Enhabit outlines full-year revenue target up to $1.063B while expanding cost controls and payer contracts

Earnings Call Insights: Enhabit, Inc. (EHAB) Q3 2025

MANAGEMENT VIEW

* President and CEO Barbara Jacobsmeyer stated the company "delivered another quarter of strong performance for our patients, partners and shareholders," highlighting a 3.6% year-over-year increase in home health admissions and a 3.7% growth in census. She emphasized, "Normalized for closed branches, our admission growth was 4.3% year-over-year."
* Jacobsmeyer reported successful renegotiations with national payers, noting, "By late September, we have recovered our census with this payer and recent admissions are now at 120% of our weekly average."
* She highlighted a continued focus on payer strategy, stating, "This was evidenced by another renegotiated national payer contract during the third quarter."
* The company opened two de novo locations in Q3 and remains "on pace for a total of 10 de novos in 2025."
* Jacobsmeyer described cost management initiatives and operational pilots, saying, "Our advanced visit per episode management pilot was initiated in mid-August in 11 branches... Early results are promising with a decline in total visits per episode in these locations from approximately 15 prior to the onset of the pilot to approximately 13 currently."
* CFO Ryan Solomon stated, "Continued strong execution in the quarter on our broader strategy delivered strong consolidated financial performance with both top line and bottom line EBITDA growth to the prior year in Q3, all while continuing to generate consistent free cash flow."
* Solomon further noted, "We have used the improved adjusted free cash flow to reduce our net debt to adjusted EBITDA leverage amount to 3.9x in Q3 2025, lower by over 1.5 turns compared to Q4 2023 when leverage was 5.4x."

OUTLOOK

* Solomon provided updated full-year guidance: "We now expect full year revenue to be in the range of $1.058 billion to $1.063 billion. We are increasing our full year adjusted EBITDA guidance to be in a range of $106 million to $109 million. We are also increasing our full year adjusted free cash flow to be in the range of $53 million to $61 million."
* Jacobsmeyer addressed the pending CMS 2026 home health rule, stating, "We remain focused on our strategies to mitigate as much of the pricing headwind as possible in 2026 and are well on our way with the various strategies we have already deployed."

FINANCIAL RESULTS

* Solomon reported, "Consolidated net revenue totaled $263.6 million, an increase versus prior year of $10 million or 3.9%."
* Consolidated adjusted EBITDA for the quarter was $27 million, reflecting a 10.2% increase from the prior year and a 0.4% sequential rise.
* Home Health revenue was $200.5 million, relatively flat compared to the prior year. Hospice revenue reached $63.1 million, up $10.5 million or 20% year-over-year.
* Hospice adjusted EBITDA totaled $17.2 million, marking a 72% increase from the prior year, and margin as a percent of revenue improved to 27.3%.
* Home office G&A expenses were $24.1 million or 9.1% of revenues in Q3, down from 9.9% in the previous quarter.
* Adjusted free cash flow year-to-date totaled $64.8 million, and available liquidity at quarter-end was $143.3 million.

Q&A

* Meghan Holtz, Jefferies LLC: Questioned the rate increase from the November payer contract and upcoming contract renewals. Jacobsmeyer responded that details would not be disclosed but noted, "More of the regional type agreements will be coming up in the next year. The future national agreements, it will be more towards the end of next year, early 2027."
* Holtz, Jefferies LLC: Asked about G&A improvement and potential for further cost reductions. Solomon replied, "A combination of some headcount reductions as well as some efficiencies... we think is durable and kind of how we think about things prospectively going forward."
* Christian Borgmeyer, TD Cowen: Asked about hospice length of stay seasonality. Jacobsmeyer said, "The holiday times tend to be a little bumpy within this segment... tends to be one of our more unpredictable times of year, especially as we go into the 2 upcoming holidays."
* Borgmeyer, TD Cowen: Inquired about re-contracting cycles. Jacobsmeyer answered, "It's by contract by contract. I would say the majority of our contracts are 3 year."
* Holtz, Jefferies LLC: Asked about labor trends and wage inflation. Jacobsmeyer noted, "We've seen a nice uptick continued in our applicant pool... we're kind of, I would say, back to that normal merit around that 3%."

SENTIMENT ANALYSIS

* Analysts focused on the durability of cost reductions, payer contract renewals, seasonality in hospice, and labor trends, with a neutral to slightly positive tone.
* Management maintained a confident tone in prepared remarks, emphasizing operational execution, but provided measured responses regarding contract specifics and labor trends, avoiding overcommitment.
* Compared to the previous quarter, analysts appeared less concerned about regulatory headwinds and more focused on operational improvements, while management was less defensive and more assertively positive about results and outlook.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for full-year revenue narrowed from the previous quarter's $1.060 billion to $1.073 billion range, now $1.058 billion to $1.063 billion.
* Adjusted EBITDA guidance increased from $104 million-$108 million to $106 million-$109 million.
* Hospice segment momentum and profitability accelerated, with year-over-year adjusted EBITDA growth of 72% in Q3 vs. 54% in Q2.
* Sequential improvement in home office G&A expenses reported.
* Management confidence increased, with less focus on CMS regulatory risks and more emphasis on cost control and growth initiatives.
* Analysts shifted attention from regulatory risks and CEO transition (highlighted last quarter) to operational execution and cost efficiency.

RISKS AND CONCERNS

* Management identified CMS pricing headwinds for 2026 as a significant risk, noting ongoing strategies to mitigate these challenges.
* Cost structure efficiency and payer mix remain critical to future performance.
* Analysts continued to probe payer contract timing, labor market pressures, and the durability of cost reductions.

FINAL TAKEAWAY

Enhabit leadership emphasized sustained growth in both home health and hospice segments, highlighted by strategic payer contract renegotiations, increased guidance for adjusted EBITDA and free cash flow, and ongoing cost management initiatives. The company remains focused on expanding market share while preparing for regulatory changes, underpinned by a strong balance sheet and operational flexibility.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/ehab/earnings/transcripts]

MORE ON ENHABIT

* Enhabit, Inc. (EHAB) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4840089-enhabit-inc-ehab-q3-2025-earnings-call-transcript]
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