0001766400FALSE00017664002024-08-062024-08-06

 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 6, 2024
The Pennant Group, Inc.
(Exact name of registrant as specified in its charter)
     
Delaware 001-38900 83-3349931
     
(State or other jurisdiction
of incorporation)
 (Commission File Number) (IRS Employer Identification No.)
1675 E Riverside Drive, Suite 150,
Eagle, ID 83616
 
(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))
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per sharePNTGNasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in 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. ☐



Item 2.02. Results of Operations and Financial Condition.
On August 6, 2024 The Pennant Group, Inc. (the “Company”) issued a press release reporting the financial results of the Company for its second quarter ended June 30, 2024. A copy of the press release is attached to this Current Report as Exhibit 99.1.

Item 7.01. Regulation FD Disclosure.

The Pennant Group, Inc. will post on its website an updated investor presentation for use at upcoming investor meetings. Please visit investor.pennantgroup.com to access the new presentation materials.

The information furnished pursuant to this Item 7.01 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.



Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
   
Exhibit No. Description
   
 
Press Release of the Company dated August 6, 2024.
104Cover 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: August 6, 2024
THE PENNANT GROUP, INC. 
 By:  /s/ LYNETTE B. WALBOM 
  Lynette B. Walbom 
  Chief Financial Officer 
 



Exhibit 99.1
pennantlogoa01a.jpg

Pennant Reports Second Quarter 2024 Results

Conference Call and Webcast scheduled for tomorrow, August 7, 2024 at 10:00 am MT

EAGLE, Idaho – August 6, 2024 (GLOBE NEWSWIRE) - 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 second quarter of 2024, reporting GAAP diluted earnings per share of $0.18 for the second quarter of 2024. Pennant also reported adjusted diluted earnings per share of $0.24 for the quarter (1).

Second Quarter Highlights

▪Total revenue for the second quarter was $168.7 million, an increase of $36.5 million or 27.6% over the prior year quarter;

▪Net income for the second quarter was $5.7 million, an increase of $2.9 million or 103.4% over the prior year quarter;

▪Adjusted net income for the second quarter was $7.3 million, an increase of $1.9 million or 35.0% over the prior year quarter;

▪Segment Adjusted EBITDAR from Operations for the second quarter was $23.5 million, an increase of $4.0 million or 20.5% over the prior year quarter;

▪Adjusted EBITDA for the second quarter was $13.2 million, an increase of $3.1 million or 30.6% over the prior year quarter;

▪Home Health and Hospice Services segment revenue for the second quarter was $125.3 million, an increase of $30.3 million or 31.9% over the prior year quarter;

▪Home Health and Hospice Services segment adjusted EBITDAR from operations for the second quarter was $21.2 million, an increase of $5.5 million or 35.3% over the prior year quarter; and segment adjusted EBITDA from operations the second quarter was $19.6 million, an increase of $5.2 million or 36.3% over the prior year quarter;

▪Total home health admissions for the second quarter were 14,140, an increase of 3,699 or 35.4% over the prior year quarter; total Medicare home health admissions for the second quarter were 5,738, an increase of 889 or 18.3% over the prior year quarter;

▪Hospice average daily census for the second quarter was 3,220, an increase of 726 or 29.1% compared to the prior year quarter;

▪Senior Living Services segment revenue for the second quarter was $43.4 million, an increase of $6.2 million or 16.6% over the prior year quarter; average occupancy for the second quarter was 78.8%, an increase of 80 basis points over the prior year quarter, and average monthly revenue per occupied room for the second quarter was $4,790 an increase of $378 or 8.6% over the prior year quarter;
1

Exhibit 99.1

▪Senior Living segment adjusted EBITDAR from operations for the second quarter was $12.8 million, an increase of $1.1 million or 9.6% over the prior year quarter; and segment adjusted EBITDA from Operations for the second quarter was $4.1 million, an increase of $0.5 million or 14.8% over the prior year quarter.

(1)
See "Reconciliation of GAAP to Non-GAAP Financial Information.”

Operating Results

“We are pleased to report excellent second quarter results, which reflect strong performance in our mature operations, coupled with robust acquisition activity,” said Brent Guerisoli, Pennant’s Chief Executive Officer. “Our on-going investment in leadership has positioned us well to add value to our existing operations even as we acquire new ones. With our solid operating results and healthy balance sheet, we are excited for continued success in the second half of the year. We are updating our annual guidance based on the sustainable momentum we see in the business, and the accretive additions that will contribute to the bottom line through the remainder of 2024.”

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-Q for the three and six months ended June 30, 2024, 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 updating its annual guidance as follows: total revenue is anticipated to be between $654.0 million and $694.5 million; full year 2024 adjusted earnings per diluted share is anticipated to be between $0.89 and $0.95; and full year 2024 adjusted EBITDA is anticipated to be between $50.7 million and $53.8 million.

“The Company’s updated guidance incorporates current operations and organic growth, diluted weighted average shares outstanding of approximately 30.7 million, and a 25.8% effective tax rate,” stated Lynette Walbom, Pennant’s Chief Financial Officer. “It anticipates continued strong operating performance through the end of the year, hospice reimbursement rate adjustments, increased interest expense, and the contributions from our joint ventures and management agreements. It excludes unannounced acquisitions, the announced purchase of Signature’s Oregon assets, start-ups, share-based compensation, acquisition-related costs, or one-time implementation and unusual items.”



Conference Call

A live webcast will be held tomorrow, August 7, 2024 at 10:00 a.m. Mountain time (12:00 p.m. Eastern time) to discuss Pennant’s second quarter 2024 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 117 home health and hospice agencies and 54 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
2

Exhibit 99.1
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.


Contact Information

Investor Relations
The Pennant Group, Inc.
(208) 506-6100
ir@pennantgroup.com

SOURCE: The Pennant Group, Inc.

3

Exhibit 99.1
THE PENNANT GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except for per-share amounts)

Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Revenue$168,745 $132,281 $325,660 $258,745 
Expense
Cost of services135,313 106,176 261,308 208,778 
Rent—cost of services10,524 9,836 20,908 19,433 
General and administrative expense11,878 8,791 23,314 17,496 
Depreciation and amortization1,468 1,214 2,799 2,494 
Loss (gain) on disposition of property and equipment, net— 3 (755)3 
Total expenses159,183 126,020 307,574 248,204 
Income from operations9,562 6,261 18,086 10,541 
Other (expense) income, net:
Other (expense) income(2)35 83 65 
Interest expense, net(1,622)(1,453)(3,414)(2,859)
Other expense, net(1,624)(1,418)(3,331)(2,794)
Income before provision for income taxes7,938 4,843 14,755 7,747 
Provision for income taxes1,844 1,921 3,603 2,828 
Net income 6,094 2,922 11,152 4,919 
Less: Net income attributable to noncontrolling interest404 125 556 272 
Net income attributable to The Pennant Group, Inc. $5,690 $2,797 $10,596 $4,647 
Earnings per share:
Basic$0.19 $0.09 $0.35 $0.16 
Diluted$0.18 $0.09 $0.35 $0.15 
Weighted average common shares outstanding:
Basic30,142 29,809 30,094 29,780 
Diluted30,781 30,193 30,583 30,171 

4

Exhibit 99.1
THE PENNANT GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)

June 30, 2024December 31, 2023
Assets
Current assets:
Cash $3,043 $6,059 
Accounts receivable—less allowance for doubtful accounts of $253 and $259, respectively76,089 61,116 
Prepaid expenses and other current assets14,981 12,902 
Total current assets94,113 80,077 
Property and equipment, net40,905 28,598 
Right-of-use assets267,353 262,923 
Deferred tax assets, net114 — 
Restricted and other assets11,953 9,337 
Goodwill110,487 91,014 
Other indefinite-lived intangibles77,542 67,742 
Total assets$602,467 $539,691 
Liabilities and equity
Current liabilities:
Accounts payable$15,392 $10,841 
Accrued wages and related liabilities30,601 28,256 
Operating lease liabilities—current18,473 17,122 
Other accrued liabilities19,223 15,330 
Total current liabilities83,689 71,549 
Long-term operating lease liabilities—less current portion251,613 248,596 
Deferred tax liabilities, net
1,336 1,855 
Other long-term liabilities10,662 8,262 
Long-term debt, net82,174 63,914 
Total liabilities429,474 394,176 
Commitments and contingencies
Equity:
Common stock, $0.001 par value; 100,000 shares authorized; 30,493 and 30,150 shares issued and outstanding, respectively, at June 30, 2024; and 30,297 and 29,948 shares issued and outstanding, respectively, at December 31, 2023
30 29 
Additional paid-in capital110,311 105,712 
Retained earnings45,259 34,663 
Treasury stock, at cost, 3 shares at June 30, 2024 and December 31, 2023
(65)(65)
Total The Pennant Group, Inc. stockholders’ equity155,535 140,339 
Noncontrolling interest17,458 5,176 
Total equity172,993 145,515 
Total liabilities and equity$602,467 $539,691 
5

Exhibit 99.1
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:
Six Months Ended June 30,
20242023
Net cash provided by operating activities$11,036 $15,533 
Net cash used in investing activities(33,280)(11,226)
Net cash provided by (used in) financing activities19,228 (3,548)
Net (decrease) increase in cash (3,016)759 
Cash beginning of period6,059 2,079 
Cash end of period$3,043 $2,838 

6

Exhibit 99.1
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 June 30,
20242023
Revenue DollarsRevenue PercentageRevenue DollarsRevenue Percentage
Home health and hospice services
Home health$61,637 36.5 %$42,411 32.1 %
Hospice59,347 35.2 46,562 35.2 
Home care and other(a)
4,317 2.6 6,047 4.6 
Total home health and hospice services125,301 74.3 95,020 71.9 
Senior living services43,444 25.7 37,261 28.1 
Total revenue$168,745 100.0 %$132,281 100.0 %
(a)Home care and other revenue is included with home health revenue in other disclosures in this press release.


Six Months Ended June 30,
20242023
Revenue DollarsRevenue PercentageRevenue DollarsRevenue Percentage
Home health and hospice services
Home health$118,849 36.5 %$84,191 32.5 %
Hospice113,954 35.0 89,851 34.7 
Home care and other(a)
8,988 2.7 12,057 4.7 
Total home health and hospice services241,791 74.2 186,099 71.9 
Senior living services83,869 25.8 72,646 28.1 
Total revenue$325,660 100.0 %$258,745 100.0 %
(a)Home care and other revenue is included with home health revenue in other disclosures in this press release.
7

Exhibit 99.1
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 June 30,
20242023Change% Change
Total agency results:
Home health and hospice revenue$125,301 $95,020 30,281 31.9 %
Home health services:
Total home health admissions14,140 10,441 3,699 35.4 %
Total Medicare home health admissions5,738 4,849 889 18.3 %
Average Medicare revenue per 60-day completed episode(a)
$3,752 $3,519 $233 6.6 %
Hospice services:
Total hospice admissions3,051 2,322 729 31.4 %
Average daily census3,220 2,494 726 29.1 %
Hospice Medicare revenue per day$184 $189 $(5)(2.6)%

Three Months Ended June 30,
20242023Change% Change
Same agency(b) results:
Home health and hospice revenue$108,516 $94,417 $14,099 14.9 %
Home health services:
Total home health admissions12,227 10,306 1,921 18.6 %
Total Medicare home health admissions5,074 4,785 289 6.0 %
Average Medicare revenue per 60-day completed episode(a)
$3,623 $3,520 $103 2.9 %
Hospice services:
Total hospice admissions2,654 2,302 352 15.3 %
Average daily census2,864 2,494 370 14.8 %
Hospice Medicare revenue per day$189 $189 $— — %


8

Exhibit 99.1
Six Months Ended June 30,
20242023Change% Change
Total agency results:
Home health and hospice revenue$241,791 $186,099 $55,692 29.9 %
Home health services:
Total home health admissions28,789 21,351 7,438 34.8 %
Total Medicare home health admissions12,084 9,797 2,287 23.3 %
Average Medicare revenue per 60-day completed episode(a)
$3,624 $3,467 $157 4.5 %
Hospice services:
Total hospice admissions6,131 4,773 1,358 28.5 %
Average daily census3,091 2,467 624 25.3 %
Hospice Medicare revenue per day$185 $186 $(1)(0.5)%

Six Months Ended June 30,
20242023Change% Change
Same agency(b) results:
Home health and hospice revenue$212,193 $185,496 $26,697 14.4 %
Home health services:
Total home health admissions24,402 21,140 3,262 15.4 %
Total Medicare home health admissions10,433 9,700 733 7.6 %
Average Medicare revenue per 60-day completed episode(a)
$3,557 $3,468 $89 2.6 %
Hospice services:
Total hospice admissions5,346 4,753 593 12.5 %
Average daily census2,782 2,467 315 12.8 %
Hospice Medicare revenue per day$188 $186 $2 1.1 %

(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, 2023.
9

Exhibit 99.1

The following table summarizes our senior living performance indicators for the periods indicated:

Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Total senior living results:
Senior living revenue$43,444 $37,261 $83,869 $72,646 
Occupancy78.8 %78.0 %78.7 %78.1 %
Average monthly revenue per occupied unit$4,790 $4,412 $4,730 $4,357 

Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Same store senior living(a) results:
Senior living revenue$39,691 $36,785 $78,595 $72,099 
Occupancy79.2 %79.6 %79.5 %79.3 %
Average monthly revenue per occupied unit$4,753 $4,390 $4,698 $4,342 

(a)
Same store senior living results is defined as all senior living communities excluding affiliate memory care units in transition, and new senior living operations acquired in 2023 or 2024.
10

Exhibit 99.1
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 June 30,
20242023
 Revenue DollarsRevenue PercentageRevenue DollarsRevenue Percentage
 
Revenue:    
Medicare$81,880 48.5 %$64,214 48.5 %
Medicaid26,462 15.7 18,931 14.3 
Subtotal108,342 64.2 83,145 62.8 
Managed Care21,349 12.7 17,254 13.1 
Private and Other(a)
39,054 23.1 31,882 24.1 
Total revenue$168,745 100.0 %$132,281 100.0 %
(a)Private and other payors includes revenue from all payors generated in the Company’s home care operations and management services agreement.

 Six Months Ended June 30,
 20242023
 Revenue DollarsRevenue PercentageRevenue DollarsRevenue Percentage
 
Revenue:    
Medicare$158,861 48.8 %$124,970 48.3 %
Medicaid51,528 15.8 36,562 14.1 
Subtotal210,389 64.6 161,532 62.4 
Managed Care41,471 12.7 34,380 13.3 
Private and Other(a)
73,800 22.7 62,833 24.3 
Total revenue$325,660 100.0 %$258,745 100.0 %
(a)Private and other payors includes revenue from all payors generated in the Company’s home care operations and management services agreement.


11

Exhibit 99.1
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 June 30,Six Months Ended June 30,
2024202320242023
Net income attributable to The Pennant Group, Inc.$5,690 $2,797 $10,596 $4,647 
Non-GAAP adjustments
Costs at start-up operations(a)
98 471 178 1,001 
Share-based compensation expense(b)
1,949 1,354 3,475 2,773 
Acquisition related costs and credit allowances(c)
365 72 502 104 
Costs associated with transitioning operations(d)
87 570 (486)669 
Unusual, non-recurring or redundant charges(e)
32 226 307 624 
Provision for income taxes on Non-GAAP adjustments(f)
(878)(49)(1,267)(531)
Non-GAAP net income$7,343 $5,441 $13,305 $9,287 
Dilutive Earnings Per Share As Reported
Net Income$0.18 $0.09 $0.35 $0.15 
Average number of shares outstanding30,781 30,193 30,583 30,171 
Adjusted Diluted Earnings Per Share
Net Income$0.24 $0.18 $0.44 $0.31 
Average number of shares outstanding30,781 30,193 30,583 30,171 
(a)Represents results related to start-up operations.
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Revenue $(2,546)$(3,286)$(4,956)$(5,893)
Cost of services 2,491 3,351 4,819 6,161 
Rent 150 401 306 723 
Depreciation & amortization3 5 9 10 
Total Non-GAAP adjustment$98 $471 $178 $1,001 
(b)Represents share-based compensation expense incurred for the periods presented.
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Cost of services$983 $781 $1,745 $1,469 
General and administrative966 573 1,730 1,304 
Total Non-GAAP adjustment$1,949 $1,354 $3,475 $2,773 
(c)Represents costs incurred to acquire an operation that are not capitalizable.



12

Exhibit 99.1
(d)During the three months ended March 31, 2023, an affiliate of the Company placed its memory care units into transition and began 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.
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Revenue$(1)$— $(1)$— 
Cost of services34 538 (594)585 
Rent52 27 104 79 
Depreciation2 5 5 5 
Total Non-GAAP adjustment$87 $570 $(486)$669 
(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.
(f)
Represents an adjustment to the provision for income tax to the year-to-date effective tax rate of 26.0% and 26.0% for the six months ended June 30, 2024 and 2023, respectively. This rate excludes the tax benefit of share-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 June 30,Six Months Ended June 30,
2024202320242023
Consolidated net income
$6,094 $2,922 $11,152 $4,919 
Less: Net income attributable to noncontrolling interest404 125 556 272 
Add: Provision for income taxes
1,844 1,921 3,603 2,828 
Net interest expense1,622 1,453 3,414 2,859 
Depreciation and amortization1,468 1,214 2,799 2,494 
Consolidated EBITDA10,624 7,385 20,412 12,828 
Adjustments to Consolidated EBITDA
Add: Costs at start-up operations(a)
(55)65 (137)268 
Share-based compensation expense(b)
1,949 1,354 3,475 2,773 
Acquisition related costs and credit allowances(c)
365 72 502 104 
Costs associated with transitioning operations(d)
33 538 (595)585 
Unusual, non-recurring or redundant charges(e)
32 226 307 624 
Rent related to items (a) and (d) above202 428 410 802 
Consolidated Adjusted EBITDA13,150 10,068 24,374 17,984 
Rent—cost of services10,524 9,836 20,908 19,433 
Rent related to items (a) and (d) above(202)(428)(410)(802)
Adjusted rent—cost of services10,322 9,408 20,498 18,631 
Consolidated Adjusted EBITDAR(f)
$23,472 $44,872 
(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 three months ended March 31, 2023, an affiliate of the Company placed its memory care units into transition and began 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.
(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.
(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.
13

Exhibit 99.1

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 ServicesSenior Living ServicesAll OtherTotal
Segment GAAP Financial Measures:
Three Months Ended June 30, 2024
Revenue$125,301 $43,444 $— $168,745 
Segment Adjusted EBITDAR from Operations$21,214 $12,804 $(10,546)$23,472 
Three Months Ended June 30, 2023
Revenue$95,020 $37,261 $— $132,281 
Segment Adjusted EBITDAR from Operations$15,681 $11,680 $(7,885)$19,476 


Home Health and Hospice ServicesSenior Living ServicesAll OtherTotal
Segment GAAP Financial Measures:
Six Months Ended June 30, 2024
Revenue$241,791 $83,869 $— $325,660 
Segment Adjusted EBITDAR from Operations$40,764 $24,815 $(20,707)$44,872 
Six Months Ended June 30, 2023
Revenue$186,099 $72,646 $— $258,745 
Segment Adjusted EBITDAR from Operations$30,093 $21,921 $(15,399)$36,615 

The table below provides a reconciliation of Segment Adjusted EBITDAR from Operations above to Condensed Consolidated Income from Operations:

Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Segment Adjusted EBITDAR from Operations(a)
$23,472 $19,476 $44,872 $36,615 
Less: Depreciation and amortization1,468 1,214 2,799 2,494 
Rent—cost of services10,524 9,836 20,908 19,433 
Other income(2)35 83 65 
Adjustments to Segment EBITDAR from Operations:
Less: Costs at start-up operations(b)
(55)65 (137)268 
Share-based compensation expense(c)
1,949 1,354 3,475 2,773 
Acquisition related costs and credit allowances(d)
365 72 502 104 
Costs associated with transitioning operations(e)
33 538 (595)585 
Unusual, non-recurring or redundant charges(f)
32 226 307 624 
Add: Net income attributable to noncontrolling interest
404 125 556 272 
Consolidated Income from Operations$9,562 $6,261 $18,086 $10,541 

14

Exhibit 99.1
(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 three months ended March 31, 2023, an affiliate of the Company placed its memory care units into transition and began 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.
(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 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 June 30,
Home Health and HospiceSenior Living
2024202320242023
Segment Adjusted EBITDAR from Operations$21,214 $15,681 $12,804 $11,680 
Less: Rent—cost of services1,664 1,374 8,860 8,462 
Rent related to start-up and transitioning operations(57)(83)(145)(345)
Segment Adjusted EBITDA from Operations$19,607 $14,390 $4,089 $3,563 

Six Months Ended June 30,
Home Health and HospiceSenior Living
2024202320242023
Segment Adjusted EBITDAR from Operations$40,764 $30,093 $24,815 $21,921 
Less: Rent—cost of services3,393 2,697 17,515 16,736 
Rent related to start-up and transitioning operations(122)(176)(288)(626)
Segment Adjusted EBITDA from Operations$37,493 $27,572 $7,588 $5,811 

15

Exhibit 99.1
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.



16
v3.24.2.u1
Cover Page
Aug. 06, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Aug. 06, 2024
Entity Registrant Name The Pennant Group, Inc.
Entity Incorporation, State or Country Code DE
Entity File Number 001-38900
Entity Tax Identification Number 83-3349931
Entity Address, Address Line One 1675 E Riverside Drive
Entity Address, Address Line Two Suite 150
Entity Address, City or Town Eagle
Entity Address, State or Province ID
Entity Address, Postal Zip Code 83616
City Area Code 208
Local Phone Number 506-6100
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, par value $0.001 per share
Trading Symbol PNTG
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Entity Central Index Key 0001766400
Amendment Flag false
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