Shares of home healthcare provider Enhabit saw a sharp decline of 29% on Tuesday, following the company's breach of its total net leverage ratio for Q3. This comes after a year of significant volatility for the firm, with shares down by over a third year-to-date.
The breach led to the announcement of a limited waiver with Wells Fargo, acting as the administrative agent to other lenders. As part of this agreement, the principal amount of Enhabit's revolving loans was reduced from $350 million to $230 million. The announcement was made after the market closed on Monday.
In addition to the reduction in loan principal, the agreement with Wells Fargo also enables Enhabit to waive financial covenants for subsequent required testing of its leverage. This testing was due to take place on September 30.
The recent developments mark a challenging period for Enhabit, as it navigates through financial constraints while striving to maintain its position in the home healthcare market. With the new agreement in place, it remains to be seen how this will impact Enhabit's financial performance in the coming quarters.
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