Enhabit Responds to Investor AREX Capital’s Call for Board Transitions

Enhabit Inc. (NYSE: EHAB) and shareholder AREX Capital Management continue to feud over the home health and hospice provider’s decision to remain an independent company.

Enhabit recently completed a strategic review, which began last August, to consider alternatives such as a merger or sale. Progress on the company’s goals had not been fast enough, CEO Barbara Jacobsmeyer said at the time. The review focused heavily on a potential sale, but, ultimately, Enhabit received no formal proposals for a transaction, the company reported.

Meanwhile, AREX has been calling on the company to pursue a sale. Now, the investor is calling on Enhabit to replace some board members. Arex holds 4.9% of Enhabit’s shares.


“The last two years have not been easy for the home health and hospice industries, but Enhabit’s peers have demonstrated an ability to navigate these challenges without substantially reducing their profitability. While peers caught colds, Enhabit caught pneumonia,” AREX Capital wrote in a statement. “We believe Enhabit’s significant underperformance versus peers is a direct result of the Board lacking the necessary industry expertise to hold management accountable.”

Dallas-based Enhabit has 255 home health locations and 112 hospice locations across 34 states. The company spun off from Encompass Health Corp. (NYSE: EHC) in 2022.

Enhabit’s revenue reached $262.4 million in the first quarter, with its home health segment bringing in $213.2 million of that total. The company’s hospice services revenue reached $49.2 million, decreasing slightly by 0.2% year-over-year.


The company has issued a response to AREX’s latest feedback on the strategic review, including a defense of its board.

“AREX continues to criticize past actions, including in many cases those that were made prior to Enhabit’s separation,” Enhabit wrote. “To be clear, seven of the proposed eight Enhabit independent directors were not even on the Board at that time, having joined the Company on the date of the spin-off or thereafter.”

Enhabit is holding a shareholder vote to determine the future of its board, with results expected later this summer.

In its response to AREX, Enhabit also pointed to growth trends in its hospice business.

“Enhabit’s hospice revenue grew by 2.9% from Q2 2022 to Q1 2024, while Amedisys’ revenue grew by 1.3% during the same period,” Enhabit continued. “Similarly, Enhabit’s hospice admissions grew by 6.9% from Q2 2022 to Q1 2024.”

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