Enhabit Home Health & Hospice

Ticker
$EHAB
Industry
Healthcare
Type
Spin-off
Rating
Covered
Category
General
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Spin-off of Home Health care business (think Ensign Group, Chemed, Amedisys, etc.). Spin completed in June 2022. Stock has sold off significantly from $25 to $15 as of September 1, 2022.

Notes

Investor presentation (June 2022) — Overview of company
Balance sheet — $524m net debt as of 2Q22
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P&L — 2019-2021 performance
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Regulatory update — EHAB walking into a landmine (2Q22) with regulatory pricing changes set to negatively impact revenue and margins
Now let's discuss the home health proposed rule. On June 17, CMS published its proposed rule for 2023, which includes a 7.69% permanent negative behavioral assumption adjustment. The cut would be partially offset by a 3.3% market basket update, reduced by a 0.4% productivity adjustment that would result in an approximate 4.2% negative payment impact for 2023.
The proposed rule also includes language around a clawback of an additional $2 billion from the industry for assumed overpayments from 2020 and 2021. We are opposed to these cuts and strongly disagree with CMS' approach, interpretation and resulting recommendations.
Enhabit, along with its trade associations and industry partners, are pushing back hard on this rule. We are currently working with our legislative supporters on Capitol Hill to mitigate these cuts.

Resources

September 2022 — WSJ: CVS buying home health peer Signify

CVS buying Signify health and others buying in the space too

This spring, UnitedHealth agreed to buy LHC Group Inc., one of the country’s largest home-health firms, for about $5.4 billion. Last year, Humana Inc. agreed to take full control of home-health provider Kindred at Home. Both LHC and Kindred provide continuous home-healthcare services.
August 2022 — 2Q22 earnings: mlOff to a rough start

Revenue down 6.3% and EBITDA down 30%. Not a great start as the first quarterly earnings release for the newly spun EHAB.

Guidance was also cut

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July 2022 — VDL: quick value post