PNTG - Earnings call 4 2023 | The Pennant Group, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Pennant Group Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kirk Cheney. Please go ahead.

Kirk Cheney

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

have our COO; CEO; with Lynette me Gochnour, Guerisoli, I today, and Here John Brent our our CFO. Walbom, and President

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

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

the terms exclusion operating Group. Also, reports. non-GAAP we we CEO. our our not complete with understanding our do the separate to in imply by that use that GAAP subsidiaries be upon are operated direct similar and turn together well References is their available its supplement Group, results, our and of that assets, the metrics. consolidated of our but Guerisoli, believe are that, as of of center employees company non-GAAP GAAP Pennant they with or have Inc yesterday's companies the can we, management, own reconciliation terms to A herein or by press provide are independent a available assets assets. employees release it with that measures relied viewed that business, on XX-K. And and in us, these GAAP operated should more to GAAP and When our Brent over operating Brent? reporting revenue to I'll of is All has any service as subsidiaries the the and activities Pennant the not

Brent Guerisoli

full year everyone, call. Kirk, quarter Thanks, and our to fourth welcome, and XXXX earnings

for want day. platform leaders our local Before teams our appreciation every to patients we and I the across deep and share express residents results, to care who

the dedication clinical success. bedrock Your are and compassion and financial Pennant's of

service. work you We in partner and life-changing are you grateful providing to alongside with

adjusted results reflect prior $XXX.X improvement year. share year of share earnings exceeds full consolidated our in million, $X.X last results $XX.X million or of raised off This over strong fourth announce increase earnings we midpoint of of an which our EBITDA year of we bringing adjusted revenue or to to call. consistent prior per generated a $XX.X year QX, adjusted million quarter pleased million the XXXX the are full $X.XX, to of and year steady and We per guidance over progress of cap growth. In earnings earnings an $X.XX, $X.XX. our XX.X% Collectively, XX.X%

During XXXX, leadership on and key on margin growth. basis commitments achieved clinical X.X% margin points improvement; employee These EBITDA development; our XXXX. in consolidated short, from In by we increased focusing X.X%. to were delivered XX experience; excellence; five our results areas:

in of the success are of each important As outcome positive we've more year, we our development. quarterly has our progress outlined prior throughout the and saw financial been to on calls, these these results leadership in areas priority efforts. No

with this made the are pleased progress in we XXXX. We area in

over added CITs operations, earn CEOs training their CEOs. C-level we including local XX designations XX year, the leaders in in and or During XX local

explained C-level designation and before, and this acting true by financial, owners other as creating we've leaders As and cultural CEOs earned clinical value. significant

new heart better typically roughly and XXXX our that we will than in reflected We recipients, with and foundation CEOs annual $X clinical leadership million our C-level C-level clinical and major do results. Clinical of contributions our generate recent most is moving everything success are their outcomes. is cultural along have and directors a our found excellence development forward the These be conjunction more leaders CITs focus. in of non-CEO at the executive with current in earnings

create officers leaders continue in to clinical are making similar become we future therapy and local clinical investments and train help to leaders operational and operations. as CEOs, chief to Just elevate we wellness

programs were XX clinical XXXX C-level to enhanced satisfaction. and onboarding, and well driving elevated clinical and as resident which is excellent development strengthened quality outcomes as in status, and training were patient leaders Our

engagement the that I'd focus progress points our areas. first development additional X great XXXX. and we've data employee in a during year-end recruiting as leadership X,XXX the demonstrated now double-digit like surpassed the with And we employees, double-digit improvement of other increase in made year by hires to in In We in months XXXX, turnover and strides have addition our over rate. made the three highlight provide some excellence, clinical to

basis a same-store growth from which And points improved XXXX front, perspective, our On revenue the of EBITDA our approximately million, $XX.X a margin growth. robust adjusted year-over-year. consolidated increased was margin XX X/X organic

guidance press of revenue in yesterday, XXXX results. $XXX.X per we on growth full release growth XXXX the our We adjusted announced of As XXXX. over $X.XX adjusted $X.XX for full million share earnings year to in the in million $X.XX. to are range and providing XX.X% $XXX.X represents we range midpoint earnings year of anticipate the The XX.X% of our and our

potential XXXX. With call in of Our over to both leaders and the turn another to organic to segments, is the the inorganic latent forward readiness compelling our our remains that, in based I'll and our look XXXX momentum guidance the provide existing strong We operations. in to performance our growth that detail results. John on and year more local drive of growth on operational

John Gochnour

you, Thank local driving growth exceptional our in top earnings and both improved communities, morning, line themselves In good teams distinguished key as our everyone. care health operating Brent, and partners segments. of their XXXX, in

Our fourth improvement this the focus for as highlighted resolutely our results quarter fundamentals. progress operational considerable we and on also potential

continued in continued and stay quarter. in million hospice XX.X% $XX.X the hospice a revenue or over resulted XX.X% first in our and was growth million or hospice. of revenue of million admissions ADC, growth increase in business, XX.X% to year home length result a our of normalization the prior Turning in Segment were XX.X% increase prior a $XXX.X health This of over momentum quarter. hospice increased $XX.X year

visits Home In growth X.X%. improved its or million $X a managed XX.X% admissions of locations revenue X.X% volume, EBITDA home million upon started in per with last contracts Our ability Home the half each the over Total the Health XX.X% rose increase managed also have we the our quarter. resulting Health X.X%, growth, XX.X% Health acquired health and of segment. and increased $XX.X as each the revenue prior and Health prior care hospice to eight build or continued more year managed Home visit, also and we new platform year care million and These rose to Along year, in continued Medicare by new steady prior an admissions or our Medicare care favorable increased take the care year rates adjusted quarter. Home increased strong and negotiate across over quarter. $X.X increase relationships in managed over contracts.

often results, volume acquisitions pressure and contribute discussed underperforming of our can to lumpiness before, As we but margin also heavy acquire quarterly compelling growth provides have we operations, in a some opportunity. because long-term

agencies to these As build results cultural, XXXX. and foundation new financial to for strong produce sustained and positioned integrate continue the line well we clinical we are in bottom success,

results the foundation success. of our clinical Our remain

effectively on focus best-in-class delivering while outcomes, utilization clinical Our and maintain expense. managing local their teams

creates positioned value-based the exceptional purchasing part criteria and to of positive data the value As we CMS' that program, the incentives to performance clinical program are reward on initial outcomes. based are purchasing who expansion financial Home well and value-based against tracking providers of Health managing capture deliver carefully we

$X.X XX.X% Living $X.X even million and segment the continued over increase quarter. Full led potential to over was yet divested segment business dramatic fourth its adjusted attention prior year meaningful over or million increase culture increase over of year living room investments XX% These new year or occupied revenue has stabilized XXX% unrealized. increase an pandemic, prior $XX.X invested senior quarter. increase develop XX.X% of the a model. monthly improvement. to year improvement. business quarter of high committed we average prior an and year over have top strong quarter, $X.X or a EBITDA buildings, quarter million the fourth and have million with was for same-store reached robust to Exiting and in the and fourth $X.X Occupancy line senior XX.X% senior quarter. of million for and million, or bottom the $XX.X Senior prior the $XXX significant to per the of time recruit leaders revenue living or XX%, and million rose Adjusting an to $XXX.X $XX.X the The for post-pandemic living prior our million, X,XXX, grow the Our an year begun

Hospice to talented executed focused acquisitions operating attractive Consistent unique acquiring a with rural half Turning our acquisitions remain December, we in results. the have We acquired spot at steady Texas sweet such in stream of leaders a call. In Southwestern, and to and ready peer opportunity Yuma, Oklahoma, discussed where last of Care strategy, Palliative we strong Arizona, strategy XXXX, serve disciplined of hospice drive locations creating second on valuations we during population that operations growth. clusters quarter's including we in a and to center. the operation, in another Arizona,

create excited are acquisitions these opportunities in our existing several that of to We serve residents of new communities states. rural

areas health between with integrated will new model, partnership and serve Each start this financial these affiliated financial a places clinical of in California. continuum Health, the historical transitions home will out quarters. On of where a unique of the improve decisions in venture of health of unlocking their and and support forward great a clinical the Our Home the by leading Muir care community care and development, John off forefront East strong acute the with meet next of to to this mature rural they is majority local driven advantage subsidiary XXXX, partners. our and demonstrates system a joint talented needs operating our Bay leaders driving our the our setting improvement growth potential in outcomes. and the Home strength operating expertise Health health Script new area. operating model that patients in own local We Northern tenant we home look Health, local as and In X, leadership manage of teams, tremendous Like harnessing venture, over effective the few with established gate. true a momentum acquisitions these agency on January us to venture the transitions helping

for hand for our financials. key Muir of innovate a over strong us and is a for Lynette the We the continue. With joint expertise establishing are while creating talented complex that, Area a the positions health team excited to a as Home at to Muir with new team John deep endeavor, at our it partners care I'll review Lynette? of Bay new success home operational in the Muir, Health solution venture Health

Lynette Walbom

release morning, for Thank year results everyone. filed XX, financial quarter yesterday. ended in and Detailed XXXX, full are press good and December you, John, and contained our the XX-K

million year the of an and full XX, EBITDA December adjusted we million, million, the a $XX.X of reported year. XX.X% year over over $XX.X the million GAAP or XX.X% increase revenue $X.X $XXX.X XXXX, For ended increase prior of or total prior

reported of GAAP earnings an of and also $X.XX diluted increase XX.X% prior year. earnings non-GAAP over adjusted We diluted per $X.XX, of per the share share

year our for million revolving of annual updated in line the results, we million quarter end, and sorry, the on guidance full provided or credit basis. million or on net $XX.X $XX.X With these and -- operations XXXX, to debt Key include year. met ended metrics XX, exceeded from a cash drawn EBITDA our for X.XXx at and flows adjusted hand quarter of cash on December $X.X

XXXX in adjusted to we As our to year $XX.X mentioned revenue $XX.X EBITDA $X.XX guidance million, and million earnings million $XXX.X $X.XX. release, per press adjusted million full of are of to of providing $XXX.X share of we

incorporates operations guidance current organic approximately and weighted outstanding Our average diluted and a rate. XX% million growth of tax XX.X effective shares

improvement Our XXXX costs acquisitions continued acquisition-related XXXX and inflationary EPS performance and continued home reimbursement implementation based increase which start-up we a is annual occupancy health and into and an our does senior see share-based items. hospice ADC, unannounced unusual on not onetime operations, in XXXX. It lingering guidance pressures, quarter-over-quarter, with rates anticipates compensation, and include exclude and interest elevated anticipated adjustments, ramp rate consistent living in

guidance Our throughout contribution venture to the from of start-up Home include year, Home resulting in Net Muir that the a earnings Health expected Mir nature recognizing earnings in that but does revenue the from will XXXX. operation ramp Zero -- assumes joint

revenue local sheet hand flow for We XXXX a our and and it effective cash growth. And to expect to with balance strengthen improvement future increased highlight growth our continued back operations capital and fund of bottom line we reflect earnings, Brent I'll to with organic lower expect cash to that, couple leaders. expenditures, from collections

Brent Guerisoli

stories spotlight results demonstrate XXXX. their remarkable become local to and achieved leaders behave can exceptional operations in pleasure that that progress Their C-level operations. my when It's the as owners occur leaders Lynette. Thanks, in two

partnerships vision, and with Mendoza California, choice occupancy County, than Brand we of a room has CEO; in CMO, into and occupied from XXXX community of communities, compelling remarkable George around themselves Chief needs Travis Clinical results, employee to Ron winning Like success. an XX% exceptionally quality Orange and their average the and results revenue. In to XX.X% instruct XX% culture beginning home employee turnover, the per in XX.X%. Financial and Mainplace future vision that greater like Director, has and X-star a is to a that, New low and national Ruby unique is Place Daniel, Rehab as up of we'll health XXXX. Ron increase Alpha's establish rate Krall; EBIT increased created collaboration the Ebelito, efforts, throughout future Alpha work, XXXX Courtney XXXX. With with on XX.X% County. Home a I'd First, procedure? in Health many their EBIT of Orange to and Racka home rallying apparent Washington, hospice score satisfaction, audience Future in Q&A Gitungo, risen meet impact the set deepen in their are community, and Renzi, highlight on place Because was community a CEO, resident Home pandemic improved health have can XX.X% now year-over-year stepped Everette it have by Health has the it increase hard revenue their and the of you a Alpha Officer, premier XX%, in CWO; questions. Chief Hospice and led Officer, Living leaders Hospice did and and future Petri, Cindy have led main Main experience. to their for provider. By Clinical Their so Year-over-year on took and open please Xx Magau including a rehospitalization all the aspects followed versus a to on strong Senior team the and dedication culture continues community. Elizabeth Mainplace toll

Operator

first Our Stephens. question Sublett Instructions] from comes Dean with [Operator

Unknown Analyst

Albert is Scott. Dean This

the So trends are revenue level? about you about growth I wanted the Senior release, Hospice segment thinking to Home break year, you throughout of speak total the if thinking down could see the in but margin then how ramp you top And you're across and each rates year-over-year just to Health Living. at line how

Lynette Walbom

our store growth look -- we for operations, acquisitional revenue our your for digits -- existing growth the Home With single also same-store and our On Hospice operations at mid-double Dean, existing question. digits and growth, Health double the a new XXXX front and Thanks, expect our for in guidance we in same-store and blended a the low to that high operations. low new in store digits. our be rate growth to with in for

and with increases both we increases were at revenue factored the occupancy RevPOR both operations, and increases XXXX, look by mid-single and impacted our As our RevPOR in digits. senior to occupancy similar increases in in those living is

be our We closer focus pre-pandemic to and XX.X% pre-pandemic [ to levels increasing ]. also occupancy levels continue to on our of

front, targeted on and occurs Hospice Home Health those factored operating in with margin margins operations have drag acquisitions a acquisitions transition those potentially we that And and on to acquisitions. because with our the we there's and our of system a On -- model. ramp take that, underperforming them a

continue labor still concerns, XXXX into and and to expect lessened inflationary which XXXX. through have also that pressure have We to some continue

senior living operational improvements EBITDA control the margin as gains included occupancy. have On and and through adjusted front, cost we efficiency drive we

So both approximately operations. in those, of efficiencies that EBITDA in occupancy some we expansion X% feel there. those as with our that operational margin we there's increase expect or a increases, And

Brent Guerisoli

was And we've add, things Yes. year. near these end acquisitions of of in lot I that we're excited growth one a experienced Dean, would the the that just done the we about And the of significant really XXXX.

the we put it that opportunity bottom so the for ton us that and front, revenue margin line. to of to And a added take on there's growth

from there's through the the of improvements year forward we're drive up estimate beginning we end there to those to in the where the we our think the year the conservative so potential year. of significant from And and fairly of we but as guidance, end certainly continue by standpoint, end go can

Unknown Analyst

And as XXXX? call lastly, think Okay. out to out anything just That's flow how thinking And we have call about in couple you're just else about cash it senior full and for might just helpful. you CapEx missed earlier, from on to in more it anything I but living I the Great. a for year? but us. to alluded operating there, think growth rate

Brent Guerisoli

Yes.

growth due leadership made we which in that's a from that And buildings, to creating double-digit offering were part mean, made standpoint the at rate the growth we've the just XXXX, On again front, was that the improvements a right? and great, large better we've rate into in investments overall. due I

we're we So pretty about what excited saw.

level factored haven't And high about there's growth. what of of right? That's probably our across really keep a the different in much in at is that We can of would pull, pretty of rate increases couple expect half the rate that we levers mind, One just rents, communities. our We're right? board expectation that. is. And we all

half good And see going carriers I the is that rate so or a direct the the of probably growth. we're then And or that say where we're cost that the of charges on would on providing. to represents front direct some carriers other

in cares talked ensuring think -- assessment this, calls the as continue And we've getting that significant to that that's past improved we're rewarded about providing. just for through that so to we're I well. There's opportunity whether elevate a and

about going the we then Lynette, flows. the pulling same think quite at levers, and in to significant cash by do healthy of rate to saw see we're level growth that so just you talk to not And want XXXX. And but continue both we those

Lynette Walbom

Yes.

On year, flow $X that in line to CapEx be expecting had spend we're was flow front. the a little the in million. over operating $XX be And to million, million this about then cash which operating with range for $XX cash on million of we flows front, cash to $X the

Operator

questions no this showing back I'm closing would Brent like to you. it to turn now I further time. Guerisoli remarks. for Thank at

Brent Guerisoli

for Okay. today. your everyone, Well, rest you, we Daniel, have thank great and joining day. a hope And thank you, us you of

Operator

you concludes call. for This participating. conference today's Thank

may You disconnect. now

The Pennant Group, Inc. (PNTG) 29 Feb 242023 Q4 Earnings call transcript