Enhabit (EHAB +0.11%), a leading US provider of home health and hospice services, released its second quarter 2025 earnings on August 6, 2025. The report highlighted a modest revenue increase and stronger-than-expected profitability, with GAAP revenue exceeding analyst estimates and non-GAAP EPS surpassing expectations. GAAP revenue was $266.1 million, above the $263.4 million analyst expectation and up from $260.6 million in the prior year period. Non-GAAP earnings per share were $0.13, beating the consensus estimate of $0.10 and up from $0.07 a year earlier. Management raised full-year guidance for revenue, adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), and adjusted EPS. The quarter showcased stability in home health and accelerated growth in the hospice segment, though some profit margins declined in home health.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.13 | $0.10 | $0.07 | 85.7 % |
| Revenue | $266.1 million | N/A | $260.6 million | 2.1 % |
| Adjusted EBITDA | $26.9 million | $25.2 million | 6.7 % | |
| Adjusted EBITDA Margin | 10.1 % | 9.7 % | 0.4 % | |
| Free Cash Flow (Non-GAAP) | $10.9 million | $8.5 million | 28.2 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Key Success Factors
Enhabit specializes in providing skilled home health and hospice care across 34 states. It delivers nursing, therapy, and specialized medical services to patients in their homes and offers end-of-life care through its hospice branches. With 249 home health and 114 hospice locations, Enhabit is one of the largest standalone operators in its sector.
The business model relies on both Medicare and non-Medicare payers, blending government reimbursements with commercial contracts. Key focus areas include optimizing its mix of payer contracts, expanding value-based payment arrangements, and leveraging its dense branch network to improve operational efficiency. The company also invests heavily in predictive analytics and technology, aiming to enhance both outcomes and cost control. Success hinges on managing labor costs, navigating regulatory changes, and maintaining strong referral relationships in an aging demographic environment.
Quarter in Review: Segment Results and Financial Trends
Revenue (GAAP) grew 2.1%, with both segments reporting different trends. In home health, segment net service revenue (GAAP) declined 2.0% to $205.9 million, mainly due to a 4.7% drop in Medicare revenue. Non-Medicare home health revenue, however, rose 1.7% (GAAP) as payer contract strategies continued to show results. Total home health admissions grew 1.3% year over year, driven by a 5.2% rise in non-Medicare admissions. However, Medicare admissions dropped 3.7%, and recertifications, which track patients re-entering care, fell 2.7%.
Profitability pressures in home health were clear. Adjusted EBITDA for the segment declined by 11.1% to $39.3 million, while the segment EBITDA margin compressed to 19.1% from 21.0% in Q2 2024. Controlling costs helped: home health cost per patient day was flat year over year despite labor market pressures. The company reduced visits per episode by 2.1% compared to Q2 2024, indicating improved efficiency but also raising questions about maintaining care quality. Revenue per episode increased 2.2%.
The hospice segment provided the period’s most notable gains. Hospice net service revenue (GAAP) jumped 19.4% year over year to $60.2 million. Admissions grew 8.7%, and average daily census, a critical measure of patients served each day, rose 12.3%. Segment Adjusted EBITDA (non-GAAP) reached $14.0 million, up 53.8% from the prior year. The hospice Adjusted EBITDA margin strengthened to 23.3%, up from 18.1% in Q2 2024. Cost control stood out: hospice cost per patient day increased just 1.0%, far below revenue per patient day growth of 6.3%, boosting margins.
Enhabit opened three new locations in the period, signaling continued expansion. The company also paid down $10.0 million in debt, part of a broader deleveraging plan reducing overall interest expense. However, some challenging trends persist: home health Medicare census remains in decline, total segment revenue fell, and recertification rates (patients re-qualified for care) decreased. Segment Adjusted EBITDA margin in home health narrowed by 1.9 percentage points year over year (non-GAAP). On the hospice side, the discharged average length of stay slipped to 103 days from 108, a trend that may reduce profitability if it extends further.
Enhabit is not a dividend-paying company.
Strategy, Market Drivers, and Technology
Home health care includes skilled nursing and therapy services provided to patients in their homes—an alternative to facility-based care. Hospice, in contrast, focuses on comfort and symptom management for terminally ill patients, typically provided in the patient’s home. Enhabit’s recent strategy prioritizes expanding payer innovation contracts—agreements that often link payments to care episodes and patient outcomes.
Demographic tailwinds continue to support the industry, with the US senior population expected to reach 78.3 million by 2040. Enhabit’s geographic scale, spread across 34 states, positions it to capture increasing demand for both service lines. The company’s investments in technology have notable effects. It uses Medalogix Pulse, a predictive analytics platform, to optimize home health visit allocation by patient need, reducing unnecessary visits while maintaining care standards. Two internal apps, now in pilot testing, further streamline staff communication and referral management.
Outlook and What to Watch
Management raised its guidance for FY2025. Updated expectations for net service revenue (GAAP) are now between $1.060 and $1.073 billion for full-year 2025, compared to the previous guidance of $1.050 to $1.080 billion. Adjusted EBITDA is now guided to $104 to $108 million for 2025, up from $101 to $107 million previously. Adjusted EPS guidance increased to a range of $0.47 to $0.55 for 2025, compared to the previous range of $0.41 to $0.51. This reflects confidence in hospice momentum, continued operational efficiency, and ongoing cost control initiatives.
The company did not announce any dividend policy changes, confirming it does not currently pay a dividend. For the rest of the year, investors should watch ongoing trends in home health Medicare volumes and margins, the company’s success in renegotiating payer contracts, and whether technology continues to foster both productivity and quality. Contract renewals, regulatory changes, shifts in patient mix, and the impact of ongoing branch expansion all remain critical factors moving forward.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
