Enhabit, Inc. heads into what is likely its final earnings release as a public company with short sellers retreating sharply and options traders piling into puts — a clash of signals made stranger by the fact that the endgame is already decided.
The merger backdrop dominates everything. On May 12, shareholders voted to approve the sale to Kinderhook Industries (Anchor Parent), with the company set to delist from NYSE shortly after. Q1 results arrived before that vote, showing net income of $19.2 million and diluted EPS of $0.36, both improved year-on-year. The stock is up 0.4% on the week to $13.79, hugging close to the analyst consensus target of $13.80 — which, given the acquisition context, is more of a deal-price anchor than a valuation call.
Short sellers have been unwinding positions ahead of the close. SI dropped roughly 12% over the week to 2.4% of free float — the sharpest weekly decline since April — and is down 15% from a month ago. That retreat makes sense: with a deal price locked in and shareholders having already approved, the asymmetric risk for any remaining short position is clear. The borrow market reflects the calm. Cost to borrow is a negligible 0.51%, down 15% over the past month, and availability remains extremely loose — the lending pool shows only around 1% utilization against a 52-week high of 11.2%. There is no squeeze pressure, no borrow stress. This is a market winding down, not gearing up.
Options positioning tells a different story, and the contrast is worth noting. The put/call ratio has climbed to 1.53, the highest reading of the past year, sitting well above its 20-day average of 0.76. That is more than one standard deviation above normal. Some of this likely reflects hedging around deal timing risk — the regulatory backdrop for home health and hospice just got more complicated. On May 13, the Centers for Medicare & Medicaid Services announced a six-month moratorium on new hospice and home health agency registrations, citing a fraud crackdown. That is the kind of sector-level headline that drives defensive options activity even when a specific company's fate appears settled.
The analyst community had already largely stepped aside. Three firms — TD Cowen, UBS, and Jefferies — all downgraded EHAB in late February and early March, each raising their price targets to $13.80 while moving to hold or neutral. The story they told at the time was one of a company that had improved operationally but where the upside was now fairly priced. Only Oppenheimer carried an Outperform into the period, with a $14.00 target. The PE multiple has compressed meaningfully over the past month — down nearly 13% to around 20x — as the price has tracked the deal range rather than any fundamental re-rating. That said, note that the CMS moratorium news broke today and adds a new sector-level variable for the remaining trading sessions before delisting.
The EPS factor scores are unusually strong for a company this close to a takeout: 92nd percentile on 30-day EPS momentum, 93rd percentile on EPS surprise, and 85th percentile on 12-month forward EPS growth. Those rankings reflect a genuine operational turnaround — full-year 2025 net loss fell from $156 million to $4.6 million — but they are largely academic at this stage. The short score sits at 30.2, declining steadily over the week, consistent with the broader unwind.
What to watch next is narrower than usual: the key variable is deal completion timing and whether the CMS moratorium creates any regulatory entanglement for the home health assets Kinderhook is acquiring, rather than anything the Q1 print itself might reveal.
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