Company to host a conference call tomorrow,
May 9, 2024, at 10 a.m. 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, 2024.
“Our momentum exiting 2023 and through the first quarter of 2024
instills confidence and excitement in our strategy and team,” said
Enhabit’s President and Chief Executive Officer Barb Jacobsmeyer.
“Our strong start to 2024 is a result of our team’s continued focus
on our operational strategies. Additional frontline clinicians,
more and better home health payor contracts and controlling general
and administrative expenses were the key drivers of our performance
in the first quarter and resulted in sustained consolidated
Adjusted EBITDA of $25.3 million in both the first quarter of 2024
and 2023. We are confident we are taking the right steps to drive
future growth.”
QUARTERLY PERFORMANCE - CONSOLIDATED
- Net service revenue of $262.4 million
- Net income attributable to Enhabit, Inc. of $0.2 million
- Adjusted EBITDA of $25.3 million
- Earnings per share of $0.01
- Adjusted earnings per share of $0.07
RECENT COMPANY HIGHLIGHTS
- Strong growth in home health Medicare Advantage admissions with
non-Medicare admissions up 25.2%, driving total admission growth of
5.3% year over year
- 38% of non-Medicare visits are now in payor innovation
contracts at improved rates
- Continued recruiting success adding 151 net new full-time
nursing hires in the first quarter
- 30-day hospitalization readmission rate in home health is 20.5%
better than the national average
- 5.6% sequential growth in hospice admissions
- 53.2% better than the national average for hospice patient
visits in last days of life
- General and administrative expense declined year over year
- Opened two hospice de novo locations in Texas in March
FINANCIAL RESULTS
Consolidated
($ in millions, except per share
data)
Q1
'24 vs. '23
2024
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 service
51.1
%
$
134.2
50.0
%
$
132.6
1.2
%
Gross margin
48.9
%
128.2
50.0
%
132.5
(3.2
)%
General and administrative expenses
38.9
%
102.2
40.2
%
106.7
(4.2
)%
Total operating expenses
90.1
%
$
236.4
90.3
%
$
239.3
(1.2
)%
Net income attributable to noncontrolling
interests
(0.7
)
(0.5
)
Adjusted EBITDA
$
25.3
$
25.3
—
%
Adjusted EBITDA margin
9.6
%
9.5
%
Net income attributable to Enhabit,
Inc.
$
0.2
$
2.7
(92.6
)%
Reported diluted EPS
$
0.01
$
0.05
(80.0
)%
Adjusted EPS
$
0.07
$
0.09
(22.2
)%
The strategy to increase admissions in payor innovation
contracts lessened the impact of mix shift contributing to
sustained consolidated Adjusted EBITDA of $25.3 million in both
periods presented. The shift to more non-Medicare admissions in
home health impacted consolidated revenue and Adjusted EBITDA by
approximately $6 million partially offset by approximately $4
million in pricing improvement.
SEGMENT RESULTS
Home Health
($ in millions)
Q1
'24 vs. '23
2024
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 margin
48.5
%
49.9
%
General and administrative expenses
59.5
62.9
(5.4
)%
Net income attributable to noncontrolling
interests
0.6
0.4
50.0
%
Adjusted EBITDA
$
43.2
$
44.3
(2.5
)%
% Adj. EBITDA margin
20.3
%
20.5
%
Operational metrics (actual
amounts)
Medicare:
Admissions
25,944
29,285
(11.4
)%
Recertifications
17,652
19,938
(11.5
)%
Completed episodes
43,171
49,231
(12.3
)%
Visits
632,047
723,399
(12.6
)%
Visits per episode
14.6
14.7
(0.7
)%
Revenue per episode
$
2,972
$
2,966
0.2
%
Non-Medicare:
Admissions
30,881
24,658
25.2
%
Recertifications
13,489
11,840
13.9
%
Visits
571,289
482,301
18.5
%
Total:
Admissions
56,825
53,943
5.3
%
Same-store total admissions growth
5.0
%
Recertifications
31,141
31,778
(2.0
)%
Same-store total recertifications
growth
(2.4
)%
Visits
1,203,336
1,205,700
(0.2
)%
Cost per visit
$
90
$
88
2.3
%
(1) Private duty represents long-term
comprehensive hourly nursing medical care.
Revenue declined year over year primarily due to the payor mix
shift to more non-Medicare admissions (approximately $6 million)
partially offset by improved pricing (approximately $4
million).
Adjusted EBITDA decreased year over year primarily due to the
payor mix shift to more non-Medicare admissions and increased cost
of service, offset by a reduction in general and administrative
expenses. Cost per visit increased 2.3% year over year primarily
due to merit and market rate increases. General and administrative
expenses declined year over year primarily due to a new
organizational structure implemented in the first quarter of 2023
to align the Company’s sales and operations teams.
Hospice
($ in millions)
Q1
'24 vs. '23
2024
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
0.1
—
%
Adjusted EBITDA
$
9.1
$
8.5
7.1
%
% Adj. EBITDA margin
18.5
%
17.2
%
Operational metrics (actual
amounts)
Total admissions
3,032
3,122
(2.9
)%
Same-store total admissions growth
(5.1
)%
Patient days
308,542
317,027
(2.7
)%
Discharged average length of
stay
104
114
(8.8
)%
Average daily census
3,391
3,523
(3.7
)%
Revenue per patient day
$
159
$
156
1.9
%
Cost per patient day
$
79
$
77
2.6
%
Net service revenue decreased year over year as increased
Medicare reimbursement rates were offset by a decrease in patient
days.
Adjusted EBITDA increased year over year primarily due to a
decrease in general and administrative expenses. Cost per day
increased 2.6% year over year primarily due to a decrease in
patient days. General and administrative expenses declined year
over year primarily due to the restructuring of hospice back office
staffing in the third quarter of 2023.
GUIDANCE
The Company reaffirmed its full-year 2024 guidance as
follows:
($ in millions, except per share
data)
2024 Guidance
Net service revenue
$1,076 to $1,102
Adjusted EBITDA
$98 to $110
Adjusted EPS
$0.12 to $0.43
For additional considerations regarding the Company’s 2024
guidance ranges, see the supplemental information posted on the
Company’s website at http://investors.ehab.com.
CONFERENCE CALL INFORMATION
The Company will host an investor conference call at 10 a.m. EDT
on May 9, 2024, to discuss its results for the first quarter of
2024. 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
https://events.q4inc.com/attendee/834974223. Following the call, a
replay will be available on the Company’s website at
http://investors.ehab.com.
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 255 home health
locations and 112 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 and reconciliation of non-GAAP
financial measures
The financial data contained in this press release and
supplemental information includes non-GAAP (generally accepted
accounting principles (GAAP)) financial measures as defined in
Regulation G under the Securities Exchange Act of 1934, including
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EPS, and Adjusted
free cash flow. See “Reconciliations of Non-GAAP Financial
Measures” for reconciliations of the non-GAAP financial measures to
the most directly comparable financial measures calculated and
presented in accordance with GAAP. Additionally, our Form 10-Q for
the three months ended March 31, 2024, provide further information
regarding “unusual or nonrecurring items that are not typical of
ongoing operations,” a reconciliation item in our Adjusted EBITDA
calculation. Such non-GAAP financial measures exclude significant
components in understanding and assessing financial performance and
should therefore not be considered superior to, as a substitute for
or alternative to the GAAP financial measures presented in this
press release. The non-GAAP financial measures in the press release
may differ from similar measures used by other companies.
The Company is unable to reconcile the guidance for Adjusted
EBITDA and Adjusted EPS to their corresponding GAAP measures
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. Accordingly,
the Company relies on the exception provided by Item 10(e)(1)(i)(B)
of Regulation S-K. 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,
2024
2023
($ in millions, except per
share data)
Net service revenue
$
262.4
$
265.1
Cost of service, excluding depreciation
and amortization
134.2
132.6
General and administrative expenses
107.5
110.5
Depreciation and amortization
7.8
7.8
Operating income
12.9
14.2
Interest expense and amortization of debt
discounts and fees
11.1
9.5
Income before income taxes and
noncontrolling interests
1.8
4.7
Income tax expense
0.9
1.5
Net income
0.9
3.2
Less: Net income attributable to
noncontrolling interests
0.7
0.5
Net income attributable to Enhabit,
Inc.
$
0.2
$
2.7
Weighted average common shares
outstanding:
Basic
50.1
49.8
Diluted
50.4
50.1
Earnings per common share:
Basic earnings per share attributable to
Enhabit, Inc. common stockholders
$
0.01
$
0.05
Diluted earnings per share attributable to
Enhabit, Inc. common stockholders
$
0.01
$
0.05
Enhabit, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(Unaudited)
March 31,
2024
December 31,
2023
($ in millions)
Assets
Current assets:
Cash and cash equivalents
$
36.5
$
27.4
Restricted cash
2.9
2.4
Accounts receivable, net of allowances
174.3
164.7
Prepaid expenses and other current
assets
12.4
15.6
Total current assets
226.1
210.1
Property and equipment, net
20.6
19.0
Operating lease right-of-use assets
57.0
57.5
Goodwill
1,061.7
1,061.7
Intangible assets, net
74.6
80.0
Other long-term assets
5.2
5.3
Total assets
$
1,445.2
$
1,433.6
Liabilities and stockholders’
equity
Current liabilities:
Current portion of long-term debt
$
22.8
$
22.5
Current operating lease liabilities
11.2
11.8
Accounts payable
9.0
7.6
Accrued payroll
49.1
38.5
Refunds due patients and other third-party
payors
10.5
8.2
Accrued medical insurance
7.4
8.4
Other current liabilities
40.5
40.7
Total current liabilities
150.5
137.7
Long-term debt, net of current portion
526.7
530.1
Long-term operating lease liabilities, net
of current portion
45.8
45.7
Deferred income tax liabilities
17.0
17.1
Other long-term liabilities
0.2
1.3
Total liabilities
740.2
731.9
Redeemable noncontrolling interests
5.0
5.0
Stockholders’ equity:
Total Enhabit, Inc. stockholders’
equity
672.3
669.7
Noncontrolling interests
27.7
27.0
Total stockholders’ equity
700.0
696.7
Total liabilities and stockholders’
equity
$
1,445.2
$
1,433.6
Enhabit, Inc. and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31,
2024
2023
($ in millions)
Cash flows from operating
activities:
Net income
$
0.9
$
3.2
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization
7.8
7.8
Amortization of debt related costs
0.4
0.3
Stock-based compensation
1.8
1.5
Deferred tax (benefit) expense
(0.5
)
0.3
Other
(0.3
)
—
Changes in assets and liabilities, net of
acquisitions
Accounts receivable, net of allowances
(9.7
)
(6.7
)
Prepaid expenses and other assets
3.7
18.1
Accounts payable
1.4
2.3
Accrued payroll
10.7
12.2
Other liabilities
1.1
(9.4
)
Net cash provided by operating
activities
17.3
29.6
Cash flows from investing
activities:
Acquisition of businesses, net of cash
acquired
—
(2.8
)
Purchases of property and equipment,
including capitalized software costs
(1.8
)
(0.6
)
Other
0.7
0.2
Net cash used in investing
activities
(1.1
)
(3.2
)
Cash flows from financing
activities:
Principal payments on debt
(5.0
)
(5.0
)
Payments on revolving credit facility
—
(5.0
)
Principal payments under finance lease
obligations
(1.0
)
(1.0
)
Distributions paid to noncontrolling
interests of consolidated affiliates
—
(2.5
)
Other
(0.6
)
(0.5
)
Net cash used in financing
activities
(6.6
)
(14.0
)
Increase in cash, cash equivalents, and
restricted cash
9.6
12.4
Cash, cash equivalents, and restricted
cash at beginning of year
29.8
27.2
Cash, cash equivalents, and restricted
cash at end of period
$
39.4
$
39.6
Enhabit, Inc. and
Subsidiaries
Supplemental
Information
Reconciliation of Diluted
Earnings Per Share to Adjusted Earnings Per Share
Three Months Ended
March 31,
2024
2023
Diluted earnings per share, as
reported
$
0.01
$
0.05
Adjustments, net of tax:
Unusual or nonrecurring items that are not
typical of ongoing operations(1)
0.06
0.03
Income tax adjustments(2)
0.01
0.01
Adjusted earnings per share(3)
$
0.07
$
0.09
(1) Unusual or nonrecurring items in Q1
2024 include costs associated with the strategic review process,
nonroutine litigation, standalone transition costs and shareholder
activism; in Q1 2023, they include nonroutine litigation,
shareholder activism and standalone transition costs.
(2) Income tax adjustments include the
effect of permanent book-tax differences attributable to
stock-based compensation.
(3) Adjusted EPS may not sum due to
rounding.
Reconciliation of Adjusted
EBITDA to Adjusted Earnings Per Share
Three Months Ended March
31,
2024
Adjustments
As Reported
Unusual or
nonrecurring
items that are not
typical of ongoing
operations
Income tax
Adjustments(3)
As Adjusted
($ in millions, except per
share data)
Adjusted EBITDA(1)
$
25.3
$
—
$
—
$
25.3
Interest expense and amortization of debt
discounts and fees
(11.1
)
—
—
(11.1
)
Depreciation and amortization
(7.8
)
—
—
(7.8
)
Unusual or nonrecurring items that are not
typical of ongoing operations(2)
(3.7
)
3.7
—
—
Stock-based compensation
(1.8
)
—
—
(1.8
)
Gain on disposal or impairment of
assets
0.2
—
—
0.2
Income before income taxes
1.1
3.7
—
4.8
Income tax expense
(0.9
)
(0.9
)
0.6
(1.2
)
Net income attributable to Enhabit,
Inc.
$
0.2
$
2.8
$
0.6
$
3.6
Diluted EPS(4)
$
0.01
$
0.06
$
0.01
$
0.07
Diluted shares
50.4
50.4
(1) Reconciliation to GAAP provided
below.
(2) Unusual or nonrecurring items in Q1
2024 include costs associated with the strategic review process,
nonroutine litigation, standalone transition costs and shareholder
activism.
(3) Income tax adjustments include the
effect of permanent book-tax differences attributable to
stock-based compensation.
(4) Diluted EPS may not sum due to
rounding.
Reconciliation of Adjusted
EBITDA to Adjusted Earnings Per Share
Three Months Ended March
31,
2023
Adjustments
As Reported
Unusual or
nonrecurring
items that are not
typical of ongoing
operations
Income Tax
Adjustments(3)
As Adjusted
($ in millions, except per
share data)
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
)
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 taxes
4.2
2.3
—
6.5
Income tax expense
(1.5
)
(0.6
)
0.4
(1.7
)
Net income attributable to Enhabit,
Inc.
$
2.7
$
1.7
$
0.4
$
4.8
Diluted EPS(4)
$
0.05
$
0.03
$
0.01
$
0.09
Diluted shares
50.1
50.1
(1) Reconciliation to GAAP provided
below.
(2) Unusual or nonrecurring items in Q1
2023 include nonroutine litigation, shareholder activism and
standalone transition costs.
(3) Income tax adjustments include the
effect of permanent book-tax differences attributable to
stock-based compensation.
(4) Diluted EPS may not sum due to
rounding.
Reconciliation of Net Income
to Adjusted EBITDA
Three Months Ended
March 31,
2024
2023
($ in millions)
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
7.8
7.8
Gain on disposal or impairment of
assets
(0.2
)
—
Stock-based compensation
1.8
1.5
Net income attributable to noncontrolling
interests
(0.7
)
(0.5
)
Unusual or nonrecurring items that are not
typical of ongoing operations(1)
3.7
2.3
Adjusted EBITDA
$
25.3
$
25.3
(1) Unusual or nonrecurring items in Q1
2024 include costs associated with the strategic review process,
nonroutine litigation, standalone transition costs and shareholder
activism; in Q1 2023, they include nonroutine litigation,
shareholder activism and standalone transition costs.
Reconciliation of Net Cash
Provided by Operating Activities to Adjusted EBITDA
Three Months Ended
March 31,
2024
2023
($ in millions)
Net cash provided by operating
activities
$
17.3
$
29.6
Current portion of income tax expense
1.4
1.2
Interest expense, excluding amortization
of debt discounts and fees
10.7
9.5
Change in assets and liabilities,
excluding derivative instrument
(7.2
)
(16.5
)
Net income attributable to noncontrolling
interests
(0.7
)
(0.5
)
Unusual or nonrecurring items that are not
typical of ongoing operations(1)
3.7
2.3
Other
0.1
(0.3
)
Adjusted EBITDA
$
25.3
$
25.3
(1) Unusual or nonrecurring items in Q1
2024 include costs associated with the strategic review process,
nonroutine litigation, standalone transition costs and shareholder
activism; in Q1 2023, they include nonroutine litigation,
shareholder activism and standalone transition costs.
Reconciliation of Net Cash
Provided by Operating Activities to Adjusted Free Cash Flow
Three Months Ended
March 31,
2024
2023
($ in millions)
Net cash provided by operating
activities
$
17.3
$
29.6
Unusual or nonrecurring items that are not
typical of ongoing operations(1)
3.7
2.3
Capital expenditures for maintenance
(1.8
)
(0.6
)
Other working capital adjustments
(0.6
)
(0.5
)
Distributions paid to noncontrolling
interests of consolidated affiliates
—
(2.5
)
Adjusted free cash flow
$
18.6
$
28.3
(1) Unusual or nonrecurring items in Q1
2024 include costs associated with the strategic review process,
nonroutine litigation, standalone transition costs and shareholder
activism; in Q1 2023, they include nonroutine litigation,
shareholder activism and standalone transition costs.
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 operations(1)
1.4
%
0.9
%
Stock-based compensation
0.7
%
0.5
%
Noncontrolling interests
(0.3
)%
(0.2
)%
Gain on disposal or impairment of
assets
(0.1
)%
—
%
Adjusted EBITDA margin
9.6
%
9.5
%
(1) Unusual or nonrecurring items in Q1
2024 include costs associated with the strategic review process,
nonroutine litigation, standalone transition costs and shareholder
activism; in Q1 2023, they include nonroutine litigation,
shareholder activism and standalone transition costs.
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, many of which are
beyond our control. 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; changes in the episodic versus non-episodic
mix of our payors, the case mix of our patients, and payment
methodologies; our ability to attract and retain key management
personnel and health care professionals; potential disruptions or
breaches of our or our vendors’, payors’, and other contract
counterparties’ information systems; the outcome of litigation; our
ability to successfully complete and integrate de novo locations,
acquisitions, investments, and joint ventures; our ability to
successfully integrate technology in our operations; our ability to
control costs, particularly labor and employee benefit costs; and
impacts resulting from the announcement of the conclusion of the
strategic review process. Additional information regarding 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 are described in reports filed with the SEC,
including our annual report on Form 10-K and subsequent quarterly
reports on Form 10-Q, copies of which are available on the
Company’s website at http://investors.ehab.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240508764297/en/
Investor relations contact Crissy Carlisle
investorrelations@ehab.com 469-860-6061 Media contact Erin
Volbeda media@ehab.com 972-338-5141
Enhabit (NYSE:EHAB)
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Enhabit (NYSE:EHAB)
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