Truist Securities has raised its price target on Enhabit Home Health & Hospice (NYSE: EHAB) to $13.80 from $10.50, while leaving its analyst rating on the stock at Hold. The adjustment follows Enhabit’s announcement that Kinderhook Industries has entered a definitive agreement to acquire the company in an all-cash transaction that values the shares at $13.80 each.
The purchase price places Enhabit’s total enterprise value at about $1.1 billion. Truist noted that the deal equates to approximately 10.3 times its estimate of Enhabit’s adjusted EBITDA for 2026. Kinderhook has secured both the debt and equity financing needed to cover the purchase price and the related transaction fees, and Enhabit’s board of directors voted unanimously to approve the agreement. The transaction is expected to close in the second quarter of 2026.
Market reaction was immediate. Enhabit’s shares rose from a prior close of $11.20 to $13.61 on the announcement, reflecting the $13.80 offer price. Data cited in analyst research show the stock has returned roughly 35% over the last six months and is trading near its 52-week high. That same analysis indicates the shares may be modestly overvalued at current trading levels, according to the platform’s evaluation.
Enhabit disclosed it will report fourth-quarter results on March 4 after the market close, but management said it will not host an earnings conference call nor provide guidance for 2026. Company commentary preceding the acquisition highlighted expectations for mid- to high-single-digit admissions growth across both of its operating segments in 2026.
The company has recently completed a strategic review process and has posted improved operational results in recent quarters, including noticeable progress in reducing leverage. Reimbursement clarity for home health also improved with the release of the 2026 Final Rule for Medicare, which the company said aided visibility for the business.
Multiple valuation measures tied to the transaction were disclosed. The $13.80 per-share offer represents a 24.4% premium to Enhabit’s closing price on February 20 and a 33.8% premium to the company’s 60-day volume-weighted average share price for the period ending February 20. Truist’s price-target adjustment aligns the firm’s valuation with the agreed-upon acquisition price.
Independent brokerages have also adjusted their views in light of the more favorable regulatory developments and the acquisition news. TD Cowen upgraded Enhabit’s rating from Hold to Buy, citing an improving regulatory environment. UBS likewise moved its rating from Neutral to Buy after the release of the final Medicare rule.
The final Medicare rule reduced the magnitude of the reimbursement cut expected for 2026. The regulation now calls for a 1.3% rate cut in 2026, an outcome that is materially less severe than the 6.4% reduction proposed earlier. Enhabit and analysts estimate the revised rule will create an adjusted EBITDA headwind of $6 million to $8 million, which is considerably smaller than the previously modeled $35 million to $40 million impact under the initial proposal.
These developments - an agreed acquisition at $13.80 per share, analyst price-target changes, and a more favorable Medicare reimbursement outcome - alter Enhabit’s near-term ownership and financial outlook. The company will move forward under the terms of the definitive agreement pending customary closing conditions and the anticipated second-quarter 2026 completion timeline.
Summary
Truist raised its Enhabit price target to mirror Kinderhook’s $13.80 offer while retaining a Hold rating. Kinderhook has financing in place and Enhabit’s board unanimously approved the deal, which values the company at about $1.1 billion and is expected to close in Q2 2026. Regulatory developments improved reimbursement visibility, significantly reducing projected EBITDA headwinds for 2026.
Key Points
- Truist raised its price target on Enhabit to $13.80 from $10.50 but kept a Hold rating - the new target equals the agreed acquisition price.
- Kinderhook’s all-cash offer values Enhabit at about $1.1 billion and is supported by secured debt and equity financing, with unanimous board approval and an expected close in Q2 2026.
- Regulatory action improved reimbursement clarity - the 2026 Final Rule trims the expected Medicare rate cut to 1.3%, lowering the anticipated adjusted EBITDA headwind to $6-8 million from an earlier estimate of $35-40 million.
Risks and Uncertainties
- The transaction remains subject to customary closing conditions and timing uncertainties - while financing is reported as secured, the deal is expected to close in the second quarter of 2026, leaving a window for potential delays.
- Enhabit will not host an earnings call or provide 2026 guidance with its upcoming fourth-quarter release, limiting near-term transparency into management’s outlook for operations and integration plans.
- Although the final Medicare rule reduced the projected EBITDA headwind, the company still faces a $6-8 million adjusted EBITDA headwind in 2026 related to reimbursement changes.