Pennant Group (PNTG) AI Stock Analysis

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Pennant Group

(NASDAQ:PNTG)

64Neutral

Pennant Group's overall score is driven by strong financial performance and positive earnings call sentiment, indicating a stable outlook with growth potential. However, technical indicators suggest bearish momentum, and the high P/E ratio raises valuation concerns. The absence of a dividend yield might deter income-focused investors.

Pennant Group (PNTG) vs. S&P 500 (SPY)

Market Cap

$880.90M

Dividend YieldN/A

Average Volume (3M)242.03K

Price to Earnings (P/E)35.9

Beta (1Y)0.79

Revenue Growth27.59%

EPS Growth61.97%

CountryUS

Employees7,000

SectorHealthcare

Sector Strength71

IndustryMedical - Care Facilities

Share Statistics

EPS (TTM)0.71

Shares Outstanding34,722,286

10 Day Avg. Volume258,679

30 Day Avg. Volume242,032

Financial Highlights & Ratios

PEG Ratio0.58

Price to Book (P/B)N/A

Price to Sales (P/S)1.16

Price to Cash Flow (P/CF)9.80

P/FCF Ratio11.70

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$29.33

Price Target Upside15.61% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering3

Pennant Group Business Overview & Revenue Model

Company DescriptionThe Pennant Group, Inc. is a leading provider of healthcare services, primarily focusing on home health, hospice, and senior living services. The company operates a network of agencies and facilities across the United States, providing comprehensive care for elderly individuals and those recovering from illness or injury. Pennant Group is committed to delivering high-quality, personalized services that meet the needs of its patients and residents.

How the Company Makes MoneyThe Pennant Group makes money through its three main service lines: home health, hospice, and senior living. Revenue in the home health and hospice sectors is generated primarily through reimbursements from Medicare, Medicaid, and private insurance for services rendered. The senior living segment earns revenue from private payers, which include residents and their families, who pay for room, board, and care services. The company's growth strategy often involves acquiring and integrating new agencies and facilities, which can expand its market reach and revenue base. Additionally, Pennant Group's focus on operational efficiency and quality care helps maintain its competitive edge and profitability.

Pennant Group Financial Statement Overview

Summary

Pennant Group demonstrates solid revenue growth and improved profitability, supported by efficient cash flow management and reduced financial leverage. However, the high liabilities and the peculiar gross profit reporting require careful monitoring. The overall financial health of the company appears stable with a positive growth trajectory.

Income Statement

Positive

The company shows a strong revenue growth rate of approximately 27.6% from 2023 to 2024, indicating robust business expansion. However, the gross profit margin remains flat at 100% due to the reported gross profit equaling total revenue, which may suggest a reporting issue. EBIT and EBITDA margins have improved to 5.5% and 4.1% respectively, reflecting better operational efficiency. The net profit margin increased from 2.5% to 3.2%, demonstrating enhanced profitability.

Balance Sheet

Neutral

Pennant Group's debt-to-equity ratio decreased to 0.93 from 2.35, indicating improved financial leverage. The return on equity (ROE) increased to 7.7%, reflecting better profitability relative to shareholder equity. However, the equity ratio stands at 43.2%, indicating moderate reliance on equity financing. Overall, the balance sheet shows a positive trend in managing debts but still retains a relatively high level of liabilities.

Cash Flow

Positive

The operating cash flow to net income ratio increased to 1.7x, suggesting strong cash generation capability relative to net income. Free cash flow improved significantly, with a growth of approximately 21.3%, showcasing enhanced cash management and operational efficiency. The free cash flow to net income ratio stands at 1.34x, indicating good cash flow coverage. The company exhibits a strong cash flow position with improved liquidity.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
695.24M	544.89M	473.24M	439.69M	390.95M
	Gross Profit
93.76M	67.04M	58.59M	45.74M	54.89M
	EBIT
38.12M	25.17M	19.67M	4.70M	18.92M
	EBITDA
44.44M	30.64M	24.60M	9.46M	23.82M
	Net Income Common Stockholders
22.56M	13.38M	6.64M	2.15M	15.74M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
24.25M	6.06M	2.08M	5.19M	43.00K
	Total Assets
679.52M	539.69M	512.12M	530.30M	506.98M
	Total Debt
273.09M	329.63M	326.57M	355.24M	319.00M
	Net Debt
248.84M	323.57M	324.49M	350.05M	318.95M
	Total Liabilities
367.56M	394.18M	386.46M	416.05M	405.80M
	Stockholders Equity
293.28M	140.34M	121.01M	110.20M	96.58M
Cash Flow		Free Cash Flow
30.31M	24.98M	-5.13M	-24.53M	42.95M
	Operating Cash Flow
39.30M	33.09M	9.04M	-18.22M	50.20M
	Investing Cash Flow
-70.68M	-30.22M	-24.24M	-20.12M	-41.62M
	Financing Cash Flow
49.57M	1.11M	12.08M	43.49M	-8.95M

Pennant Group Technical Analysis

Technical Analysis Sentiment

Positive

Last Price25.37

Price Trends

50DMA

24.96

Positive

100DMA

26.76

Negative

200DMA

29.06

Negative

Market Momentum

MACD

0.13

Negative

RSI

55.09

Neutral

STOCH

68.38

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PNTG, the sentiment is Positive. The current price of 25.37 is above the 20-day moving average (MA) of 24.74, above the 50-day MA of 24.96, and below the 200-day MA of 29.06, indicating a neutral trend. The MACD of 0.13 indicates Negative momentum. The RSI at 55.09 is Neutral, neither overbought nor oversold. The STOCH value of 68.38 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PNTG.

Pennant Group Risk Analysis

Pennant Group disclosed 41 risk factors in its most recent earnings report. Pennant Group reported the most risks in the “Legal & Regulatory” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Pennant Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (48)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PNTG	64 Neutral	$880.90M	35.88	10.40%	―	27.59%	61.97%
HCSG	64 Neutral	$717.98M	18.31	8.25%	―	2.65%	3.34%
USPH	63 Neutral	$1.05B	37.68	5.75%	2.55%	11.00%	37.38%
BKD	52 Neutral	$1.15B	―	-65.55%	―	3.95%	-5.53%
SNDA	51 Neutral	$408.21M	―	-17.38%	―	19.19%	―
AVAH	51 Neutral	$875.97M	―	42.49%	―	6.82%	92.03%
Sector *	48 Neutral	$6.46B	1.17	-48.25%	2.67%	19.50%	0.61%

* Healthcare Sector Average

Performance Comparison

PNTG

Pennant Group

26.03

6.12

30.74%

BKD

Brookdale Senior Living

6.24

-0.08

-1.27%

SNDA

Sonida Senior Living, Inc.

21.76

-7.12

-24.65%

HCSG

Healthcare Services

9.79

-1.75

-15.16%

USPH

US Physical Therapy

69.35

-29.63

-29.94%

AVAH

Aveanna Healthcare Holdings

4.71

2.42

105.68%

Pennant Group Earnings Call Summary

Earnings Call Date: Feb 27, 2025 | % Change Since: -0.67% | Next Earnings Date: May 1, 2025

Earnings Call Sentiment Positive

The earnings call for The Pennant Group highlighted strong financial performance and growth across all segments, supported by successful acquisitions and partnerships. Despite minor challenges in hospice revenue, the company's outlook remains positive with planned expansions and robust financial health.

Highlights

Record-Breaking Performance

Pennant Group concluded a year of record-breaking performance with Q4 adjusted earnings per share of $0.24 and a full year 2024 adjusted EPS of $0.94, exceeding guidance.

Significant Revenue and EBITDA Growth

Full year consolidated revenue increased by $150.3 million or 27.6% to $695.2 million. Adjusted EBITDA improved by $12.6 million or 30.9% over the prior year.

Successful Acquisitions and Partnerships

Major acquisitions include the $80 million purchase of Signature Healthcare at Home. Partnerships with John Muir Health and Hartford Healthcare are contributing positively.

Home Health and Hospice Segment Growth

Revenue increased by 31.7% to $519.5 million with a 34.1% rise in adjusted EBITDA. Home health admissions hit a new high, increasing by 40.9%.

Senior Living Segment Improvement

Revenue grew by 16.8% to $175.8 million, with full-year adjusted EBITDA rising by 31.9%. Occupancy increased by 30 basis points to 78.8%.

Strong Financial Position

The company maintains a healthy balance sheet with $245.8 million available on its credit line and $24.2 million in cash on hand.

Lowlights

Hospice Revenue Per Episode Decrease

Despite growth in hospice admissions, revenue per episode decreased by 1.6% over the prior year quarter.

Hospice Cap Expense Impact

An atypical hospice cap expense of $1.7 million in Q4 affected margins. The expense is a result of higher reimbursement rates in California not matched by hospice cap allowance increases.

Company Guidance

During the Pennant Group's fourth quarter 2024 earnings call, the company provided guidance for 2025, projecting full-year revenue between $800 million and $865 million, and an adjusted earnings per share in the range of $1.03 to $1.11. This guidance reflects an anticipated 13.8% growth over the 2024 adjusted earnings and 46.6% growth over 2023 results. The company expects a continuous ramp-up throughout the year, particularly as they transition newly acquired operations. Additionally, they forecast adjusted EBITDA between $63.1 million and $68.2 million. The guidance is based on the momentum of their home health and hospice segments, the readiness of local leaders to drive growth, and the potential to unlock value in existing operations. The company noted that their guidance excludes unannounced acquisitions and startup operations but assumes level interest rates and inflation consistent with 2024.

Pennant Group Corporate Events

Financial Disclosures

Pennant Group Reports Strong 2024 Financial Results

Positive

Feb 27, 2025

The Pennant Group reported its financial results for the fiscal year and fourth quarter of 2024, highlighting a significant increase in revenue and net income compared to the previous year. The company achieved a total revenue of $695.2 million for the year, marking a 27.6% increase, and a net income of $22.6 million, a 68.6% rise over the prior year. The Home Health and Hospice Services segment saw substantial growth, with a 31.7% increase in revenue for the year. The company also provided guidance for 2025, anticipating continued growth with expected total revenue between $800 million and $865 million.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.