Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2023 | May 08, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-41406 | |
Entity Registrant Name | Enhabit, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 47-2409192 | |
Entity Address, Address Line One | 6688 N. Central Expressway | |
Entity Address, Address Line Two | Suite 1300 | |
Entity Address, City or Town | Dallas | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75206 | |
City Area Code | 214 | |
Local Phone Number | 239-6500 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | EHAB | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 50,099,817 | |
Entity Central Index Key | 0001803737 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||
Net service revenue | $ 265.1 | $ 274.3 |
Revenue, Product and Service [Extensible Enumeration] | Service [Member] | Service [Member] |
Cost of service, excluding depreciation and amortization | $ 132.6 | $ 129.7 |
Cost, Product and Service [Extensible Enumeration] | Service [Member] | Service [Member] |
General and administrative expenses | $ 110.5 | $ 100.7 |
Depreciation and amortization | 7.8 | 8.5 |
Operating income | 14.2 | 35.4 |
Interest expense and amortization of debt discounts and fees | 9.5 | 0 |
Income before income taxes and noncontrolling interests | 4.7 | 35.4 |
Income tax expense | 1.5 | 8.7 |
Net income | 3.2 | 26.7 |
Less: Net income attributable to noncontrolling interests | 0.5 | 0.6 |
Net income attributable to Enhabit, Inc. | $ 2.7 | $ 26.1 |
Weighted average common shares outstanding: | ||
Basic (in shares) | 49.8 | 49.6 |
Diluted (in shares) | 50.1 | 49.6 |
Earnings per common share: | ||
Basic earnings per share attributable to Enhabit, Inc. common stockholders (in dollars per share) | $ 0.05 | $ 0.53 |
Diluted earnings per share attributable to Enhabit, Inc. common stockholders (in dollars per share) | $ 0.05 | $ 0.53 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Comprehensive Income [Abstract] | ||
Net income including noncontrolling interest | $ 3.2 | $ 26.7 |
Other comprehensive loss: | ||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), after Reclassification and Tax | (1.1) | 0 |
Total other comprehensive loss | (1.1) | 0 |
Comprehensive income including noncontrolling interest | 2.1 | 26.7 |
Less: Comprehensive income attributable to noncontrolling interest | 0.5 | 0.6 |
Comprehensive income attributable to Enhabit, Inc. | $ 1.6 | $ 26.1 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income (Parentheticals) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Comprehensive Income [Abstract] | ||
Unrealized loss of cash flow hedges, net of tax benefit | $ 0.3 | $ 0 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 | |
Current assets: | |||
Cash and cash equivalents | $ 37.6 | $ 22.9 | |
Restricted cash | 2 | 4.3 | |
Accounts receivable | 156.5 | 149.6 | |
Income tax receivable | 4.3 | 11.4 | |
Prepaid expenses and other current assets | 12.2 | 23.6 | |
Total current assets | 212.6 | 211.8 | |
Property and equipment, net | 19 | 20.4 | |
Operating lease right-of-use assets | 45.8 | 42 | |
Goodwill | 1,147.5 | 1,144.8 | |
Intangible assets, net | 97.1 | 102.6 | |
Other long-term assets | 5 | 5.2 | |
Total assets | [1] | 1,527 | 1,526.8 |
Current liabilities: | |||
Current portion of long-term debt | 22.7 | 23.1 | |
Current operating lease liabilities | 11.6 | 14 | |
Accounts payable | 6.2 | 3.8 | |
Accrued payroll | 47.7 | 35.5 | |
Refunds due patients and other third-party payors | 8 | 8.3 | |
Accrued medical insurance | 7.5 | 7.5 | |
Other current liabilities | 31.9 | 40.7 | |
Total current liabilities | 135.6 | 132.9 | |
Long-term debt, net of current portion | 549.7 | 560 | |
Long-term operating lease liabilities | 34.2 | 28.1 | |
Deferred income tax liabilities | 28.5 | 28.6 | |
Other long-term liabilities | 3 | 1.9 | |
Total liabilities | 751 | 751.5 | |
Commitments and contingencies | |||
Redeemable noncontrolling interests | 5.1 | 5.2 | |
Enhabit, Inc. stockholders’ equity: | |||
Common stock, $.01 par value; 200,000,000 shares authorized; issued: 50,157,207 as of March 31, 2023 and 50,099,716 as of December 31, 2022 | 0.5 | 0.5 | |
Capital in excess of par value | 408.4 | 406.9 | |
Accumulated other comprehensive income | (1.8) | (0.7) | |
Retained earnings | 337.7 | 335 | |
Treasury stock at cost, 67,879 and — shares, respectively | (0.5) | 0 | |
Total Enhabit, Inc. stockholders’ equity | 744.3 | 741.7 | |
Noncontrolling interests | 26.6 | 28.4 | |
Total stockholders’ equity | 770.9 | 770.1 | |
Total liabilities and stockholders' equity | $ 1,527 | $ 1,526.8 | |
[1] Our consolidated assets as of March 31, 2023 and December 31, 2022 include total assets of variable interest entities of $19.8 million and $20.6 million, respectively, that cannot be used by us to settle the obligations of other entities. Our consolidated liabilities as of March 31, 2023 and December 31, 2022 include total liabilities of the variable interest entities of $0.7 million and $0.5 million, respectively. See Note 2, Variable Interest Entities. |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 | |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 | |
Common stock, shares issued (in shares) | 50,157,207 | 50,099,716 | |
Treasury stock (in shares) | 67,879 | 0 | |
Assets | [1] | $ 1,527 | $ 1,526.8 |
Liabilities | 751 | 751.5 | |
VIE, Primary Beneficiary | |||
Assets | 19.8 | 20.6 | |
Liabilities | $ 0.7 | $ 0.5 | |
[1] Our consolidated assets as of March 31, 2023 and December 31, 2022 include total assets of variable interest entities of $19.8 million and $20.6 million, respectively, that cannot be used by us to settle the obligations of other entities. Our consolidated liabilities as of March 31, 2023 and December 31, 2022 include total liabilities of the variable interest entities of $0.7 million and $0.5 million, respectively. See Note 2, Variable Interest Entities. |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Capital in Excess of Par Value | Other Comprehensive Income | Retained Earnings | Treasury Stock | Noncontrolling Interests |
Number of common shares outstanding, beginning balance (in shares) at Dec. 31, 2021 | 49.6 | 0 | |||||
Balance at beginning of period at Dec. 31, 2021 | $ 1,478.3 | $ 0.5 | $ 1,094.1 | $ 0 | $ 375.4 | $ 0 | $ 8.3 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 26.7 | 26.1 | 0.6 | ||||
Other comprehensive loss, net of tax | 0 | ||||||
Capital contributions | 24.8 | 24.8 | |||||
Capital distributions | (55.8) | (55.8) | |||||
Distributions declared | (0.4) | (0.4) | |||||
Saint Alphonsus acquisition | 15.9 | 15.9 | |||||
Contributions from noncontrolling interests of consolidated affiliates | 6.4 | 2.9 | 3.5 | ||||
Number of common shares outstanding, ending balance (in shares) at Mar. 31, 2022 | 49.6 | 0 | |||||
Balance at end of period at Mar. 31, 2022 | 1,495.9 | $ 0.5 | 1,066 | 0 | 401.5 | $ 0 | 27.9 |
Number of common shares outstanding, beginning balance (in shares) at Dec. 31, 2022 | 50.1 | 0 | |||||
Balance at beginning of period at Dec. 31, 2022 | 770.1 | $ 0.5 | 406.9 | (0.7) | 335 | $ 0 | 28.4 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 3.2 | 2.7 | 0.4 | ||||
Other comprehensive loss, net of tax | (1.1) | (1.1) | |||||
Distributions declared | (2.2) | (2.2) | |||||
Stock-based compensation | 1.5 | 1.5 | |||||
Restricted stock forfeited, including forfeitures due to net share settlement of income taxes(in shares) | 0.1 | ||||||
Restricted stock forfeited, including forfeitures due to net share settlement of income taxes | (0.5) | $ (0.5) | |||||
Number of common shares outstanding, ending balance (in shares) at Mar. 31, 2023 | 50.1 | 0.1 | |||||
Balance at end of period at Mar. 31, 2023 | $ 770.9 | $ 0.5 | $ 408.4 | $ (1.8) | $ 337.7 | $ (0.5) | $ 26.6 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 3.2 | $ 26.7 |
Adjustments to reconcile net income to net cash provided by operating activities— | ||
Depreciation and amortization | 7.8 | 8.5 |
Amortization of debt related costs | 0.3 | 0 |
Stock-based compensation | 1.5 | 1.3 |
Deferred tax expense (benefit) | 0.3 | (0.2) |
Other, net | 0 | (0.2) |
Changes in assets and liabilities, net of acquisitions— | ||
Accounts receivable | (6.7) | (0.1) |
Prepaid expenses and other assets | 18.1 | (1.6) |
Accounts payable | 2.3 | (0.6) |
Accrued payroll | 12.2 | (1.6) |
Other liabilities | (9.4) | 9.2 |
Net cash provided by operating activities | 29.6 | 41.4 |
Cash flows from investing activities: | ||
Acquisition of businesses, net of cash acquired | (2.8) | 0 |
Purchases of property and equipment | (0.6) | (2.3) |
Other, net | 0.2 | 0.9 |
Net cash used in investing activities | (3.2) | (1.4) |
Cash flows from financing activities: | ||
Principal payments on term loan | (5) | 0 |
Payments on revolving credit facility | (5) | 0 |
Distributions paid to noncontrolling interests of consolidated affiliates | (2.5) | (0.5) |
Principal payments under finance lease obligations | (1) | (1.4) |
Contributions from Encompass | 0 | 23.5 |
Distributions to Encompass | 0 | (55.8) |
Contributions from noncontrolling interests of consolidated affiliates | 0 | 7.4 |
Other | (0.5) | 0 |
Net cash used in financing activities | (14) | (26.8) |
Increase in cash, cash equivalents, and restricted cash | 12.4 | 13.2 |
Cash, cash equivalents, and restricted cash at beginning of year | 27.2 | 8 |
Cash, cash equivalents, and restricted cash at end of year | 39.6 | 21.2 |
Supplemental cash flow information: | ||
Cash received for income taxes, net | (5.9) | 0 |
Cash paid for interest | 10.2 | 0 |
Supplemental schedule of noncash activities: | ||
Property and equipment additions through finance leases | 0.2 | 0.2 |
Operating lease additions | $ 7.9 | $ 2.9 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies: Organization and Description of Business— Enhabit, Inc. (“Enhabit,” “we,” “us,” “our,” and the “Company”), incorporated in Delaware in 2014, provides a comprehensive range of Medicare-certified skilled home health and hospice services in 34 states, with a concentration in the southern half of the United States. We manage our operations and disclose financial information using two reportable segments: (1) home health and (2) hospice. See Note 9, Segment Reporting . Prior to July 1, 2022, the Company operated as a reporting segment of Encompass Health Corporation (“Encompass”). On December 9, 2020, Encompass announced a formal process to explore strategic alternatives for its home health and hospice business. On January 19, 2022, Encompass announced its home health and hospice business would be rebranded and operate under the name Enhabit Home Health & Hospice. In March 2022, we changed our name from Encompass Health Home Health Holdings, Inc. to Enhabit, Inc. Separation from Encompass— On July 1, 2022, Encompass completed the previously announced separation of the Company through the distribution of all of the outstanding shares of common stock, par value $0.01 per share, of Enhabit to the stockholders of record of Encompass (the “Distribution”) as of the close of business on June 24, 2022 (the “Record Date”). The Distribution was effective at 12:01 a.m., Eastern Time, on July 1, 2022. The Distribution was structured as a pro rata distribution of one share of Enhabit common stock for every two shares of Encompass common stock held of record as of the Record Date. No fractional shares were distributed. A cash payment was made in lieu of any fractional shares. As a result of the Distribution, Enhabit is now an independent public company and its common stock is listed under the symbol “EHAB” on the New York Stock Exchange (the “Separation”). The Separation was completed pursuant to a separation and distribution agreement (the “Separation and Distribution Agreement”) and other agreements with Encompass related to the Separation, including, but not limited to, a tax matters agreement (the “Tax Matters Agreement”), an employee matters agreement (the “Employee Matters Agreement”), and a transition services agreement (the “Transition Services Agreement” or “TSA”). Following the Separation, certain functions continue to be provided by Encompass under the TSA or are being performed using the Company’s own resources or third-party providers. The Company incurred certain costs in its establishment as an independent, publicly traded company and expects to incur ongoing additional costs associated with operating as an independent, publicly traded company. In anticipation of the Distribution, we transferred the “Encompass” trade name with a book value of $135.2 million and the related deferred tax liabilities with a book value of $31.0 million to Encompass as they will continue to operate under the Encompass brand. All share and earnings per share information has been retroactively adjusted for all periods presented to reflect the Distribution. See also Note 4, Long-term Debt. Basis of Presentation and Consolidation— The accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries should be read in conjunction with the audited consolidated financial statements and accompanying notes contained in the Company’s Annual Report for the year ended December 31, 2022 on Form 10-K (the “Form 10-K”) filed with the United States Securities and Exchange Commission (the “SEC”) on April 14, 2023. The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the SEC applicable to interim financial information. Certain information and note disclosures included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) have been omitted in these interim statements, as allowed by such SEC rules and regulations. The condensed consolidated balance sheet as of December 31, 2022 has been derived from audited financial statements, but it does not include all disclosures required by GAAP. However, we believe the disclosures are adequate to make the information presented not misleading. The unaudited results of operations for the interim periods shown in these financial statements are not necessarily indicative of operating results for the entire year. In our opinion, the accompanying unaudited condensed consolidated financial statements recognize all adjustments of a normal recurring nature considered necessary to fairly state the financial position, results of operations, and cash flows for each interim period presented. Prior to July 1, 2022, we existed and functioned as part of the consolidated business of Encompass. The results related to the three months ended March 31, 2022 included within the accompanying unaudited condensed consolidated financial statements have been derived from the consolidated financial statements and accounting records of Encompass as if the Company had operated on a stand-alone basis during the periods presented and were prepared utilizing the legal entity approach, in accordance with GAAP, and pursuant to the rules and regulations of the SEC. Prior to July 1, 2022, the Company was reported as a single reportable segment within Encompass’s reportable segments and did not operate as a stand-alone company. Accordingly, Encompass historically reported the financial position and the related results of operations, cash flows and changes in equity of the Company as a component of Encompass’s condensed consolidated financial statements. The unaudited condensed consolidated financial statements include an allocation of expenses related to certain Encompass corporate functions as discussed in Note 10, Related Party Transactions , for periods prior to July 1, 2022 . The unaudited condensed consolidated financial statements also include revenues and expenses directly attributable to the Company and assets and liabilities specifically attributable to the Company. Encompass’s third-party debt and related interest expense have not been attributed to the Company because the Company is not the primary legal obligor of the debt and the borrowings are not specifically identifiable to the Company. However, subsequent to April 23, 2020, the Company was a guarantor for Encompass’s credit agreement and senior debt. In connection with the Distribution, the Company was released from its guarantee of Encompass’s indebtedness. The Company maintains its own cash management system and did not participate in a centralized cash management arrangement with Encompass. The income tax amounts in these unaudited condensed consolidated financial statements for the three months ended March 31, 2022 have been calculated based on a separate return methodology and are presented as if our income gave rise to separate federal and state consolidated income tax return filing obligations in the respective jurisdictions in which we operate. In addition to various separate state and local income tax filings, we joined with Encompass in various U.S. federal, state and local consolidated income tax filings prior to the Separation. See Note 6, Income Taxes , for information related to our Tax Sharing Agreement with Encompass. The unaudited condensed consolidated financial statements include the assets, liabilities, revenues, and expenses of all wholly owned subsidiaries, majority-owned subsidiaries over which we exercise control, and, when applicable, entities in which we have a controlling financial interest. We use the equity method to account for our investments in entities we do not control, but for which we have the ability to exercise significant influence over operating and financial policies. Consolidated Net income attributable to Enhabit, Inc. includes our share of the net earnings of these entities. We eliminate all intercompany accounts and transactions within the Company from our financial results. Transactions between the Company and Encompass have been included in these condensed consolidated financial statements. The transfers with Encompass that were not settled in cash are reflected in stockholders’ equity on the condensed consolidated balance sheets and within Capital in Excess of Par Value on the condensed consolidated statements of stockholders’ equity. Within the condensed consolidated statements of cash flows, these transfers are treated as an operating, financing or noncash activity determined by the nature of the transaction. For the three months ended March 31, 2022, transactions between the Company and Encompass were considered related party transactions. Refer to Note 10, Related Party Transactions , for more information. Net Service Revenue— Our Net service revenue disaggregated by payor source and segment are as follows (in millions): Home Health Hospice Consolidated Three Months Ended Three Months Ended Three Months Ended 2023 2022 2023 2022 2023 2022 Medicare $ 146.0 $ 169.5 $ 47.6 $ 47.9 $ 193.6 $ 217.4 Medicare Advantage 49.3 34.5 — — 49.3 34.5 Managed care 17.2 17.7 1.7 1.1 18.9 18.8 Medicaid 2.9 3.1 — 0.4 2.9 3.5 Other 0.4 0.1 — — 0.4 0.1 Total $ 215.8 $ 224.9 $ 49.3 $ 49.4 $ 265.1 $ 274.3 For a discussion of our significant accounting policies, including our policy related to Net service revenue , see Note 1, Summary of Significant Accounting Policies , to the consolidated financial statements included in the Form 10-K. Redeemable Noncontrolling Interests in Consolidated Affiliates — Certain of our joint venture agreements contain provisions that allow our partners to require us to purchase their interests in the joint venture at fair value at certain points in the future. These put rights include termination provisions, change in control provisions and breaches of the terms of the underlying operating agreements. Because these noncontrolling interests provide for redemption features that are not solely within our control, we classify them as Redeemable noncontrolling interests outside of permanent equity in our consolidated balance sheets. The following tables reconcile the net income attributable to nonredeemable Noncontrolling interests , as recorded in the shareholders’ equity section of the consolidated balance sheets, and the net income attributable to Redeemable noncontrolling interests, as recorded in the mezzanine section of the consolidated balance sheets, to the Net and comprehensive income attributable to noncontrolling interests presented in the consolidated statements of income (in millions): Three Months Ended March 31, 2023 2022 Balance at beginning of period $ 5.2 $ 5.0 Net income attributable to redeemable noncontrolling interests 0.1 0.1 Distributions to redeemable noncontrolling interests (0.2) — Balance at end of period $ 5.1 $ 5.1 Three Months Ended March 31, 2023 2022 Net income attributable to nonredeemable noncontrolling interests $ 0.4 $ 0.6 Net income attributable to redeemable noncontrolling interests 0.1 — Net income attributable to noncontrolling interests $ 0.5 $ 0.6 Earnings Per Common Share — The following table sets forth the computation of diluted weighted average common shares outstanding for the three months ended March 31, 2023 and 2022 (in millions). A total of 0.3 million options to purchase Enhabit’s shares and 0.5 million shares of restricted stock awards, performance units and restricted stock units were excluded from the diluted weighted average common shares outstanding for the three months ended March 31, 2023 because their effects were anti-dilutive. There were no dilutive or anti-dilutive shares for the three months ended March 31, 2022. See Note 10, Stock-based Payments , to the consolidated financial statements included in the Form 10-K for additional information. Three Months Ended 2023 2022 Weighted average common shares outstanding: Basic 49.8 49.6 Dilutive effect of restricted stock, restricted stock units and performance units 0.3 — Diluted 50.1 49.6 Recent Accounting Pronouncements — We do not believe any recently issued, but not yet effective, accounting standards will have a material effect on our condensed consolidated financial position, results of operations, or cash flows. |
Variable Interest Entities (VIE
Variable Interest Entities (VIEs) | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Variable Interest Entities (VIEs) | Variable Interest Entities (“VIEs”):As of March 31, 2023 and December 31, 2022, we consolidated two limited partnership-like entities that are VIEs and of which we are the primary beneficiary. Our ownership percentages in these entities are 60% and 90% as of March 31, 2023. Through partnership and management agreements with or governing these entities, we manage these entities and handle all day-to-day operating decisions. Accordingly, we have the decision-making power over the activities that most significantly impact the economic performance of the VIEs and an obligation to absorb losses or receive benefits from the VIEs that could potentially be significant to the VIEs. These decisions and significant activities include, but are not limited to, marketing efforts, oversight of patient admissions, medical training, nurse and therapist scheduling, provision of healthcare services, billing, collections and creation and maintenance of medical records. The terms of the agreements governing the VIEs prohibit us from using the assets of the VIEs to satisfy the obligations of other entities. The carrying amounts and classifications of the consolidated VIEs’ assets and liabilities, which are included in our condensed consolidated balance sheets, are as follows (in millions): March 31, December 31, Assets Current assets: Restricted cash $ 1.6 $ 4.0 Accounts receivable 3.0 2.9 Other current assets 1.6 — Total current assets 6.2 6.9 Operating lease right-of-use assets 0.2 0.2 Goodwill 12.4 12.4 Intangible assets, net 1.0 1.1 Total assets $ 19.8 $ 20.6 Liabilities Current liabilities: Current operating lease liabilities $ 0.1 $ 0.1 Accrued payroll 0.3 0.2 Other current liabilities 0.2 0.1 Total current liabilities 0.6 0.4 Long-term operating lease liabilities 0.1 — Other long-term liabilities — 0.1 Total liabilities $ 0.7 $ 0.5 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets: We are required to test our goodwill for impairment at least annually, as of October 1 st , absent any triggering events that would accelerate an impairment assessment. During the three months ended March 31, 2023, we identified no potential impairment triggering events, and determined a quantitative analysis of our two reporting units was not necessary. |
Long-term Debt
Long-term Debt | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Long-term Debt: Our long-term debt outstanding consists of the following (in millions): March 31, 2023 December 31, 2022 Credit Agreement— Advances under revolving credit facility $ 185.0 $ 190.0 Term loan A facility 383.1 387.9 Finance lease obligations 4.3 5.2 572.4 583.1 Less: Current portion (22.7) (23.1) Long-term debt, net of current portion $ 549.7 $ 560.0 The following chart shows scheduled principal payments due on long-term debt for the next five years and thereafter (in millions): Amount April 1 through December 31, 2023 $ 17.1 2024 21.7 2025 20.5 2026 20.0 2027 495.0 Gross maturities 574.3 Less unamortized debt issuance costs (1.9) Total $ 572.4 In June 2022, the Company entered into a credit agreement (the “Credit Agreement”) that consists of a $400.0 million term loan A facility (the “Term Loan A Facility”) and a $350.0 million revolving credit facility (the “Revolving Credit Facility” and together with the Term Loan A Facility, the “Credit Facilities”). The Credit Facilities mature in June 2027. Interest on the loans under the Credit Facilities is calculated by reference to the Secured Overnight Financing Rate (“SOFR”) or an alternative base rate, plus an applicable interest rate margin. Enhabit may voluntarily prepay outstanding loans under the Credit Facilities at any time without premium or penalty, other than customary breakage costs with respect to SOFR loans. The Term Loan A Facility contains customary mandatory prepayments, including with respect to proceeds from asset sales and from certain incurrences of indebtedness. The Term Loan A Facility amortizes by an amount per annum equal to 5.0% of the outstanding principal amount thereon as of the closing date, payable in equal quarterly installments, with the balance being payable in June 2027. The Revolving Credit Facility provides us with the ability to borrow and obtain letters of credit, which is subject to a $75.0 million sublimit. The obligations under the Credit Facilities are guaranteed by our existing and future wholly owned domestic material subsidiaries, subject to certain exceptions. Borrowings under the Credit Facilities are secured by first priority liens on substantially all the assets of Enhabit and the guarantors, subject to certain exceptions. The Credit Facilities contain representations and warranties, affirmative and negative covenants and events of default customary for secured financings of this type, including limitations with respect to liens, fundamental changes, indebtedness, restricted payments, investments and affiliate transactions, in each case, subject to a number of important exceptions and qualifications. In addition, the Credit Facilities obligate us to maintain a maximum total net leverage ratio of no more than 4.75 to 1.0 and a minimum interest coverage ratio of no less than 2.5 to 1.0 for the previous four consecutive quarters. The maximum total net leverage ratio is scheduled to decline to 4.5 to 1.0 on June 30, 2024. Under specified circumstances, including non-compliance with any of the covenants described above and the unavailability of any waiver, amendment or other modification thereto, we may not be able to borrow under the Revolving Credit Facility. Additionally, violation of the covenants would result in an event of default under the Credit Facilities. A default that occurs, and is not cured within any applicable cure period or is not waived, would permit lenders to accelerate the maturity of the debt under the Credit Facilities and to foreclose upon any collateral securing the debt. As of March 31, 2023, we were in compliance with the financial covenants under the Credit Facilities. Our forecast for results through June 30, 2024 indicate we will continue to be in compliance with those financial covenants through that date. We cannot guarantee we will be in compliance with our financial covenants for each reporting period through June 30, 2024. We continually evaluate our expected compliance with the covenants described above and take all appropriate steps to proactively renegotiate such covenants when appropriate. On June 30, 2022, we drew the full $400.0 million of the Term Loan A Facility and $170.0 million on the Revolving Credit Facility. The net proceeds of $566.6 million were distributed to Encompass prior to the completion of the Distribution. As of March 31, 2023, amounts drawn under the Term Loan A Facility and the Revolving Credit Facility had an interest rate of 6.7%. For additional information on the Separation, see Note 1, Summary of Significant Accounting Policies. On October 20, 2022, we entered into an interest rate swap to manage our exposure to interest rate movements for a portion of our Term Loan A Facility. The interest rate swap has a $200.0 million notional value and a maturity date of October 20, 2025. Beginning in October 2022, we receive the one-month SOFR and pay a fixed rate of interest of 4.3%. See Note 7, Derivative Instruments . The carrying amounts and estimated fair values of our long-term debt are presented in the following table (in millions): As of March 31, 2023 As of December 31, 2022 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Long-term debt: Advances under revolving credit facility $ 185.0 $ 185.0 $ 190.0 $ 190.0 Term loan A facility 383.1 354.3 387.9 356.6 Finance lease obligations 4.3 4.3 5.2 5.2 Fair values for our long-term debt and financial commitments are determined using inputs, including quoted prices in nonactive markets, that are observable either directly or indirectly, or Level 2 inputs within the fair value hierarchy. See Note 1, Summary of Significant Accounting Policies—Fair Value Measurements, to the consolidated financial statements included in the Form 10-K. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
Leases | Leases We lease office space, vehicles, and equipment under operating and finance leases with non-cancelable terms generally expiring at various dates through 2035. Our operating and finance leases generally have one In March 2023, we renewed the lease on our corporate headquarters office space for a term of 11 years. The lease commences on June 1, 2024 and expires in May 2035. The minimum lease payment obligations due under this lease are $19.8 million. The components of lease costs are as follows (in millions): Three Months Ended March 31, 2023 2022 Operating lease cost: General and administrative expenses $ 5.1 $ 5.0 Finance lease cost: Amortization of right-of-use assets 0.9 1.0 Total finance lease cost 0.9 1.0 Total lease cost $ 6.0 $ 6.0 Supplemental consolidated balance sheet information related to leases is as follows (in millions): Classification As of March 31, 2023 As of December 31, 2022 Assets Operating lease Operating lease right-of-use assets $ 45.8 $ 42.0 Finance lease (1) Property and equipment, net 9.2 10.1 Total lease assets $ 55.0 $ 52.1 Liabilities Current Liabilities: Operating lease Current portion of operating lease liabilities $ 11.6 $ 14.0 Finance lease Current portion of long-term debt 2.7 3.1 Noncurrent liabilities Operating lease Long-term operating lease liabilities, net of current portion 34.2 28.1 Finance lease Long-term debt, net of current portion 1.6 2.1 Total lease liabilities $ 50.1 $ 47.3 (1) Finance lease assets are recorded net of accumulated amortization of $21.3 million and $21.3 million as of March 31, 2023 and December 31, 2022, respectively. As of March 31, 2023 2022 Weighted Average Remaining Lease Term Operating lease 5.9 years 3.6 years Finance lease 1.8 years 1.7 years Weighted Average Discount Rate Operating lease 6.2 % 3.9 % Finance lease 3.1 % 2.0 % Maturities of lease liabilities as of March 31, 2023 are as follows (in millions): Operating Leases Finance Leases April 1 through December 31, 2023 $ 10.2 $ 2.2 2024 7.7 1.7 2025 10.1 0.5 2026 7.6 — 2027 5.2 — 2028 3.0 — 2029 and thereafter 13.5 — Total lease payments 57.3 4.4 Less: Interest portion (11.5) (0.1) Total lease liabilities $ 45.8 $ 4.3 Supplemental cash flow information related to our leases is as follows (in millions): Three Months Ended March 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 4.2 $ 4.3 Financing cash flows from finance leases 1.0 1.4 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 7.9 $ 2.9 Finance leases 0.2 0.2 |
Leases | Leases We lease office space, vehicles, and equipment under operating and finance leases with non-cancelable terms generally expiring at various dates through 2035. Our operating and finance leases generally have one In March 2023, we renewed the lease on our corporate headquarters office space for a term of 11 years. The lease commences on June 1, 2024 and expires in May 2035. The minimum lease payment obligations due under this lease are $19.8 million. The components of lease costs are as follows (in millions): Three Months Ended March 31, 2023 2022 Operating lease cost: General and administrative expenses $ 5.1 $ 5.0 Finance lease cost: Amortization of right-of-use assets 0.9 1.0 Total finance lease cost 0.9 1.0 Total lease cost $ 6.0 $ 6.0 Supplemental consolidated balance sheet information related to leases is as follows (in millions): Classification As of March 31, 2023 As of December 31, 2022 Assets Operating lease Operating lease right-of-use assets $ 45.8 $ 42.0 Finance lease (1) Property and equipment, net 9.2 10.1 Total lease assets $ 55.0 $ 52.1 Liabilities Current Liabilities: Operating lease Current portion of operating lease liabilities $ 11.6 $ 14.0 Finance lease Current portion of long-term debt 2.7 3.1 Noncurrent liabilities Operating lease Long-term operating lease liabilities, net of current portion 34.2 28.1 Finance lease Long-term debt, net of current portion 1.6 2.1 Total lease liabilities $ 50.1 $ 47.3 (1) Finance lease assets are recorded net of accumulated amortization of $21.3 million and $21.3 million as of March 31, 2023 and December 31, 2022, respectively. As of March 31, 2023 2022 Weighted Average Remaining Lease Term Operating lease 5.9 years 3.6 years Finance lease 1.8 years 1.7 years Weighted Average Discount Rate Operating lease 6.2 % 3.9 % Finance lease 3.1 % 2.0 % Maturities of lease liabilities as of March 31, 2023 are as follows (in millions): Operating Leases Finance Leases April 1 through December 31, 2023 $ 10.2 $ 2.2 2024 7.7 1.7 2025 10.1 0.5 2026 7.6 — 2027 5.2 — 2028 3.0 — 2029 and thereafter 13.5 — Total lease payments 57.3 4.4 Less: Interest portion (11.5) (0.1) Total lease liabilities $ 45.8 $ 4.3 Supplemental cash flow information related to our leases is as follows (in millions): Three Months Ended March 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 4.2 $ 4.3 Financing cash flows from finance leases 1.0 1.4 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 7.9 $ 2.9 Finance leases 0.2 0.2 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes: Our effective tax rates were 31.9% and 24.6% for the three months ended March 31, 2023 and 2022, respectively. The higher rate in 2023 was primarily due to the greater unfavorable rate impact of permanent differences attributable to stock-based compensation. Prior to July 1, 2022, the Company joined Encompass in the filing of various consolidated federal, state and local income tax returns and was a party to an income tax allocation agreement (the “Tax Sharing Agreement”). Under the Tax Sharing Agreement, the Company paid to or received from Encompass the amount, if any, by which Encompass’s income tax liability was affected by virtue of inclusion of the Company in the consolidated income tax returns of Encompass. Effectively, that arrangement resulted in the Company’s annual income tax provision being computed, with adjustments, as if the Company filed separate consolidated income tax returns. At the Distribution, the Company entered into the Tax Matters Agreement with Encompass, which terminated the existing Tax Sharing Agreement. The Tax Matters Agreement governs the Company’s respective rights, responsibilities and obligations with respect to taxes (including responsibility for taxes arising in the ordinary course of business and taxes, if any, incurred as a result of any failure of the Distribution to qualify as tax-free for U.S. federal income tax purposes), entitlement to refunds, allocation of tax attributes, preparation of tax returns, control of tax contests and other matters. In addition, the Tax Matters Agreement imposes certain restrictions on the Company and its subsidiaries until the second anniversary of the Distribution (including restrictions on share issuances, business combinations, sales of assets and similar transactions) that are designed to preserve the tax-free status of the Distribution and certain related transactions. The Tax Matters Agreement provides special rules that allocate tax liabilities in the event the Distribution or certain related transactions are not tax-free. In general, under the Tax Matters Agreement, each party is responsible for any taxes imposed |
Derivative Instruments
Derivative Instruments | 3 Months Ended |
Mar. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments: In October 2022, we entered into an interest rate swap agreement with a notional value of $200.0 million with a maturity of October 20, 2025. See Note 4, Long-Term Debt. The activities of the cash flow hedge included in accumulated other comprehensive loss for the three months ended March 31, 2023 are presented in the following table (in millions): Cash Flow Hedge Balance as of December 31, 2022 $ (0.7) Unrealized loss recognized in other comprehensive income, net of tax (1.0) Reclassified to interest expense, net of tax (0.1) Balance as of March 31, 2023 $ (1.8) The fair value of derivative assets and liabilities within the consolidated balance sheets are presented in the following table (in millions): Derivative Instruments March 31, 2023 December 31, 2022 Prepaid and other current assets $ 0.6 $ 1.0 Other long-term liabilities (3.0) (2.0) Total $ (2.4) $ (1.0) Fair values for our interest rate swap agreement are determined using inputs, including quoted prices in nonactive markets, that are observable either directly or indirectly, or Level 2 inputs within the fair value hierarchy. See Note 1, Summary of Significant Accounting Policies—Fair Value Measurements, to the consolidated financial statements included in the Form 10-K. |
Contingencies and Other Commitm
Contingencies and Other Commitments | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies and Other Commitments | Contingencies and Other Commitments:We operate in a highly regulated industry in which healthcare providers are routinely subject to litigation. As a result, various lawsuits, claims, and legal and regulatory proceedings have been and can be expected to be instituted or asserted against us. The resolution of any such lawsuits, claims, or legal and regulatory proceedings could materially and adversely affect our financial position, results of operations, and cash flows in a given period. The condensed consolidated balance sheet as of March 31, 2023 and December 31, 2022 include $0.8 million and $8.8 million, respectively, in Other current liabilities and Other current assets |
Segment Reporting
Segment Reporting | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting: Our internal financial reporting and management structure is focused on the major types of services provided by the Company. We manage our operations using two operating segments that are also our reportable segments: (1) home health and (2) hospice. These reportable operating segments are consistent with information used by our chief executive officer, who is our chief operating decision maker, to assess performance and allocate resources. The following is a brief description of our reportable segments: • Home Health - Our home health operations represent the nation’s fourth largest provider of Medicare-certified skilled home health services in terms of Medicare revenues. As of March 31, 2023, we operated 253 home health locations in 34 states, with a concentration in the southern half of the United States. We are the sole owner of 242 of these locations. We retain 50.0% to 81.0% ownership in the remaining 11 jointly owned locations. Our home health services include a comprehensive range of Medicare-certified home nursing services to adult patients in need of care. These services include, among others, skilled nursing, physical, occupational, and speech therapy, medical social work, and home health aide services. See Note 1, Summary of Significant Accounting Policies, to the consolidated financial statements included in the Form 10-K for a definition of episodic and non-episodic revenue. • Hospice - Our hospice operations represent the nation’s twelfth largest provider of Medicare-certified hospice services in terms of Medicare revenues. As of March 31, 2023, we operated 107 hospice locations in 23 states, with a concentration in the southern half of the United States. We are the sole owner of 103 of these locations. We retain 50.0% to 90.0% ownership in the remaining four jointly owned locations. Our hospice services include in-home services to terminally ill patients and their families to address patients’ physical needs, including pain control and symptom management, and to provide emotional and spiritual support. The accounting policies of our reportable segments are the same as those described in Note 1, Summary of Significant Accounting Policies, to the consolidated financial statements included in the Form 10-K. All revenues for our services are generated through external customers. See Note 1, Summary of Significant Accounting Policies—Net Service Revenue , for the disaggregation of our revenues. No corporate overhead is allocated to either of our reportable segments. Our chief operating decision maker evaluates the performance of our segments and allocates resources to them based on adjusted earnings before interest, taxes, depreciation, and amortization (“Segment Adjusted EBITDA”). Segment assets are not reviewed by our chief operating decision maker and therefore are not disclosed below. Selected financial information for our reportable segments is as follows (in millions): Home Health Hospice Three Months Ended March 31, Three Months Ended March 31, 2023 2022 2023 2022 Net service revenue $ 215.8 $ 224.9 $ 49.3 $ 49.4 Cost of service, excluding depreciation and amortization 108.2 108.0 24.4 21.7 General and administrative expenses 62.9 58.7 16.3 14.9 Noncontrolling interests 0.4 0.5 0.1 0.1 Segment Adjusted EBITDA $ 44.3 $ 57.7 $ 8.5 $ 12.7 Segment reconciliations (in millions): Three Months Ended March 31, 2023 2022 Total Segment Adjusted EBITDA $ 52.8 $ 70.4 Non-segment general and administrative expenses (29.8) (25.8) Depreciation and amortization (7.8) (8.5) Interest expense and amortization of debt discounts and fees (9.5) — Net income attributable to noncontrolling interests 0.5 0.6 Stock-based compensation expense (1.5) (1.3) Income before income taxes and noncontrolling interests $ 4.7 $ 35.4 Additional detail regarding the revenues of our operating segments by service line follows (in millions): Three Months Ended March 31, 2023 2022 Home Health: Episodic $ 170.2 $ 191.7 Non-episodic 42.9 30.4 Other 2.7 2.8 Total home health 215.8 224.9 Hospice 49.3 49.4 Total net service revenue $ 265.1 $ 274.3 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions: In connection with the Separation, we entered into several agreements with Encompass that govern the relationship of the parties following the Distribution, including a Separation and Distribution Agreement, a Transition Services Agreement, a Tax Matters Agreement and an Employee Matters Agreement. The Separation and Distribution Agreement contains provisions that, among other things, relate to (i) assets, liabilities, and contracts to be transferred, assumed, and assigned to each of Enhabit and Encompass as part of the Separation, (ii) cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of the Enhabit business with Enhabit and financial responsibility for the obligations and liabilities of Encompass’s remaining business with Encompass, (iii) procedures with respect to claims subject to indemnification and related matters, (iv) the allocation between Enhabit and Encompass of rights and obligations under existing insurance policies with respect to occurrences prior to completion of the Distribution, as well as the right to proceeds and the obligation to incur certain deductibles under certain insurance policies, and (v) procedures governing Enhabit’s and Encompass’s obligations and allocations of liabilities with respect to ongoing litigation matters that may implicate each of Enhabit’s business and Encompass’s business. Allocation of Corporate Expenses Encompass provided the Company with certain services, including, but not limited to, executive oversight, treasury, legal, accounting, human resources, tax, internal audit, financial reporting, information technology and investor relations. Some of these services continue to be provided by Encompass to the Company on a temporary basis under the Transition Services Agreement. Our condensed consolidated financial statements through March 31, 2022 include an allocation of these costs for the period prior to July 1, 2022. When specific identification is not practicable, a proportional cost method is used, primarily based on revenue and headcount. These cost allocations reasonably reflect these services and the benefits derived for the periods presented. These allocations may not be indicative of the actual expenses that would have been incurred as an independent, publicly traded company. In addition, the Company’s employees have historically participated in Encompass’s various stock-based plans. The allocations of services from Encompass to the Company of $3.5 million, including $0.5 million of stock-based compensation expense paid to employees of Encompass, were recorded in General and administrative expenses in the condensed consolidated statements of operations for the three months ended March 31, 2022. For information related to our Tax Sharing Agreement with Encompass, see Note 6, Income Taxes. Data Analytics Investment During 2019, we made a $2.0 million investment in Medalogix, LLC, a healthcare predictive data and analytics company (“Medalogix”); this investment is accounted for under the measurement alternative for investments. During the three months ended March 31, 2023 and 2022, we incurred costs of approximately $1.1 million and $0.7 million, respectively, in connection with the usage of Medalogix’s analytics platforms. These costs are included in Cost of service , excluding depreciation and amortization and General and administrative expenses in the condensed consolidated statements of income. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries should be read in conjunction with the audited consolidated financial statements and accompanying notes contained in the Company’s Annual Report for the year ended December 31, 2022 on Form 10-K (the “Form 10-K”) filed with the United States Securities and Exchange Commission (the “SEC”) on April 14, 2023. The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the SEC applicable to interim financial information. Certain information and note disclosures included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) have been omitted in these interim statements, as allowed by such SEC rules and regulations. The condensed consolidated balance sheet as of December 31, 2022 has been derived from audited financial statements, but it does not include all disclosures required by GAAP. However, we believe the disclosures are adequate to make the information presented not misleading. |
Consolidation | The results related to the three months ended March 31, 2022 included within the accompanying unaudited condensed consolidated financial statements have been derived from the consolidated financial statements and accounting records of Encompass as if the Company had operated on a stand-alone basis during the periods presented and were prepared utilizing the legal entity approach, in accordance with GAAP, and pursuant to the rules and regulations of the SEC. Prior to July 1, 2022, the Company was reported as a single reportable segment within Encompass’s reportable segments and did not operate as a stand-alone company. Accordingly, Encompass historically reported the financial position and the related results of operations, cash flows and changes in equity of the Company as a component of Encompass’s condensed consolidated financial statements. The unaudited condensed consolidated financial statements include an allocation of expenses related to certain Encompass corporate functions as discussed in Note 10, Related Party Transactions , for periods prior to July 1, 2022 . The unaudited condensed consolidated financial statements also include revenues and expenses directly attributable to the Company and assets and liabilities specifically attributable to the Company. Encompass’s third-party debt and related interest expense have not been attributed to the Company because the Company is not the primary legal obligor of the debt and the borrowings are not specifically identifiable to the Company. However, subsequent to April 23, 2020, the Company was a guarantor for Encompass’s credit agreement and senior debt. In connection with the Distribution, the Company was released from its guarantee of Encompass’s indebtedness. The Company maintains its own cash management system and did not participate in a centralized cash management arrangement with Encompass. The income tax amounts in these unaudited condensed consolidated financial statements for the three months ended March 31, 2022 have been calculated based on a separate return methodology and are presented as if our income gave rise to separate federal and state consolidated income tax return filing obligations in the respective jurisdictions in which we operate. In addition to various separate state and local income tax filings, we joined with Encompass in various U.S. federal, state and local consolidated income tax filings prior to the Separation. See Note 6, Income Taxes , for information related to our Tax Sharing Agreement with Encompass. The unaudited condensed consolidated financial statements include the assets, liabilities, revenues, and expenses of all wholly owned subsidiaries, majority-owned subsidiaries over which we exercise control, and, when applicable, entities in which we have a controlling financial interest. We use the equity method to account for our investments in entities we do not control, but for which we have the ability to exercise significant influence over operating and financial policies. Consolidated Net income attributable to Enhabit, Inc. includes our share of the net earnings of these entities. We eliminate all intercompany accounts and transactions within the Company from our financial results. Transactions between the Company and Encompass have been included in these condensed consolidated financial statements. The transfers with Encompass that were not settled in cash are reflected in stockholders’ equity on the condensed consolidated balance sheets and within Capital in Excess of Par Value |
Recent Accounting Pronouncements | Recent Accounting Pronouncements — We do not believe any recently issued, but not yet effective, accounting standards will have a material effect on our condensed consolidated financial position, results of operations, or cash flows. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Disaggregation of Net Service Revenue by Payor Source and Segment | Our Net service revenue disaggregated by payor source and segment are as follows (in millions): Home Health Hospice Consolidated Three Months Ended Three Months Ended Three Months Ended 2023 2022 2023 2022 2023 2022 Medicare $ 146.0 $ 169.5 $ 47.6 $ 47.9 $ 193.6 $ 217.4 Medicare Advantage 49.3 34.5 — — 49.3 34.5 Managed care 17.2 17.7 1.7 1.1 18.9 18.8 Medicaid 2.9 3.1 — 0.4 2.9 3.5 Other 0.4 0.1 — — 0.4 0.1 Total $ 215.8 $ 224.9 $ 49.3 $ 49.4 $ 265.1 $ 274.3 |
Schedule Of Net Income Attributable To Redeemable Noncontrolling Interest And Nonredeemable Noncontrolling Interests | The following tables reconcile the net income attributable to nonredeemable Noncontrolling interests , as recorded in the shareholders’ equity section of the consolidated balance sheets, and the net income attributable to Redeemable noncontrolling interests, as recorded in the mezzanine section of the consolidated balance sheets, to the Net and comprehensive income attributable to noncontrolling interests presented in the consolidated statements of income (in millions): Three Months Ended March 31, 2023 2022 Balance at beginning of period $ 5.2 $ 5.0 Net income attributable to redeemable noncontrolling interests 0.1 0.1 Distributions to redeemable noncontrolling interests (0.2) — Balance at end of period $ 5.1 $ 5.1 Three Months Ended March 31, 2023 2022 Net income attributable to nonredeemable noncontrolling interests $ 0.4 $ 0.6 Net income attributable to redeemable noncontrolling interests 0.1 — Net income attributable to noncontrolling interests $ 0.5 $ 0.6 |
Schedule of Diluted Weighted Average Common Shares Outstanding | The following table sets forth the computation of diluted weighted average common shares outstanding for the three months ended March 31, 2023 and 2022 (in millions). A total of 0.3 million options to purchase Enhabit’s shares and 0.5 million shares of restricted stock awards, performance units and restricted stock units were excluded from the diluted weighted average common shares outstanding for the three months ended March 31, 2023 because their effects were anti-dilutive. There were no dilutive or anti-dilutive shares for the three months ended March 31, 2022. See Note 10, Stock-based Payments , to the consolidated financial statements included in the Form 10-K for additional information. Three Months Ended 2023 2022 Weighted average common shares outstanding: Basic 49.8 49.6 Dilutive effect of restricted stock, restricted stock units and performance units 0.3 — Diluted 50.1 49.6 |
Variable Interest Entities (V_2
Variable Interest Entities (VIEs) (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Variable Interest Entities | The carrying amounts and classifications of the consolidated VIEs’ assets and liabilities, which are included in our condensed consolidated balance sheets, are as follows (in millions): March 31, December 31, Assets Current assets: Restricted cash $ 1.6 $ 4.0 Accounts receivable 3.0 2.9 Other current assets 1.6 — Total current assets 6.2 6.9 Operating lease right-of-use assets 0.2 0.2 Goodwill 12.4 12.4 Intangible assets, net 1.0 1.1 Total assets $ 19.8 $ 20.6 Liabilities Current liabilities: Current operating lease liabilities $ 0.1 $ 0.1 Accrued payroll 0.3 0.2 Other current liabilities 0.2 0.1 Total current liabilities 0.6 0.4 Long-term operating lease liabilities 0.1 — Other long-term liabilities — 0.1 Total liabilities $ 0.7 $ 0.5 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt Outstanding | Our long-term debt outstanding consists of the following (in millions): March 31, 2023 December 31, 2022 Credit Agreement— Advances under revolving credit facility $ 185.0 $ 190.0 Term loan A facility 383.1 387.9 Finance lease obligations 4.3 5.2 572.4 583.1 Less: Current portion (22.7) (23.1) Long-term debt, net of current portion $ 549.7 $ 560.0 |
Schedule of Principal Payments Due on Long-term Debt | The following chart shows scheduled principal payments due on long-term debt for the next five years and thereafter (in millions): Amount April 1 through December 31, 2023 $ 17.1 2024 21.7 2025 20.5 2026 20.0 2027 495.0 Gross maturities 574.3 Less unamortized debt issuance costs (1.9) Total $ 572.4 |
Schedule of Carrying Values and Estimated Fair Values of Long-term Debt | The carrying amounts and estimated fair values of our long-term debt are presented in the following table (in millions): As of March 31, 2023 As of December 31, 2022 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Long-term debt: Advances under revolving credit facility $ 185.0 $ 185.0 $ 190.0 $ 190.0 Term loan A facility 383.1 354.3 387.9 356.6 Finance lease obligations 4.3 4.3 5.2 5.2 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
Schedule of Components of Lease Costs | The components of lease costs are as follows (in millions): Three Months Ended March 31, 2023 2022 Operating lease cost: General and administrative expenses $ 5.1 $ 5.0 Finance lease cost: Amortization of right-of-use assets 0.9 1.0 Total finance lease cost 0.9 1.0 Total lease cost $ 6.0 $ 6.0 |
Schedule of Supplemental Consolidated Balance Sheet Information | Supplemental consolidated balance sheet information related to leases is as follows (in millions): Classification As of March 31, 2023 As of December 31, 2022 Assets Operating lease Operating lease right-of-use assets $ 45.8 $ 42.0 Finance lease (1) Property and equipment, net 9.2 10.1 Total lease assets $ 55.0 $ 52.1 Liabilities Current Liabilities: Operating lease Current portion of operating lease liabilities $ 11.6 $ 14.0 Finance lease Current portion of long-term debt 2.7 3.1 Noncurrent liabilities Operating lease Long-term operating lease liabilities, net of current portion 34.2 28.1 Finance lease Long-term debt, net of current portion 1.6 2.1 Total lease liabilities $ 50.1 $ 47.3 (1) Finance lease assets are recorded net of accumulated amortization of $21.3 million and $21.3 million as of March 31, 2023 and December 31, 2022, respectively. As of March 31, 2023 2022 Weighted Average Remaining Lease Term Operating lease 5.9 years 3.6 years Finance lease 1.8 years 1.7 years Weighted Average Discount Rate Operating lease 6.2 % 3.9 % Finance lease 3.1 % 2.0 % |
Schedule of Maturities of Operating Lease Liabilities | Maturities of lease liabilities as of March 31, 2023 are as follows (in millions): Operating Leases Finance Leases April 1 through December 31, 2023 $ 10.2 $ 2.2 2024 7.7 1.7 2025 10.1 0.5 2026 7.6 — 2027 5.2 — 2028 3.0 — 2029 and thereafter 13.5 — Total lease payments 57.3 4.4 Less: Interest portion (11.5) (0.1) Total lease liabilities $ 45.8 $ 4.3 Supplemental cash flow information related to our leases is as follows (in millions): Three Months Ended March 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 4.2 $ 4.3 Financing cash flows from finance leases 1.0 1.4 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 7.9 $ 2.9 Finance leases 0.2 0.2 |
Schedule of Maturities of Finance Lease Liabilities | Maturities of lease liabilities as of March 31, 2023 are as follows (in millions): Operating Leases Finance Leases April 1 through December 31, 2023 $ 10.2 $ 2.2 2024 7.7 1.7 2025 10.1 0.5 2026 7.6 — 2027 5.2 — 2028 3.0 — 2029 and thereafter 13.5 — Total lease payments 57.3 4.4 Less: Interest portion (11.5) (0.1) Total lease liabilities $ 45.8 $ 4.3 Supplemental cash flow information related to our leases is as follows (in millions): Three Months Ended March 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 4.2 $ 4.3 Financing cash flows from finance leases 1.0 1.4 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 7.9 $ 2.9 Finance leases 0.2 0.2 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) | The activities of the cash flow hedge included in accumulated other comprehensive loss for the three months ended March 31, 2023 are presented in the following table (in millions): Cash Flow Hedge Balance as of December 31, 2022 $ (0.7) Unrealized loss recognized in other comprehensive income, net of tax (1.0) Reclassified to interest expense, net of tax (0.1) Balance as of March 31, 2023 $ (1.8) |
Schedule of Derivative Assets at Fair Value | The fair value of derivative assets and liabilities within the consolidated balance sheets are presented in the following table (in millions): Derivative Instruments March 31, 2023 December 31, 2022 Prepaid and other current assets $ 0.6 $ 1.0 Other long-term liabilities (3.0) (2.0) Total $ (2.4) $ (1.0) |
Schedule of Derivative Liabilities at Fair Value | The fair value of derivative assets and liabilities within the consolidated balance sheets are presented in the following table (in millions): Derivative Instruments March 31, 2023 December 31, 2022 Prepaid and other current assets $ 0.6 $ 1.0 Other long-term liabilities (3.0) (2.0) Total $ (2.4) $ (1.0) |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Selected Financial Information | Selected financial information for our reportable segments is as follows (in millions): Home Health Hospice Three Months Ended March 31, Three Months Ended March 31, 2023 2022 2023 2022 Net service revenue $ 215.8 $ 224.9 $ 49.3 $ 49.4 Cost of service, excluding depreciation and amortization 108.2 108.0 24.4 21.7 General and administrative expenses 62.9 58.7 16.3 14.9 Noncontrolling interests 0.4 0.5 0.1 0.1 Segment Adjusted EBITDA $ 44.3 $ 57.7 $ 8.5 $ 12.7 |
Segment Reconciliation | Segment reconciliations (in millions): Three Months Ended March 31, 2023 2022 Total Segment Adjusted EBITDA $ 52.8 $ 70.4 Non-segment general and administrative expenses (29.8) (25.8) Depreciation and amortization (7.8) (8.5) Interest expense and amortization of debt discounts and fees (9.5) — Net income attributable to noncontrolling interests 0.5 0.6 Stock-based compensation expense (1.5) (1.3) Income before income taxes and noncontrolling interests $ 4.7 $ 35.4 |
Schedule of Additional Detail Regarding Revenues by Service Line | Additional detail regarding the revenues of our operating segments by service line follows (in millions): Three Months Ended March 31, 2023 2022 Home Health: Episodic $ 170.2 $ 191.7 Non-episodic 42.9 30.4 Other 2.7 2.8 Total home health 215.8 224.9 Hospice 49.3 49.4 Total net service revenue $ 265.1 $ 274.3 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) $ / shares in Units, $ in Millions | 3 Months Ended | ||
Jul. 01, 2022 $ / shares | Mar. 31, 2023 USD ($) segment state $ / shares | Dec. 31, 2022 $ / shares | |
Class of Stock [Line Items] | |||
Number of states in which entity operates | state | 34 | ||
Number of reportable segments | segment | 2 | ||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 |
Stock conversion ratio | 0.5 | ||
Deferred tax liabilities | $ 31 | ||
Trade Name | |||
Class of Stock [Line Items] | |||
Finite lived intangible asset | $ 135.2 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Net Service Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Net service revenue | $ 265.1 | $ 274.3 |
Medicare | ||
Disaggregation of Revenue [Line Items] | ||
Net service revenue | 193.6 | 217.4 |
Medicare Advantage | ||
Disaggregation of Revenue [Line Items] | ||
Net service revenue | 49.3 | 34.5 |
Managed care | ||
Disaggregation of Revenue [Line Items] | ||
Net service revenue | 18.9 | 18.8 |
Medicaid | ||
Disaggregation of Revenue [Line Items] | ||
Net service revenue | 2.9 | 3.5 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Net service revenue | 0.4 | 0.1 |
Home Health | ||
Disaggregation of Revenue [Line Items] | ||
Net service revenue | 215.8 | 224.9 |
Home Health | Medicare | ||
Disaggregation of Revenue [Line Items] | ||
Net service revenue | 146 | 169.5 |
Home Health | Medicare Advantage | ||
Disaggregation of Revenue [Line Items] | ||
Net service revenue | 49.3 | 34.5 |
Home Health | Managed care | ||
Disaggregation of Revenue [Line Items] | ||
Net service revenue | 17.2 | 17.7 |
Home Health | Medicaid | ||
Disaggregation of Revenue [Line Items] | ||
Net service revenue | 2.9 | 3.1 |
Home Health | Other | ||
Disaggregation of Revenue [Line Items] | ||
Net service revenue | 0.4 | 0.1 |
Hospice | ||
Disaggregation of Revenue [Line Items] | ||
Net service revenue | 49.3 | 49.4 |
Hospice | Medicare | ||
Disaggregation of Revenue [Line Items] | ||
Net service revenue | 47.6 | 47.9 |
Hospice | Medicare Advantage | ||
Disaggregation of Revenue [Line Items] | ||
Net service revenue | 0 | 0 |
Hospice | Managed care | ||
Disaggregation of Revenue [Line Items] | ||
Net service revenue | 1.7 | 1.1 |
Hospice | Medicaid | ||
Disaggregation of Revenue [Line Items] | ||
Net service revenue | 0 | 0.4 |
Hospice | Other | ||
Disaggregation of Revenue [Line Items] | ||
Net service revenue | $ 0 | $ 0 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule Of Net Income Attributable To Redeemable Noncontrolling Interest And Nonredeemable Noncontrolling Interests (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
Balance at beginning of period | $ 5.2 | $ 5 |
Net income attributable to redeemable noncontrolling interests | 0.1 | 0.1 |
Distributions declared | (0.2) | 0 |
Balance at end of period | 5.1 | 5.1 |
Net income attributable to nonredeemable noncontrolling interests | 0.4 | 0.6 |
Net income attributable to redeemable noncontrolling interests | 0.1 | 0.1 |
Net income attributable to noncontrolling interests | $ 0.5 | $ 0.6 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Schedule of Diluted Weighted Average Common Shares Outstanding (Details) - shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Antidilutive securities (in shares) | 0 | |
Weighted average common shares outstanding: | ||
Basic (in shares) | 49,800,000 | 49,600,000 |
Dilutive effect of restricted stock, restricted stock units and performance units (in shares) | 300,000 | 0 |
Diluted common shares outstanding (in shares) | 50,100,000 | 49,600,000 |
Options | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Antidilutive securities (in shares) | 300,000 | |
Restricted Stock, Performance Units, And Restricted Stock Units (RSUs) | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Antidilutive securities (in shares) | 500,000 |
Variable Interest Entities (V_3
Variable Interest Entities (VIEs) - Additional Information (Details) - VIE, Primary Beneficiary - entity | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Variable Interest Entity [Line Items] | ||
Number of entities consolidated | 2 | 2 |
Minimum | ||
Variable Interest Entity [Line Items] | ||
Ownership percentage | 60% | |
Maximum | ||
Variable Interest Entity [Line Items] | ||
Ownership percentage | 90% |
Variable Interest Entities (V_4
Variable Interest Entities (VIEs) (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 | |
Current assets: | |||
Restricted cash | $ 2 | $ 4.3 | |
Accounts receivable | 156.5 | 149.6 | |
Total current assets | 212.6 | 211.8 | |
Operating lease right-of-use assets | 45.8 | 42 | |
Goodwill | 1,147.5 | 1,144.8 | |
Intangible assets, net | 97.1 | 102.6 | |
Total assets | [1] | 1,527 | 1,526.8 |
Current liabilities: | |||
Current operating lease liabilities | 11.6 | 14 | |
Accrued payroll | 47.7 | 35.5 | |
Other current liabilities | 31.9 | 40.7 | |
Total current liabilities | 135.6 | 132.9 | |
Long-term operating lease liabilities | 34.2 | 28.1 | |
Other long-term liabilities | 3 | 1.9 | |
Total liabilities | 751 | 751.5 | |
VIE, Primary Beneficiary | |||
Current assets: | |||
Restricted cash | 1.6 | 4 | |
Accounts receivable | 3 | 2.9 | |
Other current assets | 1.6 | 0 | |
Total current assets | 6.2 | 6.9 | |
Operating lease right-of-use assets | 0.2 | 0.2 | |
Goodwill | 12.4 | 12.4 | |
Intangible assets, net | 1 | 1.1 | |
Total assets | 19.8 | 20.6 | |
Current liabilities: | |||
Current operating lease liabilities | 0.1 | 0.1 | |
Accrued payroll | 0.3 | 0.2 | |
Other current liabilities | 0.2 | 0.1 | |
Total current liabilities | 0.6 | 0.4 | |
Long-term operating lease liabilities | 0.1 | 0 | |
Other long-term liabilities | 0 | 0.1 | |
Total liabilities | $ 0.7 | $ 0.5 | |
[1] Our consolidated assets as of March 31, 2023 and December 31, 2022 include total assets of variable interest entities of $19.8 million and $20.6 million, respectively, that cannot be used by us to settle the obligations of other entities. Our consolidated liabilities as of March 31, 2023 and December 31, 2022 include total liabilities of the variable interest entities of $0.7 million and $0.5 million, respectively. See Note 2, Variable Interest Entities. |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 USD ($) unit | Mar. 31, 2023 USD ($) | |
Goodwill [Line Items] | ||
Number of reporting units | unit | 2 | |
Goodwill | $ 1,144.8 | $ 1,147.5 |
Home Health | ||
Goodwill [Line Items] | ||
Goodwill, impairment loss | $ 109 | |
Hospice | ||
Goodwill [Line Items] | ||
Reporting unit, percentage of fair value in excess of carrying amount | 15% | |
Goodwill | $ 303.6 |
Long-term Debt-Schedule of Long
Long-term Debt-Schedule of Long-Term Debt Outstanding (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Finance lease obligations | $ 4.3 | $ 5.2 |
Long term debt including current maturities | 572.4 | 583.1 |
Less: Current portion | (22.7) | (23.1) |
Long-term debt, net of current portion | 549.7 | 560 |
Line of Credit | Enhabit Credit Agreement | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Long-term debt | 185 | 190 |
Line of Credit | Enhabit Credit Agreement | Term loan A facility | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 383.1 | $ 387.9 |
Long-term Debt - Principal Paym
Long-term Debt - Principal Payments Due (Details) $ in Millions | Mar. 31, 2023 USD ($) |
Amount | |
April 1 through December 31, 2023 | $ 17.1 |
2024 | 21.7 |
2025 | 20.5 |
2026 | 20 |
2027 | 495 |
Gross maturities | 574.3 |
Less unamortized debt issuance costs | (1.9) |
Total | $ 572.4 |
Long-term Debt - Additional Inf
Long-term Debt - Additional Information (Details) | 1 Months Ended | 3 Months Ended | |||||
Jun. 30, 2022 USD ($) | Jun. 30, 2022 USD ($) | Mar. 31, 2023 USD ($) | Mar. 31, 2022 USD ($) | Jun. 30, 2024 | Oct. 31, 2022 USD ($) | Oct. 20, 2022 USD ($) | |
Debt Instrument [Line Items] | |||||||
Distributions to Encompass | $ 0 | $ 55,800,000 | |||||
Interest Rate Swap | |||||||
Debt Instrument [Line Items] | |||||||
Notional amount | $ 200,000,000 | $ 200,000,000 | |||||
Fixed interest rate | 4.30% | ||||||
Enhabit Credit Agreement | Line of Credit | |||||||
Debt Instrument [Line Items] | |||||||
Distributions to Encompass | $ 566,600,000 | ||||||
Interest rate | 6.70% | ||||||
Term loan A facility | Enhabit Credit Agreement | Line of Credit | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, face amount | $ 400,000,000 | $ 400,000,000 | |||||
Percentage of outstanding principal payable in equal quarterly installments | 5% | ||||||
Coverage leverage ratio, maximum | 4.75 | 4.75 | |||||
Interest coverage ratio, minimum | 2.5 | 2.5 | |||||
Principal borrowings on term loan | $ 400,000,000 | ||||||
Term loan A facility | Enhabit Credit Agreement | Line of Credit | Forecast | |||||||
Debt Instrument [Line Items] | |||||||
Coverage leverage ratio, maximum | 4.5 | ||||||
Revolving Credit Facility | Enhabit Credit Agreement | Line of Credit | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit facility, maximum borrowing capacity | 350,000,000 | $ 350,000,000 | |||||
Borrowings on revolving credit facility | 170,000,000 | ||||||
Letter of Credit | Enhabit Credit Agreement | Line of Credit | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit facility, maximum borrowing capacity | $ 75,000,000 | $ 75,000,000 |
Long-term Debt - Carrying Amoun
Long-term Debt - Carrying Amounts and Fair Value of Long-term Debt (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Line of Credit | Enhabit Credit Agreement | Carrying Amount | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Long-term debt, fair value | $ 185 | $ 190 |
Line of Credit | Enhabit Credit Agreement | Carrying Amount | Term loan A facility | ||
Debt Instrument [Line Items] | ||
Long-term debt, fair value | 383.1 | 387.9 |
Line of Credit | Enhabit Credit Agreement | Estimated Fair Value | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Long-term debt, fair value | 185 | 190 |
Line of Credit | Enhabit Credit Agreement | Estimated Fair Value | Term loan A facility | ||
Debt Instrument [Line Items] | ||
Long-term debt, fair value | 354.3 | 356.6 |
Finance lease obligations | Carrying Amount | ||
Debt Instrument [Line Items] | ||
Long-term debt, fair value | 4.3 | 5.2 |
Finance lease obligations | Estimated Fair Value | ||
Debt Instrument [Line Items] | ||
Long-term debt, fair value | $ 4.3 | $ 5.2 |
Leases - Additional Information
Leases - Additional Information (Details) $ in Millions | Mar. 31, 2023 USD ($) |
Lessee, Lease, Description [Line Items] | |
Minimum lease payment obligations | $ 57.3 |
Corporate Headquarters | |
Lessee, Lease, Description [Line Items] | |
Lessee, operating lease, renewal term | 11 years |
Minimum lease payment obligations | $ 19.8 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Finance lease, term of contract | 1 year |
Operating lease, term of contract | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Finance lease, term of contract | 8 years |
Operating lease, term of contract | 8 years |
Leases - Components of Lease Co
Leases - Components of Lease Costs (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Leases [Abstract] | ||
General and administrative expenses | $ 5.1 | $ 5 |
Finance lease cost: | ||
Amortization of right-of-use assets | 0.9 | 1 |
Total finance lease cost | 0.9 | 1 |
Total lease cost | $ 6 | $ 6 |
Leases - Balance Sheet Informat
Leases - Balance Sheet Information (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 |
Assets | |||
Operating lease | $ 45.8 | $ 42 | |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Property and equipment, net | Property and equipment, net | |
Finance lease | $ 9.2 | $ 10.1 | |
Total lease assets | 55 | 52.1 | |
Liabilities | |||
Operating lease, current liabilities | $ 11.6 | $ 14 | |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Current portion of long-term debt | Current portion of long-term debt | |
Finance lease, current liabilities | $ 2.7 | $ 3.1 | |
Operating lease, noncurrent liabilities | $ 34.2 | $ 28.1 | |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Long-term debt, net of current portion | Long-term debt, net of current portion | |
Finance lease, noncurrent liabilities | $ 1.6 | $ 2.1 | |
Total lease liabilities | 50.1 | 47.3 | |
Finance lease, accumulated amortization | $ 21.3 | $ 21.3 | |
Weighted Average Remaining Lease Term | |||
Operating lease | 5 years 10 months 24 days | 3 years 7 months 6 days | |
Finance lease | 1 year 9 months 18 days | 1 year 8 months 12 days | |
Weighted Average Discount Rate | |||
Operating lease | 6.20% | 3.90% | |
Finance lease | 3.10% | 2% |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Operating Leases | ||
April 1 through December 31, 2023 | $ 10.2 | |
2024 | 7.7 | |
2025 | 10.1 | |
2026 | 7.6 | |
2027 | 5.2 | |
2028 | 3 | |
2029 and thereafter | 13.5 | |
Total lease payments | 57.3 | |
Less: Interest portion | (11.5) | |
Total lease liabilities | 45.8 | |
Finance Leases | ||
April 1 through December 31, 2023 | 2.2 | |
2024 | 1.7 | |
2025 | 0.5 | |
2026 | 0 | |
2027 | 0 | |
2028 | 0 | |
2029 and thereafter | 0 | |
Total lease payments | 4.4 | |
Less: Interest portion | (0.1) | |
Finance lease obligations | $ 4.3 | $ 5.2 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 4.2 | $ 4.3 |
Financing cash flows from finance leases | 1 | 1.4 |
Right-of-use assets obtained in exchange for lease obligations: | ||
Operating leases | 7.9 | 2.9 |
Property and equipment additions through finance leases | $ 0.2 | $ 0.2 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate reconciliation, percent | 31.90% | 24.60% |
Derivative Instruments - Additi
Derivative Instruments - Additional Information (Details) - USD ($) | Oct. 31, 2022 | Oct. 20, 2022 |
Interest Rate Swap | ||
Derivative [Line Items] | ||
Notional amount | $ 200,000,000 | $ 200,000,000 |
Derivative Instruments - Schedu
Derivative Instruments - Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Balance at beginning of period | $ 770.1 | $ 1,478.3 |
Unrealized loss recognized in other comprehensive income, net of tax | (1.1) | 0 |
Balance at end of period | 770.9 | $ 1,495.9 |
Interest Rate Swap | Cash Flow Hedging | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Balance at beginning of period | (0.7) | |
Unrealized loss recognized in other comprehensive income, net of tax | (1) | |
Reclassified to interest expense, net of tax | (0.1) | |
Balance at end of period | $ (1.8) |
Derivative Instruments - Sche_2
Derivative Instruments - Schedule of Derivative Assets and Liabilities at Fair Value (Details) - Interest Rate Swap - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Derivative [Line Items] | ||
Total | $ (2.4) | $ (1) |
Prepaid Expenses and Other Current Assets | ||
Derivative [Line Items] | ||
Prepaid and other current assets | 0.6 | 1 |
Other Long-term Liabilities | ||
Derivative [Line Items] | ||
Other long-term liabilities | $ (3) | $ (2) |
Contingencies and Other Commi_2
Contingencies and Other Commitments (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Commitments and Contingencies Disclosure [Abstract] | ||
Loss contingency, estimate of possible loss | $ 0.8 | $ 8.8 |
Segment Reporting - Additional
Segment Reporting - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2023 state agency segment | |
Segment Reporting Information [Line Items] | |
Number of reportable segments | segment | 2 |
Number of states in which entity operates | state | 34 |
Home Health | |
Segment Reporting Information [Line Items] | |
Number of agencies | 253 |
Number of states in which entity operates | state | 34 |
Number of agencies with sole ownership | 242 |
Number of jointly owned home health locations | 11 |
Home Health | Minimum | |
Segment Reporting Information [Line Items] | |
Joint venture, ownership percentage | 50% |
Home Health | Maximum | |
Segment Reporting Information [Line Items] | |
Joint venture, ownership percentage | 81% |
Hospice | |
Segment Reporting Information [Line Items] | |
Number of agencies | 107 |
Number of states in which entity operates | state | 23 |
Number of agencies with sole ownership | 103 |
Number of jointly owned home health locations | 4 |
Hospice | Minimum | |
Segment Reporting Information [Line Items] | |
Joint venture, ownership percentage | 50% |
Hospice | Maximum | |
Segment Reporting Information [Line Items] | |
Joint venture, ownership percentage | 90% |
Segment Reporting - Selected Fi
Segment Reporting - Selected Financial Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Segment Reporting Information [Line Items] | ||
Net service revenue | $ 265.1 | $ 274.3 |
Cost of service, excluding depreciation and amortization | 132.6 | 129.7 |
General and administrative expenses | 110.5 | 100.7 |
Net income attributable to noncontrolling interests | 0.5 | 0.6 |
Home Health | ||
Segment Reporting Information [Line Items] | ||
Net service revenue | 215.8 | 224.9 |
Cost of service, excluding depreciation and amortization | 108.2 | 108 |
General and administrative expenses | 62.9 | 58.7 |
Net income attributable to noncontrolling interests | 0.4 | 0.5 |
Segment Adjusted EBITDA | 44.3 | 57.7 |
Hospice | ||
Segment Reporting Information [Line Items] | ||
Net service revenue | 49.3 | 49.4 |
Cost of service, excluding depreciation and amortization | 24.4 | 21.7 |
General and administrative expenses | 16.3 | 14.9 |
Net income attributable to noncontrolling interests | 0.1 | 0.1 |
Segment Adjusted EBITDA | $ 8.5 | $ 12.7 |
Segment Reporting - Reconciliat
Segment Reporting - Reconciliation (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Non-segment general and administrative expenses | $ (110.5) | $ (100.7) |
Depreciation and amortization | (7.8) | (8.5) |
Interest expense and amortization of debt discounts and fees | (9.5) | 0 |
Net income attributable to noncontrolling interests | 0.5 | 0.6 |
Income before income taxes and noncontrolling interests | 4.7 | 35.4 |
Operating Segments | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Total Segment Adjusted EBITDA | 52.8 | 70.4 |
Segment Reconciling Items | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Non-segment general and administrative expenses | (29.8) | (25.8) |
Depreciation and amortization | (7.8) | (8.5) |
Interest expense and amortization of debt discounts and fees | (9.5) | 0 |
Net income attributable to noncontrolling interests | 0.5 | 0.6 |
Stock-based compensation expense | $ (1.5) | $ (1.3) |
Segment Reporting - Revenue by
Segment Reporting - Revenue by Product Line (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenue from External Customer [Line Items] | ||
Net service revenue | $ 265.1 | $ 274.3 |
Home Health | ||
Revenue from External Customer [Line Items] | ||
Net service revenue | 215.8 | 224.9 |
Hospice | ||
Revenue from External Customer [Line Items] | ||
Net service revenue | 49.3 | 49.4 |
Episodic | Home Health | ||
Revenue from External Customer [Line Items] | ||
Net service revenue | 170.2 | 191.7 |
Non-episodic | Home Health | ||
Revenue from External Customer [Line Items] | ||
Net service revenue | 42.9 | 30.4 |
Other | Home Health | ||
Revenue from External Customer [Line Items] | ||
Net service revenue | $ 2.7 | $ 2.8 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2019 | |
Medalogix, LLC | |||
Related Party Transaction [Line Items] | |||
Payments to acquire investment | $ 2 | ||
Medalogix Analytics Platforms | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Expenses from transactions with related party | $ 1.1 | $ 0.7 | |
General and Administrative Expenses | Overhead allocation | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Expenses from transactions with related party | 3.5 | ||
General and Administrative Expenses | Stock-based compensation | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Expenses from transactions with related party | $ 0.5 |