The Pennant Group’s senior living segment “made remarkable progress” in the second quarter, CEO Brent Guerisol said Wednesday on the company’s latest earnings call.
Overall, he said, the second quarter was a “solid execution quarter” for The Pennant Group, the parent company of the Pennant group of affiliated senior living, home health and hospice companies.
Total revenue for the quarter was $132.3 million, an increase of $16 million, or 13.7%, over the same quarter in 2022, the Eagle, ID-based company reported.
Revenue for Pennant’s senior living services segment for the quarter was $37.3 million, an increase of $6.3 million, or 20.3%, over the same quarter in 2022. Average occupancy for the quarter was 78%, an increase of 150 basis points versus the prior year quarter, and average monthly revenue per occupied room was $3,939, an increase of $469, or 13.5%, compared with the same quarter in 2022.
“The turnaround in this business truly is a leadership story,” Guerisol said. “In 2021, our senior living business was at a nadir, as many of our local leaders struggled to embrace and harness the power of our unique operating model. One by one, new leaders were added, existing leaders transformed, clusters rebuilt and, collectively, we deepened our commitment to our core values and our operating model.”
Same-store senior living services segment revenue for the quarter was $36 million, an increase of $5 million, or 16.1%, over the same quarter in 2022, Additionally, same-store senior living average occupancy was 79.6%, an increase of 240 basis points versus the prior year quarter, and average monthly revenue per occupied room was $3,929, an increase of $469, or 13.2%, compared with the same quarter in 2022.
Senior living adjusted earnings before interest, taxes, depreciation, amortization and restructuring or rent costs, or EBITDAR, from operations for the quarter was $11.7 million, an increase of $2.9 million, or 33.2%, over the prior year quarter. Segment adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, from operations for the second quarter was $3.6 million, an increase of $2.6 million, or 277.4%, versus the same quarter in 2022.
Home health and hospice
Revenue for the company’s home health and hospice services segment for the quarter was $95 million, an increase of $9.7 million, or 11.3%, over the same quarter in 2022. Adjusted EBITDAR from operations for the segment was $15.7 million, essentially flat compared with the prior year quarter; and segment-adjusted EBITDA from operations for the quarter was $14.4 million, a decrease of $0.1 million, or 1%, versus the same quarter in 2022.
Guerisol said that Pennant was disappointed in the Center for Medicare & Medicaid Services’ proposed “aggressive” cuts to home health reimbursement, saying that the agency’s move “contrasts with its more nuanced treatment of other post-acute care services.” The change, he added, “risks dramatically reducing access to critical care in the most cost-effective healthcare setting as providers are still facing staffing pressures and rising costs.”
Pennant plans to work with others in the industry, CMS and legislators “to pursue solutions that work better for beneficiaries and providers,” he added.
In other segment news, President and Chief Operating Officer John Gochnour noted that in May, Pennant acquired Benefit Home Healthcare and Benefit by Your Side, a home health and home care agency based in Colorado Springs, CO.
“This acquisition complements our existing footprint in Denver and Southwest Colorado, deepening our Colorado continuum,” he said.
Additionally, in June, The Pennant Group acquired Bluebird Home Health, Bluebird Hospice and Bluebird Home Care. The companies provide skilled home health, private duty and hospice services across southwestern Idaho.
“Bluebird is a critical part of the Treasure Valley healthcare ecosystem,” Gochnour said. “Bluebird’s health and deep community relationships make it a strategic acquisition in a core operating market it shares with our service center, existing home health and hospice operations and a recently acquired assisted living operation.”
‘Plenty of dry powder’ for acquisitions
Gouchnour said that the company has “plenty of dry powder in our revolver and a robust flow of meaningful acquisition opportunities in both segments,” referring to senior living and home health/hospice.
Pennant Chief Financial Officer Lynette Walbom described the company’s operating cash flows as “strong,” a status she said would enable the company to respond to potential acquisition opportunities while maintaining a “healthy” balance sheet.
“Our operations produced $15.5 million of cash in the first half of the fiscal year,” Walbom said. “With this cash, and its positive impact on our leverage ratios, we are well-positioned to take advantage of an increasing number of attractive acquisition opportunities flowing our direction.”
For additional coverage of the earnings call, see McKnight’s Home Care.