Investors might want to bet on Enhabit (EHAB) , as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook.The upward trend in estimate revisions for this provider of home health and hospice services reflects growing optimism of analysts on its earnings prospects, which should get reflected in its stock price. After all, empirical research shows a stro ...

Enhabit, Inc. (NYSE:EHAB) Q4 2024 Results Conference Call March 6, 2025 10:00 AM ET Company Participants Jobie Williams - Senior Vice President and Treasurer Barb Jacobsmeyer - President and Chief Executive Officer Ryan Solomon - Chief Financial Officer Conference Call Participants Brian Tanquilut - Jefferies Ryan Langston - TD Cowen Operator Thank you for joining our call today. With me on the call is Barbara Jacobsmeyer, President and Chief Executive Officer, and Ryan Solomon, Chief Financial Officer. Bef ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to ________ Commission file number 001-41406 Enhabit, Inc. (Exact name of Registrant as specified in its charter) Delaware 47-2409192 (State or other jurisdiction o ...

Financial Data and Key Metrics Changes - In Q4 2024, consolidated net revenue was $258.2 million, a sequential increase of $4.6 million or 1.8% quarter over quarter, but a decrease of $2.4 million or 0.9% year over year [27] - Consolidated adjusted EBITDA for Q4 was $25.1 million, reflecting a sequential increase of $0.6 million or 2.4%, while remaining relatively flat year over year [28] - Home Health revenue was $200.4 million, a decrease of $0.6 million or 0.3% sequentially, primarily due to hurricane-related impacts [31] - Hospice revenue increased to $57.8 million, a sequential increase of $5.2 million or 9.9% [36] Business Line Data and Key Metrics Changes - Home Health admissions grew by 1.8% year over year, with non-Medicare admissions up 10.7% [7] - Hospice average daily census (ADC) increased by 8.6% year over year, with total admissions growing by 6.5% [17] - The percentage of home health visits in payer innovation contracts rose from 22% in Q4 2023 to 48% in Q4 2024 [11] Market Data and Key Metrics Changes - The Medicare ADC improved sequentially to 20,818 in Q4, with current Medicare ADC above 20,000 in Q1 2025 [34] - Hospice ADC of 3,729 in Q4 was 3.9% higher than the previous post-spin segment peak in Q4 2022 [38] Company Strategy and Development Direction - The company is focused on executing growth strategies in both home health and hospice segments, with a strong emphasis on payer innovation and operational efficiency [6][19] - A de novo strategy was implemented, successfully opening six new locations in 2024, with plans for fourteen more projects in process [20] - The company aims to optimize its cost structure by closing or consolidating branches, expecting to improve adjusted EBITDA by approximately $1 million [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the hospice segment's growth momentum and the effectiveness of the case management model implemented in 2023 [56] - The company anticipates a foundational year in 2024 to set the stage for consistent census growth and improved payer mix in 2025 [46] - Guidance for 2025 includes net service revenue of $1.05 billion to $1.08 billion and adjusted EBITDA of $101 million to $107 million, reflecting approximately 7% growth at the upper end [43] Other Important Information - The company generated approximately $54 million of adjusted free cash flow in 2024, with a conversion rate of approximately 54% [42] - The company plans to reduce leverage through 2025, having already reduced outstanding debt by approximately $40 million in 2024 [41] Q&A Session Summary Question: How does the momentum in Q4 carry over into 2025, especially with the business development team built out? - Management is confident in the hospice segment's growth due to the fully implemented case management model and the establishment of admission departments to improve referral conversion [60] Question: What visibility exists regarding payer innovation contracts and the potential to convert non-payer innovation contracts into better-paying deals? - Management noted ongoing discussions with regional plans on episodic contracts, indicating a renewed interest in moving towards episodic arrangements [64] Question: How do the new opportunities and historical agreements relate to the 2025 guidance? - The guidance includes an expectation of $19 million to $21 million in overall revenue improvement based on pricing, without assuming material incremental unit revenues from payer innovation [70] Question: Can you break down the components of hospice revenue per day increase? - The hospice cap accrual benefit was about $1.4 million, and normalizing for that shows consistency with expected Medicare rate increases [72]

Core Insights - Enhabit reported quarterly earnings of $0.04 per share, missing the Zacks Consensus Estimate of $0.05 per share, and down from $0.06 per share a year ago, representing an earnings surprise of -20% [1] - The company posted revenues of $258.2 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 0.37%, and down from $260.6 million year-over-year [2] - Enhabit has surpassed consensus EPS estimates two times over the last four quarters, but has not beaten consensus revenue estimates during the same period [2] Future Outlook - The immediate price movement of Enhabit shares will depend on management's commentary during the earnings call and the company's earnings outlook [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.06 on revenues of $266.6 million, and for the current fiscal year, it is $0.29 on revenues of $1.07 billion [7] - The estimate revisions trend for Enhabit is currently favorable, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance against the market [6] Industry Context - The Medical Services industry, to which Enhabit belongs, is currently in the top 35% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Net service revenue for Q4 2024 was $258.2 million, a decrease of 0.9% compared to Q4 2023[5] - The net loss attributable to Enhabit, Inc. was $46.0 million, representing a significant increase of 618.8% from a loss of $6.4 million in Q4 2023[6] - Adjusted EBITDA for Q4 2024 was $25.1 million, a slight decrease of 0.4% from $25.2 million in Q4 2023[6] - The net loss attributable to Enhabit, Inc. for the year ended December 31, 2024, was $156.2 million, compared to a net loss of $80.5 million in 2023, representing a 94.2% increase in losses[18] - The company reported a basic loss per share of $3.11 for the year 2024, compared to $1.61 in 2023, indicating a 93.2% increase in loss per share[24] - Adjusted diluted earnings per share for Q4 2024 was $0.04, compared to $0.06 in Q4 2023[24] - For the year ended December 31, 2024, Adjusted EBITDA was $100.1 million, compared to $97.6 million for 2023, reflecting a 2.6% increase[30] - Adjusted diluted EPS for the year ended December 31, 2024, was $0.21, compared to $0.22 in 2023[30] Revenue and Admissions - Home health non-Medicare admissions increased by 10.7%, contributing to a total admissions growth of 1.8% year over year[5] - Hospice average daily census rose by 8.6% year over year, with sequential increases every month since January 2024[5] - Hospice net service revenue increased by 13.1% year over year, with adjusted EBITDA rising by 13.7%[5] - Net service revenue for Q4 2024 was $258.2 million, a decrease of 1% from $260.6 million in Q4 2023[18] - Full-year 2025 guidance for net service revenue is projected between $1,050 million and $1,080 million[11] Expenses and Liabilities - Home health cost per patient day increased approximately 1% year over year, while hospice cost per patient day rose by 5.7%[5] - Goodwill impairment for the year was $161.7 million, significantly higher than the $85.8 million recorded in 2023[18] - Total assets decreased to $1,226.0 million in 2024 from $1,433.6 million in 2023, reflecting a decline of 14.5%[20] - Total liabilities decreased to $672.1 million in 2024 from $731.9 million in 2023, a reduction of 8.1%[20] - Interest expense for the year ended December 31, 2024, was $42.9 million, consistent with $43.0 million in 2023[38] Cash Flow and Financial Health - Cash and cash equivalents at the end of 2024 were $30.3 million, up from $29.8 million at the end of 2023[21] - The company experienced a net cash provided by operating activities of $51.2 million for the year 2024, slightly up from $48.4 million in 2023[21] - Adjusted free cash flow for the year ended December 31, 2024, was $53.5 million, a decrease from $58.8 million in 2023[39] - Net cash provided by operating activities for the three months ended December 31, 2024, was $(4.1) million, compared to $2.8 million in the same period of 2023[39] Operational Metrics - Operating loss for Q4 2024 was $(41.2) million, a significant decline from an operating income of $4.9 million in Q4 2023[18] - Gross margin as a percentage of revenue for the three months ended December 31, 2024, was 48.5%, slightly down from 48.8% in 2023[41] - General and administrative expenses as a percentage of revenue improved to (40.5)% in Q4 2024 from (43.9)% in Q4 2023[41] - Adjusted EBITDA margin for the year ended December 31, 2024, was 9.7%, an increase from 9.3% in 2023[41] Strategic Outlook and Risks - The company anticipates potential disruptions or breaches of information systems as a risk factor affecting future performance[42] - Future financial performance projections are subject to various risks, including regulatory developments and changes in reimbursement rates[42] - The strategic review process concluded in May 2024, which may impact future operational strategies[39] - The company is focused on successfully completing and integrating de novo locations, acquisitions, and joint ventures as part of its growth strategy[42]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than the traditional "buying low and selling high" approach, aiming for quicker profits [1] Group 1: Momentum Investing Characteristics - Fast-moving trending stocks can be difficult to enter at the right time, as they may lose momentum if future growth does not justify their high valuations [2] - A safer strategy involves investing in bargain stocks that exhibit recent price momentum, utilizing tools like the Zacks Momentum Style Score to identify such opportunities [3] Group 2: Enhabit (EHAB) Stock Analysis - Enhabit (EHAB) has shown a price increase of 5.2% over the past four weeks, indicating growing investor interest [4] - The stock has gained 10.8% over the past 12 weeks, with a beta of 1.83, suggesting it moves 83% more than the market [5] - EHAB has a Momentum Score of B, indicating a favorable time to invest based on momentum [6] Group 3: Earnings Estimates and Valuation - EHAB has received upward revisions in earnings estimates, earning a Zacks Rank 2 (Buy), which is associated with strong momentum effects [7] - The stock is trading at a Price-to-Sales ratio of 0.41, suggesting it is undervalued, as investors pay only 41 cents for each dollar of sales [7] Group 4: Additional Investment 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] - Zacks offers over 45 Premium Screens tailored to different investing styles, aiding in the identification of potential winning stocks [9]

Core Viewpoint - Enhabit, Inc. (NYSE: EHAB) is investing in the healthcare predictive analytics market, which is projected to grow at a CAGR of approximately 23%-24% [1] Company Summary - EHAB is undergoing restructuring efforts and has been involved in a strategic review, indicating a focus on improving operational efficiency and market positioning [1] - The company is positioned to capitalize on the growth in the healthcare predictive analytics sector, which aligns with its investment strategy [1] Industry Summary - The healthcare predictive analytics market is expected to experience significant growth, with a CAGR of nearly 23%-24%, highlighting a robust opportunity for companies like EHAB [1]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than the traditional "buying low and selling high" approach, aiming for quicker profits [1] Group 1: Momentum Investing Characteristics - Fast-moving trending stocks can be difficult to enter at the right time, as they may lose momentum if future growth does not justify their high valuations [2] - Investing in bargain stocks that have recently shown price momentum can be a safer strategy, utilizing tools like the Zacks Momentum Style Score to identify potential opportunities [3] Group 2: Case Study - Enhabit (EHAB) - Enhabit (EHAB) has shown a price increase of 9.7% over the past four weeks, indicating growing investor interest [4] - The stock has gained 12.8% over the past 12 weeks, with a beta of 1.82, suggesting it moves 82% more than the market [5] - EHAB has a Momentum Score of A, indicating a favorable time to invest based on its momentum [6] Group 3: Earnings Estimates and Valuation - An upward trend in earnings estimate revisions has contributed to EHAB earning a Zacks Rank 2 (Buy), which is associated with strong momentum effects [7] - EHAB is trading at a Price-to-Sales ratio of 0.42, suggesting it is undervalued at 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] - Investors can explore over 45 Zacks Premium Screens tailored to different investing styles to identify potential winning stocks [9]

Financial Data and Key Metrics Changes - Consolidated net revenue for Q3 2024 was $253.6 million, a decrease of $4.7 million or 1.8% year-over-year [31] - Consolidated adjusted EBITDA increased by $1.3 million or 5.6% year-over-year to $24.5 million [31] Business Line Data and Key Metrics Changes - Home health revenue decreased by $9.9 million or 4.7% year-over-year, primarily due to a decline in recertifications [33] - Hospice segment revenue increased by $5.2 million or 11% year-over-year, driven by an increase in patient days and higher Medicare reimbursement rates [36] - Average daily census for the hospice segment grew by 6.9% year-over-year [36] Market Data and Key Metrics Changes - Non-Medicare admissions grew by 20.1%, contributing to total admissions growth of 5.6% year-over-year [32] - The percentage of non-Medicare business in payor innovation contracts increased from 19% to 45% year-over-year [17] Company Strategy and Development Direction - The company is focusing on profitable revenue growth and plans to consolidate or close approximately eight to ten underperforming branches by early 2025 [26] - A de novo strategy is being pursued to enter new markets at low capital costs, with three new locations opened and nine additional projects in progress [28] - The company is actively evaluating ways to streamline operations and reduce costs, including outsourcing coding functions [52] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth in the hospice segment and the potential for mid- to high-single-digit revenue growth in 2025 [48] - The impact of recent hurricanes is expected to negatively affect Q4 revenue and adjusted EBITDA by approximately $2 million [44] - The company anticipates a continued focus on improving cash collection trends and reducing reserve rates over time [34] Other Important Information - The company has hired a new Chief Financial Officer, Ryan Solomon, who will assume his role on December 9 [55] - The final home health rule from CMS will result in a net payment increase of 0.5%, which is expected to positively impact revenue [23][45] Q&A Session Summary Question: Update on negotiations with UnitedHealthcare - Management indicated that while no agreement has been signed, they are optimistic about the progress and are actively working to shift capacity to payor innovation contracts [57][59] Question: Impact of branch closures on revenue - Management stated that details regarding the revenue impact of potential branch closures will be provided in the fourth quarter call, as some closures may involve consolidation with other branches [64] Question: Cost per visit metrics for 2025 - Management expects to maintain a reasonable range for wage increases and believes that operating leverage will help manage costs as volumes grow [66] Question: Business development tactics for hospice - Management highlighted the expansion of the business development team and the use of data to strengthen referral relationships as key tactics driving success [70]