PNTG - Earnings call transcript Q3 2024

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Operator

Good day, and thank you for standing by. Welcome to the Pennant Group Third Quarter 2024 Earnings 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. Please go ahead.

Kirk Cheney

Thank you, Dorian. 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

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

contractual to a of Inc. as we, no independent subsidiaries, holding the company revenues. referred Certain Words direct collectively its the addition, refer subsidiaries. center, Pennant, services other with and provide our us employees Group, the administrative Inc. assets, is subsidiaries. subsidiaries or such Pennant to to company, with relationships Pennant the consolidated through and Group service In operating our operating

the and companies their operated employees the center are us, that assets, consolidated Group. Pennant use not subsidiaries that terms assets. References the operating and The The similar by terms Pennant operating and and well the or any our, subsidiaries have revenue herein Inc. has independent and of or we, own do activities operated imply separate as that by of Our company management, its assets direct as Group, service employees are to

GAAP to more A a Also, to our exclusion GAAP Guerisoli, results, but When I'll in should non-GAAP viewed we of complete available the press is these reports. GAAP available turn is non-GAAP we supplement our XX-K. And that, that upon Brent relied call over reconciliation in be not together the our and CEO. measures Brent? our our to believe they understanding with yesterday's GAAP release metrics. with can of reporting with business, provide

Brent Guerisoli

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

pleased record-breaking are our across another We with report business. to results strong quarter

year: leadership an year and of reflect results the for grateful have year Collectively, over highs also the commitment amazing growing. million, our over million focus the over ongoing the revenue X,XXX and experience, increase efforts, are of an margin quarter. and quarter key quarter. to teams clinical the growth. $X.XX improvement XX% $X.XX, reflect million, of leaders quarter. Adjusted we These was dedicated the prior healthy the so the consolidated or development, $X.X $XX.X are excellence, prior EBITDA We million of XX.X% to areas or $XXX.X revenue, increase Through per drove organization. more share team significantly the Adjusted increase grew members X $XX.X in throughout earnings year our XX.X% census for QX highlighted prior an employee businesses and or results than new throughout our earnings and our

are leadership the and operating our leaders a heart local remains at model. developing of company We

as As our we the added in clusters marketing growth and investment nearly engine able in offering. which prudently XX strong talent and vision is throughout added future and XX to development we quarter to revolving the CEOs-in-training efforts story new after quickly programs over grow follow-on balance exists manage process our offering, and and Pennant's more of It purpose expanded in expansion that This seasoned clinical made year-to-date, to investors operations. more of platform in leadership The acquisitions clinical for the them form equity to for our the give us operations and to our continues opportunity new facility companies and our potential leadership have follows the of additional our the internal during leaders and catch group help have momentum. catalyst enduring capital introduce program. Shortly significant The experience and a significant the was our our in fuel grow. growth. August, to the deepens credit development our with for is our sheet end, footprint, this newly investment portfolio elevated we are we improve Thus, in pleasure

$XX.X results. operational XX.X% turn John EBITDA earnings increase over adjusted of midpoint. With a to at over the third detail revenue and midpoint dry the anticipate the $X.XX, million, and powder, second debt adjusted acquisition a opportunities pipeline. to the million abundant XX.X% Now our business, on over on XXXX midpoint, increase $XXX.X of in Based sustained purchase share $X.XX to of we the signature million increase provide in portion call $XX.X our at XXXX of X XX.X% are with our that, XXXX raising $XXX.X the at guidance per I'll to again well to over more the million, positioned on we a are robust quarter momentum to and the and well-adjusted execute annual

John Gochnour

Thank good Brent, everyone. and you, morning,

teams strong partners QX thrive a who rely new instead performance, and acquisition in transitions intense operations local periods Of new transition leaders centralized utilize team Our of on support ability the we of service local through leaders and not center both the note, our and of demonstrates do same-store to with growth. our acquisitions.

As show, performance while our results they operations. exceptionally local it continuing accelerate to well, do their in

or and million, year the hospice Our $XXX.X on EBITDA revenue XX.X%, point generating home quarter. a quarter. over $XX.X of strength, $X improvement the $XX prior This XX.X% quarterly by growth of $XX.X included health prior million segment XX increase with increased increasing rolls increased an million of same-store or quarter. or the Segment XX.X% margin over revenues adjusted to basis adjusted XX.X%. million over million EBITDA prior Segment year of

continued increased the revenue accelerate. XX.X% quarter. as X.X% increased Our admissions over per to XX.X% home home home Home revenue each health and total improved episode XX.X%. health prior health admissions increased health Medicare year

well exemplary to and care are star X.X%, to health rate with XX.X% home quarter. acute XX.X%. below a clinical behind Medicare remained national over the driving and We same-store increased XX.X% of agencies health each increased percentage the this QX, home outcomes. In XX.X% hospitalization average admissions same-store prior of pleased note also year by by remains our above rating that health of admissions four home our grew and The growth force

of lead value-based period where purchasing, ahead and operations in our home during make clinicians to at ultimately additional attract XXXX continue to XX% we we These outcomes. health the the receive to addition, curve of outcomes the of to over positive trend teams talented provider project revenues. clinical in our adjustments strong present, financial In owned XXXX to choice a us our communities, strong

We acquisitions. increased XX.X%, themselves also daily same-store same-store admissions in Average Hospice census our revenue increased successfully increased average improvement hospice as XX.X% to increased operations the existing XX.X%, recent our apart and increased and continued community programs transitioned we drive XX.X%. admissions census in XX.X%. as daily set

remained steady. items During the length over year prior is of the of period, quarter. these Each stay

We care and business communities. local in of significant teams we as for improve in education new continue development through growth operations, to community and our build see out talented stay opportunities length continuums of develop grow hospice

regulatory Pennant in realized, inflation. update CMS increase to will the reflect offset the are the should provide already the reimbursement XXXX. X.X% issued persistent X.X% to a to week, offset This as appropriate XXXX updated Medicare aggregate of hospice on which On we of a effective Last payments. on year. payments basket costs update X.X% loss additional fixed remainder in many of modeled permanent been negatives of XXXX by a rule, front, decrease services outlier And rule, through based tailwind operations. October X.X% X, of impact provide final an rates yield fee net a impact rate modest adjustment proposed dollar health our market X.X%, behavioral an for to have the on of final negative These the became increase these increase the and home the

applied based As the geographic The rule. large distribution neutral on rule's wage and reduction net index reimbursement we is a half to per XXXX proposed. update, anticipate final on finalized under Pennant, cut as final impact the originally the episode our reimbursement that as CMS

good unsupportable us While relating stakeholders home soon is CMS regarding and reimbursing for revisit CMS hopeful that for public are scarcity to cuts patients and originally feedback home providers properly we its other and to the from that responded and we policy the necessary proposed, health of appreciate recognize that will high-quality health fisc. ill-advised

previously, cyclical confidence forward. we've gives know strong As reimbursement have outcomes difficulty proposition periods to like of leaders will and has The value through as and today. clinical nature these be respond much home in the appropriately changes our We began the realized with health past. they local care Pennant stated us that in moving coupled nimbly thrived our of will

million future. paired year. quarter, As increase XX.X% Our years. There enhanced of is remains revenue increased XXX some invest grow, and reaching a senior and in revenue point XX.X% we have have upside to increase XX prior This $XX XXXX Adjusted EBITDA in a per unit, last consistent to Same-store point two the prior occupancy, invested continue increased segment sequentially. million continues X% the Living quality, revenue its to QX a XX.X% to QX was continues margin, perform increase year this leaders, to of we the in in basis to seen year-over-year occupied in business the has X.X% over in well. with X.X% $X.X excited are performance, 'XX in gains up basis we X.X% over operational living from quarter. XXXX, over segment, Senior in occupancy in QX improved

strong and November transaction in long-term ready acquisition units to XXX triple-net the and portfolio to have announced we of lease with after clusters X, state added our X quarter transition. closed an The end, in through communities CEOs-in-training Northern where prepared we we operate on Wisconsin, on assist As leaders attractive to the arrangement. the

We eagerly evaluate leases robust to continue favorable to living pipeline opportunities with step as real bidders. partner to a seek senior attract landlords higher and triple-net estate of or into well-priced purchase

remain living these will to as of improve business. our We fundamentals operational disciplined opportunities and evaluate continue we the senior

side, we to the support Washington Signature provide August, hospice center. unique as acquired Healthcare businesses model, Home. service practices beginning world-class assets On proceeding The in in we operating implement and best and Idaho integration our these of value share transition is health our from the operations At are home unlock of additional these and and well, we and

on Signature's the acquisition and January we to prepare and larger recall, may you As the transaction, close portion represent X, XXXX. to of continue second assets the Oregon

have welcome to to a we Signature, as over Pennant will laser-focused operations on in both and Pacific the of months. Northwest, operations Signature's even to largest tranche we second of of the robust the in Along stream look meaningful excited past independent XX are continue to as the We future acquisition forward one remain with we segments. integrating see acquired that have bright providers Oregon team of the the the significant number opportunities we

prioritize quotas of to organization. With operational As an we sense health new leadership that make our Lynette? and community right that of stated capital for the and that, for to market a Lynette have I'll not before, review financials. is long-term the on a or deployment. impact it for growth we investments result the our make clinical hand ensure arbitrary of We the

Lynette Walbom

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

operations the prior total the $XXX.X an $XX.X or GAAP diluted metrics million For reported $X.X million, year-to-date, of on debt from and diluted flows $X.XX increase we GAAP drawn in cash credit months $X.X million $XXX XXXX, $X.XX. Key ended $XX.X million for million end, revenue earnings revolving and and million September over quarter, adjusted quarter ended per September line share including net adjusted of X on per hand provided include of share of X.XXx the XX.X% QX. cash of XX, quarter XX, our of XXXX, to year EBITDA at earnings

As net proceeds end, approximately issued Brent quarter above, shares for in company. [indiscernible] after of X million stock, which we common described million generated the

to for $XX of the deployed. We is the set future We proceeds available have XXXX. January resources to which pay in revolver, operations down acquisition used be close abundant million to now Signature's have including fully Oregon growth, our

Operations, between share interest $XXX.X year-to-date the Full in and $X.XX our million rate. year and and in updated weighted strong outstanding the are of married revising $XXX.X operating and excludes remarkable items. I partners. XXXX results interest acquisition of of Boise, demonstrate C-level spotlight It have Ziemer, $XX.X onetime an few compensation, unannounced equity $XX.X million. This announced from through continued to Their Ali between $X.XX high-performing and when earnings Health culture contributions CMO, It our future by and on now that acquisitions, ventures shares being of Led would reimbursement per like and of year leaders who adjusted to exceptional and the year, incorporates anticipates Our end focused expense and stories health Lizette, Home Pennant solution organic organization and the Justin teams implementation and outstanding XXXX. increase diluted and year we Idaho tax a raising start-ups, occur has expense diluted XX% Bluebird through achieved in hospice adjusted and our guidance CEO, our approximately agreements. joint operations. the revenue build Bluebird rate XX.X total the Hamilton, culture Signature's leaders guidance million CCO, Stenquist; our assets, related decreased million, can local of community in impact million follows: Director Hospice, adjustments, on as Group guidance. growth, future between future results. a acquisition-related offering progress full and management strong or full a joined costs operations average debt The Accordingly, Sarah EBITDA purchase intensely share-based effective unusual Paige and develop care our current leaders and performance

the team and to acquisition, earnings census Bluebird's respectively, hospice and line XXX%, top census by year and the Home coupled with increasing continuum the light and strong Operational Luke compelling basis our Stephanie an Madera; to Wellness performance continuing home XX% on the a which private results Meadowview is performance Minichiello evident Leader, XX% just the and healthy Director, that are Bluebird healthy Copas and has Strong of third focusing quarter. We his has of Pennant's XXX in Wisconsin. shine CEO in result, grown driven As the year Safe This turnover points has care each Home model operating in Assisted occupancy and XX% can and long-standing the Western exists over significant each non-skilled quality of exceptional California; to Harbor's prior XXX% in in shown vital team and health that opportunity the on comments. financial in than employee Madera success, roughly including care, Hospice Wagner, over value look contribute XX% XX% Brent Northern Jesse have Jesse in over At to revenue the Harbor ], -- call as culture, Idaho over [ over culture Tammy rates Agency, Southern XXX%, created CWO, prior EBITDA a since over and home revenue quarter California. and and average. prior The Gazdzinski each and to growth in revenue Living, the followed that, EBITDA ability for Living results and care. the back engagement grown better continued Diego, duty XX%. industry they line Health Essel quarter. With in skilled it bottom up care respectively, care have quarter. of XX% San creates CEO, Leslie I'll year ]; success At that support community. turn over concluding local the ], social and create services. By Horizon determinants and to forward have the veteran agencies health, View Care continued [ Harbor, the support will filled need Assisted growth of our same [ reaffirms Safe our that

Brent Guerisoli

Lynette. Thanks,

highlighted to and like who, patients I'd all to our those above, change and conclude, we clinicians again sincerely to life once dedicate operators thank like the themselves residents. providing As

You it we'll alongside open the a the it we in difference are is you. With for and questions. and you an making Q&A up Dorian, instruct communities truly work serve, the can on to procedure? that, honor lives please audience

Operator

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

Benjamin Hendrix

quarter. on Congratulations the

question the Just administration. your on presidential a of views upcoming quick

get for to first backdrop contrasts you're thoughts administration an what expecting President your backdrop how and it wanted under of the the going overall Trump's or on terms and administration -- term first for segments the in regulatory backdrop? operating under Just forward -- both current

John Gochnour

first we about that, far Yes. is obviously, agnostic operate And I'd thing way Thanks politics the for we're question. that say the as as the business. the

a experience over years focus things control. that is the can first Happy we the the XX on last had administration. Trump based few democratic the we've the as that in Our anticipate we operating well as to controlling multiple things share on that through

[indiscernible] regulatory the saw enforcement during than administration we pretty thing was been side increase increase Trump has over an is first the The there different we noticed last previously. the relatively on significant that that what a --

best reducing industry they'll audits post-payment with approach significant consider to they're providers CMS that as we're recognize for and in optimistic burdening the that good And that of the isn't fraud necessary. what's to things like that way and all continues so responsible the quality that things

The [indiscernible] more declining saw had health. that under corresponded second the now to thing the home the we we with administration, [indiscernible] reimbursement on reimbursement reimbursement that on actually increases where where of flat with X years inflation solid patterns felt. That contrasts saw Trump front, we

that and those our things our think truly is biggest the care control. are highlight. the controlling can the things I focus Again, possible patients X that on delivering So best we'd to we

pace respond that employees are make We make election? good a continue care to we've things of opportunities our that So in the and the that new take sure control. continue We been that we all we acquisition that how to to that to want to at to continue growing, we'll able grow we we of sure to have can to to quality the the control have spot. want communities are we

Operator

next line Scott Our the comes Fidel. from question of

Scott Fidel

Okay. Great. Yes.

just a definitely of I several of M&A on to done senior on certainly, clearly, John's noted right wanted where transactions up it feels like that recently. follow now now in of question, living inflection side. the seeing is you've sort bit First across the an side, But businesses. right pipeline a healthy the just sort there's M&A And of comments commentary. flight around some full on

with comfortable the that it side. living of business, feels the senior So like M&A you're getting on again perhaps side more

towards that you across you're and I allocating look you the around thinking at helpful some where thinking hospice home are, the about of to and about maybe of I framework if hoping major also allocation was just of it know towards segments. opportunistically you're give of sort us you sort growth capital would health M&A X living. then each sort opportunities how capital but how frame be So senior wanted maybe could

Brent Guerisoli

I Scott. you there, at Yes. that well. there's really, when questions look opportunities, we And it And framed X we're considering. determinants Great think

organization. then we first we is we is, ready to have go to The Do have we're second into a opportunities? grow And leaders [indiscernible]. first-who-than-what where step the

grow. clusters, markets, invest healthy and we're healthy looking those leaders have to we going to for opportunities if there So are

opportunities, the it find to grow seeing great we areas. our you're those and we through look is opportunity really And [indiscernible] our the in senior living and value. What and really then out, develop So they we're reflection experiencing And pointed way, that strength right? a an pipeline. then we living there's really third this right CIT front, business. the see of in and create grow have is good the that you leaders on senior to

in acquisitions Wisconsin been teams so of in Wisconsin. We've has one in -- acquisition. that markets in more particular announced this those place. we recently had We're way. strong growing We've a other And healthy just done got we've

grow And significant to got so we've there. opportunity

The talked pipeline XXXX. opportunities to opportunistic bringing grow an going and both is about strength in great And that so going is are on well There's our have where we're growth pipeline company, We there's opportunities. we in where we grow board robust. we're segments. thing as the to Signature. and in anticipate We great other

from we're standpoint, we think most so value. going where the that create we And can to allocate capital

the thing because sense. question slowly the dollars mind And really investing done really bear year real we estate just And buildings look allocation choose moving real to part, Utah, it our in makes capital estate. those. in to to for invest for unless want living the did opportunities side for a that in value. and those other we X We on no strong we we But really, on opportunities upfront can cost into earlier of create have this most have us. allocating The it's kind side, there's a where oftentimes, to focus senior because couple the where of we'll been we're into not

growth strong the that kind it. the going of excited way our across approach business to both We're continuing to about we're and that's of lines anticipate board. So see

Scott Fidel

then assuming first Signature. was that, in I'm question interested care the in was definitely Great. probably the from of And jump sequential tranche home it. that the Got Okay. next revenues.

that? different in business more talk at home M&A also looking you of the And So of as a sort HHH of side opportunities whether confirm And about business that as that interested are well. then whether then a you're profile care line sort in growing Maybe was additional maybe bit mix business? there there. the of you can

John Gochnour

Yes, Scott. of a Really appreciate couple the question. things. And I'll highlight

really we're care of First is about how trending. excited all, home

of create home Some to PCS, side. we're Medicaid other that about more is in and and between really PCS bucket well. done that that highlight pulling non-skilled -- clarity based the care way is the allocating on business how we're so The revenue some the the this on that revenue we progress making has really much

and we're there. provider that, primary Hartford the things The the with kind also across out other there. X continuum that thing seen then that there's and of business, growth our in care that's -- excited services that One is the progress are building other country, palliative captured where the in which geriatric capturing we're management And we're really is made line. our business and fee markets we've care exponential

up I of you that sort sure things our the now determinants trending. with make there. and captured health the social group a are home using some pulled. of that abound for board. see care of the how the captured leaders rates There's in in home of of mentioned. have true X that that's that for of issues have little Their previously and highlight So hospice we done appropriately the health that of were strength that so as sort been then from components team bit some is Medicaid home of our the kind really care can highlighted business. passion And other Diego. the just across We business society. a San and we that Jesse excited of That's about what just have I'll home his care solution But We're in reallocation

model and individuals that struggling growth can an support. do And area a nonskilled need who are so as and impact that we where opportunity uniquely our see

us grow think business side that well. I see and in look opportunities you'll of So continue evaluate the to as to

Scott Fidel

for good million color. in revenue annualized million That's Okay. know third the that $XX moved helpful the because there, $XX below it business in in of is quarter the alone, towards like first Hartford just a sort It's well to half. too,

optimistic environment very a just for just Obviously, in Okay. new rate way at And last with net home levers the you the do be talked your do been can home a feel little them? of health of sort about, tight health Or 'XX the fee-for-service even administration. But you've And in neutral will with that in meantime, X health the you rate you grow business think years. like be then this have there's the maybe several you question margin that we that side? sort on rate you a operating margins on different for there regime the can for bit maintain Medicare home other of diminution hopefully, you. in that

John Gochnour

difficult decision just labor way better and their improving these a driven the growth. of licensure the we on to a leaders Scott, has possible seeing of as reimbursement. labor this and model business changes be of model the and talent our that our in this can be our of that our which it's home remain our standing best health ability impact Any extraordinary you time I confident to in that respond operating the year the in cost that of everything an operating focused a to what's clinical operate cost capability more -- transparently unique Yes, of update, impact reimbursement as done they're is an And operate think have community. We've seeking we margin. operators top continuing flat efficiently, that done productive that, increase difficult turnover, that to is teams to a local the get you from and X.X% maintain revenue job to to in encourage job retaining their change have a at to change so

it's an in update huge while we the are receive And not inflation operating environment so that headwind a in. to

to managed things you've to we're we really difficulty what care the as making years to modestly last better it's built shown build offset cut. of give allow better emerge X that you'll and that do our model tools think recognize on referral payers I our what over that we be will just that over flat institutional the periods the essentially that with years Control very use managed and reimbursement rates clinical I the we in think even the to of control. best margin relationships very, see side? Medicare side what on and rate that mean sure continue job that Can progress a outcomes view seen for. And Can I the I But do successfully. side, the last because sources? think our we've that us the Medicare we're us focus. so driving will XX different better continues uncertainty to we on can we There's side a down.

Operator

And I'm questions. showing no Instructions] [Operator further

I back to So remarks. CEO, closing conclude will like session. would turn to Brent this for Guerisoli, the question-and-answer now it

Brent Guerisoli

thank Well, everyone, Dorian, us for joining and today. Okay. you, thank you,

Operator

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

You disconnect. may now

The Pennant Group, Inc. (PNTG) 7 Nov 242024 Q3 Earnings call transcript