EX-99.1 2 correctedq42022enhabitearn.htm EX-99.1 Document
Exhibit 99.1

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CORRECTION—Enhabit, Inc.

DALLAS, Texas, April 14, 2023 —This press release corrects a prior version published on February 14, 2023 and is updated to revise the Company’s previously disclosed financial results for the period ended December 31, 2022. The corrected release reads:

Enhabit Reports Fourth Quarter Results and Issues Full-Year 2023 Guidance
Company to host a conference call tomorrow, Feb. 15, 2023 at 10 AM EST
DALLAS, TX – Feb. 14, 2022 – Enhabit, Inc. (NYSE: EHAB), a leading home health and hospice care provider, today reported its results of operations for the fourth quarter ended December 31, 2022.
“Significant changes were required in 2022 to lead important strategies for our future success,” said Enhabit’s President and Chief Executive Officer, Barb Jacobsmeyer. “The expansion of our human resource and talent acquisitions teams, the establishment of our payor innovation team, and strategic changes to management and our staffing model in hospice are all making notable progress. We have also taken steps to align our operational and sales teams into a regional structure to drive success clinically and operationally at a local level. While we face numerous headwinds in 2023, we remain confident in the long-term prospects for Enhabit.”

SUMMARY PERFORMANCE - CONSOLIDATED
Net service revenue of $263.2 million, declined 4.7% from Q4’21
Net loss of $(94.7) million, declined 417.8% from Q4’21
Adjusted EBITDA of $30.3 million, down 38.2% from Q4’21
Loss per diluted share of $(1.91)
Adjusted earnings per diluted share of $0.17
RECENT COMPANY HIGHLIGHTS
Home health continues to have strong growth in Medicare Advantage with nine new negotiated agreements added during the fourth quarter.

Strategic changes in hospice continue to provide positive momentum with average daily census growing sequentially during the fourth quarter.

Nursing labor showing signs of improvement with a 19% year-over-year increase in our full-time nursing applicant pool.

Completed three acquisitions and opened one home health de novo location in the fourth quarter, adding five hospice locations and two home health locations to our portfolio.

1


FINANCIAL RESULTS
Consolidated
Q4 '22 vs. '21
($ in millions, except per share data)20222021
Home health net service revenue$215.8$224.0(3.7)%
Hospice net service revenue47.452.1(9.0)%
Total net service revenue$263.2$276.1(4.7)%
% of Revenue% of Revenue
Cost of services50.6%$(133.3)46.5%$(128.5)3.7%
Gross margin49.4%$129.953.5%$147.6(12.0)%
Impairment of goodwill(41.4)%$(109.0)—%$—%
Administrative & general expenses38.0%(100.0)35.6%(98.2)1.8%
Operating expenses130.1%$(342.3)82.1%$(226.7)51.0%
Equity earnings / noncontrolling interests0.50.4
Adjusted EBITDA$30.3$49.0(38.2)%
Adjusted EBITDA margin11.5%17.7%
Adjusted EPS$0.17$0.59(71.2)%
Adjustments to accounts receivable reserves, the continued shift to more non-episodic patients in home health and the resumption of sequestration combined to decrease consolidated revenue. The impact of these items were offset by an approximate $5 million audit recovery related to a prior year home health medical claims review and an increase in hospice Medicare reimbursements rates effective October 1, 2022.

Adjusted EBITDA decreased primarily due to the revenue items discussed above, higher cost of services and incremental costs associated with being a stand-alone company. Cost of services were higher due to increased labor costs and costs associated with fleet and mileage reimbursement. Increased labor costs primarily resulted from a $4.3 million increase in employee group medical claims year over year.
2


SEGMENT RESULTS
Home health
Q4 '22 vs. '21
($ in millions)20222021
Net service revenue$215.8$224.0(3.7)%
Cost of services109.0106.42.4%
Gross margin49.5%52.5%
Adjusted EBITDA$47.2$59.6(20.8)%
% Adj. EBITDA margin21.9%26.6%
Operational metrics (Actual Amounts)
Starts of care
Episodic admissions34,57237,908(8.8)%
Non-episodic admissions15,47612,90919.9%
Total admissions50,04850,817(1.5)%
Same-store total admissions growth(3.1)%
Episodic recertifications25,27927,273(7.3)%
Non-episodic recertifications7,1045,34832.8%
Total recertifications32,38332,621(0.7)%
Same-store total recertifications growth(1.3)%
Total starts of care82,43183,438(1.2)%
Completed episodes60,25064,242(6.2)%
Revenue per episode$2,958$3,010(1.7)%
Visits per episode14.315.1(5.3)%
Total visits1,159,4201,219,906(5.0)%
Non-episodic visits297,350246,77720.5%
Cost per visit$92$867.0%
Total admissions decreased primarily due to a reduction in episodic admissions partially offset by continued growth in non-episodic admissions. Revenue per episode decreased year over year primarily due to the resumption of sequestration, timing of completed episodes, and adjustments to accounts receivable reserves partially offset by an increase in Medicare reimbursement rates and an approximate $5 million audit recovery related to a prior year medical claims review.

Adjusted EBITDA decreased year over year primarily due to lower revenue and higher cost of services associated with labor and increased costs associated with fleet and mileage reimbursement. Increased labor costs primarily resulted from a $2.8 million increase in employee group medical claims.
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Hospice
Q4 '22 vs. '21
($ in millions)20222021
Net service revenue$47.4$52.1(9.0)%
Cost of services24.322.110.0%
Gross margin48.7%57.6%
Adjusted EBITDA$5.6$15.2(63.2)%
% Adj. EBITDA margin11.8%29.2%
Operational metrics (Actual Amounts)
Total admissions2,9153,223(9.6)%
Same-store total admissions growth(13.5)%
Patient days330,102334,011(1.2)%
Discharged average length of stay1101063.8%
Average daily census3,5883,631(1.2)%
Revenue per day$144$156(7.7)%
Cost per day$74$6612.1%
Revenue per day decreased 7.7% year over year primarily due to adjustments to accounts receivable reserves and the resumption of sequestration partially offset by an increase in Medicare reimbursement rates. Average daily census increased sequentially from the third quarter of 2022 primarily due to improvements in staffing capacity.

Adjusted EBITDA decreased year over year primarily due to increased labor costs and costs associated with fleet and mileage reimbursement. Increased labor costs primarily resulted from lower clinical productivity associated with nurses in orientation, increased use of contract labor, and a $0.5 million increase in employee group medical claims.

4


GUIDANCE
The Company is providing full-year 2023 guidance as follows:
Full-year 2023Guidance
Net Service Revenuebetween $1,110 and $1,140 million
Adjusted EBITDAbetween $125 and $140 million
Adjusted EPSbetween $0.50 and $0.89
For additional considerations regarding the Company’s 2023 guidance ranges, see the supplemental information provided in the quarterly earnings slide deck posted on the Company’s website at http://investors.ehab.com. See also “Other Information” below for an explanation of why the Company does not provide guidance for comparable GAAP measures for Adjusted EBITDA and adjusted EPS.
CONFERENCE CALL INFORMATION
The Company will host an investor conference call at 10 AM Eastern Time on Feb. 15, 2023 to discuss its results for the fourth quarter of 2022. To access the live call by phone, dial toll-free (888) 660-6150 or international (929) 203-0843; the conference ID is 5248158. A simultaneous webcast of the call, along with supplemental information, may be accessed by visiting http://investors.ehab.com. Following the call, a replay will be available at the same location.
ABOUT ENHABIT HOME HEALTH & HOSPICE
Enhabit Home Health & Hospice is a leading national home health and hospice provider working to expand what’s possible for patient care in the home. Enhabit’s team of clinicians supports patients and their families where they are most comfortable, with a nationwide footprint spanning 252 home health locations and 105 hospice locations across 34 states. Enhabit leverages advanced technology and compassionate teams to deliver extraordinary patient care. For more information, visit ehab.com.
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OTHER INFORMATION
Note regarding presentation of non-GAAP financial measures
The financial data contained in the press release and supplemental information includes non-GAAP financial measures as defined in Regulation G under the Securities Exchange Act of 1934, including Adjusted EBITDA, Adjusted EBITDA margin, leverage ratios, adjusted EPS, and adjusted free cash flow. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP are presented on the attached schedules.

However, in reliance on the exception provided by Item 10(e)(1)(i)(B) of Regulation S-K, reconciliation of its guidance of Adjusted EBITDA and adjusted EPS to their corresponding GAAP measures is not provided because the Company is unable to provide such reconciliation, without unreasonable effort, due to the inherent difficulty in predicting, with reasonable certainty, the future impact of items that are outside the control of the Company or otherwise non-indicative of its ongoing operating performance. Such items include, but are not limited to, gains or losses related to hedging instruments; loss on early extinguishment of debt; adjustments to its income tax provision (such as valuation allowance adjustments and settlements of income tax claims); and items related to corporate and facility restructurings. For the same reasons, the Company is unable to address the probable significance of the unavailable information.

Note regarding presentation of same-store comparisons
The Company uses “same-store” comparisons to explain the changes in certain performance metrics and line items within its financial statements. Same-store comparisons are calculated based on home health and hospice locations open throughout both the full current period and the immediately prior period presented. These comparisons include the financial results of market consolidation transactions in existing markets, as it is difficult to determine, with precision, the incremental impact of these transactions on the Company’s results of operations.
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Enhabit, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended December 31,For the Year Ended December 31,
2022202120222021
(In Millions, Except Per Share Data)
Net service revenue$263.2 $276.1 $1,071.1 $1,106.6 
Cost of service (excluding depreciation and amortization)133.3 128.5 525.6 513.9 
Gross margin129.9 147.6 545.5 592.7 
General and administrative expenses104.6 103.1 414.9 412.9 
Depreciation and amortization8.3 9.0 33.0 36.9 
Impairment of goodwill109.0 — 109.0 — 
Operating (loss) income(92.0)35.5 (11.4)142.9 
Interest expense and amortization of debt discounts and fees8.7 0.1 15.0 0.3 
Equity in net income of nonconsolidated affiliates (0.1) (0.6)
Other income(0.9)(3.2)(0.9)(4.8)
(Loss) income before income taxes and noncontrolling interests(99.8)38.7 (25.5)148.0 
Income tax (benefit) expense(5.1)8.9 12.8 35.1 
Net (loss) income(94.7)29.8 (38.3)112.9 
Less: Net income attributable to noncontrolling interests0.5 0.5 2.1 1.8 
Net (loss) income attributable to Enhabit, Inc.$(95.2)$29.3 $(40.4)$111.1 
Weighted average common shares outstanding:
Basic49.7 49.6 49.7 49.6 
Diluted49.8 49.6 49.7 49.6 
(Loss) earnings per common share:
Basic (loss) earnings per share attributable to Enhabit, Inc. common stockholders$(1.92)$0.59 $(0.81)$2.24 
Diluted (loss) earnings per share attributable to Enhabit, Inc. common stockholders$(1.91)$0.59 $(0.81)$2.24 
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Enhabit, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
December 31,
2022
December 31,
2021
(In Millions)
Assets
Current assets:
Cash and cash equivalents$22.9 $5.4 
Restricted cash4.3 2.6 
Accounts receivable149.6 164.5 
Income tax receivable11.4 — 
Prepaid expenses and other current assets23.6 6.3 
Total current assets211.8 178.8 
Property and equipment, net20.4 20.4 
Operating lease right-of-use assets42.0 48.4 
Goodwill1,144.8 1,189.0 
Intangible assets, net102.6 259.1 
Other long-term assets5.2 24.3 
Total assets$1,526.8 $1,720.0 
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt$23.1 $5.0 
Current operating lease liabilities14.0 14.9 
Accounts payable3.8 3.5 
Accrued payroll35.5 66.4 
Refunds due patients and other third-party payors8.3 9.4 
Income tax payable 4.2 
Accrued medical insurance7.5 8.3 
Other current liabilities40.7 24.8 
Total current liabilities132.9 136.5 
Long-term debt, net of current portion560.0 3.5 
Long-term operating lease liabilities28.1 33.5 
Deferred income tax liabilities28.6 63.2 
Other long-term liabilities1.9 — 
751.5 236.7 
Commitments and contingencies
Redeemable noncontrolling interests5.2 5.0 
Stockholders’ equity:
Enhabit, Inc. stockholders’ equity:741.7 1,470.0 
Noncontrolling interests28.4 8.3 
Total stockholders’ equity770.1 1,478.3 
Total liabilities and stockholders’ equity$1,526.8 $1,720.0 
8

Enhabit, Inc. and Subsidiaries
Condensed Consolidated Cash Flows
(Unaudited)
For the Year Ended December 31,
20222021
(In Millions)
Cash flows from operating activities:
Net (loss) income$(38.3)$112.9 
Adjustments to reconcile net income to net cash provided by operating activities—
Depreciation and amortization33.0 36.9 
Amortization of debt related costs0.6 — 
Impairment of goodwill109.0 — 
Equity in net income of nonconsolidated affiliates (0.6)
Distributions from nonconsolidated affiliates 0.3 
Stock-based compensation9.2 3.6 
Deferred tax expense(4.3)8.6 
Other, net0.1 (5.6)
Changes in assets and liabilities, net of acquisitions—
Accounts receivable21.6 (24.8)
Prepaid expenses and other assets(27.5)(0.1)
Accounts payable0.2 (0.7)
Accrued payroll(31.0)(7.7)
Other liabilities7.5 0.5 
Net cash provided by operating activities80.1 123.3 
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired(36.3)(117.5)
Purchases of property and equipment(7.1)(4.3)
Other, net1.1 2.6 
Net cash used in investing activities(42.3)(119.2)
Cash flows from financing activities:
Principal borrowings on term loan400.0 — 
Principal payments on debt(10.0)— 
Borrowings on revolving credit facility190.0 — 
Principal payments under finance lease obligations(5.0)(7.2)
Debt issuance costs(4.7)— 
Contributions from Encompass59.8 126.4 
Distributions to Encompass(654.9)(154.1)
Contributions from noncontrolling interests of consolidated affiliates7.4 — 
Other(1.2)(1.2)
Net cash used in financing activities(18.6)(36.1)
Increase (decrease) in cash, cash equivalents, and restricted cash19.2 (32.0)
Cash, cash equivalents, and restricted cash at beginning of year8.0 40.0 
Cash, cash equivalents, and restricted cash at end of year$27.2 $8.0 
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Enhabit, Inc. and Subsidiaries
Supplemental Information
Adjusted Earnings Per Share
Q4Full Year
2022202120222021
Earnings per share, as reported$(1.91)$0.59 $(0.81)$2.24 
Adjustments, net of tax:
Transaction costs and gain on consolidation0.05 — 0.14 0.13 
Income tax adjustments0.12 — 0.12 (0.01)
Impairment of goodwill1.91 — 1.91 — 
Adjusted earnings per share*$0.17 $0.59 $1.36 $2.36 
*    Adjusted EPS may not sum due to rounding.
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Enhabit, Inc. and Subsidiaries
Supplemental Information
Adjusted Earnings Per Share
Q4 QTD
2022
Adjustments
As ReportedImpairment of GoodwillTransaction CostsIncome Tax AdjustmentsAs Adjusted
(In Millions, Except Per Share Amounts)
Adjusted EBITDA*$30.3 $ $ $ $30.3 
Depreciation and amortization(8.3)— — — (8.3)
Interest expense and amortization of debt discounts and fees(8.7)— — — (8.7)
Impairment of goodwill(109.0)109.0 — — — 
Stock-based compensation(2.1)— — — (2.1)
Transaction costs(2.5)— 2.5 — — 
Income before income tax expense(100.3)109.0 2.5 — 11.2 
Provision for income tax expense5.1 (0.6)6.2 (3.0)
Net (loss) income attributable to Enhabit$(95.2)$95.3 $1.9 $6.2 $8.2 
Diluted earnings per share**$(1.91)$1.91 $0.05 $0.12 $0.17 
Diluted shares used in calculation49.8 
*    Reconciliation to GAAP provided on page 15
**    Diluted EPS may not sum due to rounding
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Enhabit, Inc. and Subsidiaries
Supplemental Information
Adjusted Earnings Per Share
Q4 QTD
2021
Adjustments
As ReportedTransaction Costs and Gain on ConsolidationAs Adjusted
(In Millions, Except Per Share Amounts)
Adjusted EBITDA*$49.0 $ $49.0 
Depreciation and amortization(9.0)— (9.0)
Interest expense and amortization of debt discounts and fees(0.1)— (0.1)
Gain on disposal of assets0.4 — 0.4 
Stock-based compensation(1.5)— (1.5)
Stock-based compensation included in overhead allocation(0.8)— (0.8)
Transaction costs(3.0)3.0 — 
Gain on consolidation of joint venture formerly accounted for under
   the equity method of accounting
3.2 (3.2)— 
Income before income tax expense38.2 (0.2)38.0 
Provision for income tax expense(8.9)— (8.9)
Net income attributable to Enhabit$29.3 $(0.2)$29.1 
Diluted earnings per share**$0.59 $ $0.59 
Diluted shares used in calculation49.6 
*    Reconciliation to GAAP provided on page 15
**    Diluted EPS may not sum due to rounding
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Enhabit, Inc. and Subsidiaries
Supplemental Information
Adjusted Earnings Per Share
Q4 YTD
2022
Adjustments
As ReportedImpairment of GoodwillTransaction CostsIncome Tax AdjustmentsAs Adjusted
(In Millions, Except Per Share Amounts)
Adjusted EBITDA*$149.3 $ $ $ $149.3 
Depreciation and amortization(33.0)— — — (33.0)
Interest expense and amortization of debt discounts and fees(15.0)— — — (15.0)
Impairment of goodwill(109.0)109.0 — — — 
loss on disposal of assets(0.1)— — — (0.1)
Stock-based compensation(9.2)— — — (9.2)
Stock-based compensation included in overhead allocation(1.1)— — — (1.1)
Transaction costs(9.5)— 9.5 — — 
Income before income tax expense(27.6)109.0 9.5 — 90.9 
Provision for income tax expense(12.8)(13.7)(2.4)6.2 (22.7)
Net (loss) income attributable to Enhabit$(40.4)$95.3 $7.1 $6.2 $68.2 
Diluted earnings per share**$(0.81)$1.91 $0.14 $0.12 $1.36 
Diluted shares used in calculation49.7 
*    Reconciliation to GAAP provided on page 15
**    Diluted EPS may not sum due to rounding
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Enhabit, Inc. and Subsidiaries
Supplemental Information
Adjusted Earnings Per Share
Q4 YTD
2021
Adjustments
As ReportedTransaction Costs and Gain on Consolidation Income Tax AdjustmentsAs Adjusted
(In Millions, Except Per Share Amounts)
Adjusted EBITDA*$197.2 $ $ $197.2 
Depreciation and amortization(36.9)— — (36.9)
Interest expense and amortization of debt discounts and fees(0.3)— — (0.3)
Gain on disposal of assets0.8 — — 0.8 
Stock-based compensation(3.6)— — (3.6)
Stock-based compensation included in overhead allocation(2.3)— — (2.3)
Transaction costs(11.9)11.9 — — 
Gain on consolidation of joint venture formerly accounted for under
   the equity method of accounting
3.2 (3.2)— — 
Income before income tax expense146.2 8.7 — 154.9 
Provision for income tax expense(35.1)(2.2)(0.3)(37.6)
Net income attributable to Enhabit$111.1 $6.5 $(0.3)$117.3 
Diluted earnings per share**$2.24 $0.13 $(0.01)$2.36 
Diluted shares used in calculation49.6 
*    Reconciliation to GAAP provided on page 15
**    Diluted EPS may not sum due to rounding
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Enhabit, Inc. and Subsidiaries
Supplemental Information
Reconciliation of Net Income to Adjusted EBITDA
Three Months Ended
December 31,
For the Year Ended
December 31,
2022202120222021
(In Millions)
Net (Loss) Income$(94.7)$29.8 $(38.3)$112.9 
Income tax expense(5.1)8.9 12.8 35.1 
Interest expense and amortization of debt discounts and fees8.7 0.1 15.0 0.3 
Depreciation and amortization8.3 9.0 33.0 36.9 
Impairment of goodwill109.0 — 109.0 — 
(Gain) loss on disposal of assets— (0.4)0.1 (0.8)
Stock-based compensation2.1 1.5 9.2 3.6 
Stock-based compensation included in overhead allocation— 0.8 1.1 2.3 
Net income attributable to noncontrolling interests(0.5)(0.5)(2.1)(1.8)
Transaction costs2.5 3.0 9.5 11.9 
Gain on consolidation of joint venture formerly accounted for under the equity method of accounting— (3.2)— (3.2)
Adjusted EBITDA$30.3 $49.0 $149.3 $197.2 


15

Enhabit, Inc. and Subsidiaries
Supplemental Information
Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA
Three Months Ended
December 31,
For the Year Ended
December 31,
2022202120222021
(In Millions)
Net cash provided by operating activities$4.1 $23.1 $80.1 $123.3 
Interest expense and amortization of debt discounts and fees8.7 0.1 15.0 0.3 
Equity in net income of nonconsolidated affiliates— 0.1 — 0.6 
Net income attributable to noncontrolling interests in continuing operations(0.5)(0.5)(2.1)(1.8)
Distributions from nonconsolidated affiliates— (0.1)— (0.3)
Current portion of income tax expense(3.3)1.1 17.1 26.5 
Change in assets and liabilities19.2 21.7 29.2 32.8 
Transaction costs2.5 3.0 9.5 11.9 
Stock-based compensation included in overhead allocation— 0.8 1.1 2.3 
Other(0.4)(0.3)(0.6)1.6 
Adjusted EBITDA$30.3 $49.0 $149.3 $197.2 

Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow
Q4Full Year
($ in millions)2022202120222021
Net cash provided by operating activities$4.1 $23.1 $80.1 $123.3 
Capital expenditures for maintenance (1.4)(0.5)(4.5)(5.4)
Distributions paid to noncontrolling interests of consolidated affiliates(0.3)(0.2)(1.2)(1.8)
Items non-indicative of ongoing operating performance:
Stock-based compensation included in overhead allocation— 0.8 1.1 2.3 
Transaction costs and related assumed liabilities1.8 6.4 8.8 11.9 
Adjusted free cash flow $4.2 $29.6 $84.3 $130.3 

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FORWARD-LOOKING STATEMENTS
Statements contained in this press release which are not historical facts, such as those relating to future events, projections, financial guidance, legislative or regulatory developments, strategy or growth opportunities, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All such estimates, projections, and forward-looking information speak only as of the date hereof, and Enhabit undertakes no duty to publicly update or revise such forward-looking information, whether as a result of new information, future events, or otherwise. Such forward-looking statements are necessarily estimates based upon current information and involve a number of risks and uncertainties. Actual events or results may differ materially from those anticipated in these forward-looking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors which could cause actual events or results to differ materially from those estimated by Enhabit include, but are not limited to, our ability to execute on our strategic plans, regulatory and other developments impacting the markets for our services, changes in reimbursement rates, general economic conditions, our ability to attract and retain key management personnel and healthcare professionals, potential disruptions or breaches of our or our vendors’ information systems, the outcome of litigation, our ability to successfully complete and integrate de novo developments, acquisitions, investments, and joint ventures, and our ability to control costs, particularly labor and employee benefit costs. Our annual report on Form 10-K and subsequent quarterly reports on Form 10-Q, each of which will be available on the Company’s website at http://investors.ehab.com and the SEC’s website at www.sec.gov, discuss other risks and factors that could cause actual results to differ materially from those expressed or implied by any forward-looking statement in this press release. We urge you to consider all of the risks, uncertainties and factors identified above or discussed in such reports carefully in evaluating the forward-looking statements in this press release.

Investor Relations Contact                    
Mark Brewer
Mark.Brewer@ehab.com
469-860-6061

Media Contact
Erin Volbeda
media@ehab.com
972-338-5141
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