The Pennant Group Q2 Earnings Call Highlights

Key Points

• Strong Q2 performance: Revenue rose 35.8% year over year to $298 million, while adjusted EBITDA increased 48.2% to $24.3 million and adjusted diluted EPS grew 33.3% to $0.36.
• Full-year outlook raised: Pennant now expects 2026 revenue of $1.17 billion to $1.19 billion, adjusted EBITDA of $94.4 million to $98 million, and adjusted diluted EPS of $1.34 to $1.41.
• Growth driven by home health, hospice and acquisitions: The segment’s revenue increased 43.2%, supported by Southeast expansion and improved same-store performance, while senior living revenue grew 12.6% as the company continued acquiring and integrating communities.

The Pennant Group NASDAQ: PNTG reported second-quarter 2026 results that showed revenue and adjusted earnings growth across its home health, hospice and senior living businesses, prompting the company to raise its full-year outlook.

Chief Executive Officer Brent Guerisoli said the company’s performance reflected operational improvement in its established operations and progress integrating recently acquired businesses, including its sizable expansion in the Southeast. Pennant reported second-quarter revenue of $298 million, up 35.8% from a year earlier, while adjusted EBITDA rose 48.2% to $24.3 million. Adjusted EBITDA before noncontrolling interests increased 51% to $26.1 million, and adjusted diluted earnings per share increased 33.3% to $0.36.

“Our momentum is the product of diligent focus on operational excellence, along with effective transitions at recently acquired operations,” Guerisoli said.

Higher 2026 Guidance

Chief Financial Officer Lynette Walbom said year-to-date results put Pennant on pace to exceed the high end of its previous full-year outlook. The company now expects 2026 revenue of $1.17 billion to $1.19 billion, adjusted diluted earnings per share of $1.34 to $1.41, adjusted EBITDA of $94.4 million to $98 million, and adjusted EBITDA before noncontrolling interests of $101.5 million to $105.1 million.

The updated forecast assumes continued operating strength, hospice reimbursement adjustments, higher interest expense, and contributions from joint ventures and management agreements, Walbom said. It excludes unannounced acquisitions, startups, share-based compensation, acquisition-related costs, and certain one-time or unusual items.

As of June 30, Pennant had $201.9 million outstanding under its credit facility, $15.3 million in cash and net debt to adjusted EBITDA of 1.96 times. Year-to-date operating cash flow was $18.4 million.

Home Health and Hospice Growth

Pennant’s home health and hospice segment generated $237.8 million in second-quarter revenue, an increase of 43.2% from the prior-year period. Segment adjusted EBITDA increased 48.2% to $37.7 million, while adjusted EBITDA before noncontrolling interests rose 50% to $39.6 million. Same-store margin improved 70 basis points year over year, according to President and Chief Operating Officer John Gochnour.

Hospice revenue reached $103.6 million, up 40.4%. Admissions rose 38.4% and average daily census increased 40.1%, with acquisitions contributing to those gains. On a same-store basis, hospice admissions increased 8.8% and average daily census rose 10.8%.

Gochnour said CMS’s final 2027 hospice payment rule provides for a 2.3% increase in revenue per day, alongside program-integrity measures intended to address fraud and abuse in the industry. He said Pennant supports efforts to identify bad actors, while working with regulators on measures that are appropriately tailored.

Home health revenue increased 50.8% to $119.4 million. Total home health admissions rose 62.3%, while Medicare admissions increased 70.7%. Revenue per episode declined 1.9%, which Gochnour attributed to the company’s Southeast expansion into markets with lower CMS wage indexes, along with lower related wage and service costs.

Same-store total home health admissions rose 9.7%, and same-store Medicare admissions increased 13.6%. Pennant’s average CMS star rating was 4.1, compared with a national average of 3.0, while its potentially preventable hospitalization rate was 10%, compared with 10.8% nationally.

Guerisoli said Pennant is modeling the proposed 2027 home health payment rule as a 1.7% increase for its operations, versus the rule’s stated 2.4% increase. He characterized the proposal as a positive signal after four consecutive years of annual base-rate reductions.

Southeast Integration and Hartford Investment

Pennant continued integrating the home health and hospice operations acquired in the Southeast. Gochnour said the company had completed three transition waves and was nearing the end of a fourth, while a fifth and one of the largest waves began Aug. 1. The transition work is expected to continue through October.

The company is implementing new branding, leadership structures, its Homecare Homebase electronic medical record instance, technology tools and clinical practices. Gochnour said the acquired operations’ financial margins were trending ahead of internal expectations, while patient volumes had remained stronger than expected during the transition process.

In June, Pennant also expanded its relationship with Hartford HealthCare at Home, an organization it began managing in 2024. Hartford HealthCare at Home provides home health and hospice services to more than 30,000 patients annually from nine Connecticut locations. Pennant made an investment allowing it to share in the managed business’s profits or losses, which will be reflected as income from equity-method investments rather than consolidated revenue.

Guerisoli said the arrangement provides Pennant with a sizable Northeast platform and supports its broader strategy of developing healthcare-system relationships and expanding its geographic presence.

Senior Living Expansion

Pennant’s senior living segment generated $60.2 million in revenue, up 12.6% from the prior-year quarter. Segment adjusted EBITDA increased 13.2% to $5.8 million. Average monthly revenue per occupied unit increased 3.9% to $5,392 across all stores, while same-store monthly revenue per occupied unit rose 5.5% to $5,413.

Same-store occupancy increased 150 basis points from a year earlier to 81.6%. Senior Living President Andy Ryder said same-store margins improved to 10.5% from 10% a year ago, although the company expects margin “lumpiness” in the third and fourth quarters as it integrates recently acquired, lower-occupancy communities.

The company closed seven senior living transactions year to date. Its acquisitions included communities in Arizona, Wisconsin and California, as well as the August purchase of River Centre Assisted Living in Tucson, Arizona. The addition of River Centre and Copper Canyon Memory Care brought Pennant’s real estate portfolio to nine properties, including five acquired in the past 12 months.

Management also discussed investments in automation and artificial intelligence. Guerisoli said the company is piloting technology intended to reduce clinician documentation burdens and automate back-office processes, with the goal of improving care delivery, employee experience and indirect costs over time.

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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