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Summary of Significant Accounting Policies
 6 Months Ended
Jun. 30, 2025
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies Summary of Significant Accounting Policies
Organization and Description of Business. Enhabit, Inc. (“Enhabit” or the “Company”), incorporated in Delaware in 2014, provides a comprehensive range of Medicare-certified skilled home health and hospice services in 34 states, with a concentration in the southern half of the United States. The Company manages its operations and discloses financial information using two reportable segments: (i) Home Health and (ii) Hospice. See Note 7, Segment Reporting. Prior to July 1, 2022, the Company operated as a reporting segment of Encompass Health Corporation (“Encompass”).
Separation from Encompass. On July 1, 2022, Encompass completed the separation of the Company through the distribution of all of the outstanding shares of common stock, par value $0.01 per share, of Enhabit to the stockholders of record of Encompass (the “Distribution”). As a result of the Distribution, Enhabit is now an independent public company, and its common stock is listed under the symbol “EHAB” on the New York Stock Exchange (the “Separation”).
The Separation was completed pursuant to a separation and distribution agreement (the “Separation and Distribution Agreement”) and other agreements with Encompass related to the Separation, including, but not limited to, a tax matters agreement (the “Tax Matters Agreement”), an employee matters agreement (the “Employee Matters Agreement”), and a transition services agreement (the “Transition Services Agreement” or “TSA”). Following the Separation, certain functions were provided by Encompass under the TSA. Following the expiration of the TSA, these functions are being performed using the Company’s own resources or third‑party providers.
Basis of Presentation and Consolidation. The accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries should be read in conjunction with the audited consolidated financial statements and accompanying notes contained in the Company’s Annual Report for the year ended December 31, 2024 on Form 10-K (the “Form 10-K”) filed with the United States Securities and Exchange Commission (the “SEC”) on March 6, 2025. The unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules and regulations of the SEC applicable to interim financial information. Accordingly, certain information and note disclosures included in financial statements prepared in accordance with GAAP have been omitted in these interim statements, as allowed by such SEC rules and regulations. The unaudited Condensed Consolidated Balance Sheet as of December 31, 2024 has been derived from audited financial statements, but it does not include all disclosures required by GAAP. However, management believes the disclosures are adequate to make the information presented not misleading.
The unaudited results of operations for the interim periods shown in these financial statements are not necessarily indicative of operating results for the entire year. In management’s opinion, the accompanying unaudited condensed consolidated financial statements recognize all adjustments of a normal recurring nature considered necessary for a fair statement of the financial position, results of operations, and cash flows for each interim period presented.
The unaudited condensed consolidated financial statements include the assets, liabilities, revenues, and expenses of all wholly-owned subsidiaries, majority-owned subsidiaries over which the Company exercises control, and, when applicable, entities in which the Company has a controlling financial interest. Enhabit eliminates all intercompany accounts and transactions within the Company from its financial results.
Reclassification. Certain prior period balances have been reclassified to conform to the current period presentation in the unaudited condensed consolidated financial statements. The reclassification did not have any effect on the Company’s financial position, results of operations, or cash flows.
Net Service Revenue. Net service revenue disaggregated by payer source and segment is as follows (in millions):
Home HealthHospiceConsolidated
Three Months Ended June 30,
202520242025202420252024
Medicare$116.0 $121.7 $59.7 $49.5 $175.7 $171.2 
Medicare Advantage63.7 61.3 — — 63.7 61.3 
Managed Care23.1 24.2 0.5 0.9 23.6 25.1 
Medicaid1.9 2.4 — — 1.9 2.4 
Other1.2 0.6 — — 1.2 0.6 
Total$205.9 $210.2 $60.2 $50.4 $266.1 $260.6 
Home HealthHospiceConsolidated
Six Months Ended June 30,
202520242025202420252024
Medicare$230.2 $250.0 $117.0 $97.7 $347.2 $347.7 
Medicare Advantage124.3 120.6 — — 124.3 120.6 
Managed Care45.3 46.6 1.7 1.9 47.0 48.5 
Medicaid4.0 4.9 0.7 — 4.7 4.9 
Other2.7 1.3 0.1 — 2.8 1.3 
Total$406.5 $423.4 $119.5 $99.6 $526.0 $523.0 
For a discussion of the Company’s significant accounting policies, including its policy related to Net service revenue, see Note 1, Summary of Significant Accounting Policies, to the consolidated financial statements included in the Form 10‑K.
Earnings (Loss) Per Common Share. The following table sets forth the computation of diluted weighted average common shares outstanding for the three and six months ended June 30, 2025 and 2024 (in millions):
Three Months Ended
June 30,		Six Months Ended
June 30,
2025202420252024
Weighted average common shares outstanding:
Basic50.650.150.750.1
Dilutive effect of restricted stock, restricted stock units and performance units0.8— 0.5— 
Diluted51.450.151.250.1
A total of 0.3 million options to purchase Enhabit’s shares, for each of the three and six months ended June 30, 2025, and 0.1 million and 0.2 million shares of restricted stock awards, performance units and restricted stock units, for the three and six months ended June 30, 2025, respectively, were excluded from the diluted weighted average common shares outstanding because their effects were anti‑dilutive. A total of 0.3 million options to purchase Enhabit’s shares and 2.5 million shares of restricted stock awards, performance units and restricted stock units were excluded from the diluted weighted average common shares outstanding for each of the three and six months ended June 30, 2024 because their effects were anti-dilutive. See Note 9, Stock-Based Payments, to the consolidated financial statements included in the Form 10-K for additional information.
Accrued Other Expenses. Accrued other expenses includes $9.4 million and $13.5 million of accrued hospice-related costs, $6.2 million and $6.7 million of legal fees, and $6.6 million and $6.6 million of workers’ compensation expense as of June 30, 2025 and December 31, 2024, respectively.
Recent Accounting Pronouncements. In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This standard requires disaggregated income tax disclosures on the effective tax rate reconciliation and income taxes paid. This ASU is effective for annual periods beginning after December 15, 2024. Early adoption is permitted, and the disclosures in this standard are required to be applied on a prospective basis with the option to apply the standard retrospectively. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements, but will require certain additional disclosures.
In November 2024, the FASB issued ASU 2024-03, "Income Statement (Topic 220): Reporting Comprehensive Income—Expense Disaggregation Disclosures.” Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. This standard requires more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, amortization, and depletion) included in certain expense captions presented on the face of the income statement. This ASU is effective for fiscal years beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (i) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (ii) retrospectively to all prior periods presented in the financial statements. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements, but will require certain additional disclosures.