PENN Q3 2026 Earnings: A Narrower Interactive Loss and Retail Growth Lift EBITDA

PENN Entertainment (NASDAQ: PENN) reported Q3 2026 revenue of $1.84 billion, up 7.1% from $1.72 billion a year earlier, while diluted EPS improved to $0.24 from a loss of $6.03. Consolidated adjusted EBITDA increased 45.7% as retail earnings grew and the Interactive segment’s loss narrowed, although the GAAP profit swing also benefited from the absence of the prior-year $825.0 million impairment charge.

Core Financial Results

Revenue increased by $122.7 million, supported by a 3.5% rise in gaming revenue and a 19.6% increase in food, beverage, hotel, and other revenue. Consolidated adjusted EBITDA grew by $89.1 million, a faster rate than revenue, as Interactive losses declined and aggregate retail adjusted EBITDAR increased.

The comparison between GAAP profits requires context because Q3 2025 included an $825.0 million Interactive impairment, versus $8.0 million of South segment impairment charges this quarter.

Adjusted EPS excludes impairment charges, pre-opening expenses, legal matters, transaction costs, and other specified items. The smaller improvement in adjusted EPS compared with GAAP EPS better reflects the change after removing the unusually large prior-year impairment.

Business and Segment Performance

PENN’s four retail regions generated combined revenue of $1.49 billion, up approximately 5.0%, while combined segment adjusted EBITDAR rose 7.7% to $501.8 million. The retail adjusted EBITDAR margin reached 33.7%, compared with approximately 32.8% a year earlier, marking the third consecutive quarter of year-over-year margin improvement.

The Midwest produced the fastest retail revenue growth, while the West was the only retail region where adjusted EBITDAR declined despite higher revenue.

The retail figures use segment adjusted EBITDAR, while Interactive uses adjusted EBITDA. Management attributed retail growth to same-store performance and completed development projects, with increases in rated revenue, spending per visit, contributions from mid- and high-worth customers, and unrated revenue.

Interactive revenue increased by $50.7 million, while its adjusted EBITDA loss narrowed by $58.3 million. Management cited growth at the standalone Hollywood iCasino in the U.S., increased users and revenue per user in Ontario, and the early performance of PENN’s Alberta operations.

Interactive Improvement Drove Most of the EBITDA Increase

The Interactive segment accounted for $58.3 million of PENN’s $89.1 million year-over-year increase in consolidated adjusted EBITDA. Retail adjusted EBITDAR contributed another $36.0 million of improvement, and the loss in the Other category narrowed by $4.6 million. These gains were partly offset by a $9.8 million increase in rent expense associated with triple-net operating leases.

However, reported Interactive revenue includes a gaming-tax gross-up of $191.4 million, up from $139.5 million. The $51.9 million increase in that gross-up was roughly equal to the segment’s total reported revenue increase, so the headline 17.0% growth rate is not a clean measure of underlying customer revenue. The more consequential operating change was the substantial reduction in the segment’s adjusted EBITDA loss.

The GAAP earnings recovery tells a different story. Most of the swing from an $865.1 million net loss to $32.6 million of net income reflects the much smaller impairment charge this quarter. PENN nevertheless also produced improvement on an adjusted basis, indicating that the change was not solely an accounting comparison.

Profitability, Cash Outlays, and Balance Sheet

PENN’s consolidated adjusted EBITDA margin increased to approximately 15.4% from 11.3%. Retail margin expansion and lower Interactive losses more than offset higher lease-related rent expense, which rose to $167.9 million from $158.1 million.

Quarterly capital expenditures fell to $59.2 million from $172.7 million. Cash payments to REIT landlords increased to $251.8 million from $241.9 million, while cash interest paid on traditional debt edged up to $40.5 million from $39.6 million. These figures describe major cash expenditures but do not provide a complete measure of operating or free cash flow.

At September 30, 2026, PENN had total liquidity of $2.0 billion, including $1.04 billion of cash and cash equivalents. Traditional net debt declined to $1.76 billion from $2.22 billion at December 31, 2025, while total traditional debt decreased to $2.81 billion from $2.90 billion. Traditional net leverage improved to 2.3 times from 4.5 times, and lease-adjusted net leverage declined to 5.6 times from 6.8 times.

Management Commentary

Management said retail operating trends remained healthy through October and emphasized that completed development projects contributed to the quarter’s results. It also expressed confidence in achieving its full-year Interactive adjusted EBITDA target, supported by the standalone U.S. iCasino business and Canadian operations.

For Interactive, management highlighted efficient customer acquisition and reinvestment at Hollywood iCasino, higher users and revenue per user in Ontario, and PENN’s expanded presence in Alberta. The company identified U.S. iCasino and Canada as its main areas for profitable digital growth.

Risks Investors Need to Watch

• Interactive remains unprofitable: The adjusted EBITDA loss narrowed substantially but was still $18.3 million. Reaching sustained profitability remains important to further consolidated margin improvement.
• Reported Interactive growth is affected by tax gross-up: The $191.4 million gross-up represented a large portion of reported Interactive revenue and increased by more than the segment’s total revenue gain, complicating comparisons of underlying growth.
• Retail performance was uneven: South revenue was nearly flat, while West adjusted EBITDAR declined despite revenue growth. Continued portfolio-wide margin expansion therefore depends on more than the strongest Midwest properties.
• Lease and financing costs remain meaningful: Quarterly cash rent payments reached $251.8 million, and interest expense increased to $105.8 million. Lease-adjusted leverage also remained above traditional net leverage despite balance-sheet improvement.
• GAAP growth is distorted by the prior impairment: The sharp improvement in net income and EPS largely reflects the absence of the previous year’s $825.0 million Interactive impairment, making adjusted operating measures more useful for evaluating recurring progress.

Summary

PENN’s Q3 2026 results combined moderate retail revenue growth, higher retail margins, and a substantially narrower Interactive loss, lifting consolidated adjusted EBITDA faster than revenue. The return to GAAP profitability was heavily influenced by the prior-year impairment comparison, but adjusted EPS and EBITDA also improved. The next operating tests are whether Interactive can move from reduced losses to sustained profitability, whether retail margin gains can broaden across regions, and whether PENN can continue reducing leverage while meeting its lease and interest obligations.