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Enhabit, Inc. (EHAB)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered sequential growth and margin expansion: net service revenue $259.9M, Adjusted EBITDA $26.6M (10.2% margin), and adjusted diluted EPS $0.10, with leverage ratio reduced to 4.4x; management reaffirmed FY2025 guidance .
  • Home health saw ADC up 3.7% sequentially, Medicare ADC up 1.5% (second consecutive quarter), while hospice ADC increased 12.3% year over year and Adjusted EBITDA rose 64.8% YoY .
  • Consensus comparison: EPS beat (+$0.04 vs Primary EPS consensus*), revenue missed (~$6.2M below consensus*), and SPGI EBITDA missed versus consensus*; mix and unit revenue headwinds in home health and normalizing hospice cap impact explain dynamics [GetEstimates Q1 2025*].
  • Balance sheet and cash flow improved: $25M bank debt paydown, cash ~$40M, liquidity ~$111M; exit from covenant relief is a positive catalyst for flexibility and pricing .

What Went Well and What Went Wrong

What Went Well

  • Hospice momentum: ADC +12.3% YoY; revene per patient day +8.4% YoY; Adjusted EBITDA +64.8% YoY; management highlighted “continued strong growth momentum” and sustained monthly ADC increases since Jan 2024 .
  • Sequential profitability and leverage: consolidated Adjusted EBITDA +6.0% QoQ to $26.6M; leverage ratio 4.4x enabling exit from covenant relief and improved debt pricing; “steadfast execution” message from CEO .
  • Payer innovation execution: non‑Medicare home health admissions +7.4% YoY; Medicare ADC sequential growth for second quarter; management emphasized balanced mix and episodic arrangements; “Payer innovation… set the stage” commentary .

What Went Wrong

  • Home health revenue and margins pressure YoY: net service revenue down 5.9% YoY on Medicare volume and recertification declines; home health Adjusted EBITDA down 11.3% YoY .
  • Unit revenue headwinds: sequential decrease in home health revenue per patient day (-1.3% QoQ) as volumes normalized post national contract; visits per episode down to 13.9 from 14.9 YoY .
  • Hospice unit revenue benefited from ~$1.0M Medicare cap accrual reversal; normalizing removes some sequential uplift; analysts probed sustainability and potential step‑function investment needs in centralized operations .

Financial Results

Consolidated metrics vs prior year and prior quarter

MetricQ1 2024Q4 2024Q1 2025
Net Service Revenue ($USD Millions)$262.4 $258.2 $259.9
Reported Diluted EPS ($USD)$0.01 $(0.92) $0.35
Adjusted Diluted EPS ($USD)$0.07 $0.04 $0.10
Adjusted EBITDA ($USD Millions)$25.3 $25.1 $26.6
Gross Margin (%)48.9% 48.5% 49.9%
Adjusted EBITDA Margin (%)9.6% 9.7% 10.2%

Segment breakdown

MetricQ1 2024Q4 2024Q1 2025
Home Health Net Service Revenue ($USD Millions)$213.2 $200.4 $200.6
Home Health Adjusted EBITDA ($USD Millions)$43.2 $35.5 $38.3
Home Health Adj. EBITDA Margin (%)20.3% 17.7% 19.1%
Hospice Net Service Revenue ($USD Millions)$49.2 $57.8 $59.3
Hospice Adjusted EBITDA ($USD Millions)$9.1 $13.3 $15.0
Hospice Adj. EBITDA Margin (%)18.5% 23.0% 25.3%

KPIs – Home Health

KPIQ1 2024Q4 2024Q1 2025
Total Average Daily Census (Patients)42,250 39,783 41,236
Revenue per Patient Day ($USD)$55.5 $54.8 $54.1
Cost per Patient Day ($USD)$28.6 $28.8 $27.9
Visits per Episode14.9 13.9 13.9
Medicare Admissions25,944 23,121 24,044
Non‑Medicare Admissions30,881 29,810 33,178

KPIs – Hospice

KPIQ1 2024Q4 2024Q1 2025
Average Daily Census (Patients)3,391 3,729 3,809
Revenue per Patient Day ($USD)$159.6 $168.6 $173.0
Cost per Patient Day ($USD)$78.8 $80.4 $78.2
Discharged Average Length of Stay (Days)104 110 101
Total Admissions3,032 3,059 3,274
Patient Days308,542 343,063 342,784

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Service Revenue ($USD Millions)FY 2025$1,050–$1,080 $1,050–$1,080 Maintained
Adjusted EBITDA ($USD Millions)FY 2025$101–$107 $101–$107 Maintained
Adjusted EPS ($USD)FY 2025$0.41–$0.51 $0.41–$0.51 Maintained
Tax RateFY 2025~25% ~25% Maintained
Diluted Share Count (Millions)FY 2025~51.6 ~51.6 Maintained
Home Health ADC GrowthFY 2025+4% to +5% +4% to +5% Maintained
Home Health Unit Revenue (PPD)FY 2025-0.5% to flat -0.5% to flat Maintained
Home Health Cost per DayFY 2025+2% to +3% +2% to +3% Maintained
Hospice ADC GrowthFY 2025+7% to +8.5% +7% to +8.5% Maintained
Hospice Unit Revenue (PPD)FY 2025+4% to +5% +4% to +5% Maintained
Hospice Cost per DayFY 2025+2% to +3% +2% to +3% Maintained

Earnings Call Themes & Trends

TopicQ3 2024 (Previous Mentions)Q4 2024 (Previous Mentions)Q1 2025 (Current Period)Trend
Payer Innovation & MA mix45% of non‑Medicare visits in payer innovation; MA growth offsetting Medicare declines Contract renegotiation completed; positioned as full‑service provider Non‑Medicare admissions +7.4% YoY; episodic arrangements emphasized; balancing healthy payer mix Improving mix, execution gaining traction
Hospice ADC GrowthADC +6.9% YoY; sequential monthly increases since Jan Highest ADC since spin; sequential increases maintained ADC +12.3% YoY; 14 months of sequential growth; unit cost improved; cap reversal benefit Strong, accelerating growth
Operational ProductivityVisits per episode trending down via predictive analytics Medicare census stabilizing; cost control lowered G&A ~12% Lower cost per patient day; improved clinician productivity; outsourced coding completed Productivity improving, structural savings unfolding
Labor & Capacity——Labor inflation normalizing 2–3%; RN capacity up ~4% Dec–Mar Capacity building supports growth
Leverage & LiquidityReduced bank debt $10M; free cash flow generation Debt down $40M in 2024 Debt down $25M in quarter; cash ~$40M; liquidity ~$111M; leverage 4.4x; covenant relief exit Balance sheet strengthening

Management Commentary

  • “Enhabit’s first quarter 2025 results are a product of steadfast execution of our strategies… This enables us to formally exit the covenant relief period restrictions in our credit agreement and allows us to benefit from improved pricing on our debt and added flexibility going forward.” — Barb Jacobsmeyer, President & CEO .
  • “Home Health performance returned this segment to sequential profitability growth in Q1… Hospice momentum continues to be very strong… Q1 2025 leverage ratio of 4.4x… we now exit our covenant relief period restrictions… a quarter earlier than required.” — Ryan Solomon, CFO .
  • “We completed the transition of all branches to the outsourced coding resource… which we estimate will deliver $1.5 million in cost savings for the remainder of 2025… We are currently piloting two internally developed apps to improve clinician/patient communication and referral conversion.” — Management remarks .

Q&A Highlights

  • Non‑Medicare volume ramp: Management aims to balance payer mix; payer innovation represented ~82% of positive growth; focus on hiring and capacity to sustain admissions growth .
  • Labor inflation and capacity: Expect normalized 2–3% merit; RN capacity up ~4% Dec–Mar, supporting volume growth through the year .
  • Hospice operations leverage: Strong margin profile with five straight quarters of sequential margin improvement; minor incremental investments anticipated as volume steps up, without material deviation from margin trajectory .
  • Payer renegotiations: 2–3 year contracts; 43 in pipeline for renegotiation; some with escalators tied to quality; bringing data to secure better pricing and shift to episodic pay .
  • Recertifications: MetaLogix Pulse tool helps identify recert candidates; payer dynamics (MA growth, early institutional mix) constrain recerts, so strategy emphasizes overall census growth .

Estimates Context

MetricQ1 2025 Consensus*Q1 2025 Actual
Revenue ($USD Millions)$266.11*$259.90
Primary EPS ($USD)$0.062*$0.10
EBITDA ($USD Millions)$25.12*$22.20*
  • EPS beat: adjusted/primary EPS $0.10 vs $0.062 consensus (bold beat); revenue miss: $259.9M vs $266.1M consensus (bold miss); SPGI EBITDA miss vs consensus (note SPGI “EBITDA” may differ from Company’s “Adjusted EBITDA” of $26.6M) [GetEstimates Q1 2025*].
  • Drivers: home health unit revenue pressure and fewer calendar days offset volume gains; hospice growth and lower cost per patient day supported margins; ~$1.0M hospice Medicare cap reversal boosted unit revenue in Q1 . Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Hospice strength is the primary earnings driver: ADC +12.3% YoY, revenue per day +8.4% YoY, Adjusted EBITDA +64.8% YoY; margin profile at 25.3% and improving supports sustained cash generation .
  • Home health sequential recovery with payer innovation: ADC +3.7% QoQ; Medicare ADC up 1.5% QoQ; mix shift toward episodic payers should support unit economics as renegotiations progress .
  • Balance sheet de‑risking: $25M debt reduction in Q1, liquidity ~$111M, leverage 4.4x; exit from covenant relief expands strategic optionality (tuck‑ins, pricing) .
  • FY2025 guidance reaffirmed: revenue $1,050–$1,080M, Adjusted EBITDA $101–$107M, Adjusted EPS $0.41–$0.51; tax ~25% and shares ~51.6M anchors model inputs .
  • Watch unit revenue and recert trends in home health: sequential unit revenue headwinds and lower visits per episode require continued productivity gains and payer pricing progress to lift margins .
  • Hospice cap and operational centralization: Q1 benefited from ~$1.0M cap accrual reversal; continued ADC growth and shorter LOS lower cap risk; centralized ops need only minor incremental investment as volume scales .
  • Near‑term trading setup: EPS beat vs consensus and covenant exit are positives; revenue miss and home health unit revenue pressure are offset by hospice momentum; Q2 trajectory hinges on sustained ADC growth and payer mix/pricing [GetEstimates Q1 2025*].

Additional Data and Disclosures

  • Non‑GAAP adjustments: Q1 reported EPS $0.35 included $14.7M net of tax gain on sale of investment; adjusted diluted EPS $0.10 after removing (0.29) gain impact and other nonrecurring items .
  • Hospice unit revenue normalization: excluding ~$1.0M Medicare cap accrual reversal, sequential hospice unit revenue was relatively flat .
  • Payer mix: Consolidated revenue mix Q1 2025 — Medicare 65.9%, Medicare Advantage 23.3%, Managed Care 9.0% .