Enhabit (EHAB) investor relations material

Regulatory and reimbursement updates

• CMS final home health rule for 2026 narrows the negative rate impact to -1.3%, less severe than the proposed -6.4%, improving outlook but still negative for 2026.

• CMS signaled an end to permanent behavior adjustments, narrowing the lookback to 2022, with 2026 likely the last year for this adjustment.

• Temporary recoupment adjustment reduced to 2.7%, with CMS aiming to recoup $4.76 billion over about 10 years.

• Net rate updates projected to turn positive from 2027, supporting a more favorable reimbursement outlook.

• Ongoing discussions with MA plans about rate linkage and recoupment impacts.

Strategic growth and investment plans

• Confident in delivering organic profitability growth in 2026 at a rate similar to 2025.

• Improved balance sheet flexibility and reduced leverage enable increased investment in de novos and targeted M&A, especially in home health.

• Most de novo activity expected in hospice, leveraging overlap with home health markets; plans for 3–6 new home health and 9–12 new hospice locations in 2026.

• Targeting $25–$50 million for strategic acquisitions to drive 2.5–4.5% incremental inorganic growth, with discipline to ensure shareholder value.

• No further branch closures anticipated; past closures driven by low or negative margins.

Payer strategy and contract negotiations

• 57% of non-Medicare admissions in Q3 were under payer innovation contracts, up from 52% last year.

• Recent renegotiations achieved low double-digit rate increases, leveraging quality and access data.

• About one-third of MA volume remains per-visit; efforts continue to shift to episodic contracts.

• Proactive stance on payers causing revenue cycle disruptions, willing to deprioritize problematic payers.

• Payer innovation team integrated into revenue cycle management to address denials and payment issues.