Enhabit Inc. Reports Strong Q3 Earnings Amid Challenges

Enhabit, Inc ((EHAB)) has held its Q3 earnings call. Read on for the main highlights of the call.

Enhabit Inc. recently held its third-quarter earnings call, revealing a strong financial and operational performance. The company showcased significant growth in admissions and hospice profitability, alongside successful renegotiations of payer contracts. Despite these achievements, challenges persist in the stagnation of Home Health revenue and potential impacts from CMS pricing changes.

Recognition for Workplace Excellence

Enhabit has been recognized as one of Fortune’s Best Places to Work in health care. This accolade underscores the company’s commitment to fostering a culture of excellence and strong leadership, which is pivotal in driving its operational success.

Strong Home Health Admission Growth

The company reported a 3.6% year-over-year increase in home health total admissions, with a 4.3% rise when normalized for closed branches. This growth highlights Enhabit’s ability to expand its reach and service capacity in the home health sector.

Successful Payer Renegotiations

Enhabit successfully renegotiated with a national payer, resulting in a low double-digit increase in per visit rates effective August 15, 2025. This strategic move has led to admissions reaching 120% of the weekly average, showcasing the company’s adeptness in navigating payer relationships.

Record Hospice Performance

The Hospice segment achieved record revenues and profitability, with a remarkable 70% year-over-year growth in segment adjusted EBITDA and a 20% increase in revenue. This performance underscores the strength and potential of Enhabit’s hospice services.

Improved Financial Health

Enhabit has made significant strides in improving its financial health by reducing its net debt to adjusted EBITDA leverage to 3.9x from 5.4x in Q4 2023. This reduction has lowered the company’s annualized cash interest expense by approximately $19 million.

Increase in Full Year Guidance

Enhabit has raised its full-year adjusted EBITDA guidance to a range of $106 million to $109 million, with adjusted free cash flow guidance increased to $53 million to $61 million. This upward revision reflects the company’s confidence in its ongoing strategic initiatives and financial performance.

Home Health Revenue Stagnation

Despite growth in admissions, Home Health revenue remained relatively flat year-over-year. This stagnation is attributed to lower unit revenues primarily due to mix, highlighting a challenge that Enhabit needs to address.

Impact of Payer Disruptions

Early quarter disruptions in payer renegotiations led to a 1.6% sequential decline in the average daily census for Home Health. This impact underscores the importance of stable payer relationships for Enhabit’s operational stability.

Continued CMS Pricing Challenges

Potential cuts in the CMS 2026 home health rule pose risks to patient access and financial performance. Enhabit is actively advocating for a reversal of these cuts to safeguard its service delivery and financial health.

Forward-Looking Guidance

Enhabit has provided an optimistic forward-looking guidance, projecting revenues between $1.058 billion and $1.063 billion. Adjusted EBITDA is expected to range from $106 million to $109 million, with adjusted free cash flow guidance increased to between $53 million and $61 million. These projections reflect the company’s strategic focus on growth and financial stability.

In summary, Enhabit’s earnings call highlighted a robust performance with significant achievements in admissions growth and hospice profitability. However, challenges such as Home Health revenue stagnation and potential CMS pricing impacts remain. The company’s forward-looking guidance suggests continued confidence in its strategic direction and financial health.