Enhabit(EHAB) - 2025 Q2 - Quarterly Results

CEO Commentary 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] - Home health benefited from payer contract initiatives, with admissions growing 1.3% year over year and Medicare Fee-for-Service census stabilizing[2] - Hospice achieved its sixth consecutive quarter of growth, with average daily census (ADC) rising 12.3% year over year[2] - The company strengthened its balance sheet by reducing bank debt and increasing liquidity, positioning it for success in the second half of 2025[2] Recent Company Highlights 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] - Hospice average daily census (ADC) increased 12.3% year over year, marking sequential growth every quarter since Q1 2024[5] - Hospice Adjusted EBITDA increased 53.8% year over year[5] Financial Results - Consolidated 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 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] Balance Sheet and Debt Management 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] - Reduced bank debt by $10.0 million in Q2 2025[8] - Total prepayments of $45 million since Q1 2024, resulting in a $3.2 million reduction in interest expense over the same period[8] Segment Results 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 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 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 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 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] - 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 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] - The company operates 249 home health locations and 114 hospice locations across 34 states[14] - Enhabit leverages advanced technology and compassionate teams to deliver patient care in the home[14] Other Information 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 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][17] - 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] - 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] Note regarding presentation of same-store comparisons 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] - These comparisons include financial results of market consolidation transactions in existing markets, as their incremental impact is difficult to determine precisely[19] Condensed Consolidated Financial Statements 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 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 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 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] - Principal payments on debt and revolving credit facility payments were significant components of cash used in financing activities[25] Supplemental Non-GAAP Information 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 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] Reconciliation of Net Income to Adjusted EBITDA 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 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 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] Reconciliation of Gross Margin to Adjusted EBITDA Margin 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 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] - 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] - The company undertakes no duty to publicly update or revise forward-looking information[39] 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] - Media contact: Erin Volbeda, media@ehab.com, 972-338-5141[40]