COVER
COVER - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 04, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-38900 | |
Entity Registrant Name | THE PENNANT GROUP, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 83-3349931 | |
Entity Address, Address Line One | 1675 East Riverside Drive | |
Entity Address, Address Line Two | Suite 150 | |
Entity Address, City or Town | Eagle | |
Entity Address, State or Province | ID | |
Entity Address, Postal Zip Code | 83616 | |
City Area Code | (208) | |
Local Phone Number | 506-6100 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | PNTG | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 29,676,611 | |
Entity Central Index Key | 0001766400 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash | $ 2,955 | $ 5,190 |
Accounts receivable—less allowance for doubtful accounts of $822 and $902, respectively | 51,604 | 53,940 |
Prepaid expenses and other current assets | 12,324 | 16,711 |
Total current assets | 66,883 | 75,841 |
Property and equipment, net | 23,914 | 16,788 |
Right-of-use assets | 262,636 | 300,997 |
Deferred tax assets, net | 3,097 | 3,848 |
Restricted and other assets | 10,686 | 4,828 |
Goodwill | 79,190 | 74,265 |
Other indefinite-lived intangibles | 58,474 | 53,730 |
Total assets | 504,880 | 530,297 |
Current liabilities: | ||
Accounts payable | 12,754 | 10,553 |
Accrued wages and related liabilities | 24,758 | 23,480 |
Operating lease liabilities—current | 15,948 | 16,118 |
Other accrued liabilities | 19,299 | 21,484 |
Total current liabilities | 72,759 | 71,635 |
Long-term operating lease liabilities—less current portion | 249,421 | 287,753 |
Other long-term liabilities | 6,098 | 5,293 |
Long-term debt, net | 55,762 | 51,372 |
Total liabilities | 384,040 | 416,053 |
Commitments and contingencies | ||
Equity: | ||
Common stock, $0.001 par value; 100,000 shares authorized; 30,146 and 29,665 shares issued and outstanding, respectively, at September 30, 2022; and 28,826 and 28,499 shares issued and outstanding, respectively, at December 31, 2021 | 29 | 28 |
Additional paid-in capital | 98,634 | 95,595 |
Retained earnings | 17,810 | 14,641 |
Treasury stock, at cost, 3 shares at September 30, 2022 and December 31, 2021 | (65) | (65) |
Total Pennant Group, Inc. stockholders’ equity | 116,408 | 110,199 |
Noncontrolling interest | 4,432 | 4,045 |
Total equity | 120,840 | 114,244 |
Total liabilities and equity | $ 504,880 | $ 530,297 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 822 | $ 902 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 30,146,000 | 28,826,000 |
Common stock, shares outstanding (in shares) | 29,665,000 | 28,499,000 |
Treasury stock, at cost (in shares) | 3,000 | 3,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Statement [Abstract] | ||||
Revenue | $ 118,350 | $ 111,921 | $ 348,576 | $ 327,929 |
Expense | ||||
Cost of services | 94,680 | 89,619 | 277,658 | 259,908 |
Rent—cost of services | 9,391 | 10,334 | 28,520 | 30,455 |
General and administrative expense | 5,879 | 9,066 | 25,653 | 27,137 |
Depreciation and amortization | 1,251 | 1,200 | 3,677 | 3,545 |
Loss on asset dispositions and impairment, net | 5 | 0 | 6,713 | 0 |
Total expenses | 111,206 | 110,219 | 342,221 | 321,045 |
Income from operations | 7,144 | 1,702 | 6,355 | 6,884 |
Other (expense): | ||||
Other expense | (18) | 0 | (50) | (24) |
Interest expense, net | (1,058) | (512) | (2,508) | (1,344) |
Other (expense), net | (1,076) | (512) | (2,558) | (1,368) |
Income before provision for income taxes | 6,068 | 1,190 | 3,797 | 5,516 |
Provision for income taxes | 1,074 | 69 | 241 | 1,013 |
Net income | 4,994 | 1,121 | 3,556 | 4,503 |
Less: net income (loss) attributable to noncontrolling interest | 163 | (124) | 387 | (342) |
Net income and other comprehensive income attributable to The Pennant Group, Inc. | $ 4,831 | $ 1,245 | $ 3,169 | $ 4,845 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.16 | $ 0.04 | $ 0.11 | $ 0.17 |
Diluted (in dollars per share) | $ 0.16 | $ 0.04 | $ 0.10 | $ 0.16 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 29,335 | 28,444 | 28,840 | 28,364 |
Diluted (in shares) | 30,172 | 30,556 | 30,182 | 30,719 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Non-Controlling Interest |
Equity, beginning balance, common stock (in shares) at Dec. 31, 2020 | 28,696 | |||||
Equity, beginning balance at Dec. 31, 2020 | $ 101,172 | $ 28 | $ 84,671 | $ 11,945 | $ (65) | $ 4,593 |
Equity, beginning balance, treasury stock (in shares) at Dec. 31, 2020 | 3 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) attributable to The Pennant Group, Inc. | 950 | 950 | ||||
Net income (loss) attributable to Non-Controlling Interests | (37) | (37) | ||||
Share-based compensation | 2,416 | 2,416 | ||||
Issuance of common stock from the exercise of stock options (in shares) | 21 | |||||
Issuance of common stock from the exercise of stock options | 218 | 218 | ||||
Net issuance of restricted stock (in shares) | 3 | |||||
Equity, ending balance, common stock (in shares) at Mar. 31, 2021 | 28,720 | |||||
Equity, ending balance at Mar. 31, 2021 | 104,719 | $ 28 | 87,305 | 12,895 | $ (65) | 4,556 |
Equity, ending balance, treasury stock (in shares) at Mar. 31, 2021 | 3 | |||||
Equity, beginning balance, common stock (in shares) at Dec. 31, 2020 | 28,696 | |||||
Equity, beginning balance at Dec. 31, 2020 | 101,172 | $ 28 | 84,671 | 11,945 | $ (65) | 4,593 |
Equity, beginning balance, treasury stock (in shares) at Dec. 31, 2020 | 3 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) attributable to The Pennant Group, Inc. | 4,845 | |||||
Net income (loss) attributable to Non-Controlling Interests | (342) | |||||
Equity, ending balance, common stock (in shares) at Sep. 30, 2021 | 28,800 | |||||
Equity, ending balance at Sep. 30, 2021 | 113,847 | $ 28 | 92,843 | 16,790 | $ (65) | 4,251 |
Equity, ending balance, treasury stock (in shares) at Sep. 30, 2021 | 3 | |||||
Equity, beginning balance, common stock (in shares) at Mar. 31, 2021 | 28,720 | |||||
Equity, beginning balance at Mar. 31, 2021 | 104,719 | $ 28 | 87,305 | 12,895 | $ (65) | 4,556 |
Equity, beginning balance, treasury stock (in shares) at Mar. 31, 2021 | 3 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) attributable to The Pennant Group, Inc. | 2,650 | 2,650 | ||||
Net income (loss) attributable to Non-Controlling Interests | (181) | (181) | ||||
Share-based compensation | 2,499 | 2,499 | ||||
Issuance of common stock from the exercise of stock options (in shares) | 35 | |||||
Issuance of common stock from the exercise of stock options | 295 | 295 | ||||
Net issuance of restricted stock (in shares) | 4 | |||||
Equity, ending balance, common stock (in shares) at Jun. 30, 2021 | 28,759 | |||||
Equity, ending balance at Jun. 30, 2021 | 109,982 | $ 28 | 90,099 | 15,545 | $ (65) | 4,375 |
Equity, ending balance, treasury stock (in shares) at Jun. 30, 2021 | 3 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) attributable to The Pennant Group, Inc. | 1,245 | 1,245 | ||||
Net income (loss) attributable to Non-Controlling Interests | (124) | (124) | ||||
Share-based compensation | 2,568 | 2,568 | ||||
Issuance of common stock from the exercise of stock options (in shares) | 36 | |||||
Issuance of common stock from the exercise of stock options | 176 | 176 | ||||
Net issuance of restricted stock (in shares) | 5 | |||||
Equity, ending balance, common stock (in shares) at Sep. 30, 2021 | 28,800 | |||||
Equity, ending balance at Sep. 30, 2021 | $ 113,847 | $ 28 | 92,843 | 16,790 | $ (65) | 4,251 |
Equity, ending balance, treasury stock (in shares) at Sep. 30, 2021 | 3 | |||||
Equity, beginning balance, common stock (in shares) at Dec. 31, 2021 | 28,499 | 28,826 | ||||
Equity, beginning balance at Dec. 31, 2021 | $ 114,244 | $ 28 | 95,595 | 14,641 | $ (65) | 4,045 |
Equity, beginning balance, treasury stock (in shares) at Dec. 31, 2021 | 3 | 3 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) attributable to The Pennant Group, Inc. | $ 1,014 | 1,014 | ||||
Net income (loss) attributable to Non-Controlling Interests | 144 | 144 | ||||
Share-based compensation | 2,440 | 2,440 | ||||
Issuance of common stock from the exercise of stock options (in shares) | 21 | |||||
Issuance of common stock from the exercise of stock options | 90 | $ 1 | 89 | |||
Net issuance of restricted stock (in shares) | 2 | |||||
Equity, ending balance, common stock (in shares) at Mar. 31, 2022 | 28,849 | |||||
Equity, ending balance at Mar. 31, 2022 | $ 117,932 | $ 29 | 98,124 | 15,655 | $ (65) | 4,189 |
Equity, ending balance, treasury stock (in shares) at Mar. 31, 2022 | 3 | |||||
Equity, beginning balance, common stock (in shares) at Dec. 31, 2021 | 28,499 | 28,826 | ||||
Equity, beginning balance at Dec. 31, 2021 | $ 114,244 | $ 28 | 95,595 | 14,641 | $ (65) | 4,045 |
Equity, beginning balance, treasury stock (in shares) at Dec. 31, 2021 | 3 | 3 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) attributable to The Pennant Group, Inc. | $ 3,169 | |||||
Net income (loss) attributable to Non-Controlling Interests | $ 387 | |||||
Equity, ending balance, common stock (in shares) at Sep. 30, 2022 | 29,665 | 30,146 | ||||
Equity, ending balance at Sep. 30, 2022 | $ 120,840 | $ 29 | 98,634 | 17,810 | $ (65) | 4,432 |
Equity, ending balance, treasury stock (in shares) at Sep. 30, 2022 | 3 | 3 | ||||
Equity, beginning balance, common stock (in shares) at Mar. 31, 2022 | 28,849 | |||||
Equity, beginning balance at Mar. 31, 2022 | $ 117,932 | $ 29 | 98,124 | 15,655 | $ (65) | 4,189 |
Equity, beginning balance, treasury stock (in shares) at Mar. 31, 2022 | 3 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) attributable to The Pennant Group, Inc. | (2,676) | (2,676) | ||||
Net income (loss) attributable to Non-Controlling Interests | 80 | 80 | ||||
Share-based compensation | 2,380 | 2,380 | ||||
Issuance of common stock from the exercise of stock options (in shares) | 33 | |||||
Issuance of common stock from the exercise of stock options | 271 | 271 | ||||
Net issuance of restricted stock (in shares) | 4 | |||||
Equity, ending balance, common stock (in shares) at Jun. 30, 2022 | 28,886 | |||||
Equity, ending balance at Jun. 30, 2022 | 117,987 | $ 29 | 100,775 | 12,979 | $ (65) | 4,269 |
Equity, ending balance, treasury stock (in shares) at Jun. 30, 2022 | 3 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) attributable to The Pennant Group, Inc. | 4,831 | 4,831 | ||||
Net income (loss) attributable to Non-Controlling Interests | 163 | 163 | ||||
Share-based compensation | (2,747) | (2,747) | ||||
Issuance of common stock from the exercise of stock options (in shares) | 52 | |||||
Issuance of common stock from the exercise of stock options | $ 606 | 606 | ||||
Net issuance of restricted stock (in shares) | 1,208 | |||||
Equity, ending balance, common stock (in shares) at Sep. 30, 2022 | 29,665 | 30,146 | ||||
Equity, ending balance at Sep. 30, 2022 | $ 120,840 | $ 29 | $ 98,634 | $ 17,810 | $ (65) | $ 4,432 |
Equity, ending balance, treasury stock (in shares) at Sep. 30, 2022 | 3 | 3 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities: | ||
Net income | $ 3,556 | $ 4,503 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 3,677 | 3,545 |
Amortization of deferred financing fees | 390 | 358 |
Impairment of long-lived assets | 218 | 0 |
Provision for doubtful accounts | 603 | 528 |
Share-based compensation | 2,073 | 7,483 |
Deferred income taxes | 752 | 87 |
Change in operating assets and liabilities, net of acquisitions: | ||
Accounts receivable | 1,734 | (6,708) |
Prepaid expenses and other assets | (1,429) | (6,861) |
Operating lease obligations | (140) | 883 |
Accounts payable | 1,655 | (49) |
Accrued wages and related liabilities | 1,278 | (4,644) |
Other accrued liabilities | 4,333 | 2,709 |
Contract liabilities (CARES Act advance payments) | (6,211) | (14,638) |
Other long-term liabilities | 485 | (261) |
Net cash provided by (used in) operating activities | 12,974 | (13,065) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (10,426) | (4,144) |
Cash payments for business acquisitions | (9,680) | (13,550) |
Other | (70) | (372) |
Net cash used in investing activities | (20,176) | (18,066) |
Cash flows from financing activities: | ||
Proceeds from Revolving Credit Facility | 82,000 | 97,000 |
Payments on Revolving Credit Facility | (78,000) | (61,500) |
Payments for deferred financing costs | 0 | (1,394) |
Issuance of common stock upon the exercise of options | 967 | 689 |
Net cash provided by financing activities | 4,967 | 34,795 |
Net (decrease) increase in cash | (2,235) | 3,664 |
Cash beginning of period | 5,190 | 43 |
Cash end of period | 2,955 | 3,707 |
Cash paid during the period for: | ||
Interest | 2,114 | 980 |
Income taxes | 77 | 2,594 |
Lease liabilities | 27,092 | 29,327 |
Right-of-use assets obtained in exchange for new operating lease obligations | 10,326 | 2,842 |
Non-cash adjustment to right-of-use assets and lease liabilities from lease modifications | 6,270 | 159 |
Non-cash adjustment to right-of-use assets and lease liabilities from lease terminations and assignments | (43,136) | 0 |
Non-cash investing activity: | ||
Capital expenditures in accounts payable | $ 1,100 | $ 551 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | DESCRIPTION OF BUSINESS The Pennant Group, Inc. (herein referred to as “Pennant,” the “Company,” “it,” or “its”), is a holding company with no direct operating assets, employees or revenue. The Company, through its independent operating subsidiaries, provides healthcare services across the post-acute care continuum. As of September 30, 2022, the Company’s subsidiaries operated 94 home health, hospice and home care agencies and 49 senior living communities located in Arizona, California, Colorado, Idaho, Iowa, Montana, Nevada, Oklahoma, Oregon, Texas, Utah, Washington, Wisconsin and Wyoming. Certain of the Company’s subsidiaries, collectively referred to as the Service Center, provide accounting, payroll, human resources, information technology, legal, risk management, and other services to the operations through contractual relationships. Each of the Company’s affiliated operations are operated by separate, independent subsidiaries that have their own management, employees and assets. References herein to the consolidated “Company” and “its” assets and activities is not meant to imply, nor should it be construed as meaning, that Pennant has direct operating assets, employees or revenue, or that any of the subsidiaries are operated by Pennant. |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation - The accompanying unaudited condensed consolidated financial statements of the Company (the “Interim Financial Statements”) reflect the Company’s financial position, results of operations and cash flows of the business. The Interim Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the regulations of the Securities and Exchange Commission (“SEC”). Management believes that the Interim Financial Statements reflect, in all material respects, all adjustments which are of a normal and recurring nature necessary to present fairly the Company’s financial position, results of operations, and cash flows for the periods presented in conformity with GAAP. The results reported in these Interim Financial Statements are not necessarily indicative of results that may be expected for the entire year. The Condensed Consolidated Balance Sheet as of December 31, 2021 is derived from the Company’s annual audited Consolidated Financial Statements for the fiscal year ended December 31, 2021, which should be read in conjunction with these Interim Financial Statements. Certain information in the accompanying footnote disclosures normally included in annual financial statements was condensed or omitted for the interim periods presented in accordance with GAAP. All significant intercompany transactions and balances between the various legal entities comprising the Company have been eliminated in consolidation. The Company presents noncontrolling interests within the equity section of its Condensed Consolidated Balance Sheets and the amount of consolidated net income that is attributable to the Company and the noncontrolling interest in its Condensed Consolidated Statements of Income. The Company consists of various limited liability companies and corporations established to operate home health, hospice, home care, and senior living operations. The Interim Financial Statements include the accounts of all entities controlled by the Company through its ownership of a majority voting interest. Certain prior quarter amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations in the current period or prior period. Estimates and Assumptions - The preparation of the Interim Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Interim Financial Statements and the reported amounts of revenue and expenses during the reporting periods. The most significant estimates in the Interim Financial Statements relate to revenue, intangible assets and goodwill, right-of-use assets and lease liabilities for leases greater than 12 months, self-insurance reserves, and income taxes. Actual results could differ from those estimates. CARES Act : The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted on March 27, 2020 in the United States. The CARES Act allowed for deferred payment of the employer-paid portion of social security taxes through the end of 2020, with 50% due on December 31, 2021 and the remainder due on December 31, 2022. The Company deferred approximately $7,836 of the employer-paid portion of social security taxes, of which $4,129 remains as of September 30, 2022 and is included in current liabilities in accrued wages and related liabilities. The CARES Act also expanded the |
TRANSACTIONS WITH ENSIGN
TRANSACTIONS WITH ENSIGN | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions [Abstract] | |
TRANSACTIONS WITH ENSIGN | TRANSACTIONS WITH ENSIGN On October 1, 2019, The Ensign Group, Inc. (“Ensign”) completed the separation of Pennant (the “Spin-Off”). In connection with the Spin-Off, Pennant entered into several agreements with Ensign that set forth the principal actions taken or to be taken in connection with the Spin-Off and govern the relationship of the parties following the Spin-Off. The Transitions Services Agreement with Ensign (the “Transition Services Agreement”) provided Pennant primarily administrative support. The Transitions Services Agreement expired two years from the Spin-Off date. The Company incurred costs of $231 and $1,332 for the three and nine months ended September 30, 2022 and $706 and $2,441 for the three and nine months ended September 30, 2021, respectively that related primarily to shared administrative support and other services at proximate operations. Services included in cost of services were $812 and $2,035 for the three and nine months ended September 30, 2022 and $760 and $2,377 for the three and nine months ended September 30, 2021, respectively, that related primarily to room and board charges at skilled nursing facilities for hospice patients. Additionally, the Company’s independent operating subsidiaries leased 29 and 31 communities from subsidiaries of Ensign under a master lease arrangement as of September 30, 2022 and September 30, 2021, respectively. See further discussion below at Note 8, Leases . On January 27, 2022, affiliates of the Company, entered into certain operations transfer agreements (collectively, the “Transfer Agreements”) with affiliates of Ensign, providing for the transfer of the operations of five senior living communities (the “Transaction”). The Transfer Agreements require one of the transferors to place $6.5 million in escrow to cover post-closing capital expenditures and operating losses related to one of the communities, and such escrow is funded by an initial payment by the transferor at closing followed by eight equal monthly installments. The Transaction closed in April 2022. |
COMPUTATION OF NET INCOME PER C
COMPUTATION OF NET INCOME PER COMMON SHARE | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
COMPUTATION OF NET INCOME PER COMMON SHARE | COMPUTATION OF NET INCOME PER COMMON SHAREBasic net income per share is computed by dividing net income attributable to stockholders of the Company by the weighted average number of outstanding common shares for the period. The computation of diluted net income per share is similar to the computation of basic net income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. The following table sets forth the computation of basic and diluted net income per share for the periods presented: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Numerator: Net income attributable to The Pennant Group, Inc. $ 4,831 $ 1,245 $ 3,169 $ 4,845 Denominator: Weighted average shares outstanding for basic net income per share 29,335 28,444 28,840 28,364 Plus: assumed incremental shares from exercise of options and assumed conversion or vesting of restricted stock (a) 837 2,112 1,342 2,355 Adjusted weighted average common shares outstanding for diluted income per share 30,172 30,556 30,182 30,719 Earnings Per Share: Basic net income per common share $ 0.16 $ 0.04 $ 0.11 $ 0.17 Diluted net income per common share $ 0.16 $ 0.04 $ 0.10 $ 0.16 (a) The diluted per share amounts do not reflect common equivalent shares outstanding of 1,858 and 1,806 for the three and nine months ended September 30, 2022 and 815 and 437 for the three and nine months ended September 30, 2021, respectively, because of their anti-dilutive effect. |
REVENUE AND ACCOUNTS RECEIVABLE
REVENUE AND ACCOUNTS RECEIVABLE | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE AND ACCOUNTS RECEIVABLE | REVENUE AND ACCOUNTS RECEIVABLE Revenue is recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled from patients and third-party payors, including Medicaid, Medicare and managed care programs (Commercial, Medicare Advantage and Managed Medicaid plans), in exchange for providing patient care. The healthcare services in home health and hospice patient contracts include routine services in exchange for a contractual agreed-upon amount or rate. Routine services are treated as a single performance obligation satisfied over time as services are rendered. As such, patient care services represent a bundle of services that are not capable of being distinct within the context of the contract. Additionally, there may be ancillary services which are not included in the rates for routine services, but instead are treated as separate performance obligations satisfied at a point in time, if and when those services are rendered. Revenue recognized from healthcare services are adjusted for estimates of variable consideration to arrive at the transaction price. The Company determines the transaction price based on contractually agreed-upon amounts or rate, adjusted for estimates of variable consideration. The Company uses the expected value method in determining the variable component that should be used to arrive at the transaction price, using contractual agreements and historical reimbursement experience within each payor type. The amount of variable consideration which is included in the transaction price may be constrained, and is included in the net revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If actual amounts of consideration ultimately received differ from the Company’s estimates, the Company adjusts these estimates, which would affect net service revenue in the period such variances become known. Revenue from the Medicare and Medicaid programs accounted for 62.4% and 62.3% of the Company’s revenue, for the three and nine months ended September 30, 2022, and 62.2% and 62.6% for the three and nine months ended September 30, 2021, respectively. The Company records revenue from these governmental and managed care programs as services are performed at their expected net realizable amounts under these programs. The Company’s revenue from governmental and managed care programs is subject to audit and retroactive adjustment by governmental and third-party agencies. Consistent with healthcare industry accounting practices, any changes to these governmental revenue estimates are recorded in the period the change or adjustment becomes known based on final settlement. Disaggregation of Revenue The Company disaggregates revenue from contracts with its patients by reportable operating segments and payors. The Company has determined that disaggregating revenue into these categories achieves the disclosure objectives to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The Company’s service specific revenue recognition policies are as follows: Home Health Revenue Medicare Revenue Net service revenue is recognized in accordance with the Patient Driven Groupings Model (“PDGM”). Under PDGM, Medicare provides agencies with payments for each 30-day payment period provided to beneficiaries. If a beneficiary is still eligible for care after the end of the first 30-day payment period, a second 30-day payment period can begin. There are no limits to the number of periods of care a beneficiary who remains eligible for the home health benefit can receive. While payment for each 30-day payment period is adjusted to reflect the beneficiary’s health condition and needs, a special outlier provision exists to ensure appropriate payment for those beneficiaries that have the most expensive care needs. The payment under the Medicare program is also adjusted for certain variables including, but not limited to: (a) a low utilization payment adjustment if the number of visits is below an established threshold that varies based on the diagnosis of a beneficiary; (b) a partial payment if the patient transferred to another provider or the Company received a patient from another provider before completing the period of care; (c) adjustment to the admission source of claim if it is determined that the patient had a qualifying stay in a post-acute care setting within 14 days prior to the start of a 30-day payment period; (d) the timing of the 30-day payment period provided to a patient in relation to the admission date, regardless of whether the same home health provider provided care for the entire series of episodes; (e) changes to the acuity of the patient during the previous 30-day payment period; (f) changes in the base payments established by the Medicare program; (g) adjustments to the base payments for case mix and geographic wages; and (h) recoveries of overpayments. The Company adjusts Medicare revenue on completed episodes to reflect differences between estimated and actual payment amounts, an inability to obtain appropriate billing documentation and other reasons unrelated to credit risk. Therefore, the Company believes that its reported net service revenue and patient accounts receivable will be the net amounts to be realized from Medicare for services rendered. In addition to revenue recognized on completed episodes and periods, the Company also recognizes a portion of revenue associated with episodes and periods in progress. Episodes in progress are 30-day payment periods that begin during the reporting period but were not completed as of the end of the period. As such, the Company estimates revenue and recognizes it on a daily basis. The primary factors underlying this estimate are the number of episodes in progress at the end of the reporting period, expected Medicare revenue per period of care or episode of care and the Company’s estimate of the average percentage complete based on the scheduled end of period and end of episode dates. Non-Medicare Revenue Episodic Based Revenue - The Company recognizes revenue in a similar manner as it recognizes Medicare revenue for episodic-based rates that are paid by other insurance carriers, including Medicare Advantage programs. These rates can vary based upon the negotiated terms. Non-episodic Based Revenue - Revenue is recognized on an accrual basis based upon the date of service at amounts equal to its established or estimated per visit rates, as applicable. Hospice Revenue Revenue is recognized on an accrual basis based upon the date of service at amounts equal to the estimated payment rates. The estimated payment rates are calculated as daily rates for each of the levels of care the Company delivers. Revenue is adjusted for an inability to obtain appropriate billing documentation or authorizations acceptable to the payor and other reasons unrelated to credit risk. Additionally, as Medicare hospice revenue is subject to an inpatient cap and an overall payment cap, the Company monitors its provider numbers and estimates amounts due back to Medicare if a cap has been exceeded. The Company regularly evaluates and records these adjustments as a reduction to revenue and an increase to other accrued liabilities. Senior Living Revenue The Company has elected the lessor practical expedient within ASC Topic 842, Leases (“ASC 842”) and therefore recognizes, measures, presents, and discloses the revenue for services rendered under the Company’s senior living residency agreements based upon the predominant component, either the lease or non-lease component, of the contracts. The Company has determined that the services included under the Company’s senior living residency agreements each have the same timing and pattern of transfer. The Company recognizes revenue under ASC Topic 606, Revenue from Contracts with Customers for its senior residency agreements, for which it has determined that the non-lease components of such residency agreements are the predominant component of each such contract. The Company’s senior living revenue consists of fees for basic housing and assisted living care. Accordingly, the Company records revenue when services are rendered on the date services are provided at amounts billable to individual residents. Residency agreements are generally for a term of 30 days, with resident fees billed monthly in advance. For residents under reimbursement arrangements with Medicaid, revenue is recorded based on contractually agreed-upon amounts or rates on a per resident, daily basis or as services are rendered. Revenue By Payor Revenue by payor for the three months ended September 30, 2022 and 2021, is summarized in the following tables: Three Months Ended September 30, 2022 Home Health and Hospice Services Home Health Services Hospice Services Senior Living Services Total Revenue Revenue % Medicare $ 23,040 $ 35,367 $ — $ 58,407 49.4 % Medicaid 2,151 4,065 9,127 15,343 13.0 Subtotal 25,191 39,432 9,127 73,750 62.4 Managed care 14,594 1,062 — 15,656 13.2 Private and other (a) 5,472 28 23,444 28,944 24.4 Total revenue $ 45,257 $ 40,522 $ 32,571 $ 118,350 100.0 % (a) Private and other payors in the Company’s home health and hospice services segment includes revenue from all payors generated in the Company’s home care operations. Three Months Ended September 30, 2021 Home Health and Hospice Services Home Health Services Hospice Services Senior Living Services Total Revenue Revenue % Medicare $ 20,227 $ 35,059 $ — $ 55,286 49.4 % Medicaid 1,938 3,074 9,330 14,342 12.8 Subtotal 22,165 38,133 9,330 69,628 62.2 Managed care 11,969 879 — 12,848 11.5 Private and other (a) 5,800 57 23,588 29,445 26.3 Total revenue $ 39,934 $ 39,069 $ 32,918 $ 111,921 100.0 % (a) Private and other payors in the Company’s home health and hospice services segment includes revenue from all payors generated in the Company’s home care operations. Revenue by payor for the nine months ended September 30, 2022 and 2021, is summarized in the following tables: Nine Months Ended September 30, 2022 Home Health and Hospice Services Home Health Services Hospice Services Senior Living Services Total Revenue Revenue % Medicare $ 67,861 $ 103,322 $ — $ 171,183 49.1 % Medicaid 7,389 11,189 27,502 46,080 13.2 Subtotal 75,250 114,511 27,502 217,263 62.3 Managed care 42,106 2,999 — 45,105 13.0 Private and other (a) 16,538 194 69,476 86,208 24.7 Total revenue $ 133,894 $ 117,704 $ 96,978 $ 348,576 100.0 % (a) Private and other payors in the Company’s home health and hospice services segment includes revenue from all payors generated in the Company’s home care operations. Nine Months Ended September 30, 2021 Home Health and Hospice Services Home Health Services Hospice Services Senior Living Services Total Revenue Revenue % Medicare $ 61,055 $ 101,771 $ — $ 162,826 49.7 % Medicaid 6,659 8,507 27,266 42,432 12.9 Subtotal 67,714 110,278 27,266 205,258 62.6 Managed care 34,586 2,241 — 36,827 11.2 Private and other (a) 16,594 302 68,948 85,844 26.2 Total revenue $ 118,894 $ 112,821 $ 96,214 $ 327,929 100.0 % (a) Private and other payors in the Company’s home health and hospice services segment includes revenue from all payors generated in the Company’s home care operations. Balance Sheet Impact Included in the Company’s Condensed Consolidated Balance Sheets are contract assets, comprised of billed accounts receivable and unbilled receivables, which are the result of the timing of revenue recognition, billings and cash collections, as well as, contract liabilities, which primarily represent payments the Company receives in advance of services provided. Accounts receivable, net as of September 30, 2022 and December 31, 2021 is summarized in the following table: September 30, 2022 December 31, 2021 Medicare $ 31,125 $ 31,327 Medicaid 9,127 11,793 Managed care 8,990 7,901 Private and other 3,184 3,821 Accounts receivable, gross 52,426 54,842 Less: allowance for doubtful accounts (822) (902) Accounts receivable, net $ 51,604 $ 53,940 Concentrations- Credit Risk The Company has significant accounts receivable balances, the collectability of which is dependent on the availability of funds from certain governmental programs, primarily Medicare and Medicaid. These receivables represent the only significant concentration of credit risk for the Company. The Company does not believe there are significant credit risks associated with these governmental programs. The Company believes that an appropriate allowance has been recorded for the possibility of these receivables proving uncollectible, and continually monitors and adjusts these allowances as necessary. The Company’s gross receivables from the Medicare and Medicaid programs accounted for approximately 76.8% and 78.6% of its total gross accounts receivable as of September 30, 2022 and December 31, 2021, respectively. Revenue from reimbursement under the Medicare and Medicaid programs accounted for 62.4% and 62.3% for the three and nine months ended September 30, 2022, and 62.2% and 62.6% of the Company’s revenue for the three and nine months ended September 30, 2021. Practical Expedients and Exemptions As the Company’s contracts have an original duration of one year or less, the Company uses the practical expedient applicable to its contracts and does not consider the time value of money. Further, because of the short duration of these contracts, the Company has not disclosed the transaction price for the remaining performance obligations as of the end of each reporting period or when the Company expects to recognize this revenue. In addition, the Company has applied the practical expedient provided by ASC 340, Other Assets and Deferred Costs (“ASC 340”), and all incremental customer contract acquisition costs are expensed as they are incurred because the amortization period would have been one year or less. |
BUSINESS SEGMENTS
BUSINESS SEGMENTS | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
BUSINESS SEGMENTS | BUSINESS SEGMENTS The Company classifies its operations into the following reportable operating segments: (1) home health and hospice services, which includes the Company’s home health, hospice and home care businesses; and (2) senior living services, which includes the operation of assisted living, independent living and memory care communities. The reporting segments are business units that offer different services and are managed separately to provide greater visibility into those operations. The Company’s Chief Executive Officer, who is the Company’s Chief Operating Decision Maker (“CODM”), reviews financial information at the operating segment level. The Company also reports an “all other” category that includes general and administrative expense from the Company’s Service Center. As of September 30, 2022, the Company provided services through 94 affiliated home health, hospice and home care agencies, and 49 affiliated senior living operations. The Company evaluates performance and allocates capital resources to each segment based on an operating model that is designed to maximize the quality of care provided and profitability. The Company’s Service Center provides various services to all lines of business. The Company does not review assets by segment and therefore assets by segment are not disclosed below. The CODM uses Segment Adjusted EBITDAR from Operations as the primary measure of profit and loss for the Company's reportable segments and to compare the performance of its operations with those of its competitors. Segment Adjusted EBITDAR from Operations is net income attributable to the Company's reportable segments excluding interest expense, provision for income taxes, depreciation and amortization expense, rent, and, in order to view the operations performance on a comparable basis from period to period, certain adjustments including: (1) costs at start-up operations, (2) share-based compensation, (3) acquisition related costs and credit allowances, (4) redundant and nonrecurring costs associated with the Transition Services Agreement, (5) the loss related to senior living operations transferred to Ensign, (6) unusual or non-recurring charges, and (7) net income attributable to noncontrolling interest. General and administrative expenses are not allocated to the reportable segments, and are included as “All Other”, accordingly the segment earnings measure reported is before allocation of corporate general and administrative expenses. The Company's segment measures may be different from the calculation methods used by other companies and, therefore, comparability may be limited. The following tables present certain financial information regarding the Company’s reportable segments, general and administrative expenses are not allocated to the reportable segments and are included in “All Other” for the three and nine months ended September 30, 2022 and 2021: Home Health and Hospice Services Senior Living Services All Other Total Three Months Ended September 30, 2022 Revenue $ 85,779 $ 32,571 $ — $ 118,350 Segment Adjusted EBITDAR from Operations $ 15,380 $ 9,370 $ (7,779) $ 16,971 Three Months Ended September 30, 2021 Revenue $ 79,003 $ 32,918 $ — $ 111,921 Segment Adjusted EBITDAR from Operations $ 14,409 $ 9,106 $ (6,783) $ 16,732 Home Health and Hospice Services Senior Living Services All Other Total Nine Months Ended September 30, 2022 Revenue $ 251,598 $ 96,978 $ — $ 348,576 Segment Adjusted EBITDAR from Operations $ 45,056 $ 27,573 $ (23,795) $ 48,834 Nine Months Ended September 30, 2021 Revenue $ 231,715 $ 96,214 $ — $ 327,929 Segment Adjusted EBITDAR from Operations $ 43,131 $ 27,692 $ (19,249) $ 51,574 This following table provides a reconciliation of Segment Adjusted EBITDAR from Operations to income from operations: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Segment Adjusted EBITDAR from Operations $ 16,971 $ 16,732 $ 48,834 $ 51,574 Less: Depreciation and amortization 1,251 1,200 3,677 3,545 Rent—cost of services 9,391 10,334 28,520 30,455 Other expense (18) — (50) (24) Adjustments to Segment EBITDAR from Operations: Less: Costs at start-up operations (a) 430 532 938 991 Share-based compensation expense and related taxes (b) (2,501) 2,568 2,319 7,483 Acquisition related costs & credit allowances (c) 1,000 36 1,014 73 Transition services costs (d) — 236 77 1,825 Loss related to senior living operations transferred to Ensign (e) 144 — 6,078 — Unusual or non-recurring charges (f) 293 — 293 — Add: Net income (loss) attributable to noncontrolling interest 163 (124) 387 (342) Condensed Consolidated Income from Operations $ 7,144 $ 1,702 $ 6,355 $ 6,884 (a) Represents results related to start-up operations. This amount excludes rent and depreciation and amortization expense related to such operations. (b) Share-based compensation expense and related payroll taxes incurred, including the impact of the modification of certain restricted stock units described below in Note 12, Options and Award s, to the Interim Financial Statements. Share-based compensation expense and related payroll taxes are included in cost of services and general and administrative expense (c) Non-capitalizable costs associated with acquisitions and credit allowances for amounts in dispute with the prior owners of certain acquired operations. (d) Costs identified as redundant or non-recurring incurred by the Company as a result of the Spin-off. The 2021 amounts represents part of the costs incurred under the Transition Services Agreement. All amounts are included in general and administrative expense. Fees incurred under the Transition Services Agreement were $231 and $1,332 for the three and nine months ended September 30, 2022, and $706 and $2,441 for the three and nine months ended September 30, 2021. (e) On January 27, 2022, affiliates of the Company, entered into certain operations transfer agreements (collectively, the “Transfer Agreements”) with affiliates of Ensign, providing for the transfer of the operations of certain senior living communities (the “Transaction”) from affiliates of the Company to affiliates of Ensign. The closing of the Transaction was completed in two phases with the transfer of two operations on March 1, 2022 and the remainder transferred on April 1, 2022. The amount includes $6,500 for the nine months ended September 30, 2022 to cover post-closing capital expenditures and operating losses related to one of the communities transferred on April 1, 2022. The amount above also includes $144 and $(422) for the three and nine months ended September 30, 2022, respectively, for the related net impact on revenue and cost of service attributable to the transferred entities. This amount excludes rent and depreciation and amortization expense related to such operations. (f) Represents unusual or non-recurring charges for legal services, implementation costs, integration costs, and consulting fees in general and administrative expenses. |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
ACQUISITIONS | ACQUISITIONS The Company’s acquisition focus is to acquire operations that are complementary to the Company’s current businesses, accretive to the Company’s business or otherwise advance the Company’s strategy. The results of all the Company’s independent operating subsidiaries are included in the Interim Financial Statements subsequent to the date of acquisition. Acquisitions are accounted for using the acquisition method of accounting. 2022 Acquisitions During the nine months ended September 30, 2022, the Company expanded its operations with the addition of two home health and four hospice agencies as well as one senior living community. A subsidiary of the Company entered into a separate operations transfer agreement with the prior operator of each acquired operation as part of each transaction. The fair value of assets for the Company’s home health and hospice acquisitions was mostly concentrated in goodwill and intangible assets and as such, these transactions were classified as a business combination in accordance with ASC Topic 805, Business Combinations (“ASC 805”). The purchase price for the business combinations was $9,680, which consisted of equipment and other assets of $188, goodwill of $4,925, and indefinite-lived intangible assets of $4,714 related to Medicare and Medicaid licenses, and other intangible assets of $40, net of assumed liabilities of $187. The Company anticipates that the total goodwill recognized will be fully deductible for tax purposes. There were no material acquisition costs that were expensed related to the business combination during the nine months ended September 30, 2022. 2021 Acquisitions During the nine months ended September 30, 2021, the Company expanded its operations with the addition of five home health and four hospice and two home care agencies. The aggregate purchase price for these acquisitions was $14,135. A subsidiary of the Company entered into a separate operations transfer agreement with the prior operator of each acquired operation as part of each transaction. The fair value of assets for home health, hospice, home care acquisitions were mostly concentrated in goodwill and intangible assets and as such, these transactions were classified as business combinations in accordance with ASC Topic 805, Business Combinations (“ASC 805”). The purchase price for the business combinations was $13,550, which consisted of equipment and other assets of $72, goodwill of $7,341, and indefinite-lived intangible assets of $6,137 related to Medicare and Medicaid licenses. The Company anticipates that the total goodwill recognized will be fully deductible for tax purposes. There were no material acquisition costs that were expensed related to the business combinations during the nine months ended September 30, 2021. Two of the hospice agencies were acquired Medicare licenses and are considered asset acquisitions. The fair value of assets for the hospice licenses acquired totaled $585 and was allocated to indefinite-lived intangible assets. Unaudited Pro Forma Data The Company’s acquisition strategy has been focused on identifying both opportunistic and strategic acquisitions within its target markets that offer strong opportunities for return. The operating subsidiaries acquired by the Company are frequently underperforming financially and can have regulatory and clinical challenges to overcome. From time to time, these acquisitions are more strategic in nature that may or may not have positive operational results. Financial information, especially with underperforming operating subsidiaries, is often inadequate, inaccurate or unavailable. Consequently, the Company believes that prior operating results are not a meaningful representation of the Company’s current operating results or indicative of the integration potential of its newly acquired operating subsidiaries. Revenue and income (loss) before tax included in the condensed consolidated statement of income relating to the business combinations completed in the current year was $720 and $(106) during the three months ended September 30, 2022, respectively, and $3,674 and $(1,058) during the nine months ended September 30, 2022, respectively. Acquisition costs related to the business combinations were immaterial during the three and nine months ended September 30, 2022, respectively. Pro forma financial information has been included for the business combinations completed during the three and nine months ended September 30, 2022 and the three and nine months ended September 30, 2021, respectively. The acquisitions during the three and nine months ended September 30, 2022 have been included in the September 30, 2022 condensed consolidated balance sheets of the Company, and the operating results have been included in the condensed consolidated statements of income of the Company since the dates the Company gained effective control. Revenues and operating costs were based on actual results from the prior operator or from regulatory filings where available. If actual results were not available, revenue and operating costs were estimated based on available partial operating results of the prior operator of the operation, or if no information was available, estimates were derived from the Company’s post-acquisition operating results for that particular operation. The following tables represent unaudited pro forma results of condensed consolidated operations as if the business combinations to date in fiscal year 2022 had occurred at the beginning of 2021, after giving effect to certain adjustments. The unaudited pro forma information is not indicative of what the results of operations would have been if the acquisitions had actually occurred at the beginning of the periods presented, and is not intended as a projection of future results or trends. Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Revenue $ 119,070 $ 114,149 $ 352,250 $ 334,612 Net income attributable to The Pennant Group, Inc. (a) $ 4,751 $ 1,143 $ 2,370 $ 4,561 (a) Net income attributable to The Pennant Group, Inc. for the three and nine months ended September 30, 2022 and 2021 includes a tax impact of 24.5% and 24.7%, which are the respective statutory tax rates. |
PROPERTY AND EQUIPMENT_NET
PROPERTY AND EQUIPMENT—NET | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT—NET | PROPERTY AND EQUIPMENT—NET Property and equipment, net consist of the following: September 30, 2022 December 31, 2021 Land $ 96 $ — Building 1,890 — Leasehold improvements 16,161 11,660 Equipment 26,593 22,415 Furniture and fixtures 1,283 1,199 46,023 35,274 Less: accumulated depreciation (22,109) (18,486) Property and equipment, net $ 23,914 $ 16,788 Depreciation expense was $1,244 and $3,640 for the three and nine months ended September 30, 2022 and $1,189 and $3,527 for the three and nine months ended September 30, 2021, respectively. The Company acquired one building and related assets during the nine months ended September 30, 2022 associated with an existing senior living community operation. The total acquisition price of the land, building and related equipment was $2,007. The Company measures certain assets at fair value on a non-recurring basis, including long-lived assets, which are evaluated for impairment. Long-lived assets include assets such as property and equipment, operating lease assets and certain intangible assets. The inputs used to determine the fair value of long-lived assets and a reporting unit are considered Level 3 measurements due to their subjective nature. Management has evaluated its long-lived assets and determined there was no impairment during the three and nine months ended September 30, 2022 and 2021. |
GOODWILL AND OTHER INDEFINITE-L
GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS | GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS The following table represents activity in goodwill by segment for the nine months ended September 30, 2022: Home Health and Hospice Services Senior Living Services Total December 31, 2021 $ 70,623 $ 3,642 $ 74,265 Additions 4,925 — 4,925 September 30, 2022 $ 75,548 $ 3,642 $ 79,190 Other indefinite-lived intangible assets consist of the following: September 30, 2022 December 31, 2021 Trade name $ 1,385 $ 1,355 Medicare and Medicaid licenses 57,089 52,375 Total $ 58,474 $ 53,730 |
OTHER ACCRUED LIABILITIES
OTHER ACCRUED LIABILITIES | 9 Months Ended |
Sep. 30, 2022 | |
Payables and Accruals [Abstract] | |
OTHER ACCRUED LIABILITIES | OTHER ACCRUED LIABILITIES Other accrued liabilities consist of the following: September 30, 2022 December 31, 2021 Refunds payable $ 2,969 $ 3,095 Deferred revenue 1,570 1,456 Contract liabilities (CARES Act advance payments) — 6,211 Resident deposits 4,752 5,111 Property taxes 1,034 1,102 Accrued self-insurance liabilities 3,538 1,613 Accrued fee for transfer of senior living community 1,875 — Other 3,561 2,896 Other accrued liabilities $ 19,299 $ 21,484 |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Long-term debt, net consists of the following: September 30, 2022 December 31, 2021 Revolving Credit Facility $ 57,500 $ 53,500 Less: unamortized debt issuance costs (a) (1,738) (2,128) Long-term debt, net $ 55,762 $ 51,372 (a) Amortization expense for debt issuance costs was $130 and $390 for three and nine months ended September 30, 2022 and $129 and $358 for the three and nine months ended September 30, 2021, respectively, and is recorded in interest expense, net on the Condensed Consolidated Statements of Income. On February 23, 2021, Pennant entered into an amendment to its existing credit agreement (as amended, the “Credit Agreement”), which provides for an increased revolving credit facility with a syndicate of banks with a borrowing capacity of $150,000 (the “Revolving Credit Facility”). The interest rates applicable to loans under the Revolving Credit Facility are, at the Company’s election, either (i) Adjusted LIBOR (as defined in the Credit Agreement) plus a margin ranging from 2.3% to 3.3% per annum or (ii) Base Rate plus a margin ranging from 1.3% to 2.3% per annum, in each case, based on the ratio of Consolidated Total Net Debt to Consolidated EBITDA (each, as defined in the Credit Agreement). In addition, Pennant pays a commitment fee on the undrawn portion of the commitments under the Revolving Credit Facility which ranges from 0.35% to 0.50% per annum, depending on the Consolidated Total Net Debt to Consolidated EBITDA ratio of the Company and its subsidiaries. The Company is not required to repay any loans under the Credit Agreement prior to maturity in 2026, other than to the extent the outstanding borrowings exceed the aggregate commitments under the Credit Agreement. As of September 30, 2022, the Company’s weighted average interest rate on its outstanding debt was 5.27%. As of September 30, 2022, the Company had available borrowing on the Revolving Credit Facility of $88,314, which is net of outstanding letters of credit of $4,186. The fair value of the Revolving Credit Facility approximates carrying value, due to the short-term natur e and variable interest rates. The fair value of this debt is categorized within Level 2 of the fair value hierarchy based on the observable market borrowing rates. The Credit Agreement is guaranteed, jointly and severally, by certain of the Company’s independent operating subsidiaries, and is secured by a pledge of stock of the Company's material independent operating subsidiaries as well as a first lien on substantially all of each material operating subsidiary's personal property. The Credit Agreement contains customary covenants that, among other things, restrict, subject to certain exceptions, the ability of the Company and its independent operating subsidiaries to grant liens on their assets, incur indebtedness, sell assets, make investments, engage in acquisitions, |
OPTIONS AND AWARDS
OPTIONS AND AWARDS | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
OPTIONS AND AWARDS | OPTIONS AND AWARDS Outstanding options and restricted stock awards of the Company were granted under the 2019 Omnibus Incentive Plan (the “ OIP ” ) and Long-Term Incentive Plan (the “ LTIP ”), together referred to as the “Pennant Plans” ). Under the the Pennant Plans, stock-based payment awards, including employee stock options, restricted stock awards (“RSA”), and restricted stock units (“RSU” and together with RSA, “Restricted Stock”) are issued based on estimated fair value. The following disclosures represent share-based compensation expense relating to employees of the Company’s subsidiaries and non-employee directors who have awards under the Pennant Plans. Total share-based compensation expense for all Plans for the three and nine months ended September 30, 2022 and 2021 was: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Share-based compensation expense related to stock options $ 859 834 $ 2,480 $ 2,216 Share-based compensation expense related to Restricted Stock (3,664) 1,547 (643) 4,597 Share-based compensation expense related to Restricted Stock to non-employee directors 58 187 236 670 Total share-based compensation $ (2,747) $ 2,568 $ 2,073 $ 7,483 In future periods, the Company estimates it will recognize the following share-based compensation expense for unvested stock options and unvested Restricted Stock as of September 30, 2022: Unrecognized Compensation Expense Weighted Average Recognition Period (in years) Unvested Stock Options $ 11,041 3.4 Unvested Restricted Stock 3,577 4.7 Total unrecognized share-based compensation expense $ 14,618 On July 25, 2022 the Company modified certain outstanding RSUs granted in connection with the Spin-off. All the RSUs had an original vesting date of October 1, 2022. The modification resulted in the forfeiture of 250,000 outstanding RSUs and accelerated the vesting on the remaining 942,842 RSUs from October 1, 2022 to July 31, 2022. The modification of the award resulted in a net reduction of share-based compensation expense related to the awards of $3,812 in recorded general and administrative expense during the third quarter. Additionally, the Company granted 250,000 RSAs to certain executives and employees on July 25, 2022 under The Pennant Group, Inc. 2019 Omnibus Incentive Plan. The RSAs vest in five equal annual installments beginning on the first anniversary of the date of the grant. Stock Options Under the Pennant Plans, options granted to employees of the subsidiaries of Pennant generally vest over five years at 20% per year on the anniversary of the grant date. Options expire ten years after the date of grant. The Company uses the Black-Scholes option-pricing model to recognize the value of stock-based compensation expense for share-based payment awards under the Plans. Determining the appropriate fair-value model and calculating the fair value of stock-based awards at the grant date requires considerable judgment, including estimating stock price volatility and expected option life. The Company develops estimates based on historical data and market information, which can change significantly over time. The fair value of each option is estimated on the grant date using a Black-Scholes option-pricing model with the following weighted average assumptions for stock options granted as of June 30: Grant Year Options Granted Risk-Free Interest Rate Expected Life (a) Expected Volatility (b) Dividend Yield Weighted Average Fair Value of Options 2022 349 2.3 % 6.5 39.8 % — % $ 6.71 2021 364 1.0 % 6.5 38.2 % — % $ 14.82 (a) Under the midpoint method, the expected option life is the midpoint between the contractual option life and the average vesting period for the options being granted. This resulted in an expected option life of 6.5 years for the options granted. (b) Because the Company’s equity shares have been traded for a relatively short period of time, expected volatility assumption was based on the volatility of related industry stocks. The following table represents the employee stock option activity during the nine months ended September 30, 2022: Number of Options Outstanding Weighted Average Exercise Price Number of Options Vested Weighted Average Exercise Price of Options Vested December 31, 2021 2,242 $ 21.38 840 $ 12.28 Granted 349 15.40 Exercised (106) 9.12 Forfeited (162) 23.58 Expired (50) 17.28 September 30, 2022 2,273 $ 20.97 880 $ 15.57 Restricted Stock A summary of the status of Pennant’s non-vested Restricted Stock, and changes during the nine months ended September 30, 2022, is presented below: Non-Vested Restricted Stock Weighted Average Grant Date Fair Value December 31, 2021 1,493 $ 15.00 Granted 276 13.63 Vested (1,070) 14.97 Forfeited (256) 15.05 September 30, 2022 443 $ 14.18 |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
LEASES | LEASESThe Company’s independent operating subsidiaries lease 49 senior living communities and its administrative offices under non-cancelable operating leases, most of which have initial lease terms ranging from five operating companies are required to pay the following: (1) all impositions and taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor); (2) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties; (3) all insurance required in connection with the leased properties and the business conducted on the leased properties; (4) all community maintenance and repair costs; and (5) all fees in connection with any licenses or authorizations necessary or appropriate for the leased properties and the business conducted on the leased properties. Twelve of the Company’s affiliated senior living communities, excluding the communities that are operated under the Ensign Leases (as defined herein), are operated under two separate master lease arrangements. Under these master leases, a breach at a single community could subject one or more of the other communities covered by the same master lease to the same default risk. Failure to comply with Medicare and Medicaid provider requirements is a default under several of the Company’s leases and master leases. With an indivisible lease, it is difficult to restructure the composition of the portfolio or economic terms of the master lease without the consent of the landlord. On January 27, 2022, affiliates of the Company, entered into Transfer Agreements with affiliates of Ensign, providing for the transfer of the operations of senior living communities. The closing of the Transaction was completed in two phases with the transfer of two operations on March 1, 2022 and the remainder transferred on April 1, 2022. As a result of the lease terminations, the Company reduced both the right of use assets and the lease liabilities by $42,515. Four of the terminated leases were part of master lease agreements. As a result of the transferred leases being removed from master lease arrangements, the remaining lease components under the master lease arrangements were modified which resulted in a net increase to the lease liability and ROU asset balance of $6,522 for the nine months ended September 30, 2022. The components of operating lease cost, are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Operating Lease Costs: Community Rent—cost of services $ 8,129 $ 9,052 $ 24,755 $ 26,844 Office Rent—cost of services 1,262 1,282 3,765 3,611 Rent—cost of services $ 9,391 $ 10,334 $ 28,520 $ 30,455 General and administrative expense $ 86 $ 51 $ 241 $ 192 Variable lease cost (a) $ 1,590 $ 1,609 $ 4,463 $ 4,598 (a) Represents variable lease cost for operating leases, which costs include property taxes and insurance, common area maintenance, and consumer price index increases, incurred as part of the Company’s triple net lease, and which is included in cost of services for the three and nine months ended September 30, 2022 and 2021. The following table shows the lease maturity analysis for all leases as of September 30, 2022, for the years ended December 31: Year Amount 2022 (Remainder) $ 8,800 2023 34,844 2024 34,100 2025 32,770 2026 31,955 Thereafter 276,631 Total lease payments 419,100 Less: present value adjustments (153,731) Present value of total lease liabilities 265,369 Less: current lease liabilities (15,948) Long-term operating lease liabilities $ 249,421 Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used its incremental borrowing rate based on the information available at each lease’s commencement date to determine each lease's operating lease liability. As of September 30, 2022, the weighted average remaining lease term is 12.9 years and the weighted average discount rate is 7.6%. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company recorded income tax expense of $1,074 and $69 or 17.7% and 5.8% of earnings before income taxes for the three months ended September 30, 2022 and 2021, respectively. The increase in tax is primarily due to less excess tax benefits on equity compensation. The Company recorded income tax expense of $241 and $1,013 or 6.3% and 18.4% of earnings before income taxes for the nine months ended September 30, 2022 and 2021, respectively. The decrease in tax is primarily due to less non-deductible equity compensation and tax benefit related to the Transfer Agreements with Ensign. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Regulatory Matters - The Company provides services in complex and highly regulated industries. The Company’s compliance with applicable U.S. federal, state and local laws and regulations governing these industries may be subject to governmental review and adverse findings may result in significant regulatory action, which could include sanctions, damages, fines, penalties (many of which may not be covered by insurance), and even exclusion from government programs. The Company is a party to various regulatory and other governmental audits and investigations in the ordinary course of business and cannot predict the ultimate outcome of any federal or state regulatory survey, audit or investigation. While governmental audits and investigations are the subject of administrative appeals, the appeals process, even if successful, may take several years to resolve and penalties subject to appeal may remain in place during such appeals. The Department of Justice, CMS, or other federal and state enforcement and regulatory agencies may conduct additional investigations related to the Company's businesses. The Company believes that it is presently in compliance in all material respects with all applicable laws and regulations. Cost-Containment Measures - Government and third-party payors have instituted cost-containment measures designed to limit payments made to providers of healthcare services, may propose future cost-containment measures, and there can be no assurance that future measures designed to limit payments made to providers will not adversely affect the Company. Indemnities - From time to time, the Company enters into certain types of contracts that contingently require the Company to indemnify parties against third-party claims. These contracts primarily include (i) certain real estate leases, under which the Company may be required to indemnify property owners or prior operators for post-transfer environmental or other liabilities and other claims arising from the Company’s use of the applicable premises, (ii) operations transfer agreements, in which the Company agrees to indemnify past operators of agencies and communities the Company acquires against certain liabilities arising from the transfer of the operation and/or the operation thereof after the transfer, (iii) certain Ensign lending agreements, and (iv) certain agreements with management, directors and employees, under which the subsidiaries of the Company may be required to indemnify such persons for liabilities arising out of their employment relationships. The terms of such obligations vary by contract and, in most instances, a specific or maximum dollar amount is not explicitly stated therein. Generally, amounts under these contracts cannot be reasonably estimated until a specific claim is asserted. Consequently, because no claims have been asserted, no liabilities have been recorded for these obligations on the Company’s Condensed Consolidated Balance Sheets for any of the periods presented. Litigation - The Company’s businesses involve a significant risk of liability given the age and health of the patients and residents served by its independent operating subsidiaries. The Company, its operating companies, and others in the industry may be subject to a number of claims and lawsuits, including professional liability claims, alleging that services provided have resulted in personal injury, elder abuse, wrongful death or other related claims. Healthcare litigation (including class action litigation) is common and is filed based upon a wide variety of claims and theories, and the Company is routinely subjected to these claims in the ordinary course of business, including potential claims related to patient care and treatment, and professional negligence, as well as employment related claims. If there were a significant increase in the number of these claims or an increase in amounts owing should plaintiffs be successful in their prosecution of these claims, this could materially adversely affect the Company’s business, financial condition, results of operations and cash flows. In addition, the defense of these lawsuits may result in significant legal costs, regardless of the outcome, and may result in large settlement amounts or damage awards. In addition to the potential lawsuits and claims described above, the Company is also subject to potential lawsuits under the False Claims Act (the “FCA”) and comparable state laws alleging submission of fraudulent claims for services to any healthcare program (such as Medicare) or payor. A violation may provide the basis for exclusion from federally funded healthcare programs. Such exclusions could have a correlative negative impact on the Company’s financial performance. Some states, including California, Arizona and Texas, have enacted similar whistleblower and false claims laws and regulations. In addition, the Deficit Reduction Act of 2005 created incentives for states to enact anti-fraud legislation modeled on the FCA, for which 18 states have qualified, including California and Texas, where we conduct business. As such, the Company could face increased scrutiny, potential liability and legal expenses and costs based on claims under state false claims acts in markets in which it conducts business. Under the Fraud Enforcement and Recovery Act (“FERA”) and its associated rules, healthcare providers face significant penalties for the knowing retention of government overpayments, even if no false claim was involved. Providers have an obligation to proactively exercise “reasonable diligence” to identify overpayments and return those overpayments to CMS within 60 days of “identification” or the date any corresponding cost report is due, whichever is later. Retention of overpayments beyond this period may create liability under the FCA. In addition, FERA protects whistleblowers (including employees, contractors, and agents) from retaliation. The Company cannot predict or provide any assurance as to the possible outcome of any litigation. If any litigation were to proceed, and the Company and its operating companies are subjected to, alleged to be liable for, or agree to a settlement of, claims or obligations under federal Medicare statutes, the FCA, or similar state and federal statutes and related regulations, the Company’s business, financial condition and results of operations and cash flows could be materially and adversely affected. Among other things, any settlement or litigation could involve the payment of substantial sums to settle any alleged civil violations, and may also include the assumption of specific procedural and financial obligations by the Company or its independent operating subsidiaries going forward under a corporate integrity agreement and/or other arrangement with the government. Medicare Revenue Recoupments - The Company is subject to probe reviews relating to Medicare services, billings and potential overpayments by Unified Program Integrity Contractors (“UPIC”), Recovery Audit Contractors (“RAC”), Zone Program Integrity Contractors (“ZPIC”), Program Safeguard Contractors (“PSC”), Supplemental Medical Review Contractors (“SMRC”) and Medicaid Integrity Contributors (“MIC”) programs, each of the foregoing collectively referred to as “Reviews.” As of September 30, 2022, seven of the Company’s independent operating subsidiaries had Reviews scheduled, on appeal or in dispute resolution process, both pre- and post-payment. If an operation fails an initial or subsequent Review, the operation could then be subject to extended Review, suspension of payment, or extrapolation of the identified error rate to all billing in the same time period. The Company, from time to time, receives record requests in reviews which have resulted in claim denials on paid claims. The Company has appealed substantially all denials arising from these reviews using the applicable appeals process. As of September 30, 2022, and through the filing of this Quarterly Report on Form 10-Q, the Company’s independent operating subsidiaries have responded to the Reviews that are currently ongoing, on appeal or in dispute resolution process. The Company cannot predict the ultimate outcome of any regulatory and other governmental reviews. While such reviews are the subject of administrative appeals, the appeals process, even if successful, may take several years to resolve. The costs to respond to and defend such reviews may be significant and an adverse determination in such reviews may subject the Company to sanctions, damages, extrapolation of damage findings, additional recoupments, fines, other penalties (some of which may not be covered by insurance), and termination from Medicare programs which may, either individually or in the aggregate, have a material adverse effect on the Company's business and financial condition. From June 2021 to May 2022, one hospice provider number was subject to a Medicare payment suspension imposed by a UPIC. As of September 30, 2022, the total amount due from the government payor impacted by the suspension was $5,181 and was recorded in long-term other assets. The amounts suspended represent all Medicare payments due to the provider number during the suspension. In May 2022, the Company received communication that the Medicare payment suspension was terminated and the UPIC’s review was complete. The UPIC reviewed 107 patient records covering a 10-month period to determine whether, in its view, a Medicare overpayment was made. Based on the results of the review, the UPIC has alleged sampled and extrapolated overpayments of $5,165, and has withheld that amount through continued recoupment of Medicare payments. The Company is pursuing its appeal rights through the administrative appeals process, including contesting the methodology used by the UPIC to perform statistical extrapolation. At this stage of the review, based on the information currently available to the Company, the Company cannot predict the timing or the ultimate outcome of this review. As of September 30, 2022, we have an accrued liability that is immaterial for this review which was recorded as an offset to revenue. Insurance - The Company retains risk for a substantial portion of potential claims for general and professional liability, workers’ compensation and automobile liability. The Company recognizes obligations associated with these costs, up to specified deductible limits in the period in which a claim is incurred, including with respect to both reported claims and claims incurred but not reported. The general and professional liability insurance has a retention limit of $150 per claim with a $500 corridor as an additional out-of-pocket retention we must satisfy for claims within the policy year before the carrier will reimburse losses. The workers’ compensation insurance has a retention limit of $250 per claim, except for policies held in Texas and Washington which are subject to state insurance and possess their own limits. |
BASIS OF PRESENTATION AND SUM_2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements of the Company (the “Interim Financial Statements”) reflect the Company’s financial position, results of operations and cash flows of the business. The Interim Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the regulations of the Securities and Exchange Commission (“SEC”). Management believes that the Interim Financial Statements reflect, in all material respects, all adjustments which are of a normal and recurring nature necessary to present fairly the Company’s financial position, results of operations, and cash flows for the periods presented in conformity with GAAP. The results reported in these Interim Financial Statements are not necessarily indicative of results that may be expected for the entire year. |
Consolidation | The Company consists of various limited liability companies and corporations established to operate home health, hospice, home care, and senior living operations. The Interim Financial Statements include the accounts of all entities controlled by the Company through its ownership of a majority voting interest. Certain prior quarter amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations in the current period or prior period. |
Estimates and Assumptions | The preparation of the Interim Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Interim Financial Statements and the reported amounts of revenue and expenses during the reporting periods. The most significant estimates in the Interim Financial Statements relate to revenue, intangible assets and goodwill, right-of-use assets and lease liabilities for leases greater than 12 months, self-insurance reserves, and income taxes. Actual results could differ from those estimates. |
Revenue Recognition | Revenue is recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled from patients and third-party payors, including Medicaid, Medicare and managed care programs (Commercial, Medicare Advantage and Managed Medicaid plans), in exchange for providing patient care. The healthcare services in home health and hospice patient contracts include routine services in exchange for a contractual agreed-upon amount or rate. Routine services are treated as a single performance obligation satisfied over time as services are rendered. As such, patient care services represent a bundle of services that are not capable of being distinct within the context of the contract. Additionally, there may be ancillary services which are not included in the rates for routine services, but instead are treated as separate performance obligations satisfied at a point in time, if and when those services are rendered.Revenue recognized from healthcare services are adjusted for estimates of variable consideration to arrive at the transaction price. The Company determines the transaction price based on contractually agreed-upon amounts or rate, adjusted for estimates of variable consideration. The Company uses the expected value method in determining the variable component that should be used to arrive at the transaction price, using contractual agreements and historical reimbursement experience within each payor type. The amount of variable consideration which is included in the transaction price may be constrained, and is included in the net revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If actual amounts of consideration ultimately received differ from the Company’s estimates, the Company adjusts these estimates, which would affect net service revenue in the period such variances become known. Medicare Revenue Net service revenue is recognized in accordance with the Patient Driven Groupings Model (“PDGM”). Under PDGM, Medicare provides agencies with payments for each 30-day payment period provided to beneficiaries. If a beneficiary is still eligible for care after the end of the first 30-day payment period, a second 30-day payment period can begin. There are no limits to the number of periods of care a beneficiary who remains eligible for the home health benefit can receive. While payment for each 30-day payment period is adjusted to reflect the beneficiary’s health condition and needs, a special outlier provision exists to ensure appropriate payment for those beneficiaries that have the most expensive care needs. The payment under the Medicare program is also adjusted for certain variables including, but not limited to: (a) a low utilization payment adjustment if the number of visits is below an established threshold that varies based on the diagnosis of a beneficiary; (b) a partial payment if the patient transferred to another provider or the Company received a patient from another provider before completing the period of care; (c) adjustment to the admission source of claim if it is determined that the patient had a qualifying stay in a post-acute care setting within 14 days prior to the start of a 30-day payment period; (d) the timing of the 30-day payment period provided to a patient in relation to the admission date, regardless of whether the same home health provider provided care for the entire series of episodes; (e) changes to the acuity of the patient during the previous 30-day payment period; (f) changes in the base payments established by the Medicare program; (g) adjustments to the base payments for case mix and geographic wages; and (h) recoveries of overpayments. The Company adjusts Medicare revenue on completed episodes to reflect differences between estimated and actual payment amounts, an inability to obtain appropriate billing documentation and other reasons unrelated to credit risk. Therefore, the Company believes that its reported net service revenue and patient accounts receivable will be the net amounts to be realized from Medicare for services rendered. In addition to revenue recognized on completed episodes and periods, the Company also recognizes a portion of revenue associated with episodes and periods in progress. Episodes in progress are 30-day payment periods that begin during the reporting period but were not completed as of the end of the period. As such, the Company estimates revenue and recognizes it on a daily basis. The primary factors underlying this estimate are the number of episodes in progress at the end of the reporting period, expected Medicare revenue per period of care or episode of care and the Company’s estimate of the average percentage complete based on the scheduled end of period and end of episode dates. Non-Medicare Revenue Episodic Based Revenue - The Company recognizes revenue in a similar manner as it recognizes Medicare revenue for episodic-based rates that are paid by other insurance carriers, including Medicare Advantage programs. These rates can vary based upon the negotiated terms. Non-episodic Based Revenue - Revenue is recognized on an accrual basis based upon the date of service at amounts equal to its established or estimated per visit rates, as applicable. Hospice Revenue Revenue is recognized on an accrual basis based upon the date of service at amounts equal to the estimated payment rates. The estimated payment rates are calculated as daily rates for each of the levels of care the Company delivers. Revenue is adjusted for an inability to obtain appropriate billing documentation or authorizations acceptable to the payor and other reasons unrelated to credit risk. Additionally, as Medicare hospice revenue is subject to an inpatient cap and an overall payment cap, the Company monitors its provider numbers and estimates amounts due back to Medicare if a cap has been exceeded. The Company regularly evaluates and records these adjustments as a reduction to revenue and an increase to other accrued liabilities. Senior Living Revenue The Company has elected the lessor practical expedient within ASC Topic 842, Leases (“ASC 842”) and therefore recognizes, measures, presents, and discloses the revenue for services rendered under the Company’s senior living residency agreements based upon the predominant component, either the lease or non-lease component, of the contracts. The Company has determined that the services included under the Company’s senior living residency agreements each have the same timing and pattern of transfer. The Company recognizes revenue under ASC Topic 606, Revenue from Contracts with Customers for its senior residency agreements, for which it has determined that the non-lease components of such residency agreements are the predominant component of each such contract. |
COMPUTATION OF NET INCOME PER_2
COMPUTATION OF NET INCOME PER COMMON SHARE (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of basic and diluted net income per share | The following table sets forth the computation of basic and diluted net income per share for the periods presented: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Numerator: Net income attributable to The Pennant Group, Inc. $ 4,831 $ 1,245 $ 3,169 $ 4,845 Denominator: Weighted average shares outstanding for basic net income per share 29,335 28,444 28,840 28,364 Plus: assumed incremental shares from exercise of options and assumed conversion or vesting of restricted stock (a) 837 2,112 1,342 2,355 Adjusted weighted average common shares outstanding for diluted income per share 30,172 30,556 30,182 30,719 Earnings Per Share: Basic net income per common share $ 0.16 $ 0.04 $ 0.11 $ 0.17 Diluted net income per common share $ 0.16 $ 0.04 $ 0.10 $ 0.16 (a) The diluted per share amounts do not reflect common equivalent shares outstanding of 1,858 and 1,806 for the three and nine months ended September 30, 2022 and 815 and 437 for the three and nine months ended September 30, 2021, respectively, because of their anti-dilutive effect. |
REVENUE AND ACCOUNTS RECEIVAB_2
REVENUE AND ACCOUNTS RECEIVABLE (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of revenue by major payor source | Revenue by payor for the three months ended September 30, 2022 and 2021, is summarized in the following tables: Three Months Ended September 30, 2022 Home Health and Hospice Services Home Health Services Hospice Services Senior Living Services Total Revenue Revenue % Medicare $ 23,040 $ 35,367 $ — $ 58,407 49.4 % Medicaid 2,151 4,065 9,127 15,343 13.0 Subtotal 25,191 39,432 9,127 73,750 62.4 Managed care 14,594 1,062 — 15,656 13.2 Private and other (a) 5,472 28 23,444 28,944 24.4 Total revenue $ 45,257 $ 40,522 $ 32,571 $ 118,350 100.0 % (a) Private and other payors in the Company’s home health and hospice services segment includes revenue from all payors generated in the Company’s home care operations. Three Months Ended September 30, 2021 Home Health and Hospice Services Home Health Services Hospice Services Senior Living Services Total Revenue Revenue % Medicare $ 20,227 $ 35,059 $ — $ 55,286 49.4 % Medicaid 1,938 3,074 9,330 14,342 12.8 Subtotal 22,165 38,133 9,330 69,628 62.2 Managed care 11,969 879 — 12,848 11.5 Private and other (a) 5,800 57 23,588 29,445 26.3 Total revenue $ 39,934 $ 39,069 $ 32,918 $ 111,921 100.0 % (a) Private and other payors in the Company’s home health and hospice services segment includes revenue from all payors generated in the Company’s home care operations. Revenue by payor for the nine months ended September 30, 2022 and 2021, is summarized in the following tables: Nine Months Ended September 30, 2022 Home Health and Hospice Services Home Health Services Hospice Services Senior Living Services Total Revenue Revenue % Medicare $ 67,861 $ 103,322 $ — $ 171,183 49.1 % Medicaid 7,389 11,189 27,502 46,080 13.2 Subtotal 75,250 114,511 27,502 217,263 62.3 Managed care 42,106 2,999 — 45,105 13.0 Private and other (a) 16,538 194 69,476 86,208 24.7 Total revenue $ 133,894 $ 117,704 $ 96,978 $ 348,576 100.0 % (a) Private and other payors in the Company’s home health and hospice services segment includes revenue from all payors generated in the Company’s home care operations. Nine Months Ended September 30, 2021 Home Health and Hospice Services Home Health Services Hospice Services Senior Living Services Total Revenue Revenue % Medicare $ 61,055 $ 101,771 $ — $ 162,826 49.7 % Medicaid 6,659 8,507 27,266 42,432 12.9 Subtotal 67,714 110,278 27,266 205,258 62.6 Managed care 34,586 2,241 — 36,827 11.2 Private and other (a) 16,594 302 68,948 85,844 26.2 Total revenue $ 118,894 $ 112,821 $ 96,214 $ 327,929 100.0 % (a) Private and other payors in the Company’s home health and hospice services segment includes revenue from all payors generated in the Company’s home care operations. |
Schedule of accounts receivable | Accounts receivable, net as of September 30, 2022 and December 31, 2021 is summarized in the following table: September 30, 2022 December 31, 2021 Medicare $ 31,125 $ 31,327 Medicaid 9,127 11,793 Managed care 8,990 7,901 Private and other 3,184 3,821 Accounts receivable, gross 52,426 54,842 Less: allowance for doubtful accounts (822) (902) Accounts receivable, net $ 51,604 $ 53,940 |
BUSINESS SEGMENTS (Tables)
BUSINESS SEGMENTS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Schedule of financial data combined by business segment | The following tables present certain financial information regarding the Company’s reportable segments, general and administrative expenses are not allocated to the reportable segments and are included in “All Other” for the three and nine months ended September 30, 2022 and 2021: Home Health and Hospice Services Senior Living Services All Other Total Three Months Ended September 30, 2022 Revenue $ 85,779 $ 32,571 $ — $ 118,350 Segment Adjusted EBITDAR from Operations $ 15,380 $ 9,370 $ (7,779) $ 16,971 Three Months Ended September 30, 2021 Revenue $ 79,003 $ 32,918 $ — $ 111,921 Segment Adjusted EBITDAR from Operations $ 14,409 $ 9,106 $ (6,783) $ 16,732 Home Health and Hospice Services Senior Living Services All Other Total Nine Months Ended September 30, 2022 Revenue $ 251,598 $ 96,978 $ — $ 348,576 Segment Adjusted EBITDAR from Operations $ 45,056 $ 27,573 $ (23,795) $ 48,834 Nine Months Ended September 30, 2021 Revenue $ 231,715 $ 96,214 $ — $ 327,929 Segment Adjusted EBITDAR from Operations $ 43,131 $ 27,692 $ (19,249) $ 51,574 |
Schedule of reconciliation of total combined adjusted EBITDAR from operations for our reportable segments to combined income from operations | This following table provides a reconciliation of Segment Adjusted EBITDAR from Operations to income from operations: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Segment Adjusted EBITDAR from Operations $ 16,971 $ 16,732 $ 48,834 $ 51,574 Less: Depreciation and amortization 1,251 1,200 3,677 3,545 Rent—cost of services 9,391 10,334 28,520 30,455 Other expense (18) — (50) (24) Adjustments to Segment EBITDAR from Operations: Less: Costs at start-up operations (a) 430 532 938 991 Share-based compensation expense and related taxes (b) (2,501) 2,568 2,319 7,483 Acquisition related costs & credit allowances (c) 1,000 36 1,014 73 Transition services costs (d) — 236 77 1,825 Loss related to senior living operations transferred to Ensign (e) 144 — 6,078 — Unusual or non-recurring charges (f) 293 — 293 — Add: Net income (loss) attributable to noncontrolling interest 163 (124) 387 (342) Condensed Consolidated Income from Operations $ 7,144 $ 1,702 $ 6,355 $ 6,884 (a) Represents results related to start-up operations. This amount excludes rent and depreciation and amortization expense related to such operations. (b) Share-based compensation expense and related payroll taxes incurred, including the impact of the modification of certain restricted stock units described below in Note 12, Options and Award s, to the Interim Financial Statements. Share-based compensation expense and related payroll taxes are included in cost of services and general and administrative expense (c) Non-capitalizable costs associated with acquisitions and credit allowances for amounts in dispute with the prior owners of certain acquired operations. (d) Costs identified as redundant or non-recurring incurred by the Company as a result of the Spin-off. The 2021 amounts represents part of the costs incurred under the Transition Services Agreement. All amounts are included in general and administrative expense. Fees incurred under the Transition Services Agreement were $231 and $1,332 for the three and nine months ended September 30, 2022, and $706 and $2,441 for the three and nine months ended September 30, 2021. (e) On January 27, 2022, affiliates of the Company, entered into certain operations transfer agreements (collectively, the “Transfer Agreements”) with affiliates of Ensign, providing for the transfer of the operations of certain senior living communities (the “Transaction”) from affiliates of the Company to affiliates of Ensign. The closing of the Transaction was completed in two phases with the transfer of two operations on March 1, 2022 and the remainder transferred on April 1, 2022. The amount includes $6,500 for the nine months ended September 30, 2022 to cover post-closing capital expenditures and operating losses related to one of the communities transferred on April 1, 2022. The amount above also includes $144 and $(422) for the three and nine months ended September 30, 2022, respectively, for the related net impact on revenue and cost of service attributable to the transferred entities. This amount excludes rent and depreciation and amortization expense related to such operations. (f) Represents unusual or non-recurring charges for legal services, implementation costs, integration costs, and consulting fees in general and administrative expenses. |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Unaudited pro forma results of condensed consolidated operations | The following tables represent unaudited pro forma results of condensed consolidated operations as if the business combinations to date in fiscal year 2022 had occurred at the beginning of 2021, after giving effect to certain adjustments. The unaudited pro forma information is not indicative of what the results of operations would have been if the acquisitions had actually occurred at the beginning of the periods presented, and is not intended as a projection of future results or trends. Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Revenue $ 119,070 $ 114,149 $ 352,250 $ 334,612 Net income attributable to The Pennant Group, Inc. (a) $ 4,751 $ 1,143 $ 2,370 $ 4,561 (a) Net income attributable to The Pennant Group, Inc. for the three and nine months ended September 30, 2022 and 2021 includes a tax impact of 24.5% and 24.7%, which are the respective statutory tax rates. |
PROPERTY AND EQUIPMENT_NET (Tab
PROPERTY AND EQUIPMENT—NET (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment, net | Property and equipment, net consist of the following: September 30, 2022 December 31, 2021 Land $ 96 $ — Building 1,890 — Leasehold improvements 16,161 11,660 Equipment 26,593 22,415 Furniture and fixtures 1,283 1,199 46,023 35,274 Less: accumulated depreciation (22,109) (18,486) Property and equipment, net $ 23,914 $ 16,788 |
GOODWILL AND OTHER INDEFINITE_2
GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of activity in goodwill by segment | The following table represents activity in goodwill by segment for the nine months ended September 30, 2022: Home Health and Hospice Services Senior Living Services Total December 31, 2021 $ 70,623 $ 3,642 $ 74,265 Additions 4,925 — 4,925 September 30, 2022 $ 75,548 $ 3,642 $ 79,190 |
Schedule of other indefinite-lived intangible assets | Other indefinite-lived intangible assets consist of the following: September 30, 2022 December 31, 2021 Trade name $ 1,385 $ 1,355 Medicare and Medicaid licenses 57,089 52,375 Total $ 58,474 $ 53,730 |
OTHER ACCRUED LIABILITIES (Tabl
OTHER ACCRUED LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of other accrued liabilities | Other accrued liabilities consist of the following: September 30, 2022 December 31, 2021 Refunds payable $ 2,969 $ 3,095 Deferred revenue 1,570 1,456 Contract liabilities (CARES Act advance payments) — 6,211 Resident deposits 4,752 5,111 Property taxes 1,034 1,102 Accrued self-insurance liabilities 3,538 1,613 Accrued fee for transfer of senior living community 1,875 — Other 3,561 2,896 Other accrued liabilities $ 19,299 $ 21,484 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | Long-term debt, net consists of the following: September 30, 2022 December 31, 2021 Revolving Credit Facility $ 57,500 $ 53,500 Less: unamortized debt issuance costs (a) (1,738) (2,128) Long-term debt, net $ 55,762 $ 51,372 (a) Amortization expense for debt issuance costs was $130 and $390 for three and nine months ended September 30, 2022 and $129 and $358 for the three and nine months ended September 30, 2021, respectively, and is recorded in interest expense, net on the Condensed Consolidated Statements of Income. |
OPTIONS AND AWARDS (Tables)
OPTIONS AND AWARDS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of total share-based compensation expense | Total share-based compensation expense for all Plans for the three and nine months ended September 30, 2022 and 2021 was: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Share-based compensation expense related to stock options $ 859 834 $ 2,480 $ 2,216 Share-based compensation expense related to Restricted Stock (3,664) 1,547 (643) 4,597 Share-based compensation expense related to Restricted Stock to non-employee directors 58 187 236 670 Total share-based compensation $ (2,747) $ 2,568 $ 2,073 $ 7,483 In future periods, the Company estimates it will recognize the following share-based compensation expense for unvested stock options and unvested Restricted Stock as of September 30, 2022: Unrecognized Compensation Expense Weighted Average Recognition Period (in years) Unvested Stock Options $ 11,041 3.4 Unvested Restricted Stock 3,577 4.7 Total unrecognized share-based compensation expense $ 14,618 |
Schedule of stock options granted fair value assumptions | The fair value of each option is estimated on the grant date using a Black-Scholes option-pricing model with the following weighted average assumptions for stock options granted as of June 30: Grant Year Options Granted Risk-Free Interest Rate Expected Life (a) Expected Volatility (b) Dividend Yield Weighted Average Fair Value of Options 2022 349 2.3 % 6.5 39.8 % — % $ 6.71 2021 364 1.0 % 6.5 38.2 % — % $ 14.82 (a) Under the midpoint method, the expected option life is the midpoint between the contractual option life and the average vesting period for the options being granted. This resulted in an expected option life of 6.5 years for the options granted. (b) Because the Company’s equity shares have been traded for a relatively short period of time, expected volatility assumption was based on the volatility of related industry stocks. |
Schedule of employee stock option activity | The following table represents the employee stock option activity during the nine months ended September 30, 2022: Number of Options Outstanding Weighted Average Exercise Price Number of Options Vested Weighted Average Exercise Price of Options Vested December 31, 2021 2,242 $ 21.38 840 $ 12.28 Granted 349 15.40 Exercised (106) 9.12 Forfeited (162) 23.58 Expired (50) 17.28 September 30, 2022 2,273 $ 20.97 880 $ 15.57 |
Summary of non-vested restricted stock awards | A summary of the status of Pennant’s non-vested Restricted Stock, and changes during the nine months ended September 30, 2022, is presented below: Non-Vested Restricted Stock Weighted Average Grant Date Fair Value December 31, 2021 1,493 $ 15.00 Granted 276 13.63 Vested (1,070) 14.97 Forfeited (256) 15.05 September 30, 2022 443 $ 14.18 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Schedule of operating lease cost | The components of operating lease cost, are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Operating Lease Costs: Community Rent—cost of services $ 8,129 $ 9,052 $ 24,755 $ 26,844 Office Rent—cost of services 1,262 1,282 3,765 3,611 Rent—cost of services $ 9,391 $ 10,334 $ 28,520 $ 30,455 General and administrative expense $ 86 $ 51 $ 241 $ 192 Variable lease cost (a) $ 1,590 $ 1,609 $ 4,463 $ 4,598 (a) Represents variable lease cost for operating leases, which costs include property taxes and insurance, common area maintenance, and consumer price index increases, incurred as part of the Company’s triple net lease, and which is included in cost of services for the three and nine months ended September 30, 2022 and 2021. |
Schedule of future minimum lease payments | The following table shows the lease maturity analysis for all leases as of September 30, 2022, for the years ended December 31: Year Amount 2022 (Remainder) $ 8,800 2023 34,844 2024 34,100 2025 32,770 2026 31,955 Thereafter 276,631 Total lease payments 419,100 Less: present value adjustments (153,731) Present value of total lease liabilities 265,369 Less: current lease liabilities (15,948) Long-term operating lease liabilities $ 249,421 |
DESCRIPTION OF BUSINESS (Detail
DESCRIPTION OF BUSINESS (Details) - Sep. 30, 2022 | agency | facility |
Home Health and Hospice Services | ||
Segment Reporting Information [Line Items] | ||
Number of service providers | 94 | |
Senior Living Services | ||
Segment Reporting Information [Line Items] | ||
Number of properties under lease | 49 | 49 |
BASIS OF PRESENTATION AND SUM_3
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - CARES Act - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2020 |
Unusual or Infrequent Item, or Both [Line Items] | ||
Accrued payroll taxes employer portion | $ 7,836 | |
The coronavirus aid, relief, and economic security act, advance payments received | $ 27,997 | |
Accrued Wages and Related Liabilities | ||
Unusual or Infrequent Item, or Both [Line Items] | ||
Accrued payroll taxes employer portion | $ 4,129 |
TRANSACTIONS WITH ENSIGN (Detai
TRANSACTIONS WITH ENSIGN (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Jan. 01, 2022 | Sep. 30, 2022 USD ($) property | Sep. 30, 2021 USD ($) property | Sep. 30, 2022 USD ($) property | Sep. 30, 2021 USD ($) property | Jan. 27, 2022 USD ($) | |
Affiliates of Ensign | ||||||
Related Party Transaction [Line Items] | ||||||
Escrow deposits | $ 6,500 | |||||
Related party | ||||||
Related Party Transaction [Line Items] | ||||||
Cost of services | $ 812 | $ 760 | $ 2,035 | $ 2,377 | ||
Related party | Senior Living Services | ||||||
Related Party Transaction [Line Items] | ||||||
Number of operating facilities | property | 29 | 31 | 29 | 31 | ||
Related party | Transition Services Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Expiration period | 2 years | |||||
Expenses from transactions with related party | $ 231 | $ 706 | $ 1,332 | $ 2,441 |
COMPUTATION OF NET INCOME PER_3
COMPUTATION OF NET INCOME PER COMMON SHARE - RECONCILIATION (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Numerator: | ||||||||
Net income and other comprehensive income attributable to The Pennant Group, Inc. | $ 4,831 | $ (2,676) | $ 1,014 | $ 1,245 | $ 2,650 | $ 950 | $ 3,169 | $ 4,845 |
Denominator: | ||||||||
Weighted average shares outstanding for basic net income per share (in shares) | 29,335 | 28,444 | 28,840 | 28,364 | ||||
Plus: assumed incremental shares from exercise of options and assumed conversion or vesting of restricted stock (in shares) | 837 | 2,112 | 1,342 | 2,355 | ||||
Adjusted weighted average common shares outstanding for diluted income per share (in shares) | 30,172 | 30,556 | 30,182 | 30,719 | ||||
Earnings Per Share: | ||||||||
Basic net income per common share (in dollars per share) | $ 0.16 | $ 0.04 | $ 0.11 | $ 0.17 | ||||
Diluted net income per common share (in dollars per share) | $ 0.16 | $ 0.04 | $ 0.10 | $ 0.16 | ||||
Anti-dilutive effect of common equivalent shares outstanding (in shares) | 1,858 | 815 | 1,806 | 437 |
REVENUE AND ACCOUNTS RECEIVAB_3
REVENUE AND ACCOUNTS RECEIVABLE - NARRATIVE (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | |||||
Payment terms | Residency agreements are generally for a term of 30 days, with resident fees billed monthly in advance. For residents under reimbursement arrangements with Medicaid, revenue is recorded based on contractually agreed-upon amounts or rates on a per resident, daily basis or as services are rendered. | ||||
Customer concentration risk | Revenue | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue, percent | 100% | 100% | 100% | 100% | |
Customer concentration risk | Revenue | Subtotal | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue, percent | 62.40% | 62.20% | 62.30% | 62.60% | |
Customer concentration risk | Receivables | Subtotal | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue, percent | 76.80% | 78.60% |
REVENUE AND ACCOUNTS RECEIVAB_4
REVENUE AND ACCOUNTS RECEIVABLE - REVENUE BY MAJOR PAYOR (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 118,350 | $ 111,921 | $ 348,576 | $ 327,929 |
Revenue | Customer concentration risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue % | 100% | 100% | 100% | 100% |
Medicare | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 58,407 | $ 55,286 | $ 171,183 | $ 162,826 |
Medicare | Revenue | Customer concentration risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue % | 49.40% | 49.40% | 49.10% | 49.70% |
Medicaid | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 15,343 | $ 14,342 | $ 46,080 | $ 42,432 |
Medicaid | Revenue | Customer concentration risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue % | 13% | 12.80% | 13.20% | 12.90% |
Subtotal | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 73,750 | $ 69,628 | $ 217,263 | $ 205,258 |
Subtotal | Revenue | Customer concentration risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue % | 62.40% | 62.20% | 62.30% | 62.60% |
Managed care | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 15,656 | $ 12,848 | $ 45,105 | $ 36,827 |
Managed care | Revenue | Customer concentration risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue % | 13.20% | 11.50% | 13% | 11.20% |
Private and other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 28,944 | $ 29,445 | $ 86,208 | $ 85,844 |
Private and other | Revenue | Customer concentration risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue % | 24.40% | 26.30% | 24.70% | 26.20% |
Home Health and Hospice Services | Home Health Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 45,257 | $ 39,934 | $ 133,894 | $ 118,894 |
Home Health and Hospice Services | Home Health Services | Medicare | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 23,040 | 20,227 | 67,861 | 61,055 |
Home Health and Hospice Services | Home Health Services | Medicaid | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 2,151 | 1,938 | 7,389 | 6,659 |
Home Health and Hospice Services | Home Health Services | Subtotal | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 25,191 | 22,165 | 75,250 | 67,714 |
Home Health and Hospice Services | Home Health Services | Managed care | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 14,594 | 11,969 | 42,106 | 34,586 |
Home Health and Hospice Services | Home Health Services | Private and other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 5,472 | 5,800 | 16,538 | 16,594 |
Home Health and Hospice Services | Hospice Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 40,522 | 39,069 | 117,704 | 112,821 |
Home Health and Hospice Services | Hospice Services | Medicare | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 35,367 | 35,059 | 103,322 | 101,771 |
Home Health and Hospice Services | Hospice Services | Medicaid | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 4,065 | 3,074 | 11,189 | 8,507 |
Home Health and Hospice Services | Hospice Services | Subtotal | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 39,432 | 38,133 | 114,511 | 110,278 |
Home Health and Hospice Services | Hospice Services | Managed care | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,062 | 879 | 2,999 | 2,241 |
Home Health and Hospice Services | Hospice Services | Private and other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 28 | 57 | 194 | 302 |
Senior Living Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 32,571 | 32,918 | 96,978 | 96,214 |
Senior Living Services | Medicare | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Senior Living Services | Medicaid | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 9,127 | 9,330 | 27,502 | 27,266 |
Senior Living Services | Subtotal | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 9,127 | 9,330 | 27,502 | 27,266 |
Senior Living Services | Managed care | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Senior Living Services | Private and other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 23,444 | $ 23,588 | $ 69,476 | $ 68,948 |
REVENUE AND ACCOUNTS RECEIVAB_5
REVENUE AND ACCOUNTS RECEIVABLE - ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Accounts Receivable [Abstract] | ||
Accounts receivable, gross | $ 52,426 | $ 54,842 |
Less: allowance for doubtful accounts | (822) | (902) |
Accounts receivable, net | 51,604 | 53,940 |
Medicare | ||
Accounts Receivable [Abstract] | ||
Accounts receivable, gross | 31,125 | 31,327 |
Medicaid | ||
Accounts Receivable [Abstract] | ||
Accounts receivable, gross | 9,127 | 11,793 |
Managed care | ||
Accounts Receivable [Abstract] | ||
Accounts receivable, gross | 8,990 | 7,901 |
Private and other | ||
Accounts Receivable [Abstract] | ||
Accounts receivable, gross | $ 3,184 | $ 3,821 |
BUSINESS SEGMENTS - NARRATIVE (
BUSINESS SEGMENTS - NARRATIVE (Details) - Sep. 30, 2022 | agency | facility |
Home Health and Hospice Services | ||
Segment Reporting Information [Line Items] | ||
Number of service providers | 94 | |
Senior Living Services | ||
Segment Reporting Information [Line Items] | ||
Number of properties under lease | 49 | 49 |
BUSINESS SEGMENTS - FINANCIAL D
BUSINESS SEGMENTS - FINANCIAL DATA (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Segment Reporting Information [Line Items] | ||||
Revenue | $ 118,350 | $ 111,921 | $ 348,576 | $ 327,929 |
Segment Adjusted EBITDAR from Operations | 16,971 | 16,732 | 48,834 | 51,574 |
Senior Living Services | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 32,571 | 32,918 | 96,978 | 96,214 |
Operating segments | Home Health and Hospice Services | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 85,779 | 79,003 | 251,598 | 231,715 |
Segment Adjusted EBITDAR from Operations | 15,380 | 14,409 | 45,056 | 43,131 |
Operating segments | Senior Living Services | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 32,571 | 32,918 | 96,978 | 96,214 |
Segment Adjusted EBITDAR from Operations | 9,370 | 9,106 | 27,573 | 27,692 |
All Other | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Segment Adjusted EBITDAR from Operations | $ (7,779) | $ (6,783) | $ (23,795) | $ (19,249) |
BUSINESS SEGMENTS - INCOME FROM
BUSINESS SEGMENTS - INCOME FROM OPERATIONS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenue, Major Customer [Line Items] | ||||||||
Segment Adjusted EBITDAR from Operations | $ 16,971 | $ 16,732 | $ 48,834 | $ 51,574 | ||||
Less: Depreciation and amortization | 1,251 | 1,200 | 3,677 | 3,545 | ||||
Rent—cost of services | 9,391 | 10,334 | 28,520 | 30,455 | ||||
Other expense | (18) | 0 | (50) | (24) | ||||
Less: Costs at start-up operations | 430 | 532 | 938 | 991 | ||||
Share-based compensation expense and related taxes | (2,501) | 2,568 | 2,319 | 7,483 | ||||
Acquisition related costs & credit allowances | 1,000 | 36 | 1,014 | 73 | ||||
Transaction services costs | 0 | 236 | 77 | 1,825 | ||||
Loss related to senior living operations transferred to Ensign | 144 | 0 | 6,078 | 0 | ||||
Unusual or non-recurring charges | 293 | 0 | 293 | 0 | ||||
Add: Net income (loss) attributable to noncontrolling interest | 163 | $ 80 | $ 144 | (124) | $ (181) | $ (37) | 387 | (342) |
Condensed Consolidated Income from Operations | 7,144 | 1,702 | 6,355 | 6,884 | ||||
Transition Services Agreement | Related party | ||||||||
Revenue, Major Customer [Line Items] | ||||||||
Fees incurred | 231 | $ 706 | 1,332 | $ 2,441 | ||||
Transfer Agreements | Related party | Affiliates of Ensign | ||||||||
Revenue, Major Customer [Line Items] | ||||||||
Post-closing capital expenditures and operating losses | 6,500 | |||||||
Impact on revenue and service cost | $ 144 | $ (422) |
ACQUISITIONS (Details)
ACQUISITIONS (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Nov. 01, 2022 USD ($) agency | Sep. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) agency | Sep. 30, 2021 USD ($) agency | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Business Acquisition [Line Items] | ||||||
Goodwill | $ 79,190 | $ 79,190 | $ 74,265 | |||
Revenue | 720 | 3,674 | ||||
Net income (loss) before taxes | (106) | (1,058) | ||||
Series of Individually Immaterial Business Acquisitions | ||||||
Business Acquisition [Line Items] | ||||||
Total acquisition | 9,680 | $ 13,550 | ||||
Equipment and other assets | 188 | 188 | $ 72 | |||
Goodwill | 4,925 | 4,925 | 7,341 | |||
Other indefinite-lived intangible assets | 4,714 | 4,714 | 6,137 | |||
Other intangible assets | 40 | 40 | ||||
Liabilities assumed | 187 | 187 | ||||
Acquisition costs | 0 | 0 | 0 | |||
Business combination, purchase price | $ 14,135 | |||||
Hospice Services | Series of Individually Immaterial Business Acquisitions | ||||||
Business Acquisition [Line Items] | ||||||
Other indefinite-lived intangible assets | 585 | 585 | ||||
Home Health and Hospice Services | ||||||
Business Acquisition [Line Items] | ||||||
Goodwill | 75,548 | $ 75,548 | 70,623 | |||
Home Health and Hospice Services | Home Health Services | ||||||
Business Acquisition [Line Items] | ||||||
Number of businesses acquired and assets acquisitions | agency | 2 | 5 | ||||
Home Health and Hospice Services | Home Health Services | Subsequent Event | ||||||
Business Acquisition [Line Items] | ||||||
Number of businesses acquired and assets acquisitions | agency | 1 | |||||
Business combination, purchase price | $ 450 | |||||
Home Health and Hospice Services | Hospice Services | ||||||
Business Acquisition [Line Items] | ||||||
Number of businesses acquired and assets acquisitions | agency | 4 | 4 | ||||
Home Health and Hospice Services | Hospice Services | Series of Individually Immaterial Business Acquisitions | ||||||
Business Acquisition [Line Items] | ||||||
Number of businesses acquired and assets acquisitions | agency | 2 | |||||
Home Health and Hospice Services | Home Care Agencies | ||||||
Business Acquisition [Line Items] | ||||||
Number of businesses acquired and assets acquisitions | agency | 2 | |||||
Senior Living Services | ||||||
Business Acquisition [Line Items] | ||||||
Number of businesses acquired and assets acquisitions | agency | 1 | |||||
Goodwill | $ 3,642 | $ 3,642 | $ 3,642 |
ACQUISITIONS - UNAUDITED PRO FO
ACQUISITIONS - UNAUDITED PRO FORMA DATA (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Business Acquisition, Pro Forma Information [Abstract] | ||||
Revenue | $ 119,070 | $ 114,149 | $ 352,250 | $ 334,612 |
Net income attributable to The Pennant Group, Inc. | $ 4,751 | $ 1,143 | $ 2,370 | $ 4,561 |
Statutory tax rate | 24.50% | 24.70% | 24.50% | 24.70% |
PROPERTY AND EQUIPMENT_NET (Det
PROPERTY AND EQUIPMENT—NET (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) building | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 46,023,000 | $ 46,023,000 | $ 35,274,000 | ||
Less: accumulated depreciation | (22,109,000) | (22,109,000) | (18,486,000) | ||
Property and equipment, net | 23,914,000 | 23,914,000 | 16,788,000 | ||
Depreciation | 1,244,000 | $ 1,189,000 | $ 3,640,000 | $ 3,527,000 | |
Number of building acquired | building | 1 | ||||
Real estate and personal property acquired | $ 2,007,000 | ||||
Long-lived asset impairment | 0 | $ 0 | 0 | $ 0 | |
Land | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 96,000 | 96,000 | 0 | ||
Building | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 1,890,000 | 1,890,000 | 0 | ||
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 16,161,000 | 16,161,000 | 11,660,000 | ||
Equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 26,593,000 | 26,593,000 | 22,415,000 | ||
Furniture and fixtures | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 1,283,000 | $ 1,283,000 | $ 1,199,000 |
GOODWILL AND OTHER INDEFINITE_3
GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS - ACTIVITY IN GOODWILL (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 74,265 |
Additions | 4,925 |
Goodwill, ending balance | 79,190 |
Home Health and Hospice Services | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 70,623 |
Additions | 4,925 |
Goodwill, ending balance | 75,548 |
Senior Living Services | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 3,642 |
Additions | 0 |
Goodwill, ending balance | $ 3,642 |
GOODWILL AND OTHER INDEFINITE_4
GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS - INDEFINITE-LIVED INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Indefinite-lived Intangible Assets [Line Items] | ||
Other indefinite-lived intangibles | $ 58,474 | $ 53,730 |
Trade name | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Other indefinite-lived intangibles | 1,385 | 1,355 |
Medicare and Medicaid licenses | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Other indefinite-lived intangibles | $ 57,089 | $ 52,375 |
GOODWILL AND OTHER INDEFINITE_5
GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS - NARRATIVE (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Intangible asset impairments | $ 0 | $ 0 | $ 0 | $ 0 |
OTHER ACCRUED LIABILITIES (Deta
OTHER ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Other Accrued Liabilities, Current [Abstract] | ||
Refunds payable | $ 2,969 | $ 3,095 |
Deferred revenue | 1,570 | 1,456 |
Contract liabilities (CARES Act advance payments) | 0 | 6,211 |
Resident deposits | 4,752 | 5,111 |
Property taxes | 1,034 | 1,102 |
Accrued self-insurance liabilities | 3,538 | 1,613 |
Accrued fee for transfer of senior living community | 1,875 | 0 |
Other | 3,561 | 2,896 |
Other accrued liabilities | $ 19,299 | $ 21,484 |
DEBT - SCHEDULE OF LONG-TERM DE
DEBT - SCHEDULE OF LONG-TERM DEBT (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | |||||
Less: unamortized debt issuance costs | $ (1,738) | $ (1,738) | $ (2,128) | ||
Long-term debt, net | 55,762 | 55,762 | 51,372 | ||
Amortization of deferred financing fees | 130 | $ 129 | 390 | $ 358 | |
Revolving Credit Facility | Line of credit | |||||
Debt Instrument [Line Items] | |||||
Revolving Credit Facility | $ 57,500 | $ 57,500 | $ 53,500 |
DEBT - NARRATIVE (Details)
DEBT - NARRATIVE (Details) - USD ($) | Feb. 23, 2021 | Sep. 30, 2022 |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Borrowing capacity | $ 150,000,000 | |
Revolving Credit Facility | Line of credit | ||
Debt Instrument [Line Items] | ||
Weighted average interest rate | 5.27% | |
Borrowing availability | $ 88,314,000 | |
Revolving Credit Facility | Minimum | ||
Debt Instrument [Line Items] | ||
Margin | 0.35% | |
Revolving Credit Facility | Minimum | LIBOR | ||
Debt Instrument [Line Items] | ||
Margin | 2.30% | |
Revolving Credit Facility | Minimum | Base Rate | ||
Debt Instrument [Line Items] | ||
Margin | 1.30% | |
Revolving Credit Facility | Maximum | ||
Debt Instrument [Line Items] | ||
Margin | 0.50% | |
Revolving Credit Facility | Maximum | LIBOR | ||
Debt Instrument [Line Items] | ||
Margin | 3.30% | |
Revolving Credit Facility | Maximum | Base Rate | ||
Debt Instrument [Line Items] | ||
Margin | 2.30% | |
Letters of credit | Line of credit | ||
Debt Instrument [Line Items] | ||
Letters of credit outstanding | $ 4,186,000 |
OPTIONS AND AWARDS - SHARE-BASE
OPTIONS AND AWARDS - SHARE-BASED COMPENSATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation | $ (2,747) | $ 2,568 | $ 2,073 | $ 7,483 |
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation | 859 | 834 | 2,480 | 2,216 |
Restricted stock awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation | (3,664) | 1,547 | (643) | 4,597 |
Restricted stock awards | Non-employee director | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation | $ 58 | $ 187 | $ 236 | $ 670 |
OPTIONS AND AWARDS - SHARE-BA_2
OPTIONS AND AWARDS - SHARE-BASED COMPENSATION EXPENSE AND NARRATIVE (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Jul. 25, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation | $ (2,747) | $ 2,568 | $ 2,073 | $ 7,483 | |
Stock options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation | 859 | 834 | 2,480 | 2,216 | |
Restricted stock awards | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation | (3,664) | $ 1,547 | (643) | $ 4,597 | |
The Ensign Plans | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Total unrecognized share-based compensation expense | 14,618 | $ 14,618 | |||
Forfeited (in shares) | 162,000 | ||||
Share-based compensation | $ 3,812 | ||||
Granted (in shares) | 349,000 | ||||
The Ensign Plans | Stock options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unvested Stock Options | 11,041 | $ 11,041 | |||
Weighted Average Recognition Period (in years) | 3 years 4 months 24 days | ||||
Options, vesting percent per year | 20% | ||||
Options, expiration period | 10 years | ||||
The Ensign Plans | Restricted stock awards | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unvested Restricted Stock | $ 3,577 | $ 3,577 | |||
Weighted Average Recognition Period (in years) | 4 years 8 months 12 days | ||||
Granted (in shares) | 250,000 | ||||
Vesting period | 5 years | ||||
The Ensign Plans | Restricted Stock Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Forfeited (in shares) | 250,000 | ||||
Vested (in shares) | 942,842 |
OPTIONS AND AWARDS - OPTIONS GR
OPTIONS AND AWARDS - OPTIONS GRANTED (Details) - The Ensign Plans - $ / shares shares in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options granted (in shares) | 349 | |
2022 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options granted (in shares) | 349 | |
Weighted average fair value of options (in dollars per share) | $ 6.71 | |
2022 | Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-Free Interest Rate | 2.30% | |
Expected life | 6 years 6 months | |
Expected volatility | 39.80% | |
Dividend Yield | 0% | |
2021 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options granted (in shares) | 364 | |
Weighted average fair value of options (in dollars per share) | $ 14.82 | |
2021 | Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-Free Interest Rate | 1% | |
Expected life | 6 years 6 months | |
Expected volatility | 38.20% | |
Dividend Yield | 0% |
OPTIONS AND AWARDS - EMPLOYEE S
OPTIONS AND AWARDS - EMPLOYEE STOCK OPTION ACTIVITY (Details) - The Ensign Plans shares in Thousands | 9 Months Ended | |
Sep. 30, 2022 $ / shares shares | Dec. 31, 2021 $ / shares shares | |
Number of Options Outstanding | ||
Beginning balance, outstanding (in shares) | shares | 2,242 | |
Granted (in shares) | shares | 349 | |
Exercised (in shares) | shares | (106) | |
Forfeited (in shares) | shares | (162) | |
Expired (in shares) | shares | (50) | |
Ending balance, outstanding (in shares) | shares | 2,273 | |
Weighted Average Exercise Price | ||
Beginning of period, weighted average exercise price (in dollars per share) | $ / shares | $ 21.38 | |
Granted (in dollars per share) | $ / shares | 15.40 | |
Exercised (in dollars per share) | $ / shares | 9.12 | |
Forfeited (in dollars per share) | $ / shares | 23.58 | |
Expired (in dollars per share) | $ / shares | 17.28 | |
End of period, weighted average exercise price (in dollars per share) | $ / shares | $ 20.97 | |
Number of options vested (in shares) | shares | 880 | 840 |
Weighted average exercise price of options vested (in dollars per share) | $ / shares | $ 15.57 | $ 12.28 |
OPTIONS AND AWARDS - RESTRICTED
OPTIONS AND AWARDS - RESTRICTED STOCK (Details) - The Ensign Plans - Restricted stock awards shares in Thousands | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Non-Vested Restricted Stock | |
Beginning balance, outstanding (in shares) | shares | 1,493 |
Granted (in shares) | shares | 276 |
Vested (in shares) | shares | (1,070) |
Forfeited (in shares) | shares | (256) |
Ending balance, outstanding (in shares) | shares | 443 |
Weighted Average Grant Date Fair Value | |
Beginning of period, weighted average exercise price (in dollars per share) | $ / shares | $ 15 |
Granted (in dollars per share) | $ / shares | 13.63 |
Vested (in dollars per share) | $ / shares | 14.97 |
Forfeited (in dollars per share) | $ / shares | 15.05 |
End of period, weighted average exercise price (in dollars per share) | $ / shares | $ 14.18 |
LEASES - NARRATIVE (Details)
LEASES - NARRATIVE (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||||
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) property | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) property | Sep. 30, 2022 USD ($) | Sep. 30, 2022 agency | Sep. 30, 2022 facility | Sep. 30, 2022 property | Sep. 30, 2022 arrangement | Sep. 30, 2022 | Apr. 01, 2022 lease | |
Lessee, Lease, Description [Line Items] | |||||||||||
Non-cash adjustment to right-of-use assets and lease liabilities from lease modifications | $ 159 | $ 159 | $ 6,270 | ||||||||
Weighted average remaining lease term | 12 years 10 months 24 days | 12 years 10 months 24 days | |||||||||
Weighted average discount rate | 7.60% | ||||||||||
Related party | |||||||||||
Lessee, Lease, Description [Line Items] | |||||||||||
Non-cash adjustment to right-of-use assets and lease liabilities from lease terminations and assignments | $ 42,515 | ||||||||||
Non-cash adjustment to right-of-use assets and lease liabilities from lease modifications | $ 6,522 | ||||||||||
Related party | Operating lease, rent expense | |||||||||||
Lessee, Lease, Description [Line Items] | |||||||||||
Fees incurred | $ 3,760 | $ 3,169 | $ 10,250 | $ 9,415 | |||||||
Senior Living Services | |||||||||||
Lessee, Lease, Description [Line Items] | |||||||||||
Number of properties under lease | 49 | 49 | |||||||||
Senior Living Services | Related party | |||||||||||
Lessee, Lease, Description [Line Items] | |||||||||||
Number of operating facilities | property | 31 | 31 | 29 | ||||||||
Number of properties under lease, master lease agreement | facility | 12 | ||||||||||
Number of separate master lease arrangements | arrangement | 2 | ||||||||||
Number of terminated leases under master lease agreement | lease | 4 | ||||||||||
Senior Living Services | Minimum | |||||||||||
Lessee, Lease, Description [Line Items] | |||||||||||
Lease term | 5 years | 5 years | |||||||||
Senior Living Services | Minimum | Related party | |||||||||||
Lessee, Lease, Description [Line Items] | |||||||||||
Lease term | 14 years | 14 years | |||||||||
Senior Living Services | Maximum | |||||||||||
Lessee, Lease, Description [Line Items] | |||||||||||
Lease term | 21 years | 21 years | |||||||||
Senior Living Services | Maximum | Related party | |||||||||||
Lessee, Lease, Description [Line Items] | |||||||||||
Lease term | 20 years | 20 years |
LEASES - IMPACT OF NEW LEASES G
LEASES - IMPACT OF NEW LEASES GUIDANCE (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Lease, Cost | ||||
Variable lease cost | $ 1,590 | $ 1,609 | $ 4,463 | $ 4,598 |
Cost of services | ||||
Lease, Cost | ||||
Operating lease costs | 9,391 | 10,334 | 28,520 | 30,455 |
Cost of services | Community | ||||
Lease, Cost | ||||
Operating lease costs | 8,129 | 9,052 | 24,755 | 26,844 |
Cost of services | Office | ||||
Lease, Cost | ||||
Operating lease costs | 1,262 | 1,282 | 3,765 | 3,611 |
General and administrative expense | ||||
Lease, Cost | ||||
Operating lease costs | $ 86 | $ 51 | $ 241 | $ 192 |
LEASES - FUTURE MINIMUM LEASE P
LEASES - FUTURE MINIMUM LEASE PAYMENTS (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Leases, Under Adoption of ASC 842 [Abstract] | ||
2022 (Remainder) | $ 8,800 | |
2023 | 34,844 | |
2024 | 34,100 | |
2025 | 32,770 | |
2026 | 31,955 | |
Thereafter | 276,631 | |
Total lease payments | 419,100 | |
Less: present value adjustments | (153,731) | |
Present value of total lease liabilities | 265,369 | |
Less: current lease liabilities | (15,948) | $ (16,118) |
Long-term operating lease liabilities | $ 249,421 | $ 287,753 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense (benefit) | $ 1,074 | $ 69 | $ 241 | $ 1,013 |
Effective income tax rate reconciliation, percent | 17.70% | 5.80% | 6.30% | 18.40% |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands | 1 Months Ended | 9 Months Ended | |
May 02, 2022 agency | May 31, 2022 USD ($) | Sep. 30, 2022 USD ($) review | |
Concentration Risk [Line Items] | |||
Number of operating subsidiaries with reviews scheduled | review | 7 | ||
Suspended payments | $ 5,181 | ||
Number of patient records under review | agency | 107 | ||
Period of review | 10 months | ||
Sampled and extrapolated overpayments | $ 5,165 | ||
General and professional liability, retention limit | 150 | ||
Out-of-pocket retention | 500 | ||
Workers' compensation, retention limit | 250 | ||
Maximum | |||
Concentration Risk [Line Items] | |||
Self insurance, individual coverage limit | $ 325 |