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What changed in Enhabit, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Enhabit, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+428 added−397 removedSource: 10-K (2026-03-05) vs 10-K (2025-03-06)

Top changes in Enhabit, Inc.'s 2025 10-K

428 paragraphs added · 397 removed · 322 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

145 edited+48 added−46 removed39 unchanged
Biggest changeIn 2024, approximately 38% of our home health patient admissions were from physician offices or other community referral sources, and approximately 62% were from facility‑based sources, including acute care hospitals, long-term care facilities, skilled nursing facilities, or rehabilitation hospitals. Our home health services are provided by nurses, physical, occupational and speech therapists, medical social workers, and home health aides.
Biggest changeOur patients are also referred to us by assisted living and other long-term care facilities and community physicians. In 2025, approximately 38% of our home health patient admissions were from physician offices or other community referral sources, and approximately 62% were from facility‑based sources.
Our Strategy Our growth strategy includes organic growth through existing operations, opening new locations, increasing our Payer Innovation contracts and shifting business to Medicare Advantage contracts that pay us improved rates, leveraging our expertise in care transitions, and, consistent with the terms of our credit facilities, pursuing strategic acquisitions.
Our Strategy Our growth strategy includes organic growth through existing operations, opening new locations, increasing our Payer Innovation contracts and shifting Medicare Advantage business to contracts that pay us improved rates, leveraging our expertise in care transitions, and, consistent with the terms of our credit facilities, pursuing strategic acquisitions.
The 2010 Healthcare Reform Laws provided for specific reductions to healthcare providers’ annual market basket updates and other payment policy changes for Medicare reimbursement. • In 2011, President Obama signed into law the Budget Control Act of 2011 providing for an automatic 2% reduction, or “sequestration,” of Medicare program payments for all healthcare providers.
The 2010 Healthcare Reform Laws provided specific reductions to healthcare providers’ annual market basket updates and other payment policy changes for Medicare reimbursement. • In 2011, President Obama signed into law the Budget Control Act of 2011 providing for an automatic 2% reduction, or “sequestration,” of Medicare program payments for all healthcare providers.
For additional discussion of the risks associated with potential changes in regulations, see Item 1A, “ Risk Factors — Risks Related to Our Business — Other Regulatory Risks .” Medicare contractors processing claims for CMS make coverage determinations regarding medical necessity that can represent restrictive interpretations of the CMS coverage rules.
For additional discussion of the risks associated with potential changes in regulations, see Item 1A, “ Risk Factors — Risks Related to Our Business — Other Regulatory Risks .” Medicare contractors processing claims for CMS make coverage determinations regarding medical necessity that can represent restrictive interpretations of CMS coverage rules.
Human Capital Objectives We focus on the following strategic human capital objectives: Compensation and Benefits Maintaining competitive compensation and benefit programs that reward and recognize employee performance furthers our goal to attract, retain, and motivate employees who will help us deliver high-quality patient care.
We focus on the following strategic human capital objectives: Compensation and Benefits Maintaining competitive compensation and benefit programs that reward and recognize employee performance furthers our goal to attract, retain, and motivate employees who will help us deliver high-quality patient care.
Sources of Revenue We receive payment for patient care services from the federal government (primarily under the Medicare program), managed care plans and private insurers, and, to a considerably lesser degree, state governments (under their respective Medicaid or similar programs), as well as directly from patients. Revenues and receivables from Medicare are significant to our operations.
Sources of Revenue We receive payment for patient care services from the federal government (primarily under the Medicare program), managed care plans and private insurers, and, to a lesser degree, state governments (under their respective Medicaid or similar programs), as well as directly from patients. Revenues and receivables from Medicare are significant to our operations.
The regulations provide patients with significant rights related to understanding and controlling how their health information is used or disclosed and require healthcare providers to implement administrative, physical, and technical practices to protect the security of PHI. The Health Information Technology for Economic and Clinical Health (“HITECH”) Act modified and expanded the privacy and security requirements of HIPAA.
The regulations provide patients with significant rights related to understanding and controlling how their health information is used or disclosed and require covered healthcare providers to implement administrative, physical, and technical practices to protect the security of PHI. The Health Information Technology for Economic and Clinical Health (“HITECH”) Act modified and expanded the privacy and security requirements of HIPAA.
Business Development We assign teams to all aspects of the referral and patient onboarding process. We believe this high touch approach enables our business development teams to develop deep rooted relationships and build density in the markets they serve, ultimately increasing patient referrals to our home health and hospice locations.
Business Development We assign teams to all aspects of the referral and patient onboarding process. We believe this high-touch approach enables our business development teams to develop deep-rooted relationships and build density in the markets they serve, increasing patient referrals to our home health and hospice locations.
The federal law commonly known as the “Stark law” and CMS regulations promulgated under the Stark law prohibit physicians from making referrals for “designated health services,” including separately billable physical and occupational therapy, and home health services, to an entity in which the physician (or an immediate family member) has an investment interest or other financial relationship, subject to certain exceptions.
The federal law commonly known as the “Stark law” and CMS regulations promulgated under the Stark law prohibit physicians from making referrals for “designated health services,” including, among other things, separately billable physical and occupational therapy, and home health services, to an entity in which the physician (or an immediate family member) has an investment interest or other financial relationship, subject to certain exceptions.
Managed care contracts typically have terms between one and three years, although we have a number of managed care contracts that automatically renew each year (with pre-defined rates) unless a party elects to terminate the contract. In 2024, typical rate increases for our renewed home health and hospice contracts ranged from 3-5%.
Managed care contracts typically have terms between one and three years, although we have a number of managed care contracts that automatically renew each year (with pre-defined rates) unless a party elects to terminate the contract. In 2025, typical rate increases for our renewed home health and hospice contracts ranged from 3-5%.
In addition, HIPAA created new enforcement mechanisms to combat fraud and abuse, including the Medicare Integrity Program, an incentive program under which individuals can receive a monetary reward for providing information on Medicare fraud and abuse that leads to the recovery of at least a portion of the Medicare funds. Violating HIPAA may result in civil and criminal penalties. U.S.
In addition, HIPAA created new enforcement mechanisms to combat fraud and abuse, including the Medicare Integrity Program, an incentive program under which individuals can receive a monetary reward for providing information on Medicare fraud and abuse that leads to the recovery of at least a portion of the Medicare funds. Violating HIPAA may result in civil and criminal penalties.
The Stark law also prohibits those entities from filing claims or billing Medicare for those referred services. Violators of the Stark law and regulations may be subject to recoupments, civil monetary penalties, and exclusion from any federal, state, or other governmental healthcare program. The statute also provides significant penalties for circumvention schemes.
The Stark law also prohibits those entities from filing claims or billing Medicare for those referred services. Violators of the Stark law and regulations may be subject to recoupments, civil monetary penalties, FCA enforcement, and exclusion from any federal, state, or other governmental healthcare program. The statute also provides significant penalties for circumvention schemes.
For example, Medicare providers like us can be negatively affected by the adoption of coverage policies, either at the national or local level, that determine whether an item or service is covered and under what clinical circumstances it is considered to be reasonable and necessary.
For example, Medicare providers like us can be negatively affected by the adoption of coverage policies, either at the national or local level, which determine whether an item or service is covered and under what clinical circumstances it is considered to be reasonable and necessary.
While the outcome of most TPE audits is improved claims reporting, if providers fail to improve after three rounds of education sessions they will be referred to CMS for next steps which may include prepay review, extrapolation, or referral to a RAC.
While the outcome of most TPE audits is improved claims reporting, if providers fail to improve after three rounds of education sessions they will be referred to CMS for next steps which may include prepay review, extrapolation, referral to a RAC, or other action.
The 65 and older population is projected to reach 78.3 million by 2040 and 88.8 million by 2060. The growth in the elderly population is expected to significantly outpace the expected growth in facility-based beds, driving an ongoing shift from facility-based care to home-based care where clinically appropriate.
The 65 and older population is projected to reach 78.3 million by 2040 and 88.8 million by 2060. Growth in the elderly population in the United States is expected to significantly outpace the expected growth in facility-based beds, driving an ongoing shift from facility-based care to home-based care where clinically appropriate.
The HITECH Act applies certain of the HIPAA privacy and security requirements directly to business associates of covered entities. The modifications to existing HIPAA requirements include expanded accounting requirements for electronic health records, tighter restrictions on marketing and fundraising, and heightened penalties and enforcement associated with noncompliance.
The HITECH Act applies certain HIPAA privacy and security requirements directly to business associates of covered entities. The modifications to existing HIPAA requirements included expanded accounting requirements for electronic health records, tighter restrictions on marketing and fundraising, and heightened penalties and enforcement associated with noncompliance.
Certificates of Need In some states the acquisition of existing agencies or the introduction of new home health and hospice services may be subject to review by and prior approval of state regulatory bodies under a certificate of need law or similar permit of approval.
Certificates of Need In some states the acquisition of existing agencies or the introduction of new home health and hospice services may be subject to review by and prior approval of state regulatory bodies under a CON law or similar permit of approval.
In addition to the case-mix adjustment, payments for periods of care may be adjusted for other reasons, including patients whose care is unusually expensive (commonly known as outliers), low utilization patients (“LUPAs”), 8 Table of Contents and geographic differences in wages. Outlier payments are capped at 10.0% of total reimbursement per provider number.
In addition to the case-mix adjustment, payments for periods of care may be adjusted for other reasons, including patients whose care is unusually expensive (commonly known as outliers), low utilization patients (“LUPAs”), and geographic differences in wages. Outlier payments are capped at 10.0% of total reimbursement per provider number.
State and local healthcare regulations may cover additional matters such as nurse staffing ratios, healthcare worker safety, marijuana legalization, and medical aid in dying. These laws and regulations are extremely complex, and, in many instances, the industry does not have the benefit of significant regulatory or judicial interpretation.
State and local healthcare regulations may cover additional matters such as nurse staffing ratios, healthcare worker safety, marijuana legalization, and medical aid in dying. These laws and regulations are extremely complex, and, in many instances, the industry does not have the benefit of significant regulatory or judicial interpretation or consistent enforcement approaches.
Patients are generally not responsible for the difference between established gross charges and amounts reimbursed for such services under Medicare, Medicaid, and other private 6 Table of Contents insurance plans, HMOs, or PPOs, but patients are responsible to the extent of any exclusions, deductibles, co-payments, or coinsurance features of their coverage.
Patients are generally not responsible for the difference between established gross charges and amounts reimbursed for such services under Medicare, Medicaid, and other private insurance plans, HMOs, or PPOs, but patients are responsible to the extent of any exclusions, deductibles, co-payments, or coinsurance features of their coverage.
We annually review our talent to identify potential successors for key positions and to identify candidates for accelerated development based on their performance 14 Table of Contents and potential. The annual process includes an assessment of each employee’s promotability based on a set of leadership core competencies defined as part of our talent strategy.
We annually review our talent to identify potential successors for key positions and to identify candidates for accelerated development based on their performance and potential. The annual process includes an assessment of each employee’s promotability based on a set of leadership core competencies defined as part of our talent strategy.
For each day a patient elects hospice benefits, Medicare pays an adjusted daily rate based on patient location, and payments represent a prospective per diem amount tied to one of four different categories or levels of care: routine home care; continuous home care; inpatient respite care; and general inpatient care.
For each day a patient elects hospice benefits, Medicare pays an adjusted daily rate based on patient location, and payments represent a prospective per diem amount tied to one of four different required levels of care: routine home care; continuous home care; inpatient respite care; and general inpatient care.
These annual cost reports are subject to routine audits that may result in adjustments to the amounts ultimately determined to be due to us under these reimbursement programs. These audits are used for determining if any under- or over-payments were made to these programs and to set payment levels for future years.
These annual cost reports are subject to routine audits that may result in adjustments to the amounts determined to be due to us under these reimbursement programs. These audits are used to determine if any under- or over-payments were made to these programs and to set payment levels for future years.
False Claims The federal civil False Claims Act (“FCA”) imposes liability for the knowing presentation of a false claim to the U.S. government and provides for damages equal to three times the actual amount of any overpayments plus additional penalties per claim. Federal civil penalties will be adjusted to account for inflation each year.
False Claims The federal civil False Claims Act (“FCA”) imposes liability for the knowing presentation of a false claim to the U.S. government and provides for damages equal to three times the actual amount of any overpayments plus additional penalties per claim. Federal civil penalties are adjusted to account for inflation each year.
Our corporate support operations include a central clinical auditing group that performs audits on medical records, care plans, and core patient documentation to ensure proper, complete care plans are optimized toward achieving the highest quality outcomes. This corporate support operations team also develops, monitors, and deploys operating policies, allowing for consistency of operations measurement and ease of deploying productivity metrics.
Our corporate support operations include a central clinical auditing group that performs audits on medical records, care plans, and core patient documentation to optimize proper, complete care plans toward achieving the highest quality outcomes. This corporate support operations team also develops, monitors, and deploys operating policies, allowing for consistency of operations measurement and ease of deploying productivity metrics.
Medicare Reimbursement Medicare is a federal program that provides hospital and medical insurance benefits to persons aged 65 and over, qualified disabled persons, and persons with end-stage renal disease. Medicare, through statutes and regulations, establishes reimbursement methodologies and rates for various types of healthcare providers, facilities, and services.
Medicare Reimbursement Medicare is a federal program that provides hospital and medical insurance benefits to persons aged 65 and over, qualified disabled persons, and persons with end-stage renal disease. Medicare establishes reimbursement methodologies and rates for various types of healthcare providers, facilities, and services.
The primary competitive factors in any given market include the quality and cost of care and service provided, the treatment outcomes achieved, the relationship and reputation with managed care and other private payers and the acute care hospitals, physicians, and other referral sources in the market, and the regulatory barriers to entry in certificate of need states.
The primary competitive factors in any given market include the quality and cost of care and service provided, the treatment outcomes achieved, the relationship and reputation with managed care and other private payers and the acute care hospitals, physicians, and other referral sources in the market, and the regulatory barriers to entry in CON states.
The following table identifies the sources and relative mix of our revenues for the periods stated for our consolidated business: Year Ended December 31, 2024 2023 2022 Medicare (1) 66.8 % 71.5 % 78.4 % Medicare Advantage 23.0 % 19.0 % 14.2 % Managed Care 9.1 % 8.2 % 6.1 % Medicaid 0.9 % 1.2 % 1.2 % Other 0.2 % 0.1 % 0.1 % Total 100.0 % 100.0 % 100.0 % (1) The decline in Medicare revenue as a percentage of our total Net service revenue and corresponding increase in Medicare Advantage revenue is primarily the result of the impact on Home Health Net service revenue from the continued national enrollment increases in Medicare Advantage plans by Medicare beneficiaries.
The following table identifies the sources and relative mix of our revenues for the periods stated for our consolidated business: Year Ended December 31, 2025 2024 2023 Medicare (1) 65.8 % 66.8 % 71.5 % Medicare Advantage 23.9 % 23.0 % 19.0 % Managed Care 9.1 % 9.1 % 8.2 % Medicaid 0.8 % 0.9 % 1.2 % Other 0.4 % 0.2 % 0.1 % Total 100.0 % 100.0 % 100.0 % (1) The decline in Medicare revenue as a percentage of our total Net service revenue and corresponding increase in Medicare Advantage revenue is primarily the result of the impact on Home Health Net service revenue from the continued national enrollment increases in Medicare Advantage plans by Medicare beneficiaries.
People and Award-Winning Culture In 2024, we continued our efforts to ensure our clinical and support staff received the necessary education and training to deliver the highest quality care in the most cost-effective manner. We maintained our certification as a “Great Place to Work” and were recognized as a USA TODAY Top Workplace USA company.
People and Award-Winning Culture In 2025, we continued our efforts to support our clinical and support staff in receiving the necessary education and training to deliver the highest quality care in the most cost-effective manner. We maintained our certification as a “Great Place to Work” and were recognized as a USA TODAY Top Workplace USA company.
All of these materials are available free of charge and in print to any shareholder who provides a written request to the Corporate Secretary at 6688 North Central Expressway, Suite 1300, Dallas, Texas 75206.
Print versions of these materials are available free of charge to any shareholder who provides a written request to the Corporate Secretary at 6688 North Central Expressway, Suite 1300, Dallas, Texas 75206.
CMS makes annual adjustments to Medicare payment rates in prospective payment systems, including the HH‑PPS and Hospice‑PS, by what is commonly known as a “market basket update.” According to CMS, market basket updates reflect the projected inflation of goods and services used by providers to deliver care.
CMS makes annual adjustments to Medicare payment rates in prospective payment systems, including the HH‑PPS and Hospice‑PS, by what is commonly known as a “market basket update.” According to CMS, market basket updates reflect inflation and other changes in price over time of goods and services used by providers to deliver care.
The IMPACT Act also includes provisions impacting Medicare-certified hospices, including: (1) increasing survey frequency for Medicare-certified hospices to once every 36 months; (2) imposing a medical review process for facilities with a higher percentage of stays in excess of 180 days; and (3) updating the annual aggregate Medicare payment cap.
The IMPACT Act also includes provisions impacting Medicare-certified hospices, including: (i) increasing survey frequency for Medicare-certified hospices to once every 36 months; (ii) imposing a medical review process for facilities with a higher percentage of stays in excess of 180 days; and (iii) updating the annual aggregate Medicare payment cap.
Our Services Home Health Our home health services are prescribed by a physician, typically following an episode of acute illness or surgical intervention, an exacerbation or worsening of a chronic disorder, or a patient’s discharge from a hospital, skilled nursing facility, rehabilitation hospital or other institutional setting.
Our home health services are prescribed by a physician, typically following an episode of acute illness or surgical intervention, an exacerbation or worsening of a chronic disorder, or a patient’s discharge from an acute care hospital, skilled nursing facility, rehabilitation hospital or other facility-based settings.
Violators of the Anti‑Kickback Statute may be subject to civil monetary penalties and damages for improper claims, imprisonment, and exclusion from federal health care programs like the Medicare and Medicaid programs. Federal civil penalties will be adjusted to account for inflation each year. U.S.
Violators of the Anti‑Kickback Statute may be subject to civil monetary penalties and damages for improper claims, FCA enforcement, imprisonment, and exclusion from federal health care programs like the Medicare and Medicaid programs. Federal civil penalties are adjusted to account for inflation each year.
Medicare, through its Medicare Advantage program, offers Medicare-eligible individuals an opportunity to participate in managed care plans. For the year ended December 31, 2024, revenues from Medicare and Medicare Advantage represented 89.8% of total Net service revenue.
Medicare, through its Medicare Advantage program, offers Medicare-eligible 7 Table of Contents individuals an opportunity to participate in managed care plans. For the year ended December 31, 2025, revenues from Medicare and Medicare Advantage represented 89.7% of total Net service revenue .
Payments are also made for non-routine medical supplies that are used in treatment. In October 2022, CMS released its notice of final rulemaking for calendar year 2023 for home health agencies under the HH-PPS (the “2023 HH Rule”).
Payments are also made for non-routine medical supplies that are used in treatment. In November 2023, CMS released its notice of final rulemaking for calendar year 2024 for home health agencies under the HH‑PPS (the “2024 HH Rule”).
We leverage our comprehensive technology capabilities and centralized administrative functions to define best practices, streamline staffing models, and identify supply chain efficiencies across our platform. We invest significant time and training resources teaching our operators to utilize technology to help drive 3 Table of Contents timely decisions in the field.
We leverage our comprehensive technology capabilities and centralized administrative functions to define best practices, streamline staffing models, and identify supply chain efficiencies across our platform. We invest significant time and training resources teaching our operators to use technology to drive timely decisions in the field.
To achieve this growth, we (1) educate healthcare providers about the scope and benefits of our services, (2) position our agencies to add value in their communities by avoiding unnecessary hospitalizations, (3) focus on high‑quality care and related outcomes for our patients, (4) identify related products and services needed by our patients and their communities, and (5) provide a superior work environment for our employees as part of our focus to recruit and retain our clinical staff.
To achieve this growth, we (i) educate healthcare providers about the scope and benefits of our services, (ii) position our agencies to add value in their communities by avoiding unnecessary hospitalizations, (iii) focus on high‑quality care and related outcomes for our patients, (iv) identify related products and services needed by our patients and their communities, and (v) provide a superior work environment for our employees as part of our focus to recruit and retain our clinical staff.
For the year ended December 31, 2024, our hospice services had an average daily census of 3,565 hospice patients. As of December 31, 2024, we operated 115 hospice provider locations in 25 states. See Item 1, “ Business — Sources of Revenue — Hospice ,” in this Annual Report.
For the year ended December 31, 2025, our hospice business had an average daily census of 3,985 hospice patients. As of December 31, 2025, we operated 117 hospice provider locations in 25 states. See Item 1, “ Business — Sources of Revenue — Hospice ,” in this Annual Report.
The IMPACT Act requires PACs to report: (1) standardized patient assessment data at admission and discharge; 13 Table of Contents (2) quality measures, including functional status, skin integrity, medication reconciliation, incidence of major falls and patient preference regarding treatment and discharge; and (3) resource use measures, including Medicare spending per beneficiary, discharge to community and hospitalization rates of potentially preventable readmissions.
The IMPACT Act requires PACs to report: (i) standardized patient assessment data at admission and discharge; (ii) quality measures, including functional status, skin integrity, medication reconciliation, incidence of major falls and patient preference regarding treatment and discharge; and (iii) resource use measures, including Medicare spending per beneficiary, discharge to community and hospitalization rates of potentially preventable readmissions.
Governmental Review, Audits, Surveys, and Investigations Medicare reimbursement claims submitted by healthcare providers, including home health agencies and hospice provider locations, are subject to audit from time to time by governmental payers and their agents, such as MACs that act as fiscal intermediaries for all Medicare billings, auditors contracted by CMS, and insurance carriers, as well as the HHS‑OIG, CMS, and state Medicaid programs.
The penalties are adjusted annually by HHS to account for inflation and are subject to further changes. 14 Table of Contents Governmental Review, Audits, Surveys, and Investigations Medicare and Medicaid reimbursement claims submitted by healthcare providers, including home health agencies and hospice provider locations, are subject to audit from time to time by governmental payers and their agents, such as MACs that act as fiscal intermediaries for all Medicare billings, auditors contracted by CMS, and insurance carriers, as well as the HHS‑OIG, CMS, and state Medicaid programs.
Additionally, commencing in 2025, under the nationwide Home Health Value-Based Purchasing (“HHVBP”) Model, home health agencies receive increases or decreases to their Medicare payments of up to 5% based on performance against specific quality measures relative to the performance of other home health providers. Data collected in each performance year will impact Medicare payments two years later.
Additionally, commencing in 2025, under the nationwide HHVBP Model, home health agencies began to receive increases or decreases to their Medicare FFS payments of up to 5% based on performance against specific quality measures relative to the performance of other home health providers. Data collected in each performance year impacts Medicare payments two years later.
Medicare hospice reimbursements to each provider are also subject to two annual caps, one limiting total hospice payments based on the average annual payment per beneficiary and another limiting payment based on the number of days of inpatient care billed by the hospice provider.
Medicare hospice reimbursements to each provider are also subject to two annual caps: the aggregate cap, which limits total hospice payments based on the average annual payment per beneficiary, and the inpatient cap, which limits payment based on the number of days of inpatient care billed by the hospice provider.
Drive Organic Growth at Existing Operations We seek internal growth in our existing markets by consistently increasing the number of referrals and referral sources we serve.
Drive Organic Growth at Existing Operations We strive for organic growth in existing markets by consistently increasing the number of referrals and referral sources we serve.
We believe these best practices and protocols, when combined with our technology and well-trained, mission‑motivated clinicians, help ensure the delivery of consistently high-quality healthcare services, reduced inefficiencies, and improved performance across a spectrum of operational areas.
We believe these best practices and protocols, when combined with our technology and well-trained, mission‑motivated clinicians, help deliver consistently high-quality healthcare services, reduce inefficiencies, and improve performance across a spectrum of operational areas.
We make available, free of charge, through our website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, as soon as reasonably practicable after providing such reports to the Securities and Exchange Commission (“SEC”).
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K are available on our website, as soon as reasonably practicable after providing such reports to the Securities and Exchange Commission (“SEC”).
As we continue to grow organically, our scale and density will increase, further reinforcing our ability to deliver cost‑effective care. Execute on De Novo Strategy in New Markets Since 2015, we have opened 44 de novo locations, 21 of which are home health locations and 23 of which are hospice locations.
As we continue to grow organically, our scale and density will increase, further reinforcing our ability to deliver cost‑effective care. 4 Table of Contents Execute on De Novo Strategy in New and Existing Markets Since 2015, we have opened 54 de novo locations, of which 24 are home health and 30 are hospice locations.
Our Competitive Strengths We believe we differentiate ourselves from our competitors by the quality of our clinical outcomes, the scale and density of our footprint, our consistent and disciplined operating model, and our people and award‑winning culture, among other factors.
Our Competitive Strengths We believe we differentiate ourselves from our competitors by the scale and density of our footprint in targeted markets, our consistent and disciplined operating model emphasizing the use of technology, our clinical expertise and high‑quality outcomes, and our people and award‑winning culture, among other factors.
Many states have also adopted similar laws relating to state government payments for 11 Table of Contents healthcare services.
Many states have also adopted similar laws relating to state government payments for healthcare services.
The government deems identification of the overpayment to occur when a person has actual knowledge of the overpayment, acts in deliberate ignorance of the truth or falsity of information regarding overpayment, or acts in reckless disregard of such.
The government deems identification of the overpayment to occur when a person “knowingly” receives or retains an overpayment, defined to include whenever a person has actual knowledge of the overpayment, acts in deliberate ignorance of the truth or falsity of information regarding overpayment, or acts in reckless disregard of such.
In some instances, CMS’s modifications can have a substantial impact on healthcare providers. For example, home health agencies and hospice provider locations are required to submit quality data to CMS each year, and the failure to do so in accordance with the rules will result in a 2% and 4% reduction, respectively, in their market basket annual payment update.
For example, home health agencies and hospice provider locations are required to submit quality data to CMS each year, and the failure to do so in accordance with the rules will result in a 2% and 4% reduction, respectively, in their market basket annual payment update.
There are currently no limits to the number of hospice benefit periods an eligible Medicare patient may receive, and a patient may revoke the benefit at any time.
There are currently no limits to the number of 10 Table of Contents hospice benefit periods an eligible Medicare patient may receive, assuming compliance with Medicare requirements, and a patient may revoke the benefit at any time.
We believe aligning our organizational values—People, Integrity, Compassion, Excellence, Teamwork, and Communication—with our business strategy creates a business differentiator that leads to improved patient care and outcomes, higher-employee engagement and satisfaction, lower turnover, effective communication, and better teamwork. Technology We believe our use of technology enhances our competitive position in the markets we serve.
We believe aligning our organizational values—People, Integrity, Compassion, Excellence, Teamwork, and Communication—with our business strategy creates a business differentiator that leads to improved patient care and outcomes, higher-employee engagement and satisfaction, lower turnover, effective communication, and better teamwork.
The 2024 HH Rule also implemented a permanent negative behavioral adjustment of 5.78% to the calendar year 2024 base payment rate, which was phased in at 2.89% for 2024. In November 2024, CMS issued the 2025 Home Health Prospective Payment System Update final rule (the “2025 HH Rule”).
The 2024 HH Rule also implemented a permanent negative behavioral adjustment of 5.78% to the calendar year 2024 base payment rate, which was phased in at 2.89% for 2024. In November 2024, CMS released its notice of final rulemaking for calendar year 2025 for home health agencies under the HH‑PPS (the “2025 HH Rule”).
We use this platform to help identify patients at risk for unplanned hospitalizations. The platform recommends a patient-centered visit utilization plan to promote discharge without hospitalization and prompts continued touch points with discharged patients to identify and prevent post-discharge hospitalizations.
The platform recommends a patient-centered visit utilization plan to promote discharge without hospitalization and prompts continued touch points with discharged patients to identify and prevent post-discharge hospitalizations.
In July 2022, CMS released its notice of final rulemaking for calendar year 2023 for hospice provider locations under the Hospice PS (the “2023 Hospice Rule”). In addition to other changes, the 2023 Hospice Rule implemented a net 3.8% market basket increase (market basket update of 4.1% reduced by 0.3% for a productivity adjustment).
In July 2023, CMS released its notice of final rulemaking for calendar year 2024 for hospice provider locations under the Hospice‑PS (the “2024 Hospice Rule”). The 2024 Hospice Rule implemented a net 3.1% market basket increase (market basket update of 3.3% reduced by 0.2% for a productivity adjustment).
We operate our business in two segments, Home Health and Hospice. • Our home health agencies provide a comprehensive range of Medicare-certified skilled home health services, including skilled nursing, physical, occupational and speech therapy, medical social work, and home health aide services. Our patients are typically older adults with chronic conditions and significant functional limitations who are on multiple medications.
Our Services Home Health Our home health operations provide a comprehensive range of Medicare-certified skilled home health services, including skilled nursing, physical, occupational and speech therapy, medical social work, and home health aide services. Our patients are typically older adults with chronic conditions and significant functional limitations who are on multiple 5 Table of Contents medications.
The Medicare cost per patient day in home health and hospice for 2023 (the most current information available) is $63 and $186, respectively, compared to a skilled nursing facility of $556 per day for 2022 (the most current information available), highlighting home health care’s savings potential for the healthcare system.
The Medicare cost per patient day, as of 2024 (the most current information available), in home health and hospice is $64 and $191, respectively, compared to a skilled nursing facility cost of $683 per day, highlighting home health care’s savings potential for the healthcare system.
Civil Monetary Penalties Law Under the Civil Monetary Penalties Law, HHS may impose civil monetary penalties on healthcare providers for knowingly presenting, or causing to be presented, false or fraudulent claims for reimbursement; knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim for payment under a federal healthcare program; transferring remuneration or offering to transfer remuneration that the provider knows or should know will induce a beneficiary to use a particular provider or service; and knowing of an overpayment and failing to report and return such overpayment as required.
Civil Monetary Penalties Law Under the Civil Monetary Penalties Law, HHS may impose civil monetary penalties on healthcare providers for knowingly presenting, or causing to be presented, false or fraudulent claims for reimbursement; knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim for payment under a federal healthcare program; transferring remuneration or offering to transfer remuneration that the provider knows or should know will induce a beneficiary to use a particular provider or service; knowing of an overpayment and failing to report and return such overpayment as required; violating certain federal laws, including the Anti-Kickback Statute or Stark law; hiring or contracting with individuals or entities excluded from federal healthcare programs; or committing certain other acts of misconduct.
Also, the charters of our Audit & Finance Committee, Compensation & Human Capital Committee, Care, Compliance, & Cybersecurity Committee, Nominating & Corporate Governance Committee, our Corporate Governance Guidelines, Standards of Business Conduct and Ethics, Insider Trading Policy, Incentive Compensation Recoupment Policy, Amended and Restated Bylaws, Amended and Restated Certificate of Incorporation and information regarding certain of our investor presentations, press releases and shareholder communications are available through our website.
The website also contains links to the charters of our four board-level committees, the (i) Audit & Finance Committee, (ii) Compensation & Human Capital Committee, (iii) Care, Compliance, & Cybersecurity Committee, and (iv) Nominating & Corporate Governance Committee, our Corporate Governance Guidelines, Standards of Business Conduct and Ethics, Insider Trading Policy, Incentive Compensation Recoupment Policy, Amended and Restated Bylaws, Amended and Restated Certificate of Incorporation and information regarding certain of our investor presentations, press releases and shareholder communications.
Our Medicare-certified hospice operations provide a full range of hospice services, including pain and symptom management, palliative and dietary counseling, social worker visits, spiritual counseling, and family member bereavement counseling for up to 13 months after a patient’s death, all of which are designed to meet the individual physical, emotional, spiritual, and psychosocial needs of terminally ill patients and their families.
Our hospice operations provide a comprehensive range of Medicare‑certified skilled hospice services, including pain and symptom management, palliative and dietary counseling, social worker visits, spiritual counseling, and family member bereavement counseling, as required by law, all of which are designed to meet the individual physical, emotional, spiritual, and psychosocial needs of terminally ill patients and their families.
We use an electronic medical records system that we license under an agreement with Homecare Homebase. The system manages the entire patient workflow and provides field clinicians with access to patient records, diagnostic information, and notes from prior visits via a mobile application. Real-time, customized feedback and instructions are provided to field clinicians on-site.
The system manages the entire patient workflow and provides field clinicians with access to patient records, diagnostic information, and notes from prior visits via a mobile application. Real-time, customized feedback and instructions are provided to field clinicians on-site.
In addition, there are numerous legislative and regulatory initiatives at the federal and state levels addressing patient privacy concerns. HHS-OIG and other regulators have also increasingly interpreted laws and regulations to increase exposure of healthcare providers to allegations of noncompliance.
In addition, there are numerous legislative and regulatory initiatives at the federal and state levels addressing patient privacy concerns. Increasingly, state governments have implemented comprehensive and health-specific privacy statutes that add an additional layer of compliance complexity. HHS-OIG and other regulators have also increasingly interpreted laws and regulations to increase exposure of healthcare providers to allegations of noncompliance.
Our operations consist of field- and branch-level operations, business development operations, and corporate support operations. We believe organizing our operations in this way allows our clinical and administrative professionals to focus on patient care, while our business development team focuses on referral development. Our branches are managed locally by branch directors who oversee branch clinical and office teams.
We believe organizing our operations in this way allows our clinical and administrative professionals to focus on patient care, while our business development team focuses on referral development. Our branches are managed locally by branch directors who oversee branch clinical and office teams. Branch directors report to an administrator who oversees one or more branches.
In any state where we are subject to a certificate of need law, we must obtain such certificate before acquiring, opening, reclassifying, or expanding a healthcare facility, starting a new healthcare program, or opening a new home health agency or hospice.
In any state where we are subject to a CON law, we must obtain such certificate before acquiring, opening, reclassifying, or expanding a home health agency or hospice provider.
Review Choice Demonstration for Home Health Services Effective June 2024, CMS extended the Review Choice Demonstration for Home Health Services for an additional five years. The demonstration will be continuing in the current demonstration states of Illinois, Ohio, Texas, North Carolina, Florida, and Oklahoma.
Review Choice Demonstration (“RCD”) for Home Health Services In 2024, CMS extended the Review Choice Demonstration for home health services for an additional five years in Illinois, Ohio, Texas, North Carolina, Florida, and Oklahoma.
Cost Reports Because of our participation in Medicare and Medicaid, we are required to meet certain financial reporting requirements. Federal and, where applicable, state regulations require the submission of annual cost reports covering the revenue, costs, and expenses associated with the services provided by home health and hospice providers to Medicare beneficiaries and Medicaid recipients.
Federal and, where applicable, state regulations require the submission of annual cost reports covering the revenue, costs, expenses, and other data associated with the services provided by home health and hospice providers to Medicare beneficiaries and Medicaid recipients.
At the management level we have established an executive compliance committee, chaired by our Chief Compliance Officer, and an inter-departmental privacy and security committee that generally meets at least quarterly and oversees our programs and initiatives that seek to protect and secure our data and systems.
At the management level, we have established an executive compliance committee, chaired by the Chief Compliance Officer; an inter‑departmental compliance operations committee responsible for identifying key compliance risks and mitigation strategies; and an inter‑departmental privacy and security committee that oversees programs and initiatives designed to protect and secure our data and systems.
Department of Health and Human Services (“HHS”) regulations require the use of uniform electronic data transmission standards for certain healthcare claims and payment transactions submitted or received electronically. HIPAA also regulates the use and disclosure of protected health information (“PHI”), whether 12 Table of Contents communicated electronically, on paper, or orally.
Health Insurance Portability and Accountability Act-Administrative Simplification and Privacy HIPAA and related HHS regulations require the use of uniform electronic data transmission standards for certain healthcare claims and payment transactions submitted or received electronically. HIPAA also regulates the use and disclosure of protected health information (“PHI”), whether communicated electronically, on paper, or orally.
MACs also conduct Targeted Probe and Educate (“TPE”) audits, which are designed to help providers reduce claim denials and appeals with one-on-one education focused on the documentation and coding of the services they provide.
We have, from time to time, received record requests from UPICs which have resulted in claim denials on paid claims and associated refunds of overpayments. MACs also conduct Targeted Probe and Educate (“TPE”) audits, which are designed to help providers reduce claim denials and appeals with one-on-one education focused on the documentation and coding of the services they provide.
We believe this creates loyalty for physicians and facilities, generating greater consistency in future referrals. Additionally, a web-based portal allows referring physicians to easily monitor the care and progress of patients and to sign orders electronically. We also work with a predictive analytics platform to improve our data analysis of patient care.
Additionally, a web-based portal allows referring physicians to easily monitor the care and progress of patients and to sign orders electronically. We also work with a predictive analytics platform to improve our data analysis of patient care. We use this platform to help identify patients at risk for unplanned hospitalizations.
The cap limiting total Medicare hospice reimbursement is calculated at the end of the hospice cap period, based on the twelve-month period beginning on October 1 st of each year, which determines the maximum allowable payments per provider. The “80-20 rule” caps inpatient care reimbursement.
Both the aggregate and inpatient caps on Medicare hospice reimbursement are calculated at the end of the hospice cap period, based on the 12 month period beginning on October 1st of each year, which determines the maximum allowable payments per provider. The “80-20 rule” applies to the inpatient cap.
Federal civil penalties will be adjusted to account for inflation each year. There are statutory exceptions to the Stark law for many of the customary financial arrangements between physicians and providers, including personal services contracts and leases. However, the Stark law is a strict liability statute, and the requirements of Stark law exceptions are closely scrutinized.
Federal civil penalties are adjusted to account for inflation each year. 13 Table of Contents There are statutory and regulatory exceptions to the Stark law for many of the customary financial arrangements between physicians and providers, including, without limitation, personal services contracts and leases.
In 2024, our human capital management strategy focused on, among other things, increasing net full‑time nursing and therapy headcount to support Home Health growth, and employee engagement targeted at reducing turnover and increasing retention. We undertook numerous studies and employee surveys and implemented initiatives and programs targeted at recruitment and retention.
In 2025, our human capital management strategy focused on, among other things, increasing net full‑time nursing and therapy headcount to support Home Health growth and increasing net full-time nursing headcount to support Hospice growth, increasing business development direct selling headcount, leadership development, and employee engagement targeted at reducing turnover and increasing retention.
The 2024 Hospice Rule implemented a net 3.1% market basket increase (market basket update of 3.3% reduced by 0.2% for a productivity adjustment. In July 2024, CMS issued its final rule for hospice payments for fiscal year 2025 (the “2025 Hospice Rule”).
In August 2025, CMS issued its final rule for hospice payments for fiscal year 2026 (the “2026 Hospice Rule”). Effective October 1, 2025, CMS implemented a 2.6% net increase to reimbursement rates, resulting from a 3.3% update to the market basket reduced by a 0.7% productivity adjustment.
ITEM 1. BUSINESS Our Business We are a leading provider of home health and hospice services in the United States. We strive to provide superior, cost-effective care where patients prefer it: in their homes. For over twenty-five years, we have provided care in the low‑cost home setting while achieving high-quality clinical outcomes.
ITEM 1. BUSINESS Overview We are a leading provider of home health and hospice services in the United States. We strive to provide our patients with superior clinical care, where our patients prefer it: in their homes.
See Item 7, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations — Segment Results of Operations ,” for our Home Health cost per patient day for the years ended December 31, 2024, 2023, and 2022.
For example, our scale in key markets allows for shorter drive time between patient visits, reducing unproductive time on the road. See Item 7, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations — Segment Results of Operations ,” for our home health cost per patient day for the years ended December 31, 2025, 2024, and 2023.
Hospice Individuals with a terminal illness may be eligible for hospice care if they have a life expectancy of six months or less and have chosen to forego curative treatment.
Hospice Individuals with a terminal illness may be eligible for hospice care if they have a life expectancy of six months or less and have chosen to forego curative treatment. Hospice care focuses on the quality of life for patients experiencing an advanced, life limiting illness by treating the symptoms of the disease, rather than the disease itself.
One type of audit contractor, the Recovery Audit Contractors (“RACs”), may receive claims data directly from MACs, for example, on a monthly or quarterly basis, and are authorized to review previously paid claims. CMS has authorized RACs to conduct complex reviews of the medical records associated with home health and hospice reimbursement claims.
One type of audit contractor, Recovery Audit Contractors (“RACs”), may receive claims data directly from MACs, for example, on a monthly or quarterly basis, and are authorized to review previously paid claims. RACs are paid on a contingency basis tied to the amount of improper payments the RACs identify.
Any denial of a claim for payment, either as a result of an audit or ordinary course payment review by the Medicare Administrative Contractor (“MAC”), is subject to an appeals process that is currently taking numerous years to complete.
Any denial of a claim for payment, either as a result of an audit or ordinary course payment review by Medicare Administrative Contractors (“MACs”), is subject to an appeals process that is slow and unpredictable in outcome.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe transition of management, the unforeseen loss or limited availability of the services of any of our executive leaders, or our inability to recruit and retain qualified personnel 23 Table of Contents in the future, could, at least temporarily, have an adverse effect on our business, results of operations, and financial condition and be negatively perceived in the capital markets.
Biggest changeThe transition of management, the unforeseen loss or limited availability of the services of any of our executive leaders, or our inability to recruit and retain qualified personnel in the future, could, at least temporarily, create uncertainty and involve a diversion of resources and management attention, be disruptive to our daily operations or impact public or market perception, any of which could negatively impact our ability to operate effectively or execute our strategies, which could result in a material adverse impact on our business, financial position, results of operations, and cash flows.
For example, CMS incorporated some of MedPAC’s recommendations into the PDGM system mandated by the 2018 Budget Act and set out in the final rule for the 2019 HH-PPS. MedPAC has also recommended that, for fiscal year 2026, Congress should reduce the home health base rate by 7% and eliminate the hospice base payment update.
For example, CMS incorporated some of MedPAC’s recommendations into the PDGM system mandated by the 2018 Budget Act and set out in the 2019 final rule for the HH-PPS. MedPAC has also recommended that, for fiscal year 2026, Congress should reduce the home health base rate by 7% and eliminate the hospice base payment update.
Fluctuations in fuel prices affect our cost per visit and per patient day, and in an environment of increasing fuel prices, our cost per visit and per patient visit can increase due to factors beyond our control.
Fluctuations in fuel prices affect our cost per visit and per patient day, and in an environment of increasing fuel prices, our cost per visit and per patient day can increase due to factors beyond our control.
In addition, supply chain disruptions caused by a pandemic or a future public health catastrophe, or by the economic impact of foreign or domestic tariffs, could increase our expenses for necessary equipment, pharmaceuticals, and medical supplies, including without limitation, personal protective equipment. All of these potential effects would have a negative impact on our business, financial condition, and operations results.
In addition, supply chain disruptions caused by a pandemic or a future public health catastrophe, or by the economic impact of foreign or domestic tariffs, could increase our expenses for necessary equipment, pharmaceuticals, and medical supplies, including without limitation, personal protective equipment. All these potential effects would have a negative impact on our business, financial condition, and operations results.
It is not possible to predict all of the risks related to the use of AI, and changes in laws, rules, directives, and regulations governing the use of AI may adversely affect our ability to develop and use AI or subject us to legal liability.
It is not possible to predict all the risks related to the use of AI, and changes in laws, rules, directives, and regulations governing the use of AI may adversely affect our ability to develop and use AI or subject us to legal liability.
There is no assurance that future market basket updates will result in increases, or that such updates will be sufficient to offset increases in operating costs or the effects of permanent adjustments to the home health or hospice base rates. • Other federal legislation can also have a significant direct impact on our Medicare reimbursement.
There is no assurance that future market basket updates will result in increases, or that such updates will be sufficient to offset increases in operating costs or the effects of other adjustments to the home health or hospice base rates. • Other federal legislation can also have a significant direct impact on our Medicare reimbursement.
Our quality of care expectations and reporting requirements could adversely affect our business, our referrals, and the Medicare reimbursement we receive. Clinical quality is becoming increasingly important within our industry. For example, Medicare imposes a financial penalty upon hospitals that have excessive rates of patient readmissions within 30 days from hospital discharge.
Quality of care reporting requirements could adversely affect our business, our referrals, and the Medicare reimbursement we receive. Clinical quality is becoming increasingly important within our industry. For example, Medicare imposes a financial penalty upon hospitals that have excessive rates of patient readmissions within 30 days from hospital discharge.
For additional discussion of how we are reimbursed by Medicare, see Item 1, “ Business—Sources of Revenue—Medicare Reimbursement ,” in this Annual Report. An increase in Medicare Advantage and Medicaid patients and resulting change in our payer mix could adversely affect our Net service revenue or our profitability.
For additional discussion of how we are reimbursed by Medicare, see Item 1, “ Business—Sources of Revenue—Medicare Reimbursement ,” in this Annual Report. An increase in Medicare Advantage patients and resulting change in our payer mix could adversely affect our Net service revenue or our profitability.
In addition, the various restrictive covenants in our credit agreements could also adversely affect our ability to finance our future operations or capital needs and pursue available business opportunities. Further, we are required to maintain compliance with certain financial tests and ratios under the credit agreement.
In addition, the various restrictive covenants in our credit agreement could also adversely affect our ability to finance our future operations or capital needs and pursue available business opportunities. Further, we are required to maintain compliance with certain financial tests and ratios under the credit agreement.
Our indebtedness and the limitations on incurring additional debt could have important consequences and exacerbate the following risks: • limiting our ability to borrow additional amounts to fund working capital, capital expenditures, acquisitions, debt service requirements, execution of our business strategy and other general corporate purposes; • making us more vulnerable to unfavorable economic, industry and competitive conditions and government regulation by limiting our flexibility in planning for, and reacting to, changing conditions; • placing us at a competitive disadvantage compared with competing providers that have less debt or better access to capital resources; and • exposing us to risks inherent in interest rate fluctuations, which could result in higher interest expense, as discussed in Item 7, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ,” in this Annual Report.
Our indebtedness and the limitations on incurring additional debt could have important consequences and exacerbate the following risks: • limiting our ability to borrow additional amounts to fund working capital, capital expenditures, acquisitions, debt service requirements, execution of our business strategy and other general corporate purposes; • making us more vulnerable to unfavorable economic, industry and competitive conditions and government regulation by limiting our flexibility in planning for, and reacting to, changing conditions; • placing us at a competitive disadvantage compared with competing providers that have less debt or better access to capital resources; and 27 Table of Contents • exposing us to risks inherent in interest rate fluctuations, which could result in higher interest expense, as discussed in Item 7, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ,” in this Annual Report.
The occurrence of any information system failure, breach or security incident, or those of business associates or other vendors and businesses with whom we interact, which results in confidential, protected health or personal information being accessed, obtained, damaged or used by unauthorized persons or unavailability of systems necessary to the operation of our business, could impact patient care, harm our reputation, and expose us to significant remedial costs as well as regulatory actions (fines and penalties) and claims from patients, financial institutions, regulatory and law enforcement 21 Table of Contents agencies, and other persons, any of which could have a material adverse effect on our business, operations, financial position, results of operations, and cash flows.
The occurrence of any information system failure, breach or security incident, or those of business associates or other vendors and businesses with whom we interact, which results in confidential, protected health or personal information being accessed, obtained, damaged or used by unauthorized persons or unavailability of systems necessary to the operation of our business, could impact patient care, harm our reputation, and expose us to significant remedial costs as well as regulatory actions (fines and penalties) and claims from patients, financial institutions, regulatory and law enforcement agencies, and other persons, any of which could have a material adverse effect on our business, financial position, results of operations, and cash flows.
Any acquisitions, joint ventures and investments, including de novo locations, that we complete involve numerous risks including: • legal and regulatory limitations on our ability to complete acquisitions, particularly those involving not‑for‑profit providers, on terms, timelines, and valuations reasonable to us; • obtaining financing for acquisitions at a cost reasonable to us; • legal and regulatory limitations on our ability to obtain approval to operate de novo locations on anticipated timeframes; • difficulties integrating acquired operations, personnel, and information systems, and in realizing projected revenues, efficiencies, and cost savings, or returns on invested capital; • entry into markets, businesses, or services in which we may have little or no experience; • diversion of business resources or management’s attention from ongoing business operations; and • exposure to undisclosed or unforeseen liabilities of acquired operations, including liabilities for failure to comply with healthcare laws and anti-trust considerations in specific markets, successor liability imposed by Medicare, and risks and liabilities related to previously compromised information systems.
Any acquisitions, joint ventures and investments, including de novo locations, involve numerous risks, including: • legal and regulatory limitations on our ability to complete acquisitions, particularly those involving not‑for‑profit providers, on terms, timelines, and valuations reasonable to us; • obtaining financing for acquisitions at a cost reasonable to us; 29 Table of Contents • legal and regulatory limitations on our ability to obtain approval to operate de novo locations on anticipated timeframes; • difficulties integrating acquired operations, personnel, and information systems, and in realizing projected revenues, efficiencies, and cost savings, or returns on invested capital; • entry into markets, businesses, or services in which we may have little or no experience; • diversion of business resources or management’s attention from ongoing business operations; and • exposure to undisclosed or unforeseen liabilities of acquired operations, including liabilities for failure to comply with healthcare laws and anti-trust considerations in specific markets, successor liability imposed by Medicare, and risks and liabilities related to previously compromised information systems.
These laws and regulations relate to, among other things: • licensure, certification, enrollments, and accreditation; • policies, at either the national or local level, delineating what conditions must be met to qualify for reimbursement under federal programs; • coding and billing for services; • relationships with physicians and other referral sources, including physician self-referral and anti-kickback laws; 19 Table of Contents • quality of medical care; • use and maintenance of medical supplies and equipment; • implementation, maintenance, security, and privacy of patient information and medical records, including electronic health data and health system interoperability; • minimum staffing; • acquisition and dispensing of pharmaceuticals and controlled substances; and • disposal of medical and hazardous waste.
These laws and regulations relate to, among other things: • licensure, certification, enrollments, and accreditation; • policies, at either the national or local level, delineating what conditions must be met to qualify for reimbursement under federal programs; • coding and billing for services; • relationships with physicians and other referral sources, including physician self-referral and anti-kickback laws; • quality of medical care; • use and maintenance of medical supplies, equipment, and technology; • implementation, maintenance, security, and privacy of patient information and medical records, including electronic health data and health system interoperability; • minimum staffing; • acquisition and dispensing of pharmaceuticals and controlled substances; and • disposal of medical and hazardous waste.
In addition, CMS has established several ACO programs, the largest of which is the Medicare Shared Savings Program (“MSSP”), a voluntary ACO program in which hospitals, physicians, and other care providers pursue the delivery of coordinated healthcare on a more efficient, patient-centered basis.
CMS has established several ACO programs, the largest of which is the Medicare Shared Savings Program, a voluntary ACO program in which hospitals, physicians, and other care providers pursue the delivery of coordinated healthcare on a more efficient, patient-centered basis.
The billing and collection of our accounts receivable is subject to numerous and complex administrative processes and requires a significant amount of time and effort, including, but not limited to, the assessment of patient eligibility, the process of pre-authorization, the recording and collection of provider documentation, the timely and complete submission of claims for reimbursement, the application of cash receipts to patient accounts, the timely response to payer denials, and the conduct of collection activities.
The billing and collection of our accounts receivable is subject to numerous and complex administrative processes and requires a significant amount of time and effort, including, but not limited to, the assessment of patient eligibility, the process of pre-authorization, the recording and collection of provider documentation, the timely and complete submission of claims for reimbursement, the application of cash receipts to patient accounts, the timely response to payer denials, and 20 Table of Contents the conduct of collection activities.
For example, general levels of inflation and specific inflationary pressures that we have experienced in areas such as labor, transportation and medical supplies may continue to persist due to events outside of our control, such as, potential pandemic events, supply chain disruptions, and the broader macro-economic environment. In 2023 and 2024, for example, inflation increased throughout the U.S. economy.
For example, general levels of inflation and specific inflationary pressures that we have experienced in areas such as labor, transportation and medical supplies may continue to persist due to events outside of our control, such as potential pandemic events, supply chain disruptions, and the broader macro-economic environment. During 2023 to 2025, for example, inflation increased throughout the U.S. economy.
Conversely, decreases in reimbursement revenues, such as with sequestration, may limit our ability to increase compensation or benefits to the extent necessary to retain key employees, increasing our turnover and associated costs. The transition of management or unexpected departure of our key officers could harm our business. We are dependent on the efforts of our senior management.
Conversely, decreases in reimbursement revenues, such as with sequestration, may limit our ability to increase compensation or benefits to the extent necessary to retain key employees, increasing our turnover and associated costs. The transition of management or unexpected departure of our key officers could harm our business. We depend on the efforts of our senior management.
This section does not describe all risks that may be applicable to us, our industry, or our business, and it is intended only as a summary of material risk factors. Additional risks and 15 Table of Contents uncertainties we have not or cannot foresee may also adversely affect us in the future.
This section does not describe all risks that may be applicable to us, our industry, or our business, and it is intended only as a summary of material risk factors. Additional risks and uncertainties we have not or cannot foresee may also adversely affect us in the future.
We may face substantial difficulties, costs, and delays involved in the integration of acquired businesses or de novo locations. In some cases, the acquired business has itself grown through acquisitions, and there may be legacy systems, 26 Table of Contents operating policies and procedures, and financial and administrative practices yet to be fully integrated.
We may face substantial difficulties, costs, and delays involved in the integration of acquired businesses or de novo locations. In some cases, the acquired business has itself grown through acquisitions, and there may be legacy systems, operating policies and procedures, and financial and administrative practices yet to be fully integrated.
We use, and may continue to expand our use of, machine learning and artificial intelligence (“AI”) technologies to deliver our services and operate our business. The use or offering of AI technologies may result in new or expanded risks and liabilities, including enhanced government or regulatory scrutiny, litigation, compliance issues, ethical concerns, confidentiality, reputational harm and security risks.
We use, and may continue to expand our use of, machine learning and AI technologies to deliver our services and operate our business. The use or offering of AI technologies may result in new or expanded risks and liabilities, including enhanced government or regulatory scrutiny, litigation, compliance issues, ethical concerns, confidentiality, reputational harm and security risks.
Pressures relating to downturns in the economy, including increased inflation, could adversely affect our business and consolidated financial statements. Adverse developments in the United States could lead to a reduction in federal expenditures, including governmentally funded programs in which we participate, such as Medicare and Medicaid.
Other Operational and Financial Risks Pressures relating to downturns in the economy, including increased inflation, could adversely affect our business and consolidated financial statements. Adverse developments in the United States could lead to a reduction in federal expenditures, including governmentally funded programs in which we participate, such as Medicare and Medicaid.
If we fail to implement and maintain effective internal control over financial reporting, our ability to record, process, summarize, and report financial information accurately, and to prepare the consolidated financial statements within the 25 Table of Contents time periods specified by the rules and regulations of the SEC could be adversely affected.
If we fail to implement and maintain effective internal control over financial reporting, our ability to record, process, summarize, and report financial information accurately, and to prepare the consolidated financial statements within the time periods specified by the rules and regulations of the SEC could be adversely affected.
Other Operational and Financial Risks The proper function, availability, and security of our information systems are critical to our business, and failure to maintain them or to protect our data against unauthorized access could have a material adverse effect on our business, financial position, results of operations, and cash flows.
The proper function, availability, and security of our information systems are critical to our business, and failure to maintain them or to protect our data against unauthorized access could have a material adverse effect on our business, financial position, results of operations, and cash flows.
For example, the 2010 Healthcare Reform Laws provide for the expansion of the federal Anti-Kickback Law and the FCA increasing investigation and enforcement efforts in the healthcare industry generally.
For example, the 2010 Healthcare Reform Laws provide for the expansion of the federal Anti-Kickback Law and the FCA and increased investigation and enforcement efforts in the healthcare industry generally.
These provisions include, among others: • rules regarding the number of votes of stockholders required to amend certain provisions of our amended and restated certificate of incorporation and approve a business combination; • limitations on the ability of stockholders to call special meetings; • the right of our board of directors to issue preferred stock without stockholder approval; 27 Table of Contents • rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings; and • the ability of our directors, and not stockholders, to fill vacancies on our board of directors.
These provisions include, among others: • rules regarding the number of votes of stockholders required to amend certain provisions of our amended and restated certificate of incorporation and approve a business combination; • limitations on the ability of stockholders to call special meetings; • the right of our board of directors to issue preferred stock without stockholder approval; • rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings; and • the ability of our directors, and not stockholders, to increase the number of directors constituting our board of directors and to fill vacancies on our board of directors.
We may not be able to effectively adapt to such changes, or our competitors may be able to adapt more quickly, which would harm our ability to increase our volume of patients and revenue and harm our Net service revenue, financial position, results of operations, and cash flows.
We may not be able to effectively adapt to such changes, or our competitors may be able to adapt more quickly, which would harm our ability to increase our volume of patients and revenue and harm our business, financial position, results of operations, and cash flows.
For example, we depend upon our, and third parties’, information systems and software for patient care, coding, accounting, billing, collections, quality assurance, human resources, payroll and other information considered to be sensitive and/or confidential, including protected health information.
For example, we depend upon our third parties’ information systems and software for patient care, coding, accounting, billing, collections, quality assurance, human resources, payroll and other information considered to be sensitive and/or confidential, including PHI.
In addition, from time to time, there are efforts in states with certificate of need laws to weaken those laws, which could potentially increase competition in those states. Conversely, competition and statutory procedural requirements in some CON states may inhibit our ability to expand our operations in those states.
In addition, from time to time, there are efforts in states with CON laws to weaken those laws, which could potentially increase competition in those states. Conversely, competition and statutory procedural requirements in some CON states may inhibit our ability to expand our operations in those states.
Our inability to bill and collect on a timely basis pursuant to these regulations and rules could subject us to payment delays that could have a material adverse effect on our business, financial position, results of operations, and liquidity.
Our inability to bill and collect on a timely basis pursuant to these regulations and rules could subject us to payment delays that could have a material adverse effect on our business, financial position, results of operations, and cash flows.
CMS may make future permanent or temporary adjustments based on analysis of estimated aggregate expenditures through 2026, which could significantly impact our home health agencies. • For Medicare providers like us, the 2010 Healthcare Reform Laws provide that CMS will make annual adjustments to Medicare reimbursement rates, commonly known as a “market basket update,” that in recent years has been largely offset by the permanent adjustment reduction to the home health base rate.
CMS may make future permanent or temporary adjustments based on analysis of estimated aggregate expenditures, which could significantly impact reimbursement for our services. • For Medicare providers like us, the 2010 Healthcare Reform Laws provide that CMS will make annual adjustments to Medicare reimbursement rates, commonly known as a “market basket update,” that in recent years has been largely offset by adjustment reductions to the home health base rate.
Performance on these quality measures in a specified year (performance year) impacts payment adjustments in a later year (payment year). CMS may also create a similar plan for hospices in the future. The focus on alternative payment models and value-based purchasing of healthcare services has led to more extensive quality of care reporting requirements.
Performance on these quality measures in a specified year (performance year) impacts payment adjustments in a later year (payment year). CMS may also create a similar plan for hospices in the future. The focus on alternative payment models and VBP of healthcare services has led to more extensive quality of care reporting requirements.
In the home health industry, there is significant competition to acquire companies that have a large number of locations. We may face limitations on our ability to identify sufficient acquisitions or other development targets and to complete those transactions to meet goals.
In both the home health and hospice industries, there is significant competition to acquire companies that have a large number of locations. We may face limitations on our ability to identify sufficient acquisitions or other development targets and to complete those transactions to meet goals.
As stated in Item 1, “ Business—Regulation ,” we are required to comply with various federal anti-fraud and abuse laws, including the False Claims Act, the federal Anti‑Kickback Statute, the Stark or Physician Self-Referral Law, and Civil Monetary Penalties Law, as well as state laws and regulations.
As stated in Item 1, “ Business—Regulation ,” we are required to comply with various federal anti-fraud and abuse laws, including the FCA, the federal Anti‑Kickback Statute, the Stark or Physician Self-Referral Law, and Civil Monetary Penalties Law, as well as state laws and regulations.
Third-party vendors or “business associates,” in the event the vendor creates, receives, transmits or maintains protected health information on our behalf, are required to comply with substantially the same HIPAA requirements as the healthcare provider. This is accomplished using “Business Associate Agreements” with vendors.
Third-party vendors or “business associates,” in the event the vendor creates, receives, transmits or maintains PHI on our behalf, are required to comply with substantially the same HIPAA requirements as the healthcare provider. This is accomplished using “Business Associate Agreements” with vendors.
Our costs to respond to and defend reviews, audits and investigations may be significant and could have a material adverse effect on our business and consolidated financial condition, results of operations, and cash flows.
Our costs to respond to and defend reviews, audits and investigations may be significant and could have a material adverse effect on our business, financial position, results of operations, and cash flows.
Sustained unfavorable economic conditions could also result in reduced payment rates and could have a material adverse effect on our business and consolidated financial condition, results of operations and cash flows.
Sustained unfavorable economic conditions could also result in reduced payment rates and could have a material adverse effect on our business, financial position, results of operations, and cash flows.
We are required to comply with HIPAA regulations regarding the privacy and security of protected health information, as well as state laws that focus on privacy, security, and notification requirements with regard to personal information. The HIPAA regulations impose significant requirements on providers with regard to how such protected health information may be used and disclosed.
We are required to comply with HIPAA regulations regarding the privacy and security of PHI, as well as state laws that focus on privacy, security, and notification requirements regarding personal information. The HIPAA regulations impose significant requirements on providers regarding how such PHI may be used and disclosed.
Termination of one or more of our care centers from the Medicare program for failure to satisfy the program’s conditions of participation, or the imposition of alternative sanctions, could disrupt operations, require significant attention by management, or have a material adverse effect on our business and reputation and consolidated financial condition, results of operations, and cash flows.
Termination of one or more of our care centers from the Medicare or Medicaid program for failure to satisfy the program’s conditions of participation, or the imposition of alternative sanctions, could disrupt operations, require significant attention by management, or have a material adverse effect on our business, financial position, results of operations, and cash flows.
Failure of the government to make payments under these programs could have a material adverse effect on our business and consolidated financial condition, results of operations and cash flows.
Failure of the government to make payments under these programs could have a material adverse effect on our business, financial position, results of operations and cash flows.
For example, as a result of the quantitative impairment analysis performed, we recorded impairment charges totaling $161.7 million for the Home Health reporting unit and $85.8 million for the Hospice reporting unit for the years ended December 31, 2024 and 2023, respectively.
For example, as a result of the quantitative impairment analysis performed, we recorded impairment charges totaling $44.7 million and $161.7 million for the Home Health reporting unit for the years ended December 31, 2025 and 2024, respectively, and $85.8 million for the Hospice reporting unit for the year end December 31, 2023.
Future delays in reimbursement, or the future inability to collect aged accounts, or inadequate reserve estimates could have a material impact on our business and consolidated financial condition, results of operations, or cash flows.
Future delays in reimbursement, the future inability to collect aged accounts, or inadequate reserve estimates could have a material impact on our business, financial position, results of operations, or cash flows.
Further, any failure by Congress to complete the federal budget process and fund 20 Table of Contents government operations may result in a federal government shutdown, potentially causing us to incur substantial costs without reimbursement under the Medicare program, which could have a material adverse effect on our business and consolidated financial condition, results of operations and cash flows.
Further, any failure by Congress to complete the federal budget process and fund government operations may result in a federal government shutdown, potentially causing us to incur substantial costs without timely reimbursement under the Medicare program, which could have a material adverse effect on our business, financial position, results of operations, and cash flows.
Other Regulatory Risks The ongoing evolution of the healthcare delivery system, including alternative payment models and value-based purchasing initiatives, may significantly affect our business and results of operations. Government and private payers are increasingly looking to alternative payment models and value-based purchasing to contain costs.
Other Regulatory Risks The ongoing evolution of the healthcare delivery system, including alternative payment models and VBP initiatives, may significantly affect our business and results of operations. Government and private payers are increasingly looking for alternative payment models and VBP to contain costs.
Further, we may not be able to successfully integrate acquisitions or realize the anticipated benefits of any acquisitions or investments, including opening de novo locations. Historically, we selectively pursued strategic acquisitions of, and in some instances joint ventures with, other healthcare providers. Although our existing credit facility currently restricts acquisitions, they remain part of our long-term growth strategy.
Further, we may not be able to successfully integrate acquisitions or realize the anticipated benefits of any acquisitions or investments, including opening de novo locations. Historically, we selectively pursued strategic acquisitions of, and in some instances joint ventures with, other healthcare providers. Acquisitions remain part of our long-term growth strategy.
Moreover, an adverse review, audit or investigation could result in: • required refunding or retroactive adjustment of amounts we have been paid by federal or state programs or private payers; • state or federal agencies imposing fines, penalties, and other sanctions on us; 17 Table of Contents • loss of our ability to participate in the Medicare program, state programs or one or more private payer networks; or • damage to our business and reputation in various markets.
Moreover, an adverse review, audit or investigation could, among other things, result in: • required refunding or retroactive adjustment of amounts we have been paid by federal or state programs or private payers; • state or federal agencies imposing fines, penalties, and other sanctions on us; • loss of our ability to participate in federal programs like Medicare, state programs or one or more private payer networks; and/or • damage to our business and reputation in various markets.
We also are subject to audits under various federal and state government programs in which third-party firms engaged by CMS conduct extensive reviews of claims data and medical and other records to identify potential improper payments under the Medicare program.
We also are subject to audits under various federal and state government programs in which third-party firms engaged by CMS, the HHS-OIG, and private payers conduct extensive reviews of claims data and medical and other records to identify potential improper payments.
For example, changes in agency structure and staffing of government subsidized healthcare programs, including Medicare, could affect these programs by changing the number of persons enrolled in or eligible for these programs, reducing or delaying funding, changing reimbursement rules or increasing our administrative and compliance costs.
Recent changes in agency structure and staffing of government subsidized healthcare programs, including Medicare, may affect these programs by changing the number of people enrolled in or eligible for these programs, reducing or delaying funding, changing reimbursement rules or increasing our administrative and compliance costs.
Our operations are dependent on the efforts, abilities, and experience of our medical personnel, such as physical therapists, occupational therapists, speech pathologists, nurses, and other healthcare professionals. We compete with other healthcare providers in recruiting and retaining qualified personnel responsible for the daily operations of each of our locations.
Our operations depend on the efforts, abilities, and experience of our medical personnel, such as physical therapists, occupational therapists, speech pathologists, nurses, and other healthcare professionals. We compete with other healthcare providers for qualified personnel responsible for the daily operations of each of our locations.
In addition, the use of sub-regulatory guidance, statistical sampling, and extrapolation by CMS, Medicare contractors, HHS-OIG, and DOJ to deny claims, expand enforcement claims, and advocate for changes in reimbursement policy increases our risk of experiencing reduced revenue, financial penalties, or significant required changes to our operations.
In addition, the use of sub-regulatory guidance, statistical sampling, and extrapolation by CMS, Medicare contractors, HHS-OIG, and DOJ to deny claims, expand enforcement, and advocate for changes in reimbursement policy increases our risk of experiencing reduced revenue, financial penalties, or significant required changes to our operations. In 2025, there have been significant shifts in regulatory priorities in the federal government.
Government and private payers’ implementation of alternative payment models and value-based purchasing requirements could have a material adverse effect on our business.
Government and private payers’ implementation of alternative payment models and VBP requirements could have a material adverse effect on our business.
Applying this methodology, CMS implemented a 3.925%, 2.89% and 1.975% permanent adjustment reduction to the home health base rate for 2023, 2024 and 2025, respectively.
Applying this methodology, CMS implemented a 3.925%, 2.89%, 1.975%, and 0.9% permanent adjustment reduction to the home health base rate for 2023, 2024, 2025, and 2026, respectively, and implemented a temporary reduction to the home health base rate for 2026 of 2.7%.
In healthcare generally, the burdens associated with collecting, recording, and reporting quality data are increasing. Currently, for example, CMS requires home health providers to track and submit patient assessment data to support the calculation of 20 quality of care reporting measures. We, like other healthcare providers, are likely to incur additional expenses to comply with changing quality reporting requirements.
Currently, for example, CMS requires home health providers to track and submit patient assessment data to support the calculation of quality of care reporting measures. We, like other healthcare providers, are likely to incur additional expenses to comply with changing quality reporting requirements.
The sustained or continued rise of inflation may adversely impact our business operations, financial condition and results of operations.
The sustained or continued rise of inflation may adversely impact our business, financial position, results of operations, and cash flows.
A determination by a regulatory authority that an agency is not in compliance with applicable requirements could also lead to the assessment of fines or other penalties, loss of licensure, exclusion from participation in Medicare and Medicaid, and the imposition of requirements that the offending agency must take corrective action.
A determination by a regulatory authority that one of our care centers is not in compliance with applicable requirements could also lead to the assessment of fines or other penalties, loss of licensure, exclusion from participation in Medicare and 23 Table of Contents Medicaid, and the imposition of requirements that the offending agency or provider take corrective action.
In addition, value-based purchasing under HHVBP may negatively impact Medicare reimbursement for home health providers. Beginning in 2025, home health agencies will receive increases or decreases to their Medicare fee-for-service payments of up to 5% based on performance against specific quality measures relative to the performance of other home health providers.
In addition, VBP under HHVBP may negatively impact Medicare reimbursement for home health providers. Under HHVBP, home health agencies receive increases or decreases to their Medicare FFS payments of up to 5% based on performance against specific quality measures relative to the performance of other home health providers.
The managed care companies have substantial resources and existing relationships with customers, which may serve as a 22 Table of Contents large patient base for their current or future home health services. Competition by these managed care companies in home health services may adversely affect our growth strategy of capturing greater Medicare Advantage volumes.
The managed care companies have substantial resources and existing relationships with customers, which may serve as a large patient base for their current or future home health services. Competition by these managed care companies in home health services may adversely affect our ability to capture Medicare Advantage volumes.
The carrying value of our Goodwill or other Intangible assets, net, is subject to impairment testing and may result in the incurrence of impairment charges and adversely impact our results of operations and financial condition. As of December 31, 2024, we had Goodwill of $900.0 million and Intangible assets, net, of $58.1 million.
The carrying value of our Goodwill or other intangible assets, net, is subject to impairment testing and may result in the incurrence of impairment charges and adversely impact our results of operations and financial condition. As of December 31, 2025, we had Goodwill of $855.3 million and Intangible assets, net , of $38.5 million.
We have implemented administrative, technical, and physical controls to prevent unauthorized access to that data, which includes patient information and other sensitive information, but we routinely identify attempts to gain unauthorized access to our systems. We are likely to face attempted attacks in the future.
We have implemented administrative, technical, and physical controls to prevent unauthorized access to that data, which includes patient information and other sensitive information, but we routinely identify attempts to gain unauthorized access to our systems.
Further, the regulations include extensive and complex requirements to establish reasonable and appropriate administrative, technical, and physical safeguards to ensure the confidentiality, integrity, and availability of protected health information.
Further, the regulations include extensive and complex requirements to establish reasonable and appropriate administrative, technical, and physical safeguards to protect the confidentiality, integrity, and availability of PHI.
As a result, CMS must annually determine the impact of differences between assumed and actual behavior changes on estimated aggregate expenditures, beginning with 2020 and ending with 2026, and make permanent and temporary increases or decreases to the 30-day payment amount to account for such differences.
Through 2026, CMS must annually determine the impact on estimated aggregate expenditures of differences between assumed and actual behavior changes and make permanent and temporary increases or decreases to the 18 Table of Contents 30-day payment amount to account for such differences.
If we fail to attain our goals regarding acute care hospital readmission rates and other quality metrics, we expect our ability to generate referrals and our Medicare reimbursements to be adversely impacted, which could have a material adverse effect upon our business and consolidated financial condition, results of operations, and cash flows.
If we fail to attain our goals regarding acute care hospital readmission rates and other quality metrics, we expect our ability to generate referrals and our Medicare reimbursements to be adversely impacted, which could have a material adverse effect upon our business, financial position, results of operations, and cash flows. 25 Table of Contents We face intense competition for patients from other healthcare providers.
See Item 7, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Estimates ,” in this Annual Report. We may make investments or complete transactions that could expose us to unforeseen risks and liabilities.
Any additional impairment to goodwill or other intangible assets in future periods could adversely impact our results of operations and financial condition. See Item 7, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates ,” in this Annual Report. We may make investments or complete transactions that could expose us to unforeseen risks and liabilities.
If billing errors are identified in the sample of reviewed claims, the billing error can be extrapolated to all claims filed which could result in a larger overpayment than originally identified in the sample of reviewed claims.
If billing errors are identified in the sample of reviewed claims, these reviewers sometimes extrapolate the billing error to all claims filed, which could result in a larger alleged overpayment than originally identified in the sample.
While the initial suspension period may be up to 180 days, it can be extended almost indefinitely if the matter is under investigation by the HHS-OIG or the DOJ. Any such suspension would adversely affect our financial position, results of operations, and cash flows.
While the initial suspension period may be up to 180 days, it can be extended almost indefinitely if the matter is under investigation by the HHS-OIG or the DOJ. Any such suspension would adversely affect our financial position, results of operations, and cash flows. Some states in which we operate have undertaken, or are considering, similar healthcare reform initiatives.
In addition to many ordinary course reimbursement rate changes that CMS adopts each year as part of its annual rulemaking processes, Congress and certain state legislatures periodically propose significant changes in laws and regulations governing the healthcare system, which have resulted in, and may result in future, limitations on increases and, in some cases, significant reductions in the levels of payments to healthcare providers.
In addition to reimbursement rate changes resulting from CMS’s annual rulemaking processes, Congress and certain state legislatures periodically propose significant changes in laws and regulations governing the healthcare system, which have resulted in, and may result in future, limitations on increases and, in some cases, significant reductions in the levels of payments to healthcare providers.
Given the rapidly evolving nature and proliferation of cyber threats, there can be no assurance our training and network security measures or other controls will detect, prevent, or remediate security or data breaches in a timely manner or otherwise prevent unauthorized access to, damage to, or interruption of our systems and operations.
We, and third parties whose systems we rely on, have faced such attacks in the past and are likely to face such attacks in the future. 24 Table of Contents Given the rapidly evolving nature and proliferation of cyber threats, there can be no assurance our training and network security measures or other controls will detect, prevent, or remediate security or data breaches in a timely manner or otherwise prevent unauthorized access to, damage to, or interruption of our systems and operations.
For additional discussion of our indebtedness, see Item 7, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources ,” in this Annual Report, and Note 8, Long-Term Debt , to the accompanying consolidated financial statements.
For additional discussion of our indebtedness, see Item 7, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources ,” in this Annual Report, and Note 8, Long-Term Debt , to the accompanying consolidated financial statements. A pandemic, public health catastrophe or other unforeseen event, including natural disasters, could materially impact our operations.
There can be no assurance that the government will not enact future initiatives that result in pricing freezes, reimbursement reductions, or levels of reimbursement increases that are less than the increases we may experience in our costs of operations, which could result in substantial changes to, or material reduction in, our reimbursements.
There can be no assurance that the government will not enact future initiatives that result in pricing freezes, reimbursement reductions, or levels of reimbursement increases that are less than the increases we may experience in our costs of operations, which could have material adverse effects on our business, financial position, results of operations, and cash flows.
As our payer mix shifts to a greater portion of Medicare Advantage and Medicaid patients, our ability to collect higher reimbursement rates will become increasingly difficult, and we may not be able to sufficiently increase the volume of patients to offset the impact, which could have a material adverse effect on our business and consolidated financial condition, results of operations and cash flows.
As our payer mix shifts to a greater portion of Medicare Advantage patients, our ability to collect higher reimbursement rates will become increasingly difficult, and we may not be able to sufficiently increase the volume of patients to offset the impact.
Failure to comply with any of the covenants in our existing or future financing agreements could result in a default under those agreements and under any other agreements containing cross-default provisions.
Various risks, uncertainties and events beyond our control could affect our ability to comply with the covenants and financial tests and ratios in the credit agreement. Failure to comply with any of the covenants in our existing or future financing agreements could result in a default under those agreements and under any other agreements containing cross-default provisions.
Additionally, our business could be negatively affected by the actions of activist stockholders, including without limitation by causing increased volatility in our stock price. We value constructive input from investors and regularly engage in dialogue with our stockholders. Responding to actions by activist stockholders can be costly and time‑consuming and divert management’s attention from operations.
In recent periods, these aspects of our industry have caused some consolidation. Additionally, our business could be negatively affected by the actions of activist stockholders. While we value constructive input from investors and regularly engage in dialogue with our stockholders, responding to actions by activist stockholders can be costly and time‑consuming and divert management’s attention from operations.
If payments made to our hospice providers exceed either of these caps, we may be required to reimburse Medicare for payments received in excess of the caps. See Item 1, “ Business—Sources of Revenues—Hospice ,” in this Annual Report.
If payments made to our hospice providers exceed either of these caps, we may be required to reimburse Medicare for excess payments received. See Item 1, “ Business—Sources of Revenues—Hospice ,” in this Annual Report. For example, as of December 31, 2025 and 2024, we had accrued approximately $1.9 million and $3.1 million, respectively, for hospice cap exposure.
The growing emphasis on integrated care delivery across the healthcare continuum increases that risk. We cannot provide assurance that we will be able to maintain our existing referral source relationships or that we will be able to develop and maintain new relationships in existing or new markets.
We cannot provide assurance that we will be able to maintain our existing referral source relationships or that we will be able to develop and maintain new relationships in existing or new markets.
Failure to comply with applicable certification requirements may make our agencies ineligible for Medicare or Medicaid reimbursement.
Failure to comply with applicable requirements may make our agencies ineligible for reimbursement under government healthcare programs such as Medicare and Medicaid.
Providers are paid based on the overall value and quality, rather than the number, of services provided. While this is consistent with our 18 Table of Contents goal of being a high-quality, cost-effective provider, broad-based implementation of a new delivery payment model could disrupt the healthcare industry, and may have a significant impact on our business and results of operations.
While this is consistent with our goal of being a high-quality, cost-effective provider, broad-based implementation of a new delivery payment model could disrupt the healthcare industry, and may have a significant impact on our business and results of operations. 21 Table of Contents In recent years, HHS has been studying the feasibility of bundling and episode-based care.
Concerns held by federal policymakers about the federal deficit, national debt levels, or healthcare spending specifically, including solvency of the Medicare trust fund, could result in enactment of further federal spending reductions or limitations, further entitlement reform legislation affecting the Medicare program, and further reductions to provider payments. • Each year, MedPAC advises Congress on issues affecting Medicare, including, among others, the HH-PPS and the Hospice payment systems, which can affect the rates we are paid for our services.
Concerns held by federal policymakers about the federal deficit, national debt levels, or healthcare spending specifically, including solvency of the Medicare trust fund, could result in enactment of further federal spending reductions or limitations, further entitlement reform legislation affecting the Medicare program, and further reductions to provider payments.
For fiscal year 2025, for example, CMS implemented a 2.7% net increase for home health reimbursement rates and a 2.9% net increase to hospice reimbursement rates, each as compared to 2024 reimbursement rates.
For calendar year 2026, for example, CMS implemented a 1.3% payment update percentage decrease for home health reimbursement rates and, for fiscal year 2026, a 2.6% payment update percentage increase to hospice reimbursement rates, each as compared to 2025 reimbursement rates.
A shortage may require us to enhance wages and benefits to recruit and retain qualified personnel or to contract for more expensive temporary personnel. A failure to recruit and retain qualified medical personnel could cause the quality of our services to decline or constrain our ability to grow.
A shortage may require us to enhance wages and benefits to recruit and retain qualified personnel or to contract for more expensive temporary personnel.
Although the reimbursement rates we receive from traditional Medicare Fee for Service are generally higher than those received from other payers, an increasing percentage of Medicare eligible individuals are choosing to enroll in a Medicare 16 Table of Contents Advantage plan. We are therefore attempting to grow the number of Medicare Advantage networks in which we participate.
Although the reimbursement rates we receive from traditional Medicare FFS are generally higher than those received from other payers, an increasing percentage of Medicare eligible individuals are choosing to enroll in a Medicare Advantage plan. Medicare Advantage, however, presents a number of challenges with respect to reimbursement rates and collection of fees.
If our staffing costs increase, we may not experience reimbursement rate or pricing increases to offset these additional costs. Because a significant percentage of our revenues consists of fixed, prospective payments, our ability to pass along increased staffing costs is limited.
Because a significant percentage of our revenues consists of fixed, prospective payments, our ability to pass along increased staffing costs is limited.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeKey components of our strategy include annual and ongoing security awareness 28 Table of Contents training for employees, advanced detection and monitoring systems, and robust incident response and containment. We actively monitor and investigate both internally discovered and externally reported issues that may compromise our information systems, permitting quick and decisive action when necessary.
Biggest changeKey components of our strategy include annual and ongoing security awareness training for employees, advanced detection and monitoring systems, and robust incident response and containment. We actively monitor and investigate both internally discovered and externally reported issues that may compromise our information systems, permitting quick and decisive action when necessary.
The Enterprise Risk Committee meets regularly during the year to assess various significant risks—including cybersecurity risks—and receives cybersecurity updates in connection with those assessments and the development and implementation of any risk mitigation plans. Our President and Chief Executive Officer presents the report of the Enterprise Risk Committee quarterly to the full board of directors.
The Enterprise Risk Committee meets regularly during the year to assess various significant risks—including cybersecurity risks—and receives cybersecurity updates in connection with those assessments and the development and implementation of any risk mitigation plans. Our President and CEO presents the report of the Enterprise Risk Committee quarterly to the full board of directors.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur principal executive office and other properties are suitable for their respective uses and are, in all material respects, adequate for our present needs. 29 Table of Contents The following table sets forth information regarding our home health and hospice locations as of December 31, 2024: State Home Health Locations Hospice Locations Total Alabama+* 29 27 56 Alaska 1 1 2 Arizona 5 1 6 Arkansas+* 3 2 5 Colorado 6 3 9 Connecticut 1 1 2 Florida* 23 — 23 Georgia+ 19 4 23 Idaho 7 6 13 Illinois 3 1 4 Indiana 2 — 2 Kansas 4 2 6 Kentucky+* 3 — 3 Louisiana 1 2 3 Maryland+* 3 — 3 Massachusetts 5 — 5 Mississippi+ 9 11 20 Missouri 1 1 2 Montana 5 5 10 Nevada 3 1 4 New Mexico 5 4 9 North Carolina+* 6 — 6 Ohio 2 — 2 Oklahoma 19 2 21 Oregon 2 — 2 Pennsylvania 3 1 4 Rhode Island+* 1 — 1 South Carolina 3 1 4 Tennessee+* 7 1 8 Texas 51 26 77 Utah 6 6 12 Virginia 11 2 13 Washington+* 1 1 2 Wyoming 5 3 8 255 115 370 + Home health certificate of need state. * Hospice certificate of need state.
Biggest changeThe following table sets forth information regarding our home health and hospice locations as of December 31, 2025: State Home Health Locations Hospice Locations Total Alabama+* 29 27 56 Alaska 1 1 2 Arizona 5 3 8 Arkansas+* 3 2 5 Colorado 6 3 9 Connecticut 1 1 2 Florida 25 — 25 Georgia+ 18 5 23 Idaho 7 6 13 Illinois 3 1 4 Indiana 2 1 3 Kansas 4 2 6 Kentucky+ 3 — 3 Louisiana — 2 2 Maryland+ 1 — 1 Massachusetts 5 — 5 Mississippi+ 9 11 20 Missouri 1 1 2 Montana 4 4 8 Nevada 3 1 4 New Mexico 5 4 9 North Carolina+ 6 — 6 Ohio 2 — 2 Oklahoma 17 3 20 Oregon 2 — 2 Pennsylvania 3 — 3 Rhode Island+ 1 — 1 South Carolina+* 3 1 4 Tennessee+* 7 1 8 Texas 52 26 78 Utah 5 5 10 Virginia 11 2 13 Washington+* 1 1 2 Wyoming 4 3 7 249 117 366 + Home health certificate of need state. * Hospice certificate of need state.
In addition to our principal executive office, as of December 31, 2024, we leased through various consolidated entities 290 locations. Our home health and hospice locations are in the localities served by that business and are subject to relatively small space leases, primarily of 5,000 square feet or less. Those space leases are typically five years or less in term.
Our home health and hospice locations are in the localities served by that business and are subject to relatively small space leases, primarily of 5,000 square feet or less. Those space leases are typically five years or less in term.
ITEM 2. PROPERTIES We maintain our principal executive office at 6688 N. Central Expressway, Ste. 1300, Dallas, Texas 75206, the lease for which was renewed in March 2023 for an eleven-year term. See Note 6, Leases , to the accompanying consolidated financial statements for additional information about the renewal of the lease.
ITEM 2. PROPERTIES We maintain our principal executive office at 6688 N. Central Expressway, Ste. 1300, Dallas, Texas 75206, the lease for which was renewed in March 2023 for an 11 year term.
Added
See Note 6, Leases , to the accompanying consolidated financial statements for additional information about the renewal of the lease. 32 Table of Contents In addition to our principal executive office, as of December 31, 2025, we leased through various consolidated entities 280 locations.
Added
Our principal executive office and other properties are suitable for their respective uses and are, in all material respects, adequate for our present needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThese lawsuits, also known as “qui tam” actions, are common in the healthcare industry and can involve 30 Table of Contents significant monetary damages, fines, attorneys’ fees, and the award of bounties to the relators who successfully prosecute or bring these suits to the government.
Biggest changeThese lawsuits, also known as “qui tam” actions, are common in the healthcare industry and can involve significant monetary damages, fines, attorneys’ fees, and the award of bounties to the relators who successfully prosecute or bring these suits to the government.
Some of these matters have been material to us in the past, and others in the future may, either individually or in the aggregate, be material and adverse to our business, financial position, results of operations, and liquidity.
Some of these matters have been material to us in the past, and others in the future may, either individually or in the aggregate, be 33 Table of Contents material and adverse to our business, financial position, results of operations, and liquidity.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeUnregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities During the three months ended December 31, 2024, we purchased shares of our common stock as follows: Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans Approximate Dollar Value of Shares that May Yet be Purchased under our Share Repurchase Plans October 1 through October 31 — $ — — — November 1 through November 30 — — — — December 1 through December 31 31,670 8.52 — — 31,670 $ 8.52 — — (1) Represents shares of common stock we repurchased in December 2024 to satisfy employee tax-withholding obligations in connections with the vesting of stock‑based compensation awards.
Biggest changeUnregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities During the three months ended December 31, 2025, we purchased shares of our common stock as follows: Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans Approximate Dollar Value of Shares that May Yet be Purchased under our Share Repurchase Plans October 1 through October 31 — $ — — — November 1 through November 30 3,080 7.99 — — December 1 through December 31 49,649 9.65 — — 52,729 $ 9.55 — — (1) Represents shares of common stock we repurchased in November and December 2025 to satisfy employee tax-withholding obligations in connections with the vesting of stock‑based compensation awards.
The graph uses the closing market price on July 1, 2022 of $22.74 per share as the initial value of a share of our common stock. 32 Table of Contents This performance graph and other information furnished under this Comparison of Total Stockholder Return section shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Exchange Act.
The graph uses the closing market price on July 1, 2022 of $22.74 per share as the initial value of a share of our common stock. 35 Table of Contents This performance graph and other information furnished under this Comparison of Total Stockholder Return section shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Exchange Act.
Securities Authorized for Issuance Under Equity Compensation Plans Information required by this item is incorporated by reference to our definitive proxy statement for our 2025 Annual Meeting of stockholders.
Securities Authorized for Issuance Under Equity Compensation Plans Information required by this item is incorporated by reference to our definitive proxy statement for our 2026 Annual Meeting of stockholders.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock Our common stock is listed for trading on the New York Stock Exchange under the symbol “EHAB.” Holders of Common Stock As of the close of business on March 3, 2025, approximately 5,500 holders of record held our common stock.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock Our common stock is listed for trading on the New York Stock Exchange under the symbol “EHAB.” Holders of Common Stock As of the close of business on February 26, 2026, approximately 5,300 holders of record held our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

64 edited+11 added−13 removed54 unchanged
Biggest changeRevenues and expenses are measured in accordance with the policies and procedures described in Note 1, Summary of Significant Accounting Policies , to the accompanying consolidated financial statements. 37 Table of Contents The following table reconciles Net loss to Adjusted EBITDA for the years ended December 31, 2024, 2023, and 2022 (in millions): Year Ended December 31, 2024 2023 2022 Net loss $ (154.0) $ (79.0) $ (38.3) Interest expense and amortization of debt discounts and fees 42.9 43.0 15.0 (Benefit from) provision for income taxes (4.0) (11.4) 12.8 Depreciation and amortization 31.5 30.9 33.0 (Gain) loss on disposal or impairment of assets (0.7) (0.3) 0.1 Impairment of goodwill 161.7 85.8 109.0 Stock-based compensation 11.7 8.9 9.2 Stock-based compensation included in overhead allocation — — 1.1 Net income attributable to noncontrolling interests (2.2) (1.5) (2.1) Unusual or nonrecurring items not typical of ongoing operations 13.2 21.2 9.5 Adjusted EBITDA $ 100.1 $ 97.6 $ 149.3 The following table reconciles Net cash provided by operating activities to Adjusted EBITDA for the years ended December 31, 2024, 2023, and 2022 (in millions): Year Ended December 31, 2024 2023 2022 Net cash provided by operating activities $ 51.2 $ 48.4 $ 80.1 Interest expense excluding amortization of debt discounts and fees 41.4 40.9 15.0 Current portion of (benefit from) provision for income taxes 1.7 0.2 17.1 Change in assets and liabilities, excluding derivative instrument (5.2) (11.9) 29.2 Net income attributable to noncontrolling interests (2.2) (1.5) (2.1) Unusual or nonrecurring items that are not typical of ongoing operations 13.2 21.2 9.5 Stock-based compensation included in overhead allocation — — 1.1 Other — 0.3 (0.6) Adjusted EBITDA $ 100.1 $ 97.6 $ 149.3 Unusual or nonrecurring items in the year ended December 31, 2024 include: (i) third-party legal and advisory fees related to shareholder activism; (ii) third-party legal and advisory fees related to the strategic review process that concluded in May 2024; (iii) certain third-party, nonrecurring litigation fees related to a lawsuit in which the Company is a plaintiff, styled Enhabit, Inc. et al v.
Biggest changeRevenues and expenses are measured in accordance with the policies and procedures described in Note 1, Summary of Significant Accounting Policies , to the accompanying consolidated financial statements. 40 Table of Contents The following table reconciles Net income (loss) to Adjusted EBITDA for the years ended December 31, 2025, 2024, and 2023 (in millions): Year Ended December 31, 2025 2024 2023 Net income (loss) $ (2.6) $ (154.0) $ (79.0) Interest expense, net and amortization of debt discounts and fees 33.8 42.9 43.0 Provision for (benefit from) income taxes 4.0 (4.0) (11.4) Depreciation and amortization 22.5 31.5 30.9 (Gain) loss on disposal of assets (19.1) (0.7) (0.3) Impairment of goodwill 44.7 161.7 85.8 Impairment of intangible assets 3.0 — — Stock-based compensation 16.6 11.7 8.9 Net income attributable to noncontrolling interests (2.0) (2.2) (1.5) Unusual or nonrecurring items not typical of ongoing operations 7.6 13.2 21.2 Adjusted EBITDA $ 108.5 $ 100.1 $ 97.6 Unusual or nonrecurring items in the year ended December 31, 2025 include: (i) restructuring activities and severance costs; (ii) third-party legal fees associated with the suit Enhabit, Inc. et al. v.
We believe the following accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial results, as they require our most difficult, subjective, or complex judgments resulting from the need to make estimates about the effect of matters that are inherently uncertain. 44 Table of Contents Revenue Recognition We recognize Net service revenue in the reporting period in which we perform the service based on our best estimate of the transaction price for the type of service provided to the patient.
We believe the following accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial results, as they require our most difficult, subjective, or complex judgments resulting from the need to make estimates about the effect of matters that are inherently uncertain. 46 Table of Contents Revenue Recognition We recognize Net service revenue in the reporting period in which we perform the service based on our best estimate of the transaction price for the type of service provided to the patient.
For additional information about our business and reportable segments, see Item 1, “ Business ,” Item 1A, “ Risk Factors ,” “— Segment Results of Operations ,” and Note 14, Segment Reporting , to the accompanying consolidated financial statements in this Annual Report. 33 Table of Contents Factors Affecting Our Performance There are a number of factors that have impacted, and we believe will continue to impact, our results of operations and growth.
For additional information about our business and reportable segments, see Item 1, “ Business ,” Item 1A, “ Risk Factors ,” “— Segment Results of Operations ,” and Note 14, Segment Reporting , to the accompanying consolidated financial statements in this Annual Report. 36 Table of Contents Factors Affecting Our Performance There are a number of factors that have impacted, and we believe will continue to impact, our results of operations and growth.
We based our fair value estimates 46 Table of Contents on assumptions management believed to be reasonable but which are unpredictable and inherently uncertain. Actual future results may differ from those estimates. See Note 7, Goodwill and Other Intangible Assets, Net , to the accompanying consolidated financial statements for additional information.
We based our fair value estimates on assumptions management believed to be reasonable but which are unpredictable and inherently uncertain. Actual future results may differ from those estimates. 48 Table of Contents See Note 7, Goodwill and Other Intangible Assets, Net , to the accompanying consolidated financial statements for additional information.
In addition, increases in labor costs in the healthcare industry are typically higher than inflation 34 Table of Contents and, as such, would impact our costs under employee benefit plans. Managing these costs remains a significant challenge and priority for us. Suppliers may pass along rising costs to us in the form of higher prices.
In addition, increases in labor costs in the healthcare industry are typically higher than inflation and, as such, would impact our costs under employee benefit plans. Managing these costs remains a significant challenge and priority for us. 37 Table of Contents Suppliers may pass along rising costs to us in the form of higher prices.
Overview We are a leading provider of home health and hospice services in the United States. We strive to provide superior, cost-effective care where patients prefer it: in their homes. For over twenty years, we have provided care in the low-cost home setting while achieving high-quality clinical outcomes.
Overview We are a leading provider of home health and hospice services in the United States. We strive to provide superior, cost-effective care where patients prefer it: in their homes. For over 25 years, we have provided care in the low-cost home setting while achieving high-quality clinical outcomes.
Amounts include interest portion of future minimum finance lease payments. For more information, see Note 6, Leases , to the accompanying consolidated financial statements. (2) Interest on long-term debt was calculated using the rate for the credit facilities as of December 31, 2024.
Amounts include interest portion of future minimum finance lease payments. For more information, see Note 6, Leases , to the accompanying consolidated financial statements. (2) Interest on long-term debt was calculated using the rate for the credit facilities as of December 31, 2025.
If, based on our qualitative assessment, we were to believe we must perform the quantitative goodwill impairment test, we would determine the fair value of the applicable reporting unit using generally accepted valuation techniques including the income approach and the market approach.
If, based on our qualitative assessment, we were to believe we must perform the quantitative goodwill impairment test, we would determine the fair value of the applicable reporting unit using generally accepted valuation techniques including equal weighting of the income approach and the market approach.
Future changes in our assumptions or the interrelationship of those assumptions may result in purchase price allocations that are different than those recorded in recent years. Acquisition-related costs are not considered part of the consideration paid and are expensed as operating expenses as incurred.
Future changes in our assumptions or the interrelationship of those assumptions may result in purchase price allocations that are different than those recorded in recent years. 49 Table of Contents Acquisition-related costs are not considered part of the consideration paid and are expensed as operating expenses as incurred.
For a comparison of our results of operations for the years ended December 31, 2023 to 2022, see Item 7, “ Management's Discussion and Analysis of Financial Condition and Results of Operations ,” of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 15, 2024.
For a comparison of our results of operations for the years ended December 31, 2024 to 2023, see Item 7, “ Management's Discussion and Analysis of Financial Condition and Results of Operations ,” of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 6, 2025.
Based on the sensitivity analysis performed at December 31, 2024 by reporting unit, it was determined that, assuming all other assumptions and inputs used in the discounted cash flow analysis are held constant, a 50 and 100 basis point increase in the discount rate assumption would result in decreases in the fair value of the Home Health and Hospice reporting units, respectively, of approximately $20 million and $15 million, respectively.
Based on the sensitivity analysis performed at December 31, 2025 by reporting unit, it was determined that, assuming all other assumptions and inputs used in the discounted cash flow analysis are held constant, a 50 and 100 basis point increase in the discount rate assumption would result in decreases in the fair value of approximately $15 million for both Home Health and Hospice reporting units.
As of December 31, 2024 and 2023, the amount of our patient accounts receivable representing denials that were under review or audit in excess of reserves established for such denials was $1.2 million and $1.8 million, respectively, in our Home Health segment and $1.5 million and $2.2 million, respectively, in our Hospice segment.
As of December 31, 2025 and 2024, the amount of our patient accounts receivable representing denials that were under review or audit in excess of reserves established for such denials was $0.6 million and $1.2 million, respectively, in our Home Health segment and $1.2 million and $1.5 million, respectively, in our Hospice segment.
Our primary collection risks relate to the increasing complexities of documentation requirements by payers and claims reviews conducted by Medicare Administrative Contractors (“MACs”) or other contractors. The table below shows a summary of our total Accounts receivable, net of allowances, as of December 31, 2024 and 2023.
Our primary collection risks relate to the increasing complexities of documentation requirements by payers and claims reviews conducted by MACs or other contractors. The table below shows a summary of our total Accounts receivable, net of allowances , as of December 31, 2025 and 2024.
Goodwill We test Goodwill for impairment annually as of October 1 st of each year. We may perform interim impairment tests if an event occurs or circumstances change that could potentially reduce the fair value of a reporting unit below its carrying amount. We test Goodwill for impairment by performing either a qualitative evaluation or a quantitative test.
We may perform interim impairment tests if an event occurs or circumstances change that could potentially reduce the fair value of a reporting unit below its carrying amount. We test Goodwill for impairment by performing either a qualitative evaluation or a quantitative test.
For additional information regarding our debt, see Note 8, Long-Term Debt , to the accompanying consolidated financial statements and “ —Quantitative and Qualitative Disclosures about Market Risk .” The following table shows the cash flows provided by or used in operating, investing, and financing activities for the years ended December 31, 2024, 2023, and 2022 (in millions): Year Ended December 31, 2024 2023 2022 Net cash provided by operating activities $ 51.2 $ 48.4 $ 80.1 Net cash used in investing activities (2.4) (5.3) (42.3) Net cash used in financing activities (48.3) (40.5) (18.6) Increase in cash, cash equivalents, and restricted cash $ 0.5 $ 2.6 $ 19.2 Operating Activities .
For additional information regarding our debt, see Note 8, Long-Term Debt , to the accompanying consolidated financial statements and “ —Quantitative and Qualitative Disclosures about Market Risk .” The following table shows the cash flows provided by or used in operating, investing, and financing activities for the years ended December 31, 2025, 2024, and 2023 (in millions): Year Ended December 31, 2025 2024 2023 Net cash provided by operating activities $ 70.7 $ 51.2 $ 48.4 Net cash provided by (used) in investing activities 16.7 (2.4) (5.3) Net cash used in financing activities (72.2) (48.3) (40.5) Increase in cash, cash equivalents, and restricted cash $ 15.2 $ 0.5 $ 2.6 Operating Activities .
We have little or no ability to pass on these increased costs associated with providing service to Medicare and Medicaid patients due to federal and state laws that establish fixed reimbursement rates through the annual Medicare reimbursement rate updates for home health and hospice.
However, we cannot predict the magnitude of future cost increases. We have little or no ability to pass on these increased costs associated with providing service to Medicare and Medicaid patients due to federal and state laws that establish fixed reimbursement rates through the annual Medicare reimbursement rate updates for home health and hospice.
See “ —Segment Results of Operations .” Cost of service, excluding depreciation and amortization, represents the cost of operating our business, which primarily consists of payroll and related benefits, travel, supplies, including pharmacy for Hospice patients, and lease costs for our locations. 36 Table of Contents General and Administrative Expenses.
Cost of service, excluding depreciation and amortization , represents the cost of operating our business, which primarily consists of payroll and related benefits, travel, supplies, including pharmacy for Hospice patients, and lease costs for our locations. 39 Table of Contents General and Administrative Expenses.
For the year ended December 31, 2024, General and administrative expenses decreased compared to the prior year primarily due to cost savings initiatives, lower benefit related expenses, and incentive compensation, partially offset by annual merit increases in the fourth quarter of 2023 and 2024. Depreciation and Amortization.
For the year ended December 31, 2025, General and administrative expenses increased 1.8% compared to the prior year primarily due to annual merit increases in the fourth quarter and increased incentive compensation partially offset by cost savings initiatives and lower benefit related expenses. Depreciation and Amortization.
As of December 31, (in millions) 2024 2023 Current 0 – 30 Days $ 92.5 $ 102.5 31 – 60 Days 16.6 24.2 61 – 90 Days 8.9 12.6 91 – 120 Days 6.1 8.1 120 + Days 25.1 17.3 Current accounts receivable, net of allowances 149.2 164.7 Noncurrent patient accounts receivable, net of allowances 0.5 0.5 Accounts receivable, net of allowances $ 149.7 $ 165.2 Changes in general economic conditions (such as increased unemployment rates or periods of recession), business office operations, payer mix, or trends in federal or state governmental and private employer healthcare coverage could affect our collection of accounts receivable.
As of December 31, (in millions) 2025 2024 Current 0 – 30 Days $ 98.6 $ 92.5 31 – 60 Days 13.8 16.6 61 – 90 Days 10.9 8.9 91 – 120 Days 4.8 6.1 120 + Days 15.9 25.1 Current accounts receivable, net of allowances 144.0 149.2 Noncurrent patient accounts receivable, net of allowances 0.5 0.5 Accounts receivable, net of allowances $ 144.5 $ 149.7 Changes in general economic conditions (such as increased unemployment rates or periods of recession), business office operations, payer mix, or trends in federal or state governmental and private employer healthcare coverage could affect our collection of accounts receivable.
Home Health segment General and administrative expenses decreased 2.2% as compared to the prior year due to cost savings initiatives and lower benefit related expenses, partially offset by annual merit increases in the fourth quarter of 2023 and 2024. 41 Table of Contents Hospice During the years ended December 31, 2024, 2023, and 2022, our Hospice segment derived its Net service revenue from the following payer sources: Year Ended December 31, 2024 2023 2022 Medicare 98.3 % 97.1 % 98.8 % Managed care 1.7 % 2.5 % 0.7 % Medicaid — % 0.4 % 0.5 % Total 100.0 % 100.0 % 100.0 % Additional information regarding our Hospice segment’s operating results for the years ended December 31, 2024, 2023, and 2022 is as follows: Year Ended December 31, Percentage Change (in millions, except percentages) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Hospice net service revenue $ 210.0 $ 196.2 $ 194.0 7.0 % 1.1 % Cost of service, excluding depreciation and amortization 102.6 96.6 90.1 6.2 % 7.2 % Gross margin, excluding depreciation and amortization 107.4 99.6 103.9 7.8 % (4.1) % General and administrative expenses 65.5 63.4 65.2 3.3 % (2.8) % Equity earnings and noncontrolling interests 0.4 0.1 0.3 300.0 % (66.7) % Hospice Segment Adjusted EBITDA (1) $ 41.5 $ 36.1 $ 38.4 15.0 % (6.0) % Year Ended December 31, Percentage Change (actual amounts) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Total: Admissions 12,025 11,713 11,978 2.7% (2.2)% Same-store total admissions growth 0.5% (6.3)% Patient days 1,304,878 1,256,081 1,284,386 3.9% (2.2)% Discharged average length of stay 105 108 108 (2.8)% —% Average daily census 3,565 3,441 3,519 3.6% (2.2)% Revenue per patient day $ 160.9 $ 156.2 $ 151.0 3.0% 3.4% Cost per patient day $ 78.6 $ 76.9 $ 70.2 2.2% 9.5% (1) Segment Adjusted EBITDA is presented in conformity with ASC 280, Segment Reporting , as a measure reported to management for purposes of making decisions on allocating resources and addressing the performance of our segments.
Home Health segment General and administrative expenses increased 0.8% as compared to the prior year due to annual merit increases in the fourth quarter of 2023 and 2024. 43 Table of Contents Hospice During the years ended December 31, 2025, 2024, and 2023, our Hospice segment derived its Net service revenue from the following payer sources: Year Ended December 31, 2025 2024 2023 Medicare 98.2 % 98.3 % 97.1 % Managed care 1.1 % 1.7 % 2.5 % Medicaid 0.7 % — % 0.4 % Total 100.0 % 100.0 % 100.0 % Additional information regarding our Hospice segment’s operating results for the years ended December 31, 2025, 2024, and 2023 is as follows: Year Ended December 31, Percentage Change (in millions, except percentages) 2025 2024 2023 2025 vs. 2024 2024 vs. 2023 Hospice net service revenue $ 246.2 $ 210.0 $ 196.2 17.2 % 7.0 % Cost of service, excluding depreciation and amortization 113.7 102.6 96.6 10.8 % 6.2 % Gross margin, excluding depreciation and amortization 132.5 107.4 99.6 23.4 % 7.8 % General and administrative expenses 72.2 65.5 63.4 10.2 % 3.3 % Equity earnings and noncontrolling interests 0.5 0.4 0.1 25.0 % 300.0 % Hospice Segment Adjusted EBITDA (1) $ 59.8 $ 41.5 $ 36.1 44.1 % 15.0 % Year Ended December 31, Percentage Change (actual amounts) 2025 2024 2023 2025 vs. 2024 2024 vs. 2023 Total: Admissions 12,586 12,025 11,713 4.7% 2.7% Same-store total admissions growth 4.6% 0.5% Patient days 1,454,421 1,304,878 1,256,081 11.5% 3.9% Discharged average length of stay 104 105 108 (1.0)% (2.8)% Average daily census 3,985 3,565 3,441 11.8% 3.6% Revenue per patient day $ 169.3 $ 160.9 $ 156.2 5.2% 3.0% Cost per patient day $ 78.2 $ 78.6 $ 76.9 (0.5)% 2.2% (1) Segment Adjusted EBITDA is presented in conformity with ASC 280, Segment Reporting , as a measure reported to management for purposes of making decisions on allocating resources and addressing the performance of our segments.
Expenses as a % of Net Service Revenue Year Ended December 31, 2024 2023 2022 Cost of service, excluding depreciation and amortization 48.9% 49.2% 46.4% General and administrative expenses 31.2% 32.3% 33.6% 42 Table of Contents Net Service Revenue.
Expenses as a % of Net Service Revenue Year Ended December 31, 2025 2024 2023 Cost of service, excluding depreciation and amortization 46.2% 48.9% 49.2% General and administrative expenses 29.3% 31.2% 32.3% 44 Table of Contents Net Service Revenue.
The increase in Net cash provided by operating activities for the year ended December 31, 2024 as compared to the prior year resulted primarily from changes in working capital, which was partially offset by the increase in Net loss. Investing Activities .
The increase in Net cash provided by operating activities for the year ended December 31, 2025 as compared to the prior year resulted primarily from the decrease in the net loss and changes in working capital. Investing Activities .
We calculate Adjusted EBITDA as Net income (loss) adjusted to exclude (1) interest expense and amortization of debt discounts and fees, (2) provision for or benefit from income taxes, (3) depreciation and amortization, (4) gains or losses on disposal or impairment of assets or goodwill, (5) stock‑based compensation, (6) net income attributable to noncontrolling interests, and (7) unusual or nonrecurring items not typical of ongoing operations.
We calculate Adjusted EBITDA as Net income (loss) adjusted to exclude (i) interest expense, net and amortization of debt discounts and fees, (ii) provision for or benefit from income taxes, (iii) depreciation and amortization, (iv) gains or losses on disposal or impairment of assets or goodwill, (v) stock‑based compensation, (vi) net income attributable to noncontrolling interests, and (vii) unusual or nonrecurring items not typical of ongoing operations.
Volume The volume of services we provide has a significant impact on our Net service revenue. Various factors, including competition and increasing regulatory and administrative burdens, impact our ability to maintain and grow our Home Health and Hospice volumes. In any particular market, we may encounter competition from local or national entities with longer operating histories or other competitive advantages.
Various factors, including competition and increasing regulatory and administrative burdens, impact our ability to maintain and grow our Home Health and Hospice volumes. In any particular market, we may encounter competition from local or national entities with longer operating histories or other competitive advantages.
As of December 31, 2024, our footprint comprised 255 home health and 115 hospice locations across 34 states. Our operations are principally managed on a services basis and include two operating segments for financial reporting purposes: (1) Home Health; and (2) Hospice.
As of December 31, 2025, our footprint comprised 249 home health and 117 hospice locations across 34 states. Our operations are principally managed on a services basis and include two operating segments for financial reporting purposes: (i) Home Health; and (ii) Hospice.
As of December 31, 2024, we also had $51.4 million available to us under the Revolving Credit Facility, as discussed below.
As of December 31, 2025, we also had $92.5 million available to us under the Revolving Credit Facility, as discussed below.
Segment Adjusted EBITDA. The increase in Hospice Segment Adjusted EBITDA of 15.0% for the year ended December 31, 2024 as compared to the prior year primarily resulted from the increase in Net service revenue of 7.0% discussed above with Cost of service, excluding depreciation and amortization, higher by 6.2% to support revenue growth, partially offset by improved clinical staff productivity.
The increase in Hospice Segment Adjusted EBITDA of 44.1% for the year ended December 31, 2025 as compared to the prior year primarily resulted from the increase in Net service revenue of 17.2% discussed above with Cost of service, excluding depreciation and amortization , higher by 10.8% to support revenue growth, partially offset by improved clinical staff productivity with a decrease in cost per patient day of 0.5%.
The increase in Hospice Net service revenue for the year ended December 31, 2024 as compared to the prior year of 7.0% was due to improved unit revenue per patient day of 3.0% on improved Medicare reimbursement rates and growth in average daily census of 3.6% on strong admissions growth as we continue to see the benefits of the maturing case management model.
The increase in Hospice Net service revenue for the year ended December 31, 2025 as compared to the prior year of 17.2% was due to an increase in average daily census of 11.8%, as we continue to see the benefits of the maturing case management model and improved unit revenue per patient day of 5.2% on improved Medicare reimbursement rates, compared to the prior year.
The decrease in Home Health Segment Adjusted EBITDA of 5.8% for the year ended December 31, 2024 as compared to the prior year resulted primarily from the decrease in Net service revenue of 3.0% as discussed above with Cost of service, excluding depreciation and amortization, lower by 2.5% due to improved clinical staff productivity offset by higher salary costs.
The decrease in Home Health Segment Adjusted EBITDA of 6.8% for the year ended December 31, 2025 as compared to the prior year resulted primarily from the decrease in Net service revenue of 1.3% as discussed above, partially offset by decreased Cost of service, excluding depreciation and amortization of 0.4% attributable to improved clinical staff productivity in 2025.
For the year ended December 31, 2023, Impairment of goodwill resulted from an impairment charge to reduce the carrying value of our Hospice reporting unit to its fair value. See Note 7, Goodwill and Other Intangible Assets, Net , to the accompanying consolidated financial statements for additional information. Interest Expense and Amortization of Debt Discounts and Fees.
For the year ended December 31, 2025, Impairment of goodwill resulted from impairment charges to reduce the carrying value of our Home Health reporting unit to its fair value. See Note 7, Goodwill and Other Intangible Assets, Net , to the accompanying consolidated financial statements for additional information. Impairment of Other Intangible Assets.
See Note 14, Segment Reporting , to the accompanying consolidated financial statements for additional information about Segment Adjusted EBITDA. 40 Table of Contents Year Ended December 31, Percentage Change (actual amounts) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Medicare: Admissions 96,502 106,805 124,659 (9.6) % (14.3) % Recertifications 66,692 78,113 88,774 (14.6) % (12.0) % Completed episodes 162,761 185,414 213,904 (12.2) % (13.3) % Average daily census 20,447 23,597 27,346 (13.3) % (13.7) % Visits 2,351,316 2,715,380 3,175,638 (13.4) % (14.5) % Visits per episode 14.4 14.6 14.8 (1.4) % (1.4) % Revenue per episode $ 2,977 $ 3,006 $ 3,028 (1.0) % (0.7) % Non-Medicare: Admissions 120,850 100,643 77,836 20.1 % 29.3 % Recertifications 55,729 51,767 40,198 7.7 % 28.8 % Average daily census 20,540 18,253 14,129 12.5 % 29.2 % Visits 2,239,048 2,020,714 1,604,315 10.8 % 26.0 % Total: Admissions 217,352 207,448 202,495 4.8 % 2.4 % Same-store total admissions growth 4.5 % 1.2 % Recertifications 122,421 129,880 128,972 (5.7) % 0.7 % Same-store total recertifications growth (5.9) % 0.1 % Average daily census 40,987 41,850 41,475 (2.1) % 0.9 % Visits 4,590,364 4,736,094 4,779,953 (3.1) % (0.9) % Visits per episode 14.2 14.6 14.9 (2.7) % (2.0) % Cost per visit $ 93 $ 91 $ 89 2.2 % 2.2 % Revenue per patient day $ 55.0 $ 55.7 $ 58.8 (1.3) % (5.3) % Cost per patient day $ 28.6 $ 28.7 $ 29.2 (0.3) % (1.7) % Expenses as a % of Net Service Revenue Year Ended December 31, 2024 2023 2022 Cost of service, excluding depreciation and amortization 51.9 % 51.6 % 49.7 % General and administrative expenses 28.5 % 28.3 % 27.2 % Net Service Revenue.
See Note 14, Segment Reporting , to the accompanying consolidated financial statements for additional information about Segment Adjusted EBITDA. 42 Table of Contents Year Ended December 31, Percentage Change (actual amounts) 2025 2024 2023 2025 vs. 2024 2024 vs. 2023 Medicare: Admissions 91,603 96,502 106,805 (5.1) % (9.6) % Recertifications 62,687 66,692 78,113 (6.0) % (14.6) % Completed episodes 153,036 162,761 185,414 (6.0) % (12.2) % Average daily census 19,605 20,447 23,597 (4.1) % (13.3) % Visits 2,114,926 2,351,316 2,715,380 (10.1) % (13.4) % Visits per episode 13.8 14.4 14.6 (4.2) % (1.4) % Revenue per episode $ 2,974 $ 2,977 $ 3,006 (0.1) % (1.0) % Non-Medicare: Admissions 132,599 120,850 100,643 9.7 % 20.1 % Recertifications 56,915 55,729 51,767 2.1 % 7.7 % Average daily census 22,181 20,540 18,253 8.0 % 12.5 % Visits 2,249,095 2,239,048 2,020,714 0.4 % 10.8 % Total: Admissions 224,202 217,352 207,448 3.2 % 4.8 % Same-store total admissions growth 3.1 % 4.5 % Recertifications 119,602 122,421 129,880 (2.3) % (5.7) % Same-store total recertifications growth (2.3) % (5.9) % Average daily census 41,786 40,987 41,850 1.9 % (2.1) % Visits 4,364,021 4,590,364 4,736,094 (4.9) % (3.1) % Visits per episode 13.4 14.2 14.6 (5.6) % (2.7) % Cost per visit $ 97.7 $ 93.0 $ 91.0 5.1 % 2.2 % Revenue per patient day $ 53.4 $ 55.0 $ 55.7 (2.9) % (1.3) % Cost per patient day $ 28.0 $ 28.6 $ 28.7 (2.1) % (0.3) % Expenses as a % of Net Service Revenue Year Ended December 31, 2025 2024 2023 Cost of service, excluding depreciation and amortization 52.4 % 51.9 % 51.6 % General and administrative expenses 29.2 % 28.5 % 28.3 % Net Service Revenue.
Nautic Partners IX, L.P. et al. and pending in the Chancery Court of Delaware, and in which the Company has asserted claims for breach of fiduciary duty, aiding and abetting, and usurpation of corporate opportunity arising from actions involving its former officers; and (iv) costs related to severance.
Nautic Partners IX, L.P. et al. and pending in the Chancery Court of Delaware, and in which the Company has asserted claims for breach of fiduciary duty, aiding and abetting, and usurpation of corporate opportunity arising from actions involving its former officers; and (iii) third-party legal and advisory fees related to shareholder, non-shareholder and other matters, and merger and acquisition activities.
The increase in Net cash used in financing activities for the year ended December 31, 2024 as compared to the prior year resulted primarily from an increase in net repayments of debt in 2024. 43 Table of Contents Contractual Obligations Our consolidated contractual obligations as of December 31, 2024 are as follows (in millions): Total Current Long-Term Long-term debt obligations: Long-term debt, excluding revolving credit facility and finance lease obligations (1) $ 348.0 $ 20.0 $ 328.0 Revolving credit facility 160.0 — 160.0 Interest on long-term debt (2) 105.9 35.3 70.6 Finance lease obligations (1) 8.1 3.0 5.1 Operating lease obligations (3) 66.1 15.4 50.7 Purchase obligations (4) 22.8 18.3 4.5 Total $ 710.9 $ 92.0 $ 618.9 (1) We lease automobiles under finance leases for our clinicians.
The increase in Net cash used in financing activities for the year ended December 31, 2025 as compared to the prior year resulted primarily from an increase in net repayments of debt in 2025. 45 Table of Contents Contractual Obligations Our consolidated contractual obligations as of December 31, 2025 are as follows (in millions): Total Current Long-Term Long-term debt obligations: Long-term debt, excluding revolving credit facility and finance lease obligations (1) $ 328.7 $ 20.0 $ 308.7 Revolving credit facility 115.0 — 115.0 Interest on long-term debt (2) 77.4 25.8 51.6 Finance lease obligations (1) 4.9 2.5 2.4 Operating lease obligations (3) 62.0 15.5 46.5 Purchase obligations (4) 68.4 40.9 27.5 Total $ 656.4 $ 104.7 $ 551.7 (1) We lease automobiles under finance leases for our clinicians.
See Item 1, “ Business — Our Strategy .” Efficiency Cost and operating efficiencies impact the profitability of the patient care services we provide. We use a number of strategies to drive cost and operating efficiencies within our business.
In addition to organic growth, our strategy includes volume growth through de novo location openings and strategic acquisitions. See Item 1, “ Business — Our Strategy .” Efficiency Cost and operating efficiencies impact the profitability of the patient care services we provide. We use a number of strategies to drive cost and operating efficiencies within our business.
While we treat patients of all ages, most of our patients are 65 and older, and, due to the increasingly aging U.S. population, the number of Medicare enrollees is expected to continue to grow approximately 3% per year. More specifically, the average age of our home health patients and hospice patients is approximately 76 and 83, respectively.
While we treat patients of all ages, most of our patients are 65 and older, and, due to the growth of this segment of the U.S. population, the number of Medicare enrollees is expected to continue to grow approximately 3% per year.
Our supply chain efforts and our continual focus on monitoring and actively managing medical supplies and pharmaceutical costs have enabled us to mitigate the effect of increased pricing related to supplies and other operating expenses over the past few years. However, we cannot predict the magnitude of future cost increases.
In addition, we have experienced higher prices for our medical supplies as a result of inflation and other factors. Our supply chain efforts and our continual focus on monitoring and actively managing medical supplies and pharmaceutical costs have enabled us to mitigate the effect of increased pricing related to supplies and other operating expenses over the past few years.
The decrease in Home Health Net service revenue for the year ended December 31, 2024 as compared to the prior year of 3.0% is due to average daily census in Home Health being lower by 2.1% and unit revenue per patient day being lower by 1.3% primarily related to the continued unfavorable mix shift to more non-Medicare patients in the Home Health segment.
The decrease in Home Health Net service revenue for the year ended December 31, 2025 as compared to the prior year of 1.3% is due to a decrease in unit revenue per patient day of 2.9% primarily related to the growth in our non-Medicare patients, partially offset by an increase in average daily census in Home Health of 1.9%.
Home Health During the years ended December 31, 2024, 2023, and 2022, our Home Health segment derived its Net service revenue from the following payer sources: Year Ended December 31, 2024 2023 2022 Medicare 58.8 % 65.6 % 73.8 % Medicare Advantage 28.8 % 23.4 % 17.3 % Managed Care 11.1 % 9.5 % 7.3 % Medicaid 1.1 % 1.4 % 1.4 % Other 0.2 % 0.1 % 0.2 % Total 100.0 % 100.0 % 100.0 % The decline in Medicare revenue as a percentage of our Home Health Net service revenue and corresponding increase in Medicare Advantage revenue is primarily the result of continued national enrollment increases in Medicare Advantage plans by Medicare beneficiaries. 39 Table of Contents Additional information regarding our Home Health segment’s operating results for the years ended December 31, 2024, 2023, and 2022 is as follows: Year Ended December 31, Percentage Change (in millions, except percentages) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Net service revenue: Medicare $ 484.6 $ 557.4 $ 647.7 (13.1) % (13.9) % Non-Medicare 331.2 283.0 218.3 17.0 % 29.6 % Private duty (1) 9.0 9.7 11.1 (7.2) % (12.6) % Home Health net service revenue 824.8 850.1 877.1 (3.0) % (3.1) % Cost of service, excluding depreciation and amortization 428.2 439.0 435.5 (2.5) % 0.8 % Gross margin, excluding depreciation and amortization 396.6 411.1 441.6 (3.5) % (6.9) % General and administrative expenses 235.4 240.6 238.5 (2.2) % 0.9 % Other income — (0.2) (0.9) (100.0) % (77.8) % Equity earnings and noncontrolling interests 1.8 1.4 1.8 28.6 % (22.2) % Home Health Segment Adjusted EBITDA (2) $ 159.4 $ 169.3 $ 202.2 (5.8) % (16.3) % (1) Private duty represents long-term comprehensive hourly nursing medical care.
Additional information regarding our Home Health segment’s operating results for the years ended December 31, 2025, 2024, and 2023 is as follows: Year Ended December 31, Percentage Change (in millions, except percentages) 2025 2024 2023 2025 vs. 2024 2024 vs. 2023 Net service revenue: Medicare $ 455.2 $ 484.6 $ 557.4 (6.1) % (13.1) % Non-Medicare 350.8 331.2 283.0 5.9 % 17.0 % Private duty (1) 7.8 9.0 9.7 (13.3) % (7.2) % Home Health net service revenue 813.8 824.8 850.1 (1.3) % (3.0) % Cost of service, excluding depreciation and amortization 426.5 428.2 439.0 (0.4) % (2.5) % Gross margin, excluding depreciation and amortization 387.3 396.6 411.1 (2.3) % (3.5) % General and administrative expenses 237.3 235.4 240.6 0.8 % (2.2) % Other income — — (0.2) N/A (100.0) % Equity earnings and noncontrolling interests 1.5 1.8 1.4 (16.7) % 28.6 % Home Health Segment Adjusted EBITDA (2) $ 148.5 $ 159.4 $ 169.3 (6.8) % (5.8) % (1) Private duty represents long-term comprehensive hourly nursing medical care.
The difference in the effective rate is primarily due to a valuation allowance recorded against a portion of our deferred tax assets in 2024. See Note 11, Income Taxes , to the accompanying consolidated financial statements, and “ —Critical Accounting Estimates .” Adjusted EBITDA. Adjusted EBITDA is a non-GAAP measure of our financial performance.
See Note 11, Income Taxes , to the accompanying consolidated financial statements, and “ —Critical Accounting Estimates .” Adjusted EBITDA. Adjusted EBITDA is a non-GAAP measure of our financial performance.
The amount of the valuation allowance may be adjusted in future periods in the event of changes to these factors. Our evaluation of any required liability for unrecognized tax benefits contains uncertainties because management is required to make assumptions and to apply judgment to estimate the exposures associated with our various filing positions which are periodically audited by tax authorities.
This valuation allowance was reduced to $12.2 million in 2025. The reduction is primarily attributable to provisions of the OBBBA. Our evaluation of any required liability for unrecognized tax benefits contains uncertainties because management is required to make assumptions and to apply judgment to estimate the exposures associated with our various filing positions which are periodically audited by tax authorities.
See Note 1, Summary of Significant Accounting Policies — Income Taxes , and Note 11, Income Taxes , to the accompanying consolidated financial statements for a more complete discussion of income taxes and our policies related to income taxes.
See Note 1, Summary of Significant Accounting Policies — Income Taxes , and Note 11, Income Taxes , to the accompanying consolidated financial statements for a more complete discussion of income taxes and our policies related to income taxes. The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous.
During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. 47 Table of Contents In determining the fair value of assets acquired and liabilities assumed in a business combination, we primarily use the income and multi-period excess earnings approaches to estimate the value of our most significant acquired intangible assets.
In determining the fair value of assets acquired and liabilities assumed in a business combination, we primarily use the income and multi-period excess earnings approaches to estimate the value of our most significant acquired intangible assets.
For additional information, see “— Results of Operations ” and “— Segment Results of Operations .” 38 Table of Contents Segment Results of Operations Our segment and consolidated Net service revenue for the years ended December 31, 2024, 2023, and 2022 is provided in the table below.
Nautic Partners IX, L.P. et al. lawsuit referenced above; and (iv) costs related to severance. For additional information, see “— Results of Operations ” and “— Segment Results of Operations .” Segment Results of Operations Our segment and consolidated Net service revenue for the years ended December 31, 2025, 2024, and 2023 is provided in the table below.
This negative evidence is more objectively verifiable than other subjective evidence, such as our projections for future growth and improvements in profitability. On a quarterly basis, we assess all available positive and negative evidence, and we recognize only the portion of our deferred tax assets that are more likely than not to be realized.
On a quarterly basis, we assess all available positive and negative evidence, and we recognize only the portion of our deferred tax assets that are more likely than not to be realized. The amount of the valuation allowance may be adjusted in future periods in the event of changes to these factors.
For discussion of the financial and operational impacts we have experienced as a result of the pandemic, see the sections titled Item 1, “ Business ,” Item 1A, “ Risk Factors ,” “— Results of Operations ,” and “— Segment Results of Operations .” 35 Table of Contents Results of Operations Our consolidated results of operations for the years ended December 31, 2024, 2023, and 2022 were as follows: Year Ended December 31, Percentage Change (in millions, except percentages) 2024 2023 2022 2024 vs 2023 2023 vs 2022 Net service revenue $ 1,034.8 $ 1,046.3 $ 1,071.1 (1.1) % (2.3) % Cost of service, excluding depreciation and amortization 530.8 535.6 525.6 (0.9) % 1.9 % Gross margin, excluding depreciation and amortization 504.0 510.7 545.5 (1.3) % (6.4) % General and administrative expenses 425.9 441.6 414.9 (3.6) % 6.4 % Depreciation and amortization 31.5 30.9 33.0 1.9 % (6.4) % Impairment of goodwill 161.7 85.8 109.0 88.5 % (21.3) % Operating loss (115.1) (47.6) (11.4) 141.8 % 317.5 % Interest expense and amortization of debt discounts and fees 42.9 43.0 15.0 (0.2) % 186.7 % Other income — (0.2) (0.9) (100.0) % (77.8) % Loss before income taxes and noncontrolling interests (158.0) (90.4) (25.5) 74.8 % 254.5 % (Benefit from) provision for income taxes (4.0) (11.4) 12.8 (64.9) % (189.1) % Net loss (154.0) (79.0) (38.3) 94.9 % 106.3 % Less: Net income attributable to noncontrolling interests 2.2 1.5 2.1 46.7 % (28.6) % Net loss attributable to Enhabit, Inc. $ (156.2) $ (80.5) $ (40.4) 94.0 % 99.3 % The following table sets forth our consolidated results as a percentage of Net service revenue: Year Ended December 31, 2024 2023 2022 Cost of service, excluding depreciation and amortization 51.3 % 51.2 % 49.1 % General and administrative expenses 41.2 % 42.2 % 38.7 % Depreciation and amortization 3.0 % 3.0 % 3.1 % Interest expense 4.1 % 4.1 % 1.4 % Net Service Revenue.
If the Merger is consummated, our common stock will no longer be publicly listed and traded on the New York Stock Exchange, our common stock will be deregistered under the Exchange Act, we will no longer file periodic reports with the SEC and existing stockholders will cease to have any ownership interest in the Company. 38 Table of Contents Results of Operations Our consolidated results of operations for the years ended December 31, 2025, 2024, and 2023 were as follows: Year Ended December 31, Percentage Change (in millions, except percentages) 2025 2024 2023 2025 vs 2024 2024 vs 2023 Net service revenue $ 1,060.0 $ 1,034.8 $ 1,046.3 2.4 % (1.1) % Cost of service, excluding depreciation and amortization 540.2 530.8 535.6 1.8 % (0.9) % Gross margin, excluding depreciation and amortization 519.8 504.0 510.7 3.1 % (1.3) % General and administrative expenses 433.5 425.9 441.6 1.8 % (3.6) % Depreciation and amortization 22.5 31.5 30.9 (28.6) % 1.9 % Impairment of goodwill 44.7 161.7 85.8 (72.4) % 88.5 % Impairment of intangible assets 3.0 — — N/A N/A Operating income (loss) 16.1 (115.1) (47.6) 114.0 % (141.8) % Interest income 0.2 — — N/A N/A Interest expense and amortization of debt discounts and fees 34.0 42.9 43.0 (20.7) % (0.2) % Other (income) expense (19.1) — (0.2) N/A (100.0) % Income (loss) before income taxes and noncontrolling interests 1.4 (158.0) (90.4) 100.9 % (74.8) % Provision for (benefit from) income taxes 4.0 (4.0) (11.4) 200.0 % 64.9 % Net income (loss) (2.6) (154.0) (79.0) 98.3 % (94.9) % Less: Net income attributable to noncontrolling interests 2.0 2.2 1.5 (9.1) % 46.7 % Net income (loss) attributable to Enhabit, Inc. $ (4.6) $ (156.2) $ (80.5) 97.1 % (94.0) % The following table sets forth our consolidated results as a percentage of Net service revenue : Year Ended December 31, 2025 2024 2023 Cost of service, excluding depreciation and amortization 51.0 % 51.3 % 51.2 % General and administrative expenses 40.9 % 41.2 % 42.2 % Depreciation and amortization 2.1 % 3.0 % 3.0 % Interest expense and amortization of debt discounts and fees 3.2 % 4.1 % 4.1 % Net Service Revenue.
During 2025, we expect to spend approximately $5 million for maintenance capital expenditures. Actual amounts spent will be dependent upon the timing of projects for our business. As of December 31, 2024, we do not have any material off-balance sheet arrangements. Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with GAAP.
As of December 31, 2025, we do not have any material off-balance sheet arrangements. Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with GAAP.
The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous. We are required to make many subjective assumptions and judgments regarding our income tax exposures. Interpretations of and guidance surrounding income tax laws and regulations change over time.
We are required to make many subjective assumptions and judgments regarding our income tax exposures. Interpretations of and guidance surrounding income tax laws and regulations change over time. As such, changes in our subjective assumptions and judgments can materially affect amounts recognized in our consolidated financial statements.
As of December 31, 2024 and 2023, we had $28.4 million and $27.4 million, respectively, in Cash and cash equivalents. These amounts exclude $1.9 million and $2.4 million, respectively, in Restricted cash.
See “— Contractual Obligations ” for more information about our material cash requirements from our contractual obligations at December 31, 2025. As of December 31, 2025 and 2024, we had $43.6 million and $28.4 million, respectively, in Cash and cash equivalents . These amounts exclude $1.9 million in Restricted cash .
See “— Segment Results of Operations .” Cost of Service, Excluding Depreciation and Amortization. For the year ended December 31, 2024, Cost of service, excluding depreciation and amortization, decreased 0.9% compared to the prior year on a revenue decline of 1.1%.
For the year ended December 31, 2025, Net service revenue increased 2.4% compared to the prior year due to increased revenue in Hospice of 17.2% partially offset by decreased Home Heath segment revenues of 1.3%. See “— Segment Results of Operations .” Cost of Service, Excluding Depreciation and Amortization.
As such, changes in our subjective assumptions and judgments can materially affect amounts recognized in our consolidated financial statements. The ultimate recovery of certain of our deferred tax assets is dependent on the amount and timing of taxable income we will ultimately generate in the future, as well as other factors.
The ultimate recovery of certain of our deferred tax assets is dependent on the amount and timing of taxable income we will ultimately generate in the future, as well as other factors. A high degree of judgment can be required to determine the extent a valuation allowance should be provided against deferred tax assets.
We believe the growing percentage of seniors experiencing chronic conditions will result in higher utilization of home health services in the future as patients require more care to support these conditions. Due to the continued national enrollment increases in Medicare Advantage plans by Medicare beneficiaries, we expect the volume of third-party payers to shift and evolve.
More specifically, the average age of our home health patients and hospice patients is approximately 76 and 83, respectively. We believe the growing percentage of seniors experiencing chronic conditions will result in higher utilization of home health services in the future as patients require more care to support these conditions.
If actual results are not consistent with our assumptions and judgments, we may be exposed to gains or losses that could be material. See Note 1, Summary of Significant Accounting 45 Table of Contents Policies—Net Service Revenue and — Accounts Receivable, Net of Allowances , to the accompanying consolidated financial statements.
If actual results are not consistent with our assumptions and judgments, we may be exposed to gains or losses that could be material.
For the year ended December 31, 2024, Interest expense and amortization of debt discounts and fees remained relatively flat compared to the prior year. See “— Liquidity and Capital Resources .” (Benefit From) Provision For Income Taxes. Our effective tax rate in 2024 was 2.5% compared to an effective tax rate of 12.6% in 2023.
For the year ended December 31, 2025, Interest expense and amortization of debt discounts and fees decreased compared to the prior year primarily due to a lower average borrowing level under our credit facilities and lower average interest rates. See “— Liquidity and Capital Resources ” within this Item 5. Provision For (Benefit From) Income Taxes.
The decrease in Net cash used in investing activities for the year ended December 31, 2024 as compared to the prior year resulted primarily from one acquisition in 2023. See Note 2, Business Combinations . Financing Activities .
The increase in Net cash provided by (used) in investing activities for the year ended December 31, 2025 as compared to the prior year resulted primarily from the sale of an investment. During the year ended December 31, 2024, Net cash provided by (used) in investing activities primarily resulted from purchases of property and equipment. Financing Activities .
Nautic Partners IX, L.P. et al. ; (ii) third-party legal and advisory fees related to the strategic review process that concluded in May 2024; (iii) transition costs related to the Separation; (iv) costs related to restructuring and acquisitions; and (v) third-party legal and advisory fees related to shareholder activism.
Unusual or nonrecurring items in the year ended December 31, 2024 include: (i) third-party legal and advisory fees related to shareholder activism; (ii) third‑party legal and advisory fees related to the strategic review process that concluded in May 2024; (iii) certain third‑party legal fees associated with the Enhabit, Inc. et al. v.
Year Ended December 31, 2024 2023 2022 (in millions, except percentages) $ Amount % of Consolidated Revenue $ Amount % of Consolidated Revenue $ Amount % of Consolidated Revenue Home Health segment net service revenue $ 824.8 79.7 % $ 850.1 81.2 % $ 877.1 81.9 % Hospice segment net service revenue 210.0 20.3 % 196.2 18.8 % 194.0 18.1 % Consolidated net service revenue $ 1,034.8 100.0 % $ 1,046.3 100.0 % $ 1,071.1 100.0 % For the year ended December 31, 2024, our Consolidated net service revenue decreased 1.1% compared to the prior year due to a decrease in Home Health segment revenues of 3.0% with average daily census in Home Health lower by 2.1% and unit revenue per patient day lower by 1.3% primarily related to the continued unfavorable mix shift to more non‑Medicare patients in the Home Health segment.
Year Ended December 31, 2025 2024 2023 (in millions, except percentages) $ Amount % of Consolidated Revenue $ Amount % of Consolidated Revenue $ Amount % of Consolidated Revenue Home Health segment net service revenue $ 813.8 76.8 % $ 824.8 79.7 % $ 850.1 81.2 % Hospice segment net service revenue 246.2 23.2 % 210.0 20.3 % 196.2 18.8 % Consolidated net service revenue $ 1,060.0 100.0 % $ 1,034.8 100.0 % $ 1,046.3 100.0 % Net Service Revenue.
See “— Results of Operations .” For additional information regarding our business segments, including a detailed description of the services we provide, financial data for each segment, and a reconciliation of total adjusted earnings before interest, taxes, depreciation, and amortization (“Segment Adjusted EBITDA”) to Loss before income taxes and noncontrolling interests, see Note 14, Segment Reporting , to the accompanying consolidated financial statements.
See “— Segment Results of Operations .” For additional information regarding our business segments, including a detailed description of the services we provide, financial data for each segment, and a reconciliation of total adjusted earnings before interest, taxes, depreciation, and amortization (“Segment Adjusted EBITDA”) to Income (loss) before income taxes and noncontrolling interests , see Note 14, Segment Reporting , to the accompanying consolidated financial statements. 41 Table of Contents Home Health During the years ended December 31, 2025, 2024, and 2023, our Home Health segment derived its Net service revenue from the following payer sources: Year Ended December 31, 2025 2024 2023 Medicare 55.9 % 58.8 % 65.6 % Medicare Advantage 31.1 % 28.8 % 23.4 % Managed Care 11.5 % 11.1 % 9.5 % Medicaid 0.9 % 1.1 % 1.4 % Other 0.6 % 0.2 % 0.1 % Total 100.0 % 100.0 % 100.0 % The decline in Medicare revenue as a percentage of our Home Health Net service revenue and corresponding increase in Medicare Advantage revenue is primarily the result of continued national enrollment increases in Medicare Advantage plans by Medicare beneficiaries.
For the year ended December 31, 2024, Net service revenue decreased 1.1% compared to the prior year due to a decrease in Home Heath segment revenues of 3.0% with average daily census in Home Health lower by 2.1% and unit revenue per patient day lower by 1.3% primarily related to the continued unfavorable mix shift to more non‑Medicare patients in Home Health.
For the year ended December 31, 2025, Net service revenue increased 2.4% compared to the prior year due to increased revenue in Hospice of 17.2% partially offset by decreased Home Heath segment revenues of 1.3%.
See Item 1, “ Business — Sources of Revenue ,” for a table identifying the sources and relative payer mix of our revenues. Sequestration resumed as of April 1, 2022 and resulted in a 1% payment reduction through June 30, 2022. Thereafter, the full 2% Medicare payment reduction resumed.
See Item 1, “ Business — Sources of Revenue ,” for a table identifying the sources and relative payer mix of our revenues. Volume The volume of services we provide has a significant impact on our Net service revenue .
During the years ended December 31, 2024 and 2023, we made capital expenditures for property and equipment of $3.8 million and $3.5 million, respectively. These expenditures in 2023 were exclusive of $2.8 million in net cash related to our acquisition activity. There was no acquisition activity in 2024.
During the years ended December 31, 2025 and 2024, we made capital expenditures for property and equipment of $4.9 million and $3.8 million, respectively. During 2026, we expect to spend approximately $5 million for maintenance capital expenditures. Actual amounts spent will be dependent upon the timing of projects for our business.
For example, in the year ended December 31, 2023, Medicare Advantage patients accounted for 19% of our revenue as compared to 23% for the year ended December 31, 2024. In addition to organic growth, our strategy includes volume growth through de novo location openings and strategic acquisitions.
Due to the continued national enrollment increases in Medicare Advantage plans by Medicare beneficiaries, we expect the volume of third-party payers to shift and evolve. For example, in the year ended December 31, 2024, Medicare Advantage patients accounted for 23.0% of our revenue as compared to 23.9% for the year ended December 31, 2025.
We attempt to maintain a comprehensive compensation and benefits package to compete in the current challenging staffing environment. Our Separation from Encompass As a result of our separation from Encompass, certain items may impact the comparability of our historical results and future performance. Specifically, we have incurred additional expenses as a result of being a separate public company.
We attempt to maintain a comprehensive compensation and benefits package to compete in the current challenging staffing environment.
A high degree of judgment can be required to determine the extent a valuation allowance should be provided against deferred tax assets. Due to the pretax losses we have generated in recent years, we recorded a valuation allowance of $14.1 million in 2024.
Due to the pretax losses we have generated in recent years, we recorded a valuation allowance of $14.1 million in 2024. This negative evidence is more objectively verifiable than other subjective evidence, such as our projections for future growth and improvements in profitability.
For the year ended December 31, 2024, Depreciation and amortization increased compared to the prior year due to our investments in technology and fleet vehicles in 2024. Impairment of Goodwill. For the year ended December 31, 2024, Impairment of goodwill resulted from impairment charges to reduce the carrying value of our Home Health reporting unit to its fair value.
For the year ended December 31, 2025, Cost of service, excluding depreciation and amortization , increased 1.8% compared to the prior year due to increased Cost of service, excluding depreciation and amortization of 10.8% in the Hospice segment partially offset by decreased Cost of service, excluding depreciation and amortization of 0.4% in the Home Health segment.
Removed
In addition, we have experienced higher prices for our medical supplies as a result of the pandemic (as defined below) and other factors.
Added
Recent Developments 2026 Credit Agreement On February 26, 2026, the Company entered into an amended and restated credit agreement (the “2026 Credit Agreement”) that consists of a $315.0 million senior secured term loan A facility (the “2026 Term Loan A Facility”) and a $160.0 million senior secured revolving credit facility (the “2026 Revolving Credit Facility” and together with the 2026 Term Loan A Facility, the “2026 Credit Facilities”).
Removed
For more information on the Separation, see Item 1, “ Business—Our History .” COVID-19 Pandemic Impact on Our Results of Operations In response to the COVID-19 outbreak and ensuing pandemic (the “pandemic”), Congress and CMS adopted several statutory and regulatory measures intended to provide relief to healthcare providers in order to ensure patients would continue to have adequate access to care.
Added
The 2026 Credit Facilities mature on February 26, 2031. See Note 8, Long-Term Debt for additional information. Merger Agreement As previously disclosed, on February 22, 2026, we entered into the Merger Agreement with Parent and Merger Sub, providing for our acquisition by Kinderhook.
Removed
Sequestration resumed in full on July 1, 2022. The resumption of sequestration negatively impacted our Home Health and Hospice revenues by $10.1 million and $2.4 million, respectively, for the year ended December 31, 2022. The lasting impact of the pandemic remains unknown and difficult to predict.
Added
If the Merger is completed, our stockholders will be entitled to receive $13.80 in cash for each share of common stock they hold as of the effective time of the Merger. The Merger is expected to close in the second quarter of 2026, subject to customary closing conditions, including approval by our stockholders and the receipt of certain regulatory approvals.
Removed
The decrease was partially offset by increased revenue in Hospice of 7.0% associated with both improved unit revenue per patient day of 3.0% on improved Medicare reimbursement rates and growth in average daily census of 3.6% on strong admissions growth as we continue to see the benefits of the maturing case management model put in place in 2023.
Added
See Note 17, Subsequent Events , to the accompanying consolidated financial statements for additional information regarding the Merger. The consummation of the Merger remains subject to the satisfaction or, to the extent permitted under the Merger Agreement, waiver by each of us, Parent and Merger Sub, of closing conditions, including, but not limited to, stockholder approval.
Removed
In the Home Health segment, unit cost per patient day improved 0.3% due to improved clinical staff productivity and a reduction in contract labor, partially offset by approximately 3% annual merit increases that were effective in the fourth quarter of 2023 and 2024.
Added
Our board of directors has approved the Merger Agreement and the transactions contemplated thereby.
Removed
In the Hospice segment, unit cost per patient day increased 2.2% primarily due to approximately 3% annual merit increases that were effective in the fourth quarter of 2023 and 2024 and new durable medical equipment provider costs, partially offset by improving clinical staff productivity.
Added
For the year ended December 31, 2025, Depreciation and amortization decreased compared to the prior year due to a number of intangible assets, including licenses and non-compete agreements, reaching the end of their useful lives in 2024. Impairment of Goodwill.
Removed
The year ended December 31, 2023 include costs associated with: (i) certain third-party legal fees associated with the suit Enhabit, Inc. et al v.
Added
For the year ended December 31, 2025, Impairment of other intangible assets resulted from the impairment of a portion of our certificates of need. Interest Expense and Amortization of Debt Discounts and Fees.
Removed
The decrease was partially offset by increased revenue in Hospice of 7.0% associated with both improved unit revenue per patient day of 3.0% on improved Medicare reimbursement rates and growth in average daily census of 3.6% on strong admissions growth as we continue to see the benefits of the maturing case management model.
Added
Our effective tax rate in 2025 was 285.7% compared to an effective tax rate of 2.5% in 2024. The difference in the rate is primarily attributable to a larger rate impact from permanent differences attributable to the impairment of goodwill in 2025.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−1 removed1 unchanged
Biggest changeAs of December 31, 2024, our primary variable rate debt outstanding related to $160.0 million in advances under our Revolving Credit Facility and $350.1 million under our Term Loan A Facility. On October 20, 2022, we entered into an interest rate swap to hedge a portion of the cash flow risk related to our variable rate debt.
Biggest changeAs of December 31, 2025, our primary variable rate debt outstanding related to $115.0 million in advances under our Revolving Credit Facility and $330.0 million under our Term Loan A Facility.
Assuming outstanding balances were to remain the same and including the impact of our interest rate swap agreement, a 1% increase in interest rates would result in an incremental negative cash flow of $3.1 million over the next 12 months, while a 1% decrease in interest rates would result in an incremental positive cash flow of $3.1 million over the next 12 months.
Assuming outstanding balances were to remain the same a 1% increase in interest rates would result in an incremental negative cash flow of $4.5 million over the next 12 months, while a 1% decrease in interest rates would result in an incremental positive cash flow of $4.5 million over the next 12 months.
See Note 8, Long-Term Debt , to the accompanying consolidated financial statements for additional information regarding our long-term debt. See Note 12, Derivative Instruments , to the accompanying consolidated financial statements for additional information regarding our interest rate swap.
See Note 8, Long-Term Debt , to the accompanying consolidated financial statements for additional information regarding our long-term debt.
Removed
The interest rate swap has a $200.0 million notional value and a maturity date of October 20, 2025. Beginning in October 2022, we receive the one-month SOFR and pay a fixed rate of interest of 4.3%.

Other EHAB 10-K year-over-year comparisons