PNTG - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to The Pennant Group Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. Instructions]. [Operator turn Officer. your now Bunker, today, conference Investment Chief the would speaker to Derek I ahead, go Please sir.

Derek Bunker

Joelle. you today. for you, joining Thank Welcome us everyone, and thank

Here Portfolio and become Pennant Brent our President of announced Danny CFO; I will Health President John who Guerisoli, with Group and as Home XXXX. Freeman, recently Hospice and COO; The Jenn and beginning our Walker, our Gochnour, our me today Company, of CEO; in have we

and housekeeping want matters. is results. or publicly Before they filed securities I and Except information, XX, December reason. future Investor factors not Mountain on we that of remind discussion this this federal could November new a few forward-looking that our be circumstances also management's statements all today's available revise for XX-Q its as at a changing of implied announcement of as statements Pennant are reliance our Also begin, and press call. undue to XXXX. actual about results assumptions statements or materially should call forward-looking earnings made result current these statements subsequent and are beliefs This Relations to forward-looking website update any be anyone have where uncertainties filings XX, or expressed affiliates PM business which could Listeners call and Time to made of These any on based or by in on our cause available We on required listening are will to today, and statements replay today from changes are not review release A our be do subject been have a the our the as replay our updated Friday, on www.pennantgroup.com. and complete will we operate. of environment our events, impact other undertake laws, statements to today's SEC X:XX any that to XXXX, more section Website risks a arise yesterday. of on for call. expectations, that to differ We encouraged may not place until those

In holding as to The Group, and assets, provide through of employees direct Inc. Center, consolidated is referred technology, legal, words human Pennant addition, with such the subsidiaries. collectively Pennant our risk to no we, Service other to The relationships company, resources, revenues. subsidiaries company independent Inc., us contractual services a or refer and Group, subsidiaries, our the accounting, operating wholly-owned information management payroll, with operating and its The other Pennant, subsidiaries. Certain

turn operated and operating that, and herein any business, Group. to more exclusion terms results, All of to complete company use as the has available upon Service our with separate viewed a operated it of provide is References A and employees of reconciliation Danny the GAAP the that their Walker, of non-GAAP GAAP release Pennant CEO. but are our metrics. used reporting non-GAAP wholly-owned assets supplement its we, With yesterday's own in I'll relied available be with XX-Q. should our the us, to construed of over independent The have assets. Center call by can the that subsidiaries to be together GAAP Danny? reports. not in is press measures are we our consolidated The Also direct terms by companies management, they these GAAP and subsidiaries as believe the our employees that activities Pennant the to When understanding Group, and similar that or our we our are well revenue nor should not today Inc. assets, meaning imply operating meant or and as

Danny Walker

Thank today us XXXX to you, Pennant's discuss for morning, third results. good quarter joining you Derek, Thank and everyone.

strong quarter report to pleased are of We results. another

Their teams their admirable show sometimes give each after COVID-related appreciation to sometimes we, our continue veterans drive. members express And with local thankless them. one when them. is to up vulnerable Our face ongoing acknowledge day that job responsibilities services nations accomplished and difficult overwhelming, and the challenges pause patients here. I'd many but also our and on and most are to need day and Veterans like among Day, and I'm of of and armed of staff dedication grateful them head-on they to our our that this residents things

into team role. extend have organization we're say Now X, and appointed our organization of Brent a organization helped throughout in been and January of of XXXX. forward clinical operational talented results. asset. Pennant's new role a will this built talents. his doors a our over our Guerisoli management opens most provide often he broader and a the our joining He Expanding train success to parts leaders press elevate long-term many leaders to in are excited and track dozens Brent leader roles recently of other the for the fully organization We release, as leaders of recent valuable in leadership for XXXX, President are stepping beginning and has We're and seen whom company, will you years. many assume. us the as throughout be we have their serve critical of to record platform that they're have Since has to expand capable operating prepared exceptional This

Pennant Group we're So forward. and what change about thrilled for this means it The going

Q&A today the the here is call. during Brent and will mentioned, Derek of portion be available us with As

revenue $X.XX. yesterday, share earnings bumping per affirming guidance of release and adjusted XXXX we $X.XX earnings As in our our our to range shared XXXX are a we guidance annual to

in announced consistently the our over we short, quarter. results to As yesterday guidance quarterly a during the pandemic. reminder, we produced In XX% addition we the increase is initial announced last increase have strong

guidance Its $X.XX, the represent annual of annual our to which annual earnings of guidance XXXX revenue of announced per and to $XXX million increases we the and XX.X% status business of $XXX We we current far over trend effects respectively guidance XXXX ways COVID-XX. of year $X.XX In million preparing assuming in have throughout our seen year-to-date. increased this mid-points impact considered XX.X% similar and this also to it's likely share as XXXX adjusted guidance. continues it so

the the haven't of this and a quarter operating vaccines. are by was efficacy change assumed reports we potential While we the strong in from environment stemming availability the Overall, pandemic a encouraged adoption on vaccine, headwinds. another of initial ongoing despite widespread

to EBITDA And listeners record financial Relief same higher increase adjusted XX% I in $X.X came Fund. more a million, than consolidated not nearly a XX% remind the was any Provider Jen million, will in results results revenue earnings adjusted $XX.X our discuss do adjusted CARES include at period. over Our but that do last QX year. Act detail, want our

in of stakeholders these benefit the for we our exemplify resilience many drive the and in serve. local to Our both ability face strong of of segments model challenges leadership results our and our communities the the long-term value

as Health Home financial clinical operations stellar Our top well Hospice and results. continue strong produce results, bottom-line and to as

uncertain newly in pleased pandemic, acquired transitioning strong were from given platforms. environment total and record census. that Home navigating PDGM, also into levels our results to average These Health admissions which the are Hospice with the daily they multiple achieved agencies operating and pre-pandemic and Medicare especially lingering We our report are exceed impressive challenges

way cylinders our all have is we on in tailoring firing was and successfully our output growth. quality large Overall, the financial in is achieving each the our business choice. to operation transition because focus Health clinical Our of and Hospice Home to one Health to Home PDGM. and teams note, part on of provider be Of for with produced outcomes continued pleased continued continued the operate poised in each local are

and of driven reimbursement are local our While early environment; appropriate we by: draw has sample on PPS, two, appropriately under inception, PDGM resulting our our size strong are nursing patients ability factors for is performance under to community and we changing Since a performance acuity it resulted leaders adapt recognize care been reimbursement patients results based provided one, PDGM. that higher higher PDGM. serving strong reimbursed this and now two Often, are more in for needs. acuity the under reimbursed in care the by conclusions, under patients. to to long-term were nursing to These underserved operating and small our individual to committed still patient and is have

as of novelty revenue, we of Living service of foundation of We move which confident despite it challenges pandemic. field ability third adapt our the ways light quarter-over-quarter are in in to was quarter becomes find adjusted the our going the In cadence. in and our to forward part the by Living past the facing local supported PDGM results business, to ordinary our noteworthy execution continue leaders a move to our continue Senior operational This Senior EBITDA center stemming and continued increases and operations and segment industry. local pressures forward the of the resources determined the processes from profitable their teams is and

averages Our basis of declined assisted the weighted average was quarter. XXX as basis Senior points XX.X% quarter by at points. standing ahead from trend living XXX approximately third by in occupancy Living national occupancy approximately This first reported NIH the

across point a seen that the basis point Our have and occupancy low a XX hit time; occupancy we in August since in increase segment.

visitation, broadly, the every particular, in the restrictions impacted degree. living not been in-person in community industry While and senior same impacted way COVID-XX the has the senior has touring living to or same on

Across uniquely to within dynamics assembled us Our value occurring suited to significantly challenges. storm to two lower teams leaders Pennant, continue local industry than cost local a develop long-term unique factors These our pandemic-related respond portfolio over of model model. including time. current local talented resilience to operating assets market averages. we've This and attracted is operational help at operating and to a is this equip drive our significant weather we recruit will shareholder basis

highly of Senior growth strong I'll are which sheet, and balance reflects and drive These of revenue with portfolio, favorable factors guidance. organic operations strong Derek. our and guidance, strong in as improve and operating growth, opportunistic continues to to the Living EPS to expected recent Derek Home our drive healthy in as XXXX segments off our combined consolidator Health, and We well With further clinically and Hospice existing field to hand results over health The issue pleased discuss service financially. growth twice investment our position forward our to that, disciplined track continue overall our increased industries. it record XXXX lease our an fragmented activity. partners coverages, both center us the

Derek Bunker

you, Danny. Thank

were their the across providing to commitment our Pennant. life-changing just Before providing through communities for the when guidance provide want it many guidance investment XXXX we guidance thoughts of represent a during been provide and transaction, for complex update, service I'm very Danny's to to that strong time raised able their the efforts and grateful spin echo quarter, would quarter again most. growth healthy initial I individuals this a XXXX aftermath appreciation earnings year-over-year. in needed last deeply It's that and a

the those this off, sheet story balance spinning management. talented before operating possible Ensign our and performance of leaders, For you and familiar our innovative disciplined combine story with model, is when local kind

these third when are quarter achievable The was followed. momentum rigorously illustrative the of principles

joint opportunities. started total During a California, number and the take a growth successfully in transaction drive local health Home market the and Scripps started in conditions of previously Home acquisition for Diego, operations system based leaders to Health, transactions of respond agencies two Hospice bring XXXX advantage our and integrated quarter agencies, nonprofit leading to or announced local we and closed venture opportunity Hospice and Each of represents as on since Health two since the acquired multi-year outside; the Health San they These four announced unique acquisition XX. additional with agencies.

forms. the by transactions, our many growth evidenced disciplined structures strategy different As these takes of

acquisition Our opportunistic of operation. focus continues to be existing on the

of these our However, create on to start-up additional pipeline. ventures leaders the provide similar value. joint of long-term opportunities avenues and for drive and communities, community to results operations available life-changing create Each service, approaches local talented needs the leadership do unique for provide the and we tools meet to as of depending us needs

they Although pursued sheet relatively strong. as growth this leadership our path expect the be is balance particularly continue our joint and grows, we operating we've pipeline venture and new to to many our valuable structure keep times elements us, strategies, throughout successfully history, will our of

do Although stands. so disciplined about our and capital, our with be a strong we our value excited we ensuring and allocate how we stakeholders, creation to and will for we're path pipeline to deal that continue spend prospects methodically about where well-supported

to expect opportunities the a acquisition see fit meaningful and activity criteria, near-term. see investment to continue We our that similar we pace in of

make leadership Home in of leverage low For strong and performance notably field to are Jen? strong in coverage cash I'll it and segments, us flow consistent that, our our financial performance. an acquire charge over to well-equipped operations hand our and Health to fixed in Hospice beyond. and and Jen combined to resource detailed operations onboard With additional talent, provide XXXX growing more the

Jenn Freeman

three for are in you, and filed Thank Derek, everyone. XXXX, contained morning, Detailed months release good the XX, September our financial and press yesterday. results ended XX-Q

earnings For adjusted the XXXX, Non-GAAP $X.XX. $X.XX, XX.X% million, XXXX results very of consistent and $XX.X earnings $X.XX. months year per results diluted diluted GAAP operational quarter. ended execution per environment. three share $X.XX and operating September earnings difficult increase reported over our had the field share prior of to share revenue total leaders of the over represents we earnings XX, during of share quarter adjusted of XX.X% or GAAP $XX due per third per a strong an of million We increase spin-adjusted diluted revenue of

We availability of also in paid times a quarter, management of revolving line benefited of payments the advanced million our X.XX if been quarter flow the have general back EBITDA on $X.X end key and as the of metrics cash include, credit costs. at third Other from from million of of operations administrative quarter. $XX debt-to-adjusted net end, Medicare disciplined

established our CARES reminder include results from the a not Relief Provider the any do strong funds As to quarterly listeners, Act. Fund by

advance payments, Medicare program. approximately deferral in and receipt of $XX the from tax We million continue approximately CARES the Act million $X.X to payroll from benefit to

expect recruitment XXXX. begin April to automatic the We of payments advanced

received Finally, results please and million earnings adjustments. our Medicare the note per adjusted of which of exclude that holiday, our year-to-date non-GAAP COVID-XX offset because share $X.X sequestration our the benefit expenses

per the increased EPS mentioned, we $X.XX, of which share our guidance to adjusted are given a a the previously in our over mid-point increasing XXXX increase quarter, earnings of XXXX X% Danny increase initial $X.XX represents range and XX.X% the As guidance second annual to our over guidance.

of non-recurring COVID-XX, stock-based growth our operations, through and to the exclusion to successful be operating expenses turn of newly to give Danny. to diluted services to rate cost of in effects revenue and of issued guidance with ongoing annual mid-points increases and related XXXX the average XX.X% operating enable guidance changing We related start-up XX.X%. $XXX our to of XXXX environments. guidance transition which We full-year believe approximately earnings guidance. $XXX guidance. acquisition-related ability also announced effective cost, The XXXX is $X.XX And us today XXXX redundant model over year-to-date, our weighted adjusted our back here represent $X.XX upon share revised per and respectively The and provided share, XX.X call of million per shares of the meet based compensation. of or spin-off strategy inclusion XX.X% over common I'll outstanding diluted results our million that, acquisitions and confidence estimated us tax revised the XXXX of And strong to million

Danny Walker

Thank Jen. you,

the like of we Before teams living operations cluster-centered Q&A model and I'd diligence to portion with achieve each a few and our in our executing values operating to of that consistency. and we are by core individuals our call, can of the what highlight truly with examples turn

in feedback helped Home and acquisition patent needs Based to Home team Dudley, provide is Health achieved by Las agency Hospice to their has example of to continue of lead Comfort as the the Services, led a results and market. an team their of that Director address Vegas, Clinical Hospice Patrick of partners in Executive services. Health the from Tania First local they Comfort Director both Utley, Nevada on significant enable a community,

unique services revenue have tailored EBIT unique enabled to and also are surrounding Tanya in Pat growth XX% our locally culture Comfort In possible small strong solutions that and underserved. them communities address over addition, expanded quarter has quarter. their XX% at Comfort to were operating cultivate needs with and the combined achieve These of that helped growth model because

a While in Ensign partners patient acquisition geographic pandemic. coordination well of results their transition Pennant cluster the ownership as new other of the footprint partners through these their by local care the in demonstrated achieving these and leaders during supporting as

and pandemic over continue the year like space. for drive to the building, reflective of the want EBIT of quarter third leaders results over resulting and in talented living centers Amy and at continuum partners field our the like with Pennant Coordinator, solution Ensign to in is Kandy even the California, led satisfaction teams' to and worked Amy leaders Castillo. and the nearly by of which on day. higher service the Living Having prior led and express revenue lives has Another families. in Executive prior Franklin, Kandy their for El highlight driven of Lo-Har last I'd quarter, They in while thousands in XX% Cajon, tailor years, higher our have family We Amy do of These year be Director, than nearly drive navigating providers, in Kandy pressures and have occupancy example to senior community. Care long-term the an can building is living and this to Senior many effort for to X% admiration Amy in Wellness relentless what Lo-Har the residents their are quarter. working value year. Kandy continuum year and an Lo-Har and part in value the staff helped diligently again focus higher the senior Kandy to their thanks closely and important care resident to sustained each the become care

excellent the varying the these not for execution who their Our challenges. through we reason them results achieve success. our And local could are leadership resources teams surround without dedicated and

portion the to Q&A of turn now the call. will We

with mentioned, and to well. can Gochnour, on Derek we COO, As Joelle, who you available Brent questions the are operations for about Guerisoli, of the President are soon Pennant as here our audience instruct be John Q&A both procedure? please

Operator

you. first with from Stephens. Instructions] Thank Scott Our comes question Fidel [Operator

now Your open. line is

Scott Fidel

a questions. Hi, thanks of couple and have hi I everybody.

question any not just include First initial relates M&A. yet does guidance the announced XXXX future on to and it

helpful M&A thought your contribution of think remind made recent to good historically, M&A trends you'll type rates a might XXXX. look and you whether indicator growth us to that the be what the be historical in I ultimately execute likely has to So just relatively it should activity that of

Derek Bunker

Good Yes, the you. to joining Thanks is hey, talk for to This Derek. Scott. call.

think question, the of I at So question, least you and answered kind on the going historical your we what forward. second the of anticipate half trends

our don't course, into we we far, feel we continue it but no same Of pace. that can't we looking technically reason don't what at that see that it so guidance take there's like

are on position. excited Our a balance and in about horizon. We've maintained out what the we leaders strong good a see we're sheet,

looking where so So that activity think the I past forward. far you'll contribution we far, stand around you and at give our for maybe of depth -- few the kind one. going parameters ask is of we've to good know, cadence years had And a Jenn some benchmark of the that as acquisition as our I'll

Jenn Freeman

Yes.

So, it's hi, Scott, Jenn.

about million is about $X year-to- million side. with Hospice the $X side, are And Living of the Hospice I'll quarter Health the the million revenue for Senior in the million on in side, was XXXX, million or $X.X XXXX, about probably about on year-to-date, Home date $XXX,XXX. go side, and For this on for seeing then we Living revenue about that, level same $X about and XXXX is $X.X Senior on year-to-date

over the So that last years. idea you couple gives an of of kind of cadence the

Scott Fidel

and into those for to a in you've mentioned want XX living and points. that bit drill up drop seen had of question, details. just more you And basis thanks senior sort occupancy that Okay, around second hopefully

that terms Just XQ you've thinking off of you of sort trend sort interested in in guess, that underneath assuming, to in XXXX of of then into if provided, force you you're relative and about I guide could of what you're you XQ the what also from built occupancy guidance help line? us that the what occupancy, implied terms

Derek Bunker

I'll Jenn -- let that specifically. on Yes, comment I'll let

are which real they're We're move the are more kind things to in. Our not going where Jenn, some visitation, that anticipating But, of kind get assumptions to change people of continue have is to do in limited bar a that. specific you at, numbers? higher

Jenn Freeman

from infer points we're basis ended uptick call that's and I seeing the XX Yes, scripts up we the think last you earnings can that where quarter. about

through the if you expect two, year. it end take significantly So of the I don't those to change

Scott Fidel

And similar assuming then, the XXXX that around well, Jenn, baseline as occupancy. type trend of in guidance also for

Jenn Freeman

XXXX, not at assuming a in significant for uptick an client We're incline. but occupancy

would probably it around to QX be So similar levels our year-to-date.

Scott Fidel

interested as given efficacy to distributed? being this pecking guess, that where was just you've Got the facilities the vaccine your next week. peckutaries actually are, you to order. guess in nursing that, those of started being on pecking front talking be Pete end facilities thoughts of that and just order into conceptually, is how I start think sense the senior the And in timing about and would may of other for it. and sort that's be all be news drill from And your could prioritized all vaccine on at perspective actually homes [ph] how just living think the I'm a I sure quickly And the distribution this you year,

your thoughts that? interested around So

Danny Walker

we're it second finalizing maybe it. that execution the encouraging Yes, half bit wait our actual half in execution, position We'll think that making which key news. the that communities comfortable with would you sure of us really The is little how it, year, But is there see a the it of first to are be could it carries -- how benefit on through. actually that the see encouraged. we the

challenge so obstacles as then with be compliant once families I when place real our loved to -- very where to particularly communities connect big available, that That's and care but of in-person overcome are really testing as that it to We're decisions right availability working in to to won't stand and are things in baked some in of think comes currently that fully I ways and the making settings. be around our our ones. their loved on teams the a to it distribution difficulty. in our ones think community finding now hard limiting of it's pleased heavily their completely creative ones that relates we're visits, a relying loved

we So early could that's first and -- half how it. kind you of see of us enormous as coming. would watching. an don't the and in people are for that it help. We solution have I'm as it pressure to about think but the Obviously, think world going without expect you we're face a be But, doing move are to the rapidly this, relieve like waiting timing it thinking we to And some do everything what it about if could you kind of they the would see to year. we're complete

So --

Scott Fidel

And understood. for be Jenn. guess one I then one last just would me, for I

you us expected be a and back on would share you flow it, few that. if but formal do you operating with for we moving payments around of gave I to elsewhere pieces so just know for just the essentially CARES if into advanced Medicare that cash projection a able XXXX? any Just projection you have tied the

Jenn Freeman

it and in have you is. This get going one. investor put back on on to projection what Scott, I'm to our we'll -- our deck that to

Scott Fidel

Thank right. All Okay. you.

Danny Walker

Yes.

XXXX, so and really seen XXXX comfortable it way to we've so. to the in feel think good I there on we would generally, expect we we're improve and Scott, continue a track

Operator

you. Thank

Markets. next comes question Frank RBC Our from with Capital Morgan

line open. is Your now

Frank Morgan

guess Good morning. a I first housekeeping.

effect couldn't add-on the language add-on X% a you I you just You about temporary? comment, that adjusted EPS. the And over payment? tell, again Could go did made the back say I the X% that think, about of excluded

Danny Walker

Yes, we made excluded a to we X% our And it's -- sequestration from that used is our to COVID-related specifics. the for provide But for that earnings. holiday, have which Yes. question. we've then can Jenn account basically increase, costs. the great the decision

quarter or in quarters that exceeded holiday -- May. the May, So the was to available in place it couple cost first cost the us, which first in exceeded that started took that of the sequestration

This little separately a the that quarter, costs our sequestration COVID bit of we've -- there's exceeded identified.

in We might QX. expect the be that case

anything you want temporary change. to So add Jenn, that as view payment there? specific a We

specific for it to we though us. decided be favorable more exclude to even so -- basis that on it reasons could a And short-term

Jenn Freeman

thanks, Hi, Danny. Frank, and this is Yes. Jenn,

So and from EBITDAR even non-GAAP consolidated costs. if a from income operations to from segment for lot operations, look adjustments, our net reference adjustments see our combined COVID-XX you'll you at our related our to

So COVID-related both which costs, that related In received. components the expenses. is supplies that we and that the have holiday footnote on increased a that both there's payroll references includes revenue then sequestration And offset. and of line, amount that of to the

So sequestration in QX, is we million. received and $X.X year-to-date in million revenue $X.X

Frank Morgan

also, you've then, now you. And talking coming online. Got of -- actually that you're about a couple new de novos

over will a when it adjusted little roll novos said flip maybe out -- rolled actually the and adjusted the delays de into your numbers? numbers. of get talk up and are and back about may those de expected those cost novos also -- ramp bit they may of and you where think when get sort those what I will and But time

Derek Bunker

Yes. Great Frank, is question. this And Derek.

that and step strategy to market that Hospice a evaluate as the growth -- really been really these of that that, we've of we of order our to local local we leadership a as number leaders, our to of can market. our acquisitions just strategy our our of our briefly, it's there's part Health investment growth back our are of So -- fit dynamics, and upon deploying that ties that company overall the criteria, right, factors in Home dependent pipeline, availability tailor startups pull inception our fit part really since solution our local to

a butter Sometimes grow of, -- which it's bread most tradition expand. in market a that acquisition and gives the us of platform to our time and

a in that in a a the is these forms we startup, the of startup broader whether key us long-term for investment they're or that which case number potential the umbrella there we the is sort can two way. take the same traditional within that our as it's, point and evaluate same it's Sometimes announced, acquisition underwrite of itself. But

Sometimes, little -- be long-term a the but mind. that versus obviously, as break-even different, the same in that a a obviously, startup we acquisition, return same do bit with but startup might traditional potential

call so kinds operational done of of kind and this previously, of since And joining newly we've startups same. -- or he's And Brent, nine on behind the eight the of these those. were more maybe comment this I'll is making decision ask these to

Brent Guerisoli

Frank, question. Thanks, Yes. for the

things. couple of Just a

Washington, us into that get in first, we in startup our alongside currently that did Health goes to it, So state state. it's certificate a Hospice one allowed operation the operations there a of opportunity the Home of need

other is license California, in again, added really The was be prepared an local operate successful community. a existing allowed Southern that in market go us a to leader to, and that one with that into we

question asked to window that expected ways. a many to obviously, goal that they month level an that's but sort You like startup when anytime as time quickly did line sort we'd a quickly as we operationally Like we the there's a that be accretive to about, in our And, XX get acquisitions, We and do realistically, is the targeting, to sooner, accretion. XX start month even these to of, contribute? safely view possible. operation but we're of of do

Frank Morgan

-- into of time, a a event truly The over question. no is when of excluded, going work? longer Jenn or adjusted flip it those a is maybe they're specific how terms is matter that when there And in just to numbers actually your

Jenn Freeman

or of either a it's triggering for matter Frank, either they profitability a two It's – time events or Jen. of when -- show a as the matter quarters. It's

Frank Morgan

quarters. two for profitable Show

there of in Healthcare that XX%. I in in But out? curious kind strong -- guess much over was on a any How And probably parse system, they that the numbers, guessing that episodic Home was holiday sequester to looks to I'm oh, Okay. could curious, adjusted significant really I growth, payment of new just growth, mean, kind gosh, not Hospice it ability little acuity? you rate rate just PDGM the just is the And adjust of were like I'm numbers? change and if side. I'm staying just

Jenn Freeman

correct. That's

John Gochnour

take stab I'll a Frank. at correct, And that. That's John. Yes. is this

quarter The operators we've see have in change. couple XX% to year-to-date results One, trend think met very what cognizant of you continued field percentage extraordinary to we really, effectively, during true Health quarter-over-quarter, to implications that full our of PDGM. it. you're important seeing as Home of and performed this from its an things. third at are reimbursement of is pandemic, in that And the look we've very result the Our increase a the continue height it's operators the done extraordinarily to of the consider well. in LUPA I responding But manage our down the job

also an accuracy We sure continue of see in We're an episodes. early proper improvement seeing of the the to coding well-documented. patients that's that our effectively our and making in capturing institutional and simply acuity increase

in about episodes. X% saw those we increase a So

a And really so overall, we're seeing PDGM. nice from impact

Our and operators to are respond meet continuing to needs. community

fact increase based that that that is I back for. you lot overall on you care cared we've Really the of about the that Danny patients increase, think I'd point as think, always a for said. what to

has who those to therapy of the wanted the sources to can choice heavy always Whatever nursing be whether meet those provider be strategy meet needs. that patients the Our acuity provider to community referral or we needs. they been in heavy of were

helped changed it's those As nursing reimbursement high to little more appropriately a reimburse acuity has patients, us bit. generally

year-to-date early at. that. pleased at look numbers right looking is -- and still at way the think to We're at where I very the we're we're but So

Frank Morgan

that other to remaining have there visits, of versus growth enough you rate any changes number is of as things, of cost talked or the pulled LPNs do Got is Healthcare, don't to on RNs, have those cost the about you. a simply the on you mix maybe kind in on operators are good side do And of the to then side, is left levers that lot cost side? anything be adjust PDGM other Home the and any it there to

Danny Walker

pleased as right; Yes. continue to improve. with down we're seeking particularly that episode; continue an that Frank, per We're we've really to way as as there's number move outcomes seeing visits opportunity, appropriate efficiently always overall we're at been same our time, clinical and to always seeing in outcomes pull the we're the provide way able possible. to extraordinary

visits the that that's and as just to we'll we up best focus provide And to to can, that and we're move feel a the care. doing to in we're And the quality up well. and at, of delivering to But care ultimately, physician according to those clinical make and of possible that patient care, efficiency of COTAs, according Telehealth and push using mid-level, in LPNs, wherever and of to wherever and do as PTAs. the needs performed use be on like we're assist to pushing by -- have are can, on efficient so looking we continue mid-levels sure outcomes tracking. and using We technology unique room and to approach so something the measuring the plan direction, as is we on that our

Frank Morgan

or you are at start the maybe any you. repayment out Got impact opportunities you're that of seeing grant the or -- transactions still specific the out that PDGM there agencies a see any when are you just selling? it at to, lot I off, of of on one just, really today, induced you're freak starting whatever very And look are off-market doing over or then that is all kind of acquisition call or of, burning starting would payments, advanced the is what it PDGM monies, the to

Danny Walker

the PDGM, with are the, the pipeline. of off-market navigate to us to them, and into for kind and impact far those John our it opportunities as number obviously, as as of carry directly pipeline, those, impacts to stoke it's try create seeing some of continue help have agency. all certainly of, has as and those that impact. seeing to bring on they doesn't same to ways We're to areas, tools expect conversations and -- in the kind bear conversation that Yes. out lot from anticipated We're M&A all would, we be that providers but to all and the And for that parse that but too. of, part coming PDGM. as we partner we PDGM pressures impacted complication isolate opportunity, a in of the just We're that that pandemic various the legacy hard see that it's from the COVID, buyer having different mentioned, of the It to a part

So it's of definitely a expect part of to part next as part of a the we the conversation be it -- well. year bigger pipeline,

Frank Morgan

Got you.

final back I'll queue. the one and hop one in Just

be as a seems surge underway question relative parting that you're how so the initial of, any this this for obviously, your side about a and concern as surge, do lot like you of terms today, is to, and housing the Hospice Healthcare well forward? that side, the of and Thanks. kind talk how in really, prepared Just view for today senior to the both you -- business Home going feel

Danny Walker

Thanks, Yes. that's Frank. a surge it's Obviously, significant ongoing.

interface good on the Increasingly, clinical it when Living just place, first ones we procedures wave to earlier the collectively Senior through the the how Like On families there comfortable anticipate that. better side things first make. continued testing in and our continue in our so slowdown and overall, procedures incremental in corresponding to that Health grow the we and we loved good explain were we about there. safe. and that kind of will that. make Hospice hit. to spring, expect of, significant The we -- that confident a could adjustments do ability feel were occupancy -- we elective in we that's the and more place the the we're of are operators increases keeping Home and another We're in operationally leaders And be to a saw our side, time to period why with their like need their prepared Hospice

active. feel to good first fund state emergency staff continuing our safe track might and ability in keeping staff So and fund be, pay on the support those our them used position, members our out that and they're federal about needs circumstances our whatever supplement fully we've critical or the to and our quarantine we programs phase, to are around while

we more surge just our we And the would at than so quite the we fared feel confident say this next lot ability I through even to as through beginning. see, were work unexpected surge. can a you well first And in

thinking So there. that's our

Operator

Securities. Thank you. comes Instructions]. question from The with [Operator MacDonald David next Truist

Your line now is open.

David MacDonald

to put prioritizing co-locate accretion, of location, second the with little Hey, about priorities and question make but got start-ups these, to together? wanted months? left. two back think where about then I CON Washington heard timeframe in of, we that of, and was One XX part just pairing just this about should Are just bit that a the Home you can one when markets we on a sure the to guys. right, Health was, think I with come and where you either touched when Hospice start-up And think the we or to those, to the and XX terms start-ups? these states, kind

Danny Walker

David. a that's question, Yes, great

So couple things. of a

CON -- start-ups reputation, lever, and teams First, existing usually, markets, I'll our of But barriers confirm The start-up, existing then unique obviously existing to application best focus these these if with criteria. of, we down there. already creates strength where and and a is timing. on that's rigorous then let have Jenn adjacent structure the go lever to we'll based a then the our Washington on, the Brent sort investment strategic path pull the entry is there in

And literally is so up the operation. we're that awarded been there on and have very pleased to existing CON so it to an bolting just

we've in in the So one earnings XX timing. a after Once kind they quarters. is, And our we cluster operations. then these between accretion, they that XX two generally speaking, those of, kind California, is, operations, our and operations profitable well about create of, train overall really opportunities in as leaders. think them leaders, other with talked so include and those leaders, of, gap they in new the reach But and about actually, to three clusters existing our and it, two that is kind -- fills just it model, middle we for months existing XX how the recruit

and that is so successful a surrounded likelihood it's this California been they're with, of quickly three have and and and the prepared And -- the into being training working familiar one they've already leader space -- it with, they've carefully in really kind going that operations so these that strong. of that is has leader --

our just methodically of, and, We Derek that our start-up kind do These are kind these, past. like to mentioned, of hundreds deploy just of, the don't drag be is thought and done just, won't on will these just general significantly in expenses changing. we intend we've them. ever Our operations

get to do comment on a you them how bit we profitability? of little Brent, So, want to

Brent Guerisoli

time particular, forward based on opportunity the local that I the the to Yes, an investment but XX the situation. the and mean, back via opportunity teams best the itself, local a recouped And total with and presents really of talked in cost right, in again, via months. an our we leadership, is is whether or that's we when path see it acquisition repaid to start-up, that month start-ups, take frame, that which expectation and is our XX XX XX goes that to model, about

overall first to That into back, has then that we're the what and So to going paid off that upfront profitable cost it doesn't means of to the any expense ground. mean organization that get making XX more we're XX months. total capital the within delivering

we time go frame. going And so, through and be by do getting the better driven it's local as to again, in these always a just better reasonable to it teams experiences and we're

David MacDonald

joint you could provide you any of a deals, relationships? more comments around helpful. hearing type last And are conversations given sense on us just of that the of be since give be how question from then I additional pressures much joint guys COVID. the those some outbreak that seen would you Thanks. the of guess would Just interest ventures have also types my Can venture just hospitals the

Danny Walker

Go that I'll turn one. ahead, John. to -- I'll fill ask John

John Gochnour

the balls. Scripps on down of in been joint the our things that And on the working about a this with idea and I time a from San by before quarter a been is little one cannon Health long started the for project talked we've is, with venture we're getting partners this it. It's excited Great Appreciate We've book Choice about shooting Scripps our bullets about about we're very been Diego. impacts question. it market partner has right fully think clinical are excited bit in closely to comes this and really extraordinary other community. and extraordinary that we're set and and produces the health doing agency going going an systems is in transitioning a we goal our to to in is -- making to profitable sure of think that, example want that to an that find really outcomes, And self-sufficient, this transaction do right it job And by model follow. the

that scenario. that -- there. our that we're we're is transition definitely sure might in making definitely conversations Scripps positions this others who demand to There's an out now extraordinarily having. be to there's that real well partner and So But Health with on goes focus right that effective us be

Danny Walker

the there. other there and with are general as systems, conversations ongoing out just Yes, as far then communication

that for unique looking with that deploys are that and systems ourselves local that working partner regard system, that we're very our general, really in hospital think, integrates model leadership a that be hard operation continue markets. in as in position solutions don't to I structures that by get structure orchestrate so to to they out the might local they fit feel pre-set and some into other other opportunity have though dictated as to

So forward these localized. a And to systems we're conversations. to looking of continuing very lot are hospital have those

question, the for thanks So David.

Operator

for like to the time. this Walker I showing closing not back to questions call turn I'm you. at Thank any further would remarks. Danny over now

Danny Walker

us. you continuing strong of that served XXXX. heroic grateful and kind really of forward do and and to have us. And continued in plod to are joined also delivered fourth you. results in of into just country to and operating middle that for team Thank quarter have -- and veterans really in that forward to the of our pause to have joining environment. historic the staff the to thank the in extraordinary we again thanks on the all We our this give part thank who been We're members who things have want Yes, a look you we a, for that

Operator

today's you gentlemen, concludes conference participating. call. this Thank for and Ladies

You disconnect. may now

The Pennant Group, Inc. (PNTG) 11 Nov 202020 Q3 Earnings call transcript