Enhabit, Inc. · NYSE:EHAB
Enhabit — Q2 2022 Earnings Presentation
43 slides from Enhabit's earnings presentation, Aug 1, 2022
Slide 1: Second Quarter Earnings Call Supplemental Information
Second Quarter Earnings Call Supplemental Information August 2, 2022
Slide 2: Forward Looking Statement
Enhabit Home Health & Hospice 2 Forward Looking Statement 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 forward-looking
Slide 3: Contents
Enhabit Home Health & Hospice 3 Contents Overview and Key Takeaways 5-10 Detailed Financial and Operational Results 11-15 Debt, Liquidity and Cash Flow 16-18 Guidance 19-23 Company Overview 24-26 Appendix, Including Reconciliations to GAAP 27-43
Slide 4: A better way to care
Enhabit Home Health & Hospice 4 A better way to care We remain committed to providing high-quality, compassionate care to every patient wherever they call home Enhabit began trading on the NYSE under the ticker symbol EHAB on July 1, 2022.
Slide 5: Overview of Quarter Results
Overview of Quarter Results 1
Slide 6: Quarterly Results at a Glance
Enhabit Home Health & Hospice 6 Quarterly Results at a Glance Continued payor mix shift in home heath, the partial resumption of sequestration, and inflation impacted the quarter. The partial resumption of sequestration reduced consolidated net revenue and Adjusted EBITDA by ~$3.4 million. Cost of s
Slide 7: Q2'22 Strategic Commentary
Enhabit Home Health & Hospice 7 Q2’22 Strategic Commentary • Total admissions decreased Y/Y primarily due to a reduction in episodic admissions offset by continued growth in non-episodic admissions. o Factors contributing to the Y/Y decrease in volumes included: - Increased use of paid days off (PDO
Slide 8: Q2'22 Strategic Commentary
Enhabit Home Health & Hospice 8 Q2’22 Strategic Commentary • Revenue decreased Y/Y primarily due to lower volumes in both segments, the continued shift to more non-episodic patients in home health, and the partial resumption of sequestration. • Lower volumes Y/Y resulted from: o Capacity constraints
Slide 9: Q2'22 Strategic Commentary: Medicare Advantage Growth
Enhabit Home Health & Hospice 9 Q2’22 Strategic Commentary • Medicare Advantage has grown from 12.9% of our home health revenue in Q2’21 to 16.8% in Q2’22. • Continued growth in non-episodic admissions underscores the continued shift of Medicare eligibles to Medicare Advantage. • Current Medicare Ad
Slide 10: Home Health & Hospice Highlights
Enhabit Home Health & Hospice 10 Home Health & Hospice Highlights Home Health Q2 Overview 4th Largest Provider of Medicare-Certified Skilled Home Health Services 34Home Health Locations States Hospice Q2 Overview 12th Largest Provider of Medicare-Certified Hospice Services 22Hospice Locations States
Slide 11: Detailed Financial and Operational Results
Detailed Financial and Operational Results 2
Slide 12: Q2'22 Consolidated Results
Enhabit Home Health & Hospice 12 Q2’22 Consolidated Results Q2 ‘22 vs. ‘21 ($ in millions, except per share data) 2022 2021 Home health net service revenue $220.2 $232.3 (5.2)% Hospice net service revenue $47.8 $53.8 (11.2)% Total net service revenue $268.0 $286.1 (6.3)% % of Revenue % of Revenue Co
Slide 13: Home Health Segment
Enhabit Home Health & Hospice 13 Home Health Segment Q2 ‘22 vs. ‘21($ in millions) 2022 2021 Net service revenue $220.2 $232.3 (5.2)% Cost of services 108.8 106.6 2.1% Gross margin 50.6% 54.1% Adjusted EBITDA $53.0 $63.3 (16.3)% % Adj. EBITDA margin 24.1% 27.3% Operational metrics (Actual Amounts) S
Slide 14: Hospice Segment
Enhabit Home Health & Hospice 14 Hospice Segment Q2 ‘22 vs. ‘21($ in millions) 2022 2021 Net service revenue $47.8 $53.8 (11.2)% Cost of services 21.5 23.0 (6.5)% Gross margin 55.0% 57.2% Adjusted EBITDA $10.7 $14.5 (26.2)% % Adj. EBITDA margin 22.4% 27.0% Operational metrics (Actual Amounts) Total
Slide 15: Consolidated Adjusted EBITDA
Enhabit Home Health & Hospice 15 Consolidated Adjusted EBITDA *Home office administrative and general expenses in the above table exclude stock compensation of $1.8 million and $2.1 million for Q2 2022 and Q2 2021, respectively, as well as $4.1 million and $2.7 million in costs associated with the s
Slide 16: Debt, Liquidity and Cash Flow
Debt, Liquidity and Cash Flow 3
Slide 17: Debt & Liquidity Metrics
Enhabit Home Health & Hospice 17 Debt & Liquidity Metrics ($ in millions) Jun 30, 2022 Advances under $350 million revolving credit facility, due 2027 $170.0 $400 million term loan facility, due 2027 397.7 Finance lease obligations 6.2 Total debt $573.9 Less: Cash and cash equivalents 50.2 Net debt
Slide 18: Adjusted Free Cash Flow
Enhabit Home Health & Hospice 18 Adjusted Free Cash Flow The reduction in adjusted free cash flow primarily resulted from the decrease in Adjusted EBITDA. See uses of free cash flow on slide 23. ($ in millions) Reconciliations to GAAP provided on pages 36 to 42
Slide 19: Guidance
Guidance 4
Slide 20: 2022 Guidance Revised August 1, 2022
Enhabit Home Health & Hospice 20 2022 Guidance Revised August 1, 2022 ($ in millions, except per share data) 2022 Updated Guidance 2022 Original Guidance 2021 Adjusted* Net service revenue $1,075 to $1,110 $1,080 to $1,120 $1,107 Adjusted EBITDA $155 to $170 $165 to $185 $197 Adjusted EPS $1.47 to $
Slide 21: Guidance Considerations
Enhabit Home Health & Hospice 21 Guidance Considerations • An increase of 3.4% in Medicare pricing prior to resumption of sequestration • Cost per visit increase of 5% to 6% Commentary: Home Health Projections • Capacity constraints related to staffing in the first half of 2022 led to a decline in h
Slide 22: Adjusted Free Cash Flow Assumptions
Enhabit Home Health & Hospice 22Reconciliations to GAAP provided on pages 36 to 42 Adjusted Free Cash Flow Assumptions Certain cash flow items (in millions) 2021 Adjusted* 2022 YTD 2022 Assumptions Cash interest payments $0.3 $0.1 $10 to $14 Cash income tax payments, net of refunds 28.4 - $20 to $25
Slide 23: Uses of Free Cash Flow
Enhabit Home Health & Hospice 23 Uses of Free Cash Flow *Reflects Enhabit on a carve-out basis **On January 1, 2022, we acquired a 50% equity interest from Frontier Home Health and Hospice, LLC in a joint venture with Saint Alphonsus system which operates home health and hospice locations in Boise,
Slide 24: Company Overview
Company Overview 5
Slide 25: Overview
Enhabit Home Health & Hospice 25 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) We are a leading provider of home health and hospice services tha
Slide 26: Growth Strategy
Enhabit Home Health & Hospice 26 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 27: Appendix
Enhabit Home Health & Hospice 27 Appendix
Slide 28: Home Health Operational Metrics
Enhabit Home Health & Hospice 28 Home Health Operational Metrics (In Millions) Q2 2022 Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 FY 2021 Home health net service revenue $220.2 $224.9 $224.0 $221.1 $232.3 $219.9 $897.3 Home Health (Actual Amounts) Total admissions 49,399 53,309 50,817 48,412 50,598 50,
Slide 29: Hospice Operational Metrics
Enhabit Home Health & Hospice 29 Hospice Operational Metrics (In Millions) Q2 2022 Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 FY 2021 Hospice net service revenue $47.7 $49.4 $52.1 $52.8 $53.8 $50.6 $209.3 Hospice (Actual Amounts) Total admissions 2,835 3,246 3,223 3,262 3,298 3,330 13,113 Patient days
Slide 30: Reconciliation of Historic Segment Adjusted EBITDA of Encompass Health to Enhabit
Enhabit Home Health & Hospice 30 Reconciliation of Historic Segment Adjusted EBITDA of Encompass Health to Enhabit Adjusted EBITDA ($ in millions) Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Q1 2022 Q2 2022 YTD 2022 Encompass Health Segment Adjusted EBITDA $50.8 $61.7 $46.4 $52.6 $211.5 $50.1 $43.8 $93.
Slide 31: Consolidated Results – YTD 2022
Enhabit Home Health & Hospice 31 Consolidated Results – YTD 2022 Year-To-Date ‘22 vs. ‘21 ($ in millions, except per share data) 2022 2021 Home health net service revenue $445.1 $452.2 (1.6)% Hospice net service revenue $97.2 $104.4 (6.9)% Total net service revenue $542.3 $556.6 (2.6)% % of Revenue
Slide 32: Home Health Segment Results – YTD 2022
Enhabit Home Health & Hospice 32 Home Health Segment Results – YTD 2022 Year-To-Date ‘22 vs. ‘21($ in millions) 2022 2021 Net service revenue $445.1 $452.2 (1.6)% Cost of services 216.8 209.6 3.4% Gross margin 51.3% 53.6% Adjusted EBITDA $110.7 119.3 (7.2)% % Adj. EBITDA margin 24.9% 26.4% Operation
Slide 33: Hospice Segment Results – YTD 2022
Enhabit Home Health & Hospice 33 Hospice Segment Results – YTD 2022 Year-To-Date ‘22 vs. ‘21($ in millions) 2022 2021 Net service revenue $97.2 $104.4 (6.9)% Cost of services 43.2 44.6 (3.1)% Gross margin 55.6% 57.3% Adjusted EBITDA $23.4 $28.0 (16.4)% % Adj. EBITDA margin 24.1% 26.8% Operational me
Slide 34: Payor Sources - Consolidated
Enhabit Home Health & Hospice 34 Payor Sources - Consolidated Consolidated Q2 YTD FY As a % of Revenue 2022 2021 2022 2021 2021 Medicare 78.5% 82.1% 78.8% 82.4% 81.9% Medicare Advantage 13.8% 10.5% 13.2% 10.4% 10.6% Managed Care 6.7% 5.8% 6.8% 5.6% 5.9% Medicaid 1.0% 1.4% 1.2% 1.4% 1.4% Other 0.0% 0
Slide 35: Payor Sources - By Segment
Enhabit Home Health & Hospice 35 Payor Sources - By Segment Home Health Q2 YTD FY As a % of Revenue 2022 2021 2022 2021 2021 Medicare 74.5% 78.5% 75.0% 78.9% 78.2% Medicare Advantage 16.8% 12.9% 16.0% 12.8% 13.1% Managed Care 7.5% 6.8% 7.7% 6.5% 6.9% Medicaid 1.2% 1.6% 1.3% 1.6% 1.6% Other 0.0% 0.2%
Slide 36: EPS Calculation: Q2 2022
Enhabit Home Health & Hospice 36 EPS Calculation: Q2 2022 Adjusted EPS – Q2 2022 ($ in millions, except per share amounts) As Reported Income Tax Adjustments Transaction Costs As Adjusted Adjusted EBITDA $40.3 - - $40.3 Gain on disposal or impairment of assets 0.4 - - 0.4 Stock compensation expense
Slide 37: EPS Calculation: Q2 2021
Enhabit Home Health & Hospice 37 EPS Calculation: Q2 2021 Adjusted EPS – Q2 2021 ($ in millions, except per share amounts) As Reported Income Tax Adjustments Transaction Costs As Adjusted Adjusted EBITDA $57.8 - - $57.8 Gain on disposal or impairment of assets 0.4 - - 0.4 Stock compensation expense
Slide 38: EPS Calculation: YTD 2022
Enhabit Home Health & Hospice 38 EPS Calculation: YTD 2022 Adjusted EPS – YTD 2022 ($ in millions, except per share amounts) As Reported Transaction Costs As Adjusted Adjusted EBITDA $87.3 - $87.3 Gain on disposal or impairment of assets 0.5 - 0.5 Stock compensation expense (2.5) - (2.5) Transaction
Slide 39: EPS Calculation: YTD 2021
Enhabit Home Health & Hospice 39 EPS Calculation: YTD 2021 Adjusted EPS – YTD 2021 ($ in millions, except per share amounts) As Reported Income Tax Adjustments Transaction Costs As Adjusted Adjusted EBITDA $105.0 - - $105.0 Gain on disposal or impairment of assets 0.5 - - 0.5 Stock compensation expe
Slide 40: Reconciliation of Net Income to Adjusted EBITDA – Consolidated
Enhabit Home Health & Hospice 40 Reconciliation of Net Income to Adjusted EBITDA – Consolidated QTD YTD ($ in millions) 2022 2021 2022 2021 Net income $20.8 $32.8 $47.5 $61.1 Income tax expense 6.4 10.4 15.1 19.1 Interest expense and amortization of debt discounts and fees 0.1 - 0.1 0.1 Depreciation
Slide 41: Reconciliation of Cash Provided by Operations to Adjusted EBITDA
Enhabit Home Health & Hospice 41 Reconciliation of Cash Provided by Operations to Adjusted EBITDA QTD YTD ($ in millions) 2022 2021 2022 2021 Net cash provided by operating activities $33.6 $73.2 $75.0 $93.6 Interest expense and amortization of debt discounts and fees 0.1 - 0.1 0.1 Equity in net inc
Slide 42: Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow
Enhabit Home Health & Hospice 42 Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow QTD YTD ($ in millions) 2022 2021 2022 2021 Net cash provided by operating activities $33.6 $73.2 $75.0 $93.6 Cash expenditures for maintenance (0.3) (2.2) (2.6) (3.1) Distribution
Slide 43: Enhabit Home Health & Hospice
enhabit Home Health & Hospice ehab.com