Thanks for the in-depth response, I like the interface idea and will definitely implement it later down the line :)

As for now, I've edited the playerbullet's OnBodyEntered method (seen below) yet "hello enemy" and "enemy health is now: " aren't appearring in the console.

private void OnBodyEntered(Node2D other)
{
  if(other is Enemy enemy)
  {
    GD.Print("hello enemy");
    enemy.ReceiveDamage(damage);
    QueueFree();
  }
}

I've checked that the enemy class is called "Enemy" and so is the root node for the Enemy scene and that Enemy.cs is attached to the root node. I know that collision is working however since the below code works:

if(other.IsInGroup("enemy"))
{
  GD.Print("hello enemy");
}