What Happened?
Shares of senior living provider The Pennant Group (NASDAQ: PNTG) fell 9.8% in the afternoon session after a proposal from the Centers for Medicare and Medicaid Services (CMS) to raise Medicare Advantage payments by less than expected in 2027 sent a chill through the healthcare sector.
The CMS proposed a payment increase of just 0.09% for the upcoming year, which was significantly below the 4% to 6% bump the industry had anticipated. This disappointing outlook triggered a broad sell-off across health insurer stocks. For instance, shares of major players like UnitedHealth Group, Humana, and CVS Health tumbled on the news. The Pennant Group's stock appeared to have been caught in this sector-wide downturn, as the proposed rate change raised concerns among investors about future profitability for companies reliant on Medicare payments.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy The Pennant Group? Access our full analysis report here, it’s free.
What Is The Market Telling Us
The Pennant Group’s shares are not very volatile and have only had 8 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 7.8% on the news that the company reported mixed third-quarter results, where underlying weaknesses overshadowed headline beats on revenue and adjusted earnings.
Pennant's revenue grew 26.8% from the previous year to $229 million, and its adjusted earnings per share came in at $0.30, both ahead of analyst estimates. However, investors focused on less favorable details in the report. The company's adjusted EBITDA, a key measure of profitability, missed analyst expectations. Furthermore, Pennant's operating margin fell to 4.5% from 6% in the same quarter of the prior year. While the company did raise its full-year revenue outlook, the drop in these key profitability metrics appeared to weigh more heavily on investor sentiment, overshadowing the positive top-line results.
The Pennant Group is flat since the beginning of the year, and at $27.70 per share, it is trading 11.1% below its 52-week high of $31.16 from January 2026. Investors who bought $1,000 worth of The Pennant Group’s shares 5 years ago would now be looking at an investment worth $505.20.
Do you want to know what moves the business you care about? Add them to your StockStory watchlist and every time a stock significantly moves, we provide you with a timely explanation straight to your inbox. It’s free and will only take you a second.
