Enhabit(US:EHAB)2025-08-07 15:00Financial Data and Key Metrics Changes - Consolidated net service revenue for Q2 2025 was $266.1 million, reflecting a sequential increase of $6.2 million or 2.4% and a year-over-year growth of $5.5 million or 2.1% [21] - Consolidated adjusted EBITDA was $26.9 million, an increase of $300,000 or 0.7% sequentially and $1.7 million or 6.7% year-over-year, with an adjusted EBITDA margin of 10.1%, up 40 basis points from the prior year [21][20] - Adjusted free cash flow year-to-date totaled $27.8 million, representing a 51.9% free cash flow conversion rate [26] Business Line Data and Key Metrics Changes - Home Health revenue was $205.9 million, showing sequential growth of $5.3 million or 2.6%, but down $4.3 million or 2% year-over-year [21] - Home Health adjusted EBITDA totaled $39.3 million, reflecting a sequential increase of $1 million or 2.6% [22] - Hospice revenue reached $60.2 million, with sequential growth of $900,000 or 1.5% and a year-over-year increase of $9.8 million or 19.4% [24] Market Data and Key Metrics Changes - Home Health admissions were up 1.3% year-over-year, with a normalized growth of 2% when accounting for closed branches [10] - Non-Medicare admissions increased by 5.2% year-over-year, primarily within payer innovation contracts [11] - Hospice segment experienced total admissions growth of 8.7% year-over-year, with same-store growth of 5.7% [12] Company Strategy and Development Direction - The company is focused on mitigating the impact of proposed cuts from CMS by evaluating operational levers, including advanced visit per episode management [7][10] - A de novo strategy is being implemented, with plans to open 10 new locations in areas with strong growth potential [13] - The company aims to maintain competitive wage rates to recruit and retain skilled workforce amid a highly competitive labor market [9] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns over CMS's proposed cuts, which could compromise access to home health care services and pressure provider sustainability [16][17] - The company believes it is well-positioned to outperform smaller competitors due to its scalable operating model and investments in technology [18] - Management remains confident in the full-year outlook, updating revenue guidance to a range of $1.06 billion to $1.073 billion [27] Other Important Information - The CEO announced plans to step down in July 2026, emphasizing the need for new leadership to elevate the company [29][30] - The company has successfully reduced overall bank debt by $10.5 million during the quarter [26] Q&A Session Summary Question: How is the company thinking about mitigating the negative impact of the proposed home nursing rule? - Management indicated that various operational levers are being considered, including the advanced PPE initiative, which will be piloted in the coming weeks [34] Question: Can you provide details on the recent payer disruption and its impact? - The company successfully renegotiated a national payer contract, achieving a low double-digit increase in per visit rates, and has since regained a significant portion of the lost census [36][37] Question: What are the longer-term leverage targets before pivoting to M&A or heavier investments? - Management stated that while specific leverage targets have not been provided, the focus remains on deleveraging the balance sheet before considering M&A activities [52] Question: Can you elaborate on the pilot programs and what success will look like? - The pilot programs will focus on operationalizing advanced visit per episode management, with success gauged by the ability to free up capacity and direct it to additional patient loads [62][64]