Describing a year of “record breaking performance” for Pennant Group (Nasdaq: PNTG), leaders with the organization touted the home health segment in particular during the company’s Q4 2024 earnings call on Friday.

“When you look at our growth this year, it was really record breaking to have a 40% increase in home health admissions, to grow our revenue by 30%,” said Pennant President and COO John Gochnour.

Total home health admissions reached 59,741, which represented an increase of 37.3% over the prior year. For the year, total Medicare home health admissions hit 24,598, representing an increase of 26.9% compared to 2023. Same-store admissions in the home health and hospice segment grew 14.4% and same-store Medicare admissions grew 6.1% over the prior year quarter.

Pennant’s home health and hospice segment saw substantial revenue growth, reporting an increase of $125 million for the year compared to 2023. In the fourth quarter alone, revenue rose by $35.1 million, reaching $142 million.

Pennant is the holding company for a cluster of independent home health, hospice and senior living providers across 13 states.

Despite the growth numbers that Pennant put up in the home health segment, the company’s share price was down 13.66% in late afternoon trading on Friday. The company’s Q4 adjusted EBITDA was about 6% below analyst expectations. Senior living revenue segment revenue and EBITDAR margins were lighter than expected, Stephens analysts observed in a note on the results.

But home health pricing growth of 9.9% year-over-year “showcased strength despite a constrained reimbursement backdrop,” the Stephens analysts wrote.

An eventful year lays groundwork for 2025

“2024 was an eventful year for Pennant,” CEO Brent Guerisoli said on the earnings call. “We launched transformative partnerships, including a joint venture with John Muir Health in the Bay Area, which is now successfully transitioned and contributing positively to our results and a management agreement with Hartford Healthcare in Connecticut, which we view as a foundational relationship for future expansions in the eastern U.S. We also completed numerous strategic home health and hospice acquisitions.”

Pennant formed a joint venture with John Muir Health in January 2024.  As part of the JV, the two organizations offer skilled nursing, therapy, home health aide and medical social work services across the Bay Area under the name Muir Home Health.

The company also partnered with Hartford Health Care at Home (HHCAH), the home health and hospice segment of Hartford HealthCare. The deal was a management and consulting services agreement aimed at providing operational support to HHCAH. As part of the agreement, Pennant launched a service center based in Connecticut to support HHCAH’s operations.

Also among the 2024 acquisitions was the purchase of Signature Healthcare at Home’s Oregon assets for $80 million, which closed in January. The company acquired Signature’s Idaho and Washington assets on Aug. 1, 2024.

“We attribute much of the outperformance of our home health and hospice business to our local leaders’ relentless focus on quality clinical outcomes, evidenced by the fact that 83% of our agencies have a real-time star rating of four stars or above,” Gochnour said.

The focus on leadership development and empowering local leaders is a hallmark of the Pennant approach. During 2024, Pennant added 66 local agency leaders to its CEO training program and launched a clinical leadership training initiative with 40 participants, according to Guerisoli.

And leadership development continues to be “the most important initiative” for Pennant, Guerisoli said on Friday’s call.

“We were not only successful in recruiting and developing new leaders, but also in the continued development of existing local leaders who achieved record numbers of C-level designations in the year,” he said.

More growth in store

Pennant is looking for more deals but will likely be more active in the second half of the year.

“We are focused on transitioning newly acquired operations and have the best strength capital and deal flow to support substantial acquisitional growth,” Guerisoli said. “We continue to entertain numerous potential opportunities across our existing marketing and beyond. That being said, because of all of the new transitions and larger acquisitions we’ve done at the end of the year, I think it may be a little lighter at the beginning and more aggressive toward the end of the year.”

Pennant’s growth has positioned the company well for more transactions. The company accumulated $20.6 million in free cash flow during the fourth quarter.

“We are well-positioned for future growth with a healthy balance sheet and ample dry powder to deploy,” CFO Lynette Walborn said on the call.