Enhabit, Inc. · NYSE:EHAB
Enhabit — Q2 2024 Earnings Presentation
41 slides from Enhabit's earnings presentation, Aug 6, 2024
Slide 1: Second Quarter Earnings Call Supplemental Information
Second Quarter Earnings Call Supplemental Information August 7, 2024
Slide 2: Disclaimer
Enhabit Home Health & Hospice 2 Disclaimer Forward looking statements Statements contained in this presentation which are not historical facts, such as those relating to future events, projections, financial guidance, legislative or regulatory developments, strategy or growth opportunities, are forw
Slide 3: Contents
Contents Results at a Glance 4 Consolidated Results 5-6 Clinical Expertise and High-Quality Outcomes 7 Payor Innovation 8-9 De Novos 10 Home Health Segment 11-12 Hospice Segment 13-14 Consolidated Adjusted EBITDA 15 Debt and Liquidity 16 Adjusted Free Cash Flow 17 Guidance 18-19 Adjusted Free Cash F
Slide 4: Results at a Glance
Enhabit Home Health & Hospice 4 Non-Medicare admissions grew 25.2%, driving total admissions growth of 6.4% year over year. 43% of non-Medicare visits are now in payor innovation contracts at improved rates. Cost per visit decreased 2.2% year over year. 30-day hospital readmission rate 23.3% better
Slide 5: Consolidated Results
Enhabit Home Health & Hospice 5 Consolidated Results ($ in millions, except per share data) Q2 '24 vs. '232024 2023 Home health net service revenue $210.2 $213.8 (1.7) % Hospice net service revenue 50.4 48.5 3.9 % Total net service revenue $260.6 $262.3 (0.6) % % of revenue % of revenue Cost of serv
Slide 6: Consolidated Results (continued)
Enhabit Home Health & Hospice 6 Consolidated Results (continued) • 43% of non-Medicare visits are now in payor innovation contracts at improved rates. • Non-Medicare revenue per visit increased to $147. Payor Innovation strategy continues to foster Medicare Advantage growth. Consolidated revenue dec
Slide 7: Clinical Expertise and High-Quality Outcomes
Enhabit Home Health & Hospice 7 Clinical Expertise and High-Quality Outcomes Enhabit National Average % Better Than Average QoPC Star Rating1 3.4 3.0 13.3% 80% of our home health agencies are 3 Stars or higher; 28% are 4 Stars or higher1 HHCAHPS Star Rating2 3.8 3.6 5.6% 99% of our home health agenc
Slide 8: Payor Innovation
Enhabit Home Health & Hospice 8 Payor Innovation Payor innovation strategy continues to foster Medicare Advantage growth. Driving steady increases in our non-Medicare revenue per visit 43% of non-Medicare visits are now in payor innovation contracts at improved rates. Visits from payor innovation co
Slide 9: Payor Innovation (continued)
Enhabit Home Health & Hospice 9 Payor Innovation (continued) • Improved clinical capacity • Increased favorable payor contracts • negotiated 68 new contracts since spin • Pipeline of 31 new agreements, with 30 historic agreements that are being re-negotiated • Utilizing technology to provide A Bette
Slide 10: De Novos
Enhabit Home Health & Hospice 10 De Novos Strategically reinvesting for growth • Added one home health de novo location in Q2 2024 – Melbourne, Florida home health location began accepting patients in April 2024 Home Health Hospice Total December 31, 2020 241 82 323 De Novo Locations Opened 0 3 3 Ac
Slide 11: Home Health Segment
Enhabit Home Health & Hospice 11 Home Health Segment ($ in millions) Q2 '24 vs. '232024 2023 Net service revenue: Medicare $121.7 $139.4 (12.7) % Non-Medicare 86.3 71.8 20.2 % Private duty(1) 2.2 2.6 (15.4) % Home health net service revenue 210.2 213.8 (1.7) % Cost of service 106.9 111.4 (4.0) % Gro
Slide 12: Home Health Segment (continued)
Enhabit Home Health & Hospice 12 Home Health Segment (continued) Non-Medicare admissions grew 25.2%, driving total admissions growth of 6.4% year over year. • Revenue declined $3.6 million, or 1.7%, year over year primarily due to lower Medicare volume as a result of lower recertifications year over
Slide 13: Hospice Segment
Enhabit Home Health & Hospice 13 Hospice Segment ($ in millions) Q2 '24 vs. '232024 2023 Net service revenue $50.4 $48.5 3.9 % Cost of service 24.9 24.1 3.3 % Gross margin 50.6 % 50.3 % General and administrative expenses 16.3 16.1 1.2 % Net income attributable to noncontrolling interests 0.1 — NM A
Slide 14: Hospice Segment (continued)
Enhabit Home Health & Hospice 14 Hospice Segment (continued) Hospice average daily census increased 2.7% year over year. Revenue increased $1.9 million, or 3.9%, year over year due to increased Medicare reimbursement rates and an increase in patient days. • Admissions increased 1.8% year over year.
Slide 15: Consolidated Adjusted EBITDA
Enhabit Home Health & Hospice 15 Consolidated Adjusted EBITDA ($ in millions) Q2 2024 % of Consolidated Revenue Q2 2023 % of Consolidated Revenue Home health segment Adjusted EBITDA $44.2 $42.8 Hospice segment Adjusted EBITDA 9.1 8.3 Home office general & administrative expenses (28.1) 10.8 % (27.2)
Slide 16: Debt & Liquidity Metrics
Enhabit Home Health & Hospice 16 Debt & Liquidity Metrics ($ in millions) June 30, 2024 December 31, 2023 Advances under revolving credit facility, due 2027(1) $170.0 $180.0 $400 million term loan facility, due 2027(1)(2) 357.5 367.1 Finance lease obligations 8.2 5.5 Total debt $535.7 $552.6 Less: C
Slide 17: Adjusted Free Cash Flow
Enhabit Home Health & Hospice 17 Adjusted Free Cash Flow • Adjusted free cash flow decreased year over year primarily due to cash tax refunds received in 2023 without corresponding refunds in 2024 coupled with higher cash interest payments as a result of higher interest rates year over year. • See A
Slide 18: 2024 Guidance
Enhabit Home Health & Hospice 18 2024 Guidance Updated as of August 7, 2024 ($ in millions, except per share data) 2023 Actuals 2024 Previous Guidance 2024 Updated Guidance Net service revenue $1,046.3 $1,076 to $1,102 $1,050 to $1,063 Adjusted EBITDA $97.6 $98 to $110 $100 to $106 Adjusted EPS $0.2
Slide 19: Guidance Considerations
Enhabit Home Health & Hospice 19 Guidance Considerations • An increase of 1.2% in Medicare pricing • Continued shift to more non-Medicare admissions • Cost per visit increase of 0% to 1% Home Health • An increase of 2.9% in Medicare pricing for Q1 through Q3 • An increase of approximately 3% in Medi
Slide 20: Adjusted Free Cash Flow Assumptions
Enhabit Home Health & Hospice 20 Adjusted Free Cash Flow Assumptions ($ in millions) Certain cash flow items 2023 Full Year 2024 YTD 2024 Prior Assumptions 2024 Assumptions Adjusted EBITDA $97.6 $50.5 $98 to $110 $100 to $106 Cash interest expense 40.6 22.4 $40 to $45 $41 to $44 Cash income tax paym
Slide 21: Uses of Adjusted Free Cash Flow
Enhabit Home Health & Hospice 21 Uses of Adjusted Free Cash Flow ($ in millions) Growth in Core Business 2023 Full Year YTD 2024 2024 Assumptions De novos $2.2 $1.0 $2.5 to $3.5 Acquisitions(1) $2.8 $— TBD Debt repayments (borrowings), net $30.0 $20.0 TBD (1) Completed the acquisition of Specialty H
Slide 22: Appendix
Enhabit Home Health & Hospice 22 Appendix
Slide 23: Overview
Enhabit Home Health & Hospice 23 Overview 107 hospice locations co-located with home health locations(1) 10 states where we are #1 or #2 in home health(2) ~66% of total Medicare home health spend occurs in states in which we operate(2) Home Health Locations Hospice Locations Home Health & Hospice St
Slide 24: 2024 Priorities
Enhabit Home Health & Hospice 24 2024 Priorities Home Health Hospice De Novos People Strategy • Stabilize Medicare as a % of total home health revenue • Leverage payor innovation strategy – Improve Medicare Advantage rates – Shift away from lower rate contracts • Grow through increased clinical staf
Slide 25: Long-Term Outlook
Enhabit Home Health & Hospice 25 Long-Term Outlook
Slide 26: Enhabit Home Health Long-Term Outlook
Enhabit Home Health & Hospice 26 Enhabit Home Health Long-Term Outlook Q2 2024 home health admissions continued to grow versus prior year, and we expect to continue growing at mid- to high- single digits over the next three years with our ability to better serve referral sources through improved cli
Slide 27: Enhabit Hospice Long-Term Outlook
Enhabit Home Health & Hospice 27 Enhabit Hospice Long-Term Outlook Expect hospice volumes to grow at mid- to high-single digits over the next three years after investing in the case management model and the build out of business development team Sequential monthly growth in census in 2024 2024 Hospi
Slide 28: Home Health Operational Metrics
Enhabit Home Health & Hospice 28 Home Health Operational Metrics (net service revenue $ in millions) Q1 2023 Q2 2023 Q3 2023 Q4 2023 FY 2023 Q1 2024 Q2 2024 YTD 2024 Medicare $146.0 $139.4 $141.0 $130.9 $557.3 $128.3 $121.7 $250.0 Non-Medicare 67.1 71.8 67.3 76.8 283.0 82.6 86.3 168.9 Private duty(1
Slide 29: Hospice Operational Metrics
Enhabit Home Health & Hospice 29 Hospice Operational Metrics (net service revenue $ in millions) Q1 2023 Q2 2023 Q3 2023 Q4 2023 FY 2023 Q1 2024 Q2 2024 YTD 2024 Hospice net service revenue $49.3 $48.5 $47.4 $51.1 $196.2 $49.2 $50.4 $99.6 (actual amounts) Total admissions 3,122 2,837 2,882 2,872 11,
Slide 30: Consolidated Results – Year to Date 2024
Enhabit Home Health & Hospice 30 Consolidated Results – Year to Date 2024 ($ in millions, except per share data) Year-To-Date '24 vs. '232024 2023 Home health net service revenue $423.4 $429.7 (1.5) % Hospice net service revenue 99.6 97.7 1.9 % Total net service revenue $523.0 $527.4 (0.8) % % of Re
Slide 31: Home Health Segment Results – YTD 2024
Enhabit Home Health & Hospice 31 Home Health Segment Results – YTD 2024 ($ in millions) Year-To-Date '24 vs. '232024 2023 Net service revenue: Medicare $250.0 $285.5 (12.4) % Non-Medicare 169.0 138.9 21.7 % Private duty(1) 4.4 5.3 (17.0) % Home health net service revenue 423.4 429.7 (1.5) % Cost of
Slide 32: Hospice Segment Results – YTD 2024
Enhabit Home Health & Hospice 32 Hospice Segment Results – YTD 2024 ($ in millions) Year-To-Date '24 vs. '232024 2023 Net service revenue $99.6 $97.7 1.9 % Cost of service 49.2 48.6 1.2 % Gross margin 50.6 % 50.3 % General and administrative expenses 32.0 32.4 (1.2) % Net income attributable to nonc
Slide 33: Payor Sources
Enhabit Home Health & Hospice 33 Payor Sources As a % of Revenue Q2 Year-To-Date Fiscal Year Consolidated 2024 2023 2024 2023 2023 Medicare 65.7% 70.8% 66.5% 71.9% 71.5% Medicare Advantage 23.5% 20.3% 23.1% 19.5% 19.0% Managed Care 9.6% 7.7% 9.3% 7.5% 8.2% Medicaid 1.0% 1.2% 0.9% 1.1% 1.2% Other 0.2
Slide 34: EPS Calculation: Q2 2024
Enhabit Home Health & Hospice 34 EPS Calculation: Q2 2024 ($ in millions, except per share amounts) Adjusted EPS – Q2 2024 As Reported Unusual or Nonrecurring Items That are Not Typical of Ongoing Operations As Adjusted Adjusted EBITDA(1) $25.2 $— $25.2 Interest expense and amortization of debt disc
Slide 35: EPS Calculation: Q2 2023
Enhabit Home Health & Hospice 35 EPS Calculation: Q2 2023 ($ in millions, except per share amounts) Adjusted EPS – Q2 2023 As Reported Impairment of Goodwill Unusual or Nonrecurring Items That are Not Typical of Ongoing Operations Income Tax Adjustments(3) As Adjusted Adjusted EBITDA(1) $23.9 $— $—
Slide 36: EPS Calculation: YTD 2024
Enhabit Home Health & Hospice 36 EPS Calculation: YTD 2024 ($ in millions, except per share amounts) Adjusted EPS – YTD 2024 As Reported Unusual or Nonrecurring Items That are Not Typical of Ongoing Operations Income Tax Adjustments(3) As Adjusted Adjusted EBITDA(1) $50.5 $— $— $50.5 Interest expens
Slide 37: EPS Calculation: YTD 2023
Enhabit Home Health & Hospice 37 EPS Calculation: YTD 2023 ($ in millions, except per share amounts) Adjusted EPS – FY 2023 As Reported Impairment of Goodwill Unusual or Nonrecurring Items That are Not Typical of Ongoing Operations Income Tax Adjustments(3) As Adjusted Adjusted EBITDA(1) $49.2 $— $—
Slide 38: Reconciliation of Net Income (Loss) to Adjusted EBITDA – Consolidated
Enhabit Home Health & Hospice 38 Reconciliation of Net Income (Loss) to Adjusted EBITDA – Consolidated ($ in millions) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net income (loss) $0.4 $(74.1) $1.3 $(70.9) Interest expense and amortization of debt discounts and fees 10
Slide 39: Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA
Enhabit Home Health & Hospice 39 Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA ($ in millions) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net cash provided by operating activities $9.6 $9.6 $26.9 $39.2 Interest expense, excluding amorti
Slide 40: Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow
Enhabit Home Health & Hospice 40 Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow ($ in millions) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net cash provided by operating activities $9.6 $9.6 $26.9 $39.2 Unusual or nonrecurring it
Slide 41: Reconciliation of Gross Margin to Adjusted EBITDA Margin
Enhabit Home Health & Hospice 41 Reconciliation of Gross Margin to Adjusted EBITDA Margin Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Gross margin as a percentage of revenue 49.4 % 48.3 % 49.1 % 49.2 % General and administrative expenses (42.2) % (41.1) % (41.6) % (41.4