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Enhabit, Inc. (EHAB)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 consolidated net service revenue was $258.2M with Adjusted EBITDA of $25.1M and Adjusted EPS of $0.04; GAAP diluted EPS was $(0.92) due to a $53.8M goodwill impairment .
  • Hospice remained the growth engine: revenue rose 13.1% YoY to $57.8M and Adjusted EBITDA increased 13.7% YoY, with ADC up 8.6% and revenue/day up 4.2% .
  • Home health revenue declined 4.3% YoY as Medicare volumes and recertifications fell; hurricanes and a late-quarter national contract renegotiation weighed on admissions, offset by payer innovation progress (48% of non-Medicare visits now in higher-rate contracts) .
  • FY 2025 guidance: net service revenue $1.050–$1.080B, Adjusted EBITDA $101–$107M, Adjusted EPS $0.41–$0.51; cadence implies sequential improvement through the year after a Q1 trough in home health .
  • Stock-relevant catalysts: visible hospice momentum; home health payer mix optimization and Medicare stabilization; UNH national contract resolution enabling “full-service” status; ongoing branch consolidation/coding outsourcing to reduce costs .

What Went Well and What Went Wrong

What Went Well

  • Hospice momentum: ADC up 8.6% YoY; revenue/day +4.2% YoY; Adjusted EBITDA +13.7% YoY with margin the highest post-spin, aided by CMS rate and lower cap accrual .
  • Payer innovation progress: 48% of non-Medicare home health visits now in improved-rate contracts; non-Medicare admissions +10.7% YoY; management sees national/regional episodic contracts as a lever for mix and pricing .
  • Cost discipline: home office G&A down ~12% YoY in Q4; debt reduced by $40M in 2024; available liquidity ~$80M; net debt/Adjusted EBITDA improved to 4.9x .

Select quotes:

  • “We will be well positioned as a full-service provider… [and] the hospice segment exited 2024 with our highest average daily census since the spin” – CEO Barb Jacobsmeyer .
  • “Consolidated adjusted EBITDA of $25.1M… an increase sequentially of $0.6M despite onetime challenges” – CFO Ryan Solomon .
  • “Our teams continue to use pulse technology to manage a just right care plan… more efficient with episodic payers” – CEO .

What Went Wrong

  • Home health Medicare volume pressure: Medicare net service revenue down 10.4% YoY; recertifications down 14.1% YoY; visits/episode declined modestly .
  • Weather and contract headwinds: hurricanes reduced ADC and admissions; late Q4 national contract renegotiation limited growth, with replacement efforts ongoing .
  • Non-GAAP to GAAP bridge dominated by impairment: $53.8M goodwill impairment drove GAAP net loss of $(46.0)M and EPS $(0.92) (Adjusted EPS $0.04) .
  • Unit cost inflation: hospice cost/day +5.7% YoY (DME, pharmacy, merit); home health cost/visit +3.3% YoY; wage inflation remains a 2025 headwind .

Financial Results

Consolidated performance (YoY and sequential)

MetricQ4 2023Q3 2024Q4 2024
Net Service Revenue ($M)$260.6 $253.6 $258.2
Gross Margin (%)48.8% 48.1% 48.5%
Adjusted EBITDA ($M)$25.2 $24.5 $25.1
Adjusted EBITDA Margin (%)9.7% 9.7% 9.7%
GAAP Diluted EPS ($)$(0.13) $(2.20) $(0.92)
Adjusted Diluted EPS ($)$0.06 $0.03 $0.04
Goodwill Impairment ($M)$— $107.9 $53.8

Segment breakdown

MetricQ4 2023Q3 2024Q4 2024
Home Health Net Service Revenue ($M)$209.5 $201.0 $200.4
Home Health Adjusted EBITDA ($M)$40.3 $36.5 $35.5
Home Health Adj. EBITDA Margin (%)19.2% 18.2% 17.7%
Hospice Net Service Revenue ($M)$51.1 $52.6 $57.8
Hospice Adjusted EBITDA ($M)$11.7 $10.0 $13.3
Hospice Adj. EBITDA Margin (%)22.9% 19.0% 23.0%

KPIs

KPIQ4 2023Q3 2024Q4 2024
Home Health Admissions (Total)52,007 53,372 52,931
Home Health ADC (Total)41,638 —39,786
Home Health Visits per Episode (Total)14.3 14.1 13.9
Home Health Revenue per Patient Day ($)$54.7 $54.7 $54.7
Home Health Cost per Patient Day ($)$28.6 $28.8 $28.8
Hospice Admissions (Total)2,872 3,046 3,059
Hospice Patient Days315,870 333,247 343,063
Hospice ADC3,433 3,622 3,729
Hospice Revenue per Patient Day ($)$161.8 $158 $168.6
Hospice Cost per Patient Day ($)$76.1 $77 $80.4

Debt and liquidity (Q4):

  • Total debt $515.4M; Cash $28.4M; Net debt $487.0M; Net debt/Adjusted EBITDA 4.9x; Available liquidity $79.8M .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Service Revenue ($B)FY 2025N/A$1.050–$1.080 Initiated
Adjusted EBITDA ($M)FY 2025N/A$101–$107 Initiated
Adjusted EPS ($)FY 2025N/A$0.41–$0.51 Initiated
Tax Rate (%)FY 2025N/A~25% Initiated
Diluted Shares (M)FY 2025N/A~51.6 Initiated
Hospice Unit Revenue/day (%)FY 2025N/A+4% to +5% assumption Initiated
Home Health ADC Growth (%)FY 2025N/A+4% to +5% assumption Initiated
Hospice ADC Growth (%)FY 2025N/A+7% to +8.5% assumption Initiated
Unit Cost Increase (%)FY 2025N/A+2% to +3% assumption Initiated
Adjusted FCF ($M)FY 2025N/A$47–$58 Initiated

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Payer innovation & episodic MA43% of non-Medicare visits in payer innovation; non-Medicare admissions +25.2% YoY 45% in payer innovation; strong total admissions growth; UNH negotiations ongoing 48% in payer innovation; key national contract signed Dec; “full-service” status restored Strengthening
Technology (Pulse/predictive analytics)Visit efficiency, just-right care plan; cost per visit down Visits/episode reduced to 14.1 via predictive analytics Episodic efficiency emphasized; continued use of pulse to optimize capacity Ongoing execution
Regulatory/CMS reimbursementHome health final rule effects; guidance updated CMS net +0.5% HH; advocacy vs permanent cuts Hospice CMS rate effective Oct; HH CMS ~+1% assumed for 2025 Mixed headwind/tailwind
Macro/disruptions (hurricanes)—Hurricanes Helene/Milton impact; revised FY24 guidance ADC/admissions impacted early Q4; replacing volumes Normalizing post-event
UNH/national contracts—Negotiations progressing; replacing UNH census New UNH contract in place; pivot from replacement to growth Resolution positive
Cost structure actions—Announced 8–10 branch closures; coding outsourcing pilots 5 HH +2 hospice closures; consolidation; coding outsourcing savings $1.5M in 2025 Cost reductions executing
De novo expansion1 HH de novo opened; multi-project pipeline Active projects; hospice de novos funding growth 5 hospice de novos in 2024; 14 projects in process Continued build-out

Management Commentary

  • Prepared remarks (CEO): “Fourth quarter Medicare fee-for-service constituted 44% of our home health admissions… our new UHC contract… our home health teams are again able to be a full-service provider.”
  • Prepared remarks (CEO): “We exited 2024 with our highest hospice census since the spin… sequential census growth each month of the year.”
  • Prepared remarks (CFO): “Consolidated net revenue was $258.2M, an increase sequentially of 1.8%… Adjusted EBITDA of $25.1M increased sequentially 2.4% despite onetime challenges.”
  • Prepared remarks (CFO): “Hospice adjusted EBITDA margin at 23% in Q4 reflects four straight quarters of sequential improvement and the highest post spin.”

Q&A Highlights

  • Momentum into 2025: Management expects hospice ADC growth to continue; home health census grew 7.2% sequentially from January to February; confident in BD-driven growth .
  • Payer innovation leverage: Pipeline includes 49 new opportunities and 31 renegotiations; guidance does not assume material incremental unit revenue beyond CMS and the renegotiated national agreement .
  • Hospice cap vs rate: Q4 benefited from ~$1.4M lower Medicare cap accrual; underlying rate improvement consistent with CMS increase .
  • UNH volume recovery cadence: With agreement executed, acceptance resumes but recovery is expected to be gradual as capacity is managed .
  • Guidance cadence: Q1 trough in home health as replacement-to-growth pivot completes; sequential EBITDA improvement expected thereafter .

Estimates Context

  • Wall Street consensus estimates from S&P Global for Q4 2024 were unavailable at the time of analysis due to an access limit. As a result, we cannot present a vs-consensus comparison for revenue, EPS, or EBITDA from S&P Global data. Values retrieved from S&P Global were unavailable; estimate comparisons are not included.

Key Takeaways for Investors

  • Hospice is structurally improving: ADC, rate/day, and margin are inflecting positively, with four consecutive quarters of margin improvement; sustained census growth supports FY25 guidance confidence .
  • Home health mix optimization is advancing: Episodic share and payer innovation penetration increased to 48% of non-Medicare visits; pricing/mix should gradually support margins despite Medicare volume pressure .
  • Near-term home health headwinds are transient: Hurricanes and late-2024 contract transitions depressed Q4 volume, but UNH resolution and sequential early-2025 census growth indicate recovery .
  • Cost actions underpin margin: Branch closures/consolidation ($1.0M EBITDA benefit in 2025) and coding outsourcing ($1.5M benefit) help offset wage inflation and normalize incentive comp .
  • Liquidity and deleveraging progress: Net debt/Adj. EBITDA improved to 4.9x, liquidity ~$80M; continued FCF deployment toward debt reduction remains a thesis support .
  • Guidance suggests sequential improvement: Management expects EBITDA cadence to improve quarter-over-quarter through 2025, with hospice momentum and home health mix stabilization as drivers .
  • Catalysts: Execution on payer innovation conversions, accelerating hospice growth, sustained technology-driven efficiency (pulse), and further clarity on Medicare trends and advocacy outcomes .