0001766400-26-000014
SEC filingRevenue grew 36.3% to $947.7M, driven by acquisitions and organic growth, with stable operating margins and strong segment performance.
The Pennant Group, Inc. is a leading provider of healthcare services in home health, hospice, and senior living. The company operates through an innovative operating model that empowers local leaders and emphasizes peer accountability. As of December 31, 2025, it operated 172 home health and hospice agencies and 63 senior living communities across 16 states, with additional operational support in Connecticut.
Pennant has two reportable segments: Home Health and Hospice Services and Senior Living Services. The Home Health and Hospice segment contributed 77.3% of total revenue in fiscal year 2025 and includes home health, hospice, home care, and geriatric primary and palliative care. The Senior Living segment contributed 22.7% and includes assisted living, independent living, and memory care services.
The company offers a range of services rather than branded products. Home health services include nursing, therapy, medical social work, and home health aide. Hospice services focus on terminally ill patients. Senior living provides residential accommodations, meals, housekeeping, and assistance with daily activities. No specific product names or platforms are disclosed.
Pennant generates revenue from a diversified payor mix: Medicare (48.4%), Medicaid (13.1%), managed care (15.0%), and private/other payors (23.5%). The company builds local relationships through joint ventures, preferred provider arrangements, and transitional care programs. No single customer accounts for a material portion of revenue.
The post-acute care industry is highly fragmented and competitive. Competitors range from small local providers to large national chains. Key competitive factors include ability to attract talent, reputation for quality, attractiveness of facilities, and financial resources. Some competitors have greater scale or lower cost of capital.
Pennant's growth strategy has four pillars: (1) Grow talent through a CEO-in-Training program and ongoing leadership development; (2) Drive organic growth by improving clinical outcomes and becoming the provider of choice; (3) Pursue disciplined acquisitions of strategic and underperforming operations; (4) Expand partnerships with health systems and payors using data analytics.
As of December 31, 2025, Pennant had approximately 9,700 employees. Payroll-related expenses represented 68.3% of total expenses. The company emphasizes recruiting, training, and retaining leaders and clinical staff through dedicated programs.
The Pennant Group reported total revenue of $947.7 million for fiscal year 2025, a 36.3% increase from $695.2 million in 2024. Growth was driven by $185.0 million from acquisitions and $67.5 million organic expansion. Operating income rose 36.1% to $51.9 million, with operating margin stable at 5.5%. Net income attributable to Pennant increased to $29.6 million (3.1% of revenue) compared to $22.6 million (3.2%) in the prior year. The decline in net margin was primarily due to a higher effective tax rate of 26.0% versus 22.4%, driven by discrete tax effects of share-based compensation.
Cost of services increased 37.6% to $768.5 million, outpacing revenue growth and causing a 80 bps margin compression to 81.1% of revenue. This was largely attributable to wage inflation and the mix of recently acquired, lower-margin operations. Rent expense grew 13.2% to $48.7 million, but declined as a percentage of revenue by 110 bps due to operating leverage. General and administrative expense rose 41.6% to $71.1 million, primarily from increased wages and benefits to support expansion.
Home Health and Hospice Services: Segment revenue grew 41.0% to $732.7 million, fueled by a 44.1% increase in total home health admissions and a 28.6% rise in hospice average daily census. Average Medicare revenue per completed 60-day episode improved 3.5% to $3,755, and hospice Medicare revenue per day rose 4.9% to $192. The segment added 49 agencies during the year, ending with 172. Segment Adjusted EBITDAR margin was 16.5%, flat compared to prior year, as cost pressures offset volume gains.
Senior Living Services: Revenue increased 22.3% to $215.0 million, supported by a 90 bps occupancy improvement to 79.7% and an 8.0% increase in average monthly revenue per occupied unit to $5,195. The segment added six communities, ending with 63. Segment Adjusted EBITDAR margin improved to 28.8% from 29.6% in 2024, reflecting wage inflation and higher acquisition-related costs.
Management highlighted continued focus on acquisition growth, having completed the largest acquisition in company history in Q4 2025, expanding into three new states. They expect near-term margins to be pressured by integration of turnaround operations, but remain confident in long-term organic growth driven by demographic tailwinds and operational improvements. Liquidity remains strong with $17.0 million cash and $171.6 million available under the revolving credit facility. No quantitative guidance was provided for fiscal 2026.
As of December 31, 2025, total debt stood at $175.0 million, consisting of $75.0 million drawn on the revolving credit facility and $100.0 million in incremental term loans (Note 11). The weighted average interest rate was 6.1%. The company had $171.6 million of available borrowing capacity on the revolving facility (net of $3.4 million in outstanding letters of credit). Debt issuance costs of $1.2 million are netted against long-term debt. Cash and equivalents are not disclosed in the Notes, but the consolidated balance sheet shows $17.0 million.
The Notes disclose no material purchase commitments (e.g., supply agreements or capacity reservations). Lease commitments are detailed in Note 13: total operating lease payments of $417.5 million through 2040 and beyond, with a present value of $279.3 million. Finance lease payments total $7.2 million. The company self-insures for general/professional liability and workers' compensation, with undiscounted reserves of $17.6 million (current portion $4.5 million) as of December 31, 2025 (Note 16).
The Notes report no share repurchase programs or dividends. Capital allocation activities focused on debt financing: in November 2025, the company entered into a $100 million incremental term loan facility. Net debt increased by $175 million from zero at year-end 2024. Capital expenditures are not separately discussed in the Notes; the consolidated cash flow statement shows $12.0 million in property and equipment purchases for 2025.
The company operates two reportable segments: Home Health & Hospice Services and Senior Living Services (Note 6). For the year ended December 31, 2025, Home Health & Hospice generated $731.4 million in revenue (77% of total) and $120.8 million in Segment Adjusted EBITDAR (a 16.5% margin). Senior Living contributed $210.1 million in revenue (22% of total) and $60.5 million in Segment Adjusted EBITDAR (28.8% margin). Revenue growth was robust: Home Health & Hospice up 42% YoY and Senior Living up 20% YoY, largely from acquisitions (including the UnitedHealth/Amedisys transaction). Geographic mix is not disclosed in the Notes.
The provided document excerpt includes the audit report, critical audit matter, and part of the balance sheet, but does not include the Consolidated Statements of Cash Flows table. Therefore, no cash flow data can be extracted.