Enhabit : Q4 Earnings Presentation

Fourth Quarter Earnings Call

Supplemental Information

March 7, 2024

Disclaimers

Forward looking statements

Statements contained in this presentation which are not historical facts, such as those relating to future events, projections, financial guidance, legislative or regulatory developments, strategy or growth opportunities, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All such estimates, projections, and forward-looking information speak only as of the date hereof, and Enhabit undertakes no duty to publicly update or revise such forward-looking information, whether as a result of new information, future events, or otherwise. Such forward-looking statements are necessarily estimates based upon current information and involve a number of risks and uncertainties, many of which are beyond our control. Actual events or results may differ materially from the results anticipated in these forward-looking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors which could cause actual events or results to differ materially from those estimated by the Company include, but are not limited to, our ability to execute on our strategic plans; regulatory and other developments impacting the markets for our services; changes in reimbursement rates; general economic conditions; changes in the episodic versus non-episodic mix of our payors, the case mix of our patients and payment methodologies; our ability to attract and retain key management personnel and healthcare professionals; potential disruptions or breaches of our or our vendors', payors', and other contract counterparties' information systems; the outcome of litigation; our ability to successfully complete and integrate de novo developments, acquisitions, investments, and joint ventures; our ability to successfully integrate technology in our operations; our ability to control costs, particularly labor and employee benefit costs; and factors that affect the timing and options in our strategic review and, following our strategic review, consummating a strategic transaction on attractive terms or at all. Additional information regarding risks and factors that could cause actual results to differ materially from those expressed or implied by any forward-looking statement in this presentation are described in reports filed with the SEC, including our annual report on Form 10-K and subsequent quarterly reports on Form 10- Q, copies of which are available on the Company's website at http://investors.ehab.com.

Note regarding presentation of non-GAAP financial measures

This presentation includes certain "non-GAAP financial measures" as defined in Regulation G under the Securities Exchange Act of 1934, including Adjusted EBITDA, Adjusted EBITDA margin, Adjusted earnings per share, and Adjusted free cash flow. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP are presented at the end of this presentation. Our Form 8-K, filed with the SEC as of the date of this presentation, provides further explanation and disclosure regarding Enhabit's use of non-GAAP financial measures and should be read in conjunction with this supplemental information.

Note regarding presentation of same-store comparisons

The Company uses "same-store" comparisons to explain the changes in certain performance metrics and line items within its financial statements. Same-store comparisons are calculated based on home health and hospice locations open throughout both the full current period and the immediately prior period presented. These comparisons include the financial results of market consolidation transactions in existing markets, as it is difficult to determine, with precision, the incremental impact of these transactions on the Company's results of operations.

Enhabit Home Health & Hospice

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Contents

2023 Year in Review	4
2024 Priorities	5
Quarterly Results at a Glance	6
Consolidated Results	7-8
Clinical Expertise and High-Quality Outcomes	9
Payor Innovation	10
De Novos and Acquisitions	11
Home Health Segment	12-13
Hospice Segment	14-15
Consolidated Adjusted EBITDA	16
Debt and Liquidity Metrics	17
Adjusted Free Cash Flow	18
2024 Guidance and Guidance Considerations	19-20
Adjusted Free Cash Flow Assumptions and Uses of Adjusted Free Cash Flow	21-22
Appendix, Including Company Overview, Operational Metrics & Reconciliations to GAAP	23-39

2023 Year in Review

First full year as a standalone company

Payor innovation

• 41 new agreements (59 since inception of team)
• • Two new national agreements
• Success shifting non-episodic visits into payor innovation contracts
• • Q1 = 5%; Q4 = 25%

De novo strategy

• Eight locations opened
• Two additional locations pending regulatory approval

	Successful recruitment		High-quality
	and retention efforts		outcomes
•	597 net new full-time nurses	•	30-day hospital readmission rate 20.5% better than
•	Eliminated all agency nursing contract labor		national average
•	Implemented hospice case management model	•	Hospice visits in last days of life 53.2% better than
•	No staffing-constrained hospice locations		national average
		•	Award-winning quality/patient experience

Enhabit Home Health & Hospice

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2024 Priorities

Home Health

• Stabilize Medicare as a % of total home health revenue
• Leverage payor innovation strategy
• • Improve Medicare Advantage rates
  • Shift away from lower rate contracts
• Grow through increased clinical staffing, ability to accept new payors and alignment of clinical resource utilization with patient acuity and complexities

Hospice

• Grow census through improved staffing capacity with case management model
• Gain operating leverage in hospice fixed cost structure by growing census
• Increase use of analytics to drive high-quality care via case management model
• Focus on efficiencies in referral to admission process

De Novos

• Open 10 de novo locations
• Ramp up staffing, referral and admission growth in de novo locations opened in 2023

People Strategy

• Continue to increase net full-time nursing and therapy headcount to support home health growth
• Focus on employee engagement to retain workforce

Enhabit Home Health & Hospice

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Quarterly Results at a Glance

$260.6M

Revenue

Home Health

Strong growth in Medicare Advantage admissions

Non-episodic admissions grew 34.2%, driving total admissions growth of 3.9% year over year.

Continued payor innovation progress resulted in 11 new Medicare Advantage agreements negotiated during Q4 2023.

New national advanced episodic agreement effective January 1, 2024

Cost per visit flat year over year

30-day hospital readmission rate

20.5% better than national average

Hospice

Sequential growth in average daily census

Cost per day decreased to $76 in Q4 2023 after stabilizing at $77 for the prior three quarters.

53.2% better than the national average for patient visits in the last days of life

Consolidated

The continued home health payor mix shift impacted revenue and Adjusted EBITDA.

The home health payor mix shift reduced consolidated net service revenue and Adjusted EBITDA by approximately $8 million.

Continued success in recruitment and retention

25% of non-episodic visits now in payor innovation contracts at improved rates

$6.4M	$(0.13)
Net Loss attributable	Reported EPS
to Enhabit, Inc.
$25.2M	$0.06
Adjusted EBITDA	Adjusted EPS
52,007	2,872
Home Health Total	Hospice Admissions
Admissions
54,108	3,433
Home Health	Hospice Average
Completed Episodes	Daily Census
$2,924	$162
Home Health	Hospice Revenue
Revenue per
per Day
Completed Episode
$92	$76
Home Health Cost	Hospice
per Visit	Cost per Day

Enhabit Home Health & Hospice

Reconciliations to GAAP provided in Appendix

6

Consolidated Results

($ in millions, except per share data)	2023	Q4	2022		'23 vs. '22
	$209.5		$215.8
Home health net service revenue						(2.9)%
Hospice net service revenue			$51.1				$47.4	7.8 %
Total net service revenue			$260.6				$263.2	(1.0)%
	% of Revenue		% of Revenue
Cost of services	51.2 %		$133.5		50.6 %		$133.3	0.2%
Gross margin	48.8 %		$127.1		49.4 %		$129.9	(2.2)%
General and administrative expenses	38.9 %		$101.4		38.0 %		$100.0	1.4%
Total operating expenses	90.1%		$234.9		88.6%		$233.3	0.7%
Other income			-			$0.9
Net income attributable to noncontrolling interests			$0.5				$0.5
Adjusted EBITDA			$25.2				$30.3	(16.8)%
Adjusted EBITDA margin			9.7 %				11.5 %
Impairment of goodwill			$-			$(109.0)	N/A
Net loss attributable to Enhabit, Inc.			$(6.4)				$(95.2)	93.3%
Reported diluted EPS			$(0.13)				$(1.91)	93.2%
Adjusted EPS (see calculations on slides 32 and 33)			$0.06				$0.17	(64.7)%
General and administrative expenses in the above table exclude:
Unusual or nonrecurring items that are not typical of ongoing operations(1)			$11.4				$2.5
Stock compensation expense			$1.7				$2.1

1. Unusual or nonrecurring items in Q4 2023 include costs associated with nonroutine litigation, the strategic review process and restructuring activities; in Q4 2022, they include one-time standalone transition costs and costs associated with nonroutine litigation.

Enhabit Home Health & Hospice

Reconciliations to GAAP provided in Appendix

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Consolidated Results (continued)

Consolidated revenue decreased $2.6 million, or 1.0%, year over year

Consolidated Adjusted EBITDA decreased $5.1 million, or 16.8%, year over year

• The continued shift to more non-episodic admissions in home health impacted consolidated revenue and Adjusted EBITDA by approximately $8 million, net of the impact from improved pricing of payor innovation contracts.

Continued success in recruitment and retention

• 21.5% increase in full-time nursing candidate pool year over year resulted in 119 net new full-time home health nursing hires in Q4 2023
• Agency nursing contract labor eliminated as of December 31, 2023

Enhabit Home Health & Hospice	Reconciliations to GAAP provided in Appendix	8

Clinical Expertise and High-Quality Outcomes

Standardized

Protocols

Disciplined Use of

Technology

Motivated Clinicians

Superior

Performance

			Enhabit	National	% Better
			Than
				Average	Average
	QoPC	1	3.5	3.0	16.7%	89% of our home health agencies are 3	1
ü Star Rating					Stars or higher; 34% are 4 Stars or higher
	HHCAHPS2	3.7	3.5	5.7%	99% of our home health agencies are 3	2
ü Star Rating					Stars or higher; 66% are 4 Stars or higher
ü	30-Day Hospital	14.0%	17.6%	20.5%	% of patients readmitted to an acute care
Readmission	hospital within 30 days of start of care or
3					resumption of care
Rate
	Hospice					% of patients who received in person visits
		73.4%	47.9%	53.2%	from RN or medical social worker on at
	Visits in Last
	least two out of the final three days of the
ü Days of Life4
			patient's life

1. Quality of Patient Care (QoPC) Star Ratings as of January 2024 for dates of service full year 2022; April 2022 through March 2023
2. Home Health Care Consumer Assessment of Healthcare Providers (HHCAHPS) Patient Survey Star Ratings as of January 2024 for dates of service July 1, 2022 - June 30, 2023
3. Research Institute for Home Care 2022 Chartbook (data from Medicare Standard Analytics Files for CY 2022), Enhabit data is as of Q4 2023
4. Medicare fee for service claims data from January 2021 to December 2022 (source Medicare Provider Data catalog - January 2024)

Enhabit Home Health & Hospice

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Payor Innovation

Payor innovation strategy continues to foster Medicare Advantage growth.

• 11 new agreements negotiated in Q4 2023
• • Eight negotiated at episodic rates and three at improved per visit rates
• 59 agreements negotiated since inception of payor innovation team
• • 41 negotiated at episodic rates and 18 at improved per visit rates

New national payor innovation contract effective January 1, 2024

• Represents renegotiation of multiple disparate regional per- visit agreements into one, standardized national agreement with additional markets, favorable terms and reduced administrative burden
• Advanced episodic model that aligns incentives to prioritize access to home care for patients discharging from institutional settings

25% of non-episodic visits are now in payor innovation contracts at improved rates.

Visits from payor innovation contracts as a percentage of total non-episodic visits:

Q1 23

Q2 23

Q3 23

Q4 23

Enhabit Home Health & Hospice

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