| (Commission File Number) | (IRS Employer Identification No.) | ||||
| Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Exhibit Number | Description | |||||||
| 104 | Cover Page Interactive Data File - the cover page iXBRL tags are embedded within the Inline XBRL document. | |||||||
| ENHABIT, INC. | ||||||||
| By: | /s/ Dylan Black | |||||||
| Name: | Dylan Black | |||||||
| Title: | General Counsel | |||||||
| Q4 | '22 vs. '21 | |||||||||||||||||||
| ($ in millions, except per share data) | 2022 | 2021 | ||||||||||||||||||
| Home health net service revenue | $ | 220.5 | $ | 224.0 | (1.6)% | |||||||||||||||
| Hospice net service revenue | 54.6 | 52.1 | 4.8% | |||||||||||||||||
| Total net service revenue | $ | 275.1 | $ | 276.1 | (0.4)% | |||||||||||||||
| % of Revenue | % of Revenue | |||||||||||||||||||
| Cost of services | 48.5% | $ | (133.3) | 46.5% | $ | (128.5) | 3.7% | |||||||||||||
| Gross margin | 51.5% | 141.8 | 53.5% | 147.6 | (3.9)% | |||||||||||||||
| Administrative & general expenses | 37.0% | (101.9) | 35.6% | (98.2) | 3.8% | |||||||||||||||
| Operating expenses | 85.5% | $ | (235.2) | 82.1% | $ | (226.7) | 3.7% | |||||||||||||
| Equity earnings / noncontrolling interests | 0.5 | 0.4 | ||||||||||||||||||
| Adjusted EBITDA | $ | 40.3 | $ | 49.0 | (17.8)% | |||||||||||||||
| Adjusted EBITDA margin | 14.6% | 17.7% | ||||||||||||||||||
| Adjusted EPS | $ | 0.32 | $ | 0.59 | (45.8)% | |||||||||||||||
| Q4 | '22 vs. '21 | |||||||||||||
| ($ in millions) | 2022 | 2021 | ||||||||||||
| Net service revenue | $ | 220.5 | $ | 224.0 | (1.6)% | |||||||||
| Cost of services | 109.0 | 106.4 | 2.4% | |||||||||||
| Gross margin | 50.6% | 52.5% | ||||||||||||
| Adjusted EBITDA | $ | 51.9 | $ | 59.6 | (12.9)% | |||||||||
| % Adj. EBITDA margin | 23.5% | 26.6% | ||||||||||||
| Operational metrics (Actual Amounts) | ||||||||||||||
| Starts of care | ||||||||||||||
| Episodic admissions | 34,572 | 37,908 | (8.8)% | |||||||||||
| Non-episodic admissions | 15,476 | 12,909 | 19.9% | |||||||||||
| Total admissions | 50,048 | 50,817 | (1.5)% | |||||||||||
| Same-store total admissions growth | (3.1)% | |||||||||||||
| Episodic recertifications | 25,279 | 27,273 | (7.3)% | |||||||||||
| Non-episodic recertifications | 7,104 | 5,348 | 32.8% | |||||||||||
| Total recertifications | 32,383 | 32,621 | (0.7)% | |||||||||||
| Same-store total recertifications growth | (1.3)% | |||||||||||||
| Total starts of care | 82,431 | 83,438 | (1.2)% | |||||||||||
| Completed episodes | 60,250 | 64,242 | (6.2)% | |||||||||||
| Revenue per episode | $ | 3,007 | $ | 3,010 | (0.1)% | |||||||||
| Visits per episode | 14.3 | 15.1 | (5.3)% | |||||||||||
| Total visits | 1,159,420 | 1,219,906 | (5.0)% | |||||||||||
| Non-episodic visits | 297,350 | 246,777 | 20.5% | |||||||||||
| Cost per visit | $ | 92 | $ | 86 | 7.0% | |||||||||
| Q4 | '22 vs. '21 | |||||||||||||
| ($ in millions) | 2022 | 2021 | ||||||||||||
| Net service revenue | $ | 54.6 | $ | 52.1 | 4.8% | |||||||||
| Cost of services | 24.3 | 22.1 | 10.0% | |||||||||||
| Gross margin | 55.5% | 57.6% | ||||||||||||
| Adjusted EBITDA | $ | 12.8 | $ | 15.2 | (15.8)% | |||||||||
| % Adj. EBITDA margin | 23.4% | 29.2% | ||||||||||||
| Operational metrics (Actual Amounts) | ||||||||||||||
| Total admissions | 2,915 | 3,223 | (9.6)% | |||||||||||
| Same-store total admissions growth | (13.5)% | |||||||||||||
| Patient days | 330,102 | 334,011 | (1.2)% | |||||||||||
| Discharged average length of stay | 110 | 106 | 3.8% | |||||||||||
| Average daily census | 3,588 | 3,631 | (1.2)% | |||||||||||
| Revenue per day | $ | 165 | $ | 156 | 5.8% | |||||||||
| Cost per day | $ | 74 | $ | 66 | 12.1% | |||||||||
| Full-year 2023 | Guidance | |||||||
| Net Service Revenue | between $1,110 and $1,140 million | |||||||
| Adjusted EBITDA | between $125 and $140 million | |||||||
| Adjusted EPS | between $0.50 and $0.89 | |||||||
| Three Months Ended December 31, | For the Year Ended December 31, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| (In Millions, Except Per Share Data) | |||||||||||||||||||||||
| Net service revenue | $ | 275.1 | $ | 276.1 | $ | 1,083.1 | $ | 1,106.6 | |||||||||||||||
| Cost of service (excluding depreciation and amortization) | 133.3 | 128.5 | 525.6 | 513.9 | |||||||||||||||||||
| Gross margin | 141.8 | 147.6 | 557.5 | 592.7 | |||||||||||||||||||
| General and administrative expenses | 106.5 | 103.1 | 416.9 | 412.9 | |||||||||||||||||||
| Depreciation and amortization | 8.3 | 9.0 | 33.0 | 36.9 | |||||||||||||||||||
| Operating income | 27.0 | 35.5 | 107.6 | 142.9 | |||||||||||||||||||
| Interest expense and amortization of debt discounts and fees | 8.7 | 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) | |||||||||||||||||||
| Income before income taxes and noncontrolling interests | 19.2 | 38.7 | 93.5 | 148.0 | |||||||||||||||||||
| Income tax expense | 11.0 | 8.9 | 28.9 | 35.1 | |||||||||||||||||||
| Net income | 8.2 | 29.8 | 64.6 | 112.9 | |||||||||||||||||||
| Less: Net income attributable to noncontrolling interests | 0.5 | 0.5 | 2.1 | 1.8 | |||||||||||||||||||
| Net income attributable to Enhabit, Inc. | $ | 7.7 | $ | 29.3 | $ | 62.5 | $ | 111.1 | |||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||
| Basic | 49.6 | 49.6 | 49.6 | 49.6 | |||||||||||||||||||
| Diluted | 49.8 | 49.6 | 49.7 | 49.6 | |||||||||||||||||||
| Earnings per common share: | |||||||||||||||||||||||
| Basic earnings per share attributable to Enhabit, Inc. common stockholders | $ | 0.15 | $ | 0.59 | $ | 1.26 | $ | 2.24 | |||||||||||||||
| Diluted earnings per share attributable to Enhabit, Inc. common stockholders | $ | 0.15 | $ | 0.59 | $ | 1.26 | $ | 2.24 | |||||||||||||||
| December 31, 2022 | December 31, 2021 | ||||||||||
| (In Millions) | |||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 22.9 | $ | 5.4 | |||||||
| Restricted cash | 4.3 | 2.6 | |||||||||
| Accounts receivable | 161.6 | 164.5 | |||||||||
| Income tax receivable | 9.2 | — | |||||||||
| Prepaid expenses and other current assets | 23.6 | 6.3 | |||||||||
| Total current assets | 221.6 | 178.8 | |||||||||
| Property and equipment, net | 20.4 | 20.4 | |||||||||
| Operating lease right-of-use assets | 42.0 | 48.4 | |||||||||
| Goodwill | 1,253.8 | 1,189.0 | |||||||||
| Intangible assets, net | 102.6 | 259.1 | |||||||||
| Other long-term assets | 5.2 | 24.3 | |||||||||
| Total assets | $ | 1,645.6 | $ | 1,720.0 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Current portion of long-term debt | $ | 23.1 | $ | 5.0 | |||||||
| Current operating lease liabilities | 14.0 | 14.9 | |||||||||
| Accounts payable | 3.8 | 3.5 | |||||||||
| Accrued payroll | 37.4 | 66.4 | |||||||||
| Refunds due patients and other third-party payors | 8.3 | 9.4 | |||||||||
| Income tax payable | — | 4.2 | |||||||||
| Accrued medical insurance | 7.5 | 8.3 | |||||||||
| Other current liabilities | 40.7 | 24.8 | |||||||||
| Total current liabilities | 134.8 | 136.5 | |||||||||
| Long-term debt, net of current portion | 560.0 | 3.5 | |||||||||
| Long-term operating lease liabilities | 28.1 | 33.5 | |||||||||
| Deferred income tax liabilities | 42.5 | 63.2 | |||||||||
| Other long-term liabilities | 1.9 | — | |||||||||
| 767.3 | 236.7 | ||||||||||
| Commitments and contingencies | |||||||||||
| Redeemable noncontrolling interests | 5.3 | 5.0 | |||||||||
| Stockholders’ equity: | |||||||||||
| Enhabit, Inc. stockholders’ equity: | 844.6 | 1,470.0 | |||||||||
| Noncontrolling interests | 28.4 | 8.3 | |||||||||
| Total stockholders’ equity | 873.0 | 1,478.3 | |||||||||
| Total liabilities and stockholders’ equity | $ | 1,645.6 | $ | 1,720.0 | |||||||
| For the Year Ended December 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| (In Millions) | |||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 64.6 | $ | 112.9 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities— | |||||||||||
| Depreciation and amortization and amortization of debt related costs | 33.6 | 36.9 | |||||||||
| Equity in net income of nonconsolidated affiliates | — | (0.6) | |||||||||
| Distributions from nonconsolidated affiliates | — | 0.3 | |||||||||
| Stock-based compensation | 9.2 | 3.6 | |||||||||
| Deferred tax expense | 9.7 | 8.6 | |||||||||
| Other, net | 0.1 | (5.6) | |||||||||
| Changes in assets and liabilities, net of acquisitions— | |||||||||||
| Accounts receivable | 9.5 | (24.8) | |||||||||
| Prepaid expenses and other assets | (25.3) | (0.1) | |||||||||
| Accounts payable | 0.2 | (0.7) | |||||||||
| Accrued payroll | (29.0) | (7.7) | |||||||||
| Other liabilities | 7.5 | 0.5 | |||||||||
| Net cash provided by operating activities | 80.1 | 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, net | 1.1 | 2.6 | |||||||||
| Net cash used in investing activities | (42.3) | (119.2) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Principal borrowings on term loan | 400.0 | — | |||||||||
| Principal payments on debt | (10.0) | — | |||||||||
| Borrowings on revolving credit facility | 190.0 | — | |||||||||
| Principal payments under finance lease obligations | (5.0) | (7.2) | |||||||||
| Debt issuance costs | (4.7) | — | |||||||||
| Contributions from Encompass | 59.8 | 126.4 | |||||||||
| Distributions to Encompass | (654.9) | (154.1) | |||||||||
| Contributions from noncontrolling interests of consolidated affiliates | 7.4 | — | |||||||||
| Other | (1.2) | (1.2) | |||||||||
| Net cash used in financing activities | (18.6) | (36.1) | |||||||||
| Increase (decrease) in cash, cash equivalents, and restricted cash | 19.2 | (32.0) | |||||||||
| Cash, cash equivalents, and restricted cash at beginning of year | 8.0 | 40.0 | |||||||||
| Cash, cash equivalents, and restricted cash at end of year | $ | 27.2 | $ | 8.0 | |||||||
| Q4 | Full Year | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Earnings per share, as reported | $ | 0.15 | $ | 0.59 | $ | 1.26 | $ | 2.24 | |||||||||||||||
| Adjustments, net of tax: | |||||||||||||||||||||||
| Transaction costs and gain on consolidation | 0.05 | — | 0.14 | 0.13 | |||||||||||||||||||
| Income tax adjustments | 0.12 | — | 0.12 | (0.01) | |||||||||||||||||||
| Adjusted earnings per share* | $ | 0.32 | $ | 0.59 | $ | 1.52 | $ | 2.36 | |||||||||||||||
| Q4 QTD | |||||||||||||||||||||||
| 2022 | |||||||||||||||||||||||
| Adjustments | |||||||||||||||||||||||
| As Reported | Transaction Costs | Income Tax Adjustments | As Adjusted | ||||||||||||||||||||
| (In Millions, Except Per Share Amounts) | |||||||||||||||||||||||
| Adjusted EBITDA* | $ | 40.3 | $ | — | $ | — | $ | 40.3 | |||||||||||||||
| Depreciation and amortization | (8.3) | — | — | (8.3) | |||||||||||||||||||
| Interest expense and amortization of debt discounts and fees | (8.7) | — | — | (8.7) | |||||||||||||||||||
| Stock-based compensation | (2.1) | — | — | (2.1) | |||||||||||||||||||
| Transaction costs | (2.5) | 2.5 | — | — | |||||||||||||||||||
| Income before income tax expense | 18.7 | 2.5 | — | 21.2 | |||||||||||||||||||
| Provision for income tax expense | (11.0) | (0.6) | 6.2 | (5.4) | |||||||||||||||||||
| Net income attributable to Enhabit | $ | 7.7 | $ | 1.9 | $ | 6.2 | $ | 15.8 | |||||||||||||||
| Diluted earnings per share** | $ | 0.15 | $ | 0.05 | $ | 0.12 | $ | 0.32 | |||||||||||||||
| Diluted shares used in calculation | 49.8 | ||||||||||||||||||||||
| Q4 QTD | |||||||||||||||||
| 2021 | |||||||||||||||||
| Adjustments | |||||||||||||||||
| As Reported | Transaction Costs and Gain on Consolidation | As 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 or impairment of assets | 0.4 | — | 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 expense | 38.2 | (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 calculation | 49.6 | ||||||||||||||||
| Q4 YTD | |||||||||||||||||||||||
| 2022 | |||||||||||||||||||||||
| Adjustments | |||||||||||||||||||||||
| As Reported | Transaction Costs | Income Tax Adjustments | As Adjusted | ||||||||||||||||||||
| (In Millions, Except Per Share Amounts) | |||||||||||||||||||||||
| Adjusted EBITDA* | $ | 159.3 | $ | — | $ | — | $ | 159.3 | |||||||||||||||
| Depreciation and amortization | (33.0) | — | — | (33.0) | |||||||||||||||||||
| Interest expense and amortization of debt discounts and fees | (15.0) | — | — | (15.0) | |||||||||||||||||||
| Loss on disposal or impairment 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 | 91.4 | 9.5 | — | 100.9 | |||||||||||||||||||
| Provision for income tax expense | (28.9) | (2.4) | 6.2 | (25.1) | |||||||||||||||||||
| Net income attributable to Enhabit | $ | 62.5 | $ | 7.1 | $ | 6.2 | $ | 75.8 | |||||||||||||||
| Diluted earnings per share** | $ | 1.26 | $ | 0.14 | $ | 0.12 | $ | 1.52 | |||||||||||||||
| Diluted shares used in calculation | 49.7 | ||||||||||||||||||||||
| Q4 YTD | |||||||||||||||||||||||
| 2021 | |||||||||||||||||||||||
| Adjustments | |||||||||||||||||||||||
| As Reported | Transaction Costs and Gain on Consolidation | Income Tax Adjustments | As 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 or impairment of assets | 0.8 | — | — | 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 expense | 146.2 | 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 calculation | 49.6 | ||||||||||||||||||||||
| Three Months Ended December 31, | For the Year Ended December 31, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| (In Millions) | |||||||||||||||||||||||
| Net Income | $ | 8.2 | $ | 29.8 | $ | 64.6 | $ | 112.9 | |||||||||||||||
| Income tax expense | 11.0 | 8.9 | 28.9 | 35.1 | |||||||||||||||||||
| Interest expense and amortization of debt discounts and fees | 8.7 | 0.1 | 15.0 | 0.3 | |||||||||||||||||||
| Depreciation and amortization | 8.3 | 9.0 | 33.0 | 36.9 | |||||||||||||||||||
| (Gain) loss on disposal or impairment of assets | — | (0.4) | 0.1 | (0.8) | |||||||||||||||||||
| Stock-based compensation | 2.1 | 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 costs | 2.5 | 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 | $ | 40.3 | $ | 49.0 | $ | 159.3 | $ | 197.2 | |||||||||||||||
| Three Months Ended December 31, | For the Year Ended December 31, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| (In Millions) | |||||||||||||||||||||||
| Net cash provided by operating activities | $ | 4.1 | $ | 23.1 | $ | 80.1 | $ | 123.3 | |||||||||||||||
| Interest expense and amortization of debt discounts and fees | 8.7 | 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 | (1.2) | 1.1 | 19.2 | 26.5 | |||||||||||||||||||
| Change in assets and liabilities | 27.1 | 21.7 | 37.1 | 32.8 | |||||||||||||||||||
| Transaction costs | 2.5 | 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 | $ | 40.3 | $ | 49.0 | $ | 159.3 | $ | 197.2 | |||||||||||||||
| Q4 | Full Year | ||||||||||||||||||||||
| ($ in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| 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 liabilities | 1.8 | 6.4 | 8.8 | 11.9 | |||||||||||||||||||
| Adjusted free cash flow | $ | 4.2 | $ | 29.6 | $ | 84.3 | $ | 130.3 | |||||||||||||||