospice revenue reached $60.2 million, with sequential growth of $900,000 or 1.5% and a year-over-year increase of $9.8 million or 19.4% [24] Market Data and Key Metrics Changes - Home Health admissions were up 1.3% year-over-year, with a normalized growth of 2% when accounting for closed branches [10] - Non-Medicare admissions increased by 5.2% year-over-year, primarily within payer innovation contracts [11] - Hospice segment experienced total admissions growth of 8.7% year-over-year, with same-store growth of 5.7% [12] Company Strategy and Development Direction - The company is focused on mitigating the impact of proposed cuts from CMS by evaluating operational levers, including advanced visit per episode management [7][10] - A de novo strategy is being implemented, with plans to open 10 new locations in areas with strong growth potential [13] - The company aims to maintain competitive wage rates to recruit and retain skilled workforce amid a highly competitive labor market [9] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns over CMS's proposed cuts, which could compromise access to home health care services and pressure provider sustainability [16][17] - The company believes it is well-positioned to outperform smaller competitors due to its scalable operating model and investments in technology [18] - Management remains confident in the full-year outlook, updating revenue guidance to a range of $1.06 billion to $1.073 billion [27] Other Important Information - The CEO announced plans to step down in July 2026, emphasizing the need for new leadership to elevate the company [29][30] - The company has successfully reduced overall bank debt by $10.5 million during the quarter [26] Q&A Session Summary Question: How is the company thinking about mitigating the negative impact of the proposed home nursing rule? - Management indicated that various operational levers are being considered, including the advanced PPE initiative, which will be piloted in the coming weeks [34] Question: Can you provide details on the recent payer disruption and its impact? - The company successfully renegotiated a national payer contract, achieving a low double-digit increase in per visit rates, and has since regained a significant portion of the lost census [36][37] Question: What are the longer-term leverage targets before pivoting to M&A or heavier investments? - Management stated that while specific leverage targets have not been provided, the focus remains on deleveraging the balance sheet before considering M&A activities [52] Question: Can you elaborate on the pilot programs and what success will look like? - The pilot programs will focus on operationalizing advanced visit per episode management, with success gauged by the ability to free up capacity and direct it to additional patient loads [62][64]

Financial Performance - Total net service revenue increased by 2.1% year-over-year to $266.1 million in Q2 2025[20] - Hospice net service revenue increased significantly by 19.4% year-over-year to $60.2 million[20] - Net income attributable to Enhabit, Inc was $5.2 million, a substantial increase compared to a loss of $0.2 million in Q2 2024[19, 20] - Adjusted EBITDA increased by 6.7% year-over-year to $26.9 million, with an Adjusted EBITDA margin of 10.1%[19, 20] - Home health net service revenue decreased by 2.0% year-over-year to $205.9 million[19, 20] Operational Metrics - Home Health non-Medicare admissions increased by 5.2% year-over-year[18, 63] - Hospice average daily census (ADC) grew by 12.3% year-over-year[18, 40] - Home Health Medicare ADC decreased by 3.4% compared to a 14.1% decline in the corresponding 2024 period[28] Debt and Liquidity - Bank debt was reduced by $10.0 million in Q2 2025, and is $70.0 million lower than Q1 2024[19] - Total debt decreased from $515.4 million at the end of 2024 to $479.3 million as of June 30, 2025[53] - Available liquidity was $113.5 million as of June 30, 2025[53, 55] Guidance - Updated 2025 net service revenue guidance to $1.06 billion to $1.073 billion[56]

Core Insights - Enhabit reported a modest revenue increase and stronger-than-expected profitability in Q2 2025, with GAAP revenue of $266.1 million, exceeding analyst expectations of $263.4 million, and up from $260.6 million in the prior year [1][2] - Non-GAAP EPS was $0.13, beating the consensus estimate of $0.10 and up from $0.07 a year earlier, prompting management to raise full-year guidance for revenue, adjusted EBITDA, and adjusted EPS [1][2][12] Financial Performance - GAAP revenue increased by 2.1% year-over-year, while non-GAAP EPS rose by 85.7% [2] - Adjusted EBITDA was $26.9 million, up 6.7% from $25.2 million in Q2 2024, with an adjusted EBITDA margin of 10.1%, an increase of 0.4 percentage points [2] - Free cash flow (non-GAAP) increased by 28.2% to $10.9 million compared to $8.5 million in the prior year [2] Business Overview - Enhabit operates in 34 states, providing skilled home health and hospice care, with 249 home health and 114 hospice locations, making it one of the largest standalone operators in the sector [3] - The business model combines Medicare and non-Medicare payers, focusing on optimizing payer contracts and expanding value-based payment arrangements [4] Segment Performance - Home health segment revenue declined by 2.0% to $205.9 million, primarily due to a 4.7% drop in Medicare revenue, while non-Medicare home health revenue rose by 1.7% [5] - The hospice segment saw significant growth, with net service revenue increasing by 19.4% to $60.2 million, and adjusted EBITDA reaching $14.0 million, up 53.8% from the prior year [7] Strategic Initiatives - Enhabit opened three new locations and paid down $10.0 million in debt as part of a deleveraging plan [8] - The company is investing in predictive analytics and technology to enhance operational efficiency and patient outcomes [4][11] Outlook - Management raised FY2025 guidance for net service revenue to between $1.060 and $1.073 billion, adjusted EBITDA to $104 to $108 million, and adjusted EPS to a range of $0.47 to $0.55 [12] - Key factors to monitor include trends in home health Medicare volumes, payer contract negotiations, and the impact of technology on productivity and quality [13]

分组1 - Enhabit reported quarterly earnings of $0.13 per share, exceeding the Zacks Consensus Estimate of $0.10 per share, and showing an increase from $0.07 per share a year ago, resulting in an earnings surprise of +30.00% [1] - The company posted revenues of $266.1 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.14%, and showing an increase from $260.6 million year-over-year [2] - Enhabit shares have underperformed the market, losing about 14.3% since the beginning of the year compared to the S&P 500's gain of 7.1% [3] 分组2 - The current consensus EPS estimate for the coming quarter is $0.11 on revenues of $266.82 million, and for the current fiscal year, it is $0.44 on revenues of $1.06 billion [7] - The Medical Services industry, to which Enhabit belongs, is currently in the top 30% of over 250 Zacks industries, indicating a favorable outlook for the sector [8] - Auna S.A., another company in the same industry, is expected to report quarterly earnings of $0.16 per share, reflecting a year-over-year change of +433.3%, with revenues expected to be $314.67 million, up 7.8% from the previous year [9]

[CEO Commentary](index=1&type=section&id=CEO%20Commentary) Enhabit's CEO, Barb Jacobsmeyer, highlighted strong execution of strategic priorities in Q2 2025, leading to sequential and year-over-year growth in revenue and Adjusted EBITDA - Strong execution of strategic 2025 priorities resulted in sequential and year-over-year growth in revenue and Adjusted EBITDA[2](index=2&type=chunk) - Home health benefited from payer contract initiatives, with admissions growing **1.3% year over year** and Medicare Fee-for-Service census stabilizing[2](index=2&type=chunk) - Hospice achieved its sixth consecutive quarter of growth, with average daily census (ADC) rising **12.3% year over year**[2](index=2&type=chunk) - The company strengthened its balance sheet by reducing bank debt and increasing liquidity, positioning it for success in the second half of 2025[2](index=2&type=chunk) [Recent Company Highlights](index=1&type=section&id=RECENT%20COMPANY%20HIGHLIGHTS) Enhabit reported a net service revenue of $266.1 million and net income of $5.2 million for Q2 2025, with significant growth in hospice Adjusted EBITDA (53.8% YoY) and home health non-Medicare admissions (5.2% YoY), while also reducing bank debt by $10.0 million Consolidated Financial Highlights (Q2 2025) | Metric | Q2 2025 Value | | :------------------------------------- | :------------ | | Net service revenue | $266.1 million | | Net income attributable to Enhabit, Inc. | $5.2 million | | Adjusted EBITDA | $26.9 million | | Earnings per share | $0.10 | | Adjusted diluted earnings per share | $0.13 | - Home health non-Medicare admissions increased **5.2% year over year**, contributing to a total admissions growth of **1.3%** (2.0% normalized for closed branches)[5](index=5&type=chunk) - Hospice average daily census (ADC) increased **12.3% year over year**, marking sequential growth every quarter since Q1 2024[5](index=5&type=chunk) - Hospice Adjusted EBITDA increased **53.8% year over year**[5](index=5&type=chunk) [Financial Results - Consolidated](index=2&type=section&id=FINANCIAL%20RESULTS) Enhabit achieved significant financial improvements in Q2 2025, with increased total net service revenue and Adjusted EBITDA, alongside a substantial reduction in net loss and continued debt prepayment efforts [Quarterly Performance Overview](index=2&type=section&id=Quarterly%20Performance%20Overview) Enhabit reported a 2.1% increase in total net service revenue to $266.1 million in Q2 2025, driven by strong hospice revenue growth, with net income attributable to Enhabit, Inc. significantly improving to $5.2 million from a loss in the prior year, and Adjusted EBITDA growing 6.7% year over year Consolidated Financial Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (millions) | Q2 2024 (millions) | % Change | | :------------------------------------- | :------ | :------ | :------- | | Home health net service revenue | $205.9 | $210.2 | (2.0)% | | Hospice net service revenue | $60.2 | $50.4 | 19.4% | | Total net service revenue | $266.1 | $260.6 | 2.1% | | Cost of service | $135.5 | $131.8 | 2.8% | | Gross margin | $130.6 | $128.8 | 1.4% | | General and administrative expenses | $103.2 | $103.0 | 0.2% | | Total operating expenses | $238.7 | $234.8 | 1.7% | | Adjusted EBITDA | $26.9 | $25.2 | 6.7% | | Adjusted EBITDA margin | 10.1% | 9.7% | | | Net income (loss) attributable to Enhabit, Inc. | $5.2 | ($0.2) | 2,700.0% | | Reported diluted EPS | $0.10 | $— | N/A | | Adjusted diluted EPS | $0.13 | $0.07 | 85.7% | - Consolidated Adjusted EBITDA grew **6.7% year over year** and **1.2% sequentially**, reaching **$26.9 million**[8](index=8&type=chunk) [Balance Sheet and Debt Management](index=2&type=section&id=Balance%20Sheet%20and%20Debt%20Management) Enhabit continued its de-levering strategy, marking the fifth consecutive quarter of debt prepayment, reducing bank debt by $10.0 million in Q2 2025, contributing to a total of $45 million in prepayments since Q1 2024, which has lowered interest expense - Consistent de-levering of the balance sheet with the fifth straight quarter of debt prepayment[8](index=8&type=chunk) - Reduced bank debt by **$10.0 million** in Q2 2025[8](index=8&type=chunk) - Total prepayments of **$45 million** since Q1 2024, resulting in a **$3.2 million reduction in interest expense** over the same period[8](index=8&type=chunk) [Segment Results](index=3&type=section&id=SEGMENT%20RESULTS) The Home Health segment experienced a slight revenue decline but growth in non-Medicare admissions, while the Hospice segment demonstrated robust growth in revenue, average daily census, and Adjusted EBITDA [Home Health Segment](index=3&type=section&id=Home%20Health%20Segment) The Home Health segment reported a 2.0% decrease in net service revenue to $205.9 million in Q2 2025, primarily due to a decline in Medicare revenue, despite which non-Medicare admissions grew by 5.2% and total admissions increased by 1.3% year over year, while Segment Adjusted EBITDA decreased by 11.1% Home Health Segment Financials (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (millions) | Q2 2024 (millions) | % Change | | :-------------------------- | :------ | :------ | :------- | | Net service revenue | $205.9 | $210.2 | (2.0)% | | Medicare net service revenue | $116.0 | $121.7 | (4.7)% | | Non-Medicare net service revenue | $87.8 | $86.3 | 1.7% | | Cost of service | $107.2 | $106.9 | 0.3% | | Segment Adjusted EBITDA | $39.3 | $44.2 | (11.1)% | | Segment Adj. EBITDA margin | 19.1% | 21.0% | | Home Health Operational Metrics (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | % Change | | :-------------------------------- | :------ | :------ | :------- | | Medicare Admissions | 23,138 | 24,015 | (3.7)% | | Non-Medicare Admissions | 31,774 | 30,209 | 5.2% | | Total Admissions | 54,912 | 54,224 | 1.3% | | Total Average daily census | 42,122 | 41,911 | 0.5% | | Revenue per episode (Medicare) | $2,988 | $2,924 | 2.2% | | Cost per patient day | $28.0 | $28.0 | —% | [Hospice Segment](index=5&type=section&id=Hospice%20Segment) The Hospice segment demonstrated strong growth in Q2 2025, with net service revenue increasing by 19.4% to $60.2 million, supported by a 12.3% rise in average daily census and an 8.7% increase in total admissions, leading to a 53.8% surge in Segment Adjusted EBITDA year over year Hospice Segment Financials (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (millions) | Q2 2024 (millions) | % Change | | :-------------------------- | :------ | :------ | :------- | | Net service revenue | $60.2 | $50.4 | 19.4% | | Cost of service | $28.3 | $24.9 | 13.7% | | Gross margin | 53.0% | 50.6% | | | Segment Adjusted EBITDA | $14.0 | $9.1 | 53.8% | | Segment Adj. EBITDA margin | 23.3% | 18.1% | | Hospice Operational Metrics (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | % Change | | :-------------------------- | :------ | :------ | :------- | | Total admissions | 3,140 | 2,888 | 8.7% | | Patient days | 359,486 | 320,026 | 12.3% | | Average daily census | 3,950 | 3,517 | 12.3% | | Revenue per patient day | $167.5 | $157.5 | 6.3% | | Cost per patient day | $78.7 | $77.9 | 1.0% | [Guidance](index=5&type=section&id=GUIDANCE) Enhabit has increased its full-year 2025 guidance for net service revenue, Adjusted EBITDA, and Adjusted EPS, reflecting strong Q2 performance and positive momentum, with updated ranges indicating higher expectations across key financial metrics compared to previous guidance Full-Year 2025 Guidance Update | Metric | 2024 Actuals (millions) | 2025 Previous Guidance (millions) | 2025 Updated Guidance (millions) | | :---------------- | :----------- | :--------------------- | :-------------------- | | Net service revenue | $1,034.8 | $1,050 to $1,080 | $1,060 to $1,073 | | Adjusted EBITDA | $100.1 | $101 to $107 | $104 to $108 | | Adjusted EPS | $0.21 | $0.41 to $0.51 | $0.47 to $0.55 | [Conference Call Information](index=5&type=section&id=CONFERENCE%20CALL%20INFORMATION) Enhabit will host an investor conference call on August 7, 2025, at 10 a.m. EDT to discuss its Q2 2025 results, with details for accessing the live call via phone or webcast, as well as replay information, provided - An investor conference call will be held on **August 7, 2025, at 10 a.m. EDT** to discuss Q2 2025 results[13](index=13&type=chunk) - Access to the live call is available via toll-free phone (888) 660-6150 (Conference ID: 5248158) or a simultaneous webcast at https://events.q4inc.com/attendee/680483829[13](index=13&type=chunk) - A replay of the call will be available on the Company's website at http://investors.ehab.com[13](index=13&type=chunk) [About Enhabit Home Health & Hospice](index=5&type=section&id=ABOUT%20ENHABIT%20HOME%20HEALTH%20%26%20HOSPICE) Enhabit Home Health & Hospice is a leading national provider of home health and hospice care, operating 249 home health and 114 hospice locations across 34 states, focusing on expanding patient care in the home through advanced technology and compassionate teams - Enhabit is a leading national home health and hospice provider[14](index=14&type=chunk) - The company operates **249 home health locations** and **114 hospice locations** across **34 states**[14](index=14&type=chunk) - Enhabit leverages advanced technology and compassionate teams to deliver patient care in the home[14](index=14&type=chunk) [Other Information](index=7&type=section&id=OTHER%20INFORMATION) This section clarifies the company's use of non-GAAP financial measures and same-store comparisons, detailing their methodologies and limitations for financial reporting [Note regarding presentation and reconciliation of non-GAAP financial measures](index=7&type=section&id=Note%20regarding%20presentation%20and%20reconciliation%20of%20non-GAAP%20financial%20measures) Enhabit utilizes non-GAAP financial measures like Adjusted EBITDA and Adjusted EPS to provide investors with a clearer view of core business operating results, unaffected by unusual or nonrecurring items, with the methodology for Adjusted free cash flow modified in 2025 to align with management's internal performance evaluation, and prior periods recast for conformity, noting the difficulty in reconciling forward-looking non-GAAP guidance to GAAP measures - Non-GAAP financial measures (e.g., Adjusted EBITDA, Adjusted EPS) are used to facilitate evaluation of core business operating results over multiple periods, excluding unusual or nonrecurring items[16](index=16&type=chunk)[17](index=17&type=chunk) - The methodology for calculating Adjusted free cash flow was modified in 2025 to exclude the impact of unusual or nonrecurring items on cash income taxes and changes in working capital, with prior periods recast[16](index=16&type=chunk) - The company is unable to reconcile guidance for Adjusted EBITDA and Adjusted EPS to corresponding GAAP measures without unreasonable effort due to the unpredictability of certain items[18](index=18&type=chunk) [Note regarding presentation of same-store comparisons](index=7&type=section&id=Note%20regarding%20presentation%20of%20same-store%20comparisons) Enhabit uses 'same-store' comparisons to analyze changes in performance metrics, which include locations open throughout both the current and prior periods, also incorporating market consolidation transactions in existing markets, as isolating their precise incremental impact is challenging - Same-store comparisons are calculated based on home health and hospice locations open throughout both the full current and immediately prior periods[19](index=19&type=chunk) - These comparisons include financial results of market consolidation transactions in existing markets, as their incremental impact is difficult to determine precisely[19](index=19&type=chunk) [Condensed Consolidated Financial Statements](index=8&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents Enhabit's consolidated statements of income, balance sheets, and cash flows, detailing the company's financial performance, position, and liquidity for the reported periods [Condensed Consolidated Statements of Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For Q2 2025, Enhabit reported net service revenue of $266.1 million, an operating income of $16.7 million, and net income attributable to Enhabit, Inc. of $5.2 million, a significant improvement from a net loss in Q2 2024, with year-to-date figures also showing substantial growth in net income Condensed Consolidated Statements of Income (Q2 and YTD June 30) | (in millions, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net service revenue | $266.1 | $260.6 | $526.0 | $523.0 | | Operating income | $16.7 | $11.2 | $32.6 | $24.1 | | Net income | $5.7 | $0.4 | $24.1 | $1.3 | | Net income (loss) attributable to Enhabit, Inc. | $5.2 | ($0.2) | $23.0 | $— | | Diluted earnings per share attributable to Enhabit, Inc. common stockholders | $0.10 | $— | $0.45 | $— | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, Enhabit's total assets were $1,225.4 million, slightly down from December 31, 2024, with a decrease in total liabilities to $642.5 million, while total stockholders' equity increased to $577.9 million, reflecting improved financial health Condensed Consolidated Balance Sheets (June 30, 2025 vs Dec 31, 2024) | (in millions) | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $37.1 | $28.4 | | Total current assets | $205.5 | $192.7 | | Goodwill | $900.0 | $900.0 | | Total assets | $1,225.4 | $1,226.0 | | Total current liabilities | $130.9 | $126.2 | | Long-term debt, net of current portion | $456.9 | $492.6 | | Total liabilities | $642.5 | $672.1 | | Total stockholders' equity | $577.9 | $548.9 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, Enhabit generated $28.5 million in net cash from operating activities, an increase from the prior year, with investing activities providing $19.0 million, primarily due to proceeds from the sale of an investment, and financing activities resulting in a net cash outflow of $38.9 million, reflecting debt payments Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30) | (in millions) | 2025 | 2024 | | :------------------------------------------ | :----- | :----- | | Net cash provided by operating activities | $28.5 | $26.9 | | Net cash provided by (used in) investing activities | $19.0 | ($1.7) | | Net cash used in financing activities | ($38.9) | ($24.8) | | Increase in cash, cash equivalents, and restricted cash | $8.6 | $0.4 | | Cash, cash equivalents, and restricted cash at end of period | $38.9 | $30.2 | - Proceeds from the sale of investment contributed **$21.0 million** to investing activities in 2025[25](index=25&type=chunk) - Principal payments on debt and revolving credit facility payments were significant components of cash used in financing activities[25](index=25&type=chunk) [Supplemental Non-GAAP Information](index=11&type=section&id=Supplemental%20Non-GAAP%20Information) This section provides detailed reconciliations of GAAP to non-GAAP financial measures, including Adjusted EPS, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Free Cash Flow, and Adjusted EBITDA Margin, offering a comprehensive view of operational performance [Reconciliation of Earnings Per Share to Adjusted Diluted Earnings Per Share](index=11&type=section&id=Reconciliation%20of%20Earnings%20Per%20Share%20to%20Adjusted%20Diluted%20Earnings%20Per%20Share) Enhabit's Adjusted diluted EPS for Q2 2025 was $0.13, an 85.7% increase from $0.07 in Q2 2024, with this adjustment primarily accounting for unusual or nonrecurring operational items and income tax adjustments, providing a clearer view of ongoing earnings Reconciliation of EPS to Adjusted Diluted EPS (Q2 and YTD June 30) | (actual amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Diluted earnings per share attributable to Enhabit, Inc. common stockholders | $0.10 | $— | $0.45 | $— | | Gain on sale of investment and disposal of assets | — | — | (0.29) | — | | Unusual or nonrecurring items that are not typical of ongoing operations | 0.02 | 0.07 | 0.04 | 0.13 | | Income tax adjustments | 0.01 | — | 0.04 | 0.01 | | Adjusted diluted earnings per share | $0.13 | $0.07 | $0.23 | $0.14 | - Unusual or nonrecurring items in Q2 2025 included costs for restructuring, severance, nonroutine litigation, and third-party legal/advisory fees[27](index=27&type=chunk) [Reconciliation of Net Income to Adjusted EBITDA](index=12&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20EBITDA) Enhabit's Adjusted EBITDA for Q2 2025 was $26.9 million, up from $25.2 million in Q2 2024, with this reconciliation adjusting net income for interest, taxes, depreciation, amortization, stock-based compensation, noncontrolling interests, and unusual or nonrecurring items to reflect operational profitability Reconciliation of Net Income to Adjusted EBITDA (Q2 and YTD June 30) | ($ in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $5.7 | $0.4 | $24.1 | $1.3 | | Interest expense and amortization of debt discounts and fees | 8.7 | 10.9 | 18.1 | 22.0 | | Provision for (benefit from) income taxes | 2.3 | (0.1) | 9.7 | 0.8 | | Depreciation and amortization | 5.7 | 7.6 | 12.0 | 15.4 | | Gain on sale of investment and disposal of assets | — | — | (19.3) | (0.2) | | Stock-based compensation | 3.6 | 2.2 | 7.6 | 4.0 | | Net income attributable to noncontrolling interests | (0.5) | (0.6) | (1.1) | (1.3) | | Unusual or nonrecurring items that are not typical of ongoing operations | 1.4 | 4.8 | 2.4 | 8.5 | | Adjusted EBITDA | $26.9 | $25.2 | $53.5 | $50.5 | [Reconciliation of Income Before Income Taxes and Noncontrolling Interests to Segment Adjusted EBITDA](index=13&type=section&id=Reconciliation%20of%20Income%20Before%20Income%20Taxes%20and%20Noncontrolling%20Interests%20to%20Segment%20Adjusted%20EBITDA) Total Segment Adjusted EBITDA for Q2 2025 remained flat year-over-year at $53.3 million, with the Home Health segment's Adjusted EBITDA at $39.3 million (19.1% margin) and the Hospice segment's Adjusted EBITDA significantly increasing to $14.0 million (23.3% margin), reflecting strong performance in hospice Reconciliation to Total Segment Adjusted EBITDA (Q2 and YTD June 30) | ($ in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income before income taxes and noncontrolling interests | $8.0 | $0.3 | $33.8 | $2.1 | | Non-segment general and administrative expenses | 27.8 | 32.9 | 55.5 | 63.4 | | Interest expense and amortization of debt discounts and fees | 8.7 | 10.9 | 18.1 | 22.0 | | Depreciation and amortization | 5.7 | 7.6 | 12.0 | 15.4 | | Gain on sale of investment | — | — | (19.3) | — | | Stock-based compensation expense | 3.6 | 2.2 | 7.6 | 4.0 | | Net income attributable to noncontrolling interests | (0.5) | (0.6) | (1.1) | (1.3) | | Total Segment Adjusted EBITDA | $53.3 | $53.3 | $106.6 | $105.6 | Segment Adjusted EBITDA Breakdown (Q2 and YTD June 30) | ($ in millions) | Home Health Q2 2025 | Home Health Q2 2024 | Hospice Q2 2025 | Hospice Q2 2024 | Home Health YTD 2025 | Home Health YTD 2024 | Hospice YTD 2025 | Hospice YTD 2024 | | :-------------------------- | :------------------ | :------------------ | :-------------- | :-------------- | :------------------- | :------------------- | :--------------- | :--------------- | | Net service revenue | $205.9 | $210.2 | $60.2 | $50.4 | $406.5 | $423.4 | $119.5 | $99.6 | | Segment Adjusted EBITDA | $39.3 | $44.2 | $14.0 | $9.1 | $77.6 | $87.4 | $29.0 | $18.2 | | Segment Adjusted EBITDA margin | 19.1% | 21.0% | 23.3% | 18.1% | 19.1% | 20.6% | 24.3% | 18.3% | [Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow](index=14&type=section&id=Reconciliation%20of%20Net%20Cash%20Provided%20by%20Operating%20Activities%20to%20Adjusted%20Free%20Cash%20Flow) Enhabit's Adjusted free cash flow for Q2 2025 was $10.9 million, an increase from $8.5 million in Q2 2024, with this metric adjusting net cash from operating activities for unusual items, capital expenditures for maintenance, other working capital adjustments, and distributions to noncontrolling interests Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow (Q2 and YTD June 30) | ($ in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $10.6 | $9.6 | $28.5 | $26.9 | | Unusual or nonrecurring items that are not typical of ongoing operations | 3.4 | 4.8 | 4.4 | 8.5 | | Capital expenditures for maintenance | (1.9) | (0.7) | (2.2) | (2.5) | | Other working capital adjustments | (1.1) | (3.0) | (1.9) | (3.6) | | Distributions paid to noncontrolling interests of consolidated affiliates | (0.1) | (2.2) | (1.0) | (2.2) | | Adjusted free cash flow | $10.9 | $8.5 | $27.8 | $27.1 | - For 2025 and going forward, adjusted free cash flow excludes the cash impact of unusual and nonrecurring items from both cash income tax payments (refunds), net, and working capital and other[36](index=36&type=chunk) [Reconciliation of Gross Margin to Adjusted EBITDA Margin](index=14&type=section&id=Reconciliation%20of%20Gross%20Margin%20to%20Adjusted%20EBITDA%20Margin) Enhabit's Adjusted EBITDA margin improved to 10.1% in Q2 2025 from 9.7% in Q2 2024, with this reconciliation adjusting the gross margin percentage by accounting for general and administrative expenses, stock-based compensation, noncontrolling interests, and unusual or nonrecurring items Reconciliation of Gross Margin to Adjusted EBITDA Margin (Q2 and YTD June 30) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gross margin as a percentage of revenue | 49.1% | 49.4% | 49.5% | 49.1% | | General and administrative expenses | (40.7)% | (42.2)% | (41.0)% | (41.6)% | | Stock-based compensation | 1.4% | 0.9% | 1.4% | 0.8% | | Noncontrolling interests | (0.2)% | (0.2)% | (0.2)% | (0.2)% | | Unusual or nonrecurring items that are not typical of ongoing operations | 0.5% | 1.8% | 0.5% | 1.6% | | Adjusted EBITDA margin | 10.1% | 9.7% | 10.2% | 9.7% | [Forward-Looking Statements](index=15&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section serves as a cautionary note regarding forward-looking statements within the press release, emphasizing that they are estimates based on current information and subject to various known and unknown risks and uncertainties, with the company disclaiming any duty to publicly update or revise such information - The press release contains forward-looking statements that are estimates based on current information and involve known and unknown risks and uncertainties[39](index=39&type=chunk) - Factors that could cause actual results to differ materially include regulatory developments, changes in reimbursement rates, economic conditions, ability to attract and retain personnel, and potential disruptions to information systems[39](index=39&type=chunk) - The company undertakes no duty to publicly update or revise forward-looking information[39](index=39&type=chunk) [Contacts](index=15&type=section&id=Contacts) Contact information for Enhabit's investor relations and media inquiries is provided - Investor relations contact: Bob Okunski, investorrelations@ehab.com, 469-860-6061[40](index=40&type=chunk) - Media contact: Erin Volbeda, media@ehab.com, 972-338-5141[40](index=40&type=chunk)

Core Viewpoint - Enhabit (EHAB) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - Institutional investors often rely on earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [4]. Company Performance and Outlook - The upgrade for Enhabit suggests an improvement in its underlying business, which could lead to increased stock prices as investors respond positively [5][10]. - For the fiscal year ending December 2025, Enhabit is expected to earn $0.44 per share, with the Zacks Consensus Estimate having increased by 18% 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 historical 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 [9][10].