top of page
Enhabit Won’t Quantify New Goodwill Accounting Blunder
The error comes months after the hospice provider botched its accounts receivables calculation and a year after being spun off from a firm that recently settled fraud allegations for nearly $50 million.
September 1, 2023
Two quarters after revealing multiple accounting errors that resulted in the misstatement of its 2022 financials, Enhabit Inc. (EHAB), a hospice services and home health care provider, the company acknowledged a new goodwill accounting error related to the improper allocation of carrying amounts to reporting units.
Enhabit says the error resulted in adjustment to its interim financial statements for the three and six months ended June 30, 2023 to goodwill and net income but did not expressly quantify the impact for investors.
The company recorded an $85.8 million goodwill impairment in the latest quarter.
The impairment comes months after Enhabit announced it would not be able to file its most recent annual report on time. The company blamed the delay on needing more time to work on its goodwill impairment analysis.
In the same late filing notice, Enhabit also revealed it had understated its bad receivables allowance by $12 million, or 7.4% in the fourth quarter of 2022. While nearly half was a result of an update to Enhabit’s collections assumptions based on preliminary first quarter 2023 data, the company also admitted:
“Of the $12 million adjustment, a little more than half was attributable to failures in the Company’s computation of the accounts receivable.”
Though it did not restate its previously issued financials, Enhabit adjusted its net service revenue, accounts receivable, goodwill and net income for the year ended December 3, 2022.
Enhabit was spun out from Encompass Health (EHC) a little more than a year ago. Three years ago, Encompass paid the Department of Justice (DOJ) $48 million to settle fraud allegations that included patient admissions to rehabilitation facilities that were not medically necessary.
Become a DuDil Insider
Get our due diligence alerts before they're released publicly & be first to know.
bottom of page