When it comes to acquisitions in senior living, the new Pennant Group is being ”very selective in a very, very frothy market,” President and CEO Danny Walker said Wednesday on the Eagle, ID-based holding company’s first-ever earnings call.
Pennant spun off from The Ensign Group effective Oct. 1 and includes independent living, assisted living and memory care (Pinnacle Senior Living) as well as home health and hospice care (Cornerstone).
“Our priorities and preferences are always going to be an outgrowth of where we have strengths in our existing operations. …In the macro environment, there continues to be more opportunities on the senior living side than we’re willing and able to try to take,” Walker said.
In senior living, he said, Pennant is focused on serving the middle market, “where there’s still plenty of demand.” The company generally is not concerned about whether the industry is nearing an inflection point, Walker said.
“We view the senior living business as an opportunity for us to distinguish ourselves as an operator that pulls the right levers and establishes the right culture and supports each community in the way that needs to be supported so that they can achieve results regardless of the macro environment,” he said. “It’s with that in mind that we’re looking for meaningful opportunities to step into communities that can be transformed through our leadership model.”
Total revenue for the quarter was $88.4 million, an increase of $15.4 million, or 21.2%, over the third quarter of 2018, Pennant reported. Senior living services segment revenue was $33.2 million, an increase of $4.1 million, or 14.1%, over the prior-year quarter, and senior living adjusted segment EBITDAR (earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs) from operations was $11.6 million, an increase of 70 basis points over the prior-year quarter. Additionally, senior living occupancy for operations owned before 2019 increased 70 basis points compared to the prior-year quarter.
“We are enthusiastic about the opportunities we see in our senior living business, a large portion of which is still relatively early in the process of transitioning into what we are seeing in our more mature operations,” Walker said. He described the company’s senior housing business as “healthy.”
During the quarter, the company acquired Mainplace Senior Living, a 91-unit senior living community in Orange, CA, bringing the company’s total senior living communities to 52. Each business is operated by a separate, independent operating subsidiary that has its own management, employees and assets. Pennant also has 63 home health and hospice agencies.
