Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2024.


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to .

Commission file number: 001-38900

__________________________

THE PENNANT GROUP, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware			83-3349931
(State or Other Jurisdiction of			(I.R.S. Employer
Incorporation or Organization)			Identification No.)

1675 East Riverside Drive, Suite 150, Eagle, ID 83616

(Address of Principal Executive Offices and Zip Code)

(208) 506-6100

(Registrant’s Telephone Number, Including Area Code)

None

(Former name, former address and former fiscal year, if changed since last report)

________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	PNTG	Nasdaq Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of November 5, 2024, 34,348,369 shares of the registrant’s common stock were outstanding.

Table of Contents

THE PENNANT GROUP, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

TABLE OF CONTENTS


	Part I. Financial Information
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023	1
	Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2024 and 2023	2
	Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2024 and 2023	3
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023	5
	Notes to the Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	45
	Part II. Other Information
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46




Item 6.	Exhibits	47
	Signatures	48

Table of Contents

PART I. FINANCIAL INFORMATION

Item I. Financial Statements

THE PENNANT GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except par value)


	September 30, 2024		December 31, 2023
Assets
Current assets:
Cash	$	4,464	$	6,059
Accounts receivable—less allowance for doubtful accounts of $313 and $259, respectively	84,025		61,116
Prepaid expenses and other current assets	13,307		12,902
Total current assets	101,796		80,077
Property and equipment, net	41,865		28,598
Right-of-use assets	265,441		262,923
Deferred tax assets, net	245		—
Restricted and other assets	12,173		9,337
Goodwill	129,337		91,014
Other indefinite-lived intangibles	95,902		67,742
Total assets	$	646,759	$	539,691
Liabilities and equity
Current liabilities:
Accounts payable	$	15,888	$	10,841
Accrued wages and related liabilities	36,565		28,256
Operating lease liabilities—current	19,113		17,122
Other accrued liabilities	19,029		15,330
Total current liabilities	90,595		71,549
Long-term operating lease liabilities—less current portion	248,907		248,596
Deferred tax liabilities, net	818		1,855
Other long-term liabilities	10,277		8,262
Long-term debt, net	108,875		63,914
Total liabilities	459,472		394,176
Commitments and contingencies
Equity:
Common stock, $0.001 par value; 100,000 shares authorized; 30,565 and 30,308 shares issued and outstanding, respectively, at September 30, 2024; and 30,297 and 29,948 shares issued and outstanding, respectively, at December 31, 2023	31		29
Additional paid-in capital	117,947		105,712
Retained earnings	51,464		34,663
Treasury stock, at cost, 3 shares at September 30, 2024 and December 31, 2023	(65)		(65)
Total The Pennant Group, Inc. stockholders’ equity	169,377		140,339
Noncontrolling interest	17,910		5,176
Total equity	187,287		145,515
Total liabilities and equity	$	646,759	$	539,691

See accompanying notes to condensed consolidated financial statements.

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THE PENNANT GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited, in thousands, except for per-share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023

Revenue	$	180,688	$	140,192	$	506,348	$	398,937

Expense
Cost of services	144,468		112,384		405,776		321,162
Rent—cost of services	10,906		10,006		31,814		29,439
General and administrative expense	13,023		9,417		36,337		26,913
Depreciation and amortization	1,493		1,323		4,292		3,817
Loss (gain) on disposition of property and equipment, net	4		1		(751)		4
Total expenses	169,894		133,131		477,468		381,335
Income from operations	10,794		7,061		28,880		17,602
Other (expense) income, net:
Other income (expense)	109		(37)		192		28
Interest expense, net	(2,892)		(1,496)		(6,306)		(4,355)
Other expense, net	(2,783)		(1,533)		(6,114)		(4,327)
Income before provision for income taxes	8,011		5,528		22,766		13,275
Provision for income taxes	1,354		1,066		4,957		3,894
Net income	6,657		4,462		17,809		9,381
Less: Net income attributable to noncontrolling interest	452		79		1,008		351
Net income attributable to The Pennant Group, Inc.	$	6,205	$	4,383	$	16,801	$	9,030
Earnings per share:
Basic	$	0.20	$	0.15	$	0.56	$	0.30
Diluted	$	0.20	$	0.15	$	0.54	$	0.30
Weighted average common shares outstanding:
Basic	30,281		29,912		30,157		29,825
Diluted	31,363		30,206		30,869		30,178

See accompanying notes to condensed consolidated financial statements.

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THE PENNANT GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(unaudited, in thousands)


	Common Stock			Additional Paid-In Capital		Retained Earnings		Treasury Stock			Non-controlling Interest
	Shares	Amount						Shares	Amount				Total

Balance at December 31, 2023	30,297	$	29	$	105,712	$	34,663	3	$	(65)	$	5,176	$	145,515
Net income attributable to The Pennant Group, Inc.	—	—		—		4,906		—	—		—		4,906
Noncontrolling interests assumed related to acquisitions	—	—		—		—		—	—		11,726		11,726
Net income attributable to noncontrolling interests	—	—		—		—		—	—		152		152
Share-based compensation	—	—		1,440		—		—	—		—		1,440
Issuance of common stock from the exercise of stock options	72	1		492		—		—	—		—		493
Net issuance of restricted stock	2	—		—		—		—	—		—		—
Balance at March 31, 2024	30,371	$	30	$	107,644	$	39,569	3	$	(65)	$	17,054	$	164,232
Net income attributable to The Pennant Group, Inc.	—	—		—		5,690		—	—		—		5,690
Net income attributable to noncontrolling interests	—	—		—		—		—	—		404		404
Stock-based compensation	—	—		1,851		—		—	—		—		1,851
Issuance of common stock from the exercise of stock options	100	—		816		—		—	—		—		816
Net issuance of restricted stock	22	—		—		—		—	—		—		—
Balance at June 30, 2024	30,493	$	30	$	110,311	$	45,259	3	$	(65)	$	17,458	$	172,993
Net income attributable to The Pennant Group, Inc.	—	—		—		6,205		—	—		—		6,205
Equity adjustments related to acquisitions	—	—		4,794		—		—	—		—		4,794
Net income attributable to noncontrolling interests	—	—		—		—		—	—		452		452
Stock-based compensation	—	—		2,133		—		—	—		—		2,133
Issuance of common stock from the exercise of stock options	49	1		709		—		—	—		—		710
Net issuance of restricted stock	23	—		—		—		—	—		—		—
Balance at September 30, 2024	30,565	$	31	$	117,947	$	51,464	3	$	(65)	$	17,910	$	187,287

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	Common Stock			Additional Paid-In Capital		Retained Earnings		Treasury Stock			Non-controlling Interest
	Shares	Amount						Shares	Amount				Total

Balance at December 31, 2022	30,149	$	29	$	99,764	$	21,284	3	$	(65)	$	4,645	$	125,657
Net income attributable to The Pennant Group, Inc.	—	—		—		1,850		—	—		—		1,850
Net income attributable to noncontrolling interests	—	—		—		—		—	—		147		147
Share-based compensation	—	—		1,367		—		—	—		—		1,367
Issuance of common stock from the exercise of stock options	26	—		203		—		—	—		—		203
Net issuance of restricted stock	28	—		—		—		—	—		—		—
Balance at March 31, 2023	30,203	$	29	$	101,334	$	23,134	3	$	(65)	$	4,792	$	129,224
Net loss attributable to The Pennant Group, Inc.	—	—		—		2,797		—	—		—		2,797
Net income attributable to noncontrolling interests	—	—		—		—		—	—		125		125
Share-based compensation	—	—		1,303		—		—	—		—		1,303
Issuance of common stock from the exercise of stock options	38	—		249		—		—	—		—		249
Net issuance of restricted stock	10	—		—		—		—	—		—		—
Balance at June 30, 2023	30,251	$	29	$	102,886	$	25,931	3	$	(65)	$	4,917	$	133,698
Net income attributable to The Pennant Group, Inc.	—	—		—		4,383		—	—		—		4,383
Net income attributable to noncontrolling interests	—	—		—		—		—	—		79		79
Share-based compensation	—	—		1,341		—		—	—		—		1,341
Issuance of common stock from the exercise of stock options	4	—		18		—		—	—		—		18
Net issuance of restricted stock	11	—		—		—		—	—		—		—
Balance at September 30, 2023	30,266	$	29	$	104,245	$	30,314	3	$	(65)	$	4,996	$	139,519

See accompanying notes to condensed consolidated financial statements.

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THE PENNANT GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


	Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities:
Net income	$	17,809	$	9,381
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	4,292		3,817
Amortization of deferred financing fees, including write-offs from amendment	876		391
(Gain) loss on disposition of property and equipment, net	(751)		4
Provision for doubtful accounts	622		620
Share-based compensation	5,424		4,011
Deferred income taxes	(1,283)		3,066

Change in operating assets and liabilities, net of acquisitions:
Accounts receivable	(23,532)		(5,560)
Prepaid expenses and other assets	(1,396)		11,387
Operating lease obligations	(201)		121
Accounts payable	5,199		(866)
Accrued wages and related liabilities	7,962		1,376
Other accrued liabilities	2,828		(398)


Other long-term liabilities	880		560
Net cash provided by operating activities	18,729		27,910
Cash flows from investing activities:
Purchase of property and equipment	(5,670)		(5,746)
Cash payments for business acquisitions	(48,416)		(11,662)
Cash payments for asset acquisitions	(11,380)		(210)


Escrow deposits	(1,755)		—
Other	934		42
Net cash used in investing activities	(66,287)		(17,576)
Cash flows from financing activities:




Proceeds from Revolving Credit Facility	309,500		131,500
Payments on Revolving Credit Facility	(261,500)		(141,000)
Finance lease obligations	(141)		—
Payments for deferred financing costs	(3,915)		—
Issuance of common stock upon the exercise of options	2,019		470
Net cash provided by (used in) financing activities	45,963		(9,030)
Net (decrease) increase in cash	(1,595)		1,304
Cash beginning of period	6,059		2,079
Cash end of period	$	4,464	$	3,383

See accompanying notes to condensed consolidated financial statements.

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THE PENNANT GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)

(unaudited, in thousands)


	Nine Months Ended September 30,
	2024		2023
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	6,944	$	3,997
Income taxes	$	5,633	$	176
Lease liabilities	$	29,232	$	27,231
Right-of-use assets obtained in exchange for new operating lease obligations	$	16,191	$	9,357
Non-cash adjustment to right-of-use assets and lease liabilities from lease modifications	$	—	$	5,195

Non-cash investing activity:
Capital expenditures in accounts payable	$	1,630	$	680

See accompanying notes to condensed consolidated financial statements.

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THE PENNANT GROUP INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data and operational senior living units)

1. DESCRIPTION OF BUSINESS

The Pennant Group, Inc. (herein referred to as “Pennant,” the “Company,” “it,” or “its”), is a holding company with no direct operating assets, employees or revenue. The Company, through its independent operating subsidiaries, provides healthcare services across the post-acute care continuum. As of September 30, 2024, the Company’s subsidiaries operated 122 home health, hospice and home care agencies and 54 senior living communities located in Arizona, California, Colorado, Idaho, Montana, Nevada, Oklahoma, Oregon, Texas, Utah, Washington, Wisconsin and Wyoming.

Certain of the Company’s subsidiaries, collectively referred to as the Service Center, provide accounting, payroll, human resources, information technology, legal, risk management, and other services to the operations through contractual relationships. The Service Center also provides certain of these services to unaffiliated third parties under management agreements.

Each of the Company’s affiliated operations are operated by separate, independent subsidiaries that have their own management, employees and assets. References herein to the consolidated “Company” and “its” assets and activities are not meant to imply, nor should they be construed as meaning, that Pennant has direct operating assets, employees or revenue, or that any of the subsidiaries are operated by Pennant.

2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation - The accompanying unaudited condensed consolidated financial statements of the Company (the “Interim Financial Statements”) reflect the Company’s financial position, results of operations, and cash flows of the business. The Interim Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the regulations of the Securities and Exchange Commission (“SEC”). Management believes that the Interim Financial Statements reflect, in all material respects, all adjustments which are of a normal and recurring nature necessary to present fairly the Company’s financial position, results of operations, and cash flows for the periods presented in conformity with GAAP. The results reported in these Interim Financial Statements are not necessarily indicative of results that may be expected for the entire year.

The Condensed Consolidated Balance Sheet as of December 31, 2023 is derived from the Company’s annual audited Consolidated Financial Statements for the fiscal year ended December 31, 2023, which should be read in conjunction with these Interim Financial Statements. Certain information in the accompanying footnote disclosures normally included in annual financial statements was condensed or omitted for the interim periods presented in accordance with GAAP.

All intercompany transactions and balances between the various legal entities comprising the Company have been eliminated in consolidation. The Company presents noncontrolling interests within the equity section of its Condensed Consolidated Balance Sheets and the amount of consolidated net income that is attributable to the Company and the noncontrolling interest in its Condensed Consolidated Statements of Income.

The Company consists of various limited liability companies and corporations established to operate home health, hospice, home care, and senior living operations. The Interim Financial Statements include the accounts of all entities controlled by the Company through its ownership of a majority voting interest.

Reclassifications - Certain amounts in the prior financial statements have been reclassified to conform to the presentation of the current period financial statements.

Estimates and Assumptions - The preparation of the Interim Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Interim Financial Statements and the reported amounts of revenue and expenses during the reporting periods. The most significant estimates in the Interim Financial Statements relate to self-insurance reserves, revenue recognition, and intangible assets and goodwill. Actual results could differ from those estimates.

State relief funding. The Company receives state relief funding through programs from various states, including healthcare relief funding under the American Rescue Plan Act (ARPA), and other state specific relief programs. The funding generally incorporates specific use requirements primarily for direct patient care including labor related expenses that are attributable to the COVID-19 pandemic or are associated with providing patient care.

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THE PENNANT GROUP, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

These funds are recognized as a reduction of cost of services expenses when related expenses are incurred. As of September 30, 2024 and December 31, 2023, the Company had $1,147 and $780 in unapplied state relief funds, respectively. The unapplied state relief funds received are recorded in other accrued liabilities. The Company recognized state relief funding totaling $796 and $2,373 for the three and nine months ended September 30, 2024, and $923 and $3,005 for the three and nine months ended September 30, 2023, respectively, which the Company recognized as a reduction of cost of services expense.

Recent Accounting Pronouncements

Except for rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws and a limited number of grandfathered standards, the Financial Accounting Standards Board (“FASB”) ASC is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. For any new pronouncements announced, the Company considers whether the new pronouncements could alter previous generally accepted accounting principles and determines whether any new or modified principles will have a material impact on the Company's reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company's financial management and certain standards are under consideration.

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which requires the Company to expand the breadth and frequency of segment disclosures to include additional information about significant segment expenses, the chief operating decision maker and other items, and also requires the annual disclosures on an interim basis. This guidance is effective for annual periods beginning after December 15, 2023, which will be the Company's fiscal year 2024, with early adoption permitted. The Company is currently evaluating the impact of the ASU on its quarterly and annual reports.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires the Company to disclose disaggregated jurisdictional and categorical information for the tax rate reconciliation, income taxes paid and other income tax related amounts. This guidance is effective for annual periods beginning after December 15, 2024, which will be the Company's fiscal year 2025, with early adoption permitted. The Company doesn’t expect it to have any material impacts.

3. TRANSACTIONS WITH ENSIGN

Pennant completed its separation from The Ensign Group, Inc. (“Ensign”) in 2019. Certain directors who serve on our Board of Directors also serve as directors of Ensign and own shares of Ensign common stock. Pennant and Ensign continue to partner in the provision of services along the healthcare continuum.

The Company incurred costs of $297 and $879 for the three and nine months ended September 30, 2024, and $254 and $719 for the three and nine months ended September 30, 2023, respectively, that related primarily to shared services at proximate operations.

Expenses related to room and board charges at Ensign skilled nursing facilities for hospice patients were $1,180 and $4,250 for the three and nine months ended September 30, 2024, and $1,217 and $3,171 for the three and nine months ended September 30, 2023, respectively, and are included in cost of services.

The Company’s independent operating subsidiaries leased 29 communities from subsidiaries of Ensign under a master lease arrangement as of both September 30, 2024 and September 30, 2023. See further discussion below at Note 13, Leases.

4. NET INCOME PER COMMON SHARE

Basic net income per share is computed by dividing net income attributable to stockholders of the Company by the weighted average number of outstanding common shares for the period. The computation of diluted net income per share is similar to the computation of basic net income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued.

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THE PENNANT GROUP, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table sets forth the computation of basic and diluted net income per share for the periods presented:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Numerator:


Net income attributable to The Pennant Group, Inc.	$	6,205	$	4,383	$	16,801	$	9,030

Denominator:
Weighted average shares outstanding for basic net income per share	30,281		29,912		30,157		29,825
Plus: assumed incremental shares from exercise of options and assumed conversion or vesting of restricted stock(a)	1,082		294		712		353
Adjusted weighted average common shares outstanding for diluted income per share	31,363		30,206		30,869		30,178

Earnings Per Share:
Basic net income per common share	$	0.20	$	0.15	$	0.56	$	0.30
Diluted net income per common share	$	0.20	$	0.15	$	0.54	$	0.30


(a)						The diluted per share amounts do not reflect common share equivalents outstanding of 742 and 1,206 for the three and nine months ended September 30, 2024, and 2,718 and 2,278 for the three and nine months ended September 30, 2023, respectively, because of their anti-dilutive effect.

5. REVENUE AND ACCOUNTS RECEIVABLE

Revenue is recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled from patients and third-party payors, including Medicare, Medicaid, and managed care programs (Commercial, Medicare Advantage and Managed Medicaid plans). The healthcare services in home health and hospice patient contracts include routine services in exchange for a contractual agreed-upon amount or rate. Routine services are treated as a single performance obligation satisfied over time as services are rendered. As such, patient care services represent a bundle of services that are not capable of being distinct within the context of the contract. Additionally, there may be ancillary services which are not included in the rates for routine services, but instead are treated as separate performance obligations satisfied at a point in time, if and when those services are rendered.

Revenue recognized from healthcare services is adjusted for estimates of variable consideration to arrive at the transaction price. The Company determines the transaction price based on contractually agreed-upon amounts or rates, adjusted for estimates of variable consideration. The Company uses the expected value method in determining the variable component that should be used to arrive at the transaction price, using contractual agreements and historical reimbursement experience within each payor type. The amount of variable consideration which is included in the transaction price may be constrained, and is included in the net revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If actual amounts of consideration ultimately received differ from the Company’s estimates, the Company adjusts these estimates, which would affect net service revenue in the period such variances become known.

The Company records revenue from these governmental and managed care programs as services are performed at their expected net realizable amounts under these programs. The Company’s revenue from governmental and managed care programs is subject to audit and retroactive adjustment by governmental and third-party agencies. Consistent with healthcare industry accounting practices, any changes to these governmental revenue estimates are recorded in the period the change or adjustment becomes known based on final settlement.

Disaggregation of Revenue

The Company disaggregates revenue from contracts with its patients by reportable operating segments and payors. The Company has determined that disaggregating revenue into these categories achieves the disclosure objectives to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

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THE PENNANT GROUP, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company’s service specific revenue recognition policies are as follows:

Home Health Revenue

Medicare Revenue

Net service revenue is recognized in accordance with the Patient Driven Groupings Model (“PDGM”). Under PDGM, Medicare provides agencies with payments for each 30-day payment period provided to beneficiaries. If a beneficiary is still eligible for care after the end of the first 30-day payment period, a second 30-day payment period can begin. There are no limits to the number of periods of care a beneficiary who remains eligible for the home health benefit can receive. While payment for each 30-day payment period is adjusted to reflect the beneficiary’s health condition and needs, a special outlier provision exists to ensure appropriate payment for those beneficiaries that have the most expensive care needs. The 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 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 payment period; (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 Company adjusts Medicare revenue on completed episodes to reflect differences between estimated and actual payment amounts, an inability to obtain appropriate billing documentation and other reasons unrelated to credit risk. Therefore, the Company believes that its reported net service revenue and patient accounts receivable will be the net amounts to be realized from Medicare for services rendered.

In addition to revenue recognized on completed episodes and periods, the Company also recognizes a portion of revenue associated with episodes and periods in progress. Episodes in progress are 30-day payment periods that begin during the reporting period but were not completed as of the end of the period. As such, the Company estimates revenue and recognizes it on a daily basis. The primary factors underlying this estimate are the number of episodes in progress at the end of the reporting period, expected Medicare revenue per period of care or episode of care and the Company’s estimate of the average percentage complete based on the scheduled end of period and end of episode dates.

Non-Medicare Revenue

Episodic Based Revenue - The Company recognizes revenue in a similar manner as it recognizes Medicare revenue for episodic-based rates that are paid by other insurance carriers, including carriers administering Medicare Advantage programs. These rates can vary based upon the negotiated terms.

Non-episodic Based Revenue - Revenue is recognized on an accrual basis based upon the date of service at amounts equal to its established or estimated per visit rates, as applicable.

Hospice Revenue

Revenue is recognized on an accrual basis based upon the date of service at amounts equal to the estimated payment rates. The estimated payment rates are calculated as daily rates for each of the levels of care the Company delivers. Revenue is adjusted for an inability to obtain appropriate billing documentation or authorizations acceptable to the payor and other reasons unrelated to credit risk. Additionally, as Medicare hospice revenue is subject to an inpatient cap and an overall payment cap, the Company monitors its provider numbers and estimates amounts due back to Medicare if a cap has been exceeded. The Company regularly evaluates and records these adjustments as a reduction to revenue and an increase to other accrued liabilities.

Senior Living Revenue

The Company has elected the lessor practical expedient within ASC Topic 842, Leases and therefore recognizes, measures, presents, and discloses the revenue for services rendered under the Company’s senior living residency agreements

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based upon the predominant component, either the lease or non-lease component, of the contracts. The Company has determined that the services included under the Company’s senior living residency agreements each have the same timing and pattern of transfer. The Company recognizes revenue under ASC Topic 606, Revenue from Contracts with Customers for its senior residency agreements, for which it has determined that the non-lease components of such residency agreements are the predominant component of each such contract.

The Company’s senior living revenue consists of fees for basic housing and assisted living care. Accordingly, the Company records revenue when services are rendered on the date services are provided at amounts billable to individual residents. Residency agreements are generally for a term of 30 days, with resident fees billed monthly in advance. For residents under reimbursement arrangements with Medicaid, revenue is recorded based on contractually agreed-upon amounts or rates on a per resident, daily basis or as services are rendered.

Revenue By Payor

Revenue by payor for the three months ended September 30, 2024 and 2023, is summarized in the following tables:


	Three Months Ended September 30, 2024
	Home Health and Hospice Services
	Home Health Services		Hospice Services		Senior Living Services		Total Revenue		Revenue %
Medicare	$	32,403	$	54,516	$	—	$	86,919	48.1	%
Medicaid	2,847		6,303		13,565		22,715		12.6
Subtotal	35,250		60,819		13,565		109,634		60.7
Managed care	23,147		1,505		—		24,652		13.6
Private and other(a)	14,518		433		31,451		46,402		25.7
Total revenue	$	72,915	$	62,757	$	45,016	$	180,688	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.


	Three Months Ended September 30, 2023
	Home Health and Hospice Services
	Home Health Services		Hospice Services		Senior Living Services		Total Revenue		Revenue %
Medicare	$	24,076	$	43,849	$	—	$	67,925	48.5	%
Medicaid	2,521		5,190		12,182		19,893		14.2
Subtotal	26,597		49,039		12,182		87,818		62.7
Managed care	17,927		1,231		—		19,158		13.6
Private and other(a)	6,579		101		26,536		33,216		23.7
Total revenue	$	51,103	$	50,371	$	38,718	$	140,192	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.

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Revenue by payor for the nine months ended September 30, 2024 and 2023, is summarized in the following tables:


	Nine Months Ended September 30, 2024
	Home Health and Hospice Services
	Home Health Services		Hospice Services		Senior Living Services		Total Revenue		Revenue %
Medicare	$	92,600	$	153,146	$	—	$	245,746	48.5	%
Medicaid	8,935		18,925		38,526		66,386		13.1
Subtotal	101,535		172,071		38,526		312,132		61.6
Managed care	62,529		3,555		—		66,084		13.1
Private and other(a)	36,688		1,085		90,359		128,132		25.3
Total revenue	$	200,752	$	176,711	$	128,885	$	506,348	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.


	Nine Months Ended September 30, 2023
	Home Health and Hospice Services
	Home Health Services		Hospice Services		Senior Living Services		Total Revenue		Revenue %
Medicare	$	71,372	$	121,523	$	—	$	192,895	48.3	%
Medicaid	7,178		14,470		34,807		56,455		14.2
Subtotal	78,550		135,993		34,807		249,350		62.5
Managed care	49,696		3,842		—		53,538		13.4
Private and other(a)	19,105		387		76,557		96,049		24.1
Total revenue	$	147,351	$	140,222	$	111,364	$	398,937	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.

Balance Sheet Impact

Included in the Company’s Condensed Consolidated Balance Sheets are contract assets, comprised of billed accounts receivable and unbilled receivables, which are the result of the timing of revenue recognition, billings and cash collections, as well as, contract liabilities, which primarily represent payments the Company receives in advance of services provided.

Accounts receivable, net as of September 30, 2024 and December 31, 2023 is summarized in the following table:


	September 30, 2024		December 31, 2023
Medicare	$	45,685	$	35,665
Medicaid	14,289		11,578
Managed care	15,391		11,752
Private and other	8,973		2,380
Accounts receivable, gross	84,338		61,375
Less: allowance for doubtful accounts	(313)		(259)
Accounts receivable, net	$	84,025	$	61,116

Concentrations - Credit Risk

The Company has significant accounts receivable balances, the collectability of which is dependent on the availability of funds from certain governmental programs, primarily Medicare and Medicaid. These receivables represent the only significant concentration of credit risk for the Company. The Company does not believe there are significant credit risks

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associated with these governmental programs. The Company believes that an appropriate allowance has been recorded for the possibility of these receivables proving uncollectible, and continually monitors and adjusts these allowances as necessary. The Company’s gross receivables from the Medicare and Medicaid programs accounted for approximately 71.1% and 77.0% of its total gross accounts receivable as of September 30, 2024 and December 31, 2023, respectively. Combined revenue from reimbursement under the Medicare and Medicaid programs accounted for 60.7% and 61.6% of the Company’s revenue for the three and nine months ended September 30, 2024, and 62.7% and 62.5% of the Company’s revenue for the three and nine months ended September 30, 2023 respectively.

Practical Expedients and Exemptions

As the Company’s contracts have an original duration of one year or less, the Company uses the practical expedient applicable to its contracts and does not consider the time value of money. Further, because of the short duration of these contracts, the Company has not disclosed the transaction price for the remaining performance obligations as of the end of each reporting period or when the Company expects to recognize this revenue. In addition, the Company has applied the practical expedient provided by ASC 340, Other Assets and Deferred Costs, and all incremental customer contract acquisition costs are expensed as they are incurred because the amortization period would have been one year or less.

6. BUSINESS SEGMENTS

The Company classifies its operations into the following reportable operating segments: (1) home health and hospice services, which includes the Company’s home health, hospice and home care businesses; and (2) senior living services, which includes the operation of assisted living, independent living and memory care communities. The reporting segments are business units that offer different services and are managed separately to provide greater visibility into those operations. The Company’s Chief Executive Officer, who is the Company’s Chief Operating Decision Maker (“CODM”), reviews financial information at the operating segment level. The Company also reports an “all other” category that includes general and administrative expense from the Company’s Service Center.

As of September 30, 2024, the Company provided services through 122 affiliated home health, hospice and home care agencies, and 54 affiliated senior living operations. The Company evaluates performance and allocates capital resources to each segment based on an operating model that is designed to maximize the quality of care provided and profitability. The Company’s Service Center provides various services to all lines of business. The Company does not review assets by segment and therefore assets by segment are not disclosed below.

The CODM uses Segment Adjusted EBITDAR from Operations as the primary measure of profit and loss for the Company's reportable segments and to compare the performance of its operations with those of its competitors. Segment Adjusted EBITDAR from Operations is net income (loss) attributable to the Company's reportable segments excluding interest expense, provision for income taxes, depreciation and amortization expense, rent, 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, (3) acquisition related costs and credit allowances, (4) the costs associated with transitioning operations, (5) unusual, non-recurring or redundant charges, and (6) net income attributable to noncontrolling interest. 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.

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The following tables present certain financial information regarding the Company’s reportable segments, general and administrative expenses are not allocated to the reportable segments and are included in “All Other” for the three and nine months ended September 30, 2024 and 2023:


	Home Health and Hospice Services		Senior Living Services		All Other		Total
Three Months Ended September 30, 2024
Revenue	$	135,672	$	45,016	$	—	$	180,688
Segment Adjusted EBITDAR from Operations	$	23,724	$	13,411	$	(11,133)	$	26,002
Three Months Ended September 30, 2023
Revenue	$	101,474	$	38,718	$	—	$	140,192
Segment Adjusted EBITDAR from Operations	$	17,271	$	11,473	$	(8,097)	$	20,647


	Home Health and Hospice Services		Senior Living Services		All Other		Total
Nine Months Ended September 30, 2024
Revenue	$	377,463	$	128,885	$	—	$	506,348
Segment Adjusted EBITDAR from Operations	$	64,488	$	38,226	$	(31,840)	$	70,874
Nine Months Ended September 30, 2023
Revenue	$	287,573	$	111,364	$	—	$	398,937
Segment Adjusted EBITDAR from Operations	$	47,364	$	33,394	$	(23,496)	$	57,262

The following table provides a reconciliation of Segment Adjusted EBITDAR from Operations to Condensed Consolidated Income from Operations:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Segment Adjusted EBITDAR from Operations	$	26,002	$	20,647	$	70,874	$	57,262
Less: Depreciation and amortization	1,493		1,323		4,292		3,817
Rent—cost of services	10,906		10,006		31,814		29,439
Other income (expense)	109		(37)		192		28
Adjustments to Segment EBITDAR from Operations:
Less: Costs at start-up operations(a)	65		(108)		(72)		160
Share-based compensation expense and related taxes(b)	2,342		1,391		5,817		4,164
Acquisition related costs and credit allowances(c)	494		71		996		175

Costs associated with transitioning operations(d)	12		10		(583)		595
Unusual, non-recurring or redundant charges(e)	239		1,009		546		1,633
Add: Net income attributable to noncontrolling interest	452		79		1,008		351
Condensed Consolidated Income from Operations	$	10,794	$	7,061	$	28,880	$	17,602


(a)						Represents results related to start-up 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, credit allowances, and write offs for amounts in dispute with the prior owners of certain acquired operations.

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(d)						During the nine months ended September 30, 2023, an affiliate of the Company placed its memory care units into transition and began seeking to sublease the units to an unrelated third party. The amount above represents the net operating impact attributable to the units in transition. The amounts reported exclude rent and depreciation and amortization expense related to such operations and include legal settlement costs associated with an entity transitioned to Ensign.
(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.

7. ACQUISITIONS

The Company is focused on acquiring operations that are complementary to the Company’s current businesses, accretive to the Company’s business or otherwise advance the Company’s strategy. The results of all the Company’s independent operating subsidiaries are included in the Interim Financial Statements subsequent to the date of acquisition. Acquisitions are accounted for using the acquisition method of accounting.

2024 Acquisitions

During the nine months ended September 30, 2024, the Company expanded its operations with the addition of eight home health agencies, three hospice agencies, and three senior living communities. The Company also acquired the real estate of two of the three acquired senior living communities. The aggregate purchase price of the real estate of the two senior living communities acquired was $10,380, which consisted primarily of land and buildings and were accounted for as asset acquisitions. In connection with the third senior living community acquired, the Company entered into a new long-term “triple-net” lease. A subsidiary of the Company entered into a separate operations transfer agreement with the prior operator of each acquired operation as part of each transaction. These new communities included 261 operational senior living units to be operated by the Company's independent operating subsidiaries.

On January 1, 2024, the Company announced it closed on a joint venture for a home health agency with John Muir Health (“Muir”), a leading nonprofit integrated health system serving communities throughout the east bay region of San Francisco, California. The transaction combines certain assets and the operations of Muir’s home health business and the assets and operations of a local Pennant-affiliated home health agency. The joint venture is majority-owned and managed by an independent operating subsidiary of the Company and provides home health services to patients throughout the San Francisco east bay region. The Company contributed certain assets of a local Pennant-affiliated home health agency to the venture and paid Muir $11,680 for a 60% controlling ownership interest in the joint venture.

The fair value of assets for the joint venture acquired was mostly concentrated in goodwill and intangible assets and as such, this transaction was classified as a business combination in accordance with ASC Topic 805, Business Combinations (“ASC 805”). The fair value of assets acquired for the business combination was $28,200, which preliminarily consisted of goodwill of $15,500, indefinite-lived intangible assets of $8,600 related to a Medicare and Medicaid license, and tradenames of $4,100. Through its contributions of assets to the joint venture, Muir retained a non-controlling ownership interest which resulted in the Company recording a 40% noncontrolling interest with a fair value of $11,726 and an adjustment to additional paid in capital of $4,794. The Company anticipates that the total goodwill recognized will be fully deductible for tax purposes.

On May 16, 2024, the Company acquired one home health agency and one hospice agency. The transaction was classified as business combination in accordance with ASC Topic 805, Business Combinations (“ASC 805”). The aggregate purchase price for the business combinations was $5,000, which preliminarily consisted of goodwill of $2,240 and indefinite-lived intangible assets of $2,760 related to Medicare and Medicaid licenses. The Company anticipates that the total goodwill recognized will be fully deductible for tax purposes.

On August 1, 2024, the Company completed the first part of its planned acquisition of certain Signature Group, LLC operations. Through the completed acquisition, the Company acquired four home health agencies and one hospice agency. The transaction was classified as business combination in accordance with ASC Topic 805, Business Combinations (“ASC 805”). The aggregate purchase price for the business combinations was $32,000, including acquired liabilities, which preliminarily consisted of goodwill of $20,232, indefinite-lived intangible assets of $9,000 related to Medicare and Medicaid licenses, tradenames of $2,700, and equipment and other assets of $68. The Company anticipates that the total goodwill recognized will

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be fully deductible for tax purposes. The Company anticipates completing an additional acquisition transaction with Signature Group, LLC subsequent to the end of its current fiscal year.

One hospice and two home health agencies acquired were Medicare licenses and are considered asset acquisitions. One acquisition of a provider service was completed. The fair value of the assets acquired in these transactions preliminarily consisted of goodwill of $350, and indefinite-lived intangibles of $1,000.

There were no material acquisition costs that were expensed related to the business combinations during the nine months ended September 30, 2024.

2023 Acquisitions

During the nine months ended September 30, 2023, the Company expanded its operations with the addition of three home health agencies, three hospice agencies, two home care agencies, and two senior living communities. In connection with the addition of the two senior living communities, the Company entered into a new long-term “triple-net” lease. A subsidiary of the Company entered into a separate operations transfer agreement with the prior operator of each acquired operation as part of each transaction.

The fair value of assets for two home health agencies, two home care agencies, and three hospice agencies acquired were mostly concentrated in goodwill and intangible assets and as such, these transactions were classified as business combinations in accordance with ASC 805. The purchase price for the business combinations was $11,662, which consisted of equipment and other assets of $1,027, goodwill of $6,635, and indefinite-lived intangible assets of $3,895 related to Medicare and Medicaid licenses, and other intangible assets of $186, less assumed liabilities of $81. The Company anticipates that the total goodwill recognized will be fully deductible for tax purposes.

One home health agency acquired was a Medicare license and is considered an asset acquisition. The fair value of the home health license acquired was $210 and was allocated to indefinite-lived intangible assets.

There were no material acquisition costs that were expensed related to the business combinations during the nine months ended September 30, 2023.

Subsequent Events

On November 1, 2024, the Company closed on the acquisition of three senior living communities located in Wisconsin. The acquisition will add to the Company’s existing strength in the region while building out its operational footprint. In connection with the senior living communities, the Company entered into a new long-term “triple-net” lease with Ensign, a related party described in Note 3, Transactions with Ensign. A subsidiary of the Company entered into a separate operations transfer agreement with the prior operator of each acquired operation as part of the transaction. These new communities included 125 operational senior living units to be operated by the Company's independent operating subsidiaries.

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8. PROPERTY AND EQUIPMENT—NET

Property and equipment, net consist of the following:


	September 30, 2024		December 31, 2023
Land	$	5,543	$	96
Building	8,778		1,890
Leasehold improvements	21,179		21,204
Equipment	31,527		27,984
Furniture and fixtures	1,501		1,238
Construction in progress	2,536		1,263
	71,064		53,675
Less: accumulated depreciation	(29,199)		(25,077)
Property and equipment, net	$	41,865	$	28,598

Depreciation expense was $1,493 and $4,292 for the three and nine months ended September 30, 2024, respectively, and $1,321 and $3,807 for the three and nine months ended September 30, 2023 respectively.

The Company measures certain assets at fair value on a non-recurring basis, including long-lived assets, which are evaluated for impairment on an annual basis or when a triggering event occurs. Long-lived assets include assets such as property and equipment, operating lease assets and certain intangible assets. The inputs used to determine the fair value of long-lived assets in the impairment analysis are considered Level 3 measurements due to their subjective nature. Management has evaluated its long-lived assets and determined there was no impairment recorded during the three and nine months ended September 30, 2024 and 2023.

9. GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS

The following table represents activity in goodwill by segment for the nine months ended September 30, 2024:


	Home Health and Hospice Services		Senior Living Services		Total
December 31, 2023	$	87,372	$	3,642	$	91,014
Additions	38,323		—		38,323

September 30, 2024	$	125,695	$	3,642	$	129,337

Other indefinite-lived intangible assets consist of the following:


	September 30, 2024		December 31, 2023
Trade name	$	8,185	$	1,385
Medicare and Medicaid licenses	87,717		66,357
Total	$	95,902	$	67,742

No goodwill or intangible asset impairment charges were recorded during the three and nine months ended September 30, 2024 and 2023.

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10. OTHER ACCRUED LIABILITIES

Other accrued liabilities consist of the following:


	September 30, 2024		December 31, 2023
Refunds payable	$	1,512	$	1,566
Deferred revenue	1,799		1,658
Resident deposits	1,637		2,367
Property taxes	1,188		1,255
Deferred state relief funds	1,147		780
Accrued self-insurance liabilities	5,368		4,392
Hospice CAP liabilities	2,363		661
Other	4,015		2,651
Other accrued liabilities	$	19,029	$	15,330

Refunds payable includes payables related to overpayments, duplicate payments and credit balances from various payor sources. Deferred revenue occurs when the Company receives payments in advance of services provided. Resident deposits include refundable deposits to residents.

11. DEBT

Long-term debt, net consists of the following:


	September 30, 2024		December 31, 2023
Revolving Credit Facility	$	113,000	$	65,000
Less: unamortized debt issuance costs(a)	(4,125)		(1,086)
Long-term debt, net	$	108,875	$	63,914


(a)						Amortization expense for debt issuance costs, including expense of $428 related to the refinancing of our Revolving Credit Facility, was $616 and $876 for the three and nine months ended September 30, 2024, respectively, and $130 and $391 for the three and nine months ended September 30, 2023, respectively, and is recorded in interest expense, net on the Condensed Consolidated Statements of Income.

On February 23, 2021, Pennant entered into an amendment to its existing credit agreement (as amended, the “Credit Agreement”), which provided for an increased revolving credit facility with a syndicate of banks with a borrowing capacity of $150,000 (the “Revolving Credit Facility”). On June 12, 2023, Pennant entered into a second amendment to the Credit Agreement that modified the reference rate from LIBOR to Standard Overnight Financing Rate (“SOFR”). The interest rates applicable to loans under the Revolving Credit Facility were, at the Company’s election, either (i) Adjusted Term SOFR (as defined in the Credit Agreement) plus a margin ranging from 2.25% to 3.25% per annum or (ii) Base Rate plus a margin ranging from 1.25% to 2.25% per annum, in each case, based on the ratio of Consolidated Total Net Debt to Consolidated EBITDA (each, as defined in the Credit Agreement). In addition, Pennant paid a commitment fee on the undrawn portion of the commitments under the Revolving Credit Facility which ranged from 0.35% to 0.50% per annum, depending on the Consolidated Total Net Debt to Consolidated EBITDA ratio of the Company and its subsidiaries.

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On July 31, 2024, Pennant entered into an Amended and Restated Credit Agreement (the Credit Agreement, as amended and restated, the “Amended Credit Agreement”), which provides for a revolving credit facility (the Credit Facility, as upsized, the “Amended Revolving Credit Facility”) with a syndicate of banks with a borrowing capacity of $250,000. In conjunction with the amendment, the Company incurred additional debt issuance costs of $3,915 and wrote off previously deferred unamortized debt issuance costs of $428. After the effectiveness of the Amended Credit Agreement, the interest rates applicable to loans under the Amended Revolving Credit Facility are, at the Company’s election, either (i) Term SOFR (as defined in the Amended Credit Agreement) plus a margin ranging from 1.75% to 2.75% per annum or (ii) Base Rate plus a margin ranging from 0.75% to 1.75% per annum, in each case based on the ratio of Consolidated Total Net Debt to Consolidated EBITDA (each, as defined in the Amended Credit Agreement). In addition, Pennant pays a commitment fee on the undrawn portion of the commitments under the Amended Revolving Credit Facility that ranges from 0.25% to 0.45% per annum, depending on the Consolidated Total Net Debt to Consolidated EBITDA ratio of the Company and its subsidiaries. The Company is not required to repay any loans under the Amended Credit Agreement prior to maturity in July 2029. As of September 30, 2024, the Company’s weighted average interest rate on its outstanding debt was 7.87%. As of September 30, 2024, the Company had available borrowing on the Amended Revolving Credit Facility of $132,814, which was net of outstanding letters of credit of $4,186.

The fair value of the Amended Revolving Credit Facility approximates carrying value, due to the short-term nature and variable interest rates. The fair value of this debt is categorized within Level 2 of the fair value hierarchy based on the observable market borrowing rates.

The Amended Credit Agreement is guaranteed, jointly and severally, by certain of the Company’s independent operating subsidiaries, and is secured by a pledge of stock of the Company's material independent operating subsidiaries as well as a first lien on substantially all of each material operating subsidiary's personal property. The Amended Credit Agreement contains customary covenants that, among other things, restrict, subject to certain exceptions, the ability of the Company and its independent operating subsidiaries to grant liens on their assets, incur indebtedness, sell assets, make investments, engage in acquisitions, mergers or consolidations, amend certain material agreements and pay certain dividends and other restricted payments. Financial covenants require compliance with certain levels of leverage ratios that impact the amount of interest. As of September 30, 2024, the Company was compliant with all such financial covenants.

12. OPTIONS AND AWARDS

Outstanding options and restricted stock awards of the Company were granted under the 2019 Omnibus Incentive Plan (the “OIP”) and Long-Term Incentive Plan (the “LTIP,” and together with the OIP, the “Pennant Plans”).

Under the Pennant Plans, stock-based payment awards, including employee stock options, restricted stock awards (“RSA”), and restricted stock units (“RSU” and together with RSA, “Restricted Stock”) are issued based on estimated fair value. The following disclosures represent share-based compensation expense relating to employees of the Company’s subsidiaries and non-employee directors who have awards under the Pennant Plans.

Total share-based compensation expense for all Plans for the three and nine months ended September 30, 2024 and 2023 was:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Share-based compensation expense related to stock options	$	1,377	1,044		$	3,628	$	2,878
Share-based compensation expense related to Restricted Stock	150		178		392		535
Share-based compensation expense related to Restricted Stock to non-employee directors	606		119		1,404		598
Total share-based compensation	$	2,133	$	1,341	$	5,424	$	4,011

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

In future periods, the Company estimates it will recognize the following share-based compensation expense for unvested stock options and unvested Restricted Stock as of September 30, 2024:


	Unrecognized Compensation Expense		Weighted Average Recognition Period (in years)
Unvested Stock Options	$	15,014	3.6
Unvested Restricted Stock	1,672		2.8
Total unrecognized share-based compensation expense	$	16,686

Stock Options

Under the Pennant Plans, options granted to employees of the subsidiaries of Pennant generally vest over five years at 20% per year on the anniversary of the grant date. Options expire ten years after the date of grant.

The Company uses the Black-Scholes option-pricing model to recognize the value of stock-based compensation expense for share-based payment awards under the Plans. Determining the appropriate fair-value model and calculating the fair value of stock-based awards at the grant date requires considerable judgment, including estimating stock price volatility and expected option life. The Company develops estimates based on historical data and market information, which can change significantly over time.

The fair value of each option is estimated on the grant date using a Black-Scholes option-pricing model with the following weighted average assumptions for stock options granted as of September 30:


Grant Year	Options Granted	Risk-Free Interest Rate		Expected Life(a)	Expected Volatility(b)		Dividend Yield		Weighted Average Fair Value of Options
2024	778	4.3	%	6.5	42.6	%	—	%	$	10.38
2023	874	4.1	%	6.5	41.8	%	—	%	$	6.61


(a)						Under the midpoint method, the expected option life is the midpoint between the contractual option life and the average vesting period for the options being granted. This resulted in an expected option life of 6.5 years for the options granted.
(b)						Because the Company’s equity shares have been traded for a relatively short period of time, expected volatility assumption was based on the volatility of related industry stocks.

The following table represents the employee stock option activity during the nine months ended September 30, 2024:


	Number of Options Outstanding	Weighted Average Exercise Price		Number of Options Vested	Weighted Average Exercise Price of Options Vested
December 31, 2023	2,924	18.79		1,190	$	19.14
Granted	778	21.02
Exercised	(220)	9.16
Forfeited	(111)	20.36
Expired	(60)	30.71
September 30, 2024	3,311	$	19.66	1,257	$	20.60

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Restricted Stock

A summary of the status of Pennant’s non-vested Restricted Stock, and changes during the nine months ended September 30, 2024, is presented below:


	Non-Vested Restricted Stock	Weighted Average Grant Date Fair Value
December 31, 2023	265	$	14.27
Granted	68	20.62
Vested	(181)	16.94
Forfeited	(21)	16.25
September 30, 2024	131	$	13.57

13. LEASES

The Company’s independent operating subsidiaries lease senior living communities and its administrative offices under non-cancelable operating leases, most of which have initial lease terms ranging from 14 to 25 years. The Company’s independent operating subsidiaries also lease the administrative offices of home health and hospice agencies, which generally have lease terms that range from one to 10 years. Most of these leases contain renewal options, most involve rent increases and none contain purchase options. The lease term excludes lease renewals because the renewal rents are not at a bargain, there are no economic penalties for the Company to renew the lease, and it is not reasonably certain that the Company will exercise the extension options. The Company elected the accounting policy practical expedients in ASC 842 to: (i) combine associated lease and non-lease components into a single lease component; and (ii) exclude recording short-term leases as right-of-use assets and liabilities on the condensed consolidated balance sheets. Non-lease components, which are not significant overall, are combined with lease components.

As of September 30, 2024, the Company’s independent operating subsidiaries leased 29 senior living communities from subsidiaries of Ensign (“Ensign Leases”) under a master lease arrangement. The existing leases with subsidiaries of Ensign have initial terms of between 14 to 20 years. The total amount of rent expense included in rent - cost of services paid to subsidiaries of Ensign was $3,488 and $10,464 for the three and nine months ended September 30, 2024, respectively, and $3,339 and $10,088 for the three and nine months ended September 30, 2023, respectively. In addition to rent, each of the operating companies are required to pay the following: (1) all impositions and taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor); (2) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties; (3) all insurance required in connection with the leased properties and the business conducted on the leased properties; (4) all community maintenance and repair costs; and (5) all fees in connection with any licenses or authorizations necessary or appropriate for the leased properties and the business conducted on the leased properties.

Fourteen of the Company’s affiliated senior living communities, excluding the communities that are operated under the Ensign Leases (as defined herein), are operated under three separate master lease arrangements. Under these 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 Medicare and Medicaid provider requirements is a default under several of the Company’s leases and master leases. With an indivisible lease, it is difficult to restructure the composition of the portfolio or economic terms of the master lease without the consent of the landlord.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The components of operating lease cost, are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Operating Lease Costs:
Community Rent—cost of services	$	9,045	$	8,567	$	26,560	$	25,303
Office Rent—cost of services	1,861		1,439		5,254		4,136

Rent—cost of services	$	10,906	$	10,006	$	31,814	$	29,439

General and administrative expense	$	114	$	94	$	317	$	291
Variable lease cost (a)	$	2,187	$	1,876	$	6,456	$	5,367


(a)						Represents variable lease cost for operating leases, which costs include property taxes and insurance, common area maintenance, and consumer price index increases, incurred as part of the Company’s triple net lease, and which is included in cost of services for the three and nine months ended September 30, 2024 and 2023.

The following table shows the lease maturity analysis for all leases as of September 30, 2024, for the years ended December 31:


Year	Amount
2024 (Remainder)	$	10,044
2025	39,051
2026	37,230
2027	36,153
2028	35,293
Thereafter	261,134
Total lease payments	418,905
Less: present value adjustments	(150,885)
Present value of total lease liabilities	268,020
Less: current lease liabilities	(19,113)
Long-term operating lease liabilities	$	248,907

Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used its incremental borrowing rate based on the information available at each lease’s commencement date to determine each lease's operating lease liability. As of September 30, 2024, the weighted average remaining lease term is 11.9 years and the weighted average discount rate is 8.1%.

14. INCOME TAXES

The Company recorded income tax expense of $1,354 and $1,066 or 16.9% and 19.3% of earnings before income taxes for the three months ended September 30, 2024 and 2023, respectively. The decrease in the effective tax rate is primarily due to more excess tax benefits on equity compensation.

The Company recorded income tax expense of $4,957 and $3,894, or 21.8% and 29.3% of earnings before income taxes for the nine months ended September 30, 2024 and 2023, respectively. The decrease in the effective tax rate is primarily due to more excess tax benefits on equity compensation.

15. DEFINED CONTRIBUTION PLAN

The Company has a 401(k) defined contribution plan (the “401(k) Plan”), whereby eligible employees may contribute up to 90% of their annual basic earnings, subject to applicable annual Internal Revenue Code limits. Additionally, the 401(k) Plan provides for discretionary matching contributions (as defined in the 401(k) Plan) by the Company. The Company expensed

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

matching contributions to the 401(k) Plan of $303 and $874 for the three and nine months ended September 30, 2024, and $214 and $632 for the three and nine months ended September 30, 2023, respectively.

The Company has a non-qualified deferred compensation plan (the “DCP”) for executives, other highly compensated employees, independent contractors and non-employee directors. The independent contractors and non-employee directors are otherwise ineligible for participation in the Company's 401(k) plan. The DCP allows participants to defer the receipt of a portion of their base compensation, and further allows certain participants to defer up to 80% of their base salary and bonus compensation or director fees. At the participant’s election, payments can be deferred until a specific date at least one year after the year of deferral or until termination of engagement with the Company and can be paid in a lump sum or in up to ten annual installments. Separate deferral elections can be made for each year, and in limited circumstances, existing payment elections may be changed. The amounts deferred are credited with earnings and losses based upon the actual performance of the deemed investments selected by the participant. The rate of return for each participant varies depending on the specific investment elections made by the participant. Additionally, the plan deposits the employee deferrals into a rabbi trust and the funds are generally invested in individual variable life insurance contracts owned by the Company that are specifically designed to informally fund savings plans of this nature. The Company paid for related administrative costs, which were immaterial during the fiscal years presented.

At September 30, 2024 and December 31, 2023, the Company’s deferred compensation liabilities were $2,132 and $1,108, respectively, in other long-term liabilities on the condensed consolidated balance sheets. The cash surrender value of the individual variable life insurance contracts is based on investment funds that shadow the investment allocations specified by participants in the DCP. At September 30, 2024 and December 31, 2023, the cash surrender value of the company owned life insurance (“COLI”) policies were $2,141 and $1,123, respectively, and were included as a component of restricted and other assets on the condensed consolidated balance sheets. There are no outstanding loan amounts offset against the cash surrender value of the COLI policies. The losses recorded for the change in cash surrender value were immaterial for each period presented.

16. COMMITMENTS AND CONTINGENCIES

Regulatory Matters - The Company provides services in complex and highly regulated industries. The Company’s compliance with applicable U.S. federal, state and local laws and regulations governing these industries may be subject to governmental review and adverse findings may result in significant regulatory action, which could include sanctions, damages, fines, penalties (many of which may not be covered by insurance), and even exclusion from government programs. The Company is a party to various regulatory and other governmental audits and investigations in the ordinary course of business and cannot predict the ultimate outcome of any federal or state regulatory survey, audit or investigation. While governmental audits and investigations are the subject of administrative appeals, the appeals process, even if successful, may take several years to resolve and penalties subject to appeal may remain in place during such appeals, which may include suspension, termination, or revocation of participation in governmental programs for the payment of the services the Company provides. The Department of Justice, HHS, CMS, or other federal and state enforcement and regulatory agencies may conduct additional investigations related to the Company's businesses. The Company believes it is presently in compliance in all material respects with all applicable laws and regulations.

Cost-Containment Measures - Government and third-party payors have instituted cost-containment measures designed to limit payments made to providers of healthcare services, may propose future cost-containment measures, and there can be no assurance that future measures designed to limit payments made to providers will not adversely affect the Company.

Indemnities - From time to time, the Company enters into certain types of contracts that contingently require the Company to indemnify parties against third-party claims. These contracts primarily include (i) certain real estate leases, under which the Company may be required to indemnify property owners or prior operators for post-transfer environmental or other liabilities and other claims arising from the Company’s use of the applicable premises, (ii) operations transfer agreements, in which the Company agrees to indemnify past operators of agencies and communities the Company acquires against certain liabilities arising from the transfer of the operation and/or the operation thereof after the transfer, (iii) certain Ensign lending agreements, and (iv) certain agreements with management, directors and employees, under which the subsidiaries of the Company may be required to indemnify such persons for liabilities arising out of their employment relationships. The terms of such obligations vary by contract and, in most instances, a specific or maximum dollar amount is not explicitly stated therein. Generally, amounts under these contracts cannot be reasonably estimated until a specific claim is asserted. Consequently, because no claims have been asserted, no liabilities have been recorded for these obligations on the Company’s Condensed Consolidated Balance Sheets for any of the periods presented.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Litigation - The Company’s businesses involve a significant risk of liability given the age and health of the patients and residents served by its independent operating subsidiaries. The Company, its operating subsidiaries, and others in the industry may be subject to a number of claims and lawsuits, including negligence and professional liability claims, alleging that services provided have resulted in personal injury, elder abuse, wrongful death or other related claims. Healthcare litigation (including class action litigation) is common and is filed based upon a wide variety of claims and theories, and the Company is routinely subjected to these claims in the ordinary course of business, including potential claims related to patient care and treatment, and professional negligence, as well as employment-related claims. Certain of the states where we conduct business, including California and Nevada, recently adopted laws that increase the maximum amount of non-economic damages that may be awarded to a successful plaintiff in a claim for professional negligence or malpractice arising from care provided by our independent operating subsidiaries. These changes in applicable law may also increase the cost of obtaining and maintaining professional liability insurance to pay for the defense of, and any liability arising under, such claims. If there were a significant increase in the number of these claims or an increase in amounts owing should plaintiffs be successful in their prosecution of these claims, this could materially adversely affect the Company’s business, financial condition, results of operations and cash flows. In addition, the defense of these lawsuits may result in significant legal costs, regardless of the outcome, and may result in large settlement amounts or damage awards.

In addition to the potential lawsuits and claims described above, the Company also is subject to potential lawsuits under the False Claims Act (the “FCA”) and comparable state laws alleging submission of fraudulent claims for services to any governmental healthcare program (such as Medicare) or commercial payor. A violation may provide the basis for exclusion from federally funded healthcare programs. Such exclusions could have a correlative negative impact on the Company’s financial performance. Some states, including California, Arizona and Texas, have enacted similar whistleblower and false claims laws and regulations. In addition, the Deficit Reduction Act of 2005 created incentives for states to enact anti-fraud legislation modeled on the FCA, for which 18 states have qualified, including California and Texas, where we conduct business. As such, the Company could face scrutiny, potential liability and legal expenses and costs based on claims under state false claims acts in markets in which it conducts business.

Under the Fraud Enforcement and Recovery Act (“FERA”) and its associated rules, healthcare providers face significant penalties for the knowing retention of government overpayments, even if no false claim was involved. Providers have an obligation to proactively exercise “reasonable diligence” to identify overpayments and return those overpayments to CMS within 60 days of “identification” or the date any corresponding cost report is due, whichever is later. Retention of overpayments beyond this period may create liability under the FCA. In addition, FERA protects whistleblowers (including employees, contractors, and agents) from retaliation.

The Company cannot predict or provide any assurance as to the possible outcome of any litigation. If any litigation were to proceed, and the Company and its operating companies are subjected to, alleged to be liable for, or agree to a settlement of, claims or obligations under federal Medicare statutes, the FCA, or similar state and federal statutes and related regulations, the Company’s business, financial condition and results of operations and cash flows could be materially and adversely affected. Among other things, any settlement or litigation could involve the payment of substantial sums to settle any alleged civil violations, and may also include the assumption of specific procedural and financial obligations by the Company or its independent operating subsidiaries going forward under a corporate integrity agreement and/or other arrangement with the government.

Medicare Revenue Recoupments - The Company is subject to probe reviews relating to Medicare services, billings and potential overpayments by Unified Program Integrity Contractors (“UPIC”), Recovery Audit Contractors (“RAC”), Zone Program Integrity Contractors (“ZPIC”), Program Safeguard Contractors (“PSC”), Supplemental Medical Review Contractors (“SMRC”) and Medicaid Integrity Contributors (“MIC”) programs, each of the foregoing collectively referred to as “Reviews.”

As of September 30, 2024, 12 of the Company’s independent operating subsidiaries had Reviews scheduled, on appeal or in dispute resolution process, both pre- and post-payment. If an operation fails an initial or subsequent Review, the operation could then be subject to extended Review, suspension of payment, or extrapolation of the identified error rate to all billing in the same time period. The Company, from time to time, receives record requests in Reviews which have resulted in claim denials on previously paid claims. The Company has appealed substantially all denials arising from these Reviews using the applicable appeals process. As of September 30, 2024, and through the filing of this Quarterly Report on Form 10-Q, the Company’s independent operating subsidiaries have responded to the Reviews that are currently ongoing, on appeal or in dispute resolution process. The Company cannot predict the ultimate outcome of any regulatory and other governmental Reviews. While such Reviews are the subject of administrative appeals, the appeals process, even if successful, may take

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several years to resolve. The costs to respond to and defend such Reviews may be significant and an adverse determination in such Reviews may subject the Company to sanctions, damages, extrapolation of damage findings, additional recoupments, fines, other penalties (some of which may not be covered by insurance), and termination from Medicare programs which may, either individually or in the aggregate, have a material adverse effect on the Company's business and financial condition.

From June 2021 to May 2022, one hospice provider number was subject to a Medicare payment suspension imposed by a UPIC. The total amounts suspended was $5,105, which represents all Medicare payments due to the provider number during the suspension. As of September 30, 2024, the remaining amount due from the government payor impacted by the suspension was $246 and was recorded in long-term other assets.

The Medicare payment suspension concluded in May 2022, and the UPIC reviewed 107 patient records covering a 10-month period to determine whether, in its view, a Medicare overpayment was made. Based on the results of the review, the UPIC initially alleged sampled and extrapolated overpayments of $5,105, and withheld that amount through continued recoupment of Medicare payments. The Company is pursuing its appeal rights through the administrative appeals process, including contesting the methodology used by the UPIC to perform statistical extrapolation. To date the Company has been successful in appealing most of the previously denied claims. The Company received the refund of previously withheld amounts totaling $4,859 as of September 30, 2024. The Company continues to work through the appeals process for the remaining denied claims and expects to be successful in those appeals. Based on the information currently available to the Company, the Company cannot predict the timing or the ultimate outcome of this review including refunds to be received.

Insurance - The Company retains risk for a substantial portion of potential claims for general and professional liability, workers’ compensation and automobile liability. Based on changes in law that increase the maximum damages that may be recovered for professional negligence or malpractice claims in states where we operate, including California and Nevada, the costs of maintaining some of these insurance policies may increase in the future. The Company recognizes obligations associated with these costs, up to specified deductible limits in the period in which a claim is incurred, including with respect to both reported claims and claims incurred but not reported. The general and professional liability insurance has a retention limit of $150 per claim with a $500 corridor as an additional out-of-pocket retention we must satisfy for claims within the policy year before the carrier will reimburse losses. The workers’ compensation insurance has a retention limit of $250 per claim, except for policies held in Texas, Washington and Wyoming which are subject to state insurance and possess their own limits.

The Company is self-insured for claims related to employee health, dental, and vision care. To protect itself against loss exposure, the Company has purchased individual stop-loss insurance coverage that insures individual health claims that exceed $350 for each covered person for fiscal year 2024 and fiscal year 2023.

17. SUBSEQUENT EVENTS

On October 2, 2024, the Company closed the public offering (the “Offering”) of 4,025,000 shares of its common stock, $0.001 par value per share (“common stock”). The net proceeds to the Company from the offering, after underwriting discounts and commissions and before expenses, was approximately $118.5 million. The majority of the proceeds were subsequently used to pay the outstanding balance on our Revolving Credit Facility.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis in conjunction with the Interim Financial Statements and the related notes thereto contained in Part I, Item 1 of this Quarterly Report on Form 10-Q (this “Quarterly Report”). The information contained in this Quarterly Report is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this Quarterly Report and in our other reports filed with the Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report”), which discusses our business and related risks in greater detail, as well as subsequent reports we may file from time to time on Form 10-K, Form 10-Q and Form 8-K, for additional information. The section entitled “Risk Factors” filed within our 2023 Annual Report describes some of the important risk factors that may affect our business, financial condition, results of operations and/or liquidity. You should carefully consider those risks, in addition to the other information in this Quarterly Report and in our other filings with the SEC, before deciding to purchase, hold or sell our common stock.

Special Note About Forward-Looking Statements

This Quarterly Report contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, that are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “might,” “will,” “should,” “could,” “seeks,” “approximately,” “goals,” “future,” “projects,” “predicts,” “guidance,” “target,” “intends,” “plans,” “estimates,” “anticipates,” the negative version of these words or other comparable words. Forward-looking statements include, but are not limited to, statements related to our expectations regarding the performance of our business, our financial results, our liquidity and capital resources, the effects of competition and the effects of future legislation or regulations and other non-historical statements.

The risk factors discussed in this Quarterly Report and the 2023 Annual Report under the heading “Risk Factors,” could cause our results to differ materially from those expressed in forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to:

•federal and state changes to, or delays receiving, reimbursement and other aspects of Medicaid and Medicare;

•changes in, and compliance with, the laws and regulations affecting the U.S. healthcare industry;

•proposed changes to payment models and reimbursement amounts within the Medicare and Medicaid fee schedules for future calendar years;

•future cost containment measures undertaken by payors;

•government reviews, audits and investigations of our business;

•potential additional regulation affecting the transparency, ownership, operating standards, and staffing of businesses in our industry;

•increased competition and increased cost of acquisition or retention for, or a shortage of, skilled personnel;

•achievement and maintenance of competitive quality of care ratings and referrals from referral sources;

•changes in, and compliance with, state and federal employment, fair housing, safety, licensing and other laws;

•competition from other healthcare providers, federal and state efforts to regulate or deregulate the healthcare services industry, including through staffing levels and requirements, or the construction or expansion of the number of home health, hospice or senior living operations;

•actions of labor unions, including strikes, work stoppages, unfair labor practices claims, or related labor activity;

•costs associated with litigation or any future litigation settlements;

•the leases of our affiliated senior living communities;

•inability to complete future acquisitions at attractive prices or at all, and failure to successfully or efficiently integrate new acquisitions into our existing operations and operating subsidiaries;

•general economic conditions, including a housing downturn, which could affect seniors’ ability to afford resident fees, or inflation and increasing interest rates, which raise the costs of goods and borrowing capital, which may affect the delivery and affordability of our services;

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•security breaches and other cyber security incidents;

•the performance of the financial and credit markets and uncertainties related to our ability to obtain financing or the terms of such financing; and

•uncertainties related to the lingering effect of the COVID-19 pandemic, including new regulatory risks impacting our operations, the effects of Medicaid disenrollment, potential litigation, and vaccination mandates

Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in these forward-looking statements. You should not place undue reliance on any forward-looking statements in this Quarterly Report. Although we may from time to time voluntarily update our prior forward-looking statements, we disclaim any commitment to do so except as required by applicable securities laws.

Overview

We are a leading provider of high-quality healthcare services to patients 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. 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 provide home health and hospice operational support through a management service agreement in Connecticut. As of September 30, 2024, our home health and hospice business provided home health, hospice and home care services from 122 agencies operating across these 13 states, and our senior living business operated 54 senior living communities throughout six states.

The following table summarizes our affiliated home health and hospice agencies and senior living communities as of:


	December 31,								September 30,
	2016	2017	2018	2019	2020	2021	2022	2023	2024
Home health and hospice agencies	39	46	54	63	76	88	95	111	122
Senior living communities	36	43	50	52	54	54	49	51	54
Senior living units	3,184	3,434	3,820	3,963	4,127	4,127	3,500	3,588	3,835
Total number of home health, hospice, and senior living operations	75	89	104	115	130	142	144	162	176

Recent Activities

Acquisitions. During the nine months ended September 30, 2024, we expanded our operations with the addition of eight home health agencies, three hospice agencies, and three senior living communities. A subsidiary of the Company entered into a separate operations transfer agreement with the prior operator of each acquired operation as part of each transaction.

Trends

We have experienced modest senior living occupancy improvement during the nine months ended September 30, 2024, compared to the same period in 2023. Though we have seen improvements in occupancy year over year, the highly competitive environment for senior living residents and inflationary factors will continue to impact the rate at which we change our occupancy levels in our senior living communities.

When we acquire turnaround or start-up operations, we expect that our combined metrics may be impacted. We expect these metrics to vary from period to period based upon the maturity of the operations within our portfolio. We have generally experienced lower occupancy rates and higher costs at our senior living communities and lower census and higher costs at our home health and hospice agencies for recently acquired operations; as a result, we generally anticipate lower and/or fluctuating consolidated and segment margins during years of acquisition growth.

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Government Regulation

We have disclosed under the heading “Government Regulation” in the 2023 Annual Report a summary of regulations that we believe materially affect our business, financial condition or results of operations. Since the time of the filing of the 2023 Annual Report, the following regulations have been updated.

On July 30, 2024, CMS issued the 2025 Hospice Payment Rate Update final rule (the “Hospice Payment Final Rule”). The Hospice Payment Final Rule’s payment update percentage is 2.9%, which is an estimated increase of $790 million in payments from fiscal year 2024. The payment update percentage is based on a 3.4% market basket percentage increase, which is reduced by a 0.5% productivity adjustment. Hospices that fail to meet quality reporting requirements under the Hospice Quality Reporting Program (“HQRP”) will receive a 4% reduction to the annual hospice payment update percentage increase for that year, resulting in a total decrease of 1.1% to those non-compliance hospices’ payments and more than negating the payment update percentage for fiscal year 2025. The Hospice Payment Final Rule also adds two new process measures to HQRP: timely reassessment of pain impact, and timely reassessment of non-pain symptom impact, which are both expected to begin in fiscal year 2028. 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. The Hospice Payment Final Rule also includes clarifying revisions to the hospice conditions of participation; updates statistical area delineations; and makes changes to the Consumer Assessment of Healthcare Providers and Systems (“CAHPS”) Hospice Survey.

On November 1, 2024, CMS issued the 2025 Home Health Prospective Payment System Final Rule (the “Home Health Payment Final Rule”). 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 offset by an estimated -1.8% behavioral adjustment, along with a -0.4% estimated adjustment 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 Home Health Payment Final Rule also recalibrates PDGM case-mix weights, finalizes an update to the home health wage index, updates home health conditions of participation to require patient acceptance policies, and establishes or updates certain LUPA add-on factors.

In June 2024, CMS announced a Period of Enhanced Oversight for newly enrolled hospices in Arizona, California, Nevada, and Texas. The program includes hospices that are newly enrolled, or that undergo a change of ownership, or reactivating after being in a deactivated status after July 13, 2023. Such hospices are subject to enhanced oversight for up to one year and may undergo medical review by CMS contractors to deter fraud, waste and abuse of Medicare funds.

On April 22, 2024, CMS published the Ensuring Access to Medicaid Services Final Rule (the “Access Rule”) which creates and, over the course of five years, implements new obligations for providers of home- and community-based services (“HCBS”), including non-skilled personal care services in the home. The Access Rule requires that, beginning in 2030, states must implement data collection and monitoring systems to ensure that, subject to exceptions, Medicaid-funded HCBS providers spend at least 80% of their Medicaid HCBS reimbursement on compensation for direct care workers, as opposed to administrative overhead or profits. The Access Rule further requires states to establish a grievance system for addressing services provided in the fee-for-service context, publish fee-for-service payment rates paid by Medicaid, publish the average hourly rate paid to HCBS care providers, and develop hardship exemptions and separate requirements for small providers, with these requirements to be implemented within one to three years from the Access Rule taking effect. The Company anticipates potential changes to the Access Rule, or offsetting Medicaid rate increases, before its ultimate implementation in six years.

On March 6, 2024, the SEC issued its final climate disclosure rule (the “Climate Rule”), intended to regulate how public companies report on the risks and impacts of climate-related matters. The Climate Rule requires companies to report on how they manage and assess climate-related risks, as well as how the board and management oversee these risks. The Climate Rule also mandates companies to disclose the financial consequences of extreme weather events and other natural conditions in their audited financial statements. Additionally, larger companies will have to report on their greenhouse gas emissions, which will be subject to a gradual assurance requirement. The Company anticipates that it will be required to disclose information about its management and oversight of climate risks beginning in 2027, and its greenhouse gas emissions beginning in 2029, assuming no further changes to the Climate Rule, or to the Company’s status as an Accelerated Filer under SEC rules. The Climate Rule is the subject of litigation in various courts and on April 4, 2024, the SEC stayed the Climate Rule pending the outcome of these cases.

Segments

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We have two reportable segments: (1) home health and hospice services, which includes our home health, home care and hospice businesses; and (2) senior living services, which includes the operation of assisted living, independent living and memory care communities. Our Chief Executive Officer, who is our CODM, reviews financial information at the operating segment level. We also report an “all other” category that includes general and administrative expense from our Service Center.

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. 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. 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. The average number of patients who are receiving hospice care during any measurement period divided by the number of days during such measurement period.

•Hospice Medicare revenue per day. The average daily Medicare revenue recorded during any measurement period for services provided to hospice patients.

The following table summarizes our overall home health and hospice statistics for the periods indicated:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Home health services:
Total home health admissions	14,993		10,829		43,782		32,180
Total Medicare home health admissions	6,071		4,640		18,155		14,437
Average Medicare revenue per 60-day completed episode(a)	$	3,760	$	3,480	$	3,646	$	3,467
Hospice services:
Total hospice admissions	2,987		2,433		9,118		7,206
Average hospice daily census	3,444		2,698		3,209		2,544
Hospice Medicare revenue per day	$	183	$	183	$	182	$	184


(a)						The year-to-date average Medicare revenue per 60-day completed episode includes post period claim adjustments for prior quarters.

Senior Living Services

•Occupancy. The ratio of actual number of days our units are occupied during any measurement period to the number of days units are available for occupancy during such measurement period.

•Average monthly revenue per occupied unit. The revenue for senior living services during any measurement period divided by actual occupied senior living units for such measurement period divided by the number of months for such measurement period.

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The following table summarizes our senior living statistics for the periods indicated:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Occupancy	79.1		%	78.9		%	78.9		%	78.4		%
Average monthly revenue per occupied unit	$	4,836		$	4,486		$	4,758		$	4,401

Revenue Sources

Home Health and Hospice Services

Home Health. We derive the majority of our home health revenue from Medicare and managed care. The Medicare payment is adjusted for differences between estimated and actual payment amounts, an inability to obtain appropriate billing documentation or authorizations acceptable to the payor and other reasons unrelated to credit risk. Net service revenue is recognized in accordance with PDGM methodology. Under PDGM, Medicare provides agencies with payments for each 30-day period of care provided to beneficiaries. If a beneficiary is still eligible for care after the end of the first 30-day payment period, a second 30-day payment period can begin. There are no limits to the number of periods of care a beneficiary who remains eligible for the home health benefit can receive. While payment for each 30-day period of care is adjusted to reflect the beneficiary’s health condition and needs, a special outlier provision exists to ensure appropriate payment for those beneficiaries that have the most expensive care needs. 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 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. These variables are subject to periodic adjustments set by CMS regulations. For further detail regarding PDGM see the Government Regulation section of our 2023 Annual Report.

Hospice. We derive the majority of our hospice business revenue from Medicare reimbursement. The estimated payment rates are calculated as daily rates for each of the levels of care we deliver. 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”). 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. 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. 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.

CMS has established a two-tiered payment system for RHC services. Hospices are reimbursed at a higher rate for RHC services provided from days of service one through 60 and a lower rate for all subsequent days of service. CMS also provides 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. Additionally, as Medicare hospice revenue is subject to an

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inpatient cap limit and an overall payment cap, we monitor our provider numbers and estimate amounts due back to Medicare to the extent that the cap has been exceeded.

Senior Living Services. As of September 30, 2024, we provided assisted living, independent living and memory care services in 54 communities. Within our senior living operations, we generate revenue primarily from private pay sources, with a portion earned from Medicaid or other state-specific programs.

Primary Components of Expense

Cost of Services (excluding rent, general and administrative expense and depreciation and amortization). Our cost of services represents the costs of operating our independent operating subsidiaries, which primarily consists of payroll and related benefits, supplies, purchased services, and ancillary expenses such as the cost of pharmacy and therapy services provided to patients. Cost of services also includes the cost of general and professional liability insurance and other general cost of services specifically attributable to our operations.

Rent—Cost of Services. Rent—cost of services consists solely of base minimum rent amounts payable under lease agreements to our landlords. Our subsidiaries lease and operate but do not own the underlying real estate at our operations, and these amounts do not include taxes, insurance, impounds, capital reserves or other charges payable under the applicable lease agreements.

General and Administrative Expense. General and administrative expense consists primarily of payroll and related benefits and travel expenses for our Service Center personnel, including training and other operational support. General and administrative expense also includes professional fees (including accounting and legal fees), costs relating to information systems, stock-based compensation and rent for our Service Center offices.

Depreciation and Amortization. Property and equipment are recorded at their original 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.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based on Interim Financial Statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of the Interim Financial Statements and related disclosures requires us to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis we review our judgments and estimates, including but not limited to those related to self-insurance reserves, revenue, intangible assets, and goodwill. 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. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty, and actual results could differ materially from the amounts reported. While we believe that our estimates, assumptions, and judgments are reasonable, they are based on information available when the estimate was made. Refer to Note 2, Basis of Presentation and Summary of Significant Accounting Policies, within the 2023 Annual Report for further information on our critical accounting estimates and policies, which are as follows:

•Self-insurance reserves - 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.

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Recent Accounting Pronouncements

Information concerning recently issued accounting pronouncements, if applicable, are included in Note 2, Basis of Presentation and Summary of Significant Accounting Policies in the Interim Financial Statements.

Results of Operations

The following table sets forth details of our revenue, expenses and earnings as a percentage of total revenue for the periods indicated:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023



Total revenue	100.0	%	100.0	%	100.0	%	100.0	%
Expense:
Cost of services	80.0		80.2		80.1		80.5
Rent—cost of services	6.0		7.1		6.3		7.4
General and administrative expense	7.2		6.7		7.2		6.7
Depreciation and amortization	0.8		1.0		0.8		1.0
Loss (gain) on disposition of property and equipment, net	—		—		(0.1)		—
Total expenses	94.0		95.0		94.3		95.6

Income from operations	6.0		5.0		5.7		4.4
Other expense:
Other income	0.1		—		—		—
Interest expense, net	(1.6)		(1.1)		(1.2)		(1.1)
Other expense, net	(1.5)		(1.1)		(1.2)		(1.1)
Income before provision for income taxes	4.5		3.9		4.5		3.3
Provision for income taxes	0.8		0.7		1.0		0.9
Net income	3.7		3.2		3.5		2.4
Less: net income attributable to noncontrolling interest	0.3		0.1		0.2		0.1
Net income attributable to Pennant	3.4	%	3.1	%	3.3	%	2.3	%

The following table presents our consolidated GAAP Financial measures for the three and nine months ended September 30, 2024 and 2023:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(In thousands)
Consolidated GAAP Financial Measures:
Total revenue	$	180,688	$	140,192	$	506,348	$	398,937
Total expenses	$	169,894	$	133,131	$	477,468	$	381,335
Income from operations	$	10,794	$	7,061	$	28,880	$	17,602

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The following tables present certain financial information regarding our reportable segments for the periods presented. General and administrative expenses are not allocated to the reportable segments and are included in “All Other”:


	Home Health and Hospice Services		Senior Living Services		All Other		Total
	(In thousands)
Segment GAAP Financial Measures:
Three Months Ended September 30, 2024
Revenue	$	135,672	$	45,016	$	—	$	180,688
Segment Adjusted EBITDAR from Operations	$	23,724	$	13,411	$	(11,133)	$	26,002
Three Months Ended September 30, 2023
Revenue	$	101,474	$	38,718	$	—	$	140,192
Segment Adjusted EBITDAR from Operations	$	17,271	$	11,473	$	(8,097)	$	20,647


	Home Health and Hospice Services		Senior Living Services		All Other		Total
	(In thousands)
Segment GAAP Financial Measures:
Nine Months Ended September 30, 2024
Revenue	$	377,463	$	128,885	$	—	$	506,348
Segment Adjusted EBITDAR from Operations	$	64,488	$	38,226	$	(31,840)	$	70,874
Nine Months Ended September 30, 2023
Revenue	$	287,573	$	111,364	$	—	$	398,937
Segment Adjusted EBITDAR from Operations	$	47,364	$	33,394	$	(23,496)	$	57,262

The table below provides a reconciliation of Segment Adjusted EBITDAR from Operations to Condensed Consolidated Income from Operations:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(In thousands)
Segment Adjusted EBITDAR from Operations(a)	$	26,002	$	20,647	$	70,874	$	57,262
Less: Depreciation and amortization	1,493		1,323		4,292		3,817
Rent—cost of services	10,906		10,006		31,814		29,439
Other income (expense)	109		(37)		192		28
Adjustments to Segment EBITDAR from Operations:
Less: Costs at start-up operations(b)	65		(108)		(72)		160
Share-based compensation expense(c)	2,342		1,391		5,817		4,164
Acquisition related costs and credit allowances(d)	494		71		996		175



Costs associated with transitioning operations(e)	12		10		(583)		595
Unusual, non-recurring or redundant charges(f)	239		1,009		546		1,633
Add: Net income attributable to noncontrolling interest	452		79		1,008		351
Condensed Consolidated Income from Operations	$	10,794	$	7,061	$	28,880	$	17,602

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(a)						Segment Adjusted EBITDAR from Operations is net income (loss) attributable to the Company's reportable segments excluding interest expense, provision for income taxes, depreciation and amortization expense, rent, 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, (3) acquisition related costs and credit allowances, (4) the costs associated with transitioning operations, (5) unusual, non-recurring or redundant charges, and (6) net income attributable to noncontrolling interest. 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. 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.
(d)						Non-capitalizable costs associated with acquisitions, credit allowances, and write offs for amounts in dispute with the prior owners of certain acquired operations.

(e)						During the nine months ended September 30, 2023, an affiliate of the Company placed its memory care units into transition and began seeking to sublease the units to an unrelated third party. The amount above represents the net operating impact attributable to the units in transition. The amounts reported exclude rent and depreciation and amortization expense related to such operations and include legal settlement costs associated with an entity transitioned to Ensign.
(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.

Performance and Valuation Measures:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(In thousands)
Consolidated Non-GAAP Financial Measures:
Performance Metrics
Consolidated EBITDA	$	11,944	$	8,268	$	32,356	$	21,096
Consolidated Adjusted EBITDA	$	15,149	$	10,880	$	39,523	$	28,864
Valuation Metric
Consolidated Adjusted EBITDAR	$	26,002			$	70,874


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(In thousands)
Segment Non-GAAP Measures:(a)
Segment Adjusted EBITDA from Operations
Home health and hospice services	$	21,863	$	15,904	$	59,356	$	43,476
Senior living services	$	4,419	$	3,073	$	12,007	$	8,884


(a)						General and administrative expenses are not allocated to any segment for purposes of determining segment profit or loss.

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The table below reconciles Consolidated Net Income to the consolidated Non-GAAP financial measures, Consolidated EBITDA and Consolidated Adjusted EBITDA, and to the Non-GAAP valuation measure, Consolidated Adjusted EBITDAR, for the periods presented:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(In thousands)
Consolidated net income	$	6,657	$	4,462	$	17,809	$	9,381
Less: Net income attributable to noncontrolling interest	452		79		1,008		351
Add: Provision for income taxes	1,354		1,066		4,957		3,894
Interest expense, net	2,892		1,496		6,306		4,355
Depreciation and amortization	1,493		1,323		4,292		3,817
Consolidated EBITDA	11,944		8,268		32,356		21,096
Adjustments to Consolidated EBITDA
Add: Costs at start-up operations(a)	65		(108)		(72)		160
Share-based compensation expense(b)	2,342		1,391		5,817		4,164
Acquisition related costs and credit allowances(c)	494		71		996		175


Costs associated with transitioning operations(d)	12		10		(583)		595
Unusual, non-recurring or redundant charges(e)	239		1,009		546		1,633
Rent related to items (a) and (d) above	53		239		463		1,041
Consolidated Adjusted EBITDA	15,149		10,880		39,523		28,864
Rent—cost of services	10,906		10,006		31,814		29,439
Rent related to items (a) and (d) above	(53)		(239)		(463)		(1,041)
Adjusted rent—cost of services	10,853		9,767		31,351		28,398
Consolidated Adjusted EBITDAR	$	26,002			$	70,874


(a)						Represents results related to start-up 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, credit allowances, and write offs for amounts in dispute with the prior owners of certain acquired operations.

(d)						During the nine months ended September 30, 2023, an affiliate of the Company placed its memory care units into transition and began seeking to sublease the units to an unrelated third party. The amount above represents the net operating impact attributable to the units in transition. The amounts reported exclude rent and depreciation and amortization expense related to such operations and include legal settlement costs associated with an entity transitioned to Ensign.
(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.

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The tables below reconcile Segment Adjusted EBITDAR from Operations to Segment Adjusted EBITDA from Operations for the periods presented:


	Three Months Ended September 30,
	Home Health and Hospice				Senior Living
	2024		2023		2024		2023
	(In thousands)
Segment Adjusted EBITDAR from Operations	$	23,724	$	17,271	$	13,411	$	11,473
Less: Rent—cost of services	1,861		1,439		9,045		8,567
Rent related to start-up and transitioning operations	—		(72)		(53)		(167)
Segment Adjusted EBITDA from Operations	$	21,863	$	15,904	$	4,419	$	3,073


	Nine Months Ended September 30,
	Home Health and Hospice				Senior Living
	2024		2023		2024		2023
	(In thousands)
Segment Adjusted EBITDAR from Operations	$	64,488	$	47,364	$	38,226	$	33,394
Less: Rent—cost of services	5,254		4,136		26,560		25,303
Rent related to start-up and transitioning operations	(122)		(248)		(341)		(793)
Segment Adjusted EBITDA from Operations	$	59,356	$	43,476	$	12,007	$	8,884

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”). Non-GAAP Financial Measures are used in addition to, and in conjunction with, results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. Non-GAAP Financial Measures reflect an additional way of viewing aspects of our operations and company that, when viewed with our GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, we believe can provide a more comprehensive understanding of factors and trends affecting our business.

We believe these Non-GAAP Financial Measures are useful to investors and other external users of our financial statements regarding our results of operations because:

•they are widely used by investors and analysts in our industry as a supplemental measure to evaluate the overall performance of companies in our industry without regard to items such as interest expense, rent expense and depreciation and amortization, which can vary substantially from company to company depending on the book value of assets, the method by which assets were acquired, and differences in capital structures;

•they help investors evaluate and compare the results of our operations from period to period by removing the impact of our asset base and capital structure from our operating results; and

•Consolidated Adjusted EBITDAR is used by investors and analysts in our industry to value the companies in our industry without regard to capital structures.

We use Non-GAAP Financial Measures:

•as measurements of our operating performance to assist us in comparing our operating performance on a consistent basis from period to period;

•to allocate resources to enhance the financial performance of our business;

•to assess the value of a potential acquisition;

•to assess the value of a transformed operation’s performance;

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•to evaluate the effectiveness of our operational strategies; and

•to compare our operating performance to that of our competitors.

We typically use Non-GAAP Financial Measures to compare the operating performance of each operation from period to period. We find that Non-GAAP Financial Measures are useful for this purpose because they do not include such costs as interest expense, income taxes, depreciation and amortization expense, which may vary from period-to-period depending upon various factors, including the method used to finance operations, the date of acquisition of a community or business, and the tax law of the state in which a business unit operates.

We also establish compensation programs and bonuses for our leaders that are partially based upon the achievement of Consolidated Adjusted EBITDAR targets.

Non-GAAP Financial Measures have no standardized meaning defined by GAAP. Therefore, our Non-GAAP Financial Measures have limitations as analytical tools, and they should not be considered in isolation, or as a substitute for analysis of our results as reported in accordance with GAAP. Some of these limitations are:

•they do not reflect our current or future cash requirements for capital expenditures or contractual commitments;

•they do not reflect changes in, or cash requirements for, our working capital needs;

•they do not reflect the net interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;

•in the case of Consolidated Adjusted EBITDAR, it does not reflect rent expenses, which are normal and recurring operating expenses that are necessary to operate our leased operations;

•they do not reflect any income tax payments we may be required to make;

•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and do not reflect any cash requirements for such replacements; and

•other companies in our industry may calculate the same Non-GAAP Financial Measures differently than we do, which may limit their usefulness as comparative measures.

We compensate for these limitations by using Non-GAAP Financial Measures only to supplement net income on a basis prepared in accordance with GAAP in order to provide a more complete understanding of the factors and trends affecting our business. Our use of Non-GAAP Financial Measures should not be construed as an inference that our future results will be unaffected by unusual or unexpected items.

We strongly encourage investors to review the Interim Financial Statements, included in this Quarterly Report in their entirety and to not rely on any single financial measure. Because these Non-GAAP Financial Measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. These Non-GAAP Financial Measures should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP. We strongly urge you to review the reconciliation of Consolidated Net Income to the Non-GAAP Financial Measures in the table presented above, along with the Interim Financial Statements and related notes included elsewhere in this Quarterly Report.

We believe the following Non-GAAP Financial Measures are useful to investors as key operating performance measures and valuation measures:

Performance Measures:

Consolidated EBITDA

We believe Consolidated EBITDA is useful to investors in evaluating our operating performance because it helps investors evaluate and compare the results of our operations from period to period by removing the impact of our asset base (depreciation and amortization expense) from our operating results.

We calculate Consolidated EBITDA as net income, before (a) interest expense (b) provision for income taxes and (c) depreciation and amortization.

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Consolidated Adjusted EBITDA

We adjust Consolidated EBITDA when evaluating our performance because we believe that the exclusion of the additional items described below provides useful supplemental information to investors regarding our ongoing operating performance. We believe that the presentation of Consolidated Adjusted EBITDA, when considered with Consolidated EBITDA and GAAP Consolidated Net Income is beneficial to an investor’s complete understanding of our operating performance.

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;

•costs associated with transitioning operations; and

•unusual, non-recurring, or redundant charges.

Segment Adjusted EBITDA from Operations

We calculate Segment Adjusted EBITDA from Operations by adjusting Segment Adjusted EBITDAR from Operations to include rent-cost of services. We believe that the inclusion of rent-cost of services provides useful supplemental information to investors regarding our ongoing operating performance for each segment.

Valuation Measure:

Consolidated Adjusted EBITDAR

We use Consolidated Adjusted EBITDAR as one measure in determining the value of prospective acquisitions. It is also a measure commonly used by us, research analysts and investors to compare the enterprise value of different companies in the healthcare industry, without regard to differences in capital structures. Additionally, we believe the use of Consolidated Adjusted EBITDAR allows us, research analysts and investors to compare operational results of companies with operating and finance leases. A significant portion of finance lease expenditures are recorded in interest, whereas operating lease expenditures are recorded in rent expense.

This measure is not displayed as a performance measure as it excludes rent expense, which is a normal and recurring operating expense and, as such, does not reflect our cash requirements for leasing commitments. Our presentation of Consolidated Adjusted EBITDAR should not be construed as a financial performance measure.

The adjustments made and previously described in the computation of Consolidated Adjusted EBITDA are also made when computing Consolidated Adjusted EBITDAR. We calculate Consolidated Adjusted EBITDAR by excluding rent-cost of services and rent related to start up operations from Consolidated Adjusted EBITDA.

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Three Months Ended September 30, 2024 Compared to the Three Months Ended September 30, 2023

Revenue


	Three Months Ended September 30,
	2024				2023
	Revenue Dollars		Revenue Percentage		Revenue Dollars		Revenue Percentage
	(In thousands)
Home health and hospice services
Home health	$	60,988	33.8	%	$	44,921	32.0	%
Hospice	62,757		34.7		50,371		35.9
Home care and other(a)	11,927		6.6		6,182		4.4
Total home health and hospice services	135,672		75.1		101,474		72.3
Senior living services	45,016		24.9		38,718		27.7
Total revenue	$	180,688	100.0	%	$	140,192	100.0	%


(a)						Home care and other revenue is included with home health revenue in other disclosures in this Quarterly Report.

Our total revenue increased $40.5 million, or 28.9% during the three months ended September 30, 2024. We experienced growth of $34.2 million from increased operational performance in our Home Health and Hospice segment from increased admissions and rates when compared to the three months ended September 30, 2023. The growth in our Senior Living segment resulted in an increase in revenue of $6.3 million driven primarily by the improved average rate per occupied room.

Home Health and Hospice Services


	Three Months Ended September 30,
	2024		2023		Change		% Change
	(In thousands)
Home health and hospice revenue
Home health services	$	60,988	$	44,921	$	16,067	35.8	%
Hospice services	62,757		50,371		12,386		24.6
Home care and other	11,927		6,182		5,745		92.9
Total home health and hospice revenue	$	135,672	$	101,474	$	34,198	33.7	%

	Three Months Ended September 30,
	2024		2023		Change		% Change
Home health services:
Total home health admissions	14,993		10,829		4,164		38.5	%
Total Medicare home health admissions	6,071		4,640		1,431		30.8
Average Medicare revenue per 60-day completed episode	$	3,760	$	3,480	$	280	8.0
Hospice services:
Total hospice admissions	2,987		2,433		554		22.8
Average daily hospice census	3,444		2,698		746		27.7
Hospice Medicare revenue per day	$	183	$	183	$	—	—
Number of home health and hospice agencies at period end	122		103		19		18.4

Home health and hospice revenue increased $34.2 million, or 33.7%, for the three months ended September 30, 2024 compared to the prior year quarter. Revenue grew due to an increase in certain key performance indicators including, an increase of 38.5% in total home health admissions, an increase in total hospice admissions of 22.8%, and an increase in average

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daily hospice census of 27.7% during the three months ended September 30, 2024 compared to the prior year quarter. Growth was also driven by the addition of nineteen home health and hospice operations between September 30, 2023 and September 30, 2024, resulting in an increase of $22.2 million, or 21.9%.

Senior Living Services


	Three Months Ended September 30,
	2024			2023			Change			% Change

Revenue (in thousands)	$	45,016		$	38,718		$	6,298		16.3	%
Number of communities at period end	54			51			3			5.9
Occupancy	79.1		%	78.9		%	0.2		%
Average monthly revenue per occupied unit	$	4,836		$	4,486		$	350		7.8

Senior living revenue increased $6.3 million, or 16.3%, for the three months ended September 30, 2024 compared to the prior year quarter. Revenue grew primarily due to a 7.8% increase in average monthly revenue per occupied unit and an increase of 20 basis points in occupancy between September 30, 2023 and September 30, 2024. Growth was also driven by the addition of three senior living communities between September 30, 2023 and September 30, 2024, resulting in an increase of $3.4 million, or 8.8%, overall.

Cost of Services

The following table sets forth total cost of services by each of our reportable segments for the periods indicated:


	Three Months Ended September 30,
	2024		2023		Change		% Change
	(In thousands)
Home Health and Hospice	$	112,591	$	84,795	$	27,796	32.8	%
Senior Living	31,877		27,589		4,288		15.5
Total cost of services	$	144,468	$	112,384	$	32,084	28.5	%

Total consolidated cost of services increased $32.1 million, or 28.5%, for the three months ended September 30, 2024 when compared to the three months ended September 30, 2023. Cost of services as a percentage of revenue decreased by 20 basis points from 80.2% to 80.0% for the three months ended September 30, 2024 when compared to the three months ended September 30, 2023.

Home Health and Hospice Services


	Three Months Ended September 30,
	2024			2023			Change			% Change
	(In thousands)
Cost of service	$	112,591		$	84,795		$	27,796		32.8	%
Cost of services as a percentage of revenue	83.0		%	83.6		%	(0.6)		%

Cost of services related to our Home Health and Hospice Services segment increased $27.8 million, or 32.8%, primarily due to increased volume of services provided. Cost of services as a percentage of revenue for the three months ended September 30, 2024 decreased 60 basis points when compared to the three months ended September 30, 2023.

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Senior Living Services


	Three Months Ended September 30,
	2024			2023			Change			% Change
	(In thousands)
Cost of service	$	31,877		$	27,589		$	4,288		15.5	%
Cost of services as a percentage of revenue	70.8		%	71.3		%	(0.5)		%

Cost of services related to our Senior Living Services segment increased $4.3 million, or 15.5%, primarily due to increased wages and benefits. As a percentage of revenue, costs of service decreased by 50 basis points for the three months ended September 30, 2024 when compared to the three months ended September 30, 2023.

Rent—Cost of Services. Rent expense increased 9.0% from $10.0 million to $10.9 million in the three months ended September 30, 2024 when compared to the three months ended September 30, 2023, primarily as a result of the new leases on the acquired home health and hospice operations and senior living community. Rent as a percentage of total revenue decreased 110 basis points from 7.1% for the three months ended September 30, 2023, compared to 6.0% for the three months ended September 30, 2024.

General and Administrative Expense. Our general and administrative expense increased $3.6 million, or 38.3%, from $9.4 million to $13.0 million for the three months ended September 30, 2024 when compared to the three months ended September 30, 2023. General and administrative expense as a percentage of revenue increased 50 basis points from 6.7% to 7.2% during the period. The primary driver of the increase in general and administrative expense was due to an increase in payroll and related benefits for the three months ended September 30, 2024 when compared to the three months ended September 30, 2023.

Depreciation and Amortization. Depreciation and amortization expense remained consistent with the comparable period.

Provision for Income Taxes. We recorded income tax expense of $1.4 million and $1.1 million or 16.9% and 19.3% of earnings before income taxes for the three months ended September 30, 2024 and 2023, respectively. The decrease in the effective tax rate is primarily due to more excess tax benefits on equity compensation.

Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023

Revenue


	Nine Months Ended September 30,
	2024				2023
	Revenue Dollars		Revenue Percentage		Revenue Dollars		Revenue Percentage
	(In thousands)
Home health and hospice services
Home health	$	172,773	34.1	%	$	129,112	32.4	%
Hospice	176,711		34.9		140,222		35.1
Home care and other(a)	27,979		5.5		18,239		4.6
Total home health and hospice services	377,463		74.5		287,573		72.1
Senior living services	128,885		25.5		111,364		27.9
Total revenue	$	506,348	100.0	%	$	398,937	100.0	%


(a)						Home care and other revenue is included with home health revenue in other disclosures in this Quarterly Report.

Our total revenue increased $107.4 million, or 26.9%, during the nine months ended September 30, 2024. The increase in revenue was driven by increases in key metrics for home health and hospice and senior living, including hospice admissions, hospice revenue per day, hospice average daily census, senior living occupancy, and senior living revenue per occupied room.

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Home Health and Hospice Services


	Nine Months Ended September 30,
	2024		2023		Change		% Change
	(In thousands)
Home health and hospice revenue
Home health services	$	172,773	$	129,112	$	43,661	33.8	%
Hospice services	176,711		140,222		36,489		26.0
Home care and other	27,979		18,239		9,740		53.4
Total home health and hospice revenue	$	377,463	$	287,573	$	89,890	31.3	%

	Nine Months Ended September 30,
	2024		2023		Change		% Change
Home health services:
Total home health admissions	43,782		32,180		11,602		36.1	%
Total Medicare home health admissions	18,155		14,437		3,718		25.8
Average Medicare revenue per 60-day completed episode(a)	$	3,646	$	3,467	$	179	5.2
Hospice services:
Total hospice admissions	9,118		7,206		1,912		26.5
Average daily census	3,209		2,544		665		26.1
Hospice Medicare revenue per day	$	182	$	184	$	(2)	(1.1)
Number of home health and hospice agencies at period end	122		103		19		18.4


(a)						The year-to-date average for Medicare revenue per 60-day completed episode includes post period claim adjustments for prior periods.

Home health and hospice revenue increased $89.9 million, or 31.3% during the nine months ended September 30, 2024 compared to the same period in the prior year primarily due to an increase of 36.1% in home health admissions, inclusive of an increase in total Medicare home health admissions of 25.8%, an increase in hospice average daily census of 26.1%, and an increase of 26.5% in hospice admissions. The addition of nineteen home health and hospice operations between September 30, 2023 and September 30, 2024, added revenue of $51.2 million, or 17.8%.

Senior Living Services


	Nine Months Ended September 30,
	2024			2023			Change			% Change

Revenue (in thousands)	$	128,885		$	111,364		$	17,521		15.7	%
Number of communities at period end	54			51			3			5.9
Occupancy	78.9		%	78.4		%	0.5		%
Average monthly revenue per occupied unit	$	4,758		$	4,401		$	357		8.1

Senior living revenue increased $17.5 million, or 15.7%, for the nine months ended September 30, 2024 compared to the same period in the prior year primarily due to an increase of 8.1% in average monthly revenue per occupied unit and an increase of 50 basis points in the occupancy rate between September 30, 2023 and September 30, 2024. The acquisition of three senior living communities between September 30, 2023 and September 30, 2024, added $8.1 million, or 7.3%, in revenue.

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Cost of Services


	Nine Months Ended September 30,
	2024		2023		Change		% Change
	(In thousands)
Home Health and Hospice	$	314,458	$	242,280	$	72,178	29.8	%
Senior Living	91,318		78,882		12,436		15.8
Total cost of services	$	405,776	$	321,162	$	84,614	26.3	%

Consolidated cost of services increased $84.6 million, or 26.3%, during the nine months ended September 30, 2024 compared to the same period in the prior year. Cost of services as a percentage of revenue for the nine months ended September 30, 2024 decreased by 40 basis points to 80.1% from 80.5% compared to the nine months ended September 30, 2023.

Home Health and Hospice Services


	Nine Months Ended September 30,
	2024			2023			Change			% Change
Cost of service (in thousands)	$	314,458		$	242,280		$	72,178		29.8	%
Cost of services as a percentage of revenue	83.3		%	84.2		%	(0.9)		%

Cost of services related to our Home Health and Hospice services segment increased $72.2 million, or 29.8%, compared to the same period in the prior year primarily due to the increased volume of services from the growth in admissions and average daily census. Cost of services as a percentage of revenue for the nine months ended September 30, 2024 decreased by 90 basis points compared to the nine months ended September 30, 2023 primarily due to decreased wages and benefits as a percent of revenue.

Senior Living Services


	Nine Months Ended September 30,
	2024			2023			Change			% Change
Cost of service (in thousands)	$	91,318		$	78,882		$	12,436		15.8	%
Cost of services as a percentage of revenue	70.9		%	70.8		%	0.1		%

Cost of services related to our Senior Living services segment increased $12.4 million, or 15.8%, during the nine months ended September 30, 2024 compared to the same period in the prior year primarily due to higher occupancy and wage rate increases. As a percentage of revenue, costs of service increased by 10 basis points during the nine months ended September 30, 2024 when compared to the nine months ended September 30, 2023.

Rent—Cost of Services. Rent increased 8.1% from $29.4 million to $31.8 million during the nine months ended September 30, 2024 compared to the same period in the prior year, primarily as a result of the new leases on the acquired home health and hospice operations and senior living community. As a percentage of revenue, rent—cost of services decreased 110 basis points when compared to the nine months ended September 30, 2023 due to improved senior living performance.

General and Administrative Expense. Our general and administrative expense increased $9.4 million, or 35.0%, from $26.9 million to $36.3 million for the nine months ended September 30, 2024 when compared to the nine months ended September 30, 2023. The increase in general and administrative expense was due to an increase in payroll and related benefits, for the nine months ended September 30, 2024 when compared to the nine months ended September 30, 2023.

Depreciation and Amortization. Depreciation and amortization expense remained consistent with the comparable period.

Gain on disposition of property and equipment, net. We recorded a gain of $0.8 million for insurance proceeds received in excess of the carrying values of related assets during the nine months ended September 30, 2024. No gain on disposition of property and equipment was recorded during the nine months ended September 30, 2023.

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Provision for Income Taxes. We recorded income tax expense of $5.0 million and $3.9 million, or 21.8% and 29.3% of earnings before income taxes, for the nine months ended September 30, 2024 and 2023, respectively. The decrease in the effective tax rate is primarily due to more excess tax benefits on equity compensation.

Liquidity and Capital Resources

Our primary sources of liquidity are net cash provided by operating activities and borrowings under our Revolving Credit Facility.

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”). The Amended Revolving Credit Facility is not subject to interim amortization and the Company will not be required to repay any loans under the Amended Revolving Credit Facility prior to maturity in 2029. The Company is permitted to prepay all or any portion of the loans under the Amended Revolving Credit Facility prior to maturity without premium or penalty, subject to reimbursement of any SOFR breakage costs of the lenders.

The Amended Credit Agreement contains customary covenants that, among other things, restrict, subject to certain exceptions, the ability of the Company and its independent operating subsidiaries to grant liens on their assets, incur indebtedness, sell assets, make investments, engage in acquisitions, mergers or consolidations, amend certain material agreements and pay certain dividends and other restricted payments. Financial covenants require compliance with certain levels of leverage ratios that impact the amount of interest. As of September 30, 2024, the Company was compliant with all such financial covenants.

As of September 30, 2024, we had $4.5 million of cash and $132.8 million of available borrowing capacity on our Amended Revolving Credit Facility. As described in Note 17, Subsequent Events, to the Interim Financial Statements in Part I of this Quarterly Report, on October 2, 2024, the Company closed a public offering of 4,025,000 shares of its common stock with net proceeds to the Company from the offering, after underwriting discounts and commissions and before expenses, of approximately $118.5 million. The proceeds were subsequently used to pay the outstanding balance on our Amended Revolving Credit Facility.

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 our operating activities and for opportunities of acquisition growth.

The following table presents selected data from our Condensed Consolidated Statement of Cash Flows for the periods presented:


	Nine Months Ended September 30,
	2024		2023
	(In thousands)
Net cash provided by operating activities	$	18,729	$	27,910
Net cash used in investing activities	(66,287)		(17,576)
Net cash provided by (used in) financing activities	45,963		(9,030)
Net (decrease) increase in cash	(1,595)		1,304
Cash at beginning of period	6,059		2,079
Cash at end of period	$	4,464	$	3,383

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Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023

Our net cash flow from operating activities for the nine months ended September 30, 2024 decreased by $9.2 million when compared to the nine months ended September 30, 2023. The primary driver of this difference was a decrease in cash flows from the change in operating assets and liabilities of $14.9 million, net, and a decrease of $2.7 million in non-cash expenses, partially offset by an increase in net income of $8.4 million.

Our net cash used in investing activities for the nine months ended September 30, 2024 increased by $48.7 million compared to the nine months ended September 30, 2023, primarily driven by an increase in business and asset acquisitions.

Our net cash used in financing activities increased by approximately $55.0 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase was primarily due to a net increase in the balance on our line of credit during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Contractual Obligations, Commitments and Contingencies

We continue to make draws and payments on our Revolving Credit Facility, as described in Note 11, Debt, to the Interim Financial Statements in Part I of this Quarterly Report. Additionally, we have right-of-use assets obtained in exchange for new operating lease obligations, as described in the supplemental disclosures of cash flow information in the Condensed Consolidated Statement of Cash Flows and in Note 13, Leases, to the Interim Financial Statements in Part I of this Quarterly Report.

Other than those transactions there have been no other material changes to our total obligations during the period covered by this Quarterly Report outside of the normal course of our business.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk. We are exposed to risks associated with market changes in interest rates. On July 31, 2024, Pennant entered into the Amended Credit Agreement, which provides for a revolving credit facility with a syndicate of banks with a borrowing capacity of $250.0 million. A 1.0% interest rate change would cause interest expense to change by approximately $1.1 million annually based upon our outstanding long-term debt as of September 30, 2024. We manage our exposure to this market risk by monitoring available financing alternatives.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this Quarterly Report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no material changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are involved in various claims and lawsuits arising in the ordinary course of business, none of which, in the opinion of management, is expected to have a material adverse effect on our results of operations or financial condition. However, the results of such matters cannot be predicted with certainty and we cannot assure you that the ultimate resolution of any legal or administrative proceeding or dispute will not have a material adverse effect on our business, financial condition, results of operations and cash flows. See Note 15, Commitments and Contingencies, to the Interim Financial Statements for a description of claims and legal actions arising in the ordinary course of our business.

Item 1A. Risk Factors

We have disclosed under the heading “Risk Factors” in the 2023 Annual Report risk factors that materially affect our business, financial condition or results of operations, and disclosed more recent events relevant to our business under Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations. You should carefully consider the risk factors set forth in the 2023 Annual Report and the other information set forth elsewhere in this Quarterly Report. In particular, if CMS adopts the Home Health Payment Proposed Rule as a final rule in its current form or in a substantially similar form, we may be adversely affected by decreased Medicare reimbursement for home health services in calendar year 2025. Medicare’s rates for home health services not only affect Medicare beneficiaries but may also have consequences for home health patients whose benefits are paid by commercial insurance or other payors that base their payments to home health agencies on Medicare’s payment rates. You should be aware that these risk factors and other information may not describe every risk facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 5. Other Information

Rule 10b5-1 Plan Election

Jason P. Steik, Chief Clinical Officer, entered into a Rule 10b5-1 trading arrangement on August 16, 2024 (the “Rule 10b5-1 Plan”). Mr. Steik’s 10b5-1 Plan provides for the potential sale of only the number of shares of the Company’s common stock necessary to cover the tax obligations generated by the vesting of 8,400 shares of the Company’s common stock between the adoption date of the Rule 10b5-1 Plan and its expiration on July 30, 2027.

This Rule 10b5-1 trading arrangement was entered into during open trading windows and is intended to satisfy the affirmative defense conditions of Rule 10b5-1 (c) under the Securities Exchange Act of 1934, as amended, and the Company's policies regarding transactions in Company securities.

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Item 6. Exhibits

EXHIBIT INDEX


Exhibit						Description

3.1						Amended and Restated Certificate of Incorporation of The Pennant Group, Inc., effective as of September 27, 2019 (incorporated by reference to Exhibit 3.1 to The Pennant Group, Inc.’s Current Report on Form 8-K (File No. 001-38900) filed with the SEC on October 3, 2019).

3.2						Second Amended and Restated Bylaws of The Pennant Group, Inc., effective as of February 21, 2022 (incorporated by reference to Exhibit 3.1 to The Pennant Group, Inc.’s Current Report on Form 8-K (File No. 001-38900) filed with the SEC February 22, 2022).

4.1						Form of Indenture (incorporated by reference to Exhibit 4.4 to The Pennant Group, Inc.’s Registration Statement on Form S-3 (File No. 333-281302) filed with the SEC August 6, 2024 ).

10.1						Amended and Restated Credit Agreement, dated as of July 31, 2024, by and among The Pennant Group, Inc. and Truist Bank, as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to The Pennant Group, Inc.’s Current Report on Form 8-K (File No. 001-38900) filed with the SEC August 1, 2024 ).

31.1						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1						Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2						Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH						Inline XBRL Taxonomy Extension Schema Document

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover Page Interactive Data File (embedded within the Inline XBRL document)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	The Pennant Group, Inc.

Dated: November 6, 2024	BY:	/s/ LYNETTE B. WALBOM
		Lynette B. Walbom
		Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer)

EXHIBIT 31.1

I, Brent J. Guerisoli, certify that:

1.I have reviewed this quarterly report on Form 10-Q of The Pennant Group, Inc;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 6, 2024

/s/ BRENT J. GUERISOLI

Name:

Brent J. Guerisoli

Title:

Chief Executive Officer (Principal Executive Officer)

EXHIBIT 31.2

I, Lynette B. Walbom, certify that:

1.I have reviewed this quarterly report on Form 10-Q of The Pennant Group, Inc.;

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 6, 2024

/s/ LYNETTE B. WALBOM

Name:

Lynette B. Walbom

Title:

Chief Financial Officer (Principal Financial Officer, Principal Accounting Officer and Duly Authorized Officer)

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Pennant Group, Inc. (the Company) on Form 10-Q for the period ended September 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Brent J. Guerisoli, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ BRENT J. GUERISOLI

Name:

Brent J. Guerisoli

Title:

Chief Executive Officer (Principal Executive Officer)

November 6, 2024

A signed original of this written statement required by 18 U.S.C. Section 1350 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Pennant Group, Inc. (the Company) on Form 10-Q for the period ended September 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Lynette B. Walbom, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ LYNETTE B. WALBOM

Name:

Lynette B. Walbom

Title:

Chief Financial Officer (Principal Financial Officer, Principal Accounting Officer and Duly Authorized Officer)

November 6, 2024

COVER - shares	9 Months Ended
COVER - shares	Sep. 30, 2024	Nov. 05, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2024
Document Transition Report	false
Entity File Number	001-38900
Entity Registrant Name	THE PENNANT GROUP, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	83-3349931
Entity Address, Address Line One	1675 East Riverside Drive
Entity Address, Address Line Two	Suite 150
Entity Address, City or Town	Eagle
Entity Address, State or Province	ID
Entity Address, Postal Zip Code	83616
City Area Code	(208)
Local Phone Number	506-6100
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	PNTG
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		34,348,369
Entity Central Index Key	0001766400
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Amendment Flag	false

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Current assets:
Cash	$ 4,464	$ 6,059
Accounts receivable—less allowance for doubtful accounts of $313 and $259, respectively	84,025	61,116
Prepaid expenses and other current assets	13,307	12,902
Total current assets	101,796	80,077
Property and equipment, net	41,865	28,598
Right-of-use assets	265,441	262,923
Deferred tax assets, net	245	0
Restricted and other assets	12,173	9,337
Goodwill	129,337	91,014
Other indefinite-lived intangibles	95,902	67,742
Total assets	646,759	539,691
Current liabilities:
Accounts payable	15,888	10,841
Accrued wages and related liabilities	36,565	28,256
Operating lease liabilities—current	19,113	17,122
Other accrued liabilities	19,029	15,330
Total current liabilities	90,595	71,549
Long-term operating lease liabilities—less current portion	248,907	248,596
Deferred tax liabilities, net	818	1,855
Other long-term liabilities	10,277	8,262
Long-term debt, net	108,875	63,914
Total liabilities	459,472	394,176
Commitments and contingencies
Equity:
Common stock, $0.001 par value; 100,000 shares authorized; 30,565 and 30,308 shares issued and outstanding, respectively, at September 30, 2024; and 30,297 and 29,948 shares issued and outstanding, respectively, at December 31, 2023	31	29
Additional paid-in capital	117,947	105,712
Retained earnings	51,464	34,663
Treasury stock, at cost, 3 shares at September 30, 2024 and December 31, 2023	(65)	(65)
Total The Pennant Group, Inc. stockholders’ equity	169,377	140,339
Noncontrolling interest	17,910	5,176
Total equity	187,287	145,515
Total liabilities and equity	$ 646,759	$ 539,691

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 313	$ 259
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	30,565,000	30,297,000
Common stock, shares outstanding (in shares)	30,308,000	29,948,000
Treasury stock, at cost (in shares)	3,000	3,000

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Income Statement [Abstract]
Revenue	$ 180,688	$ 140,192	$ 506,348	$ 398,937
Expense
Cost of services	144,468	112,384	405,776	321,162
Rent—cost of services	10,906	10,006	31,814	29,439
General and administrative expense	13,023	9,417	36,337	26,913
Depreciation and amortization	1,493	1,323	4,292	3,817
Loss (gain) on disposition of property and equipment, net	4	1	(751)	4
Total expenses	169,894	133,131	477,468	381,335
Income from operations	10,794	7,061	28,880	17,602
Other (expense) income, net:
Other income (expense)	109	(37)	192	28
Interest expense, net	(2,892)	(1,496)	(6,306)	(4,355)
Other expense, net	(2,783)	(1,533)	(6,114)	(4,327)
Income before provision for income taxes	8,011	5,528	22,766	13,275
Provision for income taxes	1,354	1,066	4,957	3,894
Net income	6,657	4,462	17,809	9,381
Less: Net income attributable to noncontrolling interest	452	79	1,008	351
Net income attributable to The Pennant Group, Inc.	$ 6,205	$ 4,383	$ 16,801	$ 9,030
Earnings per share:
Basic (in dollars per share)	$ 0.20	$ 0.15	$ 0.56	$ 0.30
Diluted (in dollars per share)	$ 0.20	$ 0.15	$ 0.54	$ 0.30
Weighted average common shares outstanding:
Basic (in shares)	30,281	29,912	30,157	29,825
Diluted (in shares)	31,363	30,206	30,869	30,178

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Treasury Stock	Non-controlling Interest
Equity, beginning balance, common stock (in shares) at Dec. 31, 2022		30,149
Equity, beginning balance at Dec. 31, 2022	$ 125,657	$ 29	$ 99,764	$ 21,284	$ (65)	$ 4,645
Equity, beginning balance, treasury stock (in shares) at Dec. 31, 2022					3
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss) attributable to The Pennant Group, Inc.	1,850			1,850
Net income attributable to noncontrolling interests	147					147
Share-based compensation	1,367		1,367
Issuance of common stock from the exercise of stock options (in shares)		26
Issuance of common stock from the exercise of stock options	203		203
Net issuance of restricted stock (in shares)		28
Equity, ending balance, common stock (in shares) at Mar. 31, 2023		30,203
Equity, ending balance at Mar. 31, 2023	129,224	$ 29	101,334	23,134	$ (65)	4,792
Equity, ending balance, treasury stock (in shares) at Mar. 31, 2023					3
Equity, beginning balance, common stock (in shares) at Dec. 31, 2022		30,149
Equity, beginning balance at Dec. 31, 2022	125,657	$ 29	99,764	21,284	$ (65)	4,645
Equity, beginning balance, treasury stock (in shares) at Dec. 31, 2022					3
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss) attributable to The Pennant Group, Inc.	9,030
Net income attributable to noncontrolling interests	351
Equity, ending balance, common stock (in shares) at Sep. 30, 2023		30,266
Equity, ending balance at Sep. 30, 2023	139,519	$ 29	104,245	30,314	$ (65)	4,996
Equity, ending balance, treasury stock (in shares) at Sep. 30, 2023					3
Equity, beginning balance, common stock (in shares) at Mar. 31, 2023		30,203
Equity, beginning balance at Mar. 31, 2023	129,224	$ 29	101,334	23,134	$ (65)	4,792
Equity, beginning balance, treasury stock (in shares) at Mar. 31, 2023					3
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss) attributable to The Pennant Group, Inc.	2,797			2,797
Net income attributable to noncontrolling interests	125					125
Share-based compensation	1,303		1,303
Issuance of common stock from the exercise of stock options (in shares)		38
Issuance of common stock from the exercise of stock options	249		249
Net issuance of restricted stock (in shares)		10
Equity, ending balance, common stock (in shares) at Jun. 30, 2023		30,251
Equity, ending balance at Jun. 30, 2023	133,698	$ 29	102,886	25,931	$ (65)	4,917
Equity, ending balance, treasury stock (in shares) at Jun. 30, 2023					3
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss) attributable to The Pennant Group, Inc.	4,383			4,383
Net income attributable to noncontrolling interests	79					79
Share-based compensation	1,341		1,341
Issuance of common stock from the exercise of stock options (in shares)		4
Issuance of common stock from the exercise of stock options	18		18
Net issuance of restricted stock (in shares)		11
Equity, ending balance, common stock (in shares) at Sep. 30, 2023		30,266
Equity, ending balance at Sep. 30, 2023	$ 139,519	$ 29	104,245	30,314	$ (65)	4,996
Equity, ending balance, treasury stock (in shares) at Sep. 30, 2023					3
Equity, beginning balance, common stock (in shares) at Dec. 31, 2023	29,948	30,297
Equity, beginning balance at Dec. 31, 2023	$ 145,515	$ 29	105,712	34,663	$ (65)	5,176
Equity, beginning balance, treasury stock (in shares) at Dec. 31, 2023	3				3
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss) attributable to The Pennant Group, Inc.	$ 4,906			4,906
Noncontrolling interests assumed related to acquisitions	11,726					11,726
Net income attributable to noncontrolling interests	152					152
Share-based compensation	1,440		1,440
Issuance of common stock from the exercise of stock options (in shares)		72
Issuance of common stock from the exercise of stock options	493	$ 1	492
Net issuance of restricted stock (in shares)		2
Equity, ending balance, common stock (in shares) at Mar. 31, 2024		30,371
Equity, ending balance at Mar. 31, 2024	$ 164,232	$ 30	107,644	39,569	$ (65)	17,054
Equity, ending balance, treasury stock (in shares) at Mar. 31, 2024					3
Equity, beginning balance, common stock (in shares) at Dec. 31, 2023	29,948	30,297
Equity, beginning balance at Dec. 31, 2023	$ 145,515	$ 29	105,712	34,663	$ (65)	5,176
Equity, beginning balance, treasury stock (in shares) at Dec. 31, 2023	3				3
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss) attributable to The Pennant Group, Inc.	$ 16,801
Net income attributable to noncontrolling interests	$ 1,008
Equity, ending balance, common stock (in shares) at Sep. 30, 2024	30,308	30,565
Equity, ending balance at Sep. 30, 2024	$ 187,287	$ 31	117,947	51,464	$ (65)	17,910
Equity, ending balance, treasury stock (in shares) at Sep. 30, 2024	3				3
Equity, beginning balance, common stock (in shares) at Mar. 31, 2024		30,371
Equity, beginning balance at Mar. 31, 2024	$ 164,232	$ 30	107,644	39,569	$ (65)	17,054
Equity, beginning balance, treasury stock (in shares) at Mar. 31, 2024					3
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss) attributable to The Pennant Group, Inc.	5,690			5,690
Net income attributable to noncontrolling interests	404					404
Share-based compensation	1,851		1,851
Issuance of common stock from the exercise of stock options (in shares)		100
Issuance of common stock from the exercise of stock options	816		816
Net issuance of restricted stock (in shares)		22
Equity, ending balance, common stock (in shares) at Jun. 30, 2024		30,493
Equity, ending balance at Jun. 30, 2024	172,993	$ 30	110,311	45,259	$ (65)	17,458
Equity, ending balance, treasury stock (in shares) at Jun. 30, 2024					3
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss) attributable to The Pennant Group, Inc.	6,205			6,205
Equity adjustments related to acquisitions	4,794		4,794
Net income attributable to noncontrolling interests	452					452
Share-based compensation	2,133		2,133
Issuance of common stock from the exercise of stock options (in shares)		49
Issuance of common stock from the exercise of stock options	$ 710	$ 1	709
Net issuance of restricted stock (in shares)		23
Equity, ending balance, common stock (in shares) at Sep. 30, 2024	30,308	30,565
Equity, ending balance at Sep. 30, 2024	$ 187,287	$ 31	$ 117,947	$ 51,464	$ (65)	$ 17,910
Equity, ending balance, treasury stock (in shares) at Sep. 30, 2024	3				3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Cash flows from operating activities:
Net income	$ 17,809	$ 9,381
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	4,292	3,817
Amortization of deferred financing fees, including write-offs from amendment	876	391
(Gain) loss on disposition of property and equipment, net	(751)	4
Provision for doubtful accounts	622	620
Share-based compensation	5,424	4,011
Deferred income taxes	(1,283)	3,066
Change in operating assets and liabilities, net of acquisitions:
Accounts receivable	(23,532)	(5,560)
Prepaid expenses and other assets	(1,396)	11,387
Operating lease obligations	(201)	121
Accounts payable	5,199	(866)
Accrued wages and related liabilities	7,962	1,376
Other accrued liabilities	2,828	(398)
Other long-term liabilities	880	560
Net cash provided by operating activities	18,729	27,910
Cash flows from investing activities:
Purchase of property and equipment	(5,670)	(5,746)
Cash payments for business acquisitions	(48,416)	(11,662)
Cash payments for asset acquisitions	(11,380)	(210)
Escrow deposits	(1,755)	0
Other	934	42
Net cash used in investing activities	(66,287)	(17,576)
Cash flows from financing activities:
Proceeds from Revolving Credit Facility	309,500	131,500
Payments on Revolving Credit Facility	(261,500)	(141,000)
Finance lease obligations	(141)	0
Payments for deferred financing costs	(3,915)	0
Issuance of common stock upon the exercise of options	2,019	470
Net cash provided by (used in) financing activities	45,963	(9,030)
Net (decrease) increase in cash	(1,595)	1,304
Cash beginning of period	6,059	2,079
Cash end of period	4,464	3,383
Cash paid during the period for:
Interest	6,944	3,997
Income taxes	5,633	176
Lease liabilities	29,232	27,231
Right-of-use assets obtained in exchange for new operating lease obligations	16,191	9,357
Non-cash adjustment to right-of-use assets and lease liabilities from lease modifications	0	5,195
Non-cash investing activity:
Capital expenditures in accounts payable	$ 1,630	$ 680

DESCRIPTION OF BUSINESS	9 Months Ended
DESCRIPTION OF BUSINESS	Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
DESCRIPTION OF BUSINESS	DESCRIPTION OF BUSINESS The Pennant Group, Inc. (herein referred to as “Pennant,” the “Company,” “it,” or “its”), is a holding company with no direct operating assets, employees or revenue. The Company, through its independent operating subsidiaries, provides healthcare services across the post-acute care continuum. As of September 30, 2024, the Company’s subsidiaries operated 122 home health, hospice and home care agencies and 54 senior living communities located in Arizona, California, Colorado, Idaho, Montana, Nevada, Oklahoma, Oregon, Texas, Utah, Washington, Wisconsin and Wyoming. Certain of the Company’s subsidiaries, collectively referred to as the Service Center, provide accounting, payroll, human resources, information technology, legal, risk management, and other services to the operations through contractual relationships. The Service Center also provides certain of these services to unaffiliated third parties under management agreements. Each of the Company’s affiliated operations are operated by separate, independent subsidiaries that have their own management, employees and assets. References herein to the consolidated “Company” and “its” assets and activities are not meant to imply, nor should they be construed as meaning, that Pennant has direct operating assets, employees or revenue, or that any of the subsidiaries are operated by Pennant.

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2024
Accounting Policies [Abstract]
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation - The accompanying unaudited condensed consolidated financial statements of the Company (the “Interim Financial Statements”) reflect the Company’s financial position, results of operations, and cash flows of the business. The Interim Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the regulations of the Securities and Exchange Commission (“SEC”). Management believes that the Interim Financial Statements reflect, in all material respects, all adjustments which are of a normal and recurring nature necessary to present fairly the Company’s financial position, results of operations, and cash flows for the periods presented in conformity with GAAP. The results reported in these Interim Financial Statements are not necessarily indicative of results that may be expected for the entire year. The Condensed Consolidated Balance Sheet as of December 31, 2023 is derived from the Company’s annual audited Consolidated Financial Statements for the fiscal year ended December 31, 2023, which should be read in conjunction with these Interim Financial Statements. Certain information in the accompanying footnote disclosures normally included in annual financial statements was condensed or omitted for the interim periods presented in accordance with GAAP. All intercompany transactions and balances between the various legal entities comprising the Company have been eliminated in consolidation. The Company presents noncontrolling interests within the equity section of its Condensed Consolidated Balance Sheets and the amount of consolidated net income that is attributable to the Company and the noncontrolling interest in its Condensed Consolidated Statements of Income. The Company consists of various limited liability companies and corporations established to operate home health, hospice, home care, and senior living operations. The Interim Financial Statements include the accounts of all entities controlled by the Company through its ownership of a majority voting interest. Reclassifications - Certain amounts in the prior financial statements have been reclassified to conform to the presentation of the current period financial statements. Estimates and Assumptions - The preparation of the Interim Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Interim Financial Statements and the reported amounts of revenue and expenses during the reporting periods. The most significant estimates in the Interim Financial Statements relate to self-insurance reserves, revenue recognition, and intangible assets and goodwill. Actual results could differ from those estimates. State relief funding. The Company receives state relief funding through programs from various states, including healthcare relief funding under the American Rescue Plan Act (ARPA), and other state specific relief programs. The funding generally incorporates specific use requirements primarily for direct patient care including labor related expenses that are attributable to the COVID-19 pandemic or are associated with providing patient care. These funds are recognized as a reduction of cost of services expenses when related expenses are incurred. As of September 30, 2024 and December 31, 2023, the Company had $1,147 and $780 in unapplied state relief funds, respectively. The unapplied state relief funds received are recorded in other accrued liabilities. The Company recognized state relief funding totaling $796 and $2,373 for the three and nine months ended September 30, 2024, and $923 and $3,005 for the three and nine months ended September 30, 2023, respectively, which the Company recognized as a reduction of cost of services expense. Recent Accounting Pronouncements Except for rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws and a limited number of grandfathered standards, the Financial Accounting Standards Board (“FASB”) ASC is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. For any new pronouncements announced, the Company considers whether the new pronouncements could alter previous generally accepted accounting principles and determines whether any new or modified principles will have a material impact on the Company's reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company's financial management and certain standards are under consideration. In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which requires the Company to expand the breadth and frequency of segment disclosures to include additional information about significant segment expenses, the chief operating decision maker and other items, and also requires the annual disclosures on an interim basis. This guidance is effective for annual periods beginning after December 15, 2023, which will be the Company's fiscal year 2024, with early adoption permitted. The Company is currently evaluating the impact of the ASU on its quarterly and annual reports. In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires the Company to disclose disaggregated jurisdictional and categorical information for the tax rate reconciliation, income taxes paid and other income tax related amounts. This guidance is effective for annual periods beginning after December 15, 2024, which will be the Company's fiscal year 2025, with early adoption permitted. The Company doesn’t expect it to have any material impacts.

TRANSACTIONS WITH ENSIGN	9 Months Ended
TRANSACTIONS WITH ENSIGN	Sep. 30, 2024
Related Party Transactions [Abstract]
TRANSACTIONS WITH ENSIGN	TRANSACTIONS WITH ENSIGN Pennant completed its separation from The Ensign Group, Inc. (“Ensign”) in 2019. Certain directors who serve on our Board of Directors also serve as directors of Ensign and own shares of Ensign common stock. Pennant and Ensign continue to partner in the provision of services along the healthcare continuum. The Company incurred costs of $297 and $879 for the three and nine months ended September 30, 2024, and $254 and $719 for the three and nine months ended September 30, 2023, respectively, that related primarily to shared services at proximate operations. Expenses related to room and board charges at Ensign skilled nursing facilities for hospice patients were $1,180 and $4,250 for the three and nine months ended September 30, 2024, and $1,217 and $3,171 for the three and nine months ended September 30, 2023, respectively, and are included in cost of services. The Company’s independent operating subsidiaries leased 29 communities from subsidiaries of Ensign under a master lease arrangement as of both September 30, 2024 and September 30, 2023. See further discussion below at Note 13, Leases.

NET INCOME PER COMMON SHARE

9 Months Ended

Sep. 30, 2024

Earnings Per Share [Abstract]

NET INCOME PER COMMON SHARE

The following table sets forth the computation of basic and diluted net income per share for the periods presented:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Numerator:


Net income attributable to The Pennant Group, Inc.	$	6,205	$	4,383	$	16,801	$	9,030

Denominator:
Weighted average shares outstanding for basic net income per share	30,281		29,912		30,157		29,825
Plus: assumed incremental shares from exercise of options and assumed conversion or vesting of restricted stock(a)	1,082		294		712		353
Adjusted weighted average common shares outstanding for diluted income per share	31,363		30,206		30,869		30,178

Earnings Per Share:
Basic net income per common share	$	0.20	$	0.15	$	0.56	$	0.30
Diluted net income per common share	$	0.20	$	0.15	$	0.54	$	0.30


(a)						The diluted per share amounts do not reflect common share equivalents outstanding of 742 and 1,206 for the three and nine months ended September 30, 2024, and 2,718 and 2,278 for the three and nine months ended September 30, 2023, respectively, because of their anti-dilutive effect.

REVENUE AND ACCOUNTS RECEIVABLE

9 Months Ended

Sep. 30, 2024

Revenue from Contract with Customer [Abstract]

REVENUE AND ACCOUNTS RECEIVABLE

Disaggregation of Revenue

The Company’s service specific revenue recognition policies are as follows:

Home Health Revenue

Medicare Revenue

Non-Medicare Revenue

Non-episodic Based Revenue - Revenue is recognized on an accrual basis based upon the date of service at amounts equal to its established or estimated per visit rates, as applicable.

Hospice Revenue

Senior Living Revenue

Revenue By Payor

Revenue by payor for the three months ended September 30, 2024 and 2023, is summarized in the following tables:


	Three Months Ended September 30, 2024
	Home Health and Hospice Services
	Home Health Services		Hospice Services		Senior Living Services		Total Revenue		Revenue %
Medicare	$	32,403	$	54,516	$	—	$	86,919	48.1	%
Medicaid	2,847		6,303		13,565		22,715		12.6
Subtotal	35,250		60,819		13,565		109,634		60.7
Managed care	23,147		1,505		—		24,652		13.6
Private and other(a)	14,518		433		31,451		46,402		25.7
Total revenue	$	72,915	$	62,757	$	45,016	$	180,688	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.


	Three Months Ended September 30, 2023
	Home Health and Hospice Services
	Home Health Services		Hospice Services		Senior Living Services		Total Revenue		Revenue %
Medicare	$	24,076	$	43,849	$	—	$	67,925	48.5	%
Medicaid	2,521		5,190		12,182		19,893		14.2
Subtotal	26,597		49,039		12,182		87,818		62.7
Managed care	17,927		1,231		—		19,158		13.6
Private and other(a)	6,579		101		26,536		33,216		23.7
Total revenue	$	51,103	$	50,371	$	38,718	$	140,192	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.

Revenue by payor for the nine months ended September 30, 2024 and 2023, is summarized in the following tables:


	Nine Months Ended September 30, 2024
	Home Health and Hospice Services
	Home Health Services		Hospice Services		Senior Living Services		Total Revenue		Revenue %
Medicare	$	92,600	$	153,146	$	—	$	245,746	48.5	%
Medicaid	8,935		18,925		38,526		66,386		13.1
Subtotal	101,535		172,071		38,526		312,132		61.6
Managed care	62,529		3,555		—		66,084		13.1
Private and other(a)	36,688		1,085		90,359		128,132		25.3
Total revenue	$	200,752	$	176,711	$	128,885	$	506,348	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.


	Nine Months Ended September 30, 2023
	Home Health and Hospice Services
	Home Health Services		Hospice Services		Senior Living Services		Total Revenue		Revenue %
Medicare	$	71,372	$	121,523	$	—	$	192,895	48.3	%
Medicaid	7,178		14,470		34,807		56,455		14.2
Subtotal	78,550		135,993		34,807		249,350		62.5
Managed care	49,696		3,842		—		53,538		13.4
Private and other(a)	19,105		387		76,557		96,049		24.1
Total revenue	$	147,351	$	140,222	$	111,364	$	398,937	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.

Balance Sheet Impact

Accounts receivable, net as of September 30, 2024 and December 31, 2023 is summarized in the following table:


	September 30, 2024		December 31, 2023
Medicare	$	45,685	$	35,665
Medicaid	14,289		11,578
Managed care	15,391		11,752
Private and other	8,973		2,380
Accounts receivable, gross	84,338		61,375
Less: allowance for doubtful accounts	(313)		(259)
Accounts receivable, net	$	84,025	$	61,116

Concentrations - Credit Risk

Practical Expedients and Exemptions

BUSINESS SEGMENTS

9 Months Ended

Sep. 30, 2024

Segment Reporting [Abstract]

BUSINESS SEGMENTS


	Home Health and Hospice Services		Senior Living Services		All Other		Total
Three Months Ended September 30, 2024
Revenue	$	135,672	$	45,016	$	—	$	180,688
Segment Adjusted EBITDAR from Operations	$	23,724	$	13,411	$	(11,133)	$	26,002
Three Months Ended September 30, 2023
Revenue	$	101,474	$	38,718	$	—	$	140,192
Segment Adjusted EBITDAR from Operations	$	17,271	$	11,473	$	(8,097)	$	20,647


	Home Health and Hospice Services		Senior Living Services		All Other		Total
Nine Months Ended September 30, 2024
Revenue	$	377,463	$	128,885	$	—	$	506,348
Segment Adjusted EBITDAR from Operations	$	64,488	$	38,226	$	(31,840)	$	70,874
Nine Months Ended September 30, 2023
Revenue	$	287,573	$	111,364	$	—	$	398,937
Segment Adjusted EBITDAR from Operations	$	47,364	$	33,394	$	(23,496)	$	57,262

The following table provides a reconciliation of Segment Adjusted EBITDAR from Operations to Condensed Consolidated Income from Operations:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Segment Adjusted EBITDAR from Operations	$	26,002	$	20,647	$	70,874	$	57,262
Less: Depreciation and amortization	1,493		1,323		4,292		3,817
Rent—cost of services	10,906		10,006		31,814		29,439
Other income (expense)	109		(37)		192		28
Adjustments to Segment EBITDAR from Operations:
Less: Costs at start-up operations(a)	65		(108)		(72)		160
Share-based compensation expense and related taxes(b)	2,342		1,391		5,817		4,164
Acquisition related costs and credit allowances(c)	494		71		996		175

Costs associated with transitioning operations(d)	12		10		(583)		595
Unusual, non-recurring or redundant charges(e)	239		1,009		546		1,633
Add: Net income attributable to noncontrolling interest	452		79		1,008		351
Condensed Consolidated Income from Operations	$	10,794	$	7,061	$	28,880	$	17,602


(a)						Represents results related to start-up 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, credit allowances, and write offs for amounts in dispute with the prior owners of certain acquired operations.


(d)						During the nine months ended September 30, 2023, an affiliate of the Company placed its memory care units into transition and began seeking to sublease the units to an unrelated third party. The amount above represents the net operating impact attributable to the units in transition. The amounts reported exclude rent and depreciation and amortization expense related to such operations and include legal settlement costs associated with an entity transitioned to Ensign.
(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.

ACQUISITIONS	9 Months Ended
ACQUISITIONS	Sep. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]
ACQUISITIONS	ACQUISITIONS The Company is focused on acquiring operations that are complementary to the Company’s current businesses, accretive to the Company’s business or otherwise advance the Company’s strategy. The results of all the Company’s independent operating subsidiaries are included in the Interim Financial Statements subsequent to the date of acquisition. Acquisitions are accounted for using the acquisition method of accounting. 2024 Acquisitions During the nine months ended September 30, 2024, the Company expanded its operations with the addition of eight home health agencies, three hospice agencies, and three senior living communities. The Company also acquired the real estate of two of the three acquired senior living communities. The aggregate purchase price of the real estate of the two senior living communities acquired was $10,380, which consisted primarily of land and buildings and were accounted for as asset acquisitions. In connection with the third senior living community acquired, the Company entered into a new long-term “triple-net” lease. A subsidiary of the Company entered into a separate operations transfer agreement with the prior operator of each acquired operation as part of each transaction. These new communities included 261 operational senior living units to be operated by the Company's independent operating subsidiaries. On January 1, 2024, the Company announced it closed on a joint venture for a home health agency with John Muir Health (“Muir”), a leading nonprofit integrated health system serving communities throughout the east bay region of San Francisco, California. The transaction combines certain assets and the operations of Muir’s home health business and the assets and operations of a local Pennant-affiliated home health agency. The joint venture is majority-owned and managed by an independent operating subsidiary of the Company and provides home health services to patients throughout the San Francisco east bay region. The Company contributed certain assets of a local Pennant-affiliated home health agency to the venture and paid Muir $11,680 for a 60% controlling ownership interest in the joint venture. The fair value of assets for the joint venture acquired was mostly concentrated in goodwill and intangible assets and as such, this transaction was classified as a business combination in accordance with ASC Topic 805, Business Combinations (“ASC 805”). The fair value of assets acquired for the business combination was $28,200, which preliminarily consisted of goodwill of $15,500, indefinite-lived intangible assets of $8,600 related to a Medicare and Medicaid license, and tradenames of $4,100. Through its contributions of assets to the joint venture, Muir retained a non-controlling ownership interest which resulted in the Company recording a 40% noncontrolling interest with a fair value of $11,726 and an adjustment to additional paid in capital of $4,794. The Company anticipates that the total goodwill recognized will be fully deductible for tax purposes. On May 16, 2024, the Company acquired one home health agency and one hospice agency. The transaction was classified as business combination in accordance with ASC Topic 805, Business Combinations (“ASC 805”). The aggregate purchase price for the business combinations was $5,000, which preliminarily consisted of goodwill of $2,240 and indefinite-lived intangible assets of $2,760 related to Medicare and Medicaid licenses. The Company anticipates that the total goodwill recognized will be fully deductible for tax purposes. On August 1, 2024, the Company completed the first part of its planned acquisition of certain Signature Group, LLC operations. Through the completed acquisition, the Company acquired four home health agencies and one hospice agency. The transaction was classified as business combination in accordance with ASC Topic 805, Business Combinations (“ASC 805”). The aggregate purchase price for the business combinations was $32,000, including acquired liabilities, which preliminarily consisted of goodwill of $20,232, indefinite-lived intangible assets of $9,000 related to Medicare and Medicaid licenses, tradenames of $2,700, and equipment and other assets of $68. The Company anticipates that the total goodwill recognized will be fully deductible for tax purposes. The Company anticipates completing an additional acquisition transaction with Signature Group, LLC subsequent to the end of its current fiscal year. One hospice and two home health agencies acquired were Medicare licenses and are considered asset acquisitions. One acquisition of a provider service was completed. The fair value of the assets acquired in these transactions preliminarily consisted of goodwill of $350, and indefinite-lived intangibles of $1,000. There were no material acquisition costs that were expensed related to the business combinations during the nine months ended September 30, 2024. 2023 Acquisitions During the nine months ended September 30, 2023, the Company expanded its operations with the addition of three home health agencies, three hospice agencies, two home care agencies, and two senior living communities. In connection with the addition of the two senior living communities, the Company entered into a new long-term “triple-net” lease. A subsidiary of the Company entered into a separate operations transfer agreement with the prior operator of each acquired operation as part of each transaction. The fair value of assets for two home health agencies, two home care agencies, and three hospice agencies acquired were mostly concentrated in goodwill and intangible assets and as such, these transactions were classified as business combinations in accordance with ASC 805. The purchase price for the business combinations was $11,662, which consisted of equipment and other assets of $1,027, goodwill of $6,635, and indefinite-lived intangible assets of $3,895 related to Medicare and Medicaid licenses, and other intangible assets of $186, less assumed liabilities of $81. The Company anticipates that the total goodwill recognized will be fully deductible for tax purposes. One home health agency acquired was a Medicare license and is considered an asset acquisition. The fair value of the home health license acquired was $210 and was allocated to indefinite-lived intangible assets. There were no material acquisition costs that were expensed related to the business combinations during the nine months ended September 30, 2023. Subsequent Events On November 1, 2024, the Company closed on the acquisition of three senior living communities located in Wisconsin. The acquisition will add to the Company’s existing strength in the region while building out its operational footprint. In connection with the senior living communities, the Company entered into a new long-term “triple-net” lease with Ensign, a related party described in Note 3, Transactions with Ensign. A subsidiary of the Company entered into a separate operations transfer agreement with the prior operator of each acquired operation as part of the transaction. These new communities included 125 operational senior living units to be operated by the Company's independent operating subsidiaries.

PROPERTY AND EQUIPMENT—NET

9 Months Ended

Sep. 30, 2024

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT—NET

Property and equipment, net consist of the following:


	September 30, 2024		December 31, 2023
Land	$	5,543	$	96
Building	8,778		1,890
Leasehold improvements	21,179		21,204
Equipment	31,527		27,984
Furniture and fixtures	1,501		1,238
Construction in progress	2,536		1,263
	71,064		53,675
Less: accumulated depreciation	(29,199)		(25,077)
Property and equipment, net	$	41,865	$	28,598

GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS

The following table represents activity in goodwill by segment for the nine months ended September 30, 2024:


	Home Health and Hospice Services		Senior Living Services		Total
December 31, 2023	$	87,372	$	3,642	$	91,014
Additions	38,323		—		38,323

September 30, 2024	$	125,695	$	3,642	$	129,337

Other indefinite-lived intangible assets consist of the following:


	September 30, 2024		December 31, 2023
Trade name	$	8,185	$	1,385
Medicare and Medicaid licenses	87,717		66,357
Total	$	95,902	$	67,742

No goodwill or intangible asset impairment charges were recorded during the three and nine months ended September 30, 2024 and 2023.

OTHER ACCRUED LIABILITIES

9 Months Ended

Sep. 30, 2024

Payables and Accruals [Abstract]

OTHER ACCRUED LIABILITIES

Other accrued liabilities consist of the following:


	September 30, 2024		December 31, 2023
Refunds payable	$	1,512	$	1,566
Deferred revenue	1,799		1,658
Resident deposits	1,637		2,367
Property taxes	1,188		1,255
Deferred state relief funds	1,147		780
Accrued self-insurance liabilities	5,368		4,392
Hospice CAP liabilities	2,363		661
Other	4,015		2,651
Other accrued liabilities	$	19,029	$	15,330

DEBT

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

DEBT

Long-term debt, net consists of the following:


	September 30, 2024		December 31, 2023
Revolving Credit Facility	$	113,000	$	65,000
Less: unamortized debt issuance costs(a)	(4,125)		(1,086)
Long-term debt, net	$	108,875	$	63,914


(a)						Amortization expense for debt issuance costs, including expense of $428 related to the refinancing of our Revolving Credit Facility, was $616 and $876 for the three and nine months ended September 30, 2024, respectively, and $130 and $391 for the three and nine months ended September 30, 2023, respectively, and is recorded in interest expense, net on the Condensed Consolidated Statements of Income.

OPTIONS AND AWARDS

9 Months Ended

Sep. 30, 2024

Share-Based Payment Arrangement [Abstract]

OPTIONS AND AWARDS

Total share-based compensation expense for all Plans for the three and nine months ended September 30, 2024 and 2023 was:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Share-based compensation expense related to stock options	$	1,377	1,044		$	3,628	$	2,878
Share-based compensation expense related to Restricted Stock	150		178		392		535
Share-based compensation expense related to Restricted Stock to non-employee directors	606		119		1,404		598
Total share-based compensation	$	2,133	$	1,341	$	5,424	$	4,011

In future periods, the Company estimates it will recognize the following share-based compensation expense for unvested stock options and unvested Restricted Stock as of September 30, 2024:


	Unrecognized Compensation Expense		Weighted Average Recognition Period (in years)
Unvested Stock Options	$	15,014	3.6
Unvested Restricted Stock	1,672		2.8
Total unrecognized share-based compensation expense	$	16,686

Stock Options

The fair value of each option is estimated on the grant date using a Black-Scholes option-pricing model with the following weighted average assumptions for stock options granted as of September 30:


Grant Year	Options Granted	Risk-Free Interest Rate		Expected Life(a)	Expected Volatility(b)		Dividend Yield		Weighted Average Fair Value of Options
2024	778	4.3	%	6.5	42.6	%	—	%	$	10.38
2023	874	4.1	%	6.5	41.8	%	—	%	$	6.61


(a)						Under the midpoint method, the expected option life is the midpoint between the contractual option life and the average vesting period for the options being granted. This resulted in an expected option life of 6.5 years for the options granted.
(b)						Because the Company’s equity shares have been traded for a relatively short period of time, expected volatility assumption was based on the volatility of related industry stocks.

The following table represents the employee stock option activity during the nine months ended September 30, 2024:


	Number of Options Outstanding	Weighted Average Exercise Price		Number of Options Vested	Weighted Average Exercise Price of Options Vested
December 31, 2023	2,924	18.79		1,190	$	19.14
Granted	778	21.02
Exercised	(220)	9.16
Forfeited	(111)	20.36
Expired	(60)	30.71
September 30, 2024	3,311	$	19.66	1,257	$	20.60

Restricted Stock

A summary of the status of Pennant’s non-vested Restricted Stock, and changes during the nine months ended September 30, 2024, is presented below:


	Non-Vested Restricted Stock	Weighted Average Grant Date Fair Value
December 31, 2023	265	$	14.27
Granted	68	20.62
Vested	(181)	16.94
Forfeited	(21)	16.25
September 30, 2024	131	$	13.57

LEASES

9 Months Ended

Sep. 30, 2024

Leases [Abstract]

LEASES

The components of operating lease cost, are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Operating Lease Costs:
Community Rent—cost of services	$	9,045	$	8,567	$	26,560	$	25,303
Office Rent—cost of services	1,861		1,439		5,254		4,136

Rent—cost of services	$	10,906	$	10,006	$	31,814	$	29,439

General and administrative expense	$	114	$	94	$	317	$	291
Variable lease cost (a)	$	2,187	$	1,876	$	6,456	$	5,367


(a)						Represents variable lease cost for operating leases, which costs include property taxes and insurance, common area maintenance, and consumer price index increases, incurred as part of the Company’s triple net lease, and which is included in cost of services for the three and nine months ended September 30, 2024 and 2023.

The following table shows the lease maturity analysis for all leases as of September 30, 2024, for the years ended December 31:


Year	Amount
2024 (Remainder)	$	10,044
2025	39,051
2026	37,230
2027	36,153
2028	35,293
Thereafter	261,134
Total lease payments	418,905
Less: present value adjustments	(150,885)
Present value of total lease liabilities	268,020
Less: current lease liabilities	(19,113)
Long-term operating lease liabilities	$	248,907

INCOME TAXES	9 Months Ended
INCOME TAXES	Sep. 30, 2024
Income Tax Disclosure [Abstract]
INCOME TAXES	INCOME TAXES The Company recorded income tax expense of $1,354 and $1,066 or 16.9% and 19.3% of earnings before income taxes for the three months ended September 30, 2024 and 2023, respectively. The decrease in the effective tax rate is primarily due to more excess tax benefits on equity compensation. The Company recorded income tax expense of $4,957 and $3,894, or 21.8% and 29.3% of earnings before income taxes for the nine months ended September 30, 2024 and 2023, respectively. The decrease in the effective tax rate is primarily due to more excess tax benefits on equity compensation.

DEFINED CONTRIBUTION PLAN	9 Months Ended
DEFINED CONTRIBUTION PLAN	Sep. 30, 2024
Retirement Benefits [Abstract]
DEFINED CONTRIBUTION PLAN	DEFINED CONTRIBUTION PLAN The Company has a 401(k) defined contribution plan (the “401(k) Plan”), whereby eligible employees may contribute up to 90% of their annual basic earnings, subject to applicable annual Internal Revenue Code limits. Additionally, the 401(k) Plan provides for discretionary matching contributions (as defined in the 401(k) Plan) by the Company. The Company expensed matching contributions to the 401(k) Plan of $303 and $874 for the three and nine months ended September 30, 2024, and $214 and $632 for the three and nine months ended September 30, 2023, respectively. The Company has a non-qualified deferred compensation plan (the “DCP”) for executives, other highly compensated employees, independent contractors and non-employee directors. The independent contractors and non-employee directors are otherwise ineligible for participation in the Company's 401(k) plan. The DCP allows participants to defer the receipt of a portion of their base compensation, and further allows certain participants to defer up to 80% of their base salary and bonus compensation or director fees. At the participant’s election, payments can be deferred until a specific date at least one year after the year of deferral or until termination of engagement with the Company and can be paid in a lump sum or in up to ten annual installments. Separate deferral elections can be made for each year, and in limited circumstances, existing payment elections may be changed. The amounts deferred are credited with earnings and losses based upon the actual performance of the deemed investments selected by the participant. The rate of return for each participant varies depending on the specific investment elections made by the participant. Additionally, the plan deposits the employee deferrals into a rabbi trust and the funds are generally invested in individual variable life insurance contracts owned by the Company that are specifically designed to informally fund savings plans of this nature. The Company paid for related administrative costs, which were immaterial during the fiscal years presented. At September 30, 2024 and December 31, 2023, the Company’s deferred compensation liabilities were $2,132 and $1,108, respectively, in other long-term liabilities on the condensed consolidated balance sheets. The cash surrender value of the individual variable life insurance contracts is based on investment funds that shadow the investment allocations specified by participants in the DCP. At September 30, 2024 and December 31, 2023, the cash surrender value of the company owned life insurance (“COLI”) policies were $2,141 and $1,123, respectively, and were included as a component of restricted and other assets on the condensed consolidated balance sheets. There are no outstanding loan amounts offset against the cash surrender value of the COLI policies. The losses recorded for the change in cash surrender value were immaterial for each period presented.

COMMITMENTS AND CONTINGENCIES	9 Months Ended
COMMITMENTS AND CONTINGENCIES	Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	COMMITMENTS AND CONTINGENCIES Regulatory Matters - The Company provides services in complex and highly regulated industries. The Company’s compliance with applicable U.S. federal, state and local laws and regulations governing these industries may be subject to governmental review and adverse findings may result in significant regulatory action, which could include sanctions, damages, fines, penalties (many of which may not be covered by insurance), and even exclusion from government programs. The Company is a party to various regulatory and other governmental audits and investigations in the ordinary course of business and cannot predict the ultimate outcome of any federal or state regulatory survey, audit or investigation. While governmental audits and investigations are the subject of administrative appeals, the appeals process, even if successful, may take several years to resolve and penalties subject to appeal may remain in place during such appeals, which may include suspension, termination, or revocation of participation in governmental programs for the payment of the services the Company provides. The Department of Justice, HHS, CMS, or other federal and state enforcement and regulatory agencies may conduct additional investigations related to the Company's businesses. The Company believes it is presently in compliance in all material respects with all applicable laws and regulations. Cost-Containment Measures - Government and third-party payors have instituted cost-containment measures designed to limit payments made to providers of healthcare services, may propose future cost-containment measures, and there can be no assurance that future measures designed to limit payments made to providers will not adversely affect the Company. Indemnities - From time to time, the Company enters into certain types of contracts that contingently require the Company to indemnify parties against third-party claims. These contracts primarily include (i) certain real estate leases, under which the Company may be required to indemnify property owners or prior operators for post-transfer environmental or other liabilities and other claims arising from the Company’s use of the applicable premises, (ii) operations transfer agreements, in which the Company agrees to indemnify past operators of agencies and communities the Company acquires against certain liabilities arising from the transfer of the operation and/or the operation thereof after the transfer, (iii) certain Ensign lending agreements, and (iv) certain agreements with management, directors and employees, under which the subsidiaries of the Company may be required to indemnify such persons for liabilities arising out of their employment relationships. The terms of such obligations vary by contract and, in most instances, a specific or maximum dollar amount is not explicitly stated therein. Generally, amounts under these contracts cannot be reasonably estimated until a specific claim is asserted. Consequently, because no claims have been asserted, no liabilities have been recorded for these obligations on the Company’s Condensed Consolidated Balance Sheets for any of the periods presented. Litigation - The Company’s businesses involve a significant risk of liability given the age and health of the patients and residents served by its independent operating subsidiaries. The Company, its operating subsidiaries, and others in the industry may be subject to a number of claims and lawsuits, including negligence and professional liability claims, alleging that services provided have resulted in personal injury, elder abuse, wrongful death or other related claims. Healthcare litigation (including class action litigation) is common and is filed based upon a wide variety of claims and theories, and the Company is routinely subjected to these claims in the ordinary course of business, including potential claims related to patient care and treatment, and professional negligence, as well as employment-related claims. Certain of the states where we conduct business, including California and Nevada, recently adopted laws that increase the maximum amount of non-economic damages that may be awarded to a successful plaintiff in a claim for professional negligence or malpractice arising from care provided by our independent operating subsidiaries. These changes in applicable law may also increase the cost of obtaining and maintaining professional liability insurance to pay for the defense of, and any liability arising under, such claims. If there were a significant increase in the number of these claims or an increase in amounts owing should plaintiffs be successful in their prosecution of these claims, this could materially adversely affect the Company’s business, financial condition, results of operations and cash flows. In addition, the defense of these lawsuits may result in significant legal costs, regardless of the outcome, and may result in large settlement amounts or damage awards. In addition to the potential lawsuits and claims described above, the Company also is subject to potential lawsuits under the False Claims Act (the “FCA”) and comparable state laws alleging submission of fraudulent claims for services to any governmental healthcare program (such as Medicare) or commercial payor. A violation may provide the basis for exclusion from federally funded healthcare programs. Such exclusions could have a correlative negative impact on the Company’s financial performance. Some states, including California, Arizona and Texas, have enacted similar whistleblower and false claims laws and regulations. In addition, the Deficit Reduction Act of 2005 created incentives for states to enact anti-fraud legislation modeled on the FCA, for which 18 states have qualified, including California and Texas, where we conduct business. As such, the Company could face scrutiny, potential liability and legal expenses and costs based on claims under state false claims acts in markets in which it conducts business. Under the Fraud Enforcement and Recovery Act (“FERA”) and its associated rules, healthcare providers face significant penalties for the knowing retention of government overpayments, even if no false claim was involved. Providers have an obligation to proactively exercise “reasonable diligence” to identify overpayments and return those overpayments to CMS within 60 days of “identification” or the date any corresponding cost report is due, whichever is later. Retention of overpayments beyond this period may create liability under the FCA. In addition, FERA protects whistleblowers (including employees, contractors, and agents) from retaliation. The Company cannot predict or provide any assurance as to the possible outcome of any litigation. If any litigation were to proceed, and the Company and its operating companies are subjected to, alleged to be liable for, or agree to a settlement of, claims or obligations under federal Medicare statutes, the FCA, or similar state and federal statutes and related regulations, the Company’s business, financial condition and results of operations and cash flows could be materially and adversely affected. Among other things, any settlement or litigation could involve the payment of substantial sums to settle any alleged civil violations, and may also include the assumption of specific procedural and financial obligations by the Company or its independent operating subsidiaries going forward under a corporate integrity agreement and/or other arrangement with the government. Medicare Revenue Recoupments - The Company is subject to probe reviews relating to Medicare services, billings and potential overpayments by Unified Program Integrity Contractors (“UPIC”), Recovery Audit Contractors (“RAC”), Zone Program Integrity Contractors (“ZPIC”), Program Safeguard Contractors (“PSC”), Supplemental Medical Review Contractors (“SMRC”) and Medicaid Integrity Contributors (“MIC”) programs, each of the foregoing collectively referred to as “Reviews.” As of September 30, 2024, 12 of the Company’s independent operating subsidiaries had Reviews scheduled, on appeal or in dispute resolution process, both pre- and post-payment. If an operation fails an initial or subsequent Review, the operation could then be subject to extended Review, suspension of payment, or extrapolation of the identified error rate to all billing in the same time period. The Company, from time to time, receives record requests in Reviews which have resulted in claim denials on previously paid claims. The Company has appealed substantially all denials arising from these Reviews using the applicable appeals process. As of September 30, 2024, and through the filing of this Quarterly Report on Form 10-Q, the Company’s independent operating subsidiaries have responded to the Reviews that are currently ongoing, on appeal or in dispute resolution process. The Company cannot predict the ultimate outcome of any regulatory and other governmental Reviews. While such Reviews are the subject of administrative appeals, the appeals process, even if successful, may take several years to resolve. The costs to respond to and defend such Reviews may be significant and an adverse determination in such Reviews may subject the Company to sanctions, damages, extrapolation of damage findings, additional recoupments, fines, other penalties (some of which may not be covered by insurance), and termination from Medicare programs which may, either individually or in the aggregate, have a material adverse effect on the Company's business and financial condition. From June 2021 to May 2022, one hospice provider number was subject to a Medicare payment suspension imposed by a UPIC. The total amounts suspended was $5,105, which represents all Medicare payments due to the provider number during the suspension. As of September 30, 2024, the remaining amount due from the government payor impacted by the suspension was $246 and was recorded in long-term other assets. The Medicare payment suspension concluded in May 2022, and the UPIC reviewed 107 patient records covering a 10-month period to determine whether, in its view, a Medicare overpayment was made. Based on the results of the review, the UPIC initially alleged sampled and extrapolated overpayments of $5,105, and withheld that amount through continued recoupment of Medicare payments. The Company is pursuing its appeal rights through the administrative appeals process, including contesting the methodology used by the UPIC to perform statistical extrapolation. To date the Company has been successful in appealing most of the previously denied claims. The Company received the refund of previously withheld amounts totaling $4,859 as of September 30, 2024. The Company continues to work through the appeals process for the remaining denied claims and expects to be successful in those appeals. Based on the information currently available to the Company, the Company cannot predict the timing or the ultimate outcome of this review including refunds to be received. Insurance - The Company retains risk for a substantial portion of potential claims for general and professional liability, workers’ compensation and automobile liability. Based on changes in law that increase the maximum damages that may be recovered for professional negligence or malpractice claims in states where we operate, including California and Nevada, the costs of maintaining some of these insurance policies may increase in the future. The Company recognizes obligations associated with these costs, up to specified deductible limits in the period in which a claim is incurred, including with respect to both reported claims and claims incurred but not reported. The general and professional liability insurance has a retention limit of $150 per claim with a $500 corridor as an additional out-of-pocket retention we must satisfy for claims within the policy year before the carrier will reimburse losses. The workers’ compensation insurance has a retention limit of $250 per claim, except for policies held in Texas, Washington and Wyoming which are subject to state insurance and possess their own limits. The Company is self-insured for claims related to employee health, dental, and vision care. To protect itself against loss exposure, the Company has purchased individual stop-loss insurance coverage that insures individual health claims that exceed $350 for each covered person for fiscal year 2024 and fiscal year 2023.

SUBSEQUENT EVENTS	9 Months Ended
SUBSEQUENT EVENTS	Sep. 30, 2024
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	SUBSEQUENT EVENTSOn October 2, 2024, the Company closed the public offering (the “Offering”) of 4,025,000 shares of its common stock, $0.001 par value per share (“common stock”). The net proceeds to the Company from the offering, after underwriting discounts and commissions and before expenses, was approximately $118.5 million. The majority of the proceeds were subsequently used to pay the outstanding balance on our Revolving Credit Facility.

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2024	Sep. 30, 2023
Pay vs Performance Disclosure
Net income attributable to The Pennant Group, Inc.	$ 6,205	$ 5,690	$ 4,906	$ 4,383	$ 2,797	$ 1,850	$ 16,801	$ 9,030

Insider Trading Arrangements	3 Months Ended	9 Months Ended
Insider Trading Arrangements	Sep. 30, 2024 shares	Sep. 30, 2024 shares
Trading Arrangements, by Individual
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false
Jason P. Steik [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement		Jason P. Steik, Chief Clinical Officer, entered into a Rule 10b5-1 trading arrangement on August 16, 2024 (the “Rule 10b5-1 Plan”). Mr. Steik’s 10b5-1 Plan provides for the potential sale of only the number of shares of the Company’s common stock necessary to cover the tax obligations generated by the vesting of 8,400 shares of the Company’s common stock between the adoption date of the Rule 10b5-1 Plan and its expiration on July 30, 2027.
Name		Jason P. Steik
Title		Chief Clinical Officer
Rule 10b5-1 Arrangement Adopted		true
Adoption Date		August 16, 2024
Expiration Date		July 30, 2027
Arrangement Duration	1078 days
Aggregate Available	8,400	8,400

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2024
Accounting Policies [Abstract]
Basis of Presentation	The accompanying unaudited condensed consolidated financial statements of the Company (the “Interim Financial Statements”) reflect the Company’s financial position, results of operations, and cash flows of the business. The Interim Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the regulations of the Securities and Exchange Commission (“SEC”). Management believes that the Interim Financial Statements reflect, in all material respects, all adjustments which are of a normal and recurring nature necessary to present fairly the Company’s financial position, results of operations, and cash flows for the periods presented in conformity with GAAP. The results reported in these Interim Financial Statements are not necessarily indicative of results that may be expected for the entire year.
Consolidation	The Company consists of various limited liability companies and corporations established to operate home health, hospice, home care, and senior living operations. The Interim Financial Statements include the accounts of all entities controlled by the Company through its ownership of a majority voting interest. Reclassifications - Certain amounts in the prior financial statements have been reclassified to conform to the presentation of the current period financial statements.
Recent Accounting Pronouncements	Except for rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws and a limited number of grandfathered standards, the Financial Accounting Standards Board (“FASB”) ASC is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. For any new pronouncements announced, the Company considers whether the new pronouncements could alter previous generally accepted accounting principles and determines whether any new or modified principles will have a material impact on the Company's reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company's financial management and certain standards are under consideration. In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which requires the Company to expand the breadth and frequency of segment disclosures to include additional information about significant segment expenses, the chief operating decision maker and other items, and also requires the annual disclosures on an interim basis. This guidance is effective for annual periods beginning after December 15, 2023, which will be the Company's fiscal year 2024, with early adoption permitted. The Company is currently evaluating the impact of the ASU on its quarterly and annual reports. In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires the Company to disclose disaggregated jurisdictional and categorical information for the tax rate reconciliation, income taxes paid and other income tax related amounts. This guidance is effective for annual periods beginning after December 15, 2024, which will be the Company's fiscal year 2025, with early adoption permitted. The Company doesn’t expect it to have any material impacts.
Revenue Recognition	Revenue is recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled from patients and third-party payors, including Medicare, Medicaid, and managed care programs (Commercial, Medicare Advantage and Managed Medicaid plans). The healthcare services in home health and hospice patient contracts include routine services in exchange for a contractual agreed-upon amount or rate. Routine services are treated as a single performance obligation satisfied over time as services are rendered. As such, patient care services represent a bundle of services that are not capable of being distinct within the context of the contract. Additionally, there may be ancillary services which are not included in the rates for routine services, but instead are treated as separate performance obligations satisfied at a point in time, if and when those services are rendered. Revenue recognized from healthcare services is adjusted for estimates of variable consideration to arrive at the transaction price. The Company determines the transaction price based on contractually agreed-upon amounts or rates, adjusted for estimates of variable consideration. The Company uses the expected value method in determining the variable component that should be used to arrive at the transaction price, using contractual agreements and historical reimbursement experience within each payor type. The amount of variable consideration which is included in the transaction price may be constrained, and is included in the net revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If actual amounts of consideration ultimately received differ from the Company’s estimates, the Company adjusts these estimates, which would affect net service revenue in the period such variances become known. Medicare Revenue Net service revenue is recognized in accordance with the Patient Driven Groupings Model (“PDGM”). Under PDGM, Medicare provides agencies with payments for each 30-day payment period provided to beneficiaries. If a beneficiary is still eligible for care after the end of the first 30-day payment period, a second 30-day payment period can begin. There are no limits to the number of periods of care a beneficiary who remains eligible for the home health benefit can receive. While payment for each 30-day payment period is adjusted to reflect the beneficiary’s health condition and needs, a special outlier provision exists to ensure appropriate payment for those beneficiaries that have the most expensive care needs. The 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 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 payment period; (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 Company adjusts Medicare revenue on completed episodes to reflect differences between estimated and actual payment amounts, an inability to obtain appropriate billing documentation and other reasons unrelated to credit risk. Therefore, the Company believes that its reported net service revenue and patient accounts receivable will be the net amounts to be realized from Medicare for services rendered. In addition to revenue recognized on completed episodes and periods, the Company also recognizes a portion of revenue associated with episodes and periods in progress. Episodes in progress are 30-day payment periods that begin during the reporting period but were not completed as of the end of the period. As such, the Company estimates revenue and recognizes it on a daily basis. The primary factors underlying this estimate are the number of episodes in progress at the end of the reporting period, expected Medicare revenue per period of care or episode of care and the Company’s estimate of the average percentage complete based on the scheduled end of period and end of episode dates. Non-Medicare Revenue Episodic Based Revenue - The Company recognizes revenue in a similar manner as it recognizes Medicare revenue for episodic-based rates that are paid by other insurance carriers, including carriers administering Medicare Advantage programs. These rates can vary based upon the negotiated terms. Non-episodic Based Revenue - Revenue is recognized on an accrual basis based upon the date of service at amounts equal to its established or estimated per visit rates, as applicable. Hospice Revenue Revenue is recognized on an accrual basis based upon the date of service at amounts equal to the estimated payment rates. The estimated payment rates are calculated as daily rates for each of the levels of care the Company delivers. Revenue is adjusted for an inability to obtain appropriate billing documentation or authorizations acceptable to the payor and other reasons unrelated to credit risk. Additionally, as Medicare hospice revenue is subject to an inpatient cap and an overall payment cap, the Company monitors its provider numbers and estimates amounts due back to Medicare if a cap has been exceeded. The Company regularly evaluates and records these adjustments as a reduction to revenue and an increase to other accrued liabilities. Senior Living Revenue The Company has elected the lessor practical expedient within ASC Topic 842, Leases and therefore recognizes, measures, presents, and discloses the revenue for services rendered under the Company’s senior living residency agreements based upon the predominant component, either the lease or non-lease component, of the contracts. The Company has determined that the services included under the Company’s senior living residency agreements each have the same timing and pattern of transfer. The Company recognizes revenue under ASC Topic 606, Revenue from Contracts with Customers for its senior residency agreements, for which it has determined that the non-lease components of such residency agreements are the predominant component of each such contract.

NET INCOME PER COMMON SHARE (Tables)

9 Months Ended

Sep. 30, 2024

Earnings Per Share [Abstract]

Schedule of basic and diluted net income per share

The following table sets forth the computation of basic and diluted net income per share for the periods presented:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Numerator:


Net income attributable to The Pennant Group, Inc.	$	6,205	$	4,383	$	16,801	$	9,030

Denominator:
Weighted average shares outstanding for basic net income per share	30,281		29,912		30,157		29,825
Plus: assumed incremental shares from exercise of options and assumed conversion or vesting of restricted stock(a)	1,082		294		712		353
Adjusted weighted average common shares outstanding for diluted income per share	31,363		30,206		30,869		30,178

Earnings Per Share:
Basic net income per common share	$	0.20	$	0.15	$	0.56	$	0.30
Diluted net income per common share	$	0.20	$	0.15	$	0.54	$	0.30


(a)						The diluted per share amounts do not reflect common share equivalents outstanding of 742 and 1,206 for the three and nine months ended September 30, 2024, and 2,718 and 2,278 for the three and nine months ended September 30, 2023, respectively, because of their anti-dilutive effect.

REVENUE AND ACCOUNTS RECEIVABLE (Tables)

9 Months Ended

Sep. 30, 2024

Revenue from Contract with Customer [Abstract]

Schedule of revenue by major payor source

Revenue by payor for the three months ended September 30, 2024 and 2023, is summarized in the following tables:


	Three Months Ended September 30, 2024
	Home Health and Hospice Services
	Home Health Services		Hospice Services		Senior Living Services		Total Revenue		Revenue %
Medicare	$	32,403	$	54,516	$	—	$	86,919	48.1	%
Medicaid	2,847		6,303		13,565		22,715		12.6
Subtotal	35,250		60,819		13,565		109,634		60.7
Managed care	23,147		1,505		—		24,652		13.6
Private and other(a)	14,518		433		31,451		46,402		25.7
Total revenue	$	72,915	$	62,757	$	45,016	$	180,688	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.


	Three Months Ended September 30, 2023
	Home Health and Hospice Services
	Home Health Services		Hospice Services		Senior Living Services		Total Revenue		Revenue %
Medicare	$	24,076	$	43,849	$	—	$	67,925	48.5	%
Medicaid	2,521		5,190		12,182		19,893		14.2
Subtotal	26,597		49,039		12,182		87,818		62.7
Managed care	17,927		1,231		—		19,158		13.6
Private and other(a)	6,579		101		26,536		33,216		23.7
Total revenue	$	51,103	$	50,371	$	38,718	$	140,192	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.

Revenue by payor for the nine months ended September 30, 2024 and 2023, is summarized in the following tables:


	Nine Months Ended September 30, 2024
	Home Health and Hospice Services
	Home Health Services		Hospice Services		Senior Living Services		Total Revenue		Revenue %
Medicare	$	92,600	$	153,146	$	—	$	245,746	48.5	%
Medicaid	8,935		18,925		38,526		66,386		13.1
Subtotal	101,535		172,071		38,526		312,132		61.6
Managed care	62,529		3,555		—		66,084		13.1
Private and other(a)	36,688		1,085		90,359		128,132		25.3
Total revenue	$	200,752	$	176,711	$	128,885	$	506,348	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.


	Nine Months Ended September 30, 2023
	Home Health and Hospice Services
	Home Health Services		Hospice Services		Senior Living Services		Total Revenue		Revenue %
Medicare	$	71,372	$	121,523	$	—	$	192,895	48.3	%
Medicaid	7,178		14,470		34,807		56,455		14.2
Subtotal	78,550		135,993		34,807		249,350		62.5
Managed care	49,696		3,842		—		53,538		13.4
Private and other(a)	19,105		387		76,557		96,049		24.1
Total revenue	$	147,351	$	140,222	$	111,364	$	398,937	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.

Schedule of accounts receivable

Accounts receivable, net as of September 30, 2024 and December 31, 2023 is summarized in the following table:


	September 30, 2024		December 31, 2023
Medicare	$	45,685	$	35,665
Medicaid	14,289		11,578
Managed care	15,391		11,752
Private and other	8,973		2,380
Accounts receivable, gross	84,338		61,375
Less: allowance for doubtful accounts	(313)		(259)
Accounts receivable, net	$	84,025	$	61,116

BUSINESS SEGMENTS (Tables)

9 Months Ended

Sep. 30, 2024

Segment Reporting [Abstract]

Schedule of financial data combined by business segment


	Home Health and Hospice Services		Senior Living Services		All Other		Total
Three Months Ended September 30, 2024
Revenue	$	135,672	$	45,016	$	—	$	180,688
Segment Adjusted EBITDAR from Operations	$	23,724	$	13,411	$	(11,133)	$	26,002
Three Months Ended September 30, 2023
Revenue	$	101,474	$	38,718	$	—	$	140,192
Segment Adjusted EBITDAR from Operations	$	17,271	$	11,473	$	(8,097)	$	20,647


	Home Health and Hospice Services		Senior Living Services		All Other		Total
Nine Months Ended September 30, 2024
Revenue	$	377,463	$	128,885	$	—	$	506,348
Segment Adjusted EBITDAR from Operations	$	64,488	$	38,226	$	(31,840)	$	70,874
Nine Months Ended September 30, 2023
Revenue	$	287,573	$	111,364	$	—	$	398,937
Segment Adjusted EBITDAR from Operations	$	47,364	$	33,394	$	(23,496)	$	57,262

Schedule of reconciliation of total combined adjusted EBITDAR from operations for our reportable segments to combined income from operations

The following table provides a reconciliation of Segment Adjusted EBITDAR from Operations to Condensed Consolidated Income from Operations:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Segment Adjusted EBITDAR from Operations	$	26,002	$	20,647	$	70,874	$	57,262
Less: Depreciation and amortization	1,493		1,323		4,292		3,817
Rent—cost of services	10,906		10,006		31,814		29,439
Other income (expense)	109		(37)		192		28
Adjustments to Segment EBITDAR from Operations:
Less: Costs at start-up operations(a)	65		(108)		(72)		160
Share-based compensation expense and related taxes(b)	2,342		1,391		5,817		4,164
Acquisition related costs and credit allowances(c)	494		71		996		175

Costs associated with transitioning operations(d)	12		10		(583)		595
Unusual, non-recurring or redundant charges(e)	239		1,009		546		1,633
Add: Net income attributable to noncontrolling interest	452		79		1,008		351
Condensed Consolidated Income from Operations	$	10,794	$	7,061	$	28,880	$	17,602


(a)						Represents results related to start-up 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, credit allowances, and write offs for amounts in dispute with the prior owners of certain acquired operations.


(d)						During the nine months ended September 30, 2023, an affiliate of the Company placed its memory care units into transition and began seeking to sublease the units to an unrelated third party. The amount above represents the net operating impact attributable to the units in transition. The amounts reported exclude rent and depreciation and amortization expense related to such operations and include legal settlement costs associated with an entity transitioned to Ensign.
(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.

PROPERTY AND EQUIPMENT—NET (Tables)

9 Months Ended

Sep. 30, 2024

Property, Plant and Equipment [Abstract]

Schedule of property and equipment, net

Property and equipment, net consist of the following:


	September 30, 2024		December 31, 2023
Land	$	5,543	$	96
Building	8,778		1,890
Leasehold improvements	21,179		21,204
Equipment	31,527		27,984
Furniture and fixtures	1,501		1,238
Construction in progress	2,536		1,263
	71,064		53,675
Less: accumulated depreciation	(29,199)		(25,077)
Property and equipment, net	$	41,865	$	28,598

GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of activity in goodwill by segment

The following table represents activity in goodwill by segment for the nine months ended September 30, 2024:


	Home Health and Hospice Services		Senior Living Services		Total
December 31, 2023	$	87,372	$	3,642	$	91,014
Additions	38,323		—		38,323

September 30, 2024	$	125,695	$	3,642	$	129,337

Schedule of other indefinite-lived intangible assets

Other indefinite-lived intangible assets consist of the following:


	September 30, 2024		December 31, 2023
Trade name	$	8,185	$	1,385
Medicare and Medicaid licenses	87,717		66,357
Total	$	95,902	$	67,742

OTHER ACCRUED LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2024

Payables and Accruals [Abstract]

Schedule of other accrued liabilities

Other accrued liabilities consist of the following:


	September 30, 2024		December 31, 2023
Refunds payable	$	1,512	$	1,566
Deferred revenue	1,799		1,658
Resident deposits	1,637		2,367
Property taxes	1,188		1,255
Deferred state relief funds	1,147		780
Accrued self-insurance liabilities	5,368		4,392
Hospice CAP liabilities	2,363		661
Other	4,015		2,651
Other accrued liabilities	$	19,029	$	15,330

DEBT (Tables)

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

Schedule of long-term debt

Long-term debt, net consists of the following:


	September 30, 2024		December 31, 2023
Revolving Credit Facility	$	113,000	$	65,000
Less: unamortized debt issuance costs(a)	(4,125)		(1,086)
Long-term debt, net	$	108,875	$	63,914


(a)						Amortization expense for debt issuance costs, including expense of $428 related to the refinancing of our Revolving Credit Facility, was $616 and $876 for the three and nine months ended September 30, 2024, respectively, and $130 and $391 for the three and nine months ended September 30, 2023, respectively, and is recorded in interest expense, net on the Condensed Consolidated Statements of Income.

OPTIONS AND AWARDS (Tables)

9 Months Ended

Sep. 30, 2024

Share-Based Payment Arrangement [Abstract]

Schedule of total share-based compensation expense

Total share-based compensation expense for all Plans for the three and nine months ended September 30, 2024 and 2023 was:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Share-based compensation expense related to stock options	$	1,377	1,044		$	3,628	$	2,878
Share-based compensation expense related to Restricted Stock	150		178		392		535
Share-based compensation expense related to Restricted Stock to non-employee directors	606		119		1,404		598
Total share-based compensation	$	2,133	$	1,341	$	5,424	$	4,011

In future periods, the Company estimates it will recognize the following share-based compensation expense for unvested stock options and unvested Restricted Stock as of September 30, 2024:


	Unrecognized Compensation Expense		Weighted Average Recognition Period (in years)
Unvested Stock Options	$	15,014	3.6
Unvested Restricted Stock	1,672		2.8
Total unrecognized share-based compensation expense	$	16,686

Schedule of stock options granted fair value assumptions

The fair value of each option is estimated on the grant date using a Black-Scholes option-pricing model with the following weighted average assumptions for stock options granted as of September 30:


Grant Year	Options Granted	Risk-Free Interest Rate		Expected Life(a)	Expected Volatility(b)		Dividend Yield		Weighted Average Fair Value of Options
2024	778	4.3	%	6.5	42.6	%	—	%	$	10.38
2023	874	4.1	%	6.5	41.8	%	—	%	$	6.61


(a)						Under the midpoint method, the expected option life is the midpoint between the contractual option life and the average vesting period for the options being granted. This resulted in an expected option life of 6.5 years for the options granted.
(b)						Because the Company’s equity shares have been traded for a relatively short period of time, expected volatility assumption was based on the volatility of related industry stocks.

Schedule of employee stock option activity

The following table represents the employee stock option activity during the nine months ended September 30, 2024:


	Number of Options Outstanding	Weighted Average Exercise Price		Number of Options Vested	Weighted Average Exercise Price of Options Vested
December 31, 2023	2,924	18.79		1,190	$	19.14
Granted	778	21.02
Exercised	(220)	9.16
Forfeited	(111)	20.36
Expired	(60)	30.71
September 30, 2024	3,311	$	19.66	1,257	$	20.60

Schedule of non-vested restricted stock awards

A summary of the status of Pennant’s non-vested Restricted Stock, and changes during the nine months ended September 30, 2024, is presented below:


	Non-Vested Restricted Stock	Weighted Average Grant Date Fair Value
December 31, 2023	265	$	14.27
Granted	68	20.62
Vested	(181)	16.94
Forfeited	(21)	16.25
September 30, 2024	131	$	13.57

LEASES (Tables)

9 Months Ended

Sep. 30, 2024

Leases [Abstract]

Schedule of operating lease cost

The components of operating lease cost, are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Operating Lease Costs:
Community Rent—cost of services	$	9,045	$	8,567	$	26,560	$	25,303
Office Rent—cost of services	1,861		1,439		5,254		4,136

Rent—cost of services	$	10,906	$	10,006	$	31,814	$	29,439

General and administrative expense	$	114	$	94	$	317	$	291
Variable lease cost (a)	$	2,187	$	1,876	$	6,456	$	5,367


(a)						Represents variable lease cost for operating leases, which costs include property taxes and insurance, common area maintenance, and consumer price index increases, incurred as part of the Company’s triple net lease, and which is included in cost of services for the three and nine months ended September 30, 2024 and 2023.

Schedule of future minimum lease payments

The following table shows the lease maturity analysis for all leases as of September 30, 2024, for the years ended December 31:


Year	Amount
2024 (Remainder)	$	10,044
2025	39,051
2026	37,230
2027	36,153
2028	35,293
Thereafter	261,134
Total lease payments	418,905
Less: present value adjustments	(150,885)
Present value of total lease liabilities	268,020
Less: current lease liabilities	(19,113)
Long-term operating lease liabilities	$	248,907

DESCRIPTION OF BUSINESS (Details)	Sep. 30, 2024 agency facility
Home Health and Hospice Services
Segment Reporting Information [Line Items]
Number of service providers \| agency	122
Senior Living Services
Segment Reporting Information [Line Items]
Number of properties under lease \| facility	54

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Accounting Policies [Abstract]
Deferred state relief funds	$ 1,147		$ 1,147		$ 780
State relief funds, reduction	$ 796	$ 923	$ 2,373	$ 3,005

TRANSACTIONS WITH ENSIGN (Details) - Affiliated Entity $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024 USD ($) property	Sep. 30, 2023 USD ($) property	Sep. 30, 2024 USD ($) property	Sep. 30, 2023 USD ($) property
Related Party Transaction [Line Items]
Cost of services	$ 1,180	$ 1,217	$ 4,250	$ 3,171
Senior Living Services
Related Party Transaction [Line Items]
Number of operating facilities \| property	29	29	29	29
Transition Services Agreement
Related Party Transaction [Line Items]
Expenses from transactions with related party	$ 297	$ 254	$ 879	$ 719

NET INCOME PER COMMON SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2024	Sep. 30, 2023
Numerator:
Net income attributable to The Pennant Group, Inc.	$ 6,205	$ 5,690	$ 4,906	$ 4,383	$ 2,797	$ 1,850	$ 16,801	$ 9,030
Denominator:
Weighted average shares outstanding for basic net income per share (in shares)	30,281			29,912			30,157	29,825
Plus: assumed incremental shares from exercise of options and assumed conversion or vesting of restricted stock (in shares)	1,082			294			712	353
Adjusted weighted average common shares outstanding for diluted income per share (in shares)	31,363			30,206			30,869	30,178
Earnings Per Share:
Basic net income per common share (in dollars per share)	$ 0.20			$ 0.15			$ 0.56	$ 0.30
Diluted net income per common share (in dollars per share)	$ 0.20			$ 0.15			$ 0.54	$ 0.30
Anti-dilutive effect of common equivalent shares outstanding (in shares)	742			2,718			1,206	2,278

REVENUE AND ACCOUNTS RECEIVABLE - NARRATIVE (Details)	3 Months Ended		9 Months Ended		12 Months Ended
REVENUE AND ACCOUNTS RECEIVABLE - NARRATIVE (Details)	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Disaggregation of Revenue [Line Items]
Payment terms			Residency agreements are generally for a term of 30 days, with resident fees billed monthly in advance. For residents under reimbursement arrangements with Medicaid, revenue is recorded based on contractually agreed-upon amounts or rates on a per resident, daily basis or as services are rendered.
Customer Concentration Risk \| Receivables \| Subtotal
Disaggregation of Revenue [Line Items]
Revenue, percent			71.10%		77.00%
Customer Concentration Risk \| Revenue
Disaggregation of Revenue [Line Items]
Revenue, percent	100.00%	100.00%	100.00%	100.00%
Customer Concentration Risk \| Revenue \| Subtotal
Disaggregation of Revenue [Line Items]
Revenue, percent	60.70%	62.70%	61.60%	62.50%

REVENUE AND ACCOUNTS RECEIVABLE - REVENUE BY MAJOR PAYOR (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Disaggregation of Revenue [Line Items]
Revenue	$ 180,688	$ 140,192	$ 506,348	$ 398,937
Revenue \| Customer Concentration Risk
Disaggregation of Revenue [Line Items]
Revenue %	100.00%	100.00%	100.00%	100.00%
Medicare
Disaggregation of Revenue [Line Items]
Revenue	$ 86,919	$ 67,925	$ 245,746	$ 192,895
Medicare \| Revenue \| Customer Concentration Risk
Disaggregation of Revenue [Line Items]
Revenue %	48.10%	48.50%	48.50%	48.30%
Medicaid
Disaggregation of Revenue [Line Items]
Revenue	$ 22,715	$ 19,893	$ 66,386	$ 56,455
Medicaid \| Revenue \| Customer Concentration Risk
Disaggregation of Revenue [Line Items]
Revenue %	12.60%	14.20%	13.10%	14.20%
Subtotal
Disaggregation of Revenue [Line Items]
Revenue	$ 109,634	$ 87,818	$ 312,132	$ 249,350
Subtotal \| Revenue \| Customer Concentration Risk
Disaggregation of Revenue [Line Items]
Revenue %	60.70%	62.70%	61.60%	62.50%
Managed care
Disaggregation of Revenue [Line Items]
Revenue	$ 24,652	$ 19,158	$ 66,084	$ 53,538
Managed care \| Revenue \| Customer Concentration Risk
Disaggregation of Revenue [Line Items]
Revenue %	13.60%	13.60%	13.10%	13.40%
Private and other
Disaggregation of Revenue [Line Items]
Revenue	$ 46,402	$ 33,216	$ 128,132	$ 96,049
Private and other \| Revenue \| Customer Concentration Risk
Disaggregation of Revenue [Line Items]
Revenue %	25.70%	23.70%	25.30%	24.10%
Home Health and Hospice Services \| Home Health Services
Disaggregation of Revenue [Line Items]
Revenue	$ 72,915	$ 51,103	$ 200,752	$ 147,351
Home Health and Hospice Services \| Home Health Services \| Medicare
Disaggregation of Revenue [Line Items]
Revenue	32,403	24,076	92,600	71,372
Home Health and Hospice Services \| Home Health Services \| Medicaid
Disaggregation of Revenue [Line Items]
Revenue	2,847	2,521	8,935	7,178
Home Health and Hospice Services \| Home Health Services \| Subtotal
Disaggregation of Revenue [Line Items]
Revenue	35,250	26,597	101,535	78,550
Home Health and Hospice Services \| Home Health Services \| Managed care
Disaggregation of Revenue [Line Items]
Revenue	23,147	17,927	62,529	49,696
Home Health and Hospice Services \| Home Health Services \| Private and other
Disaggregation of Revenue [Line Items]
Revenue	14,518	6,579	36,688	19,105
Home Health and Hospice Services \| Hospice Services
Disaggregation of Revenue [Line Items]
Revenue	62,757	50,371	176,711	140,222
Home Health and Hospice Services \| Hospice Services \| Medicare
Disaggregation of Revenue [Line Items]
Revenue	54,516	43,849	153,146	121,523
Home Health and Hospice Services \| Hospice Services \| Medicaid
Disaggregation of Revenue [Line Items]
Revenue	6,303	5,190	18,925	14,470
Home Health and Hospice Services \| Hospice Services \| Subtotal
Disaggregation of Revenue [Line Items]
Revenue	60,819	49,039	172,071	135,993
Home Health and Hospice Services \| Hospice Services \| Managed care
Disaggregation of Revenue [Line Items]
Revenue	1,505	1,231	3,555	3,842
Home Health and Hospice Services \| Hospice Services \| Private and other
Disaggregation of Revenue [Line Items]
Revenue	433	101	1,085	387
Senior Living Services
Disaggregation of Revenue [Line Items]
Revenue	45,016	38,718	128,885	111,364
Senior Living Services \| Medicare
Disaggregation of Revenue [Line Items]
Revenue	0	0	0	0
Senior Living Services \| Medicaid
Disaggregation of Revenue [Line Items]
Revenue	13,565	12,182	38,526	34,807
Senior Living Services \| Subtotal
Disaggregation of Revenue [Line Items]
Revenue	13,565	12,182	38,526	34,807
Senior Living Services \| Managed care
Disaggregation of Revenue [Line Items]
Revenue	0	0	0	0
Senior Living Services \| Private and other
Disaggregation of Revenue [Line Items]
Revenue	$ 31,451	$ 26,536	$ 90,359	$ 76,557

REVENUE AND ACCOUNTS RECEIVABLE - ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Accounts Receivable [Abstract]
Accounts receivable, gross	$ 84,338	$ 61,375
Less: allowance for doubtful accounts	(313)	(259)
Accounts receivable, net	84,025	61,116
Medicare
Accounts Receivable [Abstract]
Accounts receivable, gross	45,685	35,665
Medicaid
Accounts Receivable [Abstract]
Accounts receivable, gross	14,289	11,578
Managed care
Accounts Receivable [Abstract]
Accounts receivable, gross	15,391	11,752
Private and other
Accounts Receivable [Abstract]
Accounts receivable, gross	$ 8,973	$ 2,380

BUSINESS SEGMENTS - NARRATIVE (Details)	Sep. 30, 2024 agency facility
Home Health and Hospice Services
Segment Reporting Information [Line Items]
Number of service providers \| agency	122
Senior Living Services
Segment Reporting Information [Line Items]
Number of properties under lease \| facility	54

BUSINESS SEGMENTS - FINANCIAL DATA (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Segment Reporting Information [Line Items]
Revenue	$ 180,688	$ 140,192	$ 506,348	$ 398,937
Segment Adjusted EBITDAR from Operations	26,002	20,647	70,874	57,262
Senior Living Services
Segment Reporting Information [Line Items]
Revenue	45,016	38,718	128,885	111,364
Operating Segments \| Home Health and Hospice Services
Segment Reporting Information [Line Items]
Revenue	135,672	101,474	377,463	287,573
Segment Adjusted EBITDAR from Operations	23,724	17,271	64,488	47,364
Operating Segments \| Senior Living Services
Segment Reporting Information [Line Items]
Revenue	45,016	38,718	128,885	111,364
Segment Adjusted EBITDAR from Operations	13,411	11,473	38,226	33,394
All Other
Segment Reporting Information [Line Items]
Revenue	0	0	0	0
Segment Adjusted EBITDAR from Operations	$ (11,133)	$ (8,097)	$ (31,840)	$ (23,496)

BUSINESS SEGMENTS - INCOME FROM OPERATIONS (Details) - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2024	Sep. 30, 2023
Segment Reporting [Abstract]
Segment Adjusted EBITDAR from Operations	$ 26,002			$ 20,647			$ 70,874	$ 57,262
Less: Depreciation and amortization	1,493			1,323			4,292	3,817
Rent—cost of services	10,906			10,006			31,814	29,439
Other income (expense)	109			(37)			192	28
Less: Costs at start-up operations	65			(108)			(72)	160
Share-based compensation expense and related taxes	2,342			1,391			5,817	4,164
Acquisition related costs and credit allowances	494			71			996	175
Costs associated with transitioning operations	12			10			(583)	595
Unusual, non-recurring or redundant charges	239			1,009			546	1,633
Add: Net income attributable to noncontrolling interest	452	$ 404	$ 152	79	$ 125	$ 147	1,008	351
Condensed Consolidated Income from Operations	$ 10,794			$ 7,061			$ 28,880	$ 17,602

ACQUISITIONS (Details) $ in Thousands					3 Months Ended	9 Months Ended
ACQUISITIONS (Details) $ in Thousands	Nov. 01, 2024 community living_unit	Aug. 01, 2024 USD ($) agency	May 16, 2024 USD ($) agency	Jan. 01, 2024 USD ($)	Sep. 30, 2024 USD ($)	Sep. 30, 2024 USD ($) agency living_unit community	Sep. 30, 2023 USD ($) agency community	Dec. 31, 2023 USD ($)
Business Acquisition [Line Items]
Acquire interest in joint venture				$ 11,680
Goodwill					$ 129,337	$ 129,337		$ 91,014
Adjustments to additional paid in capital					4,794
Series of Individually Immaterial Business Acquisitions
Business Acquisition [Line Items]
Payments to acquire land and building						10,380
Total acquisition							$ 11,662
Goodwill							6,635
Other indefinite-lived intangible assets							3,895
Equipment and other assets							1,027
Acquisition costs					0	0	0
Other intangible assets							186
Liabilities assumed							81
Home Health Services \| Series of Individually Immaterial Asset Acquisitions
Business Acquisition [Line Items]
Goodwill					350	350
Other indefinite-lived intangible assets					1,000	1,000	$ 210
Home Health Services \| Series of Individually Immaterial Business Acquisitions
Business Acquisition [Line Items]
Number of businesses acquired and assets acquisitions \| agency							2
Home Health and Hospice Services
Business Acquisition [Line Items]
Goodwill					125,695	$ 125,695		87,372
Home Health and Hospice Services \| Home Health Services
Business Acquisition [Line Items]
Number of businesses acquired and assets acquisitions \| agency						8	3
Home Health and Hospice Services \| Home Health Services \| Series of Individually Immaterial Asset Acquisitions
Business Acquisition [Line Items]
Number of assets acquired \| agency						2	1
Home Health and Hospice Services \| Hospice Services
Business Acquisition [Line Items]
Number of businesses acquired and assets acquisitions \| agency						3	3
Home Health and Hospice Services \| Hospice Services \| Series of Individually Immaterial Asset Acquisitions
Business Acquisition [Line Items]
Number of assets acquired \| agency						1
Home Health and Hospice Services \| Hospice Services \| Series of Individually Immaterial Business Acquisitions
Business Acquisition [Line Items]
Number of businesses acquired and assets acquisitions \| agency							3
Senior Living Services
Business Acquisition [Line Items]
Number of businesses acquired and assets acquisitions \| community						3	2
Goodwill					$ 3,642	$ 3,642		$ 3,642
Senior Living Services \| Subsequent Event
Business Acquisition [Line Items]
Number of businesses acquired and assets acquisitions \| community	3
Senior Living Services \| Series of Individually Immaterial Business Acquisitions
Business Acquisition [Line Items]
Number of businesses acquired and assets acquisitions \| community						2
Operational Senior Living Units
Business Acquisition [Line Items]
Number of businesses acquired and assets acquisitions \| living_unit						261
Operational Senior Living Units \| Subsequent Event
Business Acquisition [Line Items]
Number of businesses acquired and assets acquisitions \| living_unit	125
Joint Venture With John Muir Health \| Home Health Joint Venture
Business Acquisition [Line Items]
Ownership interest				60.00%
Noncontrolling owner					40.00%	40.00%
Sale of noncontrolling interests, net of tax						$ 11,726
Adjustments to additional paid in capital						4,794
Joint Venture With John Muir Health \| Series of Individually Immaterial Business Acquisitions
Business Acquisition [Line Items]
Total acquisition					$ 28,200	28,200
Goodwill					15,500	15,500
Joint Venture With John Muir Health \| Series of Individually Immaterial Business Acquisitions \| Medicare and Medicaid licenses
Business Acquisition [Line Items]
Other indefinite-lived intangible assets					8,600	8,600
Joint Venture With John Muir Health \| Series of Individually Immaterial Business Acquisitions \| Trade name
Business Acquisition [Line Items]
Other indefinite-lived intangible assets					$ 4,100	$ 4,100
One Home Health Agency and One Hospice Agency Acquired in 2024 \| Series of Individually Immaterial Business Acquisitions
Business Acquisition [Line Items]
Goodwill			$ 2,240
Business combination, purchase price			5,000
One Home Health Agency and One Hospice Agency Acquired in 2024 \| Series of Individually Immaterial Business Acquisitions \| Medicare and Medicaid licenses
Business Acquisition [Line Items]
Other indefinite-lived intangible assets			$ 2,760
One Home Health Agency and One Hospice Agency Acquired in 2024 \| Home Health Services \| Series of Individually Immaterial Business Acquisitions
Business Acquisition [Line Items]
Number of businesses acquired and assets acquisitions \| agency			1
One Home Health Agency and One Hospice Agency Acquired in 2024 \| Hospice Services \| Series of Individually Immaterial Business Acquisitions
Business Acquisition [Line Items]
Number of businesses acquired and assets acquisitions \| agency			1
Four Home Health Agency and One Hospice Agency Acquired in 2024 \| Series of Individually Immaterial Business Acquisitions
Business Acquisition [Line Items]
Goodwill		$ 20,232
Business combination, purchase price		32,000
Equipment and other assets		68
Four Home Health Agency and One Hospice Agency Acquired in 2024 \| Series of Individually Immaterial Business Acquisitions \| Medicare and Medicaid licenses
Business Acquisition [Line Items]
Other indefinite-lived intangible assets		9,000
Four Home Health Agency and One Hospice Agency Acquired in 2024 \| Series of Individually Immaterial Business Acquisitions \| Trade name
Business Acquisition [Line Items]
Other indefinite-lived intangible assets		$ 2,700
Four Home Health Agency and One Hospice Agency Acquired in 2024 \| Home Health Services \| Series of Individually Immaterial Business Acquisitions
Business Acquisition [Line Items]
Number of businesses acquired and assets acquisitions \| agency		4
Four Home Health Agency and One Hospice Agency Acquired in 2024 \| Hospice Services \| Series of Individually Immaterial Business Acquisitions
Business Acquisition [Line Items]
Number of businesses acquired and assets acquisitions \| agency		1
Home Care Services Segment \| Series of Individually Immaterial Business Acquisitions
Business Acquisition [Line Items]
Number of businesses acquired and assets acquisitions \| agency							2
Home Care Services Segment \| Home Care Agencies
Business Acquisition [Line Items]
Number of businesses acquired and assets acquisitions \| agency							2

PROPERTY AND EQUIPMENT—NET - SCHEDULE OF PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 71,064	$ 53,675
Less: accumulated depreciation	(29,199)	(25,077)
Property and equipment, net	41,865	28,598
Land
Property, Plant and Equipment [Line Items]
Property and equipment, gross	5,543	96
Building
Property, Plant and Equipment [Line Items]
Property and equipment, gross	8,778	1,890
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	21,179	21,204
Equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	31,527	27,984
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,501	1,238
Construction in progress
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 2,536	$ 1,263

PROPERTY AND EQUIPMENT—NET - NARRATIVE (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Property, Plant and Equipment [Abstract]
Depreciation	$ 1,493	$ 1,321	$ 4,292	$ 3,807

GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS - ACTIVITY IN GOODWILL (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($)
Goodwill [Roll Forward]
Goodwill, beginning balance	$ 91,014
Additions	38,323
Goodwill, ending balance	129,337
Home Health and Hospice Services
Goodwill [Roll Forward]
Goodwill, beginning balance	87,372
Additions	38,323
Goodwill, ending balance	125,695
Senior Living Services
Goodwill [Roll Forward]
Goodwill, beginning balance	3,642
Additions	0
Goodwill, ending balance	$ 3,642

GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS - INDEFINITE-LIVED INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Indefinite-lived Intangible Assets [Line Items]
Other indefinite-lived intangibles	$ 95,902	$ 67,742
Trade name
Indefinite-lived Intangible Assets [Line Items]
Other indefinite-lived intangibles	8,185	1,385
Medicare and Medicaid licenses
Indefinite-lived Intangible Assets [Line Items]
Other indefinite-lived intangibles	$ 87,717	$ 66,357

GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS - NARRATIVE (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible asset impairments	$ 0	$ 0	$ 0	$ 0

OTHER ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Other Accrued Liabilities, Current [Abstract]
Refunds payable	$ 1,512	$ 1,566
Deferred revenue	1,799	1,658
Resident deposits	1,637	2,367
Property taxes	1,188	1,255
Deferred state relief funds	1,147	780
Accrued self-insurance liabilities	5,368	4,392
Hospice CAP liabilities	2,363	661
Other	4,015	2,651
Other accrued liabilities	$ 19,029	$ 15,330

DEBT - SCHEDULE OF LONG-TERM DEBT (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Debt Instrument [Line Items]
Less: unamortized debt issuance costs	$ (4,125)		$ (4,125)		$ (1,086)
Long-term debt, net	108,875		108,875		63,914
Amortization of deferred financing fees, including write-offs from amendment	616	$ 130	876	$ 391
Revolving Credit Facility
Debt Instrument [Line Items]
Amortization of deferred financing fees, including write-offs from amendment			428
Revolving Credit Facility \| Line of Credit
Debt Instrument [Line Items]
Revolving Credit Facility	$ 113,000		$ 113,000		$ 65,000

DEBT - NARRATIVE (Details) - USD ($)			3 Months Ended		9 Months Ended
DEBT - NARRATIVE (Details) - USD ($)	Jul. 31, 2024	Jun. 12, 2023	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Feb. 23, 2021
Debt Instrument [Line Items]
Amortization of deferred financing fees, including write-offs from amendment			$ 616,000	$ 130,000	$ 876,000	$ 391,000
Revolving Credit Facility
Debt Instrument [Line Items]
Borrowing capacity	$ 250,000,000						$ 150,000,000
Debt issuance costs			$ 3,915,000		3,915,000
Amortization of deferred financing fees, including write-offs from amendment					$ 428,000
Revolving Credit Facility \| Line of Credit
Debt Instrument [Line Items]
Weighted average interest rate			7.87%		7.87%
Borrowing availability			$ 132,814,000		$ 132,814,000
Revolving Credit Facility \| Minimum
Debt Instrument [Line Items]
Margin	0.25%	0.35%
Revolving Credit Facility \| Minimum \| SOFR
Debt Instrument [Line Items]
Margin	1.75%	2.25%
Revolving Credit Facility \| Minimum \| Base Rate
Debt Instrument [Line Items]
Margin	0.75%	1.25%
Revolving Credit Facility \| Maximum
Debt Instrument [Line Items]
Margin	0.45%	0.50%
Revolving Credit Facility \| Maximum \| SOFR
Debt Instrument [Line Items]
Margin	2.75%	3.25%
Revolving Credit Facility \| Maximum \| Base Rate
Debt Instrument [Line Items]
Margin	1.75%	2.25%
Letters of Credit \| Line of Credit
Debt Instrument [Line Items]
Letters of credit outstanding			$ 4,186,000		$ 4,186,000

OPTIONS AND AWARDS - SHARE-BASED COMPENSATION (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation	$ 2,133	$ 1,341	$ 5,424	$ 4,011
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation	1,377	1,044	3,628	2,878
Restricted Stock Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation	150	178	392	535
Restricted Stock Awards \| Non-employee Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation	$ 606	$ 119	$ 1,404	$ 598

OPTIONS AND AWARDS - UNVESTED STOCK OPTIONS AND RESTRICTED STOCK (Details) - The Ensign Plans $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized share-based compensation expense	$ 16,686
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unvested Stock Options	$ 15,014
Weighted Average Recognition Period (in years)	3 years 7 months 6 days
Restricted Stock Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unvested Restricted Stock	$ 1,672
Weighted Average Recognition Period (in years)	2 years 9 months 18 days

OPTIONS AND AWARDS - NARRATIVE (Details) - The Ensign Plans	9 Months Ended
	Sep. 30, 2024
Restricted Stock Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	5 years
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options, vesting percent per year	20.00%
Options, expiration period	10 years

OPTIONS AND AWARDS - OPTIONS GRANTED (Details) - The Ensign Plans - $ / shares shares in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted (in shares)	778
2024
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted (in shares)	778
Weighted average fair value of options (in dollars per share)	$ 10.38
2024 \| Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-Free Interest Rate	4.30%
Expected life	6 years 6 months
Expected volatility	42.60%
Dividend Yield	0.00%
2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted (in shares)		874
Weighted average fair value of options (in dollars per share)		$ 6.61
2023 \| Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-Free Interest Rate		4.10%
Expected life		6 years 6 months
Expected volatility		41.80%
Dividend Yield		0.00%

OPTIONS AND AWARDS - EMPLOYEE STOCK OPTION ACTIVITY (Details) - The Ensign Plans shares in Thousands	9 Months Ended
	Sep. 30, 2024 $ / shares shares	Dec. 31, 2023 $ / shares shares
Number of Options Outstanding
Beginning balance, outstanding (in shares) \| shares	2,924
Granted (in shares) \| shares	778
Exercised (in shares) \| shares	(220)
Forfeited (in shares) \| shares	(111)
Expired (in shares) \| shares	(60)
Ending balance, outstanding (in shares) \| shares	3,311
Weighted Average Exercise Price
Beginning of period, weighted average exercise price (in dollars per share) \| $ / shares	$ 18.79
Granted (in dollars per share) \| $ / shares	21.02
Exercised (in dollars per share) \| $ / shares	9.16
Forfeited (in dollars per share) \| $ / shares	20.36
Expired (in dollars per share) \| $ / shares	30.71
End of period, weighted average exercise price (in dollars per share) \| $ / shares	$ 19.66
Number of options vested (in shares) \| shares	1,257	1,190
Weighted average exercise price of options vested (in dollars per share) \| $ / shares	$ 20.60	$ 19.14

OPTIONS AND AWARDS - RESTRICTED STOCK (Details) - The Ensign Plans - Restricted Stock Awards shares in Thousands	9 Months Ended
	Sep. 30, 2024 $ / shares shares
Non-Vested Restricted Stock
Beginning balance, outstanding (in shares) \| shares	265
Granted (in shares) \| shares	68
Vested (in shares) \| shares	(181)
Forfeited (in shares) \| shares	(21)
Ending balance, outstanding (in shares) \| shares	131
Weighted Average Grant Date Fair Value
Beginning of period, weighted average exercise price (in dollars per share) \| $ / shares	$ 14.27
Granted (in dollars per share) \| $ / shares	20.62
Vested (in dollars per share) \| $ / shares	16.94
Forfeited (in dollars per share) \| $ / shares	16.25
End of period, weighted average exercise price (in dollars per share) \| $ / shares	$ 13.57

LEASES - NARRATIVE (Details) $ in Thousands	3 Months Ended		9 Months Ended
LEASES - NARRATIVE (Details) $ in Thousands	Sep. 30, 2024 USD ($) property facility arrangement	Sep. 30, 2023 USD ($) property	Sep. 30, 2024 USD ($) property facility arrangement	Sep. 30, 2023 USD ($) property
Lessee, Lease, Description [Line Items]
Weighted average remaining lease term	11 years 10 months 24 days		11 years 10 months 24 days
Weighted average discount rate	8.10%		8.10%
Related Party \| Operating Lease, Rent Expense
Lessee, Lease, Description [Line Items]
Fees incurred \| $	$ 3,488	$ 3,339	$ 10,464	$ 10,088
Senior Living Services \| Related Party
Lessee, Lease, Description [Line Items]
Number of operating facilities \| property	29	29	29	29
Number of properties under lease, master lease agreement \| facility	14		14
Number of separate master lease arrangements \| arrangement	3		3
Senior Living Services \| Minimum
Lessee, Lease, Description [Line Items]
Lease term	14 years		14 years
Senior Living Services \| Minimum \| Related Party
Lessee, Lease, Description [Line Items]
Lease term	14 years		14 years
Senior Living Services \| Maximum
Lessee, Lease, Description [Line Items]
Lease term	25 years		25 years
Senior Living Services \| Maximum \| Related Party
Lessee, Lease, Description [Line Items]
Lease term	20 years		20 years
Home Health and Hospice Services \| Minimum
Lessee, Lease, Description [Line Items]
Lease term	1 year		1 year
Home Health and Hospice Services \| Maximum
Lessee, Lease, Description [Line Items]
Lease term	10 years		10 years

LEASES - IMPACT OF NEW LEASES GUIDANCE (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Operating Lease Costs:
Variable lease cost	$ 2,187	$ 1,876	$ 6,456	$ 5,367
Cost of Services
Operating Lease Costs:
Operating lease costs	10,906	10,006	31,814	29,439
Cost of Services \| Community
Operating Lease Costs:
Operating lease costs	9,045	8,567	26,560	25,303
Cost of Services \| Office
Operating Lease Costs:
Operating lease costs	1,861	1,439	5,254	4,136
General and administrative expense
Operating Lease Costs:
Operating lease costs	$ 114	$ 94	$ 317	$ 291

LEASES - FUTURE MINIMUM LEASE PAYMENTS (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Leases, Under Adoption of ASC 842 [Abstract]
2024 (Remainder)	$ 10,044
2025	39,051
2026	37,230
2027	36,153
2028	35,293
Thereafter	261,134
Total lease payments	418,905
Less: present value adjustments	(150,885)
Present value of total lease liabilities	268,020
Less: current lease liabilities	(19,113)	$ (17,122)
Long-term operating lease liabilities	$ 248,907	$ 248,596

INCOME TAXES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
INCOME TAXES (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Income Tax Disclosure [Abstract]
Income tax expense (benefit)	$ 1,354	$ 1,066	$ 4,957	$ 3,894
Effective income tax rate reconciliation, percent	16.90%	19.30%	21.80%	29.30%

DEFINED CONTRIBUTION PLAN (Details) $ in Thousands	3 Months Ended		9 Months Ended
DEFINED CONTRIBUTION PLAN (Details) $ in Thousands	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($) installment	Sep. 30, 2023 USD ($)
Retirement Benefits [Abstract]
Employee contribution (as a percent)			90.00%
Contribution	$ 303	$ 214	$ 874	$ 632
Percentage of compensation			80.00%
Payment deferred (in years)	1 year		1 year
Number of annual installments \| installment			10
Accrued other long term liabilities	$ 2,132	1,108	$ 2,132	1,108
Cash surrender value of life insurance	$ 2,141	$ 1,123	$ 2,141	$ 1,123

COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands	1 Months Ended	3 Months Ended	9 Months Ended	12 Months Ended
COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands	May 31, 2022 agency	Mar. 31, 2024 USD ($)	Sep. 30, 2024 USD ($) review	May 31, 2022 provider agency
Concentration Risk [Line Items]
Number of operating subsidiaries with reviews scheduled \| review			12
Suspended payments			$ 5,105
Sampled and extrapolated overpayments			246
Number of patient records under review \| agency	107			107
Period of review	10 months
Previously withheld amounts			(4,859)
General and professional liability, retention limit			150
Out-of-pocket retention			500
Workers' compensation, retention limit			250
Hospice Services Segment
Concentration Risk [Line Items]
Number providers \| provider				1
Maximum
Concentration Risk [Line Items]
Self insurance, individual coverage limit		$ 350	$ 350

SUBSEQUENT EVENTS (Details) - USD ($) $ / shares in Units, $ in Millions	Oct. 02, 2024	Sep. 30, 2024	Dec. 31, 2023
Subsequent Event [Line Items]
Common stock, par value (in dollars per share)		$ 0.001	$ 0.001
Subsequent Event
Subsequent Event [Line Items]
Common stock, par value (in dollars per share)	$ 0.001
Subsequent Event \| Public Offering
Subsequent Event [Line Items]
Number of shares issued in transaction (in shares)	4,025,000
Net proceeds from offering	$ 118.5

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