The Pennant Group, Inc. (NASDAQ: PNTG), the parent company of the
Pennant group of affiliated home health, hospice and senior living
companies, today announced its operating results for the fiscal
year and fourth quarter of 2023, reporting GAAP diluted earnings
per share of $0.44 and $0.14 for the year ended December 31, 2023
and the fourth quarter, respectively. Pennant also reported
adjusted diluted earnings per share of $0.73 for the year and $0.22
for the quarter (1).
Fourth Quarter Highlights
- Total revenue for the full year was
$544.9 million, an increase of $71.7 million or 15.1% over the
prior year, and for the quarter was $146.0 million, an increase of
$21.3 million or 17.1% over the prior year quarter;
- Net income for the full year was $13.4
million, an increase of $6.7 million or 101.4% over the prior year
and for the fourth quarter was $4.3 million, an increase of $0.9
million or 25.2% over the prior year quarter;
- Adjusted net income for the full year
was $21.9 million, an increase of $4.8 million or 28.3% over the
prior year and for the fourth quarter was $6.6 million, an increase
of $1.2 million or 22.2% over the prior year quarter;
- Segment Adjusted EBITDAR from
Operations for the full year was $79.2 million, an increase of
$11.2 million or 16.5% over the prior year and for the fourth
quarter was $21.9 million, an increase of $2.8 million or 14.7%
over the prior year quarter;
- Adjusted EBITDA for the full year was
$40.7 million, an increase of $9.2 million or 29.1% over the prior
year and for the fourth quarter was $11.9 million, an increase of
$2.0 million or 19.8% over the prior year quarter;
- Home Health and Hospice Services
segment revenue for the full year 2023 was $394.5 million, an
increase of $52.2 million or 15.3% over the prior year and for the
fourth quarter was $106.9 million, an increase of $16.2 million or
17.9% over the prior year quarter;
- Home Health and Hospice Services
segment adjusted EBITDAR from operations for the full year was
$65.6 million, an increase of $3.8 million or 6.1% over prior year
and for the fourth quarter was $18.2 million, an increase of $1.5
million or 8.8% over the prior year quarter; and segment adjusted
EBITDA from operations the full year was $60.1 million, an increase
of $3.2 million or 5.5% over the prior year and for the fourth
quarter was $16.7 million, an increase of $1.1 million or 7.3% over
the prior year quarter;
- Total home health admissions for the
the full year were 43,508, an increase of 3,072 or 7.6% over the
prior year and fourth quarter were 11,328, an increase of 1,281 or
12.8% over the prior year quarter; total Medicare home health
admissions for the full year were 19,389, an increase of 748 or
4.0% over the prior year and for the fourth quarter were 4,952, an
increase of 263 or 5.6% over the prior year quarter;
- Hospice average daily census for the
full year was 2,607, an increase of 311 or 13.5% over prior year
and for the fourth quarter was 2,796, an increase of 423 or 17.8%
compared to the prior year quarter;
- Senior Living Services segment revenue
for the full year was $150.4 million, an increase of $19.4 million
or 14.8% over prior year and for the fourth quarter was $39.1
million, an increase of $5.0 million or 14.8% over the prior year
quarter; average occupancy for the fourth quarter was 79.0%, an
increase of 130 basis points over the prior year quarter, and
average monthly revenue per occupied room for the fourth quarter
was $4,093 an increase of $423 or 11.5% over the prior year
quarter;
- Same store(2) Senior Living Services
segment revenue for the full year was $145.0 million, an increase
of $18.2 million or 14.4% over the prior year and for the fourth
quarter was $37.2 million, an increase of $3.7 million or 11.1%
over the prior year quarter; same store senior living average
occupancy for the fourth quarter was 79.9%, an increase of 130
basis points over the prior year quarter, and average monthly
revenue per occupied room for the fourth quarter was $4,068 an
increase of $398 or 10.8% over the prior year quarter;
- Senior Living segment adjusted EBITDAR
from operations for the full year was $45.3 million, an increase of
$7.7 million or 20.6% over the prior year and for the fourth
quarter was $11.9 million, an increase of $1.9 million or 19.1%
over the prior year quarter; and segment adjusted EBITDA from
Operations for the full year was $12.3 million, an increase of $6.3
million or 104.8% over the prior year and for the fourth quarter
was $3.4 million, an increase of $1.4 million or 69.4% over the
prior year quarter.
|
(1) |
|
See "Reconciliation of GAAP to Non-GAAP Financial
Information.” |
|
(2) |
|
“Same store Senior Living Services” is defined as all
senior living communities excluding those transferred to Ensign and
new senior living operations acquired in
2022 or
2023. |
Operating Results
“We are pleased with our strong finish to 2023
and continued momentum as we enter 2024,” said Brent Guerisoli,
Pennant’s Chief Executive Officer. “By executing on our five key
focus areas--leadership development, clinical excellence, employee
engagement, margin improvement, and growth--we made steady gains
throughout 2023 and solidly delivered on earnings expectations,
even after increasing guidance during the year. With a talented
group of leaders and teams in operations throughout our footprint
and compelling growth opportunities available to us, we are excited
to accelerate our performance in 2024.”
Lynette Walbom, Pennant’s Chief Financial
Officer, commented on the Company’s balance sheet and strong cash
flow: “Our operations produced $33.1 million of cash through
the fourth quarter, which positions us well to respond to growth
opportunities in 2024 and beyond.” She noted that the Company had
$6.1 million of cash on hand and $80.8 million available on its
revolving line of credit, with a net debt-to-adjusted EBITDA ratio
of 1.44x and a lease-adjusted net debt-to-adjusted EBITDAR ratio of
4.75x.
A discussion of the Company's use of Non-GAAP
financial measures is set forth below. A reconciliation of net
income to EBITDA, adjusted EBITDAR and adjusted EBITDA, as well as
a reconciliation of GAAP earnings per share, net income to adjusted
net earnings per share and adjusted net income, appear in the
financial data portion of this release. More complete information
is contained in the Company’s Form 10-K for the year ended December
31, 2023, which has been filed with the SEC today and can be viewed
on the Company’s website at www.pennantgroup.com.
2024 Guidance
Management is providing 2024 annual guidance as
follows: total revenue is anticipated to be between $596.8 million
and $633.7 million; adjusted earnings per diluted share is
anticipated to be between $0.82 and $0.91; and adjusted EBITDA is
anticipated to be between $46.2 million and $49.7 million.
Mr. Guerisoli remarked, “Our earnings guidance
midpoint of $0.87 represents 19.2% growth on our 2023 adjusted
earnings per share and 52.6% growth over our 2022 results. This
demonstrates, and is based on, the compelling momentum in both our
segments, the readiness of our local leaders to drive organic and
inorganic growth, and the latent potential that remains in our
existing operations.”
The Company does not provide quarterly earnings
guidance. Consistent with the Company’s historical patterns,
Management anticipates that total revenue, adjusted earnings per
diluted share, and adjusted EBITDA will increase each quarter
throughout the year, creating a ramp rather than a uniform
distribution over the course of 2024.
The Company’s 2024 annual guidance is based on
diluted weighted average shares outstanding of approximately 30.4
million and a 26.0% effective tax rate. The guidance assumes, among
other things, reimbursement rate adjustments and no unannounced
acquisitions. It excludes the tax-effected costs at start-up
operations, share-based compensation, acquisition-related costs,
and loss on disposition of assets and impairments. The guidance
includes anticipated revenues from the Muir Home Health joint
venture which commenced January 1, 2024, but, consistent with the
start-up nature of the venture, assumes no earnings contributions
in 2024.
Ms. Walbom stated, “We believe providing annual
adjusted consolidated EBITDA guidance in addition to annual revenue
and adjusted earnings per share guidance is helpful in
understanding our expectations for our business and operational
cash flow. This updated guidance reflects management’s expectations
based on 2023 performance and current operating conditions.”
Conference Call
A live webcast will be held tomorrow,
February 29, 2024 at 10:00 a.m. Mountain time (12:00 p.m.
Eastern time) to discuss Pennant’s fourth quarter 2023 financial
results. To listen to the webcast, or to view any financial or
statistical information required by SEC Regulation G, please visit
the Investors Relations section of Pennant’s website at
https://investor.pennantgroup.com. The webcast will be recorded and
will be available for replay via the website.
About Pennant
The Pennant Group, Inc. is a holding company of
independent operating subsidiaries that provide healthcare services
through 111 home health and hospice agencies and 51 senior living
communities located throughout Arizona, California, Colorado,
Idaho, Montana, Nevada, Oklahoma, Oregon, Texas, Utah, Washington,
Wisconsin and Wyoming. Each of these businesses is operated by a
separate, independent operating subsidiary that has its own
management, employees and assets. References herein to the
consolidated "company" and "its" assets and activities, as well as
the use of the terms "we," "us," "its" and similar verbiage, are
not meant to imply that The Pennant Group, Inc. has direct
operating assets, employees or revenue, or that any of the home
health and hospice businesses, senior living communities or the
Service Center are operated by the same entity. More information
about Pennant is available at www.pennantgroup.com.
Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995
This press release contains, and the related
conference call and webcast will include, forward-looking
statements that are based on management’s current expectations,
assumptions and beliefs about its business, financial performance,
operating results, the industry in which it operates and other
future events. Forward-looking statements can often be identified
by words such as "anticipates," "expects," "intends," "plans,"
"predicts," "believes," "seeks," "estimates," "may," "will,"
"should," "would," "could," "potential," "continue," "ongoing,"
similar expressions, and variations or negatives of these words.
These forward-looking statements include, but are not limited to,
statements regarding growth prospects, future operating and
financial performance, and acquisition activities. They are not
guarantees of future results and are subject to risks,
uncertainties and assumptions that could cause actual results to
materially and adversely differ from those expressed in any
forward-looking statement.
These risks and uncertainties relate to the
company’s business, its industry and its common stock and include:
reduced prices and reimbursement rates for its services; its
ability to acquire, develop, manage or improve operations, its
ability to manage its increasing borrowing costs as it incurs
additional indebtedness to fund the acquisition and development of
operations; its ability to access capital on a cost-effective basis
to continue to successfully implement its growth strategy; its
operating margins and profitability could suffer if it is unable to
grow and manage effectively its increasing number of operations;
competition from other companies in the acquisition, development
and operation of facilities; its ability to defend claims and
lawsuits, including professional liability claims alleging that our
services resulted in personal injury, and other regulatory-related
claims; and the application of existing or proposed government
regulations, or the adoption of new laws and regulations, that
could limit its business operations, require it to incur
significant expenditures or limit its ability to relocate its
operations if necessary. Readers should not place undue reliance on
any forward-looking statements and are encouraged to review the
company’s periodic filings with the Securities and Exchange
Commission, including its Form 10-Q and/or 10-K, for a more
complete discussion of the risks and other factors that could
affect Pennant’s business, prospects and any forward-looking
statements. Except as required by the federal securities laws,
Pennant does not undertake any obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events, changing circumstances or any other
reason after the date of this press release.
SOURCE: The Pennant Group, Inc.
THE PENNANT GROUP, INC.CONDENSED
CONSOLIDATED STATEMENTS OF INCOME(unaudited, in
thousands, except for per-share amounts) |
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Revenue |
$ |
145,954 |
|
|
$ |
124,665 |
|
|
$ |
544,891 |
|
|
$ |
473,241 |
|
|
|
|
|
|
|
|
|
Expense: |
|
|
|
|
|
|
|
Cost of services |
|
116,934 |
|
|
|
98,980 |
|
|
|
438,096 |
|
|
|
376,638 |
|
Rent—cost of services |
|
10,320 |
|
|
|
9,498 |
|
|
|
39,759 |
|
|
|
38,018 |
|
General and administrative expense |
|
9,754 |
|
|
|
8,328 |
|
|
|
36,667 |
|
|
|
33,981 |
|
Depreciation and amortization |
|
1,313 |
|
|
|
1,223 |
|
|
|
5,130 |
|
|
|
4,900 |
|
Loss on asset dispositions and impairment, net |
|
66 |
|
|
|
252 |
|
|
|
70 |
|
|
|
6,965 |
|
Total expenses |
|
138,387 |
|
|
|
118,281 |
|
|
|
519,722 |
|
|
|
460,502 |
|
Income from operations |
|
7,567 |
|
|
|
6,384 |
|
|
|
25,169 |
|
|
|
12,739 |
|
Other income (expense), net: |
|
|
|
|
|
|
|
Other income (expense) |
|
311 |
|
|
|
19 |
|
|
|
339 |
|
|
|
(31 |
) |
Interest expense, net |
|
(1,569 |
) |
|
|
(1,308 |
) |
|
|
(5,924 |
) |
|
|
(3,816 |
) |
Other expense, net |
|
(1,258 |
) |
|
|
(1,289 |
) |
|
|
(5,585 |
) |
|
|
(3,847 |
) |
Income before provision for income taxes |
|
6,309 |
|
|
|
5,095 |
|
|
|
19,584 |
|
|
|
8,892 |
|
Provision for income taxes |
|
1,780 |
|
|
|
1,408 |
|
|
|
5,674 |
|
|
|
1,649 |
|
Net income |
|
4,529 |
|
|
|
3,687 |
|
|
|
13,910 |
|
|
|
7,243 |
|
Less: net income attributable to noncontrolling interest |
|
180 |
|
|
|
213 |
|
|
|
531 |
|
|
|
600 |
|
Net income and other comprehensive income attributable to The
Pennant Group, Inc. |
$ |
4,349 |
|
|
$ |
3,474 |
|
|
$ |
13,379 |
|
|
$ |
6,643 |
|
Earnings per share: |
|
|
|
|
|
|
|
Basic |
$ |
0.15 |
|
|
$ |
0.12 |
|
|
$ |
0.45 |
|
|
$ |
0.23 |
|
Diluted |
$ |
0.14 |
|
|
$ |
0.12 |
|
|
$ |
0.44 |
|
|
$ |
0.22 |
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
29,978 |
|
|
|
29,728 |
|
|
|
29,863 |
|
|
|
29,064 |
|
Diluted |
|
30,236 |
|
|
|
30,091 |
|
|
|
30,193 |
|
|
|
30,159 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE PENNANT GROUP, INC.CONSOLIDATED
BALANCE SHEETS(in thousands, except par
value) |
|
|
December 31, 2023 |
|
December 31, 2022 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash |
$ |
6,059 |
|
|
$ |
2,079 |
|
Accounts receivable—less allowance for doubtful accounts of $259
and $592, respectively |
|
61,116 |
|
|
|
53,420 |
|
Prepaid expenses and other current assets |
|
12,902 |
|
|
|
18,323 |
|
Total current assets |
|
80,077 |
|
|
|
73,822 |
|
Property and equipment, net |
|
28,598 |
|
|
|
26,621 |
|
Right-of-use assets |
|
262,923 |
|
|
|
260,868 |
|
Deferred tax assets, net |
|
— |
|
|
|
2,149 |
|
Restricted and other assets |
|
9,337 |
|
|
|
10,545 |
|
Goodwill |
|
91,014 |
|
|
|
79,497 |
|
Other indefinite-lived intangibles |
|
67,742 |
|
|
|
58,617 |
|
Total assets |
$ |
539,691 |
|
|
$ |
512,119 |
|
Liabilities and equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
10,841 |
|
|
$ |
13,647 |
|
Accrued wages and related liabilities |
|
28,256 |
|
|
|
23,283 |
|
Lease liabilities—current |
|
17,122 |
|
|
|
16,633 |
|
Other accrued liabilities |
|
15,330 |
|
|
|
16,684 |
|
Total current liabilities |
|
71,549 |
|
|
|
70,247 |
|
Long-term lease liabilities—less current portion |
|
248,596 |
|
|
|
247,042 |
|
Deferred tax liabilities, net |
|
1,855 |
|
|
|
— |
|
Other long-term liabilities |
|
8,262 |
|
|
|
6,281 |
|
Long-term debt, net |
|
63,914 |
|
|
|
62,892 |
|
Total liabilities |
|
394,176 |
|
|
|
386,462 |
|
Equity: |
|
|
|
Common stock, $0.001 par value; 100,000 shares authorized; 30,297
and 29,948 shares issued and outstanding at December 31, 2023,
respectively, and 30,149 and 29,692 shares issued and outstanding
at December 31, 2022, respectively |
|
29 |
|
|
|
29 |
|
Additional paid-in capital |
|
105,712 |
|
|
|
99,764 |
|
Retained earnings |
|
34,663 |
|
|
|
21,284 |
|
Treasury stock, at cost, 3 shares at December 31, 2023 and
2022 |
|
(65 |
) |
|
|
(65 |
) |
Total The Pennant Group, Inc. stockholders’ equity |
|
140,339 |
|
|
|
121,012 |
|
Noncontrolling interest |
|
5,176 |
|
|
|
4,645 |
|
Total equity |
|
145,515 |
|
|
|
125,657 |
|
Total liabilities and equity |
$ |
539,691 |
|
|
$ |
512,119 |
|
|
|
|
|
|
|
|
|
THE PENNANT GROUP, INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(in
thousands) |
The following table presents selected data from
our condensed consolidated statements of cash flows for the periods
presented:
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
Net cash provided by operating activities |
$ |
33,090 |
|
|
$ |
9,044 |
|
Net cash used in investing activities |
|
(30,222 |
) |
|
|
(24,239 |
) |
Net cash provided by financing activities |
|
1,112 |
|
|
|
12,084 |
|
Net increase (decrease) in cash |
|
3,980 |
|
|
|
(3,111 |
) |
Cash beginning of period |
|
2,079 |
|
|
|
5,190 |
|
Cash end of period |
$ |
6,059 |
|
|
$ |
2,079 |
|
|
|
|
|
|
|
|
|
THE PENNANT GROUP, INC.REVENUE BY
SEGMENT(unaudited, dollars in
thousands) |
The following table sets forth our total revenue
by segment and as a percentage of total revenue for the periods
indicated:
|
Three Months Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
Revenue Dollars |
|
Revenue Percentage |
|
Revenue Dollars |
|
Revenue Percentage |
|
|
|
|
|
|
|
|
Home health and hospice services |
|
|
|
|
|
|
|
Home health |
$ |
45,932 |
|
|
|
31.5 |
% |
|
$ |
41,896 |
|
|
|
33.6 |
% |
Hospice |
|
54,405 |
|
|
|
37.3 |
|
|
|
42,816 |
|
|
|
34.3 |
|
Home care and other(a) |
|
6,554 |
|
|
|
4.5 |
|
|
|
5,939 |
|
|
|
4.8 |
|
Total home health and hospice services |
|
106,891 |
|
|
|
73.3 |
|
|
|
90,651 |
|
|
|
72.7 |
|
Senior living services |
|
39,063 |
|
|
|
26.7 |
|
|
|
34,014 |
|
|
|
27.3 |
|
Total revenue |
$ |
145,954 |
|
|
|
100.0 |
% |
|
$ |
124,665 |
|
|
|
100.0 |
% |
(a) |
|
Home care and other revenue is included with home health revenue in
other disclosures in this press release. |
|
|
|
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
Revenue Dollars |
|
Revenue Percentage |
|
Revenue Dollars |
|
Revenue Percentage |
|
|
|
|
|
|
|
|
Home health and hospice services |
|
|
|
|
|
|
|
Home health |
$ |
175,044 |
|
|
|
32.1 |
% |
|
$ |
159,858 |
|
|
|
33.8 |
% |
Hospice |
|
194,627 |
|
|
|
35.7 |
|
|
|
160,520 |
|
|
|
33.9 |
|
Home care and other(a) |
|
24,793 |
|
|
|
4.6 |
|
|
|
21,871 |
|
|
|
4.6 |
|
Total home health and hospice services |
|
394,464 |
|
|
|
72.4 |
|
|
|
342,249 |
|
|
|
72.3 |
|
Senior living services |
|
150,427 |
|
|
|
27.6 |
|
|
|
130,992 |
|
|
|
27.7 |
|
Total revenue |
$ |
544,891 |
|
|
|
100.0 |
% |
|
$ |
473,241 |
|
|
|
100.0 |
% |
(a) |
|
Home care and other revenue is included with home health revenue in
other disclosures in this press release. |
|
|
|
THE PENNANT GROUP, INC.SELECT PERFORMANCE
INDICATORS(unaudited, total revenue dollars in
thousands) |
The following table summarizes our overall home
health and hospice performance indicators for the each of the dates
or periods indicated:
|
Three Months Ended December 31, |
|
|
|
|
|
|
2023 |
|
|
|
2022 |
|
|
Change |
|
% Change |
Total agency results: |
|
|
|
|
|
|
|
Home health and hospice revenue |
$ |
106,891 |
|
|
$ |
90,651 |
|
|
|
16,240 |
|
|
|
17.9 |
% |
|
|
|
|
|
|
|
|
Home health services: |
|
|
|
|
|
|
|
Total home health admissions |
|
11,328 |
|
|
|
10,047 |
|
|
|
1,281 |
|
|
|
12.8 |
% |
Total Medicare home health admissions |
|
4,952 |
|
|
|
4,689 |
|
|
|
263 |
|
|
|
5.6 |
% |
Average Medicare revenue per 60-day completed episode(a) |
$ |
3,573 |
|
|
$ |
3,497 |
|
|
$ |
76 |
|
|
|
2.2 |
% |
Hospice services: |
|
|
|
|
|
|
|
Total hospice admissions |
|
2,540 |
|
|
|
2,246 |
|
|
|
294 |
|
|
|
13.1 |
% |
Average daily census |
|
2,796 |
|
|
|
2,373 |
|
|
|
423 |
|
|
|
17.8 |
% |
Hospice Medicare revenue per day |
$ |
189 |
|
|
$ |
182 |
|
|
$ |
7 |
|
|
|
3.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
|
|
|
|
|
2023 |
|
|
|
2022 |
|
|
Change |
|
% Change |
Same agency(b)
results: |
|
|
|
|
|
|
|
Home health and hospice revenue |
$ |
97,746 |
|
|
$ |
88,519 |
|
|
$ |
9,227 |
|
|
|
10.4 |
% |
|
|
|
|
|
|
|
|
Home health services: |
|
|
|
|
|
|
|
Total home health admissions |
|
10,617 |
|
|
|
9,792 |
|
|
|
825 |
|
|
|
8.4 |
% |
Total Medicare home health admissions |
|
4,515 |
|
|
|
4,498 |
|
|
|
17 |
|
|
|
0.4 |
% |
Average Medicare revenue per 60-day completed episode(a) |
$ |
3,601 |
|
|
$ |
3,505 |
|
|
$ |
96 |
|
|
|
2.7 |
% |
Hospice services: |
|
|
|
|
|
|
|
Total hospice admissions |
|
2,232 |
|
|
|
2,196 |
|
|
|
36 |
|
|
|
1.6 |
% |
Average daily census |
|
2,530 |
|
|
|
2,308 |
|
|
|
222 |
|
|
|
9.6 |
% |
Hospice Medicare revenue per day |
$ |
187 |
|
|
$ |
183 |
|
|
$ |
4 |
|
|
|
2.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
|
|
|
2023 |
|
|
|
2022 |
|
|
Change |
|
% Change |
Total agency results: |
|
|
|
|
|
|
|
Home health and hospice revenue |
$ |
394,464 |
|
|
$ |
342,249 |
|
|
$ |
52,215 |
|
|
|
15.3 |
% |
|
|
|
|
|
|
|
|
Home health services: |
|
|
|
|
|
|
|
Total home health admissions |
|
43,508 |
|
|
|
40,436 |
|
|
|
3,072 |
|
|
|
7.6 |
% |
Total Medicare home health admissions |
|
19,389 |
|
|
|
18,641 |
|
|
|
748 |
|
|
|
4.0 |
% |
Average Medicare revenue per 60-day completed episode(a) |
$ |
3,533 |
|
|
$ |
3,531 |
|
|
$ |
2 |
|
|
|
0.1 |
% |
Hospice services: |
|
|
|
|
|
|
|
Total hospice admissions |
|
9,746 |
|
|
|
9,166 |
|
|
|
580 |
|
|
|
6.3 |
% |
Average daily census |
|
2,607 |
|
|
|
2,296 |
|
|
|
311 |
|
|
|
13.5 |
% |
Hospice Medicare revenue per day |
$ |
185 |
|
|
$ |
178 |
|
|
$ |
7 |
|
|
|
3.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
|
|
|
2023 |
|
|
|
2022 |
|
|
Change |
|
% Change |
Same agency(b)
results: |
|
|
|
|
|
|
|
Home health and hospice revenue |
$ |
372,620 |
|
|
$ |
338,824 |
|
|
$ |
33,796 |
|
|
|
10.0 |
% |
|
|
|
|
|
|
|
|
Home health services: |
|
|
|
|
|
|
|
Total home health admissions |
|
41,173 |
|
|
|
40,041 |
|
|
|
1,132 |
|
|
|
2.8 |
% |
Total Medicare home health admissions |
|
17,888 |
|
|
|
18,358 |
|
|
|
(470 |
) |
|
|
(2.6 |
)% |
Average Medicare revenue per 60-day completed episode(a) |
$ |
3,557 |
|
|
$ |
3,534 |
|
|
$ |
23 |
|
|
|
0.7 |
% |
Hospice services: |
|
|
|
|
|
|
|
Total hospice admissions |
|
8,999 |
|
|
|
8,917 |
|
|
|
82 |
|
|
|
0.9 |
% |
Average daily census |
|
2,460 |
|
|
|
2,276 |
|
|
|
184 |
|
|
|
8.1 |
% |
Hospice Medicare revenue per day |
$ |
186 |
|
|
$ |
179 |
|
|
$ |
7 |
|
|
|
3.9 |
% |
(a) |
|
The year to date average for Medicare revenue per 60-day completed
episode includes post period claim adjustments for prior
periods. |
(b) |
|
Same agency results represent all agencies purchased or licensed
prior to January 1, 2022. |
The following table summarizes our senior living
performance indicators for the periods indicated:
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Total senior living results: |
|
|
|
|
|
|
|
Senior living revenue |
$ |
39,063 |
|
|
$ |
34,014 |
|
|
$ |
150,427 |
|
|
$ |
130,992 |
|
|
|
|
|
|
|
|
|
Occupancy |
|
79.0 |
% |
|
|
77.7 |
% |
|
|
78.5 |
% |
|
|
75.7 |
% |
Average monthly revenue per occupied unit |
$ |
4,093 |
|
|
$ |
3,670 |
|
|
$ |
3,969 |
|
|
$ |
3,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Same store senior living(a)
results: |
|
|
|
|
|
|
|
Senior living revenue |
$ |
37,226 |
|
|
$ |
33,506 |
|
|
$ |
144,969 |
|
|
$ |
126,758 |
|
|
|
|
|
|
|
|
|
Occupancy |
|
79.9 |
% |
|
|
78.6 |
% |
|
|
79.7 |
% |
|
|
77.2 |
% |
Average monthly revenue per occupied unit |
$ |
4,068 |
|
|
$ |
3,670 |
|
|
$ |
3,956 |
|
|
$ |
3,583 |
|
(a) |
|
Same store senior living results is defined as all senior living
communities excluding those transferred to Ensign and new senior
living operations acquired in 2022 or 2023. |
THE PENNANT GROUP, INC.REVENUE BY PAYOR
SOURCE(unaudited, dollars in
thousands) |
The following table presents our total revenue
by payor source as a percentage of total revenue for the periods
indicated:
|
|
Three Months Ended December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
Revenue Dollars |
|
Revenue Percentage |
|
Revenue Dollars |
|
Revenue Percentage |
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
Medicare |
|
$ |
70,915 |
|
|
|
48.6 |
% |
|
$ |
60,570 |
|
|
|
48.6 |
% |
Medicaid |
|
|
20,882 |
|
|
|
14.3 |
|
|
|
16,854 |
|
|
|
13.5 |
|
Subtotal |
|
|
91,797 |
|
|
|
62.9 |
|
|
|
77,424 |
|
|
|
62.1 |
|
Managed Care |
|
|
20,210 |
|
|
|
13.8 |
|
|
|
16,996 |
|
|
|
13.6 |
|
Private and Other(a) |
|
|
33,947 |
|
|
|
23.3 |
|
|
|
30,245 |
|
|
|
24.3 |
|
Total revenue |
|
$ |
145,954 |
|
|
|
100.0 |
% |
|
$ |
124,665 |
|
|
|
100.0 |
% |
(a) |
|
Private and other payors in our home health and hospice services
segment includes revenue from all payors generated in home care
operations. |
|
|
Year Ended December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
Revenue Dollars |
|
Revenue Percentage |
|
Revenue Dollars |
|
Revenue Percentage |
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
Medicare |
|
$ |
263,810 |
|
|
|
48.4 |
% |
|
$ |
231,753 |
|
|
|
49.0 |
% |
Medicaid |
|
|
77,337 |
|
|
|
14.2 |
|
|
|
62,934 |
|
|
|
13.3 |
|
Subtotal |
|
|
341,147 |
|
|
|
62.6 |
|
|
|
294,687 |
|
|
|
62.3 |
|
Managed Care |
|
|
73,748 |
|
|
|
13.5 |
|
|
|
62,101 |
|
|
|
13.1 |
|
Private and Other(a) |
|
|
129,996 |
|
|
|
23.9 |
|
|
|
116,453 |
|
|
|
24.6 |
|
Total revenue |
|
$ |
544,891 |
|
|
|
100.0 |
% |
|
$ |
473,241 |
|
|
|
100.0 |
% |
(a) |
|
Private and other payors in our home health and hospice services
segment includes revenue from all payors generated in home care
operations. |
THE PENNANT GROUP, INC.RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL INFORMATION(unaudited,
in thousands, except per share data) |
The following table reconciles net income to
Non-GAAP net income for the periods presented:
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Net income attributable to The Pennant Group, Inc. |
$ |
4,349 |
|
|
$ |
3,474 |
|
|
$ |
13,379 |
|
|
$ |
6,643 |
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments |
|
|
|
|
|
|
|
Net income attributable to noncontrolling interest(a) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
224 |
|
Costs at start-up operations(b) |
|
102 |
|
|
|
777 |
|
|
|
1,162 |
|
|
|
2,112 |
|
Share-based compensation expense(c) |
|
1,401 |
|
|
|
1,044 |
|
|
|
5,565 |
|
|
|
3,363 |
|
Acquisition related costs and credit allowances(d) |
|
301 |
|
|
|
(283 |
) |
|
|
476 |
|
|
|
731 |
|
Costs associated with transitioning operations(e) |
|
102 |
|
|
|
25 |
|
|
|
861 |
|
|
|
7,051 |
|
Unusual, non-recurring or redundant charges(f) |
|
942 |
|
|
|
927 |
|
|
|
2,575 |
|
|
|
1,297 |
|
Provision for income taxes on Non-GAAP adjustments(g) |
|
(562 |
) |
|
|
(533 |
) |
|
|
(2,124 |
) |
|
|
(4,353 |
) |
Non-GAAP net income |
$ |
6,635 |
|
|
$ |
5,431 |
|
|
$ |
21,894 |
|
|
$ |
17,068 |
|
|
|
|
|
|
|
|
|
Dilutive Earnings Per Share As Reported |
|
|
|
|
|
|
|
Net Income |
$ |
0.14 |
|
|
$ |
0.12 |
|
|
$ |
0.44 |
|
|
$ |
0.22 |
|
Average number of shares outstanding |
|
30,236 |
|
|
|
30,091 |
|
|
|
30,193 |
|
|
|
30,159 |
|
|
|
|
|
|
|
|
|
Adjusted Diluted Earnings Per Share |
|
|
|
|
|
|
|
Net Income |
$ |
0.22 |
|
|
$ |
0.18 |
|
|
$ |
0.73 |
|
|
$ |
0.57 |
|
Average number of shares outstanding |
|
30,236 |
|
|
|
30,091 |
|
|
|
30,193 |
|
|
|
30,159 |
|
(a) |
|
Effective the three months ended September 30, 2022 we updated our
definition of non-GAAP net income to exclude an adjustment for net
income attributable to noncontrolling interest. |
|
|
|
|
|
|
|
|
|
|
(b) |
|
Represents results related to start-up operations. |
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
Revenue |
$ |
(2,216 |
) |
|
$ |
(2,301 |
) |
|
$ |
(11,037 |
) |
|
$ |
(5,742 |
) |
|
|
Cost of services |
|
2,158 |
|
|
|
2,798 |
|
|
|
11,139 |
|
|
|
7,177 |
|
|
|
Rent |
|
156 |
|
|
|
274 |
|
|
|
1,041 |
|
|
|
660 |
|
|
|
Depreciation & amortization |
|
4 |
|
|
|
6 |
|
|
|
19 |
|
|
|
17 |
|
|
|
Total Non-GAAP adjustment |
$ |
102 |
|
|
$ |
777 |
|
|
$ |
1,162 |
|
|
$ |
2,112 |
|
|
|
|
|
|
|
|
|
|
|
(c) |
|
Represents share-based compensation expense incurred for the
periods presented. |
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
Cost of services |
$ |
832 |
|
|
$ |
644 |
|
|
$ |
3,120 |
|
|
$ |
2,439 |
|
|
|
General and administrative |
|
569 |
|
|
|
400 |
|
|
|
2,445 |
|
|
|
924 |
|
|
|
Total Non-GAAP adjustment |
$ |
1,401 |
|
|
$ |
1,044 |
|
|
$ |
5,565 |
|
|
$ |
3,363 |
|
|
|
|
|
|
|
|
|
|
|
(d) |
|
Represents costs incurred to acquire an operation that are not
capitalizable. |
(e) |
|
During the year ended December 31, 2023, an affiliate of the
Company placed its memory care units into transition and is
actively seeking to sublease the units to an unrelated third party.
The amount above represents the net operating impact attributable
to the units in transition. The amounts reported exclude rent and
depreciation and amortization expense related to such operations
and include legal settlement costs associated with one of the
entities transitioned to Ensign. During January 2022, affiliates of
the Company entered into Transfer Agreements with affiliates of
Ensign, providing for the transfer of the operations of certain
senior living communities (the “Transaction”) from affiliates of
the Company to affiliates of Ensign. The closing of the Transaction
was completed in two phases with the transfer of two operations on
March 1, 2022 and the remainder transferred on April 1, 2022. The
amount above represents the net impact on revenue and cost of
service attributable to all of the transferred entities. The
amounts reported exclude rent and depreciation and amortization
expense related to such operations. |
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
Revenue |
$ |
— |
|
|
$ |
5 |
|
|
$ |
(4 |
) |
|
$ |
(3,370 |
) |
|
|
Cost of services |
|
17 |
|
|
|
20 |
|
|
|
616 |
|
|
|
2,755 |
|
|
|
Rent |
|
82 |
|
|
|
— |
|
|
|
238 |
|
|
|
948 |
|
|
|
Depreciation |
|
3 |
|
|
|
— |
|
|
|
11 |
|
|
|
— |
|
|
|
Loss on asset dispositions and impairment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,718 |
|
|
|
Total Non-GAAP adjustment |
$ |
102 |
|
|
$ |
25 |
|
|
$ |
861 |
|
|
$ |
7,051 |
|
|
|
|
|
|
|
|
|
|
|
(f) |
|
Represents unusual or non-recurring charges for legal services,
implementation costs, integration costs, and consulting fees in
general and administrative and cost of services expenses. The
amounts reported for the year ended December 31, 2022 include
certain costs identified as redundant or non-recurring incurred by
the Company for services provided by Ensign under the Transition
Services Agreement, and were included in general and administrative
expense. |
|
|
|
|
|
|
|
|
|
|
(g) |
|
Represents an adjustment to the provision for income tax to our
year-to-date effective tax rate of 25.8% and 25.6% for the year
ended December 31, 2023 and 2022, respectively. This rate excludes
the tax benefit of shared-based payment awards. |
|
|
|
The table below reconciles Consolidated net
income to the Consolidated Non-GAAP financial measures,
Consolidated Adjusted EBITDA, and to the Non-GAAP valuation
measure, Consolidated Adjusted EBITDAR, for the periods
presented:
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Consolidated net income |
$ |
4,529 |
|
|
$ |
3,687 |
|
|
$ |
13,910 |
|
|
$ |
7,243 |
|
Less: Net income attributable to noncontrolling interest |
|
180 |
|
|
|
213 |
|
|
|
531 |
|
|
|
600 |
|
Add: Provision for income taxes |
|
1,780 |
|
|
|
1,408 |
|
|
|
5,674 |
|
|
|
1,649 |
|
Net interest expense |
|
1,569 |
|
|
|
1,308 |
|
|
|
5,924 |
|
|
|
3,816 |
|
Depreciation and amortization |
|
1,313 |
|
|
|
1,223 |
|
|
|
5,130 |
|
|
|
4,900 |
|
Consolidated EBITDA |
|
9,011 |
|
|
|
7,413 |
|
|
|
30,107 |
|
|
|
17,008 |
|
Adjustments to Consolidated EBITDA |
|
|
|
|
|
|
|
Add: Costs at start-up operations(a) |
|
(58 |
) |
|
|
497 |
|
|
|
102 |
|
|
|
1,435 |
|
Share-based compensation expense(b) |
|
1,401 |
|
|
|
1,044 |
|
|
|
5,565 |
|
|
|
3,363 |
|
Acquisition related costs and credit allowances(c) |
|
301 |
|
|
|
(283 |
) |
|
|
476 |
|
|
|
731 |
|
Costs associated with transitioning operations(d) |
|
17 |
|
|
|
25 |
|
|
|
612 |
|
|
|
6,103 |
|
Unusual, non-recurring or redundant charges(e) |
|
942 |
|
|
|
927 |
|
|
|
2,575 |
|
|
|
1,297 |
|
Rent related to items (a) and (d) above |
|
238 |
|
|
|
274 |
|
|
|
1,279 |
|
|
|
1,608 |
|
Consolidated Adjusted EBITDA |
|
11,852 |
|
|
|
9,897 |
|
|
|
40,716 |
|
|
|
31,545 |
|
Rent—cost of services |
|
10,320 |
|
|
|
9,498 |
|
|
|
39,759 |
|
|
|
38,018 |
|
Rent related to items (a) and (d) above |
|
(238 |
) |
|
|
(274 |
) |
|
|
(1,279 |
) |
|
|
(1,608 |
) |
Adjusted rent—cost of services |
|
10,082 |
|
|
|
9,224 |
|
|
|
38,480 |
|
|
|
36,410 |
|
Consolidated Adjusted EBITDAR(f) |
$ |
21,934 |
|
|
|
|
$ |
79,196 |
|
|
|
(a) |
|
Represents results related to start-up operations. This amount
excludes rent and depreciation and amortization expense related to
such operations. |
(b) |
|
Share-based compensation expense and related payroll taxes
incurred. Share-based compensation expense and related payroll
taxes are included in cost of services and general and
administrative expense. |
(c) |
|
Non-capitalizable costs associated with acquisitions, credit
allowances, and write offs for amounts in dispute with the prior
owners of certain acquired operations. |
(d) |
|
During the year ended December 31, 2023, an affiliate of the
Company placed its memory care units into transition and is
actively seeking to sublease the units to an unrelated third party.
The amount above represents the net operating impact attributable
to the units in transition. The amounts reported exclude rent and
depreciation and amortization expense related to such operations
and include legal settlement costs associated with one of the
entities transitioned to Ensign. During January 2022, affiliates of
the Company entered into Transfer Agreements with affiliates of
Ensign, providing for the transfer of the operations of certain
senior living communities (the “Transaction”) from affiliates of
the Company to affiliates of Ensign. The closing of the Transaction
was completed in two phases with the transfer of two operations on
March 1, 2022 and the remainder transferred on April 1, 2022. The
amount above represents the net impact on revenue and cost of
service attributable to all of the transferred entities. The
amounts reported exclude rent and depreciation and amortization
expense related to such operations. |
(e) |
|
Represents unusual or non-recurring charges for legal services,
implementation costs, integration costs, and consulting fees in
general and administrative and cost of services expenses. The
amounts reported for the year ended December 31, 2022 include
certain costs identified as redundant or non-recurring incurred by
the Company for services provided by Ensign under the Transition
Services Agreement, and were included in general and administrative
expense. |
(f) |
|
This measure is a valuation measure and is displayed thusly, it is
not a performance measure as it excludes rent expense, which is a
normal and recurring operating expense and, as such, does not
reflect our cash requirements for leasing commitments. Our
presentation of Consolidated Adjusted EBITDAR should not be
construed as a financial performance measure. |
|
|
|
The following table present certain financial
information regarding our reportable segments. General and
administrative expenses are not allocated to the reportable
segments and are included in “All Other”:
|
Home Health and Hospice Services |
|
Senior Living Services |
|
All Other |
|
Total |
Segment GAAP Financial Measures: |
|
|
|
|
|
|
|
Three Months Ended December 31, 2023 |
|
|
|
|
|
|
|
Revenue |
$ |
106,891 |
|
|
$ |
39,063 |
|
|
$ |
— |
|
|
$ |
145,954 |
|
Segment Adjusted EBITDAR from Operations |
$ |
18,242 |
|
|
$ |
11,900 |
|
|
$ |
(8,208 |
) |
|
$ |
21,934 |
|
Three Months Ended December 31, 2022 |
|
|
|
|
|
|
|
Revenue |
$ |
90,651 |
|
|
$ |
34,014 |
|
|
$ |
— |
|
|
$ |
124,665 |
|
Segment Adjusted EBITDAR from Operations |
$ |
16,771 |
|
|
$ |
9,990 |
|
|
$ |
(7,640 |
) |
|
$ |
19,121 |
|
|
Home Health and Hospice Services |
|
Senior Living Services |
|
All Other |
|
Total |
Segment GAAP Financial Measures: |
|
|
|
|
|
|
|
Year Ended December 31, 2023 |
|
|
|
|
|
|
|
Revenue |
$ |
394,464 |
|
|
$ |
150,427 |
|
|
$ |
— |
|
|
$ |
544,891 |
|
Segment Adjusted EBITDAR from Operations |
$ |
65,606 |
|
|
$ |
45,294 |
|
|
$ |
(31,704 |
) |
|
$ |
79,196 |
|
Year Ended December 31, 2022 |
|
|
|
|
|
|
|
Revenue |
$ |
342,249 |
|
|
$ |
130,992 |
|
|
$ |
— |
|
|
$ |
473,241 |
|
Segment Adjusted EBITDAR from Operations |
$ |
61,827 |
|
|
$ |
37,563 |
|
|
$ |
(31,435 |
) |
|
$ |
67,955 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The table below provides a reconciliation of
Segment Adjusted EBITDAR from Operations above to Condensed
Consolidated Income from Operations:
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDAR from Operations(a) |
$ |
21,934 |
|
|
$ |
19,121 |
|
|
$ |
79,196 |
|
|
$ |
67,955 |
|
Less: Depreciation and amortization |
|
1,313 |
|
|
|
1,223 |
|
|
|
5,130 |
|
|
|
4,900 |
|
Rent—cost of services |
|
10,320 |
|
|
|
9,498 |
|
|
|
39,759 |
|
|
|
38,018 |
|
Other income (expense) |
|
311 |
|
|
|
19 |
|
|
|
339 |
|
|
|
(31 |
) |
Adjustments to Segment EBITDAR from Operations: |
|
|
|
|
|
|
|
Less: Costs at start-up operations(b) |
|
(58 |
) |
|
|
497 |
|
|
|
102 |
|
|
|
1,435 |
|
Share-based compensation expense(c) |
|
1,401 |
|
|
|
1,044 |
|
|
|
5,565 |
|
|
|
3,363 |
|
Acquisition related costs and credit allowances(d) |
|
301 |
|
|
|
(283 |
) |
|
|
476 |
|
|
|
731 |
|
Costs associated with transitioning operations(e) |
|
17 |
|
|
|
25 |
|
|
|
612 |
|
|
|
6,103 |
|
Unusual, non-recurring or redundant charges(f) |
|
942 |
|
|
|
927 |
|
|
|
2,575 |
|
|
|
1,297 |
|
Add: Net income attributable to noncontrolling interest |
|
180 |
|
|
|
213 |
|
|
|
531 |
|
|
|
600 |
|
Consolidated Income from Operations |
$ |
7,567 |
|
|
$ |
6,384 |
|
|
$ |
25,169 |
|
|
$ |
12,739 |
|
(a) |
|
Segment Adjusted EBITDAR from Operations is net income (loss)
attributable to the Company's reportable segments excluding
interest expense, provision for income taxes, depreciation and
amortization expense, rent, and, in order to view the operations
performance on a comparable basis from period to period, certain
adjustments including: (1) costs at start-up operations, (2)
share-based compensation, (3) acquisition related costs and credit
allowances, (4) the costs associated with transitioning operations,
(5) unusual, non-recurring or redundant charges, and (6) net income
attributable to noncontrolling interest. General and administrative
expenses are not allocated to the reportable segments, and are
included as “All Other”, accordingly the segment earnings measure
reported is before allocation of corporate general and
administrative expenses. The Company's segment measures may be
different from the calculation methods used by other companies and,
therefore, comparability may be limited. |
(b) |
|
Represents results related to start-up operations. This amount
excludes rent and depreciation and amortization expense related to
such operations. |
(c) |
|
Share-based compensation expense and related payroll taxes
incurred. Share-based compensation expense and related payroll
taxes are included in cost of services and general and
administrative expense. |
(d) |
|
Non-capitalizable costs associated with acquisitions, credit
allowances, and write offs for amounts in dispute with the prior
owners of certain acquired operations. |
(e) |
|
During the year ended December 31, 2023, an affiliate of the
Company placed its memory care units into transition and is
actively seeking to sublease the units to an unrelated third party.
The amount above represents the net operating impact attributable
to the units in transition. The amounts reported exclude rent and
depreciation and amortization expense related to such operations
and include legal settlement costs associated with one of the
entities transitioned to Ensign. During January 2022, affiliates of
the Company entered into Transfer Agreements with affiliates of
Ensign, providing for the transfer of the operations of certain
senior living communities (the “Transaction”) from affiliates of
the Company to affiliates of Ensign. The closing of the Transaction
was completed in two phases with the transfer of two operations on
March 1, 2022 and the remainder transferred on April 1, 2022. The
amount above represents the net impact on revenue and cost of
service attributable to all of the transferred entities. The
amounts reported exclude rent and depreciation and amortization
expense related to such operations. |
(f) |
|
Represents unusual or non-recurring charges for legal services,
implementation costs, integration costs, and consulting fees in
general and administrative and cost of services expenses. The
amounts reported for the year ended December 31, 2022 include
certain costs identified as redundant or non-recurring incurred by
the Company for services provided by Ensign under the Transition
Services Agreement, and were included in general and administrative
expense. |
|
|
|
The tables below reconcile Segment Adjusted EBITDAR
from Operations to Segment Adjusted EBITDA from Operations for each
reportable segment for the periods presented:
|
Three Months Ended December 31, |
|
Home Health and Hospice |
|
Senior Living |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDAR from Operations |
$ |
18,242 |
|
|
$ |
16,771 |
|
|
$ |
11,900 |
|
|
$ |
9,990 |
|
Less: Rent—cost of services |
|
1,655 |
|
|
|
1,295 |
|
|
|
8,664 |
|
|
|
8,203 |
|
Rent related to start-up and transitioning operations |
|
(65 |
) |
|
|
(49 |
) |
|
|
(173 |
) |
|
|
(225 |
) |
Segment Adjusted EBITDA from Operations |
$ |
16,652 |
|
|
$ |
15,525 |
|
|
$ |
3,409 |
|
|
$ |
2,012 |
|
|
Year Ended December 31, |
|
Home Health and Hospice |
|
Senior Living |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDAR from Operations |
$ |
65,606 |
|
|
$ |
61,827 |
|
|
$ |
45,294 |
|
|
$ |
37,563 |
|
Less: Rent—cost of services |
|
5,791 |
|
|
|
5,060 |
|
|
|
33,967 |
|
|
|
32,958 |
|
Rent related to start-up and transitioning operations |
|
(313 |
) |
|
|
(210 |
) |
|
|
(966 |
) |
|
|
(1,398 |
) |
Segment Adjusted EBITDA from Operations |
$ |
60,128 |
|
|
$ |
56,977 |
|
|
$ |
12,293 |
|
|
$ |
6,003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discussion of Non-GAAP Financial
Measures
EBITDA consists of net income before (a)
interest expense, net, (b) (benefits) provisions for income taxes,
and (c) depreciation and amortization. Adjusted EBITDA consists of
net income attributable to the Company before (a) interest expense,
net (b) (benefits) provisions for income taxes, (c) depreciation
and amortization, (d) costs incurred for start-up operations,
including rent and excluding depreciation, interest and income
taxes, (e) share-based compensation expense, (f) non-capitalizable
acquisition related costs and credit allowances, (g) net costs
associated with transitioning operations, (h) unusual,
non-recurring or redundant charges and (i) net income attributable
to noncontrolling interest. Consolidated Adjusted EBITDAR is a
valuation measure applicable to current periods only and consists
of net income attributable to the Company before (a) interest
expense, net, (b) (benefits) provisions for income taxes, (c)
depreciation and amortization, (d) rent-cost of services, (e) costs
incurred for start-up operations, excluding rent, depreciation,
interest and income taxes, (f) share-based compensation expense,
(g) acquisition related costs and credit allowances, (h) redundant
or non-recurring transition services costs, (i) costs associated
with transitioning operations, (j) unusual, non-recurring or
redundant charges and (j) net income attributable to noncontrolling
interest. The company believes that the presentation of EBITDA,
adjusted EBITDA, consolidated adjusted EBITDAR, adjusted net income
and adjusted earnings per share provides important supplemental
information to management and investors to evaluate the company’s
operating performance. The company believes disclosure of adjusted
net income, adjusted net income per share, EBITDA, adjusted EBITDA
and consolidated adjusted EBITDAR has economic substance because
the excluded revenues and expenses are infrequent in nature and are
variable in nature, or do not represent current revenues or cash
expenditures. A material limitation associated with the use of
these measures as compared to the GAAP measures of net income and
diluted earnings per share is that they may not be comparable with
the calculation of net income and diluted earnings per share for
other companies in the company's industry. These non-GAAP financial
measures should not be relied upon to the exclusion of GAAP
financial measures. For further information regarding why the
company believes that this non-GAAP measure provides useful
information to investors, the specific manner in which management
uses this measure, and some of the limitations associated with the
use of this measure, please refer to the company's periodic filings
with the Securities and Exchange Commission, including its Annual
Report on Form 10-K and Quarterly Report on Form 10-Q. The
company’s periodic filings are available on the SEC's website at
www.sec.gov or under the "Financial Information" link of the
Investor Relations section on Pennant’s website at
http://www.pennantgroup.com.
Contact Information
Investor Relations
The Pennant Group, Inc.
(208) 506-6100
ir@pennantgroup.com
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