Pennant Group, Inc.

Previous wording

•federal and state changes to, or delays receiving, reimbursement and other aspects of Medicaid and Medicare, including proposed Medicare reimbursement reductions in the Calendar Year 2026 Home Health Prospective Payment System Rate Update Final Rule and changes to Medicaid funding and eligibility within the One Big Beautiful Bill Act;

Current wording

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

Previous 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 Alabama, Arizona, California, Colorado, Georgia, Idaho, Montana, Nevada, Oklahoma, Oregon, Tennessee, Texas, Utah, Washington, Wisconsin and Wyoming. We also provide home health and hospice operational support through a management service agreement in Connecticut. See Note 9, Equity Method Investments, for further details about our investment in these operations. As of June 30, 2026, our home health and hospice business provided home health, hospice and home care services from 175 agencies operating across these 16 states, and our senior living business operated 69 senior living communities throughout seven 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 Alabama, Arizona, California, Colorado, Georgia, Idaho, Montana, Nevada, Oklahoma, Oregon, Tennessee, Texas, Utah, Washington, Wisconsin and Wyoming. We also provide home health and hospice operational support through a management service agreement in Connecticut. See Note 9, Equity Method Investment, for further details about our investment in these operations. As of September 30, 2026, our home health and hospice business provided home health, hospice and home care services from 175 agencies operating across these 16 states, and our senior living business operated 70 senior living communities throughout seven states.

Previous wording

Acquisitions. During the six months ended June 30, 2026, we expanded our operations with the addition of six 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 nine months ended September 30, 2026, we expanded our operations with the addition of seven 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

On July 30, 2026, CMS issued the Calendar Year (“CY”) 2027 Hospice Wage Index and Payment Rate Update proposed rule (“Hospice Payment Final Rule”). The Hospice Payment Final Rule’s net payment update percentage is 2.3%, which is an estimated increase of $755 million in payments from fiscal year 2026 in the aggregate across all hospice providers. The payment update percentage is based on a 3.2% market basket percentage increase, reduced by a 0.9% productivity adjustment. In addition, the Hospice Payment Final Rule updates the statutory aggregate cap of the total overall payments per patient that may be made to a hospice annually to $36,174.75 for fiscal year 2027, which is an increase of 2.3% from the 2026 fiscal year cap of $35,361.44.

Current wording

On July 30, 2026, CMS issued the Fiscal Year (“FY”) 2027 Hospice Wage Index and Payment Rate Update final rule (“Hospice Payment Final Rule”), which took effect October 1, 2026. The Hospice Payment Final Rule’s net payment update percentage is 2.3%, which is an estimated increase of $755 million in payments from fiscal year 2026 in the aggregate across all hospice providers. The payment update percentage is based on a 3.2% market basket percentage increase, reduced by a 0.9% productivity adjustment. In addition, the Hospice Payment Final Rule updates the statutory aggregate cap of the total overall payments per patient that may be made to a hospice annually to $36,174.75 for fiscal year 2027, which is an increase of 2.3% from the 2026 fiscal year cap of $35,361.44.

Previous wording

The Hospice Payment Final Rule makes a technical change extending a hospice’s ability to use telehealth to conduct encounters that otherwise have to be conducted face-to-face through December 31, 2027, to align with the Consolidated Appropriations Act of 2026. Further, CMS has made the hospice election statement addendum, which was originally only provided to hospice patients upon request, mandatory for all hospice elections. In publishing the Hospice Payment Final Rule, CMS explained that this requirement will provide beneficiaries additional transparency regarding the items, services, and drugs not covered under Medicare’s hospice benefits, so that those beneficiaries can make appropriate treatment decisions. Finally, as part of the Hospice Quality Reporting Program, CMS will add an icon to the Medicare.gov Compare Tool that will identify hospices failing to submit any data or submitting less than the required quality data beginning in the 2028 fiscal year.

Current wording

The Hospice Payment Final Rule makes a technical change extending a hospice’s ability to use telehealth to conduct encounters that otherwise have to be conducted face-to-face through December 31, 2027, to align with the Consolidated Appropriations Act of 2026 (i.e., extension of telehealth waivers through December 31, 2027). Further, CMS has made the hospice election statement addendum, which was originally only provided to hospice patients upon request, mandatory for all hospice elections on or after October 1, 2026 (however, CMS is exercising enforcement discretion of this requirement until December 31, 2026). In publishing the Hospice Payment Final Rule, CMS explained that this requirement will provide beneficiaries additional transparency regarding the items, services, and drugs not covered under Medicare’s hospice benefits, so that those beneficiaries can make appropriate treatment decisions. Finally, as part of the Hospice Quality Reporting Program, CMS will add an icon to the Medicare.gov Compare Tool that will identify hospices failing to submit any data or submitting less than the required quality data beginning in the 2028 fiscal year.

Previous wording

Effective May 13, 2026, CMS announced a six-month, nationwide moratorium on new Medicare enrollment applications for hospice providers and home health agencies (“HHA”); this applies to all initial Medicare enrollment applications and to certain changes in majority ownership of existing enrolled providers. The moratorium does not affect currently enrolled providers. This moratorium was announced in coordination with the Anti-Fraud Task Force focusing on initiatives to combat fraud, waste, and abuse. Also, in connection with such moratorium, CMS announced certain enforcement activity against hospices and HHAs (e.g., suspension of Medicare payments to certain providers). Notably, CMS announced heightened scrutiny of newly enrolled providers in Arizona, California, Georgia, Nevada, Ohio, Oklahoma, and Texas. Following CMS’s announcement of this moratorium, certain states have followed suit: Ohio announced a Medicaid enrollment moratorium on May 14, 2026, through November 14, 2026; Arkansas announced it will no longer accept applications for hospices effective May 13, 2026; and, Nevada announced a temporary pause on the issuance of new state licenses for hospices and HHAs on June 5, 2026. All of these reflect alignment with the federal enrollment moratorium.

Current wording

Effective May 13, 2026, CMS announced a six-month, nationwide moratorium on new Medicare enrollment applications for hospice providers and home health agencies (“HHA”); this applies to all initial Medicare enrollment applications and to certain changes in majority ownership of existing enrolled providers. The moratorium does not affect currently enrolled providers. This moratorium was announced in coordination with the Anti-Fraud Task Force focusing on initiatives to combat fraud, waste, and abuse. Also, in connection with such moratorium, CMS announced certain enforcement activity against hospices and HHAs (e.g., suspension of Medicare payments to certain providers). Notably, CMS announced heightened scrutiny of newly enrolled providers in Arizona, California, Georgia, Nevada, Ohio, Oklahoma, and Texas. Following CMS’s announcement of this moratorium, certain states have followed suit: for example, Ohio announced a Medicaid enrollment moratorium on May 14, 2026, through November 14, 2026; Arkansas announced it will no longer accept applications for hospices effective May 13, 2026; and, Nevada announced a temporary pause on the issuance of new state licenses for hospices and HHAs on June 5, 2026. All of these reflect alignment with the federal enrollment moratorium.

Previous wording

On July 1, 2026, CMS published the CY 2027 Home Health Prospective Payment System proposed rule (“HHA Payment Proposed Rule”). The HHA Payment Proposed Rule includes several changes that, if finalized, could materially impact our home health offerings. Under the HHA Payment Proposed Rule, CMS proposes increasing the aggregate net payments to home health agencies by 2.4%, resulting in an aggregate estimated increase across all home health providers of $420 million in payments compared to CY 2026. The payment update percentage includes a payment increase of 2.1% or $370 million, and a 0.3% update to the fixed dollar loss ratio for outlier payments, representing a $50 million increase in funding.

Current wording

On July 6, 2026, the Federal Register published CMS’s CY 2027 Home Health Prospective Payment System proposed rule (“HHA Payment Proposed Rule”). The HHA Payment Proposed Rule includes several changes that, if finalized, could materially impact our home health offerings. Under the HHA Payment Proposed Rule, CMS proposes increasing the aggregate net payments to home health agencies by 2.4%, resulting in an aggregate estimated increase across all home health providers of $420 million in payments compared to CY 2026. The payment update percentage includes a payment increase of 2.1% or $370 million, and a 0.3% update to the fixed dollar loss ratio for outlier payments, representing a $50 million increase in funding.

Previous wording

The HHA Payment Proposed Rule also set forth significant changes to Medicare provider and supplier enrollment processes. If adopted, these provisions would apply to any Medicare provider or supplier, consistent with HHS and CMS’s stated priorities of combatting fraud, waste, and abuse. First, CMS proposed to expand the false-or-misleading information basis for denying or revoking enrollment in Medicare so that this lower standard for denial or revocation of enrollment shall be applicable to any and all of CMS’s and Medicare’s provider-enrollment-related forms or documentation. Second, CMS proposed new and expanded grounds for denying enrollment in Medicare, including but not limited to, an applicant’s failure to abide by certain change in majority ownership rules for hospices and HHAs, if that applicant’s licensure or participation ins a state or federal program for the payment of healthcare services had been suspended or revoked. Third, CMS proposed to make all Medicare enrollment revocations retroactive to the date the event or circumstance giving rise to revocation began, rather than applying only prospectively and commencing 30 days after CMS or its contractor mails notice of revocation to the provider.

Current wording

The HHA Payment Proposed Rule also set forth significant changes to Medicare provider and supplier enrollment processes. If adopted, these provisions would apply to any Medicare provider or supplier, consistent with HHS and CMS’s stated priorities of combatting fraud, waste, and abuse. First, CMS proposed to expand the false-or-misleading information basis for denying or revoking enrollment in Medicare so that this lower standard for denial or revocation of enrollment shall be applicable to any and all of CMS’s and Medicare’s provider-enrollment-related forms or documentation. Second, CMS proposed new and expanded grounds for denying enrollment in Medicare, including but not limited to, an applicant’s failure to abide by certain change in majority ownership rules for hospices and HHAs, if that applicant’s licensure or participation in a state or federal program for the payment of healthcare services had been suspended or revoked. Third, CMS proposed to make all Medicare enrollment revocations retroactive to the date the event or circumstance giving rise to revocation began, rather than applying only prospectively and commencing 30 days after CMS or its contractor mails notice of revocation to the provider. Fourth, the HHA Payment Proposed Rule expands the reapplication-bar authority so that CMS may prohibit a prospective provider or supplier from enrolling in Medicare for up to ten years if its prior application is denied for certain reasons defined by regulation, such as noncompliance with enrollment requirements, misconduct, or unpaid claims or debt owed to Medicare. The proposed rule, if adopted, would significantly expand the grounds on which providers or suppliers are barred from re-applying for enrollment in Medicare after a prior enrollment denial, which currently are limited to denials based on false or misleading information. Finally, a series of other enrollment-related changes were proposed including a new general signage requirement, documentation requirements, and clarification of procedures for appeals and rebuttals concerning CMS’s enrollment decisions.

Previous 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.

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, share-based compensation, and rent for our Service Center offices.

Previous wording

The following table presents our consolidated GAAP Financial measures for the three and six months ended June 30, 2026 and 2025:

Current wording

The following table presents our consolidated GAAP Financial measures for the three and nine months ended September 30, 2026 and 2025:

Previous wording

•activities associated with transitioning operations; and

Current wording

•activities associated with transitioning operations;

Previous wording

Our total revenue increased $78.5 million, or 35.8%, during the three months ended June 30, 2026. We experienced growth of $71.8 million from increased operational performance in our Home Health and Hospice segment from increased admissions and census, primarily driven by newly acquired agencies when compared to the three months ended June 30, 2025. The growth in our Senior Living segment resulted in an increase in revenue of $6.7 million driven by acquired senior living communities and an improved average rate per occupied room and improved occupancy.

Current wording

Our total revenue increased $73.2 million, or 32.0%, during the three months ended September 30, 2026. We experienced growth of $66.2 million from increased operational performance in our Home Health and Hospice segment from increased admissions and census, primarily driven by newly acquired agencies when compared to the three months ended September 30, 2025. The growth in our Senior Living segment resulted in an increase in revenue of $7.0 million driven by acquired senior living communities and an improved average rate per occupied room.

Previous wording

Home health and hospice revenue increased $71.8 million, or 43.2%, for the three months ended June 30, 2026 compared to the prior year quarter. Revenue grew due to an increase in certain key performance indicators, including an increase of 62.3% in total home health admissions, an increase in total hospice admissions of 38.4%, and an increase in average daily hospice census of 40.1% during the three months ended June 30, 2026 compared to the prior year quarter. Growth was also driven by the addition of thirty-eight home health and hospice operations between June 30, 2025 and June 30, 2026. Agencies acquired during calendar year 2025 and year-to-date June 30, 2026 drove an increase in revenue of $55.8 million, representing an increase of 33.6% compared to the prior year quarter.

Current wording

Home health and hospice revenue increased $66.2 million, or 38.2%, for the three months ended September 30, 2026 compared to the prior year quarter. Revenue grew due to an increase in certain key performance indicators, including an increase of 39.4% in total home health admissions, inclusive of an increase in total Medicare home health admissions of 38.0%, an increase in total hospice admissions of 31.8%, and an increase in average daily hospice census of 34.6% during the three months ended September 30, 2026 compared to the prior year quarter. Growth was also driven by the addition of thirty-four home health and hospice operations between September 30, 2025 and September 30, 2026. Agencies acquired during fiscal year 2025 and year-to-date September 30, 2026 drove an increase in revenue of $50.1 million, representing an increase of 28.9% compared to the prior year quarter.

Previous wording

Senior living revenue increased $6.7 million, or 12.6%, for the three months ended June 30, 2026 compared to the prior year quarter. Revenue grew due to an increase of 3.9% in average monthly revenue per occupied unit and an increase of 10 basis points in occupancy between June 30, 2025 and June 30, 2026. Growth was also driven by the addition of eight senior living communities between June 30, 2025 and June 30, 2026. Communities acquired during calendar year 2025 and year-to-date June 30, 2026 drove an increase in revenue of $3.2 million, representing an increase of 6.0% compared to the prior year quarter.

Current wording

Senior living revenue increased $7.0 million, or 12.6%, for the three months ended September 30, 2026 compared to the prior year quarter. Revenue grew due to an increase of 3.7% in average monthly revenue per occupied unit between September 30, 2025 and September 30, 2026. Growth was also driven by the addition of nine senior living communities between September 30, 2025 and September 30, 2026. Communities acquired during fiscal year 2025 and year-to-date September 30, 2026 drove an increase in revenue of $5.6 million, representing an increase of 10.0% compared to the prior year quarter.

Previous wording

Total consolidated cost of services increased $65.4 million, or 36.9%, for the three months ended June 30, 2026 when compared to the three months ended June 30, 2025. Cost of services as a percentage of revenue increased by 60 basis points from 80.8% to 81.4% for the three months ended June 30, 2026 when compared to the three months ended June 30, 2025.

Current wording

Total consolidated cost of services increased $62.7 million, or 33.8%, for the three months ended September 30, 2026 when compared to the three months ended September 30, 2025. Cost of services as a percentage of revenue increased by 110 basis points from 81.0% to 82.1% for the three months ended September 30, 2026 when compared to the three months ended September 30, 2025.

Previous wording

Cost of services related to our Home Health and Hospice Services segment increased $59.5 million, or 43.1%, for the three months ended June 30, 2026 when compared to the three months ended June 30, 2025, primarily due to increased volume of services provided and transition costs related to acquisitions. Cost of services as a percentage of revenue for the three months ended June 30, 2026 decreased 10 basis points when compared to the three months ended June 30, 2025.

Current wording

Cost of services related to our Home Health and Hospice Services segment increased $56.4 million, or 38.9%, for the three months ended September 30, 2026 when compared to the three months ended September 30, 2025, primarily due to increased volume of services provided and transition costs related to acquisitions. Cost of services as a percentage of revenue for the three months ended September 30, 2026 increased 50 basis points when compared to the three months ended September 30, 2025, primarily due to higher cost patterns at newly acquired operations.

Previous wording

Cost of services related to our Senior Living Services segment increased $5.8 million, or 14.9%, for the three months ended June 30, 2026 when compared to the three months ended June 30, 2025, primarily due to increased wages and benefits and acquisition activity. As a percentage of revenue, costs of service increased by 150 basis points for the three months ended June 30, 2026 when compared to the three months ended June 30, 2025, primarily due to higher cost patterns at newly acquired operations.

Current wording

Cost of services related to our Senior Living Services segment increased $6.3 million, or 15.5%, for the three months ended September 30, 2026 when compared to the three months ended September 30, 2025, primarily due to increased wages and benefits and acquisition activity. As a percentage of revenue, costs of service increased by 200 basis points for the three months ended September 30, 2026 when compared to the three months ended September 30, 2025, primarily due to higher cost patterns at newly acquired operations.

Previous wording

Rent—Cost of Services. Rent expense increased 12.6% from $11.9 million to $13.4 million in the three months ended June 30, 2026 when compared to the three months ended June 30, 2025, primarily as a result of the new leases related to the acquired home health and hospice operations and senior living communities. Rent as a percentage of total revenue decreased 90 basis points from 5.4% for the three months ended June 30, 2025, compared to 4.5% for the three months ended June 30, 2026.

Current wording

Rent—Cost of Services. Rent expense increased 14.4% from $12.1 million to $13.8 million in the three months ended September 30, 2026 when compared to the three months ended September 30, 2025, primarily as a result of the new leases related to the acquired home health and hospice operations and senior living communities. Rent as a percentage of total revenue decreased 70 basis points from 5.3% for the three months ended September 30, 2025, compared to 4.6% for the three months ended September 30, 2026.

Previous wording

General and Administrative Expense. Our general and administrative expense increased $4.0 million, or 22.8%, from $17.6 million to $21.6 million for the three months ended June 30, 2026 when compared to the three months ended June 30, 2025. General and administrative expense as a percentage of revenue decreased 70 basis points from 8.0% to 7.3% during the period. The primary driver of the increase in general and administrative expense was due to an increase in payroll, incentives, and related benefits for the three months ended June 30, 2026 when compared to the three months ended June 30, 2025.

Current wording

General and Administrative Expense. Our general and administrative expense increased $1.3 million, or 6.9%, from $19.3 million to $20.6 million for the three months ended September 30, 2026 when compared to the three months ended September 30, 2025. The primary driver of the increase in general and administrative expense was due to an increase in payroll, incentives, and related benefits for the three months ended September 30, 2026 when compared to the three months ended September 30, 2025. General and administrative expense as a percentage of revenue decreased 160 basis points from 8.4% to 6.8% during the period. The primary driver behind the higher percentage of general and administrative expense for the three months ended September 30, 2025 was due to the evaluation of and preparation for the large UnitedHealth acquisition that occurred October 1, 2025, while the lower percentage of general and administrative expense for the three months ended September 30, 2026 was due to the additional revenue from the UnitedHealth acquisition.

Previous wording

Depreciation and Amortization. Depreciation and amortization expense increased $0.9 million, or 39.9%, from $2.2 million to $3.1 million for the three months ended June 30, 2026 when compared to the three months ended June 30, 2025. The increase in depreciation and amortization was due to the increase in overall property and equipment, net balances driven in part by acquisition activity.

Current wording

Depreciation and Amortization. Depreciation and amortization expense increased $1.6 million, or 78.6%, from $2.1 million to $3.7 million for the three months ended September 30, 2026 when compared to the three months ended September 30, 2025. The increase in depreciation and amortization was due to the increase in overall property and equipment, net balances driven in part by acquisition activity.

Previous wording

Gain on disposition of property and equipment, net. We recorded a gain of $1.0 million for insurance proceeds received in excess of the carrying values of related assets during the three months ended June 30, 2025.

Current wording

Gain on disposition of property and equipment, net. We recorded a gain of $0.5 million for insurance proceeds received in excess of the carrying values of related assets during the three months ended September 30, 2026. We recorded a net gain of $0.1 million during the three months ended September 30, 2025.

Previous wording

Provision for Income Taxes. We recorded income tax expense of $3.9 million and $2.6 million, or 26.5% and 24.6% of earnings before income taxes, for the three months ended June 30, 2026 and 2025, respectively. The increase in the effective tax rate is primarily attributable to higher state income taxes driven by changes in the geographic mix of earnings, net of the associated federal tax benefit.

Current wording

Provision for Income Taxes. We recorded income tax expense of $3.1 million and $2.5 million, or 22.0% and 26.8% of earnings before income taxes, for the three months ended September 30, 2026 and 2025, respectively. The decrease in the effective tax rate is primarily attributable to excess tax benefits from share-based compensation.

Previous wording

Our total revenue increased $154.0 million, or 35.9%, during the six months ended June 30, 2026. We experienced growth of $141.0 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 six months ended June 30, 2025. The growth in our Senior Living segment resulted in an increase in revenue of $13.0 million driven by acquired senior living communities and an improved average rate per occupied room.

Current wording

Our total revenue increased $227.2 million, or 34.5%, during the nine months ended September 30, 2026. We experienced growth of $207.2 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 nine months ended September 30, 2025. The growth in our Senior Living segment resulted in an increase in revenue of $20.0 million driven by acquired senior living communities and an improved average rate per occupied room.

Previous wording

Home health and hospice revenue increased $141.0 million, or 43.3%, during the six months ended June 30, 2026 compared to the same period in the prior year primarily due to an increase of 62.5% in home health admissions, inclusive of an increase in total Medicare home health admissions of 73.0%, an increase in hospice average daily census of 38.6%, and an increase of 32.5% in hospice admissions. Growth was also driven by the addition of thirty-eight home health and hospice operations between June 30, 2025 and June 30, 2026. Agencies acquired during calendar year 2025 and year-to-date June 30, 2026 drove an increase in revenue of $109.1 million, representing an increase of 33.5% compared to the same period in the prior year.

Current wording

Home health and hospice revenue increased $207.2 million, or 41.5%, during the nine months ended September 30, 2026 compared to the same period in the prior year primarily due to an increase of 54.3% in home health admissions, inclusive of an increase in total Medicare home health admissions of 60.4%, an increase of 32.3% in hospice admissions, and an increase in hospice average daily census of 36.1%. Growth was also driven by the addition of thirty-four home health and hospice operations between September 30, 2025 and September 30, 2026. Agencies acquired during fiscal year 2025 and year-to-date September 30, 2026 drove an increase in revenue of $159.2 million, representing an increase of 31.9% compared to the same period in the prior year.

Previous wording

Senior living revenue increased $13.0 million, or 12.6%, for the six months ended June 30, 2026 compared to the same period in the prior year primarily due to an increase of 4.4% in average monthly revenue per occupied unit between June 30, 2025 and June 30, 2026. Growth was also driven by the addition of eight senior living communities between June 30, 2025 and June 30, 2026. Communities acquired during calendar year 2025 and year-to-date June 30, 2026 drove an increase in revenue of $6.0 million, representing an increase of 5.8% compared to the same period in the prior year.

Current wording

Senior living revenue increased $20.0 million, or 12.6%, for the nine months ended September 30, 2026 compared to the same period in the prior year primarily due to the addition of nine senior living communities and an increase of 4.0% in average monthly revenue per occupied unit between September 30, 2025 and September 30, 2026. Communities acquired during fiscal year 2025 and year-to-date September 30, 2026 drove an increase in revenue of $11.5 million, representing an increase of 7.2% compared to the same period in the prior year.

Previous wording

Consolidated cost of services increased $129.3 million, or 37.4%, during the six months ended June 30, 2026 compared to the same period in the prior year. Cost of services as a percentage of revenue for the six months ended June 30, 2026 increased by 90 basis points to 81.5% from 80.6% compared to the six months ended June 30, 2025.

Current wording

Consolidated cost of services increased $192.0 million, or 36.1%, during the nine months ended September 30, 2026 compared to the same period in the prior year. Cost of services as a percentage of revenue for the nine months ended September 30, 2026 increased by 90 basis points to 81.7% from 80.8% compared to the nine months ended September 30, 2025.

Previous wording

Cost of services related to our Home Health and Hospice services segment increased $118.8 million, or 43.8%, 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 six months ended June 30, 2026 increased by 30 basis points compared to the six months ended June 30, 2025.

Current wording

Cost of services related to our Home Health and Hospice services segment increased $175.2 million, or 42.1%, 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, 2026 increased by 40 basis points compared to the nine months ended September 30, 2025, primarily due to higher cost patterns at newly acquired operations.

Previous wording

Cost of services related to our Senior Living services segment increased $10.5 million, or 14.0%, during the six months ended June 30, 2026 compared to the same period in the prior year primarily due to increased wages and benefits and acquisition activity. As a percentage of revenue, costs of service increased by 80 basis points during the six months ended June 30, 2026 when compared to the six months ended June 30, 2025 primarily due to higher cost patterns at newly acquired operations.

Current wording

Cost of services related to our Senior Living services segment increased $16.8 million, or 14.5%, during the nine months ended September 30, 2026 compared to the same period in the prior year primarily due to increased wages and benefits and acquisition activity. As a percentage of revenue, costs of service increased by 120 basis points during the nine months ended September 30, 2026 when compared to the nine months ended September 30, 2025, primarily due to higher cost patterns at newly acquired operations.

Previous wording

Rent—Cost of Services. Rent increased 12.2% from $23.6 million to $26.5 million during the six months ended June 30, 2026 compared to the same period in the prior year, primarily as a result of the new leases related to the acquired home health and hospice operations and senior living communities. As a percentage of revenue, rent—cost of services decreased 100 basis points when compared to the six months ended June 30, 2025.

Current wording

Rent—Cost of Services. Rent increased 12.9% from $35.7 million to $40.3 million during the nine months ended September 30, 2026 compared to the same period in the prior year, primarily as a result of the new leases related to the acquired home health and hospice operations and senior living communities. As a percentage of revenue, rent—cost of services decreased 80 basis points when compared to the nine months ended September 30, 2025.

Previous wording

General and Administrative Expense. Our general and administrative expense increased $8.9 million, or 27.3%, from $32.4 million to $41.3 million for the six months ended June 30, 2026 when compared to the six months ended June 30, 2025. General and administrative expense as a percentage of revenue decreased 50 basis points from 7.6% to 7.1% during the period. The increase in general and administrative expense was due to an increase in payroll, incentive, and related benefits, along with increased professional services for the six months ended June 30, 2026 when compared to the six months ended June 30, 2025.

Current wording

General and Administrative Expense. Our general and administrative expense increased $10.2 million, or 19.7%, from $51.7 million to $61.9 million for the nine months ended September 30, 2026 when compared to the nine months ended September 30, 2025. The increase in general and administrative expense was due to an increase in payroll, incentive, and related benefits, along with increased professional services for the nine months ended September 30, 2026 when compared to the nine months ended September 30, 2025. General and administrative expense as a percentage of revenue decreased 90 basis points from 7.9% to 7.0% during the period. The primary driver behind the higher percentage of general and administrative expense for the nine months ended September 30, 2025 was due to the evaluation of and preparation for the large UnitedHealth acquisition that occurred October 1, 2025, while the lower percentage of general and administrative expense for the nine months ended September 30, 2026 was due to the additional revenue from the UnitedHealth acquisition.

Previous wording

Depreciation and Amortization. Depreciation and amortization expense increased $1.6 million, or 39.2%, from $4.1 million to $5.7 million for the six months ended June 30, 2026 when compared to the six months ended June 30, 2025. The increase in depreciation and amortization was due to the increase in overall property and equipment, net balances driven in part by acquisition activity.

Current wording

Depreciation and Amortization. Depreciation and amortization expense increased $3.2 million, or 52.3%, from $6.2 million to $9.4 million for the nine months ended September 30, 2026 when compared to the nine months ended September 30, 2025. The increase in depreciation and amortization was due to the increase in overall property and equipment, net balances driven primarily by acquisition activity.

Previous wording

Gain on disposition of property and equipment, net. We recorded a gain of $1.0 million for insurance proceeds received in excess of the carrying values of related assets during the six months ended June 30, 2025.

Current wording

Gain on disposition of property and equipment, net. We recorded a gain of $0.5 million for insurance proceeds received in excess of the carrying values of related assets during the nine months ended September 30, 2026. We recorded a net gain of $1.1 million primarily due to insurance proceeds received in excess of the carrying values of related assets during the nine months ended September 30, 2025.

Previous wording

Provision for Income Taxes. We recorded income tax expense of $7.7 million and $5.5 million, or 26.7% and 24.8% of earnings before income taxes, for the six months ended June 30, 2026 and 2025, respectively. The increase in the effective tax rate is primarily attributable to higher state income taxes driven by changes in the geographic mix of earnings, net of the associated federal tax benefit.

Current wording

Provision for Income Taxes. We recorded income tax expense of $10.8 million and $8.0 million, or 25.2% and 25.4% of earnings before income taxes, for the nine months ended September 30, 2026 and 2025, respectively. The decrease in the effective tax rate is primarily attributable to excess tax benefits from share-based compensation.

Previous wording

As of June 30, 2026, we had $15.3 million of cash and $145.6 million of available borrowing capacity on our Amended Revolving Credit Facility.

Current wording

As of September 30, 2026, we had $18.4 million of cash and $143.6 million of available borrowing capacity on our Amended Revolving Credit Facility.

Previous wording

Our net cash provided by operating activities for the six months ended June 30, 2026 increased by $5.0 million when compared to the six months ended June 30, 2025. The primary driver of this difference was an increase in net income of $4.7 million, an increase of $6.0 million in non-cash adjustments, and a decrease in cash flows from the change in operating assets and liabilities of $5.7 million, net.

Current wording

Our net cash provided by operating activities for the nine months ended September 30, 2026 increased by $16.2 million when compared to the nine months ended September 30, 2025. The primary driver of this difference was an increase in net income of $8.9 million, an increase of $10.2 million in non-cash adjustments, offset by a decrease in cash flows from the change in operating assets and liabilities of $2.9 million, net.

Previous wording

Our net cash used in investing activities for the six months ended June 30, 2026 decreased by $15.1 million compared to the six months ended June 30, 2025, primarily driven by a decrease in business acquisitions.

Current wording

Our net cash used in investing activities for the nine months ended September 30, 2026 decreased by $6.5 million compared to the nine months ended September 30, 2025, primarily driven by a decrease in business acquisitions.

Previous wording

Our net cash provided by financing activities decreased by approximately $12.0 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease was primarily due to a decrease in the net amount drawn on our line of credit used primarily to fund acquisition activity during the six months ended June 30, 2026 compared to the six months ended June 30, 2025.

Current wording

Our net cash provided by financing activities increased by approximately $0.6 million for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase was primarily due the net issuance of common stock due to share based compensation of $5.2 million offset by a decrease in the net amount drawn on our line of credit used primarily to fund acquisition activity of $1.8 million and distributions to noncontrolling interest of $2.7 million during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.

Previous wording

We continue to make draws and payments on our Amended Revolving Credit Facility, as described in Note 13, 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 12, Leases, to the Interim Financial Statements in Part I of this Quarterly Report.

Current wording

We continue to make draws and payments on our Amended Revolving Credit Facility, as described in Note 13, 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