What The Pennant Group (PNTG) Said on Its Q3 Earnings Call

Key Points

• Q3 revenue grew 32% to $302.3 million, while adjusted EBITDA rose 42.4% to $24.7 million and adjusted diluted EPS increased 16.7% to $0.35.
• Home health and hospice revenue climbed 38.2%, supported by acquisitions and higher patient volumes. Integration of 54 acquired Southeast locations is nearly complete, and Pennant said the operations remain ahead of expectations.
• Higher employee benefits costs and leadership strain during senior living integrations pressured margins. Management expects to meet full-year guidance but noted potential cost volatility and continued unevenness as acquisitions are integrated.

The Pennant Group NASDAQ: PNTG reported third-quarter revenue growth of 32% as acquisitions and higher patient volumes lifted its home health and hospice business, though elevated employee benefits costs and senior living integration challenges pressured margins.

Revenue rose to $302.3 million for the three months ended Sept. 30, 2026. Adjusted earnings before interest, taxes, depreciation and amortization increased 42.4% from a year earlier to $24.7 million, while adjusted diluted earnings per share rose 16.7% to $0.35. GAAP diluted earnings per share were $0.26.

CEO Brent Guerisoli said higher-than-anticipated employee benefits costs modestly affected quarterly earnings. The company has factored elevated costs into its fourth-quarter projections and still expects to achieve its full-year guidance, although he cautioned that further volatility is possible. Executives did not provide specific guidance figures on the call.

CFO Lynette Walbom said the additional benefits expense amounted to approximately 50 basis points of revenue in the third quarter, with a similar impact anticipated in the fourth. Guerisoli said the costs affected the company’s self-funded plans across both operating segments and its services.

Home Health and Hospice Growth

Home health and hospice revenue increased 38.2% year over year to $239.8 million, while segment adjusted EBITDA rose 42% to $38.1 million. President and COO John Gochnour attributed the improvement to mature operations and the transition of newly acquired locations.

Total home health admissions grew 39.4%, including a 38% increase in Medicare admissions. At same-store locations, total admissions rose 8% and Medicare admissions increased 12%. Hospice average daily census grew 34.6% overall and 13% on a same-store basis.

Home health revenue per episode declined 2.2%, which Gochnour attributed to lower rates in newly acquired Southeast locations. In response to an analyst’s question, he clarified that the decline related specifically to Medicare revenue per episode and differences in wage indexes across markets.

Pennant’s integration of 54 locations purchased from UnitedHealth and Amedisys in the Southeast is nearly complete, Gochnour said. The company finished transitioning the locations’ electronic medical records on Oct. 31, following branding and leadership changes, although some work remains, including collecting receivables from prior systems.

Gochnour said the transition caused the anticipated disruption as clinicians attended training and adjusted to new systems. He added that the acquired operations remained ahead of the company’s initial and updated expectations and that Pennant was not changing its outlook for them.

Senior Living Faces Integration Pressure

Senior living revenue rose 12.6% to $62.4 million, while segment adjusted EBITDA increased 3% to $5.7 million. Pennant has acquired 16 communities since the beginning of 2025, including seven in 2026.

Gochnour said rapid expansion temporarily stretched leadership capacity in two markets, affecting newly acquired communities and some same-store operations. Those challenges, together with higher benefits costs, weighed on segment margins. He said the issues were concentrated rather than systemic, though short-term unevenness could continue as the company integrates and fills communities acquired at low occupancy.

Senior Living President Andy Rider said the company expects the fourth quarter to be a step toward recovery in the two affected markets. Pennant typically expects a nine-quarter optimization period for transitions, with significantly distressed acquisitions generally taking three to four quarters to become accretive, he said.

During the quarter, Pennant acquired the real estate and operations of River Centre Assisted Living, a 63-unit community in Tucson, Arizona, and purchased the real estate associated with its existing Mainplace Senior Living operation in Orange, California. Gochnour said Pennant would focus primarily on stabilizing recent senior living acquisitions while selectively considering other opportunities.

Reimbursement and Financial Position

Guerisoli said the recently released home health final rule provides a 2.1% net payment-rate increase. He cited an estimated 1.5% increase as applied to Pennant’s claims based on the proposed rule, while calling the increase insufficient to address inflation and preserve access to care.

He also said Pennant supports federal efforts to combat fraud but considers some program-integrity measures in the rule overly broad and burdensome for legitimate providers.

At quarter end, Pennant had $103 million outstanding on its line of credit and $18.4 million in cash, Walbom said. Operating cash flow was $25.1 million for the quarter and $43.5 million for the year to date. Net debt was 1.95 times adjusted EBITDA.

About The Pennant Group (NASDAQ:PNTG)

The Pennant Group, Inc is a healthcare services company that operates home health, hospice and senior living businesses in the United States. Through its affiliated agencies and communities, the company provides skilled nursing, physical, occupational and speech therapy, personal care, hospice and palliative services, assisted living, and other support for older adults and individuals recovering from illness or injury.

Pennant's home health and hospice operations serve patients in their homes and other residential settings, while its senior living segment operates communities that provide assisted living and related services.

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