Pennant Group (pntg) Earnings Call Transcript

NASDAQ: PNTG

Pennant Group

Market Cap

$1.1B

Today’s Change

(-8.91%) $2.95

Current Price

$30.14

Price as of February 26, 2026 at 1:42 PM ET

Date

Feb. 26, 2026, 12 p.m. ET

Call participants

• Chief Executive Officer — Brent J. Guerisoli
• President and Chief Operating Officer — John J. Gochnour
• Chief Financial Officer — Lynette B. Walbom
• General Counsel — Kirk Cheney

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Risks

• CFO Walbom said, “we will have some initial noise as we are transitioning those operations with from United and Amedisys,” indicating anticipated operational volatility from the major recent acquisition and integration activities.
• Guidance for 2026 factors in “a time that, you know, as we are transitioning both our operating system, so HCHB, and also doing the name changes, all those pieces will cause some noise,” reflecting temporary integration and system transition disruption in results through the first three quarters.
• The company faces softness in home health revenue due to regulatory rate decreases, though “we expect to still have margin expansion,” indicating effective, but not complete, offset of reimbursement headwinds.

Takeaways

• Adjusted EPS — $0.34 in the quarter; full-year adjusted EPS reached $1.18, above the midpoint of guidance at $1.16.
• Full-year revenue — $947.7 million, up $252.5 million, or 36.3%, over the prior year.
• Full-year adjusted EBITDA — $72.5 million, an increase of $19.2 million, or 36%, year over year.
• Full-year adjusted EBITDA prior to NCI — $76.7 million, up $21.6 million, or 39.2%.
• Key acquisitions — Acquired Signature Healthcare at Home on Jan. 1 and more than 50 locations from UnitedHealth and Amedisys in October, marking the company’s largest acquisition to date.
• Leadership expansion — Over 100 new leaders added to the CEO-in-Training program, and 39 promoted to C-level locally.
• 2026 guidance – revenue — $1.13 billion to $1.17 billion, a midpoint increase of 22.4%.
• 2026 guidance – adjusted EBITDA — $88.5 million to $94.1 million, midpoint growth of 26%.
• 2026 guidance – adjusted earnings per — $1.26 to $1.36, with a midpoint of $1.31.
• Home health and hospice segment Q4 revenue — $233.3 million, up $91.3 million, or 64.3%, over the prior-year quarter.
• Home health and hospice segment Q4 adjusted EBITDA — $33.7 million, up $12.4 million, or 58.2%, year over year.
• Home health admissions — Total admissions rose 81.3%, and Medicare admissions grew 87.5% over the prior-year quarter; same-store Medicare admissions increased 8.2%, and Medicare revenue per episode grew 3.7%.
• CMS star rating – home health — Company average increased to 4.2 versus national average of 3.0.
• Medicare revenue adjustment — Most agencies received positive revenue adjustments under CMS’s Home Health Value-Based Purchasing program for 2025.
• Hospice average daily census (ADC) — Increased to 5,060, up 46.9% over the prior-year quarter.
• Same-store hospice performance — Average daily census up 8.4%, admissions up 6.6%, and hospice Medicare revenue per day up 5.9% over the prior-year quarter.
• Senior living full-year revenue — $215 million, up $39.2 million, or 22.3%.
• Senior living Q4 revenue — $56.1 million, up $9.2 million, or 19.6%, over the prior-year quarter.
• Senior living Q4 adjusted EBITDA — $6.1 million, up $1.9 million, or 46%, year over year.
• All-store and same-store occupancy – senior living — All-store occupancy at 80.6%, up 200 basis points; same-store occupancy at 82.1%, up 250 basis points.
• Senior living revenue per occupied room — Increased 5.6% over the prior-year quarter.
• Credit facility expansion — Added $100 million term loan for a total facility of $350 million.
• Major acquisition spend — $147.2 million invested in UnitedHealth acquisition in October.
• Leverage metrics — Net debt to adjusted EBITDA at 1.7x, well below covenant limit of 3.25x.
• Operating cash flow — Generated $21 million in Q4 operations cash flow; $48.3 million for the year ended Dec. 31, 2025.
• Cash position — $17 million cash on hand at year end.
• 2026 home health and hospice same-store growth assumption — Guidance embeds approximately 7% same-store revenue increase.
• 2026 G&A expense assumption — Modeled at 6.4%-6.5% of revenue.
• 2026 senior living segment guidance — Assumes 100 basis point annual occupancy increase, and approximately 6% increase in revenue per occupied room.
• 2026 capital expenditures — Forecasting approximately $15 million, reflecting elevated building spend for acquired properties.
• 2026 expected operating cash flow — Forecasted at $45 million to $55 million, taking into account transition noise from recent acquisitions.
• Acquisitions in Q4 — Acquired Twin Rivers Senior Living (55 beds, Lewiston, ID), and Honey Creek Heights real estate (135 beds, West Allis, WI).

Summary

The Pennant Group (PNTG 8.91%) reported fourth quarter and full-year results that met or exceeded raised guidance across all major metrics. The company executed its two largest acquisitions to date, integrating Signature Healthcare at Home and over 50 UnitedHealth/Amedisys locations, transforming its national footprint and catalyzing major revenue growth. Management provided annual 2026 guidance reflecting double-digit gains in revenue, adjusted EBITDA, and earnings per , with a projected ramp driven by ongoing integration of new assets, continued organic expansion, and margin improvement across both business segments.

• Management outlined a strategy focused on optimizing and fully integrating recently acquired operations through staged transitions extending into October 2026, while tempering large-scale new acquisition activity in home health and hospice until those assets stabilize.
• The company’s home health and hospice segment delivered significant increases in total and same-store volume and revenue metrics, supported by strong clinical quality scores and favorable outcomes under CMS’s Value-Based Purchasing program.
• Senior living operations demonstrated continued improvement, with both occupancy and rate gains translating to increased adjusted EBITDA and expansion potential via selected real estate acquisitions and operating leverage.
• Total leverage remains low compared to covenant thresholds after major transactions, leaving room for future investment once integration is complete and cash flow benefits ramp as expected through 2026.
• Guidance for corporate expenses, capital investment, and occupancy improvements in 2026 was explicitly quantified, underscoring management’s confidence in margin expansion despite reimbursement rate headwinds.

Industry glossary

• Adjusted EBITDA prior to NCI: Earnings before interest, taxes, depreciation, and amortization adjusted to exclude non-controlling interest, providing a measure focused on the business controlled by the company.
• Home Health Value-Based Purchasing (HHVBP): A CMS program that adjusts Medicare reimbursement based on agencies’ performance on quality and efficiency metrics.
• CMS star rating: A quality metric for home health agencies issued by the Centers for Medicare & Medicaid Services, ranging from 1 to 5 stars, with higher numbers indicating better quality.
• RevPOR: Revenue per occupied room, a profitability metric used in senior living to gauge average revenue generated per unit occupied.
• Average daily census (ADC): The average number of patients or residents served daily in a given period, used to assess volume trends in clinical care businesses.
• TSA (transition services agreement): Agreement outlining interim support and services provided during the transfer and integration of acquired assets.
• G&A: General and administrative expenses, including corporate overhead not allocated directly to service delivery.

Full Conference Call Transcript

Kirk Cheney: Thank you, Lisa. Welcome, everyone, and thank you for joining us today. Here with me today, I have Brent J. Guerisoli, our CEO, John J. Gochnour, our President and COO, and Lynette B. Walbom, our CFO. Before we begin, I have a few housekeeping matters. We filed our earnings press release and 10-K this morning. These are available on the Investor Relations section of our website at www.pennantgroup.com. A replay of this call will also be available on our website until 5:00 p.m. Mountain Time on 02/26/2027.

We want to remind anyone who may be listening to a replay of this call that all statements are made as of today, 02/26/2026, and these statements will not be updated after today’s call. Any forward-looking statements made today are based on management’s current expectations, assumptions, and beliefs about our business and the environment in which we operate. These statements are subject to risks and uncertainties that could cause our actual results to materially differ from those expressed or implied on today’s call. Listeners should not place undue reliance on forward-looking statements and are encouraged to review our SEC filings for a more complete discussion of factors that could impact our results.

Except as required by federal securities laws, The Pennant Group, Inc. and its affiliates do not undertake to publicly update or revise any forward-looking statements whether changes arise from new information, future events, or any other reason. In addition, The Pennant Group, Inc. is a holding company with no direct operating assets, employees, or revenues. Certain of our independent subsidiaries, collectively referred to as the Service Center, provide administrative and other services to the operating subsidiaries through contractual relationships with those subsidiaries. The words The Pennant Group, Inc., company, we, our, and us refer to The Pennant Group, Inc. and its consolidated subsidiaries.

All of our operating subsidiaries and the Service Center are operated by separate, independent companies that have their own management, employees, and assets. References herein to the consolidated company and its assets and activities, as well as the use of the terms we, us, our, and similar terms, do not imply that The Pennant Group, Inc. has direct operating assets or employees or revenue, or that any of the subsidiaries are operated by The Pennant Group, Inc. We supplement our GAAP reporting with non-GAAP metrics. When viewed together with our GAAP results, we believe that these measures can provide a more complete understanding of our business, but they should not be relied upon to the exclusion of GAAP reports.

A GAAP to non-GAAP reconciliation is available in yesterday’s press release and in our 10-Ks. With that, I will now turn the call over to Brent J. Guerisoli, our CEO. Brent?

Brent J. Guerisoli: Thanks, Kirk. Good morning, everyone. I want to take a moment to recognize the local leaders and teams across our organization. This commitment to our patients and residents makes everything we are going to this morning possible. We are deeply grateful for the daily actions you take in support of our honorable mission to provide life-changing service to the people in your communities. It is your dedication that defines who we are as a company. 2025 was an exceptional year for The Pennant Group, Inc. Our fourth quarter adjusted earnings per of $0.34 contributed to full year 2025 adjusted earnings per of $1.18, exceeding the midpoint of our updated annual guidance of $1.16.

Our full year consolidated results include revenue of $947.7 million, an increase of $252.5 million, or 36.3%; adjusted EBITDA of $72.5 million, an increase of $19.2 million, or 36%; and adjusted EBITDA prior to NCI of $76.7 million, an improvement of $21.6 million, or 39.2%, each over the prior year. In short, we met or exceeded the midpoint of our updated guidance across the board. From day one, 2025 was a year of growth. On January 1, we completed our acquisition of Signature Healthcare at Home in the Pacific Northwest and quickly integrated them into our unique operating model, dramatically improving their performance throughout the year.

In October, we expanded eastward with the largest acquisition in our history: the purchase of over 50 locations from UnitedHealth and Amedisys, adding meaningful reach in the Southeast. We also opportunistically acquired operations and real estate assets in our senior living segment. During this time of rapid growth, we drove progress in our same-store operations in both segments and added key leaders in the field and the Service Center who accelerated our results in 2025 and have positioned us for future success. Our five key focus areas remain the guiding principles that informed our efforts: leadership development, clinical excellence, employee experience, margin improvement, and growth. We continue to make progress across each of these areas in 2025.

On the leadership front, we added more than 100 leaders to our CEO-in-Training program this year, talented individuals whose skills and entrepreneurial energy will help us unlock additional value in our new and maturing operations. In addition, we elevated another 39 leaders to C-level status within their local operations. We have consistently said that great results begin with great people. As we invest in the right leaders and give them the tools to succeed, we become the employer and provider of choice in our communities, and the results we are reporting today are proof.

Now, ing a year of tremendous growth, while we remain open to selective and opportunistic acquisitions, we are intensely focused on optimizing performance and driving operational excellence. We must, and we will, deliver exceptional integrations of our newly acquired operations. The transition of former Amedisys/UnitedHealth agencies in Tennessee, Georgia, and Alabama is well underway, and we see enormous potential in these locations. Even as we integrate these new assets, we intend to drive growth and improvement in the mature operations across our portfolio, as we have year after year. That focus on operational excellence includes not only top-line growth, but corresponding bottom-line improvement and clinical outperformance.

Every one of our local teams is committed to delivering more value in 2026 while maintaining exceptional outcomes for patients and employees. We also intend to continue the upward trajectory of our senior living business. Since the pandemic, we have seen occupancy, revenue, and adjusted EBITDA climb consistently and significantly. There is still substantial opportunity to unlock in our senior living portfolio, and as we continue to add operations and accelerate our flywheel of operational excellence, the growth potential ahead is compelling. Turning to 2026 guidance.

As announced in our press release yesterday, we are providing full year guidance of revenue in the range of $1.13 billion to $1.17 billion, a 22.4% increase at the midpoint; adjusted EBITDA of $88.5 million to $94.1 million, a 26% increase at the midpoint; adjusted EBITDA prior to NCI of $94.2 million to $100 million, a 26.7% increase at the midpoint; and adjusted earnings per in the range of $1.26 to $1.36, with a midpoint of $1.31. Our guidance reflects the readiness of our local leaders, the strength in both of our segments, and the significant upside we expect to continue to unlock in our existing operations, both in the mature portfolio and the newly acquired locations.

This guidance is annual, not quarterly, and prior years, it reflects an anticipated ramp throughout the year, particularly as we transition a significant number of recently acquired operations in the first half. With that, I will now turn the call over to John J. Gochnour to provide more detail on our fourth quarter operational results.

Operator: John?

John J. Gochnour: Thank you, Brent, and good morning, everyone. Q4 was a strong finish to an exceptional year, and I am excited to take you through the key operational metrics highlighting our progress across both segments. In our Home Health and Hospice segment, revenue for the quarter of $233.3 million increased $91.3 million, or 64.3%, while adjusted EBITDA of $33.7 million increased $12.4 million, or 58.2%, each over the prior-year quarter. On the home health side, we saw our growth flywheel turn rapidly as we mixed strong organic growth with our newly acquired agencies throughout the Southeast. Fourth quarter admissions surged 81.3%, and Medicare admissions grew 87.5%, each over the prior-year quarter.

While quarter-over-quarter admission growth is impacted by our acquisition of the UnitedHealth and Amedisys assets, I would highlight the quality of the underlying organic growth. Same-store Medicare admissions grew 8.2%, along with a 3.7% increase in Medicare revenue per episode, each over the prior-year quarter. This strong organic improvement is attributable to our clinical excellence and the entrepreneurial ownership our local leaders bring to their operations each day. Our average CMS star rating rose to 4.2 and compares favorably to the national average of 3.0, and that quality advantage is driving real results. Under CMS’s Home Health Value-Based Purchasing program, the vast majority of the agencies that we owned in the 2023 measurement period received positive revenue adjustments in 2025.

The combination of admission strength, same-store growth, and clinical quality gives us high confidence in the underlying trajectory of our business, even in a reimbursement environment that continues to present headwinds. Our local leaders know how to pull the right levers. On the hospice side, we saw steady and consistent growth. Our CMS-reported hospice quality composite score of 97.5% helped drive all-time highs in average daily census, which grew to 5,060, a 46.9% increase over the prior-year quarter. As in home health, our acquisition growth was complemented by exceptionally strong growth in our same-store results, where average daily census increased 8.4%, admissions increased 6.6%, and hospice Medicare revenue per day increased 5.9%, each over the prior-year quarter.

The continued progress of our senior living business also should not be overlooked. With a stable and driven group of experienced leaders in that segment, we have seen substantially all metrics moving in the right direction: rate, same-store occupancy, revenue, margin, and adjusted EBITDA. Full-year Senior Living segment revenue improved to $215 million, an increase of $39.2 million, or 22.3%, over the prior year. Fourth quarter revenue of $56.1 million increased $9.2 million, or 19.6%, over the prior year. Fourth quarter Senior Living segment adjusted EBITDA improved to $6.1 million, an increase of $1.9 million, or 46%, over the prior-year quarter.

All-store occupancy rose 200 basis points to 80.6% even as revenue per occupied room increased 5.6%, each over the prior-year quarter. Same-store occupancy, which more accurately reflects the underlying operational improvement, grew 250 basis points compared to the prior-year period, ending the year at 82.1%. The health of our senior living operations is enabling us to take advantage of a favorable growth environment. Turning to our integration efforts. As Brent noted, we are diligently engaged in the transition and integration of the former Amedisys and UnitedHealth operations we acquired in October 2025. We are transitioning the locations in waves and expect to complete all waves by October 2026.

As we have noted before, any transition of this scale will have initial choppiness in early results, which our guidance anticipates. As we complete the system and branding transitions, and fully implement our operating model, we expect to achieve operational efficiencies and strong clinical outcomes similar to the prompt improvement we experienced in our recent Signature acquisition. What I would tell you is that the transition is progressing well. The reception we have had in the field has been encouraging. We inherited and have already attracted additional talented leaders in the field and in our new Nashville Service Center, and these teams are genuinely eager to harness The Pennant Group, Inc.’s locally driven model.

These new operations have joined clusters with seasoned and successful The Pennant Group, Inc. operations, and so the building blocks of peer accountability that make our model work are in place. We remain very bullish on the long-term potential of these operations and the regional expansion they will enable. On the growth front, we continue to see strong deal flow. We are always disciplined in our approach, but we will be even more selective on the Home Health and Hospice front in the first half of 2026 as we focus on ensuring our recently acquired operations are on firm footing.

On the senior living side, our reputation as a high-quality operator and our working relationships with REITs and sellers continue to generate compelling opportunities, often through triple-net leases with minimal capital outlay. We will remain disciplined and opportunistic as we screen for attractive deals in areas of strength where we have leaders prepared to step in. We expect a steady pipeline of such opportunities throughout 2026. In Q4, we completed two senior living acquisitions. On November 1, The Pennant Group, Inc. acquired the operations and real property of a 55-bed assisted living community in Lewiston, Idaho, now known as Twin Rivers Senior Living. This community reinforces our strategic commitment to expanding high-quality senior care across Idaho.

Lewiston has long been a high-performing market for The Pennant Group, Inc.’s home health and hospice operations, and we are excited to strengthen the continuum of care in that market. On November 4, we completed the acquisition of the real estate related to Honey Creek Heights Senior Living in West Allis, Wisconsin, ing our earlier operational acquisition on 01/01/2025. This community adds 135 assisted living beds to our growing Midwest portfolio and demonstrates the value we can create through real estate ownership as we acquire and improve underperforming operations. With that, I will hand it over to Lynette for a review of the financials.

Operator: Lynette?

Lynette B. Walbom: Thank you, John, and good morning, everyone. Detailed financial results for the full year ended 12/31/2025 are contained in our 10-K and press release. We reported total GAAP revenue of $947.7 million, adjusted EBITDA of $72.5 million, and adjusted diluted earnings per of $1.18. In each case, we met or exceeded the midpoint of our guidance, which we raised in November. As a note, the full-year adjusted EBITDA of $72.5 million reflects both organic improvements across our mature portfolio and the contribution of acquired operations, including the October close of the UnitedHealth transaction. Our balance sheet remains strong.

In Q4, we expanded our credit facility with the addition of a $100 million term loan, bringing our total facility to $350 million. We invested $147.2 million in the UnitedHealth acquisition in October, and we now have a net debt to adjusted EBITDA ratio of 1.7x, well under our covenant limit of 3.25x. We are in a comfortable leverage position with ample capacity for additional investments when we are prepared to make them. Our cash flows continue to be robust. In Q4, we generated $21 million of cash flows from operations, bringing our year-to-date total to $48.3 million. We had $17 million of cash on hand at year end.

We expect cash flow from operations in 2026 to benefit from organic revenue growth and continued bottom-line improvement. With robust earnings and effective cash collections, we expect to fund future growth and pay down outstanding debt from prior acquisitions throughout the year. Turning to 2026 guidance. As announced in our press release yesterday, we are providing full year guidance of revenue of $1.13 billion to $1.17 billion; adjusted EBITDA of $88.5 million to $94.1 million; adjusted EBITDA prior to NCI of $94.2 million to $100 million; and adjusted earnings per of $1.26 to $1.36. It incorporates current operations and organic growth, diluted weighted average s outstanding of approximately 37 million, and a 26% effective tax rate.

The guidance also anticipates EPS growth quarter over quarter, reflecting the ramp of the recently acquired locations, expected ramp in home health and hospice ADC, continued occupancy and rate increases in senior living, and the anticipated hospice reimbursement rate adjustments. It excludes unannounced acquisitions and start-up operations, -based compensation, acquisition-related costs, certain transition service agreement costs, and one-time implementation or unusual items. And with that, I will hand it back to Brent.

John J. Gochnour: Thanks, Lynette.

Brent J. Guerisoli: It is my pleasure to spotlight a few leaders in our organization who have set a standard of excellence in 2025. Their results are not an accident. They are the direct product of strong local leadership, peer accountability, and relentless commitment to serving their patients and residents. This is what our model looks in practice. Future chief executive officer, Eric Wise, and chief clinical officer, Tracy Repko, have built something remarkable at Columbia River Home Health in Kennewick, Washington. It begins, as it always does, with people. Eric, Tracy, and their team have created a genuinely great place to work, evidenced by a nearly 90% employee favorability score and clinical turnover under 10%.

Engaged teams deliver strong clinical results, and Columbia River is no exception. They have earned a real-time CMS star rating of 4.5 and potentially preventable hospitalizations of 6.2%, compared to a national average of 10.8%. And the financial results have ed. Columbia River’s revenue grew 43% and EBITDA grew 60% year over year. Columbia River’s clinical and financial excellence demonstrates the power of our model to create industry-leading clinical outcomes while also generating strong financial returns. At Table Rock Senior Living at Paramount in Meridian, Idaho, future CEO, Heath Braverman, and future CCO, Lindsay Zawatsky, have created a community defined by an exceptional team and the genuine care they provide each day to their residents.

Acquired by The Pennant Group, Inc. in May 2024, Table Rock at Paramount is the kind of opportunity our model was built to unlock: an underperforming operation in an area of organizational strength with prepared leaders in a community that needed what we have to offer. In just a year and a half, the community has grown from a starting occupancy of 76% to now well over 90%. Employee engagement scores have increased by 15%, and clinical metrics have seen dramatic improvements across the board. This has led to material financial improvement. Revenue increased by 27%, revenue per occupied room increased 12%, and EBITDA improved 236%, each over the prior-year quarter.

In part due to the success of Table Rock, our Idaho leaders continue to build an impressive collection of exemplary operations, and they are actively pursuing additional growth in the region. With that, we will now open for questions. Lisa, can you please instruct the audience on the Q&A procedure?

Operator: Thank you. If you would to ask a question, please press 11 on your telephone. You will hear that automated message twice, and your hand is raised. If you would to remove yourself from the queue, please press 11 again. We also ask that you wait for your name and company to be announced before proceeding with your questions. One moment while we compile the Q&A roster. The first question will be coming from the line of Brian Tan Truly of Jefferies. Your line is open.

Brian Tan Truly: Hey. Good morning, guys. Maybe I will start first with the guidance, Lynette. As I think about the guidance here, it looks pretty conservative. So am I right in just thinking that given the different moving pieces with the AMED/LHC integration that you have taken a much more conservative approach to guidance setting? Is that the right way to think through this?

Lynette B. Walbom: Yeah. That is definitely the right way to think about this. When we look at it, we will have some initial noise as we are transitioning those operations with from United and Amedisys. And that transition will occur over the first three quarters. And so there will be a time that, you know, as we are transitioning both our operating system, so HCHB, and also doing the name changes, all those pieces will cause some noise there. We also have operations that are supporting them from across the country. So while we continue those operations to still have strong growth, there will be some additional support that is being provided there.

And so I think that is another factor that we wanted to continue to build into this guidance, and we can update as needed as we go throughout the year.

Brian Tan Truly: Okay. That makes sense. And then, you know, one of the things that we have noticed with the acquired assets is the joint venture strategy that is embedded there. I guess, , the LHCG and one of the examples in the University of Tennessee JV. How do I think about number one, the performance of the JVs relative to non-JV agencies? And then the other side of it is, how do you think about the strategy or strategizing around joint ventures going forward given what you are learning from that asset?

John J. Gochnour: Yeah. Brian, this is John. That is a great question. I think as we look at our joint venture operations, and we have several of these opportunities across the country, we treat them any The Pennant Group, Inc. business, which means that we have exceptional local leaders who collaborate directly with their health system partners to deliver exceptional clinical outcomes and great financial outcomes to that community. And so what was really exciting, part of the reason why we were so excited about this deal, was the UTJV. It is an exceptional health system that services communities across Northeastern Tennessee. And I think as we have gotten in there, that is exactly what we found.

We found a great health system partner who wants to ensure great clinical outcomes for their patients, who wants us to take our great clinical outcomes and service a broader community, bringing patients into a continuum of care. And that is what is special about these partnerships. It gives us an opportunity with a premier acute partner to collaborate, to data, to information, to ensure the seamless processing of transitions of care, to make sure that the patient experience is top notch. And that is what we are experiencing in California in our joint ventures. It is what we are experiencing in Tennessee.

And so I think on a go-forward basis, working with acute care partners is part of our strategy. It will not displace our core strategy, which is to create—our mission is to create—life-changing opportunities for local leaders, and that will include both joint venture opportunities where we will work with acute system partners, but also opportunities to acquire independent agencies and continue the strategy that we have operated under for the last ten years.

Brent J. Guerisoli: Awesome. Thank you.

John J. Gochnour: Thanks, Brian.

Operator: Thank you. One moment for the next question. Our next question is coming from the line of Ben Hendrix of RBC Capital Markets. Your line is open.

Ben Hendrix: Great. Thanks a lot. I just wanted to ask a question on the Amedisys/UNH asset ramp up. Just wanted to see if you could help us compare and contrast a little bit kind of what you saw with Signature versus kind of what you are seeing in this Tennessee portfolio. What, you know, what might work better, what might lag a little bit versus Signature, and kind of what lessons learned you can apply that is given you confidence in the timeline there?

Brent J. Guerisoli: Yeah. I, you know, there are a lot of similarities. First and foremost, you know, there are a lot of great leaders in operations there. Certainly, there is a mix of really strong operations and some that need to turn. But in general, we have been really pleased with the leaders that are there and the teams that have been in place as well. Also, other similarities, they have been on Homecare Homebase, and so even though there is noise in the transition from different instances, that does help to facilitate the transition a little bit better. I also think we have learned a lot from our time, you know, last year in 2024 transitioning Signature.

There was a lot of learning, and that is why we had a ton of confidence going into this deal. The other thing I would say, and you probably remember from our conversations last year around this time when we talked about transitioning Signature, that we ly would not be doing any major acquisitions in 2025 as a result of the integration. And what we found was as our leaders jumped in, as we helped to develop and elevate the local leaders that were already in place and then add additional leaders from our CIT pipeline, those transitions went a lot more quickly than we initially anticipated.

And so we look at that, and therefore, we put ourselves in a position in 2025 to be able to do this larger acquisition with the Amedisys and United operations. And so we are approaching 2026 in the same way, with conservatism, recognizing that this is still larger in terms of size, in terms of operations. And there are multiple waves that go into place there. There is also the transition services agreement that is a unique element of this particular deal. And then we are also transitioning other support services as well. And so there are nuances that are different. But we feel confident in our local leaders. We feel confident in the teams that are already in place.

We feel confident in the bench of CITs and other leaders that we have brought in and the support across the entire organization to be able to transition well. So we remain optimistic. The other thing I would just end with is 2026 is going to be a year of transition, but we wholeheartedly believe that we should be pretty well optimized by the end of the year and going into 2027. And so our normal sort of rate of return and expectations around performance we anticipate in the coming years.

So overall, we are really excited about the progress that has already been made, but really knee-deep at all of the implementation and integration that is taking place right now.

Ben Hendrix: Great. Thank you very much. And just one quick question if I may. Was the Columbia River discussion that Brent offered, was that part of the Signature group of assets that came over? Thanks.

John J. Gochnour: So, yeah. Thank you, Ben. It was not part of those assets. We have actually operated that operation for, I think, seven years. It has been a great operation. We acquired it from a health system. And we have been operating in that Tri-City community. It is a great story because it shows the efficacy of our model. Those local leaders have expanded relationships in that community. They have grown revenue tremendously. They have grown bottom line tremendously, and that is not a one-year story. That is a seven-year story from taking it over as a very small agency that was purchased from a bankrupt health system to being a true asset to the community.

They have just year over year grown consistently, and so we were excited to honor them today.

Brent J. Guerisoli: I would also just add a key point here. Eric and Tracy and that team have, however, been involved in the transition of the Signature operations as cluster partners and as market partners. And so it shows that even in the midst of support outside of their agencies, they are able to perform well in their local operations. And so that is just another takeaway from that experience. That is the way that we operate. Our local teams go and support each other, and there are sometimes—what happens is—there is learning that happens in operations that kind of motivate change and to do things differently. And that is something that we experienced at Columbia River as well.

So it helps to give us additional confidence as we are transitioning in the Southeast.

Ben Hendrix: Great. Thank you very much.

Operator: Thank you. One moment for the next question. Our next question is coming from the line of Steven Baxter of Wells Fargo. Please go ahead.

Steven Baxter: Hi. Thanks very much for the question. I just wanted to up on the guidance. Obviously, you have given us expected contribution from the deal assets, which is very helpful, so we think about the year over year and kind of what that adds. As we kind of think about the rest of the home health and hospice, on a framing of a same-store basis, could you give us a sense of what kind of same-store revenue growth you are embedding in the model or in the guidance for 2026?

And then as we think about your ability to grow same-store EBITDA or EBITDAR given the rate conditions you will have in home health for 2026, would love just more insight into kind of how thinking about the ability to kind of grow the same-store earnings base with that rate in place. Thank you.

Lynette B. Walbom: Yeah. Thanks, Steven. So when we are talking about same-store home health and hospice growth for 2026, we have built into the model about 7% increase in home health and hospice revenue in the 2026 model. And then when we are talking about EBITDA expansion, yes, we do have the impacts of the home health rule, which will make softness in the revenue side. But as we discussed last year, we put together plans last year to really make sure that while we might have a rate decrease—at that point it was looking at 6%, you know, 6.5%, essentially—what were the things that we could do to still have margin expansion or to maintain margin at that higher 6.5%.

And so those initiatives are still pushing forward, the ones that make sense for us to do at a 1.3% rate decrease. So as we look at that, we expect to still have margin expansion of a few basis points to get us to, you know, again, having some margin expansion in 2026.

Steven Baxter: Got it. That is great. And then I would love to just hear a little bit, you know, kind of continuing on the guidance theme, just how you guys are thinking about the margin opportunity in senior living. And then just as we kind of look at the corporate line, , obviously, the corporate line has kind of had a decent amount of growth as you have done acquisitions the past couple of years. Would love just a sense of how to think about modeling growth in corporate expenses maybe over the next year or two? Thank you.

Lynette B. Walbom: Yeah. So when we are looking at G&A, we have modeled in roughly 6.4% to 6.5% of revenue for G&A for 2026. And then on the senior living front, we are looking at, again, revenue—when we look at the revenue components—so an occupancy increase of about 100 basis points over the year, and then on the rate side, roughly having RevPOR increases similar to this past year, at about 6%.

Operator: Thank you. One moment for the next question. Our next question is coming from the line of David MacDonald of Truist Securities. Please go ahead.

David MacDonald: Yeah. Good afternoon, everyone. Guys, more of a strategic question. If we look back a couple of years, you know, your scaled competitors are now basically captives. So I am just curious, can you spend a minute on just, you know, what you think the incremental opportunity you are afforded now given, you know, what the competitive dynamic looks across some of the home health and hospice competitors.

John J. Gochnour: Yeah, Dave. It is a really fair question. And I think one of the things that I would highlight is the acquisition of some of our peers by payers in particular reflects the value that home health care in particular, and hospice care in addition, reflects in the continuum of care. And so I think one of the key things to highlight is we are adding tremendous value. The efforts by our home health partners and hospice partners that keep people out of the hospital, they allow people to receive care in their homes, which is the lowest-cost setting. And so when you look at the competitive dynamics, they have certainly changed. It has not changed our modus operandi.

Our focus is our belief that health care is a local business. It is a belief that there are going to be nuanced needs for patients, employees, and referral partners in every community that we serve. And so our focus is really on how do we develop a local leadership team that can respond to those needs in the most effective way, that can be most responsive to community partners, that can deliver the best clinical outcomes for our patients. And I think that is why you continue to see such strong organic growth quarter after quarter and year over year.

And so when you look at the dynamics of potentially some of our largest competitors being part of, you know, a specific health care payer, that gives us an opportunity to position ourselves as the premier independent provider of these services. And we feel that argument is compelling. It gives us an opportunity to negotiate with payers across the board, letting them make the decision based on exceptional clinical outcomes and not the fact that we may be affiliated with a different payer. And so we think there is opportunity from a contract negotiation place. We feel our clinical outcomes set us apart at the local level and at the national level.

And then I think that is what drives the sustainable financial results and outperformance from a growth perspective that you are seeing right now. So we are excited about the future. Obviously, we feel these services add tremendous value. It gives us an opportunity to work with our industry partners from a regulatory perspective to really push on the narrative around that value and make sure it is reflected in Medicare reimbursement, and really accelerate our business as we go forward.

David MacDonald: And then, guys, just one other quick -up. Just in terms of potential gain. I mean, when we look at the captives, you know, all of those companies had a very heavy footprint east of the Mississippi. And now that you guys, you know, as your footprint kind of further expands, a) can you talk about gain opportunity especially in some of your new markets?

And then b) I know that you have talked about a little bit of a pause as you integrate in terms of M&A, but, you know, with a high-profile transaction the United/AMED deal, can you just talk about incomings and, you know, what you have seen in terms of a potential uptick in the pipeline even if, you know, you are going to wait a bit to execute on some of that.

Brent J. Guerisoli: Yeah. Dave, one thing I would say, part of the strategy or the rationale for going into Tennessee in particular was just the talent base that is there and the ability to build a Service Center and a location in the Southeast to be able to expand. So that was part of the calculus. Obviously, we need to integrate the operations, but we anticipate that the Southeast will become an area of strength for us and that we can grow significantly there. And we have seen it already as we have incorporated these operations. We have had a significant number of folks that we have been able to add to the team, others that have reached out to us.

And there is ample opportunity for us to grow. And so we are excited about the potential that allows us to have. And, certainly, as we look forward right now, we have put a little bit of a pause on the large growth. We will do tuck-in acquisition opportunities. It actually does not change our approach on the senior living side, and we have got, you know, there are always opportunities in the pipeline there. But on the home health and hospice side, there has been plenty of outreach as well. There is much more recognition. I think as you expand into different geographies, certainly, it opens up the door for more opportunities to expand as well.

And so assuming that we transition the way that we expect to, we are looking forward to, you know, really doing the integration, but then seeking significant expansion opportunities going forward as well.

John J. Gochnour: Okay, David. Thanks very much. On the market question, we do think that the Southeast is different than where we operate in the West because there has been so much consolidation. And we believe that gives us a unique opportunity to set ourselves apart because of our local operating model. And so where all of the competitors are national in scope and scale, we think that gives us a competitive advantage because of our unique, locally driven focus.

And so there is an opportunity to gain market over where this business was when we acquired it, and that is part of the compelling growth opportunity that we see just in these assets, but also as we expand in the Southeast. So thanks for the question. Okay.

David MacDonald: Thank you.

Operator: Thank you. One moment for the next question. And the next question is coming from the line of Raj Kumar of Stephens. Please go ahead.

Raj Kumar: Hey. Good morning. Maybe just ing up on the senior living kind of 100 bps occupancy improvement and mid-single-digit kind of RevPAR baked into 2026 guide. I guess, what is the kind of underlying cost assumption as we are trying to parse out kind of incremental margin improvement in the senior living segment? And then, you know, historically, I believe you kind of called out an operating income margin in the kind of mid-teens for this segment. And, you know, now you are kind of in the double-digit range.

So as we kind of think about that opportunity, what does that kind of look from, you know, an occupancy standpoint as we kind of think about the long-term trajectory of the senior living business?

Lynette B. Walbom: Yeah. Thanks, Raj. When we are talking about the 1% increase in occupancy over the year, what that will allow us to do, again, is those operations where we kind of achieved that breakeven of where we are able to drop more to the bottom line from a rent—we have covered our rent hurdle—we look at that as being about 30% of that can flow down through the bottom line to get us to higher and more adjusted EBITDA. So that would be the math on that one.

Brent J. Guerisoli: Yeah. I mean, just to provide a little more color, Raj, you know, that 100 bps increase really calculates in our current incremental operating margin just a little under $1 million in value for every 100 basis point increase. And so, obviously, there is expansion in that. So if that margin increases a little bit, then that opportunity increases a little bit as well. But, hopefully, that gives you a little bit more clarity on the kind of incremental increase on the occupancy front.

Raj Kumar: Got it. And then maybe just a couple quick ones from a modeling perspective. Just kind of any kind of goalpost around operating cash flow and then as we think about kind of CapEx from the kind of new integration, any framing around that would be helpful.

Lynette B. Walbom: Yeah. From an operating cash flow perspective, for the year, we are looking at between $45 million and $55 million. I think we will have some noise that comes in there from cash collections as we are starting to transition those operations and working under a TSA that we have built into that number. And then from a CapEx perspective, we are forecasting roughly $15 million in CapEx spend in 2026. Part of that increase is due to some of the buildings that we have acquired that needed a little more CapEx spend to get them to where we want them to be from a property standpoint.

Raj Kumar: Got it. Thank you.

Operator: Thank you. One moment for the next question. And our next question is coming from the line of Jared Hoppy of William Blair and Company. Please go ahead.

Jared Hoppy: Hey, guys. Thanks for taking the questions. Maybe I will ask another one about 2026 and try and take a slightly different angle. But when you think about the moving parts this year with the transition and, yes, some of the incremental costs that are sort of absorbed in 2026 and you are kind of having this mindset of targeting having most of the optimization efforts completed by year end, I am wondering if there is sort of a way to frame what the exit run rate for EBITDA could look by year end relative to what you are actually guiding to.

Obviously, not to get too far ahead of things, but just, you know, figure it might be helpful to sort of frame what the jumping off point could look for 2027.

Brent J. Guerisoli: Yeah. Well, I will just jump in. I mean, our goal—we talk about, I mean, our current rate is, you know, between 15–16%. And so that would sort of be kind of a target natural place to get to, is to sort of where we currently are running. And then our optimal level is around 80% is what we have talked about. And so, you know, that might be aggressive to get there by the end of the year. However, we are going to push toward that number. But that kind of gives you an idea of the potential upside there if we can drive to kind of our current operational level.

Jared Hoppy: Got it. That is helpful. And then as my -up, would to drill into the hospice segment. I am curious what the competitive backdrop is these days. Obviously, you guys continue to put up, you know, really strong organic growth, strong ADC growth on a same-agency basis. It seems others in the market are experiencing, you know, strong organic growth trends as well. So just kind of curious to hear your perspective on the competitive dynamics in that business.

John J. Gochnour: I think you have seen a normalization. Right? We went through an acceleration at the beginning of the pandemic. We went through a deceleration after the pandemic ended because of the sort of pull forward that happened because we lost so many lives that would have otherwise received more extended hospice care during the pandemic. And so I think you have now—sort of you are starting to see—the beginning of what for years has been sort of called the silver wave, where that generation of Americans—the average age of our hospice patient is 83 years old. So you go back 83 years and what was happening?

It was 1944 and the war was ending, and you start to see the beginning of that baby boomer generation. And so there is, in part, you know, I think people were anticipating the silver wave beginning, but during the war, there was a downturn in birth. And so now we are getting to the other side of that. And you look at it and say, okay, going forward, we have got some real opportunity to care for people at this most important stage of their life, when they need medical help and they need an interdisciplinary team that can provide everything from psychosocial to medical director care.

And that, I think, is why we feel so blessed to be in the hospice business and have the opportunity to serve and care for these patients. But I think that is part of the backdrop. I think you also see not everyone is, you know, seeing that kind of growth. I think what you are seeing is folks who have an ability to meet the needs of their local communities—those are the folks who are doing well. And I think that is highlighted by our over 8% quarter-over-quarter same-store growth, highlighted by our 7.5% year-over-year same-store growth that just shows that across our platform, our teams are doing a great job of meeting the needs of their communities.

And that is giving them an opportunity to care for this silver wave of aging patients that desperately need this care to improve their quality of life during that last stage of life.

Operator: Thank you. And this does conclude today’s Q&A session. I would now to turn the call back over to Brent J. Guerisoli, CEO, for closing remarks. Please go ahead.

Brent J. Guerisoli: Thank you, Lisa, and thank you, everyone, for joining us today. Have a great day.

Operator: This concludes today’s program. You may all disconnect.

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