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Conference Call and Webcast scheduled for tomorrow, August 9, 2022 at 10:00 am MT

EAGLE, Idaho, Aug. 08, 2022 (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 second quarter 2022, reporting GAAP diluted loss per share of $0.09 and adjusted diluted earnings per share of $0.14 for the quarter⁽¹⁾.

Second Quarter Highlights

• Total revenue for the quarter was $116.3 million, an increase of $6.0 million or 5.4% over the prior year quarter;

• Net loss for the second quarter was $2.7 million, adjusted EBITDA for the quarter was $7.6 million, an increase of $1.5 million or 23.8% over the first quarter of 2022, and adjusted EBITDAR for the quarter was $16.6 million;

• Home Health and Hospice Services segment revenue for the second quarter was $85.3 million, an increase of $7.2 million or 9.3% over the prior year quarter, segment adjusted EBITDAR from Operations was $15.7 million, and segment adjusted EBITDA was $14.5 million, an increase $0.7 million or 4.8% over the prior year quarter;

• Total home health admissions for the second quarter was 10,055, total Medicare home health admissions for the second quarter was 4,682, an increase of 6.3% over the prior year quarter;

• Total hospice admissions for the second quarter was 2,119, an increase of 3.5% over the prior year quarter, and hospice average daily census for the second quarter was 2,285, an increase of 2.4% compared to the first quarter 2022 and a decrease of 0.5% compared to the prior year quarter;

• Senior Living Services segment revenue for the second quarter was $31.0 million, a decrease of $1.3 million or 3.9% over the prior year quarter, segment adjusted EBITDAR from Operations for the quarter was $8.8 million, and segment adjusted EBITDA for the second quarter was $0.9 million, an increase of $0.1 million over the prior year quarter; and

• Senior living average occupancy for the second quarter was 76.5%, an increase of 380 basis points over the prior year quarter, and average monthly revenue per occupied room for the second quarter was $3,470, an increase of $294 or 9.3% over the prior year quarter and $99 or 2.9% over the first quarter of 2022.

Operating Results

“We are pleased to report our second quarter results showing continued operational momentum in each segment,” said Brent Guerisoli, Pennant’s Chief Executive Officer. “We are grateful to each of our local teams and our service center partners for navigating ongoing operational headwinds and a challenging labor environment. As we face further economic and regulatory uncertainty, our unique operating model and leadership depth give us confidence in the abilities of our teams to be successful and create value for our long-term stakeholders.”

Commenting on the Company’s operating results, Mr. Guerisoli said, “Our home health and hospice business posted another solid quarter despite persistent labor and inflationary pressures. Our revenue of $85.3 million in the second quarter was driven largely by strong Medicare home health admissions, which increased 6.3% over the prior year quarter, and total hospice admissions, which increased 3.5% over the prior year quarter. Segment adjusted EBITDA margin expanded 120 basis points over the first quarter of 2022, leading to segment adjusted EBITDA growth of $1.8 million or 14.4% over the same period. Underpinning these strong results is our focus on producing quality clinical outcomes, with over half of our home health agencies have a CMS star rating of 4.5 or 5 stars, and an average rehospitalization rate 340 basis points below the national average according to real-time third party analytics. We continue to see tremendous opportunities in our home health and hospice segment to drive stronger performance across our existing platform and expand our footprint by acquiring high-quality agencies in adjacent markets. ”

“Our senior living segment continues to build momentum even in the face of lingering labor pressures,” said Mr. Guerisoli. “Strong occupancy and RevPOR results highlight the solid demand for quality senior living services that we are poised to address in our markets. Excluding the impact of the six senior living operations exited during 2022, our same store average occupancy for the second quarter was 77.2%, an increase of 180 basis points over the first quarter 2022 and 190 basis points over the prior year quarter, and same store average revenue per occupied room would have increased 0.5% over the first quarter 2022 and 5.8% over the prior year quarter. Across the segment, as we continue developing leadership teams, improving our data and systems, and driving accountability around our core opportunities, we know we can execute with operational excellence and continue to achieve financial, cultural and clinical success.”

During the quarter, the Company completed the transfer of five senior living communities to Ensign affiliates, acquired the real estate underlying the operations of its 82-unit assisted living and memory care community in Twin Falls, Idaho, which will continue to be operated by an affiliate of the Company, and closed on the acquisition of one home health agency in Montana. After quarter-end, the Company acquired the operations of Barber Station Assisted Living and Memory Care, a Class A senior living community with 39 assisted living and 45 memory care units in Boise, Idaho, signing a favorable long-term triple-net lease. “We see increasing opportunity across the home health and hospice landscape to acquire quality agencies at prices consistent with our disciplined investment strategy. Our pipeline of potential acquisitions is healthy, our strong balance sheet and access to capital allow us to invest opportunistically, and the uncertainties facing providers--particularly home health operators--are substantial, creating opportunities for us to work with high-quality business owners looking for a strategic partner to amplify the legacy they’ve built. We are poised to be the buyer-of-choice for these providers, and we’re excited about deploying capital and growing in a significant way over the next several quarters,” said Derek Bunker, Pennant’s Chief Investment Officer.

Jennifer Freeman, Pennant's Chief Financial Officer, reported that the Company ended the second quarter with strong liquidity, with $3.2 million of cash on hand and $90.8 million of availability on its revolving line of credit. Ms. Freeman reported that the Company had a net debt-to-adjusted EBITDA ratio of 1.96x and a lease-adjusted net debt-to-adjusted EBITDAR ratio of 5.67x as of quarter-end. “Our cash position and liquidity in the second quarter improved sequentially over the first quarter. We completed the process of returning $28.0 million in Medicare advance payments received in 2020. Aside from acquisitions which may cause our leverage to temporarily remain elevated, we look forward to our leverage ratio and cash flow improving. We are excited to deploy growing dry powder in what we believe will be a compelling investment environment on the horizon,” said Ms. Freeman.

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 Quarterly Report on Form 10-Q,Form 10-Q for the three and six months ended June 30, 2022, which has been filed with the SEC today and can be viewed on the company’s website at www.pennantgroup.com.

2022 Guidance

Management reaffirms its 2022 annual guidance of total revenue between $450 million and $460 million. Full year 2022 adjusted earnings per diluted share is anticipated to be between $0.60 and $0.68 and full year 2022 adjusted EBITDA is anticipated to be between $33.2 million and $35.7 million.

The Company’s 2022 annual guidance is based on diluted weighted average shares outstanding of approximately 30.4 million and a 25.8% effective tax rate. The guidance assumes, among other things, anticipated reimbursement rate adjustments, no unannounced acquisitions, and the lingering effects of COVID-19. It excludes the tax-effected costs at start-up operations, share-based compensation, acquisition-related costs, and loss on disposition of assets and impairments.

Ms. Freeman stated, “We believe providing annual adjusted consolidated EBITDA guidance in addition to annual revenue and adjusted earnings per share guidance is helpful in understanding our expectations for our business and operational cash flow. While the first half of 2022 presented unique concerns making guidance more challenging, we are on track with the operational ramp we expected.”

Conference Call

A live webcast will be held tomorrow, August 9, 2022 at 10:00 a.m. Mountain time (12:00 p.m. Eastern time) to discuss Pennant’s second quarter 2022 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 until 5:00 p.m. Mountain time on Friday, September 9, 2022.

About Pennant

The Pennant Group, Inc. is a holding company of independent operating subsidiaries that provide healthcare services through 89 home health and hospice agencies and 49 senior living communities located throughout Arizona, California, Colorado, Idaho, Iowa, 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, 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.

Contact Information

Investor Relations
The Pennant Group, Inc.
(208) 506-6100
ir@pennantgroup.com

SOURCE: The Pennant Group, Inc.

THE PENNANT GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except for per-share amounts)

THE PENNANT GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
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