PNTG - Earnings call transcript Q2 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and thank you for standing by. Welcome to The Pennant Group's Second Quarter 2024 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 first speaker today, Kirk Cheney, Corporate Secretary. Please go ahead.

Kirk Cheney

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

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

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

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

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

Brent Guerisoli

and second Kirk, call. our Thanks, everyone, welcome, earnings XXXX quarter to

momentum quarter we first of robust for results growth to we teams. quarter, leaders local each create meaningful Following our service to second are across thrilled opportunities lines and experience a continue report and as record-breaking

clinical margin, effort applied trajectory the reflect key growth and engagement, excellence, areas: to focus of financial X every consistent performance growth. and we through business aspect development, our Our have our leadership employee

product $XXX.X bear. In for $X.XX, end the our million, QX, on adjusted now of fruits financial of revenue of tangible are exceeding initiatives these many about talking quarters, to these million of of top share and efforts the adjusted per been earnings have the EBITDA earnings coming focus as each pipeline. We calls firm we steady the proactive $XX.X but generated leadership are relentless foundation several They which build also results we and a we These to now laid yet demonstrate of to on positioned and a build. consensus. over approach fundamentals, growth upon a incremental prudent we are the years improvement, have last

of potential increase a we and have our our living year, time beginning local a This and care organic solution purchase Hartford additional joint as across in We initiated the disciplined at bold Home largest period improves this history lives compared estate of with along completed add venture, day their the acquisitions than powder flow, in under are cash X of demonstrates with represents for X,XXX the revolver, to approximately a increases Signature Hospice Collectively, the and, and growth. covenant not insight And an at highs. completed $XXX operating sheet in growth, with deals, of our a terms. Muir into in through both amended greater acquisition provider experiencing the our an the become key newly other entered our impact week, does choice was Health loan lives of the with we've the industries, (sic) we This senior and expansion and balance Hartford health Home and of communities, partners closed lives added Health in our organic adaptability all-time the management facility as agreement also we of our growth strong sophistication XXXX. additional In X,XXX further into are best-in-class the Signature agreement. will our capacity yet growth continuum. Since with a confidence HealthCare, than this included under exciting company to the Signature the which include touch operator future creates growth borrowing history end in XX% lives. Last as syndicate acquisitional Home and in which reinforces million Healthcare a number process, commitment X a which provides [ This our the X transactions, and Home the assets. announced real X ] banking strategy. management more Healthcare transaction, of X,XXX umbrella an together significant the of transaction continued each whose Pennant's Pennant to announced upsized dry

XXXX seize adjusted the a on midpoint and added over in a X.X% a adjusted our over As ready and opportunities a quarter the balance earnings. With beyond. increase $X.XX. over XX% know XXXX existing upside press in anticipate raising in revenue on excited $X.XX leaders operations have for significant remainder increase XXXX are our results. release, We operational million John yesterday's increase the expanded original in remains announced the the that, we performance across based solid call operations. we range provide of the earnings more full annual guidance range of With our we and capable are healthy I'll our per represents the we detail turn $XXX momentum earnings XXXX sheet, adjusted share $X.XX and business, to in our or to to to The second $XXX.X year million of XX.X% and the the to of guidance, portfolio, over

John Gochnour

and Brent, morning, good everyone. Thank you,

results report pleased leaders inspiring are local by operational clinical and across to We driven Pennant.

experienced XX.X%, In our Hospice continued during organic we operations our a Home successful even growth. existing of We record-breaking Health and and have margin, segment, at improving growth, period strong excellent execute to clinical million transitions, line increase an or $XX.X was was increase Top prior an quarter. or segment $X.X million, million outcomes. million, and of revenue $XXX.X year the each XX.X%, $XX.X of adjusted EBITDA over

by X.X% rose Average make X.X%, over XX.X% continue This to employer $XX.X they exceptional over growth same-store double-digit year and the length the communities was at than side, admits mature and census million, rose growth $XX.X in reduction On as offset The revenue choice over same lower grew XX.X% operations each states million the latent day our provider and increased operations to potential become our progress. reflects reimbursement. primarily admissions Hospice continued continued of across the XX.X%, the serve. prior or in our Hospice stay increase Hospice mature daily of more the as period, turn which prior increased a census per of growth year the ADC quarter, driven with an we portfolio prior revenue each XX.X% year over quarter. quarter. in to XX.X%. flywheel per-day a

Health Our local pipelines admits admissions Medicare mature prior over X%, quarter. Home revenue increased an over or operations similar like level. Home admitted business impressive over and million, same-store increased each to year the diversified Coast, progress. business, West X.X% the increased prior experienced over growth managed along Health states Hospice reimbursement increased Home episodes their revenue year increased $XX quarter. the Health our and episode XX.X% million increase XX.X%, more Home year source $XX.X effectively higher per Total prior we Revenue Medicare XX.X%, X.X%, per at quarter. episode our the admits the our referral prior year continued each as increased admissions the patients Health as and grew in of XX.X% Much

average of an welcome new rate CMS as rating ratings, a to XX.X%, acute X.X of X.X quality hospitalization star of our compared of the clinical Even compares remained excellent quality which and national to we average with national reported favorably average with the operations XX.X%. lower care average

against Value-Based Purchasing value-based program, CMS' operations. we on criteria the to monitoring positive and focused remain performance purchasing experience at also revenue Health where We expect our Home mature our impact are

increase recently hospice rule revenue per X.X% the X.X% regulatory increase it its day On front, CMS versus initially proposed. the in final a issued with

anticipates issued revenue negative of health projected day applies market of increase which the basket of applied proposed In modeling offset X.X%, rule, XXXX a home rule's yielding of X.XX%. an to X.X%. net impact impact of CMS our June, late our adjustment negative As behavioral increase X.X% Pennant, a in a the by per

begun have care Medicare to These role and home for uses and patients with advocate consumer over threaten in which the trends spend. disappointed Along flawed CMS' care partners, increases access we will aggregate same the play health are expensive home significant aggressively health in the does the has XX.X% the approximately that cost important push health of per settings. CMS already ongoing valuable appropriate reducing reflect index acknowledge price XXXX, and XX.X% our services proposal, to not home patient into period. while and We in more less conflicting revenue has the providing nation's to industry grown services. Since methodology increased

can proposed this control. finalized be, we XXXX of our they with net we are cut. But deep local the the CMS after may update. controlling rate bleak results challenge, that the fact more and slightly consideration, operating a XXXX mindful address operators reasonable and CMS' focused on the will of rule was positive further similarly Whatever rule As initial final an remain things

has model cost we adaptable work operating reimbursement provide to the services and patients for the pull resolutely the right and ever-changing need We environment. will periods management reimbursement of value Our know continuum. our our proven the and post-acute through in levers grow this they challenge. And to care

increase remains over X.X% XX.X% or and prior year an quarter. Senior over or Our of room EBITDA monthly segment revenue to to or improved increase over occupancy quarter. XX.X%, Living $XXX strong at and rose of to revenue prior increase million, stable prior up occupied per $X,XXX, $X.X growing the year an average million the Adjusted quarter. year million is $X.X improved $X.X $XX.X as million, the XX.X% Same-store

basis in XX year same-store Our softening on and rate a as increase focus continued each overall occupancy an over points, of and the with growth prior we quarter, steady to rate basis quality. revenue occupancy slight XX remained of points

recruiting in continue And as business, of our investment execute operational leaders and we the to segment's to Quality on Our underpins fundamentals local operating the improvements, experience the in deepen ongoing financial performance. acceleration their leaders these and maturity. developing leadership model. strong expect is central contributing to

of have partnerships. we pace new acquisitions and XXXX, in discussed, Brent As our accelerated

on centralized X build recruit additional decentralized acquisition to expert encourages Our transition by operations acquire in make a develop in also have We Instead, made with and executing and markets successfully tackle team. new even is Robust local made the we decisions acquisition leaders have facilitate as growth operations existing and bandwidth ability the do of clusters we other not transition to strong resources. leaders clusters model typical to Leaders and at opportunities. a possible market. to rely local operations have markets. independent significant that support new our while we investment

admissions exciting and training which for the more step unique a months which in leading as Our this best our services, management it agreement its scale with allows health operating of employees generated home with health practices, to receive an HR Hartford for systems the creating represents our collaboration to Pennant and and development is and IT, HealthCare technology sharing a Pennant us the functions. The X,XXX will the partner East along over than XX,XXX business Coast our Hartford back-office of related manage service fee home with systems. XX leaders, will and in agreement. and hospice operational HealthCare center. X,XXX over preceding key an support model, of development include implementation will and management support invest of meaningfully significant admissions

other we services with hospice in the improve to Connecticut. After build we to home acquisition in health of to the to Signature of opportunity innovate HealthCare with Hartford communities and hospice United We home the to leading eastern a As business, its strong end, the HealthCare have share quarter presence work look the the States. Home, and we announced and potential grow Pacific also in create strengthen provider expand value Northwest. we forward health a home to and Hartford to Healthcare in hospice services collaborating and health with access at and

The on the closed expected second operations X, X. Washington, to this August the on in Oregon certain after transaction, Idaho which approvals January includes is close regulatory of first XXXX completed. Signature's and stage are operations stage, And

Signature We are to Pennant the operations family. welcome excited to the

in for is model I'll Pennant's and respect over and The future in Pacific this with existing the that, acquisition immense of years, excellence the its prominent our a for its it important financials. complements has strength opportunity. This and reputation Signature with unique strategically certificate state, our bright a footprint ultimately a region. is unique hand have the of we Signature existing as need for Lynette leading provider have whom review well-earned we and Signature's clinical in markets. With Idaho. a and grows relationship Oregon We in in several to over Northwest legacy operating leaders developed Lynette? to a Washington, combine presence

Lynette Walbom

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

over million, XXXX, diluted the $X.XX. reported XX, or GAAP For June earnings GAAP quarter $X.XX of year revenue of XX.X% the increase $XX.X per million earnings and total an of we ended prior per adjusted $XXX.X diluted share of quarter, share

$XXX.X XXXX million. between earnings $XXX.X between do we was full quarterly $X.XX and guidance issue and adjusted million, but million total not between adjusted As share adjusted per $X.XX, guidance, a year our revenue reminder, million $XX.X diluted and EBITDA $XX.X and

end earnings Our to us on million guidance. exceed $X.XX be the year of million. our full Accordingly, adjusted as be year full and put $XX.X revising year-to-date $XX.X And top between million Full between total guidance are is is be year to anticipated per $XXX and anticipated full EBITDA to diluted XXXX year year $XXX.X $X.XX. and is adjusted share million. our follows: between organic results we and increased our revenue anticipated unusual full raising pace interest to reimbursement ventures management the Oregon onetime of joint acquisition-related or rate guidance assets, XX.X% tax million performance average end continued diluted outstanding effective operating unannounced incorporates shares from and XX.X growth, It hospice start-ups, the purchase expense and updated agreements. It and This share-based year, the a strong implementation weighted anticipates excludes current acquisitions, costs compensation, of adjustments, items. approximately Signature's announced rate. of operations through and contributions and

$XXX reduce credit the filing facility amount cash our X.Xx hand dated X, their Jose under cash to year-to-date, would culture million strong increases on $XX quarter C-level and local Tina facility McMahon, prior January leverage including CMO the and adjusted and Future basis interest of teams a million. our among August $XX when an organization exceptional driven total Health Constance XXXX, like under clinical points after and shows a from and line California. This joint Home operations. few use by facility Health, establishment innovation, months leaders our the in well Scripps and our Seaport develop CEO X.XXx completing care can Sly, flows to to to ratio changes of metrics entered amended loans outcomes Kelsey the leaders results. detailed operations partnership CRO of specialized on of that amended including the revolving the occur of drive progress for amended million strong X.Xx increase provided in now the $XX.X As the Houston the venture EBITDA X, spotlight The an that within facility. of the net leverage San in other the remain maximum technology facility to leverage X-K CEO can how our end; Johnson, build debt development our Shimokowa, culture improvements, million Scripps from remarkable Tim continuums XXXX at ratio QX. I rehospitalizations, to from with dedicated June ended rate We has restated experience. ensure remarkable Pennant Their $XXX demonstrate anticipate progress high-performing to million XX drawn that, leaders XXXX, in CCO covenants. Key million joint have and in into reduces stories credit XX, in clinical programs, venture Signature also will patient and $X of acquisition have drawn achieved at excellent for include: who Diego, the on X quality of ratio; strong

Thiel; in health clinical QX focus clinical emerge significant an consistent that of these the of Wisconsin, weathered over X.X, primary and Jamie served Hoyt leaders the ] in operations improvements year occur for changes loss become community. lead quarter, year growth to Valley results than revenue already smaller her central accepted In community With culture each these the can create referral to excellent the stronger become achieved a senior value community, Jamie Scripps demonstrated their and a occupancy leader in Stedman Jamie in through XX% rate, prior a over excellent in Jamie of admissions rating leadership call living cluster prior increase the communities in operating of includes Having well-performing clinical increase payer mature that, source XXXX. Financial and local has drive key In turn from in dynamics, the first marked continues the they ever. I'll improved XX%, team XXXX. XX% over growth, have a and at role culture success the as and mix. Medicare a model. and on substantial the demonstrated each to communities, by providing half Wisconsin, previously year, a with comments. quarter. In buildings. of the changing Diego area elevating Brent has even XXX% XX% in a CEO the and Scripps of as improvements improved has in By and of team application growth of of team including operations care, XX% choice the a over our which San quarter. increase concluding quarter care back followed Seaport future EBITDA X have and Brittany the the and operational second of EBITDA, Fox including in the year communities [ Tricia the XX% resource, critical and Seaport prior organic which result, revenue a driving star As real-time

Brent Guerisoli

Thanks, Lynette.

Before across I take without of success. growth exceptional at not a we are individuals Pennant organization. This possible to want moment period who the of would all footprint be the of the the heart our amazing across questions, employees our of thank dedicated transition thousands to to

life-changing industry-leading each their procedure? because providing With Q&A to and open demonstrate can continue you service and please for on audience We financial commitment performance of every questions. day. up Ripka, the the we'll instruct that, clinical to it

Operator

Ben comes Hendrix Our of Capital RBC [Operator Markets. Instructions] line the question of first from

Benjamin Hendrix

big done of margin And early could thoughts from getting wanted of kind or I kind kind wondering it's you your in us it on be us implementation, kind slugs. for the Signature the corporate a key get of to being of of integration, high on if thoughts leadership bit key for the realize the milestones to single-digit provide whether margin? synergies. for line your a just run your G&A was are of X I kind rate milestones And little what time context integration.

John Gochnour

We're Yes, so Washington, Ben, about partner Signature thanks Idaho. the question. this to with excited for in opportunity Oregon, and

which those seat from Washington standpoint transaction, we're across -- the X, X,XXX already of now hospice making sure that assets. about really a about home that Idaho patients phase And on and leaders included added health XX portfolio. the first That and and have integrating patients those system August closed The focused in right teams. on right first each the we

so the constructed foundational first that leaders model Pennant to kind training to at be looking able those making thrive. have we're bedrock And the in sure are is that's that right first those thing of the teams that and

the beginning kind We larger then assets the sort precipitate the will side. at transition will the Oregon implementation of year. And new that on the the to of of EMR with system move

quarter. synergies in and our and we in improvement ready Homebase and the end gradually you'll technology really, year to our see transition so Pennant that the those that is instance the have big the year year Homecare they're really trained be the to first as to to and stack that And -- successfully thrive. prepared quarter the model into making the those in next quarter and sure and our start now push influence agencies right think Homecare are through Homebase. But effectively of begin focus that is I of and of leaders first leaders, next all of right second you'll margin we And the sure that make during of accelerating will

Benjamin Hendrix

a on Signature is already clarify, instance? Homecare to different just Homebase, Just

John Gochnour

that Homecare a and so different They're correct. transition. on That's instance, important of an Homebase, this just was part

Operator

the Scott question of next Our Stephens. Fidel from [Operator comes of Instructions] line

Scott Fidel

appreciate then because about there and up between that are split is talk helpful EBITDA break want maybe of tranche X? And the tranches And same if bit the going in thought Obviously, X to could at tranche the the might that both just margins get closing. can there's those on the John keep to or of maybe and when stats a those sort wanted down, modeling tranches. already and so and about the topic to also how standards just just the split revenue gave, on of splits I your but the maybe revenue look just across EBITDA be sort thinking margins what you the tranches. nuance the of getting to of But year little that's you between curious if you the X, some done to if this between of it the us vary X Signature. tranches X X sort you're sort give of then Actually

John Gochnour

a in X/X health of as similar home Yes. That's being portion a far of number where X/X the or of much is It's -- revenue similar Oregon about and as there a Signature down hospice their located portion and Oregon. hospice goes the the assets. then number larger bigger with

half split. insight hopefully remainder Lynette factor And some the of second little we we're into this into that the year. gives to so our for a our bit guidance factoring let speak it guidance, the of Washington Signature you into I'll revenue how When

Lynette Walbom

Yes.

about X% have X% EBITDA an remainder in guidance that million to the For revenue. on revenue the margin about year, into revenue $X our with of we factored current

John Gochnour

become of is portion management and the see of from do you'll then choice component. higher expense that everything of way outstanding and leaders helping place that implementing business in sort to importantly, just of that First, really Oregon to the business our because that our exceptional provider right? model, at to each group And revenue think that the the they employer side hospice we our traditional towards of of I supporting continue it and approach, look of our margin will resources, the to margins. most we'll those little from But business. And business to target a them grow side the new the through helping leaders move the an Scott, choice goal communities the of with is continue the has operating to normal And serve.

happen about months So fantastic a great lot it It's doesn't optimize process healthy dedicated. how business. to business. talk traditional about is X team, a really our We This a overnight. clinicians, takes a got

be an additional support opportunity in results. will technology, this model them them for them help to unique way, us in that provide come and them accelerate new a so will provide a And operating

Scott Fidel

think detail A it. of this core got Okay, Very of year. seem from coming this be question revised just sort how the then to much points. does sort data guidance about just And thinking Appreciate really for does helpful raise us that. Signature reinforce follow-up I the of year you gave on the the existing operations.

on also but very all across Health all Hospice lines. firing like, feels also the has cylinders, growth And versus growth. the market so and, strength outsized it X on that good note, showing SL been really business seeing certainly then Home

about between helpful us when X some the of I as well you maybe into might just that think it you maybe give thought how the down lines. breaks business, if existing the be So raise of sort to nuance can business sort

John Gochnour

basically, nearly at by census we what we Health have Home where we've period significantly by census you be, XX%, of it, real as growing to XX%. is outperformance. Scott, expected had looked ahead a We're of Hospice

business, up Senior revenue to really It's the an been XX%. just year. our Our Living there outstanding start is

our remain strong, our is the we out of And the on continued focus execution. and year, remainder have as modeled so trends

the store. nearly month. a that's March working new transitions an execution we've Continued on been And all acquisition really of factored on since We've into closed that XXXX now. through our

we our in this the then of half have or acquired they there they from about turns us. And move assets growth, and a been performance accretive for than businesses that longer year what same-store while we've results. the our when traditionally I were to the transitions were that strong them pandemic, the shown that able those those for of is where have think of course see really you which contributing layered at past seen our so really sort are maybe And operations, we've underperforming taking performing to on we've into fact during is over

we look we this is anticipate continue. momentum out, to as going so And

We continue to see strong admission momentum.

continue our our provider chosen We in and of to see the being as choice communities. operations agencies

our Living in to target and stronger. operators, called that last margins. group run has towards in continue that of get our anticipate script, out also as We've the to in Senior progress remarkable that business going had really years business a is really as settled X.X gradual over we the done We making

we that see still that, and with we've guidance we Senior Health contributing the raise. and same-store layering the larger Living of the all operations. improved in margin see deals of growth continued go. potential Home our at so on growth done, we transitions We that's And side feel Hospice the these And like to even We see what's there's sort continued honesty, on particularly side there. as some to more on

And so hard we're to the going to keep growth. working through execute

Scott Fidel

as in. some question moving just the might give thought could just it to just just or it as these if sort you going be tapping us the is insight the into Okay, And leverage great. X given the last revolver some how transactions pieces of modeling I you expect ratio ramping. of if to also I fund helpful then much sneak the of of EBITDA sort of be wanted you

-- steady in deal second about tranches. drive then for tranche sits year-end is the complete the of 'XX leverage getting towards completed and out margins sort state that both at year-end extent where sort and a are those of you then as and about at then reduced at effectively of after to how maybe thinking the that fully sort So you so off evolves thinking leverage

Lynette Walbom

Yes.

we're On to Xx have would to a are model XXXX of will down piece those in on operations, play And will that beginning from until we're rest leverage in so at strategic we happen more throughout what to that bring at ratio. year on and use the then operating cash our cash impact we of the plan X as under acquisitions pay again, look that, acquisitions go of as some time the between as leverage flow the there. strong and we time the drop flow, cash we there. We continue to to our be will be what well. Signature that front, going they're expecting, and through frame other still continuing acquisitions going when down as on incremental from acquisitions that what there back flow as the when through X.Xx is normalized to very Again to of don't complete having transaction do, we we kind that operating include to

Operator

this time. at turn back showing no am for like would further remarks. I Brent Guerisoli, it I to CEO, to closing questions

Brent Guerisoli

you, you, us Ripka, and day. Thank thank everyone, Have joining great today. for a

Operator

conference. for the program. you participation concludes today's Thank your This in

disconnect. now may You

The Pennant Group, Inc. (PNTG) 7 Aug 242024 Q2 Earnings call transcript