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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