[UPDATED] Enhabit Will Remain a Standalone Business

The home health and hospice provider Enhabit, Inc. (NYSE: EHAB) will continue to operate as a stand-alone company instead of pursuing a sale.

The company has 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.

“We believe macro headwinds including, among other things, uncertain regulatory developments including Medicare reimbursement policies throughout the health care industry and an evolving antitrust landscape, a difficult healthcare operating environment, and persistently high interest rates ultimately stifled possibilities for a transaction that would enhance shareholder value,” said Enhabit Board Chair Leo Higdon in a statement. “Considering this, and other strategic alternatives reviewed with advisors during the review process, the Board determined the best way to enhance shareholder value at this time is to continue to operate as a stand-alone business.”

More details on the company’s decision ma come during its first quarter earnings call on Thursday.

Enhabit in Q4 2023 brought in $260.6 million, down year-over-year from $263.2 million. Net service revenues for the hospice segment rose 7.8% to more than $58 million in Q4 compared to the prior year’s quarter.

The strategic review followed a June 2023 push by one of Enhabit’s minority investors, AREX Capital Management, to pursue a sale or other alternative in a letter to the home health and hospice provider’s board of directors. AREX holds about 4.5% of Enhabit’s shares.

AREX was motivated in part by recent, massive deals involving similar companies. For example, during the past year the UnitedHealth Group (NYSE: UNH) subsidiary Optum closed a deal to purchase LHC Group for $5.4 billion and agreed to acquire Amedisys (NASDAQ: AMED) for $3.3 billion.

“With the strategic alternatives review process concluded, the management team is focused on operating Enhabit’s core businesses,” Jacobsmeyer said in a statement. “Our momentum exiting 2023 and through the first quarter of 2024, in which we hired additional frontline clinicians, negotiated more and better home health payer contracts, and controlled G&A expenses, instills excitement in our strategy and team, and we are confident we are taking the right steps to drive future growth to increase shareholder value.”