Pennant CEO Daniel Walker said the Eagle, ID, holding company’s first-quarter earnings results “reflect the momentum building” in its portfolio.
“We experienced challenges related to the omicron variant surge in the early part of the first quarter, and ongoing labor pressures,” Walker said Tuesday in announcing the company’s first-quarter earnings. “Despite these headwinds, our local teams navigated a challenging operating environment and produced strong results in line with our projections.”
President Brent Guerisoli said that Pennant’s senior living segment took another step forward in its ongoing turnaround through developing stronger leadership, expanding marketing and sales expertise, and driving accountability. Improved results, he added, highlight the demand for senior living services that Pennant is poised to address in its markets.
“With developing leadership teams, better data and systems, and accountability around our core opportunities, we know we can continue to drive improved segment earnings if we execute with operational excellence,” Guerisoli said.
Revenues, occupancy up
Total revenue for the quarter increased by $8.2 million (7.8%) to $113.9 million compared with the prior-year quarter. Senior living segment revenue for the quarter was $33.4 million, a $2.4 million (77%) increase over the same quarter in 2021.
Senior living occupancy for the quarter was 72.6%, a 50 basis point (0.5%) increase over the prior-year quarter and a 20 basis point (0.2%) increase from the fourth quarter of 2021. Same-store average occupancy for the first quarter was 75.4%, up 10 basis points (0.1%) over the fourth quarter and 80 basis points (0.8%) over the prior-year quarter.
Pennant Group Chief Financial Officer Jennifer Freeman said the company experienced a modestly slower start to the year, as anticipated, as the pandemic lingered into the first quarter. She estimated that the first-quarter 2022 results were negatively affected by COVID-19 to the tune of $1 million. The company lost $3 million in revenue for the quarter and had $500,000 in COVID-19-related expenses across all segments, Freeman added.
As census, staffing and other operating challenges persist, it will continue to cost some “chop” in the near term results, she said.
“Overall, we’re pleased with the progress made in the first quarter and a challenging operating environment marred by persistent COVID headwinds and labor pressures,” Guerosoli said.
Transactions
During the quarter and since, Guerisoli said, Pennant closed on the transfer of five senior living communities to affiliates of The Ensign Group, completing a transaction he called “a win for all parties involved, and which allows us to concentrate our resources on our highest upside opportunities to unlock value faster.”
The company also acquired the real estate underlying the operations of its 82-unit assisted living and memory care community in Twin Falls, ID, and exited the operations of an independent living community used during the height of the pandemic as a short-term stay setting for COVID-19 patients transitioning home from acute settings.
“Our recently acquired operations are picking up steam, and as they continue to mature in our portfolio, we are excited to invest in additional agencies throughout this year,” said Pennant Chief Investment Officer Derek Bunker. “Our pipeline of potential acquisitions is solid. We continue to source many off-market opportunities as sellers seek a strategic partner aligned with their mission and focused on providing exceptional employee experiences and quality care to patients and families.”
Bunker said the overall acquisition pipeline is solid, with many opportunities in senior living as well as in the home health and hospice segments.
