Core Viewpoint - Enhabit reported quarterly earnings of $0.03 per share, missing the Zacks Consensus Estimate of $0.04 per share, representing a -25% earnings surprise [1] - The company posted revenues of $253.6 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 3.09% [2] Financial Performance - Enhabit has surpassed consensus EPS estimates three times over the last four quarters [2] - Year-over-year revenue comparison shows a decline from $258.3 million to $253.6 million [2] - The current consensus EPS estimate for the upcoming quarter is $0.09 on revenues of $272.56 million, and for the current fiscal year, it is $0.26 on revenues of $1.06 billion [7] Stock Performance - Enhabit shares have declined approximately 26.6% since the beginning of the year, contrasting with the S&P 500's gain of 21.2% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Outlook - The Medical Services industry, to which Enhabit belongs, is currently ranked in the bottom 46% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Enhabit's stock performance [5]

Financial Performance - Net service revenue for Q3 2024 was $253.6 million, a decrease of 1.8% from $258.3 million in Q3 2023[4] - Adjusted EBITDA increased to $24.5 million, reflecting a 5.6% improvement year over year from $23.2 million[5] - Adjusted EPS remained flat at $0.03 compared to Q3 2023[5] - The company reported a net loss attributable to Enhabit, Inc. of $110.2 million, a significant increase from a loss of $2.4 million in Q3 2023[5] - The company reported a net loss of $109.5 million for the three months ended September 30, 2024, compared to a net loss of $2.2 million for the same period in 2023[18] - The impairment of goodwill was $107.9 million for the three months ended September 30, 2024, compared to $0 for the same period in 2023[18] - Net loss attributable to Enhabit, Inc. for Q3 2024 was $110.2 million, with a diluted EPS of $(2.20), compared to a net loss of $2.4 million and diluted EPS of $(0.05) in Q3 2023[24] - The company recorded an impairment of goodwill amounting to $107.9 million in Q3 2024, which significantly impacted the overall financial results[23] - Net loss for the three months ended September 30, 2024, was $109.5 million, compared to a loss of $2.2 million for the same period in 2023[27] Revenue Breakdown - Medicare net service revenue decreased by 16.8% to $117.3 million, while non-Medicare revenue increased by 20.9% to $81.5 million[7] - Hospice net service revenue grew by 11.0% to $52.6 million, driven by increased patient days and Medicare reimbursement rates[10] - Non-Medicare admissions rose by 20.1%, contributing to total admissions growth of 5.6% year over year[3] - Net service revenue for the three months ended September 30, 2024, was $253.6 million, a decrease of 1.1% from $258.3 million for the same period in 2023[18] Cash Flow and Debt Management - The company reduced bank debt by $10 million during the quarter[3] - The company reported net cash provided by operating activities of $55.3 million for the nine months ended September 30, 2024, compared to $45.5 million for the same period in 2023[20] - Net cash provided by operating activities for the three months ended September 30, 2024, was $28.4 million, significantly higher than $6.3 million in the same period of 2023[30] - Adjusted free cash flow for the three months ended September 30, 2024, was $30.3 million, compared to $8.6 million for the same period in 2023[30] Assets and Liabilities - Total assets decreased to $1,304.3 million as of September 30, 2024, from $1,433.6 million as of December 31, 2023[19] - Total liabilities decreased to $706.4 million as of September 30, 2024, from $731.9 million as of December 31, 2023[19] - Cash and cash equivalents increased to $45.7 million as of September 30, 2024, from $27.4 million as of December 31, 2023[19] Operational Metrics - Average daily census in the hospice segment increased by 6.9% year over year, with sequential growth every month since January 2024[11] - Same-store comparisons are used to explain changes in performance metrics, calculated based on home health and hospice locations open throughout both the current and prior periods[17] - Adjusted EBITDA for the three months ended September 30, 2024, was $24.5 million, up from $23.2 million in the prior year[27] - Adjusted EBITDA for the nine months ended September 30, 2024, was $75.0 million, consistent with the same period in 2023[25] Unusual Items and Adjustments - Unusual or nonrecurring items in Q3 2024 included costs associated with shareholder activism and restructuring activities, totaling $3.6 million[23] - The company incurred impairment of goodwill amounting to $107.9 million for the three months ended September 30, 2024[27] - The total interest expense and amortization of debt discounts and fees for the nine months ended September 30, 2024, was $32.8 million, compared to $30.7 million in the same period of 2023[26] Future Outlook - The company anticipates continued focus on strategic growth opportunities and managing costs effectively in the upcoming quarters[33] - The company revised its full-year 2024 guidance for net service revenue to a range of $1,031 million to $1,046 million[12] - The company is unable to reconcile guidance for Adjusted EBITDA and Adjusted EPS to GAAP measures due to the inherent difficulty in predicting future impacts of certain items[16] Shareholder Impact - Diluted shares outstanding increased from 50.1 million in Q3 2023 to 50.8 million in Q3 2024, indicating a slight dilution[24] - The company experienced a significant increase in stock-based compensation, which amounted to $3.8 million in Q3 2024, compared to $3.1 million in Q3 2023[24] - The adjusted diluted EPS for Q3 2024 was $0.03, a slight improvement from $0.03 in Q3 2023, despite the overall net loss[24]

Overview of Vanguard's Transaction - Vanguard Group Inc executed a significant transaction on September 30, 2024, reducing its holdings in Enhabit Inc by 626,911 shares, bringing its total stake to 2,976,480 shares [1] Insight into Vanguard Group Inc - Founded in 1975, Vanguard has become a global leader in low-cost mutual funds and ETFs, emphasizing a client-owned structure that benefits investors [2] Enhabit Inc at a Glance - Enhabit Inc operates in the healthcare sector, providing home health and hospice services across the U.S. The company has faced financial challenges, with a current market capitalization of approximately $376.119 million and a stock price of $7.48, down from its IPO [4] Impact of Vanguard's Stock Reduction - The reduction in Enhabit shares by Vanguard indicates a potential reassessment of confidence in Enhabit's financial health and market position, marking a strategic adjustment rather than a reactionary decision [5] Market and Performance Analysis of Enhabit Inc - Enhabit's stock has declined over 70% since its IPO, with a year-to-date drop of 26.38%. The company's GF Score of 25/100 and Piotroski F-Score of 4 suggest operational struggles, influencing Vanguard's decision to decrease holdings [6] Strategic Rationale Behind the Reduction - Vanguard's decision to reduce its position in Enhabit may stem from ongoing financial performance issues and a bleak market outlook for the healthcare provider, aligning with a broader risk management strategy [7] Future Prospects for Enhabit Inc - Enhabit aims to improve its core home health and hospice services but must address financial health and market strategy to reverse negative stock performance trends [8] Conclusion - Vanguard's reduction in Enhabit shares highlights a strategic shift that could have broader implications for both entities, with market conditions and company performances influencing future investment decisions [9]

Financial Data and Key Metrics Changes - Consolidated net revenue for Q2 2024 was $260.6 million, down $1.7 million or 0.6% year-over-year [13] - Consolidated adjusted EBITDA increased by $1.3 million or 5.4% year-over-year to $25.2 million [13] - Home Health segment revenue declined by $3.6 million or 1.7% primarily due to lower Medicare recertification [13] - Hospice segment revenue increased by $1.9 million or 3.9% year-over-year due to increased Medicare reimbursement rates [14] - Cost per visit in Home Health decreased by 2.2% year-over-year, contributing to adjusted EBITDA growth [13] Business Line Data and Key Metrics Changes - Home Health segment saw total admissions growth of 6.4% year-over-year, driven by a 25.2% increase in non-Medicare admissions [13] - The percentage of non-Medicare visits in payer innovation contracts rose from 6% in Q1 2023 to 43% in Q2 2024 [7] - Hospice average daily census grew 2.7% year-over-year, with sequential growth each month since January 2024 [14] Market Data and Key Metrics Changes - The leverage ratio decreased to 5.1x, down from 5.4x at year-end 2023, indicating improved financial stability [15] - Available liquidity was approximately $72 million, including $29 million in cash [15] Company Strategy and Development Direction - The company is focusing on payer innovation strategies to improve revenue and admissions, particularly in non-Medicare segments [7] - A commitment to advocacy efforts against proposed cuts in home health payments is emphasized, with ongoing engagement with trade associations [6] - The company plans to continue opening new locations as part of its de novo strategy, targeting 10 new openings per year [42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term growth potential, citing demographic trends and the cost-effectiveness of home care [17] - The company anticipates mid to high single-digit growth in home health admissions and hospice volumes over the next three years [17] - Management acknowledged challenges in Medicare fee-for-service admissions but is implementing strategies to improve performance [19][33] Other Important Information - The CFO announced plans to step down, with gratitude expressed for her contributions to the company [12] - The company has successfully eliminated contract labor, which is expected to enhance productivity and reduce costs [11] Q&A Session Summary Question: How is the company strategizing to turn Medicare fee-for-service admissions around? - The strategy focuses on building payer innovation and contracts, with a third of branches showing growth in fee-for-service business [19] Question: How much room is there to drive down cost per visit? - The company is working on productivity and optimization, with the elimination of contract labor expected to yield full benefits by January 2025 [21] Question: What is the impact of the United contract termination on revenue? - The termination is not expected to significantly impact guidance as the company has been in negotiations and has other agreements in place [32] Question: What actions are being taken to grow the Medicare business? - The company is analyzing referral sources and adjusting strategies based on payer mix shifts to improve Medicare volumes [33] Question: What is the same-store census growth for Hospice? - Same-store average daily census growth was reported at 1.2% positive [34]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________ FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2024 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 001-41406 ___________________ Enhabit, Inc. (Exact name of registrant as specified in its charter) Delaware 47-2409192 (State or other jurisdiction of incorp ...

Financial Performance - Total net service revenue decreased by 06% year-over-year to $2606 million[9] - Adjusted EBITDA increased by 54% year-over-year to $252 million[11] - Adjusted EPS increased significantly by 750% year-over-year to $007[11] - Home health net service revenue decreased by 17% to $2102 million[9] - Hospice net service revenue increased by 39% to $504 million[9] Operational Metrics - Home Health - Home health total admissions increased by 64% year-over-year[26] - Non-Medicare admissions grew significantly by 252% year-over-year[7, 26] - Cost per visit decreased by 22% year-over-year to $89[7, 8] Operational Metrics - Hospice - Hospice average daily census increased by 27% year-over-year[7, 31] - Hospice admissions increased by 18% year-over-year[7, 31] Payor Innovation - 43% of non-Medicare visits are now under payor innovation contracts at improved rates[7, 13, 18] - Non-Medicare revenue per visit increased to $147[14, 18] Debt and Liquidity - Bank debt was reduced by $15 million in the quarter, and is down $30 million year-over-year[7] - The company made a voluntary $10 million payment, reducing the outstanding balance of the revolving credit facility from $180 million to $170 million[35] Guidance - Updated 2024 net service revenue guidance to $1050 to $1063 billion[39] - Updated 2024 Adjusted EBITDA guidance to $100 to $106 million[39] - Updated 2024 Adjusted EPS guidance to $019 to $037[39]

Enhabit (EHAB) came out with quarterly earnings of $0.07 per share, beating the Zacks Consensus Estimate of $0.06 per share. This compares to earnings of $0.04 per share a year ago. These figures are adjusted for nonrecurring items. This quarterly report represents an earnings surprise of 16.67%. A quarter ago, it was expected that this provider of home health and hospice services would post earnings of $0.05 per share when it actually produced earnings of $0.07, delivering a surprise of 40%. Over the last ...

Financial Performance - Net service revenue for Q2 2024 was $260.6 million, a decrease of 0.6% compared to Q2 2023[2] - Adjusted EBITDA increased by 5.4% year over year to $25.2 million, with an adjusted EBITDA margin of 9.7%[4] - Operating income for the six months ended June 30, 2024, was $24.1 million, compared to a loss of $60.3 million for the same period in 2023[15] - Net income attributable to Enhabit, Inc. for the three months ended June 30, 2024, was a loss of $0.2 million, significantly improved from a loss of $74.4 million in the same period last year[15] - Adjusted EBITDA for Q2 2024 was $25.2 million, compared to $23.9 million in Q2 2023, reflecting a year-over-year increase of 5.4%[20] - The net income attributable to Enhabit, Inc. for the six months ended June 30, 2024, was $6.9 million, compared to a net loss of $(70.9) million in the same period of 2023[25] - Diluted EPS for Q2 2024 was $0.07, compared to a diluted EPS of $(1.49) in Q2 2023, indicating a significant recovery[21] - Adjusted earnings per share for the six months ended June 30, 2024, was $0.14, compared to $0.14 for the same period in 2023[18] Revenue and Guidance - Updated full-year 2024 guidance for net service revenue is now $1,050 to $1,063 million, down from previous guidance of $1,076 to $1,102 million[9] - Adjusted EPS guidance for 2024 was updated to a range of $0.19 to $0.37, compared to previous guidance of $0.12 to $0.43[9] - Net service revenue for the three months ended June 30, 2024, was $260.6 million, a decrease of 0.6% from $262.3 million for the same period in 2023[15] Admissions and Patient Metrics - Total admissions growth was 6.4% year over year, driven by a 25.2% increase in non-Medicare admissions[2][6] - Hospice average daily census increased by 2.7% year over year, with a sequential increase every month since January 2024[2][8] - The 30-day hospitalization readmission rate in home health is 23.3% better than the national average[2] - Average revenue per patient day in hospice increased by 0.6% year over year to $157[8] Costs and Expenses - Cost per visit decreased by 2.2% year over year, primarily due to reduced contract labor costs[7] - Total interest expense and amortization of debt discounts and fees for Q2 2024 was $(10.9) million, slightly higher than $(10.3) million in Q2 2023[21] - Stock-based compensation for Q2 2024 was $(2.2) million, compared to $(2.6) million in Q2 2023, indicating a reduction in related expenses[21] Cash Flow and Balance Sheet - Cash and cash equivalents increased to $30.2 million at the end of the period, up from $27.2 million at the beginning of the period[17] - Net cash provided by operating activities for the six months ended June 30, 2024, was $26.9 million, compared to $39.2 million for the same period in 2023[17] - Net cash provided by operating activities for the three months ended June 30, 2024, was $9.6 million, consistent with the same period in 2023[26] - Total assets as of June 30, 2024, were $1,419.0 million, a slight decrease from $1,433.6 million as of December 31, 2023[16] - Total liabilities decreased to $713.6 million as of June 30, 2024, from $731.9 million as of December 31, 2023[16] Strategic Focus and Risks - The company anticipates potential risks including regulatory developments and changes in reimbursement rates that could impact future performance[29] - The company is focused on executing strategic plans and integrating technology into operations to enhance growth opportunities[29] Unusual Items and Acquisitions - The company reported unusual or nonrecurring items in Q2 2024 totaling $(4.8) million, primarily related to shareholder activism and litigation costs[20] - The company has not reported any acquisitions during the six months ended June 30, 2024, compared to an acquisition cost of $2.8 million in the same period last year[17]

Enhabit (EHAB) appears an attractive pick, as it has been recently upgraded to a Zacks Rank #1 (Strong Buy). This rating change essentially reflects an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices. A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years. Individual inves ...

Core Insights - The management's discussion during the earnings call will significantly influence the sustainability of immediate price changes and future earnings expectations [1] - A positive Earnings ESP reading is a strong predictor of an earnings beat, especially when combined with a solid Zacks Rank [8] Earnings Estimates - The consensus EPS estimate for the upcoming quarter has remained unchanged over the last 30 days, indicating a stable reassessment by covering analysts [2] - Enhabit is expected to report earnings of $0.06 per share, reflecting a year-over-year increase of +50% [23] - The Most Accurate Estimate for Enhabit is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +63.64% [15] Revenue Expectations - Revenues for Enhabit are projected to be $265.99 million, which is an increase of 1.4% from the same quarter last year [18] Earnings Surprise History - Over the last four quarters, Enhabit has beaten consensus EPS estimates two times, indicating a mixed performance history [10] - The upcoming earnings report on August 6, 2024, could significantly impact the stock price depending on whether the results meet or exceed expectations [17] Investment Considerations - Betting on stocks expected to beat earnings expectations can increase the odds of success, making it essential to check a company's Earnings ESP and Zacks Rank before quarterly releases [5] - Enhabit is viewed as a compelling earnings-beat candidate, but investors should consider other factors before making investment decisions [11]