PNTG - Pennant Reports Fourth Quarter 2022 Results

EAGLE, Idaho, Feb. 23, 2023 (GLOBE NEWSWIRE) -- The Pennant Group, Inc. (NASDAQ: PNTG), the parent company of the Pennant group of affiliated home health, hospice and senior living companies, today announced its operating results for the fiscal year and fourth quarter of 2022, reporting GAAP diluted earnings per share of $0.22 and $0.12 for the year ended December 31, 2022 and the fourth quarter, respectively. Pennant also reported adjusted diluted earnings per share of $0.57 for the year and $0.18 for the quarter ⁽¹⁾ .

Fourth Quarter Highlights

• Total revenue was $473.2 million for the fiscal year 2022, an increase of $33.5 million or 7.6% over the prior year, and total revenue for the quarter was $124.7 million, an increase of $12.9 million or 11.5% over the prior year quarter;

• Net income for the full year was $6.6 million, an increase of $3.9 million over the prior year, and net income for the fourth quarter was $3.5 million, an increase of $5.6 million over the prior year quarter, our adjusted net income for the full year was $17.1 million, an increase of $3.1 million or 21.8% over the prior year and adjusted net income of the fourth quarter was $5.4 million, an increase of $3.3 million or 152.4% over the prior year quarter;

• Adjusted EBITDA was $31.5 million for the full year, an increase of $5.1 million or 19.5% over the prior year, and adjusted EBITDA was $9.9 million for the fourth quarter, an increase of $4.9 million or 98.3% over the prior year quarter; adjusted EBITDAR for the full year and fourth quarter was $68.0 million and $19.1 million, respectively;

• Home Health and Hospice Services segment revenue for the full year was $342.2 million, an increase of $32.7 million or 10.6% over the prior year, and segment revenue for the fourth quarter was $90.7 million, an increase of $12.8 million or 16.4%;

• Home Health and Hospice Services segment adjusted EBITDA from operations was $57.0 million for the full year, an increase of $5.9 million or 11.6%, and $15.5 million, an increase of $4.3 million or 38.5% for the fourth quarter; segment adjusted EBITDAR for the full year and the fourth quarter was $61.8 million and $16.8 million respectively;

• Total home health admissions for the full year increased from 37,366 to 40,436 or 8.2%; and total home health admissions for the fourth quarter increased from 9,286 to 10,047 or 8.2%, each over the prior comparable period, and total Medicare home health admissions for the full year increased from 17,356 to 18,641 or 7.4%, while total Medicare home health admissions for the fourth quarter increased from 4,241 to 4,689 or 10.6%, both over the prior year comparable periods;

• Total hospice admissions for the full year were 9,166, an increase of 553 or 6.4% over the prior year, and total hospice admissions for the fourth quarter were 2,246, an increase of 53 or 2.4% over the prior year quarter. Hospice average daily census for the full year was 2,296 an increase of 0.2% over the prior year, and hospice average daily census for the fourth quarter was 2,373, an increase of 5.2% compared to the prior year quarter;

• Senior Living Services segment revenue for the full year was $131.0 million, an increase of $0.9 million or 0.7% over the prior year, segment revenue for the fourth quarter was $34.0 million, an increase of $0.1 million or 0.3% a over the prior year quarter and $1.4 million or 4.4% over the third quarter of 2022.

• Same store ⁽²⁾ Senior Living Services segment revenue was $126.8 million for the full year, an increase of $12.8 million or 11.2% over the prior year, and $33.5 million for the fourth quarter, an increase of $3.8 million or 12.9% over the prior year quarter; same store senior living average occupancy for the fourth quarter was 78.6%, an increase of 330 basis points over the prior year quarter, and average monthly revenue per occupied room for the fourth quarter was $3,670 an increase of $282 or 8.3% over the prior year quarter and $113 or 3.2%% over the third quarter of 2022.

• Senior Living segment adjusted EBITDA from Operations was $6.0 million for the full year, an increase of $4.4 million or 282.4% over the prior year, $2.0 million for the fourth quarter, an increase of $1.3 million or 171.2% over the prior year quarter; segment adjusted EBITDAR from operations was $37.6 million for the full year, an increase of 0.1% over the prior year and segment adjusted EBITDAR from operations for the fourth quarter was $10.0 million, an increase of $0.2 million or 1.7% over the prior year quarter.

Operating Results

“We are pleased to report full year and fourth quarter results that demonstrate progress in both segments in 2022 and meaningful momentum heading into 2023,” said Brent Guerisoli, Pennant’s Chief Executive Officer. “We saw top line growth in both segments, and despite labor and inflationary pressures, our teams produced strong adjusted-EBITDA results consistent with our projections. Our senior living business continued to stabilize. Throughout 2022 we invested in the next generation of leaders who are positioned to accelerate our growth in 2023. With these pieces in place, we are providing full year 2023 guidance of annual revenue between $503.5 million and $518.4 million, adjusted EBITDA of $38.4 million to $42.6 million, and adjusted earnings per diluted share of $0.66 to $0.76. The midpoint of $0.71 represents 24.6% growth on our 2022 adjusted earnings.”

“Our home health business continued its strong performance. In the fourth quarter, home health revenue grew $8.8 million or 22.5% and hospice revenue grew $4.0 million or 10.4%, each over the prior year quarter. These strong top line results were driven by home health admissions that increased 8.2% over the fourth quarter 2021. Hospice revenue was buoyed by a hospice average daily census that increased 5.2% over the prior year quarter. While we are pleased that home health and hospice segment adjusted EBITDA of $15.5 million increased $4.3 million or 38.5% over the prior year quarter, we know there is significant potential to grow and improve our home health and hospice segment in 2023.”

“Our senior living segment continues its steady turnaround,” said Mr. Guerisoli. Senior Living segment adjusted EBITDA grew to $6.0 million, a $4.4 million increase over the prior year, and improved to $2.0 million for the fourth quarter, an increase of $1.3 million over the prior year quarter. Our same store occupancy improved sequentially each quarter in 2022, reaching 78.6% for the fourth quarter, a 330 basis point improvement in these same facilities over the prior year quarter, and 100 basis points improvement sequentially over the third quarter of 2022. Average monthly revenue per occupied unit for the fourth quarter grew to $3,670, an increase of $379 or 11.5% over the prior year quarter and $110 or 3.0% sequentially over the third quarter of 2022. The significant improvement in this segment is evidence that strong leaders and strong clusters drive strong results over time. We are excited to see this turnaround story become a growth story in 2023 and beyond.”

“As we invest in deepening our leadership pool, we are continuing to expand our acquisition pipeline,” said John Gochnour, Pennant’s President and Chief Operating Officer. “We see attractive acquisition targets within our footprint, including off-market opportunities from sellers drawn to our reputation, culture, and quality record. We announced one home health acquisition in the fourth quarter, our purchase of the Kenosha Visiting Nurse Association in Kenosha, Wisconsin. KVNA has provided high quality in-home care in the Kenosha area for almost 100 years. We are excited to carry on that legacy and continue to build our Pennant care continuum in the Wisconsin market, where we operate several senior living communities.”

Jennifer Freeman, Pennant’s Interim Chief Financial Officer, reported on the Company’s cash position, commenting that the Company had $2.1 million of cash on hand and $81.3 million available on its revolving line of credit. Ms. Freeman noted that the Company had a net debt-to-adjusted EBITDA ratio of 1.93x and a lease-adjusted net debt-to-adjusted EBITDAR ratio of 5.30x as of December 31, 2022. “We’re pleased with our liquidity position which will enable us to make strategic investments in 2023,” said Ms. Freeman.

Ms. Freeman noted that management’s 2023 annual guidance is based on diluted weighted average shares outstanding of approximately 30.7 million and a 25.5% effective tax rate. The guidance assumes, among other things, organic growth in current operations, margin expansion, anticipated reimbursement rate adjustments, and elevated interest rates. It does not include unannounced acquisitions and excludes costs at start-up operations, share-based compensation, acquisition-related costs, and one-time implementation and unusual items.

A discussion of the Company's use of Non-GAAP financial measures is set forth below. A reconciliation of net income to EBITDA, adjusted EBITDAR and adjusted EBITDA, as well as a reconciliation of GAAP earnings per share, net income to adjusted net earnings per share and adjusted net income, appear in the financial data portion of this release. More complete information is contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, which has been filed with the SEC today and can be viewed on the Company’s website at www.pennantgroup.com.

Conference Call

A live webcast will be held tomorrow, February 24, 2023 at 10:00 a.m. Mountain time (12:00 p.m. Eastern time) to discuss Pennant’s fourth quarter 2022 financial results. To listen to the webcast, or to view any financial or statistical information required by SEC Regulation G, please visit the Investors Relations section of Pennant’s website at https://investor.pennantgroup.com. The webcast will be recorded and will be available for replay via the website until 5:00 p.m. Mountain time on Friday, March 24, 2023.

About Pennant

The Pennant Group, Inc. is a holding company of independent operating subsidiaries that provide healthcare services through 95 home health and hospice agencies and 49 senior living communities located throughout Arizona, California, Colorado, Idaho, Iowa, Montana, Nevada, Oklahoma, Oregon, Texas, Utah, Washington, Wisconsin and Wyoming. Each of these businesses is operated by a separate, independent operating subsidiary that has its own management, employees and assets. References herein to the consolidated "company" and "its" assets and activities, as well as the use of the terms "we," "us," "its" and similar verbiage, are not meant to imply that The Pennant Group, Inc. has direct operating assets, employees or revenue, or that any of the home health and hospice businesses, senior living communities or the Service Center are operated by the same entity. More information about Pennant is available at www.pennantgroup.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This press release contains, and the related conference call and webcast will include, forward-looking statements that are based on management’s current expectations, assumptions and beliefs about its business, financial performance, operating results, the industry in which it operates and other future events. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. These forward-looking statements include, but are not limited to, statements regarding growth prospects, future operating and financial performance, and acquisition activities. They are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to materially and adversely differ from those expressed in any forward-looking statement.

These risks and uncertainties relate to the company’s business, its industry and its common stock and include: reduced prices and reimbursement rates for its services; its ability to acquire, develop, manage or improve operations, its ability to manage its increasing borrowing costs as it incurs additional indebtedness to fund the acquisition and development of operations; its ability to access capital on a cost-effective basis to continue to successfully implement its growth strategy; its operating margins and profitability could suffer if it is unable to grow and manage effectively its increasing number of operations; competition from other companies in the acquisition, development and operation of facilities; its ability to defend claims and lawsuits, including professional liability claims alleging that our services resulted in personal injury, and other regulatory-related claims; and the application of existing or proposed government regulations, or the adoption of new laws and regulations, that could limit its business operations, require it to incur significant expenditures or limit its ability to relocate its operations if necessary. Readers should not place undue reliance on any forward-looking statements and are encouraged to review the company’s periodic filings with the Securities and Exchange Commission, including its Form 10-Q and/or 10-K, for a more complete discussion of the risks and other factors that could affect Pennant’s business, prospects and any forward-looking statements. Except as required by the federal securities laws, Pennant does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changing circumstances or any other reason after the date of this press release.

Contact Information

Investor Relations
The Pennant Group, Inc.
(208) 506-6100
ir@pennantgroup.com

SOURCE: The Pennant Group, Inc.

THE PENNANT GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except for per-share amounts)

THE PENNANT GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except par value)

THE PENNANT GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)

The following table presents selected data from our condensed consolidated statement of cash flows for the periods presented:

THE PENNANT GROUP, INC.
REVENUE BY SEGMENT
(unaudited, dollars in thousands)

The following table sets forth our total revenue by segment and as a percentage of total revenue for the periods indicated:

THE PENNANT GROUP, INC.
SELECT PERFORMANCE INDICATORS
(unaudited, total revenue dollars in thousands)

The following table summarizes our overall home health and hospice performance indicators for the each of the dates or periods indicated:

The following table summarizes our senior living performance indicators for the periods indicated:

THE PENNANT GROUP, INC.
REVENUE BY PAYOR SOURCE
(unaudited, dollars in thousands)

The following table presents our total revenue by payor source and as a percentage of total revenue for the periods indicated:

THE PENNANT GROUP, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(unaudited, in thousands, except per share data)

The following table reconciles net income to Non-GAAP net income for the periods presented:

THE PENNANT GROUP, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(unaudited, in thousands)

The tables below reconcile Consolidated net income to the consolidated Non-GAAP financial measures, Consolidated and Consolidated Adjusted EBITDA, and to the Non-GAAP valuation measure, Consolidated Adjusted EBITDAR, for the periods presented:

THE PENNANT GROUP, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(unaudited, in thousands)

The following table present certain financial information regarding our reportable segments. General and administrative expenses are not allocated to the reportable segments and are included in “All Other”:

The table below provides a reconciliation of Segment Adjusted EBITDAR from Operations above to Condensed Consolidated Income from Operations: