Conference Call and Webcast scheduled for tomorrow, November 7, 2024 at 10:00 am MT
EAGLE, Idaho, Nov. 06, 2024 (GLOBE NEWSWIRE) -- The Pennant Group, Inc. (NASDAQ: PNTG), the parent company of the Pennant group of affiliated home health, hospice and senior living companies, today announced its operating results for the third quarter of 2024, reporting GAAP diluted earnings per share of $0.20 for the third quarter of 2024. Pennant also reported adjusted diluted earnings per share of $0.26 for the quarter (1).
Third Quarter Highlights
Total revenue for the third quarter was $180.7 million, an increase of $40.5 million or 28.9% over the prior year quarter;
Net income for the third quarter was $6.2 million, an increase of $1.8 million or 41.6% over the prior year quarter;
Adjusted net income for the third quarter was $8.2 million, an increase of $2.2 million or 36.8% over the prior year quarter;
Segment Adjusted EBITDAR from Operations for the third quarter was $26.0 million, an increase of $5.4 million or 25.9% over the prior year quarter;
Adjusted EBITDA for the third quarter was $15.1 million, an increase of $4.3 million or 39.2% over the prior year quarter;
Home Health and Hospice Services segment revenue for the third quarter was $135.7 million, an increase of $34.2 million or 33.7% over the prior year quarter;
Home Health and Hospice Services segment adjusted EBITDAR from operations for the third quarter was $23.7 million, an increase of $6.5 million or 37.4% over the prior year quarter; and segment adjusted EBITDA from operations the third quarter was $21.9 million, an increase of $6.0 million or 37.5% over the prior year quarter;
Total home health admissions for the third quarter were 14,993, an increase of 4,164 or 38.5% over the prior year quarter; total Medicare home health admissions for the third quarter were 6,071, an increase of 1,431 or 30.8% over the prior year quarter;
Hospice average daily census for the third quarter was 3,444, an increase of 746 or 27.7% compared to the prior year quarter;
Senior Living Services segment revenue for the third quarter was $45.0 million, an increase of $6.3 million or 16.3% over the prior year quarter; average occupancy for the third quarter was 79.1%, an increase of 20 basis points over the prior year quarter, and average monthly revenue per occupied room for the third quarter was $4,836 an increase of $350 or 7.8% over the prior year quarter;
Senior Living segment adjusted EBITDAR from operations for the third quarter was $13.4 million, an increase of $1.9 million or 16.9% over the prior year quarter; and segment adjusted EBITDA from Operations for the third quarter was $4.4 million, an increase of $1.3 million or 43.8% over the prior year quarter.
(1
)
See "Reconciliation of GAAP to Non-GAAP Financial Information.”
Operating Results
“Our strong third quarter financial results demonstrate the momentum we are building across the business, and we are pleased to see robust performance in our existing operations even as we integrate new ones. The equity offering we executed after quarter end, coupled with the expansion of our revolving credit facility during the quarter, position us exceptionally well for future growth. With these operating results and a healthy balance sheet, we are poised for success through the remainder of 2024 and beyond,” said Brent Guerisoli, the Company’s Chief Executive Officer.
A discussion of the Company's use of Non-GAAP financial measures is set forth below. A reconciliation of net income to EBITDA, adjusted EBITDAR and adjusted EBITDA, as well as a reconciliation of GAAP earnings per share, net income to adjusted net earnings per share and adjusted net income, appear in the financial data portion of this release. More complete information is contained in the Company’s Form 10-Q for the three and nine months ended September 30, 2024, which has been filed with the SEC today and can be viewed on the Company’s website at www.pennantgroup.com.
2024 Guidance
Management is updating its annual guidance as follows: total revenue is anticipated to be between $665.3 million and $706.5 million; full year 2024 adjusted earnings per diluted share is anticipated to be between $0.90 and $0.96; and full year 2024 adjusted EBITDA is anticipated to be between $51.9 million and $55.2 million.
“The Company’s updated guidance reflects the continued momentum in the business, and incorporates current operations and organic growth, diluted weighted average shares outstanding of approximately 32.5 million, and a 26.0% effective tax rate,” stated Lynette Walbom, Pennant’s Chief Financial Officer. “It anticipates consistent operating performance through the end of the year, hospice reimbursement rate adjustments, decreased interest expense, and contributions from our joint ventures and management agreements. It excludes unannounced acquisitions, the announced purchase of Signature’s Oregon assets, start-ups, share-based compensation, acquisition-related costs, or one-time implementation and unusual items.”
Conference Call
A live webcast will be held tomorrow, November 7, 2024 at 10:00 a.m. Mountain time (12:00 p.m. Eastern time) to discuss Pennant’s third quarter 2024 financial results. To listen to the webcast, or to view any financial or statistical information required by SEC Regulation G, please visit the Investors Relations section of Pennant’s website at https://investor.pennantgroup.com. The webcast will be recorded and will be available for replay via the website.
About Pennant
The Pennant Group, Inc. is a holding company of independent operating subsidiaries that provide healthcare services through 122 home health and hospice agencies and 54 senior living communities located throughout Arizona, California, Colorado, Idaho, Montana, Nevada, Oklahoma, Oregon, Texas, Utah, Washington, Wisconsin and Wyoming. Each of these businesses is operated by a separate, independent operating subsidiary that has its own management, employees and assets. References herein to the consolidated "company" and "its" assets and activities, as well as the use of the terms "we," "us," "its" and similar verbiage, are not meant to imply that The Pennant Group, Inc. has direct operating assets, employees or revenue, or that any of the home health and hospice businesses, senior living communities or the Service Center are operated by the same entity. More information about Pennant is available at www.pennantgroup.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This press release contains, and the related conference call and webcast will include, forward-looking statements that are based on management’s current expectations, assumptions and beliefs about its business, financial performance, operating results, the industry in which it operates and other future events. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. These forward-looking statements include, but are not limited to, statements regarding growth prospects, future operating and financial performance, and acquisition activities. They are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to materially and adversely differ from those expressed in any forward-looking statement.
These risks and uncertainties relate to the company’s business, its industry and its common stock and include: reduced prices and reimbursement rates for its services; its ability to acquire, develop, manage or improve operations, its ability to manage its increasing borrowing costs as it incurs additional indebtedness to fund the acquisition and development of operations; its ability to access capital on a cost-effective basis to continue to successfully implement its growth strategy; its operating margins and profitability could suffer if it is unable to grow and manage effectively its increasing number of operations; competition from other companies in the acquisition, development and operation of facilities; its ability to defend claims and lawsuits, including professional liability claims alleging that our services resulted in personal injury, and other regulatory-related claims; and the application of existing or proposed government regulations, or the adoption of new laws and regulations, that could limit its business operations, require it to incur significant expenditures or limit its ability to relocate its operations if necessary. Readers should not place undue reliance on any forward-looking statements and are encouraged to review the company’s periodic filings with the Securities and Exchange Commission, including its Form 10-Q and/or 10-K, for a more complete discussion of the risks and other factors that could affect Pennant’s business, prospects and any forward-looking statements. Except as required by the federal securities laws, Pennant does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changing circumstances or any other reason after the date of this press release.
THE PENNANT GROUP, INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME(unaudited, in thousands, except for per-share amounts)
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2024
2023
2024
2023
Revenue
$
180,688
$
140,192
$
506,348
$
398,937
Expense
Cost of services
144,468
112,384
405,776
321,162
Rent—cost of services
10,906
10,006
31,814
29,439
General and administrative expense
13,023
9,417
36,337
26,913
Depreciation and amortization
1,493
1,323
4,292
3,817
Loss (gain) on disposition of property and equipment, net
4
1
(751
)
4
Total expenses
169,894
133,131
477,468
381,335
Income from operations
10,794
7,061
28,880
17,602
Other (expense) income, net:
Other income (expense)
109
(37
)
192
28
Interest expense, net
(2,892
)
(1,496
)
(6,306
)
(4,355
)
Other expense, net
(2,783
)
(1,533
)
(6,114
)
(4,327
)
Income before provision for income taxes
8,011
5,528
22,766
13,275
Provision for income taxes
1,354
1,066
4,957
3,894
Net income
6,657
4,462
17,809
9,381
Less: Net income attributable to noncontrolling interest
452
79
1,008
351
Net income attributable to The Pennant Group, Inc.
$
6,205
$
4,383
$
16,801
$
9,030
Earnings per share:
Basic
$
0.20
$
0.15
$
0.56
$
0.30
Diluted
$
0.20
$
0.15
$
0.54
$
0.30
Weighted average common shares outstanding:
Basic
30,281
29,912
30,157
29,825
Diluted
31,363
30,206
30,869
30,178
THE PENNANT GROUP, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(in thousands, except par value)
September 30, 2024
December 31, 2023
Assets
Current assets:
Cash
$
4,464
$
6,059
Accounts receivable—less allowance for doubtful accounts of $313 and $259, respectively
84,025
61,116
Prepaid expenses and other current assets
13,307
12,902
Total current assets
101,796
80,077
Property and equipment, net
41,865
28,598
Right-of-use assets
265,441
262,923
Deferred tax assets, net
245
—
Restricted and other assets
12,173
9,337
Goodwill
129,337
91,014
Other indefinite-lived intangibles
95,902
67,742
Total assets
$
646,759
$
539,691
Liabilities and equity
Current liabilities:
Accounts payable
$
15,888
$
10,841
Accrued wages and related liabilities
36,565
28,256
Operating lease liabilities—current
19,113
17,122
Other accrued liabilities
19,029
15,330
Total current liabilities
90,595
71,549
Long-term operating lease liabilities—less current portion
248,907
248,596
Deferred tax liabilities, net
818
1,855
Other long-term liabilities
10,277
8,262
Long-term debt, net
108,875
63,914
Total liabilities
459,472
394,176
Commitments and contingencies
Equity:
Common stock, $0.001 par value; 100,000 shares authorized; 30,565 and 30,308 shares issued and outstanding, respectively, at September 30, 2024; and 30,297 and 29,948 shares issued and outstanding, respectively, at December 31, 2023
31
29
Additional paid-in capital
117,947
105,712
Retained earnings
51,464
34,663
Treasury stock, at cost, 3 shares at September 30, 2024 and December 31, 2023
(65
)
(65
)
Total The Pennant Group, Inc. stockholders’ equity
169,377
140,339
Noncontrolling interest
17,910
5,176
Total equity
187,287
145,515
Total liabilities and equity
$
646,759
$
539,691
THE PENNANT GROUP, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)
The following table presents selected data from our condensed consolidated statements of cash flows for the periods presented:
Nine Months Ended September 30,
2024
2023
Net cash provided by operating activities
$
18,729
$
27,910
Net cash used in investing activities
(66,287
)
(17,576
)
Net cash provided by (used in) financing activities
45,963
(9,030
)
Net (decrease) increase in cash
(1,595
)
1,304
Cash beginning of period
6,059
2,079
Cash end of period
$
4,464
$
3,383
THE PENNANT GROUP, INC.REVENUE BY SEGMENT(unaudited, dollars in thousands)
The following table sets forth our total revenue by segment and as a percentage of total revenue for the periods indicated:
Three Months Ended September 30,
2024
2023
Revenue Dollars
Revenue Percentage
Revenue Dollars
Revenue Percentage
Home health and hospice services
Home health
$
60,988
33.8
%
$
44,921
32.0
%
Hospice
62,757
34.7
50,371
35.9
Home care and other(a)
11,927
6.6
6,182
4.4
Total home health and hospice services
135,672
75.1
101,474
72.3
Senior living services
45,016
24.9
38,718
27.7
Total revenue
$
180,688
100.0
%
$
140,192
100.0
%
(a
)
Home care and other revenue is included with home health revenue in other disclosures in this press release.
Nine Months Ended September 30,
2024
2023
Revenue Dollars
Revenue Percentage
Revenue Dollars
Revenue Percentage
Home health and hospice services
Home health
$
172,773
34.1
%
$
129,112
32.4
%
Hospice
176,711
34.9
140,222
35.1
Home care and other(a)
27,979
5.5
18,239
4.6
Total home health and hospice services
377,463
74.5
287,573
72.1
Senior living services
128,885
25.5
111,364
27.9
Total revenue
$
506,348
100.0
%
$
398,937
100.0
%
(a
)
Home care and other revenue is included with home health revenue in other disclosures in this press release.
THE PENNANT GROUP, INC.SELECT PERFORMANCE INDICATORS(unaudited, total revenue dollars in thousands)
The following table summarizes our overall home health and hospice performance indicators for the each of the dates or periods indicated:
Three Months EndedSeptember 30,
2024
2023
Change
% Change
Total agency results:
Home health and hospice revenue
$
135,672
$
101,474
34,198
33.7
%
Home health services:
Total home health admissions
14,993
10,829
4,164
38.5
%
Total Medicare home health admissions
6,071
4,640
1,431
30.8
%
Average Medicare revenue per 60-day completed episode(a)
$
3,760
$
3,480
$
280
8.0
%
Hospice services:
Total hospice admissions
2,987
2,433
554
22.8
%
Average daily census
3,444
2,698
746
27.7
%
Hospice Medicare revenue per day
$
183
$
183
$
—
—
%
Three Months EndedSeptember 30,
2024
2023
Change
% Change
Same agency(b) results:
Home health and hospice revenue
$
110,748
$
98,732
$
12,016
12.2
%
Home health services:
Total home health admissions
12,221
10,570
1,651
15.6
%
Total Medicare home health admissions
5,008
4,521
487
10.8
%
Average Medicare revenue per 60-day completed episode(a)
$
3,587
$
3,488
$
99
2.8
%
Hospice services:
Total hospice admissions
2,624
2,351
273
11.6
%
Average daily census
2,995
2,650
345
13.0
%
Hospice Medicare revenue per day
$
184
$
186
$
(2
)
(1.1
)%
Nine Months EndedSeptember 30,
2024
2023
Change
% Change
Total agency results:
Home health and hospice revenue
$
377,463
$
287,573
$
89,890
31.3
%
Home health services:
Total home health admissions
43,782
32,180
11,602
36.1
%
Total Medicare home health admissions
18,155
14,437
3,718
25.8
%
Average Medicare revenue per 60-day completed episode(a)
$
3,646
$
3,467
$
179
5.2
%
Hospice services:
Total hospice admissions
9,118
7,206
1,912
26.5
%
Average daily census
3,209
2,544
665
26.1
%
Hospice Medicare revenue per day
$
182
$
184
$
(2
)
(1.1
)%
Nine Months EndedSeptember 30,
2024
2023
Change
% Change
Same agency(b) results:
Home health and hospice revenue
$
322,941
$
284,228
$
38,713
13.6
%
Home health services:
Total home health admissions
36,623
31,710
4,913
15.5
%
Total Medicare home health admissions
15,441
14,221
1,220
8.6
%
Average Medicare revenue per 60-day completed episode(a)
$
3,546
$
3,469
$
77
2.2
%
Hospice services:
Total hospice admissions
7,970
7,104
866
12.2
%
Average daily census
2,851
2,528
323
12.8
%
Hospice Medicare revenue per day
$
185
$
186
$
(1
)
(0.5
)%
(a
)
The year to date average for Medicare revenue per 60-day completed episode includes post period claim adjustments for prior periods.
(b
)
Same agency results represent all agencies purchased or licensed prior to January 1, 2023.
The following table summarizes our senior living performance indicators for the periods indicated:
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2024
2023
2024
2023
Total senior living results:
Senior living revenue
$
45,016
$
38,718
$
128,885
$
111,364
Occupancy
79.1
%
78.9
%
78.9
%
78.4
%
Average monthly revenue per occupied unit
$
4,836
$
4,486
$
4,758
$
4,401
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2024
2023
2024
2023
Same store senior living(a) results:
Senior living revenue
$
41,030
$
38,126
$
119,625
$
110,225
Occupancy
80.2
%
80.1
%
79.7
%
79.6
%
Average monthly revenue per occupied unit
$
4,790
$
4,454
$
4,724
$
4,380
(a)
Same store senior living results is defined as all senior living communities excluding affiliate memory care units in transition, and new senior living operations acquired in 2023 or 2024.
THE PENNANT GROUP, INC.REVENUE BY PAYOR SOURCE(unaudited, dollars in thousands)
The following table presents our total revenue by payor source as a percentage of total revenue for the periods indicated:
Three Months Ended September 30,
2024
2023
Revenue Dollars
Revenue Percentage
Revenue Dollars
Revenue Percentage
Revenue:
Medicare
$
86,919
48.1
%
$
67,925
48.5
%
Medicaid
22,715
12.6
19,893
14.2
Subtotal
109,634
60.7
87,818
62.7
Managed Care
24,652
13.6
19,158
13.6
Private and Other(a)
46,402
25.7
33,216
23.7
Total revenue
$
180,688
100.0
%
$
140,192
100.0
%
(a)
Private and other payors includes revenue from all payors generated in the Company’s home care operations and management services agreement.
Nine Months Ended September 30,
2024
2023
Revenue Dollars
Revenue Percentage
Revenue Dollars
Revenue Percentage
Revenue:
Medicare
$
245,746
48.5
%
$
192,895
48.3
%
Medicaid
66,386
13.1
56,455
14.2
Subtotal
312,132
61.6
249,350
62.5
Managed Care
66,084
13.1
53,538
13.4
Private and Other(a)
128,132
25.3
96,049
24.1
Total revenue
$
506,348
100.0
%
$
398,937
100.0
%
(a)
Private and other payors includes revenue from all payors generated in the Company’s home care operations and management services agreement.
THE PENNANT GROUP, INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION(unaudited, in thousands, except per share data)
The following table reconciles net income to Non-GAAP net income for the periods presented:
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2024
2023
2024
2023
Net income attributable to The Pennant Group, Inc.
$
6,205
$
4,383
$
16,801
$
9,030
Non-GAAP adjustments
Costs at start-up operations(a)
66
59
244
1,060
Share-based compensation expense(b)
2,342
1,391
5,817
4,164
Acquisition related costs and credit allowances(c)
494
71
996
175
Interest expense - write off deferred financing fees(e)
428
—
428
—
Costs associated with transitioning operations(d)
68
90
(418
)
759
Unusual, non-recurring or redundant charges(e)
239
1,009
546
1,633
Provision for income taxes on Non-GAAP adjustments(f)
(1,675
)
(1,031
)
(2,942
)
(1,562
)
Non-GAAP net income
$
8,167
$
5,972
$
21,472
$
15,259
Dilutive Earnings Per Share As Reported
Net Income
$
0.20
$
0.15
$
0.54
$
0.30
Average number of shares outstanding
31,363
30,206
30,869
30,178
Adjusted Diluted Earnings Per Share
Net Income
$
0.26
$
0.20
$
0.70
$
0.51
Average number of shares outstanding
31,363
30,206
30,869
30,178
(a)
Represents results related to start-up operations.
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2024
2023
2024
2023
Revenue
$
—
$
(2,928
)
$
(4,956
)
$
(8,821
)
Cost of services
65
2,820
4,884
8,981
Rent
—
162
306
885
Depreciation & amortization
1
5
10
15
Total Non-GAAP adjustment
$
66
$
59
$
244
$
1,060
(b)
Represents share-based compensation expense incurred for the periods presented.
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2024
2023
2024
2023
Cost of services
$
1,069
$
819
$
2,814
$
2,288
General and administrative
1,273
572
3,003
1,876
Total Non-GAAP adjustment
$
2,342
$
1,391
$
5,817
$
4,164
(c)
Represents costs incurred to acquire an operation that are not capitalizable.
(d)
During the nine months ended September 30, 2023, an affiliate of the Company placed its memory care units into transition and began seeking to sublease the units to an unrelated third party. The amount above represents the net operating impact attributable to the units in transition. The amounts reported exclude rent and depreciation and amortization expense related to such operations and include legal settlement costs associated with an entity transitioned to Ensign.
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2024
2023
2024
2023
Revenue
$
—
$
(4
)
$
(1
)
$
(4
)
Cost of services
12
14
(582
)
599
Rent
53
77
157
156
Depreciation
3
3
8
8
Total Non-GAAP adjustment
$
68
$
90
$
(418
)
$
759
(e)
Represents unusual or non-recurring charges for legal services, implementation costs, integration costs, and consulting fees in general and administrative and cost of services expenses.
(f)
Represents an adjustment to the provision for income tax to the year-to-date effective tax rate of 26.0% and 25.9% for the nine months ended September 30, 2024 and 2023, respectively. This rate excludes the tax benefit of share-based payment awards.
The table below reconciles Consolidated net income to the Consolidated Non-GAAP financial measures, Consolidated Adjusted EBITDA, and to the Non-GAAP valuation measure, Consolidated Adjusted EBITDAR, for the periods presented:
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2024
2023
2024
2023
Consolidated net income
$
6,657
$
4,462
$
17,809
$
9,381
Less: Net income attributable to noncontrolling interest
452
79
1,008
351
Add: Provision for income taxes
1,354
1,066
4,957
3,894
Net interest expense
2,892
1,496
6,306
4,355
Depreciation and amortization
1,493
1,323
4,292
3,817
Consolidated EBITDA
11,944
8,268
32,356
21,096
Adjustments to Consolidated EBITDA
Add: Costs at start-up operations(a)
65
(108
)
(72
)
160
Share-based compensation expense(b)
2,342
1,391
5,817
4,164
Acquisition related costs and credit allowances(c)
494
71
996
175
Costs associated with transitioning operations(d)
12
10
(583
)
595
Unusual, non-recurring or redundant charges(e)
239
1,009
546
1,633
Rent related to items (a) and (d) above
53
239
463
1,041
Consolidated Adjusted EBITDA
15,149
10,880
39,523
28,864
Rent—cost of services
10,906
10,006
31,814
29,439
Rent related to items (a) and (d) above
(53
)
(239
)
(463
)
(1,041
)
Adjusted rent—cost of services
10,853
9,767
31,351
28,398
Consolidated Adjusted EBITDAR(f)
$
26,002
$
70,874
(a)
Represents results related to start-up operations. This amount excludes rent and depreciation and amortization expense related to such operations.
(b)
Share-based compensation expense and related payroll taxes incurred. Share-based compensation expense and related payroll taxes are included in cost of services and general and administrative expense.
(c)
Non-capitalizable costs associated with acquisitions, credit allowances, and write offs for amounts in dispute with the prior owners of certain acquired operations.
(d)
During the nine months ended September 30, 2023, an affiliate of the Company placed its memory care units into transition and began seeking to sublease the units to an unrelated third party. The amount above represents the net operating impact attributable to the units in transition. The amounts reported exclude rent and depreciation and amortization expense related to such operations and include legal settlement costs associated with an entity transitioned to Ensign.
(e)
Represents unusual or non-recurring charges for legal services, implementation costs, integration costs, and consulting fees in general and administrative and cost of services expenses.
(f)
This measure is a valuation measure and is displayed thusly, it is not a performance measure as it excludes rent expense, which is a normal and recurring operating expense and, as such, does not reflect our cash requirements for leasing commitments. Our presentation of Consolidated Adjusted EBITDAR should not be construed as a financial performance measure.
The following table present certain financial information regarding our reportable segments. General and administrative expenses are not allocated to the reportable segments and are included in “All Other”:
Home Healthand HospiceServices
Senior LivingServices
All Other
Total
Segment GAAP Financial Measures:
Three Months Ended September 30, 2024
Revenue
$
135,672
$
45,016
$
—
$
180,688
Segment Adjusted EBITDAR from Operations
$
23,724
$
13,411
$
(11,133
)
$
26,002
Three Months Ended September 30, 2023
Revenue
$
101,474
$
38,718
$
—
$
140,192
Segment Adjusted EBITDAR from Operations
$
17,271
$
11,473
$
(8,097
)
$
20,647
Home Healthand HospiceServices
Senior LivingServices
All Other
Total
Segment GAAP Financial Measures:
Nine Months Ended September 30, 2024
Revenue
$
377,463
$
128,885
$
—
$
506,348
Segment Adjusted EBITDAR from Operations
$
64,488
$
38,226
$
(31,840
)
$
70,874
Nine Months Ended September 30, 2023
Revenue
$
287,573
$
111,364
$
—
$
398,937
Segment Adjusted EBITDAR from Operations
$
47,364
$
33,394
$
(23,496
)
$
57,262
The table below provides a reconciliation of Segment Adjusted EBITDAR from Operations above to Condensed Consolidated Income from Operations:
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2024
2023
2024
2023
Segment Adjusted EBITDAR from Operations(a)
$
26,002
$
20,647
$
70,874
$
57,262
Less: Depreciation and amortization
1,493
1,323
4,292
3,817
Rent—cost of services
10,906
10,006
31,814
29,439
Other income
109
(37
)
192
28
Adjustments to Segment EBITDAR from Operations:
Less: Costs at start-up operations(b)
65
(108
)
(72
)
160
Share-based compensation expense(c)
2,342
1,391
5,817
4,164
Acquisition related costs and credit allowances(d)
494
71
996
175
Costs associated with transitioning operations(e)
12
10
(583
)
595
Unusual, non-recurring or redundant charges(f)
239
1,009
546
1,633
Add: Net income attributable to noncontrolling interest
452
79
1,008
351
Consolidated Income from Operations
$
10,794
$
7,061
$
28,880
$
17,602
(a)
Segment Adjusted EBITDAR from Operations is net income (loss) attributable to the Company's reportable segments excluding interest expense, provision for income taxes, depreciation and amortization expense, rent, and, in order to view the operations performance on a comparable basis from period to period, certain adjustments including: (1) costs at start-up operations, (2) share-based compensation, (3) acquisition related costs and credit allowances, (4) the costs associated with transitioning operations, (5) unusual, non-recurring or redundant charges, and (6) net income attributable to noncontrolling interest. General and administrative expenses are not allocated to the reportable segments, and are included as “All Other,” accordingly the segment earnings measure reported is before allocation of corporate general and administrative expenses. The Company's segment measures may be different from the calculation methods used by other companies and, therefore, comparability may be limited.
(b)
Represents results related to start-up operations. This amount excludes rent and depreciation and amortization expense related to such operations.
(c)
Share-based compensation expense and related payroll taxes incurred. Share-based compensation expense and related payroll taxes are included in cost of services and general and administrative expense.
(d)
Non-capitalizable costs associated with acquisitions, credit allowances, and write offs for amounts in dispute with the prior owners of certain acquired operations.
(e)
During the nine months ended September 30, 2023, an affiliate of the Company placed its memory care units into transition and began seeking to sublease the units to an unrelated third party. The amount above represents the net operating impact attributable to the units in transition. The amounts reported exclude rent and depreciation and amortization expense related to such operations and include legal settlement costs associated with an entity transitioned to Ensign.
(f)
Represents unusual or non-recurring charges for legal services, implementation costs, integration costs, and consulting fees in general and administrative and cost of services expenses.
The tables below reconcile Segment Adjusted EBITDAR from Operations to Segment Adjusted EBITDA from Operations for each reportable segment for the periods presented:
Three Months Ended September 30,
Home Health andHospice
Senior Living
2024
2023
2024
2023
Segment Adjusted EBITDAR from Operations
$
23,724
$
17,271
$
13,411
$
11,473
Less: Rent—cost of services
1,861
1,439
9,045
8,567
Rent related to start-up and transitioning operations
—
(72
)
(53
)
(167
)
Segment Adjusted EBITDA from Operations
$
21,863
$
15,904
$
4,419
$
3,073
Nine Months Ended September 30,
Home Health andHospice
Senior Living
2024
2023
2024
2023
Segment Adjusted EBITDAR from Operations
$
64,488
$
47,364
$
38,226
$
33,394
Less: Rent—cost of services
5,254
4,136
26,560
25,303
Rent related to start-up and transitioning operations
(122
)
(248
)
(341
)
(793
)
Segment Adjusted EBITDA from Operations
$
59,356
$
43,476
$
12,007
$
8,884
Discussion of Non-GAAP Financial Measures
EBITDA consists of net income before (a) interest expense, net, (b) (benefits) provisions for income taxes, and (c) depreciation and amortization. Adjusted EBITDA consists of net income attributable to the Company before (a) interest expense, net (b) (benefits) provisions for income taxes, (c) depreciation and amortization, (d) costs incurred for start-up operations, including rent and excluding depreciation, interest and income taxes, (e) share-based compensation expense, (f) non-capitalizable acquisition related costs and credit allowances, (g) net costs associated with transitioning operations, (h) unusual, non-recurring or redundant charges and (i) net income attributable to noncontrolling interest. Consolidated Adjusted EBITDAR is a valuation measure applicable to current periods only and consists of net income attributable to the Company before (a) interest expense, net, (b) (benefits) provisions for income taxes, (c) depreciation and amortization, (d) rent-cost of services, (e) costs incurred for start-up operations, excluding rent, depreciation, interest and income taxes, (f) share-based compensation expense, (g) acquisition related costs and credit allowances, (h) redundant or non-recurring transition services costs, (i) costs associated with transitioning operations, (j) unusual, non-recurring or redundant charges and (j) net income attributable to noncontrolling interest. The company believes that the presentation of EBITDA, adjusted EBITDA, consolidated adjusted EBITDAR, adjusted net income and adjusted earnings per share provides important supplemental information to management and investors to evaluate the company’s operating performance. The company believes disclosure of adjusted net income, adjusted net income per share, EBITDA, adjusted EBITDA and consolidated adjusted EBITDAR has economic substance because the excluded revenues and expenses are infrequent in nature and are variable in nature, or do not represent current revenues or cash expenditures. A material limitation associated with the use of these measures as compared to the GAAP measures of net income and diluted earnings per share is that they may not be comparable with the calculation of net income and diluted earnings per share for other companies in the company's industry. These non-GAAP financial measures should not be relied upon to the exclusion of GAAP financial measures. For further information regarding why the company believes that this non-GAAP measure provides useful information to investors, the specific manner in which management uses this measure, and some of the limitations associated with the use of this measure, please refer to the company's periodic filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Report on Form 10-Q. The company’s periodic filings are available on the SEC's website at www.sec.gov or under the "Financial Information" link of the Investor Relations section on Pennant’s website at http://www.pennantgroup.com.
