Average daily census growth propelled Enhabit Inc. (NYSE: EHAB) to a strong quarter for its hospice segment in early 2025.

With shortfalls in its home health business, hospice is a prime growth driver for Enhabit. The company’s hospice ADC rose 12.3% year over year to 3,809, up from 3,391 in Q1 2024. Enhabit also saw an 8% increase in admissions over the prior year’s quarter. Enhabit’s ADC has grown sequentially in every month since January 2024.

These successes can be attributed not only to increased referrals, but also to a timely response by the company’s hospice team, which is accelerated by the company’s case management model and regional consolidation of its admissions departments, according to CEO Barb Jacobsmeyer. 

“Our referrals were up in the first quarter year over year, about 3% but if you recall, last year, we put in regional admissions departments so that we can have a very quick and timely answer to our referral sources. I do think that has helped the conversion rate,” Jacobsmeyer said in a Q1 earnings call. “Our conversion rate was up 310 basis points. Our conversion rate is 79%. It is a combination of the referrals, but also some of the work that we put into that timely response.”

Enhabit operates more than 225 home health locations and 110 hospice locations across 34 states. For growth, the company is highly reliant on its de novo strategy. Enhabit opened one new location so far in 2025, with 13 more in the works, Jacobsmeyer said. Enhabit opened five new hospice operations during 2024, building on seven that were established during 2022 and 2023.

The company’s Q1 net service revenue reached $259.9 million, down from $26.4 million year over year, with the decline attributed to challenges in its home health business. Meanwhile, hospice revenue rose 20.5% to $59.3 million, up from $49.2 million in the prior year’s quarter.

Jacobsmeyer said that she expects this hospice growth to continue throughout the remainder of the year.

“Because of the work that we’ve done to diversify the referral forces and the focus on the admission department, we don’t anticipate any change in our growth trajectory,” she said in the earnings call.

Enhabit’s Q1 adjusted EBITDA increased 5.1% year over year to $26.6 million, compared to $25.3 million in the first quarter of 2024.

“We saw positive stock reaction to [Enhabit’s] Q1 EBITDA beat, which was driven by strength in hospice, but was also characterized by continued positive admissions growth in non-Medicare home health and stabilizing segment gross margins, aided by new, better-priced Medicare contracts and normalized labor inflation,” Brian Tanquilut, an equity analyst at Jefferies, indicated in a note shared with Hospice News.