The following is a summary of the Enhabit, Inc. (EHAB) Q2 2024 Earnings Call Transcript:

Financial Performance:

• Enhabit reported a minor year-over-year decrease in consolidated net revenue of $260.6 million, down by $1.7 million or 0.6%.

• Consolidated adjusted EBITDA was $25.2 million, marking an increase of $1.3 million or 5.4% year-over-year.

• Home Health segment revenue declined by $3.6 million or 1.7%, primarily due to lower Medicare re-certification, while payer innovation strategy fostered non-Medicare growth.

• Hospice segment revenue increased by $1.9 million or 3.9% year-over-year.

• The company expects to generate $39 million to $58 million of free cash flow in 2024.

Business Progress:

• Enhabit has seen success in shifting admissions to better paying contracts through its payer innovation strategy, growing the percentage of non-Medicare visits in these contracts from 6% in Q1 2023 to 43% in Q2 2024.

• Hospice segment showed steady census growth with strategic investments in centralized admissions and case management model.

• The company has made significant progress in its de novo strategy, opening a new home health location in Melbourne, Florida, and plans to open about 10 new locations per year.

Opportunities:

• Enhabit capitalizes on payer innovation contracts, which are driving an increase in non-Medicare revenue per visit.

• The shift from low-paying contracts to fee-for-service and favorable contracts presents an opportunity for more sustainable revenue growth.

• The company anticipates continued growth from both Home Health and Hospice segments, expecting mid to high single digits growth over the next three years.

Risks:

• Ongoing negotiations and contract terminations with key providers like UnitedHealthcare might impact the short-term financial outlook and require rapid adjustment to new payer agreements.

• A proposed 2025 home health payment rule that could negatively impact profit margins and overall revenue is seen as a potential legislative and operational risk.

More details: Enhabit IR

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