Enhabit, Inc. · NYSE:EHAB
Enhabit — Q1 2024 Earnings Presentation
33 slides from Enhabit's earnings presentation, May 8, 2024
Slide 1: First Quarter Earnings Call Supplemental Information
First Quarter Earnings Call Supplemental Information May 9, 2024
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 5-6 Clinical Expertise and High-Quality Outcomes 7 Payor Innovation 8 De Novos 9 Home Health Segment 10-12 Hospice Segment 13-14 Consolidated Adjusted EBITDA 15 Debt and Liquidity 16 Adjusted Free Cash Flow 17 Guidance 18-19 Adjusted Free Cash Flow
Slide 4: Results at a Glance
Enhabit Home Health & Hospice 4 Non-Medicare admissions grew 25.2%, driving total admissions growth of 5.3% year over year. Strong growth in Medicare Advantage admissions and stabilization of Medicare admissions. Cost per visit increased 2.3% year over year. 38% of non-Medicare visits are now in pay
Slide 5: Consolidated Results
Enhabit Home Health & Hospice 5 Consolidated Results ($ in millions, except per share data) Q1 '24 vs. '232024 2023 Home health net service revenue $213.2 $215.8 (1.2) % Hospice net service revenue 49.2 49.3 (0.2) % Total net service revenue $262.4 $265.1 (1.0) % % of revenue % of revenue Cost of se
Slide 6: Consolidated Results (continued)
Enhabit Home Health & Hospice 6 Consolidated Results (continued) • The shift to more non-Medicare admissions in home health impacted consolidated revenue and Adjusted EBITDA by approximately $6 million partially offset by approximately $4 million in pricing improvement. Strategy to increase admissio
Slide 7: Clinical Expertise and High-Quality Outcomes
Enhabit Home Health & Hospice 7 Clinical Expertise and High-Quality Outcomes Enhabit National Average % Better Than Average QoPC Star Rating1 3.5 3.0 16.7% 89% of our home health agencies are 3 Stars or higher; 34% are 4 Stars or higher1 HHCAHPS Star Rating2 3.7 3.5 5.7% 99% of our home health agenc
Slide 8: Payor Innovation
Enhabit Home Health & Hospice 8 Payor Innovation Payor innovation strategy continues to foster Medicare Advantage growth. Strategy to increase admissions in payor innovation contracts lessens the impact of mix shift. 38% of non-Medicare visits are now in payor innovation contracts at improved rates.
Slide 9: De Novos
Enhabit Home Health & Hospice 9 De Novos Strategically reinvesting for growth • Added two hospice de novo locations in Q1 2024 – Denton, TX hospice location began accepting patients in March 2024 – Richmond, TX hospice location began accepting patients in March 2024 • One additional home health de n
Slide 10: Home Health Reporting Change
Enhabit Home Health & Hospice 10 Home Health Reporting Change Reconciliations to GAAP provided in Appendix With an advanced episodic model added to our payor innovation contracts effective January 1, 2024, we have updated how we report volume and pricing metrics for our home health segment, separati
Slide 11: Home Health Segment
Enhabit Home Health & Hospice 11 Home Health Segment ($ in millions) Q1 '24 vs. '232024 2023 Net service revenue: Medicare $128.3 $146.0 (12.1) % Non-Medicare 82.6 67.1 23.1 % Private duty(1) 2.3 2.7 (14.8) % Home health net service revenue 213.2 215.8 (1.2) % Cost of service 109.9 108.2 1.6 % Gross
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 5.3% year over year. • Revenue declined $2.6 million, or 1.2%, year over year primarily due to the payor mix shift to more non-Medicare admissions. – The shift to m
Slide 13: Hospice Segment
Enhabit Home Health & Hospice 13 Hospice Segment ($ in millions) Q1 '24 vs. '232024 2023 Net service revenue $49.2 $49.3 (0.2) % Cost of service 24.3 24.4 (0.4) % Gross margin 50.6 % 50.5 % General and administrative expenses 15.7 16.3 (3.7) % Net income attributable to noncontrolling interests 0.1
Slide 14: Hospice Segment (continued)
Enhabit Home Health & Hospice 14 Hospice Segment (continued) Hospice average daily census decreased 3.7% year over year. Revenue decreased $0.1 million, or 0.2%, year over year as increased Medicare reimbursement rates were offset by a decrease in patient days. • Admissions decreased 2.9% year over
Slide 15: Consolidated Adjusted EBITDA
Enhabit Home Health & Hospice 15 Consolidated Adjusted EBITDA ($ in millions) Q1 2024 % of Consolidated Revenue Q1 2023 % of Consolidated Revenue Home health segment Adjusted EBITDA $43.2 $44.3 Hospice segment Adjusted EBITDA 9.1 8.5 Home office general & administrative expenses (27.0) 10.3 % (27.5)
Slide 16: Debt & Liquidity Metrics
Enhabit Home Health & Hospice 16 Debt & Liquidity Metrics ($ in millions) March 31, 2024 December 31, 2023 Advances under revolving credit facility, due 2027(1) $180.0 $180.0 $400 million term loan facility, due 2027(1)(2) 362.3 367.1 Finance lease obligations 7.2 5.5 Total debt $549.5 $552.6 Less:
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 approximately $6 million of income tax refunds received in Q1 2023. • See Adjusted free cash flow assumptions on slide 20. • See uses of Adjusted free cash flow on slide 21. (
Slide 18: 2024 Guidance
Enhabit Home Health & Hospice 18 2024 Guidance Reaffirmed as of May 8, 2024 ($ in millions, except per share data) 2023 Actuals 2024 Guidance Net service revenue $1,046.3 $1,076 to $1,102 Adjusted EBITDA $97.6 $98 to $110 Adjusted EPS $0.22 $0.12 to $0.43 Reconciliations to GAAP provided in Appendix
Slide 19: Guidance Considerations
Enhabit Home Health & Hospice 19 Guidance Considerations • An increase of 1.2% in Medicare pricing • Continued shift to more non-Medicare admissions • Cost per visit increase of 2.0% to 3.0% Home Health • An increase of 2.9% in Medicare pricing for Q1 through Q3 • Cost per patient day increase of 2.
Slide 20: Adjusted Free Cash Flow Assumptions
Enhabit Home Health & Hospice 20 Adjusted Free Cash Flow Assumptions ($ in millions) Certain cash flow items 2023 Full Year 2024 YTD 2024 Assumptions Adjusted EBITDA $97.6 $25.3 $98 to $110 Cash interest expense 40.6 11.8 $40 to $45 Cash income tax payments (refunds), net (8.2) (0.2) $4 to $6 Workin
Slide 21: Uses of Adjusted Free Cash Flow
Enhabit Home Health & Hospice 21 Uses of Adjusted Free Cash Flow ($ in millions) Growth in Core Business 2023 Full Year Q1 2024 2024 Assumptions De novos $2.2 $0.7 $2.5 to $3.5 Acquisitions(1) $2.8 $— TBD Debt repayments (borrowings), net $30.0 $5.0 TBD (1) Completed the acquisition of Specialty Hom
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: Home Health Operational Metrics
Enhabit Home Health & Hospice 25 Home Health Operational Metrics (net service revenue $ in millions) Q1 2023 Q2 2023 Q3 2023 Q4 2023 FY 2023 Q1 2024 Medicare $146.0 $139.4 $141.0 $130.9 $557.3 $128.3 Non-Medicare 67.1 71.8 67.3 76.8 283.0 82.6 Private duty(1) 2.7 2.6 2.6 1.8 9.7 2.3 Home health net
Slide 26: Hospice Operational Metrics
Enhabit Home Health & Hospice 26 Hospice Operational Metrics (net service revenue $ in millions) Q1 2023 Q2 2023 Q3 2023 Q4 2023 FY 2023 Q1 2024 Hospice net service revenue $49.3 $48.5 $47.4 $51.1 $196.2 $49.2 (actual amounts) Total admissions 3,122 2,837 2,882 2,872 11,713 3,032 Patient days 317,02
Slide 27: Payor Sources
Enhabit Home Health & Hospice 27 Payor Sources As a % of Revenue First Quarter Fiscal Year Consolidated 2024 2023 2023 Medicare 67.4% 73.0% 71.5% Medicare Advantage 22.6% 18.6% 19.0% Managed Care 8.8% 7.1% 8.2% Medicaid 0.9% 1.1% 1.2% Other 0.3% 0.2% 0.1% Total 100.0% 100.0% 100.0% Home Health Medic
Slide 28: EPS Calculation: Q1 2024
Enhabit Home Health & Hospice 28 EPS Calculation: Q1 2024 ($ in millions, except per share amounts) Adjusted EPS – Q1 2024 As Reported Unusual or nonrecurring items that are not typical of ongoing operations Income Tax Adjustments(3) As Adjusted Adjusted EBITDA(1) $25.3 $— $— $25.3 Interest expense
Slide 29: EPS Calculation: Q1 2023
Enhabit Home Health & Hospice 29 EPS Calculation: Q1 2023 ($ in millions, except per share amounts) Adjusted EPS – Q1 2023 As Reported Unusual or nonrecurring items that are not typical of ongoing operations Income Tax Adjustments(3) As Adjusted Adjusted EBITDA(1) $25.3 $— $— $25.3 Depreciation and
Slide 30: Reconciliation of Net Income to Adjusted EBITDA – Consolidated
Enhabit Home Health & Hospice 30 Reconciliation of Net Income to Adjusted EBITDA – Consolidated ($ in millions) Three Months Ended March 31, 2024 2023 Net income $0.9 $3.2 Income tax expense 0.9 1.5 Interest expense and amortization of debt discounts and fees 11.1 9.5 Depreciation and amortization 7
Slide 31: Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA
Enhabit Home Health & Hospice 31 Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA ($ in millions) Three Months Ended March 31, 2024 2023 Net cash provided by operating activities $17.3 $29.6 Current portion of income tax expense 1.4 1.2 Interest expense, excluding amort
Slide 32: Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow
Enhabit Home Health & Hospice 32 Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow ($ in millions) Three Months Ended March 31, 2024 2023 Net cash provided by operating activities $17.3 $29.6 Unusual or nonrecurring items that are not typical of ongoing operation
Slide 33: Reconciliation of Gross Margin to Adjusted EBITDA Margin
Enhabit Home Health & Hospice 33 Reconciliation of Gross Margin to Adjusted EBITDA Margin Three Months Ended March 31, 2024 2023 Gross margin as a percentage of revenue 48.9 % 50.0 % General and administrative expenses (41.0) % (41.7) % Unusual or nonrecurring items that are not typical of ongoing o