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What changed in Pennant Group, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Pennant Group, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+257 added−240 removedSource: 10-K (2026-02-26) vs 10-K (2025-02-27)

Top changes in Pennant Group, Inc.'s 2025 10-K

257 paragraphs added · 240 removed · 206 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

81 edited+29 added−17 removed139 unchanged
Biggest changeHQRP, mandated by the Patient Protection and Affordable Care Act, requires hospice agencies to submit required quality data for inclusion on the public facing Hospice Compare website hosted by CMS. Hospices that fail to meet quality reporting requirements receive a 4.0% reduction to the annual market basket update for the next fiscal year. Licensure and Certificates of Need (“CON”).
Biggest changeFailure to report such data when required subjects a PAC to a 2.0% reduction in market basket prices then in effect. Hospice Quality Reporting Requirements . HQRP, mandated by the Patient Protection and Affordable Care Act, requires hospice agencies to submit required quality data for inclusion on the public facing Hospice Compare website hosted by CMS.
Payment adjustments could be as much as 5% in 2025 based on data obtained in FY 2023 and CMS could increase the payment adjustment percentage in future years. Review Choice Demonstration for Home Health Services .
FY 2025 payment adjustments could be as much as 5% based on data obtained in FY 2023 and CMS could increase the payment adjustment percentage in future years. Review Choice Demonstration for Home Health Services .
We believe our model of empowering local leaders and providing them a platform of support, including expert resources and industry-leading systems, will continue to attract and retain highly talented and entrepreneurial leaders. Focus on Organic Growth. We believe that we have a significant opportunity to drive organic growth within our current portfolio, including recently acquired operations.
We believe our model of empowering local leaders and providing them with a platform of support, including expert resources and industry-leading systems, will continue to attract and retain highly talented and entrepreneurial leaders. Focus on Organic Growth. We believe that we have a significant opportunity to drive organic growth within our current portfolio, including recently acquired operations.
Item 1. Business Overview The Pennant Group, Inc. is a leading provider of high-quality healthcare services to patients or residents of all ages, including the growing senior population, in the United States. Through our innovative operating model and unique core values, we strive to be the provider of choice in the communities we serve.
Item 1. Business Overview The Pennant Group, Inc. is a leading provider of high-quality healthcare services to patients, residents, and clients of all ages, including the growing senior population, in the United States. We strive to be the provider of choice in the communities we serve through our innovative operating model and unique core values.
In order to operate our businesses, we must comply with federal, state and local laws relating to, among other things, licensure, delivery and adequacy of medical care, distribution of pharmaceuticals, equipment, personnel, operating policies, fire prevention, immigration, employment, rate-setting, billing and reimbursement, building codes and environmental protection.
In order to operate our businesses, we must comply with federal, state and local laws relating to, among other things, licensure, delivery and adequacy of medical care, distribution of pharmaceuticals, equipment, personnel, operating policies, fire prevention, immigration, employment, rate-setting, billing and reimbursement, building codes, privacy, antitrust, and environmental protection.
The primary competitive factors in these businesses include reputation, attractiveness and location of physical assets, cost of services, quality of clinical services, responsiveness to patient or resident needs, location and the ability to provide support in other areas such as third-party reimbursement, information management and patient recordkeeping.
The primary competitive factors in these businesses include reputation, attractiveness and location of physical assets, cost of services, quality of care, responsiveness to patient or resident needs, location and the ability to provide support in other areas such as third-party reimbursement, information management and patient recordkeeping.
As with the home health and hospice industries, there is significant fragmentation in the senior housing industry, with the top 25 operators owning approximately 28% of the licensed beds within the US. We believe that our strategy of acquiring strategic and underperforming operations in these highly fragmented markets will be an instrumental to our future growth. Changing Regulatory Framework .
As with the home health and hospice industries, there is significant fragmentation in the senior housing industry, with the top 25 operators owning approximately 28% of the licensed beds within the U.S. We believe that our strategy of acquiring strategic and underperforming operations in these highly fragmented markets will be an instrumental to our future growth. Changing Regulatory Framework .
Payments may be adjusted for certain variables including, but not limited to the number of visits provided, patient transfers, and other factors. Home Health Value Based Purchasing (“HHVBP”) . After introducing HHVBP models in select states from 2016 to 2021, CMS expanded HHVBP to all fifty states beginning on January 1, 2022.
Payments may be adjusted for certain variables including, but not limited to the number of visits provided, patient transfers, and other factors. 12 Table of Contents Home Health Value Based Purchasing (“HHVBP”) . After introducing HHVBP models in select states from 2016 to 2021, CMS expanded HHVBP to all fifty states beginning on January 1, 2022.
Section 1877 of the Social Security Act, commonly known as the “Stark Law,” provides that a physician may not refer a 14 Table of Contents Medicare or Medicaid patient for a “designated health service” to an entity with which the physician or an immediate family member has a financial relationship unless the financial arrangement meets an exception under the Stark Law or its regulations.
Section 1877 of the Social Security Act, commonly known as the “Stark Law,” provides that a physician may not refer a Medicare or Medicaid patient for a “designated health service” to an entity with which the physician or an immediate family member has a financial relationship unless the financial arrangement meets an exception under the Stark Law or its regulations.
These rates are subject to annual adjustments based on inflation and geographic wage considerations. Reimbursement for Senior Living Services . Assisted living, independent living and memory care community revenue is primarily derived from private pay residents at rates we establish based upon the services we provide and market conditions 8 Table of Contents in the area of operation.
These rates are subject to annual adjustments based on inflation and geographic wage considerations. Reimbursement for Senior Living Services . Assisted living, independent living and memory care community revenue is primarily derived from private pay residents at rates we establish based upon the services we provide and market conditions in the area of operation.
The industry is highly fragmented and characterized by numerous local and regional providers, in addition to large national providers that have achieved geographic diversity and economies of scale. Some of our independent operating subsidiaries also compete with skilled nursing facilities, inpatient rehabilitation facilities and long-term acute care hospitals.
The industry is highly fragmented and characterized by numerous local and regional providers, in 8 Table of Contents addition to large national providers that have achieved geographic diversity and economies of scale. Some of our independent operating subsidiaries also compete with skilled nursing facilities, inpatient rehabilitation facilities and long-term acute care hospitals.
Payments are based on daily rates for each day a beneficiary is enrolled in the hospice benefit and are subject to two annual caps. Rates are set based on specific levels of care, are adjusted by a wage index to reflect healthcare labor costs across the country and are established annually through federal legislation.
Hospice Reimbursement and Cap Amounts . Payments are based on daily rates for each day a beneficiary is enrolled in the hospice benefit and are subject to two annual caps. Rates are set based on specific levels of care, are adjusted by a wage index to reflect healthcare labor costs across the country and are established annually through federal legislation.
The disciplined acquisition and integration of strategic and underperforming operations is a key element of our past success and is integral to our future growth plans. Historically, we have successfully transitioned both turnaround and stable target businesses, transforming them into top-quality operations preferred by referral 4 Table of Contents sources and community partners.
The disciplined acquisition and integration of strategic and underperforming operations is a key element of our past success and is integral to our future growth plans. Historically, we have successfully transitioned both turnaround and stable target businesses, transforming them into top-quality operations preferred by referral sources and community partners.
The Review Choice Demonstration for Home Health Services (“RCD”) is mandatory for our HHAs in Texas and allows them to select from three initial options for payment review: 12 Table of Contents • Pre-claim review • Post-payment review • Minimal post-payment review with a 25% payment reduction After a 6-month period, HHAs demonstrating compliance with Medicare rules through pre-claim review or post-payment review will have additional choices, including relief from most reviews except for a review of a small sample of claims.
The Review Choice Demonstration for Home Health Services (“RCD”) is mandatory for our HHAs in Texas and Oklahoma and allows them to select from three initial options for payment review: • Pre-claim review • Post-payment review • Minimal post-payment review with a 25% payment reduction After a 6-month period, HHAs demonstrating compliance with Medicare rules through pre-claim review or post-payment review will have additional choices, including relief from most reviews except for a review of a small sample of claims.
As a result of the growth of assisted living in recent years, states have adopted licensing standards applicable to assisted living communities. Most state licensing standards apply to assisted living communities regardless of whether they accept Medicaid funding. Our senior living segment is subject to a variety of federal, state and local environmental laws and regulations.
As a result of the growth of assisted living in recent years, states have adopted licensing standards applicable to assisted living communities. Most state licensing standards apply to assisted living communities regardless of whether they accept Medicaid funding. 16 Table of Contents Our senior living segment is subject to a variety of federal, state and local environmental laws and regulations.
The laws and statutes affecting the regulatory landscape of the home health, hospice and senior living industries continue to expand. We expect that these changes will continue. In addition to this changing regulatory environment, 10 Table of Contents federal, state and local officials are increasingly focusing their efforts on the enforcement of these laws.
The laws and statutes affecting the regulatory landscape of the home health, hospice and senior living industries continue to expand. We expect that these changes will continue. In addition to this changing regulatory environment, federal, state and local officials are increasingly focusing their efforts on the enforcement of these laws.
Medicaid programs generally provide health benefits for qualifying individuals and may supplement Medicare benefits for the disabled and for persons aged 65 and older meeting financial eligibility 7 Table of Contents requirements. Medicaid reimbursement formulas are established by each state with the approval of the federal government in accordance with federal guidelines.
Medicaid programs generally provide health benefits for qualifying individuals and may supplement Medicare benefits for the disabled and for persons aged 65 and older meeting financial eligibility requirements. Medicaid reimbursement formulas are established by each state with the approval of the federal government in accordance with federal guidelines.
Our operational leaders are committed to ongoing training and participate in regular leadership development and educational programs. We believe that our commitment to professional development strengthens the quality of our operational leaders and staff and will continue to differentiate us from our competitors. Proven Track Record of Successful Acquisitions.
Our operational leaders are committed to ongoing training and participate in regular leadership development and educational programs. We believe that our commitment to professional development strengthens the quality of our operational leaders and staff and will continue to differentiate us from our competitors. 9 Table of Contents Proven Track Record of Successful Acquisitions.
We plan to continue to take advantage of the fragmented home health, hospice and senior living industries by being proactive yet disciplined in acquiring strategic and underperforming operations with high upside potential within both existing and new geographic markets.
We plan to continue to take advantage of the fragmented home health, hospice and senior living industries by being proactive yet disciplined in acquiring strategic and underperforming operations with high upside 4 Table of Contents potential within both existing and new geographic markets.
Our ability to attract and retain future leaders is critical to our ongoing success. Therefore, we are dedicated to continuously recruiting and developing a diverse group of capable leaders.
Our ability to attract and retain future leaders is critical to our ongoing success. Therefore, we are dedicated to continuously recruiting and developing a broad group of capable leaders.
We believe healthcare should be operated primarily as a local business. Our innovative operating model, described in Part 1, Item 1 - “Our Innovative Operating Model” , is one of our key competitive strengths. 9 Table of Contents Effective Talent Recruitment, Development and Retention.
We believe healthcare should be operated primarily as a local business. Our innovative operating model, described in Part 1, Item 1 - “Our Innovative Operating Model” , is one of our key competitive strengths. Effective Talent Recruitment, Development and Retention.
CAHPS surveys are designed to produce comparable data on the perspective of patients and their caregivers that allows meaningful and objective comparisons between agencies. Home health and hospice agencies that do not submit the required data incur a 4% reduction in their annual base rate payment update. Home Health Star Rating .
CAHPS surveys are designed to produce comparable data on the perspective of patients and their caregivers that allows meaningful and objective comparisons between agencies. Since October 1, 2023, hospice agencies that do not submit the required data incur a 4% reduction in their annual base rate payment update. Home Health Star Rating .
Using the CMS five-star quality rating criteria, our home health agencies achieved an average of 4.1 out of 5 stars across all agencies for the for the year ended December 31, 2024, compared to the industry average of 3.0 stars (see Government Regulation below for further discussion on the five-star quality rating system).
Using the CMS five-star quality rating criteria, our home health agencies achieved an average of 4.2 out of 5 stars across all agencies for the for the year ended December 31, 2025, compared to the industry average of 3.0 stars (see Government Regulation below for further discussion on the five-star quality rating system).
Home health agencies that do not submit quality measure data to CMS incur a 4% reduction in their annual home health payment update.
Home health agencies that do not submit quality measure data to CMS incur a 2% reduction in their annual home health payment update.
The inpatient cap limits hospice care provided on an inpatient basis. This cap limits the number of days that are paid at the higher inpatient care rate to 20.0% of the total number of days of hospice care that are provided to all Medicare beneficiaries served by a provider.
This cap limits the number of days that are paid at the higher inpatient care rate to 20.0% of the total number of days of hospice care that are provided to all Medicare beneficiaries served by a provider.
According to the January 2025 quarterly refresh of CMS Home Health Compare star rating criteria, our home health agencies have achieved an average of 4.1 out of 5 stars across all agencies compared to the industry average of 3.0 stars. Home Health Reimbursement Under PDGM .
According to the January 2026 quarterly refresh of CMS Home Health Compare star rating criteria, our home health agencies have achieved an average of 4.2 out of 5 stars across all agencies compared to the industry average of 3.0 stars. Home Health Reimbursement Under PDGM .
If our operations fail to comply with these directives or otherwise fail to comply substantially with licensure and certification laws, rules and regulations, we could lose our certification as a Medicare or Medicaid provider, lose our state licenses to operate and be subject to fines and penalties.
If our operations fail to comply with these directives or otherwise fail to comply substantially with licensure and 15 Table of Contents certification laws, rules and regulations, we could lose our certification as a Medicare or Medicaid provider, lose our state licenses to operate and be subject to fines and penalties.
Furthermore, the generation currently retiring has access to fewer post-retirement benefits and accumulated less savings than in the past, creating demand for more affordable senior housing and in-home care options. As a high-quality provider in lower cost settings, we believe we are well-positioned to benefit from this trend. Shift of Patient Care to Lower Cost Alternatives .
Furthermore, the generation currently retiring has access to fewer 6 Table of Contents post-retirement benefits and accumulated less savings than in the past, creating demand for more affordable senior housing and in-home care options. As a high-quality provider in lower cost settings, we believe we are well-positioned to benefit from this trend.
The CoPs require home health agencies to submit quality reporting data through Outcome and Assessment Information Set (“OASIS”) assessments within 30 days of completing the assessment of the Medicare and Medicaid beneficiary as a condition of payment and for quality measurement purposes.
The CoPs require home health agencies to submit quality reporting data through Outcome and Assessment Information Set (“OASIS”) assessments within 30 days of completing the assessment of the individual as a condition of payment and for quality measurement purposes.
FY 2024 was the second year for the expanded HHVBP model, based on FY 2022 for its baseline, and HHA performance for the FY 2024 applicable measure set determines payment adjustments applicable to FY 2026 Medicare fee-for-service claims by HHAs. FY 2025 is the first year when payment will be adjusted determined on FY 2023 performance.
FY 2024 was the second year for the expanded HHVBP model, based on FY 2022 for its baseline, and HHA performance for the FY 2024 applicable measure set determines payment adjustments applicable to FY 2026 Medicare fee-for-service claims by HHAs. FY 2025 was the first year when payments were adjusted determined on FY 2023 performance.
As described in Part 1, Item 1., Grow Talent Base and Develop Future Leaders, our CEO-in-Training and Clinical Operations Leadership Training programs provide significant in-person instruction and extensive training with key leaders from across the organization to empower local leaders. For the year ended December 31, 2024, 67.7% of our total expenses were payroll related.
As described in Part 1, Item 1., Grow Talent Base and Develop Future Leaders, our CEO-in-Training and Clinical Operations Leadership Training programs provide significant in-person instruction and extensive training with key leaders from across the organization to empower local leaders. For the year ended December 31, 2025, 68.3% of our total expenses were payroll related.
Human Capital The operation of our home health and hospice operations and senior living communities requires a large number of highly skilled healthcare professionals and support staff. As of December 31, 2024, we had approximately 7,000 employees who were employed by our independent operating subsidiaries or our Service Center.
Human Capital The operation of our home health and hospice operations and senior living communities requires a large number of highly skilled healthcare professionals and support staff. As of December 31, 2025, we had approximately 9,700 employees who were employed by our independent operating subsidiaries or our Service Center.
For the year ended December 31, 2024, we generated 74.7% of our revenue from home health and hospice services and 25.3% of our revenue from senior living services. Our diversified service portfolio allows us to opportunistically execute on our acquisition strategy as valuations fluctuate over industry cycles.
For the year ended December 31, 2025, we generated 77.3% of our revenue from home health and hospice services and 22.7% of our revenue from senior living services. Our diversified service portfolio allows us to opportunistically execute on our acquisition strategy as valuations fluctuate over industry cycles.
Our geriatric primary and palliative care services include physician and nurse practitioner services provided in the home, facility, or other appropriate setting. We generated approximately 64.7%, 66.9% and 67.7% of our home health and hospice segment revenue from Medicare during the years ended December 31, 2024, 2023 and 2022, respectively. Senior Living.
Our geriatric primary and palliative care services include physician and nurse practitioner services provided in the home, facility, or other appropriate settings. We generated approximately 62.5%, 64.7% and 66.9% of our home health and hospice segment revenue from Medicare during the years ended December 31, 2025, 2024, and 2023, respectively. Senior Living.
We believe that our achievement of high-quality clinical outcomes positions us as a solution for patients, residents and referral sources, leading to census growth and improved profitability. Diversified Portfolio by Payor and Services. As of December 31, 2024, we operated 123 home health and hospice agencies and 57 senior living communities across 13 states.
We believe that our achievement of high-quality clinical outcomes positions us as a solution for patients, residents and referral sources, leading to census growth and improved profitability. Diversified Portfolio by Payor and Services. As of December 31, 2025, we operated 172 home health and hospice agencies and 63 senior living communities across 16 states.
As of December 31, 2024, we operate multiple lines of business, including home health, hospice and senior living, throughout Arizona, California, Colorado, Idaho, Montana, Nevada, Oklahoma, Oregon, Texas, Utah, Washington, Wisconsin and Wyoming. We also provide home health and hospice operational support through a management service agreement in Connecticut.
As of December 31, 2025, we operate in multiple lines of business, including home health, hospice, and senior living services across Alabama, Arizona, California, Colorado, Georgia, Idaho, Montana, Nevada, Oklahoma, Oregon, Tennessee, Texas, Utah, Washington, Wisconsin and Wyoming. We also provide home health and hospice operational support through a management service agreement in Connecticut.
We provide home health and hospice services through 123 agencies, and senior living services at 57 communities with 3,960 total units in our assisted living, independent living and memory care business. We derive revenue from a diversified blend of payors including Medicare and Medicaid programs, private pay patients and residents, and managed care payors.
We provide home health and hospice services through 172 agencies, and senior living services at 63 communities with 4,428 total units in our assisted living, independent living and memory care business. We derive revenue from a diversified blend of payors including Medicare and Medicaid programs, private pay patients and residents, and managed care payors.
We are also subject to federal and state antitrust laws. Enforcement of the antitrust laws against healthcare providers is common, and antitrust liability may arise in a wide variety of circumstances, including third party contracting, physician relations, joint venture, merger, affiliation and acquisition activities.
Enforcement of the antitrust laws against healthcare providers is common, and antitrust liability may arise in a wide variety of circumstances, including third party contracting, physician relations, joint venture, merger, affiliation and acquisition activities.
The growth of the senior population in the U.S. continues to increase healthcare costs, often at a rate faster than the available funding from government-sponsored healthcare programs.
Shift of Patient Care to Lower Cost Alternatives . The growth of the senior population in the U.S. continues to increase healthcare costs, often at a rate faster than the available funding from government-sponsored healthcare programs.
Presidential and congressional elections may result in significant changes in legislation, regulation, and implementation of Medicare, Medicaid, and government policy, along with potential changes to tax rates and other tax treatment of our operations. We continually monitor these developments so we can respond to the changing regulatory environment impacting our business. These rules could be amended by the current administration.
Further presidential and congressional actions may result in additional significant changes in legislation, regulation, and implementation of Medicare, Medicaid, and government policy, along with potential changes to tax rates and other tax treatment of our operations. We continually monitor these developments so we can respond to the changing regulatory environment impacting our business.
As discussed in greater detail below under Government Regulation , and adjusted in subsequent calendar years’ payment rules, this reimbursement structure involved case mix calculation methodology refinements, changes to low-utilization payment adjustment (“LUPA”) thresholds, the elimination of therapy thresholds, a change to the unit of payment from a 60-day episode to a 30-day period of care, and reduction in fiscal year 2020 and full elimination in fiscal year 2021 of requests for anticipated payments (“RAPs”), which were no longer available by January 1, 2022.
As discussed in greater detail below under Government Regulation , and adjusted in subsequent calendar years’ payment rules, this reimbursement structure involved case mix calculation methodology refinements, changes to low-utilization payment adjustment (“LUPA”) thresholds, the elimination of therapy thresholds, a change to the unit of payment from a 60-day episode to a 30-day period of care, and the elimination of requests for anticipated payments (“RAPs”).
The HIPAA regulations have and will continue to impose significant costs on our facilities in order to 15 Table of Contents comply with these standards. Our operations are also subject to any federal or state privacy-related laws that are more restrictive than the privacy regulations issued under HIPAA.
The HIPAA regulations have and will continue to impose significant costs on our facilities in order to comply with these standards. Our operations are also subject to any federal or state privacy-related laws that are more restrictive than the privacy regulations issued under HIPAA. These laws vary and could impose additional penalties for privacy and security breaches.
Because of this diversified portfolio, our blended payor mix was 48.3% Medicare, 13.2% Medicaid, 13.3% managed care and 25.2% private pay and other for the year ended December 31, 2024. Our balanced payor mix can provide greater business stability through economic cycles and mitigates volatility arising from government-driven reimbursement changes.
Because of this diversified portfolio, our blended payor mix was 48.4% Medicare, 13.1% Medicaid, 15.0% managed care and 23.5% private pay and other payment sources for the year ended December 31, 2025. Our balanced payor mix can provide greater business stability through economic cycles and mitigates volatility arising from government-driven reimbursement changes.
To develop these leaders, we have a rigorous “CEO-in-Training Program” that includes significant in-person instruction on leadership, clinical and operational topics, as well as extensive on-the-ground training and active learning with key leaders from across the organization.
We use a multi-faceted strategy to identify and recruit proven business leaders from various industries and backgrounds. To develop these leaders, we have a rigorous “CEO-in-Training Program” that includes significant in-person instruction on leadership, clinical and operational topics, as well as extensive on-the-ground training and active learning with key leaders from across the organization.
These requirements could change before the proposed rule is finalized. Climate Laws. In 2023, California enacted SB 253 and SB 261, which require new climate disclosures from companies doing business in California. SB 253 requires companies with annual revenues of $1 billion or more to disclose their greenhouse gas emissions.
In 2023, California enacted SB 253 and SB 261, which require new climate disclosures from companies doing business in California. SB 253 requires companies with annual revenues of $1 billion or more to disclose their greenhouse gas emissions.
The following table sets forth our total revenue by payor source as a percent of revenue generated by each of our reportable segments and as a percentage of total revenue for the year ended December 31, 2024: Year Ended December 31, 2024 Home Health and Hospice Services Home Health Services Hospice Services Senior Living Services Total Revenue Medicare 45.8 % 86.6 % — % 48.3 % Medicaid 4.3 10.8 30.6 13.2 Subtotal 50.1 97.4 30.6 61.5 Managed care 31.5 2.0 — 13.3 Private and other (a) 18.4 0.6 69.4 25.2 Total revenue 100.0 % 100.0 % 100.0 % 100.0 % (a) Private and other payors in the Company’s home health services includes revenue from all payors generated in the Company’s home care operations and management services agreement.
The following table sets forth our total revenue by payor source as a percent of revenue generated by each of our reportable segments and as a percentage of total revenue for the year ended December 31, 2025: Year Ended December 31, 2025 Home Health and Hospice Services Home Health Services Hospice Services Senior Living Services Total Revenue Medicare 43.8 % 87.0 % — % 48.4 % Medicaid 4.0 10.8 34.1 13.1 Subtotal 47.8 97.8 34.1 61.5 Managed care 33.2 1.4 — 15.0 Private and other (a) 19.0 0.8 65.9 23.5 Total revenue 100.0 % 100.0 % 100.0 % 100.0 % (a) Private and other payors in the Company’s home health services includes revenue from all payors generated in the Company’s home care operations and management services agreement.
These laws vary and could impose additional penalties for privacy and security breaches. In December 2024, HHS issued a notice of proposed rulemaking proposing several changes to HIPAA’s security rule, including, among other things, requiring written procedures to respond to security incidents, annual security compliance audits, encryption of PHI, and use of multi-factor authentication.
In December 2024, HHS issued a notice of proposed rulemaking proposing several changes to HIPAA’s security rule, including, among other things, requiring written procedures to respond to security incidents, annual security compliance audits, encryption of PHI, and use of multi-factor authentication. These requirements could change before the proposed rule is finalized. Climate Laws.
There were over 11,300 Medicare-certified home health agencies operating in 2022, with the top ten largest operators accounting for approximately 26.6% of the market. There are approximately 6,000 hospice agencies in the U.S. with the top ten largest operators accounting for about 19.1% of the total market share.
There were over 12,200 Medicare-certified home health agencies operating in 2025, with the top ten largest operators accounting for approximately 25% of the market. There are over 6,000 hospice agencies in the U.S. with the top ten largest operators accounting for about 20% of the total market share.
These reports and other information concerning our company may be accessed through the SEC’s website at http://www.sec.gov. 16 Table of Contents You may also find on our website at www.pennantgroup.com electronic copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act.
You may also find on our website at www.pennantgroup.com electronic copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act.
In addition, the Hospice Payment Final Rule updates the statutory aggregate cap that limits the overall payments per patient that may be made to a hospice annually. The hospice cap amount for the 2025 fiscal year is $34,465.34, increased from the 2024 fiscal year cap of $33,494.01.
In addition, the Hospice Payment Final Rule updates the statutory aggregate cap that limits the overall payments per patient that may be made to a hospice annually. The hospice cap amount for the 2026 fiscal year is $35,361.44, which is a 2.6% increase from the 2025 fiscal year cap of $34,465.34.
As of December 31, 2024, we provided assisted living, independent living and memory care services in 57 communities with 3,960 total available units.
As of December 31, 2025, we provided assisted living, independent living and memory care services in 63 communities with 4,428 total available units.
According to the U.S. Census Bureau in 2023, between 2022 and 2060, the number of individuals over 65 years old is projected to be one of the fastest growing segments of the United States population, growing from 17% to 24%.
Census Bureau in 2023, between 2022 and 2060, the number of individuals over 65 years old is projected to be one of the fastest growing segments of the United States population, growing from 17% to 24%. The Bureau identified the year 2030 as the year all baby boomers will be more than 65 years of age.
From 2014 to 2024, we grew our home health and hospice services and senior living services revenue by 669.0% or a compounded annual growth rate of 22.6%. 5 Table of Contents From December 31, 2014 to December 31, 2024, we grew the number of our home health and hospice agencies and senior living units by 392.0% and 149.5%, respectively.
From 2016 to 2025, we grew our home health and hospice services and senior living services revenue by 336.3% or a compounded annual growth rate of 15.9%. 5 Table of Contents From December 31, 2016 to December 31, 2025, we grew the number of our home health and hospice agencies and senior living units by 341.0% and 39.1%, respectively.
Managed Care and Private Insurance . Managed care patients consist of individuals who are insured by certain third-party entities, or who are Medicare beneficiaries who have assigned their Medicare benefits to a managed care organization plan.
Managed care patients consist of individuals who are insured by certain third-party entities, or who are Medicare beneficiaries who have assigned their Medicare benefits to a managed care organization plan. Private and Other Payors . Private and other payors consist primarily of individuals, family members or other third parties who directly pay for the services we provide.
We also provide home health and hospice operational support through a management service agreement in Connecticut. Our home health services consist of providing a combination of clinical services including nursing, speech, occupational and physical therapy, medical social work and home health aide services within a patient's home.
Our home health services consist of providing a combination of clinical services including nursing, speech, occupational and physical therapy, medical social work and home health aide services within a patient's home.
On April 27, 2024, HHS finalized and published a final rule containing revised regulations that implemented Section 1557 of the ACA and its anti-discrimination provisions, which contains staggered implementation dates that began taking effect on July 5, 2024.
On April 27, 2024, HHS finalized and published a final rule containing revised regulations that implemented Section 1557 of the ACA and its anti-discrimination provisions, which contains staggered implementation dates that began taking effect on July 5, 2024, however, such rules are subject to decreased enforcement or different enforcement priorities than in the past, as discussed below (see Civil Rights ).
Conditions of Participation . Our home health and hospice operations must comply with regulations promulgated by the United States Department of Health and Human Services (“HHS”) and CMS in order to participate 11 Table of Contents in the Medicare program and receive Medicare payments.
Our home health and hospice operations must comply with regulations promulgated by the HHS and CMS in order to participate in the Medicare program and receive Medicare payments.
We believe that the industries in which we operate will continue to benefit from several macroeconomic and regulatory trends highlighted below: Increased Demand Driven by Aging Populations . As seniors account for an increasing percentage of the total U.S. population, we believe demand for home health and hospice will continue to increase and demand for senior living services will improve.
As seniors account for an increasing percentage of the total U.S. population, we believe demand for home health and hospice will continue to increase and demand for senior living services will improve. According to the U.S.
The home health and hospice segment is growing within the overall healthcare landscape in the United States. According to Grandview Research, Inc., the home health market is expected to grow at a compounded annual growth rate (“CAGR”) of 8.0% from 2024 to 2030.
According to Grandview Research, Inc., the home health market is expected to grow at a compounded annual growth rate (“CAGR”) of 8.0% from 2024 to 2030. The hospice industry is estimated at approximately $37.9 billion and is projected to grow at an estimated CAGR of 8.1% from 2024 to 2030.
This guidance also addresses instances of non-compliance, such as unequal treatment based on religious beliefs or dietary restrictions, and outlines the support OCR provides to ensure compliance, encouraging affected individuals to file complaints for potential enforcement actions. This guidance could be amended by the current administration. Civil and Criminal Fraud and Abuse Laws and Enforcement .
National Strategy to Counter Antisemitism, highlighting the prohibition of discrimination based on religion or other protected characteristics during public health emergencies. This guidance also addresses instances of non-compliance, such as unequal treatment based on religious beliefs or dietary restrictions, and outlines the support OCR provides to ensure compliance, encouraging affected individuals to file complaints for potential enforcement actions.
Medicare payments are subject to two fixed annual caps, which are assessed on a provider-number basis and are broken into an inpatient cap amount and an overall payment cap. These cap amounts are calculated and published by the applicable Medicare fiscal intermediary on an annual basis covering the fiscal year, measured as the period from October 1 through September 30.
These cap amounts are calculated and published by the applicable Medicare fiscal intermediary on an annual basis covering the fiscal year, measured as the period from October 1 through the following September 30. The inpatient cap limits hospice care provided on an inpatient basis.
If payments received by any one of our hospice provider numbers exceeds either of these caps, we are required to reimburse Medicare for payments received in excess of the cap amounts. The hospice cap amount for the 2024 fiscal year was $33,494.01.
If payments received by any one of our hospice provider numbers 13 Table of Contents exceeds either of these caps, we are required to reimburse Medicare for payments received in excess of the cap amounts. The hospice cap amount for the 2026 fiscal year is $35,361.44, which is a 2.6% increase from the 2025 fiscal year cap of $34,465.34.
Agency and Unit Growth Since 2014 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Home health and hospice agencies 25 32 39 46 54 63 76 88 95 111 123 Senior living communities (a) 15 36 36 43 50 52 54 54 49 51 57 Senior living units (a) 1,587 3,184 3,184 3,434 3,820 3,963 4,127 4,127 3,500 3,588 3,960 Total number of home health, hospice, and senior living operations 40 68 75 89 104 115 130 142 144 162 180 (a) During January 2022, affiliates of the Company entered into certain operations transfer agreements with affiliates of Ensign, providing for the transfer of the operations of five senior living communities.
Agency and Unit Growth Since 2016 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Home health and hospice agencies 39 46 54 63 76 88 95 111 123 172 Senior living communities 36 43 50 52 54 54 49 51 57 63 Senior living units 3,184 3,434 3,820 3,963 4,127 4,127 3,500 3,588 3,960 4,428 Total number of home health, hospice, and senior living operations 75 89 104 115 130 142 144 162 180 235 We aim to continue to grow our revenue and earnings by expanding our existing operations and acquiring additional operations in existing and new markets.
Changes in laws or regulations, or new interpretations of existing laws may have an adverse impact on our methods and costs of doing business. Our independent operating subsidiaries are also subject to various regulations and licensing requirements promulgated by state and local health and social service agencies and other regulatory authorities.
Our independent operating subsidiaries are also subject to various regulations and licensing requirements promulgated by state and local health and social service agencies and other regulatory authorities.
Medicaid reimbursement varies from state to state and is based upon a number of different methodologies, including cost-based, prospective payment, case mixed adjusted payments, and negotiated rates. Rates are subject to a state’s annual budgetary requirements and funding, statutory and regulatory changes and interpretations and rulings by individual state agencies and State Plan Amendments approved by CMS.
Medicaid reimbursement varies from state to state and is based upon a number of different methodologies, including cost-based, prospective payment, case mixed adjusted payments, and negotiated rates.
Civil Rights. On January 25, 2024, the HHS Office for Civil Rights (“OCR”) issued guidance to healthcare providers, services, and facilities emphasizing the importance of non-discriminatory visitation policies consistent with CMS regulations and the U.S. National Strategy to Counter Antisemitism, highlighting the prohibition of discrimination based on religion or other protected characteristics during public health emergencies.
These rules could be amended by the current administration. Civil Rights. On January 25, 2024, the HHS Office for Civil Rights (“OCR”) issued guidance to healthcare providers, services, and facilities emphasizing the importance of non-discriminatory visitation policies consistent with CMS regulations and the U.S.
The reforms contained in the ACA have affected our independent operating subsidiaries in some manner and are directed in large part at increased quality and cost reductions. These reforms include modifications to the conditions of qualification for payment, bundling of payments to cover both acute and post-acute care and the imposition of enrollment limitations on new providers.
These reforms include modifications to the conditions of qualification for payment, bundling of payments to cover both acute and post-acute care and the imposition of enrollment limitations on new providers.
Certain states, including a number in which we operate, carefully restrict new entrants into the market based on demographic and/or demonstrative usage of additional providers.
Some states require healthcare providers (including home health, hospice and most senior living providers) to obtain prior state approval for the purchase, construction or expansion of healthcare operations, or changes in services. Certain states, including a number in which we operate, carefully restrict new entrants into the market based on demographic and/or demonstrative usage of additional providers.
SB 261 requires companies with annual revenues of $500 million or more to disclose their climate-related risks and the measures they use to reduce and adapt to those risks. These reports are first due from companies in 2026. Additional details regarding the application and requirements of these laws will be included in future regulations. Antitrust Laws.
SB 261 requires companies with annual revenues of $500 million or more to disclose their climate-related risks and the measures they use to reduce and adapt to those risks. These reports were expected to be due from companies in 2026, but the Ninth Circuit recently enjoined the enforcement of SB 261 and California has accordingly postponed the associated deadlines.
These laws and regulations could limit our ability to expand into new markets and to expand our services and facilities in existing markets. Recent Updates. On July 30, 2024, CMS issued the 2025 Hospice Payment Rate Update Final Rule (the “Hospice Payment Final Rule”).
These laws and regulations could limit our ability to expand into new markets and to expand our services and facilities in existing markets. Recent Updates.
For more information about our operating segments, as well as financial information, see “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and Note 6, Business Segments , to the Consolidated Financial Statements. Services Home Health and Hospice. As of December 31, 2024, we provided home health and hospice services through 123 agencies.
Our reporting segments are business units that offer different services and are managed separately to provide greater visibility into those operations. For more information about our operating segments, as well as financial information, see “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and Note 6, Business Segments , to the Consolidated Financial Statements.
We aim to continue to grow our revenue and earnings by expanding our existing operations and acquiring additional operations in existing and new markets. Industry Trends The healthcare sector is one of the largest and fastest-growing sectors of the U.S. economy. According to the Centers for Medicare and Medicaid Services (“CMS”), national healthcare spending increased from 8.9% of U.S.
Industry Trends The healthcare sector is one of the largest and fastest-growing sectors of the U.S. economy. According to the Centers for Medicare and Medicaid Services (“CMS”), national healthcare spending increased from 8.9% of U.S. GDP, or $253 billion, in 1980 to an estimated 18.0% of GDP, or $5.3 trillion, in 2024.
We anticipate potential changes to the Access Rule, or offsetting Medicaid rate increases, before the Access Rule’s ultimate implementation in six years. Medicare. All providers are subject to compliance with various federal, state and local statutes and regulations in the U.S. and receive periodic inspection by state licensing agencies to review standards of medical care, equipment and safety.
Other states may take similar actions to address the OBBBA which can further affect the Company’s operations. Medicare. All providers are subject to compliance with various federal, state and local statutes and regulations in the U.S. and receive periodic inspection by state licensing agencies to review standards of medical care, equipment and safety. Conditions of Participation .
Our Growth Strategy We believe that the following strategies are primarily responsible for our growth to date and will continue to drive the growth of our business: Grow Talent Base and Develop Future Leaders. We view ourselves as a leadership company. Our growth strategy is focused on expanding our talent base and recruiting and developing future leaders.
We generate revenue in these communities primarily from private pay sources, with a portion earned from Medicaid or other state-specific programs. Our Growth Strategy We believe that the following strategies are primarily responsible for our growth to date and will continue to drive the growth of our business: Grow Talent Base and Develop Future Leaders.
The IMPACT Act requires the submission of standardized assessment data for quality improvement, payment and discharge planning purposes across the spectrum of post-acute care providers (“PACs”), including home health agencies. Failure to report such data when required subjects a PAC to a 2% reduction in market basket prices then in effect. 13 Table of Contents Hospice Quality Reporting Requirements .
Improving Medicare Post-Acute Care Transformation Act of 2014 (“IMPACT Act”) . The IMPACT Act requires the submission of standardized assessment data for quality improvement, payment and discharge planning purposes across the spectrum of post-acute care providers (“PACs”), including home health agencies.
A key component of our organizational culture is our belief that strong local leadership is a primary ingredient to operational success. We use a multi-faceted strategy to identify and recruit proven business leaders from various industries and backgrounds.
We view ourselves as a leadership company. Our growth strategy is focused on expanding our talent base and recruiting and developing future leaders. A key component of our organizational culture is our belief that strong local leadership is a primary ingredient to operational success.
GDP, or $253 billion, in 1980 to an estimated 17.6% of GDP, or $4.8 trillion, in 2023. CMS projects national healthcare spending will grow by an average of 5.6% annually from 2023 through 2032, accounting for approximately 19.7% of U.S. GDP, or approximately $7.7 trillion, in 2032.
CMS projects national healthcare spending will grow by an average of 5.8% annually from 2024 through 2033, accounting for approximately 20.3% of U.S. GDP in 2033. The home health and hospice segment is growing within the overall healthcare landscape in the United States.
The hospice industry is estimated at approximately $37.9 billion and is projected to grow at an estimated CAGR of 8.1% from 2024 to 2030. The senior living market is expected to expand at an estimated CAGR of 4.2% between 2024 to 2030.
The senior living market is expected to expand at an estimated CAGR of 4.2% between 2024 to 2030. We believe that the industries in which we operate will continue to benefit from several macroeconomic and regulatory trends highlighted below: Increased Demand Driven by Aging Populations .
The Home Health Payment Final Rule’s payment update percentage for calendar year 2025 is 2.7%, an estimated increase of $445 million from calendar year 2024, which is reduced by an estimated 1.8% behavioral adjustment, along with a 0.4% estimated reduction for fixed dollar losses, resulting in an aggregate net increase of 0.5%, or $85 million, for the calendar year 2025 payment rate compared to calendar year 2024.
The HH Payment Final Rule’s net payment update percentage is -1.3%, resulting in an aggregate estimated decrease across all home health providers of $220 million in payments compared to fiscal year 2025.
Washington and Montana are the only CON states in which we operate home health or hospice agencies. Patient Protection and Affordable Care Act (“ACA”). Various healthcare reform provisions became law upon enactment of the ACA in 2010.
Alabama, Georgia, Montana, Tennessee, and Washington are the CON states in which we operate home health or hospice agencies, which total 46 agencies. In addition, one state we operate in (California) has imposed a statutory moratorium on issuing new licenses to hospices until January 1, 2027. Patient Protection and Affordable Care Act (“ACA”).

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs an example, the failure of the 2011 Joint Select Committee to meet its Deficit Reduction goal resulted in an automatic reduction in Medicare home health and hospice payments of 2% beginning April 1, 2013 (“sequestration” - suspended from May 1, 2020 through March 31, 2022; further extended by the Infrastructure Investment and Jobs Act of 2023, the Consolidated Appropriations Act of 2023, and the Consolidated Appropriations Act of 2024; the continuing resolution for further spending passed in the American Relief Act of 2025 (“ARA”) did waive the 4% pay-as-you-go sequestration, but the ARA did not halt reductions found in Medicare payment rules that took effect for fiscal year 2025, including those reductions that exceeded 2%).
Biggest changeAs an example, the failure of the 2011 Joint Select Committee to meet its Deficit Reduction goal resulted in an automatic reduction in Medicare home health and hospice payments of 2% beginning April 1, 2013.
Similarly, recent legislation in California and Nevada increasing the amounts of non-economic damages recoverable in actions based on professional negligence against healthcare providers may also result in higher premiums for our operations within those states and limit the options for available coverage.
Similarly, recent legislation in California, Iowa, and Nevada increasing the amounts of non-economic damages recoverable in actions based on professional negligence against healthcare providers may also result in higher premiums for our operations within those states and limit the options for available coverage.
Fair Labor Standards Act which governs such matters as minimum wages, overtime and other working conditions, the Americans with Disabilities Act (the “ADA”) and similar state laws that provide civil rights protections to individuals with disabilities in the context of employment, public accommodations and other areas, the National Labor Relations Act, regulations of the Equal Employment Opportunity Commission, regulations of the Office of Civil Rights, regulations of state Attorneys General, family leave mandates and a variety of similar laws.
Fair Labor Standards Act which governs such matters as minimum wages, overtime and other working conditions, the Americans with Disabilities Act (the “ADA”) and similar state laws that provide civil rights protections to individuals with disabilities in the context of employment, public accommodations and other areas, the National Labor Relations Act, regulations of the Equal Employment Opportunity Commission, regulations of the OCR, regulations of state Attorneys General, family leave mandates and a variety of similar laws.
Seniors often use the proceeds of home sales to fund their admission to assisted living communities. A downturn in the housing markets, such as the slowdown in activity that was ongoing in 2023 and 2024 as a result of higher-than-normal mortgage interest rates, could adversely affect seniors’ ability to afford our resident fees and entrance fees.
Seniors often use the proceeds of home sales to fund their admission to assisted living communities. A downturn in the housing markets, such as the slowdown in activity that was ongoing in 2024 and 2025 as a result of higher-than-normal mortgage interest rates, could adversely affect seniors’ ability to afford our resident fees and entrance fees.
Such changes could reduce the number of eligible workers and increase wage costs, including for skilled workers who may work or receive professional training in the United States under various visa programs, making it more difficult or impossible for us to staff our operations. 24 Table of Contents Extreme weather, natural disasters, or other catastrophic events could adversely affect our results from operations.
Such changes could reduce the number of eligible workers and increase wage costs, including for skilled workers who may work or receive professional training in the United States under various visa programs, making it more difficult or impossible for us to staff our operations. Extreme weather, natural disasters, or other catastrophic events could adversely affect our results from operations.
Further, any failure by the United States Congress to complete the federal budget process and fund government operations may result in a Federal Government shutdown, potentially causing us to incur substantial costs without reimbursement under the Medicare program, which could have a material adverse effect on our business and consolidated financial condition, results of operations and cash flows.
Further, any failure by the United States Congress to complete the federal budget process and fund government operations may result in a Federal Government shutdown, potentially causing us to incur substantial costs without reimbursement under the Medicare program, which could have a material adverse effect on our business and consolidated financial condition, results of operations and cash 19 Table of Contents flows.
Based upon factors such as our ability to identify suitable acquisition candidates, the purchase price of the operations, prevailing market conditions, the availability of leadership to manage new operations and our own willingness to take on new operations, 21 Table of Contents the rate at which we have historically acquired home health, hospice and senior living operations has fluctuated and we anticipate similar fluctuation in the future.
Based upon factors such as our ability to identify suitable acquisition candidates, the purchase price of the operations, prevailing market conditions, the availability of leadership to manage new operations and our own willingness to take on new operations, the rate at which we have historically acquired home health, hospice and senior living operations has fluctuated and we anticipate similar fluctuation in the future.
As discussed in greater detail in Item 1., Government Regulation , our ability to acquire or establish new home health, hospice or senior living operations or expand or provide new services at existing operations would be adversely affected if we are unable to obtain the necessary approvals, if there are changes in the standards applicable to those approvals, new laws or changes in applicable laws governing CON requirements (or increasing the circumstances where a CON is needed), or if we experience delays and increased expenses associated with obtaining those approvals.
As discussed in greater detail in Item 1., Government Regulation , our ability to acquire or establish new home health, hospice or senior living operations or expand or provide new services at existing operations would be adversely affected if we are unable to obtain the necessary approvals, if there are changes in the standards applicable to those approvals, new laws or changes in 20 Table of Contents applicable laws governing CON requirements (or increasing the circumstances where a CON is needed), or if we experience delays and increased expenses associated with obtaining those approvals.
Staffing challenges increased during the pandemic and have persisted due to health care worker burnout, COVID-19 exposures, vaccine mandates, and wage inflation, increasing the competition for qualified staff and cost of retaining personnel, and continue to affect our operations. There can be no assurance that we will be able to attract and retain key personnel going forward.
Staffing challenges increased during the pandemic and have persisted due to health care worker burnout, vaccine mandates, and wage inflation, increasing the competition for qualified staff and cost of retaining personnel, and continue to affect our operations. There can be no assurance that we will be able to attract and retain key personnel going forward.
In addition to routine audits, in its November 2023 Final Rule, CMS finalized a provisional period of enhanced oversight, including prepayment medical reviews, for all 17 Table of Contents hospice providers that are newly enrolled or undergo a change of ownership, which expanded in June 2024 to include reactivated hospice providers in states where we operate.
In addition to routine audits, in its November 2023 Final Rule, CMS finalized a provisional period of enhanced oversight, including prepayment medical reviews, for all hospice providers that are newly enrolled or undergo a change of ownership, which expanded in June 2024 to include reactivated hospice providers in states where we operate.
Many operations we have historically acquired were underperforming prior to the acquisition. Even where operations have been improved, we still may face post-acquisition regulatory issues related to pre-acquisition events. These may include, without limitation, payment recoupment related to our predecessors’ prior noncompliance, the imposition of fines, penalties, operational restrictions or special regulatory status.
Many operations we have 22 Table of Contents historically acquired were underperforming prior to the acquisition. Even where operations have been improved, we still may face post-acquisition regulatory issues related to pre-acquisition events. These may include, without limitation, payment recoupment related to our predecessors’ prior noncompliance, the imposition of fines, penalties, operational restrictions or special regulatory status.
In addition, from time to time, we may opt to voluntarily stop accepting new patients pending completion of a new state survey, to 18 Table of Contents avoid straining staff and other resources while retraining staff, upgrading operating systems or making other operational improvements, all of which can impact our financial results.
In addition, from time to time, we may opt to voluntarily stop accepting new patients pending completion of a new state survey, to avoid straining staff and other resources while retraining staff, upgrading operating systems or making other operational improvements, all of which can impact our financial results.
If there are any delays in receiving regulatory approvals from the applicable federal, state or local government agencies, or from independent accreditation authorities that may be required by federal, state or local government agencies, or the inability to receive such 20 Table of Contents approvals, such delays could result in delayed or lost reimbursement related to periods of service prior to the receipt of such approvals.
If there are any delays in receiving regulatory approvals from the applicable federal, state or local government agencies, or from independent accreditation authorities that may be required by federal, state or local government agencies, or the inability to receive such approvals, such delays could result in delayed or lost reimbursement related to periods of service prior to the receipt of such approvals.
Seventeen of our affiliated senior living communities are currently subject to regulatory agreements with HUD that give the Commissioner of HUD broad authority to have us replaced as the operator of those communities in the event that the Commissioner determines there are operational deficiencies at such communities under HUD regulations.
Seventeen of our affiliated senior living communities are currently subject to regulatory agreements with HUD that give the Commissioner of HUD broad authority to have us replaced as the 25 Table of Contents operator of those communities in the event that the Commissioner determines there are operational deficiencies at such communities under HUD regulations.
Under certain master leases, a breach at a single community 23 Table of Contents could subject one or more of the other communities covered by the same master lease to the same default risk. Failure to comply with provider requirements is a default under several of the leases and master lease agreements.
Under certain master leases, a breach at a single community could subject one or more of the other communities covered by the same master lease to the same default risk. Failure to comply with provider requirements is a default under several of the leases and master lease agreements.
Risks Related to Our Business and Industry Our revenue could be impacted by federal changes to reimbursement and other aspects of Medicare. We derived 48.3% of our revenue from the Medicare program for the year ended December 31, 2024, which is typical. In addition, other payors may use published Medicare rates as a basis for reimbursements.
Risks Related to Our Business and Industry Our revenue could be impacted by federal changes to reimbursement and other aspects of Medicare. We derived 48.4% of our revenue from the Medicare program for the year ended December 31, 2025, which is typical for our business. In addition, other payors may use published Medicare rates as a basis for reimbursements.
Risks Related to Ownership of Our Common Stock 25 Table of Contents Anti-takeover provisions in our organizational documents and Delaware law might discourage or delay acquisition attempts for us that you might consider favorable.
Risks Related to Ownership of Our Common Stock Anti-takeover provisions in our organizational documents and Delaware law might discourage or delay acquisition attempts for us that you might consider favorable.
Inflation is expected to ease in 2025 but may continue to affect the Company’s profit in providing services. We have historically derived a substantial portion of our revenue from the Medicare program. We also derive revenue from state Medicaid and similar reimbursement programs. Payments under these programs generally provide for reimbursement levels that are adjusted for inflation annually.
Inflation may continue to affect the Company’s profit in providing services. We have historically derived a substantial portion of our revenue from the Medicare program. We also derive revenue from state Medicaid and similar reimbursement programs. Payments under these programs generally provide for reimbursement levels that are adjusted for inflation annually.
For the year ended December 31, 2024, 61.5% of our revenue was provided by government payors that reimburse us at predetermined rates, which is typical.
For the year ended December 31, 2025, 61.5% of our revenue was provided by government payors that reimburse us at predetermined rates, which is typical for our business.
In addition, any such financing, refinancing or sale of assets might not be available on terms that are economically favorable to us, or at all.
In addition, any such financing, refinancing or sale of assets might not be available 24 Table of Contents on terms that are economically favorable to us, or at all.
We may not be able to obtain licensure, CON approval, Medicare or Medicaid certification, Attorney General approval or other necessary approvals for future expansion projects. In recent years, states including, but not limited to, California and Oregon have introduced additional regulatory reviews and other barriers to health care transactions.
We may not be able to obtain licensure, CON approval, Medicare or Medicaid certification, Attorney General approval or other necessary approvals for future expansion projects. In recent years, states have introduced additional regulatory reviews and other barriers to health care transactions.
Throughout 2023 and 2024, however, there has been a nationwide trend of increasing union activity, including strikes in the healthcare industry and in states, such as California, in which we operate.
In recent years, however, there has been a nationwide trend of increasing union activity, including strikes in the healthcare industry and in states, such as California, in which we operate.
These provisions could also discourage proxy contests and make it more difficult for our stockholders to elect directors of their choosing and to cause us to take other corporate actions desired. Item 1B. Unresolved Staff Comments None.
These provisions could also discourage proxy contests and make it more difficult for our stockholders to elect directors of their choosing and to cause us to take other corporate actions desired.
Because we lease most of our affiliated senior living communities, we could experience risks associated with leased property, including risks relating to lease termination, lease extensions and special charges, which could adversely affect our business, financial position or results of operations. As of December 31, 2024, we leased all of our senior living communities, except for three.
Because we lease most of our affiliated senior living communities, we could experience risks associated with leased property, including risks relating to lease termination, lease extensions and special charges, which could adversely affect our business, financial position or results of operations. As of December 31, 2025, we leased a majority of our senior living communities.
Our general liability and workers compensation insurance policies include self-insured retentions under which we are responsible to pay for a portion of each claim. We establish insurance loss reserves based on an estimation process that use information obtained from both company-specific and industry data. The estimation process requires us to continually monitor and evaluate the life cycle of claims.
Our general liability and workers compensation insurance policies include self-insured retentions under which we are responsible to pay for a portion of each claim. We establish insurance loss reserves based on an estimation process that use information obtained from both company- 23 Table of Contents specific and industry data.
Private pay sources also reserve the right to conduct audits. Disagreements about billing and reimbursement are common in our industry due in part to the subjectivity inherent in patient diagnosis and care, record keeping, claims processing and other aspects of the patient service and reimbursement processes.
Disagreements about billing and reimbursement are common in our industry due in part to the subjectivity inherent in patient diagnosis and care, record keeping, claims processing and other aspects of the patient service and reimbursement processes.
Using data obtained from this monitoring and our assumptions about emerging trends, we, along with an independent actuary, develop information about the size of ultimate claims based on historical experience and other available industry information.
The estimation process requires us to continually monitor and evaluate the life cycle of claims. Using data obtained from this monitoring and our assumptions about emerging trends, we, along with an independent actuary, develop information about the size of ultimate claims based on historical experience and other available industry information.
In addition, our home health payment rates could be reduced, as described in Item 1., Government Regulation - Home Health Value Based Purchasing (HHVBP ); further, our star ratings measured by CMS on a five-star basis may decrease, resulting in lower estimation by potential residents and patients and reducing the likelihood of having those potential residents and patients use our services, as described in Item 1., Our Competitive Strengths - Superior Clinical Outcomes and Quality Care. 22 Table of Contents If we are unable to obtain insurance, or if insurance becomes more costly for us to obtain, our business may be adversely affected.
In addition, our home health payment rates could be reduced, as described in Item 1., Government Regulation - Home Health Value Based Purchasing (HHVBP ); further, our star ratings measured by CMS on a five-star basis may decrease, resulting in lower estimation by potential residents and patients and reducing the likelihood of having those potential residents and patients use our services, as described in Item 1., Our Competitive Strengths - Superior Clinical Outcomes and Quality Care.
Additionally, the annual increase in 19 Table of Contents Medicare beneficiary caps may not keep pace with the rate of inflation or increased operating costs as it applies to the costs of caring for such patients, potentially resulting in our hospice independent operating subsidiaries treating these patients at a loss.
Additionally, the annual increase in Medicare beneficiary caps may not keep pace with the rate of inflation or increased operating costs as it applies to the costs of caring for such patients, potentially resulting in our hospice independent operating subsidiaries treating these patients at a loss. Security breaches and other cyber-security incidents could subject us to significant liability.
Over the last several years, there has been a significant increase in the construction of new senior living communities, including in the markets where we provide services. This has resulted in increased competition in many of our markets.
In general, regulatory and other barriers to entry in the senior living industry are not prohibitive. Over the last several years, there has been a significant increase in the construction of new senior living communities, including in the markets where we provide services. This has resulted in increased competition in many of our markets.
Changes to immigration laws and policies, or increased enforcement of existing laws and regulations, could impact our employees or the labor pool from which we hire future employees.
Changes to immigration laws and policies, or increased enforcement of existing laws and regulations, could impact our employees or the labor pool from which we hire future employees. Throughout 2025, enforcement of immigration laws has intensified, and these increased efforts may continue through 2026.
Compliance with the regulations of the Department of Housing and Urban Development (“HUD”) may require us to make unanticipated expenditures which could increase our costs.
Failure to timely submit required cost reports may result in financial penalties. Compliance with the regulations of the Department of Housing and Urban Development (“HUD”) may require us to make unanticipated expenditures which could increase our costs.
Recent legislation in Nevada that prohibits the reduction of funds available to pay claims based on the costs of defending claims or litigation may result in higher premiums for our operations within that state.
Our claims history, asset mix, or other factors may adversely affect our ability to obtain insurance at favorable rates. Recent legislation in Nevada that prohibits the reduction of funds available to pay claims based on the costs of defending claims or litigation may result in higher premiums for our operations within that state.
CMS has also introduced in the past, and will likely introduce in the future, new payment models, such as value-based arrangements or payment models that look to numerous factors in order to issue full payment, in markets in which we operate. Those models may depend on the formation of preferred provider relationships among payors and providers.
CMS has also introduced in the past, and will likely introduce in the future, new payment models, such as value-based arrangements or payment models that look to numerous factors in order to issue full payment or determine the maximum amount payable, in markets in which we operate.
Security breaches and other cyber-security incidents could subject us to significant liability. Data breaches and leaks, which represent a material risk to our business, are reported to have occurred with greater frequency and severity in 2024 than in prior years. Our business depends on the proper functioning and availability of our computer systems and networks.
Data breaches and leaks, which represent a material risk to our business, are reported to have occurred with greater frequency and severity in 2025 than in prior years, in which there had already been a drastic increase in the frequency of these incidents. Our business depends on the proper functioning and availability of our computer systems and networks.
We derived 13.2% of our revenue from Medicaid programs for the year ended December 31, 2024, which is typical. Any budget reductions or funding restrictions, discontinuance or reduction of federal matching, change in payment methodology or delays in states in which we operate could adversely affect our net patient service revenue and profitability.
Any budget reductions or funding restrictions, discontinuance or reduction of federal matching, change in payment methodology or delays in states in which we operate could adversely affect our net patient service revenue and profitability.
Claims are filed based upon a wide variety of assertions and theories, including deficiencies in conditions of participation under certain state and federal healthcare programs and wage and hour class actions.
The frequency and severity of litigation in the healthcare industry has increased, due in part to large verdicts and punitive damage awards. Claims are filed based upon a wide variety of assertions and theories, including deficiencies in conditions of participation under certain state and federal healthcare programs and wage and hour class actions.
If insurers or managed care companies from whom we receive substantial payments were to reduce the amounts they pay for services, we may lose patients if we choose not to renew our contracts with these insurers at lower rates. We are subject to litigation that could result in significant legal costs and large settlement amounts or damage awards.
If insurers or managed care 21 Table of Contents companies from whom we receive substantial payments were to reduce the amounts they pay for services, we may lose patients if we choose not to renew our contracts with these insurers at lower rates.
Our business involves a significant risk of liability given the age and health of the patients and residents of our independent operating subsidiaries and the services we provide. The frequency and severity of litigation in the healthcare industry has increased, due in part to large verdicts and punitive damage awards.
We are subject to litigation that could result in significant legal costs and large settlement amounts or damage awards. Our business involves a significant risk of liability given the age and health of the patients and residents of our independent operating subsidiaries and the services we provide.
It may become more difficult and costly for us to obtain coverage for patient care liabilities and other risks, including property and casualty insurance. Our claims history, asset mix, or other factors may adversely affect our ability to obtain insurance at favorable rates.
If we are unable to obtain insurance, or if insurance becomes more costly for us to obtain, our business may be adversely affected. It may become more difficult and costly for us to obtain coverage for patient care liabilities and other risks, including property and casualty insurance.
Responding to audits, litigation or enforcement efforts diverts material time, resources and attention, and could have a materially detrimental impact on our results of operations during and after any such investigation or proceedings, regardless of whether we prevail.
Responding to audits, litigation or enforcement efforts diverts material time, resources and attention, and could have a materially detrimental impact on our results of operations during and after any such investigation or proceedings, regardless of whether we prevail. 18 Table of Contents If we do not operate in compliance with the extensive laws and regulations to which we are subject, or if these laws and regulations change, we could be required to make significant expenditures or change our operations to bring our operations into compliance.
Conversely, and specific to the highly competitive senior living industry, the elimination or reduction of state regulations that limit the construction, expansion or renovation of new or existing communities could result in increased competition to us. In general, regulatory and other barriers to entry in the senior living industry are not prohibitive.
Moratoriums on hospice or home enrollments or transfers, such as California’s moratorium on hospice licensing, could also be imposed at the federal level. Conversely, and specific to the highly competitive senior living industry, the elimination or reduction of state regulations that limit the construction, expansion or renovation of new or existing communities could result in increased competition to us.
We can expect continuing cost containment pressures on Medicaid outlays, whether administered directly by a state program or through an MCO, for our services. Reforms to the U.S. healthcare system continue to impose new requirements upon us and may lower our reimbursements. Healthcare reform is a key political and legislative focal point.
Reforms to the U.S. healthcare system continue to impose new requirements upon us and may lower our reimbursements. Healthcare reform is a key political and legislative focal point.
The consequences of elections are not yet fully known for this industry, and our industry may be affected by presidential and congressional election outcomes. It is possible new laws may lower reimbursement or increase the cost of doing business and adversely affect our business.
It is possible new laws may lower reimbursement or increase the cost of doing business and adversely affect our business.
Unanticipated delays in receiving reimbursement from state programs due to changes in their policies or billing or audit procedures may adversely impact our liquidity and working capital. Failure to timely submit required cost reports may result in financial penalties.
In addition, from time to time, procedural issues require us to resubmit claims before payment is remitted, which contributes to aged receivables. Unanticipated delays in receiving reimbursement from state programs due to changes in their policies or billing or audit procedures may adversely impact our liquidity and working capital.
Some states in which we operate experience or have experienced budget deficits or could have a budget deficit in the future, which may delay reimbursement in a manner that would adversely affect our liquidity. In addition, from time to time, procedural issues require us to resubmit claims before payment is remitted, which contributes to aged receivables.
Some states in which we operate experience or have experienced budget deficits or could have a budget deficit in the future, including as a result of changes to federal funds matching for state Medicaid programs under OBBBA, which may delay reimbursement in a manner that would adversely affect our liquidity.
Our operations may not successfully implement or adapt to these changes and our operations could be materially impacted. Reductions in Medicaid reimbursement rates or changes in the rules governing the Medicaid program could have a material, adverse effect on our revenues, financial condition and results of operations.
Reductions in Medicaid reimbursement rates or changes in the rules governing the Medicaid program could have a material, adverse effect on our revenues, financial condition and results of operations. We derived 13.1% of our revenue 17 Table of Contents from Medicaid programs for the year ended December 31, 2025, which is typical for our business.
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If we do not operate in compliance with the extensive laws and regulations to which we are subject, or if these laws and regulations change, we could be required to make significant expenditures or change our operations to bring our operations into compliance.
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Those models may depend on the formation of preferred provider relationships among payors and providers. Our operations may not successfully implement or adapt to these changes and our operations could be materially impacted.
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By way of example, in 2022 California passed Assembly Bill 2673 which prohibits issuance of new hospice licenses and limits transfer of existing licenses, and other states where we operate may introduce similar legislation in the future. In 2024, CMS implemented a rule prohibiting hospice ownership from being transferred more than once in a 36-month period.
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We can expect continuing cost containment pressures on Medicaid outlays, whether administered directly by a state program or through an MCO, for our services. Also, the OBBBA’s enactment may result in significant impacts to how states fund their Medicaid programs, including who is eligible to participate, potentially resulting in significant and adverse effects on our revenues, financial condition, and operations.
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Such changes may impact the structure, organization, and priorities of the Department of Health and Human Services and its sub-agencies, including CMS.
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The full impact of the current presidential administration, outcomes of the mid-term elections in 2026, and the legislative consequences of those mid-term elections are not yet fully known for this industry, and our industry may be affected by the 2026 mid-term election outcomes.
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In January 2025, CMS increased the number of states subject to the provisional period of enhanced oversight, and in January 2026 further expanded the number of states subject to this enhanced oversight to six. Private pay sources also reserve the right to conduct audits.
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However, these automatic reductions, known as “sequestration,” have not been implemented due to numerous legislative efforts to suspend these reductions since 2020, including most recently: the Infrastructure Investment and Jobs Act of 2023, Consolidated Appropriations Act of 2024, American Relief Act of 2025, and most recently the OBBBA. Nevertheless, this sequestration taking effect remains a possibility.
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As of December 31, 2025, five (5) of the states we operate in have a state law requiring clearance from state authorities to engage in certain healthcare-related transactions within the state (California, Colorado, Connecticut, Nevada, and Oregon), and more states where our independent operating subsidiaries operate, or in which we seek to expand, may enact similar laws.
Added
As mentioned above, California legislatively prohibited the licensing of new hospices, and limited the transfer of existing licenses through January 1, 2027, and other states where we operate may introduce similar legislation in the future (see Licensure and CON ).
Added
In 2024, CMS implemented a rule prohibiting Medicare-enrolled hospices from transferring a majority of ownership or engaging in any similar transaction more than once in a 36-month period. States, including Oregon, have also passed or proposed laws inhibiting the corporate ownership or management of health care entities.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe conduct periodic tests to maintain readiness and resiliency while regularly reviewing policies to protect data security. External companies or agencies may provide consulting, guidance, assistance, or support in response to a cybersecurity incident. Employees receive regular training, at least annually, on cybersecurity threats and best practices to maintain information security.
Biggest changeWe are committed to protecting our data, systems, and network and continually invest in enhancements to mitigate or reduce the impact of cybersecurity threats. We conduct periodic tests to maintain readiness and resiliency while regularly reviewing policies to protect data security. External companies or agencies may provide consulting, guidance, assistance, or support in response to a cybersecurity incident.
These include: • Data security policies for the Company and its subsidiaries; • Frequent security training; 26 Table of Contents • Establishing controls over network devices, actively tracking, monitoring, and evaluating them for new, missing, or updated software needed to strengthen security, patch known vulnerabilities, or stabilize software or operating system issues; • Protecting sensitive data through encryption techniques; and • Utilizing systems with backup and recoverability principles, such as periodic data backups and safeguards in case of a disaster.
These include: • Data security policies for the Company and its subsidiaries; • Frequent security training; • Establishing controls over network devices, actively tracking, monitoring, and evaluating them for new, missing, or updated software needed to strengthen security, patch known vulnerabilities, or stabilize software or operating system issues; • Protecting sensitive data through encryption techniques; and • Utilizing systems with backup and recoverability principles, such as periodic data backups and safeguards in case of a disaster.
The IRT, in consultation with outside experts if needed, is responsible for initial containment, analysis, incident containment, incident eradication, and recovery. The IS team also coordinates with our legal and compliance teams as needed; and 5. After each significant incident, analyses are conducted to improve prevention and make incident response processes more efficient and effective.
The IRT, in consultation with outside experts if needed, is responsible for initial containment, analysis, incident containment, incident eradication, and recovery. The IS team also coordinates with our legal and compliance teams as needed; and 27 Table of Contents 5. After each significant incident, analyses are conducted to improve prevention and make incident response processes more efficient and effective.
Governance Our Audit Committee receives quarterly reports on our information security and cyber fraud prevention programs from the service center's CIO and CISO, each of whom has over 15 years of experience in IT, including various leadership roles at other large corporations. Directors Scott E. Lamb, Gregory K. Morris M.D., and John G.
Governance Our Audit Committee receives quarterly reports on our information security and cyber fraud prevention programs from the service center's CIO and CISO, each of whom has over 20 years of experience in IT, including various leadership roles at other large corporations. Directors Scott E. Lamb, Suzanne D. Snapper, and John G. Nackel, Ph.D. provide key oversight on cybersecurity matters.
The IS team, established by the service center's CIO and CISO, has dedicated cybersecurity staff focusing on security monitoring, vulnerability management, incident response, risk assessments, employee training, security engineering, and management of cybersecurity policies, standards, and regulatory compliance. The Company implements security standards that include SOC 1 and SOC 2 compliance.
Our executive team is also regularly briefed on any significant security risks during monthly leadership meetings. The IS team, established by the service center's CIO and CISO, has dedicated cybersecurity staff focusing on security monitoring, vulnerability management, incident response, risk assessments, employee training, security engineering, and management of cybersecurity policies, standards, and regulatory compliance.
We align with a Cyber Security Framework and take a risk-based approach during control assessment and implementation, following the National Institute of Standards and Technology (“NIST”) framework. We are committed to protecting our data, systems, and network and continually invest in enhancements to mitigate or reduce the impact of cybersecurity threats.
The Company implements security standards that include SOC 1 and SOC 2 compliance. We align with a Cyber Security Framework and take a risk-based approach during control assessment and implementation, following the National Institute of Standards and Technology (“NIST”) framework.
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Nackel, Ph.D. provide key oversight on cybersecurity matters. Our executive team is also regularly briefed on any significant security risks during monthly leadership meetings.
Added
Employees receive regular training, at least annually, on cybersecurity threats and best practices to maintain information security.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table provides summary information regarding the locations of our home health and hospice agencies and our senior living communities and operational units as of December 31, 2024: State Home Health Agencies Hospice Agencies Senior Living Communities Senior Living Units Arizona 7 13 5 840 California 9 12 7 629 Colorado 9 2 — — Idaho 6 5 3 232 Montana 1 1 — — Nevada 1 2 4 385 Oklahoma 2 2 — — Oregon 2 1 — — Texas 6 10 12 709 Utah 8 5 2 188 Washington 10 4 — — Wisconsin 2 1 24 977 Wyoming 1 1 — — Total 64 59 57 3,960
Biggest changeWe lease 57 of our communities through long-term, triple-net lease arrangements, and own the remaining 6 properties. 28 Table of Contents The following table provides summary information regarding the locations of our home health and hospice agencies and our senior living communities and operational units as of December 31, 2025: State Home Health Services Hospice Services Senior Living Communities Senior Living Units Alabama 2 1 — — Arizona 8 13 6 968 California 12 12 7 629 Colorado 9 3 — — Georgia 1 — — — Idaho 7 6 5 340 Montana 1 1 — — Nevada 1 2 4 385 Oklahoma 2 2 — — Oregon 7 6 — — Tennessee 22 4 — — Texas 6 10 14 829 Utah 8 5 2 188 Washington 10 4 — — Wisconsin 2 2 25 1,089 Wyoming 2 1 — — Total 100 72 63 4,428
Item 2. Properties Service Center We lease office space to accommodate our Service Center. Our primary Service Center is located in Eagle, Idaho. The leased property consists of approximately 16,794 square feet of office space and the lease term expires March 31, 2025. We also have leased office space for service centers in Midvale, Utah and Farmington, Connecticut.
Item 2. Properties Service Center We lease office space to accommodate our Service Center. Our primary Service Center is located in Eagle, Idaho. The leased property consists of approximately 16,794 square feet of office space and the lease term expires March 31, 2030. We also have leased office space for service centers in Sandy, Utah; Farmington, Connecticut; and Nashville, Tennessee.
Home Health and Hospice Agencies and Senior Living Communities As of December 31, 2024, we operated 123 home health, hospice and home care agencies in Arizona, California, Colorado, Idaho, Montana, Nevada, Oklahoma, Oregon, Texas, Utah, Washington, Wisconsin and Wyoming.
Home Health and Hospice Agencies and Senior Living Communities As of December 31, 2025, we operated 172 home health, hospice and home care agencies in Alabama, Arizona, California, Colorado, Georgia, Idaho, Montana, Nevada, Oklahoma, Oregon, Tennessee, Texas, Utah, Washington, Wisconsin and Wyoming. Office space is leased within geographies served by our agencies.
Office space is leased within geographies served by our agencies. 27 Table of Contents As of December 31, 2024, we operated 57 affiliated senior living communities in Arizona, California, Idaho, Nevada, Texas, Utah, and Wisconsin with 3,960 Senior Living units. We lease 54 of our communities through long-term, triple-net lease arrangements, and own the remaining 3 properties.
As of December 31, 2025, we operated 63 affiliated senior living communities in Arizona, California, Idaho, Nevada, Texas, Utah, and Wisconsin with 4,428 Senior Living units.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe peer group we selected is comprised of: Amedysis, Inc. (“AMED”), Addus Homecare Corporation (“ADUS”), Chemed Corporation (“CHE”), Encompass Health Corporation (“EHC”), Sonida Senior Living Inc., formerly known as Capital Senior Living Corporation (“SNDA”), and Brookdale Senior Living, Inc. (“BKD”).
Biggest changeThe new peer group we selected is comprised of: Addus HomeCare Corporation (“ADUS”), Aveanna Healthcare Holdings Inc. (“AVAH”), Brookdale Senior Living Inc. (“BKD”), Chemed Corporation (“CHE”), Enhabit, Inc. (“EHAB”), and Sonida Senior Living, Inc. (“SNDA”). The old peer group is comprised of: Amedisys, Inc. (“AMED”), ADUS, BKD, CHE, Encompass Health Corporation (“EHC”), and SNDA.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Common stock trades under the symbol “PNTG” on the NASDAQ Global Select Market. As of February 24, 2025 , there are approximately 71 holders of record of our stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Common stock trades under the symbol “PNTG” on the NASDAQ Global Select Market. As of February 23, 2026, there are approximately 72 holders of record of our stock.
The graph below compares the cumulative total stockholder return on our common stock, $0.001 par value per share, during the period from January 1, 2020, through December 31, 2024, with the cumulative total return on the NASDAQ composite index and an industry peer group over the same period (assuming the investment of $100 in our common stock, the NASDAQ composite index and the industry peer group on January 1, 2020 and the reinvestment of dividends).
The graph below compares the cumulative total stockholder return on our common stock, $0.001 par value per share, during the period from January 1, 2021, through December 31, 2025, with the cumulative total return on the NASDAQ composite index, a new industry peer group of six companies, and an old industry peer group of six companies over the same period (assuming the investment of $100 in our common stock, the NASDAQ composite index, the new industry peer group, and the old industry peer group on January 1, 2021 and the reinvestment of dividends).
Stock Performance Graph The following Stock Performance Graph and related information shall not be deemed “soliciting material” or “filed” with the SEC, nor should such information be incorporated by reference into any future filings under the Securities Act or the Exchange Act except to the extent that we specifically incorporate it by reference in such filing.
Issuer Repurchases of Equity Securities The Company did not repurchase any shares in 2025, nor did it approve any share repurchase program. 29 Table of Contents Stock Performance Graph The following Stock Performance Graph and related information shall not be deemed “soliciting material” or “filed” with the SEC, nor should such information be incorporated by reference into any future filings under the Securities Act or the Exchange Act except to the extent that we specifically incorporate it by reference in such filing.
The cumulative total stockholder return on the following graph is historical and is not necessarily indicative of future stock price performance.
The changes to the peer group were necessitated by the acquisition of AMED by UnitedHealth Group Incorporated (“UnitedHealth”) and the spin-off of EHAB from EHC. The cumulative total stockholder return on the following graph is historical and is not necessarily indicative of future stock price performance.
Dividend Policy We do not intend to pay dividends on our common stock for the foreseeable future.
Dividend Policy We do not intend to pay dividends on our common stock for the foreseeable future. Instead, we anticipate that all of our future earnings will be retained to support our operations and to finance the growth and development of our business.
No cash dividends have been paid on our common stock. 1/1/2020 12/2020 12/2021 12/2022 12/2023 12/2024 PNTG $ 100.0 $ 175.6 $ 69.8 $ 33.2 $ 42.1 $ 80.1 NASDAQ 100.0 144.9 177.1 119.5 172.8 223.9 Peer Group 100.0 130.3 102.6 92.3 105.8 116.6 Item 6. [Reserved]
No cash dividends have been paid on our common stock. 1/1/2021 12/2021 12/2022 12/2023 12/2024 12/2025 PNTG $ 100.0 $ 39.8 $ 18.9 $ 24.0 $ 45.7 $ 48.5 NASDAQ 100.0 122.2 82.4 119.2 154.5 187.1 New Peer Group 100.0 97.9 81.9 95.9 95.2 97.6 Old Peer Group 100.0 78.7 70.8 81.2 89.5 92.3 Item 6. [Reserved]
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Instead, we anticipate that all of our future earnings will be retained to support our operations and to finance the growth and development of our business. 28 Table of Contents Issuer Repurchases of Equity Securities The Company did not repurchase any shares in 2024, nor did it approve any share repurchase program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeGeneral and administrative expenses are not allocated to the reportable segments: Home Health and Hospice Services Senior Living Services All Other Total Year Ended December 31, 2024 Segment Revenue $ 515,344 $ 174,767 $ 5,129 $ 695,240 Segment Cost of Services 427,635 123,107 Segment Adjusted EBITDAR from Operations $ 87,709 $ 51,660 $ 139,369 Year Ended December 31, 2023 Segment Revenue $ 385,652 $ 148,198 $ 11,041 $ 544,891 Segment Cost of Services 320,046 102,904 Segment Adjusted EBITDAR from Operations $ 65,606 $ 45,294 $ 110,900 Year Ended December 31, 2022 Segment Revenue $ 337,371 $ 126,758 $ 9,112 $ 473,241 Segment Cost of Services 275,544 89,195 Segment Adjusted EBITDAR from Operations $ 61,827 $ 37,563 $ 99,390 The table below provides a reconciliation of Segment Adjusted EBITDAR from Operations above to income from operations: 2024 2023 2022 Segment Adjusted EBITDAR from Operations (a) $ 139,369 $ 110,900 $ 99,390 Less: Unallocated corporate expenses 43,587 31,704 31,435 Less: Depreciation and amortization 6,119 5,130 4,900 Rent—cost of services 43,029 39,759 38,018 Other income 207 339 (31) Adjustments to Segment EBITDAR from Operations: Less: Costs at start-up operations (b) 137 102 1,435 Share-based compensation expense (c) 8,242 5,565 3,363 Acquisition related costs and credit allowances (d) 1,278 476 731 Costs associated with transitioning operations (e) (570) 612 6,103 Unusual, non-recurring or redundant charges (f) 1,004 2,575 1,297 Add: Net income attributable to noncontrolling interest 1,780 531 600 Income from operations $ 38,116 $ 25,169 $ 12,739 35 Table of Contents (a) Segment Adjusted EBITDAR from Operations is net income attributable to the Company's reportable segments excluding interest expense, provision for income taxes, depreciation and amortization expense, rent, unallocated corporate and administrative expenses, and, in order to view the operations performance on a comparable basis from period to period, certain adjustments including: (1) costs at start-up operations, (2) share-based compensation expense, (3) acquisition related costs and credit allowances, (4) costs associated with transitioning operations, (5) unusual, non-recurring or redundant charges, and (6) net income (loss) attributable to noncontrolling interest.
Biggest changeGeneral and administrative expenses are not allocated to the reportable segments: Home Health and Hospice Services Senior Living Services All Other Total Year Ended December 31, 2025 Segment Revenue $ 731,392 $ 210,078 $ 6,235 $ 947,705 Segment Cost of Services 610,561 149,553 Segment Adjusted EBITDAR from Operations $ 120,831 $ 60,525 $ 181,356 Year Ended December 31, 2024 Segment Revenue $ 515,344 $ 174,767 $ 5,129 $ 695,240 Segment Cost of Services 427,635 123,107 Segment Adjusted EBITDAR from Operations $ 87,709 $ 51,660 $ 139,369 Year Ended December 31, 2023 Segment Revenue $ 385,652 $ 148,198 $ 11,041 $ 544,891 Segment Cost of Services 320,046 102,904 Segment Adjusted EBITDAR from Operations $ 65,606 $ 45,294 $ 110,900 The table below provides a reconciliation of Segment Adjusted EBITDAR from Operations above to income from operations: Year Ended December 31, 2025 2024 2023 Segment Adjusted EBITDAR from Operations (a) $ 181,356 $ 139,369 $ 110,900 Less: Unallocated corporate expenses 60,455 43,587 31,704 Less: Depreciation and amortization 8,538 6,119 5,130 Rent—cost of services 48,700 43,029 39,759 Other income 422 207 339 Adjustments to Segment EBITDAR from Operations: Less: Start-up operations (b) 182 137 102 Share-based compensation expense (c) 9,036 8,242 5,565 Acquisition related costs (d) 6,587 1,278 476 Activities associated with transitioning operations (e) (880) (570) 612 Transition services costs (f) 503 — — Unusual, non-recurring, or redundant charges (g) 113 1,004 2,575 Add: Net income attributable to noncontrolling interest 4,186 1,780 531 Income from operations $ 51,886 $ 38,116 $ 25,169 35 Table of Contents (a) Segment Adjusted EBITDAR from Operations is net income attributable to the Company's reportable segments excluding interest expense, provision for income taxes, depreciation and amortization expense, rent, unallocated corporate and administrative expenses, and, in order to view the operations’ performance on a comparable basis from period to period, certain adjustments including: (1) activities associated with start-up operations, (2) share-based compensation expense, (3) acquisition related costs, (4) activities associated with transitioning operations, (5) transition services costs, (6) unusual, non-recurring, or redundant charges, and (7) net income attributable to noncontrolling interest.
Revolving Credit Facility On July 31, 2024, Pennant amended and restated its existing credit agreement (as amended, the “Amended Credit Agreement”), which provides for an increased revolving credit facility with a syndicate of banks with a borrowing capacity of $250.0 million (the “Amended Revolving Credit Facility”).
Credit Agreement On July 31, 2024, Pennant amended and restated its existing credit agreement (as amended, the “Amended Credit Agreement”), which provides for an increased revolving credit facility with a syndicate of banks with a borrowing capacity of $250.0 million (the “Amended Revolving Credit Facility”).
The PDGM payment under the Medicare program is also adjusted for certain variables including, but not limited to: (a) a low utilization payment adjustment if the number of visits is below an established threshold that varies based on the diagnosis of a beneficiary; (b) a partial payment if the patient transferred to another provider or the Company received a patient from another provider before completing the period of care; (c) adjustment to the admission source 31 Table of Contents of claim if it is determined that the patient had a qualifying stay in a post-acute care setting within 14 days prior to the start of a 30-day payment period; (d) the timing of the 30-day payment period provided to a patient in relation to the admission date, regardless of whether the same home health provider provided care for the entire series of episodes; (e) changes to the acuity of the patient during the previous 30-day period of care; (f) changes in the base payments established by the Medicare program; (g) adjustments to the base payments for case mix and geographic wages; and (h) recoveries of overpayments.
The PDGM payment under the Medicare program is also adjusted for certain variables 32 Table of Contents including, but not limited to: (a) a low utilization payment adjustment if the number of visits is below an established threshold that varies based on the diagnosis of a beneficiary; (b) a partial payment if the patient transferred to another provider or the Company received a patient from another provider before completing the period of care; (c) adjustment to the admission source of claim if it is determined that the patient had a qualifying stay in a post-acute care setting within 14 days prior to the start of a 30-day payment period; (d) the timing of the 30-day payment period provided to a patient in relation to the admission date, regardless of whether the same home health provider provided care for the entire series of episodes; (e) changes to the acuity of the patient during the previous 30-day period of care; (f) changes in the base payments established by the Medicare program; (g) adjustments to the base payments for case mix and geographic wages; and (h) recoveries of overpayments.
Financial covenants require compliance with certain levels of leverage ratios that impact the amount of interest. As of December 31, 2024, the Company was compliant with all such financial covenants. On October 2, 2024, the Company closed the public offering (the “Offering”) of 4,025 shares of its common stock, $0.001 par value per share (“common stock”).
Financial covenants require compliance with certain levels of leverage ratios that impact the amount of interest. As of December 31, 2025, the Company was compliant with all such financial covenants. On October 2, 2024, the Company closed the public offering (the “Offering”) of 4,025 shares of its common stock, $0.001 par value per share (“common stock”).
Depreciation and amortization expense stayed flat as a percentage of total revenue. 42 Table of Contents (Gain) loss on Asset Dispositions and Impairment, Net.
Depreciation and amortization expense stayed flat as a percentage of total revenue. 42 Table of Contents Gain on Asset Dispositions and Impairment, Net.
See Note 14 , Income Taxes , to the Consolidated Financial Statements included elsewhere in this report filed on Form 10-K for further discussion. Comparison of Prior Year Information For a comparison of our results of operations of the fiscal year ended December 31, 2023 as compared to the year ended December 31, 2022 refer to Item 7.
See Note 14 , Income Taxes , to the Consolidated Financial Statements included elsewhere in this report filed on Form 10-K for further discussion. Comparison of Prior Year Information For a comparison of our results of operations of the fiscal year ended December 31, 2024 as compared to the year ended December 31, 2023 refer to Item 7.
As a percentage of revenue, rent — cost of services decreased 110 basis points when compared to the year ended December 31, 2023 due to improved overall sales leverage and performance. General and Administrative Expense.
As a percentage of revenue, rent — cost of services decreased 110 basis points when compared to the year ended December 31, 2024 due to improved overall sales leverage and performance. General and Administrative Expense.
We operate in multiple lines of businesses including home health, hospice and senior living services across Arizona, California, Colorado, Idaho, Montana, Nevada, Oklahoma, Oregon, Texas, Utah, Washington, Wisconsin and Wyoming. We also provide home health and hospice operational support through a management service agreement in Connecticut.
We operate in multiple lines of businesses including home health, hospice and senior living services across Alabama, Arizona, California, Colorado, Georgia, Idaho, Montana, Nevada, Oklahoma, Oregon, Tennessee, Texas, Utah, Washington, Wisconsin and Wyoming. We also provide home health and hospice operational support through a management service agreement in Connecticut.
The average amount of revenue for each completed 60-day home health episode generated from patients who are receiving care under Medicare reimbursement programs. 30 Table of Contents • Total hospice admissions . Total admissions of hospice patients, including new acquisitions, new admissions and recertifications. • Average hospice daily census .
The average amount of revenue for each completed 60-day home health episode generated from patients who are receiving care under Medicare reimbursement programs. • Total hospice admissions . Total admissions of hospice patients, including new acquisitions, new admissions and recertifications. • Average hospice daily census .
We base our estimates and judgments upon our historical experience, knowledge of current conditions and our belief of what could occur in the future considering available information, including assumptions that we believe to be reasonable under the circumstances.
We base our estimates and judgments upon our historical experience, knowledge of current conditions and our belief 33 Table of Contents of what could occur in the future considering available information, including assumptions that we believe to be reasonable under the circumstances.
We calculate Consolidated Adjusted EBITDA by adjusting Consolidated EBITDA to exclude the effects of non-core business items, which for the reported periods includes, to the extent applicable: • costs at start-up operations; • share-based compensation expense; • acquisition related costs and credit allowances; 39 Table of Contents • costs associated with transitioning operations ; and • unusual or non-recurring charges.
We calculate Consolidated Adjusted EBITDA by adjusting Consolidated EBITDA to exclude the effects of non-core business items, which for the reported periods includes, to the extent applicable: • results at start-up operations; • share-based compensation expense; • acquisition related costs; 39 Table of Contents • activities associated with transitioning operations ; and • unusual, non-recurring, or redundant charges.
(d) During the year ended December 31, 2023, an affiliate of the Company placed its memory care units into transition and is converting the facility into an assisted living community. We received insurance proceeds related to the property in 2024 which were recorded as a gain on asset disposition on the consolidated statements of income.
(d) During the year ended December 31, 2023, an affiliate of the Company placed its memory care units into transition and is converting the facility into an assisted living community. We received insurance proceeds related to the property in 2024 and 2025 which were recorded in gain on disposition of property and equipment, net on the consolidated statements of income.
As a percentage of revenue, costs of service increased by 50 basis points during the year ended December 31, 2024 when compared to the year ended December 31, 2023 primarily due to increased wages and benefits. Rent—Cost of Services .
As a percentage of revenue, costs of service increased by 150 basis points during the year ended December 31, 2025 when compared to the year ended December 31, 2024 primarily due to increased wages and benefits. Rent—Cost of Services .
The following table summarizes our senior living statistics for the periods indicated: Year Ended December 31, 2024 2023 Occupancy 78.8 % 78.5 % Average monthly revenue per occupied unit $ 4,811 $ 4,443 Revenue Sources Home Health and Hospice Services Home Health . We derive the majority of our home health revenue from Medicare and managed care.
The following table summarizes our senior living statistics for the periods indicated: Year Ended December 31, 2025 2024 Occupancy 79.7 % 78.8 % Average monthly revenue per occupied unit $ 5,195 $ 4,811 Revenue Sources Home Health and Hospice Services Home Health . We derive the majority of our home health revenue from Medicare and managed care.
The total admissions of home health patients, including new acquisitions, new admissions and readmissions. • Total Medicare home health admissions . Total admissions of home health patients, who are receiving care under Medicare reimbursement programs, including new acquisitions, new admissions and readmissions. • Average Medicare revenue per completed 60-day home health episode .
Total admissions of home health patients, who are receiving care under Medicare reimbursement programs, including new acquisitions, new admissions and readmissions. 31 Table of Contents • Average Medicare revenue per completed 60-day home health episode .
The increase in the amount of cost of services was driven primarily by volume of services provided and increased wages and benefits. Cost of services as a percentage of revenue decreased by 10 basis points from 80.4% to 80.3% over the same time period.
The increase in the amount of cost of services was driven primarily by volume of services provided and increased wages and benefits. Cost of services as a percentage of revenue increased by 80 basis points from 80.3% to 81.1% over the same time period.
(Gain) loss on asset dispositions and impairment, net is a gain of $0.7 million for the year ended December 31, 2024 compared to a loss of $0.1 million for the year ended December 31, 2023 primarily due to insurance proceeds related to one of our senior living communities. Provision for Income Taxes .
Gain on asset dispositions and impairment, net was $1.0 million for the year ended December 31, 2025 compared to $0.7 million for the year ended December 31, 2024 primarily due to insurance proceeds related to one of our senior living communities. Provision for Income Taxes .
The following table summarizes our affiliated home health and hospice agencies and senior living communities as of: 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Home health and hospice agencies 25 32 39 46 54 63 76 88 95 111 123 Senior living communities 15 36 36 43 50 52 54 54 49 51 57 Senior living units 1,587 3,184 3,184 3,434 3,820 3,963 4,127 4,127 3,500 3,588 3,960 Total number of home health, hospice, and senior living operations 40 68 75 89 104 115 130 142 144 162 180 Recent Activities Acquisitions.
The following table summarizes our affiliated home health and hospice agencies and senior living communities as of: 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Home health and hospice agencies 39 46 54 63 76 88 95 111 123 172 Senior living communities 36 43 50 52 54 54 49 51 57 63 Senior living units 3,184 3,434 3,820 3,963 4,127 4,127 3,500 3,588 3,960 4,428 Total number of home health, hospice, and senior living operations 75 89 104 115 130 142 144 162 180 235 Recent Activities Acquisitions.
Management's Discussion and Analysis of Financial Condition and Results of Operations on Form 10-K filed with the SEC on February 28, 2024. Liquidity and Capital Resources Our primary sources of liquidity are cash generated through operating activities and borrowings under our revolving credit facility.
Management's Discussion and Analysis of Financial Condition and Results of Operations on Form 10-K filed with the SEC on February 27, 2025. Liquidity and Capital Resources Our primary sources of liquidity are cash generated through operating activities and borrowings under our credit agreement.
The increase in general and administrative expense was primarily due to an increase of $12.5 million in wages and benefits for the year ended December 31, 2024 when compared to the year ended December 31, 2023. Depreciation and Amortization.
The increase in general and administrative expense was primarily due to an increase of $18.8 million in wages and benefits for the year ended December 31, 2025 when compared to the year ended December 31, 2024. Depreciation and Amortization.
We believe that our existing cash, cash generated through operations, and access to available borrowing capacity under our Amended Credit Agreement, will be sufficient to provide adequate liquidity for the next twelve months for both our operating activities and opportunities for acquisition growth. 43 Table of Contents The following table presents selected data from our statement of cash flows for the periods presented: Year Ended December 31, 2024 2023 (In thousands) Net cash provided by operating activities $ 39,298 $ 33,090 Net cash used in investing activities (70,684) (30,222) Net cash provided by financing activities 49,573 1,112 Net change in cash 18,187 3,980 Cash at beginning of year 6,059 2,079 Cash at end of year $ 24,246 $ 6,059 Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 Our net cash flow from operating activities for the year ended December 31, 2024 increased by $6.2 million when compared to the year ended December 31, 2023.
We believe that our existing cash, cash generated through operations, and access to available borrowing capacity under our Amended Credit Agreement, will be sufficient to provide adequate liquidity for the next twelve months for both our operating activities and opportunities for acquisition growth. 43 Table of Contents The following table presents selected data from our statement of cash flows for the periods presented: Year Ended December 31, 2025 2024 (In thousands) Net cash provided by operating activities $ 48,294 $ 39,298 Net cash used in investing activities (227,971) (70,684) Net cash provided by financing activities 172,455 49,573 Net change in cash (7,222) 18,187 Cash at beginning of year 24,246 6,059 Cash at end of year $ 17,024 $ 24,246 Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024 Our net cash flow from operating activities for the year ended December 31, 2025 increased by $9.0 million when compared to the year ended December 31, 2024.
Rent increased 8.2% from $39.8 million to $43.0 million for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily as a result of the newly acquired senior living communities.
Rent increased 13.2% from $43.0 million to $48.7 million for the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily as a result of the newly acquired senior living communities.
General and administrative expenses are not allocated to the reportable segments, and are included as “All Other”, accordingly the segment earnings measure reported is before allocation of corporate general and administrative expenses. The Company's segment measures may be different from the calculation methods used by other companies and, therefore, comparability may be limited. (b) Represents results related to start-up operations.
General and administrative expenses are not allocated to the reportable segments, and are included as “Unallocated corporate expenses”, accordingly the segment earnings measure reported is before allocation of corporate general and administrative expenses. The Company's segment measures may be different from the calculation methods used by other companies and, therefore, comparability may be limited.
During 2024, we expanded our operations with the addition of eight home health agencies, three hospice agencies, and six senior living communities. A subsidiary of the Company entered into a separate purchase agreements with the prior operator of each acquired operation as part of each transaction.
During 2025, we expanded our operations with the addition of 30 home health agencies, nine hospice agencies, four home care agencies, and six senior living communities. A subsidiary of the Company entered into a separate purchase agreements with the prior operator of each acquired operation as part of each transaction. Expansion into New States .
The improvement in these metrics resulted in net organic revenue growth of $46.4 million for the year ended December 31, 2024.
The improvement in these metrics resulted in net organic revenue growth of $52.8 million for the year ended December 31, 2025.
Property and equipment are initially recorded at their historical cost. Depreciation is computed using the straight-line method over the estimated useful lives of the depreciable assets (ranging from one to 40 years).
Property and equipment are initially recorded at their historical cost. Depreciation is computed using the straight-line method over the estimated useful lives of the depreciable assets (ranging from one to 40 years). Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the remaining lease term.
Performance and Valuation Measures: Year Ended December 31, 2024 2023 2022 (In thousands) Consolidated Non-GAAP Financial Measures: Performance Metrics Consolidated EBITDA $ 42,662 $ 30,107 $ 17,008 Consolidated Adjusted EBITDA $ 53,286 $ 40,716 $ 31,545 Valuation Metric Consolidated Adjusted EBITDAR $ 95,782 Year Ended December 31, 2024 2023 2022 (In thousands) Segment Non-GAAP Measures: (a) Segment Adjusted EBITDA from Operations Home health and hospice services $ 80,660 $ 60,128 $ 56,977 Senior living services $ 16,213 $ 12,293 $ 6,003 (a) General and administrative expenses are not allocated to any segment for purposes of determining segment profit or loss. 36 Table of Contents The table below reconciles Consolidated Net Income to Consolidated EBITDA, Consolidated Adjusted EBITDA and Consolidated Adjusted EBITDAR for the periods presented: Year Ended December 31, 2024 2023 2022 (In thousands) Consolidated Net income $ 24,339 $ 13,910 $ 7,243 Less: Net income attributable to noncontrolling interest 1,780 531 600 Add: Provision for income taxes 7,028 5,674 1,649 Net interest expense 6,956 5,924 3,816 Depreciation and amortization 6,119 5,130 4,900 Consolidated EBITDA 42,662 30,107 17,008 Adjustments to Consolidated EBITDA Add: Costs at start-up operations (a) 137 102 1,435 Share-based compensation expense (b) 8,242 5,565 3,363 Acquisition related costs and credit allowances (c) 1,278 476 731 Activities associated with transitioning operations (d) (570) 612 6,103 Unusual or non-recurring charges (e) 1,004 2,575 1,297 Rent related to items (a) and (e) above 533 1,279 1,608 Consolidated Adjusted EBITDA 53,286 40,716 31,545 Rent—cost of services 43,029 39,759 38,018 Rent related to items (a) and (e) above (533) (1,279) (1,608) Adjusted rent—cost of services 42,496 38,480 36,410 Consolidated Adjusted EBITDAR $ 95,782 (a) Represents results related to start-up operations.
Performance and Valuation Measures: Year Ended December 31, 2025 2024 2023 (In thousands) Consolidated Non-GAAP Financial Measures: Performance Metrics Consolidated EBITDA $ 56,660 $ 42,662 $ 30,107 Consolidated Adjusted EBITDA $ 72,466 $ 53,286 $ 40,716 Valuation Metric Consolidated Adjusted EBITDAR $ 120,901 Year Ended December 31, 2025 2024 2023 (In thousands) Segment Non-GAAP Measures: (a) Segment Adjusted EBITDA from Operations Home health and hospice services $ 111,135 $ 80,660 $ 60,128 Senior living services $ 21,785 $ 16,213 $ 12,293 (a) General and administrative expenses are not allocated to any segment for purposes of determining segment profit or loss. 36 Table of Contents The table below reconciles Consolidated Net Income to Consolidated EBITDA, Consolidated Adjusted EBITDA and Consolidated Adjusted EBITDAR for the periods presented: Year Ended December 31, 2025 2024 2023 (In thousands) Consolidated Net income $ 33,764 $ 24,339 $ 13,910 Less: Net income attributable to noncontrolling interest 4,186 1,780 531 Add: Provision for income taxes 11,866 7,028 5,674 Net interest expense 6,678 6,956 5,924 Depreciation and amortization 8,538 6,119 5,130 Consolidated EBITDA 56,660 42,662 30,107 Adjustments to Consolidated EBITDA Add: Start-up operations (a) 182 137 102 Share-based compensation expense (b) 9,036 8,242 5,565 Acquisition related costs (c) 6,587 1,278 476 Activities associated with transitioning operations (d) (880) (570) 612 Transition services costs (e) 503 — — Unusual, non-recurring, or redundant charges (f) 113 1,004 2,575 Rent related to items (a) and (e) above 265 533 1,279 Consolidated Adjusted EBITDA 72,466 53,286 40,716 Rent—cost of services 48,700 43,029 39,759 Rent related to items (a) and (e) above (265) (533) (1,279) Adjusted rent—cost of services 48,435 42,496 38,480 Consolidated Adjusted EBITDAR $ 120,901 (a) Represents results related to start-up operations.
Growth was also driven by the acquisition of eleven home health and hospice operations during the year ended December 31, 2024, and the acquisition of thirteen home health, home care, and hospice operations during the year ended December 31, 2023, resulting in an increase in revenue of $78.6 million, or 19.9% overall.
Growth was also driven by the acquisition of forty-three home health, home care and hospice operations during the year ended December 31, 2025, and the acquisition of eleven home health, home care, and hospice operations during the year ended December 31, 2024, resulting in an increase in revenue of $160.5 million, or 30.9% overall.
As of December 31, 2024, our home health and hospice business provided home health, hospice and 29 Table of Contents home care services from 123 agencies operating across 13 states, and our senior living business operated 57 senior living communities throughout seven states.
As of December 31, 2025, our home health and hospice business provided 30 Table of Contents home health, hospice and home care services from 172 agencies operating across 16 states, and our senior living business operated 63 senior living communities throughout seven states.
Senior Living Services Year Ended December 31, 2024 2023 Change % Change (In thousands) Cost of service $ 124,975 $ 106,252 $ 18,723 17.6 % Cost of services as a percentage of revenue 71.1 % 70.6 % 0.5 % Cost of services related to our Senior Living services segment increased $18.7 million, or 17.6%, during the year ended December 31, 2024 in response to higher occupancy, acquisitions and wage rate increases.
Senior Living Services Year Ended December 31, 2025 2024 Change % Change (In thousands) Cost of service $ 156,043 $ 124,975 $ 31,068 24.9 % Cost of services as a percentage of revenue 72.6 % 71.1 % 1.5 % Cost of services related to our Senior Living services segment increased $31.1 million, or 24.9%, during the year ended December 31, 2025 in response to higher occupancy, acquisitions and wage rate increases.
Home Health and Hospice Services Year Ended December 31, 2024 2023 Change % Change (In thousands) Cost of service $ 433,474 $ 331,844 $ 101,630 30.6 % Cost of services as a percentage of revenue 83.4 % 84.1 % (0.7) % Cost of services related to our Home Health and Hospice services segment increased $101.6 million, or 30.6%, primarily due to increased volume of services from the growth in admissions and average daily census as well as increased wages and benefits.
Home Health and Hospice Services Year Ended December 31, 2025 2024 Change % Change (In thousands) Cost of service $ 612,460 $ 433,474 $ 178,986 41.3 % Cost of services as a percentage of revenue 83.6 % 83.4 % 0.2 % Cost of services related to our Home Health and Hospice services segment increased $179.0 million, or 41.3%, primarily due to increased volume of services from the growth in admissions and average daily census as well as increased wages and benefits.
The primary drivers of this difference was a $10.4 million increase in net income, offset by a $2.5 million net decrease in cash flows from the change in operating assets and liabilities and a net decrease of $1.7 million in non-cash expenses.
The primary drivers of this difference were a $9.4 million increase in net income and a $2.5 million net decrease in cash flows from the change in operating assets and liabilities.
Recent Accounting Pronouncements Information concerning recently issued accounting pronouncements which are not yet effective is included in Note 2, Basis of Presentation and Summary of Significant Accounting Policies in the Consolidated Financial Statements. 33 Table of Contents Results of Operations The following table sets forth details of our expenses and earnings as a percentage of total revenue for the periods indicated: Year Ended December 31, 2024 2023 2022 Total revenue 100.0 % 100.0 % 100.0 % Expense: Cost of services 80.3 80.4 79.6 Rent—cost of services 6.2 7.3 8.0 General and administrative expense 7.2 6.7 7.2 Depreciation and amortization 0.9 0.9 1.0 (Gain) loss on asset dispositions and impairment, net (0.1) — 1.5 Total expenses 94.5 95.3 97.3 Income from operations 5.5 4.7 2.7 Other expense, net: Other income — 0.1 — Interest expense, net (1.0) (1.2) (0.8) Other expense, net (1.0) (1.1) (0.8) Income before provision for income taxes 4.5 3.6 1.9 Provision for income taxes 1.0 1.0 0.4 Net income 3.5 2.6 1.5 Less: net income attributable to noncontrolling interest 0.3 0.1 0.1 Net income attributable to Pennant 3.2 % 2.5 % 1.4 % Year Ended December 31, 2024 2023 2022 (In thousands) Consolidated GAAP Financial Measures: Total revenue $ 695,240 $ 544,891 $ 473,241 Total expenses 657,124 519,722 460,502 Income from operations $ 38,116 $ 25,169 $ 12,739 34 Table of Contents The following table presents certain financial information regarding our reportable segments.
Results of Operations The following table sets forth details of our expenses and earnings as a percentage of total revenue for the periods indicated: Year Ended December 31, 2025 2024 2023 Total revenue 100.0 % 100.0 % 100.0 % Expense: Cost of services 81.1 80.3 80.4 Rent—cost of services 5.1 6.2 7.3 General and administrative expense 7.5 7.2 6.7 Depreciation and amortization 0.9 0.9 0.9 Gain on asset dispositions and impairment, net (0.1) (0.1) — Total expenses 94.5 94.5 95.3 Income from operations 5.5 5.5 4.7 Other expense, net: Other income — — 0.1 Interest expense, net (0.7) (1.0) (1.2) Other expense, net (0.7) (1.0) (1.1) Income before provision for income taxes 4.8 4.5 3.6 Provision for income taxes 1.2 1.0 1.0 Net income 3.6 3.5 2.6 Less: net income attributable to noncontrolling interest 0.5 0.3 0.1 Net income attributable to Pennant 3.1 % 3.2 % 2.5 % 34 Table of Contents Year Ended December 31, 2025 2024 2023 (In thousands) Consolidated GAAP Financial Measures: Total revenue $ 947,705 $ 695,240 $ 544,891 Total expenses 895,819 657,124 519,722 Income from operations $ 51,886 $ 38,116 $ 25,169 The following table presents certain financial information regarding our reportable segments.
Revenue grew due to an increase in almost all key performance indicators including an increase in total home health admissions of 37.3%, an increase in Medicare home health admissions of 26.9%, an increase in average Medicare revenue per 60-day completed episode of 6.0%, an increase of 25.3% in total hospice admissions, and an increase of 25.4% in hospice average daily census, while Hospice Medicare revenue per day decreased by 1.1%.
Revenue grew due to an increase in all key performance indicators including an increase in total home health admissions of 44.1%, an increase in Medicare home health admissions of 41.8%, an increase in average Medicare revenue per 60-day completed episode of 3.5%, an increase of 24.4% in total hospice admissions, and an increase of 28.6% in hospice average daily census, and an increase in Hospice Medicare revenue per day of 4.9%.
Share-based compensation expense and related payroll taxes are included in cost of services and general and administrative expense. (c) Non-capitalizable costs associated with acquisitions and credit allowances for amounts in dispute with the prior owners of certain acquired operations.
This amount excludes rent and depreciation and amortization expense related to such operations. (b) Share-based compensation expense and related payroll taxes incurred. Share-based compensation expense and related payroll taxes are included in cost of services and general and administrative expense. (c) Non-capitalizable costs associated with acquisitions and write-offs for amounts in dispute with the prior owners of certain acquired operations.
Our net cash used in investing activities for the year ended December 31, 2024 increased by $40.5 million compared to the year ended December 31, 2023, primarily driven by a $40.4 million increase in business acquisitions, asset acquisitions, and escrow deposits during the year ended December 31, 2024 compared to the year ended December 31, 2023.
Our net cash used in investing activities for the year ended December 31, 2025 increased by $157.3 million compared to the year ended December 31, 2024, primarily driven by a $154.7 million increase in business acquisitions, asset acquisitions, and escrow deposits and a $3.0 million increase in purchases of property and equipment during the year ended December 31, 2025 compared to the year ended December 31, 2024.
The following table summarizes our overall home health and hospice services statistics for the periods indicated: Year Ended December 31, 2024 2023 Home health services: Total home health admissions 59,741 43,508 Total Medicare home health admissions 24,598 19,389 Average Medicare revenue per completed 60-day home health episode (a) $ 3,677 $ 3,468 Hospice services: Total hospice admissions 12,208 9,746 Average hospice daily census 3,268 2,607 Hospice Medicare revenue per day $ 183 $ 185 (a) The year to date average for Medicare revenue per 60-day completed episode includes post period claim adjustments for prior periods.
The following table summarizes our overall home health and hospice services statistics for the periods indicated: Year Ended December 31, 2025 2024 Home health services: Total home health admissions 86,076 59,741 Total Medicare home health admissions 34,882 24,598 Average Medicare revenue per completed 60-day home health episode (a) $ 3,755 $ 3,628 Hospice services: Total hospice admissions 15,189 12,208 Average hospice daily census 4,204 3,268 Hospice Medicare revenue per day $ 192 $ 183 (a) The year to date average for Medicare revenue per 60-day completed episode includes post period claim adjustments for prior periods.
Rates are set based on specific levels of care, are adjusted by a wage index to reflect healthcare labor costs across the country and are established annually through federal legislation. The following are the four levels of care provided under the hospice benefit: • Routine Home Care (RHC).
Rates are set based on specific levels of care, are adjusted by a wage index to reflect healthcare labor costs across the country and are established annually through federal legislation. CMS has established a two-tiered payment system for RHC.
General and administrative expense increased $13.5 million, or 36.9%, from $36.7 million to $50.2 million for the year ended December 31, 2024 when compared to the year ended December 31, 2023.
General and administrative expense increased $20.9 million, or 41.6%, from $50.2 million to $71.1 million for the year ended December 31, 2025 when compared to the year ended December 31, 2024.
The valuation methods and assumptions used in estimating costs up to retention amounts to settle open claims of insureds and an estimate of the cost of insured claims up to retention amounts that have been incurred but not reported; • Revenue recognition - The amounts owed by private pay individuals for services and estimate of variable considerations to arrive at the transaction price, including methods and assumptions, used to determine settlements with Medicare and Medicaid adjustments due to audits and reviews; and • Acquisition accounting and goodwill - The assumptions used to allocate the purchase price paid for assets acquired and liabilities assumed in connection with our acquisitions, and the review of goodwill for impairment at the Company’s annual impairment test date or upon the occurrence of a triggering event.
We develop information about the size of the ultimate claims based on historical experience, current industry information, and actuarial analysis; • Revenue recognition - The amounts owed by private pay individuals for services and estimate of variable considerations to arrive at the transaction price, including methods and assumptions, used to determine settlements with Medicare and Medicaid adjustments due to audits and reviews; and • Acquisition accounting and goodwill - The assumptions used to allocate the purchase price paid for assets acquired and liabilities assumed in connection with our acquisitions, and the review of goodwill for impairment at the Company’s annual impairment test date or upon the occurrence of a triggering event.
Cost of services as a percentage of revenue for the year ended December 31, 2024 decreased by 70 basis points compared to the year ended December 31, 2023 primarily due to increased efficiency in our operations.
Cost of services as a percentage of revenue for the year ended December 31, 2025 increased by 20 basis points compared to the year ended December 31, 2024 primarily due to increased wages and benefits.
Senior Living Services Year Ended December 31, 2024 2023 Change % Change Revenue (in thousands) $ 175,756 $ 150,427 $ 25,329 16.8 % Number of communities at period end 57 51 6 11.8 Occupancy 78.8 % 78.5 % 0.3 % Average monthly revenue per occupied unit $ 4,811 $ 4,443 $ 368 8.3 % Senior living revenue increased $25.3 million, or 16.8%, for the year ended December 31, 2024 when compared to the same period in the prior year primarily due to a 8.3% increase in average monthly revenue per occupied unit and a 0.3% increase in occupancy rate.
Senior Living Services Year Ended December 31, 2025 2024 Change % Change Revenue (in thousands) $ 214,978 $ 175,756 $ 39,222 22.3 % Number of communities at period end 63 57 6 10.5 Occupancy 79.7 % 78.8 % 0.9 % Average monthly revenue per occupied unit $ 5,195 $ 4,811 $ 384 8.0 % Senior living revenue increased $39.2 million, or 22.3%, for the year ended December 31, 2025 when compared to the same period in the prior year primarily due to an 8.0% increase in average monthly revenue per occupied unit and a 90 basis point increase in occupancy rate.
As of December 31, 2024 we had $24.2 million of cash and $245.8 million of available borrowing capacity on our Amended Revolving Credit Facility.
As of December 31, 2025 we had $17.0 million of cash and $171.6 million of available borrowing capacity on our Amended Revolving Credit Facility.
The amounts reported for the year ended December 31, 2022 include certain costs identified as redundant or non-recurring incurred by the Company for services provided by Ensign under the Transition Services Agreement, and were included in general and administrative expense. 37 Table of Contents The table below reconciles Segment Adjusted EBITDAR from Operations to Segment Adjusted EBITDA from Operations for the periods presented: Year Ended December 31, Home Health and Hospice Senior Living 2024 2023 2022 2024 2023 2022 (In thousands) Segment Adjusted EBITDAR from Operations $ 87,709 $ 65,606 $ 61,827 $ 51,660 $ 45,294 $ 37,563 Less: Rent—cost of services 7,189 5,791 5,060 35,840 33,967 32,958 Rent related to start-up and transitioning operations (140) (313) (210) (393) (966) (1,398) Segment Adjusted EBITDA from Operations $ 80,660 $ 60,128 $ 56,977 $ 16,213 $ 12,293 $ 6,003 The following discussion includes references to certain performance and valuation measures, which are non-GAAP financial measures, including Consolidated EBITDA, Consolidated Adjusted EBITDA, Segment Adjusted EBITDA from Operations, and Consolidated Adjusted EBITDAR (collectively, “Non-GAAP Financial Measures”).
(f) Represents unusual, non-recurring, or redundant charges for legal services, implementation costs, integration costs, and consulting fees in general and administrative and cost of services expenses. 37 Table of Contents The table below reconciles Segment Adjusted EBITDAR from Operations to Segment Adjusted EBITDA from Operations for the periods presented: Year Ended December 31, Home Health and Hospice Senior Living 2025 2024 2023 2025 2024 2023 (In thousands) Segment Adjusted EBITDAR from Operations $ 120,831 $ 87,709 $ 65,606 $ 60,525 $ 51,660 $ 45,294 Less: Rent—cost of services 9,752 7,189 5,791 38,949 35,840 33,967 Rent related to start-up and transitioning operations (56) (140) (313) (209) (393) (966) Segment Adjusted EBITDA from Operations $ 111,135 $ 80,660 $ 60,128 $ 21,785 $ 16,213 $ 12,293 The following discussion includes references to certain performance and valuation measures, which are non-GAAP financial measures, including Consolidated EBITDA, Consolidated Adjusted EBITDA, Segment Adjusted EBITDA from Operations, and Consolidated Adjusted EBITDAR (collectively, “Non-GAAP Financial Measures”).
Growth in revenue was also driven by the acquisition of six senior living communities during the year ended December 31, 2024, and the acquisition of two senior living communities during the year ended December 31, 2023, resulting in an increase of $12.5 million, or 8.3% overall. 41 Table of Contents Cost of Services The following table sets forth total cost of services by each of our reportable segments for the periods indicated: Year Ended December 31, 2024 2023 Change % Change (In thousands) Home Health and Hospice $ 433,474 $ 331,844 $ 101,630 30.6 % Senior Living 124,975 106,252 18,723 17.6 Total cost of services $ 558,449 $ 438,096 $ 120,353 27.5 % Consolidated cost of services increased $120.4 million, or 27.5%, for the year ended December 31, 2024 when compared to the year ended December 31, 2023.
Growth in revenue was also driven by the acquisition of six senior living communities during the year ended December 31, 2025, and the acquisition of six senior living communities during the year ended December 31, 2024, resulting in an increase of $24.6 million, or 14.0% overall. 41 Table of Contents Cost of Services The following table sets forth total cost of services by each of our reportable segments for the periods indicated: Year Ended December 31, 2025 2024 Change % Change (In thousands) Home Health and Hospice $ 612,460 $ 433,474 $ 178,986 41.3 % Senior Living 156,043 124,975 31,068 24.9 Total cost of services $ 768,503 $ 558,449 $ 210,054 37.6 % Consolidated cost of services increased $210.1 million, or 37.6%, for the year ended December 31, 2025 when compared to the year ended December 31, 2024.
Our effective tax rate for the year ended December 31, 2024 was 22.4% of earnings before income taxes compared with an effective tax rate of 29.0% for the year ended December 31, 2023. The decrease in the effective tax rate is primarily due to a change in deductible equity compensation expenses.
Our effective tax rate for the year ended December 31, 2025 was 26.0% of earnings before income taxes compared with an effective tax rate of 22.4% for the year ended December 31, 2024. The increase in the effective tax rate is primarily driven by the change in discrete tax effects of share-based compensation.
Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 Revenue Year Ended December 31, 2024 2023 Revenue Dollars Revenue Percentage Revenue Dollars Revenue Percentage (In thousands) Home health and hospice services Home health $ 239,539 34.5 % $ 175,044 32.1 % Hospice 240,102 34.5 194,627 35.7 Home care and other (a) 39,843 5.7 24,793 4.6 Total home health and hospice services 519,484 74.7 394,464 72.4 Senior living services 175,756 25.3 150,427 27.6 Total revenue $ 695,240 100.0 % $ 544,891 100.0 % (a) Home care and other revenue is included with home health revenue in other disclosures in this report.
Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024 Revenue Year Ended December 31, 2025 2024 Revenue Dollars Revenue Percentage Revenue Dollars Revenue Percentage (In thousands) Home health and hospice services Home health $ 351,240 37.1 % $ 239,539 34.5 % Hospice 317,801 33.5 240,102 34.5 Home care and other (a) 63,686 6.7 39,843 5.7 Total home health and hospice services 732,727 77.3 519,484 74.7 Senior living services 214,978 22.7 175,756 25.3 Total revenue $ 947,705 100.0 % $ 695,240 100.0 % (a) Home care and other revenue is included with home health revenue in other disclosures in this report.
Home health and hospice revenue increased $125.0 million, or 31.7%.
Home health and hospice revenue increased $213.2 million, or 41.0%.
Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the remaining lease term. 32 Table of Contents Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).
Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).
Our consolidated revenue increased $150.3 million, or 27.6%, driven by the net organic growth of existing operations across all segments of $59.2 million or 10.9% as well as increased revenue from acquired operations of $91.1 million, or 16.7%, during the year ended December 31, 2024. 40 Table of Contents Home Health and Hospice Services Year Ended December 31, 2024 2023 Change % Change (In thousands) Home health and hospice revenue Home health services $ 239,539 $ 175,044 $ 64,495 36.8 % Hospice services 240,102 194,627 45,475 23.4 Home care and other 39,843 24,793 15,050 60.7 Total home health and hospice revenue $ 519,484 $ 394,464 $ 125,020 31.7 % Year Ended December 31, 2024 2023 Change % Change Home health services: Total home health admissions 59,741 43,508 16,233 37.3 % Total Medicare home health admissions 24,598 19,389 5,209 26.9 Average Medicare revenue per 60-day completed episode (a) $ 3,677 $ 3,468 $ 209 6.0 Hospice services: Total hospice admissions 12,208 9,746 2,462 25.3 Average daily census 3,268 2,607 661 25.4 Hospice Medicare revenue per day $ 183 $ 185 $ (2) (1.1) Number of home health and hospice agencies at period end 123 111 12 10.8 % (a) The year to date average for Medicare revenue per 60-day completed episode includes post period claim adjustments for prior periods.
Our consolidated revenue increased $252.5 million, or 36.3%, driven by the net organic growth of existing operations across all segments of $67.5 million or 9.7% as well as increased revenue from acquired operations of $185.0 million, or 26.6%, during the year ended December 31, 2025. 40 Table of Contents Home Health and Hospice Services Year Ended December 31, 2025 2024 Change % Change (In thousands) Home health and hospice revenue Home health services $ 351,240 $ 239,539 $ 111,701 46.6 % Hospice services 317,801 240,102 77,699 32.4 Home care and other 63,686 39,843 23,843 59.8 Total home health and hospice revenue $ 732,727 $ 519,484 $ 213,243 41.0 % Year Ended December 31, 2025 2024 Change % Change Home health services: Total home health admissions 86,076 59,741 26,335 44.1 % Total Medicare home health admissions 34,882 24,598 10,284 41.8 Average Medicare revenue per 60-day completed episode (a) $ 3,755 $ 3,628 $ 127 3.5 Hospice services: Total hospice admissions 15,189 12,208 2,981 24.4 Average daily census 4,204 3,268 936 28.6 Hospice Medicare revenue per day $ 192 $ 183 $ 9 4.9 Number of home health and hospice agencies at period end 172 123 49 39.8 % (a) The year to date average for Medicare revenue per 60-day completed episode includes post period claim adjustments for prior periods.
The amounts reported exclude rent and depreciation and amortization expense related to such operations. (f) Represents unusual or non-recurring charges for legal services, implementation costs, integration costs, and consulting fees in general and administrative and cost of services expenses.
(g) Represents unusual, non-recurring, or redundant charges for legal services, implementation costs, integration costs, and consulting fees in general and administrative and cost of services expenses.
Our Chief Executive Officer, who is our Chief Operating Decision Maker (“CODM”), reviews financial information at the operating segment level using segment adjusted EBITDAR from operations. We also report an “all other” category that includes general and administrative expense from our Service Center.
Our Chief Executive Officer, who is our Chief Operating Decision Maker (“CODM”), reviews financial information at the operating segment level using segment adjusted EBITDAR from operations. Key Performance Indicators We manage the fiscal aspects of our business by monitoring key performance indicators that affect our financial performance.
CMS also provided for a Service Intensity Add-On, which increases payments for certain RHC services provided by registered nurses and social workers to hospice patients during the final seven days of life. Medicare reimbursement is adjusted for an inability to obtain appropriate billing documentation or authorizations acceptable to the payor and other reasons unrelated to credit risk.
Hospices are reimbursed at a higher rate for RHC services provided from days of service 1 through 60 and a lower rate for all subsequent days of service. CMS also provided for a Service Intensity Add-On, which increases payments for certain RHC services provided by registered nurses and social workers to hospice patients during the final seven days of life.
The amounts reported for the year ended December 31, 2022 include certain costs identified as redundant or non-recurring incurred by the Company for services provided by Ensign under the Transition Services Agreement, and were included in general and administrative expense.
(f) Costs identified as redundant or non-recurring incurred by the Company as a result of the transition services agreement between the Company and UnitedHealth entered into as part of the acquisition agreement. All amounts are included in Cost of services. Fees incurred under the transition services agreement were $3,001 for the year ended December 31, 2025.
Key Performance Indicators We manage the fiscal aspects of our business by monitoring key performance indicators that affect our financial performance. These indicators and their definitions include the following: Home Health and Hospice Services • Total home health admissions .
These indicators and their definitions include the following: Home Health and Hospice Services • Total home health admissions . The total admissions of home health patients, including new acquisitions, new admissions and readmissions. • Total Medicare home health admissions .
This amount excludes rent and depreciation and amortization expense related to such operations. (c) Share-based compensation expense and related payroll taxes incurred, including the impact of the modification of certain restricted stock units described below in Note 12, Options and Awards, to the Consolidated Financial Statements.
(b) Represents results related to start-up operations. This amount excludes rent and depreciation and amortization expense related to such operations. (c) Share-based compensation expense and related payroll taxes incurred. Share-based compensation expense and related payroll taxes are included in cost of services and general and administrative expense.
(e) During the year ended December 31, 2023, an affiliate of the Company placed its memory care units into transition and is converting the facility into an assisted living community. We received insurance proceeds related to the property in 2024 which were recorded as a gain on asset disposition on the consolidated statements of income.
(d) Non-capitalizable costs associated with acquisitions and write-offs for amounts in dispute with the prior owners of certain acquired operations. (e) During the year ended December 31, 2023, an affiliate of the Company placed its memory care units into transition and is converting the facility into an assisted living community.
The amounts reported exclude rent and depreciation and amortization expense related to such operations. (e) Represents unusual or non-recurring charges for legal services, implementation costs, integration costs, and consulting fees in general and administrative and cost of services expenses.
The amounts reported exclude rent and depreciation and amortization expense related to such operations. (e) Costs identified as redundant or non-recurring incurred by the Company as a result of the transition services agreement between the Company and UnitedHealth entered into as part of the acquisition agreement. All amounts are included in Cost of services.
Although we saw steady improvements in occupancy throughout 2023 as a result of renewed consideration of senior living communities as the negative impacts of the global pandemic subsided, and stable occupancy during 2024, the highly competitive environment for senior living residents and inflationary factors will continue to impact our occupancy levels in our senior living communities.
Though we have seen improvements in revenue per occupied unit and occupancy year over year, the highly competitive environment for senior living residents and inflationary factors will continue to impact the rate at which our revenue per occupied unit and occupancy levels change in our senior living communities.
Our net cash provided by financing activities increased by $48.5 million for the year ended December 31, 2024 when compared to the year ended December 31, 2023 primarily due to an issuance of equity through a secondary offering totaling $118.1 million offset by a net repayment of debt totaling $65.0 million and payments for deferred financing costs of $3.9 million during the year ended December 31, 2024.
Our net cash provided by financing activities increased by $122.9 million for the year ended December 31, 2025 when compared to the year ended December 31, 2024, primarily driven by an increase in net proceeds from our Amended Revolving Credit Facility of $140.0 million and an increase in proceeds from our Incremental Term Loans of $100.0 million.
Removed
Trends We have experienced stable senior living occupancy through the year ended December 31, 2024.
Added
In the fourth quarter of 2025, we expanded our home health, hospice, and home care operations into the southeastern United States. This expansion was our largest acquisition to date and included 30 home health, hospice, and home care agencies in Alabama, Georgia, and Tennessee.
Removed
Care that is not classified under any of the other levels of care, such as the work of nurses, social workers or home health aides. • General Inpatient Care.
Added
This expansion is part of our strategy to grow our national presence in the post-acute care continuum across both our existing markets and new markets. Trends We have experienced improvement in senior living revenue per occupied unit and occupancy through the year ended December 31, 2025, compared to the same period in 2024.
Removed
Pain control or acute or chronic symptom management that cannot be managed in a setting other than an inpatient Medicare-certified facility, such as a hospital, skilled nursing facility or hospice inpatient facility. • Continuous Home Care.
Added
Medicare reimbursement is adjusted for an inability to obtain appropriate billing documentation or authorizations acceptable to the payor and other reasons unrelated to credit risk.
Removed
Care for patients experiencing a medical crisis that requires nursing services to achieve palliation and symptom control, if the agency provides a minimum of eight hours of care within a 24-hour period. • Inpatient Respite Care. Short-term, inpatient care to give temporary relief to the caregiver who regularly provides care to the patient.
Added
The Company accrues amounts equal to the actuarial estimated costs to settle open claims of insureds, as well as an estimate of the costs of insured claims that have been incurred but not reported.
Removed
CMS has established a two-tiered payment system for RHC. Hospices are reimbursed at a higher rate for RHC services provided from days of service 1 through 60 and a lower rate for all subsequent days of service.
Added
Recent Accounting Pronouncements Information concerning recently issued accounting pronouncements which are not yet effective is included in Note 2, Basis of Presentation and Summary of Significant Accounting Policies in the Consolidated Financial Statements.
Removed
Share-based compensation expense and related payroll taxes are included in cost of services and general and administrative expense. (d) Non-capitalizable costs associated with acquisitions and credit allowances for amounts in dispute with the prior owners of certain acquired operations.
Added
“All Other” consists of revenues generated at operating locations not included in the segment financial information reviewed by the CODM. Revenue included in the “All Other” category is insignificant individually, and therefore does not constitute a reportable segment.
Removed
The amounts reported exclude rent and depreciation and amortization expense related to such operations and include legal settlement costs associated with one of the entities transitioned to Ensign.
Added
We received insurance proceeds related to the property in 2024 and 2025 which were recorded in gain on disposition of property and equipment, net on the consolidated statements of income. The amounts reported exclude rent and depreciation and amortization expense related to such operations.
Removed
During January 2022, affiliates of the Company entered into Transfer Agreements with affiliates of Ensign, providing for the transfer of the operations of certain senior living communities (the “Transaction”) from affiliates of the Company to affiliates of Ensign.
Added
Fees incurred under the transition services agreement were $3,001 for the year ended December 31, 2025.
Removed
The closing of the Transaction was completed in two phases with the transfer of two operations on March 1, 2022 and the remainder transferred on April 1, 2022. The amount above represents the net impact on revenue and cost of service attributable to all of the transferred entities.
Added
On November 3, 2025, Pennant entered into the First Amendment to Amended and Restated Credit Agreement (the “First Amendment”), pursuant to which, Pennant obtained an incremental term loan facility in an aggregate principal amount of $100 million (the “Incremental Term Loans”).
Removed
This amount excludes rent and depreciation and amortization expense related to such operations. (b) Share-based compensation expense and related payroll taxes incurred, including the impact of the modification of certain restricted stock units described below in Note 12, Options and Awards, to the Consolidated Financial Statements.
Added
The Incremental Term Loans constitute term loans under, and are subject to the terms and provisions of, the Amended Credit Agreement, including bearing interest at the same interest rate, and having the same maturity date, as the Amended Revolving Credit Facility. In conjunction with the First Amendment, the Company incurred additional debt issuance costs of $1,203.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeA 1.0% interest rate change would cause interest expense to remain constant based upon our outstanding long-term debt as of December 31, 2024. We manage our exposure to this market risk by monitoring available financing alternatives.
Biggest changeA 1.0% interest rate change would cause interest expense to change by approximately $1.8 million annually based upon our outstanding long-term debt as of December 31, 2025. We manage our exposure to this market risk by monitoring available financing alternatives.

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