The Pennant Group, Inc.

What they do

Pennant delivers home health, hospice and home care services through 172 agencies across 16 states, and operates 63 senior living communities with 4,428 units in assisted living, independent living and memory care across seven states. It also provides home health and hospice operational support under a management service agreement in Connecticut. Revenue comes from a diversified payor mix including Medicare, Medicaid, private pay and managed care, with Medicare representing 48.4% of 2025 revenue.

Revenue drivers

• Home Health and Hospice Services — Largest reportable segment: $237.8 million of second quarter 2026 revenue, up 43.2% year over year, spanning home health, hospice, home care, geriatric primary and palliative care. Driven by admissions, Medicare 60-day episode revenue and hospice average daily census.
• Senior Living Services — Second reportable segment: $60.2 million of second quarter 2026 revenue, up 12.6% year over year, from assisted living, independent living and memory care across 63 communities and 4,428 units. Economics driven by occupancy and average monthly revenue per occupied room.
• Acquisitions and expansion — In 2025 Pennant added 30 home health agencies, nine hospice agencies, four home care agencies and six senior living communities, including a fourth-quarter southeastern U.S. entry with 30 agencies in Alabama, Georgia and Tennessee. Recently acquired operations generally carry lower occupancy or census and higher costs, pressuring margins during integration.
• Medicare reimbursement — Medicare was 48.4% of 2025 revenue, and other payors may benchmark to published Medicare rates, so rate updates and payment rules directly affect Home Health and Hospice segment economics.

Recent performance

Second quarter 2026 total revenue was $298.0 million, up $78.5 million or 35.8% over the prior year quarter. GAAP diluted EPS was $0.25 and adjusted diluted EPS was $0.36; net income was $9.1 million, up 28.2%. Consolidated Adjusted EBITDAR was $37.6 million, up 33.3%, and Consolidated Adjusted EBITDA was $24.3 million, up 48.2%. Total home health admissions rose 62.3% to 28,947 while same store admissions rose 9.7%; hospice average daily census rose 40.1% to 5,477. Senior Living revenue rose 12.6%, with total occupancy of 78.9% and same store occupancy of 81.6%.

Strategy

Pennant's stated model decentralizes decision-making to local clinical and operational leaders organized in geographic clusters, with peer accountability intended to improve clinical and financial results. Growth is acquisition-led: 2025 additions totaled 30 home health agencies, nine hospice agencies, four home care agencies and six senior living communities, including its largest acquisition to date entering Alabama, Georgia and Tennessee in the fourth quarter of 2025. Management says integration of the southeastern operations is ahead of expectations, with the two largest waves expected to be fully transitioned by the middle of the fourth quarter of 2026. The company expanded operations from 180 total home health, hospice and senior living operations at the end of 2024 to 235 at the end of 2025.

Risks

• Medicare reimbursement exposure — Pennant derived 48.4% of 2025 revenue from Medicare, and the Calendar Year 2026 Home Health Prospective Payment System Rate Update Final Rule proposes reimbursement reductions that would directly pressure Home Health and Hospice revenue.
• Medicaid funding changes — The company specifically cites changes to Medicaid funding and eligibility within the One Big Beautiful Bill Act as a factor that could materially affect results.
• Acquisition integration risk — Pennant's growth depends on completing and integrating acquisitions, and it states that recently acquired operations generally have lower occupancy or census and higher costs, which can lower or make consolidated and segment margins fluctuate.
• Labor, regulation and litigation — Risks include a shortage of skilled personnel and higher retention costs, government reviews, audits and investigations, additional staffing and licensure regulation, and costs of litigation or settlements.

Outlook

Management said the second quarter puts Pennant on pace to exceed the top end of its original full year guidance, without providing specific figures in the release. It expects to complete transition of the two largest waves of the southeastern acquisition by the middle of the fourth quarter of 2026, ahead of prior expectations. The company states that lower occupancy or census and higher costs at recently acquired operations generally mean lower or fluctuating consolidated and segment margins during periods of acquisition growth.