Although wage pressures stifled third-quarter earnings, The Pennant Group saw notable progress on revenue and occupancy and is on track to make “significant” improvements and deliver strong results into 2023, according to CEO Brent Guerisoli.
During an earnings call on Tuesday, Guerisoli said the Eagle, ID-based company continues to build long-term foundational strength, investing in people, systems and data tools to improve the ability of its teams to respond to the needs of its senior living communities.
“These are ongoing processes to build the engine to drive outsized performance,” he said, adding that he sees substantial latent potential in its existing operations.
The senior living portfolio continued its recovery by taking several steps forward, Chief Operating Officer John Gochnour said.
Senior living same-store revenue increased 11.8% over the prior-year quarter, with a 140 basis point occupancy increase to 77.6%. Gochnour attributed revenue increases to summer rate increases and better processes for more accurately billing and tracking levels of care and service provided.
Other third-quarter highlights:
- Revenue for the senior living services segment in the third quarter decreased 1.1% over the same quarter in 2021.
- Average monthly revenue per occupied room for the third quarter increased 12.2% over the prior-year quarter and 2.6% over the second quarter of 2022.
- Total third-quarter revenue for the company increased 5.7% over the prior-year quarter.
Labor challenges lingered, with average wages up 2.7% in the third quarter over the prior quarter, according to Pennant. Chief Financial Officer Jennifer Freeman said that staffing inflation and other operating challenges likely will persist into the foreseeable future and will create hurdles, but she maintained a sense of optimism.
“We are confident in our future and expect further organic top- and bottom-line growth in 2023 in addition to the opportunity to acquire high-quality assets we expect to execute on in the next year and beyond,” Freeman said.
Gochnour and Guerisoli said the company’s focus is on attracting and developing CEO-level leaders to accelerate the segment’s turnaround.
“Our third-quarter results reflect another step forward operationally as we seek to unlock the significant latent potential in our existing business,” Guerisoli said. “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.”