Enhabit’s Q1 2025 Earnings Call: Key Contradictions on Inflation, Recertification Rates, and Payer Mix

Inflation expectations and salary increases, recertification rates and initiatives, payer mix and hiring initiatives, Medicare Advantage and Fee-for-Service Shifts are the key contradictions discussed in Enhabit's latest 2025Q1 earnings call.



Strong Financial Performance:
- Enhabit Home Health and Hospitals reported consolidated net revenue of $259.9 million in Q1 2025, with a 0.7% sequential increase.
- The growth was driven by strong sequential performance in both home health and hospice segments, with particular strength from hospice momentum.

Home Health Segment Performance:
- The home health segment revenue reached $200.6 million, with a 0.1% increase in revenue and a 1.4% increase in patient day volume.
- Sequential improvement in cost per patient day by 3.1% was achieved through improved clinical staff productivity.

Hospice Segment Growth:
- The hospice segment revenue grew by 2.6% sequentially and 20.5% year-over-year, with average daily census (ADC) increasing to 38.09, up 2.1% sequentially and 12.3% year-over-year.
- The growth was supported by improved conversion rates and timely responses to referral sources.

Balance Sheet Improvement and Debt Reduction:
- The company generated approximately $17 million in free cash flow in Q1, with a leverage ratio improving to 4.4x.
- The balance sheet was strengthened by reducing overall bank debt by $25 million, supported by free cash flow generation and proceeds from the sale of an investment interest.

Organic Growth and Strategic Initiatives:
- The de novo strategy contributed to growth with the opening of one hospice location and 13 projects underway.
- Strategic initiatives, such as transitioning all branches to outsourced coding resources and closing underperforming branches, are expected to deliver significant cost savings.