Enhabit Reports Strong Growth and Operational Gains in Q1 2025 as Strategic Execution Delivers Results
Enhabit a prominent provider of home health and hospice care services, announced its financial results for the first quarter ended March 31, 2025, reflecting solid progress across its operational, financial, and strategic initiatives.
President and Chief Executive Officer Barb Jacobsmeyer attributed the company’s strong performance to focused execution and disciplined strategy. “Enhabit’s first quarter 2025 results are a product of steadfast execution of our strategies,” she stated. “Home health census grew 3.7% sequentially and hospice census grew 12.3% year over year. The combination of strong growth, improved profitability, and continued balance sheet improvements resulted in a leverage ratio now below 4.5 times. This enables us to formally exit the covenant relief period restrictions in our credit agreement and allows us to benefit from improved pricing on our debt and added flexibility going forward.”
Financial Overview
For the first quarter of 2025, Enhabit reported net service revenue of $259.9 million, reflecting the company’s steady topline expansion. Net income attributable to Enhabit, Inc. reached $17.8 million, bolstered in part by a $14.7 million gain on the sale of an investment, net of tax. The company’s adjusted EBITDA totaled $26.6 million, representing a 5.1% increase year over year and a 6.0% sequential gain from the previous quarter. These results underscore Enhabit’s efforts to improve operational efficiency and maintain consistent earnings performance despite a challenging reimbursement environment in post-acute care.
Earnings per share (EPS) came in at $0.35, while adjusted diluted EPS stood at $0.10, excluding the impact of one-time items such as the aforementioned investment gain. The company’s improved bottom line reflects a mix of strategic growth in both the home health and hospice segments, disciplined cost management, and favorable movement on the balance sheet.
Operational Highlights
Enhabit made measurable progress in both its key business segments—home health and hospice—during the quarter. In the home health business, non-Medicare admissions rose 7.4% year over year, while total admissions increased 0.7%. However, when adjusting for the 2024 leap year and the closure of certain branches in Q1 2025, normalized admissions growth reached 2.5%. This adjusted metric provides a clearer picture of Enhabit’s organic growth trajectory, stripping out temporary factors that may distort headline figures.
Medicare average daily census (ADC) in home health grew by 1.5% sequentially, marking the second consecutive quarter of Medicare ADC growth. Meanwhile, total home health ADC increased by 3.7% on a sequential basis, with year-end momentum carrying into the first quarter. The company also reported exiting Q1 2025 with total ADC above prior-year levels—an encouraging sign that volume recovery and expansion efforts are yielding positive results.
One of the most important financial indicators in home health—cost per patient day—declined by 2.4% year over year, reflecting success in Enhabit’s cost management initiatives and operational streamlining.
Hospice Segment: A Standout Performer
The hospice segment demonstrated particularly robust growth in the quarter. Average daily census in hospice rose by 12.3% year over year, while admissions increased 8.0%, signaling rising demand for end-of-life care services and the success of Enhabit’s outreach and referral strategies. Notably, the company achieved sequential growth in hospice ADC every month since January 2024, suggesting sustained momentum across geographies.
Operational leverage was on full display in this segment, with hospice Adjusted EBITDA surging 64.8% year over year. This exceptional gain came alongside a modest 0.8% year-over-year decrease in hospice cost per patient day, reinforcing the effectiveness of scale efficiencies and resource allocation. Enhabit also expanded its hospice footprint with the opening of one new de novo hospice branch during the quarter, reflecting its ongoing investment in long-term growth.
Cost Control and Balance Sheet Strength
On the expense front, Enhabit continued to benefit from disciplined cost containment initiatives. Home office general and administrative (G&A) expenses declined by 1.3% year over year, as the company maintained a firm grip on overhead while driving volume growth across its service lines.
The company’s financial position further strengthened during the quarter through aggressive debt reduction. Enhabit reduced its bank debt by $25.0 million, bringing the year-over-year reduction in bank debt to $60.0 million. As a result, Enhabit reported a leverage ratio below 4.5x, achieving this milestone a full quarter earlier than required by the terms of its credit agreement.
This improvement in financial leverage has important implications. It enables Enhabit to formally exit its covenant relief period, which had placed certain restrictions on financial flexibility. With these restrictions lifted, the company now gains access to more favorable pricing on its debt and increased flexibility in pursuing strategic investments, debt refinancing, or shareholder return strategies.
