Hedge fund AREX Capital Management, LP is urging Enhabit, Inc. (NYSE:EHAB) to put itself up for sale and wants the home health and hospice provider to begin a strategic review to help reverse a 50% slide in its share price, according to a letter seen by Reuters. Enhabit is already interviewing two board directors proposed by Arex, which owns a 4.5% stake in the company, but the hedge fund wants more drastic action as the share price has been cut nearly in half since it went public a year ago. The Board should fully explore the potential delivery of substantial and fair value to shareholders through a sale of the Company," Arex wrote in the letter to Enhabit's chief executive officer and board.

"Compared to the risks and potential rewards inherent in the status quo, a sale is the obvious way to maximize value for all shareholders," Andrew Rechtschaffen, Arex' managing partner, and James Corcoran, a partner, wrote. Enhabit was spun off from post-acute healthcare services provider Encompass Health Corp. (EHC.N) on July 1, 2022 and since then its shares have dropped 47%, compared with a 16% gain in the S&P 500 index and an 11% increase in the Russell 2000 index.