Enhabit Inc at UBS Global Healthcare Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: AJ Rice - UBS AG - Analyst : Well, we're 10 months into the year. Why don't you just spend a minute sort of assessing the performance here today? What have been the upside, positives? What have been any challenges that you would highlight?

Question: AJ Rice - UBS AG - Analyst : I'm going to ask you about that rule in a minute, but can you remind us a little bit about how you think about long-term growth algorithm? How should we think about the company achieving that over the next few years?

Question: AJ Rice - UBS AG - Analyst : And when you think about -- so that's the topline and where are you at on margin versus where you think you could be in the next few years?

Question: AJ Rice - UBS AG - Analyst : And when you think, well, let's just talk about the proposed rule, do you have a sense of where that is at this point? Any thoughts about it?

Question: AJ Rice - UBS AG - Analyst : Yeah, and it just seems like there's two things. Are we going to have to absorb the full rate cut, 6.4%, whatever, or -- But also, do we get clarity on where we go from here? Some have said, well, we get the 6.4% rate cut, and then you're growing off of lower base, so that is clarity. Is that your view, or what are you guys thinking about that?

Question: AJ Rice - UBS AG - Analyst : Right, right. And what is your thought about how much you can mitigate? I know it's a little tricky because you want to wait and see, but you've had a big chunk of the year to work on mitigation strategy. So where are we at here?

Question: AJ Rice - UBS AG - Analyst : Did you size in the worst case scenario what that headwind would be?

Question: AJ Rice - UBS AG - Analyst : Okay. I think in the with the third quarter, you updated your outlook a little bit, lower home health expectations offset with some higher hospice. Anything to say what the trend was that drove that decision to moderate?

Question: AJ Rice - UBS AG - Analyst : And the hospice improvement just trends are a little stronger across the board, or was there anything to call out specifically there?

Question: AJ Rice - UBS AG - Analyst : So on the payer disruption, it seems to now be resolved. And did you walk away with what are the rate implications for the fourth quarter and beyond? Anything you can say on that?

Question: AJ Rice - UBS AG - Analyst : Okay. So you've got this preferred arrangements when you're -- and obviously it's important to do the first deal, to get the flexibility to do the things you need to do to get hopefully better rates. As those are coming up for renewal, how are they materially changing, or is it just, what is the nature of how those work?

Question: AJ Rice - UBS AG - Analyst : And how are they measuring high-quality?

Question: AJ Rice - UBS AG - Analyst : And we're hearing on the labor side things are getting a little back to normal after some challenging times right around the pandemic in the first year or so out of the pandemic. Has that turned around also on the supply? Is the supply demand dynamic still pretty tight when they go to find discharge places, or has there been some easing of that as there's been easing on the rate? Yeah.

Question: AJ Rice - UBS AG - Analyst : Yeah. And has there been any change? I mean, obviously we've got Humana with their Kindred at Home. That's -- we're several years into that. We've got United with LHC and now Amedisys. Has that changed the dynamics in any of your markets to say significantly?

Question: AJ Rice - UBS AG - Analyst : And what is happening just in traditional fee for service because we had a couple of years where it was actually declining. It seems like the MA penetration rate is moderating a little bit now. Is that turning around and creating more fee-for-service volume for you?

Question: AJ Rice - UBS AG - Analyst : Right. And when you think about your payer innovation contracts, where are we at in that move to most of the major payers at this point on board with some kind of a payer innovation contract, or is there still big national players that are not there yet and a lot of regionals? I know you got a lot of blue plans out there.

Question: AJ Rice - UBS AG - Analyst : Okay, when you think about Medicare fee for service versus MA, you got the discharge planners there trying to make the decision. Are you taking everything at this point pretty much or?

Question: AJ Rice - UBS AG - Analyst : Okay. And do you feel like most of your competitors are doing that, or do you see that as still guys that are just chasing the fee for service business?

Question: AJ Rice - UBS AG - Analyst : Okay. I know hospice revenues were up 20% in the quarter, mainly ADC and revenue per patient day, and you had one extra calendar day. Same store admissions were down or basically flat down, 0.3. What would you attribute the strong growth with? Is that mainly share gains or what would you say?

Question: AJ Rice - UBS AG - Analyst : And when you think about where we're at with hospice overall or is there just still an underlying growth and penetration, more people that are -- could qualify for hospice getting it, or are we sort of at a plateau on that, you think?

Question: AJ Rice - UBS AG - Analyst : And do you see a big difference when you look at that geographically across the country, or?

Question: AJ Rice - UBS AG - Analyst : Okay. That market had been pretty competitive from an acquisition standpoint. Pricing was pretty high. Have you seen any change in that or moderation in that?

Question: AJ Rice - UBS AG - Analyst : And what is the overlap between your home health in hospice at this point in footprint?

Question: AJ Rice - UBS AG - Analyst : And what it, where are you at on the penetration versus where the opportunity would be?

Question: AJ Rice - UBS AG - Analyst : Is there a target of de novos into new markets where you already have home -- I mean, home health that you've got in mind?

Question: AJ Rice - UBS AG - Analyst : Okay. Talk a little bit more about the, and this goes back to home health, the visit per episode pilot program. You're saying -- sounds like you're farther along than I realized actually. You started out earlier in the year with a few locations, but now you've got a pretty significant outlet.

Question: AJ Rice - UBS AG - Analyst : And is there any risk in rolling them out at that pace, or? You feel like, well, these 11 were great, so we know we're in good shape? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 11, 2025 / 5:30PM, EHAB.N - Enhabit Inc at UBS Global Healthcare Conference

Question: AJ Rice - UBS AG - Analyst : In the 15 to 13, how much is Metalogics versus how much is the incremental stuff you're doing on top of that.

Question: AJ Rice - UBS AG - Analyst : It's gotten down to 15.

Question: AJ Rice - UBS AG - Analyst : Okay, interesting. And is there one thing that you can call out that says this is what's causing -- how we can get down from 15 to 13? What is --

Question: AJ Rice - UBS AG - Analyst : Yeah, so how should we see that flowing through? You went to the 80 and now you're at the -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 11, 2025 / 5:30PM, EHAB.N - Enhabit Inc at UBS Global Healthcare Conference

Question: AJ Rice - UBS AG - Analyst : And the incremental volume is there for them. If you free them up to take on the incremental volume, they're able to do it?

Question: AJ Rice - UBS AG - Analyst : And how do the clinicians respond to that? Do they feel like you're looking over their shoulder a little more when you tell them you're only going to do 13? Do they really care whether they've got an incremental patient because they freed up capacity?

Question: AJ Rice - UBS AG - Analyst : Okay. So this has been couched around the idea of, this is preparation for this rate cut, so it's the government's fault.

Question: AJ Rice - UBS AG - Analyst : And what are, what is the sort of the baseline trend on wages at this point? What do you, where are we going to end up for this year and what are you seeing for next year?

Question: AJ Rice - UBS AG - Analyst : Okay. And is on labor, your turnover rates and all of that are back to pre-pandemic levels pretty much?.

Question: AJ Rice - UBS AG - Analyst : Okay. I think leverage wise you were down to 3.9 in the third quarter debt to EBITDA. What is your target at this point? Do you have a target for where you'd like to be? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 11, 2025 / 5:30PM, EHAB.N - Enhabit Inc at UBS Global Healthcare Conference

Question: AJ Rice - UBS AG - Analyst : I mean, presumably we need some clarity on the home health rule before you would do it, but do you see that opening up opportunities significantly? Would you say, okay, we've gotten whatever the rate is 6.4%, hopefully something less than that, and that's it we're going to go. And we think there'll be opportunities to --

Question: AJ Rice - UBS AG - Analyst : I mean, you get the rate rule, do you automatically know, okay, this is what these guys look like and this is it happens, or does it have six months where we got to have everything shake out and then you're sort of, okay, this is how these guys are going to look going forward. And so we can think about tuck-in deals. Do you think it takes some time, even once the rate notice is finalized?

Question: AJ Rice - UBS AG - Analyst : But the difference is mainly on what the operating income level is as opposed to what the right price to pay for the asset is.

Question: AJ Rice - UBS AG - Analyst : Is there any way to put a parameter around what the going price for a home health agency is.

Question: AJ Rice - UBS AG - Analyst : And I mean, I think we hear about tuck-in deals. Traditionally, we're sort of mid-single-digit EBITDA multiples, maybe a bigger platform deal was 10 or 12 or something like that. You think that's changed in any way in the discussion or -- I don't if you can agree on what the earnings power is. I'm trying to -- I guess I'm trying to pin you down a little bit.

Question: AJ Rice - UBS AG - Analyst : In hospice evaluations they're sort of in the mid 10s even now is that still.

Question: AJ Rice - UBS AG - Analyst : Okay. And I don't know, you may say we can't say anything, but I'm going to still ask you about it anyway, so the former founder and CEO, you've got the litigation. The judge made the ruling that you would share in the earnings. Yeah, I mean, are you getting anything of that? Are you likely to get anything out of that anytime soon? I know you're supposed to split that 50-50 with Encompass, I believe is the way it's set up.

Question: AJ Rice - UBS AG - Analyst : And is it clear who would be if they were, I mean, if I'm on the other side of that, I want to negotiate a settlement and just be done with it, is it clear whether that's you would negotiate the settlement or Encompass would negotiate the settlement, or you have to do that jointly? Is there any --

Question: AJ Rice - UBS AG - Analyst : All right. So what -- just to summarize, what would you say a summary comment here about where the company's at, looking ahead to next year? What should we keep in mind?

Question: AJ Rice - UBS AG - Analyst : All right. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 11, 2025 / 5:30PM, EHAB.N - Enhabit Inc at UBS Global Healthcare Conference

Question: AJ Rice - UBS AG - Analyst : All right, you've got some scarcity value in home health these days. There aren't really many plays left, so which people ask that, you're the one that people are focused on. So thanks for participating in the conference again this year. And thanks, everyone, and have a great rest of your day.