The Pennant Group, Inc. earnings

Management highlights

• Acknowledged dedication of Pennant's people. • 2026 Q1 had strong results across businesses with revenue, adjusted EBITDA, adjusted diluted earnings per share up. • Committed to improving operational performance in new and mature operations. • Added 101 CEOs in training in 2025 and 47 more in 2026 YTD. Elevated 11 local CEOs and 24 other local C-level leaders in 2025. • Transition of Tennessee, Alabama, and Georgia operations from United Healthcare continues with two waves fully into systems, continuing through October. • Home health and hospice segment growth driven by clinical outcomes, payer relationships, local leaders. • Senior living segment delivered meaningful progress in revenue, adjusted EBITDA, and occupancy. • Service center and segment leaders integrating new operations into systems.

Guidance

• Not adjusting guidance at this time, but pointing to the upper end of the guidance range.

Segment performance

Home health and hospice segment: Quarterly revenue of $229.1 million, an increase of $69.2 million or 43.3% over the prior year quarter. Segment-adjusted EBITDA of $33.6 million, up $8.5 million or 33.7%, and segment-adjusted EBITDA prior to NCI of $35.4 million, up $9.5 million or 36.6% each over the prior year quarter. Total home health admissions reached 30,721, an increase of 62.7%, while Medicare home health admissions rose to 13,303, an increase of 75.1% each over the prior year quarter. Hospice average daily census reached 5,199, an increase of 37%, and same-store hospice average daily census grew to 3,952, an increase of 10.2% each over the prior year quarter. Same-store segment-adjusted EBITDA margin prior to NCI was 17.2%, a 110 basis point improvement over the prior year quarter. Senior living segment: Revenue of $56.3 million increased $6.3 million or 12.6%. Adjusted EBITDA of $6.4 million increased $1.5 million or 30.6%. Segment adjusted EBITDA margin improved to 11.8%, a 190 basis point increase each over the prior year quarter. Same store occupancy rose to 81%, up 180 basis points, while all store occupancy reached 78.6%, up 10 basis points, each over the prior year quarter.

Risks & headwinds

• Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those expressed or implied. • Transition activity may bring operational challenges. • Labor cost pressure. • Macro factors like fuel price impact. • Regulatory risks related to fraud, waste, and abuse.

Analyst Q&A

• Q: Brian Tanvalet with Jefferies asked about integration progress of Metasys United assets and KPIs.

  A: Have moved through first two integration waves, begun third, working on leadership development. Census rebounded during transition, expect margin improvement as transition services agreement costs roll off.

• Q: Raj Kumar with Stevens asked about Medicare admission growth in home health.

  A: Local teams executing well, model built for being provider of choice, optimistic about being chosen in community.

• Q: David McDonald with Truist asked about payer conversations and fraud, waste, abuse.

  A: Positive payer conversations, invested in team, have industry-leading compliance program. Opportunities as bad actors rooted out.

• Q: Ben Hendrix with RBC Capital Markets asked about hospice CAP and competition.

  A: Monitoring CAP, local teams using tactics to address, competition in higher reimbursement markets.

• Q: Stephen Baxter with Wells Fargo asked about guidance.

  A: Don't want to declare victory yet, will look at performance through end of Q2 to adjust.

• Q: Jarrett Hassa with William Blair asked about same agency margin levers.

  A: Model about people and ownership, offset revenue decline through home health value-based purchasing, efficient care planning, and continuum of care.

• Q: Jarrett Hassa with William Blair asked about senior living acquisitions.

  A: Newer acquisitions are distressed assets with long-term upside, Capitol Hill is example of transformation, excited to integrate new ones.