The Pennant Group, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue for the third quarter was $302.3 million, an increase of $73.2 million or 32.0% year-over-year.
• Net income was $9.6 million, an increase of $3.6 million or 58.5% year-over-year.
• Adjusted net income was $12.7 million, an increase of $2.2 million or 21.6% year-over-year.
• GAAP diluted earnings per share were $0.26, compared to $0.17 in the prior year quarter.
• Adjusted diluted earnings per share were $0.35, compared to $0.30 in the prior year quarter.
• Consolidated Adjusted EBITDA was $24.7 million, an increase of $7.4 million or 42.4% year-over-year.
• Consolidated Adjusted EBITDA prior to noncontrolling interest (NCI) was $26.1 million, an increase of $8.0 million or 44.0% year-over-year.
• Consolidated Adjusted EBITDAR was $38.4 million, an increase of $9.1 million or 31.1% year-over-year.
• For the nine months ended September 30, 2026, total revenue was $885.6 million, net income was $32.3 million, and adjusted net income was $37.0 million.
• Cash provided by operating activities for the nine months ended September 30, 2026, was $43.5 million, compared to $27.3 million in the prior year period.
• Cash used in investing activities for the nine months ended September 30, 2026, was $68.5 million.
• Cash provided by financing activities for the nine months ended September 30, 2026, was $26.3 million.
• Total assets as of September 30, 2026, were $1,042.8 million, up from $968.2 million as of December 31, 2025.
• Long-term debt, net, was $193.3 million as of September 30, 2026, compared to $168.8 million as of December 31, 2025.
• Cash and cash equivalents were $18.4 million as of September 30, 2026.

Guidance and Future Outlook:

• Management stated that third quarter results are consistent with full-year guidance and put the company on track for a successful conclusion to the year.
• The company continues to drive forward on five key initiatives: leadership development, clinical excellence, margin, growth, and employee experience.
• Management expressed confidence that their multi-year emphasis on developing great leaders has positioned the company to unlock significant upside across the portfolio.

Business Segments and Product Lines:

• Home Health and Hospice Services:
  • Revenue was $239.8 million, an increase of $66.2 million or 38.2% year-over-year.
  • Segment adjusted EBITDAR from operations was $41.4 million, an increase of $12.3 million or 42.3% year-over-year.
  • Segment adjusted EBITDA from operations was $38.1 million, an increase of $11.3 million or 42.0% year-over-year.
  • Total home health admissions were 28,479, an increase of 8,053 or 39.4% year-over-year.
  • Same store home health admissions were 17,825, an increase of 1,319 or 8.0% year-over-year.
  • Total Medicare home health admissions were 11,347, an increase of 3,126 or 38.0% year-over-year.
  • Same store Medicare home health admissions were 7,383, an increase of 791 or 12.0% year-over-year.
  • Hospice average daily census was 5,443, an increase of 1,399 or 34.6% year-over-year.
  • Same store hospice average daily census was 4,164, an increase of 478 or 13.0% year-over-year.
• Senior Living Services:
  • Revenue was $62.4 million, an increase of $7.0 million or 12.6% year-over-year.
  • Average occupancy was 78.4%, a decrease of 250 basis points year-over-year.
  • Same store average occupancy was 81.2%, a decrease of 60 basis points year-over-year.
  • Average monthly revenue per occupied room was $5,385, an increase of $190 or 3.7% year-over-year.
  • Same store average monthly revenue per occupied room was $5,370, an increase of $234 or 4.6% year-over-year.
  • Segment adjusted EBITDAR from operations was $16.2 million, an increase of $0.9 million or 5.7% year-over-year.
  • Segment adjusted EBITDA from operations was $5.7 million, an increase of $0.2 million or 3.0% year-over-year.
• Growth and Acquisitions:
  • Over the last two years, the company added 75 home health and hospice locations and 16 senior living communities.
  • The company operates 175 home health and hospice agencies and 70 senior living communities across 12 states.
  • Revenue by payor source for the quarter showed Medicare at 50.6% (up from 47.5%), Medicaid at 13.2% (down from 13.7%), Managed care at 15.9% (up from 14.4%), and Private and other at 20.3% (down from 24.4%).

Market and Competitive Landscape:

• The company operates in the healthcare services sector, specifically home health, hospice, and senior living.
• Management noted that each acquisition was carefully selected based on considerable long-term potential.
• Significant investments were made in operational leaders, service center support, and enhanced infrastructure to effectively transition acquisitions and improve same-store results.

Risks and Challenges:

• Risks include reduced prices and reimbursement rates for services.
• Challenges include the ability to acquire, develop, manage, or improve operations.
• The company faces risks related to increasing borrowing costs as it incurs additional indebtedness to fund acquisition and development.
• There are risks regarding the ability to access capital on a cost-effective basis to implement growth strategies.
• Operating margins and profitability could suffer if the company is unable to effectively manage its increasing number of operations.
• Competition exists from other companies in the acquisition, development, and operation of facilities.
• The company faces risks related to defending claims and lawsuits, including professional liability claims and regulatory-related claims.
• Application of existing or proposed government regulations or adoption of new laws could limit business operations or require significant expenditures.

Management Commentary and Tone:

• Brent Guerisoli, CEO, described the quarter as "solid" with "strong year-over-year improvement across the organization."
• John Gochnour, COO, highlighted the strategic addition of 75 home health/hospice locations and 16 senior living communities over the last two years.
• Management emphasized that investments in operational leaders and infrastructure have improved the organization's ability to transition acquisitions while simultaneously improving results at same-store operations.

Other Key Points:

• A conference call and webcast were scheduled for November 5, 2026, at 10:00 a.m. MT.
• The company entered into a transition services agreement with UnitedHealth Group Incorporated as part of an acquisition agreement consummated on October 1, 2025.
• Fees incurred under the transition services agreement were $1.55 million for the three months ended September 30, 2026.
• Costs associated with transitioning operations included insurance proceeds recorded in gain on disposition of property and equipment, net, related to a facility converted from memory care to assisted living.
• Non-GAAP adjustments included $3.4 million in share-based compensation expense for the quarter.
• Acquisition-related costs were $0.1 million for the quarter.
• Transition services costs were $1.6 million for the quarter.
• The company's Form 10-Q for the three and nine months ended September 30, 2026, will be filed with the SEC.