EHAB — Enhabit, Inc.

Summary of Enhabit Inc. Q3 2025 Earnings Call

1. Key Financial Results and Metrics:

• Consolidated Net Revenue: $263.6 million, a 3.9% increase year-over-year.
• Adjusted EBITDA: $27 million, up 10.2% from the prior year, with an adjusted EBITDA margin of 10.2%.
• Home Health Revenue: $200.5 million, a slight decrease of 0.2% year-over-year.
• Hospice Revenue: $63.1 million, reflecting a 20% increase year-over-year.
• Adjusted Free Cash Flow: Year-to-date total of $64.8 million, with a conversion rate of approximately 56%.
• Net Debt to Adjusted EBITDA Leverage Ratio: Improved to 3.9x, down from 5.4x in Q4 2023.

2. Strategic Updates and Business Highlights:

• Home health admissions rose 3.6% year-over-year, with non-Medicare admissions up 10.4%.
• Successful renegotiation of national payer contracts led to a low double-digit increase in per visit rates.
• Seven consecutive quarters of sequential census growth in hospice, with a 12.6% increase in census year-over-year.
• The company opened 6 new de novo locations year-to-date, with plans for a total of 10 by year-end.
• Implementation of an advanced visit per episode management pilot, showing promising early results in reducing visits per episode.

3. Forward Guidance and Outlook:

• Full-year revenue guidance increased to a range of $1.058 billion to $1.063 billion.
• Adjusted EBITDA guidance raised to $106 million to $109 million.
• Adjusted free cash flow guidance improved to a range of $53 million to $61 million.
• Continued focus on mitigating potential pricing headwinds from the upcoming CMS 2026 home health rule.

4. Bad News, Challenges, or Points of Concern:

• Home Health segment faced revenue challenges due to payer renegotiation disruptions and branch closures, which could have resulted in an additional $3 million in revenue.
• Average daily census for Home Health decreased sequentially by 1.6%, indicating potential volatility.
• Concerns regarding the impact of the proposed CMS cuts on patient access to home health care, which could worsen existing trends.

5. Notable Q&A Insights:

• Management indicated that while they cannot disclose specific rate increases from payer contracts, they are optimistic about future negotiations.
• G&A expenses improved due to headcount reductions and efficiencies, with further cost reduction potential identified.
• Labor market conditions are improving, with an uptick in nursing and therapy applicants, although wage inflation remains a concern, particularly in therapy markets.
• Seasonal factors may impact hospice length of stay, making predictions for Q4 challenging due to holiday-related fluctuations.

Overall, Enhabit Inc. demonstrated solid financial performance and strategic execution in Q3 2025, while also navigating challenges related to payer disruptions and potential regulatory impacts. The company remains focused on growth and improving operational efficiencies as it looks ahead.