The Pennant Group NASDAQ: PNTG reported a sharp increase in first-quarter 2026 revenue and adjusted earnings as growth in its home health and hospice business, continued senior living margin improvement and ongoing integration of newly added operations helped drive results.
Chief Executive Officer Brent Guerisoli said the company delivered “another excellent quarter,” citing revenue of $285.4 million, up 36% from the prior-year quarter. Adjusted EBITDA rose 32.6% to $21.7 million, while adjusted EBITDA prior to noncontrolling interests increased 37.2% to $23.5 million. Adjusted diluted earnings per share were $0.32, up 18.5% year over year.
Guerisoli said Pennant is focused in 2026 on improving operating performance after what he described as “dramatic acquisitional growth” in 2025. He said same-store segment adjusted EBITDA margins are on an upward trajectory and pointed to leadership development as a key driver of the company’s ability to absorb recent growth.
Home Health and Hospice Growth Drives Revenue Gains
President and Chief Operating Officer John Gochnour said Pennant’s Home Health and Hospice segment generated revenue of $229.1 million in the quarter, an increase of $69.2 million, or 43.3%, from the prior-year period. Segment adjusted EBITDA rose 33.7% to $33.6 million, while adjusted EBITDA prior to noncontrolling interests increased 36.6% to $35.4 million.
Total home health admissions reached 30,721, up 62.7% year over year, while Medicare home health admissions rose 75.1% to 13,303. Same-store home health admissions increased 5.8%, and same-store Medicare admissions grew 9.2%.
Hospice also posted growth, with average daily census reaching 5,199, up 37% from the prior-year quarter. Same-store hospice average daily census increased 10.2% to 3,952.
Gochnour attributed the results to clinical outcomes, payer relationships and local leaders’ ability to serve as trusted community resources. He said same-store segment adjusted EBITDA margin prior to noncontrolling interests improved 110 basis points to 17.2%, despite a 1.3% reduction in the Medicare home health base rate and ongoing wage pressure.
Overall Home Health and Hospice segment adjusted EBITDA margin prior to noncontrolling interests declined 70 basis points to 15.5%, which management said reflected the expected impact of integrating more than 50 new operations and temporary costs tied to a transition services agreement.
Integration of Southeast Operations Remains Central Focus
Management spent much of the call discussing the integration of home health, hospice and home care operations in Tennessee, Alabama and Georgia. Guerisoli said two of five operational waves have been fully transitioned into Pennant’s systems, with the process expected to continue through October.
Gochnour said the company has begun the third wave, with the third and fourth waves representing the largest parts of the integration effort. He said the company expects the bulk of the transition work to occur in the second quarter and early third quarter, with expenses dropping as operations move off the transition services agreement and onto Pennant’s systems.
Guerisoli said the company has successfully increased total census above the levels at the time of acquisition, despite challenges including electronic medical record transition disruption, lower seasonal admissions over the holidays and severe weather in January.
“We don’t want to declare victory just yet,” Guerisoli said during the question-and-answer session, adding that the company wants another quarter of results before considering any changes to guidance.
Pennant did not adjust its full-year guidance, though Guerisoli said management would “point you to the upper end” of the guidance range.
Senior Living Margins Improve as Acquisitions Continue
Pennant’s Senior Living segment reported revenue of $56.3 million, up 12.6% from the prior-year quarter. Adjusted EBITDA rose 30.6% to $6.4 million, and segment adjusted EBITDA margin improved 190 basis points to 11.8%.
Same-store occupancy increased 180 basis points to 81%, while all-store occupancy was 78.6%, up 10 basis points year over year. Gochnour said all-store occupancy declined 200 basis points sequentially, driven largely by recent acquisitions of low-occupancy communities and typical holiday seasonality.
After quarter end, Pennant completed four senior living acquisitions. On April 1, the company acquired the operations and real estate of Lavender Lane Senior Living, which includes 43 assisted living and memory care units and 25 independent living units in the Phoenix area. On May 1, three additional communities joined Pennant through triple-net leases: a 100-unit community in Glendale, Arizona, now operating as Saguaro Senior Living, and two Wisconsin communities now operating as Cardinal Lane Senior Living and Harbor Haven Senior Living.
Andrew Ryder, President of Pennant’s Senior Living segment, said the newly acquired senior living assets have “pretty large upside” but are largely distressed assets. He said the company expects some lumpiness in occupancy and margins during integration but sees long-term opportunity.
Financial Position and Cash Flow
Chief Financial Officer Lynette Walbom said GAAP net income rose 9.6% to $8.5 million, while adjusted net income increased 19.8% to $11.5 million. GAAP diluted earnings per share were $0.24, up 9.1% from the prior-year quarter.
At quarter end, Pennant had $72 million outstanding on its revolving line of credit and $98.8 million outstanding on its term loan, for total borrowings of $178.8 million under its credit facility. The company had $4.9 million in cash on hand and a net debt to adjusted EBITDA ratio of 1.93 times.
Cash flows used in operations were $3.4 million, an improvement of $17.8 million compared with the prior-year quarter. In response to an analyst question, Walbom said capital expenditures are expected to be heavier in the first part of the year and likely to total $15 million to $18 million for the full year.
Management Highlights Payer Discussions and Regulatory Issues
In the question-and-answer session, Guerisoli said Pennant’s broader geographic footprint has helped make the company a more natural partner for large payers. He said the company is seeing progress in managed care discussions, including better contracts and “Medicare-like reimbursement,” supported by clinical performance.
Gochnour also addressed increased government focus on waste, fraud and abuse in health care. He said Pennant has invested in an “industry-leading compliance program” and that every provider number undergoes a claims audit and on-site review annually. He said enforcement actions in some markets, including California and Arizona, have created opportunities for established providers with strong clinical and compliance records.
On hospice regulation, Gochnour noted that the proposed 2026 hospice rule includes a 2.4% increase to the hospice daily rate, which he said aligns with Pennant’s guidance assumptions and could provide a tailwind in the fourth quarter.
Management also said it continues to evaluate home health and hospice tuck-in acquisitions and potential joint ventures with integrated health systems, while maintaining integration of the Southeast operations as its primary focus.
About The Pennant Group NASDAQ: PNTG
The Pennant Group NASDAQ: PNTG is a publicly traded holding company that provides specialized services to the asset management industry. Through its operating subsidiaries, the company delivers outsourced fund administration, securities lending, prime brokerage, and capital markets solutions designed to support hedge funds, private equity firms, mutual funds and other institutional investors. By leveraging a combination of technology platforms and industry expertise, The Pennant Group helps clients streamline middle- and back-office processes, enhance operational efficiency and manage regulatory requirements.
Key service offerings include fund accounting and reporting, trade settlement and reconciliation, risk monitoring, securities lending programs and execution support across a range of asset classes.
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