Core Viewpoint - Enhabit (EHAB) is showing solid improvement in earnings estimates, which may lead to continued short-term price momentum and a positive earnings outlook [1][2]. Estimate Revisions - The upward trend in earnings estimate revisions reflects growing analyst optimism regarding Enhabit's earnings prospects, which is expected to positively impact its stock price [2]. - For the current quarter, the earnings estimate is $0.07 per share, unchanged from the previous year, with a Zacks Consensus Estimate increase of 18.18% over the last 30 days due to one upward revision [4]. - For the full year, Enhabit is expected to earn $0.37 per share, representing a 76.19% increase from the prior year, with a 26.14% increase in consensus estimates driven by three upward revisions [5]. Zacks Rank - Enhabit currently holds a Zacks Rank 2 (Buy), indicating promising estimate revisions and a strong potential for outperformance compared to the S&P 500 [6]. - The Zacks Rank system has a proven track record, with Zacks 1 (Strong Buy) stocks averaging a +25% annual return since 2008 [3]. Stock Performance - Enhabit has experienced a 6.4% gain over the past four weeks, driven by solid estimate revisions, suggesting that its earnings growth prospects may lead to further stock price increases [7].

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]

Financial Data and Key Metrics Changes - Consolidated net revenue for Q4 was $258.2 million, reflecting 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, an increase of $0.6 million or 2.4% sequentially, remaining relatively flat year over year [28] - Home Health revenue decreased by $0.6 million or 0.3% sequentially, while hospice revenue increased by $5.2 million or 9.9% sequentially [31][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 same-store up 7% [17] - Home Health adjusted EBITDA totaled $35.5 million in Q4, reflecting a sequential decrease of $1.0 million or 2.7% [32] Market Data and Key Metrics Changes - 72% of Home Health census is now in episodic payers, indicating a shift towards a more favorable payer mix [30] - Hospice ADC of 3,729 is 3.9% higher than the previous post-spin segment peak in Q4 of 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 census growth and payer innovation contracts [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 ability to maintain growth momentum into 2025, particularly in hospice operations [55] - The company anticipates a foundational year in 2024 to set the stage for consistent census growth and improved payer mix [46] - Management highlighted the importance of managing visits per episode to maintain high-quality outcomes while increasing clinical capacity [12] Other Important Information - The company generated approximately $54 million of adjusted free cash flow during 2024, with a conversion rate of approximately 54% [42] - 2025 guidance for net service revenue is projected between $1.05 billion to $1.08 billion, with adjusted EBITDA in the range of $101 million to $107 million [43] Q&A Session Summary Question: How does the momentum in Q4 carry over into 2025? - Management is confident in the case management model and the business development team's ability to convert referrals quickly, expecting continued sequential growth [60] Question: What visibility exists regarding payer innovation contracts? - 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 guidance? - The guidance includes an expectation of $19 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? - The hospice cap accrual benefit was about $1.4 million, and normalizing for that shows consistency with expected Medicare rate increases [72]

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 ...

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]