Pennant Group Shines Through Integration: Same-Store Margins Hit New Highs
Q1 2026 report shows strong growth, successful Amedisys/United transition, and a cautious-but-optimistic guidance stance.
PNTG · Earnings Call · 2026-05-07
Integration Wave Crests
The Pennant Group delivered a robust first quarter, with revenue of $285.4 million, up 36% year-over-year, and adjusted EBITDA of $21.7 million, up 32.6%. The headline is the progress on integrating the large Amedisys/UnitedHealth acquisition in Tennessee, Alabama, and Georgia. CEO Brent Guerisoli noted, “we have successfully rebounded and increased total census above the levels at the time of acquisition.” — Brent Guerisoli, Chief Executive Officer (CEO) · 2026-05-07 The integration is proceeding in waves, with two of five completed and the largest waves (three and four) now underway. This is consistent with the plan laid out earlier, though CFO Lynette Walbom had warned of “initial noise as we're transitioning those operations from United and Amedisys.” — Lynette Walbom, Chief Financial Officer · 2026-02-26 The transition service agreement costs are expected to roll off in the second half, providing a tailwind. Brent reiterated,
With only one quarter behind us and substantial additional transition work on the near horizon, we are not adjusting guidance at this time, but would point you to the upper end of our guidance range.
Same-Store Gains Amidst Headwinds
The same-store story is arguably the most compelling. Despite a 1.3% Medicare rate cut and elevated wage pressure, Home Health and Hospice same-store segment adjusted EBITDA margin prior to NCI expanded to 17.2%, a 110-basis-point improvement. COO John Gochnour credited operational excellence: “Our local leaders focus on operational excellence drove same-store segment adjusted EBITDA margin prior to NCI to 17.2%, a 110 basis point improvement over the prior year quarter.” — John Gochnour, President and Chief Operating Officer (COO) · 2026-05-07 Key drivers included home health value based purchasing performance, reduced visits per episode, and strong hospice admissions. In Senior Living, same-store occupancy rose 180 bps to 81%, and margins improved 190 bps to 11.8%. The flagship Capitol Hill community saw occupancy surge 2,300 bps and EBITDA up 238%, showcasing the model's turnaround potential.
Margin Levers and the Year Ahead
Management is targeting further margin expansion as integration winds down. They also see opportunities from the heightened focus on fraud and waste, positioning themselves as a compliant, high-quality operator gaining share as bad actors are removed. Payer conversations are expanding, with a broader national footprint enabling better contracts. The company is investing heavily in leadership development, adding 101 CEOs-in-training in 2025 and 47 more YTD 2026. Operating margin now sits at 6.1%, up from a trough of 3% in 2022, reflecting operating leverage and improving mix. With integration on track and same-store momentum strong, the stock has rallied over 26% in the last 90 days, signaling investor confidence.