Q4 2021 Earnings Key Takeaways

On Feb. 2, we released our Q4 earnings report and issued 2022 guidance. When we last released our earnings in October, we decreased our 2021 guidance in light of ongoing COVID-19-related challenges, particularly staffing shortages affecting the home health and hospice segment. As predicted, our Q4 financial results were solid and in line with the guidance we provided at that time.

The continued dedication of our team members allowed us to make significant operational and strategic progress and to generate strong financial results in 2021 in spite of these challenges. On a consolidated basis for fiscal year 2021, we generated 10.3 percent revenue growth and 19.5 percent Adjusted EBITDA growth, surpassing the $1 billion milestone in Adjusted EBITDA for the first time in our company’s history. Although we anticipate continued challenges related to the pandemic, we are confident in the growth opportunities for each of our businesses.

Enhabit Home Health & Hospice Spin-off

As we recently announced, we are proceeding with the spin-off of our home health and hospice business as an independent, publicly traded company under the new name Enhabit Home Health & Hospice. We believe this decision will provide a number of significant benefits, including enhanced management focus, separate capital structures and allocation of financial resources, better alignment of management incentives and the creation of independent equity currencies. The announcement of the spin-off and the introduction of the Enhabit brand have been received with great enthusiasm by our employees in the home health and hospice segment. We are targeting completion of the spin-off in the first half of 2022.

Continued COVID-19 Challenges

Continued COVID-19 surges and industry-wide labor pressures have led to staffing challenges throughout the company, but our home health and hospice segment continues to experience the greatest impact. We estimate a loss of at least 1,700 total home health admissions in Q4 as a result of staffing constraints. However, we made progress on key staffing initiatives and saw positive movement in volume growth. Our rehabilitation hospitals experienced a significant increase in volume that drove revenue growth in Q4. This accelerated demand for our services in a tight market for skilled clinicians necessitated an increase in sign-on and shift bonuses as well as agency staffing.

While challenges remain, we believe the pandemic has created an even stronger awareness of the high level of care we provide in our inpatient rehabilitation hospitals and further reinforced home as a preferred care setting. We expect stakeholders will increasingly divert admissions away from SNFs to higher value IRFs and home health providers. And, as the population ages, the demand for our high-quality services will increase.

Maximizing Our Growth Strategy

We continued to invest in capacity expansions across our service lines. In 2021, we opened eight new rehabilitation hospitals and added 117 beds to existing hospitals. We also closed on approximately $102 million of home health and hospice acquisitions and opened three new locations. In 2022, we plan to open 10 new rehabilitation hospitals and add more than 100 beds to existing hospitals. We will continue to pursue home health and hospice acquisitions and currently have an active pipeline of potential deals. We also plan to open 10 additional new home health and hospice locations.

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