Enhabit Inc. (NYSE: EHAB) has funneled its resources toward organic growth, rather than acquisitions, amid high hospice multiples that have lingered for several years. However, the company has not completely ruled out merger and acquisition opportunities.

De novos have been key to Enhabit’s expansion, CFO Ryan Solomon said at the Bank of America Home Care Conference.

Though quieter on the hospice M&A front as record high valuations dominate the space, Enhabit is anticipating increased potential for “meaningful” opportunities in the new year, Solomon stated.

“We feel that increased investment is something that we could target in 2026, whether it be through de novos or targeted strategic M&A,” Solomon said during the conference. “We’re going to continue to be very disciplined in our approach to make sure that we’re not targeting M&A just to acquire. Hospice continues to be relatively high multiples, not to say that there aren’t potentially opportunities there from and M&A perspective. We’ve got an awful lot of opportunities …”

Dallas-based Enhabit has 362 hospice and home health locations across 34 states. Enhabit was formed in 2022 when Encompass Health (NYSE: EHC) spun off its home health and hospice assets in 2021.

The company’s M&A activity has tapered down in recent years. Enhabit’s last purchase occurred in December when it acquired Southwest Florida Home Care, Inc.’s home health agency in Fort Myers, Florida. That same year Enhabit picked up Texas-based Caring Hearts Hospice. Financial terms for both deals were undisclosed.

Organic growth has been an important lever for the company’s hospice segment, according to Enhabit President and CEO Barb Jacobsmeyer.

The company is within range of its goal to open 10 new locations during the calendar year of 2025. Enhabit launched its seventh de novo as of the third quarter.

About 109 of Enhabit’s hospice locations overlap in its home health markets. This colocation strategy has been a crucial part of building brand recognition among communities, payers and referral sources, Jacobsmeyer indicated.

Decision-making processes around organic growth are made with careful consideration of the different needs of local patient populations and of the state licensing requirements, she said.

“[It’s] where should we prioritize putting hospice where we have home health?” Jacobsmeyer said during the conference. “There’s a lot of benefit from the branding. People are already aware of Enhabit in the market, both from a referral source as well as a clinical base. So, it really comes down to that local market and what does that state require as far as putting in a de novo.”