What Happened?
Shares of senior living provider The Pennant Group (NASDAQ: PNTG) jumped 2.1% in the afternoon session after the company announced it acquired certain home health, hospice, and personal care operations from UnitedHealth Group for $146.5 million.
The deal, which resulted from an antitrust settlement tied to UnitedHealth's acquisition of Amedisys, marked a significant expansion for Pennant. The purchase included 54 locations across Tennessee, Georgia, and Alabama, establishing the company's entry into the Southeast United States. These newly acquired operations had generated a combined revenue of $189.3 million over the previous twelve months. Pennant's CEO stated that the acquisition was a strategic move and that the company would continue to look for growth opportunities.
After the initial pop the shares cooled down to $26.17, up 2.3% from previous close.
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What Is The Market Telling Us
The Pennant Group’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock dropped 3.4% as several negative developments weighed on the sector.
Weakness in managed care providers was a significant factor, with companies like Elevance Health and Humana seeing declines due to an analyst downgrade and a lost lawsuit regarding Medicare bonus payments, respectively. Additionally, some pharmaceutical and biotech companies experienced sharp drops following unfavorable news; for instance, Sarepta Therapeutics plunged after a report indicated another patient death tied to its experimental gene therapy, and GSK's blood cancer drug dosage was voted against by the FDA advisory committee. Broader market sentiment, including concerns about rising costs and inadequate pricing for 2025 plans among health insurers, also contributed to the downward pressure on healthcare equities.
The Pennant Group is down 1.1% since the beginning of the year, and at $26.17 per share, it is trading 26.7% below its 52-week high of $35.69 from October 2024. Investors who bought $1,000 worth of The Pennant Group’s shares 5 years ago would now be looking at an investment worth $698.24.
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