COVER
COVER - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 06, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
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 $0.001 per share | |
Trading Symbol | PNTG | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 29,926,501 | |
Entity Central Index Key | 0001766400 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash | $ 3,383 | $ 2,079 |
Accounts receivable—less allowance for doubtful accounts of $931 and $592, respectively | 59,353 | 53,420 |
Prepaid expenses and other current assets | 9,460 | 18,323 |
Total current assets | 72,196 | 73,822 |
Property and equipment, net | 27,983 | 26,621 |
Right-of-use assets | 262,987 | 260,868 |
Deferred tax assets, net | 126 | 2,149 |
Restricted and other assets | 7,983 | 10,545 |
Goodwill | 86,132 | 79,497 |
Other indefinite-lived intangibles | 62,908 | 58,617 |
Total assets | 520,315 | 512,119 |
Current liabilities: | ||
Accounts payable | 12,182 | 13,647 |
Accrued wages and related liabilities | 24,660 | 23,283 |
Operating lease liabilities—current | 16,341 | 16,633 |
Other accrued liabilities | 15,577 | 16,684 |
Total current liabilities | 68,760 | 70,247 |
Long-term operating lease liabilities—less current portion | 249,574 | 247,042 |
Other long-term liabilities | 8,679 | 6,281 |
Long-term debt, net | 53,783 | 62,892 |
Total liabilities | 380,796 | 386,462 |
Commitments and contingencies | ||
Equity: | ||
Common stock, $0.001 par value; 100,000 shares authorized; 30,266 and 29,919 shares issued and outstanding, respectively, at September 30, 2023; and 30,149 and 29,692 shares issued and outstanding, respectively, at December 31, 2022 | 29 | 29 |
Additional paid-in capital | 104,245 | 99,764 |
Retained earnings | 30,314 | 21,284 |
Treasury stock, at cost, 3 shares at September 30, 2023 and December 31, 2022 | (65) | (65) |
Total The Pennant Group, Inc. stockholders’ equity | 134,523 | 121,012 |
Noncontrolling interest | 4,996 | 4,645 |
Total equity | 139,519 | 125,657 |
Total liabilities and equity | $ 520,315 | $ 512,119 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 931 | $ 592 |
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) | 30,266,000 | 30,149,000 |
Common stock, shares outstanding (in shares) | 29,919,000 | 29,692,000 |
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, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||||
Revenue | $ 140,192 | $ 118,350 | $ 398,937 | $ 348,576 |
Expense | ||||
Cost of services | 112,384 | 94,680 | 321,162 | 277,658 |
Rent—cost of services | 10,006 | 9,391 | 29,439 | 28,520 |
General and administrative expense | 9,417 | 5,879 | 26,913 | 25,653 |
Depreciation and amortization | 1,323 | 1,251 | 3,817 | 3,677 |
Loss on asset dispositions and impairment, net | 1 | 5 | 4 | 6,713 |
Total expenses | 133,131 | 111,206 | 381,335 | 342,221 |
Income from operations | 7,061 | 7,144 | 17,602 | 6,355 |
Other (expense) income: | ||||
Other (expense) income | (37) | (18) | 28 | (50) |
Interest expense, net | (1,496) | (1,058) | (4,355) | (2,508) |
Other (expense), net | (1,533) | (1,076) | (4,327) | (2,558) |
Income before provision for income taxes | 5,528 | 6,068 | 13,275 | 3,797 |
Provision for income taxes | 1,066 | 1,074 | 3,894 | 241 |
Net income | 4,462 | 4,994 | 9,381 | 3,556 |
Less: Net income attributable to noncontrolling interest | 79 | 163 | 351 | 387 |
Net income attributable to The Pennant Group, Inc. | $ 4,383 | $ 4,831 | $ 9,030 | $ 3,169 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.15 | $ 0.16 | $ 0.30 | $ 0.11 |
Diluted (in dollars per share) | $ 0.15 | $ 0.16 | $ 0.30 | $ 0.10 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 29,912 | 29,335 | 29,825 | 28,840 |
Diluted (in shares) | 30,206 | 30,172 | 30,178 | 30,182 |
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, 2021 | 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 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) attributable to The Pennant Group, Inc. | 1,014 | 1,014 | ||||
Net income attributable to noncontrolling 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 | 28,826 | |||||
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 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) attributable to The Pennant Group, Inc. | 3,169 | |||||
Net income attributable to noncontrolling interests | 387 | |||||
Equity, ending balance, common stock (in shares) at Sep. 30, 2022 | 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 | |||||
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 attributable to noncontrolling 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 attributable to noncontrolling 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 | 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 | |||||
Equity, beginning balance, common stock (in shares) at Dec. 31, 2022 | 29,692 | 30,149 | ||||
Equity, beginning balance at Dec. 31, 2022 | $ 125,657 | $ 29 | 99,764 | 21,284 | $ (65) | 4,645 |
Equity, beginning balance, treasury stock (in shares) at Dec. 31, 2022 | 3 | 3 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) attributable to The Pennant Group, Inc. | $ 1,850 | 1,850 | ||||
Net income attributable to noncontrolling interests | 147 | 147 | ||||
Share-based compensation | 1,367 | 1,367 | ||||
Issuance of common stock from the exercise of stock options (in shares) | 26 | |||||
Issuance of common stock from the exercise of stock options | 203 | 203 | ||||
Net issuance of restricted stock (in shares) | 28 | |||||
Equity, ending balance, common stock (in shares) at Mar. 31, 2023 | 30,203 | |||||
Equity, ending balance at Mar. 31, 2023 | $ 129,224 | $ 29 | 101,334 | 23,134 | $ (65) | 4,792 |
Equity, ending balance, treasury stock (in shares) at Mar. 31, 2023 | 3 | |||||
Equity, beginning balance, common stock (in shares) at Dec. 31, 2022 | 29,692 | 30,149 | ||||
Equity, beginning balance at Dec. 31, 2022 | $ 125,657 | $ 29 | 99,764 | 21,284 | $ (65) | 4,645 |
Equity, beginning balance, treasury stock (in shares) at Dec. 31, 2022 | 3 | 3 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) attributable to The Pennant Group, Inc. | $ 9,030 | |||||
Net income attributable to noncontrolling interests | $ 351 | |||||
Equity, ending balance, common stock (in shares) at Sep. 30, 2023 | 29,919 | 30,266 | ||||
Equity, ending balance at Sep. 30, 2023 | $ 139,519 | $ 29 | 104,245 | 30,314 | $ (65) | 4,996 |
Equity, ending balance, treasury stock (in shares) at Sep. 30, 2023 | 3 | 3 | ||||
Equity, beginning balance, common stock (in shares) at Mar. 31, 2023 | 30,203 | |||||
Equity, beginning balance at Mar. 31, 2023 | $ 129,224 | $ 29 | 101,334 | 23,134 | $ (65) | 4,792 |
Equity, beginning balance, treasury stock (in shares) at Mar. 31, 2023 | 3 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) attributable to The Pennant Group, Inc. | 2,797 | 2,797 | ||||
Net income attributable to noncontrolling interests | 125 | 125 | ||||
Share-based compensation | 1,303 | 1,303 | ||||
Issuance of common stock from the exercise of stock options (in shares) | 38 | |||||
Issuance of common stock from the exercise of stock options | 249 | 249 | ||||
Net issuance of restricted stock (in shares) | 10 | |||||
Equity, ending balance, common stock (in shares) at Jun. 30, 2023 | 30,251 | |||||
Equity, ending balance at Jun. 30, 2023 | 133,698 | $ 29 | 102,886 | 25,931 | $ (65) | 4,917 |
Equity, ending balance, treasury stock (in shares) at Jun. 30, 2023 | 3 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) attributable to The Pennant Group, Inc. | 4,383 | 4,383 | ||||
Net income attributable to noncontrolling interests | 79 | 79 | ||||
Share-based compensation | 1,341 | 1,341 | ||||
Issuance of common stock from the exercise of stock options (in shares) | 4 | |||||
Issuance of common stock from the exercise of stock options | $ 18 | 18 | ||||
Net issuance of restricted stock (in shares) | 11 | |||||
Equity, ending balance, common stock (in shares) at Sep. 30, 2023 | 29,919 | 30,266 | ||||
Equity, ending balance at Sep. 30, 2023 | $ 139,519 | $ 29 | $ 104,245 | $ 30,314 | $ (65) | $ 4,996 |
Equity, ending balance, treasury stock (in shares) at Sep. 30, 2023 | 3 | 3 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 9,381 | $ 3,556 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 3,817 | 3,677 |
Amortization of deferred financing fees | 391 | 390 |
Impairment of long-lived assets | 0 | 218 |
Provision for doubtful accounts | 620 | 603 |
Share-based compensation | 4,011 | 2,073 |
Deferred income taxes | 3,066 | 752 |
Change in operating assets and liabilities, net of acquisitions: | ||
Accounts receivable | (5,560) | 1,734 |
Prepaid expenses and other assets | 11,387 | (1,429) |
Operating lease obligations | 121 | (140) |
Accounts payable | (866) | 1,655 |
Accrued wages and related liabilities | 1,376 | 1,278 |
Other accrued liabilities | (394) | 4,333 |
Contract liabilities (CARES Act advance payments) | 0 | (6,211) |
Other long-term liabilities | 560 | 485 |
Net cash provided by operating activities | 27,910 | 12,974 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (5,746) | (10,426) |
Cash payments for business acquisitions | (11,662) | (9,680) |
Other | (168) | (70) |
Net cash used in investing activities | (17,576) | (20,176) |
Cash flows from financing activities: | ||
Proceeds from Revolving Credit Facility | 131,500 | 82,000 |
Payments on Revolving Credit Facility | (141,000) | (78,000) |
Issuance of common stock upon the exercise of options | 470 | 967 |
Net cash (used in) provided by financing activities | (9,030) | 4,967 |
Net increase (decrease) in cash | 1,304 | (2,235) |
Cash beginning of period | 2,079 | 5,190 |
Cash end of period | 3,383 | 2,955 |
Cash paid during the period for: | ||
Interest | 3,997 | 2,114 |
Income taxes | 176 | 77 |
Lease liabilities | 27,231 | 27,092 |
Right-of-use assets obtained in exchange for new operating lease obligations | 9,357 | 10,326 |
Non-cash adjustment to right-of-use assets and lease liabilities from lease modifications | 5,195 | 6,270 |
Non-cash adjustment to right-of-use assets and lease liabilities from lease terminations and assignments | 0 | (43,136) |
Non-cash investing activity: | ||
Capital expenditures in accounts payable | $ 680 | $ 1,100 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 9 Months Ended |
Sep. 30, 2023 | |
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, 2023, the Company’s subsidiaries operated 103 home health, hospice and home care agencies and 51 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 are not meant to imply, nor should they 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, 2023 | |
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, 2022 is derived from the Company’s annual audited Consolidated Financial Statements for the fiscal year ended December 31, 2022, 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. 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, all of which was repaid by December 31, 2022. The CARES Act also expanded the Centers for Medicare & Medicaid Services’ (“CMS”) ability to provide accelerated/advance payments intended to increase the cash flow of healthcare providers and suppliers impacted by COVID-19. During 2020, the Company applied for and received $27,997 in funds under the Accelerated and Advance Payment (“AAP”) Program, all of which was recouped as of June 23, 2022. State relief funding. The Company receives state relief funding through programs from various states, including healthcare relief funding under the American Rescue Plan Act (ARPA), and other state specific relief programs. The funding generally incorporates specific use requirements primarily for direct patient care including labor related expenses that are attributable to the COVID-19 pandemic or are associated with providing patient care. These funds are recognized as a reduction of cost of services expenses when related expenses are incurred. As of September 30, 2023 and December 31, 2022, the Company had $872 and $1,479 in unapplied state relief funds, respectively. The unapplied state relief funds received are recorded in other accrued liabilities. The Company recognized state relief funding totaling $923 and $3,005 for the three and nine months ended September 30, 2023, respectively, and $734 and $1,980 for the three and nine months ended September 30, 2022, respectively, which the Company recognized as a reduction of cost of services expense. Recent Accounting Pronouncements Except for rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws and a limited number of grandfathered standards, the FASB ASC is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. For any new pronouncements announced, the Company considers whether the new pronouncements could alter previous generally accepted accounting principles and determines whether any new or modified principles will have a material impact on the Company's reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company's financial management and certain standards are under consideration. On August 23, 2023, the FASB issued ASU 2023-05 “ Business Combinations—Joint Venture Formations (Subtopic 805-60)” (ASU 2023-05) under which an entity that qualifies as either a joint venture or a corporate joint venture, as defined in the ASC master glossary, is required to apply a new basis of accounting upon the formation of the joint venture. Specifically, ASU 2023-05 stipulates that a joint venture or a corporate joint venture must initially measure its assets and liabilities at fair value on the formation date. The amendments in ASU 2023-05 are effective for all joint ventures within the ASU’s scope that are formed on or after January 1, 2025. Early adoption is permitted. |
TRANSACTIONS WITH ENSIGN
TRANSACTIONS WITH ENSIGN | 9 Months Ended |
Sep. 30, 2023 | |
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”). Pennant and Ensign continue to partner in the provision of services along the healthcare continuum. The Company incurred costs of $254 and $719 for the three and nine months ended September 30, 2023, and $231 and $1,332 for the three and nine months ended September 30, 2022, respectively, that related primarily to shared services at proximate operations. Expenses related to room and board charges at Ensign skilled nursing facilities for hospice patients were $1,217 and $3,171 for the three and nine months ended September 30, 2023, respectively, and $812 and $2,035 for the three and nine months ended September 30, 2022, respectively, and are included in cost of services. The Company’s independent operating subsidiaries leased 29 communities from subsidiaries of Ensign under a master lease arrangement as of both September 30, 2023 and September 30, 2022. 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 required one of the transferors to place $6,500 in escrow to cover post-closing capital expenditures and operating losses related to one of the communities, and such escrow was funded by an initial payment by the transferor at closing followed by eight equal monthly installments. The Company recorded the amount in loss on asset dispositions and impairment, net during the three months ended June 2022. The Transaction closed in April 2022. |
NET INCOME PER COMMON SHARE
NET INCOME PER COMMON SHARE | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
NET INCOME PER COMMON SHARE | NET INCOME PER COMMON SHARE Basic net income (loss) per share is computed by dividing net income (loss) attributable to stockholders of the Company by the weighted average number of outstanding common shares for the period. The computation of diluted net income (loss) per share is similar to the computation of basic net income (loss) 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 (loss) per share for the periods presented: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator: Net income attributable to The Pennant Group, Inc. $ 4,383 $ 4,831 $ 9,030 $ 3,169 Denominator: Weighted average shares outstanding for basic net income per share 29,912 29,335 29,825 28,840 Plus: assumed incremental shares from exercise of options and assumed conversion or vesting of restricted stock (a) 294 837 353 1,342 Adjusted weighted average common shares outstanding for diluted income per share 30,206 30,172 30,178 30,182 Earnings Per Share: Basic net income per common share $ 0.15 $ 0.16 $ 0.30 $ 0.11 Diluted net income per common share $ 0.15 $ 0.16 $ 0.30 $ 0.10 (a) The diluted per share amounts do not reflect common equivalent shares outstanding of 2,718 and 2,278 for the three and nine months ended September 30, 2023, respectively, and 1,858 and 1,806 for the three and nine months ended September 30, 2022, respectively, because of their anti-dilutive effect. |
REVENUE AND ACCOUNTS RECEIVABLE
REVENUE AND ACCOUNTS RECEIVABLE | 9 Months Ended |
Sep. 30, 2023 | |
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 Medicare, Medicaid, Commercial and managed care programs (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 is 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 rates, 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. Combined revenue from the Medicare and Medicaid programs accounted for 62.7% and 62.5% of the Company’s revenue for the three and nine months ended September 30, 2023, respectively, and 62.4% and 62.3% for the three and nine months ended September 30, 2022, 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 carriers administrating 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 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, 2023 and 2022, is summarized in the following tables: Three Months Ended September 30, 2023 Home Health and Hospice Services Home Health Services Hospice Services Senior Living Services Total Revenue Revenue % Medicare $ 24,076 $ 43,849 $ — $ 67,925 48.5 % Medicaid 2,521 5,190 12,182 19,893 14.2 Subtotal 26,597 49,039 12,182 87,818 62.7 Managed care 17,927 1,231 — 19,158 13.6 Private and other (a) 6,579 101 26,536 33,216 23.7 Total revenue $ 51,103 $ 50,371 $ 38,718 $ 140,192 100.0 % (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, 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. Revenue by payor for the nine months ended September 30, 2023 and 2022, is summarized in the following tables: Nine Months Ended September 30, 2023 Home Health and Hospice Services Home Health Services Hospice Services Senior Living Services Total Revenue Revenue % Medicare $ 71,372 $ 121,523 $ — $ 192,895 48.3 % Medicaid 7,178 14,470 34,807 56,455 14.2 Subtotal 78,550 135,993 34,807 249,350 62.5 Managed care 49,696 3,842 — 53,538 13.4 Private and other (a) 19,105 387 76,557 96,049 24.1 Total revenue $ 147,351 $ 140,222 $ 111,364 $ 398,937 100.0 % (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, 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. 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, 2023 and December 31, 2022 is summarized in the following table: September 30, 2023 December 31, 2022 Medicare $ 33,709 $ 31,321 Medicaid 12,699 10,700 Managed care 11,422 9,370 Private and other 2,454 2,621 Accounts receivable, gross 60,284 54,012 Less: allowance for doubtful accounts (931) (592) Accounts receivable, net $ 59,353 $ 53,420 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 77.0% and 77.8% of its total gross accounts receivable as of September 30, 2023 and December 31, 2022, respectively. Combined revenue from reimbursement under the Medicare and Medicaid programs accounted for 62.7% and 62.5% for the three and nine months ended September 30, 2023, respectively, and 62.4% and 62.3% of the Company’s revenue for the three and nine months ended September 30, 2022, respectively. 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 , 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, 2023 | |
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, 2023, the Company provided services through 103 affiliated home health, hospice and home care agencies, and 51 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 (loss) 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) the costs associated with transitioning operations, (5) unusual, non-recurring or redundant charges, and (6) 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, 2023 and 2022: Home Health and Hospice Services Senior Living Services All Other Total Three Months Ended September 30, 2023 Revenue $ 101,474 $ 38,718 $ — $ 140,192 Segment Adjusted EBITDAR from Operations $ 17,271 $ 11,473 $ (8,097) $ 20,647 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 Home Health and Hospice Services Senior Living Services All Other Total Nine Months Ended September 30, 2023 Revenue $ 287,573 $ 111,364 $ — $ 398,937 Segment Adjusted EBITDAR from Operations $ 47,364 $ 33,394 $ (23,496) $ 57,262 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 The 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, 2023 2022 2023 2022 Segment Adjusted EBITDAR from Operations $ 20,647 $ 16,971 $ 57,262 $ 48,834 Less: Depreciation and amortization 1,323 1,251 3,817 3,677 Rent—cost of services 10,006 9,391 29,439 28,520 Other (expense) income (37) (18) 28 (50) Adjustments to Segment EBITDAR from Operations: Less: Costs at start-up operations (a) (108) 430 160 938 Share-based compensation expense and related taxes (b) 1,391 (2,501) 4,164 2,319 Acquisition related costs and credit allowances (c) 71 1,000 175 1,014 Costs associated with transitioning operations (d) 10 144 595 6,078 Unusual, non-recurring or redundant charges (e) 1,009 293 1,633 370 Add: Net income attributable to noncontrolling interest 79 163 351 387 Condensed Consolidated Income from Operations $ 7,061 $ 7,144 $ 17,602 $ 6,355 (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. 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, credit allowances, and write offs for amounts in dispute with the prior owners of certain acquired operations. (d) During the nine months ended September 30, 2023, an affiliate of the Company placed its memory care units into transition and is actively seeking to sublease the units to an unrelated third party. The amount above represents the net operating impact attributable to the units in transition. The amounts reported exclude rent and depreciation and amortization expense related to such operations and include legal settlement costs associated with one of the entities transitioned to Ensign. During January 2022, affiliates of the Company entered into 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 above represents the net impact on revenue and cost of service attributable to all of the transferred entities. The amounts reported exclude rent and depreciation and amortization expense related to such operations. (e) Represents unusual or non-recurring charges for legal services, implementation costs, integration costs, and consulting fees in general and administrative and cost of services expenses. The amounts reported for the nine months ended September 30, 2022 include certain costs identified as redundant or non-recurring incurred by the Company for services provided by Ensign under the Transition Services Agreement, and were included in general and administrative expense. |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
ACQUISITIONS | ACQUISITIONS The Company is focused on acquiring 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. 2023 Acquisitions During the nine months ended September 30, 2023, the Company expanded its operations with the addition of three home health agencies, three hospice agencies, two home care agencies, and two senior living communities. In connection with the addition of the two senior living communities, the Company entered into a new long-term “triple-net” lease. 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 two home health agencies, three hospice agencies, and two home care agencies acquired 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 $11,662, which preliminarily consisted of of goodwill of $6,635, indefinite-lived intangible assets of $3,895 related to Medicare and Medicaid licenses, equipment and other assets of $1,027 related to accounts receivable, and other indefinite-lived intangible assets of $186, less assumed liabilities of $81. The Company anticipates that the total goodwill recognized will be fully deductible for tax purposes. One home health agency acquired was a Medicare license and is considered an asset acquisition. The fair value of the home health license acquired was $210 and was recorded in indefinite-lived intangible assets. There were no material acquisition costs that were expensed related to the business combinations during the nine months ended September 30, 2023. 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 home health acquisitions was mostly concentrated in goodwill and intangible assets and as such, these transactions were classified as business combinations in accordance with 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, 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 Subsequent Events On October 2, 2023, the Company closed on an acquisition of one hospice agency in California. On November 1, 2023, the Company closed on an acquisition of two hospice agencies, one in Texas and one in Oklahoma. The total purchase price of the three hospice agencies was $6,600. As of the date of this report, the preliminary allocation of the purchase price for the acquisitions acquired subsequent to September 30, 2023 were not completed as necessary valuation information was not yet available. As such, the determination whether these acquisitions should be classified as business combinations or asset acquisitions under ASC 805 will be determined upon completion of the allocation of the purchase price. |
PROPERTY AND EQUIPMENT_NET
PROPERTY AND EQUIPMENT—NET | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT—NET | PROPERTY AND EQUIPMENT—NET Property and equipment, net consist of the following: September 30, 2023 December 31, 2022 Land $ 96 $ 96 Building 1,890 1,890 Leasehold improvements 20,496 18,759 Equipment 28,730 25,532 Furniture and fixtures 1,271 1,151 52,483 47,428 Less: accumulated depreciation (24,500) (20,807) Property and equipment, net $ 27,983 $ 26,621 Depreciation expense was $1,321 and $3,807 for the three and nine months ended September 30, 2023, respectively, and $1,244 and $3,640 for the three and nine months ended September 30, 2022, respectively. 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 in the impairment analysis are considered Level 3 measurements due to their subjective nature. Management has evaluated its long-lived assets and determined there was no impairment recorded during the three and nine months ended September 30, 2023 and 2022. |
GOODWILL AND OTHER INDEFINITE-L
GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2023 | |
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, 2023: Home Health and Hospice Services Senior Living Services Total December 31, 2022 $ 75,855 $ 3,642 $ 79,497 Additions 6,635 — 6,635 September 30, 2023 $ 82,490 $ 3,642 $ 86,132 Other indefinite-lived intangible assets consist of the following: September 30, 2023 December 31, 2022 Trade name $ 1,571 $ 1,385 Medicare and Medicaid licenses 61,337 57,232 Total $ 62,908 $ 58,617 |
OTHER ACCRUED LIABILITIES
OTHER ACCRUED LIABILITIES | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
OTHER ACCRUED LIABILITIES | OTHER ACCRUED LIABILITIES Other accrued liabilities consist of the following: September 30, 2023 December 31, 2022 Refunds payable $ 1,754 $ 2,244 Deferred revenue 1,786 1,592 Resident deposits 2,657 4,315 Property taxes 1,254 1,027 Deferred state relief funds 872 1,479 Accrued self-insurance liabilities 4,590 3,546 Other 2,664 2,481 Other accrued liabilities $ 15,577 $ 16,684 |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Long-term debt, net consists of the following: September 30, 2023 December 31, 2022 Revolving Credit Facility $ 55,000 $ 64,500 Less: unamortized debt issuance costs (a) (1,217) (1,608) Long-term debt, net $ 53,783 $ 62,892 (a) Amortization expense for debt issuance costs was $130 and $391 for the three and nine months ended September 30, 2023, respectively, and $130 and $390 for the three and nine months ended September 30, 2022, 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”). On June 12, 2023, Pennant entered into a second amendment to the Credit Agreement that modified the reference rate from LIBOR to Standard Overnight Financing Rate (“SOFR”). The interest rates applicable to loans under the Revolving Credit Facility are, at the Company’s election, either (i) Adjusted Term SOFR (as defined in the Credit Agreement) plus a margin ranging from 2.25% to 3.25% per annum or (ii) Base Rate plus a margin ranging from 1.25% to 2.25% 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, 2023, the Company’s weighted average interest rate on its outstanding debt was 8.17%. As of September 30, 2023, the Company had available borrowing on the Revolving Credit Facility of $90,814, 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, mergers or consolidations, amend certain material agreements and pay certain dividends and other restricted payments. Financial covenants require compliance with certain levels of leverage ratios that impact the amount of interest. As of September 30, 2023, the Company was compliant with all such financial covenants. |
OPTIONS AND AWARDS
OPTIONS AND AWARDS | 9 Months Ended |
Sep. 30, 2023 | |
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 ”, and together with the OIP, the “Pennant Plans” ). Under 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, 2023 and 2022 was: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Share-based compensation expense related to stock options $ 1,044 859 $ 2,878 $ 2,480 Share-based compensation expense related to Restricted Stock 178 (3,664) 535 (643) Share-based compensation expense related to Restricted Stock to non-employee directors 119 58 598 236 Total share-based compensation $ 1,341 $ (2,747) $ 4,011 $ 2,073 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, 2023: Unrecognized Compensation Expense Weighted Average Recognition Period Unvested Stock Options $ 12,492 3.4 Unvested Restricted Stock 2,573 3.7 Total unrecognized share-based compensation expense $ 15,065 On July 25, 2022 the Company modified certain outstanding RSUs granted to the former chief executive officer of the Company 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 outstanding RSUs and accelerated the vesting on the remaining 943 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 recorded in general and administrative expense in the third quarter of 2022. 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 September 30: Grant Year Options Granted Risk-Free Interest Rate Expected Life (a) Expected Volatility (b) Dividend Yield Weighted Average Fair Value of Options 2023 874 4.1 % 6.5 41.8 % — % $ 6.61 2022 349 2.3 % 6.5 39.8 % — % $ 6.71 (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, 2023: Number of Options Outstanding Weighted Number of Options Vested Weighted Average Exercise Price of Options Vested December 31, 2022 2,219 20.76 973 $ 16.90 Granted 874 13.62 Exercised (66) 7.06 Forfeited (48) 21.63 Expired (49) 19.87 September 30, 2023 2,930 $ 18.79 1,073 $ 18.63 Restricted Stock A summary of the status of Pennant’s non-vested Restricted Stock, and changes during the nine months ended September 30, 2023, is presented below: Non-Vested Restricted Stock Weighted Average Grant Date Fair Value December 31, 2022 418 $ 14.26 Granted 53 11.40 Vested (199) 13.51 Forfeited (3) 15.61 September 30, 2023 269 $ 15.36 |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
LEASES | LEASES The Company’s independent operating subsidiaries lease 51 senior living communities and its administrative offices under non-cancelable operating leases, most of which have initial lease terms ranging from 15 to 25 years. Most of these leases contain renewal options, most involve rent increases and none contain purchase options. The lease term excludes lease renewals because the renewal rents are not at a bargain, there are no economic penalties for the Company to renew the lease, and it is not reasonably certain that the Company will exercise the extension options. The Company’s independent operating subsidiaries leased 29 communities from subsidiaries of Ensign (the “Ensign Leases”) under a master lease arrangement as of both September 30, 2023 and September 30, 2022. Each of the leases have an initial term of between 14 and 20 years from the lease commencement date. The total amount of rent expense included in rent - cost of services paid to subsidiaries of Ensign was $3,339 and $10,088 for the three and nine months ended September 30, 2023, respectively, and $3,760 and $10,250 for the three and nine months ended September 30, 2022, respectively. In addition to rent, each of the 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. Fourteen of the Company’s affiliated senior living communities, excluding the communities that are operated under the Ensign Leases (as defined herein), are operated under three 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. As further described in Note 3, on January 27, 2022, affiliates of the Company entered into Transfer Agreements with affiliates of Ensign, providing for the transfer of the operations of five 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 a master lease agreement. As a result of the transferred leases being removed from the master lease arrangement, the remaining lease components under the master lease arrangement 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. On July 7, 2023 the Company modified one of its master leases, which included nine locations, with an unrelated party to extend the term of the master lease from September 30, 2035 to March 31, 2038. As a result of the modification, the lease components under the master lease arrangement were modified which resulted in a net increase to the lease liability and ROU asset balance of $5,195 for the three and nine months ended September 30, 2023. The components of operating lease cost, are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Operating Lease Costs: Community Rent—cost of services $ 8,567 $ 8,129 $ 25,303 $ 24,755 Office Rent—cost of services 1,439 1,262 4,136 3,765 Rent—cost of services $ 10,006 $ 9,391 $ 29,439 $ 28,520 General and administrative expense $ 94 $ 86 $ 291 $ 241 Variable lease cost (a) $ 1,876 $ 1,590 $ 5,367 $ 4,463 (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, 2023 and 2022. The following table shows the lease maturity analysis for all leases as of September 30, 2023, for the years ended December 31: Year Amount 2023 (Remainder) $ 9,287 2024 36,549 2025 35,195 2026 34,032 2027 33,268 Thereafter 281,565 Total lease payments 429,896 Less: present value adjustments (163,981) Present value of total lease liabilities 265,915 Less: current lease liabilities (16,341) Long-term operating lease liabilities $ 249,574 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, 2023, the weighted average remaining lease term is 12.8 years and the weighted average discount rate is 8.1%. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXESThe Company recorded income tax expense of $1,066 and $1,074 or 19.3% and 17.7% of earnings before income taxes for the three months ended September 30, 2023 and 2022, respectively. The increase in the effective tax rate is primarily due to the modification of certain outstanding RSUs granted in connection with the Spin-off and not having the impact of the Transaction in the current year.The Company recorded income tax expense of $3,894 and $241, or 29.3% and 6.3% of earnings before income taxes for the nine months ended September 30, 2023 and 2022, respectively. The increase in the effective tax rate is primarily due to the modification of certain outstanding RSUs granted in connection with the Spin-off and not having the impact of the Transaction in the current year. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2023 | |
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, which may include suspension, termination, or revocation of participation in governmental programs for the payment of the services the Company provides. 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 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. Certain of the states where we conduct business, including California, recently adopted laws that increase the maximum amount of non-economic damages that may be awarded to a successful plaintiff in a claim for professional negligence or malpractice arising from care provided by our independent operating subsidiaries. These changes in applicable law may also increase the cost of obtaining and maintaining professional liability insurance to pay for the defense of, and any liability arising under, such 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 also is subject to potential lawsuits under the False Claims Act (the “FCA”) and comparable state laws alleging submission of fraudulent claims for services to any governmental healthcare program (such as Medicare) or commercial 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 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, 2023, nine 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 previously paid claims. The Company has appealed substantially all denials arising from these Reviews using the applicable appeals process. As of September 30, 2023, 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. The total amounts suspended was $5,105, which represents all Medicare payments due to the provider number during the suspension. As of September 30, 2023, the total amount due from the government payor impacted by the suspension was $1,915 and was recorded in long-term other assets. In May 2022, the Company received communication that the Medicare payment suspension, for the above-referenced hospice provider number, 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 initially alleged sampled and extrapolated overpayments of $5,105, and 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. To date the Company has been successful in appealing some of the previously denied claims. The Company received the refund of previously withheld amounts totaling $3,191 and $3,222 for the three and nine months ended September 30, 2023, respectively. The Company continues to work through the appeals process for the remaining denied claims of $1,915 and expects to be successful in those appeals. Based on the information currently available to the Company, the Company cannot predict the timing or the ultimate outcome of this review including refunds to be received. As of September 30, 2023, the Company has 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. Based on changes in law that increase the maximum damages that may be recovered for professional negligence or malpractice claims in states where we operate, including, California, the costs of maintaining some of these insurance policies may increase in the future. 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, Washington and Wyoming which are subject to state insurance and possess their own limits. |
COMMON STOCK REPURCHASE PROGRAM
COMMON STOCK REPURCHASE PROGRAM | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
COMMON STOCK REPURCHASE PROGRAM | COMMON STOCK REPURCHASE PROGRAMOn December 12, 2022, the Board of Directors of the Company approved a share repurchase program under which the Company may repurchase up to $1,000 of its common stock. Under the share repurchase program, the Company may repurchase shares from time to time through open market purchases, including through the use of trading plans intended to comply with Rule 10b5-1 under the Securities Exchange Act of 1934. The timing and total amount of stock repurchases will depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, and other considerations. The authorization expires on December 12, 2023, and may be suspended or discontinued at any time and does not obligate the Company to acquire any amount of common stock. No shares were repurchased during the three and nine months ended September 30, 2023. |
BASIS OF PRESENTATION AND SUM_2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
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. |
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 Medicare, Medicaid, Commercial and managed care programs (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 is 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 rates, 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 carriers administrating 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 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. |
Recent Accounting Pronouncements | Except for rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws and a limited number of grandfathered standards, the FASB ASC is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. For any new pronouncements announced, the Company considers whether the new pronouncements could alter previous generally accepted accounting principles and determines whether any new or modified principles will have a material impact on the Company's reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company's financial management and certain standards are under consideration. On August 23, 2023, the FASB issued ASU 2023-05 “ Business Combinations—Joint Venture Formations (Subtopic 805-60)” (ASU 2023-05) under which an entity that qualifies as either a joint venture or a corporate joint venture, as defined in the ASC master glossary, is required to apply a new basis of accounting upon the formation of the joint venture. Specifically, ASU 2023-05 stipulates that a joint venture or a corporate joint venture must initially measure its assets and liabilities at fair value on the formation date. The amendments in ASU 2023-05 are effective for all joint ventures within the ASU’s scope that are formed on or after January 1, 2025. Early adoption is permitted. |
NET INCOME PER COMMON SHARE (Ta
NET INCOME PER COMMON SHARE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of basic and diluted net income (loss) per share | The following table sets forth the computation of basic and diluted net income (loss) per share for the periods presented: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator: Net income attributable to The Pennant Group, Inc. $ 4,383 $ 4,831 $ 9,030 $ 3,169 Denominator: Weighted average shares outstanding for basic net income per share 29,912 29,335 29,825 28,840 Plus: assumed incremental shares from exercise of options and assumed conversion or vesting of restricted stock (a) 294 837 353 1,342 Adjusted weighted average common shares outstanding for diluted income per share 30,206 30,172 30,178 30,182 Earnings Per Share: Basic net income per common share $ 0.15 $ 0.16 $ 0.30 $ 0.11 Diluted net income per common share $ 0.15 $ 0.16 $ 0.30 $ 0.10 (a) The diluted per share amounts do not reflect common equivalent shares outstanding of 2,718 and 2,278 for the three and nine months ended September 30, 2023, respectively, and 1,858 and 1,806 for the three and nine months ended September 30, 2022, respectively, because of their anti-dilutive effect. |
REVENUE AND ACCOUNTS RECEIVAB_2
REVENUE AND ACCOUNTS RECEIVABLE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of revenue by major payor source | Revenue by payor for the three months ended September 30, 2023 and 2022, is summarized in the following tables: Three Months Ended September 30, 2023 Home Health and Hospice Services Home Health Services Hospice Services Senior Living Services Total Revenue Revenue % Medicare $ 24,076 $ 43,849 $ — $ 67,925 48.5 % Medicaid 2,521 5,190 12,182 19,893 14.2 Subtotal 26,597 49,039 12,182 87,818 62.7 Managed care 17,927 1,231 — 19,158 13.6 Private and other (a) 6,579 101 26,536 33,216 23.7 Total revenue $ 51,103 $ 50,371 $ 38,718 $ 140,192 100.0 % (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, 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. Revenue by payor for the nine months ended September 30, 2023 and 2022, is summarized in the following tables: Nine Months Ended September 30, 2023 Home Health and Hospice Services Home Health Services Hospice Services Senior Living Services Total Revenue Revenue % Medicare $ 71,372 $ 121,523 $ — $ 192,895 48.3 % Medicaid 7,178 14,470 34,807 56,455 14.2 Subtotal 78,550 135,993 34,807 249,350 62.5 Managed care 49,696 3,842 — 53,538 13.4 Private and other (a) 19,105 387 76,557 96,049 24.1 Total revenue $ 147,351 $ 140,222 $ 111,364 $ 398,937 100.0 % (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, 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. |
Schedule of accounts receivable | Accounts receivable, net as of September 30, 2023 and December 31, 2022 is summarized in the following table: September 30, 2023 December 31, 2022 Medicare $ 33,709 $ 31,321 Medicaid 12,699 10,700 Managed care 11,422 9,370 Private and other 2,454 2,621 Accounts receivable, gross 60,284 54,012 Less: allowance for doubtful accounts (931) (592) Accounts receivable, net $ 59,353 $ 53,420 |
BUSINESS SEGMENTS (Tables)
BUSINESS SEGMENTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
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, 2023 and 2022: Home Health and Hospice Services Senior Living Services All Other Total Three Months Ended September 30, 2023 Revenue $ 101,474 $ 38,718 $ — $ 140,192 Segment Adjusted EBITDAR from Operations $ 17,271 $ 11,473 $ (8,097) $ 20,647 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 Home Health and Hospice Services Senior Living Services All Other Total Nine Months Ended September 30, 2023 Revenue $ 287,573 $ 111,364 $ — $ 398,937 Segment Adjusted EBITDAR from Operations $ 47,364 $ 33,394 $ (23,496) $ 57,262 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 |
Schedule of reconciliation of total combined adjusted EBITDAR from operations for our reportable segments to combined income from operations | The 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, 2023 2022 2023 2022 Segment Adjusted EBITDAR from Operations $ 20,647 $ 16,971 $ 57,262 $ 48,834 Less: Depreciation and amortization 1,323 1,251 3,817 3,677 Rent—cost of services 10,006 9,391 29,439 28,520 Other (expense) income (37) (18) 28 (50) Adjustments to Segment EBITDAR from Operations: Less: Costs at start-up operations (a) (108) 430 160 938 Share-based compensation expense and related taxes (b) 1,391 (2,501) 4,164 2,319 Acquisition related costs and credit allowances (c) 71 1,000 175 1,014 Costs associated with transitioning operations (d) 10 144 595 6,078 Unusual, non-recurring or redundant charges (e) 1,009 293 1,633 370 Add: Net income attributable to noncontrolling interest 79 163 351 387 Condensed Consolidated Income from Operations $ 7,061 $ 7,144 $ 17,602 $ 6,355 (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. 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, credit allowances, and write offs for amounts in dispute with the prior owners of certain acquired operations. (d) During the nine months ended September 30, 2023, an affiliate of the Company placed its memory care units into transition and is actively seeking to sublease the units to an unrelated third party. The amount above represents the net operating impact attributable to the units in transition. The amounts reported exclude rent and depreciation and amortization expense related to such operations and include legal settlement costs associated with one of the entities transitioned to Ensign. During January 2022, affiliates of the Company entered into 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 above represents the net impact on revenue and cost of service attributable to all of the transferred entities. The amounts reported exclude rent and depreciation and amortization expense related to such operations. (e) Represents unusual or non-recurring charges for legal services, implementation costs, integration costs, and consulting fees in general and administrative and cost of services expenses. The amounts reported for the nine months ended September 30, 2022 include certain costs identified as redundant or non-recurring incurred by the Company for services provided by Ensign under the Transition Services Agreement, and were included in general and administrative expense. |
PROPERTY AND EQUIPMENT_NET (Tab
PROPERTY AND EQUIPMENT—NET (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment, net | Property and equipment, net consist of the following: September 30, 2023 December 31, 2022 Land $ 96 $ 96 Building 1,890 1,890 Leasehold improvements 20,496 18,759 Equipment 28,730 25,532 Furniture and fixtures 1,271 1,151 52,483 47,428 Less: accumulated depreciation (24,500) (20,807) Property and equipment, net $ 27,983 $ 26,621 |
GOODWILL AND OTHER INDEFINITE_2
GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
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, 2023: Home Health and Hospice Services Senior Living Services Total December 31, 2022 $ 75,855 $ 3,642 $ 79,497 Additions 6,635 — 6,635 September 30, 2023 $ 82,490 $ 3,642 $ 86,132 |
Schedule of other indefinite-lived intangible assets | Other indefinite-lived intangible assets consist of the following: September 30, 2023 December 31, 2022 Trade name $ 1,571 $ 1,385 Medicare and Medicaid licenses 61,337 57,232 Total $ 62,908 $ 58,617 |
OTHER ACCRUED LIABILITIES (Tabl
OTHER ACCRUED LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of other accrued liabilities | Other accrued liabilities consist of the following: September 30, 2023 December 31, 2022 Refunds payable $ 1,754 $ 2,244 Deferred revenue 1,786 1,592 Resident deposits 2,657 4,315 Property taxes 1,254 1,027 Deferred state relief funds 872 1,479 Accrued self-insurance liabilities 4,590 3,546 Other 2,664 2,481 Other accrued liabilities $ 15,577 $ 16,684 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | Long-term debt, net consists of the following: September 30, 2023 December 31, 2022 Revolving Credit Facility $ 55,000 $ 64,500 Less: unamortized debt issuance costs (a) (1,217) (1,608) Long-term debt, net $ 53,783 $ 62,892 (a) Amortization expense for debt issuance costs was $130 and $391 for the three and nine months ended September 30, 2023, respectively, and $130 and $390 for the three and nine months ended September 30, 2022, 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, 2023 | |
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, 2023 and 2022 was: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Share-based compensation expense related to stock options $ 1,044 859 $ 2,878 $ 2,480 Share-based compensation expense related to Restricted Stock 178 (3,664) 535 (643) Share-based compensation expense related to Restricted Stock to non-employee directors 119 58 598 236 Total share-based compensation $ 1,341 $ (2,747) $ 4,011 $ 2,073 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, 2023: Unrecognized Compensation Expense Weighted Average Recognition Period Unvested Stock Options $ 12,492 3.4 Unvested Restricted Stock 2,573 3.7 Total unrecognized share-based compensation expense $ 15,065 |
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 September 30: Grant Year Options Granted Risk-Free Interest Rate Expected Life (a) Expected Volatility (b) Dividend Yield Weighted Average Fair Value of Options 2023 874 4.1 % 6.5 41.8 % — % $ 6.61 2022 349 2.3 % 6.5 39.8 % — % $ 6.71 (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, 2023: Number of Options Outstanding Weighted Number of Options Vested Weighted Average Exercise Price of Options Vested December 31, 2022 2,219 20.76 973 $ 16.90 Granted 874 13.62 Exercised (66) 7.06 Forfeited (48) 21.63 Expired (49) 19.87 September 30, 2023 2,930 $ 18.79 1,073 $ 18.63 |
Schedule 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, 2023, is presented below: Non-Vested Restricted Stock Weighted Average Grant Date Fair Value December 31, 2022 418 $ 14.26 Granted 53 11.40 Vested (199) 13.51 Forfeited (3) 15.61 September 30, 2023 269 $ 15.36 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
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, 2023 2022 2023 2022 Operating Lease Costs: Community Rent—cost of services $ 8,567 $ 8,129 $ 25,303 $ 24,755 Office Rent—cost of services 1,439 1,262 4,136 3,765 Rent—cost of services $ 10,006 $ 9,391 $ 29,439 $ 28,520 General and administrative expense $ 94 $ 86 $ 291 $ 241 Variable lease cost (a) $ 1,876 $ 1,590 $ 5,367 $ 4,463 (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, 2023 and 2022. |
Schedule of future minimum lease payments | The following table shows the lease maturity analysis for all leases as of September 30, 2023, for the years ended December 31: Year Amount 2023 (Remainder) $ 9,287 2024 36,549 2025 35,195 2026 34,032 2027 33,268 Thereafter 281,565 Total lease payments 429,896 Less: present value adjustments (163,981) Present value of total lease liabilities 265,915 Less: current lease liabilities (16,341) Long-term operating lease liabilities $ 249,574 |
DESCRIPTION OF BUSINESS (Detail
DESCRIPTION OF BUSINESS (Details) - Sep. 30, 2023 | agency | facility |
Home Health and Hospice Services | ||
Segment Reporting Information [Line Items] | ||
Number of service providers | 103 | |
Senior Living Services | ||
Segment Reporting Information [Line Items] | ||
Number of properties under lease | 51 | 51 |
BASIS OF PRESENTATION AND SUM_3
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2020 | |
Unusual or Infrequent Item, or Both [Line Items] | ||||||
Deferred state relief funds | $ 872 | $ 872 | $ 1,479 | |||
State relief funds, reduction | $ 923 | $ 734 | $ 3,005 | $ 1,980 | ||
CARES Act | ||||||
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 |
TRANSACTIONS WITH ENSIGN (Detai
TRANSACTIONS WITH ENSIGN (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2023 USD ($) agency | Sep. 30, 2022 USD ($) property | Sep. 30, 2023 USD ($) agency | Sep. 30, 2022 USD ($) property | Sep. 30, 2023 property | Sep. 30, 2023 facility | Jan. 27, 2022 USD ($) facility | |
Affiliates of Ensign | |||||||
Related Party Transaction [Line Items] | |||||||
Escrow deposits | $ 6,500 | ||||||
Senior Living Services | |||||||
Related Party Transaction [Line Items] | |||||||
Number of properties under lease | 51 | 51 | 51 | ||||
Related party | |||||||
Related Party Transaction [Line Items] | |||||||
Cost of services | $ 1,217 | $ 812 | $ 3,171 | $ 2,035 | |||
Related party | Senior Living Services | |||||||
Related Party Transaction [Line Items] | |||||||
Number of operating facilities | property | 29 | 29 | 29 | ||||
Number of properties under lease | facility | 5 | ||||||
Number of communities | facility | 1 | ||||||
Related party | Transition Services Agreement | |||||||
Related Party Transaction [Line Items] | |||||||
Expenses from transactions with related party | $ 254 | $ 231 | $ 719 | $ 1,332 |
NET INCOME PER COMMON SHARE (De
NET INCOME PER COMMON SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Numerator: | ||||||||
Net income attributable to The Pennant Group, Inc. | $ 4,383 | $ 2,797 | $ 1,850 | $ 4,831 | $ (2,676) | $ 1,014 | $ 9,030 | $ 3,169 |
Denominator: | ||||||||
Weighted average shares outstanding for basic net income per share (in shares) | 29,912 | 29,335 | 29,825 | 28,840 | ||||
Plus: assumed incremental shares from exercise of options and assumed conversion or vesting of restricted stock (in shares) | 294 | 837 | 353 | 1,342 | ||||
Adjusted weighted average common shares outstanding for diluted income per share (in shares) | 30,206 | 30,172 | 30,178 | 30,182 | ||||
Earnings Per Share: | ||||||||
Basic net income per common share (in dollars per share) | $ 0.15 | $ 0.16 | $ 0.30 | $ 0.11 | ||||
Diluted net income per common share (in dollars per share) | $ 0.15 | $ 0.16 | $ 0.30 | $ 0.10 | ||||
Anti-dilutive effect of common equivalent shares outstanding (in shares) | 2,718 | 1,858 | 2,278 | 1,806 |
REVENUE AND ACCOUNTS RECEIVAB_3
REVENUE AND ACCOUNTS RECEIVABLE - NARRATIVE (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
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 | 62.70% | 62.40% | 62.50% | 62.30% | |
Customer concentration risk | Receivables | Subtotal | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue, percent | 77% | 77.80% |
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, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 140,192 | $ 118,350 | $ 398,937 | $ 348,576 |
Revenue | Customer concentration risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue % | 100% | 100% | 100% | 100% |
Medicare | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 67,925 | $ 58,407 | $ 192,895 | $ 171,183 |
Medicare | Revenue | Customer concentration risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue % | 48.50% | 49.40% | 48.30% | 49.10% |
Medicaid | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 19,893 | $ 15,343 | $ 56,455 | $ 46,080 |
Medicaid | Revenue | Customer concentration risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue % | 14.20% | 13% | 14.20% | 13.20% |
Subtotal | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 87,818 | $ 73,750 | $ 249,350 | $ 217,263 |
Subtotal | Revenue | Customer concentration risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue % | 62.70% | 62.40% | 62.50% | 62.30% |
Managed care | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 19,158 | $ 15,656 | $ 53,538 | $ 45,105 |
Managed care | Revenue | Customer concentration risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue % | 13.60% | 13.20% | 13.40% | 13% |
Private and other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 33,216 | $ 28,944 | $ 96,049 | $ 86,208 |
Private and other | Revenue | Customer concentration risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue % | 23.70% | 24.40% | 24.10% | 24.70% |
Home Health and Hospice Services | Home Health Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 51,103 | $ 45,257 | $ 147,351 | $ 133,894 |
Home Health and Hospice Services | Home Health Services | Medicare | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 24,076 | 23,040 | 71,372 | 67,861 |
Home Health and Hospice Services | Home Health Services | Medicaid | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 2,521 | 2,151 | 7,178 | 7,389 |
Home Health and Hospice Services | Home Health Services | Subtotal | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 26,597 | 25,191 | 78,550 | 75,250 |
Home Health and Hospice Services | Home Health Services | Managed care | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 17,927 | 14,594 | 49,696 | 42,106 |
Home Health and Hospice Services | Home Health Services | Private and other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 6,579 | 5,472 | 19,105 | 16,538 |
Home Health and Hospice Services | Hospice Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 50,371 | 40,522 | 140,222 | 117,704 |
Home Health and Hospice Services | Hospice Services | Medicare | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 43,849 | 35,367 | 121,523 | 103,322 |
Home Health and Hospice Services | Hospice Services | Medicaid | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 5,190 | 4,065 | 14,470 | 11,189 |
Home Health and Hospice Services | Hospice Services | Subtotal | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 49,039 | 39,432 | 135,993 | 114,511 |
Home Health and Hospice Services | Hospice Services | Managed care | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,231 | 1,062 | 3,842 | 2,999 |
Home Health and Hospice Services | Hospice Services | Private and other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 101 | 28 | 387 | 194 |
Senior Living Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 38,718 | 32,571 | 111,364 | 96,978 |
Senior Living Services | Medicare | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Senior Living Services | Medicaid | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 12,182 | 9,127 | 34,807 | 27,502 |
Senior Living Services | Subtotal | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 12,182 | 9,127 | 34,807 | 27,502 |
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 | $ 26,536 | $ 23,444 | $ 76,557 | $ 69,476 |
REVENUE AND ACCOUNTS RECEIVAB_5
REVENUE AND ACCOUNTS RECEIVABLE - ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Accounts Receivable [Abstract] | ||
Accounts receivable, gross | $ 60,284 | $ 54,012 |
Less: allowance for doubtful accounts | (931) | (592) |
Accounts receivable, net | 59,353 | 53,420 |
Medicare | ||
Accounts Receivable [Abstract] | ||
Accounts receivable, gross | 33,709 | 31,321 |
Medicaid | ||
Accounts Receivable [Abstract] | ||
Accounts receivable, gross | 12,699 | 10,700 |
Managed care | ||
Accounts Receivable [Abstract] | ||
Accounts receivable, gross | 11,422 | 9,370 |
Private and other | ||
Accounts Receivable [Abstract] | ||
Accounts receivable, gross | $ 2,454 | $ 2,621 |
BUSINESS SEGMENTS - NARRATIVE (
BUSINESS SEGMENTS - NARRATIVE (Details) - Sep. 30, 2023 | agency | facility |
Home Health and Hospice Services | ||
Segment Reporting Information [Line Items] | ||
Number of service providers | 103 | |
Senior Living Services | ||
Segment Reporting Information [Line Items] | ||
Number of properties under lease | 51 | 51 |
BUSINESS SEGMENTS - FINANCIAL D
BUSINESS SEGMENTS - FINANCIAL DATA (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Segment Reporting Information [Line Items] | ||||
Revenue | $ 140,192 | $ 118,350 | $ 398,937 | $ 348,576 |
Segment Adjusted EBITDAR from Operations | 20,647 | 16,971 | 57,262 | 48,834 |
Senior Living Services | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 38,718 | 32,571 | 111,364 | 96,978 |
Operating segments | Home Health and Hospice Services | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 101,474 | 85,779 | 287,573 | 251,598 |
Segment Adjusted EBITDAR from Operations | 17,271 | 15,380 | 47,364 | 45,056 |
Operating segments | Senior Living Services | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 38,718 | 32,571 | 111,364 | 96,978 |
Segment Adjusted EBITDAR from Operations | 11,473 | 9,370 | 33,394 | 27,573 |
All Other | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Segment Adjusted EBITDAR from Operations | $ (8,097) | $ (7,779) | $ (23,496) | $ (23,795) |
BUSINESS SEGMENTS - INCOME FROM
BUSINESS SEGMENTS - INCOME FROM OPERATIONS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Segment Reporting [Abstract] | ||||||||
Segment Adjusted EBITDAR from Operations | $ 20,647 | $ 16,971 | $ 57,262 | $ 48,834 | ||||
Less: Depreciation and amortization | 1,323 | 1,251 | 3,817 | 3,677 | ||||
Rent—cost of services | 10,006 | 9,391 | 29,439 | 28,520 | ||||
Other (expense) income | (37) | (18) | 28 | (50) | ||||
Less: Costs at start-up operations | (108) | 430 | 160 | 938 | ||||
Share-based compensation expense and related taxes | 1,391 | (2,501) | 4,164 | 2,319 | ||||
Acquisition related costs and credit allowances | 71 | 1,000 | 175 | 1,014 | ||||
Costs associated with transitioning operations | 10 | 144 | 595 | 6,078 | ||||
Unusual, non-recurring or redundant charges | 1,009 | 293 | 1,633 | 370 | ||||
Add: Net income attributable to noncontrolling interest | 79 | $ 125 | $ 147 | 163 | $ 80 | $ 144 | 351 | 387 |
Condensed Consolidated Income from Operations | $ 7,061 | $ 7,144 | $ 17,602 | $ 6,355 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) $ in Thousands | 1 Months Ended | 9 Months Ended | ||||
Nov. 01, 2023 agency | Oct. 02, 2023 agency | Nov. 01, 2023 USD ($) | Sep. 30, 2023 USD ($) agency | Sep. 30, 2022 USD ($) agency | Dec. 31, 2022 USD ($) | |
Business Acquisition [Line Items] | ||||||
Goodwill | $ 86,132 | $ 79,497 | ||||
Series of Individually Immaterial Business Acquisitions | ||||||
Business Acquisition [Line Items] | ||||||
Total acquisition | 11,662 | $ 9,680 | ||||
Goodwill | 6,635 | 4,925 | ||||
Other indefinite-lived intangible assets | 4,714 | |||||
Equipment and other assets | 1,027 | 188 | ||||
Other intangible assets | 186 | 40 | ||||
Liabilities assumed | 81 | 187 | ||||
Acquisition costs | 0 | $ 0 | ||||
Home Health Services | Series of Individually Immaterial Business Acquisitions | ||||||
Business Acquisition [Line Items] | ||||||
Other indefinite-lived intangible assets | $ 3,895 | |||||
Hospice Services | Subsequent Event | ||||||
Business Acquisition [Line Items] | ||||||
Number of businesses acquired and assets acquisitions | agency | 2 | 1 | ||||
Hospice Services | Series of Individually Immaterial Business Acquisitions | ||||||
Business Acquisition [Line Items] | ||||||
Number of businesses acquired and assets acquisitions | agency | 3 | |||||
Other indefinite-lived intangible assets | $ 210 | |||||
Home Health and Hospice Services | ||||||
Business Acquisition [Line Items] | ||||||
Goodwill | $ 82,490 | 75,855 | ||||
Home Health and Hospice Services | Subsequent Event | ||||||
Business Acquisition [Line Items] | ||||||
Business combination, purchase price | $ 6,600 | |||||
Home Health and 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 Health Services | ||||||
Business Acquisition [Line Items] | ||||||
Number of businesses acquired and assets acquisitions | agency | 3 | 2 | ||||
Home Health and Hospice Services | Hospice Services | ||||||
Business Acquisition [Line Items] | ||||||
Number of businesses acquired and assets acquisitions | agency | 3 | 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 | 1 | |||||
Home Care Services Segment | 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 | 2 | 1 | ||||
Goodwill | $ 3,642 | $ 3,642 |
PROPERTY AND EQUIPMENT_NET (Det
PROPERTY AND EQUIPMENT—NET (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 52,483 | $ 52,483 | $ 47,428 | ||
Less: accumulated depreciation | (24,500) | (24,500) | (20,807) | ||
Property and equipment, net | 27,983 | 27,983 | 26,621 | ||
Depreciation | 1,321 | $ 1,244 | 3,807 | $ 3,640 | |
Land | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 96 | 96 | 96 | ||
Building | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 1,890 | 1,890 | 1,890 | ||
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 20,496 | 20,496 | 18,759 | ||
Equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 28,730 | 28,730 | 25,532 | ||
Furniture and fixtures | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 1,271 | $ 1,271 | $ 1,151 |
GOODWILL AND OTHER INDEFINITE_3
GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS - ACTIVITY IN GOODWILL (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 79,497 |
Additions | 6,635 |
Goodwill, ending balance | 86,132 |
Home Health and Hospice Services | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 75,855 |
Additions | 6,635 |
Goodwill, ending balance | 82,490 |
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, 2023 | Dec. 31, 2022 |
Indefinite-lived Intangible Assets [Line Items] | ||
Other indefinite-lived intangibles | $ 62,908 | $ 58,617 |
Trade name | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Other indefinite-lived intangibles | 1,571 | 1,385 |
Medicare and Medicaid licenses | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Other indefinite-lived intangibles | $ 61,337 | $ 57,232 |
GOODWILL AND OTHER INDEFINITE_5
GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS - NARRATIVE (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
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, 2023 | Dec. 31, 2022 |
Other Accrued Liabilities, Current [Abstract] | ||
Refunds payable | $ 1,754 | $ 2,244 |
Deferred revenue | 1,786 | 1,592 |
Resident deposits | 2,657 | 4,315 |
Property taxes | 1,254 | 1,027 |
Deferred state relief funds | 872 | 1,479 |
Accrued self-insurance liabilities | 4,590 | 3,546 |
Other | 2,664 | 2,481 |
Other accrued liabilities | $ 15,577 | $ 16,684 |
DEBT - SCHEDULE OF LONG-TERM DE
DEBT - SCHEDULE OF LONG-TERM DEBT (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | |||||
Less: unamortized debt issuance costs | $ (1,217) | $ (1,217) | $ (1,608) | ||
Long-term debt, net | 53,783 | 53,783 | 62,892 | ||
Amortization of deferred financing fees | 130 | $ 130 | 391 | $ 390 | |
Revolving Credit Facility | Line of credit | |||||
Debt Instrument [Line Items] | |||||
Revolving Credit Facility | $ 55,000 | $ 55,000 | $ 64,500 |
DEBT - NARRATIVE (Details)
DEBT - NARRATIVE (Details) - USD ($) | Jun. 12, 2023 | Sep. 30, 2023 | Feb. 23, 2021 |
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 | 8.17% | ||
Borrowing availability | $ 90,814,000 | ||
Revolving Credit Facility | Minimum | |||
Debt Instrument [Line Items] | |||
Margin | 0.35% | ||
Revolving Credit Facility | Minimum | SOFR | |||
Debt Instrument [Line Items] | |||
Margin | 2.25% | ||
Revolving Credit Facility | Minimum | Base Rate | |||
Debt Instrument [Line Items] | |||
Margin | 1.25% | ||
Revolving Credit Facility | Maximum | |||
Debt Instrument [Line Items] | |||
Margin | 0.50% | ||
Revolving Credit Facility | Maximum | SOFR | |||
Debt Instrument [Line Items] | |||
Margin | 3.25% | ||
Revolving Credit Facility | Maximum | Base Rate | |||
Debt Instrument [Line Items] | |||
Margin | 2.25% | ||
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, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation | $ 1,341 | $ (2,747) | $ 4,011 | $ 2,073 |
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation | 1,044 | 859 | 2,878 | 2,480 |
Restricted stock awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation | 178 | (3,664) | 535 | (643) |
Restricted stock awards | Non-employee directors | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation | $ 119 | $ 58 | $ 598 | $ 236 |
OPTIONS AND AWARDS - UNVESTED S
OPTIONS AND AWARDS - UNVESTED STOCK OPTIONS AND RESTRICTED STOCK (Details) - The Ensign Plans $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Total unrecognized share-based compensation expense | $ 15,065 |
Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unvested Stock Options | $ 12,492 |
Weighted Average Recognition Period (in years) | 3 years 4 months 24 days |
Restricted stock awards | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unvested Restricted Stock | $ 2,573 |
Weighted Average Recognition Period (in years) | 3 years 8 months 12 days |
OPTIONS AND AWARDS - NARRATIVE
OPTIONS AND AWARDS - NARRATIVE (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Jul. 25, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation | $ 1,341 | $ (2,747) | $ 4,011 | $ 2,073 | |
Restricted stock awards | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation | 178 | (3,664) | 535 | (643) | |
Stock options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation | $ 1,044 | 859 | $ 2,878 | $ 2,480 | |
The Ensign Plans | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Forfeited (in shares) | 48 | ||||
Share-based compensation | $ 3,812 | ||||
The Ensign Plans | Restricted Stock Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Forfeited (in shares) | 250 | ||||
Vested (in shares) | 943 | ||||
The Ensign Plans | Restricted stock awards | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting period | 5 years | ||||
The Ensign Plans | Stock options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options, vesting percent per year | 20% | ||||
Options, expiration period | 10 years |
OPTIONS AND AWARDS - OPTIONS GR
OPTIONS AND AWARDS - OPTIONS GRANTED (Details) - The Ensign Plans - $ / shares shares in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options granted (in shares) | 874 | |
2023 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options granted (in shares) | 874 | |
Weighted average fair value of options (in dollars per share) | $ 6.61 | |
2023 | Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-Free Interest Rate | 4.10% | |
Expected life | 6 years 6 months | |
Expected volatility | 41.80% | |
Dividend Yield | 0% | |
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% |
OPTIONS AND AWARDS - EMPLOYEE S
OPTIONS AND AWARDS - EMPLOYEE STOCK OPTION ACTIVITY (Details) - The Ensign Plans shares in Thousands | 9 Months Ended | |
Sep. 30, 2023 $ / shares shares | Dec. 31, 2022 $ / shares shares | |
Number of Options Outstanding | ||
Beginning balance, outstanding (in shares) | shares | 2,219 | |
Granted (in shares) | shares | 874 | |
Exercised (in shares) | shares | (66) | |
Forfeited (in shares) | shares | (48) | |
Expired (in shares) | shares | (49) | |
Ending balance, outstanding (in shares) | shares | 2,930 | |
Weighted Average Exercise Price | ||
Beginning of period, weighted average exercise price (in dollars per share) | $ / shares | $ 20.76 | |
Granted (in dollars per share) | $ / shares | 13.62 | |
Exercised (in dollars per share) | $ / shares | 7.06 | |
Forfeited (in dollars per share) | $ / shares | 21.63 | |
Expired (in dollars per share) | $ / shares | 19.87 | |
End of period, weighted average exercise price (in dollars per share) | $ / shares | $ 18.79 | |
Number of options vested (in shares) | shares | 1,073 | 973 |
Weighted average exercise price of options vested (in dollars per share) | $ / shares | $ 18.63 | $ 16.90 |
OPTIONS AND AWARDS - RESTRICTED
OPTIONS AND AWARDS - RESTRICTED STOCK (Details) - The Ensign Plans - Restricted stock awards shares in Thousands | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Non-Vested Restricted Stock | |
Beginning balance, outstanding (in shares) | shares | 418 |
Granted (in shares) | shares | 53 |
Vested (in shares) | shares | (199) |
Forfeited (in shares) | shares | (3) |
Ending balance, outstanding (in shares) | shares | 269 |
Weighted Average Grant Date Fair Value | |
Beginning of period, weighted average exercise price (in dollars per share) | $ / shares | $ 14.26 |
Granted (in dollars per share) | $ / shares | 11.40 |
Vested (in dollars per share) | $ / shares | 13.51 |
Forfeited (in dollars per share) | $ / shares | 15.61 |
End of period, weighted average exercise price (in dollars per share) | $ / shares | $ 15.36 |
LEASES - NARRATIVE (Details)
LEASES - NARRATIVE (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||||||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) property | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) property | Sep. 30, 2023 agency | Sep. 30, 2023 property | Sep. 30, 2023 facility | Sep. 30, 2023 arrangement | Sep. 30, 2023 | Jul. 07, 2023 location | Apr. 01, 2022 lease | Jan. 27, 2022 facility | |
Lessee, Lease, Description [Line Items] | ||||||||||||
Non-cash adjustment to right-of-use assets and lease liabilities from lease modifications | $ 5,195 | $ 5,195 | $ 6,270 | |||||||||
Number of locations | location | 9 | |||||||||||
Weighted average remaining lease term | 12 years 9 months 18 days | 12 years 9 months 18 days | ||||||||||
Weighted average discount rate | 8.10% | |||||||||||
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 | $ 3,339 | $ 3,760 | $ 10,088 | $ 10,250 | ||||||||
Senior Living Services | ||||||||||||
Lessee, Lease, Description [Line Items] | ||||||||||||
Number of properties under lease | 51 | 51 | ||||||||||
Senior Living Services | Related party | ||||||||||||
Lessee, Lease, Description [Line Items] | ||||||||||||
Number of properties under lease | facility | 5 | |||||||||||
Number of operating facilities | property | 29 | 29 | 29 | |||||||||
Number of properties under lease, master lease agreement | facility | 14 | |||||||||||
Number of separate master lease arrangements | arrangement | 3 | |||||||||||
Number of terminated leases under master lease agreement | lease | 4 | |||||||||||
Senior Living Services | Minimum | ||||||||||||
Lessee, Lease, Description [Line Items] | ||||||||||||
Lease term | 15 years | 15 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 | 25 years | 25 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, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Lease, Cost | ||||
Variable lease cost | $ 1,876 | $ 1,590 | $ 5,367 | $ 4,463 |
Cost of services | ||||
Lease, Cost | ||||
Operating lease costs | 10,006 | 9,391 | 29,439 | 28,520 |
Cost of services | Community | ||||
Lease, Cost | ||||
Operating lease costs | 8,567 | 8,129 | 25,303 | 24,755 |
Cost of services | Office | ||||
Lease, Cost | ||||
Operating lease costs | 1,439 | 1,262 | 4,136 | 3,765 |
General and administrative expense | ||||
Lease, Cost | ||||
Operating lease costs | $ 94 | $ 86 | $ 291 | $ 241 |
LEASES - FUTURE MINIMUM LEASE P
LEASES - FUTURE MINIMUM LEASE PAYMENTS (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Leases, Under Adoption of ASC 842 [Abstract] | ||
2023 (Remainder) | $ 9,287 | |
2024 | 36,549 | |
2025 | 35,195 | |
2026 | 34,032 | |
2027 | 33,268 | |
Thereafter | 281,565 | |
Total lease payments | 429,896 | |
Less: present value adjustments | (163,981) | |
Present value of total lease liabilities | 265,915 | |
Less: current lease liabilities | (16,341) | $ (16,633) |
Long-term operating lease liabilities | $ 249,574 | $ 247,042 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense (benefit) | $ 1,066 | $ 1,074 | $ 3,894 | $ 241 |
Effective income tax rate reconciliation, percent | 19.30% | 17.70% | 29.30% | 6.30% |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended |
May 31, 2022 USD ($) agency | Sep. 30, 2023 USD ($) review | Sep. 30, 2023 USD ($) review | Dec. 31, 2022 USD ($) | |
Concentration Risk [Line Items] | ||||
Number of operating subsidiaries with reviews scheduled | review | 9 | 9 | ||
Suspended payments | $ 5,105 | $ 5,105 | ||
Sampled and extrapolated overpayments | $ 1,915 | |||
Number of patient records under review | agency | 107 | |||
Period of review | 10 months | |||
Previously withheld amounts | (3,191) | (3,222) | ||
General and professional liability, retention limit | 150 | 150 | ||
Out-of-pocket retention | 500 | 500 | ||
Workers' compensation, retention limit | $ 250 | 250 | ||
Maximum | ||||
Concentration Risk [Line Items] | ||||
Self insurance, individual coverage limit | $ 350 | $ 350 |
COMMON STOCK REPURCHASE PROGR_2
COMMON STOCK REPURCHASE PROGRAM (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2023 | Dec. 12, 2022 | |
Equity [Abstract] | |||
Repurchase of common stock amount | $ 1,000 | ||
Stock repurchased (in shares) | 0 | 0 |