Enhabit 2025 Q1 Earnings Surges with 1944.4% Net Income Growth

Enhabit (EHAB) reported its fiscal 2025 Q1 earnings on May 07, 2025. Enhabit surpassed earnings expectations with an EPS of $0.10, adjusted for non-recurring items, while analysts anticipated $0.07, resulting in a 42.86% surprise. The company maintained its full-year guidance, projecting net service revenue between $1.05 billion and $1.08 billion, adjusted EBITDA from $101 million to $107 million, and adjusted EPS ranging from $0.41 to $0.51, in line with previous forecasts. This reflects Enhabit's confidence in its strategic execution and financial performance.

Revenue
Enhabit reported a total revenue of $259.90 million for Q1 2025, reflecting a 1.0% decrease compared to $262.40 million in Q1 2024. The home health segment contributed $200.60 million, while the hospice segment generated $59.30 million, maintaining the total net service revenue at $259.90 million.

Earnings/Net Income
Enhabit's EPS increased significantly by 3400.0% to $0.35 in 2025 Q1 from $0.01 in 2024 Q1, reflecting strong earnings growth. The company's net income also rose by 1944.4% to $18.40 million from $900,000 a year ago, showcasing a robust financial performance.

Price Action
The stock price of Enhabit gained 0.86% on the latest trading day, improved by 2.63% over the week, and increased 0.61% month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing Enhabit shares after a quarter with declining revenue and holding them for 30 days proved ineffective, as it underperformed compared to simply holding the stock. This was evident from backtest results spanning from December 31, 2021, to March 24, 2024. The analysis highlights the difficulty in predicting short-term stock price movements based solely on revenue declines, emphasizing the need to consider other factors affecting stock performance.

CEO Commentary
"Enhabit's first quarter 2025 results are a product of steadfast execution of our strategies," said Barb Jacobsmeyer, President and CEO of Enhabit. Home health census grew 3.7% sequentially, while hospice census witnessed a robust 12.3% year-over-year increase. The combination of strong growth, improved profitability, and enhanced balance sheet health has driven the leverage ratio below 4.5 times. This achievement allows Enhabit to exit the covenant relief period restrictions in its credit agreement, resulting in better pricing on debt and increased operational flexibility.

Guidance
The Company reaffirmed its full-year 2025 guidance, projecting net service revenue between $1,050 million and $1,080 million, adjusted EBITDA of $101 million to $107 million, and adjusted earnings per share ranging from $0.41 to $0.51.

Additional News
Enhabit recently expanded its operational footprint by opening a new hospice de novo branch, further solidifying its presence in the hospice sector. This strategic move aligns with Enhabit's growth strategy, enhancing its ability to deliver comprehensive home health and hospice care services across its extensive network. Additionally, the company has successfully reduced its bank debt by $25 million in the first quarter, contributing to a total year-over-year reduction of $60 million. This financial maneuver strengthens Enhabit's balance sheet and provides greater flexibility for future investments and operational improvements, reinforcing its commitment to sustainable growth and financial health.