Slide 1: Second Quarter Earnings Call Supplemental Information
Second Quarter Earnings Call Supplemental Information August 9, 2023
Slide 2: Disclaimer: Forward looking statements
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 5-7 De Novos and Acquisitions 8 Home Health Segment 9-10 - Quality 11 Hospice Segment 12-13 Consolidated Adjusted EBITDA 14 Debt, Liquidity and Adjusted Free Cash Flow 15-16 Guidance 17-20 Appendix, Including Company Overview & Reconciliations to G
Slide 4: Results at a Glance
Enhabit Home Health & Hospice 4 Home health continued strong growth in Medicare Advantage admissions; new agreements added Non-episodic admissions grew 38.0%, driving total admissions growth of 3.2% year over year. Continued progress in payor innovation resulted in ten new Medicare Advantage agreeme
Slide 5: Consolidated Results
Enhabit Home Health & Hospice 5 Consolidated Results ($ in millions, except per share data) Q2 '23 vs. '222023 2022 Home health net service revenue $213.8 $220.2 (2.9) % Hospice net service revenue $48.5 $47.8 1.5 % Total net service revenue $262.3 $268.0 (2.1) % % of Revenue % of Revenue Cost of se
Slide 6: Consolidated Results (continued)
Enhabit Home Health & Hospice 6 Consolidated Results (continued) • The continued shift to more non-episodic admissions in home health and the resumption of sequestration impacted consolidated revenue. – Approximately 31% of total home health visits were non-episodic visits in Q2 2023, up from approx
Slide 7: Consolidated Results (continued): Medicare Advantage, Recruitment and Retention
Enhabit Home Health & Hospice 7 Consolidated Results (continued) Continued growth in Medicare Advantage Continued success in Recruitment and Retention • Continued increase in full-time nursing candidate pool drove 203 net new full-time nursing hires in Q2 2023. – Home health - 180 – Hospice - 23 • C
Slide 8: De Novos and Acquisitions
Enhabit Home Health & Hospice 8 De Novos and Acquisitions Strategically reinvesting for growth • Added 3 new de novo locations in Q2 2023 – Opened two home health locations in Q2 2023 (year-to-date home health de novo openings = 2) > Kalispell, Montana and Missoula, Montana began accepting patients
Slide 9: Home Health Segment
Enhabit Home Health & Hospice 9 Home Health Segment ($ in millions) Q2 '23 vs. '222023 2022 Net service revenue $213.8 $220.2 (2.9) % Cost of services $111.4 $108.8 2.4 % Gross margin 47.9 % 50.6 % General & administrative expenses $59.4 $57.8 2.8 % Other Income $(0.1) $— Equity earnings / noncontro
Slide 10: Home Health Segment (continued)
Enhabit Home Health & Hospice 10 Home Health Segment (continued) Revenue declined $6.4 million, or 2.9%, primarily due to the continued payor mix shift to more non-episodic admissions and the resumption of sequestration. • Total admissions growth was driven by 38.0% year-over-year growth in non-epis
Slide 11: Clinical Expertise and High-Quality Outcomes
Enhabit Home Health & Hospice 11 Clinical Expertise and High-Quality Outcomes National Average Enhabit % Above National Average QoPC Star Rating(1) 3.0. 3.6 20% HHCAHPS Star Rating(2) 3.7 3.9 5.4% 30-Day Hospital Readmission Rate(3) 18.2 14.5 370 bps better Standardized Protocols Motivated Clinician
Slide 12: Hospice Segment
Enhabit Home Health & Hospice 12 Hospice Segment ($ in millions) Q2 '23 vs. '222023 2022 Net service revenue $48.5 $47.8 1.5 % Cost of services $24.1 $21.5 12.1 % Gross margin 50.3 % 55.0 % General & administrative expenses $16.1 $15.5 3.9 % Equity earnings / noncontrolling interest $— $0.1 Adjusted
Slide 13: Hospice Segment (continued)
Enhabit Home Health & Hospice 13 Hospice Segment (continued) Hospice average daily census decreased 0.7% year over year Revenue increased 1.5% over the prior year primarily due to increased Medicare reimbursement rates. • The resumption of sequestration reduced revenue approximately $0.5 million. •
Slide 14: Consolidated Adjusted EBITDA
Enhabit Home Health & Hospice 14 Consolidated Adjusted EBITDA ($ in millions) Q2 2023 % of Consolidated Revenue Q2 2022 % of Consolidated Revenue Home health segment Adjusted EBITDA $42.8 $53.0 Hospice segment Adjusted EBITDA $8.3 $10.7 Home office general & administrative expenses $(27.2) (10.4) %
Slide 15: Debt & Liquidity Metrics
Enhabit Home Health & Hospice 15 Debt & Liquidity Metrics ($ in millions) June 30, 2023 December 31, 2022 Advances under $350 million revolving credit facility, due 2027(1) $180.0 $190.0 $400 million term loan facility, due 2027(2) $377.8 $387.9 Finance lease obligations $4.0 $5.2 Total debt $561.8
Slide 16: Adjusted Free Cash Flow
Enhabit Home Health & Hospice 16 Adjusted Free Cash Flow • Adjusted free cash flow decreased year over year primarily due to the reduction in Adjusted EBITDA and increase in cash interest payments. – Credit agreement entered into on June 30, 2022 in connection with separation from Encompass Health;
Slide 17: 2023 Guidance Revised as of August 9, 2023
Enhabit Home Health & Hospice 17 2023 Guidance Revised as of August 9, 2023 Reconciliations to GAAP provided on pages 35 to 37 ($ in millions, except per share data) 2022 Actuals 2023 Original Guidance 2023 Revised Guidance Net service revenue $1,071.1 $1,110 to $1,140 $1,057 to $1,065 Adjusted EBIT
Slide 18: Guidance Considerations
Enhabit Home Health & Hospice 18 Guidance Considerations • An increase of 0.7% in Medicare pricing prior to the resumption of sequestration in Q1 and Q2 • Continued shift to more non-episodic admissions • Cost per visit increase of 1% to 3% Home Health • An increase of 3.8% in Medicare pricing prior
Slide 19: Adjusted Free Cash Flow Assumptions
Enhabit Home Health & Hospice 19 Adjusted Free Cash Flow Assumptions ($ in millions) Certain cash flow items 2022 Full Year 2023 YTD 2023 Assumptions Cash interest expense $12.9 $17.9 $38 to $40 Cash income tax payments (refunds), net 11.9 (5.4) $(4) to $(5) Working capital and other 35.7 (3.9) $0 t
Slide 20: Uses of Adjusted Free Cash Flow
Enhabit Home Health & Hospice 20 Uses of Adjusted Free Cash Flow ($ in millions) Growth in Core Business 2022 Full Year YTD 2023 2023 Assumptions De novos $1.2 $1.3 $2 to $4 Acquisitions(1)(2) $36.3 $2.8 TBD Debt repayments (borrowings), net(3) $(10.0) $20.0 TBD (1) On January 1, 2022, Enhabit acqui
Slide 21: Appendix
Enhabit Home Health & Hospice 21 Appendix
Slide 22: Overview
Enhabit Home Health & Hospice 22 Overview 103 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 St
Slide 23: Growth Strategy
Enhabit Home Health & Hospice 23 Growth Strategy Multi-faceted growth avenues with clearly defined areas of opportunity Drive organic growth at existing operations Execute on de novo strategy Evaluate strategic acquisitions Leverage care transitions expertise Expand Medicare Advantage focus Explore
Slide 24: Home Health Operational Metrics
Enhabit Home Health & Hospice 24 Home Health Operational Metrics (net service revenue $ in millions) Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Q1 2023 Q2 2023 Home health net service revenue $224.9 $220.2 $216.3 $215.8 $877.1 $215.8 $213.8 (Actual Amounts) Total admissions 53,309 49,399 49,739 50,048
Slide 25: Hospice Operational Metrics
Enhabit Home Health & Hospice 25 Hospice Operational Metrics (net service revenue $ in millions) Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Q1 2023 Q2 2023 Hospice net service revenue $49.4 $47.8 $49.4 $47.4 $194.0 $49.3 $48.5 (Actual Amounts) Total admissions 3,246 2,835 2,982 2,915 11,978 3,122 2,837
Slide 26: Reconciliation of Historic Segment Adjusted EBITDA of Encompass Health to Enhabit
Enhabit Home Health & Hospice 26 Reconciliation of Historic Segment Adjusted EBITDA of Encompass Health to Enhabit Adjusted EBITDA PLACE HOLDER – WILL NEED: • EBITDA to Net income • Adjusted EPS to reported EPS and Net income ($ in millions) Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Q1 2022 Q2 2022 FY
Slide 27: Consolidated Results – YTD 2023
Enhabit Home Health & Hospice 27 Consolidated Results – YTD 2023 ($ in millions, except per share data) Year-To-Date '23 vs. '222023 2022 Home health net service revenue $429.7 $445.1 (3.5) % Hospice net service revenue $97.7 $97.2 0.5 % Total net service revenue $527.4 $542.3 (2.7) % % of Revenue %
Slide 28: Home Health Segment Results – YTD 2023
Enhabit Home Health & Hospice 28 Home Health Segment Results – YTD 2023 ($ in millions) Year-To-Date '23 vs. '222023 2022 Net service revenue $429.7 $445.1 (3.5) % Cost of services $219.5 $216.8 1.2 % Gross margin 48.9 % 51.3 % General & administrative expenses $122.3 $116.5 5.0 % Other income $(0.1
Slide 29: Hospice Segment Results – YTD 2023
Enhabit Home Health & Hospice 29 Hospice Segment Results – YTD 2023 ($ in millions) Year-To-Date '23 vs. '222023 2022 Net service revenue $97.7 $97.2 0.5 % Cost of services $48.6 $43.2 12.5 % Gross margin 50.3 % 55.6 % General & administrative expenses $32.4 $30.4 6.6 % Equity earnings / noncontroll
Slide 30: Payor Sources
Enhabit Home Health & Hospice 30 Payor Sources As a % of Revenue Second Quarter Year To Date Fiscal Year 2022 2023 2022 2023 2022 Consolidated Medicare 78.5% 70.8% 78.8% 71.9% 78.4% Medicare Advantage 13.8% 20.3% 13.2% 19.5% 14.2% Managed Care 6.7% 7.7% 6.8% 7.5% 6.1% Medicaid 1.0% 1.2% 1.2% 1.1% 1.
Slide 31: EPS Calculation: Q2 2023
Enhabit Home Health & Hospice 31 EPS Calculation: Q2 2023 ($ 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 As Adjusted Adjusted EBITDA $23.9 $— $— $— $23
Slide 32: EPS Calculation: Q2 2022
Enhabit Home Health & Hospice 32 EPS Calculation: Q2 2022 ($ in millions, except per share amounts) Adjusted EPS – Q2 2022 As Reported Unusual or nonrecurring items that are not typical of ongoing operations As Adjusted Adjusted EBITDA $40.3 $— $40.3 Depreciation and amortization (8.2) — (8.2) Unusu
Slide 33: EPS Calculation: YTD 2023
Enhabit Home Health & Hospice 33 EPS Calculation: YTD 2023 ($ in millions, except per share amounts) Adjusted EPS – YTD 2023 As Reported Impairment of Goodwill Unusual or nonrecurring items that are not typical of ongoing operations Income Tax Adjustments As Adjusted Adjusted EBITDA $49.2 $— $— $— $
Slide 34: EPS Calculation: FY 2022
Enhabit Home Health & Hospice 34 EPS Calculation: FY 2022 Adjusted EPS – FY 2022 ($ in millions, except per share amounts) As Reported Unusual or nonrecurring items that are not typical of ongoing operations As Adjusted Adjusted EBITDA $87.3 $— $87.3 Depreciation and amortization (16.7) — (16.7) Unu
Slide 35: Reconciliation of Net (Loss) Income to Adjusted EBITDA – Consolidated
Enhabit Home Health & Hospice 35 Reconciliation of Net (Loss) Income to Adjusted EBITDA – Consolidated ($ in millions) Second Quarter YTD 2023 2022 2023 2022 Net (loss) income $(74.1) $20.8 $(70.9) $47.5 Impairment of goodwill 85.8 — 85.8 — Income tax (benefit) expense (10.6) 6.4 (9.1) 15.1 Interest
Slide 36: Reconciliation of Cash Provided by Operations to Adjusted EBITDA
Enhabit Home Health & Hospice 36 Reconciliation of Cash Provided by Operations to Adjusted EBITDA ($ in millions) Second Quarter YTD 2023 2022 2023 2022 Net cash provided by operating activities $9.6 $33.6 $39.2 $75.0 Interest expense, excluding amortization of debt discounts and fees 10.1 0.1 19.3
Slide 37: Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow
Enhabit Home Health & Hospice 37 Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow ($ in millions) Second Quarter YTD 2023 2022 2023 2022 Net cash provided by operating activities $9.6 $33.6 $39.2 $75.0 Cash expenditures for maintenance (1.1) (0.3) (1.7) (2.6) Ot