Announces new national payor agreement and
two new convener agreements with national reach effective May 1,
2023
Company to host a conference call tomorrow,
May 10, 2023 at 10 AM EDT
Enhabit, Inc. (NYSE: EHAB), a leading home health and hospice
care provider, today reported its results of operations for the
first quarter ended March 31, 2023.
“The first quarter was underscored by progress in two of our
critical success factors for 2023. Our sequential admissions growth
for home health and hospice was possible due to our continued
efforts in recruitment and retention of clinical staff and our
payor innovation team negotiating a new national payor agreement
and two convener agreements with national reach,” said Enhabit’s
President and Chief Executive Officer, Barb Jacobsmeyer. “With our
expansion of Medicare Advantage contracts and improved rates
combined with reduced staffing capacity constraints, we expect to
see improvements in our bottom line throughout 2023.”
QUARTERLY PERFORMANCE - CONSOLIDATED
- Net service revenue of $265.1 million
- Net income of $3.2 million
- Adjusted EBITDA of $25.3 million
- Earnings per diluted share of $0.05
- Adjusted earnings per diluted share of $0.09
RECENT COMPANY HIGHLIGHTS
- Executed new national agreement with Medicare Advantage payor
plus two new agreements with conveners with national reach
- Continued strong growth in home health Medicare Advantage
admissions with non-episodic admissions up 31.9% driving total
admissions growth of 1.2% year over year
- Continued recruiting success adding 101 net new full-time
nursing hires in the first quarter
- Further reduced staffing constrained hospice locations with
continued implementation of case management model for nurses;
hospice staffing constraints lowest in four quarters
- Acquired one home health location in Indiana and opened two de
novo hospice locations in Texas in March
FINANCIAL RESULTS
Consolidated
Q1
'23 vs. '22
($ in millions, except per share
data)
2023
2022
Home health net service revenue
$
215.8
$
224.9
(4.0
)%
Hospice net service revenue
49.3
49.4
(0.2
)%
Total net service revenue
$
265.1
$
274.3
(3.4
)%
% of Revenue
% of Revenue
Cost of services
50.0
%
$
(132.6
)
47.3
%
$
(129.7
)
2.2
%
Gross margin
50.0
%
132.5
52.7
%
144.6
(8.4
)%
General and administrative expenses
40.2
%
(106.7
)
35.3
%
(96.9
)
10.1
%
Operating expenses
90.2
%
$
(239.3
)
82.6
%
$
(226.6
)
5.6
%
Equity earnings / noncontrolling
interests
0.5
0.6
Adjusted EBITDA
$
25.3
$
47.0
(46.2
)%
Adjusted EBITDA margin
9.5
%
17.1
%
Adjusted EPS
$
0.09
$
0.56
(83.9
)%
The continued shift to more non-episodic admissions in home
health and the resumption of sequestration reduced consolidated net
service revenue and adjusted EBITDA approximately $10 million year
over year.
Adjusted EBITDA decreased year over year primarily due to the
continued shift to more non-episodic admissions in home health, the
resumption of sequestration, and increased general and
administrative expenses. General and administrative expenses were
higher year over year primarily due to an increase in employee
group medical claims, approximately $2 million of incremental costs
associated with being a stand-alone company, vendor rebates
received in the first quarter of 2022, and improved back office
staffing in the field.
SEGMENT RESULTS
Home health
Q1
'23 vs. '22
($ in millions)
2023
2022
Net service revenue
$
215.8
$
224.9
(4.0
)%
Cost of services
$
108.2
108.0
0.2
%
Gross margin
49.9
%
52.0
%
General and administrative expenses
$
62.9
$
58.7
7.2
%
Non-controlling interest
$
0.4
$
0.5
(20.0
)%
Adjusted EBITDA
$
44.3
$
57.7
(23.2
)%
% Adj. EBITDA margin
20.5
%
25.7
%
Operational metrics (Actual
Amounts)
Starts of care
Episodic admissions
35,032
38,971
(10.1
)%
Non-episodic admissions
18,911
14,338
31.9
%
Total admissions
53,943
53,309
1.2
%
Same-store total admissions growth
—
%
Episodic recertifications
23,674
25,808
(8.3
)%
Non-episodic recertifications
8,104
5,979
35.5
%
Total recertifications
31,778
31,787
—
%
Same-store total recertifications
growth
(0.5
)%
Total starts of care
85,721
85,096
0.7
%
Completed episodes
57,827
63,111
(8.4
)%
Revenue per episode
$
2,943
$
3,038
(3.1
)%
Visits per episode
14.8
15.2
(2.6
)%
Total visits
1,205,700
1,228,084
(1.8
)%
Non-episodic visits
351,283
270,253
30.0
%
Cost per visit
$
88
$
86
2.3
%
The year-over-year decrease in revenue was due primarily to the
continued payor mix shift to more non-episodic admissions and the
resumption of sequestration. Revenue per episode decreased year
over year primarily due to the resumption of sequestration and the
timing of completed episodes partially offset by a 0.7% increase in
Medicare reimbursement rates.
Adjusted EBITDA decreased year over year primarily due to lower
revenue and increased general and administrative expenses. General
and administrative expenses increased primarily due to an increase
in employee group medical claims, vendor rebates received in the
first quarter of 2022, and improved back office staffing in the
field. Cost per visit increased year over year primarily due to
merit and market rate increases for clinical staff, increased
contract labor, and increased costs associated with employee group
medical claims partially offset by improved clinical
productivity.
Hospice
Q1
'23 vs. '22
($ in millions)
2023
2022
Net service revenue
$
49.3
$
49.4
(0.2
)%
Cost of services
$
24.4
21.7
12.4
%
Gross margin
50.5
%
56.1
%
General and administrative expenses
$
16.3
$
14.9
9.4
%
Non-controlling interest
$
0.1
$
0.1
—
%
Adjusted EBITDA
$
8.5
$
12.7
(33.1
)%
% Adj. EBITDA margin
17.2
%
25.7
%
Operational metrics (Actual
Amounts)
Total admissions
3,122
3,246
(3.8
)%
Same-store total admissions growth
(11.3
)%
Patient days
317,027
319,834
(0.9
)%
Discharged average length of
stay
114
108
5.6
%
Average daily census
3,523
3,554
(0.9
)%
Revenue per day
$
155
$
154
0.6
%
Cost per day
$
77
$
68
13.2
%
Net service revenue was relatively flat to the prior year as the
decline in average daily census and resumption of sequestration was
offset by increased Medicare reimbursement rates. Admissions
decreased 3.8% year over year but increased 7.1% sequentially.
Revenue per day increased year over year primarily due to increased
Medicare reimbursement rates partially offset by the resumption of
sequestration and patient mix.
Adjusted EBITDA decreased year over year primarily due to higher
cost of services resulting from increased labor costs. Cost per day
increased year over year primarily due to increased labor costs
related to the implementation of the new case management model,
including costs associated with dedicated on-call and triage
nurses, increased contract labor, and an increase in employee group
medical claims.
GUIDANCE
The Company reaffirmed its full-year 2023 guidance as
follows:
Full-year 2023
Guidance
Net Service Revenue
between $1,110 and $1,140 million
Adjusted EBITDA
between $125 and $140 million
Adjusted EPS
between $0.50 and $0.89
For additional considerations regarding the Company’s 2023
guidance ranges, see the supplemental information posted on the
Company’s website at http://investors.ehab.com. See also “Other
Information” below for an explanation of why the Company does not
provide guidance for comparable GAAP measures for adjusted EBITDA
and adjusted EPS.
CONFERENCE CALL INFORMATION
The Company will host an investor conference call at 10 AM
Eastern Time on May 10, 2023 to discuss its results for the first
quarter of 2023. To access the live call by phone, dial toll-free
(888) 660-6150 or international (929) 203-0843; the conference ID
is 5248158. A simultaneous webcast of the call, along with
supplemental information, may be accessed by visiting
http://investors.ehab.com. Following the call, a replay will be
available at the same location.
ABOUT ENHABIT HOME HEALTH & HOSPICE
Enhabit Home Health & Hospice (Enhabit, Inc.) is a leading
national home health and hospice provider working to expand what's
possible for patient care in the home. Enhabit’s team of clinicians
supports patients and their families where they are most
comfortable, with a nationwide footprint spanning 253 home health
locations and 107 hospice locations across 34 states. Enhabit
leverages advanced technology and compassionate teams to deliver
extraordinary patient care. For more information, visit
ehab.com.
OTHER INFORMATION
Note regarding presentation of non-GAAP financial
measures
The financial data contained in the press release and
supplemental information includes non-GAAP financial measures as
defined in Regulation G under the Securities Exchange Act of 1934,
including adjusted EBITDA, adjusted EBITDA margin, leverage ratios,
adjusted EPS, and adjusted free cash flow. Reconciliations of these
non-GAAP financial measures to the most directly comparable
financial measures calculated in accordance with GAAP are presented
on the attached schedules. In reliance on the exception provided by
Item 10(e)(1)(i)(B) of Regulation S-K, reconciliation of our
guidance of adjusted EBITDA and adjusted EPS to their corresponding
GAAP measures is not provided because the Company is unable to
provide such reconciliation, without unreasonable effort, due to
the inherent difficulty in predicting, with reasonable certainty,
the future impact of items that are outside the control of the
Company or otherwise non-indicative of its ongoing operating
performance. Such items include, but are not limited to, gains or
losses related to hedging instruments; loss on early extinguishment
of debt; adjustments to its income tax provision (such as valuation
allowance adjustments and settlements of income tax claims); and
items related to corporate and facility restructurings. For the
same reasons, the Company is unable to address the probable
significance of the unavailable information.
Note regarding presentation of same-store comparisons
The Company uses “same-store” comparisons to explain the changes
in certain performance metrics and line items within its financial
statements. Same-store comparisons are calculated based on home
health and hospice locations open throughout both the full current
period and the immediately prior period presented. These
comparisons include the financial results of market consolidation
transactions in existing markets, as it is difficult to determine,
with precision, the incremental impact of these transactions on the
Company’s results of operations.
Enhabit, Inc. and
Subsidiaries
Condensed Consolidated
Statements of Income
(Unaudited)
Three Months Ended March
31,
2023
2022
(In Millions, Except Per Share
Data)
Net service revenue
$
265.1
$
274.3
Cost of service, excluding depreciation
and amortization
132.6
129.7
General and administrative expenses
110.5
100.7
Depreciation and amortization
7.8
8.5
Operating income
14.2
35.4
Interest expense and amortization of debt
discounts and fees
9.5
—
Income before income taxes and
noncontrolling interests
4.7
35.4
Income tax expense
1.5
8.7
Net income
3.2
26.7
Less: Net income attributable to
noncontrolling interests
0.5
0.6
Net income attributable to Enhabit,
Inc.
$
2.7
$
26.1
Weighted average common shares
outstanding:
Basic
49.8
49.6
Diluted
50.1
49.6
Earnings per common share:
Basic earnings per share attributable to
Enhabit, Inc. common stockholders
$
0.05
$
0.53
Diluted earnings per share attributable to
Enhabit, Inc. common stockholders
$
0.05
$
0.53
Enhabit, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(Unaudited)
March 31, 2023
December 31,
2022
(In Millions)
Assets
Current assets:
Cash and cash equivalents
$
37.6
$
22.9
Restricted cash
2.0
4.3
Accounts receivable
156.5
149.6
Income tax receivable
4.3
11.4
Prepaid expenses and other current
assets
12.2
23.6
Total current assets
212.6
211.8
Property and equipment, net
19.0
20.4
Operating lease right-of-use assets
45.8
42.0
Goodwill
1,147.5
1,144.8
Intangible assets, net
97.1
102.6
Other long-term assets
5.0
5.2
Total assets
$
1,527.0
$
1,526.8
Liabilities and Stockholders’
Equity
Current liabilities:
Current portion of long-term debt
$
22.7
$
23.1
Current operating lease liabilities
11.6
14.0
Accounts payable
6.2
3.8
Accrued payroll
47.7
35.5
Refunds due patients and other third-party
payors
8.0
8.3
Accrued medical insurance
7.5
7.5
Other current liabilities
31.9
40.7
Total current liabilities
135.6
132.9
Long-term debt, net of current portion
549.7
560.0
Long-term operating lease liabilities
34.2
28.1
Deferred income tax liabilities
28.5
28.6
Other long-term liabilities
3.0
1.9
751.0
751.5
Commitments and contingencies
Redeemable noncontrolling interests
5.1
5.2
Stockholders’ equity:
Enhabit, Inc. stockholders’ equity:
744.3
741.7
Noncontrolling interests
26.6
28.4
Total stockholders’ equity
770.9
770.1
Total liabilities and stockholders’
equity
$
1,527.0
$
1,526.8
Enhabit, Inc. and
Subsidiaries
Condensed Consolidated Cash
Flows
(Unaudited)
Three Months Ended March
31,
2023
2022
(In Millions)
Cash flows from operating
activities:
Net income
$
3.2
$
26.7
Adjustments to reconcile net income to net
cash provided by operating activities—
Depreciation and amortization
7.8
8.5
Amortization of debt related costs
0.3
—
Stock-based compensation
1.5
1.3
Deferred tax expense (benefit)
0.3
(0.2
)
Other, net
—
(0.2
)
Changes in assets and liabilities, net of
acquisitions—
Accounts receivable
(6.7
)
(0.1
)
Prepaid expenses and other assets
18.1
(1.6
)
Accounts payable
2.3
(0.6
)
Accrued payroll
12.2
(1.6
)
Other liabilities
(9.4
)
9.2
Net cash provided by operating
activities
29.6
41.4
Cash flows from investing
activities:
Acquisition of businesses, net of cash
acquired
(2.8
)
—
Purchases of property and equipment
(0.6
)
(2.3
)
Other, net
0.2
0.9
Net cash used in investing
activities
(3.2
)
(1.4
)
Cash flows from financing
activities:
Principal payments on term loan
(5.0
)
—
Payments on revolving credit facility
(5.0
)
—
Distributions paid to noncontrolling
interests of consolidated affiliates
(2.5
)
(0.5
)
Principal payments under finance lease
obligations
(1.0
)
(1.4
)
Contributions from Encompass
—
23.5
Distributions to Encompass
—
(55.8
)
Contributions from noncontrolling
interests of consolidated affiliates
—
7.4
Other
(0.5
)
Net cash used in financing
activities
(14.0
)
(26.8
)
Increase in cash, cash equivalents, and
restricted cash
12.4
13.2
Cash, cash equivalents, and restricted
cash at beginning of year
27.2
8.0
Cash, cash equivalents, and restricted
cash at end of year
$
39.6
$
21.2
Enhabit, Inc. and
Subsidiaries
Supplemental
Information
Adjusted Earnings Per
Share
Q1
2023
2022
Earnings per share, as reported
$
0.05
$
0.53
Adjustments, net of tax:
Income tax adjustments
0.01
—
Unusual or nonrecurring items that are not
typical of ongoing operations(1)
0.03
0.03
Adjusted earnings per share(2)
$
0.09
$
0.56
(1)
Unusual or nonrecurring items include
costs associated with the strategic alternatives review,
shareholder activism defense, and non-routine litigation.
(2)
Adjusted EPS may not sum due to
rounding.
Enhabit, Inc. and
Subsidiaries
Supplemental
Information
Adjusted Earnings Per
Share
Q1 QTD
2023
Adjustments
As Reported
Income Tax Adjustments
Unusual or nonrecurring items
that are not typical of ongoing operations
As Adjusted
(In Millions, Except Per Share
Amounts)
Adjusted EBITDA(1)
$
25.3
$
—
$
—
$
25.3
Depreciation and amortization
(7.8
)
—
—
(7.8
)
Interest expense and amortization of debt
discounts and fees
(9.5
)
—
—
(9.5
)
Gain on disposal of assets
—
—
—
—
Stock-based compensation
(1.5
)
—
—
(1.5
)
Unusual or nonrecurring items that are not
typical of ongoing operations(2)
(2.3
)
—
2.3
—
Income before income tax
expense
4.2
—
2.3
6.5
Provision for income tax expense
(1.5
)
0.4
(0.6
)
(1.7
)
Net income attributable to
Enhabit
$
2.7
$
0.4
$
1.7
$
4.8
Diluted earnings per share(3)
$
0.05
$
0.01
$
0.03
$
0.09
Diluted shares used in
calculation
50.1
(1)
See reconciliation of net income to
adjusted EBITDA.
(2)
Unusual or nonrecurring items include
costs associated with the strategic alternatives review,
shareholder activism defense, and non-routine litigation.
(3)
Adjusted EPS may not sum due to
rounding.
Enhabit, Inc. and
Subsidiaries
Supplemental
Information
Adjusted Earnings Per
Share
Q1 QTD
2022
Adjustments
As Reported
Unusual or nonrecurring items
that are not typical of ongoing operations
As Adjusted
(In Millions, Except Per Share
Amounts)
Adjusted EBITDA(1)
$
47.0
$
—
$
47.0
Depreciation and amortization
(8.5
)
—
(8.5
)
Interest expense and amortization of debt
discounts and fees
—
—
—
Gain on disposal of assets
0.1
—
0.1
Stock-based compensation
(1.3
)
—
(1.3
)
Stock-based compensation included in
overhead allocation
(0.5
)
—
(0.5
)
Unusual or nonrecurring items that are not
typical of ongoing operations(2)
(2.0
)
2.0
—
Income before income tax
expense
34.8
2.0
36.8
Provision for income tax expense
(8.7
)
(0.5
)
(9.2
)
Net income attributable to
Enhabit
$
26.1
$
1.5
$
27.6
Diluted earnings per share(3)
$
0.53
$
0.03
$
0.56
Diluted shares used in
calculation
49.6
(1)
See reconciliation of net income to
adjusted EBITDA.
(2)
Unusual or nonrecurring items include
costs associated with the strategic alternatives review,
shareholder activism defense, and non-routine litigation.
(3)
Adjusted EPS may not sum due to
rounding.
Enhabit, Inc. and
Subsidiaries
Supplemental
Information
Reconciliation of Net Income
to Adjusted EBITDA
Three Months Ended
March 31,
2023
2022
(In Millions)
Net Income
$
3.2
$
26.7
Income tax expense
1.5
8.7
Interest expense and amortization of debt
discounts and fees
9.5
—
Depreciation and amortization
7.8
8.5
(Gain) loss on disposal or impairment of
assets
—
(0.1
)
Stock-based compensation
1.5
1.3
Stock-based compensation included in
overhead allocation
—
0.5
Net income attributable to noncontrolling
interests
(0.5
)
(0.6
)
Unusual or nonrecurring items that are not
typical of ongoing operations(1)
2.3
2.0
Adjusted EBITDA
$
25.3
$
47.0
(1)
Unusual or nonrecurring items include
costs associated with the strategic alternatives review,
shareholder activism defense, and non-routine litigation.
Reconciliation of Net Cash
Provided by Operating Activities to Adjusted EBITDA
Three Months Ended
March 31,
2023
2022
(In Millions)
Net cash provided by operating
activities
$
29.6
$
41.4
Interest expense and amortization of debt
discounts and fees
9.5
—
Equity in net income of nonconsolidated
affiliates
—
—
Net income attributable to noncontrolling
interests in continuing operations
(0.5
)
(0.6
)
Distributions from nonconsolidated
affiliates
—
(0.2
)
Current portion of income tax expense
1.2
8.9
Change in assets and liabilities
(16.5
)
(5.3
)
Unusual or nonrecurring items that are not
typical of ongoing operations(1)
2.3
2.0
Stock-based compensation included in
overhead allocation
—
0.5
Other
(0.3
)
0.3
Adjusted EBITDA
$
25.3
$
47.0
(1)
Unusual or nonrecurring items include
costs associated with the strategic alternatives review,
shareholder activism defense, and non-routine litigation.
Enhabit, Inc. and
Subsidiaries
Supplemental
Information
Reconciliation of Net Cash
Provided by Operating Activities to Adjusted Free Cash Flow
Q1
($ in millions)
2023
2022
Net cash provided by operating
activities
$
29.6
$
41.4
Capital expenditures for maintenance
(0.6
)
(2.3
)
Distributions paid to noncontrolling
interests of consolidated affiliates
(2.5
)
(0.5
)
Other working capital adjustments
(0.5
)
(0.5
)
Items non-indicative of ongoing
operating performance:
Stock-based compensation included in
overhead allocation
—
0.5
Unusual or nonrecurring items that are not
typical of ongoing operations(1)
2.3
2.0
Adjusted free cash flow
$
28.3
$
40.6
(1)
Unusual or nonrecurring items include
costs associated with the strategic alternatives review,
shareholder activism defense, and non-routine litigation.
FORWARD-LOOKING STATEMENTS
Statements contained in this press release 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
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. All such estimates, projections, and
forward-looking information speak only as of the date hereof, and
Enhabit undertakes no duty to publicly update or revise such
forward-looking information, whether as a result of new
information, future events, or otherwise. Such forward-looking
statements are necessarily estimates based upon current information
and involve a number of risks and uncertainties. Actual events or
results may differ materially from those anticipated in these
forward-looking statements as a result of a variety of factors.
While it is impossible to identify all such factors, factors which
could cause actual events or results to differ materially from
those estimated by Enhabit include, but are not limited to, our
ability to execute on our strategic plans, regulatory and other
developments impacting the markets for our services, changes in
reimbursement rates, general economic conditions, our ability to
attract and retain key management personnel and healthcare
professionals, potential disruptions or breaches of our or our
vendors’ information systems, the outcome of litigation, our
ability to successfully complete and integrate de novo
developments, acquisitions, investments, and joint ventures, and
our ability to control costs, particularly labor and employee
benefit costs. Our Form 10K and subsequent quarterly reports on
Form 10-Q, each of which can be found on the Company’s website at
http://investors.ehab.com and the SEC’s website at www.sec.gov,
discuss other risks and factors that could cause actual results to
differ materially from those expressed or implied by any
forward-looking statement in this press release. We urge you to
consider all of the risks, uncertainties and factors identified
above or discussed in such reports carefully in evaluating the
forward-looking statements in this press release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230509005947/en/
Investor Relations Contact Mark Brewer
InvestorRelations@ehab.com 469-860-6061
Media Contact Erin Volbeda Media@ehab.com
972-338-5141
Enhabit (NYSE:EHAB)
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