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 2022, reporting GAAP diluted earnings
per share of $0.22 and $0.12 for the year ended December 31, 2022
and the fourth quarter, respectively. Pennant also reported
adjusted diluted earnings per share of $0.57 for the year and $0.18
for the quarter (1).
Fourth Quarter Highlights
- Total revenue was $473.2 million
for the fiscal year 2022, an increase of $33.5 million or 7.6% over
the prior year, and total revenue for the quarter was $124.7
million, an increase of $12.9 million or 11.5% over the prior year
quarter;
- Net income for the full year was
$6.6 million, an increase of $3.9 million over the prior year, and
net income for the fourth quarter was $3.5 million, an increase of
$5.6 million over the prior year quarter, our adjusted net income
for the full year was $17.1 million, an increase of $3.1 million or
21.8% over the prior year and adjusted net income of the fourth
quarter was $5.4 million, an increase of $3.3 million or 152.4%
over the prior year quarter;
- Adjusted EBITDA was $31.5 million
for the full year, an increase of $5.1 million or 19.5% over the
prior year, and adjusted EBITDA was $9.9 million for the fourth
quarter, an increase of $4.9 million or 98.3% over the prior year
quarter; adjusted EBITDAR for the full year and fourth quarter was
$68.0 million and $19.1 million, respectively;
- Home Health and Hospice Services
segment revenue for the full year was $342.2 million, an increase
of $32.7 million or 10.6% over the prior year, and segment revenue
for the fourth quarter was $90.7 million, an increase of $12.8
million or 16.4%;
- Home Health and Hospice Services
segment adjusted EBITDA from operations was $57.0 million for the
full year, an increase of $5.9 million or 11.6%, and $15.5 million,
an increase of $4.3 million or 38.5% for the fourth quarter;
segment adjusted EBITDAR for the full year and the fourth quarter
was $61.8 million and $16.8 million respectively;
- Total home health admissions for
the full year increased from 37,366 to 40,436 or 8.2%; and total
home health admissions for the fourth quarter increased from 9,286
to 10,047 or 8.2%, each over the prior comparable period, and total
Medicare home health admissions for the full year increased from
17,356 to 18,641 or 7.4%, while total Medicare home health
admissions for the fourth quarter increased from 4,241 to 4,689 or
10.6%, both over the prior year comparable periods;
- Total hospice admissions for the
full year were 9,166, an increase of 553 or 6.4% over the prior
year, and total hospice admissions for the fourth quarter were
2,246, an increase of 53 or 2.4% over the prior year quarter.
Hospice average daily census for the full year was 2,296 an
increase of 0.2% over the prior year, and hospice average daily
census for the fourth quarter was 2,373, an increase of 5.2%
compared to the prior year quarter;
- Senior Living Services segment
revenue for the full year was $131.0 million, an increase of $0.9
million or 0.7% over the prior year, segment revenue for the fourth
quarter was $34.0 million, an increase of $0.1 million or 0.3% a
over the prior year quarter and $1.4 million or 4.4% over the third
quarter of 2022.
- Same store(2) Senior Living
Services segment revenue was $126.8 million for the full year, an
increase of $12.8 million or 11.2% over the prior year, and $33.5
million for the fourth quarter, an increase of $3.8 million or
12.9% over the prior year quarter; same store senior living average
occupancy for the fourth quarter was 78.6%, an increase of 330
basis points over the prior year quarter, and average monthly
revenue per occupied room for the fourth quarter was $3,670 an
increase of $282 or 8.3% over the prior year quarter and $113 or
3.2%% over the third quarter of 2022.
- Senior Living segment adjusted
EBITDA from Operations was $6.0 million for the full year, an
increase of $4.4 million or 282.4% over the prior year, $2.0
million for the fourth quarter, an increase of $1.3 million or
171.2% over the prior year quarter; segment adjusted EBITDAR from
operations was $37.6 million for the full year, an increase of 0.1%
over the prior year and segment adjusted EBITDAR from operations
for the fourth quarter was $10.0 million, an increase of $0.2
million or 1.7% over the prior year quarter.
(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 are pleased to report full year and fourth
quarter results that demonstrate progress in both segments in 2022
and meaningful momentum heading into 2023,” said Brent Guerisoli,
Pennant’s Chief Executive Officer. “We saw top line growth in both
segments, and despite labor and inflationary pressures, our teams
produced strong adjusted-EBITDA results consistent with our
projections. Our senior living business continued to stabilize.
Throughout 2022 we invested in the next generation of leaders who
are positioned to accelerate our growth in 2023. With these pieces
in place, we are providing full year 2023 guidance of annual
revenue between $503.5 million and $518.4 million, adjusted EBITDA
of $38.4 million to $42.6 million, and adjusted earnings per
diluted share of $0.66 to $0.76. The midpoint of $0.71 represents
24.6% growth on our 2022 adjusted earnings.”
“Our home health business continued its strong
performance. In the fourth quarter, home health revenue grew $8.8
million or 22.5% and hospice revenue grew $4.0 million or 10.4%,
each over the prior year quarter. These strong top line results
were driven by home health admissions that increased 8.2% over the
fourth quarter 2021. Hospice revenue was buoyed by a hospice
average daily census that increased 5.2% over the prior year
quarter. While we are pleased that home health and hospice segment
adjusted EBITDA of $15.5 million increased $4.3 million or 38.5%
over the prior year quarter, we know there is significant potential
to grow and improve our home health and hospice segment in
2023.”
“Our senior living segment continues its steady
turnaround,” said Mr. Guerisoli. Senior Living segment adjusted
EBITDA grew to $6.0 million, a $4.4 million increase over the prior
year, and improved to $2.0 million for the fourth quarter, an
increase of $1.3 million over the prior year quarter. Our same
store occupancy improved sequentially each quarter in 2022,
reaching 78.6% for the fourth quarter, a 330 basis point
improvement in these same facilities over the prior year quarter,
and 100 basis points improvement sequentially over the third
quarter of 2022. Average monthly revenue per occupied unit for the
fourth quarter grew to $3,670, an increase of $379 or 11.5% over
the prior year quarter and $110 or 3.0% sequentially over the third
quarter of 2022. The significant improvement in this segment is
evidence that strong leaders and strong clusters drive strong
results over time. We are excited to see this turnaround story
become a growth story in 2023 and beyond.”
“As we invest in deepening our leadership pool,
we are continuing to expand our acquisition pipeline,” said John
Gochnour, Pennant’s President and Chief Operating Officer. “We see
attractive acquisition targets within our footprint, including
off-market opportunities from sellers drawn to our reputation,
culture, and quality record. We announced one home health
acquisition in the fourth quarter, our purchase of the Kenosha
Visiting Nurse Association in Kenosha, Wisconsin. KVNA has provided
high quality in-home care in the Kenosha area for almost 100 years.
We are excited to carry on that legacy and continue to build our
Pennant care continuum in the Wisconsin market, where we operate
several senior living communities.”
Jennifer Freeman, Pennant’s Interim Chief
Financial Officer, reported on the Company’s cash position,
commenting that the Company had $2.1 million of cash on hand and
$81.3 million available on its revolving line of credit. Ms.
Freeman noted that the Company had a net debt-to-adjusted EBITDA
ratio of 1.93x and a lease-adjusted net debt-to-adjusted EBITDAR
ratio of 5.30x as of December 31, 2022. “We’re pleased with our
liquidity position which will enable us to make strategic
investments in 2023,” said Ms. Freeman.
Ms. Freeman noted that management’s 2023 annual
guidance is based on diluted weighted average shares outstanding of
approximately 30.7 million and a 25.5% effective tax rate. The
guidance assumes, among other things, organic growth in current
operations, margin expansion, anticipated reimbursement rate
adjustments, and elevated interest rates. It does not include
unannounced acquisitions and excludes costs at start-up operations,
share-based compensation, acquisition-related costs, and one-time
implementation and unusual items.
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 Annual Report on Form 10-K for the
year ended December 31, 2022, which has been filed with the SEC
today and can be viewed on the Company’s website at
www.pennantgroup.com.
Conference Call
A live webcast will be held tomorrow,
February 24, 2023 at 10:00 a.m. Mountain time (12:00 p.m.
Eastern time) to discuss Pennant’s fourth 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, March 24, 2023.
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 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 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 EndedDecember 31, |
|
Year EndedDecember 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
Revenue |
$ |
124,665 |
|
|
$ |
111,765 |
|
|
$ |
473,241 |
|
|
$ |
439,694 |
|
|
|
|
|
|
|
|
|
Expense |
|
|
|
|
|
|
|
Cost of services |
|
98,980 |
|
|
|
90,328 |
|
|
|
376,638 |
|
|
|
350,236 |
|
Rent—cost of services |
|
9,498 |
|
|
|
10,408 |
|
|
|
38,018 |
|
|
|
40,863 |
|
General and administrative expense |
|
8,328 |
|
|
|
9,122 |
|
|
|
33,981 |
|
|
|
36,259 |
|
Depreciation and amortization |
|
1,223 |
|
|
|
1,239 |
|
|
|
4,900 |
|
|
|
4,784 |
|
Loss on asset dispositions and impairment, net |
|
252 |
|
|
|
2,857 |
|
|
|
6,965 |
|
|
|
2,857 |
|
Total expenses |
|
118,281 |
|
|
|
113,954 |
|
|
|
460,502 |
|
|
|
434,999 |
|
Income from operations |
|
6,384 |
|
|
|
(2,189 |
) |
|
|
12,739 |
|
|
|
4,695 |
|
Other (expense): |
|
|
|
|
|
|
|
Other (expense) income |
|
19 |
|
|
|
— |
|
|
|
(31 |
) |
|
|
(24 |
) |
Interest expense, net |
|
(1,308 |
) |
|
|
(597 |
) |
|
|
(3,816 |
) |
|
|
(1,941 |
) |
Other expense, net |
|
(1,289 |
) |
|
|
(597 |
) |
|
|
(3,847 |
) |
|
|
(1,965 |
) |
Income before provision for income taxes |
|
5,095 |
|
|
|
(2,786 |
) |
|
|
8,892 |
|
|
|
2,730 |
|
Provision for income taxes |
|
1,408 |
|
|
|
(431 |
) |
|
|
1,649 |
|
|
|
582 |
|
Net income |
|
3,687 |
|
|
|
(2,355 |
) |
|
|
7,243 |
|
|
|
2,148 |
|
Less: net income (loss) attributable to noncontrolling
interest |
|
213 |
|
|
|
(206 |
) |
|
|
600 |
|
|
|
(548 |
) |
Net income and other comprehensive income attributable to The
Pennant Group, Inc. |
$ |
3,474 |
|
|
$ |
(2,149 |
) |
|
$ |
6,643 |
|
|
$ |
2,696 |
|
Earnings per share: |
|
|
|
|
|
|
|
Basic |
$ |
0.12 |
|
|
$ |
(0.08 |
) |
|
$ |
0.23 |
|
|
$ |
0.09 |
|
Diluted |
$ |
0.12 |
|
|
$ |
(0.08 |
) |
|
$ |
0.22 |
|
|
$ |
0.09 |
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
29,728 |
|
|
|
28,530 |
|
|
|
29,064 |
|
|
|
28,406 |
|
Diluted |
|
30,091 |
|
|
|
28,530 |
|
|
|
30,159 |
|
|
|
30,642 |
|
THE PENNANT GROUP,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(unaudited, in thousands, except par
value)
|
December 31, 2022 |
|
December 31, 2021 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash |
$ |
2,079 |
|
|
$ |
5,190 |
|
Accounts receivable—less allowance for doubtful accounts of $592
and $902, respectively |
|
53,420 |
|
|
|
53,940 |
|
Prepaid expenses and other current assets |
|
18,323 |
|
|
|
16,711 |
|
Total current assets |
|
73,822 |
|
|
|
75,841 |
|
Property and equipment, net |
|
26,621 |
|
|
|
16,788 |
|
Right-of-use assets |
|
260,868 |
|
|
|
300,997 |
|
Deferred tax assets, net |
|
2,149 |
|
|
|
3,848 |
|
Restricted and other assets |
|
10,545 |
|
|
|
4,828 |
|
Goodwill |
|
79,497 |
|
|
|
74,265 |
|
Other indefinite-lived intangibles |
|
58,617 |
|
|
|
53,730 |
|
Total assets |
$ |
512,119 |
|
|
$ |
530,297 |
|
Liabilities and equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
13,647 |
|
|
$ |
10,553 |
|
Accrued wages and related liabilities |
|
23,283 |
|
|
|
23,480 |
|
Operating lease liabilities—current |
|
16,633 |
|
|
|
16,118 |
|
Other accrued liabilities |
|
16,684 |
|
|
|
21,484 |
|
Total current liabilities |
|
70,247 |
|
|
|
71,635 |
|
Long-term operating lease liabilities—less current portion |
|
247,042 |
|
|
|
287,753 |
|
Other long-term liabilities |
|
6,281 |
|
|
|
5,293 |
|
Long-term debt, net |
|
62,892 |
|
|
|
51,372 |
|
Total liabilities |
|
386,462 |
|
|
|
416,053 |
|
Commitments and contingencies |
|
|
|
Equity: |
|
|
|
Common stock, $0.001 par value; 100,000 shares authorized; 30,149
and 29,692 shares issued and outstanding, respectively, at December
31, 2022; and 28,826 and 28,499 shares issued and outstanding,
respectively, at December 31, 2021 |
|
29 |
|
|
|
28 |
|
Additional paid-in capital |
|
99,764 |
|
|
|
95,595 |
|
Retained earnings |
|
21,284 |
|
|
|
14,641 |
|
Treasury stock, at cost, 3 shares at December 31, 2022 and
2021 |
|
(65 |
) |
|
|
(65 |
) |
Total Pennant Group, Inc. stockholders’ equity |
|
121,012 |
|
|
|
110,199 |
|
Noncontrolling interest |
|
4,645 |
|
|
|
4,045 |
|
Total equity |
|
125,657 |
|
|
|
114,244 |
|
Total liabilities and equity |
$ |
512,119 |
|
|
$ |
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:
|
Year Ended December 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
Net cash provided by (used in) operating activities |
$ |
9,044 |
|
|
$ |
(18,223 |
) |
Net cash used in investing activities |
|
(24,239 |
) |
|
|
(20,120 |
) |
Net cash provided by financing activities |
|
12,084 |
|
|
|
43,490 |
|
Net (decrease) increase in cash |
|
(3,111 |
) |
|
|
5,147 |
|
Cash beginning of period |
|
5,190 |
|
|
|
43 |
|
Cash end of period |
$ |
2,079 |
|
|
$ |
5,190 |
|
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, |
|
|
2022 |
|
|
|
2021 |
|
|
Revenue Dollars |
|
Revenue Percentage |
|
Revenue Dollars |
|
Revenue Percentage |
|
|
|
|
|
|
|
|
Home health and hospice services |
|
|
|
|
|
|
|
Home health |
$ |
41,896 |
|
33.6 |
% |
|
$ |
33,786 |
|
30.3 |
% |
Hospice |
|
42,816 |
|
34.3 |
|
|
|
38,791 |
|
34.7 |
|
Home care and other(a) |
|
5,939 |
|
4.8 |
|
|
|
5,278 |
|
4.7 |
|
Total home health and hospice services |
|
90,651 |
|
72.7 |
|
|
|
77,855 |
|
69.7 |
|
Senior living services |
|
34,014 |
|
27.3 |
|
|
|
33,910 |
|
30.3 |
|
Total revenue |
$ |
124,665 |
|
100.0 |
% |
|
$ |
111,765 |
|
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, |
|
|
2022 |
|
|
|
2021 |
|
|
Revenue Dollars |
|
Revenue Percentage |
|
Revenue Dollars |
|
Revenue Percentage |
|
|
|
|
|
|
|
|
Home health and hospice services |
|
|
|
|
|
|
|
Home health |
$ |
159,858 |
|
33.8 |
% |
|
$ |
136,505 |
|
31.0 |
% |
Hospice |
|
160,520 |
|
33.9 |
|
|
|
151,612 |
|
34.5 |
|
Home care and other(a) |
|
21,871 |
|
4.6 |
|
|
|
21,453 |
|
4.9 |
|
Total home health and hospice services |
|
342,249 |
|
72.3 |
|
|
|
309,570 |
|
70.4 |
|
Senior living services |
|
130,992 |
|
27.7 |
|
|
|
130,124 |
|
29.6 |
|
Total revenue |
$ |
473,241 |
|
100.0 |
% |
|
$ |
439,694 |
|
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 EndedDecember 31, |
|
|
|
|
|
|
2022 |
|
|
2021 |
|
Change |
|
% Change |
Total agency results: |
|
|
|
|
|
|
|
Home health and hospice revenue |
$ |
90,651 |
|
$ |
77,855 |
|
|
12,796 |
|
16.4 |
% |
|
|
|
|
|
|
|
|
Home health services: |
|
|
|
|
|
|
|
Total home health admissions |
|
10,047 |
|
|
9,286 |
|
|
761 |
|
8.2 |
% |
Total Medicare home health admissions |
|
4,689 |
|
|
4,241 |
|
|
448 |
|
10.6 |
% |
Average Medicare revenue per 60-day completed episode(a) |
$ |
3,533 |
|
$ |
3,448 |
|
$ |
85 |
|
2.5 |
% |
Hospice services: |
|
|
|
|
|
|
|
Total hospice admissions |
|
2,246 |
|
|
2,193 |
|
|
53 |
|
2.4 |
% |
Average daily census |
|
2,373 |
|
|
2,256 |
|
|
117 |
|
5.2 |
% |
Hospice Medicare revenue per day |
$ |
182 |
|
$ |
176 |
|
$ |
6 |
|
3.4 |
% |
|
Three Months EndedDecember 31, |
|
|
|
|
|
|
2022 |
|
|
2021 |
|
Change |
|
% Change |
Same agency(b)
results: |
|
|
|
|
|
|
|
Home health and hospice revenue |
$ |
79,740 |
|
$ |
72,925 |
|
$ |
6,815 |
|
|
9.3 |
% |
|
|
|
|
|
|
|
|
Home health services: |
|
|
|
|
|
|
|
Total home health admissions |
|
9,096 |
|
|
8,539 |
|
|
557 |
|
|
6.5 |
% |
Total Medicare home health admissions |
|
4,150 |
|
|
3,805 |
|
|
345 |
|
|
9.1 |
% |
Average Medicare revenue per 60-day completed episode(a) |
$ |
3,559 |
|
$ |
3,484 |
|
$ |
75 |
|
|
2.2 |
% |
Hospice services: |
|
|
|
|
|
|
|
Total hospice admissions |
|
2,046 |
|
|
2,089 |
|
|
(43 |
) |
|
(2.1 |
)% |
Average daily census |
|
2,158 |
|
|
2,186 |
|
|
(28 |
) |
|
(1.3 |
)% |
Hospice Medicare revenue per day |
$ |
178 |
|
$ |
174 |
|
$ |
4 |
|
|
2.3 |
% |
|
Three Months EndedDecember 31, |
|
|
|
|
|
|
2022 |
|
|
2021 |
|
Change |
|
% Change |
New agency(c)
results: |
|
|
|
|
|
|
|
Home health and hospice revenue |
$ |
10,911 |
|
$ |
4,930 |
|
$ |
5,981 |
|
|
121.3 |
% |
|
|
|
|
|
|
|
|
Home health services: |
|
|
|
|
|
|
|
Total home health admissions |
|
951 |
|
|
747 |
|
|
204 |
|
|
27.3 |
% |
Total Medicare home health admissions |
|
539 |
|
|
436 |
|
|
103 |
|
|
23.6 |
% |
Average Medicare revenue per 60-day completed episode(a) |
$ |
3,300 |
|
$ |
3,031 |
|
$ |
269 |
|
|
8.9 |
% |
Hospice services: |
|
|
|
|
|
|
|
Total hospice admissions |
|
200 |
|
|
104 |
|
|
96 |
|
|
92.3 |
% |
Average daily census |
|
215 |
|
|
70 |
|
|
145 |
|
|
207.1 |
% |
Hospice Medicare revenue per day |
$ |
219 |
|
$ |
256 |
|
$ |
(37 |
) |
|
(14.5 |
)% |
|
Year EndedDecember 31, |
|
|
|
|
|
|
2022 |
|
|
2021 |
|
Change |
|
% Change |
Total agency results: |
|
|
|
|
|
|
|
Home health and hospice revenue |
$ |
342,249 |
|
$ |
309,570 |
|
$ |
32,679 |
|
10.6 |
% |
|
|
|
|
|
|
|
|
Home health services: |
|
|
|
|
|
|
|
Total home health admissions |
|
40,436 |
|
|
37,366 |
|
|
3,070 |
|
8.2 |
% |
Total Medicare home health admissions |
|
18,641 |
|
|
17,356 |
|
|
1,285 |
|
7.4 |
% |
Average Medicare revenue per 60-day completed episode(a) |
$ |
3,545 |
|
$ |
3,443 |
|
$ |
102 |
|
3.0 |
% |
Hospice services: |
|
|
|
|
|
|
|
Total hospice admissions |
|
9,166 |
|
|
8,613 |
|
|
553 |
|
6.4 |
% |
Average daily census |
|
2,296 |
|
|
2,291 |
|
|
5 |
|
0.2 |
% |
Hospice Medicare revenue per day |
$ |
178 |
|
$ |
174 |
|
$ |
4 |
|
2.3 |
% |
|
Year EndedDecember 31, |
|
|
|
|
|
|
2022 |
|
|
2021 |
|
Change |
|
% Change |
Same agency(b)
results: |
|
|
|
|
|
|
|
Home health and hospice revenue |
$ |
308,466 |
|
$ |
296,413 |
|
$ |
12,053 |
|
|
4.1 |
% |
|
|
|
|
|
|
|
|
Home health services: |
|
|
|
|
|
|
|
Total home health admissions |
|
36,955 |
|
|
35,716 |
|
|
1,239 |
|
|
3.5 |
% |
Total Medicare home health admissions |
|
16,677 |
|
|
16,329 |
|
|
348 |
|
|
2.1 |
% |
Average Medicare revenue per 60-day completed episode(a) |
$ |
3,573 |
|
$ |
3,465 |
|
$ |
108 |
|
|
3.1 |
% |
Hospice services: |
|
|
|
|
|
|
|
Total hospice admissions |
|
8,208 |
|
|
8,448 |
|
|
(240 |
) |
|
(2.8 |
)% |
Average daily census |
|
2,127 |
|
|
2,260 |
|
|
(133 |
) |
|
(5.9 |
)% |
Hospice Medicare revenue per day |
$ |
176 |
|
$ |
172 |
|
$ |
4 |
|
|
2.3 |
% |
|
Year EndedDecember 31, |
|
|
|
|
|
|
2022 |
|
|
2021 |
|
Change |
|
% Change |
New agency(c)
results: |
|
|
|
|
|
|
|
Home health and hospice revenue |
$ |
33,783 |
|
$ |
13,157 |
|
$ |
20,626 |
|
|
156.8 |
% |
|
|
|
|
|
|
|
|
Home health services: |
|
|
|
|
|
|
|
Total home health admissions |
|
3,481 |
|
|
1,650 |
|
|
1,831 |
|
|
111.0 |
% |
Total Medicare home health admissions |
|
1,964 |
|
|
1,027 |
|
|
937 |
|
|
91.2 |
% |
Average Medicare revenue per 60-day completed episode(a) |
$ |
3,263 |
|
$ |
3,000 |
|
$ |
263 |
|
|
8.8 |
% |
Hospice services: |
|
|
|
|
|
|
|
Total hospice admissions |
|
958 |
|
|
165 |
|
|
793 |
|
|
480.6 |
% |
Average daily census |
|
169 |
|
|
31 |
|
|
138 |
|
|
445.2 |
% |
Hospice Medicare revenue per day |
$ |
208 |
|
$ |
301 |
|
$ |
(93 |
) |
|
(30.9 |
)% |
(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 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 EndedDecember 31, |
|
Year EndedDecember 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
Occupancy |
|
77.7 |
% |
|
|
72.4 |
% |
|
|
75.7 |
% |
|
|
72.7 |
% |
Average monthly revenue per occupied unit |
$ |
3,670 |
|
|
$ |
3,291 |
|
|
$ |
3,516 |
|
|
$ |
3,207 |
|
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 December 31, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
Revenue Dollars |
|
Revenue Percentage |
|
Revenue Dollars |
|
Revenue Percentage |
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
Medicare |
|
$ |
60,570 |
|
48.6 |
% |
|
$ |
53,962 |
|
48.3 |
% |
Medicaid |
|
|
16,854 |
|
13.5 |
|
|
|
15,923 |
|
14.2 |
|
Subtotal |
|
|
77,424 |
|
62.1 |
|
|
|
69,885 |
|
62.5 |
|
Managed Care |
|
|
16,996 |
|
13.6 |
|
|
|
12,536 |
|
11.2 |
|
Private and Other(a) |
|
|
30,245 |
|
24.3 |
|
|
|
29,344 |
|
26.3 |
|
Total revenue |
|
$ |
124,665 |
|
100.0 |
% |
|
$ |
111,765 |
|
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, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
Revenue Dollars |
|
Revenue Percentage |
|
Revenue Dollars |
|
Revenue Percentage |
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
Medicare |
|
$ |
231,753 |
|
49.0 |
% |
|
$ |
216,788 |
|
49.3 |
% |
Medicaid |
|
|
62,934 |
|
13.3 |
|
|
|
58,355 |
|
13.3 |
|
Subtotal |
|
|
294,687 |
|
62.3 |
|
|
|
275,143 |
|
62.6 |
|
Managed Care |
|
|
62,101 |
|
13.1 |
|
|
|
49,363 |
|
11.2 |
|
Private and Other(a) |
|
|
116,453 |
|
24.6 |
|
|
|
115,188 |
|
26.2 |
|
Total revenue |
|
$ |
473,241 |
|
100.0 |
% |
|
$ |
439,694 |
|
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 EndedDecember 31, |
|
Year EndedDecember 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
Net income attributable to The Pennant Group, Inc. |
$ |
3,474 |
|
|
$ |
(2,149 |
) |
|
$ |
6,643 |
|
|
$ |
2,696 |
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments |
|
|
|
|
|
|
|
Net income attributable to noncontrolling interest(a) |
|
— |
|
|
|
(206 |
) |
|
|
224 |
|
|
|
(548 |
) |
Costs at start-up operations(b) |
|
777 |
|
|
|
170 |
|
|
|
2,112 |
|
|
|
1,470 |
|
Share-based compensation expense(c) |
|
1,044 |
|
|
|
2,557 |
|
|
|
3,363 |
|
|
|
10,040 |
|
Acquisition related costs and credit allowances(d) |
|
(283 |
) |
|
|
7 |
|
|
|
731 |
|
|
|
80 |
|
Transition services costs(e) |
|
— |
|
|
|
183 |
|
|
|
77 |
|
|
|
2,008 |
|
Loss related to senior living operations transferred to
Ensign(f) |
|
25 |
|
|
|
2,835 |
|
|
|
7,051 |
|
|
|
2,835 |
|
Unusual or non-recurring charges (g) |
|
927 |
|
|
|
— |
|
|
|
1,220 |
|
|
|
— |
|
Provision for income taxes on Non-GAAP adjustments(h) |
|
(533 |
) |
|
|
(1,245 |
) |
|
|
(4,353 |
) |
|
|
(4,573 |
) |
Non-GAAP net income |
$ |
5,431 |
|
|
$ |
2,152 |
|
|
$ |
17,068 |
|
|
$ |
14,008 |
|
|
|
|
|
|
|
|
|
Dilutive Earnings Per Share As Reported |
|
|
|
|
|
|
|
Net Income |
$ |
0.12 |
|
|
$ |
(0.08 |
) |
|
$ |
0.22 |
|
|
$ |
0.09 |
|
Average number of shares outstanding |
|
30,091 |
|
|
|
28,530 |
|
|
|
30,159 |
|
|
|
30,642 |
|
|
|
|
|
|
|
|
|
Adjusted Diluted Earnings Per Share |
|
|
|
|
|
|
|
Net Income |
$ |
0.18 |
|
|
$ |
0.07 |
|
|
$ |
0.57 |
|
|
$ |
0.46 |
|
Average number of shares outstanding |
|
30,091 |
|
|
|
30,319 |
|
|
|
30,159 |
|
|
|
30,642 |
|
(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 EndedDecember 31, |
|
Year EndedDecember 31, |
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
Revenue |
$ |
(2,301 |
) |
|
$ |
(2,366 |
) |
|
$ |
(5,742 |
) |
|
$ |
(14,320 |
) |
|
|
Cost of services |
|
2,798 |
|
|
|
2,420 |
|
|
|
7,177 |
|
|
|
15,365 |
|
|
|
Rent |
|
274 |
|
|
|
100 |
|
|
|
660 |
|
|
|
396 |
|
|
|
Depreciation |
|
6 |
|
|
|
16 |
|
|
|
17 |
|
|
|
29 |
|
|
|
Total Non-GAAP adjustment |
$ |
777 |
|
|
$ |
170 |
|
|
$ |
2,112 |
|
|
$ |
1,470 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) |
|
Represents share-based compensation expense incurred for the
periods presented. |
|
|
|
|
|
Three Months EndedDecember 31, |
|
Year EndedDecember 31, |
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
Cost of services |
$ |
644 |
|
|
$ |
584 |
|
|
$ |
2,439 |
|
|
$ |
2,077 |
|
|
|
General and administrative |
|
400 |
|
|
|
1,973 |
|
|
|
924 |
|
|
|
7,963 |
|
|
|
Total Non-GAAP adjustment |
$ |
1,044 |
|
|
$ |
2,557 |
|
|
$ |
3,363 |
|
|
$ |
10,040 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) |
|
Represents costs incurred to acquire an operation that are not
capitalizable. |
(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 $229 and
$1,561 for the three months and year ended December 31, 2022, and
$683 and $3,124 for the three months and year ended December 31,
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 year ended December 31, 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 $25
and $(397) for the three months and year ended December 31, 2022,
respectively, for the related net impact on revenue, cost of
service, and impairment losses attributable to the transferred
entities. This amount excludes rent and depreciation and
amortization expense related to such operations. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedDecember 31, |
|
Year EndedDecember 31, |
|
|
|
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
|
2021 |
|
|
Revenue |
$ |
5 |
|
$ |
— |
|
$ |
(3,370 |
) |
|
$ |
— |
|
|
Cost of services |
|
20 |
|
|
— |
|
|
2,755 |
|
|
|
— |
|
|
Rent |
|
— |
|
|
— |
|
|
948 |
|
|
|
— |
|
|
Loss on asset dispositions and impairment |
$ |
— |
|
$ |
2,835 |
|
$ |
6,718 |
|
|
$ |
2,835 |
|
|
Total Non-GAAP adjustment |
$ |
25 |
|
$ |
2,835 |
|
$ |
7,051 |
|
|
$ |
2,835 |
|
|
|
|
|
|
|
|
|
|
|
|
(g) |
|
Represents unusual or non-recurring charges for legal services,
implementation costs, integration costs, and consulting fees in
general and administrative expenses and cost of services. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedDecember 31, |
|
Year EndedDecember 31, |
|
|
|
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
|
2021 |
|
|
Cost of services |
$ |
262 |
|
$ |
— |
|
$ |
262 |
|
|
$ |
— |
|
|
General and administrative |
$ |
665 |
|
$ |
— |
|
$ |
958 |
|
|
$ |
— |
|
|
Total Non-GAAP adjustment |
$ |
927 |
|
$ |
— |
|
$ |
1,220 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
(h) |
|
Represents an adjustment to the provision for income tax to our
year-to-date effective tax rate of 25.6% and 26.9% for the years
ended December 31, 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 EndedDecember 31, |
|
Year EndedDecember 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
Consolidated net income |
$ |
3,687 |
|
|
$ |
(2,355 |
) |
|
$ |
7,243 |
|
|
$ |
2,148 |
|
Less: Net income (loss) attributable to noncontrolling
interest |
|
213 |
|
|
|
(206 |
) |
|
|
600 |
|
|
|
(548 |
) |
Add: Provision for income taxes (benefit) |
|
1,408 |
|
|
|
(431 |
) |
|
|
1,649 |
|
|
|
582 |
|
Net interest expense |
|
1,308 |
|
|
|
597 |
|
|
|
3,816 |
|
|
|
1,941 |
|
Depreciation and amortization |
|
1,223 |
|
|
|
1,239 |
|
|
|
4,900 |
|
|
|
4,784 |
|
Consolidated EBITDA |
|
7,413 |
|
|
|
(744 |
) |
|
|
17,008 |
|
|
|
10,003 |
|
Adjustments to Consolidated EBITDA |
|
|
|
|
|
|
|
Add: Costs at start-up operations(a) |
|
497 |
|
|
|
54 |
|
|
|
1,435 |
|
|
|
1,045 |
|
Share-based compensation expense(b) |
|
1,044 |
|
|
|
2,557 |
|
|
|
3,363 |
|
|
|
10,040 |
|
Acquisition related costs and credit allowances(c) |
|
(283 |
) |
|
|
7 |
|
|
|
731 |
|
|
|
80 |
|
Transition services costs(d) |
|
— |
|
|
|
183 |
|
|
|
77 |
|
|
|
2,008 |
|
Loss related to senior living operations transferred to
Ensign(e) |
|
25 |
|
|
|
2,835 |
|
|
|
6,103 |
|
|
|
2,835 |
|
Unusual or non-recurring charges(f) |
|
927 |
|
|
|
— |
|
|
|
1,220 |
|
|
|
— |
|
Rent related to items (a) and (e) above |
|
274 |
|
|
|
100 |
|
|
|
1,608 |
|
|
|
396 |
|
Consolidated Adjusted EBITDA |
|
9,897 |
|
|
|
4,992 |
|
|
|
31,545 |
|
|
|
26,407 |
|
Rent—cost of services |
|
9,498 |
|
|
|
10,408 |
|
|
|
38,018 |
|
|
|
40,863 |
|
Rent related to items (a) and (e) above |
|
(274 |
) |
|
|
(100 |
) |
|
|
(1,608 |
) |
|
|
(396 |
) |
Adjusted rent—cost of services |
|
9,224 |
|
|
|
10,308 |
|
|
|
36,410 |
|
|
|
40,467 |
|
Consolidated Adjusted EBITDAR |
$ |
19,121 |
|
|
|
|
$ |
67,955 |
|
|
|
(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 $229 and
$1,561 for the three months and year ended December 31, 2022, and
$683 and $3,124 for the three months and year ended December 31,
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 year ended December 31, 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 $25
and $(397) for the three months and year ended December 31, 2022,
respectively, for the related net impact on revenue, cost of
service, and impairment losses 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 and cost of services. |
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 December 31, |
|
Home Health and Hospice Services |
|
Senior Living Services |
|
All Other |
|
Total |
Segment GAAP Financial Measures: |
|
|
|
|
|
|
|
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 |
Three Months Ended December 31, 2021 |
|
|
|
|
|
|
|
Revenue |
$ |
77,855 |
|
$ |
33,910 |
|
$ |
— |
|
|
$ |
111,765 |
Segment Adjusted EBITDAR from Operations |
$ |
12,434 |
|
$ |
9,825 |
|
$ |
(6,959 |
) |
|
$ |
15,300 |
|
Year Ended December 31, |
|
Home Health and Hospice Services |
|
Senior Living Services |
|
All Other |
|
Total |
Segment GAAP Financial Measures: |
|
|
|
|
|
|
|
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 |
Year Ended December 31, 2021 |
|
|
|
|
|
|
|
Revenue |
$ |
309,570 |
|
$ |
130,124 |
|
$ |
— |
|
|
$ |
439,694 |
Segment Adjusted EBITDAR from Operations |
$ |
55,565 |
|
$ |
37,517 |
|
$ |
(26,208 |
) |
|
$ |
66,874 |
The table below provides a reconciliation of
Segment Adjusted EBITDAR from Operations above to Condensed
Consolidated Income from Operations:
|
Three Months EndedDecember 31, |
|
Year EndedDecember 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDAR from Operations(a) |
$ |
19,121 |
|
|
$ |
15,300 |
|
|
$ |
67,955 |
|
|
$ |
66,874 |
|
Less: Depreciation and amortization |
|
1,223 |
|
|
|
1,239 |
|
|
|
4,900 |
|
|
|
4,784 |
|
Rent—cost of services |
|
9,498 |
|
|
|
10,408 |
|
|
|
38,018 |
|
|
|
40,863 |
|
Other Income |
|
19 |
|
|
|
— |
|
|
|
(31 |
) |
|
|
(24 |
) |
Adjustments to Segment EBITDAR from Operations: |
|
|
|
|
|
|
|
Less: Costs at start-up operations (b) |
|
497 |
|
|
|
54 |
|
|
|
1,435 |
|
|
|
1,045 |
|
Share-based compensation expense (c) |
|
1,044 |
|
|
|
2,557 |
|
|
|
3,363 |
|
|
|
10,040 |
|
Acquisition related costs and credit allowances(d) |
|
(283 |
) |
|
|
7 |
|
|
|
731 |
|
|
|
80 |
|
Transition services costs(e) |
|
— |
|
|
|
183 |
|
|
|
77 |
|
|
|
2,008 |
|
Loss related to senior living operations transferred to
Ensign(f) |
|
25 |
|
|
|
2,835 |
|
|
|
6,103 |
|
|
|
2,835 |
|
Unusual or non-recurring charges(g) |
|
927 |
|
|
|
— |
|
|
|
1,220 |
|
|
|
— |
|
Add: Net loss attributable to noncontrolling interest |
|
213 |
|
|
|
(206 |
) |
|
|
600 |
|
|
|
(548 |
) |
Consolidated Income from Operations |
$ |
6,384 |
|
|
$ |
(2,189 |
) |
|
$ |
12,739 |
|
|
$ |
4,695 |
|
(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 $229 and
$1,561 for the three months and year ended December 31, 2022, and
$683 and $3,124 for the three months and year ended December 31,
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 year ended December 31, 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 $25
and $(397) for the three months and year ended December 31, 2022,
respectively, for the related net impact on revenue, cost of
service, and impairment losses 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 and cost of services. |
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 December 31, |
|
Home Health and Hospice |
|
Senior Living |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDAR from Operations |
$ |
16,771 |
|
|
$ |
12,434 |
|
|
$ |
9,990 |
|
|
$ |
9,825 |
|
Less: Rent—cost of services |
|
1,295 |
|
|
|
1,295 |
|
|
|
8,203 |
|
|
|
9,113 |
|
Rent related to start-up and transferred operations |
|
(49 |
) |
|
|
(70 |
) |
|
|
(225 |
) |
|
|
(30 |
) |
Segment Adjusted EBITDA from Operations |
$ |
15,525 |
|
|
$ |
11,209 |
|
|
$ |
2,012 |
|
|
$ |
742 |
|
|
Year Ended December 31, |
|
Home Health and Hospice |
|
Senior Living |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDAR from Operations |
$ |
61,827 |
|
|
$ |
55,565 |
|
|
$ |
37,563 |
|
|
$ |
37,517 |
|
Less: Rent—cost of services |
|
5,060 |
|
|
|
4,906 |
|
|
|
32,958 |
|
|
|
35,957 |
|
Rent related to start-up and transferred operations |
|
(210 |
) |
|
|
(386 |
) |
|
|
(1,398 |
) |
|
|
(10 |
) |
Segment Adjusted EBITDA from Operations |
$ |
56,977 |
|
|
$ |
51,045 |
|
|
$ |
6,003 |
|
|
$ |
1,570 |
|
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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