Enhabit(US:EHAB)2025-03-06 22:42Financial Data and Key Metrics Changes - Consolidated net revenue for Q4 was $258.2 million, reflecting a sequential increase of $4.6 million or 1.8% quarter over quarter, but a decrease of $2.4 million or 0.9% year over year [27] - Consolidated adjusted EBITDA for Q4 was $25.1 million, an increase of $0.6 million or 2.4% sequentially, remaining relatively flat year over year [28] - Home Health revenue decreased by $0.6 million or 0.3% sequentially, while hospice revenue increased by $5.2 million or 9.9% sequentially [31][36] Business Line Data and Key Metrics Changes - Home Health admissions grew by 1.8% year over year, with non-Medicare admissions up 10.7% [7] - Hospice average daily census (ADC) increased by 8.6% year over year, with same-store up 7% [17] - Home Health adjusted EBITDA totaled $35.5 million in Q4, reflecting a sequential decrease of $1.0 million or 2.7% [32] Market Data and Key Metrics Changes - 72% of Home Health census is now in episodic payers, indicating a shift towards a more favorable payer mix [30] - Hospice ADC of 3,729 is 3.9% higher than the previous post-spin segment peak in Q4 of 2022 [38] Company Strategy and Development Direction - The company is focused on executing growth strategies in both Home Health and Hospice segments, with a strong emphasis on census growth and payer innovation contracts [6][19] - A de novo strategy was implemented, successfully opening six new locations in 2024, with plans for fourteen more projects in process [20] - The company aims to optimize its cost structure by closing or consolidating branches, expecting to improve adjusted EBITDA by approximately $1 million [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to maintain growth momentum into 2025, particularly in hospice operations [55] - The company anticipates a foundational year in 2024 to set the stage for consistent census growth and improved payer mix [46] - Management highlighted the importance of managing visits per episode to maintain high-quality outcomes while increasing clinical capacity [12] Other Important Information - The company generated approximately $54 million of adjusted free cash flow during 2024, with a conversion rate of approximately 54% [42] - 2025 guidance for net service revenue is projected between $1.05 billion to $1.08 billion, with adjusted EBITDA in the range of $101 million to $107 million [43] Q&A Session Summary Question: How does the momentum in Q4 carry over into 2025? - Management is confident in the case management model and the business development team's ability to convert referrals quickly, expecting continued sequential growth [60] Question: What visibility exists regarding payer innovation contracts? - Management noted ongoing discussions with regional plans on episodic contracts, indicating a renewed interest in moving towards episodic arrangements [64] Question: How do the new opportunities and historical agreements relate to guidance? - The guidance includes an expectation of $19 to $21 million in overall revenue improvement based on pricing, without assuming material incremental unit revenues from payer innovation [70] Question: Can you break down the components of hospice revenue per day? - The hospice cap accrual benefit was about $1.4 million, and normalizing for that shows consistency with expected Medicare rate increases [72]