EHAB - Earnings call transcript Q1 2024

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Operator

Good morning, everyone, and welcome to Enhabit Home Health & Hospice's First Quarter 2024 Earnings Conference Call. [Operator Instructions]. Today's conference is being recorded.

If you have any objections, you may disconnect at this time.

I will now turn the call over to Crissy Carlisle, Enhabits' Chief Financial Officer. floor. the have you Crissy,

Crissy Carlisle

Thank you, joining call Thank for Officer. morning, Barb and call today. good Executive our Chief the President everyone. With Jacobsmeyer, you and operator, me is on

harbor you we the earnings supplemental On with which Page at the quarter information statements, the do Before are supplemental the you if not have will on the page release, X-K a Form last related set the earnings investors.ehab.com. available also X information, forth already find and SEC release. of first copy, filed safe are website begin, our on of

discussed During actual the our we make to results beyond uncertainties to projections, control. SEC XX-K, uncertainties, which and materially estimates are our our report forward-looking website. statements, and call, are our read you on differ expectations and to risks subject are We on will of in annual Certain cause which could many our encourage them. risks are Form including filings from available which that

cautioned We duty are forward-looking and guidance reliance which on presented, information current place not undertake not of based undue these projections, on forward-looking other as today. only of are future and speak estimates to the events update do a estimates, to statements. You

information measures. supplemental include discussion will and financial Our on non-GAAP certain call this

end measures, such supplemental the of information the measure reconciliation and at For to earnings available the GAAP most comparable is the release. directly

over Barb. call turn that, With the to I'll

Barbara Jacobsmeyer

thanks and morning, Good us. Crissy. joining Thanks, for

were $XX.X of first in contracts quarter and quarter resulted year's operational consolidated of home payer and additional G&A in more team's last line of first Our million, expenses frontline better EBITDA to strong continued focus a start with strategies, the the on our our is adjusted results. our and XXXX drivers in result health sustained performance key controlling clinicians,

recognize knowledge that or by No As our they is their impacts do our support role, matter what the clinical our work the stated recent on meaningful. survey, our staff, patients' that lives. driven employee engagement employees they is

we each families. and their our I'm are Enhabits' this Week, During Home hard and mix. of employees' and of Home and our continued with for proud growth on Nurse' increased mission segment, our our with celebration Health one are to achieving peers, traditional stabilization our entire of clinical through every our our Health experiencing Medicare want focused of to in team. of our and now resources. of innovation revenue payer Medicare line stabilization patients work to high-quality outcomes mix of we fee-for-service our With thank of strategy result a nurses utilization Medicare I admissions, In our progress especially dedication are

fee-for-service While experienced a admissions Medicare year-over-year XX.X%, increase of we sequential declined X.X%.

year. that quarter acknowledge continues we our provide are of quarter innovation of shifting historically to X improved the admissions contracts do out teams rates. X, XX% at to Contracts of paying paying our lower declined XXXX XX% in our team emissions this Our total our from Admissions lower contracts, to field a job payer building portfolio historically payers and members. the to payer great in contracts successfully contracts new in care high-quality these

As working. innovation these our strategy show, results payer is

agreement. remain payers disciplined from be focused work with negotiate to continue approach agreements new moving as paying lower we our the to We in away and volumes on

conviction improve to terminate committed agreements value of decision to We holding the make the to we provide, are rates renegotiation when in and our while the firm to necessary. we'll historic contracts

mandate for matters needs patients services and Gapping segments, context demand are acuity Hospice clinician a our both most ensuring increased challenges of to journey. important within complexity in in the our to of Home teams our visits. us focused & intensity effectively what for that and on patient care care the aligns Health Finally, with have of manage their created the

However, of board patients our each to but the to instead receive simply ensure effectively visits plan rightsize is strategy plan. care not reduce a across to just-right care

For mean our on depending some, and unique equally patients visits Overutilization are harmful presentation. business. to others this more underutilization for their it and fewer may needs our

Additionally, some and is who and benefits care. from agencies virtual and beginning our for efficient patients our benefit which of patients tech-enabled can encounters, understand the are to convenient enjoy

explore well manner strategic in service as how as We the a we continue to patients lines families benefit implementing serve. both care can and virtual

for scope for the strategy team improve capacity, XXXX in expand an to our Health Enhabit plan visit Medalogix Pulse at patient supports patients the for in manner way and efficient efficiency, effort predictive to supports patient care experience. our outcomes. more a and families deliver Medalogix compromising ability our bolsters and of Home without analytics to better strategy We outcomes optimization to in care Leveraging virtual patient needs our team. Hospice a

terms us us apart in of life strategic gain the and growing allow establishing leverage against with position staffing outcomes, case is and to what In will with which model. Hospice patient is sets the our competitive fixed referral negotiating when management the associated segment, Our rates priority structure end operating of relationships. visits census, including our payers hospitalization at cost

Our sales our we above reports sources. strengthen referral loyalty last relationships head count count are from on year's loss focused utilizing with now is and to data

added business. costs. strategy. to strategy talent development acquisition grow continue members we our to additional recruit through team market we our novo de a team both complement to is allows locations which strategically the to in us business are XXXX. work people organic quartile reinvest saw growth our in of for key employee critical novo and in health de novo working to were our novos We engagement addition, recent segments, growth organic with in Promoter In To is This low A de new the and pleased companies. more to to X enter with We continue a survey, capital growth the open quarter XX top our de Score strategy. care our underway the Net Hospice first with

our efforts. retention with seeing recruitment and continued We are success

full-time year-over-year our full-time XXX quarter, increased pool of XX% first new the resulted candidate nursing the and in addition During nurses. net

quarter's discuss over the will Crissy I now results. it turn to to

Crissy Carlisle

$XXX.X million Consolidated net $X.X for X% year-over-year. Barb. or revenue Thanks, quarter first million down the was

to payer shift of Our $XX.X million admissions strategy both first mix and of of XXXX the lessened to impact in EBITDA quarter contributing XXXX. consolidated the innovation increase adjusted sustained and contracts

report our changed payer separating volume Before segment, January impact and I we and to we payers. to I episodic change results move from quarter. X, current the advanced segment, all first our With an Health into the Medicare XXXX, contract want Home Home period financial presentation conform no how the we of mention traditional updated consolidated the added The other effective Health metrics reporting our innovation pricing model on the had periods have were made to to for statements. prior in

experienced at of lessening driving same-store Home non-Medicare and we Medicare segment, XX.X%, results. admissions of strongest mix our XX% basis. grew of stabilization success spin-off payer X% shift admissions. Medicare our is contracts post Advantage. now This proof growth the admissions In visits payer rates. innovation same-store X.X%, our that of innovation financial strong in is will experienced in This are Medicare Health improved impact growth we've discussed, a with non-Medicare growth Year-over-year, to Barb drive growth positive admissions Advantage as total the and on

is non-Medicare reduced of a on the mix approximately of million EBITDA admissions revenue improvement. $X net $X million and During million That adjusted non-Medicare quarter by approximately impact in shift, from first to shift $X $X of basis. the offset negative more comprised XXXX, the pricing million approximately

increases. X.X% and shift structure primarily quarter the to implemented million and EBITDA decreased expenses year-over-year, of due X.X% $X.X in Health the new to by mix expenses. administrative visit our organizational offset and were administrative a primarily to $X.X service operations as merit and in million per or Home general increased and reduction market rate or XXXX align year-over-year Cost cost due General of team. adjusted sales year-over-year, increased X.X% a decreased first

In the our increase Admissions admissions first revenue persisted decreased expenses each of April. reimbursement in of quarter daily average days. the were sequential into grew expenses by Hospice a X.X% in X.X% and year-over-year, $X.X X.X% while decreased year-over-year. decrease Medicare We patient fourth X.X% expenses offset XXXX decreased Hospice quarter daily million decline Sequentially, of rates saw fourth in that increased XXXX. the followed of over month daily sequential year-over-year throughout or segment, a XXXX quarter a average average by

segment continue per to daily balance general service average to our team we to and expenses to million development primarily that approximate remainder due a X.X% $X.X of million As up in or the expenses. increased we quarter. ramp continued portfolio, Cost of Adjusted $XX administrative business decrease in and our EBITDA expect throughout the year. year-over-year grow referral

the implementation medical and arrangement we resulted contract able labor. the the associated our were the quarter relatively staffing we elimination In earnings increased flat we that costs from management as the the have offset equipment anniversaried to able during we terms keep with now durable of fourth discussed new savings dollars, call with model, case were to costs as of of

staffing volumes expect the case of and operating expenses quarter staff due XXXX. of need to a the year-over-year third restructuring General in of without resulting against increase management declined back-office patient additional associated continue hire our to costs model. the administrative with number leverage Hospice to We the to staffing in significant fixed primarily

fully million the consolidated year-over-year end the general services Hospice of decreased quarter, Home we Encompass Our of By transitioned off the expenses $X.X first and transition Health agreement. administrative to revenue. XX.X%

our first leverage our less of transition than X.Xx, Let's sheet. We now leverage ended of year-end X.XXx well with X.Xx. the ratio a covenant quarter XXXX maximum of to balance within and the

from including during our approximately of $XX of novo generated quarter cash a to This is million, flow We rate quarter. flow liquidity cash approximately including rate approximately in We XX%. XXXX, strategy. includes de of the our adequate available timing cash have free We positive believe conversion the free of impact the support to first which $XX of of payroll hand. million the $XX this approximately million conversion operations, equates on

the our of confident adjusted XXXX. consolidated range in $X,XXX to for and Let's $XXX guidance. a EBITDA to million. in first with feel million million remain to $X,XXX XXXX range that maintain guidance for $XX turn for service our outlook about good million includes quarter We our of revenue net now results a We

generate to flow We million expect $XX to continue XXXX. -- we $XX million free of continue cash to in generate to

to turn I'll back Barb. that, With it

Barbara Jacobsmeyer

process, range as separate relates the Q&A, for serious with lines external process. parties of the it the evaluation a review was interest yesterday the financial process of a our open strategic press concluded. in advisers, alternatives release, to engagement strategic after announced our support There as on legal has of we based Before alternatives strategic and in full

and health the formal among to macro alternatives business. operating rates. developments did and health a the industry uncertain due persistently an determined at this Board largely landscape, the time our other review Medicare enhance strategic company the reimbursement and policies during this operate stand-alone including, to for not value to reviewed continue care with throughout proposals regulatory any the best is environment headwinds, shareholder is things, difficult way However, care receive believe advisers a We transaction. interest other and high Considering anti-trust to this as evolving process, including the

to want results, or The Board to strategic management any any taking The results. remain we to remind I and discuss the our Board is other topic. be our call to purpose focused today's the operational operating open core operating on businesses not value. and and review consider our everyone regarding to financial questions enhance will be team will all and shareholder opportunities continue that and financial and of

Operator, be for open the questions. lines now ready we're to for

Operator

Our [Operator UBS. at Rice question A.J. first comes from Instructions]

Albert Rice

obviously, assuming on running guided Maybe the at you've be what and and increases increase, per I'm benefits to your X% running to a for, cost at you underlying X% least visit X%. wages salary seem that. to X% are

time? labor those the business you driving like running. were how I per there. some It on might offsetting right visits X/XX opportunity And episode got trends you've you comment just the if day. on down where roughly But look What's have at episode of dynamics? cost more about peers down that they're much the would over indeed, I'm think can a more maybe room per slightly looking

Crissy Carlisle

Yes.

I'll So A.J. of visit piece. per the the then per maybe Barb can take questions, some cost address and visit episode

I productivity you're of significant right, and to the number was and managing and teams visit, long optimizing around I thing year. per visit doing you hear XXXX contracts X% per is a considerations merit labor, so. end cost and then again, then cost one the market and the having increases the contracts guidance great elimination or just a for of the are XX-week eliminated the are contract the job didn't the our yes, later, mention of And the But benefit by all those staff. part that On that think

Barbara Jacobsmeyer

today you had the the end long that we time we say piloted episode, And quarter with are that branches. by -- branches. right of would when to also we remember, branches were We intensity needs those go if per the rolling at were when patients. visits similar where using in within for we spending and the a then from of where rollout on look it completed leaders third rollout for our the are all we XX utilization we And to we XX then recommendations, the time the intensity now are where means sure with dashboard make to to higher that lower again, is to the visit out piloting

we to managing per when piloted we episode, where that in relates those know is have business So still we this XX opportunity branches. as were it we

Albert Rice

on a obviously that's high Maybe MA higher which which segment this Home episodic, lower margins, non-Medicare your they fairly then to your has resegmentation margins. going to is may Health of follow-up provision have margin and Okay. include segment, or

X on gross is different do the trend? forward? quite So of that items segment the we gross that margin going how about are profile, how to think X -- And likely it business margin

Crissy Carlisle

Yes.

think believe that about one, it's what reporting, think comparable there. I Medicare us non-Medicare we when So and more we seeing so historically from more you're should peer-like -- to make you're

have includes non-Medicare information to you enough have you my while still to now. within really still you perspective. prevent number run that can this also success non-Medicare from here's our to total -- that visit rate why And to a last what's time You the to And can see revenue, visits. get it here's we've per episodic, disclosures need close a see made on information to we -- the year happening basis you rate that from with get

bit I these X that model think traditional given to there. sets, it's that So easier way all and to not trying a got it, non-Medicare. you're It's little preventing different X you've the probably model we're just as Medicare

Operator

Our next with question Rice A.J. UBS. the from line comes of

Barbara Jacobsmeyer

operator. A.J. was just on

Operator

I'm Citi. comes of Jason Cassorla sorry The with that. line from call the about next

Jason Cassorla

visits unpack innovation guess, us by the would get grew I revenue on innovation legacy. visit innovation A.J. a guess, the follow-up on versus of significantly help that mean, kind of of reimbursed the specifically side year-over-year. almost a the in just visits, revenue Payer Maybe pieces per as sense Great. just was the were help can bit $XXX,XXX. down moving up, non-Medicare on a you payer payer the I pricing can quarter you non-Medicare around visits weren't I It X% those per visit? nonpayer innovation higher visits because imply $XXX,XXX

to per payer Just innovation non-Medicare -- the around any on the revenue the help the be and visit would great color inside start.

Crissy Carlisle

agreements. details be Yes. very these have Jason, around from to the that us those discussing the one we careful prohibit agreements national is of things of

large that's that And get episodic the advanced that model, other to so for not an if good too be we national details, into far party. given have is we the agreement going one

reason, to of made that's have with we we XX% pricing, to of to and XX% historically And XX% and to historic you have is still that had payer team. make the of that better Medicare that very the discounts So we that than far part the again, discounts be innovation non-Medicare. seen in episodic the we've careful statements to and I whole, we're before our kind that. that X% decision we tell a as can around did discount, go XX% the

Jason Cassorla

-- just Medicare the follow-up Maybe episode there's just a here, on enough. declines. on the Fair Okay.

would Should of contract be this lack with momentum gating this past was the there episode Is update that line national seeing factor updates in out that maybe year? helpful. that referral a I Medicare I your contracting start trends with the began in point? increased any sources. declines You've already more Just of mean, market we what's MA at coming the guess discussed there? there

Barbara Jacobsmeyer

Sure.

We we helped point, But X, Medicare national we shown on think So just stabilization that the of has us payer new have contracts when quarter that those admissions. kind X, at look quarter we your do with the started up MA. gearing that. more of quarter X, the of being to

do will as help helped seen referral I be us think be us a seen that So provider to has continue our to and stronger sources.

So to the receive our payer goal referral to continue a healthy sources. is very mix from

Operator

Brian comes the next Our Tanquilut of question line from Jefferies. with

Jack Slevin

think the But for the taking don't think a appreciate as you details on I out review the change the step still are coming and color Brian. all you want on the just there. dig about back sort you're Slevin what of to going maybe Jack into forward, towards and strategic the It's of drive Or do of any to there? pillars priorities review, there's same? trying

Barbara Jacobsmeyer

are I are are warehouse going focused we do think we there from off transition I own have the data Encompass. We the same. that still standpoint. as to our do pillars on think that now completely innovation an be some of things

now think our our that's to I tools. So allow us build intelligence have own going to data business to

be there look help some us our like So we some team tools workflow will help and at on in as that focus using to field. to the things intake, other of

Jack Slevin

Got it.

really about to what the And quarter. just that cash sheet thinking thinking looks multiyear Can how speak balance about maybe of then, the look? the helpful. on the and sort sort pretty generation pathway Crissy, to you Okay. delever solid That's just is in of you're

Crissy Carlisle

sure. Yes,

of EBITDA to continue So in to delever to the expected the us amortization XXXX. help and stabilization required are of term loan

One that factors to stabilized. that was QX, from biggest in QX deleveraging of EBITDA the fact the

generates to expense, flow, in results the turn allows free cash cash lower required flow. beyond amortization more you which free make strong us mentioned, We also payments interest continue as have which in to that

have a and on getting drawn stacked into cycle believe that payment quarter in related the has of revolver from want million now acquisitions XXXX once over I everyone good tax remind we stabilized. we of of ourselves We had that on deferred fund operations EBITDA to when we to without drawing we're $XX So that revolver. fourth the payroll COVID. only

like headed. So where we we're

that flow one EBITDA That's can I then free the have XX% historically range. think target think be a of de $X for priority, it we course, $X for rest to if and about cash think about the cash use to the how consider And would million cash you debt you have is flow reduction. of We then guidance to way delever. flow million or the free you conversion, novo.

Operator

comes the line Gajuk Our Bank next question Joanna with America. from of of

Joanna Gajuk

So I guess follow-up internal? guidance. your versus The kept quarter how your the So You you guidance, is the right? pretty said here on wide. was your range

your update any high and view low the on of end range? the variability So between around the the

Crissy Carlisle

say there's would this I no real that Joanna. at update point,

much we've national The sense we're be innovation payer better a growth. resource to revenue the total the As the range to think patient days agreements previously, help year those key as we mentioned and the in better percent that shift a assumptions rates and that Medicare contracts continue a better referral those with in of Health Home have starting just sources. can be then X to us Hospice

QX QX have cadence, and to referral impacted comments. They pay covered when QX tend and In they in I off as our to a tend or are sources. eye bit our all of because vacation, well need do volume, follow patients by And of staff symptoms the on quarters that's and we our be sickest. little and flu-related regards care. our time as the our in both such think strongest QX to to be regards those the

CEO based had position And change, consecutive this at of several we've we through again, least we've reporting the retention over recruitment to XXX year hires nursing now. we're our quarters the portion and in staff off our with that that, been for new of manage net better success think clinical a

trend the our throughout EBITDA and forward, that build to about we going change that And so a will again, ability have year. good feel moderate

Joanna Gajuk

plans And or new, Great. I guess, a or follow-up, around the also your contracts. may, innovation if but I maybe

per that's So existing when I to when but rates, I like you negotiate negotiate guess is because new where also, your happening, maybe for separate these sounds that of from guess, improve some it you some the for visit contracts. contracts, of rates these try contracts you to there's

you relief So I too? if first case And these was these at as utilization essentially to trying getting rate a I somebody the to if kind is do get you then is all? you of to management the then pricing increases of, low-paying And plans. much business do, that, And question when are in the guess of like are ask improving trying that also all, are MA a number by increasing contracts? that like, what guess, you trying authorized on you on do how that, the

Barbara Jacobsmeyer

Sure.

say negotiate focus So that, mentioned, to contracts. new there we as on I renegotiation. But on we a continue work yes, is and would also

new the that for innovation contracts are up So yet. none those we the renegotiation of brought since payer into XXXX,

many is a over renegotiation When and focused regional our acquisitions smaller which renegotiation. those of more large plan So for go we in plans, time. through really the one came national around of of

walk to XX% a is It the approach for will prioritize can. of or we're So are will it work not one contract our members to that as sticking new to more we that on getting we it do tell with you then to per I agreement, plans, the and business team we accept. is if to episodic where XX% visit that easier is is need -- not, doing things say many we than no away. if rate. that better to place have in an though not we are And than trying times just we development to now in our we

we're So now. where at that's

legacy built the can a good with ones. we've little the contract, firm more that be we up Now bit

Operator

Cowen. comes question Ryan Langston line from of TD next Our with the

Ryan Langston

therapists types good. Barb, think Sounds which of I how the or any like pool I think, you guess, like nursing support the is, candidate might is XX%, other have like? about of to clinical and up said

Barbara Jacobsmeyer

therapy built we to more really working I a are do area. recruit your don't to some we recruitment rural some more difficult add is therapy more markets therapy of and back a out from be did lot the we We nursing where frontline retention. key would pools to markets into have to well that it need that Overall, the physicians. There tends say now grow. of around Sure. of are therapy have

So those encourage do areas we are focus candidate therapy there's see the on other at that we a on that to get can ones pool. look when it from ways we But to if the retention. we and well national recruitment level,

Ryan Langston

the the any Great. had just out? there I said like timing in some impact quick, from into disruption it real there It million fourth I a was AR impacts, to little quarter, Was a And or -- $XX anything else change little looks about up just getting think sequentially. change trouble bit. you but the call. looked up Crissy, call

Crissy Carlisle

Yes.

some While change payers our do. directly don't is them, and we house, not use our of primary clearing

the Health where a days have about of resulted as result Change payment XX did of delays we so incident. a period And

are those usual. as getting as quickly We payments just not

And some them of in set copy as hard the well. some methods versus are automated via coming of

in with just, The does have take other and grow, administrative underway quarters. to our the things an expect on and with revenue longer Medicare do cycle just team Medicare continues it. strategy we to There's and But build coming increase collect. again, that we're that some burden associated as Advantage seeing some is movement see to Advantage

Operator

Carlisle closing turn some I over to for remarks. call the now will back Crissy

Crissy Carlisle

Thank questions, you again for investorrelations@ehab.com. joining If please additional e-mail today's have you call.

Operator

This today's concludes call. conference

a Have disconnect. good day. now may You

Enhabit (EHAB) 9 May 242024 Q1 Earnings call transcript