The Pennant Group Inc. (Nasdaq: PNTG) is celebrating a milestone. The company has reached an all-time high in home health and hospice average daily census.
Specifically, Pennant saw a 7.1% year-over-year increase in home health admissions last quarter.
“We are excited about this progress, and still see significant opportunities to improve our bottom-line financial performance,” Pennant CEO Brent Guerisoli said during the company’s first-quarter earnings call on Friday. “With the benefit of the positive momentum built over the last several quarters, we remain on track to deliver on our 2023 earnings commitments.”
The Eagle, Idaho-based Pennant is a holding company of independent operating subsidiaries, with a network that includes 96 home health and hospice agencies and 51 senior living communities located across the U.S.
Pennant COO and President John J. Gochnour credited the company’s efforts to create “unique solutions” in the communities they serve for the growth it is seeing. He noted that Pennant’s growth was also being driven by the company’s strong clinical outcomes.
During the call, Guerisoli emphasized Pennant’s commitment to its key organizational priorities. These priorities include leadership development and margin growth, among others.
“Where I’m personally investing much of my time and attention is diligently focusing on finding, hiring and developing a robust pipeline of exceptional operational leaders who can optimize the many exciting growth opportunities that lay before us,” he said.
In fact, over the next several years, Pennant has its sights set on developing 100 local CEOs.
“To earn the title of CEO, our leaders must not only achieve extraordinary clinical outcomes, culture and growth, but also drive significant financial improvement in their operation,” Guerisoli said.
The company’s pledge to identify and develop local CEOs falls right in line with Pennant’s overall strategy of empowering local leaders and treating health care like a local business.
As part of its local CEO development effort, Pennant has beefed up its leadership training programs for operators and clinical leaders. Guerisoli also noted that the company has increased the depth of its leadership pool.
The company has appointed seven local CEOs, adding to its 22 existing local CEOs. The company has also hired 11 CEOs that are in training.
“The future of our organization is in good hands, and this continued investment will drive our future growth,” Guerisoli said.
Pennant also detailed its multifaceted approach to optimize its operations and increase margins.
“Our local teams carefully measure and manage utilization and staff productivity,” Guerisoli said. “Second, our team diligently monitors payer mix to balance reimbursement with our commitment to be a solution to the needs of our communities.”
The company has also established a standard for new acquisitions. In general, Pennant’s strategy has been to acquire and turn around underperforming operations.
New acquisitions must now contribute meaningfully to earnings no later than the ninth quarter post-acquisition.
“As an example, in early 2021 we acquired home health operations in Phoenix and Tucson, Arizona,” Guerisoli said. “The first four quarters post-acquisition were foundation building quarters, reinforcing culture, operational and clinical leadership teams, and community relationships. Over those four quarters revenue increased 48% and earnings increased 13% year over year. In Q1 of 2023, the ninth quarter since the acquisition, these operations are now high-performers, with a 135% increase in revenue and a 200% in earnings since the acquisition.”
Overall, Pennant’s total revenue for Q1 was $126.5 million, an 11% increase compared to $113.9 million during the same period last year.
Additionally, the home health and hospice services segment revenue for Q1 was $91.1 million, a 13.2% increase compared to $80.4 million during the same period last year.
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