A provider of home health, hospice, and senior living services across 16 states, running home health and hospice agencies plus senior living communities where local leaders make the day-to-day calls with backing from a central service team. It became its own publicly traded company in 2019 when it spun off from The Ensign Group, which had built up these in-home and senior living operations over the prior decade. The name nods to the small triangular flag, a fitting image for a firm that calls its far-flung operations a "cluster model" of locally empowered teams.
Gross margin fell to 18.6% as cost of services reached 81.4% of revenue, the highest ratio in the table.
The cost of running Pennant's operations continued to climb. rose 35.8% to $298.0 million and rose 49.1% to $17.2 million, but compressed to 18.6% as the reached 81.4%, driven by the integration of newly acquired agencies. The company is growing, but it is spending more to do so.
Key takeaways
The rose to 81.4% of , up from 80.8% a year ago, compressing by 0.7 points to 18.6% as the company absorbed higher costs from its acquired operations.
rose 35.8% to $298.0 million, with the Home Health and Hospice driving the increase through a 62.7% rise in total home health admissions and a 37.0% increase in average daily hospice census, both fueled primarily by the UnitedHealth/Amedisys acquisition.
rose 49.1% to $17.2 million, and widened 0.5 points to 5.8%, as the gain from acquisitions outweighed the increase in cost of services.
Section summaries
Legal Proceedings
The Company has no material pending legal proceedings to report for the period.
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The Company states it is a party to various regulatory audits and investigations in the ordinary course of business but cannot predict their outcomes.
It is subject to routine healthcare litigation, including professional liability, elder abuse, and wrongful death claims, as well as employment-related claims like wage and hour class actions.
The Company faces potential lawsuits under the and comparable state laws for allegedly submitting fraudulent claims to healthcare programs.
fell 37.0% to $21.8 million, and fell 50.9% to $15.5 million, as the working-capital reversal that boosted the prior-year quarter did not repeat.
rose to $192.5 million, up from $37.0 million a year ago, reflecting the term loan used for the UnitedHealth/Amedisys acquisition; the company disclosed that a 1% interest rate move now changes annual by approximately $1.7 million.
The company added a new risk factor on artificial intelligence, citing potential regulatory, clinical, and competitive threats from the use of AI in its operations and third-party systems.
What changed
The , flagged as a key watch item after reaching 81.5% in Q1 2026, improved only marginally to 81.4% in Q2, indicating that the transition costs from the 37 newly acquired agencies have not yet meaningfully faded.
turned positive at $21.8 million after a $3.4 million use in Q1 2026, but the figure was well below the $34.6 million reported in Q2 2025, confirming that the prior year's result was a one-quarter working-capital reversal rather than a new run-rate.
The company did not quantify the impact of the CY2026 Home Health final rule with its -1.3% net payment update, a disclosure that was flagged as a watch item in the prior quarter's filing.
What to watch
Whether the , now at 81.4%, begins to decline in the second half of 2026 as the acquired agencies mature, or whether wage inflation keeps it elevated and below 19%.
Whether for the full year can grow from the $48.3 million reported in FY 2025, given the $21.8 million generated in Q2 2026 and the $3.4 million use in Q1.
The integration of the UnitedHealth/Amedisys acquisition and whether the acquired agencies achieve the census and margin trajectory of legacy operations, particularly as of $192.5 million increases sensitivity.
The outcome of the 16 Medicare recoupment reviews currently scheduled, on appeal, or in dispute resolution, and whether any result in a material repayment.
It is subject to Medicare reviews by various contractors, with 16 subsidiaries having reviews scheduled, on appeal, or in dispute resolution as of June 30, 2026.
No material loss contingencies are recorded, and the Company establishes reserves based on historical experience and current developments.