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 third
quarter 2022, reporting GAAP diluted earnings per share of $0.16
and adjusted diluted earnings per share of $0.14 for the
quarter(1).
Third Quarter Highlights
- Total revenue for the quarter was
$118.4 million, an increase of $6.4 million or 5.7% over the prior
year quarter;
- Net income for the third quarter
was $4.8 million, adjusted EBITDA for the quarter was $7.9 million,
an increase of $1.4 million or 21.6% over the prior year quarter,
and adjusted EBITDAR for the quarter was $17.0 million;
- Home Health and Hospice Services
segment revenue for the third quarter was $85.8 million, an
increase of $6.8 million or 8.6% over the prior year quarter,
segment adjusted EBITDAR from Operations was $15.4 million, and
segment adjusted EBITDA was $14.2 million, an increase $1.0 million
or 7.7% over the prior year quarter;
- Total home health admissions for
the third quarter was 10,152 and total Medicare home health
admissions for the third quarter was 4,637, an increase of 10.2%
and 10.1%, respectively, over the prior year quarter;
- Total hospice admissions for the
third quarter was 2,392, an increase of 7.8% over the prior year
quarter, and hospice average daily census for the third quarter was
2,293, an increase of 0.4% compared to the second quarter 2022 and
a decrease of 1.9% compared to the prior year quarter;
- Senior Living Services segment
revenue for the third quarter was $32.6 million, a decrease of $0.3
million or 1.1% over the prior year quarter, segment adjusted
EBITDAR from Operations was $9.4 million, and segment adjusted
EBITDA for the third quarter was $1.5 million, an increase of $1.4
million over the prior year quarter; and
- Same store senior living(2) revenue for the third quarter was
$32.2 million, an increase of $3.4 million or 11.8% over the prior
year, same store senior living average occupancy for the third
quarter was 77.6%, an increase of 140 basis points over the prior
year quarter, and average monthly revenue per occupied room for the
third quarter was $3,560, an increase of $386 or 12.2% over the
prior year quarter and $90 or 2.6% over the second quarter of
2022.
(1) |
|
See "Reconciliation of GAAP to Non-GAAP Financial
Information.” |
(2) |
|
Same store senior living
is defined as all senior living communities excluding those
transferred to Ensign and new senior living operations acquired in
2022. |
Operating Results
“We continue to make progress on our objectives
to recruit and develop talented leaders, be the provider of choice
in each community we serve through quality care and operational
excellence, and generate strong cash flow for our stakeholders,”
said Brent Guerisoli, Pennant’s Chief Executive Officer. “Our third
quarter results reflect another step forward operationally as we
seek to unlock the significant latent potential in our existing
business. In our home health business, we experienced strong
admission volume, while our hospice average daily census grew
sequentially. We saw continued momentum in our senior living
segment recovery, with gains in occupancy and revenue per occupied
room, reflecting ongoing healthy demand for our high quality
services. We look forward to accelerating results across both
segments as we head into 2023 and as our leaders drive revenue and
contain costs despite an inflationary operating environment.”
During the quarter and since, the Company
completed the acquisition of Ardent Hospice and Palliative Care
with locations in southern and central California, and Kenosha
Visiting Nurse Association in Kenosha, Wisconsin. “We are excited
about the opportunity to add these quality home health and hospice
agencies to the Pennant family and look forward to reporting more
activity on this front in 2023. Our recently acquired agencies are
developing strength within our portfolio and add significant
opportunity for organic growth for years to come. As we continue to
generate strong cash flow and improved operational momentum in both
segments, we are well positioned to pursue significant acquisition
opportunities consistent with our disciplined growth strategy,”
commented John Gochnour, Pennant’s President and Chief Operating
Officer.
Jennifer Freeman, Pennant's Chief Financial
Officer, reported that the Company ended the third quarter with
strong liquidity. Operating cash flow for the third quarter was
$8.1 million, bringing year-to-date operating cash flow to $19.2
million, excluding $6.2 million in Medicare advance payments the
Company repaid in the first half of the year. As of September 30,
2022, we had $3.0 million of cash on hand and $88.3 million of
availability on its revolving line of credit. Ms. Freeman reported
that the Company had a net debt-to-adjusted EBITDA ratio of 2.0x
and a lease-adjusted net debt-to-adjusted EBITDAR ratio of 5.59x as
of quarter-end. “Our cash flow continues to improve and reflect the
earning power and resiliency of our business. Having completed
repayment of the Medicare advance payments, our ability to generate
cash should continue to improve and provide a greater war chest for
opportunistic investments, accelerating our ability to grow
strategically,” said Ms. Freeman.
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 Quarterly Report on Form 10-Q for the
three and nine months ended September 30, 2022, which has been
filed with the SEC today and can be viewed on the company’s website
at www.pennantgroup.com.
2022 Guidance
Management anticipates 2022 annual guidance of
total revenue between $458 million and $462 million, earnings per
diluted share between $0.55 and $0.60, and adjusted EBITDA between
$31.0 million and $33.5 million. The Company’s 2022 annual guidance
is based on diluted weighted average shares outstanding of
approximately 30.3 million and a 25.6% effective tax rate. The
guidance assumes, among other things, anticipated reimbursement
rate adjustments, no unannounced acquisitions, and the lingering
effects of COVID-19. It excludes the tax-effected costs at start-up
operations, share-based compensation, acquisition-related costs,
and loss on disposition of assets and impairments.
Conference Call
A live webcast will be held tomorrow,
November 8, 2022 at 10:00 a.m. Mountain time (12:00 p.m.
Eastern time) to discuss Pennant’s third quarter 2022 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 until 5:00 p.m.
Mountain time on Friday, December 9, 2022.
About Pennant
The Pennant Group, Inc. is a holding company of
independent operating subsidiaries that provide healthcare services
through 95 home health and hospice agencies and 49 senior living
communities located throughout Arizona, California, Colorado,
Idaho, Iowa, 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, 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 RelationsThe Pennant Group, Inc.(208)
506-6100ir@pennantgroup.com
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 September 30, |
|
Nine Months Ended September 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
Revenue |
$ |
118,350 |
|
|
$ |
111,921 |
|
|
$ |
348,576 |
|
|
$ |
327,929 |
|
|
|
|
|
|
|
|
|
Expense |
|
|
|
|
|
|
|
Cost of services |
|
94,680 |
|
|
|
89,619 |
|
|
|
277,658 |
|
|
|
259,908 |
|
Rent—cost of services |
|
9,391 |
|
|
|
10,334 |
|
|
|
28,520 |
|
|
|
30,455 |
|
General and administrative expense |
|
5,879 |
|
|
|
9,066 |
|
|
|
25,653 |
|
|
|
27,137 |
|
Depreciation and amortization |
|
1,251 |
|
|
|
1,200 |
|
|
|
3,677 |
|
|
|
3,545 |
|
Loss on asset dispositions and impairment, net |
|
5 |
|
|
|
— |
|
|
|
6,713 |
|
|
|
— |
|
Total expenses |
|
111,206 |
|
|
|
110,219 |
|
|
|
342,221 |
|
|
|
321,045 |
|
Income from operations |
|
7,144 |
|
|
|
1,702 |
|
|
|
6,355 |
|
|
|
6,884 |
|
Other (expense): |
|
|
|
|
|
|
|
Other expense |
|
(18 |
) |
|
|
— |
|
|
|
(50 |
) |
|
|
(24 |
) |
Interest expense, net |
|
(1,058 |
) |
|
|
(512 |
) |
|
|
(2,508 |
) |
|
|
(1,344 |
) |
Other (expense), net |
|
(1,076 |
) |
|
|
(512 |
) |
|
|
(2,558 |
) |
|
|
(1,368 |
) |
Income before provision for
income taxes |
|
6,068 |
|
|
|
1,190 |
|
|
|
3,797 |
|
|
|
5,516 |
|
Provision for income
taxes |
|
1,074 |
|
|
|
69 |
|
|
|
241 |
|
|
|
1,013 |
|
Net income |
|
4,994 |
|
|
|
1,121 |
|
|
|
3,556 |
|
|
|
4,503 |
|
Less: net income (loss)
attributable to noncontrolling interest |
|
163 |
|
|
|
(124 |
) |
|
|
387 |
|
|
|
(342 |
) |
Net income and other
comprehensive income attributable to The Pennant Group, Inc. |
$ |
4,831 |
|
|
$ |
1,245 |
|
|
$ |
3,169 |
|
|
$ |
4,845 |
|
Earnings per share: |
|
|
|
|
|
|
|
Basic |
$ |
0.16 |
|
|
$ |
0.04 |
|
|
$ |
0.11 |
|
|
$ |
0.17 |
|
Diluted |
$ |
0.16 |
|
|
$ |
0.04 |
|
|
$ |
0.10 |
|
|
$ |
0.16 |
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
Basic |
|
29,335 |
|
|
|
28,444 |
|
|
|
28,840 |
|
|
|
28,364 |
|
Diluted |
|
30,172 |
|
|
|
30,556 |
|
|
|
30,182 |
|
|
|
30,719 |
|
THE PENNANT GROUP,
INC. CONDENSED CONSOLIDATED BALANCE
SHEETS(unaudited, in thousands, except par
value)
|
September 30, 2022 |
|
December 31, 2021 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash |
$ |
2,955 |
|
|
$ |
5,190 |
|
Accounts receivable—less allowance for doubtful accounts of $822
and $902, respectively |
|
51,604 |
|
|
|
53,940 |
|
Prepaid expenses and other current assets |
|
12,324 |
|
|
|
16,711 |
|
Total current assets |
|
66,883 |
|
|
|
75,841 |
|
Property and equipment,
net |
|
23,914 |
|
|
|
16,788 |
|
Right-of-use assets |
|
262,636 |
|
|
|
300,997 |
|
Deferred tax assets, net |
|
3,097 |
|
|
|
3,848 |
|
Restricted and other
assets |
|
10,686 |
|
|
|
4,828 |
|
Goodwill |
|
79,190 |
|
|
|
74,265 |
|
Other indefinite-lived
intangibles |
|
58,474 |
|
|
|
53,730 |
|
Total assets |
$ |
504,880 |
|
|
$ |
530,297 |
|
Liabilities and
equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
12,754 |
|
|
$ |
10,553 |
|
Accrued wages and related liabilities |
|
24,758 |
|
|
|
23,480 |
|
Operating lease liabilities—current |
|
15,948 |
|
|
|
16,118 |
|
Other accrued liabilities |
|
19,299 |
|
|
|
21,484 |
|
Total current liabilities |
|
72,759 |
|
|
|
71,635 |
|
Long-term operating lease
liabilities—less current portion |
|
249,421 |
|
|
|
287,753 |
|
Other long-term
liabilities |
|
6,098 |
|
|
|
5,293 |
|
Long-term debt, net |
|
55,762 |
|
|
|
51,372 |
|
Total liabilities |
|
384,040 |
|
|
|
416,053 |
|
Commitments and
contingencies |
|
|
|
Equity: |
|
|
|
Common stock, $0.001 par value; 100,000 shares authorized; 30,146
and 29,665 shares issued and outstanding, respectively, at
September 30, 2022; and 28,826 and 28,499 shares issued and
outstanding, respectively, at December 31, 2021 |
|
29 |
|
|
|
28 |
|
Additional paid-in capital |
|
98,634 |
|
|
|
95,595 |
|
Retained earnings |
|
17,810 |
|
|
|
14,641 |
|
Treasury stock, at cost, 3 shares at September 30, 2022 and
December 31, 2021 |
|
(65 |
) |
|
|
(65 |
) |
Total Pennant Group, Inc. stockholders’ equity |
|
116,408 |
|
|
|
110,199 |
|
Noncontrolling interest |
|
4,432 |
|
|
|
4,045 |
|
Total equity |
|
120,840 |
|
|
|
114,244 |
|
Total liabilities and equity |
$ |
504,880 |
|
|
$ |
530,297 |
|
THE PENNANT GROUP,
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(unaudited, in thousands)
The following table presents selected data from
our condensed consolidated statement of cash flows for the periods
presented:
|
Nine Months Ended September 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
Net cash provided by (used in)
operating activities |
$ |
12,974 |
|
|
$ |
(13,065 |
) |
Net cash used in investing
activities |
|
(20,176 |
) |
|
|
(18,066 |
) |
Net cash provided by financing
activities |
|
4,967 |
|
|
|
34,795 |
|
Net (decrease) increase in cash |
|
(2,235 |
) |
|
|
3,664 |
|
Cash beginning of period |
|
5,190 |
|
|
|
43 |
|
Cash end of period |
$ |
2,955 |
|
|
$ |
3,707 |
|
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 September 30, |
|
|
2022 |
|
|
|
2021 |
|
|
Revenue Dollars |
|
Revenue Percentage |
|
Revenue Dollars |
|
Revenue Percentage |
|
|
|
|
|
|
|
|
Home health and hospice
services |
|
|
|
|
|
|
|
Home health |
$ |
39,873 |
|
|
|
33.8 |
% |
|
$ |
34,228 |
|
|
|
30.6 |
% |
Hospice |
|
40,522 |
|
|
|
34.2 |
|
|
|
39,069 |
|
|
|
34.9 |
|
Home care and other(a) |
|
5,384 |
|
|
|
4.5 |
|
|
|
5,706 |
|
|
|
5.1 |
|
Total home health and hospice services |
|
85,779 |
|
|
|
72.5 |
|
|
|
79,003 |
|
|
|
70.6 |
|
Senior living services |
|
32,571 |
|
|
|
27.5 |
|
|
|
32,918 |
|
|
|
29.4 |
|
Total revenue |
$ |
118,350 |
|
|
|
100.0 |
% |
|
$ |
111,921 |
|
|
|
100.0 |
% |
(a) |
|
Home care and other revenue is
included with home health revenue in other disclosures in this
press release. |
|
Nine Months Ended September 30, |
|
|
2022 |
|
|
|
2021 |
|
|
Revenue Dollars |
|
Revenue Percentage |
|
Revenue Dollars |
|
Revenue Percentage |
|
|
|
|
|
|
|
|
Home health and hospice
services |
|
|
|
|
|
|
|
Home health |
$ |
117,962 |
|
|
|
33.8 |
% |
|
$ |
102,719 |
|
|
|
31.3 |
% |
Hospice |
|
117,704 |
|
|
|
33.8 |
|
|
|
112,821 |
|
|
|
34.4 |
|
Home care and other(a) |
|
15,932 |
|
|
|
4.6 |
|
|
|
16,175 |
|
|
|
5.0 |
|
Total home health and hospice services |
|
251,598 |
|
|
|
72.2 |
|
|
|
231,715 |
|
|
|
70.7 |
|
Senior living services |
|
96,978 |
|
|
|
27.8 |
|
|
|
96,214 |
|
|
|
29.3 |
|
Total revenue |
$ |
348,576 |
|
|
|
100.0 |
% |
|
$ |
327,929 |
|
|
|
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 September 30, |
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
Change |
|
% Change |
Total agency
results: |
|
|
|
|
|
|
|
Home health and hospice revenue |
$ |
85,779 |
|
|
$ |
79,003 |
|
|
|
6,776 |
|
|
|
8.6 |
% |
|
|
|
|
|
|
|
|
Home health services: |
|
|
|
|
|
|
|
Total home health admissions |
|
10,152 |
|
|
|
9,213 |
|
|
|
939 |
|
|
|
10.2 |
% |
Total Medicare home health admissions |
|
4,637 |
|
|
|
4,211 |
|
|
|
426 |
|
|
|
10.1 |
% |
Average Medicare revenue per 60-day completed episode(a) |
$ |
3,589 |
|
|
$ |
3,388 |
|
|
$ |
201 |
|
|
|
5.9 |
% |
Hospice services: |
|
|
|
|
|
|
|
Total hospice admissions |
|
2,392 |
|
|
|
2,219 |
|
|
|
173 |
|
|
|
7.8 |
% |
Average daily census |
|
2,293 |
|
|
|
2,337 |
|
|
|
(44 |
) |
|
|
(1.9 |
)% |
Hospice Medicare revenue per day |
$ |
176 |
|
|
$ |
174 |
|
|
$ |
2 |
|
|
|
1.1 |
% |
|
Three Months Ended September 30, |
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
Change |
|
% Change |
Same
agency(b)results: |
|
|
|
|
|
|
|
Home health and hospice revenue |
$ |
76,701 |
|
|
$ |
74,778 |
|
|
$ |
1,923 |
|
|
|
2.6 |
% |
|
|
|
|
|
|
|
|
Home health services: |
|
|
|
|
|
|
|
Total home health admissions |
|
9,271 |
|
|
|
8,640 |
|
|
|
631 |
|
|
|
7.3 |
% |
Total Medicare home health admissions |
|
4,165 |
|
|
|
3,896 |
|
|
|
269 |
|
|
|
6.9 |
% |
Average Medicare revenue per 60-day completed episode(a) |
$ |
3,615 |
|
|
$ |
3,423 |
|
|
$ |
192 |
|
|
|
5.6 |
% |
Hospice services: |
|
|
|
|
|
|
|
Total hospice admissions |
|
1,982 |
|
|
|
2,178 |
|
|
|
(196 |
) |
|
|
(9.0 |
)% |
Average daily census |
|
2,091 |
|
|
|
2,294 |
|
|
|
(203 |
) |
|
|
(8.8 |
)% |
Hospice Medicare revenue per day |
$ |
176 |
|
|
$ |
173 |
|
|
$ |
3 |
|
|
|
1.7 |
% |
|
Three Months Ended September 30, |
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
Change |
|
% Change |
New
agency(c)results: |
|
|
|
|
|
|
|
Home health and hospice revenue |
$ |
9,078 |
|
|
$ |
4,225 |
|
|
$ |
4,853 |
|
|
|
114.9 |
% |
|
|
|
|
|
|
|
|
Home health services: |
|
|
|
|
|
|
|
Total home health admissions |
|
881 |
|
|
|
574 |
|
|
|
307 |
|
|
|
53.5 |
% |
Total Medicare home health admissions |
|
472 |
|
|
|
315 |
|
|
|
157 |
|
|
|
49.8 |
% |
Average Medicare revenue per 60-day completed episode(a) |
$ |
3,323 |
|
|
$ |
2,883 |
|
|
$ |
440 |
|
|
|
15.3 |
% |
Hospice services: |
|
|
|
|
|
|
|
Total hospice admissions |
|
410 |
|
|
|
41 |
|
|
|
369 |
|
|
|
900.0 |
% |
Average daily census |
|
202 |
|
|
|
43 |
|
|
|
159 |
|
|
|
369.8 |
% |
Hospice Medicare revenue per day |
$ |
169 |
|
|
$ |
202 |
|
|
$ |
(33 |
) |
|
|
(16.3 |
)% |
|
Nine Months Ended September 30, |
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
Change |
|
% Change |
Total agency
results: |
|
|
|
|
|
|
|
Home health and hospice revenue |
$ |
251,598 |
|
|
$ |
231,715 |
|
|
$ |
19,883 |
|
|
|
8.6 |
% |
|
|
|
|
|
|
|
|
Home health services: |
|
|
|
|
|
|
|
Total home health admissions |
|
30,389 |
|
|
|
28,079 |
|
|
|
2,310 |
|
|
|
8.2 |
% |
Total Medicare home health admissions |
|
13,952 |
|
|
|
13,115 |
|
|
|
837 |
|
|
|
6.4 |
% |
Average Medicare revenue per 60-day completed episode(a) |
$ |
3,548 |
|
|
$ |
3,383 |
|
|
$ |
165 |
|
|
|
4.9 |
% |
Hospice services: |
|
|
|
|
|
|
|
Total hospice admissions |
|
6,920 |
|
|
|
6,420 |
|
|
|
500 |
|
|
|
7.8 |
% |
Average daily census |
|
2,270 |
|
|
|
2,313 |
|
|
|
(43 |
) |
|
|
(1.9 |
)% |
Hospice Medicare revenue per day |
$ |
177 |
|
|
$ |
173 |
|
|
$ |
4 |
|
|
|
2.3 |
% |
|
Nine Months Ended September 30, |
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
Change |
|
% Change |
Same
agency(b)results: |
|
|
|
|
|
|
|
Home health and hospice revenue |
$ |
228,726 |
|
|
$ |
223,488 |
|
|
$ |
5,238 |
|
|
|
2.3 |
% |
|
|
|
|
|
|
|
|
Home health services: |
|
|
|
|
|
|
|
Total home health admissions |
|
27,859 |
|
|
|
27,192 |
|
|
|
667 |
|
|
|
2.5 |
% |
Total Medicare home health admissions |
|
12,527 |
|
|
|
12,557 |
|
|
|
(30 |
) |
|
|
(0.2 |
)% |
Average Medicare revenue per 60-day completed episode(a) |
$ |
3,580 |
|
|
$ |
3,404 |
|
|
$ |
176 |
|
|
|
5.2 |
% |
Hospice services: |
|
|
|
|
|
|
|
Total hospice admissions |
|
6,162 |
|
|
|
6,360 |
|
|
|
(198 |
) |
|
|
(3.1 |
)% |
Average daily census |
|
2,116 |
|
|
|
2,295 |
|
|
|
(179 |
) |
|
|
(7.8 |
)% |
Hospice Medicare revenue per day |
$ |
175 |
|
|
$ |
172 |
|
|
$ |
3 |
|
|
|
1.7 |
% |
|
Nine Months Ended September 30, |
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
Change |
|
% Change |
New
agency(c)results: |
|
|
|
|
|
|
|
Home health and hospice revenue |
$ |
22,872 |
|
|
$ |
8,227 |
|
|
$ |
14,645 |
|
|
|
178.0 |
% |
|
|
|
|
|
|
|
|
Home health services: |
|
|
|
|
|
|
|
Total home health admissions |
|
2,530 |
|
|
|
887 |
|
|
|
1,643 |
|
|
|
185.2 |
% |
Total Medicare home health admissions |
|
1,425 |
|
|
|
558 |
|
|
|
867 |
|
|
|
155.4 |
% |
Average Medicare revenue per 60-day completed episode(a) |
$ |
3,219 |
|
|
$ |
2,815 |
|
|
$ |
404 |
|
|
|
14.4 |
% |
Hospice services: |
|
|
|
|
|
|
|
Total hospice admissions |
|
758 |
|
|
|
60 |
|
|
|
698 |
|
|
|
1163.3 |
% |
Average daily census |
|
154 |
|
|
|
18 |
|
|
|
136 |
|
|
|
755.6 |
% |
Hospice Medicare revenue per day |
$ |
201 |
|
|
$ |
356 |
|
|
$ |
(155 |
) |
|
|
(43.5 |
)% |
(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 communities purchased or licensed
prior to January 1, 2021. |
(c) |
|
New agency results represent all agencies acquired on or subsequent
to January 1, 2021 and all startup operations that have a start
date or license date subsequent to January 1, 2021. |
The following table summarizes our senior living
performance indicators for the periods indicated:
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
Occupancy |
|
76.5 |
% |
|
|
73.7 |
% |
|
|
75.1 |
% |
|
|
72.8 |
% |
Average monthly revenue per
occupied unit |
$ |
3,560 |
|
|
$ |
3,174 |
|
|
$ |
3,465 |
|
|
$ |
3,179 |
|
THE PENNANT GROUP,
INC.REVENUE BY PAYOR
SOURCE(unaudited, dollars in
thousands)
The following table presents our total revenue
by payor source and as a percentage of total revenue for the
periods indicated:
|
Three Months Ended September 30, |
|
|
2022 |
|
|
|
2021 |
|
|
Revenue Dollars |
|
Revenue Percentage |
|
Revenue Dollars |
|
Revenue Percentage |
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
Medicare |
$ |
58,407 |
|
|
|
49.4 |
% |
|
$ |
55,286 |
|
|
|
49.4 |
% |
Medicaid |
|
15,343 |
|
|
|
13.0 |
|
|
|
14,342 |
|
|
|
12.8 |
|
Subtotal |
|
73,750 |
|
|
|
62.4 |
|
|
|
69,628 |
|
|
|
62.2 |
|
Managed Care |
|
15,656 |
|
|
|
13.2 |
|
|
|
12,848 |
|
|
|
11.5 |
|
Private and Other(a) |
|
28,944 |
|
|
|
24.4 |
|
|
|
29,445 |
|
|
|
26.3 |
|
Total revenue |
$ |
118,350 |
|
|
|
100.0 |
% |
|
$ |
111,921 |
|
|
|
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. |
|
Nine Months Ended September 30, |
|
|
2022 |
|
|
|
2021 |
|
|
Revenue Dollars |
|
Revenue Percentage |
|
Revenue Dollars |
|
Revenue Percentage |
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
Medicare |
$ |
171,183 |
|
|
|
49.1 |
% |
|
$ |
162,826 |
|
|
|
49.7 |
% |
Medicaid |
|
46,080 |
|
|
|
13.2 |
|
|
|
42,432 |
|
|
|
12.9 |
|
Subtotal |
|
217,263 |
|
|
|
62.3 |
|
|
|
205,258 |
|
|
|
62.6 |
|
Managed Care |
|
45,105 |
|
|
|
13.0 |
|
|
|
36,827 |
|
|
|
11.2 |
|
Private and Other(a) |
|
86,208 |
|
|
|
24.7 |
|
|
|
85,844 |
|
|
|
26.2 |
|
Total revenue |
$ |
348,576 |
|
|
|
100.0 |
% |
|
$ |
327,929 |
|
|
|
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 September 30, |
|
Nine Months Ended September 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
Net income attributable to The
Pennant Group, Inc. |
$ |
4,831 |
|
|
$ |
1,245 |
|
|
$ |
3,169 |
|
|
$ |
4,845 |
|
|
|
|
|
|
|
|
|
Non-GAAP
adjustments |
|
|
|
|
|
|
|
Net income attributable to
noncontrolling interest(a) |
|
— |
|
|
|
(124 |
) |
|
|
224 |
|
|
|
(342 |
) |
Costs at start-up
operations(b) |
|
749 |
|
|
|
641 |
|
|
|
1,335 |
|
|
|
1,300 |
|
Share-based compensation
expense(c) |
|
(2,501 |
) |
|
|
2,568 |
|
|
|
2,319 |
|
|
|
7,483 |
|
Acquisition related costs and
credit allowances(d) |
|
1,000 |
|
|
|
36 |
|
|
|
1,014 |
|
|
|
73 |
|
Transition services
costs(e) |
|
— |
|
|
|
236 |
|
|
|
77 |
|
|
|
1,825 |
|
Loss related to senior living
operations transferred to Ensign(f) |
|
144 |
|
|
|
— |
|
|
|
7,026 |
|
|
|
— |
|
Unusual or non-recurring
charges(g) |
|
293 |
|
|
|
— |
|
|
|
293 |
|
|
|
— |
|
Provision for income taxes on
Non-GAAP adjustments(h) |
|
(379 |
) |
|
|
(1,172 |
) |
|
|
(3,820 |
) |
|
|
(3,328 |
) |
Non-GAAP net
income |
$ |
4,137 |
|
|
$ |
3,430 |
|
|
$ |
11,637 |
|
|
$ |
11,856 |
|
|
|
|
|
|
|
|
|
Dilutive Earnings Per
Share As Reported |
|
|
|
|
|
|
|
Net Income |
$ |
0.16 |
|
|
$ |
0.04 |
|
|
$ |
0.10 |
|
|
$ |
0.16 |
|
Average number of shares
outstanding |
|
30,172 |
|
|
|
30,556 |
|
|
|
30,182 |
|
|
|
30,719 |
|
|
|
|
|
|
|
|
|
Adjusted Diluted
Earnings Per Share |
|
|
|
|
|
|
|
Net Income |
$ |
0.14 |
|
|
$ |
0.11 |
|
|
$ |
0.39 |
|
|
$ |
0.39 |
|
Average number of shares
outstanding |
|
30,172 |
|
|
|
30,556 |
|
|
|
30,182 |
|
|
|
30,719 |
|
(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 September 30, |
|
Nine Months Ended September 30, |
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
Revenue |
$ |
(1,852 |
) |
|
$ |
(1,768 |
) |
|
$ |
(3,441 |
) |
|
$ |
(11,954 |
) |
|
|
Cost of
services |
|
2,282 |
|
|
|
2,300 |
|
|
|
4,379 |
|
|
|
12,945 |
|
|
|
Rent |
|
315 |
|
|
|
97 |
|
|
|
386 |
|
|
|
296 |
|
|
|
Depreciation |
|
4 |
|
|
|
12 |
|
|
|
11 |
|
|
|
13 |
|
|
|
Total Non-GAAP
adjustment |
$ |
749 |
|
|
$ |
641 |
|
|
$ |
1,335 |
|
|
$ |
1,300 |
|
|
|
|
|
|
|
|
|
|
|
(c) |
|
Represents
share-based compensation expense incurred for the periods
presented. |
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
Cost of
services |
$ |
674 |
|
|
$ |
557 |
|
|
$ |
1,795 |
|
|
$ |
1,493 |
|
|
|
General and
administrative |
|
(3,175 |
) |
|
|
2,011 |
|
|
|
524 |
|
|
|
5,990 |
|
|
|
Total Non-GAAP
adjustment |
$ |
(2,501 |
) |
|
$ |
2,568 |
|
|
$ |
2,319 |
|
|
$ |
7,483 |
|
|
|
|
|
|
|
|
|
|
|
(d) |
|
Represents costs incurred to acquire an operation that are not
capitalizable. |
THE PENNANT GROUP,
INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
INFORMATION(unaudited, in thousands, except per
share data)
(e) |
|
Costs identified as redundant or non-recurring incurred by the
Company as a result of the Spin-off. The 2021 amounts represents
part of the costs incurred under the Transition Services Agreement.
All amounts are included in general and administrative expense.
Fees incurred under the Transition Services Agreement were $231 and
$1,332 for the three and nine months ended September 30, 2022, and
$706 and $2,441 for the three and nine months ended September 30,
2021. |
|
|
|
|
|
|
|
|
|
|
(f) |
|
On January 27, 2022, affiliates of the Company, entered into
certain operations transfer agreements (collectively, the “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 includes $6,500
for the nine months ended September 30, 2022 to cover post-closing
capital expenditures and operating losses related to one of the
communities transferred on April 1, 2022. The amount above also
includes $144 and $(422) for the three and nine months ended
September 30, 2022, respectively, for the related net impact on
revenue and cost of service attributable to the transferred
entities. This amount excludes rent and depreciation and
amortization expense related to such operations. |
|
|
|
Three Months Ended June 30, |
|
Nine Months Ended September 30, |
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
Revenue |
$ |
(39 |
) |
|
$ |
— |
|
|
$ |
(3,375 |
) |
|
$ |
— |
|
|
|
Cost of
services |
|
183 |
|
|
|
— |
|
|
|
9,453 |
|
|
|
— |
|
|
|
Rent |
|
— |
|
|
|
— |
|
|
|
948 |
|
|
|
— |
|
|
|
Total Non-GAAP
adjustment |
$ |
144 |
|
|
$ |
— |
|
|
$ |
7,026 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
(g) |
|
Represents unusual or non-recurring charges for legal services,
implementation costs, integration costs, and consulting fees in
general and administrative expenses. |
|
|
|
|
|
|
|
|
|
(h) |
|
Represents an adjustment to the provision for income tax to our
year-to-date effective tax rate of 25.6% and 26.8% for the three
and nine months ended September 30, 2022 and 2021, respectively.
This rate excludes the tax benefit of shared-based payment
awards. |
THE PENNANT GROUP,
INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
INFORMATION(unaudited, in thousands)
The tables below reconcile Consolidated net
income to the consolidated Non-GAAP financial measures,
Consolidated and Consolidated Adjusted EBITDA, and to the Non-GAAP
valuation measure, Consolidated Adjusted EBITDAR, for the periods
presented:
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
Consolidated net income |
$ |
4,994 |
|
|
$ |
1,121 |
|
|
$ |
3,556 |
|
|
$ |
4,503 |
|
Less: Net loss attributable to
noncontrolling interest |
|
163 |
|
|
|
(124 |
) |
|
|
387 |
|
|
|
(342 |
) |
Add: Provision for income
taxes (benefit) |
|
1,074 |
|
|
|
69 |
|
|
|
241 |
|
|
|
1,013 |
|
Net interest expense |
|
1,058 |
|
|
|
512 |
|
|
|
2,508 |
|
|
|
1,344 |
|
Depreciation and amortization |
|
1,251 |
|
|
|
1,200 |
|
|
|
3,677 |
|
|
|
3,545 |
|
Consolidated EBITDA |
|
8,214 |
|
|
|
3,026 |
|
|
|
9,595 |
|
|
|
10,747 |
|
Adjustments to Consolidated
EBITDA |
|
|
|
|
|
|
|
Add: Costs at start-up
operations(a) |
|
430 |
|
|
|
532 |
|
|
|
938 |
|
|
|
991 |
|
Share-based compensation expense(b) |
|
(2,501 |
) |
|
|
2,568 |
|
|
|
2,319 |
|
|
|
7,483 |
|
Acquisition related costs and credit allowances(c) |
|
1,000 |
|
|
|
36 |
|
|
|
1,014 |
|
|
|
73 |
|
Transition services costs(d) |
|
— |
|
|
|
236 |
|
|
|
77 |
|
|
|
1,825 |
|
Loss related to senior living operations transferred to
Ensign(e) |
|
144 |
|
|
|
— |
|
|
|
6,078 |
|
|
|
— |
|
Unusual or non-recurring charges(f) |
|
293 |
|
|
|
— |
|
|
|
293 |
|
|
|
— |
|
Rent related to items (a) and (e) above |
|
315 |
|
|
|
97 |
|
|
|
1,334 |
|
|
|
296 |
|
Consolidated Adjusted EBITDA |
|
7,895 |
|
|
|
6,495 |
|
|
|
21,648 |
|
|
|
21,415 |
|
Rent—cost of services |
|
9,391 |
|
|
|
10,334 |
|
|
|
28,520 |
|
|
|
30,455 |
|
Rent related to items (a) and (e) above |
|
(315 |
) |
|
|
(97 |
) |
|
|
(1,334 |
) |
|
|
(296 |
) |
Adjusted rent—cost of services |
|
9,076 |
|
|
|
10,237 |
|
|
|
27,186 |
|
|
|
30,159 |
|
Consolidated Adjusted EBITDAR |
$ |
16,971 |
|
|
|
|
$ |
48,834 |
|
|
|
(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, including the impact of the modification of certain
restricted stock units described below in Note 12, Options and
Awards, to the Interim Financial Statements. 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 and credit
allowances for amounts in dispute with the prior owners of certain
acquired operations. |
(d) |
|
Costs identified as redundant or non-recurring incurred by the
Company as a result of the Spin-off. The 2021 amounts represents
part of the costs incurred under the Transition Services Agreement.
All amounts are included in general and administrative expense.
Fees incurred under the Transition Services Agreement were $231 and
$1,332 for the three and nine months ended September 30, 2022, and
$706 and $2,441 for the three and nine months ended September 30,
2021. |
(e) |
|
On January 27, 2022, affiliates of the Company, entered into
certain operations transfer agreements (collectively, the “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 includes $6,500
for the nine months ended September 30, 2022 to cover post-closing
capital expenditures and operating losses related to one of the
communities transferred on April 1, 2022. The amount above also
includes $144 and $(422) for the three and nine months ended
September 30, 2022, respectively, for the related net impact on
revenue and cost of service attributable to the transferred
entities. This amount excludes 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 expenses. |
THE PENNANT GROUP,
INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
INFORMATION(unaudited, in thousands)
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”:
|
Three Months Ended September 30, |
|
Home Health and Hospice Services |
|
Senior Living Services |
|
All Other |
|
Total |
Segment GAAP Financial
Measures: |
|
|
|
|
|
|
|
Three Months Ended
June 30, 2022 |
|
|
|
|
|
|
|
Revenue |
$ |
85,779 |
|
|
$ |
32,571 |
|
|
$ |
— |
|
|
$ |
118,350 |
|
Segment Adjusted EBITDAR from
Operations |
$ |
15,380 |
|
|
$ |
9,370 |
|
|
$ |
(7,779 |
) |
|
$ |
16,971 |
|
Three Months Ended
June 30, 2021 |
|
|
|
|
|
|
|
Revenue |
$ |
79,003 |
|
|
$ |
32,918 |
|
|
$ |
— |
|
|
$ |
111,921 |
|
Segment Adjusted EBITDAR from
Operations |
$ |
14,409 |
|
|
$ |
9,106 |
|
|
$ |
(6,783 |
) |
|
$ |
16,732 |
|
|
Nine Months Ended September 30, |
|
Home Health and Hospice Services |
|
Senior Living Services |
|
All Other |
|
Total |
Segment GAAP Financial
Measures: |
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2022 |
|
|
|
|
|
|
|
Revenue |
$ |
251,598 |
|
|
$ |
96,978 |
|
|
$ |
— |
|
|
$ |
348,576 |
|
Segment Adjusted EBITDAR from
Operations |
$ |
45,056 |
|
|
$ |
27,573 |
|
|
$ |
(23,795 |
) |
|
$ |
48,834 |
|
Nine Months Ended
September 30, 2021 |
|
|
|
|
|
|
|
Revenue |
$ |
231,715 |
|
|
$ |
96,214 |
|
|
$ |
— |
|
|
$ |
327,929 |
|
Segment Adjusted EBITDAR from
Operations |
$ |
43,131 |
|
|
$ |
27,692 |
|
|
$ |
(19,249 |
) |
|
$ |
51,574 |
|
The table below provides a reconciliation of
Segment Adjusted EBITDAR from Operations above to Condensed
Consolidated Income from Operations:
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDAR from
Operations(a) |
$ |
16,971 |
|
|
$ |
16,732 |
|
|
$ |
48,834 |
|
|
$ |
51,574 |
|
Less: Depreciation and
amortization |
|
1,251 |
|
|
|
1,200 |
|
|
|
3,677 |
|
|
|
3,545 |
|
Rent—cost of services |
|
9,391 |
|
|
|
10,334 |
|
|
|
28,520 |
|
|
|
30,455 |
|
Other Income |
|
(18 |
) |
|
|
— |
|
|
|
(50 |
) |
|
|
(24 |
) |
Adjustments to Segment EBITDAR
from Operations: |
|
|
|
|
|
|
|
Less: Costs at start-up
operations(b) |
|
430 |
|
|
|
532 |
|
|
|
938 |
|
|
|
991 |
|
Share-based compensation expense(c) |
|
(2,501 |
) |
|
|
2,568 |
|
|
|
2,319 |
|
|
|
7,483 |
|
Acquisition related costs and credit allowances(d) |
|
1,000 |
|
|
|
36 |
|
|
|
1,014 |
|
|
|
73 |
|
Transition services costs(e) |
|
— |
|
|
|
236 |
|
|
|
77 |
|
|
|
1,825 |
|
Loss related to senior living operations transferred to
Ensign(f) |
|
144 |
|
|
|
— |
|
|
|
6,078 |
|
|
|
— |
|
Unusual or non-recurring charges(g) |
|
293 |
|
|
|
— |
|
|
|
293 |
|
|
|
— |
|
Add: Net loss attributable to
noncontrolling interest |
|
163 |
|
|
|
(124 |
) |
|
|
387 |
|
|
|
(342 |
) |
Consolidated Income from
Operations |
$ |
7,144 |
|
|
$ |
1,702 |
|
|
$ |
6,355 |
|
|
$ |
6,884 |
|
(a) |
|
Segment Adjusted EBITDAR from Operations is net income 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) redundant and nonrecurring costs associated with the Transition
Services Agreement, (5) the loss related to senior living
operations transferred to Ensign, (6) unusual or non-recurring
charges, and (7) 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, including the impact of the modification of certain
restricted stock units described below in Note 12, Options and
Awards, to the Interim Financial Statements. 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 and credit allowances for amounts in
dispute with the prior owners of certain acquired operations. |
(e) |
|
Costs identified as redundant or non-recurring incurred by the
Company as a result of the Spin-off. The 2021 amounts represents
part of the costs incurred under the Transition Services Agreement.
All amounts are included in general and administrative expense.
Fees incurred under the Transition Services Agreement were $231 and
$1,332 for the three and nine months ended September 30, 2022, and
$706 and $2,441 for the three and nine months ended September 30,
2021. |
(f) |
|
On January 27, 2022, affiliates of the Company, entered into
certain operations transfer agreements (collectively, the “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 includes $6,500
for the nine months ended September 30, 2022 to cover post-closing
capital expenditures and operating losses related to one of the
communities transferred on April 1, 2022. The amount above also
includes $144 and $(422) for the three and nine months ended
September 30, 2022, respectively, for the related net impact on
revenue and cost of service attributable to the transferred
entities. This amount excludes rent and depreciation and
amortization expense related to such operations. |
(g) |
|
Represents unusual or non-recurring charges for legal services,
implementation costs, integration costs, and consulting fees in
general and administrative expenses. |
THE PENNANT GROUP,
INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
INFORMATION(unaudited, in thousands)
The table below reconcile Segment Adjusted EBITDAR from
Operations to Segment Adjusted EBITDA from Operations for each
reportable segment for the periods presented:
|
Three Months Ended September 30, |
|
Home Health and Hospice |
|
Senior Living |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDAR from
Operations |
$ |
15,380 |
|
|
$ |
14,409 |
|
|
$ |
9,370 |
|
|
$ |
9,106 |
|
Less: Rent—cost of
services |
|
1,262 |
|
|
|
1,282 |
|
|
|
8,129 |
|
|
|
9,052 |
|
Rent related to start-up and transferred operations |
|
(90 |
) |
|
|
(67 |
) |
|
|
(225 |
) |
|
|
(30 |
) |
Segment Adjusted EBITDA from
Operations |
$ |
14,208 |
|
|
$ |
13,194 |
|
|
$ |
1,466 |
|
|
$ |
84 |
|
|
Nine Months Ended September 30, |
|
Home Health and Hospice |
|
Senior Living |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDAR from
Operations |
$ |
45,056 |
|
|
$ |
43,131 |
|
|
$ |
27,573 |
|
|
$ |
27,692 |
|
Less: Rent—cost of
services |
|
3,765 |
|
|
|
3,611 |
|
|
|
24,755 |
|
|
|
26,844 |
|
Rent related to start-up and transferred operations |
|
(161 |
) |
|
|
(316 |
) |
|
|
(1,173 |
) |
|
|
20 |
|
Segment Adjusted EBITDA from
Operations |
$ |
41,452 |
|
|
$ |
39,836 |
|
|
$ |
3,991 |
|
|
$ |
828 |
|
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) (benefits)
provisions for income taxes, (b) depreciation and amortization, (c)
costs incurred for start-up operations, including rent and
excluding depreciation, interest and income taxes, (d) share-based
compensation expense, (e) non-capitalizable acquisition related
costs and credit allowances, (f) redundant or non-recurring
transition services costs, (g) loss related to senior living
operations transferred to Ensign, (h) usual or non-recurring
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 and credit
allowances, (h) redundant or non-recurring transition services
costs, (i) loss related to senior living operations transferred to
Ensign, (j) usual or non-recurring 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.
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