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The Pennant Group of Eagle, ID, pointed to its local leadership model as the reason for a strong second quarter, according to an earnings call Wednesday.

“As the industry faced extraordinary challenges from COVID-19, our operating model provided the toolkit for our local leaders to offset many of these headwinds, as evidenced by [senior living] segment revenue increasing 3.7% and occupancy improving 40 basis points, exclusive of communities acquired in the prior 12 months,” CEO and President Daniel Walker said. “While we recognize the uncertainty caused by COVID-19 and remain focused on operating through the pandemic to the best of our ability, we believe these results reflect a growing strength in our senior living business as our local leaders continue to refine their operations through the principles of our field-driven operating model.”

Total senior living occupancy declined 2.2% during the second quarter and another 2% since cases began increasing in states where Pennant has senior living communities. But occupancy was 80.7% for the second quarter, and average revenue per occupied room increased 3.2% over the prior-year quarter.

The Pennant Group experienced potential COVID-19-related revenues losses of $8.1 million since the start of the pandemic. Walker reported 13 residents with active coronavirus cases at six of its 54 senior living communities.

“Local leaders effectively adapted to increasingly complex operating conditions, which vary from market to market,” Walker said. “The pandemic is confirming our long-held view that the senior living community is an important care delivery setting and there is a growing need for senior living operators to prioritize care programs, including infection control, in addition to providing quality of life amenities. 

“We anticipate the pandemic’s impact will continue for a period of time, but our local operating model and our clinical strength position us well to address the community demand for robust care and wellness programs in a high quality of life setting.”

Walker said there is an “inherent upside” in senior living communities, given the company’s below-market entry prices and operating model that provides the tools for its operators to build significant value over time. 

“What we are experiencing in our senior living business is part of the cyclical nature of health care, akin to the headwinds we faced when starting our home health and hospice business 10 years ago,” Walker said. “Our platform represents a unique opportunity for our stakeholders to experience similar long-term value creation with an earnings-producing senior living business at a tie of significant industry disruption.”

Chief Financial Officer Jennifer L. Freeman said the company rejected and returned $10 million it received in Coronavirus Aid, Relief, and Economic Security (CARES) Act provider relief funds.

“We believe our operating model and growth strategy enables us to be successful through a challenging operator environment, COVID-19 included,” Freeman said. “The pandemic presents a new opportunity for resilient operators to be responsive to local needs.”

Derek J. Bunker, chief investment officer, executive vice president and secretary, said peaking into a crystal ball over the next 18 months, he sees strong development in the senior living market. He said that the Pennant Group continues to see a lot of senior living opportunities but will remain “picky about what we want to explore further.”

In other coronavirus-related news:

  • Residents of Washington state’s 4,000 assisted living communities, adult family homes and nursing homes will once again be able to visit friends and family members. Gov. Jay Inslee unveiled a four-stage reopening plan to lift strict visitation rules. Facilities must go at least 28 days without a positive COVID-19 case in a building, and a facility can’t advance to a stage that exceeds its county’s current status under the state’s reopening plan. 
  • Minnesota is laying out new guidelines to help assisted living communities and other long-term care facilities open back up to visitors. Minnesota’s stated goal is to “maximize the health and well-being” of residents rather than simply prevent the spread of the virus. Recommendations include a two-tier system that allows for visits and trips outside the facility if COVID-19 is in check. The state also recommends safety precautions for visitors, including masks and screenings.
  • Rep. Andy Kim (D-NJ), a member of the House Select Committee on the Coronavirus Crisis,  held a virtual meeting with long-term care facility, health department and emergency management leaders from across Burlington and Ocean counties in New Jersey to express concerns about continued lags in testing and issues acquiring personal protective equipment. Kim was joined by local health and senior living leaders to discuss ongoing supply chain issues for PPE, the need for additional testing and national guidance on testing, and the need to improve communication and clarity of federal guidance and regulations of long-term care facilities during the ongoing crisis.
  • Florida Gov. Ron DeSantis issued a pair of emergency rules on Monday addressing assisted living communities and nursing homes. The state Agency for Health Care Administration said the rules mandate that facilities allow Department of Health officials into the buildings and require staff members to comply with any COVID-19 testing. The rules replace a pair of emergency rules issued May 12.
  • The New York legislature took part in another day of hearings Monday addressing the effects of COVID-19 on assisted living communities and group and nursing homes in the state. The pandemic has worsened issues related to staffing shortages and financial burdens evident before the pandemic, they said. LadingAge New York testified regarding access to PPE.