Enhabit Elects New Board Members

Enhabit Inc. (NYSE: EHAB) has elected a new board of directors, according to preliminary results of a shareholder vote today.

The revamped board includes eight members proposed by Enhabit and one put forth by minority shareholder AREX Capital Management. Final results of the vote will be released in a U.S. Securities and Exchange Commission filing next month, the company indicated in a press release.

“The results announced today are considered preliminary until final results are tabulated and certified by the independent Inspector of Elections,” Enhabit said in a statement. “Once the voting results are finalized, directors will each serve a one-year term expiring in 2025.”

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The vote follows a feud between Enhabit and AREX that has gone on for more than a year. AREX holds 4.9% of Enhabit’s shares.

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. Subsequently, the investor called on Enhabit to replace three board members with individuals they proposed.

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“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 preceding the vote. “We believe Enhabit’s significant underperformance versus peers is a direct result of the Board lacking the necessary industry expertise to hold management accountable.”

Members of the incoming board include:

  • Jeffrey W. Bolton
  • Tina L. Brown-Stevenson
  • Charles M. Elson
  • Erin P. Hoeflinger
  • Barbara A. Jacobsmeyer
  • Stuart M. McGuigan
  • Gregory S. Rush
  • Barry P. Schochet
  • Mark W. Ohlendorf

Only one of these, Ohlendorf, was proposed by AREX.

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.

The company will release its comprehensive earnings report next month. But a preliminary report indicates that Enhabit has seen five straight months of sequential hospice average daily census growth, though the document did not quantify that increase. Meanwhile, its home health segment saw a 6.4% year-over-year rise in admissions during the second quarter.

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