Summary of Enhabit (EHAB) FY Conference Call - June 10, 2025 Company Overview - **Company**: Enhabit (EHAB) - **Industry**: Home Health and Hospice Care Key Points Industry and Market Dynamics - The home health industry is experiencing mid-single-digit volume growth, with Medicare Advantage driving higher utilization compared to traditional Medicare, which is declining at approximately -4% [7][10] - The aging population is a significant factor fueling growth in home health services [7] - Enhabit has seen a decline in traditional Medicare volumes but is working to stabilize and improve this through strategic initiatives [10][35] Company Strategy and Performance - Enhabit has focused on payer innovation as a critical part of its strategy to be recognized as a full-service provider [3] - The company has made substantial investments in changing its case management clinical model for hospice, which has shown positive results in growth [4] - Enhabit aims to grow its payer innovation contracts, which have shown a year-over-year increase of approximately 15% [21] - The company has successfully renegotiated contracts with major national and regional payers, enhancing its full-service provider status [14] Financial Metrics and Projections - Enhabit reported a decline in fee-for-service volumes, improving from -13% to -7% year-over-year, with a target to further reduce this to -4% to -5% by the end of the year [35][38] - The company has a goal to maintain a Medicare revenue percentage in line with peers, currently at just under 57% [12] - The average daily census (ADC) for hospice is expected to continue growing due to improved case management and business development efforts [60] Cost Management and Efficiency - Home health cost per day increased by 1% in 2024, with a focus on managing costs through technology and optimizing visit utilization [68][70] - Hospice cost per day is projected to grow by 2% to 3%, reflecting market inflation and operational efficiencies [75] - General and administrative (G&A) costs have been effectively managed, running slightly below the target range of $27 million to $28 million per quarter [76] Regulatory and Reimbursement Environment - Enhabit is advocating for better reimbursement rates from CMS, emphasizing the need for all-payer margin analysis rather than just Medicare margins [49][50] - The company is preparing for potential clawbacks and is actively engaging with MedPAC to address reimbursement challenges [53][54] Future Outlook - Enhabit plans to continue expanding its hospice services, with a focus on early patient acceptance and education for referral sources [57][64] - The company is targeting approximately 10 new sites annually, with a focus on hospice, which is expected to contribute to overall revenue growth [61] - Enhabit aims to leverage best practices from successful markets to enhance performance across its portfolio [39] Additional Insights - The company is focused on maintaining high-quality care while managing costs effectively, ensuring a balanced approach to patient care and operational efficiency [73] - Enhabit is committed to strategic growth through organic means, de novo expansions, and potential M&A opportunities, particularly in the hospice sector [62] This summary encapsulates the key insights and strategic directions discussed during the Enhabit FY Conference Call, highlighting the company's performance, market dynamics, and future growth strategies.