Enhabit (EHAB) 2024 Wells Fargo Healthcare Conference summary

Strategic contract and payer innovation updates

• Initiated payer innovation strategy to diversify contracts, moving from a single large payer to 68 contracts, including two national agreements, reducing reliance on UnitedHealthcare.

• Notice of termination given to UnitedHealthcare after unsuccessful negotiations, enabled by new national contracts with better rates.

• Payer innovation contracts now offer 0-25% discounts versus the previous 40% discount, improving reimbursement rates.

• Local business development and branch directors play a key role in growing volumes under new contracts.

• Confident in ability to replace UnitedHealthcare volumes due to expanded payer network and ongoing negotiations.

Non-Medicare and Medicare reimbursement outlook

• Non-Medicare volumes and rates have improved through high-quality outcomes and strategic contract negotiations.

• Medicare Fee-for-Service proposed rule for 2025 suggests a -1.7% industry rate cut, with an estimated -1% impact based on patient mix and wage index.

• Final Medicare rule is expected to be more favorable, potentially resulting in a flat or slightly positive rate update.

• Non-Medicare pricing upside anticipated as UnitedHealthcare volumes shift to better-paying contracts.

Hospice segment strategy and performance

• Hospice segment overcame clinical capacity constraints by adopting a case management model, eliminating contract labor, and improving recruitment and retention.

• Hired experienced business development leaders and established centralized admission offices, fueling sequential growth in average daily census in 2024.

• Expect continued growth in hospice census and stable cost structure due to fixed staffing investments.