Slide 1: Third Quarter Earnings Call Supplemental Information
Third Quarter Earnings Call Supplemental Information November 2, 2022
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 Overview of Quarter Results 4-10 Detailed Financial and Operational Results 11-16 Debt, Liquidity and Cash Flow 17-19 Guidance 20-24 Company Overview 25-27 Appendix, Including Reconciliations to GAAP 28-42
Slide 4: Overview of Quarter Results
Enhabit Home Health & Hospice 4 Overview of Quarter Results
Slide 5: Quarterly Results at a Glance
Enhabit Home Health & Hospice 5 Home health continues to show strong growth in Medicare Advantage admissions. Non-episodic admissions grew 31.5%, driving total admissions growth of 2.7% year over year. Total admissions are up 1.8% year to date for 2022. $265.7M Revenue $31.7M Adjusted EBITDA 49,739
Slide 6: Q3'22 Strategic Commentary
Enhabit Home Health & Hospice 6 Q3’22 Strategic Commentary • Total admissions growth driven by 31.5% year over year growth in non-episodic admissions • Staffing capacity continues to improve • Revenue per episode increased 3.2% year over year primarily due to an increase in Medicare reimbursement ra
Slide 7: Q3'22 Strategic Commentary
Enhabit Home Health & Hospice 7 Q3’22 Strategic Commentary • The resumption of sequestration, continued shift to more non-episodic patients in home health, and lower volumes in hospice combined to decrease consolidated revenue by $15 million year over year - Full resumption of sequestration on July
Slide 8: Q3'22 Strategic Commentary
Enhabit Home Health & Hospice 8 Q3’22 Strategic Commentary • Deploying a disciplined approach to manage growth in Medicare Advantage and close the rate differential – Payor innovation team is actively engaged in discussions with payors around our value proposition – Experiencing success negotiating
Slide 9: Q3'22 Strategic Commentary
Enhabit Home Health & Hospice 9 Q3’22 Strategic Commentary Strategically reinvesting for growth • Robust acquisition pipeline • Two acquisitions already closed in the fourth quarter of 2022 - Closed Caring Hearts Hospice in northeast Texas on October 1st; added four locations - Closed Unity Hospice
Slide 10: Home Health & Hospice Highlights
Enhabit Home Health & Hospice 10 Home Health & Hospice Highlights Home Health Q3 Overview 4th Largest Provider of Medicare-Certified Skilled Home Health Services 34Home Health Locations States Hospice Q3 Overview 12th Largest Provider of Medicare-Certified Hospice Services 22Hospice Locations States
Slide 11: Detailed Financial and Operational Results
Enhabit Home Health & Hospice 11 Detailed Financial and Operational Results
Slide 12: Consolidated Results Q3 '22 vs. '21
Enhabit Home Health & Hospice 12 Consolidated Results Q3 '22 vs. '21($ in millions, except per share data) 2022 2021 Home health net service revenue $216.3 $221.1 (2.2) % Hospice net service revenue $49.4 $52.8 (6.4) % Total net service revenue $265.7 $273.9 (3.0) % % of Revenue % of Revenue Cost of
Slide 13: Home Health Segment Q3 '22 vs. '21
Enhabit Home Health & Hospice 13 Home Health Segment Q3 '22 vs. '21($ in millions) 2022 2021 Net service revenue $216.3 $221.1 (2.2) % Cost of services $109.6 $107.6 1.9 % Gross margin 49.3 % 51.3 % Adjusted EBITDA $44.6 $51.2 (12.9) % % Adj. EBITDA margin 20.6 % 23.2 % Operational metrics (Actual A
Slide 14: Hospice Segment Q3 '22 vs. '21
Enhabit Home Health & Hospice 14 Hospice Segment Q3 '22 vs. '21($ in millions) 2022 2021 Net service revenue $49.4 $52.8 (6.4) % Cost of services $22.7 $23.6 (3.8) % Gross margin 54.0 % 55.3 % Adjusted EBITDA $9.3 $13.1 (29.0) % % Adj. EBITDA margin 18.8 % 24.8 % Operational metrics (Actual Amounts)
Slide 15: Consolidated Adjusted EBITDA
Enhabit Home Health & Hospice 15 Consolidated Adjusted EBITDA (1) Home office administrative and general expenses in the above table exclude stock compensation of $4.5 million and $0.3 million for Q3 2022 and Q3 2021, $0.9 million and $4.1 million in costs associated with the strategic alternatives
Slide 16: Clinical Expertise and High-Quality Outcomes
Enhabit Home Health & Hospice 16 Clinical Expertise and High-Quality Outcomes National Average Enhabit % Above National Average QoPC Star Rating(1) 3.3 3.8 15% HHCAHPS Star Rating(2) 3.7 3.9 5% 30-Day Hospital Readmission Rate 17.3%(3) 14.0% 330 bps better Standardized Protocols Motivated Clinicians
Slide 17: Debt, Liquidity and Cash Flow
Enhabit Home Health & Hospice 17 Debt, Liquidity and Cash Flow
Slide 18: Debt & Liquidity Metrics
Enhabit Home Health & Hospice 18 Debt & Liquidity Metrics ($ in millions) September 30, 2022 Advances under $350 million revolving credit facility, due 2027 $170.0 $400 million term loan facility, due 2027 $392.9 Finance lease obligations $5.7 Total debt $568.6 Less: Cash and cash equivalents $44.1
Slide 19: Adjusted Free Cash Flow
Enhabit Home Health & Hospice 19 Adjusted Free Cash Flow 2022 YTD 2021 YTD Adjusted EBITDA ($ in thousands) $87,317 $105,012 Change in net working capital (6,561) (8,297) Cash interest payments (123) (145) Cash tax payments - - Maintenance capital expenditures 2616 3,129 Adjusted free cash flow $78,
Slide 20: Guidance
Enhabit Home Health & Hospice 20 Guidance
Slide 21: 2022 Guidance Revised November 1, 2022
Enhabit Home Health & Hospice 21 2022 Guidance Revised November 1, 2022 ($ in millions, except per share data) 2022 Updated Guidance 2022 Previous Guidance 2021 Adjusted(1) Net service revenue $1,070 to $1,080 $1,075 to $1,100 $1,107 Adjusted EBITDA $150 to $155 $155 to $170 $197 Adjusted EPS $1.37
Slide 22: Guidance Considerations
Enhabit Home Health & Hospice 22 Guidance Considerations Changes since prior guidance are underlined • An increase of 3.4% in Medicare pricing prior to resumption of sequestration • Cost per visit increase of 6% to 7% • Impact of Hurricane Ian Commentary: Home Health Projections • Capacity constrain
Slide 23: Adjusted Free Cash Flow Assumptions
Enhabit Home Health & Hospice 23 Adjusted Free Cash Flow Assumptions Certain cash flow items (in millions) 2021 Adjusted(1) 2022 YTD 2022 Assumptions Cash interest payments $0.3 $6.0 $13 to $15 Cash income tax payments, net of refunds 28.4 11.8 $11 to $13 Working capital 32.8 18.0 $20 to $25 Mainten
Slide 24: Uses of Free Cash Flow
Enhabit Home Health & Hospice 24 Uses of Free Cash Flow (in millions) 2021 Adjusted(1) 2022 YTD 2022 Assumptions Growth in Core Business De novos $— $0.5 $2 to $3 Acquisitions(2)(3) $117.5 $— $50 to $100 Debt redemptions (borrowings), net(4) $— $5.0 TBD (1) Reflects Enhabit on a carve-out basis (2)
Slide 25: Company Overview
Enhabit Home Health & Hospice 25 Company Overview
Slide 26: Overview
Enhabit Home Health & Hospice 26 Overview 86 hospice locations co-located with home health locations(1) 11 states where we are #1 or #2 in home health(2) ~69% of total Medicare home health spend occurs in states in which we operate(2) Home Health Locations Hospice Locations Home Health & Hospice Sta
Slide 27: Growth Strategy
Enhabit Home Health & Hospice 27 Growth Strategy Multi-faceted growth avenues with clearly defined areas of opportunity Drive organic growth at existing operations Execute on de novo strategy Pursue strategic acquisitions Leverage care transitions expertise Expand Medicare Advantage focus Explore ad
Slide 28: Appendix
Enhabit Home Health & Hospice 28 Appendix
Slide 29: Home Health Operational Metrics
Enhabit Home Health & Hospice 29 Home Health Operational Metrics (In Millions) Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 FY 2021 Home health net service revenue $216.3 $220.2 $224.9 $224.0 $221.1 $232.3 $219.9 $897.3 (Actual Amounts) Total admissions 49,739 49,399 53,309 50,817 48,412
Slide 30: Hospice Operational Metrics
Enhabit Home Health & Hospice 30 Hospice Operational Metrics (In Millions) Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 FY 2021 Hospice net service revenue $49.4 $47.8 $49.4 $52.1 $52.8 $53.8 $50.6 $209.3 (Actual Amounts) Total admissions 2,982 2,835 3,246 3,223 3,262 3,298 3,330 13,113 P
Slide 31: Reconciliation of Historic Segment Adjusted EBITDA of Encompass Health to Enhabit
Enhabit Home Health & Hospice 31 Reconciliation of Historic Segment Adjusted EBITDA of Encompass Health to Enhabit Adjusted EBITDA PLACE HOLDER – WILL NEED: • EBITDA to Net income • Adjusted EPS to reported EPS and Net income ($ in millions) Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Q1 2022 Q2 2022 YT
Slide 32: Consolidated Results – YTD 2022
Enhabit Home Health & Hospice 32 Consolidated Results – YTD 2022 Year-To-Date '22 vs. '21 ($ in millions, except per share data) 2022 2021 Home health net service revenue $661.4 $673.3 (1.8) % Hospice net service revenue $146.6 $157.2 (6.7) % Total net service revenue $808.0 $830.5 (2.7) % % of Reve
Slide 33: Home Health Segment Results – YTD 2022
Enhabit Home Health & Hospice 33 Home Health Segment Results – YTD 2022 Year-To-Date '22 vs. '21($ in millions) 2022 2021 Net service revenue $661.4 $673.3 (1.8) % Cost of services 326.4 $317.2 2.9 % Gross margin 50.7 % 52.9 % Adjusted EBITDA $155.3 $170.5 (8.9) % % Adj. EBITDA margin 23.5 % 25.3 %
Slide 34: Hospice Segment Results – YTD 2022
Enhabit Home Health & Hospice 34 Hospice Segment Results – YTD 2022 Year-To-Date '22 vs. '21($ in millions) 2022 2021 Net service revenue $146.6 $157.2 (6.7) % Cost of services $65.8 $68.2 (3.5) % Gross margin 55.1 % 56.6 % Adjusted EBITDA $32.8 $41.1 (20.2) % % Adj. EBITDA margin 22.4 % 26.1 % Oper
Slide 35: Payor Sources
Enhabit Home Health & Hospice 35 Payor Sources As a % of Revenue Q3 2022 Q3 2021 YTD 2022 YTD 2021 FY 2021 Consolidated Medicare 77.6 % 81.9 % 78.4 % 82.2 % 81.9 % Medicare Advantage 14.5 % 10.4 % 13.7 % 10.4 % 10.6 % Managed Care 6.4 % 6.2 % 6.6 % 5.8 % 5.9 % Medicaid 1.4 % 1.4 % 1.2 % 1.4 % 1.4 %
Slide 36: EPS Calculation: Q3 2022
Enhabit Home Health & Hospice 36 EPS Calculation: Q3 2022 Adjusted EPS – Q3 2022 ($ in millions, except per share amounts) As Reported Transaction Costs As Adjusted Adjusted EBITDA $31.7 $— $31.7 Depreciation and amortization (8.0) — (8.0) Interest exp. and amortization of debt discounts & fees (6.2
Slide 37: EPS Calculation: Q3 2021
Enhabit Home Health & Hospice 37 EPS Calculation: Q3 2021 Adjusted EPS – Q3 2021 ($ in millions, except per share amounts) As Reported Transaction Costs As Adjusted Adjusted EBITDA $43.0 $— $43.0 Depreciation and amortization (9.4) — (9.4) Interest exp. and amortization of debt discounts & fees (0.1
Slide 38: EPS Calculation: YTD 2022
Enhabit Home Health & Hospice 38 EPS Calculation: YTD 2022 Adjusted EPS – YTD 2022 ($ in millions, except per share amounts) As Reported Transaction Costs As Adjusted Adjusted EBITDA $119.0 $— $119.0 Depreciation and amortization (24.7) — (24.7) Interest exp. and amortization of debt discounts & fee
Slide 39: EPS Calculation: YTD 2021
Enhabit Home Health & Hospice 39 EPS Calculation: YTD 2021 Adjusted EPS – YTD 2021 ($ in millions, except per share amounts) As Reported Income Tax Adjustments Transaction Costs As Adjusted Adjusted EBITDA $148.2 $— $— $148.2 Depreciation and amortization (27.9) — — (27.9) Interest exp. and amortiza
Slide 40: Reconciliation of Net Income to Adjusted EBITDA – Consolidated
Enhabit Home Health & Hospice 40 Reconciliation of Net Income to Adjusted EBITDA – Consolidated Third Quarter YTD ($ in millions) 2022 2021 2022 2021 Net income $8.9 $22.0 $56.4 $83.1 Income tax expense 2.8 7.1 17.9 26.2 Interest expense and amortization of debt discounts and fees 6.2 0.1 6.3 0.2 De
Slide 41: Reconciliation of Cash Provided by Operations to Adjusted EBITDA
Enhabit Home Health & Hospice 41 Reconciliation of Cash Provided by Operations to Adjusted EBITDA Third Quarter YTD ($ in millions) 2022 2021 2022 2021 Net cash provided by operating activities $1.0 $6.6 $76.0 $100.2 Interest expense and amortization of debt discounts and fees 6.2 0.1 6.3 0.2 Equity
Slide 42: Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow
Enhabit Home Health & Hospice 42 Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow PLACE HOLDER – WILL NEED: • EBITDA to Net income • Adjusted EPS to reported EPS and Net income Third Quarter YTD ($ in millions) 2022 2021 2022 2021 Net cash provided by operating
Slide 43: Enhabit Home Health & Hospice
enhabit Home Health & Hospice ehab.com