UBS Lowers Enhabit Price Target to $8.50 from $10, Maintains Neutral Rating

UBS has lowered the price target for Enhabit (EHAB) to $8.50 from $10 and maintains a Neutral rating. The Q2 results were positive, but the company is focused on addressing the home health rate cut. The analyst highlights the ongoing challenges facing the home health industry and advises caution.

Enhabit, Inc. (NYSE: EHAB), a leading provider of home health and hospice care, reported its second-quarter 2025 financial results, showcasing a positive performance despite industry challenges. The company reported net service revenue of $266.1 million, net income of $5.2 million, and Adjusted EBITDA of $26.9 million for the quarter ended June 30, 2025. These results reflect strong execution of strategic priorities, with sequential and year-over-year growth in revenue and Adjusted EBITDA.

Home health services saw admissions grow by 1.3% year over year, while hospice care delivered its sixth consecutive quarter of growth with an average daily census rising by 12.3%. The company also strengthened its balance sheet by reducing bank debt and increasing liquidity. Enhabit opened three de novo locations, including one home health and two hospice facilities, and continued its de-levering efforts, reducing bank debt by $10.0 million in the quarter.

However, UBS has recently lowered the price target for Enhabit to $8.50 from $10, maintaining a Neutral rating. The analyst highlighted the ongoing challenges facing the home health industry, including rate cuts, and advised caution. Enhabit is focused on addressing these issues, but the analyst noted that the company's efforts to mitigate the impact of rate cuts may take time to materialize.

Enhabit's financial performance for the second quarter was robust, with strong growth in revenue and Adjusted EBITDA. However, the company faces significant challenges in the home health industry, particularly concerning rate cuts. Investors should closely monitor the company's efforts to address these challenges and the impact on its financial performance.

References:
[1] https://www.businesswire.com/news/home/20250805819765/en/Enhabit-Reports-Second-Quarter-2025-Financial-Results