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    PNTG
    Earnings call· Jun 2026(Q2 FY26)

    Pennant Group Q2 FY26 earnings call PNTG

    Aug 6, 2026 Source

    Executive summary

    The Pennant Group Q2 FY26 — Strong Organic Growth and Raised Full-Year Guidance

    The Pennant Group delivered a strong second quarter, exceeding internal expectations with robust organic growth across its core operations and effective integration of recent acquisitions, particularly in the Southeast. The company raised its full-year guidance, signaling confidence in its operational excellence initiatives and strategic investments, despite ongoing regulatory scrutiny in the hospice sector and anticipated short-term margin variability in senior living from new integrations.

    Highlights

    5

    • Total revenue increased by $78.5 million or 35.8% year-over-year to $298 million.

    • Adjusted EBITDA prior to NCI increased by $8.8 million or 51% year-over-year to $26.1 million.

    • Full-year revenue guidance raised to $1.17 billion to $1.19 billion, and adjusted EPS guidance raised to $1.34 to $1.41.

    • Home Health & Hospice segment revenue grew 43.2% to $237.8 million, with same-store hospice admissions up 8.8% and same-store home health admissions up 9.7%.

    • Senior Living same-store occupancy increased 150 basis points to 81.6% and same-store monthly revenue per occupied unit rose $282 or 5.5%.

    Concerns

    3

    • Hospice industry facing intense scrutiny due to significant fraud and abuse issues, leading to new administrative costs for compliance.

    • Home Health revenue per episode decreased by 1.9% year-over-year due to acquisitions in lower CMS wage index markets.

    • Senior Living segment anticipates lumpiness in margin in Q3 and Q4 due to integration of newly acquired communities with low occupancy.

    Guidance & targets

    8
    CategoryTargetConfidence
    Full-year revenue
    $1.17 billion to $1.19 billion
    high materiality
    High
    Full-year adjusted diluted earnings per share
    $1.34 to $1.41
    high materiality
    High
    Full-year adjusted EBITDA
    $94.4 million and $98 million
    high materiality
    High
    Full-year adjusted EBITDA prior to NCI
    $101.5 million and $105.1 million
    high materiality
    High
    Effective tax rate
    26%
    medium materiality
    High
    Diluted weighted average shares outstanding
    approximately 37 million
    low materiality
    High
    Home Health 2027 proposed rule increase
    2.4%
    medium materiality
    High
    Hospice 2027 final payment rule increase
    2.3%
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Home Health & Hospice
    Exemplary clinical and cultural performance continues to create financial momentum, reflecting both new operations and focus on operational excellence.
    Adjusted EBITDA prior to NCI: $39.6 millionAdjusted EBITDA prior to NCI growth: 50% YoYSame-store margin improved: 70 bps YoY
    		$237.8 million43.2%—Adjusted EBITDA $37.7 million
    Hospice
    Growth reflects investment in the Southeast and community response to locally driven approach and clinical excellence.
    Admissions increased: 38.4%Average daily census increased: 40.1%Same-store admissions increased: 8.8%Same-store ADC grew: 10.8%
    		$103.6 million40.4%——
    Home Health
    Operations continue to grow and perform well, with strong same-store trends and quality scores. Revenue per episode decrease due to lower CMS wage indexes in new Southeast markets.
    Total admissions increased: 62.3%Medicare admissions increased: 70.7%Revenue per episode decreased: 1.9% YoYSame-store total admissions increased: 9.7%Same-store Medicare admissions increased: 13.6%CMS star rating: 4.1 (national average 3.0)Potentially preventable hospitalization rate: 10% (national average 10.8%)Same-store revenue per episode increase: 40 bps YoY
    		$119.4 million50.8%——
    Senior Living
    Continued significant growth with broad-based stability and leadership. Anticipates lumpiness in margin in Q3 and Q4 due to integration of newly acquired communities with low occupancy.
    Adjusted EBITDA growth: 13.2% YoYAverage all-store monthly revenue per occupied unit: $5,392Average all-store monthly revenue per occupied unit growth: $204 or 3.9% YoYSame-store monthly revenue per occupied unit: $5,413Same-store monthly revenue per occupied unit growth: $282 or 5.5% YoYSame-store occupancy: 81.6%Same-store occupancy increase: 150 bps YoYSame-store margin improved: 50 bps YoY (from 10% to 10.5%)
    		$60.2 million12.6%—Adjusted EBITDA $5.8 million

    Operational metrics

    21
    Adjusted EBITDA
    $24.3 millionup $7.9 million or 48.2% YoY
    Q2 FY26

    Company-wide adjusted EBITDA

    Adjusted EBITDA prior to NCI
    $26.1 millionup $8.8 million or 51% YoY
    Q2 FY26

    Company-wide adjusted EBITDA prior to Non-Controlling Interest

    Adjusted diluted EPS
    $0.36up $0.09 or 33.3% YoY
    Q2 FY26

    Company-wide adjusted diluted earnings per share

    GAAP diluted EPS
    $0.25
    Q2 FY26

    Company-wide GAAP diluted earnings per share

    Cash and cash equivalents
    $15.3 million
    as of June 30, 2026

    Cash on hand at quarter end

    Net debt to adjusted EBITDA
    1.96x
    Q2 FY26

    Leverage ratio

    Cash flows provided from operations
    $18.4 million
    YTD

    Year-to-date operating cash flows

    Credit facility outstanding
    $201.9 million
    as of June 30, 2026

    Outstanding balance under credit facility

    Hospice cap accrual
    $1.3 million
    Q2 FY26

    Medicare cap accrual in the quarter

    Emblem Hospice revenue growth
    75%
    YoY

    Revenue growth for Emblem Hospice

    Emblem Hospice EBITDA growth
    315%
    YoY

    EBITDA growth for Emblem Hospice

    Emblem Hospice average daily census growth
    43%
    YoY

    Average daily census growth for Emblem Hospice

    Emblem Hospice caregiver satisfaction score
    95%
    Q2 FY26

    Caregiver satisfaction score at Emblem Hospice

    Signature Healthcare at Home star rating
    4.5
    real-time

    CMS star rating for Signature Healthcare at Home

    Signature Healthcare at Home preventable hospitalization score
    7.2%
    Q2 FY26

    Potentially preventable hospitalization score for Signature Healthcare at Home

    Signature Healthcare at Home census increase
    nearly 30%
    since acquisition

    Census increase since acquisition by Pennant

    Signature Healthcare at Home EBITDA increase
    doubled
    vs prior year

    EBITDA increase for Signature Healthcare at Home

    Desert View Senior Living occupancy
    above 95%
    past 4 years

    Consistent occupancy rate for Desert View Senior Living

    Desert View Senior Living revenue growth
    10%
    YoY

    Revenue growth for Desert View Senior Living

    Desert View Senior Living EBITDA growth
    29%
    YoY

    EBITDA growth for Desert View Senior Living

    Capital expenditure for distressed buildings
    $15 million to $17 million
    annual basis

    Anticipated CapEx spend for significantly distressed buildings acquired in late 2025 to bring them up to standard.

    Industry KPIs

    4
    MetricValueDetails
    Utilization trendsHome Health total admissions: 62.3%; Home Health Medicare admissions: 70.7%; Same-store Home Health total admissions: 9.7%; Same-store Home Health Medicare admissions: 13.6%; Hospice admits: 38.4%; Hospice average daily census: 40.1%; Same-store Hospice admissions: 8.8%; Same-store Hospice ADC: 10.8%; Senior Living same-store occupancy: 81.6%%
    Same facility volumesAverage all-store monthly revenue per occupied unit: $5,392; Same-store monthly revenue per occupied unit: $5,413USD
    Segment revenue operating incomeHome Health & Hospice revenue: $237.8 million; Home Health & Hospice Adjusted EBITDA: $37.7 million; Senior Living revenue: $60.2 million; Senior Living Adjusted EBITDA: $5.8 millionUSD
    Adjusted EPS EBITDA leverage guidanceAdjusted EBITDA prior to NCI: $26.1 million; Adjusted diluted EPS: $0.36; Net debt/Adjusted EBITDA: 1.96xUSD, USD/share, x

    Deals & partnerships

    4
    Copper Canyon Memory CareAcquisition of operations and real estate of a 40-unit memory care community.

    Acquired in May, a 40-unit community in Tucson, Arizona, strengthening robust care continuum in Tucson.

    Memory Care of Contra CostaAssumption of operations of a senior living community with 46 memory care units.

    Operations assumed on June 1st, a 46-unit community in Pleasant Hill, California.

    River Center Assisted LivingAcquisition of operations and real estate associated with a 63-unit assisted living community.

    Acquired on August 1st, a 63-unit community in Tucson, Arizona, increasing real estate portfolio to 9 properties.

    Hartford HealthCare at HomeInvestment in the future of Hartford HealthCare at Home, allowing Pennant to share in profits or losses from management of the business.

    Next evolution of a partnership that began over 2 years ago, providing home health and hospice services to over 30,000 patients annually from 9 locations in Connecticut. Established a service center in Connecticut.

    Risks & headwinds

    4
    Hospice industry fraud and abuse issuesOngoing

    Leads to new administrative costs

    Mitigation: Working closely with regulators to tailor regulations and enforcement; robust internal compliance program; strong ability to navigate audit activity.

    Home Health revenue per episode decreaseQ2 FY26

    1.9% decrease YoY

    Mitigation: Offset by lower actual wages and overall cost of service in new Southeast markets.

    Senior Living margin lumpiness from new acquisitionsQ3 and Q4

    Anticipated lumpiness

    Mitigation: Integrating newly acquired communities, many with low occupancy but compelling long-term potential to be unlocked.

    Medicare cap liability in hospiceQ2 FY26

    $1.3 million accrual in Q2 FY26

    Mitigation: Sophisticated tools to project cap; monthly data to operators; managing length of stay, particularly in higher reimbursement states like California; individualized plans for operations with cap liability.

    What to watch in Q3 FY26

    5

    Senior Living margin integration

    Q3 and Q4
    CurrentAnticipated lumpiness in Q3 and Q4
    TargetProgress in integrating newly acquired communities and stabilizing margins

    Why it matters

    Integration of new senior living acquisitions with low occupancy could impact segment margins, affecting overall profitability.

    As we have discussed previously, in Q3 and Q4, we anticipate some lumpiness in senior living margin as we integrate these newly acquired communities, many of which have low occupancy but compelling long-term potential that we are excited to unlock.

    Q&A highlights

    6

    How does Pennant manage growth across different payer types (fee-for-service vs. MA) and ensure stability given potential shifts in population?

    Pennant's local model allows leaders to make referral decisions based on staffing and reimbursement, driving strong organic growth (13.6% Medicare referrals, 9.9% total admissions). They expect continued growth in both fee-for-service and MA, investing in the service center to present compelling clinical and efficiency stories to payers for MA rates.

    “I think our local approach allows us to diversify our offering based on the needs of the community. And that includes everything from the clinical programs we design... It also allows us to be super responsive to referral sources because decision-makers are housed there in the local community.”

    asked by Raj Kumar · answered by John Gochnour

    2 min read6 chapters

    Detailed Narrative

    01

    Operational Excellence & Acquisition Integration

    The company emphasized two critical initiatives for 2026: rigorous pursuit of operational excellence across all business lines and effective integration of recent acquisitions, especially the sizable Southeast acquisition. Management noted remarkable progress in organic growth and outperformance of internal expectations for the largest acquisition in its history, attributing success to diligent focus and effective transitions.

    02

    Home Health Reimbursement Outlook

    After four consecutive years of base rate cuts, the proposed 2027 Home Health rule indicates a 2.4% increase (modeled as 1.7% for Pennant's operations), which management views as a positive signal for a more stable rate environment. This aligns with the increasing demand for home health services due to an aging population and their cost-effectiveness as a critical, lowest-cost solution.

    03

    Hospice Regulatory Environment

    The hospice industry is under intense scrutiny due to fraud and abuse issues, leading to new program integrity measures. While these create administrative costs, Pennant supports them to identify bad actors and believes its compliant operations are well-equipped to thrive. The 2027 hospice final payment rule includes a 2.3% increase in revenue per day, alongside measures to increase rigor relating to hospice enrollment.

    04

    Strategic Acquisitions & Geographic Expansion

    Pennant closed seven senior living deals year-to-date, including the acquisition of Copper Canyon Memory Care and River Center Assisted Living in Tucson, Arizona, expanding its real estate portfolio to nine properties. The company also expanded its partnership with Hartford HealthCare at Home, making an investment to share in profits/losses, establishing a significant presence in Connecticut and the Northeast, and creating a platform for broader national expansion.

    05

    Technology and Automation Focus

    Management highlighted a key focus on technology advancements, including AI, to drive efficiencies. This includes piloting solutions to make clinicians more efficient in documentation, improving their experience and productivity, and back-office automation to eliminate manual processes and reduce indirect spend. The company expects these investments to lead to improved quality outcomes and financial results.

    06

    Local Leadership & Performance Highlights

    The call spotlighted several high-performing local leaders and teams, demonstrating the strength of Pennant's operating model. Examples included Emblem Hospice in Tucson, Arizona, which saw 43% ADC growth and 315% EBITDA increase year-over-year, and Signature Healthcare at Home in Eugene, Oregon, achieving a 4.5-star rating and nearly 30% census increase since acquisition.

    AI-generated summary of the company’s earnings call. Not investment advice.