Pennant Group, Inc.

Previous wording

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

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•potential additional regulation affecting the transparency, ownership, operating standards, conditions of licensure or participation in certain payment programs, and staffing of businesses in our industry;

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•security breaches and other cyber security incidents;

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•security breaches and other cyber security incidents; and

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

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

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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.

Current wording

We are a leading provider of high-quality healthcare services to patients and residents 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 also provide home health and hospice operational support through a management service agreement in Connecticut. As of March 31, 2025, our home health and hospice business provided home health, hospice and home care services from 137 agencies operating across these 13 states, and our senior living business operated 60 senior living communities throughout seven states.

Previous wording

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.

Current wording

Acquisitions. During the three months ended March 31, 2025, we expanded our operations with the addition of five home health agencies, four 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.

Previous wording

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.

Current wording

We have experienced improvement in senior living revenue per occupied unit during the three months ended March 31, 2025, compared to the same period in 2024. Though we have seen improvements in revenue per occupied unit year over year, the highly competitive environment for senior living residents and inflationary factors will continue to impact the rate at which our revenue per occupied unit changes in our senior living communities.

Previous wording

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.

Current wording

On April 11, 2025, CMS issued the 2026 Hospice Payment Rate Update proposed rule (the “Hospice Payment Proposed Rule”). The Hospice Payment Proposed Rule’s payment update percentage is 2.4%, which is an estimated increase of $695 million in payments from fiscal year 2025. The payment update percentage is based on a 3.2% market basket percentage increase, which is reduced by a 0.8% productivity adjustment. The Hospice Payment Proposed Rule clarifies that the physician member of a hospice’s interdisciplinary group may recommend admission to hospice care, which aligns certification regulations with the hospice conditions of participation. In addition, the Hospice Payment Proposed 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 2026 fiscal year is $35,292.51, increased from the 2025 fiscal year cap of $34,465.34. The Hospice Payment Proposed Rule also proposes two new quality measures for potential adoption into the Hospice Quality Reporting Program: timely reassessment of pain impact and timely reassessment of non-pain symptom impact. If finalized and adopted for implementation beginning in fiscal year 2028, these measures would be intended to evaluate timely follow-up on patient symptoms. Finally, the Hospice Payment Proposed Rule contained a request for information seeking public comment on approaches and opportunities to streamline regulations and reduce burdens on participating providers, including hospice agencies.

Previous wording

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.

Current wording

We have two reportable segments: (1) home health and hospice services, which includes our home health, hospice, home care, and geriatric primary and palliative care businesses; and (2) senior living services, which includes our assisted living, independent living, and memory care services. Our Chief Executive Officer, who is our CODM, reviews financial information at the operating segment level using segment adjusted EBITDAR from operations.

Previous wording

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.

Current wording

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 LUPA 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 2024 Annual Report.

Previous wording

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.

Current wording

CMS has established a two-tiered payment system for RHC. Hospices are reimbursed at a higher rate for RHC services provided from days of service 1 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.

Previous wording

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 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.

Current wording

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

Previous wording

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.

Current wording

Senior Living Services. Within our senior living operations, we generate revenue primarily from private pay sources, with a portion earned from Medicaid or other state-specific programs.

Previous wording

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.

Current wording

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 employee wages and related benefits, share-based compensation, supplies, purchased services, and ancillary expenses such as the cost of pharmacy and therapy services provided to patients and res. Cost of services also includes the cost of general and professional liability insurance and other general cost of services specifically attributable to our operations.

Previous wording

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.

Current wording

General and Administrative Expense. General and administrative expense consists primarily of employee wages and related benefits and travel expenses for our Service Center personnel in providing 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.

Previous wording

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.

Current wording

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

Previous wording

•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;

Current wording

•Self-insurance reserves - The Company is self-insured for general and professional liability, workers’ compensation, automobile, and its employee health plans while maintaining stop-loss coverage with third-party insurers to limit its total liability exposure. 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;

Previous wording

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

Current wording

The following table presents our consolidated GAAP Financial measures for the three months ended March 31, 2025 and 2024:

Previous wording

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”:

Current wording

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.

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

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The table below reconciles Segment Adjusted EBITDAR from Operations to Segment Adjusted EBITDA from Operations for the periods presented:

Previous wording

•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;

Current wording

•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 length of the lease to which the asset applies, the method by which assets were acquired, and differences in capital structures;

Previous wording

•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

Current wording

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

Previous wording

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.

Current wording

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.

Previous wording

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

Current wording

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

Previous wording

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.

Current wording

We adjust Consolidated EBITDA when evaluating our performance because we believe that the exclusion of certain 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 Net Income is beneficial to an investor’s complete understanding of our operating performance.

Previous wording

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.

Current wording

We use Consolidated Adjusted EBITDAR as one measure in determining the value of prospective acquisitions. It is also a measure commonly used by 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 without regard to operating and finance leases. A significant portion of finance lease expenditures are recorded in interest, whereas operating lease expenditures are recorded in rent expense.

Previous wording

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.

Current wording

Our total revenue increased $52.9 million, or 33.7%, during the three months ended March 31, 2025. We experienced growth of $43.4 million from increased operational performance in our Home Health and Hospice segment from increased admissions and census, in part driven by newly acquired agencies when compared to the three months ended March 31, 2024. The growth in our Senior Living segment resulted in an increase in revenue of $9.5 million driven by acquired senior living communities and the improved average rate per occupied room.

Previous wording

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 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%.

Current wording

Home health and hospice revenue increased $43.4 million, or 37.2%, for the three months ended March 31, 2025 compared to the prior year quarter. Revenue grew due to an increase in certain key performance indicators, including an increase of 28.9% in total home health admissions, an increase in total hospice admissions of 22.8%, and an increase in average daily hospice census of 28.1% during the three months ended March 31, 2025 compared to the prior year quarter. Growth was also driven by the addition of twenty-five home health and hospice operations between March 31, 2024 and March 31, 2025. Agencies acquired during calendar year 2024 and year-to-date March 31, 2025 drove an increase of $30.9 million, or 26.6%.

Previous wording

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.

Current wording

Senior living revenue increased $9.5 million, or 23.6%, for the three months ended March 31, 2025 compared to the prior year quarter. Revenue grew due to an 11.3% increase in average monthly revenue per occupied unit between March 31, 2024 and March 31, 2025. Growth was also driven by the addition of seven senior living communities between March 31, 2024 and March 31, 2025. Communities acquired during calendar year 2024 and year-to-date March 31, 2025 drove an increase of $6.0 million, or 14.9%, overall.

Previous wording

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.

Current wording

Total consolidated cost of services increased $42.8 million, or 33.9%, for the three months ended March 31, 2025 when compared to the three months ended March 31, 2024. Cost of services as a percentage of revenue increased by 10 basis points from 80.3% to 80.4% for the three months ended March 31, 2025 when compared to the three months ended March 31, 2024.

Previous wording

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.

Current wording

Cost of services related to our Home Health and Hospice Services segment increased $35.4 million, or 36.4%, primarily due to increased volume of services provided. Cost of services as a percentage of revenue for the three months ended March 31, 2025 decreased 50 basis points when compared to the three months ended March 31, 2024 due to increased efficiency in our operations.

Previous wording

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.

Current wording

Cost of services related to our Senior Living Services segment increased $7.3 million, or 25.5%, primarily due to increased wages and benefits and acquisition activity. As a percentage of revenue, costs of service increased by 110 basis points for the three months ended March 31, 2025 when compared to the three months ended March 31, 2024.

Previous wording

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.

Current wording

Rent—Cost of Services. Rent expense increased 12.8% from $10.4 million to $11.7 million in the three months ended March 31, 2025 when compared to the three months ended March 31, 2024, primarily as a result of the new leases on the acquired home health and hospice operations and senior living communities. Rent as a percentage of total revenue decreased 100 basis points from 6.6% for the three months ended March 31, 2024, compared to 5.6% for the three months ended March 31, 2025.

Previous wording

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.

Current wording

General and Administrative Expense. Our general and administrative expense increased $3.4 million, or 29.8%, from $11.4 million to $14.8 million for the three months ended March 31, 2025 when compared to the three months ended March 31, 2024. General and administrative expense as a percentage of revenue decreased 20 basis points from 7.3% to 7.1% 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 March 31, 2025 when compared to the three months ended March 31, 2024.

Previous wording

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.

Current wording

Provision for Income Taxes. We recorded income tax expense of $2.9 million and $1.8 million or 25.1% and 25.8% of earnings before income taxes for the three months ended March 31, 2025 and 2024, respectively. Certain of our subsidiaries are treated for income tax purposes like partnerships. The noncontrolling portion of those subsidiaries’ earnings reduces our effective tax rate. The decrease in the effective tax rate is primarily due to having more earnings by those subsidiaries.

Previous wording

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.

Current wording

As of March 31, 2025, we had $5.2 million of cash and $193.3 million of available borrowing capacity on our Amended Revolving Credit Facility.

Previous wording

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.

Current wording

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 both our operating activities and for opportunities of acquisition growth.

Previous wording

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.

Current wording

Our net cash flow from operating activities for the three months ended March 31, 2025 decreased by $21.8 million when compared to the three months ended March 31, 2024. The primary driver of this difference was a decrease in cash flows from the change in operating assets and liabilities of $27.9 million, net, and a decrease of $2.7 million in non-cash expenses, partially offset by an increase in net income of $3.5 million.

Previous wording

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.

Current wording

Our net cash used in investing activities for the three months ended March 31, 2025 increased by $26.7 million compared to the three months ended March 31, 2024, primarily driven by an increase in business and asset acquisitions.

Previous wording

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.

Current wording

Our net cash provided by financing activities increased by approximately $32.8 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was primarily due to a net increase in the balance on our line of credit during the three months ended March 31, 2025 compared to the three months ended March 31, 2024.