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Pennant Group, Inc. (PNTG)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was a record quarter: revenue $209.8M (+33.7% YoY), GAAP diluted EPS $0.22, and adjusted diluted EPS $0.27, driven by strong home health/hospice and improving senior living performance .
  • Results beat Wall Street consensus: revenue $209.8M vs $201.5M*, EPS $0.27 vs $0.238*, and adjusted EBITDA $16.4M vs $14.2M*; management pointed to the upper end of its 2025 guidance range .
  • Segment strength: Home Health & Hospice revenue $159.9M and adjusted EBITDA $25.1M; Senior Living revenue $50.0M and adjusted EBITDA $4.9M; KPIs showed admissions +28.9%, hospice ADC +28.1%, and senior living RevPOR +11.3% .
  • Operating cash flow was -$21.2M due to acquisition-related AR build and timing; CFO guides 2025 operating cash flow to $35–$45M and cites net debt/adjusted EBITDA of 0.83x .
  • Strategic catalysts: completion of Signature Oregon assets (Jan 1), multiple senior living acquisitions (Feb 1, Apr 1), and a signed agreement related to the UHG–Amedisys transaction, pending closing .

Values with asterisk (*) retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Demand and organic growth reaccelerated: same-store home health admissions +12.2%, hospice same-store ADC +10.4%; management called Q4 seasonal softness “normal seasonality” with strength resuming in Q1 .
  • Clinical differentiation: CMS average star rating 4.1 with PPH 8.7% versus industry ~10%, supporting payer relationships and growth .
  • Senior Living revenue quality improved: RevPOR up 11.3% YoY, segment adjusted EBITDA margin rose to 9.9% (+120 bps YoY) .

What Went Wrong

  • Operating cash flow declined (-$21.2M) on acquisition-related AR build and incentive payout timing, though DSO trends improved; 2025 CFO guided to $35–$45M .
  • Hospice cap remains a monitoring point: Q4 2024 included an atypical $1.7M cap expense, with management expecting a smaller drag in 2025 as referral mix is managed .
  • Labor inflation persists, especially in senior living (~<5%); home health/hospice normalized at ~3.2% .

Financial Results

Consolidated Results vs Prior Periods

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$180.7 $188.9 $209.8
GAAP Diluted EPS ($)$0.20 $0.16 $0.22
Adjusted Diluted EPS ($)$0.26 $0.24 $0.27
Consolidated Adjusted EBITDA ($USD Millions)$15.1 $13.8 $16.4

S&P Global Fundamentals (GAAP)

MetricQ3 2024Q4 2024Q1 2025
EBIT ($USD Millions)$10.80*$9.30*$12.65*
EBIT Margin (%)5.98%*4.93%*6.03%*
EBITDA ($USD Millions)$12.29*$11.13*$14.54*
Net Income Margin (%)3.43%*3.05%*3.71%*

Values with asterisk (*) retrieved from S&P Global.

Segment Breakdown

MetricQ3 2024Q4 2024Q1 2025
Home Health & Hospice Revenue ($USD Millions)$135.7 $142.0 $159.9
Senior Living Revenue ($USD Millions)$45.0 $46.9 $50.0
HHH Adjusted EBITDA from Operations ($USD Millions)$21.9 $21.3 $25.1
Senior Living Adjusted EBITDA from Operations ($USD Millions)$4.4 $4.2 $4.9

KPIs

KPIQ1 2024Q1 2025
Home Health Admissions (Total)14,649 18,878
Medicare Home Health Admissions6,346 7,599
Avg Medicare Revenue per 60-day Episode ($)$3,477 $3,801
Hospice Admissions (Total)3,080 3,783
Hospice Average Daily Census2,962 3,794
Senior Living Occupancy (%)78.5% 78.5%
Senior Living Avg Monthly Rev per Occupied Unit ($)$4,667 $5,193

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$800M–$865M $800M–$865M (pointing to upper end) Maintained; bias to high end
Adjusted EBITDAFY 2025$63.1M–$68.2M $63.1M–$68.2M (pointing to upper end) Maintained; bias to high end
Adjusted EPSFY 2025$1.03–$1.11 $1.03–$1.11 (pointing to upper end) Maintained; bias to high end
Operating Cash FlowFY 2025N/A$35M–$45M New quantitative outlook

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Home health reimbursementNet neutral impact expected under 2025 final rule; model resilient Margin improvement despite rate headwinds Strength continues with admissions and Medicare episode rev up; value-based tailwinds Improving ops vs stable reimbursement
Hospice capNot highlightedAtypical $1.7M cap expense; expecting smaller 2025 drag Monitoring; focus on referral mix to mitigate Improving management of exposure
Labor inflationNot highlightedCost pressure; margin discipline SL ~<5% inflation; HHH ~3.2% normalized Moderating in HHH; elevated in SL
Acquisitions pipelineEquity offering and revolver upsized to fund growth Signature WA/ID closed; Signature OR scheduled; SL deals Signature OR closed; SL acquisitions; pending UHG–Amedisys assets Accelerating platform scale
Senior living pricing/occupancyRevPOR +7.8%; margins up; occupancy rising RevPOR +8.6%; margin up; occupancy flattish RevPOR +11.3%; margin +120 bps; occupancy flat by design Pricing strength; occupancy targeted next

Management Commentary

  • CEO: “We are pleased to report another record-breaking quarter… adjusted diluted earnings per share of $0.27, an increase of $0.07, or 35% over the prior year quarter.”
  • COO: “Home health admissions grew to 18,878… hospice ADC climbed to 3,794… adjusted EBITDA margin of 15.8% despite rapid growth and acquisitions.”
  • CFO: “Operating cash flows were impacted by acquisitions and timing… we expect 2025 cash flows from operations to be between $35M and $45M… trending towards the upper end of our 2025 guidance.”
  • COO on seasonality: “Every year in the fourth quarter, we experience some seasonal decline… then we see that pick back up in the first quarter.”

Q&A Highlights

  • Growth cadence and guidance bias: Management emphasized both segments contributing and a conservative stance amid transitions; guidance skewed to the upper end pending continued performance .
  • Senior living pricing vs macro: RevPOR growth robust (~11% YoY) with balance between private pay sensitivity and Medicaid programs; targeting mid-single-digit RevPOR for the year alongside occupancy initiatives .
  • Labor environment: Hiring/retention trends strong; added >200 net nurses YoY; labor inflation ~<5% in SL and ~3.2% in HHH .
  • UHG–Amedisys assets: Limited detail due to process; reiterated leadership pipeline capacity and confidence following larger-scale Signature integration .

Estimates Context

MetricQ4 2024 ActualQ4 2024 Consensus*Q1 2025 ActualQ1 2025 Consensus*Surprise
Revenue ($USD Millions)$188.9 $185.8*$209.8 $201.5*Beat both quarters
EPS (Adjusted Diluted, $)$0.24 $0.24*$0.27 $0.238*Beat Q1; In line Q4
Adjusted EBITDA ($USD Millions)$13.8 $14.6*$16.4 $14.2*Beat Q1; Slight miss Q4 (definition differences possible)

Values with asterisk (*) retrieved from S&P Global. Note: Company reports “Adjusted EBITDA”; consensus “EBITDA” definitions may differ.

Key Takeaways for Investors

  • Earnings momentum broad-based: Both segments delivered outsized growth; home health admissions and hospice ADC set new highs; senior living margins and pricing improved .
  • Narrative trending positive: Management now points to the upper end of annual guidance; potential upward revisions if performance persists and integration continues smoothly .
  • Cash flow swing looks transitory: Acquisition-related AR build and incentive timing drove Q1 OCF negative; CFO guides $35–$45M for FY25, supported by improving DSO .
  • Watch risk factors: Hospice cap exposure (notable in Q4) and senior living labor inflation could pressure margins; management is actively mitigating via referral mix and cost controls .
  • Strategic M&A continues: Signature OR closed; multiple SL acquisitions add units and real estate; pending UHG–Amedisys assets could expand footprint and scale .
  • Clinical quality is a differentiator: Above-industry star ratings and lower hospitalization rates underpin payer relationships and value-based purchasing benefits .
  • Near-term trading setup: Consensus beats on revenue, EPS, and adjusted EBITDA, plus guidance bias to the high end, are positive catalysts; monitor updates on UHG–Amedisys and any guidance changes on the Q2 call .