Outstanding options and restricted stock awards of the Company were granted under the Amended and Restated 2019 Omnibus Incentive Plan (the “Amended and Restated Plan”) and Long-Term Incentive Plan (the “LTIP”, and together with the Amended and Restated Plan, the “Pennant Plans”). During the second quarter of 2025, the Company’s stockholders approved the Amended and Restated Plan, which increased the total number of shares authorized for issuance under the 2019 Omnibus Incentive Plan (the “Predecessor Plan”). Including the shares rolled over from the Predecessor Plan, the Amended and Restated Plan provides for the issuance of 3,293 shares of common stock.

Under the Pennant Plans, stock-based payment awards, including employee stock options, restricted stock awards (“RSA”), and restricted stock units (“RSU” and together with RSA, “Restricted Stock”) are issued based on estimated fair value. The following disclosures represent share-based compensation expense relating to employees of the Company’s subsidiaries and non-employee directors who have awards under the Pennant Plans.

The following disclosures represent share-based compensation expense relating to the Pennant Plans, including awards to employees of the Company’s subsidiaries.


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Share-based compensation expense related to stock options	$	2,366	1,642		$	4,266	$	2,974
Share-based compensation expense related to Restricted Stock	162		182		370		614
Share-based compensation expense related to Restricted Stock to non-employee directors	421		359		834		742
Total share-based compensation	$	2,949	$	2,183	$	5,470	$	4,330

In future periods, the Company estimates it will recognize the following share-based compensation expense for unvested stock options and unvested Restricted Stock as of June 30, 2026:


	Unrecognized Compensation Expense		Weighted Average Recognition Period (in years)
Unvested Stock Options	$	37,340	4.1
Unvested Restricted Stock	1,502		2.8
Total unrecognized share-based compensation expense	$	38,842

Under the Pennant Plans, options granted to employees of the subsidiaries of Pennant generally vest over five years at 20% per year on the anniversary of the grant date. Options expire ten years after the date of grant.

The Company uses the Black-Scholes option-pricing model to recognize the value of stock-based compensation expense for share-based payment awards under the Pennant Plans. Determining the appropriate fair-value model and calculating the fair value of stock-based awards at the grant date requires considerable judgment, including estimating stock price volatility and expected option life. The Company develops estimates based on historical data and market information, which can change significantly over time.

The fair value of each option is estimated on the grant date using a Black-Scholes option-pricing model with the following weighted average assumptions for stock options granted as of June 30:


Grant Year	Options Granted	Risk-Free Interest Rate		Expected Life(a)	Expected Volatility(b)		Dividend Yield		Weighted Average Fair Value of Options
2026	988	4.0	%	6.5	52.7	%	—	%	$	19.57
2025	962	4.1	%	6.5	42.0	%	—	%	$	13.88


(a)						Under the midpoint method, the expected option life is the midpoint between the contractual option life and the average vesting period for the options being granted. This resulted in an expected option life of 6.5 years for the options granted.
(b)						Because the Company’s equity shares have been traded for a relatively short period of time, expected volatility assumption was based on the volatility of related industry stocks.


	Number of Options Outstanding	Weighted Average Exercise Price		Number of Options Vested	Weighted Average Exercise Price of Options Vested
December 31, 2025	4,367	22.34		1,811	$	21.44
Granted	988	34.76
Exercised	(142)	17.09
Forfeited	(126)	23.81
Expired	(14)	30.57
June 30, 2026	5,073	$	24.85	2,184	$	22.03

A summary of the status of Pennant’s non-vested Restricted Stock, and changes during the six months ended June 30, 2026, is presented below:


	Non-Vested Restricted Stock	Weighted Average Grant Date Fair Value
December 31, 2025	127	$	18.17
Granted	85	32.11
Vested	(85)	32.11
Forfeited	(8)	18.41
June 30, 2026	119	$	18.16