Pennant Group, Inc 8-K/A, filed Dec 17, 2025
Pennant Group, Inc. (PNTG)
8-K/A
2025-12-17
For: 2025-10-02
View Original
Added on
April 11, 2026
About this 8-K/A
Pennant Group, Inc filed this 8-K/A on December 17, 2025, reporting on events of October 2, 2025.
Items reported
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 2)
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 2, 2025
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||||||||
| (Address of principal executive offices and Zip Code) | ||||||||
Registrant's telephone number, including area code: (208 ) 506-6100
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | ||||||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Explanatory Note
On October 2, 2025, The Pennant Group, Inc. (the “Company”) filed a Current Report on Form 8-K (the “Closing Form 8-K”) announcing the consummation of the previously disclosed acquisitions contemplated by that certain Purchase Agreement (the “Purchase Agreement”), dated April 30, 2025, as amended by the First Amendment to Purchase Agreement dated October 1, 2025 (the “Amendment” and the Agreement as so amended by the Amendment, the “Amended Agreement”), by and among the Company, its wholly-owned subsidiaries, Cornerstone Healthcare, Inc. (“Equity Buyer”) and Tensaw River Healthcare LLC (“Asset Buyer”), and UnitedHealth Group Incorporated (“UnitedHealth”), Amedisys, Inc. (“Amedisys”) and certain other sellers (collectively, the “Sellers”). Pursuant to the Amended Agreement, Equity Buyer agreed to acquire from the Sellers certain equity interests in, and Asset Buyer agreed to acquire from the Sellers certain assets of, certain subsidiaries of UnitedHealth and Amedisys related to the business of providing home health, hospice, or palliative care services through certain providers (the “Transaction”). The Closing Form 8-K was previously amended by the filing of Amendment No. 1 on Form 8-K/A on October 2, 2025.
This Amendment No. 2 on Form 8-K/A (this “Amendment”) is being filed solely for the purpose of supplementing Items 9.01(a) and 9.01(b) of the Closing Form 8-K to provide the required financial statements of the acquired Amedisys subsidiaries and acquired UnitedHealth subsidiaries, as specified in Rule 3-05 of Regulation S-X, and the pro forma financial information required in connection with the Transaction pursuant to Article 11 of Regulation S-X. This Amendment should be read in conjunction with the Closing Form 8-K.
The pro forma financial information included as Exhibit 99.5 to this Amendment has been prepared for illustrative purposes only as required by Form 8-K, and is not intended to, and does not purport to, represent what the Company’s actual results or financial condition would have been if the Transaction had occurred on the relevant date and is not intended to project the future results or the financial condition that the Company may achieve following the Transaction. Except as set forth herein, no modifications have been made to the information contained in the Closing Form 8-K, and the Company has not updated any information therein to reflect events that have occurred since the date of the Closing Form 8-K.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
The audited abbreviated financial statements of the acquired Amedisys subsidiaries, which comprise the statement of revenue and direct expenses for the year ended December 31, 2024, the statement of assets acquired and liabilities assumed as of December 31, 2024, and the notes related thereto, together with the Independent Auditors’ Report thereon, are filed as Exhibit 99.1 to this Amendment and are incorporated herein by reference.
The audited abbreviated financial statements of the acquired UnitedHealth subsidiaries, which comprise the statement of revenue and direct expenses for the year ended December 31, 2024, the statement of assets acquired and liabilities assumed as of December 31, 2024, and the notes related thereto, together with the Independent Auditors’ Report thereon, are filed as Exhibit 99.2 to this Amendment and are incorporated herein by reference.
The unaudited abbreviated financial statements of the acquired Amedisys subsidiaries, which comprise the statement of revenue and direct expenses for the six months ended June 30, 2025, the statement of assets acquired and liabilities assumed as of June 30, 2025, and the notes related thereto, are filed as Exhibit 99.3 to this Amendment and are incorporated herein by reference.
The unaudited abbreviated financial statements of the acquired UnitedHealth subsidiaries, which comprise the statement of revenue and direct expenses for the six months ended June 30, 2025, the statement of assets acquired and liabilities assumed as of June 30, 2025, and the notes related thereto, are filed as Exhibit 99.4 to this Amendment and are incorporated herein by reference.
(b) Pro Forma Financial Information.
The unaudited pro forma condensed combined financial statements of the Company and the acquired businesses for the six months ended June 30, 2025 and for the year ended December 31, 2024, and the notes related thereto, are filed as Exhibit 99.5 to this Amendment and are incorporated herein by reference.
(d) Exhibits.
| Exhibit No. | Description | |||||||
| Consent of Deloitte & Touche LLP relating to the abbreviated financial statements for the acquired Amedisys subsidiaries. | ||||||||
| Consent of Deloitte & Touche LLP relating to the abbreviated financial statements for the acquired UnitedHealth subsidiaries. | ||||||||
| Audited abbreviated financial statements of the acquired Amedisys subsidiaries as of and for the year ended December 31, 2024, including notes thereto and Independent Auditors’ report thereon. | ||||||||
| Audited abbreviated financial statements of the acquired UnitedHealth subsidiaries as of and for the year ended December 31, 2024, including notes thereto and Independent Auditors’ report thereon. | ||||||||
| Unaudited abbreviated financial statements of the acquired Amedisys subsidiaries as of and for the six months ended June 30, 2025, including notes thereto. | ||||||||
| Unaudited abbreviated financial statements of the acquired UnitedHealth subsidiaries as of and for the six months ended June 30, 2025, including notes thereto. | ||||||||
| Unaudited pro forma condensed combined financial statements of the Company and the acquired UnitedHealth and Amedisys subsidiaries for the six months ended June 30, 2025 and for the year ended December 31, 2024. | ||||||||
| 104 | Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document. | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: December 16, 2025 | THE PENNANT GROUP, INC. | |||||||||||||
| By: | /s/ LYNETTE B. WALBOM | |||||||||||||
| Lynette B. Walbom | ||||||||||||||
| Chief Financial Officer | ||||||||||||||
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-281302 on Form S-3 and Registration Statement Nos. 333-233937 and 333-288547 on Form S-8 of The Pennant Group, Inc. of our report dated December 16, 2025, relating to the abbreviated financial statements of the Acquired Amedisys Subsidiaries appearing in this Form 8-K/A dated December 16, 2025.
/s/ DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
December 16, 2025
EXHIBIT 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-281302 on Form S-3 and Registration Statement Nos. 333-233937 and 333-288547 on Form S-8 of The Pennant Group, Inc. of our report dated December 16, 2025, relating to the abbreviated financial statements of the Acquired UnitedHealth Subsidiaries appearing in this Form 8-K/A dated December 16, 2025.
/s/ DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
December 16, 2025
Exhibit 99.1
ACQUIRED AMEDISYS SUBSIDIARIES
ABBREVIATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2024 (Audited)
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ACQUIRED AMEDISYS SUBSIDIARIES
INDEX TO ABBREVIATED FINANCIAL STATEMENTS
| Page | |||||
| Report of Independent Certified Public Accountants | 3 | ||||
| Abbreviated Financial Statements: | |||||
| Statement of Revenue and Direct Expenses for the year ended December 31, 2024 (Audited) | 5 | ||||
| Statement of Assets Acquired and Liabilities Assumed as of December 31, 2024 (Audited) | 6 | ||||
| Notes to Abbreviated Financial Statements | 7 | ||||
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INDEPENDENT AUDITOR’S REPORT
To the Audit Committee of The Pennant Group, Inc.
Opinion
We have audited the abbreviated financial statements of Acquired Amedisys Subsidiaries (the “Company”), which comprise the statement of assets acquired and liabilities assumed as of December 31, 2024, the related statement of revenues and direct expenses for the year then ended, and the related notes to the abbreviated financial statements (collectively referred to as the "financial statements").
In our opinion, the accompanying financial statements present fairly, in all material respects, the assets acquired and liabilities assumed of the Company as of December 31, 2024, and its revenues and direct expenses for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Basis of Accounting
As discussed in Note 1 to the financial statements, the financial statements have been prepared for the purposes of complying with the rules and regulations of the U.S. Securities and Exchange Commission and are not intended to be a complete presentation of the Company’s financial position or results of operations. Our opinion is not modified with respect to this matter.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
•Exercise professional judgment and maintain professional skepticism throughout the audit.
•Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
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•Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.
•Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
/s/ DELOITTE & TOUCHE LLP
Minneapolis, MN
December 16, 2025
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ACQUIRED AMEDISYS SUBSIDIARIES
ABBREVIATED FINANCIAL STATEMENTS
STATEMENT OF REVENUE AND DIRECT EXPENSES
(in thousands)
| Year Ended December 31, 2024 | |||||
| Revenue | $ | 79,743 | |||
| Direct expenses | |||||
| Cost of services | 63,612 | ||||
| Rent—cost of services | 1,259 | ||||
| Depreciation and amortization | 339 | ||||
| Total direct expenses | 65,210 | ||||
| Revenue less direct expenses | $ | 14,533 | |||
The accompanying notes are an integral part of these abbreviated financial statements.
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ACQUIRED AMEDISYS SUBSIDIARIES
ABBREVIATED FINANCIAL STATEMENTS
STATEMENT OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
(in thousands)
| December 31, 2024 | |||||
| Assets acquired | |||||
| Current assets: | |||||
| Accounts receivable | $ | 10,077 | |||
| Prepaid expenses and other current assets | 9 | ||||
| Total current assets | 10,086 | ||||
| Property and equipment, net | 289 | ||||
| Operating lease right-of-use assets | 2,516 | ||||
| Restricted and other assets | 10 | ||||
| Indefinite-lived intangibles | 2,332 | ||||
| Total assets acquired | $ | 15,233 | |||
| Liabilities assumed | |||||
| Current liabilities: | |||||
| Accrued wages and related liabilities | $ | 1,652 | |||
| Operating lease liabilities—current | 859 | ||||
| Other accrued liabilities | 467 | ||||
| Total current liabilities | 2,978 | ||||
| Long-term operating lease liabilities—less current portion | 1,608 | ||||
| Other long-term liabilities | 46 | ||||
| Total liabilities assumed | $ | 4,632 | |||
The accompanying notes are an integral part of these abbreviated financial statements.
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ACQUIRED AMEDISYS SUBSIDIARIES
NOTES TO ABBREVIATED FINANCIAL STATEMENTS
(dollars in thousands, unless otherwise indicated)
1. DESCRIPTION OF BUSINESS
Amedisys, Inc. (“Amedisys”, or the “Company”) is a leading healthcare services company committed to helping our patients age in place by providing clinically excellent care and support in the home. Amedisys’ operations involve servicing patients through home health, hospice, and high acuity care.
On June 26, 2023, Amedisys, UnitedHealth Group Incorporated, a Delaware corporation (“UnitedHealth”), and Aurora Holdings Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of UnitedHealth (“Merger Sub”), entered into an Agreement and Plan of Merger, pursuant to which Merger Sub will merge with and into Amedisys with Amedisys continuing as the surviving corporation and becoming a wholly owned subsidiary of UnitedHealth. The consummation of the Merger occurred on August 14, 2025.
On April 30, 2025, the Pennant Group, Inc. (“Pennant”) entered into a purchase agreement (the “Purchase Agreement”), as subsequently amended by the First Amendment to Purchase Agreement dated October 1, 2025 (the “Amendment” and the Purchase Agreement as so amended by the Amendment, the “Amended Agreement”), by and among its wholly-owned subsidiaries, Cornerstone Healthcare, Inc. (“Equity Buyer”) and Tensaw River Healthcare LLC (“Asset Buyer”), and UnitedHealth, Amedisys, and certain other sellers (collectively, the “Sellers”). Pursuant to the Amended Agreement, Equity Buyer agreed to acquire from the Sellers certain equity interests in, and Asset Buyer agreed to acquire from the Sellers certain assets of, certain subsidiaries of UnitedHealth and Amedisys related to providing home health, hospice, or palliative care services through certain providers (the “Transaction”). The Transaction closed on October 1, 2025 (the “Closing Date”).
The equity interests and assets acquired from subsidiaries of Amedisys are referred to as the “subsidiaries”.
2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation - The accompanying abbreviated financial statements, which consist of the statement of revenue and direct expenses for the year ended December 31, 2024, the statement of assets acquired and liabilities assumed as of December 31, 2024, and the related notes thereto, will henceforth be collectively referred to as the “Abbreviated Financial Statements”. The Abbreviated Financial Statements were prepared for the purpose of complying with the requirements of Rule 3-05 of the U.S. Securities Exchange Commission Regulation S-X and present the assets acquired and liabilities assumed and the related revenue and direct expenses of the subsidiaries of Amedisys. The Abbreviated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
The subsidiaries did not represent a substantial portion of Amedisys’ assets and liabilities. It is impracticable to prepare complete financial statements related to the subsidiaries as Amedisys has not maintained the distinct and separate books and records necessary to prepare full stand-alone or carve-out financial statements. As a result, the statement of revenue and direct expenses was derived from the operating activities directly attributable to the subsidiaries from Amedisys’ books and records and contains certain estimates and allocation methodologies. Although management is unable to determine all of the actual costs, expenses and resulting operating results associated with the subsidiaries, it considers the allocation of such items to be reasonable for the periods presented. However, the revenue and direct expenses of the subsidiaries may differ from the results that would have been achieved had the subsidiaries operated as a separate entity and may not necessarily reflect the assets and liabilities or revenue and expenses of the subsidiaries on a stand-alone basis in the future.
In addition, and as described further below, the statement of revenue and direct expenses excludes corporate overhead costs borne by Amedisys to support the subsidiaries. As such, the statement is not indicative of the future results of the subsidiaries as it omits various operating expenses that Pennant will incur to operate the subsidiaries in the future.
Amedisys performed certain functions for the subsidiaries including, but not limited to, corporate management, certain legal services, administration of insurance, regulatory and compliance, treasury, information systems, finance, corporate income tax administration, employee compensation and benefit management, facilities and other corporate expenses. The costs of these functions historically have not been allocated to its services, and are not directly attributable or specifically identifiable to the subsidiaries, and therefore, are not included in the Abbreviated Financial Statements. Income taxes and interest expense have not been included in the accompanying statements as these expenses are not specifically attributable to the subsidiaries. As the subsidiaries have historically been managed as part of the operations of the Company and have not been operated as stand-alone
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entities, information about the subsidiaries’ operating, investing, and financing cash flows is not available. As such, a statement of cash flows is not presented in the Abbreviated Financial Statements.
Estimates and Assumptions - The preparation of the Abbreviated Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Abbreviated Financial Statements and the reported amounts of revenue and expenses during the reporting period. The most significant estimates in the Abbreviated Financial Statements relate to revenue recognition and intangible assets. Actual results could differ from those estimates.
Revenue Recognition - Revenues are recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled from patients and third-party payors, including Medicaid, Medicare and insurers (private and Medicare replacement plans), in exchange for providing patient care. Revenue recognized from healthcare services are adjusted for estimates of variable consideration to arrive at the transaction price. The Company determines the transaction price based on contractually agreed-upon amounts or rates, adjusted for estimates of variable consideration. The Company uses the expected value method in determining the variable component that should be used to arrive at the transaction price, using contractual agreements and historical reimbursement experience within each payor type. The amount of variable consideration which is included in the transaction price may be constrained and is included in the net revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If actual amounts of consideration ultimately received differ from the Company’s estimates, the Company adjusts these estimates, which would affect net service revenue in the period such variances become known.
As the Company’s contracts have an original duration of one year or less, the Company uses the practical expedient applicable to its contracts and does not consider the time value of money. Further, because of the short duration of these contracts, the Company has not disclosed the transaction price for the remaining performance obligations as of the end of each reporting period or when the Company expects to recognize this revenue. In addition, the Company has applied the practical expedient provided by Accounting Standard Codification (“ASC”) Topic 340, Other Assets and Deferred Costs, and all incremental customer contract acquisition costs are expensed as they are incurred because the amortization period would have been one year or less. See Note 3, Revenue and Accounts Receivable.
Accounts Receivable - Accounts receivable consist primarily of amounts due from Medicare and Medicaid programs, other government programs, healthcare systems, managed care health plans and private payor sources, net of estimates for variable consideration.
Property and Equipment, net - Property and equipment are initially recorded at their historical cost. Depreciation is computed using the straight-line method over the estimated useful lives of the depreciable assets (ranging from two to seven years). Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the remaining lease term. Repairs and maintenance are expensed as incurred.
Intangible Assets - The Company’s indefinite-lived intangible assets consist of certificates of need and Medicare licenses. The Company tests indefinite-lived intangible assets for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable.
3. REVENUE AND ACCOUNTS RECEIVABLE
Revenue is recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled from patients and third-party payors, including Medicaid, Medicare and managed care programs (Commercial, Medicare Advantage and Managed Medicaid plans). The healthcare services in home health and hospice patient contracts include routine services in exchange for a contractual agreed-upon amount or rate. Routine services are treated as a single performance obligation satisfied over time as services are rendered. As such, patient care services represent a bundle of services that are not capable of being distinct within the context of the contract. Additionally, there may be ancillary services which are not included in the rates for routine services, but instead are treated as separate performance obligations satisfied at a point in time, if and when those services are rendered.
Revenue recognized from healthcare services are adjusted for estimates of variable consideration to arrive at the transaction price. The Company determines the transaction price based on contractually agreed-upon amounts or rate, adjusted for estimates of variable consideration. The Company uses the expected value method in determining the variable component that should be used to arrive at the transaction price, using contractual agreements and historical reimbursement experience within
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each payor type. The amount of variable consideration which is included in the transaction price may be constrained and is included in the net revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If actual amounts of consideration ultimately received differ from the Company’s estimates, the Company adjusts these estimates, which would affect net service revenue in the period such variances become known.
The Company records revenue from Medicare, Medicaid and managed care programs as services are performed at their expected net realizable amounts under these programs. The Company’s revenue from governmental and managed care programs is subject to audit and retroactive adjustment by governmental and third-party agencies. Consistent with healthcare industry accounting practices, any changes to these governmental revenue estimates are recorded in the period the change or adjustment becomes known based on final settlement.
Revenue by payor for the year ended December 31, 2024 is summarized in the following table:
| Year Ended December 31, 2024 | ||||||||||||||||||||||||||
| Home Health and Hospice Services | ||||||||||||||||||||||||||
Home Health Services(a) | Hospice Services | Total Revenue | Revenue % | |||||||||||||||||||||||
| Medicare | $ | 37,779 | $ | 10,940 | $ | 48,719 | 61.1 | % | ||||||||||||||||||
| Medicaid | 1,236 | 250 | 1,486 | 1.9 | ||||||||||||||||||||||
| Subtotal | 39,015 | 11,190 | 50,205 | 63.0 | ||||||||||||||||||||||
| Managed care | 24,034 | 168 | 24,202 | 30.3 | ||||||||||||||||||||||
| Private and other | 5,336 | — | 5,336 | 6.7 | ||||||||||||||||||||||
| Total revenue | $ | 68,385 | $ | 11,358 | $ | 79,743 | 100.0 | % | ||||||||||||||||||
| (a) | Revenue derived from palliative care services is presented as part of Home Health Services. | |||||||
Accounts receivable as of December 31, 2024 is summarized in the following table:
| December 31, 2024 | ||||||||
| Medicare | $ | 5,276 | ||||||
| Medicaid | 729 | |||||||
| Managed care | 3,115 | |||||||
| Private and other | 957 | |||||||
| Accounts receivable | $ | 10,077 | ||||||
4. PROPERTY AND EQUIPMENT—NET
Property and equipment, net consist of the following:
| December 31, 2024 | |||||
| Equipment | $ | 641 | |||
| Furniture and fixtures | 501 | ||||
| Leasehold improvements | 95 | ||||
| Total property and equipment | 1,237 | ||||
| Less: accumulated depreciation | (948) | ||||
| Property and equipment, net | $ | 289 | |||
Depreciation expense was $339 for the year ended December 31, 2024.
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5. INDEFINITE-LIVED INTANGIBLE ASSETS
Indefinite-lived intangible assets consist of certificates of need and Medicare licenses.
6. OTHER ACCRUED LIABILITIES
Other accrued liabilities consist of the following:
| December 31, 2024 | |||||
| Accrued self-insurance liabilities | $ | 229 | |||
| Accrued legal fees, legal settlements, and other audits | 180 | ||||
| Other | 58 | ||||
| Other accrued liabilities | $ | 467 | |||
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7. LEASES
The Company has operating leases, primarily for offices, that expire at various dates over the next six years. The office leases generally contain renewal options for periods ranging from one to five years. Because the Company is not reasonably certain to exercise these renewal options, the options are not considered in determining the lease term, and payments associated with the option years are excluded from lease payments. The office leases also generally include termination options, which allow for early termination of the lease after the first one to three years. Because the Company is not reasonably certain to exercise these termination options, the options are not considered in determining the lease term; payments for the full lease term are included in lease payments. The office leases do not contain any material residual value guarantees.
Supplemental information related to leases is as follows:
| December 31, 2024 | |||||
| Operating Leases: | |||||
| Weighted-average remaining lease term (years) | 3.20 | ||||
| Weighted-average discount rate | 5.0 | % | |||
The following table shows the lease maturity analysis for all leases as of December 31, 2024, for the years ended December 31:
| Year | Amounts | ||||
| 2025 | $ | 963 | |||
| 2026 | 798 | ||||
| 2027 | 517 | ||||
| 2028 | 241 | ||||
| 2029 | 135 | ||||
| Thereafter | 33 | ||||
| Total lease payments | 2,687 | ||||
| Less: present value adjustments | (220) | ||||
| Present value of total lease liabilities | 2,467 | ||||
| Less: current lease liabilities | (859) | ||||
| Long-term lease liabilities | $ | 1,608 | |||
8. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through December 16, 2025, the date on which these Abbreviated Financial Statements were available to be issued, and is not aware of any items that that would require adjustment to or disclosure in these Abbreviated Financial Statements and related notes.
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Exhibit 99.2
ACQUIRED UNITEDHEALTH SUBSIDIARIES
ABBREVIATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2024 (Audited)
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ACQUIRED UNITEDHEALTH SUBSIDIARIES
INDEX TO ABBREVIATED FINANCIAL STATEMENTS
| Page | |||||
| Report of Independent Certified Public Accountants | 3 | ||||
| Abbreviated Financial Statements: | |||||
| Statement of Revenue and Direct Expenses for the year ended December 31, 2024 (Audited) | 5 | ||||
| Statement of Assets Acquired and Liabilities Assumed as of December 31, 2024 (Audited) | 6 | ||||
| Notes to Abbreviated Financial Statements | 7 | ||||
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INDEPENDENT AUDITOR’S REPORT
To the Audit Committee of The Pennant Group, Inc.
Opinion
We have audited the abbreviated financial statements of Acquired UnitedHealth Subsidiaries (the “Company”), which comprise the statement of assets acquired and liabilities assumed as of December 31, 2024, the related statement of revenues and direct expenses for the year then ended, and the related notes to the abbreviated financial statements (collectively referred to as the "financial statements").
In our opinion, the accompanying financial statements present fairly, in all material respects, the assets acquired and liabilities assumed of the Company as of December 31, 2024, and its revenues and direct expenses for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Basis of Accounting
As discussed in Note 1 to the financial statements, the financial statements have been prepared for the purposes of complying with the rules and regulations of the U.S. Securities and Exchange Commission and are not intended to be a complete presentation of the Company’s financial position or results of operations. Our opinion is not modified with respect to this matter.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
•Exercise professional judgment and maintain professional skepticism throughout the audit.
•Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
3
•Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.
•Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
/s/ DELOITTE & TOUCHE LLP
Minneapolis, MN
December 16, 2025
4
ACQUIRED UNITEDHEALTH SUBSIDIARIES
ABBREVIATED FINANCIAL STATEMENTS
STATEMENT OF REVENUE AND DIRECT EXPENSES
(in thousands)
| Year Ended December 31, 2024 | |||||
| Revenue | $ | 104,307 | |||
| Direct expenses | |||||
| Cost of services | 75,735 | ||||
| Rent—cost of services | 1,610 | ||||
| Depreciation and amortization | 55 | ||||
| Total direct expenses | 77,400 | ||||
| Revenue less direct expenses | $ | 26,907 | |||
The accompanying notes are an integral part of these abbreviated financial statements.
5
ACQUIRED UNITEDHEALTH SUBSIDIARIES
ABBREVIATED FINANCIAL STATEMENTS
STATEMENT OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
(in thousands)
| December 31, 2024 | |||||
| Assets acquired | |||||
| Current assets: | |||||
| Accounts receivable | $ | 13,254 | |||
| Prepaid expenses and other current assets | 966 | ||||
| Total current assets | 14,220 | ||||
| Property and equipment, net | 191 | ||||
| Operating lease right-of-use assets | 2,929 | ||||
| Restricted and other assets | 36 | ||||
| Indefinite-lived intangibles | 2,292 | ||||
| Total assets acquired | $ | 19,668 | |||
| Liabilities assumed | |||||
| Current liabilities: | |||||
| Accrued wages and related liabilities | $ | 1,652 | |||
| Operating lease liabilities—current | 1,250 | ||||
| Other accrued liabilities | 716 | ||||
| Total current liabilities | 3,618 | ||||
| Long-term operating lease liabilities—less current portion | 1,679 | ||||
| Total liabilities assumed | $ | 5,297 | |||
The accompanying notes are an integral part of these abbreviated financial statements.
6
ACQUIRED UNITEDHEALTH SUBSIDIARIES
NOTES TO ABBREVIATED FINANCIAL STATEMENTS
(dollars in thousands, unless otherwise indicated)
1. DESCRIPTION OF BUSINESS
LHC Group, Inc. (“LHC”), a subsidiary of UnitedHealth Group Incorporated (“UnitedHealth”, or the “Company”), is a health care provider specializing in the post-acute continuum of care. LHC operations involve servicing patients through home health, hospice, home and community-based services, facility-based services primarily through long-term acute care hospitals, and healthcare innovations.
On April 30, 2025, the Pennant Group, Inc. (“Pennant”) entered into a purchase agreement (the “Purchase Agreement”), as subsequently amended by the First Amendment to Purchase Agreement dated October 1, 2025 (the “Amendment” and the Purchase Agreement as so amended by the Amendment, the “Amended Agreement”), by and among its wholly-owned subsidiaries, Cornerstone Healthcare, Inc. (“Equity Buyer”) and Tensaw River Healthcare LLC (“Asset Buyer”), and UnitedHealth, Amedisys, Inc. (“Amedisys”), and certain other sellers (collectively, the “Sellers”). Pursuant to the Amended Agreement, Equity Buyer agreed to acquire from the Sellers certain equity interests in, and Asset Buyer agreed to acquire from the Sellers certain assets of, certain subsidiaries of UnitedHealth and Amedisys related to providing home health, hospice, or palliative care services through certain providers (the “Transaction”). The Transaction closed on October 1, 2025 (the “Closing Date”).
The equity interests and assets acquired from subsidiaries of UnitedHealth are referred to as the “subsidiaries”.
2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation - The accompanying abbreviated financial statements, which consist of the statement of revenue and direct expenses for the year ended December 31, 2024, the statement of assets acquired and liabilities assumed as of December 31, 2024, and the related notes thereto, will henceforth be collectively referred to as the “Abbreviated Financial Statements”. The Abbreviated Financial Statements were prepared for the purpose of complying with the requirements of Rule 3-05 of the U.S. Securities Exchange Commission Regulation S-X and present the assets acquired and liabilities assumed and the related revenue and direct expenses of the subsidiaries of UnitedHealth. The Abbreviated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
The subsidiaries did not represent a substantial portion of UnitedHealth’s assets and liabilities. It is impracticable to prepare complete financial statements related to the subsidiaries as UnitedHealth has not maintained the distinct and separate books and records necessary to prepare full stand-alone or carve-out financial statements. As a result, the statement of revenue and direct expenses was derived from the operating activities directly attributable to the subsidiaries from UnitedHealth’s books and records and contains certain estimates and allocation methodologies. Although management is unable to determine all of the actual costs, expenses and resulting operating results associated with the subsidiaries, it considers the allocation of such items to be reasonable for the periods presented. However, the revenue and direct expenses of the subsidiaries may differ from the results that would have been achieved had the subsidiaries operated as a separate entity and may not necessarily reflect the assets and liabilities or revenue and expenses of the subsidiaries on a stand-alone basis in the future.
In addition, and as described further below, the statement of revenue and direct expenses excludes corporate overhead costs borne by UnitedHealth to support the subsidiaries. As such, the statement is not indicative of the future results of the subsidiaries as it omits various operating expenses that Pennant will incur to operate the subsidiaries in the future.
UnitedHealth performed certain functions for the subsidiaries including, but not limited to, corporate management, certain legal services, administration of insurance, regulatory and compliance, treasury, information systems, finance, corporate income tax administration, employee compensation and benefit management, facilities and other corporate expenses. The costs of these functions historically have not been allocated to its services, and are not directly attributable or specifically identifiable to the subsidiaries, and therefore, are not included in the Abbreviated Financial Statements. Income taxes and interest expense have not been included in the accompanying statements as these expenses are not specifically attributable to the subsidiaries. As the subsidiaries have historically been managed as part of the operations of the Company and have not been operated as stand-alone entities, information about the subsidiaries’ operating, investing, and financing cash flows is not available. As such, a statement of cash flows is not presented in the Abbreviated Financial Statements.
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Estimates and Assumptions - The preparation of the Abbreviated Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Abbreviated Financial Statements and the reported amounts of revenue and expenses during the reporting period. The most significant estimates in the Abbreviated Financial Statements relate to revenue recognition and intangible assets. Actual results could differ from those estimates.
Revenue Recognition - Revenues are recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled from patients and third-party payors, including Medicaid, Medicare and insurers (private and Medicare replacement plans), in exchange for providing patient care. Revenue recognized from healthcare services are adjusted for estimates of variable consideration to arrive at the transaction price. The Company determines the transaction price based on contractually agreed-upon amounts or rates, adjusted for estimates of variable consideration. The Company uses the expected value method in determining the variable component that should be used to arrive at the transaction price, using contractual agreements and historical reimbursement experience within each payor type. The amount of variable consideration which is included in the transaction price may be constrained and is included in the net revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If actual amounts of consideration ultimately received differ from the Company’s estimates, the Company adjusts these estimates, which would affect net service revenue in the period such variances become known.
As the Company’s contracts have an original duration of one year or less, the Company uses the practical expedient applicable to its contracts and does not consider the time value of money. Further, because of the short duration of these contracts, the Company has not disclosed the transaction price for the remaining performance obligations as of the end of each reporting period or when the Company expects to recognize this revenue. In addition, the Company has applied the practical expedient provided by Accounting Standard Codification (“ASC”) Topic 340, Other Assets and Deferred Costs, and all incremental customer contract acquisition costs are expensed as they are incurred because the amortization period would have been one year or less. See Note 3, Revenue and Accounts Receivable.
Accounts Receivable - Accounts receivable consist primarily of amounts due from Medicare and Medicaid programs, other government programs, healthcare systems, managed care health plans and private payor sources, net of estimates for variable consideration.
Property and Equipment, net - Property and equipment are initially recorded at their historical cost. Depreciation is computed using the straight-line method over the estimated useful lives of the depreciable assets (ranging from five to seven years). Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the remaining lease term. Repairs and maintenance are expensed as incurred.
Intangible Assets - The Company’s indefinite-lived intangible assets consist of certificates of need, Medicare licenses, and tradenames. The Company tests indefinite-lived intangible assets for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable.
3. REVENUE AND ACCOUNTS RECEIVABLE
Revenue is recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled from patients and third-party payors, including Medicaid, Medicare and managed care programs (Commercial, Medicare Advantage and Managed Medicaid plans). The healthcare services in home health and hospice patient contracts include routine services in exchange for a contractual agreed-upon amount or rates. Routine services are treated as a single performance obligation satisfied over time as services are rendered. As such, patient care services represent a bundle of services that are not capable of being distinct within the context of the contract. Additionally, there may be ancillary services which are not included in the rates for routine services, but instead are treated as separate performance obligations satisfied at a point in time, if and when those services are rendered.
Revenue recognized from healthcare services are adjusted for estimates of variable consideration to arrive at the transaction price. The Company determines the transaction price based on contractually agreed-upon amounts or rates, adjusted for estimates of variable consideration. The Company uses the expected value method in determining the variable component that should be used to arrive at the transaction price, using contractual agreements and historical reimbursement experience within each payor type. The amount of variable consideration which is included in the transaction price may be constrained and is included in the net revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If actual amounts of consideration ultimately received differ from the
8
Company’s estimates, the Company adjusts these estimates, which would affect net service revenue in the period such variances become known.
The Company records revenue from Medicare, Medicaid and managed care programs as services are performed at their expected net realizable amounts under these programs. The Company’s revenue from governmental and managed care programs is subject to audit and retroactive adjustment by governmental and third-party agencies. Consistent with healthcare industry accounting practices, any changes to these governmental revenue estimates are recorded in the period the change or adjustment becomes known based on final settlement.
Revenue by payor for the year ended December 31, 2024 is summarized in the following table:
| Year Ended December 31, 2024 | ||||||||||||||||||||||||||
| Home Health and Hospice Services | ||||||||||||||||||||||||||
Home Health Services(a) | Hospice Services | Total Revenue | Revenue % | |||||||||||||||||||||||
| Medicare | $ | 25,881 | $ | 37,852 | $ | 63,733 | 61.1 | % | ||||||||||||||||||
| Medicaid | 391 | 415 | 806 | 0.8 | ||||||||||||||||||||||
| Subtotal | 26,272 | 38,267 | 64,539 | 61.9 | ||||||||||||||||||||||
| Managed care | 27,255 | 1,755 | 29,010 | 27.8 | ||||||||||||||||||||||
| Private and other | 9,029 | 1,729 | 10,758 | 10.3 | ||||||||||||||||||||||
| Total revenue | $ | 62,556 | $ | 41,751 | $ | 104,307 | 100.0 | % | ||||||||||||||||||
| (a) | Revenue derived from palliative care services is presented as part of Home Health Services. | |||||||
Accounts receivable as of December 31, 2024 is summarized in the following table:
| December 31, 2024 | ||||||||
| Medicare | $ | 6,332 | ||||||
| Medicaid | 628 | |||||||
| Managed care | 6,168 | |||||||
| Private and other | 126 | |||||||
| Accounts receivable | $ | 13,254 | ||||||
4. PROPERTY AND EQUIPMENT—NET
Property and equipment, net consist of the following:
| December 31, 2024 | |||||
| Furniture and fixtures | $ | 269 | |||
| Leasehold improvements | 92 | ||||
| Total property and equipment | 361 | ||||
| Less: accumulated depreciation | (170) | ||||
| Property and equipment, net | $ | 191 | |||
Depreciation expense was $55 for the year ended December 31, 2024.
5. INDEFINITE-LIVED INTANGIBLE ASSETS
Indefinite-lived intangible assets consist of certificates of need and Medicare licenses of $1,084 and tradenames of $1,208.
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6. OTHER ACCRUED LIABILITIES
Other accrued liabilities consist of the following:
| December 31, 2024 | |||||
| Respite payable | $ | 259 | |||
| Accrued self-insurance liabilities | 187 | ||||
| General inpatient liability | 152 | ||||
| Hospice CAP liabilities | 96 | ||||
| Other | 22 | ||||
| Other accrued liabilities | $ | 716 | |||
7. LEASES
The Company has operating leases through which their independent operating subsidiaries lease administrative offices of home health and hospice agencies with initial lease terms ranging from two to five years. Most of these operating leases are non-cancelable, contain renewal options, most involve rent increases and none contain purchase options. The lease term excludes lease renewals because the renewal rents are not at a bargain, there are no economic penalties for the Company to renew the lease, and it is not reasonably certain that the Company will exercise the extension options.
Supplemental information related to leases is as follows:
| December 31, 2024 | |||||
| Operating Leases: | |||||
| Weighted-average remaining lease term (years) | 2.76 | ||||
| Weighted-average discount rate | 5.0 | % | |||
The following table shows the lease maturity analysis for all leases as of December 31, 2024, for the years ended December 31:
| Year | Amounts | ||||
| 2025 | $ | 1,436 | |||
| 2026 | 1,135 | ||||
| 2027 | 684 | ||||
| 2028 | 243 | ||||
| 2029 | — | ||||
| Thereafter | — | ||||
| Total lease payments | 3,498 | ||||
| Less: present value adjustments | (569) | ||||
| Present value of total lease liabilities | 2,929 | ||||
| Less: current lease liabilities | (1,250) | ||||
| Long-term lease liabilities | $ | 1,679 | |||
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8. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through December 16, 2025, the date on which these Abbreviated Financial Statements were available to be issued, and is not aware of any items that that would require adjustment to or disclosure in these Abbreviated Financial Statements and related notes.
11
Exhibit 99.3
ACQUIRED AMEDISYS SUBSIDIARIES
ABBREVIATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2025 (Unaudited)
1
ACQUIRED AMEDISYS SUBSIDIARIES
INDEX TO ABBREVIATED FINANCIAL STATEMENTS
| Page | |||||
| Abbreviated Financial Statements: | |||||
| Statement of Revenue and Direct Expenses for the six months ended June 30, 2025 (Unaudited) | 3 | ||||
| Statement of Assets Acquired and Liabilities Assumed as of June 30, 2025 (Unaudited) | 4 | ||||
| Notes to Abbreviated Financial Statements | 5 | ||||
2
ACQUIRED AMEDISYS SUBSIDIARIES
ABBREVIATED FINANCIAL STATEMENTS
STATEMENT OF REVENUE AND DIRECT EXPENSES
(in thousands)
| Six Months Ended June 30, 2025 | |||||
| Revenue | $ | 41,262 | |||
| Direct expenses | |||||
| Cost of services | 32,871 | ||||
| Rent—cost of services | 644 | ||||
| Depreciation and amortization | 173 | ||||
| Total direct expenses | 33,688 | ||||
| Revenue less direct expenses | $ | 7,574 | |||
The accompanying notes are an integral part of these abbreviated financial statements.
3
ACQUIRED AMEDISYS SUBSIDIARIES
ABBREVIATED FINANCIAL STATEMENTS
STATEMENT OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
(in thousands)
| June 30, 2025 | |||||
| Assets acquired | |||||
| Current assets: | |||||
| Accounts receivable | $ | 10,098 | |||
| Prepaid expenses and other current assets | 11 | ||||
| Total current assets | 10,109 | ||||
| Property and equipment, net | 262 | ||||
| Operating lease right-of-use assets | 2,595 | ||||
| Restricted and other assets | 10 | ||||
| Indefinite-lived intangibles | 2,332 | ||||
| Total assets acquired | $ | 15,308 | |||
| Liabilities assumed | |||||
| Current liabilities: | |||||
| Accrued wages and related liabilities | $ | 1,719 | |||
| Operating lease liabilities—current | 850 | ||||
| Other accrued liabilities | 294 | ||||
| Total current liabilities | 2,863 | ||||
| Long-term operating lease liabilities—less current portion | 1,682 | ||||
| Other long-term liabilities | 44 | ||||
| Total liabilities assumed | $ | 4,589 | |||
The accompanying notes are an integral part of these abbreviated financial statements.
4
ACQUIRED AMEDISYS SUBSIDIARIES
NOTES TO ABBREVIATED FINANCIAL STATEMENTS
(dollars in thousands, unless otherwise indicated)
1. DESCRIPTION OF BUSINESS
Amedisys, Inc. (“Amedisys”, or the “Company”) is a leading healthcare services company committed to helping our patients age in place by providing clinically excellent care and support in the home. Amedisys’ operations involve servicing patients through home health, hospice, and high acuity care.
On June 26, 2023, Amedisys, UnitedHealth Group Incorporated, a Delaware corporation (“UnitedHealth”), and Aurora Holdings Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of UnitedHealth (“Merger Sub”), entered into an Agreement and Plan of Merger, pursuant to which Merger Sub will merge with and into Amedisys with Amedisys continuing as the surviving corporation and becoming a wholly owned subsidiary of UnitedHealth. The consummation of the Merger occurred on August 14, 2025.
On April 30, 2025, the Pennant Group, Inc. (“Pennant”) entered into a purchase agreement (the “Purchase Agreement”), as subsequently amended by the First Amendment to Purchase Agreement dated October 1, 2025 (the “Amendment” and the Purchase Agreement as so amended by the Amendment, the “Amended Agreement”), by and among its wholly-owned subsidiaries, Cornerstone Healthcare, Inc. (“Equity Buyer”) and Tensaw River Healthcare LLC (“Asset Buyer”), and UnitedHealth, Amedisys, and certain other sellers (collectively, the “Sellers”). Pursuant to the Amended Agreement, Equity Buyer agreed to acquire from the Sellers certain equity interests in, and Asset Buyer agreed to acquire from the Sellers certain assets of, certain subsidiaries of UnitedHealth and Amedisys related to providing home health, hospice, or palliative care services through certain providers (the “Transaction”). The Transaction closed on October 1, 2025 (the “Closing Date”).
The equity interests and assets acquired from subsidiaries of Amedisys are referred to as the “subsidiaries”.
2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation - The accompanying abbreviated financial statements, which consist of the statement of revenue and direct expenses for the six months ended June 30, 2025, the statement of assets acquired and liabilities assumed as of June 30, 2025, and the related notes thereto, will henceforth be collectively referred to as the “Abbreviated Financial Statements”. The Abbreviated Financial Statements were prepared for the purpose of complying with the requirements of Rule 3-05 of the U.S. Securities Exchange Commission Regulation S-X and present the assets acquired and liabilities assumed and the related revenue and direct expenses of the subsidiaries of Amedisys. The Abbreviated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
The subsidiaries did not represent a substantial portion of Amedisys’ assets and liabilities. It is impracticable to prepare complete financial statements related to the subsidiaries as Amedisys has not maintained the distinct and separate books and records necessary to prepare full stand-alone or carve-out financial statements. As a result, the statement of revenue and direct expenses was derived from the operating activities directly attributable to the subsidiaries from Amedisys’ books and records and contains certain estimates and allocation methodologies. Although management is unable to determine all of the actual costs, expenses and resulting operating results associated with the subsidiaries, it considers the allocation of such items to be reasonable for the periods presented. However, the revenue and direct expenses of the subsidiaries may differ from the results that would have been achieved had the subsidiaries operated as a separate entity and may not necessarily reflect the assets and liabilities or revenue and expenses of the subsidiaries on a stand-alone basis in the future.
In addition, and as described further below, the statement of revenue and direct expenses excludes corporate overhead costs borne by Amedisys to support the subsidiaries. As such, the statement is not indicative of the future results of the subsidiaries as it omits various operating expenses that Pennant will incur to operate the subsidiaries in the future.
Amedisys performed certain functions for the subsidiaries including, but not limited to, corporate management, certain legal services, administration of insurance, regulatory and compliance, treasury, information systems, finance, corporate income tax administration, employee compensation and benefit management, facilities and other corporate expenses. The costs of these functions historically have not been allocated to its services, and are not directly attributable or specifically identifiable to the subsidiaries, and therefore, are not included in the Abbreviated Financial Statements. Income taxes and interest expense have not been included in the accompanying statements as these expenses are not specifically attributable to the subsidiaries. As the subsidiaries have historically been managed as part of the operations of the Company and have not been operated as stand-alone
5
entities, information about the subsidiaries’ operating, investing, and financing cash flows is not available. As such, a statement of cash flows is not presented in the Abbreviated Financial Statements.
Estimates and Assumptions - The preparation of the Abbreviated Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Abbreviated Financial Statements and the reported amounts of revenue and expenses during the reporting period. The most significant estimates in the Abbreviated Financial Statements relate to revenue recognition and intangible assets. Actual results could differ from those estimates.
Revenue Recognition - Revenues are recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled from patients and third-party payors, including Medicaid, Medicare and insurers (private and Medicare replacement plans), in exchange for providing patient care. Revenue recognized from healthcare services are adjusted for estimates of variable consideration to arrive at the transaction price. The Company determines the transaction price based on contractually agreed-upon amounts or rates, adjusted for estimates of variable consideration. The Company uses the expected value method in determining the variable component that should be used to arrive at the transaction price, using contractual agreements and historical reimbursement experience within each payor type. The amount of variable consideration which is included in the transaction price may be constrained and is included in the net revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If actual amounts of consideration ultimately received differ from the Company’s estimates, the Company adjusts these estimates, which would affect net service revenue in the period such variances become known.
As the Company’s contracts have an original duration of one year or less, the Company uses the practical expedient applicable to its contracts and does not consider the time value of money. Further, because of the short duration of these contracts, the Company has not disclosed the transaction price for the remaining performance obligations as of the end of each reporting period or when the Company expects to recognize this revenue. In addition, the Company has applied the practical expedient provided by Accounting Standard Codification (“ASC”) Topic 340, Other Assets and Deferred Costs, and all incremental customer contract acquisition costs are expensed as they are incurred because the amortization period would have been one year or less. See Note 3, Revenue and Accounts Receivable.
Accounts Receivable - Accounts receivable consist primarily of amounts due from Medicare and Medicaid programs, other government programs, healthcare systems, managed care health plans and private payor sources, net of estimates for variable consideration.
Property and Equipment, net - Property and equipment are initially recorded at their historical cost. Depreciation is computed using the straight-line method over the estimated useful lives of the depreciable assets (ranging from two to seven years). Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the remaining lease term. Repairs and maintenance are expensed as incurred.
Intangible Assets - The Company’s indefinite-lived intangible assets consist of certificates of need and Medicare licenses. The Company tests indefinite-lived intangible assets for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable.
3. REVENUE AND ACCOUNTS RECEIVABLE
Revenue is recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled from patients and third-party payors, including Medicaid, Medicare and managed care programs (Commercial, Medicare Advantage and Managed Medicaid plans). The healthcare services in home health and hospice patient contracts include routine services in exchange for a contractual agreed-upon amount or rate. Routine services are treated as a single performance obligation satisfied over time as services are rendered. As such, patient care services represent a bundle of services that are not capable of being distinct within the context of the contract. Additionally, there may be ancillary services which are not included in the rates for routine services, but instead are treated as separate performance obligations satisfied at a point in time, if and when those services are rendered.
Revenue recognized from healthcare services are adjusted for estimates of variable consideration to arrive at the transaction price. The Company determines the transaction price based on contractually agreed-upon amounts or rate, adjusted for estimates of variable consideration. The Company uses the expected value method in determining the variable component that should be used to arrive at the transaction price, using contractual agreements and historical reimbursement experience within
6
each payor type. The amount of variable consideration which is included in the transaction price may be constrained and is included in the net revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If actual amounts of consideration ultimately received differ from the Company’s estimates, the Company adjusts these estimates, which would affect net service revenue in the period such variances become known.
The Company records revenue from Medicare, Medicaid and managed care programs as services are performed at their expected net realizable amounts under these programs. The Company’s revenue from governmental and managed care programs is subject to audit and retroactive adjustment by governmental and third-party agencies. Consistent with healthcare industry accounting practices, any changes to these governmental revenue estimates are recorded in the period the change or adjustment becomes known based on final settlement.
Revenue by payor for the six months ended June 30, 2025 is summarized in the following table:
| Six Months Ended June 30, 2025 | ||||||||||||||||||||||||||
| Home Health and Hospice Services | ||||||||||||||||||||||||||
Home Health Services(a) | Hospice Services | Total Revenue | Revenue % | |||||||||||||||||||||||
| Medicare | $ | 18,957 | $ | 6,134 | $ | 25,091 | 60.8 | % | ||||||||||||||||||
| Medicaid | 582 | 186 | 768 | 1.9 | ||||||||||||||||||||||
| Subtotal | 19,539 | 6,320 | 25,859 | 62.7 | ||||||||||||||||||||||
| Managed care | 12,646 | 82 | 12,728 | 30.8 | ||||||||||||||||||||||
| Private and other | 2,675 | — | 2,675 | 6.5 | ||||||||||||||||||||||
| Total revenue | $ | 34,860 | $ | 6,402 | $ | 41,262 | 100.0 | % | ||||||||||||||||||
| (a) | Revenue derived from palliative care services is presented as part of Home Health Services. | |||||||
Accounts receivable as of June 30, 2025 is summarized in the following table:
| June 30, 2025 | ||||||||
| Medicare | $ | 5,385 | ||||||
| Medicaid | 828 | |||||||
| Managed care | 3,203 | |||||||
| Private and other | 682 | |||||||
| Accounts receivable | $ | 10,098 | ||||||
4. PROPERTY AND EQUIPMENT—NET
Property and equipment, net consist of the following:
| June 30, 2025 | |||||
| Equipment | $ | 598 | |||
| Furniture and fixtures | 501 | ||||
| Leasehold improvements | 99 | ||||
| Total property and equipment | 1,198 | ||||
| Less: accumulated depreciation | (936) | ||||
| Property and equipment, net | $ | 262 | |||
Depreciation expense was $173 for the six months ended June 30, 2025.
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5. INDEFINITE-LIVED INTANGIBLE ASSETS
Indefinite-lived intangible assets consist of certificates of need and Medicare licenses.
6. OTHER ACCRUED LIABILITIES
Other accrued liabilities consist of the following:
| June 30, 2025 | |||||
| Accrued self-insurance liabilities | $ | 230 | |||
| Accrued legal fees, legal settlements, and other audits | 11 | ||||
| Other | 53 | ||||
| Other accrued liabilities | $ | 294 | |||
8
7. LEASES
The Company has operating leases, primarily for offices, that expire at various dates over the next six years. The office leases generally contain renewal options for periods ranging from one to five years. Because the Company is not reasonably certain to exercise these renewal options, the options are not considered in determining the lease term, and payments associated with the option years are excluded from lease payments. The office leases also generally include termination options, which allow for early termination of the lease after the first one to three years. Because the Company is not reasonably certain to exercise these termination options, the options are not considered in determining the lease term; payments for the full lease term are included in lease payments. The office leases do not contain any material residual value guarantees.
Supplemental information related to leases is as follows:
| June 30, 2025 | |||||
| Operating Leases: | |||||
| Weighted-average remaining lease term (years) | 3.34 | ||||
| Weighted-average discount rate | 5.3 | % | |||
The following table shows the lease maturity analysis for all leases as of June 30, 2025, for the years ended December 31:
| Year | Amounts | ||||
| 2025 (Remainder) | $ | 467 | |||
| 2026 | 931 | ||||
| 2027 | 655 | ||||
| 2028 | 368 | ||||
| 2029 | 266 | ||||
| Thereafter | 104 | ||||
| Total lease payments | 2,791 | ||||
| Less: present value adjustments | (259) | ||||
| Present value of total lease liabilities | 2,532 | ||||
| Less: current lease liabilities | (850) | ||||
| Long-term lease liabilities | $ | 1,682 | |||
8. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through December 16, 2025, the date on which these Abbreviated Financial Statements were available to be issued, and is not aware of any items that that would require adjustment to or disclosure in these Abbreviated Financial Statements and related notes.
9
Exhibit 99.4
ACQUIRED UNITEDHEALTH SUBSIDIARIES
ABBREVIATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2025 (Unaudited)
1
ACQUIRED UNITEDHEALTH SUBSIDIARIES
INDEX TO ABBREVIATED FINANCIAL STATEMENTS
| Page | |||||
| Abbreviated Financial Statements: | |||||
| Statement of Revenue and Direct Expenses for the six months ended June 30, 2025 (Unaudited) | 3 | ||||
| Statement of Assets Acquired and Liabilities Assumed as of June 30, 2025 (Unaudited) | 4 | ||||
| Notes to Abbreviated Financial Statements | 5 | ||||
2
ACQUIRED UNITEDHEALTH SUBSIDIARIES
ABBREVIATED FINANCIAL STATEMENTS
STATEMENT OF REVENUE AND DIRECT EXPENSES
(in thousands)
| Six Months Ended June 30, 2025 | |||||
| Revenue | $ | 54,150 | |||
| Direct expenses | |||||
| Cost of services | 39,407 | ||||
| Rent—cost of services | 839 | ||||
| Depreciation and amortization | 27 | ||||
| Total direct expenses | 40,273 | ||||
| Revenue less direct expenses | $ | 13,877 | |||
The accompanying notes are an integral part of these abbreviated financial statements.
3
ACQUIRED UNITEDHEALTH SUBSIDIARIES
ABBREVIATED FINANCIAL STATEMENTS
STATEMENT OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
(in thousands)
| June 30, 2025 | |||||
| Assets acquired | |||||
| Current assets: | |||||
| Accounts receivable | $ | 13,836 | |||
| Prepaid expenses and other current assets | 836 | ||||
| Total current assets | 14,672 | ||||
| Property and equipment, net | 165 | ||||
| Operating lease right-of-use assets | 3,078 | ||||
| Restricted and other assets | 36 | ||||
| Indefinite-lived intangibles | 2,292 | ||||
| Total assets acquired | $ | 20,243 | |||
| Liabilities assumed | |||||
| Current liabilities: | |||||
| Accrued wages and related liabilities | $ | 1,785 | |||
| Operating lease liabilities—current | 1,397 | ||||
| Other accrued liabilities | 762 | ||||
| Total current liabilities | 3,944 | ||||
| Long-term operating lease liabilities—less current portion | 1,681 | ||||
| Total liabilities assumed | $ | 5,625 | |||
The accompanying notes are an integral part of these abbreviated financial statements.
4
ACQUIRED UNITEDHEALTH SUBSIDIARIES
NOTES TO ABBREVIATED FINANCIAL STATEMENTS
(dollars in thousands, unless otherwise indicated)
1. DESCRIPTION OF BUSINESS
LHC Group, Inc. (“LHC”), a subsidiary of UnitedHealth Group Incorporated (“UnitedHealth”, or the “Company”), is a health care provider specializing in the post-acute continuum of care. LHC operations involve servicing patients through home health, hospice, home and community-based services, facility-based services primarily through long-term acute care hospitals, and healthcare innovations.
On April 30, 2025, the Pennant Group, Inc. (“Pennant”) entered into a purchase agreement (the “Purchase Agreement”), as subsequently amended by the First Amendment to Purchase Agreement dated October 1, 2025 (the “Amendment” and the Purchase Agreement as so amended by the Amendment, the “Amended Agreement”), by and among its wholly-owned subsidiaries, Cornerstone Healthcare, Inc. (“Equity Buyer”) and Tensaw River Healthcare LLC (“Asset Buyer”), and UnitedHealth, Amedisys, Inc. (“Amedisys”), and certain other sellers (collectively, the “Sellers”). Pursuant to the Amended Agreement, Equity Buyer agreed to acquire from the Sellers certain equity interests in, and Asset Buyer agreed to acquire from the Sellers certain assets of, certain subsidiaries of UnitedHealth and Amedisys related to providing home health, hospice, or palliative care services through certain providers (the “Transaction”). The Transaction closed on October 1, 2025 (the “Closing Date”).
The equity interests and assets acquired from subsidiaries of UnitedHealth are referred to as the “subsidiaries”.
2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation - The accompanying abbreviated financial statements, which consist of the statement of revenue and direct expenses for the six months ended June 30, 2025, the statement of assets acquired and liabilities assumed as of June 30, 2025, and the related notes thereto, will henceforth be collectively referred to as the “Abbreviated Financial Statements”. The Abbreviated Financial Statements were prepared for the purpose of complying with the requirements of Rule 3-05 of the U.S. Securities Exchange Commission Regulation S-X and present the assets acquired and liabilities assumed and the related revenue and direct expenses of the subsidiaries of UnitedHealth. The Abbreviated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
The subsidiaries did not represent a substantial portion of UnitedHealth’s assets and liabilities. It is impracticable to prepare complete financial statements related to the subsidiaries as UnitedHealth has not maintained the distinct and separate books and records necessary to prepare full stand-alone or carve-out financial statements. As a result, the statement of revenue and direct expenses was derived from the operating activities directly attributable to the subsidiaries from UnitedHealth’s books and records and contains certain estimates and allocation methodologies. Although management is unable to determine all of the actual costs, expenses and resulting operating results associated with the subsidiaries, it considers the allocation of such items to be reasonable for the periods presented. However, the revenue and direct expenses of the subsidiaries may differ from the results that would have been achieved had the subsidiaries operated as a separate entity and may not necessarily reflect the assets and liabilities or revenue and expenses of the subsidiaries on a stand-alone basis in the future.
In addition, and as described further below, the statement of revenue and direct expenses excludes corporate overhead costs borne by UnitedHealth to support the subsidiaries. As such, the statement is not indicative of the future results of the subsidiaries as it omits various operating expenses that Pennant will incur to operate the subsidiaries in the future.
UnitedHealth performed certain functions for the subsidiaries including, but not limited to, corporate management, certain legal services, administration of insurance, regulatory and compliance, treasury, information systems, finance, corporate income tax administration, employee compensation and benefit management, facilities and other corporate expenses. The costs of these functions historically have not been allocated to its services, and are not directly attributable or specifically identifiable to the subsidiaries, and therefore, are not included in the Abbreviated Financial Statements. Income taxes and interest expense have not been included in the accompanying statements as these expenses are not specifically attributable to the subsidiaries. As the subsidiaries have historically been managed as part of the operations of the Company and have not been operated as stand-alone entities, information about the subsidiaries’ operating, investing, and financing cash flows is not available. As such, a statement of cash flows is not presented in the Abbreviated Financial Statements.
5
Estimates and Assumptions - The preparation of the Abbreviated Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Abbreviated Financial Statements and the reported amounts of revenue and expenses during the reporting period. The most significant estimates in the Abbreviated Financial Statements relate to revenue recognition and intangible assets. Actual results could differ from those estimates.
Revenue Recognition - Revenues are recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled from patients and third-party payors, including Medicaid, Medicare and insurers (private and Medicare replacement plans), in exchange for providing patient care. Revenue recognized from healthcare services are adjusted for estimates of variable consideration to arrive at the transaction price. The Company determines the transaction price based on contractually agreed-upon amounts or rates, adjusted for estimates of variable consideration. The Company uses the expected value method in determining the variable component that should be used to arrive at the transaction price, using contractual agreements and historical reimbursement experience within each payor type. The amount of variable consideration which is included in the transaction price may be constrained and is included in the net revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If actual amounts of consideration ultimately received differ from the Company’s estimates, the Company adjusts these estimates, which would affect net service revenue in the period such variances become known.
As the Company’s contracts have an original duration of one year or less, the Company uses the practical expedient applicable to its contracts and does not consider the time value of money. Further, because of the short duration of these contracts, the Company has not disclosed the transaction price for the remaining performance obligations as of the end of each reporting period or when the Company expects to recognize this revenue. In addition, the Company has applied the practical expedient provided by Accounting Standard Codification (“ASC”) Topic 340, Other Assets and Deferred Costs, and all incremental customer contract acquisition costs are expensed as they are incurred because the amortization period would have been one year or less. See Note 3, Revenue and Accounts Receivable.
Accounts Receivable - Accounts receivable consist primarily of amounts due from Medicare and Medicaid programs, other government programs, healthcare systems, managed care health plans and private payor sources, net of estimates for variable consideration.
Property and Equipment, net - Property and equipment are initially recorded at their historical cost. Depreciation is computed using the straight-line method over the estimated useful lives of the depreciable assets (ranging from five to seven years). Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the remaining lease term. Repairs and maintenance are expensed as incurred.
Intangible Assets - The Company’s indefinite-lived intangible assets consist of certificates of need, Medicare licenses, and tradenames. The Company tests indefinite-lived intangible assets for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable.
3. REVENUE AND ACCOUNTS RECEIVABLE
Revenue is recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled from patients and third-party payors, including Medicaid, Medicare and managed care programs (Commercial, Medicare Advantage and Managed Medicaid plans). The healthcare services in home health and hospice patient contracts include routine services in exchange for a contractual agreed-upon amount or rates. Routine services are treated as a single performance obligation satisfied over time as services are rendered. As such, patient care services represent a bundle of services that are not capable of being distinct within the context of the contract. Additionally, there may be ancillary services which are not included in the rates for routine services, but instead are treated as separate performance obligations satisfied at a point in time, if and when those services are rendered.
Revenue recognized from healthcare services are adjusted for estimates of variable consideration to arrive at the transaction price. The Company determines the transaction price based on contractually agreed-upon amounts or rates, adjusted for estimates of variable consideration. The Company uses the expected value method in determining the variable component that should be used to arrive at the transaction price, using contractual agreements and historical reimbursement experience within each payor type. The amount of variable consideration which is included in the transaction price may be constrained and is included in the net revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If actual amounts of consideration ultimately received differ from the
6
Company’s estimates, the Company adjusts these estimates, which would affect net service revenue in the period such variances become known.
The Company records revenue from Medicare, Medicaid and managed care programs as services are performed at their expected net realizable amounts under these programs. The Company’s revenue from governmental and managed care programs is subject to audit and retroactive adjustment by governmental and third-party agencies. Consistent with healthcare industry accounting practices, any changes to these governmental revenue estimates are recorded in the period the change or adjustment becomes known based on final settlement.
Revenue by payor for the six months ended June 30, 2025 is summarized in the following table:
| Six Months Ended June 30, 2025 | ||||||||||||||||||||||||||
| Home Health and Hospice Services | ||||||||||||||||||||||||||
Home Health Services(a) | Hospice Services | Total Revenue | Revenue % | |||||||||||||||||||||||
| Medicare | $ | 13,177 | $ | 19,773 | $ | 32,950 | 60.8 | % | ||||||||||||||||||
| Medicaid | 362 | 105 | 467 | 0.9 | ||||||||||||||||||||||
| Subtotal | 13,539 | 19,878 | 33,417 | 61.7 | ||||||||||||||||||||||
| Managed care | 15,119 | 1,294 | 16,413 | 30.3 | ||||||||||||||||||||||
| Private and other | 3,773 | 547 | 4,320 | 8.0 | ||||||||||||||||||||||
| Total revenue | $ | 32,431 | $ | 21,719 | $ | 54,150 | 100.0 | % | ||||||||||||||||||
| (a) | Revenue derived from palliative care services is presented as part of Home Health Services. | |||||||
Accounts receivable as of June 30, 2025 is summarized in the following table:
| June 30, 2025 | ||||||||
| Medicare | $ | 6,096 | ||||||
| Medicaid | 774 | |||||||
| Managed care | 6,811 | |||||||
| Private and other | 155 | |||||||
| Accounts receivable | $ | 13,836 | ||||||
4. PROPERTY AND EQUIPMENT—NET
Property and equipment, net consist of the following:
| June 30, 2025 | |||||
| Furniture and fixtures | $ | 269 | |||
| Leasehold improvements | 92 | ||||
| Total property and equipment | 361 | ||||
| Less: accumulated depreciation | (196) | ||||
| Property and equipment, net | $ | 165 | |||
Depreciation expense was $27 for the six months ended June 30, 2025.
5. INDEFINITE-LIVED INTANGIBLE ASSETS
Indefinite-lived intangible assets consist of certificates of need and Medicare licenses of $1,084 and tradenames of $1,208.
7
6. OTHER ACCRUED LIABILITIES
Other accrued liabilities consist of the following:
| June 30, 2025 | |||||
| Respite payable | $ | 310 | |||
| Accrued self-insurance liabilities | 204 | ||||
| General inpatient liability | 152 | ||||
| Hospice CAP liabilities | 96 | ||||
| Other accrued liabilities | $ | 762 | |||
7. LEASES
The Company has operating leases through which their independent operating subsidiaries lease administrative offices of home health and hospice agencies with initial lease terms ranging from two to five years. Most of these operating leases are non-cancelable, contain renewal options, most involve rent increases and none contain purchase options. The lease term excludes lease renewals because the renewal rents are not at a bargain, there are no economic penalties for the Company to renew the lease, and it is not reasonably certain that the Company will exercise the extension options.
Supplemental information related to leases is as follows:
| June 30, 2025 | |||||
| Operating Leases: | |||||
| Weighted-average remaining lease term (years) | 2.45 | ||||
| Weighted-average discount rate | 4.9 | % | |||
The following table shows the lease maturity analysis for all leases as of June 30, 2025, for the years ended December 31:
| Year | Amounts | ||||
| 2025 (Remainder) | $ | 752 | |||
| 2026 | 1,338 | ||||
| 2027 | 860 | ||||
| 2028 | 257 | ||||
| 2029 | — | ||||
| Thereafter | — | ||||
| Total lease payments | 3,207 | ||||
| Less: present value adjustments | (129) | ||||
| Present value of total lease liabilities | 3,078 | ||||
| Less: current lease liabilities | (1,397) | ||||
| Long-term lease liabilities | $ | 1,681 | |||
8
8. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through December 16, 2025, the date on which these Abbreviated Financial Statements were available to be issued, and is not aware of any items that that would require adjustment to or disclosure in these Abbreviated Financial Statements and related notes.
9
Exhibit 99.5
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial information and notes thereto have been prepared by The Pennant Group, Inc. (the “Company” or “Pennant”) in accordance with Article 11 of Regulation S-X in order to give effect to the Transaction (as defined below).
On April 30, 2025, Pennant entered into a purchase agreement (the “Purchase Agreement”), as subsequently amended by the First Amendment to Purchase Agreement dated October 1, 2025 (the “Amendment” and the Purchase Agreement as so amended by the Amendment, the “Amended Agreement”), by and among the Company, its wholly-owned subsidiaries, Cornerstone Healthcare, Inc. (“Equity Buyer”) and Tensaw River Healthcare LLC (“Asset Buyer”), and UnitedHealth Group Incorporated (“UnitedHealth”), Amedisys, Inc. (“Amedisys”) and certain other sellers (collectively, the “Sellers”). Pursuant to the Amended Agreement, Equity Buyer agreed to acquire from the Sellers certain equity interests in, and Asset Buyer agreed to acquire from the Sellers certain assets of, certain subsidiaries of UnitedHealth and Amedisys related to the business of providing home health, hospice, or palliative care services through certain providers (the “Transaction”). The Transaction closed on October 1, 2025 (the “Closing Date”).
The equity interests and assets acquired from subsidiaries of UnitedHealth are referred to as the “UnitedHealth Subsidiaries”, and the equity interests and assets acquired from subsidiaries of Amedisys are referred to as the “Amedisys Subsidiaries”. The UnitedHealth Subsidiaries and Amedisys Subsidiaries are collectively referred to as the “Acquired Subsidiaries”.
The following tables and accompanying notes (collectively the “Unaudited Pro Forma Condensed Combined Financial Statements”) present the Company’s unaudited statements of operations on a pro forma combined basis after giving effect to the Transaction. The information in the tables below under the heading “Unaudited Pro Forma Condensed Combined Statement of Operations” for the six months ended June 30, 2025 and the year ended December 31, 2024 give effect to the Transaction as if it had occurred on January 1, 2024 (the “Unaudited Pro Forma Condensed Combined Statements of Operations”). The information in the tables below under the heading “Unaudited Pro Forma Condensed Combined Balance Sheet” as of June 30, 2025 gives effect to the Transaction as if it had occurred on June 30, 2025.
The historical financial information has been adjusted in the Unaudited Pro Forma Condensed Combined Financial Statements to give effect to pro forma adjustments deemed to be directly related to the Transaction to be incurred either prior to the Transaction or post-close, irrespective of whether such adjustment is deemed to be recurring.
The pro forma transaction accounting adjustments are based upon currently available information and certain assumptions that the Company’s management believes are reasonable and factually supportable as of the date of this filing. The Unaudited Pro Forma Condensed Combined Financial Statements are presented for informational purposes only and are not intended to present or be indicative of what the results of operations or financial position would have been had the events actually occurred on the date indicated, nor are they meant to be indicative of future results of operations or financial position for any future period or as of any future date. Future results may differ significantly from the pro forma amounts presented. The Unaudited Pro Forma Condensed Combined Financial Statements do not include any adjustments not otherwise described herein; they do not give effect to the potential impact of current financial conditions, or any anticipated revenue enhancements, cost savings, operating synergies or dis-synergies that may result from the Transaction. In the opinion of the Company’s management, all adjustments necessary to present fairly the pro forma financial information have been made.
The historical financial information of the acquired UnitedHealth and Amedisys subsidiaries is derived (“carved-out”) from UnitedHealth and Amedisys’ consolidated financial statements, including the unaudited consolidated statement of revenues and direct expenses for the six months ended June 30, 2025, and the unaudited statement of assets acquired and liabilities assumed as of June 30, 2025, which were prepared in accordance with GAAP and presented in the acquired Amedisys subsidiaries’ Abbreviated Financial Statements included in Exhibit 99.1 of this Form 8-K/A, and the acquired UnitedHealth subsidiaries’ Abbreviated Financial Statements included in Exhibit 99.2 of this Form 8-K/A, and the audited consolidated statement of revenues and direct expenses for the year ended December 31, 2024, and the audited consolidated statement of assets acquired and liabilities assumed as of December 31, 2024, which were prepared in accordance with GAAP and presented in the acquired Amedisys subsidiaries’ Abbreviated Financial Statements included in Exhibit 99.3 of this Form 8-K/A, and the acquired UnitedHealth subsidiaries’ Abbreviated Financial Statements included in Exhibit 99.4 of this Form 8-K/A. Note 1 to the acquired subsidiaries’ Abbreviated Financial Statements provides further information regarding the
1
Exhibit 99.5
basis of presentation and allocations made in the Abbreviated Financial Statements. The Abbreviated Financial Statements only reflect the acquired subsidiaries conveyed in the Agreement, and do not purport to reflect the financial position and results of operations of the acquired subsidiaries had such business operated on a stand-alone basis during the periods presented.
These Unaudited Pro Forma Condensed Combined Financial Statements and accompanying notes should be read in conjunction with the following:
•The historical audited consolidated financial statements included in The Pennant Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on February 27, 2025;
•The historical unaudited condensed consolidated financial statements included in The Pennant Group, Inc.’s Quarterly Report on Form 10-Q as of and for the six months ended June 30, 2025, which was filed with the SEC on August 6, 2025;
•The Acquired Subsidiaries’ audited Abbreviated Financial Statements as of and for the year ended December 31, 2024, included in Exhibit 99.1 and Exhibit 99.2 of The Pennant Group, Inc.’s Current Report on Form 8-K/A filed with the SEC on December 16, 2025, of which this Exhibit 99.5 is a part (the “Form 8-K/A”); and
•The Acquired Subsidiaries’ unaudited Abbreviated Financial Statements as of and for the six months ended June 30, 2025, included in Exhibit 99.3 and Exhibit 99.4 of the Form 8-K/A.
2
Exhibit 99.5
THE PENNANT GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2024
(in thousands, except per-share amounts)
| Pennant Group, Inc. (Historical) | Amedisys subsidiaries (Historical) | UnitedHealth subsidiaries (Historical) | Financing Adjustments | Note Ref. | Transaction Adjustments | Note Ref. | Pro Forma Combined | |||||||||||||||||||
| Revenue | $ | 695,240 | $ | 79,743 | $ | 104,307 | $ | — | $ | — | $ | 879,290 | ||||||||||||||
| Expenses | ||||||||||||||||||||||||||
| Cost of services | 558,449 | 63,612 | 75,735 | — | — | 697,796 | ||||||||||||||||||||
| Rent—cost of services | 43,029 | 1,259 | 1,610 | — | — | 45,898 | ||||||||||||||||||||
| General and administrative expense | 50,209 | — | — | — | 3,735 | E | 53,944 | |||||||||||||||||||
| Depreciation and amortization | 6,119 | 339 | 55 | — | — | 6,513 | ||||||||||||||||||||
| Gain on disposition of property and equipment, net | (682) | — | — | — | — | (682) | ||||||||||||||||||||
| Total expenses | 657,124 | 65,210 | 77,400 | — | 3,735 | 803,469 | ||||||||||||||||||||
| Income from operations | 38,116 | 14,533 | 26,907 | — | (3,735) | 75,821 | ||||||||||||||||||||
| Other (expense) income, net: | ||||||||||||||||||||||||||
| Other income | 207 | — | — | — | — | 207 | ||||||||||||||||||||
| Interest expense, net | (6,956) | — | — | (12,823) | B | — | (19,779) | |||||||||||||||||||
| Other expense, net | (6,749) | — | — | (12,823) | — | (19,572) | ||||||||||||||||||||
| Income before provision for income taxes | 31,367 | 14,533 | 26,907 | (12,823) | (3,735) | 56,249 | ||||||||||||||||||||
| Provision for income taxes | 7,028 | — | — | (3,223) | C | 9,477 | J | 13,282 | ||||||||||||||||||
| Net income | 24,339 | 14,533 | 26,907 | (9,600) | (13,212) | 42,967 | ||||||||||||||||||||
| Less: Net income attributable to noncontrolling interest | 1,780 | — | — | — | 2,764 | K | 4,544 | |||||||||||||||||||
| Net income attributable to The Pennant Group, Inc. | $ | 22,559 | $ | 14,533 | $ | 26,907 | $ | (9,600) | $ | (15,976) | $ | 38,423 | ||||||||||||||
| Earnings per share: | ||||||||||||||||||||||||||
| Basic | $ | 0.72 | $ | 1.23 | ||||||||||||||||||||||
| Diluted | $ | 0.70 | $ | 1.20 | ||||||||||||||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||||||||||||
| Basic | 31,191 | 31,191 | ||||||||||||||||||||||||
| Diluted | 32,000 | 32,000 | ||||||||||||||||||||||||
See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Statements.
3
Exhibit 99.5
THE PENNANT GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2025
(in thousands, except per-share amounts)
| Pennant Group, Inc. (Historical) | Amedisys subsidiaries (Historical) | UnitedHealth subsidiaries (Historical) | Financing Adjustments | Note Ref. | Transaction Adjustments | Note Ref. | Pro Forma Combined | |||||||||||||||||||
| Revenue | $ | 429,343 | $ | 41,262 | $ | 54,150 | $ | — | $ | — | $ | 524,755 | ||||||||||||||
| Expenses | ||||||||||||||||||||||||||
| Cost of services | 346,020 | 32,871 | 39,407 | — | — | 418,298 | ||||||||||||||||||||
| Rent—cost of services | 23,640 | 644 | 839 | — | — | 25,123 | ||||||||||||||||||||
| General and administrative expense | 32,437 | — | — | — | — | 32,437 | ||||||||||||||||||||
| Depreciation and amortization | 4,116 | 173 | 27 | — | — | 4,316 | ||||||||||||||||||||
| Gain on disposition of property and equipment, net | (1,048) | — | — | — | — | (1,048) | ||||||||||||||||||||
| Total expenses | 405,165 | 33,688 | 40,273 | — | — | 479,126 | ||||||||||||||||||||
| Income from operations | 24,178 | 7,574 | 13,877 | — | — | 45,629 | ||||||||||||||||||||
| Other (expense) income, net: | ||||||||||||||||||||||||||
| Other income | 186 | — | — | — | — | 186 | ||||||||||||||||||||
| Interest expense, net | (2,409) | — | — | (4,588) | B | — | (6,997) | |||||||||||||||||||
| Other expense, net | (2,223) | — | — | (4,588) | — | (6,811) | ||||||||||||||||||||
| Income before provision for income taxes | 21,955 | 7,574 | 13,877 | (4,588) | — | 38,818 | ||||||||||||||||||||
| Provision for income taxes | 5,452 | — | — | (1,147) | C | 5,364 | J | 9,669 | ||||||||||||||||||
| Net income | 16,503 | 7,574 | 13,877 | (3,441) | (5,364) | 29,149 | ||||||||||||||||||||
| Less: Net income attributable to noncontrolling interest | 1,643 | — | — | — | 1,449 | K | 3,092 | |||||||||||||||||||
| Net income attributable to The Pennant Group, Inc. | $ | 14,860 | $ | 7,574 | $ | 13,877 | $ | (3,441) | $ | (6,813) | $ | 26,057 | ||||||||||||||
| Earnings per share: | ||||||||||||||||||||||||||
| Basic | $ | 0.43 | $ | 0.76 | ||||||||||||||||||||||
| Diluted | $ | 0.42 | $ | 0.74 | ||||||||||||||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||||||||||||
| Basic | 34,500 | 34,500 | ||||||||||||||||||||||||
| Diluted | 35,284 | 35,284 | ||||||||||||||||||||||||
See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Statements.
4
Exhibit 99.5
THE PENNANT GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 2025
(in thousands, except par value)
| Pennant Group, Inc. (Historical) | Amedisys subsidiaries (Historical) | UnitedHealth subsidiaries (Historical) | Financing Adjustments | Note Ref. | Transaction Adjustments | Note Ref. | Pro Forma Combined | |||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Current assets: | ||||||||||||||||||||||||||
| Cash | $ | 14,385 | $ | — | $ | — | $ | 146,531 | A | $ | (152,719) | D, E | $ | 8,197 | ||||||||||||
| Accounts receivable | 95,720 | 10,098 | 13,836 | — | — | 119,654 | ||||||||||||||||||||
| Prepaid expenses and other current assets | 17,269 | 11 | 836 | — | — | 18,116 | ||||||||||||||||||||
| Total current assets | 127,374 | 10,109 | 14,672 | 146,531 | (152,719) | 145,967 | ||||||||||||||||||||
| Property and equipment, net | 52,578 | 262 | 165 | — | — | 53,005 | ||||||||||||||||||||
| Operating lease right-of-use assets | 273,842 | 2,595 | 3,078 | — | 56 | G | 279,571 | |||||||||||||||||||
| Deferred tax assets, net | 33 | — | — | — | — | 33 | ||||||||||||||||||||
| Restricted and other assets | 23,804 | 10 | 36 | — | — | 23,850 | ||||||||||||||||||||
| Goodwill | 156,604 | — | — | — | 80,826 | I | 237,430 | |||||||||||||||||||
| Other indefinite-lived intangibles | 117,182 | 2,332 | 2,292 | — | 61,565 | F | 183,371 | |||||||||||||||||||
| Total assets | $ | 751,417 | $ | 15,308 | $ | 20,243 | $ | 146,531 | $ | (10,272) | $ | 923,227 | ||||||||||||||
| Liabilities and equity | ||||||||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||||||||
| Accounts payable | $ | 19,211 | $ | — | $ | — | $ | — | $ | — | $ | 19,211 | ||||||||||||||
| Accrued wages and related liabilities | 42,731 | 1,719 | 1,785 | — | — | 46,235 | ||||||||||||||||||||
| Operating lease liabilities—current | 20,667 | 850 | 1,397 | — | 19 | G | 22,933 | |||||||||||||||||||
| Other accrued liabilities | 22,332 | 294 | 762 | — | — | 23,388 | ||||||||||||||||||||
| Total current liabilities | 104,941 | 2,863 | 3,944 | — | 19 | 111,767 | ||||||||||||||||||||
| Long-term operating lease liabilities—less current portion | 255,781 | 1,682 | 1,681 | — | — | 259,144 | ||||||||||||||||||||
| Deferred tax liabilities, net | 1,143 | — | — | — | — | 1,143 | ||||||||||||||||||||
| Other long-term liabilities | 18,925 | 44 | — | — | — | 18,969 | ||||||||||||||||||||
| Long-term debt | 37,000 | — | — | 146,531 | A | — | 183,531 | |||||||||||||||||||
| Total liabilities | 417,790 | 4,589 | 5,625 | 146,531 | 19 | 574,554 | ||||||||||||||||||||
| Equity: | ||||||||||||||||||||||||||
| Common stock, $0.001 par value | 35 | — | — | — | — | 35 | ||||||||||||||||||||
| Additional paid-in capital | 241,250 | — | — | — | — | 241,250 | ||||||||||||||||||||
| Retained earnings | 72,082 | — | — | — | (3,735) | E | 68,347 | |||||||||||||||||||
| Treasury stock, at cost, 3 shares at June 30, 2025 | (65) | — | — | — | — | (65) | ||||||||||||||||||||
| Total The Pennant Group, Inc. stockholders’ equity | 313,302 | — | — | — | (3,735) | 309,567 | ||||||||||||||||||||
| Noncontrolling interest | 20,325 | — | — | — | 18,781 | H | 39,106 | |||||||||||||||||||
| Total equity | 333,627 | — | — | — | 15,046 | 348,673 | ||||||||||||||||||||
| Total liabilities and equity | $ | 751,417 | $ | 4,589 | $ | 5,625 | $ | 146,531 | $ | 15,065 | $ | 923,227 | ||||||||||||||
See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Statements.
5
Exhibit 99.5
THE PENNANT GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(dollars in thousands, unless otherwise indicated)
1. DESCRIPTION OF TRANSACTION
On April 30, 2025, the Pennant Group, Inc. (the “Company” or “Pennant”) entered into a purchase agreement (the “Purchase Agreement”), as subsequently amended by the First Amendment to Purchase Agreement dated October 1, 2025 (the “Amendment” and the Purchase Agreement as so amended by the Amendment, the “Amended Agreement”), by and among the Company, its wholly-owned subsidiaries, Cornerstone Healthcare, Inc. (“Equity Buyer”) and Tensaw River Healthcare LLC (“Asset Buyer”), and UnitedHealth Group Incorporated (“UnitedHealth”), Amedisys, Inc. (“Amedisys”) and certain other sellers (collectively, the “Sellers”). Pursuant to the Amended Agreement, Equity Buyer agreed to acquire from the Sellers certain equity interests in, and Asset Buyer agreed to acquire from the Sellers certain assets of, certain subsidiaries of UnitedHealth and Amedisys related to the business of providing home health, hospice, or palliative care services through certain providers (the “Transaction”). The Transaction closed on October 1, 2025 (the “Closing Date”). Concurrent with the Transaction, the Company entered into a transition services agreement with the Sellers to receive, for a fee, certain transitional services and technical support during the transition service period. At inception, the fees under the transition services agreement are estimated to be approximately $1.0 million per month and are expected to decrease over the transition period. The Unaudited Pro Forma Condensed Combined Statements of Operations do not include an adjustment for management’s estimate of the fees to be incurred during the transition service period as such amounts are uncertain as of the transaction date.
2. BASIS OF PRESENTATION
The Unaudited Pro Forma Condensed Combined Financial Statements were prepared in accordance with Article 11 of Regulation S-X to illustrate the pro forma effects of the Transaction.
The Unaudited Pro Forma Condensed Combined Statements of Operations for the six months ended June 30, 2025 and the year ended December 31, 2024 combine the historical consolidated statements of operations of the Company and the historical statements of revenues and direct expenses of the Acquired Subsidiaries for such periods, giving effect to (i) the Transaction, as if it had taken place on January 1, 2024, and (ii) the assumptions and adjustments described in the accompanying notes to these Unaudited Pro Forma Condensed Combined Financial Statements. The Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2025 combines the historical statements of assets acquired and liabilities assumed of the Acquired Subsidiaries as of June 30, 2025, giving effect to (i) the Transaction, as if it had taken place on June 30, 2025, and (ii) the assumptions and adjustments described in the accompanying notes to these Unaudited Pro Forma Condensed Combined Financial Statements.
The Unaudited Pro Forma Condensed Combined Financial Statements have been prepared using the acquisition method of accounting in accordance with ASC 805 with the Company treated as the accounting acquirer. As of the date of the Form 8-K/A, the Company has not completed the detailed valuation procedures necessary to finalize the required estimated fair values and estimated lives of the assets acquired, the estimated fair values of the liabilities assumed, and the related allocation of the purchase price. The effect of fair values and purchase price allocation contained within these statements are preliminary and are based on management's estimates after initial consultations with valuation personnel and discussions with the Acquired Subsidiaries' management. For income tax purposes, the transaction was structured as a taxable business combination, therefore the Company will receive a step-up in the tax basis of the assets acquired and liabilities assumed to their fair values at the acquisition date. In connection with the acquisition, no deferred income taxes were recorded. The final allocation of the purchase price will be determined after completion of an analysis to determine the estimated fair value of the Acquired Subsidiaries' assets acquired, liabilities assumed, and associated tax adjustments; the analysis is expected to be completed within a year of the closing of the Transaction. Accordingly, the final acquisition accounting adjustments may be materially different from the unaudited pro forma adjustments described in these notes to the Unaudited Pro Forma Condensed Combined Financial Statements.
The Unaudited Pro Forma Condensed Combined Financial Statements, including the preliminary purchase price allocation, is presented for illustrative purposes only and does not necessarily reflect the operating results or financial position that would have occurred if the Transaction had been consummated on the dates indicated, nor is it
6
Exhibit 99.5
necessarily indicative of the results of operations or financial condition that may be expected for any future period or date. Accordingly, such information should not be relied upon as an indicator of future performance, financial condition, or liquidity.
3. PRELIMINARY PURCHASE PRICE ALLOCATION
For purposes of developing the Unaudited Pro Forma Condensed Combined Financial Statements as of June 30, 2025, assets of the Acquired Subsidiaries, including identifiable intangible assets, and liabilities assumed, have been recorded at their estimated fair values. The allocation has not been finalized. The final determination of the estimated fair values are dependent upon certain valuations and other analyses that have not yet been completed, and as previously stated, could differ materially from the amounts presented in the Unaudited Pro Forma Condensed Combined Financial Statements. The final determination will be completed as soon as practicable but no later than one year after the consummation of the Transaction.
The Unaudited Pro Forma Condensed Combined Financial Statements include estimated total cash consideration of approximately $149.0 million. The Purchase Agreement provides for closing working capital and other adjustments to be completed after the Transaction. These adjustments, which could materially change the purchase price consideration of the Transaction, have yet to be finalized and are not reflected in the Unaudited Pro Forma Condensed Combined Financial Statements.
The following table sets forth a preliminary allocation of the purchase price to the identifiable tangible and intangible assets acquired and liabilities assumed of the Acquired
7
Exhibit 99.5
Subsidiaries, based on the Acquired Subsidiaries; unaudited statements of assets acquired and liabilities assumed as of June 30, 2025 (in thousands):
| Preliminary purchase price consideration transferred | $ | 148,984 | |||
| Assets acquired: | |||||
| Accounts receivable | 23,934 | ||||
| Prepaid expenses and other current assets | 847 | ||||
| Property and equipment, net | 427 | ||||
| Operating lease right-of-use assets | 5,729 | ||||
| Restricted and other assets | 46 | ||||
| Indefinite-lived intangibles | 66,189 | ||||
| Goodwill | 80,826 | ||||
| Total preliminary fair value of assets acquired | 177,998 | ||||
| Liabilities assumed: | |||||
| Accrued wages and related liabilities | $ | 3,504 | |||
| Operating lease liabilities—current | 2,266 | ||||
| Other accrued liabilities | 1,056 | ||||
| Long-term operating lease liabilities—less current portion | 3,363 | ||||
| Other long-term liabilities | 44 | ||||
| Total preliminary fair value of liabilities assumed | 10,233 | ||||
| Noncontrolling interest of acquired net assets | 18,781 | ||||
| Preliminary fair value of net assets acquired | $ | 148,984 | |||
4. FINANCING ADJUSTMENTS
The financing adjustments included in the Unaudited Pro Forma Condensed Combined Financial Statements are as follows:
A.Represents an adjustment to long-term debt to reflect the $146.5 million cash proceeds from borrowings under the Company’s Amended and Restated Credit Agreement (the “Credit Facility”). These amounts were used to finance the transaction, in addition to cash on hand.
B.Represents a $4.6 million and $12.8 million increase to interest expense, net for the six months ended June 30, 2025, and the year ended December 31, 2024, respectively, resulting from interest on the new debt.
A sensitivity analysis on interest expense has been performed to assess the effect of a 12.5 basis point change of interest on the interest expense. Based on a 12.5 basis point change in the interest rate, interest expense would increase/decrease by approximately $0.2 million for the six months ended June 30, 2025, and $0.3 million for the year ended December 31, 2024.
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Exhibit 99.5
C.Reflects an adjustment to the provision for income taxes as a result of the estimated income tax effects of the pro forma financing adjustments herein. The adjustment was calculated using a blended federal and state statutory income tax rate of 25.1% for the year ended December 31, 2024, and 25.0% for the six months ended June 30, 2025. The blended statutory tax rate is not necessarily indicative of the effective tax rate of the Company following the Transaction, which could be significantly different depending on various factors.
5. TRANSACTION ADJUSTMENTS
The transaction adjustments included in the Unaudited Pro Forma Condensed Combined Financial Statements are as follows:
D.Represents estimated total cash consideration of approximately $149.0 million, comprised of $146.5 million paid to the Sellers on the Closing Date and $2.5 million of net working capital adjustments paid to the Sellers pursuant to the Purchase Agreement.
E.Represents an adjustment for $3.7 million in transaction costs incurred by the Company from July 1, 2025 that are not reflected in the historical financial statements. Additionally, $1.4 million of transaction costs were incurred as of June 30, 2025 and are included in the historical balance sheet and statement of operations of the Company as of and for the six months ended June 30, 2025.
F.Represents an adjustment to eliminate the Acquired Subsidiaries’ historical intangible assets of $4.6 million. This adjustment also establishes the estimated fair values of the acquired identifiable indefinite-lived intangible assets consisting of Trade Names, and Medicare and Medicaid Licenses at a total estimated fair value of $66.2 million, which, as noted above, is preliminary and subject to change through the end of the measurement period. The preliminary fair value of the Trade Names, and Medicare and Medicaid Licenses was based on third-party preliminary studies utilizing income and market-based methodologies and corroborated with publicly available market benchmarks.
G.Represents an adjustment to the right-of-use assets and lease liabilities for real estate leases acquired as part of the Transaction. The Company calculated the lease liability based on the remaining lease payments and the Company’s incremental borrowing rate on the Closing Date.
H.Represents an adjustment to recognize the fair value of the 33% noncontrolling interest in University of TN Medical Center Home Care Services, LLC.
I.Represents an adjustment to reflect the resulting goodwill that would have been recorded if the Transaction occurred on June 30, 2025.
J.Represents an adjustment of $9.5 million for the year ended December 31, 2024, comprised of $10.4 million of income tax expense associated with the historical income before taxes of the Acquired Subsidiaries, and $0.9 million of income tax benefit related to the transaction adjustments herein.
Represents an adjustment of $5.4 million for the six-months ended June 30, 2025 associated with the historical income before taxes of the Acquired Subsidiaries.
The adjustments were calculated using a blended federal and state statutory income tax rate of 25.1% for the year ended December 31, 2024, and 25.0% for the six months ended June 30, 2025. The blended statutory tax rate is not necessarily indicative of the effective tax rate of the Company following the Transaction, which could be significantly different depending on various factors.
K.Represents 33% of the net income for noncontrolling interest in University of TN Medical Center Home Care Services, LLC.
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Exhibit 99.5
6. PRO FORMA EARNINGS PER SHARE
The pro forma combined basic and diluted earnings per share have been adjusted to reflect the pro forma net income for the six months ended June 30, 2025 and the year ended December 31, 2024. As there were no shares issued as part of the purchase price, basic and diluted pro forma weighted average shares outstanding are the same as the weighted average shares outstanding for the six months ended June 30, 2025 and the year ended December 31, 2024. The pro forma net income increased due to the inclusion of the Acquired Subsidiaries’ net income and adjustments discussed above resulting in an increase in the basic and diluted pro forma earnings per share. The following table reflects the corresponding pro forma adjustments, in thousands, except per share amounts. For the six months ended June 30, 2025 and the year ended December 31, 2024, the pro forma weighted average shares outstanding and proforma net income per share has been calculated as follows:
| Six months ended June 30, 2025 | Year ended December 31, 2024 | |||||||
| Pro forma net income attributable to Combined Company | $ | 26,057 | $ | 38,423 | ||||
| Historical weighted-average number of common shares outstanding | ||||||||
| Basic | 34,500 | 31,191 | ||||||
| Diluted | 35,284 | 32,000 | ||||||
| Impact of the Transaction on weighted-average number of common shares outstanding | — | — | ||||||
| Pro forma weighted-average number of common shares outstanding | ||||||||
| Basic | 34,500 | 31,191 | ||||||
| Diluted | 35,284 | 32,000 | ||||||
| Pro forma net income per common share | ||||||||
| Basic | $ | 0.76 | $ | 1.23 | ||||
| Diluted | $ | 0.74 | $ | 1.20 | ||||
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