Enhabit (NYSE: EHAB) Conference Call Summary Company Overview - Enhabit is one of the largest home health and hospice providers in the U.S. [2] Key Industry Insights - The final home health rate update from CMS resulted in a better outcome than initially proposed, although it still represents a cut [2][3] - Enhabit anticipates organic profitability growth in 2026 at a similar rate to 2025, despite the negative reimbursement rate [3][5] - The final rule indicates a potential end to permanent behavior adjustments by CMS, which is viewed positively by the company [7][8] Financial Performance and Projections - The company expects to target increased investments in 2026, including de novo openings and strategic M&A, due to improved balance sheet flexibility [4][12] - Temporary adjustments from CMS are projected to recoup approximately $460 million in 2026, with a total over-reimbursement of $4.76 billion anticipated over ten years [10][11] - Approximately 20% of Enhabit's Medicare Advantage (MA) census is linked to Medicare fee-for-service [16] M&A and Investment Strategy - Enhabit plans to be disciplined in M&A, focusing on accretive transactions, particularly in home health, while hospice acquisitions may be more challenging due to high multiples [12][13] - The company is looking to increase de novo investments in hospice, particularly in overlapping markets with home health [13][57] Payer Innovation and Contract Negotiations - 57% of Enhabit's non-Medicare admissions are in payer innovation contracts, up from 52% year-over-year [19] - The company is successfully renegotiating contracts, achieving low double-digit rate increases without significant disruption [21][22] - Enhabit is focusing on moving per-visit contracts towards episodic contracts to better manage patient care [25][26] Market Dynamics and Challenges - Medicare fee-for-service admissions declined by about 3% in Q3, with Enhabit maintaining a mix of 47% Medicare and 53% MA [32][33] - The company is actively working to improve its fee-for-service mix through partnerships and community care initiatives [34][36] Cost Management and Labor - Enhabit expects a decline in cost per day due to increased volume and fixed salary costs [37] - Wage inflation is projected to remain around 3% for both home health and hospice [38][46] Growth Projections - Long-term growth for both home health and hospice is expected to be in the mid to high single digits [43][49] - The hospice segment has seen robust growth, with 25% of hospice admissions coming from home health [59] Corporate Financial Health - Enhabit exited the quarter with a leverage ratio of 3.9, with plans to maintain flexibility while pursuing targeted acquisitions [60][61] - The company aims to balance free cash flow deployment with deleveraging efforts [62] Conclusion - Enhabit is positioned for growth through strategic investments, disciplined M&A, and a focus on improving profitability despite regulatory challenges in the home health and hospice sectors [4][12][60]

Core Viewpoint - The company reported a year-to-date growth of 1%, primarily impacted by reductions in the cyber and property segments [2]. Group 1: Performance Overview - The company anticipated easier growth in the second half of the year due to easing rate reductions in key segments such as D&O, cyber, and property [2]. - D&O rate reductions have started to ease after three years of significant softening, while the company managed to maintain flat rates in the North American cyber market during the July renewal season [2]. - The property market has also seen a reduction in aggressive rate cuts following a strong second quarter [2]. Group 2: Market Conditions - Despite initial predictions, the D&O and property markets remain highly competitive, which has hindered growth [3]. - The U.S. cyber market is now considered unprofitable due to increased levels of cybercrime and liability claims experienced since 2023 [3].

Core Insights - Uniswap is adjusting its fee structure, changing the allocation from 0.3% to 0.25% for liquidity providers (LP) and 0.05% for UNI buybacks [1] Group 1: Fee Structure Changes - The new fee distribution will allocate 0.25% to LPs and 0.05% for UNI buybacks [1] - This adjustment is expected to generate approximately $3.8 million in UNI buybacks over a 30-day period, based on an annual fee estimate of $2.8 billion [1] Group 2: Buyback Comparison - The projected buyback level of $3.8 million is slightly higher than the previous PUMP level of $3.5 million but lower than the HYPE level of $9.5 million [1]

Financial Data and Key Metrics Changes - Ongoing earnings for Q1 2025 were reported at $0.19 per share, aligning with expectations and reflecting the midyear implementation of new rates at PNM [5][23] - The company affirmed its guidance for 2025, projecting earnings per share in the range of $2.74 to $2.84, with a long-term EPS growth target of 7% to 9% [6][27] Business Line Data and Key Metrics Changes - TNMP set a new system peak in Q1, 22% higher than the previous year's peak, with demand-based load increasing by 9.7%, driven by growth in North and West Texas [10][11] - Data center load increased by 70 megawatts in Q1, with expectations of an additional 150 megawatts by year-end [11] Market Data and Key Metrics Changes - Interconnection requests rose by 6% compared to Q1 of the previous year, particularly in the Gulf Coast area, indicating continued growth expectations [11] - The New Mexico legislative session concluded with key bills aimed at expediting infrastructure build-out to attract new businesses [8][9] Company Strategy and Development Direction - The company is focused on a five-year capital plan that supports growth in Texas, with investments projected to increase from $600 million this year to over $1 billion starting in 2028 [13] - The regulatory agenda includes upcoming filings for rate reviews and resource applications, with a focus on balancing system needs and customer rate impacts [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to execute growth plans, emphasizing the importance of size and scale in financing large capital expenditures [37] - The company is optimistic about the impact of recent legislation on its operations and financial performance, particularly regarding the Permian transmission projects [32][66] Other Important Information - The company has not made changes to its five-year capital investment plan, maintaining a focus on customer rate impacts while addressing system needs [19][24] - The upcoming regulatory agenda includes decisions on rate reviews and resource applications, with a target for new rates implementation in Q2 of next year [15][20] Q&A Session Summary Question: Impact of House Bill 5,247 on TNMP - Management confirmed that House Bill 5,247 would be beneficial to TNMP, allowing for the grouping of costs and reducing regulatory lag [34] Question: Update on Rate Design and Capital Structure for TNMP - The major drivers of the upcoming TNMP base rate case will primarily focus on rate design, with the current capital structure being 45% equity [45][46] Question: Confidence in Execution Timeline for Permian Basin CapEx - Management expressed confidence in delivering approximately $750 million of capital, with CCNs to be filed early next year [48] Question: RFP at PNM and Targeted Ownership - The RFP process in New Mexico is progressing as expected, with an independent evaluator involved to justify resource needs [57] Question: Impact of Tariffs on Capital Plan - Management indicated that tariffs are expected to have about a 2% impact on the capital plan, consistent with other utilities [59] Question: Incremental Investment Opportunities in Transmission Development - Management noted that the overall statewide transmission investment need is approximately $4 billion over the next twenty years [60]