What do you think of the revised guidance for rest of 2023 will do in terms of buy price? My new estimate is around $19.08/share as opposed to this Friday's close of $11.5/share. I currently don't have a position but would be tempted to enter at $11/share. Great writeup!
As for my thoughts post Q2, Bloomberg and CapIQ put have cut 2024 AEBITDA estimates to about $110M. A 12.5 multiple on that gets me to $1,375M in enterprise value, and $835M in equity value ($16.7 a share) after subtracting $540M in net debt.
Now this is obviously a much less appealing price (especially when you bought at $14.7!) but I think that understates Enhabit's value. In the earnings call, management mentioned standalone costs were adding about $26-$28M in incremental opex spending. A strategic buyer would be able to take those costs to zero. If you add those back, then EBITDA is closer to the $125M I stated in my original writeup.
An acquirer also likely has better insurance contracts than the one Enhabit currently has now, which could be further accreditive for near-term EBITDA.
Hope this helps! How did you get to $19 for your valuation?
Exactly, My NTM adj. EBITDA was a heartier $120M to a buyer based on EHAB being a young public company and being currently burdened with $15M of public company costs.
What do you think of the revised guidance for rest of 2023 will do in terms of buy price? My new estimate is around $19.08/share as opposed to this Friday's close of $11.5/share. I currently don't have a position but would be tempted to enter at $11/share. Great writeup!
Thanks for the kind words Sanfiyy!
As for my thoughts post Q2, Bloomberg and CapIQ put have cut 2024 AEBITDA estimates to about $110M. A 12.5 multiple on that gets me to $1,375M in enterprise value, and $835M in equity value ($16.7 a share) after subtracting $540M in net debt.
Now this is obviously a much less appealing price (especially when you bought at $14.7!) but I think that understates Enhabit's value. In the earnings call, management mentioned standalone costs were adding about $26-$28M in incremental opex spending. A strategic buyer would be able to take those costs to zero. If you add those back, then EBITDA is closer to the $125M I stated in my original writeup.
An acquirer also likely has better insurance contracts than the one Enhabit currently has now, which could be further accreditive for near-term EBITDA.
Hope this helps! How did you get to $19 for your valuation?
Exactly, My NTM adj. EBITDA was a heartier $120M to a buyer based on EHAB being a young public company and being currently burdened with $15M of public company costs.