May 9 (Reuters) - Hedge fund AREX Capital Management is seeking seven board seats at Enhabit, arguing that new directors are needed to help reverse poor financial performance at the U.S. home health and hospice provider, people familiar with the matter said on Thursday.

AREX, which has been pushing Enhabit to put itself up for sale, privately nominated the seven candidates in March during the company's nominating window, the sources said. The AREX nominees have healthcare and capital markets experience and include an AREX partner, James Corcoran, the sources said.

Enhabit this week said it decided to continue as an independent, public company after having evaluated a range of strategic options. A company representative was not immediately available for comment on the AREX board challenge.

AREX has argued that the board lacks home hospice expertise, which it says its candidates can provide. AREX kept its nominations private until now because it did not want to disrupt the strategic review process, the sources said.

The Enhabit board currently has 13 members but will be reduced to nine at the company's annual meeting later this year.

Enhabit was spun off from post-acute healthcare services provider Encompass Health in July 2022, and since then its shares have lost more than half of their value. Shares closed trading at $9.70 on Wednesday.

AREX had told the company last year that it wanted it to commit immediately to start a review before the end of 2023 and close any potential transaction after the two-year anniversary of the spinoff to avoid tax complications.

Enhabit agreed with investors Cruiser Capital and Harbour Point Capital Management in March 2023 to refresh its board by adding two new directors who have experience in healthcare consulting and information technology. (Reporting by Svea Herbst-Bayliss Editing by Greg Roumeliotis)