What Happened?
Shares of senior living provider The Pennant Group (NASDAQ: PNTG) fell 10.8% in the afternoon session after the company reported fourth-quarter 2025 results that beat expectations but issued a disappointing financial outlook for 2026.
The stock dropped 9.4% even as Pennant's fourth-quarter revenue grew 53.3% from the previous year to $289.3 million and its adjusted earnings per share of $0.34 surpassed estimates. Investors instead focused on the weaker-than-expected forecast for the upcoming year. Specifically, the company's guidance for full-year 2026 adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) was $91.3 million at the midpoint. This figure came in below analysts' expectations of $93.76 million, overshadowing the strong quarterly performance and signaling potential pressure on future profitability.
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What Is The Market Telling Us
The Pennant Group’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. Moves this big are rare for The Pennant Group and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 13 days ago when the stock gained 2.8% on the news that a softer-than-expected inflation report fueled hopes for interest rate cuts by the Federal Reserve.
The January Consumer Price Index (CPI), a key measure of inflation, rose by 0.2%, which was less than economists had forecast, with the annual rate cooling to 2.4%. This encouraging data increased market expectations for the Fed to begin cutting interest rates as early as June. The news prompted a rally in Treasuries as their yields fell. While the market's reaction was initially described as a "bumpy ride" due to concerns in other sectors, the favorable inflation data ultimately helped calm Wall Street. Lower inflation is a key prerequisite for the central bank to ease its monetary policy, which is generally supportive of stock valuations.
The Pennant Group is up 5.4% since the beginning of the year, but at $29.34 per share, it is still trading 11.3% below its 52-week high of $33.09 from February 2026. Investors who bought $1,000 worth of The Pennant Group’s shares 5 years ago would now be looking at an investment worth $555.89.
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