Pennant Upsizes Senior Living Segment With Focus On ‘revenue Quality’

The Pennant Group (NASDAQ:PNTG) is growing its senior living portfolio as the company continues its effort to improve operations and identify new expansion opportunities.

The Eagle, Idaho-based company in the first quarter of 2025 added three senior living communities, and as part of that deal entered into new triple-net lease agreements comprising 188 units. Pennant also in the quarter added five home health agencies and four hospice agencies to its operational footprint.

As of the end of the first quarter of 2025, the company’s footprint included 137 home health, hospice and home care agencies, along with 60 senior living communities in 12 states.

Pennant has made 36 new acquisitions since the start of 2024 in both its senior living and home health segments, with Guerisoli noting that the acquired properties are performing “above our initial expectations” based on strong first quarter results.

In the first quarter of 2025, Pennant reported total senior living revenue of $50 million, representing a 23.6% increase in revenue since the first quarter of 2024.

Occupancy for the company’s senior living segment remained flat at 78.5% in the first quarter of this year, with no change from the same period last year. The company’s average monthly revenue per occupied room registered at $5,193, representing an increase of $526 or 11.3% over the first quarter of last year.

Pennant Group CEO Brent Guerisoli acknowledged the company’s senior living segment has been “flat in occupancy.”

“I think it’s primarily because of that focus on really getting the right level of revenue quality,” Guerisoli said.

And despite the flat occupancy, the segment continues to “gather steam” as operational improvements and its acquisition opportunities “picks up speed.”

“We’re excited about the progress, the revenue quality on the senior living side and in addition to some of the margin improvement, we’ve had really outsized underperformance as well on the home hospice side,” Guerisoli said.

Zooming out the lens, Guerisoli said there remains “some sensitivity” around uncertainty created due to macroeconomic factors and how that could impact the ability of incoming senior living residents to afford private pay options.

“Our focus over the last couple of years has been improving our revenue quality,” Guerisoli said. “That could mean by payer, it could mean by just ensuring that we’re charging the right rates and the local operations.”

The top Pennant leader added that labor cost inflation continues to post a challenge, reporting just under 5% of labor inflation in the first quarter.

Pennant Group COO John Gochnour said the company sees “significant latent potential” to further improve occupancy and margin across the company’s senior living segment in 2025.

On April 1, Pennant announced the acquisition of a 128-unit senior living community in Arizona, and marked the fourth acquisition made this year following a three-property acquisition of communities in Idaho and Texas. The most recent Arizona acquisition stemmed from an underperforming property that had fallen into receivership, Gochnour said, allowing Pennant to purchase a “relatively new and attractive facility.”

“This acquisition highlights our ability to navigate unique transitions and unlock significant value in complex circumstances,” Gochnour said.

The Idaho property is subject to a triple-net lease with a purchase option and the two Texas communities are structured in long-term, triple-net leases.

Looking ahead to future opportunities, Gochnour said the company will continue to evaluate a “strong pipeline of acquisition opportunities” in both home health and senior living segments.

A decrease of operating cash flow of $21.8 million reported in the first quarter compared to the same period last year stemmed from the acquisitions made during the first quarter of 2025.

To help fuel its growth, Pennant has created a “leadership pipeline over time” to install up-and-coming leaders into newly acquired properties in order to “step into those opportunities,” according to Guerisoli.

“We’ve been able to continue to staff and be prepared for growth as that occurs,” Guerisoli said.

At market close on Wednesday, Pennant stock rose 3.43%, an increase of $0.92 to rest at $27.76.

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