• Consolidated Net Revenue: $258.2 million, a sequential increase of $4.6 million or 1.8%, but a year-over-year decrease of $2.4 million or 0.9%.
• Consolidated Adjusted EBITDA: $25.1 million, a sequential increase of $0.6 million or 2.4%, flat year over year.
• Home Health Revenue: $200.4 million, a sequential decrease of $0.6 million or 0.3%.
• Home Health Adjusted EBITDA: $35.5 million, a sequential decrease of $1.0 million or 2.7%.
• Hospice Revenue: $57.8 million, a sequential increase of $5.2 million or 9.9%.
• Hospice Adjusted EBITDA: $13.3 million, a sequential increase of $3.3 million or 33%.
• Average Daily Census (ADC) - Home Health: Decreased 0.5% sequentially.
• Average Daily Census (ADC) - Hospice: Increased 8.6% year over year, with same-store up 7%.
• Non-Medicare Admissions Growth: Up 10.7% year over year, driving total admission growth of 1.8%.
• Home Health Visits in Payer Innovation Contracts: Increased from 22% in Q4 2023 to 48% in Q4 2024.
• Cost per Day - Hospice: Increased 2.6% for the full year 2024.
• De Novo Locations Opened in 2024: Six new locations (five hospice, one home health).
• Branch Closures and Consolidations: Closing five home health and two hospice branches, consolidating one home health and two hospice branches.
• Debt Reduction in 2024: Approximately $40 million.
• Available Liquidity: Approximately $80 million, including $28 million of cash on hand.
• Adjusted Free Cash Flow in 2024: Approximately $54 million, with a conversion rate of 54%.
• 2025 Guidance - Net Service Revenue: $1.050 billion to $1.080 billion.
• 2025 Guidance - Adjusted EBITDA: $101 million to $107 million.

• Warning! GuruFocus has detected 5 Warning Signs with EHAB.

Release Date: March 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Enhabit Inc (NYSE:EHAB) achieved a 10.7% year-over-year increase in non-Medicare admissions, contributing to a total admission growth of 1.8% despite challenges.
• The company successfully increased the percentage of home health visits in payer innovation contracts from 22% in Q4 2023 to 48% in Q4 2024, resulting in a 5.7% improvement in non-Medicare revenue per visit.
• Enhabit Inc (NYSE:EHAB) reported a sequential census growth of 7.2% from January to February 2025, indicating strong momentum entering the new year.
• The hospice segment experienced significant growth, with an 8.6% year-over-year increase in average daily census and a 6.5% growth in total admissions.
• The company successfully opened six de novo locations in 2024, with plans for 14 more projects, enhancing its market presence and growth potential.

Negative Points

• Enhabit Inc (NYSE:EHAB) faced a decrease in consolidated net revenue by $2.4 million or 0.9% year over year in Q4 2024.
• The home health segment experienced a sequential decrease in revenue by $0.6 million or 0.3%, primarily due to hurricane-related impacts.
• The company is closing or consolidating several branches, which may indicate operational challenges or inefficiencies.
• Enhabit Inc (NYSE:EHAB) anticipates wage inflation and normalization of incentive compensation expenses as primary headwinds in 2025.
• The company expects a decrease or flat revenue per patient day in the home health segment for 2025, reflecting challenges in maintaining pricing power.

Q & A Highlights

Q: How do you see the momentum from Q4 carrying over into 2025, especially with the business development team built out? What are your thoughts on fee-for-service and gaining share there? A: Barbara Jacobsmeyer, President and CEO, stated that they are confident in continuing the growth momentum in hospice due to the fully implemented case management model and the establishment of admissions departments in every region. For home health, they are now able to focus on being a full-service provider, which has already shown positive census growth from January to February, with a balanced payer mix.

Q: What visibility do you have on payer innovation contracts, and how do you plan to convert non-payer contracts into better-paying deals with MA plans? A: Barbara Jacobsmeyer explained that there is a strong pipeline of regional plans interested in moving towards episodic arrangements. The company is actively working with these plans, emphasizing the benefits of episodic contracts, which place responsibility on providers to manage visits and maintain quality outcomes.

Q: Regarding the home health payer innovation side, how do the 49 new opportunities and 31 renegotiated agreements relate to 2025 guidance? Is there potential upside to the guidance? A: Ryan Soloman, CFO, mentioned that the guidance is consistent with previous investor presentations, expecting $19 million to $21 million in revenue improvement based on pricing. The guidance does not assume any significant incremental revenue from payer innovation contracts beyond the CMS final rate rule and recently negotiated agreements.

Q: Can you break down the components of hospice revenue per day increase, considering the tough comparison from last year? A: Ryan Soloman noted that the hospice cap accrual benefit was approximately $1.4 million. When normalized, the revenue per day increase aligns with expectations from the Medicare rate increase, excluding the accrual benefit.

Q: What are the primary headwinds in 2025 regarding cost structure, and how do you plan to address them? A: Ryan Soloman highlighted wage inflation and normalization of incentive compensation expenses as primary headwinds. The company plans to offset these through productivity improvements and optimizing staffing, aiming for a 2% to 3% increase in unit costs year over year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.