SEC Form PREM14A filed by Enhabit Inc.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No. )

 

 

Filed by the Registrant ☒

Filed by a party other than the Registrant ☐

Check the appropriate box:

 

☒	Preliminary Proxy Statement

 

☐	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

☐	Definitive Proxy Statement

 

☐	Definitive Additional Materials

 

☐	Soliciting Material under § 240.14a-12

Enhabit, Inc.

(Name of Registrant as Specified in its Charter)

Payment of Filing Fee (Check all boxes that apply):

 

☐	No fee required

 

☐	Fee paid previously with preliminary materials

 

☒	Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

 

PRELIMINARY PROXY STATEMENT—SUBJECT TO COMPLETION—

DATED MARCH 30, 2026

 

Enhabit, Inc.

6688 N. Central Expressway, Suite 1300

Dallas, Texas 75206

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

 

 

  , 2026

Dear Enhabit Stockholder:

You are cordially invited to attend a special meeting of the stockholders of Enhabit, Inc., a Delaware corporation (“Enhabit,” the “Company,” “we,” “us” or “our”), to be held virtually on     , 2026 at    , Central Time (including any adjournments or postponements thereof, the “Special Meeting”). Stockholders will be able to attend the Special Meeting by registering in advance at www.proxydocs.com/EHAB prior to the deadline of     , Central Time on     , 2026. You will not be able to attend the Special Meeting in person. For purposes of attendance at the Special Meeting, all references in this proxy statement to “present” shall mean virtually present at the Special Meeting.

We have entered into an Agreement and Plan of Merger (as it may be amended from time to time, the “Merger Agreement”), dated as of February 22, 2026, by and among Enhabit, Anchor Parent, LLC, a Delaware limited liability company (“Parent”), and Anchor Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”). Pursuant to and subject to the terms and conditions of the Merger Agreement, Merger Sub will be merged with and into Enhabit, with Enhabit surviving the merger as a wholly owned subsidiary of Parent (the “Merger”). Parent and Merger Sub are affiliates of funds advised by Kinderhook Industries, LLC (“Kinderhook”) (or an affiliate thereof). Kinderhook is a leading private investment firm focused on middle market businesses in the healthcare services, environmental & industrial services, and light manufacturing & automotive sectors.

At the Special Meeting, you will be asked to consider and vote on a proposal to adopt the Merger Agreement (the “Merger Proposal”). Enhabit has outstanding shares of common stock, par value of $0.01 per share (“Common Stock”), with each holder of Common Stock entitled to one vote per share. Approval of the Merger Proposal requires the affirmative vote of the majority of the voting power of the issued and outstanding shares of Common Stock as of the close of business on    , 2026 (the “Record Date”).

At the Special Meeting, you will also be asked to consider and vote on a proposal to approve, on a non-binding, advisory basis, certain compensation that may be paid or become payable to Enhabit’s named executive officers that is based on or otherwise relates to the Merger (the “Compensation Proposal”). Approval of the Compensation Proposal requires the affirmative vote of the majority of the outstanding shares of Common Stock as of the close of business on the Record Date entitled to vote on the Compensation Proposal and present or represented by proxy at the Special Meeting.

Additionally, at the Special Meeting, you will be asked to consider and vote on a proposal to approve the adjournment or postponement of the Special Meeting to a later date or dates, if necessary or appropriate, to solicit

additional proxies if there are insufficient votes virtually or by proxy to approve the Merger Proposal at the time of the Special Meeting (the “Adjournment Proposal”). Approval of the Adjournment Proposal requires the affirmative vote of the majority of the outstanding shares of Common Stock as of the close of business on the Record Date entitled to vote on the Adjournment Proposal and present or represented by proxy at the Special Meeting.

If the Merger is consummated, you will be entitled to receive $13.80 in cash, without interest, for each share of Common Stock that you own (unless you have properly exercised appraisal rights, including by not voting in favor of the Merger Proposal). The merger consideration per share of Common Stock represents a premium of approximately 33.8% to the 60-day volume weighted average share price of the Common Stock on the New York Stock Exchange (“NYSE”) for the period ended February 20, 2026 (the last full trading day prior to the announcement of the transaction). On     , 2026, the last practicable day before the printing of this proxy statement, the closing price of the Common Stock on NYSE was $    per share.

The Board of Directors of Enhabit (the “Board”), after considering the factors more fully described in the enclosed proxy statement, has unanimously (i) determined that it is in the best interests of Enhabit and our stockholders, and declared it advisable, to enter into the Merger Agreement, (ii) approved the execution, delivery and performance of the Merger Agreement and the consummation of the transactions contemplated by the Merger Agreement, including the Merger, and (iii) resolved to recommend to our stockholders that they vote for the adoption of the Merger Agreement and directed that such matter be submitted to our stockholders for consideration at the Special Meeting. The Board unanimously recommends that stockholders vote “FOR” the Merger Proposal, “FOR” the Compensation Proposal and “FOR” the Adjournment Proposal.

The enclosed proxy statement provides detailed information about the Special Meeting, the Merger Agreement and the Merger. A copy of the Merger Agreement is attached as Annex A to the proxy statement. We encourage you to read the accompanying proxy statement, including all documents incorporated by reference into the proxy statement, and its annexes, including the Merger Agreement, carefully and in their entirety, as they contain important information. You may also obtain more information about Enhabit from documents we file with the U.S. Securities and Exchange Commission from time to time.

Whether or not you plan to attend the Special Meeting, please complete, sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying postage prepaid envelope or grant your proxy electronically over the Internet or by telephone. Only your last-dated proxy will be counted, and any proxy may be revoked prior to its exercise at the Special Meeting. If you attend and vote at the Special Meeting, your vote will revoke any proxy that you have previously submitted.

Your vote is very important, regardless of the number of shares that you own. We cannot consummate the Merger unless the Merger Proposal is approved by the affirmative vote of the majority of the voting power of the issued and outstanding shares of Common Stock as of the close of business on the Record Date.

If you have questions or need assistance voting your shares, please contact:

MacKenzie Partners, Inc.

1407 Broadway, 27th Floor New York, New York 10018

(212) 929-5500 (Call Collect)

or

Call Toll-Free (800) 322-2885

Email: [email protected]

We encourage you to join us in voting to approve the Merger that our management team and the Board view as highly beneficial to our stockholders.

The Merger has not been approved or disapproved by the U.S. Securities and Exchange Commission or any state securities commission. Neither the U.S. Securities and Exchange Commission nor any state securities commission has passed upon the merits or fairness of the Merger or upon the adequacy, accuracy or completeness of the information contained in this document or the accompanying proxy statement. Any representation to the contrary is a criminal offense.

PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY.

The accompanying proxy statement is dated     , 2026 and, together with the enclosed form of proxy card, is first being mailed to our stockholders on or about     , 2026.

 

PRELIMINARY PROXY STATEMENT—SUBJECT TO COMPLETION—

DATED MARCH 30, 2026

 

Enhabit, Inc.

6688 N. Central Expressway, Suite 1300

Dallas, Texas 75206

 

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD VIRTUALLY VIA LIVE WEBCAST ON     , 2026

 

 

NOTICE IS HEREBY GIVEN that a special meeting of the stockholders of Enhabit, Inc., a Delaware corporation (“Enhabit,” the “Company,” “we,” “us” or “our”), will be held virtually via live webcast on     , 2026 at     , Central Time (including any adjournments or postponements thereof, the “Special Meeting”). To attend the Special Meeting, you must register in advance at www.proxydocs.com/EHAB prior to the deadline of     , Central Time on     , 2026. The Special Meeting is being held for the following purposes:

 

1.

to consider and vote on a proposal to adopt the Agreement and Plan of Merger (as it may be amended from time to time, the “Merger Agreement”), dated as of February 22, 2026, by and among Enhabit, Anchor Parent, LLC, a Delaware limited liability company (“Parent”), and Anchor Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which Merger Sub will be merged with and into Enhabit, with Enhabit surviving the merger as a wholly owned subsidiary of Parent (the “Merger”);

 

2.

to consider and vote on a proposal to approve, on a non-binding, advisory basis, certain compensation that may be paid or become payable to Enhabit’s named executive officers that is based on or otherwise relates to the Merger; and

 

3.

to consider and vote on a proposal to approve the adjournment or postponement of the Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes virtually or by proxy to approve the proposal to adopt the Merger Agreement at the time of the Special Meeting.

Only stockholders of record as of the close of business on     , 2026 (the “Record Date”) are entitled to notice of the Special Meeting and to vote at the Special Meeting or at any adjournment or postponement thereof.

The Board unanimously recommends that you vote:

 

1.

“FOR” the proposal to adopt the Merger Agreement (the “Merger Proposal”);

 

2.

“FOR” the proposal to approve, on a non-binding, advisory basis, certain compensation that may be paid or become payable to Enhabit’s named executive officers that is based on or otherwise relates to the Merger; and

3.

“FOR” the proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the Merger Proposal at the time of the Special Meeting.

Your vote is very important, regardless of the number of shares that you own. Whether or not you plan to attend the Special Meeting, please complete, sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the Internet or by telephone. If you fail to return your proxy card, grant your proxy electronically over the Internet or by telephone or attend the Special Meeting, your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting and, if a quorum is present, will have the same effect as a vote “AGAINST” the Merger Proposal.

Under Delaware law, stockholders and beneficial owners who do not vote in favor of the Merger Proposal will have the right to seek appraisal of the fair value of their issued and outstanding shares as determined by the Delaware Court of Chancery if the Merger is consummated, but only if they submit a written demand for such an appraisal to Enhabit before the vote on the Merger Proposal and comply with the other Delaware law procedures explained in the accompanying proxy statement.

 

YOUR VOTE IS VERY IMPORTANT!

Whether or not you plan to attend the Special Meeting, please submit your proxy as soon as possible, by Internet, by telephone or by completing, signing and returning the enclosed proxy card by mail in the prepaid reply envelope. You may revoke your proxy or change your vote before it is voted at the Special Meeting.

If your shares are held in the name of a bank, broker or other nominee, you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form provided to you by your bank, broker or other nominee. Your broker or other agent cannot vote on any of the proposals, including the Merger Proposal, without your instructions.

If your shares are registered directly in your name, voting electronically at the Special Meeting will revoke any proxy that you previously submitted. If you hold your shares through a bank, broker or other nominee and do not have a 12-digit control number, you must obtain a “legal proxy” in order to vote virtually or by proxy at the Special Meeting.

If you fail to return your proxy card, grant your proxy electronically over the Internet or by telephone or vote by virtual ballot at the Special Meeting, your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting, and, if a quorum is present, will have the same effect as a vote “AGAINST” the Merger Proposal.

We encourage you to read the accompanying proxy statement, including all documents incorporated by reference into the accompanying proxy statement, and its annexes, carefully and in their entirety. If you have any questions concerning the Merger, the Special Meeting or the accompanying proxy statement, would like additional copies of the accompanying proxy statement or require assistance in submitting your proxy or voting your shares, please contact our proxy solicitor by using the contact information provided below:

MacKenzie Partners, Inc.

1407 Broadway, 27th Floor New York, New York 10018

(212) 929-5500 (Call Collect)

or

Call Toll-Free (800) 322-2885

Email: [email protected]

 

TABLE OF CONTENTS

 

		Page
PROXY STATEMENT			1
SUMMARY			2
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER			17
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS			28
THE PARTIES			30
THE SPECIAL MEETING			31
DATE, TIME AND PLACE OF THE SPECIAL MEETING			31
PURPOSE OF THE SPECIAL MEETING			31
RECORD DATE; SHARES ENTITLED TO VOTE; QUORUM			31
VOTE REQUIRED; ABSTENTIONS AND BROKER NON-VOTES			32
SHARES HELD BY DIRECTORS AND EXECUTIVE OFFICERS			32
VOTING; PROXIES			32
REVOCABILITY OF PROXIES			34
ABSTENTIONS			35
ADJOURNMENTS AND POSTPONEMENTS			35
BOARD RECOMMENDATION			35
SOLICITATION OF PROXIES			35
ANTICIPATED DATE OF CONSUMMATION OF THE MERGER			35
APPRAISAL RIGHTS			36
HOUSEHOLDING OF SPECIAL MEETING MATERIALS			37
QUESTIONS AND ADDITIONAL INFORMATION			37
THE MERGER			38
CERTAIN EFFECTS OF THE MERGER ON ENHABIT			38
EFFECT ON ENHABIT IF THE MERGER IS NOT CONSUMMATED			38
MERGER CONSIDERATION			38
BACKGROUND OF THE MERGER			39
RECOMMENDATION OF THE BOARD OF DIRECTORS AND REASONS FOR THE MERGER			55
OPINION OF GOLDMAN SACHS & CO. LLC			60
CERTAIN UNAUDITED PROSPECTIVE FINANCIAL INFORMATION			67
INTERESTS OF THE DIRECTORS AND EXECUTIVE OFFICERS OF ENHABIT IN THE MERGER			71
FINANCING OF THE MERGER			79
CLOSING AND EFFECTIVE TIME OF THE MERGER			79
APPRAISAL RIGHTS			79
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER			86
REGULATORY APPROVALS REQUIRED FOR THE MERGER			89
DELISTING AND DEREGISTRATION OF COMMON STOCK			90
THE MERGER AGREEMENT			91
EXPLANATORY NOTE REGARDING THE MERGER AGREEMENT			91
EFFECT OF THE MERGER			91
CLOSING AND EFFECTIVE TIME			92
DIRECTORS AND OFFICERS; CERTIFICATE OF INCORPORATION; BYLAWS			92
MERGER CONSIDERATION			92
TREATMENT OF EQUITY AWARDS			93
EXCHANGE AND PAYMENT PROCEDURES			94
REPRESENTATIONS AND WARRANTIES			94
CONDUCT OF BUSINESS PENDING THE MERGER			98
SOLICITATION OF OTHER OFFERS			102

 

-i-

TABLE OF CONTENTS

(continued)

 

		Page
RECOMMENDATION CHANGE			104
EMPLOYEE MATTERS			107
CONDITIONS TO THE CLOSING OF THE MERGER			109
INDEMNIFICATION AND INSURANCE			110
OTHER COVENANTS			112
TERMINATION OF THE MERGER AGREEMENT			114
COMPANY TERMINATION FEE; PARENT TERMINATION FEE			115
SPECIFIC PERFORMANCE			116
FEES AND EXPENSES			116
AMENDMENT AND WAIVER			117
GOVERNING LAW			117
THE SUPPORT AGREEMENTS			118
PROPOSAL NO. 1: APPROVAL OF THE MERGER PROPOSAL			119
THE MERGER PROPOSAL			119
VOTE REQUIRED			119
BOARD RECOMMENDATION			119
PROPOSAL NO. 2: THE COMPENSATION PROPOSAL			120
VOTE REQUIRED			120
BOARD RECOMMENDATION			120
PROPOSAL NO. 3: ADJOURNMENT OF THE SPECIAL MEETING			121
THE ADJOURNMENT PROPOSAL			121
VOTE REQUIRED			121
BOARD RECOMMENDATION			121
MARKET PRICES AND DIVIDEND DATA			122
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			123
FUTURE STOCKHOLDER PROPOSALS			125
WHERE YOU CAN FIND MORE INFORMATION			126
MISCELLANEOUS			127

ANNEXES

 

Annex A: Agreement and Plan of Merger, dated February 22, 2026, by and among Enhabit, Inc., Anchor Parent, LLC and Anchor Merger Sub, Inc.		A-1
Annex B: Form of Voting and Support Agreement		B-1
Annex C: Opinion of Goldman Sachs & Co. LLC		C-1

 

 

-ii-

PROXY STATEMENT

This proxy statement contains information relating to a special meeting of stockholders (the “Special Meeting”) of Enhabit, Inc. The Special Meeting will be held virtually on     , 2026 at     , Central Time. Stockholders will be able to attend the Special Meeting by registering in advance at www.proxydocs.com/EHAB prior to the deadline of     , Central Time on     , 2026. You will not be able to attend the Special Meeting in person. For purposes of attendance at the Special Meeting, all references in this proxy statement to “present” means virtually present at the Special Meeting. We are furnishing this proxy statement to stockholders as part of the solicitation of proxies by the board of directors of Enhabit, Inc. (the “Board”) for use at the Special Meeting and at any adjournments or postponements thereof. This proxy statement is dated   , 2026 and is first being mailed to our stockholders on or about     , 2026.

Except as otherwise specifically noted in this proxy statement or as the context otherwise requires, “Enhabit,” “we,” “our,” “us,” the “Company” and similar words in this proxy statement refer to Enhabit, Inc. Throughout this proxy statement, we refer to Anchor Parent, LLC as “Parent” and Anchor Merger Sub, Inc. as “Merger Sub.” In addition, throughout this proxy statement, we refer to: (i) the Agreement and Plan of Merger, dated as of February 22, 2026, as it may be amended from time to time, by and among Parent, Merger Sub and Enhabit as the “Merger Agreement”; (ii) the merger of Merger Sub with and into Enhabit, with Enhabit surviving as a wholly owned subsidiary of Parent as the “Merger”; (iii) each share of common stock, par value $0.01 per share, of Enhabit as “Common Stock”; and (iv) the holders of shares of Common Stock as the “stockholders.” Unless indicated otherwise, any other capitalized term used herein but not otherwise defined herein has the meaning assigned to such term in the Merger Agreement.

 

1

 

2

 

3

 

4

 

5

 

6

 

7

 

8

 

9

 

10

 

11

 

12

 

13

 

14

 

15

 

16

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

The following questions and answers are intended to briefly address some commonly asked questions regarding the Special Meeting and the Merger. These questions and answers may not address all the questions that may be important to you as a stockholder. Accordingly, you should read the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to or incorporated by reference in this proxy statement.

 

Q:	Why am I receiving this proxy statement?

 

A:

On February 22, 2026, Enhabit entered into the Merger Agreement providing for the Merger of Merger Sub, a wholly owned subsidiary of Parent, with and into Enhabit, with Enhabit surviving the Merger as a wholly owned subsidiary of Parent. The Board is furnishing this proxy statement and form of proxy card to the stockholders of Enhabit in connection with the solicitation of proxies to be voted at the Special Meeting.

 

Q:	What is the proposed transaction?

 

A:

The proposed transaction is the acquisition of Enhabit by Parent pursuant to the Merger Agreement. If the Merger Proposal is approved by the affirmative vote of the majority of the voting power of the issued and outstanding shares of Common Stock as of the close of business on the Record Date, and the other closing conditions set forth in the Merger Agreement have been satisfied or, to the extent permitted by applicable law, waived, Merger Sub will be merged with and into Enhabit, with Enhabit surviving the Merger as a wholly owned subsidiary of Parent. As a result of the Merger, the Common Stock will no longer be publicly traded. Following the Effective Time of the Merger, we will cooperate with Parent to delist the Common Stock from NYSE and deregister the Common Stock under the Exchange Act. Following such delisting and deregistration, Enhabit will no longer file periodic reports with the SEC.

 

Q:	What will holders of shares of Common Stock receive if the Merger is consummated?

 

A:

Upon consummation of the Merger, you will be entitled to receive the Merger Consideration of $13.80 in cash, without interest and less any applicable withholding taxes, for each share of Common Stock that you own as of the Effective Time, unless you have properly exercised and not failed to perfect, waived, withdrawn or otherwise lost your right to appraisal in accordance with Section 262 of the DGCL. For example, if you own 100 shares of Common Stock as of the Effective Time, you will receive $1,380 in cash in exchange for your shares (less any applicable withholding taxes). You will not be entitled to receive shares in the Surviving Corporation or in Parent as a result of the Merger.

 

Q:	How does the Merger Consideration compare to the market price of the Common Stock as of a recent trading date?

 

A:

The Merger Consideration represents a premium of approximately 33.8% to the 60-day volume weighted average share price of the Common Stock on NYSE up to February 20, 2026 (the last full trading day prior to the announcement of the transaction). On    , 2026, the last practicable day before the printing of this proxy statement, the closing price of our Common Stock on NYSE was $     per share.

 

Q:	When and where is the Special Meeting?

 

A:

The Special Meeting will take place virtually on     , 2026, at     , Central Time. There will not be a physical meeting location. Stockholders will be able to virtually attend and vote at the Special Meeting by registering in advance at www.proxydocs.com/EHAB prior to the deadline of     , Central Time on     , 2026. Please have your 12-digit control number available and follow the instructions to complete your registration request. Upon completing registration, stockholders will receive a confirmation

 

17

email with a link and instructions for accessing the Special Meeting. We encourage you to access the Special Meeting before the start time of     , Central Time on     , 2026. Please allow ample time for online check-in, which will begin at     , Central Time on     , 2026. For purposes of attendance at the Special Meeting, all references in this proxy statement to “present” shall mean virtually present at the Special Meeting.

 

Q:	Who is entitled to vote at the Special Meeting?

 

A:

Only stockholders of record of shares of Common Stock as of the close of business on the Record Date of      , 2026 will be entitled to notice of, and to vote at, the Special Meeting. As of the Record Date, there were      shares of Common Stock issued and outstanding and entitled to vote at the Special Meeting.

 

Q:	What are stockholders being asked to vote on at the Special Meeting?

 

A:	You are being asked to consider and vote on the following proposals:

 

•

the Merger Proposal, in which stockholders will be asked to approve the Merger Agreement;

 

•

the Compensation Proposal, in which stockholders will be asked to approve, on a non-binding, advisory basis, certain compensation that may be paid or become payable to Enhabit’s named executive officers that is based on or otherwise relates to the Merger; and

 

•

a proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes virtually or by proxy to adopt the Merger Proposal at the time of the Special Meeting (the “Adjournment Proposal”).

Pursuant to Enhabit’s amended and restated bylaws (the “Bylaws”), the only business that will be transacted at the Special Meeting are the Merger Proposal, the Compensation Proposal and the Adjournment Proposal, as stated in the accompanying notice of the Special Meeting.

 

Q:	Have any stockholders agreed to vote for the Merger Proposal?

 

A:

On February 22, 2026, Supporting Stockholders who beneficially owned, collectively, over 2% (without giving effect to any vesting of RSUs as described under “The Merger Agreement—Treatment of Equity Awards”) of the total voting power of Enhabit as of the Record Date entered into Support Agreements with Parent and Merger Sub pursuant to which each of the Supporting Stockholders agreed, among other things, to vote all of their shares in favor of the Merger Proposal, subject to the terms and conditions contained in the Support Agreements. Our directors and executive officers have informed us that they currently intend to vote all of their shares “FOR” the Merger Proposal.

 

Q:	What vote is required to adopt the proposal to approve the Merger Agreement?

 

A:

The affirmative vote of the majority of the voting power of the issued and outstanding shares of Common Stock as of the close of business on the Record Date is required to approve the Merger Proposal. As a result, the failure to grant a proxy to vote your shares by submitting a signed proxy card, to grant a proxy electronically over the Internet or by telephone or to vote virtually at the Special Meeting will have the same effect as a vote “AGAINST” the Merger Proposal. An abstention from voting for the Merger Proposal will have the same effect as a vote “AGAINST” the Merger Proposal.

 

Q:	What factors did the Board consider in deciding to enter into the Merger Agreement and recommending the adoption of the Merger Agreement by Enhabit stockholders?

 

A:	In reaching its decision to unanimously adopt, approve and declare advisable the Merger Agreement and the transactions contemplated thereby, and to recommend that stockholders approve the Merger Proposal, the

 

18

Board consulted with Enhabit’s senior management, as well as its legal and financial advisors and considered the terms of the proposed Merger Agreement and the transactions contemplated thereby, as well as other alternatives. For a more detailed description of these factors, see “The Merger—Recommendation of the Board of Directors and Reasons for the Merger” beginning on page 55 of this proxy statement.

 

Q:	What is a quorum and how many shares are needed to constitute a quorum? How can the meeting be adjourned if a quorum is not present?

 

A:

A quorum of stockholders is the presence of stockholders holding the minimum number of shares necessary to transact business at the Special Meeting. The presence at the Special Meeting, present or represented by proxy, of the holders of record of at least a majority of the outstanding shares of Common Stock entitled to vote at the Special Meeting will constitute a quorum at the Special Meeting for the transaction of business.

If a quorum is not present, then under the Bylaws, the chairperson of the Special Meeting may adjourn the meeting, and the meeting may be held as adjourned without further notice other than an announcement at the meeting at which the adjournment or postponement is taken of the hour, date and place, if any, to which the meeting is adjourned and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present and vote at such adjourned meeting.

 

Q:	What vote is required to approve the Compensation Proposal?

 

A:

Approval of the Compensation Proposal requires the affirmative vote of the majority of the outstanding shares of Common Stock as of the close of business on the Record Date entitled to vote on the Compensation Proposal and present or represented by proxy at the Special Meeting. An abstention from voting for the Compensation Proposal will have the same effect as a vote “AGAINST” the Compensation Proposal.

 

Q:	Why are stockholders being asked to approve, on a non-binding, advisory basis, the Compensation Proposal?

 

A:	The Exchange Act, and applicable SEC rules thereunder, require Enhabit to seek non-binding approval of certain payments that may be or could become payable to its named executive officers that is based on or otherwise relates to the Merger.

 

Q:	What will happen if the Compensation Proposal is not approved at the Special Meeting?

 

A:

Approval of the Compensation Proposal is not a condition to the completion of the Merger. The vote with respect to the Compensation Proposal is an advisory vote and will not be binding on Enhabit. Accordingly, if the Merger Proposal is approved and the Merger is completed, the compensation will be payable, subject only to the conditions applicable thereto under the applicable compensation agreements and arrangements, regardless of the outcome of the non-binding, advisory vote of stockholders.

 

Q:	What vote is required to approve the Adjournment Proposal?

 

A:

Approval of the Adjournment Proposal requires the affirmative vote of the majority of the outstanding shares of Common Stock as of the close of business on the Record Date entitled to vote on the Adjournment Proposal and present or represented by proxy at the Special Meeting. An abstention from voting for the Adjournment Proposal will have the same effect as a vote “AGAINST” the Adjournment Proposal.

 

Q:	How does the Board recommend that I vote?

 

A:	The Board, after considering the various factors described under “The Merger—Recommendation of the Board of Directors and Reasons for the Merger” beginning on page 55 of this proxy statement,

 

19

unanimously (i) determined that it is in the best interests of Enhabit and our stockholders, and declared it advisable, to enter into the Merger Agreement, (ii) approved the execution, delivery and performance of the Merger Agreement and the consummation of the transactions contemplated by the Merger Agreement, including the Merger, and (iii) resolved to recommend to our stockholders that they vote for the adoption of the Merger Agreement and directed that such matter be submitted to our stockholders for consideration at the Special Meeting.

The Board unanimously recommends that you vote “FOR” the Merger Proposal, “FOR” the Compensation Proposal and “FOR” the Adjournment Proposal.

 

Q:	What do I need to do now?

 

A:

We encourage you to read this proxy statement, the annexes to this proxy statement, including the Merger Agreement, and the documents we incorporate by reference and refer to in this proxy statement carefully and consider how the Merger affects you, and then sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying reply envelope, or grant your proxy electronically on the Internet or by telephone, so that your shares can be voted at the Special Meeting. If you hold your shares in “street name,” please refer to the voting instruction forms provided by your bank, broker or other nominee to vote your shares.

 

Q:	How do I vote?

 

A:	If you are a stockholder of record (that is, if your shares are registered in your name with our transfer agent, Computershare Trust Company, N.A. (the “Transfer Agent”)), there are three ways to cause your shares to be voted at the Special Meeting:

 

•

Submit a Proxy by Internet: You can submit a proxy in advance of the Special Meeting over the Internet by visiting www.proxypush.com/EHAB;

 

•

Submit a Proxy by Telephone: You can submit a proxy in advance of the Special Meeting by calling 1-866-569-2003 toll-free (within the U.S. or Canada) and granting your proxy; or

 

•

Mailing a Proxy Card: You can submit a proxy in advance of the Special Meeting by signing, dating and returning the enclosed proxy card in the accompanying prepaid reply envelope.

If you are a stockholder of record, you may attend the Special Meeting virtually and vote by registering in advance at www.proxydocs.com/EHAB prior to the deadline of     , Central Time on     , 2026. Please have your 12-digit control number available and follow the instructions to complete your registration request. Upon completing registration, stockholders will receive a confirmation email with a link and instructions for accessing the Special Meeting.

If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted “FOR” each of the Merger Proposal, the Compensation Proposal and the Adjournment Proposal.

A 12-digit control number, located on your proxy card, is designed to verify your identity and allow you to grant a proxy to vote your shares, and to confirm that your voting instructions have been properly recorded when granting a proxy electronically over the Internet or by telephone. Please be aware that, although there is no charge for granting a proxy to vote your shares, if you grant a proxy electronically over the Internet or by telephone, you may incur costs such as telephone and Internet access charges for which you will be responsible. Even if you plan to attend the Special Meeting virtually, we encourage you to submit a proxy in advance by Internet, telephone or mail so that your vote will be counted in the event you later decide not to attend the Special Meeting virtually.

If your shares are held in “street name” through a bank, broker or other nominee, you should follow the directions provided by your bank, broker or other nominee regarding how to instruct your bank, broker or

 

20

other nominee to vote your shares. Without those instructions, your shares will not be voted, which will have the same effect as voting “AGAINST” the Merger Proposal.

 

Q:	What is the difference between holding shares as a stockholder of record and as a beneficial owner?

 

A:	If your shares are registered directly in your name with the Transfer Agent you are considered, with respect to those shares, to be the “stockholder of record.” In this case, this proxy statement and your proxy card have been sent directly to you by or on behalf of Enhabit.

If your shares are held through a bank, broker or other nominee, you are considered the “beneficial owner” of such shares and are considered to hold them in “street name.” In that case, this proxy statement has been forwarded to you by your bank, broker or other nominee who is considered, with respect to those shares, to be the stockholder of record. As the beneficial owner, you have the right to direct your bank, broker or other nominee on how to vote your shares by following their instructions for voting. You are also invited to attend the Special Meeting and may vote in advance via the Internet at www.proxypush.com/EHAB using the 12-digit control number included in your proxy materials. If you did not receive a 12-digit control number, you should follow the instructions from your bank, broker or other nominee, including any requirement to obtain a legal proxy.

 

Q:	Will my shares held in “street name” or another form of record ownership be combined for voting purposes with shares I hold as the stockholder of record?

 

A:

No. Because any shares you may hold in “street name” will be deemed to be held of record by a different stockholder than any shares you hold directly as the stockholder of record, any shares held in “street name” will not be combined for voting purposes with the shares you hold as the stockholder of record. Similarly, if you own shares in various registered forms, such as jointly with your spouse, as trustee of a trust or as custodian for a minor, you will receive, and will need to sign and return, a separate proxy card for those shares because they are held in a different form of record ownership. Shares held by a corporation or business entity must be voted by an authorized officer of the entity. Shares held in an individual retirement account must be voted under the rules governing the account.

 

Q:	If I hold my shares in “street name,” will my bank, broker or other nominee vote my shares for me on the proposals to be considered at the Special Meeting?

 

A:

Not without your direction. Your bank, broker or other nominee will only be permitted to vote your shares on any “non-routine” proposal if you instruct your bank, broker or other nominee on how to vote. Under applicable stock exchange rules, banks, brokers or other nominees have the discretion to vote your shares on routine matters if you fail to instruct your bank, broker or other nominee on how to vote your shares with respect to such matters. Each of the proposals in this proxy statement are non-routine matters, and banks, brokers and other nominees therefore cannot vote on these proposals without your instructions. Therefore, it is important that you instruct your bank, broker or other nominee on how you wish to vote your shares.

You should follow the procedures provided by your bank, broker or other nominee to instruct them, as applicable, to vote your shares. Without such instructions, your shares will not be voted at the Special Meeting. A failure to vote will have the same effect as if you voted “AGAINST” the Merger Proposal.

 

Q:	What happens if I do not vote?

 

A:

The required vote to approve the Merger Proposal is based on the total number of issued and outstanding shares of our Common Stock as of the Record Date, not just the shares that are voted at the Special Meeting. If you do not vote virtually or by proxy, it will have the same effect as a vote “AGAINST” the Merger Proposal.

 

21

Q:	May I change my vote after I have mailed my signed proxy card or otherwise submitted my vote by proxy?

 

A:	Yes. If you are a stockholder of record, you may change your vote or revoke your proxy by:

 

•

delivering a written notice of revocation of your proxy to the Corporate Secretary at c/o Enhabit, Inc., 6688 N. Central Expressway, Suite 1300, Dallas, Texas 75206, that is received on or before 10:59 p.m., Central Time on     , 2026, the day preceding the Special Meeting;

 

•

signing a new proxy card with a date later than the date of the previously submitted proxy card relating to the same shares and returning it to us by mail prior to the Special Meeting;

 

•

submitting a new proxy by telephone prior to 10:59 p.m., Central Time on     , 2026, the day preceding the Special Meeting;

 

•

submitting a new proxy by Internet prior to 10:59 p.m., Central Time on     , 2026, the day preceding the Special Meeting; or

 

•

attending the Special Meeting and voting thereat (simply attending the Special Meeting will not cause your proxy to be revoked).

Please note, however, that only your last-dated proxy will count. Attending the Special Meeting without taking one of the actions described above will not in itself revoke your proxy. Please note that if you want to revoke your proxy by mailing a new proxy card to Enhabit or by sending a written notice of revocation to Enhabit, you should ensure that you send your new proxy card or written notice of revocation in sufficient time for it to be received by Enhabit before the Special Meeting.

Please note that if you hold your shares in “street name,” and you have instructed a bank, broker or other nominee to vote your shares, the above-described options for revoking your voting instructions do not apply, and instead you should contact your bank, broker or other nominee for instructions regarding how to change or revoke your vote.

 

Q:	What is a proxy?

 

A:

A “proxy” is your legal designation of another person to vote your shares. This written document describing the matters to be considered and voted on at the Special Meeting is called a “proxy statement.” The document used to designate a proxy to vote your shares is called a “proxy card.” The Board has designated Barbara A. Jacobsmeyer, our President and Chief Executive Officer, and Dylan C. Black, our General Counsel and Secretary, as proxies for the Special Meeting.

 

Q:	If a stockholder gives a proxy, how are the shares voted?

 

A:	Regardless of the method you choose to grant a proxy to vote your shares, the individuals named on the enclosed proxy card, or your proxies, will vote your shares in the way that you indicate.

When completing the Internet or telephone process or the proxy card, you may specify whether your shares should be voted “FOR” or “AGAINST” or to abstain from voting on the specific items of business to come before the Special Meeting.

If you properly sign your proxy card but do not mark the boxes showing how your shares should be voted on a matter, the shares represented by your properly signed proxy will be voted “FOR” the Merger Proposal, “FOR” the Compensation Proposal and “FOR” the Adjournment Proposal.

 

Q:	May I attend the Special Meeting and vote in person?

 

A:	All stockholders as of the Record Date may attend and vote at the virtual Special Meeting by registering in advance at www.proxydocs.com/EHAB prior to the deadline of     , Central Time on     ,

 

22

2026. Please have your 12-digit control number available and follow the instructions to complete your registration request. Upon completing registration, stockholders will receive a confirmation email with a link and instructions for accessing the Special Meeting. You will not be able to attend the Special Meeting physically in person.

 

•

Stockholders of record: If you are a stockholder of record, in order to participate in the Special Meeting, you will need your 12-digit control number included on the proxy notice, proxy card or the voting instruction form previously distributed to you. If you are a stockholder of record, you may vote electronically during the Special Meeting by following the instructions available at www.proxydocs.com/EHAB.

 

•

Stockholders holding shares in “street” name: If your shares are held in “street name” through a brokerage firm, bank, trust or other similar organization and you do not have a 12-digit control number, in order to participate in the Special Meeting, you must first obtain a legal proxy from your bank, broker or other nominee reflecting the number of shares you held as of the Record Date, your name and email address. If you hold your shares in “street name,” you must obtain the appropriate documents from your bank, broker or other nominee giving you the right to vote the shares at the Special Meeting.

Instructions on how to attend and participate in the Special Meeting via the webcast are posted at www.proxydocs.com/EHAB.

You should ensure that you have a strong Internet connection and allow plenty of time to log in and ensure that you can hear streaming audio prior to the start of the Special Meeting. We will offer live technical support for all stockholders attending the meeting.

Even if you plan to attend the Special Meeting, we encourage you to complete, sign, date and return the enclosed proxy or grant a proxy electronically over the Internet or via telephone to ensure that your shares will be represented at the Special Meeting. If you hold your shares in “street name,” because you are not the stockholder of record, we encourage you to provide voting instructions to your bank, broker or other nominee.

 

Q:	What happens if I sell or otherwise transfer my shares before consummation of the Merger?

 

A:	If you sell or transfer your shares before consummation of the Merger, you will have transferred your right to receive the Merger Consideration in the Merger. In order to receive the Merger Consideration, you must hold your shares through consummation of the Merger.

The Record Date for stockholders entitled to vote at the Special Meeting is earlier than the date the Merger is anticipated to be consummated. Accordingly, if you sell or transfer your shares after the Record Date but before the Special Meeting, unless special arrangements (such as provision of a proxy) are made between you and the person to whom you sell or otherwise transfer your shares and each of you notifies Enhabit in writing of such special arrangements, you will transfer the right to receive the Merger Consideration, if the Merger is consummated, to the person to whom you sell or transfer your shares, but you will have retained your right to vote these shares at the Special Meeting. Even if you sell or otherwise transfer your shares after the Record Date, we encourage you to complete, date, sign and return the enclosed proxy card or grant a proxy via the Internet or telephone.

 

Q:	How will I receive the Merger Consideration to which I am entitled?

 

A:

If you hold your shares in book-entry form but not through the Depository Trust Company, you will receive instructions regarding delivery of an “agent’s message” with respect to such book-entry shares. If your shares are held in “street name” by your bank, broker or other nominee, you may receive instructions from your bank, broker or other nominee as to what action, if any, you need to take to effect the surrender of your “street name” shares in exchange for the Merger Consideration.

 

23

Q:	When do you expect the Merger to be consummated?

 

A:

Consummation of the Merger is subject to various closing conditions, including, among others, adoption of the Merger Agreement by Enhabit’s stockholders, the expiration or termination of the applicable waiting period (or extension thereof) under the HSR Act, completion of state healthcare transaction filings in Indiana and Massachusetts, and a Change in Effective Control application in Rhode Island, and certain other conditions. The expiration or termination of the applicable waiting period under the HSR Act will occur at 11:59 p.m., Eastern Time, on April 17, 2026, unless extended or earlier terminated.

We currently anticipate that the Merger will be consummated in the second quarter of 2026, assuming satisfaction or waiver of all of the conditions to the Merger. However, it is possible, including as a result of factors outside the control of Enhabit and Parent, that the Merger will be consummated at a later time or not at all.

 

Q:	What effects will the Merger have on Enhabit?

 

A:

The Common Stock is currently registered under the Exchange Act and is listed on NYSE under the symbol “EHAB.” As a result of the Merger, Enhabit will cease to be a publicly traded company and will become a wholly owned subsidiary of Parent. As soon as reasonably practicable following the consummation of the Merger, the Common Stock will cease trading on and be delisted from NYSE and will be deregistered under the Exchange Act, and Enhabit will no longer be required to file periodic reports with the SEC.

 

Q:	What happens if the Merger is not consummated?

 

A:

If the Merger Agreement is not adopted by stockholders as of the Record Date or if the Merger is not consummated for any other reason, stockholders will not receive any payment for their shares pursuant to the Merger Agreement. Instead, Enhabit will remain a public company, the Common Stock will continue to be listed and traded on NYSE and registered under the Exchange Act and we will continue to file periodic reports with the SEC. Furthermore, if the Merger is not consummated, depending on the circumstances that caused the Merger not to be consummated, the price of shares of Common Stock may decline significantly. If that were to occur, it is uncertain when, if ever, the price of shares of Common Stock would return to the price at which the shares trade as of the date of this proxy statement.

Under specified circumstances, we may be required to pay Parent a termination fee of $24,536,766 upon the termination of the Merger Agreement as described under “The Merger Agreement—Company Termination Fee; Parent Termination Fee—Company Termination Fee” beginning on page 115 of this proxy statement.

 

Q:	Do any directors or executive officers have interests in the Merger that may differ from those of stockholders generally?

 

A:

In considering the recommendation of the Board with respect to the Merger Proposal, you should be aware that our directors and executive officers may have interests in the Merger that may be different from, or in addition to, your interests as a stockholder. The Board was aware of these potential interests and considered them, among other matters, in approving the Merger Agreement and the Merger and in recommending that the Merger Agreement be adopted by stockholders. For a description of the potential interests of our directors and executive officers in the Merger, see “The Merger—Interests of the Directors and Executive Officers of Enhabit in the Merger” beginning on page 71 of this proxy statement.

 

Q:	Who will count the votes obtained at the Special Meeting?

 

A:	The votes will be counted by MacKenzie Partners, Inc. (“MacKenzie”), the independent inspector of election appointed for the Special Meeting.

 

24

Q:	Who will solicit votes for and bear the cost and expenses of this proxy solicitation?

 

A:

We will bear the cost of the solicitation of proxies. We have retained MacKenzie, a proxy solicitation firm, to solicit proxies in connection with the Special Meeting at a cost of approximately $25,000 plus expenses. We will also indemnify MacKenzie against losses arising out of its provisions of these services on our behalf. In addition, we may reimburse banks, brokers and other nominees representing beneficial owners of shares for their expenses in forwarding soliciting materials to such beneficial owners. Proxies may also be solicited by our directors, officers and employees, personally or by telephone, email, over the Internet or other means of communication. No additional compensation will be paid for such services.

 

Q:	Where can I find the voting results of the Special Meeting?

 

A:

We intend to publish final voting results in a Current Report on Form 8-K that we will file with the SEC within four business days of the Special Meeting. All reports that we file with the SEC are publicly available when filed. See “Where You Can Find More Information” beginning on page 126 of this proxy statement.

 

Q:	What are the material U.S. federal income tax consequences to stockholders of the exchange of shares for cash pursuant to the Merger?

 

A:

Stockholders’ receipt of cash in exchange for shares of Common Stock will be a taxable transaction for U.S. federal income tax purposes. A U.S. Holder generally will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received by such U.S. Holder pursuant to the Merger and such U.S. Holder’s adjusted tax basis in the shares of Common Stock surrendered in the Merger. A Non-U.S. Holder generally will not be subject to U.S. federal income tax with respect to the exchange of the shares of Common Stock in the Merger unless such Non-U.S. Holder has certain connections to the United States, but may be subject to backup withholding unless the Non-U.S. Holder complies with certain certification procedures or otherwise establishes a valid exemption from backup withholding. You are urged to consult your own tax advisors to determine the U.S. federal income tax consequences relating to the Merger in light of your own particular circumstances and any consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction or other tax laws. A more complete description of the material U.S. federal income tax consequences of the Merger is provided under “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 86 of this proxy statement.

 

Q:	What will the holders of Enhabit equity awards receive in the Merger?

 

A:

Each Company Option that is outstanding and unexercised as of immediately prior to the Effective Time will, to the extent unvested, accelerate and become fully vested and exercisable effective immediately prior to, and contingent upon, the Effective Time. Except as otherwise provided in the Merger Agreement or expressly agreed to in writing after the date of the Merger Agreement and prior to the Effective Time by Parent and a holder of Company Options, as of the Effective Time, by virtue of the Merger and without any further action on the part of the holder of any Company Option, each Company Option that is then outstanding and unexercised will be automatically cancelled and converted into the right to receive a cash payment equal to the product of (i) the total number of shares of Common Stock subject to such Company Option as of immediately prior to the Effective Time, multiplied by (ii) the excess, if any, of the (A) Per Share Amount over (B) the exercise price per share applicable to such Company Option, without interest and subject to any applicable tax withholding. Each Company Option that is outstanding and unexercised as of the Effective Time and that has an exercise price per share equal to or greater than the Per Share Amount will be automatically cancelled, without any further action on the part of the holder of any Company Option, without any cash payment or other consideration being made in respect thereof.

Each Company RSU and each Company RSA that is outstanding as of immediately prior to the Effective Time will, to the extent unvested, become fully vested effective immediately prior to, and contingent upon,

 

25

the Effective Time. Except as otherwise expressly agreed to in writing after the date of the Merger Agreement and prior to the Effective Time by Parent and a holder of Company RSUs or Company RSAs, as of the Effective Time, by virtue of the Merger and without any further action on the part of the holder of any Company RSU or Company RSA, each Company RSU and Company RSA that is then outstanding will be automatically cancelled and converted into the right to receive a cash payment equal to the product of (A) the total number of shares of Common Stock underlying such Company RSU or the total number of Company RSAs, as applicable, as of immediately prior to the Effective Time, multiplied by (B) the Per Share Amount, without interest and subject to any applicable tax withholding.

Each Company PSU that is outstanding as of immediately prior to the Effective Time will, to the extent unvested, become vested effective immediately prior to, and contingent upon, the Effective Time, in the number of shares of Common Stock subject to the Company PSU based on the greater of the target performance level and the actual performance level measured as of the Effective Time (as determined by the Compensation and Human Capital Committee of the Board as constituted immediately prior to the Effective Time) (or, for any Company PSUs for which the performance period has been completed as of the Effective Time, the actual performance level). Except as otherwise expressly agreed to in writing after the date of the Merger Agreement and prior to the Effective Time by Parent and a holder of Company PSUs, as of the Effective Time, by virtue of the Merger and without any further action on the part of the holder of any Company PSU, (i) the vested portion of a Company PSU (after giving effect to the foregoing) will be automatically cancelled and converted into the right to receive a cash payment equal to the product of (A) the total number of shares of Common Stock underlying such vested portion of the Company PSU as of immediately prior to the Effective Time, and (B) the Per Share Amount, without interest and subject to any applicable tax withholding, and (ii) the unvested portion of a Company PSU will be automatically cancelled without any cash payment or other consideration being made in respect thereof.

 

Q:	Are holders of shares of Common Stock entitled to appraisal rights in connection with the Merger under the DGCL?

 

A:

Yes. As a holder of record or beneficial owner of shares of Common Stock, you are entitled to exercise appraisal rights under the DGCL in connection with the Merger if you take certain actions and meet certain conditions. Under the DGCL, holders and beneficial owners of shares who do not vote for the adoption of the Merger Agreement have the right to seek appraisal of the fair value of their shares, as determined by the Delaware Court of Chancery if the Merger is consummated. Appraisal rights are only available if the holder of shares complies fully with all applicable requirements of Section 262 of the DGCL. Any appraisal amount determined by the court could be more than, the same as, or less than the value of the consideration that such stockholder may receive in the Merger. Any stockholder intending to exercise appraisal rights must, among other things, submit a written demand for appraisal to Enhabit before the vote on the adoption of the Merger Agreement is taken and must not vote or otherwise submit a proxy to vote in favor of adoption of the Merger Agreement. Failure to follow exactly the procedures specified under Section 262 of the DGCL will result in the loss of appraisal rights. Because of the complexity of the DGCL relating to appraisal rights, if you are considering exercising your appraisal rights we encourage you to seek the advice of your own legal counsel. See “The Merger—Appraisal Rights” beginning on page 79 of this proxy statement.

 

Q:	What should I do if I receive more than one set of voting materials?

 

A:

You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if your shares are held in more than one brokerage account or are registered differently, you will receive more than one proxy card or voting instruction card. Please complete, date, sign and return (or grant a proxy to vote via the Internet or telephone with respect to) each proxy card and voting instruction card that you receive to ensure that all of your shares are voted.

 

26

Q:	What is householding and how does it affect me?

 

A:

The SEC permits us to send a single set of proxy materials to any household at which two or more stockholders reside, unless contrary instructions have been received, but only if we provide advance notice and follow certain procedures. In such cases, each stockholder continues to receive a separate notice of the meeting and proxy card. Certain brokerage firms may have instituted householding for beneficial owners of shares held through brokerage firms. If your family has multiple accounts holding shares, you may have already received householding notification from your broker. Please contact your broker directly if you have any questions or require additional copies of this proxy statement. The broker will arrange for delivery of a separate copy of this proxy statement promptly upon your written or oral request. You may decide at any time to revoke your decision to household, and thereby receive multiple copies.

 

Q:	Who can help answer my questions?

 

A:

If you have any more questions concerning the Merger, the Special Meeting or this proxy statement, would like additional copies of this proxy statement or enclosed proxy card, or require assistance in submitting your proxy or voting your shares, please contact our proxy solicitor at the contact information provided below:

MacKenzie Partners, Inc.

1407 Broadway, 27th Floor New York, New York 10018

(212) 929-5500 (Call Collect)

or

Call Toll-Free (800) 322-2885

Email: [email protected]

If your bank, broker or other nominee holds your shares, you should also call your bank, broker or other nominee for additional information.

 

27

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement and any document which we refer to herein contains, and Enhabit’s other filings and press releases may contain, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of 1995, which are intended to be covered by the safe harbor created by such sections and other applicable laws. Forward-looking statements include all statements that do not relate solely to historical or current facts, such as statements regarding our expectations, intentions or strategies regarding the future. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “aim,” “potential,” “continue,” “ongoing,” “goal,” “can,” “seek,” “target” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. These forward-looking statements are based on management’s current beliefs, as well as assumptions made by, and information currently available to, Enhabit, all of which are subject to change. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected and are subject to a number of known and unknown risks and uncertainties, including:

 

•

the risk that the proposed Merger may not be completed in a timely manner or at all, which may adversely affect Enhabit’s business and the price of the Common Stock;

 

•

the failure to satisfy any of the conditions to the consummation of the Merger, including the receipt of certain regulatory approvals;

 

•

the failure to obtain the Stockholder Approval;

 

•

the occurrence of any fact, event, change, development or circumstance that could give rise to the termination of the Merger Agreement, including in circumstances requiring Enhabit to pay the Company Termination Fee;

 

•

the effect of the announcement or pendency of the proposed Merger on Enhabit’s business relationships, operating results and business generally;

 

•

risks that the proposed Merger disrupts Enhabit’s current plans and operations;

 

•

Enhabit’s ability to retain and hire key personnel and maintain relationships with key business partners and customers, and others with whom it does business, in light of the proposed Merger;

 

•

risks related to the diversion of management’s attention from Enhabit’s ongoing business operations;

 

•

unexpected costs, charges or expenses resulting from the proposed Merger;

 

•

the ability of Parent to obtain financing for the proposed Merger;

 

•

potential litigation relating to the proposed Merger that could be instituted against the parties to the Merger Agreement or their respective directors, managers or officers, including the effects of any outcomes related thereto;

 

•

continued availability of capital and financing;

 

•

certain restrictions during the pendency of the proposed Merger that may impact Enhabit’s ability to pursue certain business opportunities or strategic transactions; and

 

•

other risks described in Enhabit’s filings with the SEC, such risks and uncertainties described under the headings “Cautionary Note Regarding Forward-Looking Statements,” “Risk Factors” and other sections of Enhabit’s Annual Report on Form 10-K filed with the SEC on March 5, 2026 and subsequent filings.

No list or discussion of risks or uncertainties should be considered a complete statement of all potential risks and uncertainties. Unlisted or unknown factors may present significant additional obstacles to the realization of

 

28

forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss and legal liability to third parties and similar risks, any of which could have a material adverse effect on the completion of the proposed Merger and/or Enhabit’s consolidated financial condition, results of operations or liquidity. The forward-looking statements speak only as of the date they are made. Enhabit undertakes no obligation to provide revisions or updates to any forward-looking statements, whether as a result of new information, future events or otherwise, should circumstances change, except as otherwise required by law.

 

29

THE PARTIES

Enhabit, Inc.

Enhabit is a leading national home health and hospice provider in the United States. Enhabit strives to provide superior, cost-effective care where patients prefer it: in their homes. For over twenty-five years, Enhabit has provided care in the low-cost home setting while achieving high-quality clinical outcomes. As of December 31, 2025, Enhabit’s nationwide footprint comprised 249 home health and 117 hospice locations across 34 states.

Enhabit is headquartered in Dallas, Texas. Enhabit’s Common Stock is listed on NYSE under the symbol “EHAB.” Its principal executive office is located at 6688 N. Central Expressway, Suite 1300, Dallas, Texas 75206 and its telephone number is (214) 239-6500.

Anchor Parent, LLC

Parent is a Delaware limited liability company and was formed on February 18, 2026, solely for the purpose of engaging in the transactions contemplated by the Merger Agreement and other documents or agreements executed and delivered in connection with the Merger Agreement. Parent has not engaged in any business activities other than in connection with the transactions contemplated by the Merger Agreement. Upon the completion of the Merger, Enhabit will be a wholly owned subsidiary of Parent. The principal executive offices of Parent are located at 505 Fifth Avenue, 25th Floor, New York, NY 10017 and its telephone number is 212-201-6780.

Anchor Merger Sub, Inc.

Anchor Merger Sub, Inc. is a Delaware corporation and a direct wholly owned subsidiary of Parent and was formed on February 18, 2026, solely for the purpose of engaging in the transactions contemplated by the Merger Agreement and other documents or agreements executed and delivered in connection with the Merger Agreement. Merger Sub has not engaged in any business activities other than in connection with the transactions contemplated by the Merger Agreement. Upon the completion of the Merger, Merger Sub will cease to exist with Enhabit continuing as the Surviving Corporation and a direct wholly owned subsidiary of Parent. The principal executive offices of Merger Sub are located at 505 Fifth Avenue, 25th Floor, New York, NY 10017 and its telephone number is 212-201-6780.

Parent and Merger Sub are affiliates of funds advised by Kinderhook (or an affiliate thereof).

 

30

THE SPECIAL MEETING

We are furnishing this proxy statement to stockholders as part of the solicitation of proxies by the Board for use at the Special Meeting or any adjournment or postponement thereof.

Date, Time and Place of the Special Meeting

This proxy statement is being furnished to stockholders as part of the solicitation of proxies by the Board for use at the Special Meeting to be held virtually on     , 2026, at     , Central Time. Stockholders will be able to virtually attend and vote at the Special Meeting by registering in advance at www.proxydocs.com/EHAB prior to the deadline of     , Central Time on     , 2026. Please have your 12-digit control number available and follow the instructions to complete your registration request. Upon completing registration, stockholders will receive a confirmation email with a link and instructions for accessing the Special Meeting.

Shares of Common Stock held directly in your name as a stockholder of record or held in “street name” as a beneficial owner may be voted via the internet at www.proxypush.com/EHAB using the 12-digit control number included in your proxy materials or at the Special Meeting by registering in advance at www.proxydocs.com/EHAB. If you did not receive a 12-digit control number, you should follow the instructions from your bank, broker or other nominee, including any requirement to obtain a legal proxy.

Purpose of the Special Meeting

At the Special Meeting, we will ask the stockholders as of the Record Date to vote on the Merger Proposal, the Compensation Proposal and the Adjournment Proposal. If stockholders fail to adopt the Merger Agreement by approving the Merger Proposal, the Merger will not occur. A copy of the Merger Agreement is attached to this proxy statement as Annex A and incorporated herein by reference, and the material provisions of the Merger Agreement are described under “The Merger Agreement” beginning on page 91 of this proxy statement.

This proxy statement and the enclosed form of proxy are first being mailed to stockholders on or about      , 2026.

Record Date; Shares Entitled to Vote; Quorum

Only stockholders of record as of the close of business on     , 2026, the Record Date for the Special Meeting, are entitled to notice of and to vote at the Special Meeting or at any adjournments or postponements thereof. A list of stockholders entitled to vote or act at the Special Meeting will be available in our offices located at Enhabit, Inc., 6688 N. Central Expressway, Suite 1300, Dallas, Texas 75206, during regular business hours for a period of at least 10 days before the Special Meeting.

As of the Record Date, there were      shares of Common Stock issued and outstanding and entitled to vote or act at the Special Meeting.

A quorum of stockholders is necessary to transact business at the Special Meeting. The presence at the Special Meeting, virtually or by proxy, of the holders of a majority of the shares of our Common Stock outstanding and entitled to vote or act at the Special Meeting will constitute a quorum at the Special Meeting for the transaction of business. In the absence of a quorum, the Special Meeting may be adjourned by the chairperson of the Special Meeting. If you fail to return your proxy card, grant your proxy electronically over the Internet or by telephone or attend the Special Meeting, your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting. Shares represented by proxies received but marked “ABSTAIN” will be included in the calculation of the number of shares considered to be present at the Special Meeting for purposes of determining a quorum. If a beneficial owner of shares held in street name gives voting instructions to the bank, broker or other nominee with respect to at least one of the proposals, but gives no instruction as to one

 

31

or more of the other proposals, then those shares will be deemed present at the Special Meeting and for purposes of establishing a quorum at the Special Meeting, will be voted as instructed with respect to any proposal as to which instructions were given, and will not be voted with respect to any other proposal.

In the event that a quorum is not present at the Special Meeting to transact business or vote on the Merger Proposal, it is expected that the meeting would be adjourned to a later date to solicit additional proxies, and a quorum will have to be established at such adjourned date.

Vote Required; Abstentions and Broker Non-Votes

Each share of Common Stock issued and outstanding as of the close of business on the Record Date is entitled to one vote at the Special Meeting.

The affirmative vote of the majority of the voting power of the issued and outstanding shares of Common Stock as of the close of business on the Record Date is required to approve the Merger Proposal. A failure to vote your shares or an abstention from voting for the Merger Proposal will have the same effect as a vote “AGAINST” the Merger Proposal. If you hold your shares in “street name,” the failure to instruct your bank, broker or other nominee on how to vote your shares on the Merger Proposal will have the same effect as a vote “AGAINST” the Merger Proposal.

Approval of the Compensation Proposal requires the affirmative vote of the majority of the outstanding shares of Common Stock as of the close of business on the Record Date entitled to vote on the Compensation Proposal and present or represented by proxy at the Special Meeting. A failure to vote your shares will have no effect on the Compensation Proposal. An abstention from voting for the Compensation Proposal will have the same effect as a vote “AGAINST” the Compensation Proposal. If you hold your shares in “street name,” the failure to instruct your bank, broker or other nominee on how to vote your shares on the Compensation Proposal will have no effect on the Compensation Proposal.

Approval of the Adjournment Proposal requires the affirmative vote of the majority of the outstanding shares of Common Stock as of the close of business on the Record Date entitled to vote on the Adjournment Proposal and present or represented by proxy at the Special Meeting. A failure to vote your shares will have no effect on the Adjournment Proposal. An abstention from voting for the Adjournment Proposal will have the same effect as a vote “AGAINST” the Adjournment Proposal. If you hold your shares in “street name,” the failure to instruct your bank, broker or other nominee on how to vote your shares on the Adjournment Proposal will have no effect on the Adjournment Proposal.

Shares Held by Directors and Executive Officers

As of the close of business on the Record Date, directors and executive officers of Enhabit and their affiliates beneficially owned and were entitled to vote, in the aggregate,      shares of Common Stock, which collectively represented approximately     % of the total voting power of the capital stock of Enhabit issued and outstanding on that date.

Voting; Proxies

Voting at the Special Meeting

You can vote at the virtual Special Meeting, which will be held on     , 2026 at     , Central Time, by pre-registering at www.proxydocs.com/EHAB (unless the Special Meeting is adjourned or postponed).

You also may authorize the persons named as proxies on the proxy card to vote your shares by returning the proxy card in advance by mail, over the Internet or by telephone. Although Enhabit offers multiple different

 

32

voting methods, Enhabit encourages you to vote over the Internet or by phone as Enhabit believes they are the most cost-effective methods. We also recommend that you vote as soon as possible, even if you are planning to attend the Special Meeting, so that the vote count will not be delayed.

Providing Voting Instructions by Proxy

To ensure that your shares are voted at the Special Meeting, we recommend that you submit your proxy or provide voting instructions for your shares held in “street name” to your bank, broker or other nominee promptly, even if you plan to attend the Special Meeting.

Shares Held by Record Holders

If you are a stockholder of record and your shares are registered in your name with the Transfer Agent, you may submit your proxy using one of the methods described below.

 

•

Submit a Proxy by Telephone or via the Internet. This proxy statement is accompanied by a proxy card with instructions for submitting a proxy. You can grant a proxy by telephone by calling the toll-free number 1-866-569-2003 or via the Internet at www.proxypush.com/EHAB by following the instructions specified on the enclosed proxy card. Votes submitted by telephone or via the Internet for the matters brought before the Special Meeting as described in this proxy statement must be received by 10:59 p.m., Central Time on     , 2026, the day preceding the Special Meeting. Your shares will be voted as you direct, and in the same manner as if you had completed, signed, dated and returned your proxy card, as described below. You must have the enclosed proxy card available, and follow the instructions on the proxy card, in order to submit a proxy electronically over the Internet or by telephone.

 

•

Submit a Proxy Card. If you complete, sign, date and return the enclosed proxy card by mail so that it is received prior to 10:59 p.m., Central Time on     , 2026, the day preceding the Special Meeting, your shares will be voted in the manner directed by you on your proxy card.

Voting instructions are included on your proxy card. All shares represented by properly executed proxies received in time for the Special Meeting will be voted at the Special Meeting in accordance with the instructions of the stockholder. If you sign, date and return your proxy card without indicating how you wish to vote, such shares represented by your properly signed proxy card will be voted “FOR” each of the Merger Proposal, the Compensation Proposal and the Adjournment Proposal. If you fail to return your proxy card, grant your proxy electronically over the Internet or by telephone or attend the Special Meeting, your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting, and your failure to vote will have the same effect as a vote “AGAINST” the Merger Proposal, and will have no effect on the vote regarding the Compensation Proposal and the Adjournment Proposal.

Shares Held in “Street Name”

If your shares are held in “street name” through a bank, broker or other nominee, your bank, broker or other nominee will send you instructions as to how to provide voting instructions for your shares. You may cause your shares to be voted through your bank, broker or other nominee by completing and returning the voting form provided by your bank, broker or other nominee, or by the Internet or telephone through your bank, broker or other nominee by following the instructions provided to you by them if such a service is available, or by attending the Special Meeting and voting using your 12-digit control number, or, if you did not obtain a 12-digit control number, by contacting your bank, broker or other nominee to obtain a 12-digit control number so that you may vote.

Under applicable stock exchange rules, banks, brokers or other nominees have the discretion to vote your shares on “routine” matters if you fail to instruct your bank, broker or other nominee on how to vote your shares

 

33

with respect to such matters. A so-called “broker non-vote” results when banks, brokers and other nominees return a valid proxy voting upon a matter or matters for which the applicable rules provide discretionary authority but do not vote on a particular proposal because they do not have discretionary authority to vote on the matter and have not received specific voting instructions from the beneficial owner of the relevant shares. Enhabit does not expect any broker non-votes at the Special Meeting because the Merger Proposal, the Compensation Proposal and the Adjournment Proposal described in this proxy statement are all “non-routine” matters, and your bank, broker or other nominee therefore cannot vote on these proposals without your instructions. Accordingly, if you do not return your bank’s, broker’s or other nominee’s voting form, do not provide voting instructions via the Internet or telephone through your bank, broker or other nominee, if applicable, or do not attend the Special Meeting and vote virtually with a “legal proxy” from your bank, broker or other nominee, your shares will not be considered present at the Special Meeting for purposes of determining whether a quorum is present at the Special Meeting, and your failure to vote will have the same effect as if you voted “AGAINST” the Merger Proposal, and will have no effect on the Compensation Proposal and the Adjournment Proposal. However, if a beneficial owner of shares held in street name gives voting instructions to the bank, broker or other nominee with respect to one of the proposals, but gives no instruction as to the other proposal, then those shares will be deemed present at the Special Meeting for purposes of establishing a quorum at the Special Meeting, will be voted as instructed with respect to any proposal as to which instructions were given, and will not be voted with respect to any other proposal. For shares held in “street name,” only shares affirmatively voted “FOR” the Merger Proposal, the Compensation Proposal or the Adjournment Proposal will be counted as a vote in favor of such proposal.

Revocability of Proxies

Any person giving a proxy pursuant to this solicitation has the power to revoke and change it any time before it is voted at the Special Meeting. If you are a stockholder of record, you may change your vote or revoke your proxy by:

 

•

delivering a written notice of revocation of your proxy to the Corporate Secretary at c/o Enhabit, Inc., 6688 N. Central Expressway, Suite 1300, Dallas, Texas 75206, that is received on or before 10:59 p.m., Central Time on     , 2026, the day preceding the Special Meeting;

 

•

signing a new proxy card with a date later than the date of the previously submitted proxy card relating to the same shares and returning it to us by mail prior to the Special Meeting;

 

•

submitting a new proxy by telephone prior to 10:59 p.m., Central Time on     , 2026, the day preceding the Special Meeting;

 

•

submitting a new proxy by Internet prior to 10:59 p.m., Central Time on     , 2026, the day preceding the Special Meeting; or

 

•

attending the Special Meeting and voting thereat (simply attending the Special Meeting will not cause your proxy to be revoked).

Please note, however, that only your last-dated proxy will count. Attending the Special Meeting without taking one of the actions described above will not in itself revoke your proxy. Please note that if you want to revoke your proxy by mailing a new proxy card to Enhabit or by sending a written notice of revocation to Enhabit, you should ensure that you send your new proxy card or written notice of revocation in sufficient time for it to be received by Enhabit before the Special Meeting.

If you hold your shares in “street name,” you should contact your bank, broker or other nominee for instructions regarding how to change your vote or submit new voting instructions. You may also vote virtually at the Special Meeting with your 12-digit control number, or, if you did not obtain a 12-digit control number, by contacting your bank, broker or other nominee to obtain instructions on how to vote. Any adjournment of the Special Meeting for the purpose of soliciting additional proxies will allow stockholders who have already sent in their proxies to revoke them at any time prior to their use at the Special Meeting, as adjourned or postponed.

 

34

Abstentions

An abstention occurs when a stockholder attends a meeting, either virtually or by proxy, but abstains from voting. Abstentions will be included in the calculation of the number of shares represented at the Special Meeting for purposes of determining whether a quorum has been achieved. Abstaining from voting will have the same effect as a vote “AGAINST” the Merger Proposal, the Compensation Proposal and the Adjournment Proposal.

Adjournments and Postponements

Although it is not currently expected, subject to certain restrictions in the Merger Agreement, the Special Meeting may be adjourned or postponed, among other reasons, for the purpose of soliciting additional proxies. Under the Bylaws, Enhabit may postpone, reschedule or cancel any special meeting of stockholders. Under the Bylaws, any meeting of stockholders may be adjourned from time to time by the chairperson of the meeting. Notice need not be given of the adjourned meeting if the time and place, if any, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and may vote at such meeting are announced at the meeting at which the adjournment is taken.

If the Special Meeting is adjourned or postponed to solicit additional proxies, stockholders who have already submitted their proxies will be able to revoke them at any time prior to their use at the Special Meeting, as adjourned or postponed.

In the event that there is present or represented by proxy at the Special Meeting, sufficient favorable voting power to secure the vote of the stockholders necessary to adopt the Merger Agreement, we do not currently anticipate that we will adjourn or postpone the Special Meeting.

Board Recommendation

The Board, after considering the various factors more fully described under “The Merger—Recommendation of the Board of Directors and Reasons for the Merger” beginning on page 55 of this proxy statement, unanimously (i) determined that it is in the best interests of Enhabit and our stockholders, and declared it advisable, to enter into the Merger Agreement, (ii) approved the execution, delivery and performance of the Merger Agreement and the consummation of the transactions contemplated by the Merger Agreement, including the Merger, and (iii) resolved to recommend to our stockholders that they vote for the adoption of the Merger Agreement and directed that such matter be submitted to our stockholders for consideration at the Special Meeting.

The Board unanimously recommends that you vote “FOR” the Merger Proposal, “FOR” the Compensation Proposal, and “FOR” the Adjournment Proposal.

Solicitation of Proxies

The Board is soliciting your proxy, and we will bear the cost of the solicitation of proxies.

We have retained MacKenzie, a proxy solicitation firm, to solicit proxies in connection with the Special Meeting at a cost of approximately $25,000 plus expenses. We will also indemnify MacKenzie against losses arising out of its provisions of these services on our behalf. In addition, we may reimburse banks, brokers and other nominees representing beneficial owners of shares for their expenses in forwarding soliciting materials to such beneficial owners. Proxies may also be solicited by our directors, officers and employees, personally or by telephone, email, over the Internet or other means of communication. No additional compensation will be paid for such services.

Anticipated Date of Consummation of the Merger

We currently anticipate that the Merger will be consummated in the second quarter of 2026, assuming satisfaction or, to the extent permitted by applicable law, waiver of all of the conditions to the Merger. However,

 

35

the Merger is subject to various conditions, and it is possible, including as a result of factors outside the control of Enhabit and Parent, that the Merger will be consummated at a later time or not at all.

Appraisal Rights

If the Merger is consummated, holders of Common Stock who do not wish to accept the Merger Consideration are entitled to seek appraisal of their shares under Section 262 of the DGCL and, if all procedures described in Section 262 of the DGCL are strictly complied with, to receive payment in cash for the fair value of their shares exclusive of any element of value arising from the accomplishment or expectation of the Merger, as determined by the Delaware Court of Chancery, together with interest, if any, to be paid upon the amount determined to be the fair value. The “fair value” of shares as determined by the Delaware Court of Chancery may be more or less than, or the same as, the consideration that such stockholder may receive in the Merger. These rights are known as “appraisal rights.” This proxy statement serves as a notice of such appraisal rights pursuant to Section 262 of the DGCL.

Persons who exercise appraisal rights under Section 262 of the DGCL will not receive the consideration that they would otherwise be entitled to receive pursuant to the Merger Agreement. They will receive an amount determined to be the “fair value” of their shares following petition to, and an appraisal by, the Delaware Court of Chancery. Persons considering seeking appraisal of their shares should recognize that the fair value of their shares determined under Section 262 of the DGCL could be more than, the same as or less than the consideration they would otherwise be entitled to receive pursuant to the Merger Agreement. Strict compliance with the procedures set forth in Section 262 of the DGCL is required. Failure to comply strictly with all of the procedures set forth in Section 262 of the DGCL will result in the loss or waiver of appraisal rights. Consequently, and in view of the complexity of the provisions of Section 262 of the DGCL, stockholders wishing to exercise appraisal rights are urged to consult their legal and financial advisors before attempting to exercise such rights.

A holder of record of shares or a beneficial owner who (i) continuously holds or beneficially owns, as applicable, such shares through the Effective Time, (ii) has not consented to the Merger in writing, voted in favor of the Merger or otherwise withdrawn, lost or waived appraisal rights, (iii) strictly complies with the procedures under Section 262 of the DGCL, (iv) does not thereafter withdraw his, her or its demand for appraisal of such shares and (v) in the case of a beneficial owner, is a person who (a) reasonably identifies in his, her or its demand the holder of record of the shares for which the demand is made, (b) provides documentary evidence of such beneficial owner’s beneficial ownership and a statement that such documentary evidence is a true and correct copy of what it purports to be and (c) provides an address at which such beneficial owner consents to receive notices given by Enhabit and to be set forth on the Chancery List (as defined in the section titled “The Merger—Appraisal Rights” beginning on page 79 of this proxy statement), will be entitled to receive the fair value of his, her or its shares exclusive of any element of value arising from the accomplishment or expectation of the Merger, as determined by the Delaware Court of Chancery, together with interest, if any, to be paid upon the amount determined to be the fair value.

A copy of Section 262 of the DGCL may be accessed without subscription or cost at the following publicly available website: https://delcode.delaware.gov/title8/c001/sc09/index.html#262. The foregoing summary is not a complete statement of the law relating to appraisal rights and is qualified in its entirety by reference to Section 262 and any amendments thereto after the date of this proxy statement. Any person who desires to exercise his, her or its appraisal rights should review carefully Section 262 and is urged to consult his, her or its legal advisor before electing or attempting to exercise such rights. To the extent there are any inconsistencies between the foregoing summary, on the one hand, and Section 262, on the other hand, Section 262 will govern. For more information, please see the section titled “The Merger—Appraisal Rights” beginning on page 79 of this proxy statement.

 

36

Householding of Special Meeting Materials

Unless we have received contrary instructions, we or your bank, broker or other intermediary may send a single copy of this proxy statement to any household at which two or more stockholders reside if we believe the stockholders are members of the same family. Each stockholder in the household will continue to receive a separate proxy card. This process, known as “householding,” reduces the volume of duplicate information received at your household and helps to reduce our expenses.

If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate copy of our proxy statement, please notify your bank, broker or other intermediary or us. We will promptly deliver a separate copy of our proxy statement to any stockholder without charge upon written or verbal request. Direct your written request to our Corporate Secretary at 6688 N. Central Expressway, Suite 1300, Dallas, Texas 75206, or call us at 469-860-6061. Stockholders sharing an address that are receiving multiple copies of this proxy statement can request delivery of a single copy of the proxy materials by contacting their bank, broker or other intermediary or sending a written request to us at the address above.

Questions and Additional Information

If you have more questions about the Merger or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card or voting instructions, please contact our proxy solicitor:

MacKenzie Partners, Inc.

1407 Broadway, 27th Floor New York, New York 10018

(212) 929-5500 (Call Collect)

or

Call Toll-Free (800) 322-2885

Email: [email protected]

If your bank, broker or other nominee holds your shares, you should also call your bank, broker or other nominee for additional information.

 

37

THE MERGER

This discussion of the Merger does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, which is attached to this proxy statement as Annex A and incorporated by reference into this proxy statement. You should read the entire Merger Agreement carefully as it is the legal document that governs the Merger.

Certain Effects of the Merger on Enhabit

If the Merger Agreement is adopted by stockholders and the other conditions to the Closing are either satisfied or waived, Merger Sub will be merged with and into Enhabit, with Enhabit continuing as the Surviving Corporation and a wholly owned subsidiary of Parent.

The Common Stock is listed and traded on NYSE under the symbol “EHAB.” As a result of the Merger, Enhabit will cease to be a publicly traded company and will become a wholly owned subsidiary of Parent. We will cooperate with Parent to delist the Common Stock from NYSE and deregister the Common Stock under the Exchange Act following the Effective Time. Upon such delisting and deregistration, we will no longer be a publicly traded company and will no longer be required to file periodic reports with the SEC, in each case in accordance with applicable law, rules and regulations. If the Merger is consummated, you will not own any shares of the capital stock of either the Surviving Corporation or Parent.

Effect on Enhabit if the Merger Is Not Consummated

If the Merger Agreement is not adopted by the affirmative vote of the majority of the voting power of the issued and outstanding shares of Common Stock as of the close of business on the Record Date at the Special Meeting or if the Merger is not consummated for any other reason, stockholders will not receive any payment for their shares pursuant to the Merger Agreement. Instead, Enhabit will remain a public company, its Common Stock will continue to be listed and traded on NYSE and registered under the Exchange Act and Enhabit will continue to file periodic reports with the SEC.

Furthermore, if the Merger is not consummated, depending on the circumstances that caused the Merger not to be consummated, the price of the shares of Common Stock may decline significantly. If that were to occur, it is uncertain when, if ever, the price of the shares would return to the price at which the shares traded prior to the public announcement of the execution of the Merger Agreement on February 22, 2026 or as of the date of this proxy statement.

Accordingly, if the Merger is not consummated, there can be no assurance as to the effect of these risks and opportunities on the future value of your shares. If the Merger is not consummated, the Board will continue to evaluate and review our business, operations, assets, operating results, financial condition, prospects and business strategy, among other things, and make such changes as are deemed appropriate and continue to seek to enhance stockholder value. If the Merger Agreement is not adopted by stockholders or if the Merger is not consummated for any other reason, there can be no assurance that any other transaction acceptable to Enhabit will be offered or that our business, prospects or results of operations will not be adversely impacted.

In addition, upon termination of the Merger Agreement, under specified circumstances, Enhabit may be required to pay Parent the Company Termination Fee, as described under “The Merger Agreement—Company Termination Fee; Parent Termination Fee—Company Termination Fee” beginning on page 115 of this proxy statement.

Merger Consideration

At the Effective Time, except as otherwise expressly agreed to in writing after the date of the Merger Agreement and prior to the Effective Time by Parent and a holder of Common Stock, each share of Common

 

38

Stock issued and outstanding immediately prior to the Effective Time will be automatically cancelled and converted into the right to receive $13.80 in cash without interest. As of the Effective Time, all such shares of Common Stock will no longer be issued and outstanding and will be automatically cancelled and will cease to exist, and each holder of any such shares of Common Stock will cease to have any rights with respect thereto, except the right to receive the Merger Consideration.

At the Effective Time, each share of Common Stock held in the treasury of Enhabit or any of its subsidiaries or any owned by Parent or Merger Sub or any direct or indirect wholly owned subsidiary of Parent or Merger Sub immediately prior to the Effective Time will automatically be cancelled and will cease to exist and no consideration will be delivered in exchange therefor.

At the Effective Time, each share of common stock of Merger Sub issued and outstanding immediately prior to the Effective Time will automatically be converted into and become one fully paid, nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation with the same rights, powers and privileges as the shares so converted and will constitute the only outstanding shares of capital stock of the Surviving Corporation.

After the Merger is consummated, under the terms of the Merger Agreement, you will have the right to receive the Merger Consideration, but you will no longer have any rights as a Enhabit stockholder as a result of the Merger (except that of any holder exercising their appraisal rights granted under Section 262 of the DGCL), nor will you be entitled to receive any shares in Parent or the Surviving Corporation.

Each of the paying agent, the Surviving Corporation, Merger Sub and Parent will be entitled to deduct and withhold from any amounts payable pursuant to the Merger Agreement such amounts as are required to be deducted and withheld therefrom under applicable tax laws. If the paying agent, the Surviving Corporation, Merger Sub or Parent, as the case may be, so deducts and withholds amounts and timely and remits such amounts to the applicable governmental authority, such amounts will be treated for all purposes under the Merger Agreement as having been paid to the person to whom such amounts would otherwise have been paid.

Background of the Merger

The following chronology summarizes the key meetings and events that led to the signing of the Merger Agreement. This chronology does not purport to catalog every conversation of or among members of the Board, Enhabit’s representatives, Kinderhook’s representatives or other parties.

The Board and members of Enhabit’s management team (“Management”) regularly evaluate Enhabit’s operating performance, long-term strategy and capital structure, taking into consideration, among other factors, industry developments, market conditions, regulatory matters and developments, cost reduction strategies, reimbursement rates and investments in potential new growth opportunities. In connection with this ongoing review, the Board and Management periodically assess the continued operations of Enhabit on a standalone basis, as well as potential strategic alternatives and financing opportunities available to enhance and maximize value for Enhabit’s stockholders.

In August 2023, Enhabit executed an engagement letter with Goldman Sachs for Goldman Sachs to serve as financial advisor in connection with Enhabit’s exploration and evaluation of financial and strategic alternatives, including, among other things, a potential sale of Enhabit. Enhabit selected Goldman Sachs for such advisory role due to, among other reasons, it being an internationally recognized investment banking firm, its industry expertise and prior knowledge of Enhabit’s business given previous engagements of Goldman Sachs by Enhabit.

Also in August 2023, in light of various challenges facing Enhabit’s business and the receipt of an unsolicited outreach from a strategic party regarding a potential transaction, the Board, with the assistance of representatives of Goldman Sachs, formally initiated a review of strategic alternatives. Such review to consider a

 

39

wide range of options for Enhabit, including, among other things, a potential sale, merger or other strategic transaction, was publicly announced on August 23, 2023.

From August 2023 to May 2024, Enhabit, with the assistance of representatives of Goldman Sachs, conducted a thorough strategic review process involving 38 potential counterparties, including strategic buyers and financial sponsors, which included Party A, Party B, Party E and Party G as further discussed below in this section of this proxy statement titled “Background of the Merger.” Throughout the process, the Board met to discuss the process, potential counterparties and alternatives available to Enhabit to maximize value for its stockholders.

As part of such process, Enhabit entered into confidentiality agreements with four potential counterparties, including on September 29, 2023, with a financial sponsor (referred to herein as “Party A”) and on October 2, 2023, with a strategic counterparty (referred to herein as “Party B”). These confidentiality agreements, as well as the other confidentiality agreements discussed below in this section of this proxy statement titled “Background of the Merger” (unless otherwise noted), contained customary standstill provisions, with restrictions preventing the applicable counterparty from requesting that the Board waive such standstill provisions, although such provisions provided that the standstill restrictions would automatically terminate upon Enhabit’s entry into a definitive agreement for the sale of Enhabit.

Although the four potential counterparties, consisting of two financial sponsors and two strategic acquirors, provided preliminary indications of interest during such review of strategic alternatives, none ultimately submitted formal proposals for a transaction. The Board ultimately unanimously determined that the best way to maximize stockholder value was to continue to execute on Enhabit’s strategic plan as an independent, public company.

From time to time between August 2024 and the entry into the Merger Agreement with Kinderhook on February 22, 2026, various stockholders of Enhabit contacted Enhabit to encourage it to explore strategic alternatives. At times, certain of such stockholders indicated an intention to make their requests public. Enhabit believes that some of its stockholders, without input from the Board or Management or advisors, encouraged potential counterparties to consider exploring a strategic transaction with Enhabit.

On August 23, 2024, Party A and Party B jointly and on an unsolicited basis contacted representatives of Goldman Sachs to discuss a potential investment transaction involving such parties and Enhabit. The Board was notified of this outreach and authorized representatives of Goldman Sachs to engage and coordinate meetings with Management, and, subject to Party A’s and Party B’s execution of a confidentiality agreement, the sharing of information.

On September 25, 2024, representatives of Party A and Party B and members of Management met to discuss Party A’s and Party B’s interest in potentially pursuing a transaction with Enhabit.

On October 7, 2024, Enhabit, Party A and Party B executed a joint confidentiality agreement given that Party A and Party B had indicated a desire to explore a potential joint strategic investment with Enhabit. This joint confidentiality agreement did not contain a standstill provision, but each of Party A and Party B remained subject to the standstill provisions in their respective previously executed confidentiality agreements.

On November 6, 2024, a financial sponsor (referred to herein as “Party C”) contacted representatives of Goldman Sachs regarding a potential transaction with Enhabit. The Board was notified of this outreach and authorized representatives of Goldman Sachs to engage and coordinate meetings with Management, and, subject Party C’s execution of a confidentiality agreement, the sharing of information.

On November 15, 2024, a strategic counterparty (referred to herein as “Party D”) contacted representatives of Goldman Sachs seeking an introduction to Enhabit in connection with its consideration of a potential

 

40

transaction. The Board was notified of this outreach and authorized representatives of Goldman Sachs to engage with Party D and coordinate meetings with Management, and, subject to Party D’s execution of a confidentiality agreement, the sharing of information.

On November 22, 2024, the Board held a special meeting, with members of Management present, at which it, among other things, received an update regarding the outreach from Party A and Party B. At this meeting, the Board discussed a potential strategic investment involving Party A and Party B and potential alternatives available to Enhabit to maximize value for its stockholders. The Board also received an update from the general counsel of Enhabit regarding the status of the ongoing litigation in Delaware related to breaches of fiduciary duties by certain individuals during the time period that they had served as senior officers of the home health and hospice division of Encompass Health Corporation (“Encompass”), from which Enhabit was spun out on July 1, 2022 (the “Delaware Litigation”).

On December 4, 2024, Enhabit publicly announced that the Delaware Court of Chancery had awarded damages and other relief to Enhabit and Encompass in the Delaware Litigation.

On December 18, 2024, members of Management met virtually with representatives of Party D regarding Enhabit’s business. After such date, Party D and representatives of Goldman Sachs on behalf of Enhabit had follow-up discussions virtually.

On December 20, 2024, Kinderhook contacted representatives of Goldman Sachs to discuss a potential transaction with Enhabit. The Board was notified of this outreach and authorized representatives of Goldman Sachs to engage with Kinderhook and coordinate meetings with Management, and, subject to Kinderhook’s execution of a confidentiality agreement, the sharing of information.

On January 3, 2025, Enhabit and Kinderhook executed a confidentiality agreement.

On January 8, 2025, members of Management met in person with representatives of Party A regarding Enhabit’s business.

On January 15, 2025, members of Management met in person with representatives of Kinderhook regarding Enhabit’s business. Throughout 2025, Management, representatives of Goldman Sachs and Kinderhook had discussions regarding Enhabit’s business and a potential transaction.

On January 17, 2025, Enhabit and Party D executed a confidentiality agreement, and Party D received access to a virtual data room maintained by Enhabit.

On January 30, 2025, representatives of Goldman Sachs, on behalf of Enhabit, received a non-binding indication of interest from Kinderhook to acquire Enhabit for $9.00 per share and a request for Enhabit to engage in discussions on an exclusive basis with Kinderhook. This indication of interest stated that the proposal would expire on March 3, 2025. The indication of interest was provided to the Board. Enhabit’s closing stock price as of January 29, 2025 was $8.40.

On February 18, 2025 and February 19, 2025, the Board held a regularly scheduled meeting, with members of Management and representatives of Goldman Sachs present, at which it conducted routine business. During the meeting, members of Management presented preliminary draft financial projections for fiscal years 2025 through 2029 (the “February 2025 Projections”). The February 2025 Projections were extrapolated for fiscal years 2030 through 2034 to assist the Board in its consideration of strategic alternatives, utilizing Management’s estimates of growth rates and margins (collectively, the “2025 10-Year Model”). The February 2025 Projections were prepared in the ordinary course to assist the Board in reviewing Enhabit’s business and its consideration of strategic alternatives. During the Board meeting, representatives of Goldman Sachs provided an overview of the home health and hospice industries, research analyst perspectives of Enhabit, and preliminary perspectives on

 

41

Management’s February 2025 Projections. With input from representatives of Goldman Sachs, the Board also discussed Party A’s, Party B’s, Party D’s and Kinderhook’s interest in acquiring Enhabit and the status of discussions relating thereto. The Board directed Management and representatives of Goldman Sachs to continue to engage with these parties in an effort to determine whether a transaction with any of such parties was viable and could maximize value for Enhabit’s stockholders. The Board also received an update from the general counsel of Enhabit regarding the status of the Delaware Litigation.

On March 6, 2025, Enhabit reported its financial results for the 2024 fiscal year.

On March 11, 2025, Enhabit and a portfolio company of a financial sponsor (referred to herein as “Party E”) executed a confidentiality agreement for a one-year term, containing a standstill provision that did not by its terms terminate upon Enhabit’s entry into a definitive agreement for the sale of Enhabit. Party E had previously explored a potential transaction with Enhabit as part of Enhabit’s strategic alternatives review that ended in May 2024.

On March 19, 2025, members of Management met in person with representatives of Party E regarding Enhabit’s business. As further discussed below, during 2025, representatives of Enhabit and representatives of Party E had several meetings and discussions to explore a potential strategic transaction.

On March 20, 2025, members of Management met virtually with representatives of Party C regarding Enhabit’s business.

In March 2025, Enhabit responded to diligence requests and provided diligence materials to Party D. Thereafter, Party D did not engage further, conducted no further diligence and did not submit any proposal for a potential transaction.

On April 18, 2025, Enhabit and Party C executed a confidentiality agreement after Party C contacted representatives of Goldman Sachs to discuss its continued interest in Enhabit.

On April 24, 2025, representatives of Goldman Sachs, on behalf of Enhabit, received a non-binding indication of interest from Party E to acquire Enhabit for $11.00 per share. The indication of interest was provided to the Board. Enhabit’s closing stock price as of April 23, 2025 was $7.52.

On April 28, 2025, the Board held a special meeting, with members of Management and representatives of Goldman Sachs present, to discuss, among other things, Party E’s non-binding indication of interest. Following the discussion, the Board directed representatives of Goldman Sachs to respond to Party E and propose a period of limited and focused due diligence, after which Enhabit would expect Party E’s offer to be increased, given the Board’s view that Party E’s existing offer provided insufficient value to Enhabit’s stockholders as compared to the standalone value of Enhabit.

On May 2, 2025, in order for Party E to explore a potential transaction with Enhabit jointly with Party E’s portfolio company that had entered into a confidentiality agreement on March 11, 2025, Enhabit and Party E executed a confidentiality agreement.

Between May 2, 2025 and September 15, 2025, Party E conducted due diligence on Enhabit’s business, including by participating in several meetings with members of Management, and engaged in discussions regarding potential actions to mitigate the impact of the then-proposed Centers for Medicare & Medicaid Services (“CMS”) payment policies and reimbursement rates for home health providers, which reflected a material reduction over prior periods (the “CMS Reimbursement Rates”).

On May 5, 2025 and May 6, 2025, the Board held a regularly scheduled meeting with members of Management and representatives of Goldman Sachs present, at which meeting the Board conducted routine business, and representatives of Goldman Sachs updated the Board on the status of discussions and diligence

 

42

ongoing with Party E given its recent indication of interest as well as various strategic alternatives available to Enhabit. The Board directed Management and representatives of Goldman Sachs to continue to engage with Party E on focused due diligence with an expectation that Party E would provide an improved offer for the Board to consider following such additional diligence. The Board also received an update regarding the status of the Delaware Litigation from the general counsel of Enhabit and a presentation regarding the claims to be asserted against former officers and related parties in Texas (the “Texas Litigation” and, together with the Delaware Litigation, the “Delaware and Texas Litigations”), both given by the general counsel of Enhabit.

On May 8, 2025, Enhabit reported its financial results for the first quarter of 2025.

On May 27, 2025, Party C was granted access to the virtual data room maintained by Enhabit.

On June 12, 2025, Party C communicated to representatives of Goldman Sachs that it intended to make an offer to acquire Enhabit for a per share price of approximately $12.00.

On June 17, 2025, the Board held a special meeting with members of Management and representatives of Goldman Sachs present, in which Goldman Sachs presented preliminary and illustrative financial analyses with respect to Enhabit based on the 2025 10-Year Model, which had been previously reviewed by the Board, and provided updates on the status of discussions with Party C and Party E. Representatives of Goldman Sachs relayed that Party C had indicated that it intended to submit an offer of approximately $12.00 per share and that Party E had indicated that it would submit an offer of approximately $12.50 per share following further due diligence. The Board directed Management and representatives of Goldman Sachs to continue to engage with these parties in an effort to determine whether a transaction with any of such parties could maximize value for Enhabit’s stockholders. The Board also received an update from the general counsel of Enhabit regarding the status of the Delaware and Texas Litigations.

Thereafter, no formal offer was received from Party C, and it did not engage further with Enhabit.

On June 30, 2025, CMS released preliminary CMS Reimbursement Rates, which investors and analysts generally viewed as unfavorable to Enhabit due, in part, to lower reimbursement rates that would be available to Enhabit as a result of the reduction in such rates. Enhabit’s closing stock price on June 27, 2025 was $9.56, and the closing stock price on July 1, 2025 was $7.88. Over the next several weeks, Enhabit’s stock price decreased to a 52-week low of $6.47 on August 4, 2025.

On July 10, 2025, the Board held a special meeting, with members of Management and representatives of Goldman Sachs present, to discuss preliminary valuation considerations and updates on discussions with Party E. The Board also discussed the uncertainty around the preliminary CMS Reimbursement Rates, including the potential impact such rates would have on Party E’s willingness to propose a value for Enhabit that would maximize value for Enhabit’s stockholders.

On July 21, 2025, representatives of Goldman Sachs, on behalf of Enhabit, received a non-binding indication of interest from Kinderhook to acquire Enhabit for $8.75 per share and a request for Enhabit to engage in discussions on an exclusive basis with Kinderhook, which was provided to the Board. The indication of interest stated that the proposal would expire on July 31, 2025. Following receipt, and upon the direction of the Board, members of Management and representatives of Goldman Sachs continued to engage with Kinderhook in an effort to determine whether a transaction with Kinderhook could maximize value for Enhabit’s stockholders. Enhabit’s closing stock price as of July 18, 2025 was $6.75. Following receipt of the July 21 proposal, members of the Board engaged in communications, and directed representatives of Goldman Sachs to reject such proposal, given the view that such offer did not provide sufficient value for stockholders.

On July 25, 2025, at the direction of the Board, representatives of Goldman Sachs communicated to Kinderhook that the Board had rejected its proposal and that Kinderhook would need to propose a higher value in order for Enhabit to engage in discussions with Kinderhook regarding a potential transaction.

 

43

On August 5, 2025, the Board held a regularly scheduled meeting at which it conducted routine business and, among other things, the Board directed a sub-group of members to assist Management in addressing time-sensitive communications with, and responses to, potential counterparties. Thereafter, members of Management and the sub-group met multiple times on an informal basis to discuss matters relating to engagement with various potential counterparties.

On August 7, 2025, Enhabit reported its financial results for the second quarter of 2025.

On August 12, 2025, members of Management met virtually with representatives of Party E regarding the preliminary CMS Reimbursement Rates and the impact such rates could have on the business of Enhabit were they to become final, which finalization was expected to occur in late November 2026.

On August 13, 2025, a financial sponsor (referred to herein as “Party F”) indicated to representatives of Goldman Sachs that it was interested in exploring a transaction with Enhabit.

Also on August 13, 2025, Enhabit and Party F executed a confidentiality agreement, and, on August 14, 2025, Party F received access to the virtual data room maintained by Enhabit.

On August 26, 2025, representatives of Goldman Sachs, on behalf of Enhabit, received an updated non-binding indication of interest from Kinderhook to acquire Enhabit for $10.00 per share and a request for Enhabit to engage in discussions on an exclusive basis with Kinderhook. The indication of interest stated that the proposal would expire on September 15, 2025. The indication of interest was provided to the Board. Enhabit’s closing stock price as of August 25, 2025 was $8.07.

On August 28, 2025, members of Management met in person with representatives of Party F regarding Enhabit’s business. During the remainder of 2025 through early 2026, Party F engaged in discussions with members of Management and representatives of Goldman Sachs regarding Enhabit’s business and a potential transaction.

On September 1, 2025, representatives of Goldman Sachs, on behalf of Enhabit, received a non-binding indication of interest from Party F to acquire Enhabit for $10.25 per share. The indication of interest was provided to the Board. Enhabit’s closing stock price as of August 29, 2025 was $7.88.

On September 9, 2025, following discussions with representatives of Goldman Sachs on behalf of Enhabit, Party F revised its prior non-binding indication of interest to increase its proposal to $11.25 per share. The updated indication of interest was provided to the Board. Enhabit’s closing stock price as of September 8, 2025 was $7.70.

On September 15, 2025, representatives of Goldman Sachs, on behalf of Enhabit, received a revised non-binding indication of interest from Party E to acquire Enhabit for $11.50 per share. The indication of interest was provided to the Board. Enhabit’s closing stock price as of September 12, 2025 was $7.87.

On September 16, 2025, the Board held a regularly scheduled meeting with members of Management and representatives of Goldman Sachs present to discuss market updates, Goldman Sachs’ preliminary and illustrative financial analyses with respect to Enhabit based on the 2025 10-Year Model and updates on discussions with Kinderhook, Party E and Party F. The Board also discussed various other strategic and financial alternatives potentially available to Enhabit that could maximize value for its stockholders. The Board also discussed the potential impact of the anticipated final CMS Reimbursement Rates on Enhabit generally and various potential strategic alternatives related to the CMS Reimbursement Rates. Following such discussion, the Board directed representatives of Goldman Sachs to contact each of Kinderhook, Party E and Party F and provide additional value-informing due diligence materials while awaiting the announcement of the final CMS Reimbursement Rates, which was expected to provide more certainty regarding Enhabit’s expected future

 

44

performance. The Board directed representatives of Goldman Sachs to provide guidance to each such potential counterparty that it would need to raise its proposed price in order for the Board to consider moving forward with negotiating a potential transaction. Enhabit’s general counsel also provided an update to the Board regarding the status of the Delaware and Texas Litigations. Also at the meeting, the Board discussed engaging Jones Day to represent it in its review of potential strategic alternatives.

Following the September 16, 2025 Board meeting, Management and representatives of Goldman Sachs provided additional diligence materials to Kinderhook, Party E and Party F.

On September 16, 2025, Enhabit engaged Jones Day to represent it in connection with its review of potential strategic alternatives, and Jones Day confirmed there were no legal conflicts of interest that would affect its ability to represent Enhabit in such matter, including that Kinderhook was not a client of Jones Day.

On November 3, 2025 and November 4, 2025, the Board held a regularly scheduled meeting with members of Management present. During the course of such meeting, the Board reviewed various strategic paths available to Enhabit to maximize value for Enhabit’s stockholders, including pursuing various potential initiatives for organic and inorganic growth. The Board also discussed the potential impact of the anticipated final CMS Reimbursement Rates on Enhabit generally and various potential strategic alternatives. The Board also received an update from Enhabit’s general counsel regarding the status of the Delaware and Texas Litigations.

On November 5, 2025, Enhabit reported its financial results for the third quarter of 2025.

On November 28, 2025, CMS released the final CMS Reimbursement Rates, which were viewed as more favorable to Enhabit than the preliminary rates. Enhabit’s closing stock price on November 28, 2025 was $8.94, and the closing stock price on December 1, 2025 was $9.69.

On December 1, 2025, in light of the final CMS Reimbursement Rates, Party E, Party F and Kinderhook contacted representatives of Goldman Sachs regarding a potential transaction involving Enhabit, and Party E indicated it would be updating its valuation of Enhabit and submitting a revised indication of interest.

On December 7, 2025, a special meeting of the Board was held at which members of Management were present. During the meeting, among other things, the Board reviewed Management’s preliminary draft financial projections for fiscal years 2026 through 2030 (the “December 2025 Projections”). After considering various assumptions, including the potential impact of the final CMS Reimbursement Rates that had been reflected in the December 2025 Projections, the Board authorized the sharing of the December 2025 Projections with Party E, Party F and Kinderhook. Thereafter, such information was shared with Party E and Party F and, following Kinderhook’s entry into an amendment to its existing confidentiality agreement to extend the term thereof through September 3, 2026, with Kinderhook. The December 2025 Projections were extrapolated for fiscal years 2031 through 2034 utilizing Management’s estimates of growth rates and margins, and later through 2035. Such December 2025 Projections with the extrapolations were provided to representatives of Goldman Sachs for purposes of its preliminary and illustrative financial analyses.

On December 8, 2025, representatives of Goldman Sachs, on behalf of Enhabit, received a non-binding indication of interest from Kinderhook to acquire Enhabit for $12.00 per share and a request for Enhabit to engage in discussions on an exclusive basis with Kinderhook. The indication of interest was provided to the Board. Enhabit’s closing stock price as of December 5, 2025 was $9.33.

On December 11, 2025, Enhabit and Kinderhook entered into an amendment to extend the term of their existing confidentiality agreement through September 3, 2026.

On December 12, 2025, Kinderhook was granted access to the virtual data room maintained by Enhabit.

 

45

On December 15, 2025, representatives of Goldman Sachs, on behalf of Enhabit, received a non-binding indication of interest from Party F to acquire Enhabit for $12.25 per share. The indication of interest was provided to the Board. Enhabit’s closing stock price as of December 12, 2025 was $9.68.

On December 16, 2025, the Board held a regularly scheduled meeting with members of Management, representatives of Goldman Sachs and representatives of Jones Day, Enhabit’s outside legal counsel, present. Representatives of Jones Day reviewed with the Board legal considerations that would be relevant in its consideration of a potential transaction involving Enhabit, as well as the directors’ fiduciary duties under Delaware law relevant to considering any such transaction or other potential strategic alternative, including the continued pursuit of Enhabit’s standalone plan. During the Board meeting, representatives of Goldman Sachs reviewed with the Board the final CMS Reimbursement Rates, market updates, preliminary perspectives on the December 2025 Projections, as extrapolated for fiscal years 2030 through 2034 (subsequently revised to be extrapolated for fiscal years 2031 through 2035), preliminary and illustrative financial analyses based on such preliminary draft financial projections and updates on discussions with Party E, Party F and Kinderhook. Following discussion, the Board determined that, based on, among other things, the proposals received to date, the final CMS Reimbursement Rates and the Board’s assessment of the standalone value of Enhabit, it would not be advisable to engage in a strategic transaction at the values indicated by Party F and Kinderhook, but that the Board would continue to consider all alternatives available to Enhabit to maximize value for Enhabit’s stockholders. The Board directed representatives of Goldman Sachs to invite Party E, Party F and Kinderhook to conduct further diligence with guidance to each that it would need to raise its proposed price in order for the Board to consider moving forward with negotiating a potential transaction. During such meeting, the Board further considered the December 2025 Projections, and the Board was provided with an update from the general counsel of Enhabit regarding developments with respect to, and the status of, the Delaware and Texas Litigations.

Following the December 16, 2025 meeting of the Board, representatives of Party E, Party F and Kinderhook participated in meetings with members of Management, as authorized by the Board.

On December 17, 2025, representatives of Goldman Sachs, on behalf of Enhabit, received a non-binding indication of interest from Party E to acquire Enhabit for $13.00 per share. Such indication of interest was provided to the Board. Enhabit’s closing stock price as of December 16, 2025 was $9.61.

On January 5, 2026, members of Management met in person with representatives of Party F to discuss a potential transaction and Enhabit’s business. Following this meeting, and until Party F informed representatives of Goldman Sachs on January 21, 2026 that it had ceased to explore the opportunity to acquire Enhabit, representatives of Enhabit, representatives of Goldman Sachs and representatives of Party F had several meetings and discussions regarding Enhabit’s business and a potential transaction.

On January 6, 2026, after Party A expressed an interest in exploring a potential transaction with Enhabit to representatives of Goldman Sachs in December 2025, Enhabit and Party A entered into a new confidentiality agreement due to the expiration of the previous confidentiality agreement entered into between Enhabit and Party A, and, on January 8, 2026, Party A was granted access to the virtual data room maintained by Enhabit.

On January 8, 2026, members of Management met in person with representatives of Kinderhook to discuss a potential transaction and Enhabit’s business. Following this meeting until the execution of the Merger Agreement, Management, representatives of Enhabit, representatives of Goldman Sachs and representatives of Kinderhook had several meetings and discussions regarding Enhabit’s business and a potential transaction.

On January 13, 2026, following discussions among the Board, Management and representatives of Goldman Sachs and Jones Day, and, given the interest expressed by each of Party A, Party E, Party F and Kinderhook and the desire to provide such parties with the ability to pursue a potential transaction on a comparable timeline, representatives of Goldman Sachs sent a letter to each of Party A, Party E, Party F and Kinderhook requesting that each party provide updated indications of interest and a markup of a draft merger agreement to be prepared by Jones Day and provided in the virtual data room maintained by Enhabit by January 27, 2026.

 

46

On January 16, 2026, representatives of Goldman Sachs, on behalf of Enhabit, received a non-binding indication of interest from Party F to acquire Enhabit for $12.50 per share. Party F’s indication of interest also included a draft merger agreement prepared by Party F’s counsel, which included (a) a go-shop provision that would allow Enhabit to solicit additional acquisition proposals for 30 days following signing, (b) a termination fee equal to 2% of the equity value of the transaction if Enhabit were to terminate the merger agreement to enter into a superior proposal during the go-shop period, and (c) a termination fee equal to 3.75% of the equity value of the transaction if Enhabit were to terminate the merger agreement to enter into a superior proposal following the go-shop period and in connection with other customary termination events. The indication of interest noted that it was Party F’s best and final offer and that Party F would not be willing to move forward with a potential transaction unless Enhabit and Party F entered into the merger agreement by January 20, 2026. Party F also expressed that it would not participate in any process for a transaction with Enhabit beyond January 20, 2026. The indication of interest and merger agreement were provided to the Board. Enhabit’s closing stock price as of January 15, 2026 was $10.89.

On January 19, 2026, a draft merger agreement, prepared by Jones Day, in consultation with Management, was provided to Party A, Party E and Kinderhook in the virtual data room maintained by Enhabit.

Also on January 19, 2026, the Board held a special meeting with members of Management and representatives of Goldman Sachs and Jones Day present. The Board discussed the indications of interest received from Kinderhook at $12.00 per share, from Party E at $13.00 per share and from Party F at $12.50 per share. Representatives of Goldman Sachs discussed the key terms of Party F’s offer, including Party F’s financing plans and its unwillingness to participate in any process for the transaction with Enhabit beyond January 20, 2026. Representatives of Jones Day then discussed the key terms of the transaction documents provided by Party F, including, among other things, the proposed financing terms, the approach to antitrust matters, the Board’s ability to seek and entertain superior proposals and other conditions of the proposal. The Board and its advisors also noted that Party F’s proposal would likely preclude Enhabit from pursuing a transaction with Kinderhook, Party E or any other potentially interested counterparty prior to the execution of a merger agreement with Party F that could potentially deliver additional value to Enhabit’s stockholders, the accelerated timeline contemplated by Party F’s proposal, the value of Party F’s proposal (including as compared to the potential standalone value of Enhabit) and the fact that Party F’s revised proposal did not attempt to take into consideration any potential value of the Delaware and Texas Litigations. The Board also received an update from Enhabit’s general counsel regarding the status of the Delaware and Texas Litigations and the settlement of the plaintiffs’ claims for attorney’s fees and mitigation damages in the Delaware Litigation. Following discussion, the Board directed representatives of Goldman Sachs to inform Party F that it would need to increase its offer to at least $13.00 per share and provide for an amount to address the value for the Delaware and Texas Litigations, potentially through a contingent value right (“CVR”), increase the length of the go-shop period and reduce the termination fee payable by Enhabit upon termination of the merger agreement to allow Enhabit to enter into a superior proposal and upon other customary termination events.

On January 19, 2026 following the meeting, representatives of Goldman Sachs conveyed the Board’s direction to Party F. Thereafter, Party F informed representatives of Goldman Sachs that it was willing to increase its offer to $13.00, revise the go-shop provision so that Enhabit could solicit additional acquisition proposals for 40 days following signing and decrease the termination fee in the event that Enhabit were to terminate the merger agreement to enter into a superior proposal during the go-shop period to 1.7% of the equity value of the transaction, but that it would not include a CVR or other additional value in respect of the Delaware and Texas Litigations.

On January 20, 2026, Party F informed representatives of Goldman Sachs that it was withdrawing from the process because it was not willing to participate in a competitive process and would not provide a CVR or other additional consideration for any potential value of the Delaware and Texas Litigations and that its proposal was its best and final offer.

 

47

Also on January 20, 2026, members of Management met virtually with representatives of Party A to discuss a potential transaction and Enhabit’s business. Following this meeting and until Party A ceased to explore the opportunity to acquire Enhabit on January 28, 2026, members of Management, representatives of Enhabit, representatives of Goldman Sachs and representatives of Party A had meetings and discussions regarding Enhabit’s business and a potential transaction. Party A did not ultimately submit a revised proposal.

Also on January 20, 2026, Enhabit and Encompass entered into a settlement agreement with respect to certain claims and certain parties in the Delaware Litigation, which provided for a payment of $43.1 million by February 3, 2026, which was to be split substantially equally between Enhabit and Encompass, in full satisfaction of their claims for attorneys’ fees and mitigation damages in the Delaware Litigation.

On January 21, 2026, representatives of Goldman Sachs, on behalf of Enhabit, received a non-binding indication of interest from Kinderhook to acquire Enhabit for $12.00 per share. Kinderhook’s indication of interest included a draft merger agreement (the “Merger Agreement”) prepared by Kirkland & Ellis LLP, Kinderhook’s outside legal counsel (“K&E”), which was in a different form than the Jones Day draft provided to Kinderhook in the virtual data room. The indication of interest was also submitted with a proposed equity commitment letter and limited guarantee but did not separately ascribe any value to the Delaware and Texas Litigations. The indication of interest, the Merger Agreement and accompanying financing documentation were provided to the Board. Enhabit’s closing stock price as of January 20, 2026 was $10.43.

Also on January 21, 2026, members of Management met virtually with representatives of Party E to discuss a potential transaction and Enhabit’s business. Following this meeting and until Party E ceased to explore the opportunity to acquire Enhabit on February 9, 2026, members of Management, representatives of Enhabit, representatives of Goldman Sachs and representatives of Party E had several meetings and discussions regarding Enhabit’s business and a potential transaction.

On January 23, 2026, the Board held a special meeting with members of Management and representatives of Goldman Sachs and Jones Day. Representatives of Wachtell Lipton Rosen & Katz, which represents Enhabit in the Delaware Litigation; Sayles Law Firm, which represents Enhabit in the Texas Litigation; and Bradley Arant Boult Cummings LLP (“Bradley”), which represents Enhabit in the Delaware and Texas Litigations, also attended a portion of the meeting and presented to the Board regarding the potential value of the remedies awarded in the Delaware Litigation and the damages remedies being pursued in the Texas Litigation.

Also during the January 23, 2026 meeting of the Board, representatives of Goldman Sachs provided an update on the status and key financial terms of Kinderhook’s offer, including Kinderhook’s financing plans. Representatives of Jones Day then reviewed the key legal terms of the transaction documents proposed by Kinderhook, including (a) the proposed financing terms (including the draft equity commitment letter and limited guarantee), (b) the approach to antitrust and other regulatory matters, (c) that Kinderhook had indicated that it was amenable to a go-shop provision that would allow Enhabit to solicit additional acquisition proposals for 30 days following signing if it were able to preempt a process involving other potential counterparties, (d) a termination fee equal to 2% of the equity value of the transaction if Enhabit were to terminate the Merger Agreement to enter into a Superior Proposal during the go-shop period, (e) a termination fee equal to 3.9% of the equity value of the transaction if Enhabit were to terminate the Merger Agreement to enter into a Superior Proposal following the go-shop period or if the Merger Agreement terminated as a result of Enhabit’s breach of the no-shop provisions, (f) a termination fee equal to 4.5% of the equity value of the transaction payable by Kinderhook upon certain termination events relating to its failure to consummate the transaction, (g) certain proposed termination rights of Kinderhook, and (h) that Enhabit’s named executive officers would enter into a voting and support agreement. It was also noted that the indication of interest did not separately address, including through a CVR, any potential value associated with the Delaware and Texas Litigations or the settlement payment that Enhabit expected to receive by February 3, 2026. Following discussion, the Board determined that Kinderhook’s offer did not provide sufficient value for stockholders and directed representatives of Goldman Sachs to convey to Kinderhook that it would need to increase its offer to address value for the

 

48

Delaware and Texas Litigations, potentially through a CVR, which Kinderhook had indicated to representatives of Goldman Sachs that it would be potentially willing to consider. The representatives of Jones Day also again reviewed legal considerations and fiduciary duties relevant to considering various alternatives for maximizing value for Enhabit’s stockholders.

Also during the January 23, 2026 meeting of the Board, the Board and members of Management further discussed the Delaware and Texas Litigations, and the Board directed a sub-group of members of the Board to review whether a specific value for the potential recoveries in the Delaware and Texas Litigations was determinable with any degree of certainty.

Following the January 23, 2026 Board meeting, representatives of Goldman Sachs conveyed the Board’s determination to Kinderhook.

On January 25, 2026, representatives of Goldman Sachs, on behalf of Enhabit, received a non-binding indication of interest from Party E to acquire Enhabit for $13.50 per share. Party E’s indication of interest did not include a markup to Jones Day’s draft merger agreement. The indication of interest also did not separately ascribe any value to the Delaware and Texas Litigations, but noted that Party E would be amenable to a CVR. The indication of interest was provided to the Board. Enhabit’s closing stock price as of January 23, 2026 was $10.79.

On January 28, 2026, with input from Management, Jones Day delivered a revised draft of the Merger Agreement to Kinderhook’s counsel, K&E. Key revisions in the draft included (a) the inclusion of a CVR, (b) the addition of a go-shop provision that would permit Enhabit to solicit additional acquisition proposals for 40 days following signing, (c) the deletion of certain rights of Kinderhook to terminate the Merger Agreement, (d) a termination fee equal to 1.5% of the equity value of the transaction payable by Enhabit if Enhabit were to terminate the Merger Agreement to enter into a Superior Proposal during the go-shop period, (e) a termination fee equal to 3.5% of the equity value of the transaction payable by Enhabit upon certain other termination events, (f) a termination fee equal to 6% of the equity value of the transaction payable by Kinderhook upon certain termination events relating to its failure to consummate the transaction, and (g) the deletion of the requirement for certain officers of Enhabit to enter into a voting and support agreement. Between January 28, 2026 and the entry into the Merger Agreement on February 22, 2026, representatives of Jones Day and K&E exchanged drafts of the Merger Agreement and various other ancillary transaction documents (including the equity commitment letter, limited guarantee and a later provided debt commitment letter) and had discussions regarding the same. The key issues negotiated and resolved in the draft Merger Agreement included the size of the termination fee payable by Enhabit, the circumstances under which it was payable, the size of the termination fee payable by Kinderhook, the removal of the go-shop provision, the parties’ obligations to seek regulatory approvals for the transaction as conditions to closing, the circumstances in which the parties could terminate the Merger Agreement, the entry into the voting and support agreement by Enhabit’s named executive officers and the removal of a CVR in exchange for additional value payable to Enhabit’s stockholders (for more information about the Merger Agreement, please see the section of this proxy statement titled “The Merger Agreement”).

Later on January 28, 2026, Jones Day sent K&E, and representatives of Goldman Sachs sent Party E, a proposed term sheet outlining the proposed terms of a CVR related to the Delaware and Texas Litigations, including, among other things, the proposed allocation of proceeds, funding obligations, management of the Delaware and Texas Litigations following closing and the term of the CVR. From January 28, 2026 until February 18, 2026, Jones Day and K&E exchanged drafts of the term sheet for the CVR. The key issues negotiated included the allocation of proceeds, funding obligations, management of the Delaware and Texas Litigations following closing and the term of the CVR.

On January 30, 2026, the Board held a special meeting with members of Management and representatives of Goldman Sachs and Jones Day present. Representatives of Goldman Sachs provided an update on the negotiations with Kinderhook and Party E, noting, among other things, that Kinderhook and Party E were

 

49

continuing to conduct due diligence and evaluate a potential transaction. Representatives of Goldman Sachs also discussed the market’s reaction to the final CMS Reimbursement Rates and market impact for Enhabit, including, among other things, impact with respect to the potential alternatives available to Enhabit, including a potential transaction involving Kinderhook or Party E. Enhabit’s general counsel and the sub-group of Board members that had studied whether a value could reasonably be determined with respect to the Delaware and Texas Litigations discussed updates regarding the Delaware and Texas Litigations, including various risks and uncertainties as to the amount of such recoveries and the timing thereof, to the extent such recoveries ultimately occurred. The preliminary consensus reached by such sub-group of the Board was that, given the variables, no specific value could reasonably be ascribed to such potential recoveries. The representatives of Jones Day also refreshed the Board regarding legal considerations and fiduciary duties relevant to considering various alternatives for maximizing value for Enhabit’s stockholders. Following discussion, the Board directed Management and representatives of Goldman Sachs and Jones Day to continue engaging with Kinderhook and Party E on negotiations, the transaction documents and due diligence.

On January 31, 2026, representatives of Goldman Sachs, on behalf of Enhabit, received an updated non-binding indication of interest from Kinderhook to acquire Enhabit for $12.50 per share plus a CVR of up to $1.50 per share, pursuant to which (a) Enhabit’s stockholders would receive one-thirds of the net proceeds received in the Delaware and Texas Litigations and Kinderhook would retain the remaining two-thirds, and (b) the CVR would terminate upon the earlier of five years from the consummation of a transaction and a sale of Enhabit by Kinderhook. The updated indication of interest was provided to the Board. Enhabit’s closing stock price as of January 20, 2026 was $10.63.

On February 2, 2025, members of Management met with representatives of Kinderhook and K&E to discuss various due diligence matters.

On February 4, 2026, Enhabit and Party E entered into a clean team agreement in order to provide to Party E’s advisors with information that could be competitively sensitive. On that day, members of Management also held in-person meetings with representatives of Party E.

Also on February 4, 2026, a strategic counterparty (referred to herein as “Party G”) sent an unsolicited, non-binding indication of interest to acquire Enhabit for $13.00 per share. Party G’s indication of interest was based only on publicly available information. The indication of interest did not separately ascribe any value to the Delaware and Texas Litigations. The indication of interest was provided to the Board. Enhabit’s closing stock price as of February 3, 2026 was $10.82.

On February 7, 2026, Enhabit and Party G executed a confidentiality agreement, and Party G was given access to certain portions of the virtual data room maintained by Enhabit.

On February 9, 2026, Party E, which had explored the opportunity to acquire Enhabit both on its own and jointly with one of its portfolio companies, informed representatives of Goldman Sachs that it would not be submitting a revised offer and would no longer be participating in its review of a potential transaction with Enhabit.

On February 10, 2026, members of Management met in person with representatives of Party G to discuss a potential transaction and Enhabit’s business, in which it was determined that Party G had significant remaining diligence to complete.

Also on February 10, 2026, representatives of Goldman Sachs sent a process letter to Party G in which Party G was asked to submit a revised bid by February 13, 2026. The draft merger agreement that had been made available to Party A, Party E and Kinderhook was also made available to Party G.

 

50

Also on February 10, 2026, K&E sent Jones Day a revised draft of the Merger Agreement, a CVR term sheet and certain ancillary documents, which, among other things, reiterated its request that Enhabit’s named executive officers enter into voting and support agreements in connection with the Merger Agreement. The revised draft also noted that Kinderhook was no longer amenable to a go-shop provision given its understanding that Enhabit engaged in discussions with other potential counterparties.

On February 12, 2026, Enhabit issued a press release announcing that Enhabit and Encompass had collected $43.1 million, which was split substantially equally between Enhabit and Encompass, in full satisfaction of their claims for attorneys’ fees and mitigation damages in the Delaware Litigation.

On February 13, 2026, representatives of Goldman Sachs, on behalf of Enhabit, received a preliminary, non-binding indication of interest from Party G to acquire Enhabit for $14.50 per share. The preliminary indication of interest included an estimated time to complete diligence of four to six weeks. The preliminary indication of interest did not separately ascribe any value to the Delaware and Texas Litigations and did not include a markup of the merger agreement or any other transaction agreements, including financing commitment documentation. The preliminary indication of interest was subsequently provided to the Board. Enhabit’s closing stock price as of February 12, 2026 was $11.22.

In light of Kinderhook’s insistence that Enhabit’s named executive officers enter into voting and support agreements in connection with the Merger Agreement, Enhabit’s named executive officers engaged Katzke Miller & Morgenbesser LLP (“KMM”) as their counsel to negotiate the terms of the Support Agreements (for more information about the Support Agreements please see the section of this proxy statement titled “The Support Agreements”). Until the entry into the Merger Agreement on February 22, 2026, representatives of KMM and K&E exchanged drafts of the Support Agreements.

On February 18, 2026, Enhabit entered into a clean team agreement with Party G, in order to provide to Party G’s advisors information that could be competitively sensitive, and proceeded to provide Party G with access to additional due diligence materials under that agreement.

On the morning of February 18, 2026, Kinderhook orally communicated to the general counsel of Enhabit and Mr. Bolton that it intended to submit an updated non-binding indication of interest to acquire Enhabit for $13.35 per share, with no CVR.

On February 18, 2026 and February 19, 2026, the Board held regularly scheduled meetings at which it conducted routine business and discussed the potential transaction with Party G and Kinderhook. Representatives of Goldman Sachs discussed a review of the trading prices of Enhabit’s stock and analyst expectations and price targets.

At the Board meetings, representatives of Goldman Sachs also reviewed its preliminary and illustrative financial analyses based on the December 2025 Projections, as extrapolated for fiscal years 2031 through 2035. Following discussion, the Board and Management finalized the December 2025 Projections and extrapolations for fiscal years 2031 through 2035 (collectively, the “2026 10-Year Model” and, together with the 2025 10-Year Model, the “Enhabit Forecasts”), as further discussed in the section of this proxy statement titled “—Certain Unaudited Prospective Financial Information,” and determined that the 2026 10-Year Model then reflected Enhabit’s best estimate of Enhabit’s future performance.

During the Board meeting on February 18, 2026, Jones Day, on behalf of Enhabit, received a formal updated non-binding indication of interest from Kinderhook to acquire Enhabit for $13.35 per share with no CVR, and requesting exclusivity through February 23, 2026. Kinderhook’s non-binding indication of interest also indicated that key outstanding diligence remained regarding Enhabit’s capitalization and transaction expenses, but that its diligence was otherwise substantially concluded. The revised indication of interest was provided to the Board. Enhabit’s closing stock price as of February 17, 2026 was $11.29.

 

51

During the Board meetings, the representatives of Goldman Sachs also provided an update to the Board regarding the status of discussions and negotiations with potential counterparties, including, among other things, (a) that Kinderhook’s updated non-binding indication of interest to acquire Enhabit stated that it was Kinderhook’s best and final proposal, (b) that Party E had withdrawn its consideration of a potential transaction with Enhabit on February 9, 2026, both on its own and jointly with one of its portfolio companies, (c) that Party F had withdrawn its consideration of a potential transaction with Enhabit on January 20, 2026, (d) that, while Party G had provided a non-binding indication of interest on February 13, 2026 to acquire Enhabit for $14.50 per share (with no CVR in respect of the Delaware and Texas Litigations), (i) it would likely take Party G at least four more weeks to complete its due diligence review of Enhabit’s business, (ii) consistent with guidance from representatives of Goldman Sachs, Management had concerns regarding Party G’s ability to ultimately consummate a transaction of the size and complexity of Enhabit given that Party G did not appear to have a track record of acquiring and integrating companies of Enhabit’s size, particularly in the public company context, (iii) a transaction with Party G would likely result in a higher degree of regulatory complexity than a transaction with Kinderhook, potentially from both a timing and certainty perspective, and (iv) Party G did not appear to have fully engaged third-party legal advisors and had not yet provided a markup of the merger agreement or comprehensive financing commitments.

Also during the Board meetings, representatives of Jones Day provided an update on the status of engagement to date with Kinderhook, including as to the remaining open items in the draft transaction documents, including the go-shop provision. Representatives of Goldman Sachs and the Board discussed that, while Kinderhook might have been willing to agree to a moderate increase in price, Kinderhook was not likely to agree to an offer near Party G’s proposal of $14.50 per share, and that there was a risk that requesting too high a price could result in Kinderhook choosing not to proceed with a transaction. The Board and representatives of Goldman Sachs and Jones Day discussed Party G’s ability to make an unsolicited Superior Proposal following the announcement of a transaction with Kinderhook pursuant to the provisions of the Merger Agreement. The Board also discussed the fact that Kinderhook’s proposal included definitive debt and equity commitments and presented relatively low regulatory risk, with a high likelihood of closing certainty. The representatives of Jones Day again reviewed the legal considerations and fiduciary duties relevant to considering various alternatives for maximizing value for Enhabit’s stockholders in the current context.

Also during the Board meetings, representatives of Goldman Sachs reported that Kinderhook had indicated that a CVR was not acceptable and that it had removed such CVR from its proposal in partial exchange for its increase in indicated price to $13.35 per share. Representatives of Goldman Sachs and Jones Day discussed with the Board that, even if Kinderhook were willing to include a CVR in the proposed transaction, the CVR would likely provide minimal additional value to Enhabit’s stockholders because of Kinderhook’s previously stated requirements that (a) Kinderhook would receive two-thirds of the net proceeds received in the Delaware and Texas Litigations and (b) the CVR would terminate upon the earlier of five years from the consummation of a transaction and a sale of Enhabit by Kinderhook, which time period was likely to be insufficient to realize full recoveries in connection with the Delaware and Texas Litigations. In light of this, as well as the uncertainties as to the timing and amounts of recovery in respect of the Delaware and Texas Litigations, it was the consensus of the Board that it was unable to ascribe certain value to the Delaware and Texas Litigations and, as a result, that the Board should instead focus on maximizing the per share price payable to Enhabit’s stockholders in connection with the consummation of a potential transaction.

Following additional discussion during the Board meeting, the Board determined that (a) while it was not approving a transaction at this time, a per share price of $13.80, reflecting a higher price than had been received in any proposal from a third-party other than Party G, would likely provide more value to Enhabit’s stockholders than continuing to pursue its standalone plan or other alternatives, (b) it would likely not be advisable to pursue a transaction with Party G at this time due to the various risks associated with Party G’s proposal that were discussed earlier in the Board meeting, but that Enhabit should continue to facilitate diligence with Party G and that, accordingly, Kinderhook should not be provided its requested exclusivity, and (c) it would be advisable for

 

52

representatives of Goldman Sachs to inform Kinderhook that, in order to proceed further with a transaction with Kinderhook at this time, it would need to increase its proposed per share price to $13.80.

On February 19, 2026, following the Board’s determination, representatives of Goldman Sachs conveyed to Kinderhook that it would need to increase its proposed per share price to $13.80.

Following additional negotiations and diligence regarding Enhabit’s capitalization and transaction expenses, on February 20, 2026, Kinderhook, after first orally increasing its offer to $13.65 per share, orally indicated to representatives of Goldman Sachs that it would increase its offer to $13.80 per share if the Merger Agreement was entered into no later than February 23, 2026.

On February 20, 2026, representatives of Goldman Sachs provided a customary material relationships disclosure letter to the Board regarding its relationships with Kinderhook, in which it noted that Goldman Sachs’ investment banking unit was not currently mandated by Kinderhook or its affiliates, portfolio companies or funds managed thereby to provide to any such person financial advisory and/or underwriting services.

On February 21, 2026, Kinderhook orally informed representatives of Goldman Sachs that it was increasing its offer to $13.80 per share and agreeing to reduce the termination fee payable by Enhabit upon certain termination events to 3.3% of the equity value of the transaction in exchange for the removal of the CVR and the go-shop provision in the Merger Agreement, given that Enhabit had pursued discussions with multiple other potential counterparties. Enhabit’s closing stock price as of February 20, 2026 was $11.09.

On February 22, 2026, the Board held a special meeting with members of Management and representatives of Goldman Sachs and Jones Day present. The Board and the representatives of Jones Day reviewed and discussed the disclosures in the material relationships disclosure letter provided by Goldman Sachs on February 20, 2026. The Board did not identify in Goldman Sachs’ relationships disclosure letter any matter that would affect the ability of Goldman Sachs to fulfill its responsibilities as financial advisor to Enhabit.

During the Board meeting, representatives of Goldman Sachs provided an update regarding recent developments and negotiations with Kinderhook. Representatives of Jones Day provided an update on the status of negotiations with Kinderhook on the terms of the Merger Agreement and related transaction documents. Following this discussion, the Board then discussed the various reasons for pursuing the merger considered, at the February 22, 2026 meeting and prior meetings, in connection with the proposed transaction, as described in the section of this proxy statement titled “—Recommendation of the Board of Directors and Reasons for the Merger.” Ms. Jacobsmeyer also discussed the various risks facing Enhabit operating as a standalone company, including in respect of the regulatory environment and other near- and long-term challenges for Enhabit. Following this discussion, the Board discussed the risks and uncertainties of Party G’s proposal, including, among other things, the likely time delay, counterparty risk, financing risk, regulatory risk and possibility of losing interest from Kinderhook if timing were delayed, and determined that it would not be in the best interests of Enhabit’s stockholders for Enhabit to pursue a transaction with Party G at this time, noting that Party G would have the ability to submit an unsolicited Superior Proposal following an announcement of a transaction with Kinderhook, given that the standstill restrictions to which Party G was subject would automatically terminate in such event. Following this, representatives of Jones Day reviewed with the Board the legal considerations and fiduciary duties relevant to its consideration of a potential transaction.

Also during the Board meeting, representatives of Goldman Sachs reviewed the 2026 10-Year Model which was authorized by the Board for use by Goldman Sachs in its financial analyses and opinion as further discussed in the section of this proxy statement titled “—Certain Unaudited Prospective Financial Information.” Representatives of Goldman Sachs reviewed Goldman Sachs’ financial analyses as further discussed in the section of this proxy statement titled “—Opinion of Goldman Sachs & Co. LLC.” Representatives of Goldman Sachs then rendered to the Board its oral opinion, subsequently confirmed in writing by delivery of a written opinion, that, as of February 22, 2026 and based upon and subject to the factors and assumptions set forth in

 

53

Goldman Sachs’ written opinion, the Merger Consideration to be paid to the holders (other than Parent and its affiliates) of the outstanding shares of Common Stock pursuant to the Merger Agreement was fair from a financial point of view to such holders. For a discussion of the opinion of Goldman Sachs, please see the section of this proxy statement titled “—Opinion of Goldman Sachs & Co. LLC.”

After further discussion, the Board unanimously (a) determined that it is in the best interests of Enhabit and its stockholders, and declared it advisable, to enter into the Merger Agreement, (b) approved the execution, delivery and performance of the Merger Agreement and the consummation of the transactions contemplated thereby, including the Merger, and (c) resolved to recommend that the stockholders of Enhabit adopt the Merger Agreement and directed that such matter be submitted for consideration of the stockholders of Enhabit at the Enhabit Stockholder Meeting.

Later on February 22, 2026, Enhabit and Kinderhook entered into the Merger Agreement and Enhabit’s named executive officers and Kinderhook entered into the Support Agreements. Prior to the execution of the Merger Agreement, Management did not discuss, and Kinderhook did not make any proposals or enter into any agreements with employees of Enhabit relating to, the post-closing employment, retention or compensation of Enhabit’s employees, except for Kinderhook’s customary commitments included in the Merger Agreement to maintain certain aspects of Enhabit’s existing arrangements for a period of 12 months following the completion of the Merger.

On February 23, 2026, Enhabit and Kinderhook issued a joint press release announcing the execution of the Merger Agreement.

On March 7, 2026, Party G delivered to representatives of Goldman Sachs, on behalf of Enhabit, an unsolicited, non-binding indication of interest to acquire Enhabit for a per share price in excess of its February 13, 2026 proposal. The indication of interest included a markup of the Merger Agreement and draft financing commitment letters, and was subject to, among other things, its completion of due diligence.

On March 10, 2026, the Board held a special meeting with members of Management and representatives of Goldman Sachs and Jones Day present to discuss Party G’s proposal. Representatives of Goldman Sachs and Jones Day reviewed the financial and legal terms of Party G’s proposal, as well as the provisions of the existing Merger Agreement relating to the receipt of Acquisition Proposals, including the ability of Enhabit to (a) seek clarification from Party G as to the terms of its proposal and (b) potentially provide information to, and engage in discussions with, Party G if the Board determined that Party G’s proposal could reasonably be expected to lead to a Superior Proposal. Following discussion, the Board directed the representatives of Goldman Sachs and Jones Day to seek to clarify certain financial and legal terms of Party G’s proposal. Representatives of Goldman Sachs and Jones Day then asked questions of Party G’s advisors in an effort to clarify such terms.

On March 13, 2026, the Board held a special meeting with members of Enhabit’s management team and representatives of Goldman Sachs and Jones Day to further discuss Party G’s proposal. Representatives of Goldman Sachs and Jones Day provided an update on the clarifications from Party G and its advisors, including as to its proposed sources and uses of funds and the status of its due diligence, financing commitments and regulatory analysis.

Following discussion, the Board determined that Party G’s non-binding proposal could reasonably be expected to lead to a Superior Proposal. The Board did not, however, make a determination that Party G’s proposal was a Superior Proposal, nor did the Board make any determination to change its recommendation that Enhabit’s stockholders vote for the adoption of the Merger Agreement, in each case in light of, among other things, the preliminary and non-binding nature of the proposal, the conditions thereto and the various risks associated with Party G’s proposal that had been considered by the Board prior to the execution of the Merger Agreement with Kinderhook. As a result, Management, representatives of Goldman Sachs and Jones Day were directed to provide access to the data room maintained by Enhabit and to engage in discussions with Party G in an effort to enable the Board to determine whether Party G’s proposal could ultimately be deemed to be a Superior Proposal.

 

54

Thereafter, Party G, its representatives and advisors were granted access to the full virtual data room maintained by Enhabit, engaged in due diligence and had numerous meetings with members of Management regarding Enhabit’s business, although neither Party G nor its advisors engaged substantively with Enhabit’s regulatory counsel regarding antitrust or state healthcare regulatory analyses or provided updated financing commitments. On March 26, 2026, following two scheduled diligence meetings at which representatives of Party G failed to attend without notice, representatives of Party G informed representatives of Goldman Sachs that Party G was no longer pursuing a transaction with Enhabit. Due to Party G’s withdrawal of its March 7, 2026 proposal, Enhabit revoked Party G’s access to the virtual data room on the same day.

On March 27, 2026, representatives of Party G contacted representatives of Goldman Sachs and indicated that, notwithstanding Party G’s decision to cease pursuit of a transaction as conveyed the prior day, Party G had reconsidered and was again interested in pursuing a transaction with Enhabit. Party G did not provide a new proposal. There can be no assurance that Party G will submit a new Acquisition Proposal or as to any determination by the Board with respect thereto.

On March 29, 2026, representatives of Goldman Sachs provided an updated material disclosure letter to Enhabit regarding its relationships with Kinderhook to correct an error in its prior letter, in which it indicated that, as of February 20, 2026, Goldman Sachs’ investment banking unit was mandated by Kinderhook and/or its affiliates, portfolio companies or funds managed thereby to provide financial advisory and/or underwriting services unrelated to the transactions contemplated by the Merger Agreement with respect to a matter and, if such matter were to be consummated, Goldman Sachs expected that it would recognize compensation in an aggregate amount less than the transaction fee payable to Goldman Sachs by Enhabit in connection with the transactions contemplated by the Merger Agreement.

Recommendation of the Board of Directors and Reasons for the Merger

At a meeting of the Board held on February 22, 2026, after consideration and discussions with members of Management and representatives of Goldman Sachs and Jones Day, the Board unanimously:

 

•

determined that it is in the best interests of Enhabit and its stockholders, and declared it advisable, to enter into the Merger Agreement;

 

•

approved the execution, delivery and performance of the Merger Agreement and the consummation of the transactions contemplated thereby, including the Merger; and

 

•

resolved to recommend that the stockholders of Enhabit adopt the Merger Agreement and directed that such matter be submitted for consideration of the stockholders of Enhabit at the Special Meeting.

Accordingly, the Board recommends that the stockholders vote “FOR” the Merger Proposal, “FOR” the Compensation Proposal and “FOR” the Adjournment Proposal.

In making its determinations and in reaching its recommendations, the Board held a number of meetings and consulted with members of Management and its outside legal and financial advisors. The Board considered a number of factors and benefits, including the following, which are not presented in order of relative importance, that weighed in favor of the Merger:

Merger Consideration

 

•

The fact that the price of $13.80 per share of Common Stock in cash payable in the Merger provides certainty, immediate value and liquidity to all stockholders of Enhabit and represents greater value than is reasonably likely to be realized if Enhabit continues to pursue its standalone plan, or other alternatives.

 

•

The historical market prices, volatility and trading information with respect to shares of Common Stock, including the fact that $13.80 per share to be received by the holders of Common Stock in the

 

55

Merger represents a premium of approximately 24.4% to the Company’s closing stock price on February 20, 2026 ( the last full trading day prior to the announcement of the transaction) and a premium of approximately 33.8% to the 60-day volume weighted average share price of the Common Stock on NYSE for the period ended February 20, 2026 (the last full trading day prior to the announcement of the transaction).

 

•

The Board’s ability to solicit an increased offer from Kinderhook from $8.75 per share in July 2025 to $13.80 per share.

 

•

The Board’s view that Kinderhook’s increased offer of $13.80 per share (as more fully described in the section of this proxy statement titled “—Background of the Merger”) reflected consideration for potential future recoveries in the Delaware and Texas Litigations.

 

•

The belief of the Board, after discussions with members of Management and outside legal and financial advisors, that, after negotiations with Kinderhook and its representatives, $13.80 per share was the highest price that Kinderhook was willing to pay as of the date of execution of the Merger Agreement and that the terms of the Merger Agreement include the most favorable terms to Enhabit, in the aggregate, to which Kinderhook would be willing to agree.

Enhabit’s Operating and Financial Condition and Prospects

 

•

The current economic environment and industry in which Enhabit operates, including continued costs, risks and uncertainties associated with continuing to pursue its standalone plan, taking into account Enhabit’s business, assets, financial condition, results from operations, historical and projected financial performance, opportunities and execution challenges, as well as market dynamics impacting Enhabit’s outlook.

 

•

The uncertainty of the future market price with respect to shares of Common Stock, including as a result of risks and uncertainties in the industry, such as regulatory developments.

 

•

The belief of the Board that the $13.80 per share in Merger Consideration payable in cash was more favorable to Enhabit stockholders on a risk-adjusted basis than the potential value that might result from other strategic opportunities potentially available to Enhabit in the future, based upon the directors’ knowledge of Enhabit’s business, assets, financial condition and results of operations, Enhabit’s historical and projected financial performance and market dynamics, the risks facing Enhabit and the opportunities reasonably available to Enhabit, and the belief that the Merger represented an attractive and comparatively certain value for Enhabit stockholders relative to the risk-adjusted prospects for Enhabit pursuing its standalone plan.

Potential Strategic Alternatives

 

•

The Board’s consideration of strategic alternatives (including the possibility of continuing to operate Enhabit as an independent company or pursuing a different transaction, including pursuant to Party G’s proposal received on February 13, 2026 (“Party G’s February Proposal”), and the perceived risks of those alternatives, as well as the potential benefits and risks to Enhabit’s stockholders of those alternatives and the timing and likelihood of effecting such alternatives) and the Board’s belief, after discussions with members of Management and outside legal and financial advisors, that the value offered to stockholders in the Merger, combined with their assessment concerning the certainty of the Closing, was more favorable to the stockholders of Enhabit than pursuing Enhabit’s standalone plan or any other strategic alternatives considered, taking into account execution risks as well as business, competitive, financial, industry, legal, market and regulatory risks.

 

•

The extensive strategic review conducted by Enhabit, with the assistance of Enhabit’s outside legal and financial advisors, including that Enhabit received indications of interest from four potential counterparties and engaged in discussions with five potential counterparties since November 28, 2025

 

56

(the date on which CMS released the final CMS Reimbursement Rates) and the conclusion that no other proposed transaction was currently available to Enhabit that would reasonably be expected to outweigh the benefits of the Merger for Enhabit’s stockholders, taking into account, among other things, the risks and uncertainties considered by the Board in respect of Party G’s February Proposal, as described in the section of this proxy statement titled “—Background of the Merger.”

 

•

The Board’s consideration that, if Enhabit did not enter into the Merger Agreement with Kinderhook, there could be a considerable period of time before the trading price of the Common Stock would reach and sustain a per share price equal to the Merger Consideration.

Negotiation Process

 

•

The fact that the terms of the Merger Agreement were the result of arm’s-length negotiations conducted by Enhabit, with the knowledge and at the direction of the Board, and with the assistance of Enhabit’s outside legal and financial advisors.

 

•

The fact that Enhabit’s outside legal and financial advisors were involved throughout the process and negotiations and updated the Board directly and regularly, which provided the Board with additional perspectives on the negotiations in addition to those of members of Management.

 

•

The enhancements that Enhabit and its outside legal and financial advisors were able to obtain as a result of negotiations with Kinderhook, including the increase in the valuation offered by Kinderhook from the time of its initial offer to the final agreement and the inclusion of provisions in the Merger Agreement that were favorable to Enhabit and that the Board believes enhance Closing certainty and increase the likelihood of completing the Merger, while maintaining the Board’s ability to entertain and potentially ultimately accept a Superior Proposal should one become available.

Goldman Sachs’ Opinion and Analysis

 

•

The Board considered the oral opinion of Goldman Sachs, subsequently confirmed in writing by delivery of a written opinion, to the effect that, as of February 22, 2026, and based upon and subject to the factors and assumptions set forth in Goldman Sachs’ written opinion, the Merger Consideration to be paid to the holders (other than Parent and its affiliates) of the outstanding shares of Common Stock pursuant to the Merger Agreement was fair from a financial point of view to such holders. For additional information, see the section of this proxy statement titled “—Opinion of Goldman Sachs & Co. LLC” and Annex C to this proxy statement.

Negotiations with Kinderhook and Terms of the Merger Agreement. The terms and conditions of the Merger Agreement, which were the product of arm’s-length negotiations between Enhabit and Kinderhook, with the assistance and guidance of Enhabit’s outside legal and financial advisors, including:

 

•

Enhabit’s ability under certain circumstances to furnish information to, and conduct negotiations with, third parties submitting Superior Proposals or potentially Superior Proposals;

 

•

the Board’s belief that the terms of the Merger Agreement would be unlikely to deter third parties from making a Superior Proposal;

 

•

the Board’s ability, under certain circumstances, to change, withdraw, amend or modify its recommendation that Enhabit’s stockholders vote in favor of the adoption of the Merger Agreement;

 

•

Enhabit’s ability, under certain circumstances, to terminate the Merger Agreement to enter into an alternative definitive agreement for a Superior Proposal. In that regard, the Board believed that the Company Termination Fee of approximately $24.5 million payable by Enhabit in such instance is reasonable and consistent with or below similar fees payable in comparable transactions and not preclusive of other offers;

 

57

•

that the approval of the Merger Agreement requires the affirmative vote of the holders of record of a majority of the outstanding shares of the Common Stock;

 

•

the availability of statutory appraisal rights to Enhabit stockholders that do not vote in favor of the adoption of the Merger Agreement and otherwise comply with all required procedures under the DGCL;

 

•

the requirement that the parties use their respective reasonable best efforts to consummate the transactions contemplated by the Merger Agreement, including to obtain HSR Act approval and any other regulatory approvals required under law, in each case, as promptly as reasonably practicable;

 

•

the fact that Kinderhook obtained committed Debt Financing in an amount reasonably necessary to consummate the transactions contemplated by the Merger Agreement;

 

•

representations by Kinderhook in the Merger Agreement that the Financing will be sufficient to pay (i) the Merger Consideration and any other amounts required to be paid at the Closing (including the Payoff Amounts) and (ii) all related fees and expenses payable on the date of the Closing by Kinderhook and Merger Sub in connection with the transactions contemplated by the Merger Agreement;

 

•

the Equity Investor’s commitment to guarantee Kinderhook’s obligation to pay the Parent Termination Fee of approximately $44.6 million to Enhabit in the event of a termination for which such termination fee is due and payable to Enhabit pursuant to the terms of the Merger Agreement;

 

•

that the terms of the Merger Agreement provide sufficient operating flexibility for Enhabit to conduct its business in all material respects in the ordinary course until the earlier of the consummation of the Merger or the termination of the Merger Agreement;

 

•

the conditions to closing contained in the Merger Agreement (including the absence of a financing condition), which conditions are limited in number, and which, in the case of the conditions relating to the accuracy of Enhabit’s representations and warranties, are generally subject to a Company Material Adverse Effect qualification;

 

•

that the definition of “Company Material Adverse Effect” in the Merger Agreement has a number of customary exceptions and is generally a very high standard applied by the courts;

 

•

the End Date of November 22, 2026 is expected to allow for sufficient time to complete the Merger and obtain all required regulatory approvals;

 

•

Enhabit’s ability, under circumstances specified in the Merger Agreement, to specifically enforce Parent’s or Merger Sub’s obligation to consummate the Merger if the Debt Financing has been funded or will be funded at Closing; and

 

•

the belief that the transactions contemplated by the Merger Agreement have a substantial likelihood of being consummated successfully.

Business Reputation of Kinderhook. The belief of the Board that the business reputation and experience with transactions of the size and nature of the Merger and financial resources of Kinderhook were factors that supported the conclusion that a transaction with affiliates of Kinderhook had a substantial likelihood of being consummated successfully.

In the course of its deliberations, the Board also considered a variety of material risks and other countervailing factors related to entering into the Merger Agreement, including, but not limited to, the following, which are not presented in order of relative importance:

 

•

the fact that Enhabit’s public stockholders will not participate in any future growth potential that may be accelerated by Enhabit as a private company, or benefit from any future earnings of Enhabit as a private company following completion of the transactions contemplated by the Merger Agreement;

 

58

•

the possibility that all conditions to the Merger will not be timely satisfied or waived, and if it is not consummated, that (i) Enhabit’s directors, Management and other employees will have expended extensive time and effort and will have experienced significant distractions from their work on behalf of Enhabit during the pendency of the Merger, (ii) Enhabit will have incurred significant transaction costs, (iii) Enhabit’s continuing business relationships with employees, patients, providers and payors may be adversely affected, (iv) the trading price of the Common Stock could be adversely affected, (v) the other contractual and legal remedies available to Enhabit in the event of the termination of the Merger Agreement may be insufficient, costly to pursue or both, and (vi) the failure of the Merger to be consummated could result in an adverse perception among Enhabit’s employees, patients, providers and payors, which could cause an adverse impact on Enhabit’s operating results;

 

•

the potential negative effects of the public announcement of the Merger on Enhabit’s ability to retain key management and other personnel, and its commercial relationships with customers, providers and payors;

 

•

the restrictions on the conduct of Enhabit’s business prior to the completion of the Merger that require Enhabit to conduct its business in all material respects in the ordinary course and prevent Enhabit from taking certain specified actions without the consent of Kinderhook, subject to specific limitations;

•

the substantial costs involved in connection with entering into the Merger Agreement and the substantial costs to be incurred in completing the Merger (many of which are payable whether or not the Merger is consummated) and the substantial time and effort of Management required to complete the Merger, which may disrupt its business operations and have a negative effect on its financial results;

 

•

the fact that completion of the Merger requires approval (or expiration of the waiting period) under the HSR Act, certain U.S. state healthcare regulatory requirements and certain other regulatory filings and the possibility that regulatory agencies may delay, object to or challenge the Merger or may seek to impose terms and conditions on their approvals that are not acceptable to Kinderhook;

 

•

the possibility that the Debt Financing contemplated by the Debt Commitment Letter could not be obtained, resulting in Kinderhook not having sufficient funds to complete the Merger notwithstanding the absence of a financing condition in the Merger Agreement, and that the Parent Termination Fee to be paid by Kinderhook to Enhabit in such circumstances may not be sufficient to cover costs incurred by Enhabit in connection with the contemplated Merger;

 

•

the fact that the Merger Agreement precludes Enhabit from actively soliciting alternative acquisition proposals, which may limit potential alternative proposals, notwithstanding the process to date and the fact that the Company Termination Fee that would be payable by Enhabit if it entered into an agreement for a Superior Proposal could further hinder potential alternative proposals;

 

•

the fact that Party G proposed a higher per-share value than the Merger Consideration prior to the execution of the Merger Agreement in Party G’s February Proposal, which the Board determined at the time of the Merger Agreement would not be in the best interests of Enhabit’s stockholders to pursue at that time, given the risks and uncertainties of such counterparty’s proposal, including the likely time delay, counterparty risk, financing risk and possibility of losing interest from Kinderhook if timing of the entry into the Merger Agreement was delayed (as more fully described in the section of this proxy statement titled “—Background of the Merger”);

 

•

the possibility that, although the Merger provides Enhabit’s stockholders with the opportunity to realize a premium to the price at which shares of Common Stock traded immediately prior to media reports regarding a potential sale of Enhabit, the price for shares of Common Stock might have increased in the future to a price greater than $13.80 in more favorable industry conditions;

 

•

the possibility that Enhabit’s stockholders could receive greater consideration in a future change in control transaction;

 

59

•

the fact that any gains arising from the receipt of the Merger Consideration would generally be taxable to Enhabit’s stockholders for U.S. federal income tax purposes; and

 

•

the risk of litigation arising from stockholders in respect of the Merger Agreement or transactions contemplated by the Merger Agreement.

In addition, the Board was aware of and considered the interests of Enhabit’s directors and executive officers that may be different from, or in addition to, the interests of stockholders generally when approving the Merger Agreement and recommending that stockholders vote to adopt the Merger Agreement. For more information, see the section of this proxy statement titled “—Interests of the Directors and Executive Officers of Enhabit in the Merger.”

The foregoing discussion of the information and factors considered by the Board in reaching its conclusions and recommendations is intended to be illustrative and not exhaustive. In light of the variety of factors considered in connection with their evaluation of the Merger and the complexity of these matters, the Board did not find it practicable to, and did not, quantify or otherwise attempt to rank or assign relative weights to the various factors considered in reaching their respective determinations. In considering the factors described above and any other factors, individual members of the Board may have viewed factors differently or given different weight, merit or consideration to different factors. In addition, the Board did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to the ultimate determination of the Board, but rather the Board conducted an overall review of the factors described above, including discussions with members of Management and outside legal and financial advisors.

The foregoing discussion of the reasoning and consideration of certain factors by the Board and the resulting determinations and recommendation, and certain other information presented in this section, as well as similar information included in this proxy statement, is forward-looking in nature and, therefore, the information should be read in light of the factors discussed in the section of this proxy statement titled “Cautionary Statement Regarding Forward-Looking Statements.” For the reasons described above, and in light of other factors that the Board believed were appropriate to consider, the Board approved the Merger Agreement and the transactions contemplated thereby, including the Merger, and recommends that stockholders vote in favor of the Merger Proposal, the Compensation Proposal and the Adjournment Proposal.

Opinion of Goldman Sachs & Co. LLC

Goldman Sachs rendered its opinion to the Board that, as of February 22, 2026, and based upon and subject to the factors and assumptions set forth therein, the Merger Consideration to be paid to the holders (other than Parent and its affiliates) of the outstanding shares of Common Stock pursuant to the Merger Agreement was fair from a financial point of view to such holders.

The full text of the written opinion of Goldman Sachs, dated February 22, 2026, which sets forth assumptions made, procedures followed, matters considered, qualifications and limitations on the review undertaken in connection with Goldman Sachs’ opinion, is attached as Annex C to this proxy statement. The summary of Goldman Sachs’ opinion contained in this proxy statement is qualified in its entirety by reference to the full text of Goldman Sachs’ written opinion. Goldman Sachs provided advisory services and its opinion for the information and assistance of the Board in connection with its consideration of the Merger. Goldman Sachs’ opinion is not a recommendation as to how any holder of shares of Common Stock should vote with respect to the Merger or any other matter.

In connection with rendering its opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

 

•

the Merger Agreement;

 

60

•

Enhabit’s Annual Reports to stockholders and Annual Reports on Form 10-K for the three fiscal years ended December 31, 2024;

 

•

Enhabit’s Registration Statement on Form 10, including the information statement contained therein, initially filed on May 25, 2022 relating to the distribution by Encompass of all of the outstanding shares of Common Stock, to Encompass stockholders;

 

•

certain interim reports to stockholders and Quarterly Reports on Form 10-Q of Enhabit;

 

•

certain other communications from Enhabit to its stockholders;

 

•

certain publicly available research analyst reports for Enhabit; and

 

•

certain internal financial analyses and forecasts for Enhabit, prepared by the management of Enhabit and approved for Goldman Sachs’ use by Enhabit, which are referred to as the “2026 10-Year Model,” as further described in the section of this proxy statement titled “—Certain Unaudited Prospective Financial Information.”

Goldman Sachs also held discussions with members of Management regarding their assessment of the past and current business operations, financial condition and future prospects of Enhabit; reviewed the reported price and trading activity for the outstanding shares of Common Stock; compared certain financial and stock market information for Enhabit with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the home health and hospice industry and in other industries; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.

For purposes of rendering this opinion, Goldman Sachs, with the Board’s consent, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by, it, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with the Board’s consent that the 2026 10-Year Model were reasonably prepared on a basis reflecting the best then available estimates and judgments of Management. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of Enhabit and it was not furnished with any such evaluation or appraisal. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Merger will be obtained without any adverse effect on the expected benefits of the Merger in any way meaningful to its analysis. Goldman Sachs assumed that the Merger would be consummated on the terms set forth in the Merger Agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

Goldman Sachs’ opinion does not address the underlying business decision of Enhabit to engage in the Merger, or the relative merits of the Merger as compared to any strategic alternatives that may be available to Enhabit, including a non-binding indication of interest for a transaction proposed by a third party that may have resulted in a higher price per share of Common Stock in cash than in the Merger, which indication of interest Enhabit advised Goldman Sachs it determined not to pursue as a result of, among other things, risks, uncertainties and other considerations concerning such proposed transaction; nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs’ opinion addresses only the fairness from a financial point of view to the holders (other than Parent and its affiliates) of the outstanding shares of Common Stock, as of the date of the opinion, of the Merger Consideration to be paid to such holders pursuant to the Merger Agreement. Goldman Sachs’ opinion does not express any view on, and does not address, any other term or aspect of the Merger Agreement or the Merger or any term or aspect of any other agreement or instrument contemplated by the Merger Agreement or entered into or amended in connection with the Merger, including the fairness of the Merger to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors, or other constituencies of Enhabit; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of Enhabit, or class of such persons, in

 

61

connection with the Merger, whether relative to the Merger Consideration to be paid to the holders (other than Parent and its affiliates) of the outstanding shares of Common Stock pursuant to the Merger Agreement or otherwise. In addition, Goldman Sachs does not express any opinion as to the prices at which the Common Stock will trade at any time or, as to the potential effects of volatility in the credit, financial and stock markets on Enhabit, Parent or the Merger, or as to the impact of the Merger on the solvency or viability of Enhabit or Parent or the ability of Enhabit or Parent to pay their respective obligations when they come due. Goldman Sachs’ opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Goldman Sachs as of, the date of its opinion and Goldman Sachs assumes no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date hereof. Goldman Sachs’ advisory services and its opinion were provided for the information and assistance of the Board in connection with its consideration of the Merger and such opinion does not constitute a recommendation as to how any holder of Common Stock should vote with respect to such transaction or any other matter. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

Summary of Financial Analyses

The following is a summary of the material financial analyses delivered by Goldman Sachs to the Board in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before February 20, 2026, the last trading day before the public announcement of the Merger, and is not necessarily indicative of current market conditions.

Illustrative Discounted Cash Flow Analysis

Using the 2026 10-Year Model, Goldman Sachs performed an illustrative discounted cash flow analysis on Enhabit to derive a range of illustrative present values per share of Common Stock. Using the mid-year convention for discounting cash flows and discount rates ranging from 11.5% to 14.5%, reflecting estimates of Enhabit’s weighted average cost of capital, Goldman Sachs discounted to present value as of December 31, 2025 (i) estimates of unlevered free cash flow for Enhabit for the period from January 1, 2026 through December 31, 2035 as reflected in the 2026 10-Year Model and (ii) a range of illustrative terminal values for Enhabit, which were calculated by applying perpetuity growth rates ranging from 0.5% to 1.5% to a terminal year estimate of the unlevered free cash flow to be generated by Enhabit as reflected in the 2026 10-Year Model (which analysis implied terminal value to next twelve month (“NTM”) earnings before interest, taxes, depreciation and amortization (“EBITDA”) (“NTM EBITDA”) multiples ranging from 4.7x to 6.5x). The range of perpetuity growth rates was estimated by Goldman Sachs utilizing its professional judgment and experience, taking into account the 2026 10-Year Model and market expectations regarding long-term real growth of gross domestic product and inflation. Utilizing its professional judgment and experience, Goldman Sachs derived such discount rates by application of the Capital Asset Pricing Model (“CAPM”), which requires certain company-specific inputs, including Enhabit’s target capital structure weightings, the cost of long-term debt, after-tax yield on cash, if any, future applicable marginal cash tax rate and a beta for Enhabit, as well as certain financial metrics for the United States financial markets generally.

Goldman Sachs derived ranges of illustrative enterprise values for Enhabit by adding the ranges of present values it derived above. Goldman Sachs then subtracted from the range of illustrative enterprise values it derived for Enhabit the amount of Enhabit’s total debt and added the amount of Enhabit’s cash and cash equivalents (including $43.1 million in litigation settlement proceeds) in each case, as provided by and approved for Goldman Sachs’ use by Management, to derive a range of illustrative equity values for Enhabit. Goldman Sachs

 

62

then divided the range of illustrative equity values it derived by the number of fully diluted outstanding shares of Common Stock as provided by and approved for Goldman Sachs’ use by Management, using the treasury stock method, to derive a range of illustrative present values per share of $10.41 to $16.26.

Illustrative Present Value of Future Share Price Analysis

Using the 2026 10-Year Model, Goldman Sachs performed an illustrative analysis of the implied present value of an illustrative future value per share of Common Stock. For this analysis, Goldman Sachs first calculated the implied enterprise value for Enhabit as of December 31 for each of the fiscal years 2026, 2027, and 2028, by applying a range of illustrative enterprise value to NTM EBITDA (“EV/NTM EBITDA”) multiples of 8.0x to 9.0x to estimates of Enhabit’s NTM EBITDA for each of the fiscal years 2026, 2027, and 2028. This illustrative range of EV/NTM EBITDA multiple estimates was derived by Goldman Sachs utilizing its professional judgment and experience, taking into account current and historical EV/NTM EBITDA multiples for Enhabit.

Goldman Sachs then subtracted the amount of Enhabit’s total debt and added the amount of Enhabit’s cash and cash equivalents (pro forma for proceeds from litigation) for each of the fiscal years 2026, 2027, and 2028, each as provided by and approved for Goldman Sachs’ use by Management, from the respective implied enterprise values in order to derive a range of illustrative equity values as of December 31 for Enhabit for each of the fiscal years 2026, 2027, and 2028. Goldman Sachs then divided these implied equity values by the projected year-end number of fully diluted outstanding shares of Common Stock for each of fiscal years 2026, 2027, and 2028, calculated using information provided by and approved for Goldman Sachs’ use by Management, to derive a range of implied future values per share of Common Stock. Goldman Sachs then discounted these implied future equity values per share of Common Stock to December 31, 2025 using an illustrative discount rate of 13.9%, reflecting an estimate of Enhabit’s cost of equity. Goldman Sachs derived such discount rate by application of the CAPM, which requires certain company-specific inputs, including a beta for the company, as well as certain financial metrics for the United States financial markets generally. This analysis resulted in a range of implied present values of $13.28 to $21.51 per share of Common Stock.

Selected Transactions Analysis

Goldman Sachs analyzed certain information relating to the following selected transactions in the home health and hospice industry since 2018. For each of the selected transactions, Goldman Sachs calculated and compared the implied enterprise value of the applicable target company based on the consideration paid in the Merger as a multiple of the target company’s last twelve month (“LTM”) adjusted EBITDA based on information in public filings, press releases and Bloomberg and Wall Street research. While none of the companies that participated in the selected transactions are directly comparable to Enhabit, the companies that participated in the selected transactions are companies with operations that, for the purposes of analysis, may be considered similar to certain of Enhabit’s results, market sizes and product profile.

 

63

The following table presents the results of this analysis:

 

Announcement Date		Selected Transactions				LTM EV/EBITDA
		Acquiror		Target
June 2025		Linden Capital Partners LLC		Agape Care Group LLC		Undisclosed
June 2024		Addus Home Care Corporation		Curo Health Services, LLC (d/b/a Gentiva)		Undisclosed
June 2023		UnitedHealth Group Incorporated		Amedisys, Inc.		13.8x
June 2023		Addus Home Care Corporation		American Home Care, LLC (d/b/a Tennessee Quality Care)		Undisclosed
April 2022		Clayton, Dubilier & Rice, LLC		Kindred Healthcare, LLC		12.0x
April 2021		Humana Inc.		Kindred Healthcare, LLC		11.0x
February 2021		Bright Spring Health Services, Inc.		Abode Healthcare, Inc.		16.0x
October 2020		H.I.G Capital, LLC		St. Croix Hospice LLC		16.6x
September 2020		Providence Service Corporation		Simplura Health Group		11.6x
September 2020		Vistria Group, LP and Centerbridge Partners LP		Help at Home, LLC		12.2x
October 2019		Ascension Health		FC Compassus LLC		11.8x
October 2018		Amedisys, Inc.		Compassionate Care Hospice of New Hampshire LLC		12.6x
April 2018		Humana Inc., TPG Inc., Welsh, Carson, Anderson & Stowe		Curo Health Services LLC		15.0x
April 2018		Blue Wolf Capital Partners LLC		Jordan Health Services		10.0x

Based on the results of the foregoing calculations and Goldman Sachs’ professional judgment and experience, Goldman Sachs applied a reference range of EV/LTM adjusted EBITDA multiples of 10.0x to 18.5x to Enhabit’s LTM adjusted EBITDA as of December 31, 2025, as provided by and approved for Goldman Sachs’ use by Management, to derive a range of implied enterprise values for Enhabit. Goldman Sachs then subtracted from the range of implied enterprise values it derived for Enhabit the amount of total debt of Enhabit and added the amount of Enhabit’s cash and cash equivalents (pro forma for proceeds from litigation), in each case as provided by and approved for Goldman Sachs’ use by Management, and divided the result by the number of fully diluted outstanding shares of Common Stock as of February 20, 2026, as provided by and approved for Goldman Sachs’ use by Management, to derive a reference range of implied values per share of Common Stock of $12.72 to $29.57.

 

64

Premia Paid Analysis

Goldman Sachs reviewed and analyzed, using publicly available information, the acquisition premia for all-cash transactions announced from January 1, 2020 through February 20, 2026 involving a public company in the healthcare industry (excluding biotechnology transactions) based in the United States as the target where the disclosed enterprise values for the Merger were between $1.0 billion and $5.0 billion. For the entire period, using publicly available information, Goldman Sachs calculated the median, low and high premia of the price paid in the 18 transactions relative to the target’s last undisturbed closing stock price prior to announcement of the Merger. This analysis indicated a median premium of 28%, low premium of 12% and high premium of 77% across the period. Using this analysis, Goldman Sachs applied a reference range of illustrative premiums of 12% to 77% to the closing price per share of Common Stock of $11.09 as of February 20, 2026 to derive a range of implied equity values per share of Common Stock of $12.45 to $19.61.

General

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs’ opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to Enhabit or Parent or the contemplated transaction.

Goldman Sachs prepared these analyses for purposes of Goldman Sachs providing its opinion to the Board as to the fairness from a financial point of view of the Merger Consideration to be paid to the holders (other than Parent and its affiliates) of the outstanding shares of Common Stock pursuant to the Merger Agreement. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Enhabit, Parent, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecasts.

The Merger Consideration was determined through arm’s-length negotiations between Enhabit and Parent and was approved by the Board. Goldman Sachs provided advice to Enhabit during these negotiations. Goldman Sachs did not, however, recommend any specific amount of consideration to Enhabit or the Board or that any specific amount of consideration constituted the only appropriate consideration for the Merger.

As described above, Goldman Sachs’ opinion to the Board was one of many factors taken into consideration by the Board in making its determination to approve the Merger Agreement. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex C to this proxy statement.

Goldman Sachs and its affiliates (collectively, “Goldman Sachs Affiliated Entities”) are engaged in advisory, underwriting, lending and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of Enhabit, Parent, any of their respective affiliates and third parties, including

 

65

Kinderhook, a significant shareholder of Parent, and any of its respective affiliates and, as applicable, portfolio companies (collectively, “Relevant Entities”) or any currency or commodity that may be involved in the transactions contemplated by the Merger Agreement. Goldman Sachs acted as financial advisor to Enhabit in connection with, and participated in certain of the negotiations leading to, the Merger contemplated by the Merger Agreement. During the two-year period ended February 22, 2026, Goldman Sachs Investment Banking has not been engaged by Enhabit or its affiliates to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation. During the two-year period ended February 22, 2026, Goldman Sachs Investment Banking has not been engaged by Parent or its affiliates to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation. During the two-year period ended February 22, 2026, Goldman Sachs Investment Banking has not been engaged by Kinderhook or its affiliates to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation. As of February 22, 2026, Goldman Sachs Investment Banking was mandated by Kinderhook and/or its Related Entities (as defined below) to provide financial advisory and/or underwriting services unrelated to the Merger with respect to a matter and, if such matter were to be consummated, Goldman Sachs Investment Banking expected, as of February 22, 2026, that it would recognize compensation in an aggregate amount less than the transaction fee expected in connection with the Merger. In addition, as of February 22, 2026, Goldman Sachs Investment Banking was not soliciting Kinderhook and/or its Related Entities to work on financial advisory and/or underwriting matters for any such persons on which it has not been mandated. Goldman Sachs may in the future provide financial advisory and/or underwriting services to Enhabit, Parent, Kinderhook and their respective affiliates and/or as applicable, portfolio companies, for which Goldman Sachs Investment Banking may receive compensation.

As of February 22, 2026, Goldman Sachs Affiliated Entities had (i) no direct GS Principal Investment in Enhabit and/or its affiliates (excluding any significant shareholder and its other affiliates), (ii) an aggregate direct GS Principal Investment of approximately $5.55 million in Kinderhook and/or its Related Entities , and (iii) no direct GS Principal Investment in Kinderhook Capital Fund 8, L.P., a fund managed by Kinderhook or Kinderhook Capital Fund 8-B, L.P., a fund managed by Kinderhook. As of February 22, 2026, funds managed by affiliates of Goldman Sachs Investment Banking were not co-invested with Kinderhook and/or its affiliates and were invested in equity interests of funds managed by affiliates of Kinderhook. Such funds managed by affiliates of Goldman Sachs Investment Banking may co-invest with, and invest in equity interests of, Kinderhook and/or its affiliates or funds managed thereby in the future.

On the public side of Goldman Sachs’ informational wall (the “Public Side”) and in the ordinary course of its various business activities, Goldman Sachs Affiliated Entities may also own equity securities in the Relevant Entities, and/or their respective affiliates arising from engaging in market making, trade execution, clearing, custody, margin lending and other similar financing transactions, securities lending, and related activities (including by acting as agent for third parties executing their transactions or as principal supplying liquidity to market participants, and any related hedging, other risk management or inventory management) (collectively, “Market Making Activities”), which positions change frequently. Regulatory, informational and operational barriers separate the Public Side from Goldman Sachs Investment Banking.

For purposes of this section of the proxy statement, (x) Goldman Sachs relied on its books and records to (i) unless otherwise indicated, calculate all amounts and (ii) determine whether an entity is an affiliate, portfolio company, subsidiary or majority-owned subsidiary of another entity, and (y) the following terms have the definitions set forth below:

GS Principal Investments (including any associated commitments) are (i) direct balance sheet investments in equity interests or equity securities held by Goldman Sachs Affiliated Entities for its own account or (ii) direct investments in equity interests held by a fund managed by a Goldman Sachs Affiliated Entity which fund is primarily for the benefit of Goldman Sachs Affiliated Entities and/or its current and former employees and not third party clients. GS Principal Investments do not include equity interests arising from Market Making Activities, equity derivatives, convertible debt instruments, or warrants or equity kickers received in connection

 

66

with senior secured loans, mezzanine loans, warehouse loans, preferred equity with a fixed rate of return or other similar types of financing transactions (which may also be subject to hedging or other risk-mitigating instruments). GS Principal Investments also do not include investments by funds managed by Goldman Sachs Affiliated Entities which funds are almost entirely for the benefit of third party clients (“GS Client Funds”), which funds can co-invest alongside, and/or make Investments in, the Relevant Entities or their respective Related Entities. As investment managers for GS Client Funds, Goldman Sachs Affiliated Entities are required to fulfill a fiduciary responsibility to GS Client Funds in making decisions to purchase, sell, hold or vote on, or take any other action with respect to, any financial instrument.

Related Entities are, as applicable, a person or entity’s subsidiaries, affiliates, portfolio companies and/or funds managed thereby.

The Board selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the Merger. Pursuant to a letter agreement dated August 21, 2023, Enhabit engaged Goldman Sachs to act as its financial advisor in connection with the Merger. The engagement letter between Enhabit and Goldman Sachs provides for a transaction fee that is estimated, based on the information available as of the date of announcement, at approximately $24.8 million, all of which is contingent upon the consummation of the Merger. In addition, Enhabit has agreed to reimburse Goldman Sachs for certain of its expenses, including attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.

Certain Unaudited Prospective Financial Information

Although Enhabit may periodically publish limited public guidance concerning its expected financial performance, Enhabit does not, as a matter of course, publicly disclose long-term forecasts or internal projections as to its future performance due to the inherent uncertainty of the assumptions and estimates underlying such projections.

In connection with Enhabit’s regular process for evaluating Enhabit’s business and its consideration of strategic alternatives, including the continued execution of Enhabit’s standalone plan or a possible transaction with a third party, Management maintains financial projections including certain non-public, unaudited prospective financial information for Enhabit on a standalone basis. Enhabit’s financial projections are periodically updated by Management and reviewed with the Board.

As discussed in the section of this proxy statement titled “The Merger—Background of the Merger,” Management prepared, and the Board approved, the February 2025 Projections in the ordinary course to assist the Board in reviewing Enhabit’s business and its consideration of strategic alternatives, including the continued execution of Enhabit’s standalone plan or a possible transaction with a third party. The February 2025 Projections contained non-public, unaudited prospective financial information for Enhabit for fiscal years 2025 through 2029. For purposes of the Board’s consideration of strategic alternatives, the February 2025 Projections were extrapolated for fiscal years 2030 through 2034, referred to collectively as the 2025 10-Year Model, utilizing Management’s estimates of growth rates and margins. The 2025 10-Year Model was provided to representatives of Goldman Sachs for purposes of its preliminary and illustrative financial analyses, as further described in the section of this proxy statement titled “The Merger—Background of the Merger.”

As discussed in the section of this proxy statement titled “The Merger—Background of the Merger,” in the ordinary course to reflect future periods and in recognition of changes in the external environment, including as a result of the finalization of the CMS Reimbursement Rates, Management prepared updated preliminary draft financial projections for fiscal years through 2030, referred to as the December 2025 Projections. The Board approved the December 2025 Projections, after which such projections were made available to Party E, Party F and Kinderhook during the due diligence process. The December 2025 Projections were extrapolated for fiscal

 

67

years 2031 through 2035 utilizing Management’s estimates of growth rates and margins, referred to collectively as the 2026 10-Year Model. The Board reviewed the 2026 10-year Model at various times through the date on which Enhabit entered into the Merger Agreement and determined that it reflected the best estimate of Enhabit’s future performance. Accordingly, the Board relied upon the 2026 10-Year Model to assist it in reviewing Enhabit’s business and its consideration of strategic alternatives, including the continued execution of Enhabit’s standalone plan or a possible transaction with a third party. The 2026 10-Year Model was provided to representatives of Goldman Sachs, and the Board directed representatives of Goldman Sachs to use the 2026 10-Year Model for purposes of its financial analyses and opinion, as further described in the section of this proxy statement titled “The Merger—Opinion of Goldman Sachs & Co. LLC.”

Enhabit is summarizing the Enhabit Forecasts in this proxy statement in order to provide stockholders with access to certain non-public, unaudited, and risk-adjusted prospective financial information that was prepared for and used by the Board and representatives of Goldman Sachs to evaluate the Merger.

The following table summarizes the 2025 10-Year Model:

 

		Management Projections																				Extrapolations
($ in millions)		2025E				2026E				2027E				2028E				2029E				2030E				2031E				2032E				2033E				2034E
Net Service Revenue – Home health			852				923				982				1,044				1,110				1,168				1,216				1,254				1,280				1,293
Net Service Revenue – Hospice			236				266				299				336				374				409				439				461				476				480
Total Net Service Revenue			1,088				1,189				1,281				1,380				1,484				1,577				1,655				1,716				1,756				1,773
Segment Adjusted EBITDA – Home Health(1)			160				183				200				216				235				243				248				251				251				248
Segment Adjusted EBITDA – Hospice(1)			56				63				73				83				94				102				108				113				115				115
Non-Segment General and Administrative Expenses and Net Income Attributable to Noncontrolling Interests			(106	)			(108	)			(112	)			(113	)			(116	)			(122	)			(126	)			(129	)			(130	)			(129	)
Adjusted EBITDA(2)			110				138				161				186				213				223				230				235				236				234
Unlevered Free Cash Flow(3)			55				96				92				107				125				131				137				141				144				144

(1)	Segment Adjusted EBITDA is a non-GAAP financial measure and is defined as adjusted earnings before interest, taxes, depreciation and amortization.

(2)

Adjusted EBITDA is a non-GAAP financial measure and is calculated 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.

(3)	Unlevered Free Cash Flow is a non-GAAP financial measure and is calculated as Adjusted EBITDA less depreciation and amortization, stock-based compensation, and tax expense, plus (i) depreciation and amortization, less (ii) capital expenditures, and adjusted for changes in net working capital.

 

68

The following table summarizes the 2026 10-Year Model:

 

		Management Projections																				Extrapolations
($ in millions)		2026E				2027E				2028E				2029E				2030E				2031E				2032E				2033E				2034E				2035E
Net Service Revenue – Home health			839				893				952				1,019				1,090				1,142				1,180				1,204				1,215				1,228
Net Service Revenue – Hospice			268				306				346				388				435				475				506				526				537				542
Total Net Service Revenue			1,106				1,199				1,298				1,407				1,524				1,617				1,686				1,731				1,752				1,770
Segment Adjusted EBITDA – Home Health(1)			154				176				201				229				259				261				254				243				232				233
Segment Adjusted EBITDA – Hospice(1)			69				81				95				109				126				131				132				132				128				127
Non-Segment General and Administrative Expenses and Net Income Attributable to Noncontrolling Interests			(107	)			(109	)			(112	)			(115	)			(118	)			(124	)			(128	)			(130	)			(130	)			(129	)
Adjusted EBITDA(2)			117				148				184				223				267				269				258				245				230				231
Unlevered Free Cash Flow(3)			87				82				106				132				161				164				157				150				141				143

(1)	Segment Adjusted EBITDA is a non-GAAP financial measure and is defined as adjusted earnings before interest, taxes, depreciation and amortization.

(2)

Adjusted EBITDA is a non-GAAP financial measure and is calculated 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.

(3)	Unlevered Free Cash Flow is a non-GAAP financial measure and is calculated as Adjusted EBITDA less depreciation and amortization, stock-based compensation, and tax expense, plus (i) depreciation and amortization, less (ii) capital expenditures, and adjusted for changes in net working capital.

Cautionary Note About the Enhabit Forecasts

The Enhabit Forecasts were developed by Management as then-current estimates of Enhabit’s future financial performance as a standalone company, without giving effect to the Merger, or any changes to Enhabit’s operations or strategy that may be implemented in connection with the pendency of, or following the consummation of, the Merger. The Enhabit Forecasts also do not consider the effect of any failure of the Merger to be completed, and should not be viewed as accurate or continuing in that context. The Enhabit Forecasts do not take into account any circumstances, transactions or events occurring after the date on which the Enhabit Forecasts were prepared and do not give effect to any changes after the date on which they were made, including as a result of the Merger or any effects of the Merger.

The Enhabit Forecasts were not prepared with a view toward public disclosure or complying with U.S. generally accepted accounting principles (“GAAP”), published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation or presentation of prospective financial information. The Enhabit Forecasts included in this document have been prepared by, and are the responsibility of, Management. Neither Enhabit’s independent auditor nor any other independent accountants have audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the Enhabit Forecasts, nor have they expressed an opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information.

Although the Enhabit Forecasts are presented with numerical specificity, they reflect numerous assumptions and estimates as to future events, made by Management that Management believed in good faith were reasonable

 

69

and reflected the best then-currently available estimates and judgments of Management, subject to applicable assumptions. Enhabit’s ability to achieve the financial results contemplated by the Enhabit Forecasts will be affected by its ability to achieve its strategic goals, objectives and targets over the applicable periods, and will be subject to operational and execution risks associated therewith. The Enhabit Forecasts reflect assumptions as to certain business decisions that are subject to change. Important factors that may affect actual results and cause the Enhabit Forecasts not to be achieved include, among others, the risks identified in Enhabit’s SEC filings, including its Annual Report on Form 10-K for fiscal years ended December 31, 2025 and December 31, 2024, and subsequent filings with the SEC, as well as in the section of this proxy statement titled “Cautionary Statement Regarding Forward-Looking Statements” in this proxy statement. All of these factors are difficult to predict, and many of them are outside of Enhabit’s control. As a result, there can be no assurance that the Enhabit Forecasts will be realized, and actual results may be materially better or worse than those contained in the Enhabit Forecasts. The Enhabit Forecasts may differ from publicized analyst estimates and forecasts. You should evaluate the Enhabit Forecasts, if at all, in conjunction with Enhabit’s historical financial statements and other information regarding Enhabit contained in its SEC filings. The Enhabit Forecasts may not be consistent with Enhabit’s historical operating data as a result of the assumptions and estimates detailed above. Except to the extent required by applicable federal securities laws, Enhabit does not intend to update or otherwise revise the Enhabit Forecasts to reflect circumstances existing after the date that such information was prepared or to reflect the occurrence of future events.

Because the Enhabit Forecasts reflect estimates and judgments, they are susceptible to sensitivities and assumptions, as well as to multiple interpretations based on actual experience and business developments. The Enhabit Forecasts also cover multiple years, and such information by its nature becomes less predictive with each succeeding year. The Enhabit Forecasts are not, and should not be considered to be, a guarantee of future operating results. The Enhabit Forecasts should not be regarded as an indication that Management, the Board or any of their respective advisors, or any other person, considered or now considers the Enhabit Forecasts to be necessarily predictive of actual future results. Further, the Enhabit Forecasts are not fact and should not be relied upon as being necessarily indicative of Enhabit’s future results or for purposes of making any investment decision.

Certain of the financial measures included in the Enhabit Forecasts are not calculated in accordance with GAAP. Financial measures, such as Adjusted EBITDA and Unlevered Free Cash Flow, are non-GAAP financial measures. These non-GAAP financial measures should not be viewed as a substitute for GAAP financial measures and may be different from similarly titled non-GAAP financial measures used by other companies. Furthermore, there are limitations inherent in non-GAAP financial measures because they exclude charges and credits that are required to be included in a GAAP presentation. Accordingly, these non-GAAP financial measures should be considered together with, and not as an alternative to, financial measures prepared in accordance with GAAP. Financial measures included in forecasts provided to a financial advisor and a board of directors in connection with a business combination transaction, such as the Enhabit Forecasts, are excluded from the definition of “non-GAAP financial measures” under applicable SEC rules and regulations. As a result, the Enhabit Forecasts are not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure. Reconciliations of non-GAAP financial measures were not provided to or relied upon by the Board, Goldman Sachs or Kinderhook. Accordingly, no reconciliation of the non-GAAP financial measures included in the Enhabit Forecasts is provided in this proxy statement.

The Enhabit Forecasts constitute forward-looking statements. By including the Enhabit Forecasts in this proxy statement, none of Enhabit, the Board, Goldman Sachs or any of Enhabit’s or the Board’s respective representatives and advisors has made or makes any representation to any person regarding Enhabit’s ultimate performance as compared to the information contained in the Enhabit Forecasts. The inclusion of the Enhabit Forecasts should not be regarded as an indication that the Board, Enhabit, Goldman Sachs or any other recipient of the Enhabit Forecasts considered, or now considers, the Enhabit Forecasts to be predictive of Enhabit’s actual performance or actual future results, and you should not rely on the Enhabit Forecasts as such. For information

 

70

on factors that may cause Enhabit’s future results to materially vary, see the section of this proxy statement titled “Cautionary Statement Regarding Forward-Looking Statements.” Further, the inclusion of the Enhabit Forecasts in this proxy statement does not constitute an admission or representation by Enhabit that the information presented is material. The Enhabit Forecasts are included in this proxy statement solely to give stockholders access to the information that was made available to the Board, Goldman Sachs and Kinderhook, as described above. The Enhabit Forecasts are not included in this proxy statement in order to influence any stockholder as to how to vote at the special meeting with respect to the Merger, or whether to seek appraisal rights with respect to their shares.

In light of the foregoing factors and the uncertainties inherent in the Enhabit Forecasts, stockholders are cautioned not to place undue reliance, if any, on the Enhabit Forecasts.

Interests of the Directors and Executive Officers of Enhabit in the Merger

Overview

In considering the proposals to be voted on at the Special Meeting, Enhabit stockholders should be aware that Enhabit’s directors and executive officers have interests in the transactions contemplated by the Merger Agreement that may be different from, or in addition to, the interests of Enhabit stockholders generally, including, among other things, the treatment of outstanding Company Equity Awards under the Merger Agreement, the potential payment of severance benefits, accelerated vesting of outstanding Company Equity Awards, and/or the vesting of retention awards upon certain qualifying terminations of employment, and rights to ongoing indemnification and insurance coverage. The members of the Board were aware of and considered these interests, among other matters, in evaluating and reaching the decision to adopt the Merger Agreement and determining that the transactions contemplated by the Merger Agreement are advisable, fair to, and in the best interests of Enhabit’s stockholders, and in resolving to recommend that Enhabit’s stockholders vote to approve the Merger Agreement. These interests are described in more detail below and, with respect to the named executive officers of Enhabit, are quantified in the tables below.

Treatment of Company Equity Awards

Company Equity Awards will be treated as follows in accordance with the Merger Agreement. As of the Effective Time:

 

•

each Company Option that is outstanding and unexercised will, to the extent unvested, accelerate and become fully vested and exercisable effective immediately prior to, and contingent upon, the Effective Time. Except as otherwise expressly agreed to in writing prior to the Effective Time by Parent and the holder of the award, as of the Effective Time, each outstanding and unexercised Company Option will be automatically cancelled and converted to the right to receive an amount in cash, equal to the product obtained by multiplying (i) the total number of shares of Common Stock subject to the Company Option by (ii) the excess, if any, of (A) the Per Share Amount over (B) the exercise price per share of Common Stock applicable to such Company Option. Each Company Option that is then outstanding and unexercised and that has an exercise price per share of Common Stock that is equal to, or greater than, the Per Share Amount will be automatically cancelled, without any further action on the part of the holder of any Company Option, and no consideration will be delivered in exchange therefor;

 

•

each Company RSU and Company RSA that is outstanding will, to the extent unvested, become fully vested effective immediately prior to, and contingent upon, the Effective Time. Except as otherwise expressly agreed to in writing prior to the Effective Time by Parent and the holder of the award, as of the Effective Time, each Company RSU and Company RSA that is then outstanding will be automatically cancelled and converted into the right to receive a cash payment in an amount equal to the product of (A) the total number of shares of Common Stock underlying such Company RSU or the total number of Company RSAs, as applicable, multiplied by (B) the Per Share Amount; and

 

71

•

each Company PSU that is outstanding will become vested in the number of shares of Common Stock subject to the Company PSU based on the greater of the target performance level and the actual performance level measured as of the Effective Time (as determined by the Compensation & Human Capital Committee of the Board as constituted immediately prior to the Effective Time) (or, for any Company PSUs for which the performance period has been completed as of the Effective Time, the actual performance level). Except as otherwise expressly agreed to in writing prior to the Effective Time by Parent and the holder of the award, as of the Effective Time, the vested portion of a Company PSU will be automatically cancelled and converted into the right to receive a cash payment in an amount equal to the product of (A) the total number of shares of Common Stock underlying such vested portion of the Company PSU, multiplied by (B) the Per Share Amount. The unvested portion of a Company PSU will be automatically cancelled and no consideration will be delivered in exchange therefor.

All of Enhabit’s executive officers hold Company RSUs and Company PSUs, and only Ms. Jacobsmeyer also holds Company Options and Company RSAs. The Company’s non-employee directors currently hold Company RSUs that are fully vested.

For an estimate of the amounts that would be payable to each of Enhabit’s named executive officers in respect of their unvested Company Equity Awards upon the closing of the transactions contemplated by the Merger Agreement, see the section of this proxy statement titled “—Quantification of Potential Payments and Benefits to Enhabit’s Named Executive Officers in Connection with the Merger” below. The estimated value (using a per share price of Enhabit common stock of $13.80) in respect of unvested Company Equity Awards held by Enhabit’s only executive officer who is not a named executive officer, Jeanne L. Kalvaitis, that would vest if the Merger was to be completed on March 16, 2026 is $999,962. As noted above, none of Enhabit’s non-employee directors hold any unvested Company Equity Awards. The vested Company RSUs held by each non-employee director will be treated as described above.

Jacobsmeyer Transition Agreement

Our Chief Executive Officer, Ms. Jacobsmeyer, is party to a Transition, Separation and Release Agreement (the “Jacobsmeyer Transition Agreement”) with Enhabit. Pursuant to the Jacobsmeyer Transition Agreement, Ms. Jacobsmeyer will continue to serve as President and Chief Executive Officer of Enhabit until the earlier of July 31, 2026 (the “Separation Date”) and the date a successor Chief Executive Officer is appointed by the Board (such earlier date, the “Transition Date”). During any period between the Transition Date and the Separation Date, Ms. Jacobsmeyer will serve as a non-executive employee advisor to Enhabit and be paid a base salary at a monthly rate of $25,000. Pursuant to the Jacobsmeyer Transition Agreement, if the Company terminates Ms. Jacobsmeyer’s employment without “cause” prior to the Separation Date, Ms. Jacobsmeyer will vest in her Company Equity Awards to the same extent she would have had she remained employed through the Separation Date. Further, subject to Ms. Jacobsmeyer’s execution of a release of claims in connection with her departure on the Separation Date, she will be entitled to: (1) full vesting of any Company RSUs she holds that are then unvested (subject to forfeiture or clawback in the event Ms. Jacobsmeyer materially breaches the restrictive covenants in the Jacobsmeyer Transition Agreement); and (2) continued eligibility to participate in the Company’s annual cash incentive award program for senior executives for 2026, subject to proration based on her period of service as Chief Executive Officer during 2026. The Jacobsmeyer Transition Agreement provides that the circumstances of her transition as described therein do not entitle her to any benefits under Enhabit’s Executive Severance Plan (the “Executive Severance Plan”), but that she does remain eligible to participate in Enhabit’s Executive Change in Control Benefits Plan (the “Executive Change in Control Benefits Plan”) until the Transition Date.

Retention Agreements

Each of the following executive officers is party to a cash retention agreement (the “Retention Agreements”) with Enhabit: Ryan T. Solomon, Julie D. Jolley, Dylan C. Black, Tanya R. Marion, and Jeanne L. Kalvaitis. Retention

 

72

bonuses under the Retention Agreements will vest and pay out on December 31, 2026, or earlier in the event of: (1) a termination of the applicable executive officer’s employment by Enhabit without “cause” or by the executive for “good reason,” (2) the applicable executive officer’s death or “disability,” or (3) a qualifying “change in control” where the award is not continued by the surviving company. For an estimate of the amounts that would be payable to Enhabit’s named executive officers under the Retention Agreements upon a qualifying termination of employment in connection with the Closing, see the section of this proxy statement titled “—Quantification of Potential Payments and Benefits to Enhabit’s Named Executive Officers in Connection with the Merger” below. The estimated aggregate value in respect of the retention award held by Ms. Kalvaitis (who is not a named executive officer) that would vest if the Merger was to be completed and she were to experience a qualifying termination on March 16, 2026 is $152,500.

Executive Severance Plan

Each of the current executive officers of Enhabit, other than Ms. Jacobsmeyer, is a participant in the Executive Severance Plan. Under the Executive Severance Plan, if a participating executive officer’s employment is terminated by the participant for “good reason” or by Enhabit other than for “cause,” the participant is entitled to receive a cash severance payment, health benefits, and the other benefits as described below, subject to the participant’s execution of an effective restrictive covenant and release agreement:

 

•

a lump sum cash severance payment equal to his or her annual base salary in effect at the time of termination multiplied by 1.75x;

 

•

any accrued obligations;

 

•

continued coverage under Enhabit’s medical, dental and vision insurance plans and programs, excluding disability, for up to 12 months, at the same cost sharing between Enhabit and the participant as a similarly situated active employee;

 

•

vesting of a prorated portion of any then-unvested Company Equity Award that is subject only to time-based vesting; and

 

•

vesting of a prorated portion of any then-unvested Company Equity Award that is performance-based, based on actual achievement of the performance objectives for the full performance period, as determined after the conclusion of such performance period by the Compensation Committee.

Amounts paid under the Executive Severance Plan are in lieu of, and not in addition to, any other severance or termination payments under any other plan or agreement with Enhabit. As a condition to receipt of any payment under the Executive Severance Plan, the participant must waive any entitlement to any other severance or termination payment.

Executive Change in Control Benefits Plan

Each of the current executive officers of Enhabit is a participant in the Executive Change in Control Benefits Plan. Under the Executive Change in Control Benefits Plan, if a participant’s employment is terminated (i) following the occurrence of a specified event which may lead to a “change in control” and within six months prior to the consummation of the “change in control” to which such specified event relates or (ii) within 24 months following a “change in control,” either by the participant for “good reason” or by Enhabit without “cause,” then the participant will receive the payments and benefits described below, subject to the participant’s execution of an effective restrictive covenant and release agreement:

 

•

For Ms. Jacobsmeyer:

 

•

a lump sum cash severance payment equal to the sum of Ms. Jacobsmeyer’s highest annual base salary in the preceding three years plus the average of actual annual incentives for the prior three years, multiplied by 2.5x;

 

73

•

a prorated target annual incentive award for any incomplete performance period (and, in the case of a termination after the completion of the performance period but before payment of the earned award, an amount for such completed period based on actual performance);

 

•

any accrued obligations; and

 

•

continued coverage under Enhabit’s medical, dental and vision insurance plans and programs, excluding disability, for up to 18 months, at the same cost sharing between Enhabit and the participant as a similarly situated active employees.

 

•

For all other participating executive officers:

 

•

a lump sum cash severance payment equal to the sum of the executive officer’s highest annual base salary in the preceding three years plus the average of actual annual incentives for the prior three years (excluding years where the executive officer was not eligible), multiplied by 1.75x;

 

•

a prorated target annual incentive award for any incomplete performance period (and, in the case of a termination after the completion of the performance period but before payment of the earned award, an amount for such completed period based on actual performance);

 

•

any accrued obligations; and

 

•

continued coverage under Enhabit’s medical, dental and vision insurance plans and programs, excluding disability, for up to 12 months, at the same cost sharing between Enhabit and the participant as a similarly situated active employee.

In addition, if a “change in control” of Enhabit were to occur, outstanding Enhabit equity awards would be treated as follows: (1) if a replacement award is not provided with respect to such outstanding award, the award would vest (with respect to performance-based awards, such vesting would be at the “change-in-control performance level” described below) or (2) a replacement award is provided with respect to such outstanding award, but the participant resigns for “good reason” or is terminated without “cause” within 24 months following such “change in control,” then such award would vest. Options or stock appreciation rights that vest under (2) would remain exercisable until the earlier of two years following the termination or the original expiration date. With respect to outstanding performance-based awards, the replacement award must be a time-based award covering a number of units based on the “change-in-control performance level”, which is (x) the greater of the target value or actual performance at the time of the “change in control,” if such “change in control” occurred on or before the last day of the performance period, or (y) actual performance, if such “change in control” occurred after the end of the performance period.

Payments under the Executive Change in Control Benefits Plan are subject to a “best net” cutback with respect to Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), whereby, in the event that it is determined that any payment or benefit would constitute a “parachute payment” within the meaning of Section 280G of the Code, such payments or benefits will be reduced so that no portion is subject to the excise tax imposed by Section 4999 of the Code, but only to the extent such reduction will result in a net after-tax benefit to the executive.

For estimates of the amounts that would be payable to Enhabit’s named executive officers pursuant to the Executive Change in Control Benefits Plan upon a qualifying termination of employment that occurs in connection with the transactions contemplated by the Merger Agreement, see the section of this proxy statement titled “—Quantification of Payments and Benefits to the Company’s Named Executive Officers in Connection with the Merger” below. The estimated severance value for Ms. Kalvaitis under the Executive Change in Control Benefits Plan, excluding the value of unvested Company Equity Awards and her retention award provided above and assuming that the Merger was to be completed and she were to experience a qualifying termination on March 16, 2026 and that no “best net” cutback is applied is $679,468.

 

74

Definitions of Certain Terms

For purposes of the Executive Severance Plan and Executive Change in Control Benefits Plan, “cause” generally means: (i) Enhabit’s procurement of evidence of the participant’s act of fraud, misappropriation, or embezzlement with respect to Enhabit or any of its subsidiaries; (ii) the participant’s indictment for, conviction of, or plea of guilty or no contest to, any misdemeanor involving moral turpitude or any felony (other than a minor traffic violation); (iii) the suspension or debarment of the participant or of Enhabit or its affiliates from participation in any federal or state health care program as a result of any willful or grossly negligent act or omission of the participant in connection with his or her employment with Enhabit or any of its subsidiaries; (iv) the participant’s admission, or a finding by a court or the SEC (or a similar state agency), of liability for the violation of any securities laws, other than those that are noncriminal; (v) a formal indication that the participant is a target or the subject of any investigation or proceeding into the actions or inactions of the participant for a violation of any securities laws (other than those that are noncriminal); (vi) the participant’s failure after reasonable prior written notice from Enhabit or any of its subsidiaries to comply with any valid and legal directive of the chief executive officer of Enhabit or Enhabit’s board of directors that is not remedied within 30 days of the participant being provided written notice thereof from Enhabit; (vii) any willful or gross misconduct by the participant in connection with the participant’s duties to Enhabit that could reasonably be expected to be materially injurious to the financial condition or business reputation of Enhabit or its affiliates; or (viii) other than as provided in clauses (i) through (vii) above, the participant’s breach of any material provision of any employment agreement or other material agreement with Enhabit, if applicable, or the participant’s breach of or failure to perform the material duties and responsibilities of the participant’s job, that is not remedied within 30 days or repeated breaches of a similar nature.

For purposes of the Executive Severance Plan, “good reason” means, subject to an applicable notice and cure period, (i) assignment of a position that is of a lesser rank than held by the participant prior to the assignment and that results in a material adverse change in such participant’s reporting position, duties or responsibilities or title or elected or appointed offices as in effect immediately prior to the effective date of such change; (ii) a material reduction in such participant’s “total compensation” from that in effect immediately prior to the effective date of such reduction, where “total compensation” means the sum of base salary, target bonus opportunity and the opportunity to receive compensation in the form of equity in Enhabit, subject to certain exceptions; or (iii) any change of more than 50 miles in the location of the principal place of employment of such participant immediately prior to the effective date of such change. The “good reason” definition in the Executive Change in Control Benefits Plan is substantially the same as the foregoing, provided that such definition also includes as triggers: (1) in the case of an executive officer of Enhabit, ceasing to be an executive officer of a company with securities registered under the Exchange Act and (2) any change in a participant’s status as a Tier 1 or Tier 2 participant under such plan to a status that provides a lower benefit under such plan during the applicable change in control protection period.

For purposes of the Executive Change in Control Benefits Plan, “change in control” means: (i) the acquisition by any person or group of beneficial ownership of 30% or more of either the then-outstanding shares of common stock or the combined voting power of Enhabit’s then-outstanding voting securities subject to certain exceptions; or (ii) during any 24 month period, the individuals who at the beginning of such period constituted the board, or the “Incumbent Board,” cease for any reason to constitute at least a majority of the board (any person becoming a director in the future whose election, or nomination for election, was approved by a vote of at least a majority of the directors then constituting the Incumbent Board shall be considered as though such person were a member of the Incumbent Board); or (iii) the consummation of a merger or consolidation of Enhabit with or into another person or the merger of another person with or into Enhabit, or the sale of all or substantially all the assets of Enhabit to another person, other than a transaction following which (a) in the case of a merger or consolidation transaction, holders of securities that represented 100% of the combined voting power immediately prior to such transaction own at least a majority of the combined voting power immediately after such transaction and (b) in the case of an asset sale, each transferee is owned by holders of securities that represented at least a majority of the combined voting power immediately prior to such sale; or (iv) a liquidation or dissolution of Enhabit or the adoption of a plan of liquidation or dissolution of Enhabit.

 

75

Director Deferred Compensation Plan

Enhabit sponsors the Director Deferred Compensation Plan, which allows Enhabit’s non-employee directors to elect to receive Enhabit common stock in lieu of cash compensation and to elect to defer receipt of such common stock received in lieu of cash compensation in the form of deferred stock units. Accounts under this plan are already fully vested. Because the members of the Board are expected to separate from service in connection with the Closing, account balances under this plan (which per the terms of such plan are fully vested) are expected to pay out in connection with the Merger under the terms of such plan.

Director and Officer Indemnification and Insurance

Pursuant to the terms of the Merger Agreement, the directors and officers of Enhabit will generally be entitled to certain ongoing indemnification and coverage under directors’ and officers’ liability insurance and fiduciary liability insurance policies for a period of six years following the Effective Time. Such indemnification and insurance coverage is further described in the section of this proxy statement titled “The Merger Agreement—Indemnification and Insurance” beginning on page 110.

Quantification of Payments and Benefits to the Company’s Named Executive Officers in Connection with the Merger

The table below entitled “Golden Parachute Compensation,” along with its footnotes, shows the compensation that may be paid or may become payable to Enhabit’s named executive officers that is based on or otherwise related to the transactions contemplated by the Merger Agreement, as required by Item 402(t) of Regulation S-K, which compensation is subject to a non-binding advisory vote of Enhabit’s stockholders, as described below.

The named executive officers for purposes of this disclosure are the following individuals:

 

Name		Position
Barbara A. Jacobsmeyer		President and Chief Executive Officer
Ryan T. Solomon		Chief Financial Officer
Dylan C. Black		General Counsel and Secretary
Julie D. Jolley		Executive Vice President, Home Health
Tanya R. Marion		Chief Human Resources Officer

Please note that the amounts indicated below are estimates based on multiple assumptions that may or may not actually occur or be accurate on the relevant date, including the assumptions described below, and do not reflect certain compensation actions that may occur before the completion of the Merger and, as a result, the actual amounts, if any, to be received by a current named executive officer may differ in material respects from the amounts set forth below.

The amounts indicated below do not attempt to quantify any reduction that may be required as a result of the Code Section 280G “best net” cutback included in the Executive Change in Control Benefits Plan; therefore, actual payments to the named executive officers could be less than the amounts indicated below.

In addition, the table below does not include amounts that Enhabit’s named executive officers were already entitled to receive or vested in as of the date hereof.

Assumptions

For purposes of calculating the amounts indicated in the table below, unless otherwise noted, we have assumed:

 

•

the Effective Time is March 16, 2026, which is the assumed date of the Closing of the Merger solely for purposes of this Merger-related compensation disclosure;

 

76

•

a price per share of Enhabit Common Stock of $13.80;

 

•

each named executive officer is employed by Enhabit as of the Effective Time and their employment is terminated by Enhabit or its successor without “cause” or by the officer for “good reason” (as such terms are defined in the relevant plans and agreements), in each case, immediately following the Effective Time (each, referred to as a “qualifying termination”);

 

•

the named executive officers hold only the Company Equity Awards held by each named executive officer as of March 16, 2026, the latest practicable date before the filing of this proxy statement;

 

•

all unvested Company Equity Awards held by each named executive officer as of March 16, 2026 remain unvested as of the Effective Time;

 

•

all unvested Company PSUs held by each named executive officer as of March 16, 2026 will become vested in the number of shares of Common Stock subject to the Company PSU based on the target performance level;

 

•

each named executive officer will receive the benefits outlined in the Executive Change in Control Benefits Plan;

 

•

no named executive officer enters into any new agreement or becomes entitled to, prior to the Closing, additional compensation or benefits related to the transactions contemplated by the Merger Agreement;

 

•

each named executive officer has properly executed any required releases and complied with all requirements necessary in order to receive all payments and benefits; and

 

•

for purposes of the agreements and plans described below, the consummation of the transactions as contemplated by the Merger Agreement constitutes a “change in control” or “change of control” (as defined under Enhabit’s applicable compensation plans) at the Effective Time.

For a narrative description of the terms and conditions applicable to the payments quantified in the table below, see the sections of this proxy statement titled “—Treatment of Company Equity Awards”, “—Jacobsmeyer Transition, Separation, and Release Agreement”, “—Retention Agreements”, and “—Executive Change in Control Benefits Plan” above.

Golden Parachute Compensation

 

Name		Cash ($)(1)				Equity ($)(2)				Perquisites/ Benefits ($)(3)				Total ($)
Barbara A. Jacobsmeyer			3,296,413				7,795,026				1,278				11,092,717
Ryan T. Solomon			1,372,036				2,870,096				32,793				4,274,925
Dylan C. Black			1,136,140				1,757,347				16,401				2,909,888
Julie D. Jolley			1,187,294				2,007,734				20,120				3,215,148
Tanya R. Marion			1,009,540				1,650,439				32,793				2,692,772

 

(1)

Cash. The estimated amounts listed in this column include the aggregate value of cash severance benefits each named executive officer would be entitled to receive under the Executive Change in Control Benefits Plan in connection with a qualifying termination within two years after the Closing (or for certain terminations occurring prior to the Closing, as described above), including a lump sum cash severance payment based on a multiple of the named executive officer’s base salary and three-year average of actual annual incentive payments; a pro-rata target annual incentive payment for the year of the qualifying termination; accrued but unused and unpaid vacation; and, for each of Mr. Solomon, Mr. Black, Ms. Jolley, and Ms. Marion, a cash payment pursuant to the applicable Retention Agreement, as set forth in more detail

 

77

in the table below. Severance payments under the Executive Change in Control Benefits Plan are “double-trigger” in that they would be paid to the named executive officer only if such named executive officer experiences a qualifying termination within the time period specified above. Likewise, payments under the Retention Agreements are “double-trigger” benefits in that they would be triggered and paid prior to their originally scheduled payment date only if the named executive officer’s employment is terminated prior to December 31, 2026, or if a “change in control” occurs and the surviving company does not assume the Retention Agreement. The estimated amounts shown in this column are based on the compensation levels in effect on March 16, 2026, the latest practicable date to determine such amounts before the filing of this proxy statement; therefore, if compensation levels are changed after such date, actual payments to a named executive officer may be different than those listed in this column. For additional information see the sections of this proxy statement titled “Retention Agreements” and “Executive Change in Control Benefits Plan” above. The table below provides further information regarding the amounts included in this column for each named executive officer:

 

Name		Lump Sum Cash Severance ($)				Pro-Rata Target Bonus ($)				Retention Agreement Payment ($)				Unused and Unpaid Vacation ($)				Total ($)
Barbara A. Jacobsmeyer			3,073,288				223,125				—				—				3,296,413
Ryan T. Solomon			1,034,534				87,502				250,000				—				1,372,036
Dylan C. Black			872,890				68,250				195,000				—				1,136,140
Julie D. Jolley			920,544				71,750				195,000				—				1,187,294
Tanya R. Marion			773,289				61,250				175,001				—				1,009,540

 

(2)

Equity. The estimated amounts listed in this column represent the aggregate value in respect of each named executive officer’s unvested Company Equity Awards (including unvested Company RSUs, unvested Company PSUs, and unvested Company RSAs) as of March 16, 2026, the latest practicable date before the filing of this proxy statement. No value is included with respect to Company Options, because they were all “underwater” as of March 16, 2026. Vesting of Company Equity Awards is a “single-trigger” benefit that will be triggered by the Closing as provided under the terms of the Merger Agreement. For additional information, please see the section of this proxy statement titled “The Merger Agreement—Treatment of Company Equity Awards” and the table set forth below.

 

		Aggregate Value of Unvested Company RSUs ($)				Aggregate Value of Unvested Company PSUs ($)				Aggregate Value of Unvested Company RSAs ($)				Aggregate Value of In-the- Money Company Options ($)				Total ($)
Barbara A. Jacobsmeyer			1,754,380				5,130,343				910,303				—				7,795,026
Ryan T. Solomon			1,844,563				1,025,533				—				—				2,870,096
Dylan C. Black			808,128				949,219				—				—				1,757,347
Julie D. Jolley			876,838				1,130,896				—				—				2,007,734
Tanya R. Marion			738,576				911,863				—				—				1,650,439

 

(3)

Perquisites/Benefits. The estimated amounts listed in this column represent the estimated value of continued medical, dental and vision benefits each named executive officer would be entitled to receive under the Executive Change in Control Benefits Plan in connection with a qualifying termination within two years after the effective time (or for certain terminations occurring prior to the Closing). Such payments are “double-trigger” in that they would be paid to a named executive officer only if such named executive officer experiences a qualifying termination within the time period specified above. The estimated amounts shown in this column are based on benefits in effect on March 16, 2026, the latest practicable date to determine such amounts before the filing of this proxy statement; therefore, if benefit levels are changed

 

78

after such date, actual payments to a named executive officer may be different than those listed in this column. For additional information see the section of this proxy statement titled “Interests of the Directors and Executive Officers of Enhabit in the Merger—Executive Change in Control Benefits Plan.”

Financing of the Merger

The Merger is not conditioned upon receipt of financing by Parent. Parent has obtained debt financing commitments for the Financing in an amount sufficient, when combined with the equity investment described below and other sources of proceeds, to complete the transactions contemplated by the Merger Agreement. The Merger Agreement requires each of Parent and Merger Sub to use, and to cause their respective affiliates to use, reasonable best efforts to arrange, obtain and consummate the Debt Financing on the terms and subject only to the conditions described in the Debt Commitment Letter. Pursuant to the Merger Agreement, Enhabit is required to, and shall cause each of its subsidiaries and each of their respective representatives to, use reasonable best efforts to provide Parent with customary cooperation in connection with the Debt Financing. The Debt Financing is generally subject to the satisfaction of the conditions to Parent and Merger Sub’s obligations to effect the Closing as set forth in the Merger Agreement and the substantially concurrent Closing on the terms and subject to the conditions of the Merger Agreement.

Concurrently with the execution of the Merger Agreement, the Equity Investor delivered a limited guarantee in favor of Enhabit and pursuant to which, subject to the terms and conditions contained therein, the Equity Investor is guaranteeing certain obligations of Parent and Merger Sub in connection with the Merger Agreement, including the payment of the Parent Termination Fee.

The Equity Investor has committed to invest in Parent an amount equal to $688 million, solely for the purpose of funding, and to the extent necessary to fund (together with the proceeds of the Debt Financing and other sources of proceeds), the payment of (a) the aggregate Merger Consideration and any other amounts required to be paid at Closing and (b) all related fees and expenses payable on the date of Closing by Parent and Merger Sub in connection with the transactions contemplated by the Merger Agreement.

Closing and Effective Time of the Merger

The Closing will take place on a date that is three business days after satisfaction or, to the extent permitted under the Merger Agreement, waiver of all conditions to the Closing set forth in the Merger Agreement (other than any such conditions which by their nature are to be satisfied at the Closing, but subject to the satisfaction or, to the extent permitted under the Merger Agreement waiver of those conditions), unless the Merger Agreement has been terminated pursuant to its terms or unless another time or date agreed to in writing by the parties.

As soon as practicable on the Closing Date, the parties will cause the Merger to be consummated by filing with the Secretary of State of the State of Delaware the certificate of merger in such form as required by, and executed in accordance with, the relevant provisions of the DGCL and will make all other filings or recordings required under the DGCL to consummate the Merger. The Merger will become effective at such time as the certificate of merger is duly filed with the Secretary of State, or at such later time as Parent and Enhabit agree and specify in the certificate of merger.

Appraisal Rights

If the Merger is consummated, holders of record and beneficial owners of shares of Common Stock who do not vote in favor of the Merger, who properly demand an appraisal of their shares, who continuously hold (in the case of holders of record) or continuously own (in the case of beneficial owners) their shares through the effective date of the Merger, who otherwise comply with the statutory requirements of Section 262 of the DGCL and who do not withdraw their demands or otherwise lose their rights to appraisal, subject to the conditions thereof, are entitled to seek appraisal of their shares of Common Stock in connection with the Merger under

 

79

Section 262. Unless the context requires otherwise, all references in Section 262 and in this summary (i) to a “stockholder” or a “holder of shares” are to a record holder of shares, (ii) to a “beneficial owner” are to a person who is the beneficial owner of shares of stock held either in voting trust or by a nominee on behalf of such person, and (iii) to a “person” are to any individual, corporation, partnership, unincorporated association or other entity.

The following discussion is not a complete statement of the law pertaining to appraisal rights under the DGCL and is qualified in its entirety by the full text of Section 262, a copy of which may be accessed without subscription or cost at the following publicly available website: https://delcode.delaware.gov/title8/c001/sc09/index.html#262. The following summary does not constitute any legal or other advice and does not constitute a recommendation that Enhabit stockholders or beneficial owners exercise their appraisal rights under Section 262. Stockholders and beneficial owners of shares should carefully review the full text of Section 262 as well as the information discussed below. To the extent there are any inconsistencies between the foregoing summary, on the one hand, and Section 262, on the other hand, Section 262 will govern. Failure to follow the steps required by Section 262 for demanding and perfecting appraisal rights may result in the loss of such rights.

Under Section 262, if the Merger is completed, stockholders or beneficial owners of shares of Common Stock who (i) properly submit a written demand for appraisal of such holder’s or owner’s shares to Enhabit prior to the vote on the Merger at the Special Meeting, (ii) do not vote in favor of the Merger, (iii) continuously hold (in the case of a holder of record) or own (in the case of a beneficial owner) such shares through the effective date of the Merger, (iv) do not validly withdraw their demands or otherwise lose, waive or fail to perfect their rights to appraisal, and (v) otherwise comply with the statutory requirements and satisfy certain ownership thresholds set forth in Section 262, may be entitled to have their shares appraised by the Delaware Court of Chancery if certain conditions set forth in Section 262(g) are satisfied and to receive payment of the “fair value” of their shares, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with (unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown) interest on the amount determined by the Delaware Court of Chancery to be fair value from the effective date of the Merger through the date of payment of the judgment. If you are a beneficial owner of shares of Common Stock and you wish to exercise appraisal rights in such capacity, in addition to the foregoing requirements, your demand must also (a) reasonably identify the holder of record of the shares for which that demand is made, (b) be accompanied by documentary evidence of your beneficial ownership of such shares and include a statement that such documentary evidence is a true and correct copy of what it purports to be, and (c) provide an address at which you consent to receive notices given by the Surviving Corporation and to be set forth on the verified list required by Section 262(f). However, after an appraisal petition has been filed, the Delaware Court of Chancery, at a hearing to determine persons entitled to appraisal rights, will dismiss appraisal proceedings as to all persons who are otherwise entitled to appraisal rights unless (1) the total number of shares entitled to appraisal exceeds one percent of the outstanding shares of the class of shares eligible for appraisal, or (2) the value of the consideration provided in the Merger for such total number of shares exceeds $1 million. These conditions are referred to herein as the “ownership thresholds.” Unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown, interest on an appraisal award from the effective date of the Merger through the date of payment of the judgment will be compounded quarterly and will accrue at five percent over the Federal Reserve discount rate (including any surcharge) as established from time to time during such period (except that, if at any time before the entry of judgment in the proceeding, the Surviving Corporation makes a voluntary cash payment to each person seeking appraisal, interest will accrue thereafter only upon the sum of (A) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery, and (B) interest theretofore accrued, unless paid at that time). The Surviving Corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment.

Under Section 262, if the proposed merger for which appraisal rights are provided is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, must notify each of its stockholders who was such on the record date for notice of such meeting with respect to shares for which appraisal rights are available pursuant to Section 262 that appraisal rights are available and must include in

 

80

the notice either a copy of Section 262 or information directing the stockholders to a publicly available electronic resource at which Section 262 may be accessed without subscription or cost. This proxy statement constitutes Enhabit’s notice to its stockholders that appraisal rights are available in connection with the Merger, and the full text of Section 262 may be accessed without subscription or cost at the following publicly available website: https://delcode.delaware.gov/title8/c001/sc09/index.html#262. In connection with the Merger, any stockholder or beneficial owner of shares of Common Stock who wishes to exercise appraisal rights, or who wishes to preserve such holder’s or owner’s right to do so, should review Section 262 carefully. Failure to strictly comply with the requirements of Section 262 in a timely and proper manner will result in the loss of appraisal rights under the DGCL. A stockholder or beneficial owner who loses such holder’s or owner’s appraisal rights will be entitled to receive the per share price described in the Merger Agreement without interest and subject to any applicable withholding taxes. Because of the complexity of the procedures for exercising the right to seek appraisal of shares, Enhabit believes that if a stockholder or a beneficial owner is considering exercising such rights, that holder or owner should seek the advice of legal counsel.

Stockholders or beneficial owners wishing to exercise the right to seek an appraisal of their shares must do ALL of the following:

 

•

The stockholder or beneficial owner must not vote in favor of the Merger. Because a proxy that is signed and submitted but does not otherwise contain voting instructions will, unless revoked, be voted in favor of the proposal to adopt the Merger Agreement, a stockholder or beneficial owner who submits a proxy and who wishes to exercise appraisal rights must submit a proxy with instructions to vote against the proposal to adopt the Merger Agreement or to affirmatively abstain.

 

•

The stockholder or beneficial owner must deliver to Enhabit a written demand for appraisal of such holder’s or owner’s shares before the vote on the Merger at the Special Meeting. Such demand must reasonably inform Enhabit of the identity of the holder or owner, as applicable, and that the holder or owner, as applicable, intends thereby to demand appraisal of such shares. In the case of a demand made by a beneficial owner, the demand must reasonably identify the holder of record of the shares for which the demand is made, be accompanied by documentary evidence of the beneficial owner’s beneficial ownership of the shares for which appraisal is demanded, include a statement that such documentary evidence is a true and correct copy of what it purports to be and provide an address at which the beneficial owner consents to receive notices given by the Surviving Corporation in the Merger under Section 262 and to be set forth on the verified list required by subsection (f) of Section 262.

 

•

The stockholder must continuously hold or the beneficial owner must continuously own the shares from the date of making the demand through the effective date of the Merger. A stockholder or beneficial owner will lose appraisal rights if the holder or owner transfers the shares before the effective date of the Merger.

 

•

The stockholder or beneficial owner must otherwise comply with Section 262.

Additionally, the demanding stockholder or beneficial owner or another stockholder or beneficial owner who has properly demanded appraisal or the Surviving Corporation must file a petition in the Delaware Court of Chancery demanding a determination of the value of the shares of all such persons within 120 days after the Effective Date of the Merger. The Surviving Corporation is under no obligation to file any petition and has no intention of doing so. Accordingly, it is the obligation of stockholders or beneficial owners to take all necessary action to perfect their appraisal rights in respect of shares within the time prescribed in Section 262.

After an appraisal petition has been filed, the Delaware Court of Chancery, at a hearing to determine persons entitled to appraisal rights, will dismiss appraisal proceedings as to all persons who asserted appraisal rights unless one of the ownership thresholds is met.

 

81

Written Demand

A stockholder or beneficial owner wishing to exercise appraisal rights must deliver to Enhabit, before the vote on the Merger at the Special Meeting, a written demand for the appraisal of such holder’s or owner’s shares. In addition, that stockholder or beneficial owner must not vote or submit a proxy in favor of the Merger. A vote in favor of the Merger, virtually at the Special Meeting or by proxy (whether by mail or via the Internet or telephone), will constitute a waiver of appraisal rights in respect of the shares so voted and will nullify any previously filed written demands for appraisal with respect to such stockholder’s or beneficial owner’s shares. A stockholder exercising appraisal rights must hold of record the shares on the date the written demand for appraisal is made and must continue to hold the shares of record through the effective date of the Merger. A beneficial owner exercising appraisal rights must own the shares on the date the written demand for appraisal is made and must continue to own such shares through the effective date of the Merger. For a stockholder, a proxy that is submitted and does not contain voting instructions will, unless revoked, be voted in favor of the Merger, and it will constitute a waiver of the stockholder’s right of appraisal and will nullify any previously delivered written demand for appraisal. A stockholder or beneficial owner who submits a proxy and who wishes to exercise appraisal rights must submit a proxy containing instructions to vote against the Merger or abstain from voting on the Merger. Neither voting against the Merger nor abstaining from voting or failing to vote on the Merger will, in and of itself, constitute a written demand for appraisal satisfying the requirements of Section 262. The written demand for appraisal must be in addition to and separate from any proxy or vote on the Merger. A stockholder’s or beneficial owner’s failure to make the written demand prior to the taking of the vote on the Merger at the Special Meeting will constitute a waiver of appraisal rights.

A holder of record of shares is entitled to demand appraisal for the shares registered in that holder’s name. A demand for appraisal in respect of shares by a holder of record must reasonably inform Enhabit of the identity of the stockholder and that the stockholder intends thereby to demand an appraisal of such stockholder’s shares.

A beneficial owner may, in such person’s name, demand in writing an appraisal of such beneficial owner’s shares. A demand for appraisal in respect of such shares should be executed by or on behalf of the beneficial owner and must reasonably inform Enhabit of the identity of the beneficial owner and that the beneficial owner intends thereby to demand an appraisal of such owner’s shares. The demand made by such beneficial owner must also (i) reasonably identify the holder of record of the shares for which the demand is made, (ii) be accompanied by documentary evidence of such beneficial owner’s beneficial ownership of the shares and a statement that such documentary evidence is a true and correct copy of what it purports to be, and (iii) provide an address at which such beneficial owner consents to receive notices given by the Surviving Corporation and to be set forth on the verified list required by Section 262(f).

If the shares with respect to which a demand is made are owned of record or beneficially owned in a fiduciary capacity, such as by a trustee, guardian or custodian, such demand should be executed by or on behalf of the record owner or beneficial owner in such capacity, and if the shares are owned of record or beneficially owned by more than one person, as in a joint tenancy and tenancy in common, the demand should be executed by or on behalf of all joint holders of record or beneficial owners. An authorized agent, including an authorized agent for two or more joint stockholders or beneficial owners, as applicable, may execute a demand for appraisal on behalf of a stockholder or beneficial owner, as applicable; however, the agent must identify the stockholder or stockholders or beneficial owner or owners and expressly disclose that, in executing the demand, the agent is acting as agent for the stockholder or stockholders or beneficial owner or owners, as applicable. A stockholder, such as a broker, bank or other nominee, who holds shares as a nominee for others may exercise his, her or its right of appraisal with respect to shares held for one or more beneficial owners, while not exercising this right for other beneficial owners. In that case, the written demand should state the number of shares as to which appraisal is sought. Where no number of shares is expressly mentioned, the demand will be presumed to cover all shares held in the name of the stockholder.

 

82

All written demands for appraisal pursuant to Section 262 should be mailed or delivered to:

Enhabit, Inc.

6688 N. Central Expressway, Suite 1300

Dallas, Texas 75206

Attn: Corporate Secretary

If a person who has made a demand for an appraisal in accordance with Section 262 delivers to the Surviving Corporation a written withdrawal of such person’s demand for an appraisal in respect of some or all of such person’s shares in accordance with subsection (e) of Section 262, either within 60 days after the Effective Time of the Merger or thereafter with the written approval of the Surviving Corporation, then the right of such person to an appraisal of such shares subject to the withdrawal will cease. Notwithstanding the foregoing, an appraisal proceeding in the Delaware Court of Chancery will not be dismissed as to any person without the approval of the Delaware Court of Chancery, and such approval may be conditioned upon such terms as the Delaware Court of Chancery deems just; provided, however that any person who has not commenced an appraisal proceeding or joined that proceeding as a named party may withdraw such person’s demand for appraisal and accept the terms offered upon the Merger within 60 days after the Effective Time of the Merger.

Notice by the Surviving Corporation

If the Merger is completed, within 10 days after the Effective Date of the Merger, the Surviving Corporation will notify each record holder of shares of Common Stock who has properly made a written demand for appraisal pursuant to Section 262 and who has not voted in favor of the Merger, and any beneficial owner who has properly demanded appraisal in accordance with Section 262, that the Merger has become effective and the effective date thereof.

Filing a Petition for Appraisal

Within 120 days after the Effective Date of the Merger, but not thereafter, the Surviving Corporation or any person who has demanded appraisal of such person’s shares and otherwise complied with Section 262 and who is otherwise entitled to appraisal rights under Section 262 may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery, with a copy served on the Surviving Corporation in the case of a petition filed by a person, demanding a determination of the “fair value” of the shares held by all persons entitled to appraisal. The Surviving Corporation is under no obligation, and has no present intention, to file a petition, and Enhabit’s stockholders and beneficial owners should not assume that the Surviving Corporation will file a petition or initiate any negotiations with respect to the “fair value” of the shares. Accordingly, any persons who desire to have their shares appraised by the Delaware Court of Chancery should initiate all necessary action to perfect their appraisal rights in respect of their shares within the time and in the manner prescribed in Section 262. The failure to file such a petition within the period specified in Section 262 could nullify a previous written demand for appraisal.

Within 120 days after the effective date of the Merger, any person who has complied with the requirements for an appraisal of such person’s shares pursuant to Section 262 and who is entitled to appraisal rights thereunder will be entitled, upon written request, to receive from the Surviving Corporation a statement setting forth the aggregate number of shares not voted in favor of the Merger and with respect to which Enhabit has received demands for appraisal, and the aggregate number of stockholders or beneficial owners holding or owning such shares (provided that, where a beneficial owner makes a demand pursuant to Section 262, the holder of record of such shares will not be considered a separate stockholder holding such shares for purposes of such aggregate number). The Surviving Corporation must give this statement to the requesting person within 10 days after receipt by the Surviving Corporation of the written request for such a statement or within 10 days after the expiration of the period for delivery of demands for appraisal, whichever is later.

 

83

If a petition for an appraisal is duly filed by a person and a copy thereof is served upon the Surviving Corporation, the Surviving Corporation will then be obligated within 20 days after such service to file in the office of the Delaware Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all persons who have demanded appraisal for their shares and with whom agreements as to the value of their shares have not been reached by the Surviving Corporation. The Delaware Court of Chancery may order that notice of the time and place fixed for the hearing of such petition be given to the Surviving Corporation and all of the persons shown on the verified list at the addresses stated therein. The forms of the notices by mail and by publication will be approved by the Delaware Court of Chancery, and the costs of any such notices will be borne by the Surviving Corporation.

At the hearing on such petition, the Delaware Court of Chancery will determine the persons who have complied with Section 262 and who have become entitled to appraisal rights thereunder. The Delaware Court of Chancery will dismiss appraisal proceedings as to all of the persons who are otherwise entitled to appraisal rights unless one of the ownership thresholds is met.

Determination of Fair Value

After the Delaware Court of Chancery determines the persons entitled to appraisal, and that at least one of the ownership thresholds above has been satisfied, then the appraisal proceeding will be conducted in accordance with the rules of the Delaware Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding, the Delaware Court of Chancery will determine the “fair value” of the shares, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining fair value, the Delaware Court of Chancery will take into account all relevant factors. Unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown, interest from the effective date of the Merger through the date of payment of the judgment will be compounded quarterly and will accrue at five percent over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the Merger and the date of payment of the judgment. However, the Surviving Corporation has the right, at any time prior to the Delaware Court of Chancery’s entry of judgment in the proceedings, to make a voluntary cash payment to each person seeking appraisal. If the Surviving Corporation makes a voluntary cash payment pursuant to subsection (h) of Section 262, interest will accrue thereafter only on the sum of (i) the difference, if any, between the amount paid by the Surviving Corporation in such voluntary cash payment and the fair value of the shares as determined by the Delaware Court of Chancery, and (ii) interest accrued before such voluntary cash payment, unless paid at that time. In Weinberger v. UOP, Inc., Delaware Supreme Court discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that “proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered, and that “[f]air price obviously requires consideration of all relevant factors involving the value of a company.” The Delaware Supreme Court stated that, in making this determination of fair value, the court must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts that could be ascertained as of the date of the Merger that throw any light on future prospects of the merged corporation. The Delaware Supreme Court has indicated that transaction price is one of the relevant factors the Delaware Court of Chancery may consider in determining fair value and that, absent deficiencies in the sale process, the transaction price should be given “considerable weight.” Section 262 provides that fair value is to be “exclusive of any element of value arising from the accomplishment or expectation of the merger.” In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such exclusion is a “narrow exclusion [that] does not encompass known elements of value,” but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger, the Supreme Court of Delaware also stated that “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered.”

 

84

Upon application by the Surviving Corporation or by any person entitled to participate in the appraisal proceeding, the Delaware Court of Chancery may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the persons entitled to an appraisal. Any person whose name appears on the verified list may participate fully in all proceedings until it is finally determined that such person is not entitled to appraisal rights. When the fair value of the shares is determined, the Delaware Court of Chancery will direct the payment of the fair value of the shares, together with interest, if any, by the Surviving Corporation to the persons entitled thereto. Payment will be made to each such person upon such terms and conditions as the Delaware Court of Chancery may order. The Delaware Court of Chancery’s decree may be enforced as other decrees in such court may be enforced.

Persons considering seeking appraisal should be aware that the fair value of their shares as so determined by the Delaware Court of Chancery could be more than, the same as or less than the consideration they would receive pursuant to the Merger if they did not seek appraisal of their shares and that an opinion of an investment banking firm as to the fairness from a financial point of view of the consideration payable in a Merger is not an opinion as to, and may not in any manner address, fair value under Section 262. Although Enhabit believes that each of the per share Merger Consideration is fair, no representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery, and holders of record and beneficial owners of shares should recognize that such an appraisal could result in a determination of a value higher or lower than, or the same as, the per share price. Neither Enhabit nor Parent anticipates offering more than the per share price to any stockholder or beneficial owner exercising appraisal rights, and each of Enhabit and Parent reserves the right to make a voluntary cash payment pursuant to subsection (h) of Section 262 and to assert, in any appraisal proceeding, that for purposes of Section 262, the fair value of a share is less than the per share Merger Consideration. If a petition for appraisal is not timely filed, neither of the ownership thresholds above has been satisfied in respect of persons seeking appraisal rights or other requirements imposed by Section 262 to seek and perfect appraisal are not satisfied, then the right to an appraisal will cease. The costs of the appraisal proceedings (which do not include attorneys’ fees or the fees and expenses of experts) may be determined by the Delaware Court of Chancery and taxed upon the parties as the Delaware Court of Chancery deems equitable under the circumstances. Upon application of a person whose name appears on the list filed by the Surviving Corporation pursuant to Section 262(f) who participated in the proceeding and incurred expenses in connection therewith, the Delaware Court of Chancery may also order that all or a portion of such expenses, including, without limitation, reasonable attorney’s fees and the fees and expenses of experts, be charged pro rata against the value of all the shares entitled to an appraisal not dismissed pursuant to subsection (k) of Section 262 or subject to such an award pursuant to a reservation of jurisdiction under such subsection (a “Reservation”). In the absence of such an order, each party bears its own expenses.

If any person who demands appraisal of his, her or its shares under Section 262 fails to perfect, or loses or validly withdraws, such person’s right to appraisal, such person’s shares will be deemed to have been converted at the Effective Time into the right to receive the per share price as provided in the Merger Agreement. A person will fail to perfect, or effectively lose or withdraw, such person’s right to appraisal if no petition for appraisal is filed within 120 days after the effective date of the Merger, if neither of the ownership thresholds above has been satisfied in respect of persons seeking appraisal rights or if the person delivers to the Surviving Corporation a written withdrawal of such person’s demand for appraisal in accordance with Section 262.

From and after the effective date of the Merger, no person who has demanded appraisal rights with respect to some or all of such person’s shares in compliance with Section 262 will be entitled to vote such shares for any purpose or to receive payment of dividends or other distributions on the shares (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the Merger); provided, however, that if no petition for an appraisal is filed within the time provided in Section 262, or if such person delivers to the Surviving Corporation a written withdrawal of such person’s demand for an appraisal in respect of some or all of such person’s shares within 60 days after the effective date of the Merger, then the right of such person to an appraisal of the shares subject to the withdrawal will cease. Notwithstanding the foregoing, no appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any person without the approval of the Delaware Court of Chancery, and such approval may be conditioned upon such terms as the

 

85

Delaware Court of Chancery deems just, including, without limitation, a Reservation; provided, however, that the foregoing will not affect the right of any person who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such person’s demand for appraisal and to accept the terms offered upon the Merger within 60 days after the effective date of the Merger.

To the extent there are any inconsistencies between the foregoing summary, on the one hand, and Section 262, on the other hand, Section 262 will govern.

Failure to comply strictly with all of the procedures set forth in Section 262 will result in the loss of a person’s statutory appraisal rights. In that event, you will be entitled to receive the per share price for your dissenting shares in accordance with the Merger Agreement, without interest and subject to any applicable withholding taxes. Consequently, any person wishing to exercise appraisal rights is encouraged to consult legal counsel before attempting to exercise those rights.

Material U.S. Federal Income Tax Consequences of the Merger

The following discussion is a summary of certain material U.S. federal income tax consequences of the Merger that may be relevant to holders of shares of Common Stock whose shares are converted into the right to receive cash pursuant to the Merger. This discussion is based upon the Code, final, temporary and proposed Treasury Regulations promulgated under the Code, court decisions, published positions of the Internal Revenue Service (the “IRS”), and other applicable authorities, all as in effect on the date of this proxy statement and all of which are subject to change or differing interpretations at any time, possibly with retroactive effect. This discussion is limited to holders that hold their shares of Common Stock as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment purposes). This summary of material U.S. federal income tax consequences is not a complete description of all potential U.S. federal income tax consequences of the Merger. This summary does not describe any of the tax consequences arising under the laws of any state, local or non-U.S. tax jurisdiction and does not consider any aspects of U.S. federal tax law other than income taxation (e.g., estate, gift or alternative minimum tax). In addition, this summary does not address (i) the potential application of the Medicare net investment income surtax, (ii) any withholding considerations under the Foreign Account Tax Compliance Act of 2010 (including regulations issued thereunder and intergovernmental agreements entered into pursuant thereto or in connection therewith), (iii) the rules regarding qualified small business stock within the meaning of Sections 1202 or 1045 of the Code, or (iv) the U.S. federal income tax consequences to holders of Common Stock that exercise appraisal rights under the DGCL. For purposes of this discussion, a “holder” means either a U.S. Holder or a Non-U.S. Holder (each, as defined below), or both, as the context may require.

This discussion is for general information only and does not describe all of the U.S. federal income tax considerations that may be relevant to holders in light of their particular facts and circumstances or to a holder subject to special rules:

 

•

holders that may be subject to special treatment under U.S. federal income tax laws, such as: financial institutions, tax-exempt organizations, governmental organizations, S corporations, partnerships or any other entities or arrangements treated as pass-through entities or partnerships for U.S. federal income tax purposes (or any investor therein), banks, insurance companies, mutual funds, brokers or dealers in stocks, securities, commodities or currencies, traders in securities that elect to use the mark-to-market method of accounting for their securities, regulated investment companies, real estate investment trusts, or certain former citizens or long-term residents of the United States;

 

•

holders that are corporations that accumulate earnings to avoid U.S. federal income tax;

 

•

holders holding their shares of Common Stock as part of a hedging, straddle or other risk reducing transaction or as part of a conversion transaction or other integrated investment;

 

•

holders deemed to have sold their shares of Common Stock under the constructive sale provisions of the Code;

 

86

•

holders that received their shares of Common Stock in compensatory transactions;

 

•

holders that hold their shares of Common Stock through individual retirement or other tax-deferred accounts;

 

•

U.S. Holders whose “functional currency” is not the U.S. dollar;

 

•

holders that are required to report income no later than when such income is reported in an “applicable financial statement”;

 

•

“controlled foreign corporation” or a “passive foreign investment company”;

 

•

a U.S. expatriate or former citizen or long-term resident of the United States; or

 

•

holders that own or have owned (actually or constructively) 5% or more of the shares.

If a partnership (including an entity or arrangement classified as a partnership for U.S. federal income tax purposes) is a beneficial owner of shares of Common Stock, the U.S. federal income tax treatment of a partner in such partnership will generally depend upon the status of the partner and the activities of the partnership. Partnerships holding shares of Common Stock and partners therein should consult their own tax advisors regarding the particular tax consequences to them of the Merger.

We have not sought, and do not intend to seek, any ruling from the IRS with respect to the statements made and the conclusions reached in the following summary. No assurance can be given that the IRS will agree with the views expressed in this summary, or that a court will not sustain any challenge by the IRS in the event of litigation.

THIS DISCUSSION OF MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES IS PROVIDED FOR GENERAL INFORMATION ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE TO ANY HOLDER. A HOLDER SHOULD CONSULT ITS OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE MERGER IN LIGHT OF ITS PARTICULAR CIRCUMSTANCES AND ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR OTHER TAX LAWS.

U.S. Holders

For purposes of this proxy statement, a “U.S. Holder” is a beneficial owner of Common Stock who or that is, or is treated as, for U.S. federal income tax purposes:

 

•

An individual who is a citizen or resident of the United States;

 

•

A corporation, or any other entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

 

•

An estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

 

•

A trust (i) that is subject to the primary supervision of a court within the United States and the control of one or more United States persons as defined in Section 7701(a)(30) of the Code or (ii) that has a valid election in effect under applicable Treasury Regulations to be treated as a United States person for U.S. federal income tax purposes.

Stockholders’ receipt of cash in exchange for shares of Common Stock will be a taxable transaction for U.S. federal income tax purposes. In general, such U.S. Holder will recognize gain or loss equal to the difference, if any, between the amount of cash received and the U.S. Holder’s adjusted tax basis in the shares of Common Stock surrendered in the Merger. A U.S. Holder’s adjusted tax basis generally will equal the amount that such U.S. Holder paid for the shares of Common Stock. Any such gain or loss generally will be capital gain or loss and will be long-term capital gain or loss if such U.S. Holder’s holding period in such shares of Common Stock

 

87

is more than one year at the time of the consummation of the Merger. If a U.S. Holder acquired different blocks of shares of Common Stock at different times or different prices, such U.S. Holder must determine its adjusted tax basis and holding period separately with respect to each block of shares of Common Stock. A reduced tax rate on capital gains generally will apply to long-term capital gains of non-corporate U.S. Holders, including individuals. There are limitations on the deductibility of capital losses.

Payments made to a U.S. Holder in exchange for shares of Common Stock in the Merger may be subject to information reporting to the IRS and backup withholding at a rate of 24%. To avoid backup withholding on such payments, U.S. Holders that do not otherwise establish an exemption must complete and return to the Payment Agent (as defined herein) a properly executed IRS Form W-9 certifying under penalties of perjury that such holder is a United States person for U.S. federal income tax purposes, that the taxpayer identification number provided on such IRS Form W-9 is correct and that such holder is not subject to backup withholding. Certain types of U.S. Holders (including, with respect to certain types of payments, corporations) generally are not subject to backup withholding.

Backup withholding is not an additional tax. Any amounts withheld from payments to a U.S. Holder under the backup withholding rules generally will be allowed as a refund or a credit against such U.S. Holder’s U.S. federal income tax liability, if any, provided the required information is timely furnished to the IRS. U.S. Holders should consult their own tax advisors regarding their qualification for an exemption from backup withholding and the procedures for such an exemption.

Non-U.S. Holders

For purposes of this proxy statement, the term “Non-U.S. Holder” means a beneficial owner of shares of Common Stock that is neither a U.S. Holder nor an entity or arrangement treated as a partnership for U.S. federal income tax purposes.

Non-U.S. Holders should consult their tax advisors to determine the U.S. federal, state, local, non-U.S. and other tax consequences that may be relevant to them in light of their particular circumstances.

Any gain realized by a Non-U.S. Holder on the receipt of cash in exchange for shares of Common Stock generally will not be subject to U.S. federal income tax unless:

 

•

such gain is effectively connected with a trade or business of such Non-U.S. Holder in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by such Non-U.S. Holder in the United States), in which case the Non-U.S. Holder generally will be subject to United States federal income tax on a net income basis with respect to such gain in the same manner as if such Non-U.S. Holder were a resident of the United States, and, if the Non-U.S. Holder is a corporation, such gain may also be subject to an additional branch profits tax at a rate of 30% (or a lower rate specified under an applicable tax treaty);

 

•

such Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of the disposition, and certain other specified conditions are met, in which case such gain will be subject to U.S. federal income tax at a rate of 30% (or a lower rate specified under an applicable tax treaty), which may be offset by U.S.-source capital losses of such Non-U.S. Holder recognized in the same taxable year (if any) provided the Non-U.S. Holder timely files U.S. federal income tax returns with respect to such losses; or

 

•

our Common Stock constitutes a United States real property interest (a “USRPI”) by reason of Enhabit’s status as a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code (a “USRPHC”), at any time during the shorter of the five-year period ending on the date of the Merger or the period that the Non-U.S. Holder held the applicable Common Stock.

 

88

With respect to the third bullet point above, Enhabit believes that it is not a USRPHC. Because the determination of whether Enhabit is a USRPHC depends, however, on the fair market value of its USRPIs relative to the fair market value of its non-U.S. real property interests and other business assets, there can be no assurance Enhabit is not a USRPHC. Even if Enhabit is a USRPHC, a Non-U.S. Holder of our Common Stock may qualify for an exemption if our Common Stock is regularly traded on an established securities market and the Non-U.S. Holder does not actually or constructively hold more than 5% of such regularly traded Common Stock at any time within the shorter of the five-year period preceding the Merger and the Non-U.S. Holder’s holding period for our Common Stock. There can be no assurance that Common Stock will be treated as regularly traded on an established securities market for this purpose. Non-U.S. Holders are urged to consult their own tax advisors about the consequences that could result if we are, were or were to become a USRPHC.

Non-U.S. Holders should consult their own tax advisors regarding potentially applicable income tax treaties that may provide for different rules.

Payments made to Non-U.S. Holders in exchange for shares of Common Stock in the Merger may be subject to information reporting to the IRS and backup withholding at a rate of 24%. Non-U.S. Holders generally can avoid information reporting and backup withholding by providing the Payment Agent with the applicable and properly completed and executed applicable IRS Form W-8 certifying that the Non-U.S. Holder is not a United States person or by otherwise establishing an exemption to information reporting and backup withholding requirements. Copies of information returns that are filed with the IRS may be made available under an applicable tax treaty or information exchange agreement to the tax authorities of the country in which the Non-U.S. Holder resides or is established.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules generally will be allowed as a refund or a credit against a Non-U.S. Holder’s U.S. federal income tax liability, if any, provided the required information is timely furnished to the IRS.

This summary of the material U.S. federal income tax consequences of the Merger to U.S. Holders and Non-U.S. Holders is for general information purposes only and is not tax advice. Holders of our Common Stock should consult their own tax advisors regarding the application of the U.S. federal tax laws to their particular situation and the applicability and effect of state, local or foreign tax laws and tax treaties.

Regulatory Approvals Required for the Merger

General Efforts

Subject to the terms and conditions of the Merger Agreement, Enhabit and Parent have agreed to use their reasonable best efforts to do all things necessary, proper or advisable under applicable law to consummate the transactions contemplated by the Merger Agreement, including (i) the obtaining of all necessary actions or non-actions, waivers, consents and approvals, and expiration or termination of any waiting periods from governmental authorities and the making of all necessary registrations and filings (including filings with governmental authorities, if any) and the taking of all steps as may be necessary to obtain an approval or waiver from, or to avoid a proceeding by, any governmental authorities, (ii) the delivery of required notices to, and the obtaining of required consents or waivers from, third parties (provided that Enhabit is not obligated to make any payment or commercial concession to any third party, or incur any liability, as a condition to (or in connection with) obtaining any such consent or waiver), and (iii) the execution and delivery of any additional instruments necessary to consummate the Merger and to fully carry out the purposes of the Merger Agreement.

State Regulatory Approvals

Pursuant to health care laws and regulations of certain states, applicable state regulatory and governmental authorities must approve, or be notified of, Parent’s acquisition of control of Enhabit’s regulated businesses or

 

89

entities, including through required state healthcare transaction filings in Indiana and Massachusetts, and a Change in Effective Control application in Rhode Island (on which completion of the Merger is conditioned under the Merger Agreement). To obtain these approvals and provide such notices, Enhabit, or the applicable Enhabit subsidiary, and in some instances Parent, or the applicable Parent regulated entity, as the case may be, have filed or will file notices, applications and other statements, as required by any applicable healthcare laws and regulations of each applicable state or applicable regulated entities’ licenses.

HSR Act; Competition Laws

Under the HSR Act, and the rules promulgated thereunder by the Federal Trade Commission (the “FTC”), the Merger cannot be consummated until Enhabit and Parent each file a notification and report form with the FTC and the Antitrust Division of the U.S. Department of Justice (the “DOJ”) under the HSR Act and the applicable waiting period thereunder has expired or been terminated. A transaction notifiable under the HSR Act may not be completed until the expiration of a 30 calendar-day waiting period following the parties’ filing of their respective HSR Act notification forms or the early termination of that waiting period. Enhabit and Parent filed their respective HSR Act notifications on March 18, 2026. The waiting period under the HSR Act is set to expire at 11:59 p.m., Eastern Time, on April 17, 2026, unless extended or earlier terminated. Enhabit and Parent have requested “early termination” of such waiting period. The DOJ or the FTC may extend the 30 day waiting period by issuing a Request for Additional Information and documentary materials (a “Second Request”). If either agency issues a Second Request, the waiting period will be extended until 30 days after the parties substantially comply with the request.

Enhabit and Parent (including, if applicable, its “ultimate parent entity,” as that term is defined in the HSR Act and its implementing regulations) will (i) promptly, but in no event later than 20 business days after the date of the Merger Agreement, file any and all notices, reports and other documents required to be filed by such party under the HSR Act with respect to the Merger and the other transactions contemplated by the Merger Agreement and will use reasonable best efforts to promptly secure the expiration or termination of any applicable waiting periods under the HSR Act (including, but not limited to, seeking early termination of the applicable waiting periods pursuant to the HSR Act); (ii) promptly and in compliance with all applicable laws make all filings, and use reasonable best efforts to timely obtain all consents, permits, authorizations, waivers, clearances and approvals, and to cause the expiration or termination of any applicable waiting periods, as may be required under any other applicable antitrust laws (to the extent required); (iii) as promptly as reasonably practicable respond appropriately to any request by the DOJ or the FTC under the HSR Act or by any other governmental authority under applicable antitrust laws in connection with the Merger and the other transactions contemplated by the Merger Agreement; (iv) use reasonable best efforts to cause to be taken, on a timely basis, all other actions necessary or appropriate for the purpose of consummating and effectuating the Merger and the other transactions contemplated by the Merger Agreement; and (v) defend any claim asserted in court by any governmental authority or any other person under antitrust laws in order to avoid entry of, or to have vacated or terminated, any order (whether temporary, preliminary or permanent) that would prevent the Closing occurring prior to the End Date. Parent will pay all filing fees under the HSR Act and other applicable antitrust laws, and Enhabit will not be required to pay any fees or other payments to any governmental authority in connection with any filings under the HSR Act or such other filings as may be required under applicable antitrust laws, in connection with the Merger or the other transactions contemplated by the Merger Agreement.

Delisting and Deregistration of Common Stock

If the Merger is consummated, following the Effective Time, the Common Stock will cease trading on NYSE and will be deregistered under the Exchange Act. As such, Enhabit would no longer file periodic reports with the SEC.

 

90

THE MERGER AGREEMENT

The discussion of the terms of the Merger Agreement in this section and elsewhere in this proxy statement is qualified in its entirety by reference to the complete text of the Merger Agreement, a copy of which is attached as Annex A to this proxy statement and is incorporated into this proxy statement by reference. This summary does not purport to be complete and may not contain all of the information about the Merger that is important to you. You are encouraged to read the Merger Agreement carefully and in its entirety as it is the legal document that governs the Merger.

Explanatory Note Regarding the Merger Agreement

The following description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is included as Annex A attached hereto. The Merger Agreement has been included to provide Enhabit’s stockholders with information regarding its terms. It is not intended to provide any other factual information about Enhabit, Parent, Merger Sub or their respective subsidiaries or affiliates. The representations, warranties, covenants and agreements contained in the Merger Agreement (1) were made only for purposes of the Merger Agreement as of the specific dates therein, (2) were made solely for the benefit of the parties to the Merger Agreement, (3) may be subject to qualifications and limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk among the parties to the Merger Agreement instead of establishing these matters as facts, and (4) may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to Enhabit’s stockholders. The representations and warranties may also be subject to a contractual standard of materiality different from those generally applicable to reports and documents filed with the SEC or what may be viewed as material by Enhabit’s stockholders and, in some cases, were qualified by (1) matters specifically disclosed in Enhabit’s filings with the SEC prior to the date of the Merger Agreement and (2) confidential matters disclosed to the contracting parties in connection with the Merger Agreement. Enhabit’s stockholders are not third-party beneficiaries under the Merger Agreement and should not rely on the representations, warranties, covenants and agreements or any descriptions thereof as characterizations of the actual state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be reflected in Enhabit’s public disclosures. In addition, you should not rely on the covenants in the Merger Agreement as actual limitations on the respective businesses of Enhabit, Parent and Merger Sub, because Enhabit may take certain actions that are either expressly permitted in the confidential disclosures to the Merger Agreement or as otherwise consented to by the appropriate party, which consent may be given without prior notice to the public. Accordingly, the representations, warranties, covenants and other agreements in the Merger Agreement should not be read alone, and you should read the information provided elsewhere in this document and in our filings with the SEC regarding Enhabit and its business. See the section of this proxy statement titled “Where You Can Find More Information.”

Effect of the Merger

The Merger Agreement provides that, upon the terms and subject to the conditions of the Merger Agreement, at the Effective Time, Merger Sub will be merged with and into Enhabit in accordance with the DGCL, whereupon the separate existence of Merger Sub will cease, and Enhabit will continue as the Surviving Corporation in the Merger. At the Effective Time, as a result of the Merger, the Surviving Corporation will become a wholly owned subsidiary of Parent, and Enhabit’s Common Stock will no longer be publicly traded. In addition, after the Effective Time, the Common Stock will be delisted from the NYSE and will be deregistered under the Exchange Act.

 

91

Closing and Effective Time

The Closing will take place on the date that is three business days after satisfaction or, to the extent permitted under the Merger Agreement, waiver of all conditions to the Closing (as described in the section of this proxy statement titled “—Conditions to the Closing of the Merger”) (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or, to the extent permitted under the Merger Agreement, waiver of those conditions), unless the Merger Agreement has been terminated pursuant to its terms or unless another time or date is agreed to in writing by the parties to the Merger Agreement. On the Closing Date, the parties will execute and deliver a certificate of merger to the Secretary of State of the State of Delaware for filing as provided under the DGCL. The Merger will become effective upon the filing with, and acceptance by the Secretary of State of the State of Delaware of the certificate of merger, or at such other time as may be agreed by the parties in writing and specified in the certificate of merger.

Directors and Officers; Certificate of Incorporation; Bylaws

At the Effective Time, all rights, privileges, immunities, powers and franchises of Enhabit will vest in the Surviving Corporation, and all of the debts, liabilities and duties of Enhabit and Merger Sub will become the debts, liabilities and duties of the Surviving Corporation.

Under the Merger Agreement, the directors of Merger Sub immediately prior to the Effective Time will be the directors of the Surviving Corporation from and after the Effective Time, and the officers of Merger Sub immediately prior to the Effective Time will be the officers of the Surviving Corporation from and after the Effective Time, each to hold office until the earlier of their death, resignation, removal or until their respective successors are duly elected and qualified in accordance with the certificate of incorporation and bylaws of the Surviving Corporation and applicable law. At the Effective Time, the certificate of incorporation of Enhabit will be amended and restated to read in its entirety as set forth in Exhibit A to the Merger Agreement, and the Bylaws of Enhabit will be amended and restated to read in their entirety as set forth in Exhibit B to the Merger Agreement, and each will govern the Surviving Corporation until, subject to the indemnification requirements provided by the Merger Agreement, amended in accordance with applicable law.

Merger Consideration

Common Stock

At the Effective Time, except as otherwise expressly agreed to in writing after the date of the Merger Agreement and prior to the Effective Time by Parent and a holder of Common Stock, and except as otherwise provided in the Merger Agreement, each share of Common Stock issued and outstanding immediately prior to the Effective Time will be automatically canceled and converted into the right to receive the Merger Consideration (which is, with respect to each share of Common Stock, the Per Share Amount). As of the Effective Time, all such shares of Common Stock will no longer be issued and outstanding and will be automatically cancelled and will cease to exist, and each holder of any such shares of Common Stock will cease to have any rights with respect thereto, except the right to receive the Merger Consideration in accordance with the Merger Agreement.

At the Effective Time, each share of Common Stock held in the treasury of Enhabit or any of its subsidiaries or any shares of Common Stock owned by Parent or Merger Sub immediately prior to the Effective Time will automatically be cancelled and will cease to exist and no consideration will be delivered in exchange therefor.

At the Effective Time, each share of common stock of Merger Sub issued and outstanding immediately prior to the Effective Time will automatically be converted into and become one fully paid, nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation with the same rights, powers and privileges as the shares so converted and will constitute the only outstanding shares of capital stock of the Surviving Corporation.

 

92

Treatment of Equity Awards

Treatment of Company Options

Each Company Option that is outstanding and unexercised as of immediately prior to the Effective Time will, to the extent unvested, accelerate and become fully vested and exercisable effective immediately prior to, and contingent upon, the Effective Time. At the Effective Time, except as otherwise expressly agreed to in writing after the date of the Merger Agreement and prior to the Effective Time by Parent and a holder of Company Options, and except as otherwise provided in the Merger Agreement, each outstanding and unexercised Company Option will be automatically cancelled and converted to the right to receive an amount in cash, without interest and subject to applicable Tax (as defined in the Merger Agreement) withholding under applicable law and any other authorized deductions, equal to the product obtained by multiplying (i) the total number of shares of Common Stock subject to the Company Option as of immediately prior to the Effective Time by (ii) the excess, if any, of (A) the Per Share Amount over (B) the exercise price per share of Common Stock applicable to such Company Option.

As of the Effective Time, each Company Option that is then outstanding and unexercised and that has an exercise price per share of Common Stock that is equal to, or greater than, the Per Share Amount will be automatically cancelled, without any further action on the part of the holder of any Company Option, without any cash payment or other consideration being made in respect therof.

Treatment of Company RSUs and Company RSAs

Each Company RSU and Company RSA that is outstanding as of immediately prior to the Effective Time will, to the extent unvested, become fully vested effective immediately prior to, and contingent upon, the Effective Time. Except as otherwise expressly agreed to in writing after the date of the Merger Agreement and prior to the Effective Time by Parent and a holder of Company RSUs or Company RSAs, as of the Effective Time, each Company RSU and Company RSA that is then outstanding will be automatically cancelled and converted into the right to receive a cash payment in an amount equal to the product of (A) the total number of shares of Common Stock underlying such Company RSU or the total number of Company RSAs, as applicable, as of immediately prior to the Effective Time, multiplied by (B) the Per Share Amount, which will be paid in accordance with “Payment of Equity Awards” below, without interest and subject to any applicable Tax withholding under applicable law in accordance with the Merger Agreement and any other authorized deductions.

Treatment of Company PSUs

Each Company PSU that is outstanding as of immediately prior to the Effective Time will, to the extent unvested, become vested effective immediately prior to, and contingent upon, the Effective Time, in the number of shares of Common Stock subject to the Company PSU based on the greater of the target performance level and the actual performance level measured as of the Effective Time (as determined by the Compensation and Human Capital Committee of the Board as constituted immediately prior to the Effective Time) (or, for any Company PSUs for which the performance period has been completed as of the Effective Time, the actual performance level). Except as otherwise expressly agreed to in writing after the date of the Merger Agreement and prior to the Effective Time by Parent and a holder of Company PSUs, as of the Effective Time, (i) the vested portion of a Company PSU (after giving effect to the first sentence of this paragraph) will be automatically cancelled and converted into the right to receive a cash payment in an amount equal to the product of (A) the total number of shares of Common Stock underlying such vested portion of the Company PSU as of immediately prior to the Effective Time, multiplied by (B) the Per Share Amount, without interest and subject to any applicable Tax withholding under applicable law in accordance with “Payment of Equity Awards” below and any other authorized deductions, and (ii) the unvested portion of a Company PSU will be automatically cancelled without any cash payment or other consideration being made in respect thereof.

 

93

Payment of Equity Awards

No later than ten business days after the Effective Time, the Surviving Corporation will pay, or will cause to be paid, the payments provided for above, less applicable tax withholding under applicable law in accordance with the Merger Agreement and other authorized deductions, to the applicable recipients thereof, with such payments to be made, to the extent applicable, through the payroll of the Surviving Corporation or any of its subsidiaries; provided that, to the extent any such payments constitute a deferral of compensation subject to Section 409A of the Code, those payments will, to the extent necessary to comply with Section 409A of the Code, instead be paid by, or at the direction of, the Surviving Corporation at the time when the related Company Equity Awards would otherwise have been settled in accordance with their terms or at such other time that is necessary to comply with Section 409A of the Code.

Exchange and Payment Procedures

Prior to the Effective Time, Parent will appoint a bank or trust company reasonably acceptable to Enhabit to act as the payment agent for the Merger (the “Payment Agent”). At the Effective Time, Parent will deposit (or cause to be deposited) with the Payment Agent the aggregate per share Merger Consideration.

Promptly after the Effective Time (and in any event no later than three business days after the Effective Time), Parent will send (or cause the Payment Agent to send) to each record holder of shares of Common Stock at the Effective Time whose shares were converted into the right to receive the Merger Consideration a letter of transmittal and instructions in forms reasonably satisfactory to Enhabit (which will specify that delivery will be effected, and risk of loss and title will pass, only upon delivery or transfer of the certificates (or affidavits of loss in lieu of the certificates) to the Payment Agent). Each holder of shares of Common Stock that have been converted into the right to receive the Merger Consideration will be entitled to receive the Merger Consideration in respect of the shares represented by a certificate, within two business days, upon (1) surrender to the Payment Agent of a certificate, together with a completed and executed letter of transmittal, or (2) receipt of an “agent’s message” by the Payment Agent (or such other evidence, if any, of transfer as the Payment Agent may reasonably request) in the case of a book-entry transfer of shares of Common Stock and, in each case, delivery to the Payment Agent of such other documents as may reasonably be requested by the Payment Agent.

Any cash deposited with the Payment Agent not claimed by the holders of shares of Common Stock twelve months after the Effective Time will be delivered to the Surviving Corporation, upon demand, and any such holder who has not exchanged shares of Common Stock for the Merger Consideration in accordance with the exchange procedures in the Merger Agreement prior to that time will thereafter look only to Parent and the Surviving Corporation (as unsecured creditor thereof) for payment of the Merger Consideration.

Representations and Warranties

The Merger Agreement contains representations and warranties of Enhabit and Parent and Merger Sub.

Some of the representations and warranties in the Merger Agreement made by Enhabit are qualified as to materiality or Company Material Adverse Effect. For purposes of the Merger Agreement, “Company Material Adverse Effect” means any change, event, occurrence, facts, condition, circumstance, development or effect (each, an “Effect”) that, individually or in the aggregate with such other Effects has had, or would reasonably be expected to have, a material adverse effect on the business, financial condition or results of the operations of Enhabit and its subsidiaries, taken as a whole; provided, however that, none of the following (alone or in combinations) will constitute or be taken into account in determining whether a Company Material Adverse Effect has occurred or would reasonably be expected to occur:

(A) the negotiation, execution, announcement or performance of the Merger Agreement or the pendency or consummation of the Merger or other transactions contemplated by the Merger Agreement (including any litigation or any loss of or adverse change in the relationship of Enhabit and its subsidiaries with

 

94

their respective employees, investors, contractors, lenders, customers, technology and other partners, suppliers, vendors, governmental authorities or other third parties related thereto (provided that this clause (A) will not apply with respect to any breach or inaccuracy of any representation or warranty set forth in Section 4.02(a) or Section 4.04 of the Merger Agreement));

(B) the identity of Parent or any of its affiliates as the acquiror of Enhabit, or any facts or circumstances concerning Parent or any of its affiliates, including any communication by any of them regarding plans, proposals or projections with respect to Enhabit, its subsidiaries or their employees;

(C) any change in economic, market, business, political, financial, commodity, credit, debt, securities, derivatives or capital market conditions in the United States or in any other country or region in the world, including inflation, labor shortages, interest rates, foreign exchange or exchange rates and any suspension of trading in securities (whether equity, debt, derivative or hybrid securities) generally on any security exchange or over-the-counter market;

(D) general conditions in any industry in which Enhabit and its subsidiaries operate or in any specific jurisdiction or geographical area in the United States or elsewhere in the world, or changes therein;

(E) any changes or proposed changes in GAAP or other accounting standards after the date of the Merger Agreement (or the enforcement or interpretation thereof);

(F) (i) any changes or proposed changes in applicable law (or the enforcement or interpretation thereof), including the adoption, implementation, repeal, modification, reinterpretation or proposal of any law, regulation or policy (or the enforcement or interpretation thereof) by any governmental authority, or any panel or advisory body empowered or appointed thereby, or (ii) any effect arising out of or resulting from the Inflation Reduction Act of 2022, or any changes or proposed changes thereto;

(G) the taking of any action, or refraining from taking any action, in each case at the written direction, or with the consent, of Parent or Merger Sub, or the taking of any action, or failure to take any action, by Parent, Merger Sub or any of their affiliates;

(H) any claim, demand or proceeding (including any class action or derivative litigation) asserted, commenced or threatened by, on behalf of or in the name of, against or otherwise involving Parent, Merger Sub, Enhabit, the Board, any committee thereof and/or any of Parent’s or Enhabit’s directors or officers relating directly or indirectly to the Merger Agreement, the Merger or any related transaction (including any such claim, demand or proceeding based on allegations that Enhabit’s entry into the Merger Agreement or the terms and conditions of the Merger Agreement or any related transaction constituted a breach of the fiduciary duties of any member of the Board, any member of the board of directors of any of Enhabit’s subsidiaries or any officer of Enhabit or any of its subsidiaries), in each case other than any proceeding solely among the parties hereto or their respective affiliates (“Transaction Litigation”) or any demand or proceeding for appraisal or the fair value of any shares of Common Stock pursuant to the DGCL in connection with the Merger Agreement;

(I) any outbreak, continuation or escalation of acts of terrorism (including cyber-terrorism), civil unrest, hostilities, sabotage or war (whether or not declared, including the Russian-Ukrainian and Israeli-Palestinian conflicts, and escalations and effects thereof), hurricanes, volcanoes, tornados, floods, earthquakes, tsunamis, mudslides, weather-related events, epidemics, pandemics (including COVID-19), plagues, other outbreaks of illness or public health events, fires or natural or man-made disaster or act of God, including any worsening of such conditions existing as of the date of the Merger Agreement;

(J) the availability or cost of equity, debt or other financing to Parent, Merger Sub or the Surviving Corporation; or

 

95

(K) any failure by Enhabit to meet, or changes to, internal, published or analysts’ estimates, projections, expectations, budgets or forecasts of operating statistics, revenue, earnings, cash flow or any other financial or performance measures (whether made by Enhabit or any third parties), any change in Enhabit’s credit ratings, or any change in the price or trading volume of shares of Common Stock or other Enhabit securities (it being understood that the underlying causes of such failures or changes in this clause (K) may be taken into account in determining whether a Company Material Adverse Effect has occurred, unless such underlying cause would otherwise be excepted by the definition of Company Material Adverse Effect);

provided, that in the case of clauses (C), (D), (E), (F) and (I) above, such Effect may be taken into account in determining whether or not there has been a Company Material Adverse Effect to the extent that such Effect has a materially disproportionate adverse effect on Enhabit and its subsidiaries, taken as a whole, as compared to other participants in the industry in which Enhabit and its subsidiaries operate, in which case only the incremental materially disproportionate impact or impacts may be taken into account in determining whether or not there has been a Company Material Adverse Effect.

In the Merger Agreement, Enhabit made customary representations and warranties to Parent and Merger Sub that are subject, in some cases, to specified exceptions and qualifications contained in the Merger Agreement. These representations and warranties relate to, among other things:

 

•

due organization, valid existence, good standing and qualification to conduct business with respect to Enhabit and its subsidiaries;

 

•

Enhabit’s requisite corporate power and authority to enter into the Merger Agreement and the enforceability of the Merger Agreement;

 

•

the necessary approval of the Board;

 

•

the requisite vote of Enhabit’s stockholders in connection with the Merger Agreement;

 

•

Enhabit’s and its subsidiaries’ possession of necessary governmental authorizations;

 

•

required consents, approvals and regulatory filings in connection with the Merger Agreement and performance thereof;

 

•

the absence of any conflict or violation of any organizational documents of Enhabit, certain existing contracts of Enhabit and its subsidiaries, applicable law or certain orders applicable to Enhabit or its subsidiaries or the resulting creation of any lien upon the properties or assets of Enhabit or its subsidiaries due to the execution and delivery of the Merger Agreement and performance thereof;

 

•

the capital structure of Enhabit as well as the ownership and capital structure of its subsidiaries;

 

•

the accuracy and completeness of Enhabit’s SEC filings;

 

•

Enhabit’s financial statements, internal control over financial reporting and disclosure controls and procedures;

 

•

the conduct of the business of Enhabit and its subsidiaries in the ordinary course of business since September 30, 2025;

 

•

the absence of any Company Material Adverse Effect since January 31, 2025;

 

•

the absence of specified undisclosed material liabilities;

 

•

legal proceedings and orders;

 

•

licenses, registrations, permits and other governmental authorizations;

 

•

Enhabit’s and its subsidiaries’ compliance with laws since January 31, 2024;

 

•

anti-corruption, trade controls and anti-money laundering law matters in the past three years;

 

96

•

the existence, validity and enforceability of specified categories of Enhabit’s and its subsidiaries’ material contracts, and notices with respect to violation, termination, material decrease in the amount of business or intent not to renew those material contracts therefrom;

 

•

tax matters;

 

•

employee benefit plans;

 

•

labor and employment matters;

 

•

insurance matters;

 

•

environmental matters;

 

•

intellectual property matters;

 

•

information technology systems;

 

•

real property owned, leased or subleased by Enhabit and its subsidiaries;

 

•

data security and privacy matters;

 

•

government contracts and government bids;

 

•

payment of fees to brokers in connection with the Merger Agreement;

 

•

the rendering of Goldman Sachs’ fairness opinion to the Board;

 

•

the absence of any takeover laws or regulations or any anti-takeover provision in Enhabit’s organizational documents that would be applicable to Merger Agreement and the transactions contemplated thereby;

 

•

affiliate party transactions;

 

•

information about Enhabit for inclusion in this proxy statement; and

 

•

healthcare matters.

In the Merger Agreement, Parent and Merger Sub made customary representations and warranties to Enhabit that are subject, in some cases, to specified exceptions and qualifications contained in the Merger Agreement. These representations and warranties relate to, among other things:

 

•

due organization, good standing and authority and qualification to conduct business with respect to Parent and Merger Sub;

 

•

both Parent’s and Merger Sub’s authority to enter into and perform the Merger Agreement;

 

•

required consents and regulatory filings in connection with the Merger Agreement and performance thereof;

 

•

the absence of any conflict or violation of Parent’s and Merger Sub’s organizational documents, existing contracts or applicable law or order due to the execution and delivery of the Merger Agreement and performance thereof;

 

•

the capital structure and operations of Parent and Merger Sub;

 

•

the absence of any required vote or approval of holders of voting interests in Parent;

 

•

the absence of legal proceedings and orders;

 

•

matters with respect to the Debt Financing and availability of funds;

 

•

the solvency of Parent, Merger Sub and the Surviving Corporation and their respective subsidiaries as of the Effective Time and immediately after the Closing, including after giving effect to the Debt Financing;

 

97

•

the absence of agreements (other than those contemplated by the Merger Agreement) between Parent and Merger Sub or any of their respective affiliates, and Enhabit’s stockholders;

 

•

the absence of any stockholder or management arrangements related to the Merger;

 

•

lack of ownership of capital stock of Enhabit;

 

•

payment of fees to brokers in connection with the Merger Agreement;

 

•

information concerning Parent and Merger Sub for inclusion in this proxy statement;

 

•

neither Parent nor Merger Sub being a “foreign person” nor being controlled by a “foreign person,” in each case, as defined in the Defense Production Act of 1950, and both Parent and Merger Sub satisfying the eligibility requirements for the specific clarification for investment funds; and

 

•

the execution and delivery of the equity financing letter and Guarantee to Enhabit, the enforceability of the equity financing letter and Guarantee and the absence of defaults or breaches thereof.

The representations and warranties contained in the Merger Agreement will not survive the Effective Time.

Conduct of Business Pending the Merger

The Merger Agreement provides that, except for matters (i) expressly permitted or contemplated by the Merger Agreement, (ii) disclosed in the confidential disclosure letter to the Merger Agreement, (iii) required by applicable law or the rules or regulations of NYSE, or (iv) undertaken with the prior written consent of Parent (which consent will not be unreasonably withheld, conditioned or delayed; provided that Parent will be deemed to have consented in writing if it provides no written response within five business days after a written request by Enhabit for such consent) during the period of time between the date of the signing of the Merger Agreement and the Effective Time, Enhabit will, and will cause each of its subsidiaries to, use commercially reasonable efforts to:

 

•

conduct its business in all material respects in the ordinary course; and

 

•

preserve substantially intact its business organization and material business relationships.

In addition, Enhabit has also agreed that, except for matters (i) expressly permitted or contemplated by the Merger Agreement, (ii) disclosed in the confidential disclosure letter to the Merger Agreement, (iii) required by applicable law or the rules or regulations of NYSE, or (iv) undertaken with the prior written consent of Parent (which consent will not be unreasonably withheld, conditioned or delayed; provided that Parent will be deemed to have consented in writing if it provides no written response within five business days after a written request by Enhabit for such consent), during the period of time between the date of the signing of the Merger Agreement and the Effective Time, Enhabit will not, and will cause each of its subsidiaries not to:

 

•

amend Enhabit’s certificate of incorporation or Bylaws, or amend in a manner materially adverse to Enhabit, any certificate of incorporation or bylaws, or other comparable charter or organizational documents, of its subsidiaries;

 

•

declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock, property or otherwise) in respect of, or enter into any agreement with respect to the voting of, any capital stock of Enhabit or any of its subsidiaries, other than dividends and distributions by a direct or indirect wholly owned subsidiary of Enhabit to its parent;

 

•

split, combine or reclassify any capital stock of Enhabit, issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for, shares of capital stock of Enhabit or any of its subsidiaries, or purchase, redeem or otherwise acquire any Enhabit securities, except for

 

98

acquisition of shares of Common Stock by Enhabit in satisfaction by holders of Company Equity Awards that are outstanding at the close of business on February 20, 2026 (the “Capitalization Date”) or subsequently issued in compliance with the terms of the Merger Agreement or withholding taxes with respect to any such Company Equity Award in accordance with the applicable terms of any such Company Equity Award and the applicable Company Employee Plan (as defined in the Merger Agreement);

 

•

issue, deliver, sell or grant any Enhabit securities or Company Equity Awards, other than (a) the issuance of Common Stock upon exercise of a Company Option or in settlement of and pursuant to the terms of Company RSUs or Company PSUs that are, in each case, outstanding on the Capitalization Date or subsequently issued in compliance with the terms of the Merger Agreement, in accordance with and, to the extent required under, the applicable terms of such Company Equity Award and the applicable Company Employee Plan or (b) any Enhabit securities withheld to cover taxes associated with the exercise of a Company Option, settlement of any Company RSU or Company PSU or the vesting of a Company RSA that in each case, are outstanding on the Capitalization Date or subsequently issued in compliance with the terms of the Merger Agreement, in accordance with the applicable terms of such Company Equity Award and the applicable Company Employee Plan;

 

•

adopt a plan or agreement of, or resolutions providing for or authorizing, complete or partial liquidation, dissolution, restructuring or recapitalization of Enhabit;

 

•

except as required by Company Employee Plans in effect on the date of the Merger Agreement, (a) increase or modify in a manner detrimental to Enhabit, the salary, wages, benefits, bonuses, commissions or other compensation payable or to become payable to Enhabit’s or any of its subsidiaries’ current or former employees, directors, executive officers or other individual service providers (other than, ordinary course reasonable merit increases consistent with past practice and resulting from such individual’s annual performance review), (b) enter into, adopt, modify or amend (in a way that materially increases the costs to Enhabit or any of its subsidiaries), or terminate any material Company Employee Plan (or any plan, agreement, program, policy or other arrangement that would be a material Company Employee Plan if in existence on the date of the Merger Agreement), (c) increase, grant, provide, promise or otherwise agree to any severance, termination, retention bonus, transaction bonus, change in control, phantom equity or other similar payments or benefits to any current or former employees, directors, executive officers or other individual service providers of Enhabit or any of its subsidiaries (except for release of claims agreements entered into with employees in the ordinary course of business and consistent with past practice that provide for the payment of severance amounts that any such employee is entitled to receive pursuant to Company Employee Plans in effect on the date of the Merger Agreement), (d) hire or engage any employees, directors, executive officers or other individual service providers (including independent contractors) of Enhabit or any of its subsidiaries, other than in each case of the following clauses (1) and (2), (1) employees with a position below the Senior Vice President level; provided that the costs of hiring and compensating such employees is substantially similar to the costs for similarly-situated employees of Enhabit and such newly-hired employees are provided with standard severance benefits, and (2) employees who are hired to fill open positions or backfill positions, (e) terminate (other than for cause) the employment or services of any current employees, directors, executive officers or other individual service providers of Enhabit or any of its subsidiaries who has an annual base compensation in excess of $250,000, (f) take any action to accelerate the vesting or payment or lapsing of restrictions, or fund or in any other way secure the payment, of compensation or benefits under any Company Employee Plan (including accelerating the vesting of any Company Equity Awards), (g) make grants under the Company Stock Plans (as defined in the Merger Agreement), (h) grant to any current or former employees, directors, executive officers or other individual service providers of Enhabit or any of its subsidiaries any right to reimbursement, indemnification or payment for

 

99

taxes incurred under Section 409A or Section 4999 of the Code, solely with respect to clauses (a) through (c) above, in each case, except as required to be made pursuant to the terms of Company Employee Plans set forth in the confidential disclosure letter to the Merger Agreement or collective bargaining, collective labor or works council agreements, in each case, in effect as of the date of the Merger Agreement;

 

•

acquire or divest any business, assets or capital stock of or to, or make any investment in, any person or division thereof, whether in whole or in part (and whether by purchase or sale of stock, purchase or sale of assets, merger consolidation, or otherwise), other than (a) acquisitions in the ordinary course of business of inventory, supplies, intellectual property assets (which would not be material to Enhabit and its subsidiaries as a whole), raw materials, equipment or similar assets, (b) divestitures of obsolete or used equipment in the ordinary course of business, (c) transactions solely between Enhabit and any of its subsidiaries or solely between subsidiaries of Enhabit, or (d) other than any acquisitions for consideration that is not in the aggregate in excess of $5,000,000;

 

•

sell, lease, license, pledge, transfer, subject to any material lien or otherwise dispose of, assign, abandon, or let lapse or expire any material intellectual property owned by Enhabit or any of its subsidiaries (“Company Intellectual Property”), material assets or material properties, except (a) non-exclusive licenses of Company Intellectual Property pursuant to contracts existing as of the date of the Merger Agreement, (b) non-exclusive licenses of Company Intellectual Property to customers, contractors, technology and other partners or suppliers of Enhabit and its subsidiaries in the ordinary course of business, (c) sales of inventory or used equipment in the ordinary course of business, (d) Permitted Liens (as defined in the Merger Agreement) (other than licenses of intellectual property, which are addressed in clauses (a) and (b)), (e) the expiration of Company Intellectual Property in accordance with its maximum statutory term, (f) pursuant to any Contract (as defined in the Merger Agreement) permitted to be entered into under the Merger Agreement, (g) for transactions between Enhabit and any wholly owned subsidiary of Enhabit or between wholly owned subsidiaries of Enhabit, or (h) in the ordinary course of business;

 

•

disclose any trade secret to any person other than to (a) Parent and its affiliates, (b) in the ordinary course of business in circumstances in which it has imposed reasonable and customary confidentiality restrictions, (c) as expressly permitted pursuant to the terms of the Merger Agreement or (d) escrow any source code to any product or software owned by the Company or any of its Subsidiaries, or disclose, license, release, distribute, or make available, or grant any rights, to any source code to such products or software;

 

•

make any material change to Enhabit’s or any of its subsidiaries’ policies related to Personal Data (as defined in the Merger Agreement), except as required to comply with Data Protection Laws (as defined in the Merger Agreement) or otherwise as directed or required by a governmental authority;

 

•

enter into any contract that includes any covenant explicitly limiting the ability of Enhabit or any of its subsidiaries to compete or engage in any line of business or to compete with any person in any geographic area or which would have any such effect on Parent or any of its affiliates after the Effective Time;

 

•

change any of the accounting methods, principles or practices used by Enhabit or any of its subsidiaries materially affecting their assets, liabilities or business, except for such changes that are required by GAAP, Regulation S-X promulgated under the Exchange Act or applicable law or as otherwise specifically disclosed in Enhabit’s reports filed with the SEC;

 

•

except for (a) intercompany loans between Enhabit and any of its wholly owned subsidiaries or between any wholly owned subsidiaries of Enhabit, or (b) borrowings (including under the Credit Agreement, dated as of June 1, 2022, by and among Enhabit, the lenders from time to time party

 

100

thereto, and Wells Fargo Bank, N.A., as administrative agent and collateral agent, as amended from time to time (the “Credit Agreement”)) in the ordinary course of business for working capital purposes in an amount not to exceed $5,000,000 in the aggregate, (c) Indebtedness (as defined in the Merger Agreement) (including borrowings under the Credit Agreement) in connection with the transactions permitted under the Section 6.01(b)(vii) of the Merger Agreement, or (d) in connection with the contemplated amendment and restatement of the Credit Agreement to effect a maturity extension of the loans thereunder (provided that any such amendment and restatement (whether consummated by way of a refinancing or otherwise) of the Credit Agreement will not, except as permitted by clause (1) below, result in an increase of the amount of commitments, loans or other obligations outstanding immediately prior to giving effect thereto or otherwise result in fees, costs (including original issue discount or upfront fees), expenses, premiums (including any premium that will be payable upon the termination of and/or repayment of any indebtedness thereunder) or other payment obligation), (1) incur, issue, or otherwise become liable for (x) additional Indebtedness or (y) other amounts (including, any fees, costs (including original issue discount or upfront fees), expenses, premiums (including any premium that will be payable upon the termination of and/or repayment of any indebtedness thereunder) or other payment obligation) in connection with any amendment, amendment and restatement, refinancing or replacement of the Credit Agreement or other Indebtedness, or the establishment of any additional Indebtedness, in an aggregate amount under this clause (1) in excess of $10,000,000, (2) modify in a manner materially adverse to Enhabit or its subsidiaries the terms of any material Indebtedness existing as of the date of the Merger Agreement, or (3) assume, guarantee or endorse the obligations of any person (other than a wholly owned subsidiary of Enhabit) in an aggregate amount in excess of $5,000,000;

 

•

(a) amend or extend in any manner adverse to Enhabit or any of its subsidiaries (other than automatic extensions in accordance with its terms) any Material Contract (as defined in the Merger Agreement) with a term longer than one year which cannot be terminated by Enhabit or a subsidiary of Enhabit, as applicable, on fewer than 90 days’ notice without penalty (other than payments for services rendered prior to the date of termination), or amend any Contract set forth on Section 6.01(b)(xiv) of the confidential disclosure letter to the Merger Agreement, (b) terminate (other than terminations upon the expiration of the then-current term) any Material Contract, or (c) enter into any contract that would be a Material Contract if entered into prior to the date of the Merger Agreement;

 

•

settle, pay, discharge or satisfy any proceeding, other than any proceeding that (a) involves only the payment of monetary damages by Enhabit not in excess of $2,000,000 in the aggregate for all such proceedings, (b) results solely in a monetary obligation that is funded by an indemnity obligation to, or an insurance policy of, Enhabit or any of its subsidiaries, or (c) results in a payment to Enhabit or any of its subsidiaries;

 

•

enter into, amend, extend, negotiate, or terminate any collective bargaining agreement, contract or other agreement or understanding with any union;

 

•

implement or announce any employee layoffs, facility closings, reductions in force, furloughs, temporary layoffs, salary or wage reductions, work schedule changes or other such actions that implicate notification requirements pursuant to the Worker Adjustment and Retraining Notification Act of 1988, as amended, or similar applicable laws;

 

•

(a) make (other than in the ordinary course of filing periodic Tax Returns (as defined in the Merger Agreement)), change or revoke any tax election, adopt or change any tax accounting period or method, or file any amendment with respect to any Tax Return, in each case, that could reasonably be expected to give rise to a material liability for Taxes, (b) request any ruling from any governmental authority with respect to material taxes of Enhabit or its subsidiaries, (c) enter into any Tax sharing, allocation or indemnification agreement (other than customary commercial

 

101

or financial arrangements entered into in the ordinary course of business the principal purpose of which is not Tax) or “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. law), in each case, related to any material amount of tax or (d) settle or compromise any material tax liability or agree to an extension or waiver of the statute of limitations with respect to a Tax Return with respect to material taxes (other than through a customary extension of a Tax Return);

 

•

make any loans or advances to any other person, except for (a) extensions of credit to customers in the ordinary course of business, (b) advances to directors, officers and other employees for travel and other business-related expenses, in each case in the ordinary course of business and in compliance in all material respects with Enhabit’s policies related thereto or (c) loans, advances or capital contributions to, or investments in, direct or indirect wholly owned subsidiaries of Enhabit;

 

•

make any capital expenditures in an amount exceeding $500,000, other than capital expenditures in the ordinary course of business or contemplated by and identified on the capital expenditure schedule Made Available (as defined in the Merger Agreement) to Parent; or

 

•

authorize, commit or agree to take any of the foregoing actions.

Solicitation of Other Offers

Certain Definitions

For purposes of this proxy statement:

“Acceptable Confidentiality Agreement” means a confidentiality agreement containing confidentiality and use terms not materially less restrictive in the aggregate to the counterparty thereto than the confidentiality and use terms of the confidentiality agreement, dated January 3, 2025 (as amended), between Enhabit and Kinderhook Industries, LLC (it being agreed that such confidentiality agreement need not contain any “standstill” or similar provisions or otherwise prohibit the making, or amendment, of any Acquisition Proposal); provided, however, that such confidentiality agreement does not contain provisions that prohibit Enhabit from complying with the provisions of Article 6 of the Merger Agreement. Notwithstanding the foregoing, a person who has previously entered into a confidentiality agreement with Enhabit relating to a potential acquisition of, or business combination with, Enhabit will not be required to enter into a new or revised confidentiality agreement, and such existing confidentiality agreement will be deemed to be an Acceptable Confidentiality Agreement for all purposes under the Merger Agreement.

“Acquisition Proposal” means any offer, proposal, inquiry or indication of interest from any third party relating to any transaction or series of related transactions involving (i) any acquisition or purchase by, or issuance to, any third party, directly or indirectly, of 20% or more of any class of outstanding voting or equity securities of Enhabit, or any tender offer or exchange offer that, if consummated, would result in any third party beneficially owning 20% or more of any class of outstanding voting or equity securities of Enhabit, (ii) any merger, amalgamation, consolidation, share exchange, business combination, joint venture or other similar transaction involving Enhabit or any of its subsidiaries, the business of which constitutes 20% or more of the net revenues, net income or assets of Enhabit and its subsidiaries, taken as a whole, (iii) any liquidation, dissolution, recapitalization, extraordinary dividend or other significant corporate reorganization of Enhabit or any of its subsidiaries, the business of which constitutes 20% or more of the net revenues, net income or assets of Enhabit and its subsidiaries, taken as a whole, (iv) any merger, consolidation, share exchange, business combination, joint venture, recapitalization, reorganization or other similar transaction involving Enhabit, pursuant to which the stockholders of Enhabit immediately preceding such transaction hold less than 80% of the equity interests in the surviving or resulting entity of such transaction or (v) any combination of the foregoing.

“Superior Proposal” means any bona fide written Acquisition Proposal not solicited in violation of Section 6.02 of the Merger Agreement that the Board or any committee thereof determines in good faith (after consultation with a Company Financial Advisor and outside legal counsel), taking into account such legal,

 

102

financial, regulatory, and other aspects of the Acquisition Proposal (including the certainty of closing and the form of consideration (and the risk of fluctuation in the value thereof)) and the third party making the Acquisition Proposal as the Board or any committee thereof reasonably deems relevant, would, if consummated, (i) be reasonably capable of being consummated on the terms proposed, taking into account such legal, regulatory and financing aspects of the proposal (including the sources of and terms of financing, market conditions, the form of consideration, termination fees, expense reimbursement provisions, the timing of and condition of closing and certainty of closing) as the Board or any committee thereof reasonably deems relevant and the identity of the person making the proposal and (ii) result in a transaction that is more favorable from a financial point of view to Enhabit’s stockholders than the Merger (including any revisions to the terms of the Merger Agreement proposed by Parent in writing prior to the time of such determination); provided, however, that, for purposes of this definition of “Superior Proposal,” references in the term “Acquisition Proposal” to “20% or more” or “less than 80%” is deemed to be references to “more than 50%” or “less than 50%,” respectively.

No-Shop

Except as otherwise permitted by the Merger Agreement, from the date of the Merger Agreement until the earlier to occur of the Effective Time or the termination of the Merger Agreement:

 

•

Enhabit will not, and will cause its subsidiaries and its and its subsidiaries’ directors and officers not to, and will use its reasonable best efforts to cause its and its subsidiaries’ other representatives not to directly or indirectly (other than with respect to Parent and Merger Sub):

 

•

solicit, initiate, knowingly facilitate or knowingly encourage any proposals or offers that constitute, or that would reasonably be expected to lead to, an Acquisition Proposal (it being agreed that supplying non-public information in the ordinary course of business will not be prohibited);

 

•

engage in, continue or otherwise participate in any discussions, solicitations or negotiations with any third party regarding an Acquisition Proposal or furnish to any third party information or provide to any third party access to the businesses, properties, assets or personnel of Enhabit or any of its subsidiaries, in each case for the purpose of knowingly encouraging or knowingly facilitating an Acquisition Proposal; or

 

•

enter into or agree to enter into any letter of intent, merger agreement, acquisition agreement or other similar agreement (other than an Acceptable Confidentiality Agreement pursuant to the no-shop provisions of the Merger Agreement) with respect to an Acquisition Proposal or enter into or agree to enter into any agreement requiring Enhabit to abandon, terminate or fail to consummate the transactions contemplated by the Merger Agreement;

 

•

Enhabit will, and will cause its subsidiaries to, and will direct and use reasonable best efforts to cause Enhabit’s and its subsidiaries’ representatives to, immediately cease and terminate any existing discussions or negotiations with any third party theretofore conducted by Enhabit, its subsidiaries or their respective representatives with respect to an Acquisition Proposal, and promptly following the date of the Merger Agreement (and in any event within one Business Day (as defined in the Merger Agreement) thereafter), Enhabit must request that all non-public information previously provided by or on behalf of Enhabit or any of its subsidiaries to any such third party be returned or destroyed in accordance with the applicable confidentiality agreement in place with such third party; and

 

•

Enhabit will not waive, terminate or modify, any provision of any standstill or confidentiality agreement that prohibits or purports to prohibit a proposal being made to the Board (or any committee thereof) unless the Board has determined in good faith, after consultation with its outside counsel, that the failure to take such action would prohibit the counterparty from making a confidential Acquisition Proposal to the Board.

 

103