Enhabit, Inc ((EHAB)) has held its Q4 earnings call. Read on for the main highlights of the call.
Enhabit, Inc.’s recent earnings call painted a picture of strategic progress amidst operational challenges. The company showcased significant growth in its hospice segment and successful strategies in payer innovation and cost management. However, it also acknowledged hurdles such as a decline in home health revenue and the necessity for branch consolidations. Overall, the sentiment from the call reflects a company navigating through challenges while making strategic advancements.
Growth in Hospice Segment
The hospice segment of Enhabit, Inc. demonstrated impressive growth, achieving an 8.6% year-over-year increase in average daily census and a 6.5% rise in total admissions. This growth translated into an improved adjusted EBITDA margin of 23% in Q4, highlighting the segment’s robust performance.
Non-Medicare Admissions Increase
In the Home Health segment, non-Medicare admissions surged by 10.7% year over year, contributing to a total admission growth of 1.8%. This increase underscores the company’s successful efforts in diversifying its revenue streams.
Expansion of Payer Innovation Contracts
Enhabit, Inc. made significant strides in expanding its payer innovation contracts, with home health visits under these contracts growing from 22% in Q4 2023 to 48% in Q4 2024. This expansion resulted in a 5.7% improvement in non-Medicare revenue per visit, showcasing the effectiveness of the company’s innovative strategies.
Successful De Novo Strategy
The company opened six new de novo locations in 2024, with five in hospice and one in home health. These expansions were funded by EBITDA from previous de novos, indicating a successful strategy in expanding its operational footprint.
Improved Cost Management
Enhabit, Inc. demonstrated effective cost management in the Home Health segment, with cost per patient day increasing by only 1% year over year. This achievement is notable given the merit and market-related cost increases, reflecting the company’s focus on operational efficiency.
Decline in Home Health Revenue
The Home Health segment experienced a revenue decline of $0.6 million or 0.3% sequentially, primarily due to hurricane-related impacts early in Q4. This decline highlights the external challenges impacting the segment’s performance.
Consolidation and Closure of Branches
To improve operational efficiency, Enhabit, Inc. announced the closure or consolidation of five home health and two hospice branches. This move is expected to enhance adjusted EBITDA by $1 million in 2025, reflecting the company’s strategic approach to resource optimization.
Flat Year-Over-Year EBITDA
Despite sequential improvements, the consolidated adjusted EBITDA remained relatively flat year over year. This indicates ongoing challenges in achieving profitability growth, a key area of focus for the company moving forward.
Forward-Looking Guidance
Looking ahead to 2025, Enhabit, Inc. provided guidance indicating anticipated net service revenue between $1.05 billion and $1.08 billion, with adjusted EBITDA ranging from $101 million to $107 million, reflecting approximately 7% growth. The company expects Home Health to achieve average daily census growth of 4% to 5%, with a focus on optimizing payer contracts. Hospice is projected to see ADC growth of 7% to 8.5%. The guidance also emphasizes cost efficiency, with expected wage inflation and incentive compensation adjustments.
In summary, Enhabit, Inc.’s earnings call reflects a company making strategic progress amidst operational challenges. Key takeaways include robust growth in the hospice segment, successful payer innovation strategies, and effective cost management. However, challenges such as the decline in home health revenue and flat EBITDA growth highlight areas for improvement. Looking forward, the company remains optimistic about its growth prospects in 2025.