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.

Financial Data and Key Metrics Changes - In Q1 2025, consolidated net revenue was $259.9 million, reflecting a sequential increase of $1.7 million or 0.7% quarter over quarter, but a decrease of $2.5 million or 1% year over year [16] - Consolidated adjusted EBITDA was $26.6 million, an increase of $1.5 million or 6% sequentially, and up $1.3 million or 5.1% year over year, with an overall EBITDA margin of 10.2%, an increase of 60 basis points from the prior year [17] - The leverage ratio improved to 4.4 times, below the covenant of 4.5 times, allowing for better pricing under existing agreements and additional flexibility for acquisitions [22][24] Business Line Data and Key Metrics Changes - Home Health segment revenue was $200.6 million, a slight increase of $200,000 or 0.1%, with a 3.7% increase in average daily census [18] - Hospice segment revenue reached $59.3 million, reflecting a sequential increase of $1.5 million or 2.6% and a year-over-year increase of $10.1 million or 20.5% [19] - Home Health adjusted EBITDA totaled $38.3 million, reflecting a sequential increase of $2.8 million or 7.9% [18] Market Data and Key Metrics Changes - Non-Medicare admissions in Home Health were up 7.4% year over year, driven by payer innovation contracts [8] - Hospice admissions grew 8% year over year, with same-store growth of 5.2% [10] - Average daily census in hospice reached 38.09 in Q1, an improvement of 2.1% sequentially and 12.3% year over year [20] Company Strategy and Development Direction - The company is focusing on payer contract initiatives to drive growth, with a significant increase in the percentage of home health visits under payer innovation contracts from 30.8% to 44% [9] - A de novo strategy is being implemented, with one new hospice location opened and 13 projects underway [11] - The company aims to continue leveraging technology to improve efficiency and reduce costs, including piloting two internally developed apps [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to build capacity in a normalizing labor market, with a 4% increase in capacity from December to March [29] - The company reaffirmed its 2025 guidance based on strong Q1 results and business momentum [24] - Management noted that the focus remains on balancing admissions to maintain a healthy payer mix, especially in light of negative growth in Medicare [26] Other Important Information - The company completed the transition to outsourced coding resources, expected to deliver $1.5 million in cost savings for the remainder of 2025 [12] - Free cash flow generated in Q1 was approximately $17 million, with a 63.5% conversion rate [21] Q&A Session Summary Question: Thoughts on volume growth within the non-Medicare book of business - Management noted that payer innovation contracts contributed significantly to positive growth, with a focus on hiring to improve average daily census and admissions [26][27] Question: Expectations for labor market inflation - Management indicated a return to normal salary inflation rates of 2% to 3%, with some markets experiencing tighter conditions [28] Question: Initiatives for gaining share in hospice - Management highlighted the combination of increased referrals and the establishment of regional admissions departments to improve conversion rates [31][32] Question: Dynamics behind business per episode in home health - The use of the Metalogics Pulse tool has been critical in optimizing visits per episode, focusing on higher acuity patients [33][34] Question: Capacity and productivity in hospice - Management confirmed that they are maintaining capacity at the branch level and do not anticipate changes in growth trajectory [42][43] Question: Rate increases and inflation protection in payer contracts - Most contracts are two to three years long, with some having escalators tied to quality metrics, and management is actively renegotiating contracts [48][49] Question: Declining research rates - Management acknowledged challenges in securing research for patients, particularly as Medicare Advantage grows, but emphasized a focus on overall census growth [50][52]

Enhabit, Inc. (NYSE:EHAB) Q4 2024 Results Conference Call March 6, 2025 10:00 AM ET Company Participants Jobie Williams - Senior Vice President and Treasurer Barb Jacobsmeyer - President and Chief Executive Officer Ryan Solomon - Chief Financial Officer Conference Call Participants Brian Tanquilut - Jefferies Ryan Langston - TD Cowen Operator Thank you for joining our call today. With me on the call is Barbara Jacobsmeyer, President and Chief Executive Officer, and Ryan Solomon, Chief Financial Officer. Bef ...