Thank you for joining our call today. With me on the call is Barbara Jacobsmeyer, President and Chief Executive Officer, and Ryan Solomon, Chief Financial Officer. Before we begin, if you do not already have a copy, the fourth quarter earnings release, supplemental information, and related Form 8-Ks filed with the SEC are available on our website at investors.ehab.com. On page two of the supplemental information, you will find the safe harbor statements which are also set forth on the last page of the earnings release. During the call, we will make forward-looking statements which are subject to risks and uncertainties, many of which are beyond our control. Certain risks and uncertainties that could cause actual results to differ materially from our projections, estimates, and expectations are discussed in our SEC filings, including our annual report on Form 10-K, which are available on our website. We encourage you to read them. You are cautioned not to place undue reliance on the estimates, projections, guidance, and other forward-looking information presented, which are based on current estimates of future events and speak only as of today. We do not undertake a duty to update these forward-looking statements. Our supplemental information and discussion on this call include certain non-GAAP financial measures. For such measures, reconciliation to the most directly comparable GAAP measure is available at the end of the supplemental information in the earnings release. With that, I'll turn the call over to Barbara Jacobsmeyer.

Good morning, and thanks for joining us. I'm going to start with a review of the fourth quarter and then highlight how executing on our strategies in 2024 has laid the foundation for improved performance in 2025. Home Health executed on specific growth strategies in 2024. Throughout the year, we focused on stabilizing our Medicare fee-for-service admissions as a percentage of overall home health admissions, growing the percentage of home health visits in our payer innovation contract, and leveraging visit efficiency to increase clinical capacity. Similar to past quarters, fourth quarter Medicare fee-for-service constituted 44% of our home health admissions. Fourth quarter non-Medicare admissions were up 10.7% year over year, driving our total admission growth of 1.8%. Our home health team achieved total admissions growth even while replacing UnitedHealthcare volumes for much of the fourth quarter and managing through the impacts of Hurricane Elaine and Milton. If UHC volumes had remained flat, and there had been no hurricanes, admission growth would have been 5.4%, which would have been in line with quarters two and three. We enter 2025 in a stronger position. With our new UHC contract in place, alongside our other two fully ramped-up national contracts, our home health teams are again able to be a full-service provider for our referral sources. Our teams are motivated and reenergized by the ability to turn their sole focus to admission and census growth. That focus is already driving results, with our census growth of 7.2% sequentially from January to February. January's ADC was 38,721 and grew to approximately 41,500 in February, with February exiting above 42,000. In 2024, we also increased the percentage of home health visits in payer innovation contracts. In the fourth quarter of 2023, 22% of non-Medicare visits were in payer innovation contracts. That rate grew to 48%…

We have seen continued growth momentum. Our hospice average daily census continues to grow sequentially in January and February. To complement our organic growth strategy in both segments, and to enter new markets with low capital cost, we continue our de novo strategy. In 2024, we successfully opened six de novo locations, five hospice and one home health. We funded 2024 de novo projects with EBITDA generated by 2022 and 2023 de novos. We have fourteen de novo projects in process, including the four continuing projects from 2024. Our concentration continues to be weighted towards adding hospice locations adjacent to home health operations because we benefit from talent recruiting, market brand recognition, and referral source awareness. Turning now to cost structure strategies updates.

On the Q3 call, we mentioned we would be closing or consolidating a number of branches. We are closing five home health and two hospice branches and will be consolidating one home health and two hospice branches. While notice has been given to staff and patients, branch closing dates vary by state due to notice requirements. We expect seven to be closed or consolidated by the end of quarter one 2025, with the remainder by the end of quarter two. We anticipate the impact of these closures and consolidations will improve 2025 adjusted EBITDA by approximately $1 million or by an annualized rate of $1.5 million. We also indicated we were outsourcing coding functions as another cost savings measure. All branches will be transitioned by the end of the first quarter, which we estimate will deliver $1.5 million in cost savings for the remainder of 2025. And now I will turn it over to Ryan Solomon who will cover the financial results of quarter four, and our 2025 guidance.

Thank you, Barb. Before recapping the results for the fourth quarter, I would like to thank Barb and the broader Enhabit, Inc. board for the opportunity to join the team here as CFO back in December. In my short time in the role, it is clear to me that our strategy is sound, and we are well-positioned to deliver meaningful shareholder value. Many of the key elements are in place to deliver revenue growth across both segments while also creating leverage on our cost base. Combining these elements with a continued focus on a healthy payer mix in our home health segment should improve the overall margin profile of our business. As we execute this strategy, we will continue to focus on deleveraging our balance sheet to provide more flexibility under our capital structure and open additional avenues for growth. Shifting to our Q4 consolidated results, we delivered improved performance sequentially both in revenue and adjusted EBITDA, despite one-time challenges within the quarter. In the fourth quarter, consolidated net revenue was $258.2 million, an increase sequentially of $4.6 million or 1.8% quarter over quarter, while a decrease of $2.4 million or 0.9% year over year. Consolidated sequential revenue growth was led by continued strong momentum in our hospice segment, on both volume and rate, partially offset by lower revenue from the Home Health segment primarily related to hurricane volume impacts early in the quarter. Consolidated revenue growth in the quarter translated into improved profitability sequentially, with consolidated adjusted EBITDA of $25.1 million in the quarter, an increase sequentially of $0.6 million or 2.4%, while remaining relatively flat year over year. Drivers of Q4 consolidated profitability improvement sequentially include improved revenue performance partially offset by our annual merit increase effective October first. Before shifting to our Q4 segment performance commentary, I…

And an inception of a prospective CMS rate increase in October 2025. On the cost side of the equation, we face two primary headwinds in 2025: wage inflation and normalization of our incentive compensation expenses as we improve performance. In regards to wage inflation, we assume similar 3% merit and other market-related increases in 2025 to what we experienced in 2024. The assumed continued wage inflation more than offsets our net reimbursement rate increases we received from Medicare in both segments as well as our payer innovation efforts. In both our home health and hospice segments, we believe we can partially offset compensation inflation through productivity and optimization improvements, and currently believe our unit cost will increase between 2% and 3% over the year. We expect our home office cost to remain relatively flat as a percent of the consolidated revenue at 9.7% of revenues, as merit increases and increased incentive compensation year over year are partially offset by the run rate value of savings of 2024 reductions and continued cost discipline in 2025. As previously outlined, key components of our strategy in 2025 are to grow while optimizing our payments, with a particular focus on limiting our rate of decline relative to prior years. The assumptions around the mix are challenging to forecast and have an outsized impact on overall guidance assumptions. With this in mind, the difference between the low and high end of our guidance range primarily is dependent upon our ability to optimize our payer mix. We expect to generate $47 million to $58 million of adjusted free cash flow in 2025. Adjusted free cash flow in 2025 will be impacted by our return to cash income tax payments, which represents a $7 million to $8 million incremental use of cash in 2025 that we did not experience in 2024, largely offset with improved cash flow from operations and assumed improvement in working capital related to speeding up accounts receivable collection cycle. With our assumed free cash flow generation, we remain focused on reducing leverage through 2025. With that, thank you for the time this morning, and I will turn the call back over to Barb for a few final comments.

Thanks, Ryan. Before we open the line for questions, I want to reflect on our team's drive in 2024. We remain committed to executing our strategies and delivering results. This was evidenced by our strong results in hospice, particularly in the second half of 2024. We made a large investment in our case management model in 2023, believing it key to changing our hospice business trajectory in a meaningful manner. Solving our capacity challenges through this investment allowed us to turn focus to our business development strategy, which resulted in increasing census growth throughout 2024 and into 2025. Similar for home health, we believe that executing on our payer strategy has laid the groundwork for long-term home health success. At the end of the fourth quarter, we were forced to turn our focus to replacing business. That noise is behind us. We are attacking 2025 laser-focused on growth. Operator, we will now open the lines for questions. Thank you. Please ensure you are not on speakerphone and that your phone is not on mute when called upon. Your first question comes from Brian Tanquilut of Jefferies. Your line is open.

Hey. Good morning. Maybe Barb, as I think about the momentum that we've seen you guys deliver in Q4, just curious how you're thinking about that carrying over into 2025, especially now that you have the BD team built out. And then maybe kind of related to that, just what are your thoughts on fee-for-service and your ability to gain share there going forward?

Sure. So first on the hospice, you know, we do feel confident that we have this case management model fully implemented and no capacity constraints. We've really started to build on that business development team. We do have the admissions department in every region now. It was something that was feedback from our referral sources that the key to really converting referrals is how quickly can we respond. So we believe those admission departments have been critical. And so, you know, you saw that sequential growth each month of 2024, and it's continued now in January and February. So we don't see any reason why that should not continue. And then on the home health side, really being able now to turn fully to being that full-service provider. You know, I mentioned the census growth that we've seen just from January to February. That has been with a nice mix. We're seeing a nice blend of, you know, adding the non-episodic to episodic and the fee-for-service. So we're seeing the teams really balance that payer mix as we're growing our census here in the new year.

Got it. And then maybe as I think about your comments in the press release about the payer innovation contracts and in your prepared remarks as well, what kind of visibility do you have there, and how are you thinking about the leverage that you have to convert non-payer innovation contracts into better-paying deals with many plans?

Sure. So we still have, you know, a lot of regional in the pipeline that we're working with. You know, there is, I think, a renewed interest in moving towards episodic. I think one of the things we've really been able to help payers realize is that, you know, when you get into an episodic arrangement, it puts the responsibility on the provider to manage those visits and maintain or grow their quality outcomes. And so there continue to be good discussions with regional plans on episodic contracts. So I don't, you know, I don't see our payer innovation team slowing down in

Awesome. Thank you.

The next question comes from Ryan Langston of T.D. Cowen. Your line is open.

Thanks. Good morning. Maybe just follow-up on Brian's question on the Home Health Payer Innovation side, I think in the slides, you have forty-nine new opportunities, thirty-one historical agreements, you're renegotiating. How does that relate back to twenty-five guidance? I guess, is there some potential maybe upside to the guide depending on how the out of those negotiations happen.

Yeah, Ryan. This is Ryan here. In regards to the guide, the way we thought about that, it's really consistent with the information that we provided in our investor presentation in December, we believe that nineteen to twenty-one million of overall revenue improvement based on pricing is intact. We think about the building blocks around that, it's really the CMS final rate rule, the net recently negotiated national agreement that we saw in place. We haven't assumed any sort of material kind of payer innovation, you know, incremental unit revenues in that overall kind of revenue guide that we provide.

Got it. And then just last one for me. The hospice revenue per day was up pretty nicely despite a pretty tough comp from last year. I think Ryan, you said maybe some benefit from hospice cap accruals versus the third quarter. Any way you could break down sort of the components between maybe sort of true rate and what those accruals were? Thanks.

Yeah. I think so when we think about the hospice cap accrual benefit, when we look at that, you know, overall, what we saw and we included in our supplemental materials was about a $1.4 million benefit. And so when you normalize for that, you're gonna see it more consistent with what you would have expected in an overall kind of Medicare rate increase that we saw within the quarter. So once you set that aside, I think it would be pretty consistent with what you would have expected from a Medicare rate increase.

Okay. Thanks. Appreciate it.

There are no further questions at this time. I will turn the call to Jobie Williams for closing remarks.

If you have any additional questions, please email investor relations at ehab.com. Thank you again for joining today's call.

This concludes today's conference call. Thank you for joining. You may now disconnect.