Enhabit, Inc’s Earnings Call: Growth Amid Challenges

Enhabit, Inc ((EHAB)) has held its Q1 earnings call. Read on for the main highlights of the call.

Enhabit, Inc’s recent earnings call painted a picture of cautious optimism. The company reported notable growth in admissions and revenue in both its home health and hospice segments. Improvements in cost efficiency and financial performance were also highlighted. However, challenges such as a decline in total home health census and a year-over-year decrease in consolidated revenue, along with branch closures, were acknowledged. Overall, the positive aspects of growth and financial improvements slightly outweighed the negative aspects.

Home Health Admissions Growth

The earnings call revealed an 8.1% increase in home health admissions from Q4 to Q1, with fee-for-service admissions growing by 4% sequentially. Year-over-year admission growth was modest at 0.7%, but when adjusted for Leap Year and branch closures, normalized growth reached 2.5%.

Growth in Non-Medicare Revenue

Non-Medicare admissions saw a significant increase of 7.4% year-over-year, driven by innovative payer contracts. This growth contributed to a 7.6% improvement in non-Medicare revenue per visit, highlighting the company’s successful adaptation to changing market dynamics.

Hospice Segment Performance

The hospice segment demonstrated strong performance with total admissions growing 8% year-over-year and a 12.3% increase in census. Same-store growth was also impressive, with admissions up 5.2% and census growing by 10.6%.

Cost Efficiency Improvements

Enhabit reported a decrease in cost per day by 0.8% year-over-year and 2.7% sequentially in the hospice segment. The company completed its transition to outsourced coding resources, which is expected to save $1.5 million by 2025.

Financial Performance

The financial performance of Enhabit showed positive trends, with the home health segment’s EBITDA improving by 7.9% sequentially, and the hospice segment’s EBITDA growing by a remarkable 65% year-over-year. The leverage ratio also improved to 4.4x in Q1 2025.

Balance Sheet and Cash Flow

The company generated approximately $17 million in free cash flow and reduced overall bank debt by $25 million during the quarter, indicating strong financial management and cash flow generation.

Decline in Total Home Health Census

Despite the growth in admissions, the total home health census was down 2.4% year-over-year, attributed to a low entry point in January, which remains a challenge for the company.

Decreased Revenue Year-over-Year

Enhabit faced a slight decrease in consolidated net revenue, down $2.5 million or 1.0% year-over-year, reflecting some of the challenges the company is navigating.

Branch Closures

The company closed or consolidated seven branches in the first quarter and plans to close four more by the end of Q2 2025, as part of its strategic realignment efforts.

Forward-Looking Guidance

Enhabit provided forward-looking guidance that reaffirmed its 2025 outlook based on strong Q1 results and business momentum. The company anticipates continued growth in admissions and revenue, driven by payer innovation contracts and improved referral-to-admission conversion rates. The transition to outsourced coding resources is expected to yield significant cost savings, and strategic branch closures are aimed at optimizing operations.

In summary, Enhabit, Inc’s earnings call highlighted a balanced outlook with significant growth in key areas, despite some challenges. The company’s strategic initiatives and financial improvements suggest a cautiously optimistic future, with a focus on sustaining growth and enhancing operational efficiency.