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Enhabit’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter fell to $25.3 million, a decrease of 46.2% compared to the year-earlier quarter, the home health and hospice company reported late Tuesday. Total net service revenue slipped by 3.4% to $265.1 million.

The shift to non-episodic home health admissions and the resumption of sequestration reduced net service revenue and adjusted EBITDA by about $10 million, Enhabit said in an earnings release.

“Adjusted EBITDA decreased year over year primarily due to the continued shift to more non-episodic admissions in home health, the resumption of sequestration, and increased general and administrative expenses,” the firm stated.

While adjusted EBITDA for home health dropped by 23.2% to $44.3 million, total admissions grew by 1.2% to 53,943. Adjusted EBITDA for hospice decreased by 33.1% to $8.5 million. Total hospice admissions decreased by 3.8% to 3,122.

“The first quarter was underscored by progress in two of our critical success factors for 2023,” Enhabit’s President and Chief Executive Officer Barb Jacobsmeyer said in a statement. “Our sequential admissions growth for home health and hospice was possible due to our continued efforts in recruitment and retention of clinical staff and our payer innovation team negotiating a new national payer agreement and two convener agreements with national reach. With our expansion of Medicare Advantage contracts and improved rates combined with reduced staffing capacity constraints, we expect to see improvements in our bottom line throughout 2023.”

Sequestration was also a factor in the company’s disappointing earnings in the fourth quarter of 2022, Enhabit said in February.