QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
(State or Other Jurisdiction of | (I.R.S. Employer | ||||
Incorporation or Organization) | Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Large accelerated filer | ☐ | ☒ | Non-accelerated filer | ☐ | Smaller reporting company | Emerging growth company |
Item 1A. | Risk Factors | |||||||
June 30, 2021 | December 31, 2020 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash | $ | $ | |||||||||
Accounts receivable—less allowance for doubtful accounts of $ | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Property and equipment, net | |||||||||||
Right-of-use assets | |||||||||||
Escrow deposits | |||||||||||
Deferred tax assets | |||||||||||
Restricted and other assets | |||||||||||
Goodwill | |||||||||||
Other indefinite-lived intangibles | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued wages and related liabilities | |||||||||||
Operating lease liabilities—current | |||||||||||
Other accrued liabilities | |||||||||||
Total current liabilities | |||||||||||
Long-term operating lease liabilities—less current portion | |||||||||||
Other long-term liabilities | |||||||||||
Long-term debt, net | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies | |||||||||||
Equity: | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Treasury stock, at cost, | ( | ( | |||||||||
Total Pennant Group, Inc. stockholders’ equity | |||||||||||
Noncontrolling interest | |||||||||||
Total equity | |||||||||||
Total liabilities and equity | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Revenue | $ | $ | $ | $ | |||||||||||||||||||
Expense | |||||||||||||||||||||||
Cost of services | |||||||||||||||||||||||
Rent—cost of services | |||||||||||||||||||||||
General and administrative expense | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Total expenses | |||||||||||||||||||||||
Income from operations | |||||||||||||||||||||||
Other expense: | |||||||||||||||||||||||
Other expense | ( | ( | |||||||||||||||||||||
Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||
Other expense, net | ( | ( | ( | ( | |||||||||||||||||||
Income before provision for income taxes | |||||||||||||||||||||||
Provision for income taxes | |||||||||||||||||||||||
Net income | |||||||||||||||||||||||
Less: net loss attributable to noncontrolling interest | ( | ( | |||||||||||||||||||||
Net income and other comprehensive income attributable to The Pennant Group, Inc. | $ | $ | $ | $ | |||||||||||||||||||
Earnings per share: | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | $ | $ | $ | $ | |||||||||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted |
Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Non-Controlling Interest | |||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Total | |||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||
Net income attributable to The Pennant Group, Inc. | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Net loss attributable to Non-Controlling Interests | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Issuance of common stock from the exercise of stock options | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Net issuance of restricted stock | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2021 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||
Net income attributable to The Pennant Group, Inc. | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Net loss attributable to Non-Controlling Interests | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Issuance of common stock from the exercise of stock options | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Net issuance of restricted stock | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2021 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-In Capital | Retained Earnings/ (Accumulated Deficit) | Treasury Stock | Non-Controlling Interest | |||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Total | |||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
Net income attributable to The Pennant Group, Inc. | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Issuance of common stock from the exercise of stock options | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Net issuance of restricted stock | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2020 | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
Net income/ (loss) attributable to The Pennant Group, Inc. | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Issuance of common stock from the exercise of stock options | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Net issuance of restricted stock | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Shares of common stock withheld to satisfy tax withholding obligations | ( | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | $ | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, | |||||||||||
2021 | 2020 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Amortization of deferred financing fees | |||||||||||
Provision for doubtful accounts | |||||||||||
Share-based compensation | |||||||||||
Deferred income taxes | |||||||||||
Change in operating assets and liabilities: | |||||||||||
Accounts receivable | ( | ( | |||||||||
Prepaid expenses and other assets | ( | ( | |||||||||
Operating lease obligations | |||||||||||
Accounts payable | ( | ( | |||||||||
Accrued wages and related liabilities | ( | ( | |||||||||
Other accrued liabilities | |||||||||||
Contract liabilities (CARES Act advance payments) | ( | ||||||||||
Other long-term liabilities | ( | ||||||||||
Net cash (used in) provided by operating activities | ( | ||||||||||
Cash flows from investing activities: | |||||||||||
Purchase of property and equipment | ( | ( | |||||||||
Cash payments for business acquisitions, net of escrow | ( | ( | |||||||||
Escrow deposits | ( | ||||||||||
Other | ( | ( | |||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from Revolving Credit Facility | |||||||||||
Payments on Revolving Credit Facility | ( | ( | |||||||||
Repurchase of shares of common stock to satisfy tax withholding obligations | ( | ||||||||||
Payments for deferred financing costs | ( | ( | |||||||||
Issuance of common stock upon the exercise of options | |||||||||||
Net cash provided by (used in) financing activities | ( | ||||||||||
Net increase in cash | |||||||||||
Cash beginning of period | |||||||||||
Cash end of period | $ | $ |
Six Months Ended June 30, | |||||||||||
2021 | 2020 | ||||||||||
Supplemental disclosures of cash flow information: | |||||||||||
Cash paid during the period for: | |||||||||||
Interest | $ | $ | |||||||||
Income taxes | $ | $ | |||||||||
Lease liabilities | $ | $ | |||||||||
Right-of-use assets obtained in exchange for new operating lease obligations | $ | $ | |||||||||
Net non-cash adjustment to right-of-use assets and lease liabilities from lease modifications | $ | $ | |||||||||
Non-cash investing activity: | |||||||||||
Capital expenditures | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Add: net loss attributable to noncontrolling interests | ( | ( | |||||||||||||||||||||
Net income attributable to The Pennant Group, Inc. | $ | $ | $ | $ | |||||||||||||||||||
Denominator: | |||||||||||||||||||||||
Weighted average shares outstanding for basic net income per share | |||||||||||||||||||||||
Plus: assumed incremental shares from exercise of options and assumed conversion or vesting of restricted stock(a) | |||||||||||||||||||||||
Adjusted weighted average common shares outstanding for diluted income per share | |||||||||||||||||||||||
Earnings Per Share: | |||||||||||||||||||||||
Basic net income per common share | $ | $ | $ | $ | |||||||||||||||||||
Diluted net income per common share | $ | $ | $ | $ |
(a) | The calculation of dilutive shares outstanding excludes out-of-the-money stock options (i.e., such options’ exercise prices were greater than the average market price of our common shares for the period) because their inclusion would have been antidilutive. Options outstanding which are anti-dilutive and therefore not factored into the weighted average common shares amount above were |
Three Months Ended June 30, 2021 | ||||||||||||||||||||||||||||||||
Home Health and Hospice Services | ||||||||||||||||||||||||||||||||
Home Health Services | Hospice Services | Senior Living Services | Total Revenue | Revenue % | ||||||||||||||||||||||||||||
Medicare | $ | $ | $ | $ | % | |||||||||||||||||||||||||||
Medicaid | ||||||||||||||||||||||||||||||||
Subtotal | ||||||||||||||||||||||||||||||||
Managed care | ||||||||||||||||||||||||||||||||
Private and other(a) | ||||||||||||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | % |
(a) | Private and other payors in our home health and hospice services segment includes revenue from all payors generated in our home care operations. |
Three Months Ended June 30, 2020 | ||||||||||||||||||||||||||||||||
Home Health and Hospice Services | ||||||||||||||||||||||||||||||||
Home Health Services | Hospice Services | Senior Living Services | Total Revenue | Revenue % | ||||||||||||||||||||||||||||
Medicare | $ | $ | $ | $ | % | |||||||||||||||||||||||||||
Medicaid | ||||||||||||||||||||||||||||||||
Subtotal | ||||||||||||||||||||||||||||||||
Managed care | ||||||||||||||||||||||||||||||||
Private and other(a) | ||||||||||||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | % |
(a) | Private and other payors in our home health and hospice services segment includes revenue from all payors generated in our home care operations. |
Six Months Ended June 30, 2021 | ||||||||||||||||||||||||||||||||
Home Health and Hospice Services | ||||||||||||||||||||||||||||||||
Home Health Services | Hospice Services | Senior Living Services | Total Revenue | Revenue % | ||||||||||||||||||||||||||||
Medicare | $ | $ | $ | $ | % | |||||||||||||||||||||||||||
Medicaid | ||||||||||||||||||||||||||||||||
Subtotal | ||||||||||||||||||||||||||||||||
Managed care | ||||||||||||||||||||||||||||||||
Private and other(a) | ||||||||||||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | % |
(a) | Private and other payors in our home health and hospice services segment includes revenue from all payors generated in our home care operations. |
Six Months Ended June 30, 2020 | ||||||||||||||||||||||||||||||||
Home Health and Hospice Services | ||||||||||||||||||||||||||||||||
Home Health Services | Hospice Services | Senior Living Services | Total Revenue | Revenue % | ||||||||||||||||||||||||||||
Medicare | $ | $ | $ | $ | % | |||||||||||||||||||||||||||
Medicaid | ||||||||||||||||||||||||||||||||
Subtotal | ||||||||||||||||||||||||||||||||
Managed care | ||||||||||||||||||||||||||||||||
Private and other(a) | ||||||||||||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | % |
(a) | Private and other payors in our home health and hospice services segment includes revenue from all payors generated in our home care operations. |
June 30, 2021 | December 31, 2020 | ||||||||||
Medicare | $ | $ | |||||||||
Medicaid | |||||||||||
Managed care | |||||||||||
Private and other | |||||||||||
Accounts receivable, gross | |||||||||||
Less: allowance for doubtful accounts | ( | ( | |||||||||
Accounts receivable, net | $ | $ |
Home Health and Hospice Services | Senior Living Services | All Other | Total | |||||||||||||||||||||||
Three Months Ended June 30, 2021 | ||||||||||||||||||||||||||
Revenue | $ | $ | $ | $ | ||||||||||||||||||||||
Segment Adjusted EBITDAR from Operations | $ | $ | $ | ( | $ | |||||||||||||||||||||
Three Months Ended June 30, 2020 | ||||||||||||||||||||||||||
Revenue | $ | $ | $ | $ | ||||||||||||||||||||||
Segment Adjusted EBITDAR from Operations | $ | $ | $ | ( | $ |
Home Health and Hospice Services | Senior Living Services | All Other | Total | |||||||||||||||||||||||
Six Months Ended June 30, 2021 | ||||||||||||||||||||||||||
Revenue | $ | $ | $ | $ | ||||||||||||||||||||||
Segment Adjusted EBITDAR from Operations | $ | $ | $ | ( | $ | |||||||||||||||||||||
Six Months Ended June 30, 2020 | ||||||||||||||||||||||||||
Revenue | $ | $ | $ | $ | ||||||||||||||||||||||
Segment Adjusted EBITDAR from Operations | $ | $ | $ | ( | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Segment Adjusted EBITDAR from Operations | $ | $ | $ | $ | |||||||||||||||||||
Less: Depreciation and amortization | |||||||||||||||||||||||
Rent—cost of services | |||||||||||||||||||||||
Other expense | ( | ( | |||||||||||||||||||||
Adjustments to Segment EBITDAR from Operations: | |||||||||||||||||||||||
Less: Costs at start-up operations(a) | |||||||||||||||||||||||
Share-based compensation expense(b) | |||||||||||||||||||||||
Acquisition related costs(c) | |||||||||||||||||||||||
Transition services costs(d) | |||||||||||||||||||||||
Net COVID-19 related costs(e) | |||||||||||||||||||||||
Add: Net loss attributable to noncontrolling interest | ( | ( | |||||||||||||||||||||
Condensed Consolidated Income from Operations | $ | $ | $ | $ |
(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 incurred which is included in cost of services and general and administrative expense. | |||||||
(c) | Acquisition related costs related to business combinations completed during the periods. |
(d) | A portion of the costs incurred under the Transition Services Agreement identified as redundant or nonrecurring that are included in general and administrative expense. Fees incurred under the Transition Services agreement, net of the Company’s payroll reimbursement, were $ | |||||||
(e) | Beginning in the first quarter of fiscal year 2021, we updated our definition of Segment Adjusted EBITDAR to no longer include an adjustment for COVID-19 expenses offset by the amount of sequestration relief. COVID-19 expenses continue to be part of daily operations for which less specific identification is visible. Furthermore, the sequestration relief has been extended through December 31, 2021. Sequestration relief was $ The 2020 amounts represent incremental costs incurred as part of the Company's response to COVID-19 including direct medical supplies, labor, and other expenses, net of $ |
June 30, 2021 | December 31, 2020 | ||||||||||
Leasehold improvements | $ | $ | |||||||||
Equipment | |||||||||||
Furniture and fixtures | |||||||||||
Less: accumulated depreciation | ( | ( | |||||||||
Property and equipment, net | $ | $ |
Home Health and Hospice Services | Senior Living Services | Total | |||||||||||||||
December 31, 2020 | $ | $ | $ | ||||||||||||||
Additions | |||||||||||||||||
June 30, 2021 | $ | $ | $ |
June 30, 2021 | December 31, 2020 | ||||||||||
Trade name | $ | $ | |||||||||
Medicare and Medicaid licenses | |||||||||||
Total | $ | $ |
June 30, 2021 | December 31, 2020 | ||||||||||
Refunds payable | $ | $ | |||||||||
Deferred revenue | |||||||||||
Resident deposits | |||||||||||
Contract Liabilities (CARES Act advance payments) | |||||||||||
Property taxes | |||||||||||
Accrued self-insurance liabilities - current portion | |||||||||||
Other | |||||||||||
Other accrued liabilities | $ | $ |
June 30, 2021 | December 31, 2020 | ||||||||||
Revolving Credit Facility | $ | $ | |||||||||
Less: unamortized debt issuance costs(a) | ( | ( | |||||||||
Long-term debt, net | $ | $ |
(a) | Amortization expense for debt issuance costs was $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Share-based compensation expense related to stock options | $ | $ | $ | ||||||||||||||||||||
Share-based compensation expense related to Restricted Stock | |||||||||||||||||||||||
Share-based compensation expense related to Restricted Stock to non-employee directors | |||||||||||||||||||||||
Total share-based compensation | $ | $ | $ | $ |
Unrecognized Compensation Expense | Weighted Average Recognition Period (in years) | ||||||||||
Unvested Stock Options | $ | ||||||||||
Unvested Restricted Stock | |||||||||||
Total unrecognized share-based compensation expense | $ |
Grant Year | Options Granted | Risk-Free Interest Rate | Expected Life(a) | Expected Volatility(b) | Dividend Yield | Weighted Average Fair Value of Options | ||||||||||||||||||||||||||||||||
2021 | % | % | % | $ | ||||||||||||||||||||||||||||||||||
2020 | % | % | % | $ | ||||||||||||||||||||||||||||||||||
(a) | Under the midpoint method, the expected option life is the midpoint between the contractual option life and the average vesting period for the options being granted. This resulted in an expected option life of | |||||||
(b) | Because the Company’s equity shares have been traded for a relatively short period of time, expected volatility assumption was based on the volatility of related industry stocks. |
Number of Options Outstanding | Weighted Average Exercise Price | Number of Options Vested | Weighted Average Exercise Price of Options Vested | ||||||||||||||||||||
December 31, 2020 | $ | $ | |||||||||||||||||||||
Granted | |||||||||||||||||||||||
Exercised | ( | ||||||||||||||||||||||
Forfeited & Expired | ( | ||||||||||||||||||||||
June 30, 2021 | $ | $ |
Non-Vested Restricted Stock | Weighted Average Grant Date Fair Value | ||||||||||
December 31, 2020 | $ | ||||||||||
Granted | |||||||||||
Vested | ( | ||||||||||
Forfeited | ( | ||||||||||
June 30, 2021 | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Operating Lease Costs: | |||||||||||||||||||||||
Facility Rent—cost of services | $ | $ | $ | $ | |||||||||||||||||||
Office Rent—cost of services | |||||||||||||||||||||||
Sublease Income | ( | ( | |||||||||||||||||||||
Rent—cost of services | $ | $ | $ | $ | |||||||||||||||||||
General and administrative expense | $ | $ | $ | $ | |||||||||||||||||||
Variable lease cost (a) | $ | $ | $ | $ |
(a) | Represents variable lease cost for operating leases, which costs include property taxes and insurance, common area maintenance, and consumer price index increases, incurred as part of our triple net lease, and which is included in cost of services for the three and six months ended June 30, 2021 and 2020. |
Year | Amount | ||||
2021 (Remainder) | $ | ||||
2022 | |||||
2023 | |||||
2024 | |||||
2025 | |||||
Thereafter | |||||
Total lease payments | |||||
Less: present value adjustments | ( | ||||
Present value of total lease liabilities | |||||
Less: current lease liabilities | ( | ||||
Long-term operating lease liabilities | $ |
December 31, | June 30, | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||
Home health and hospice agencies | 16 | 25 | 32 | 39 | 46 | 54 | 63 | 76 | 86 | ||||||||||||||||||||||||||||||||||||||||||||
Senior living communities | 12 | 15 | 36 | 36 | 43 | 50 | 52 | 54 | 54 | ||||||||||||||||||||||||||||||||||||||||||||
Senior living units | 1,256 | 1,587 | 3,184 | 3,184 | 3,434 | 3,820 | 3,963 | 4,127 | 4,127 | ||||||||||||||||||||||||||||||||||||||||||||
Total number of home health, hospice, and senior living operations | 28 | 40 | 68 | 75 | 89 | 104 | 115 | 130 | 140 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Home health services: | |||||||||||||||||||||||
Total home health admissions | 10,069 | 5,259 | 19,166 | 11,395 | |||||||||||||||||||
Total Medicare home health admissions | 4,406 | 2,459 | 8,904 | 5,268 | |||||||||||||||||||
Average Medicare revenue per 60-day completed episode | $ | 3,441 | $ | 3,412 | $ | 3,424 | $ | 3,232 | |||||||||||||||
Hospice services: | |||||||||||||||||||||||
Total hospice admissions | 2,047 | 1,954 | 4,201 | 3,630 | |||||||||||||||||||
Average hospice daily census | 2,296 | 1,979 | 2,301 | 1,925 | |||||||||||||||||||
Hospice Medicare revenue per day | $ | 171 | $ | 164 | $ | 172 | $ | 163 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Occupancy | 72.7 | % | 78.5 | % | 72.4 | % | 79.3 | % | |||||||||||||||
Average monthly revenue per occupied unit | $ | 3,176 | $ | 3,204 | $ | 3,181 | $ | 3,205 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Total revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||
Expense: | |||||||||||||||||||||||
Cost of services | 78.5 | 73.5 | 78.8 | 74.9 | |||||||||||||||||||
Rent—cost of services | 9.2 | 10.5 | 9.3 | 10.5 | |||||||||||||||||||
General and administrative expense | 8.0 | 8.1 | 8.4 | 7.7 | |||||||||||||||||||
Depreciation and amortization | 1.1 | 1.3 | 1.1 | 1.2 | |||||||||||||||||||
Total expenses | 96.8 | 93.4 | 97.6 | 94.3 | |||||||||||||||||||
Income from operations | 3.2 | 6.6 | 2.4 | 5.7 | |||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Other income | — | — | — | — | |||||||||||||||||||
Interest expense, net | (0.4) | (0.4) | (0.4) | (0.4) | |||||||||||||||||||
Other expense, net | (0.4) | (0.4) | (0.4) | (0.4) | |||||||||||||||||||
Income before provision for income taxes | 2.8 | 6.2 | 2.0 | 5.3 | |||||||||||||||||||
Provision for income taxes | 0.6 | 1.5 | 0.4 | 1.3 | |||||||||||||||||||
Net income | 2.2 | 4.7 | 1.6 | 4.0 | |||||||||||||||||||
Less: net loss attributable to noncontrolling interest | (0.2) | — | (0.1) | — | |||||||||||||||||||
Net income attributable to Pennant | 2.4 | % | 4.7 | % | 1.7 | % | 4.0 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Consolidated GAAP Financial Measures: | |||||||||||||||||||||||
Total revenue | $ | 110,345 | $ | 92,740 | $ | 216,008 | $ | 184,589 | |||||||||||||||
Total expenses | $ | 106,776 | $ | 86,665 | $ | 210,826 | $ | 174,242 | |||||||||||||||
Income from operations | $ | 3,569 | $ | 6,075 | $ | 5,182 | $ | 10,347 |
Home Health and Hospice Services | Senior Living Services | All Other | Total | |||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
Segment GAAP Financial Measures: | ||||||||||||||||||||||||||
Three Months Ended June 30, 2021 | ||||||||||||||||||||||||||
Revenue | $ | 78,105 | $ | 32,240 | $ | — | $ | 110,345 | ||||||||||||||||||
Segment Adjusted EBITDAR from Operations | $ | 14,931 | $ | 9,752 | $ | (6,068) | $ | 18,615 | ||||||||||||||||||
Three Months Ended June 30, 2020 | ||||||||||||||||||||||||||
Revenue | $ | 57,984 | $ | 34,756 | $ | — | $ | 92,740 | ||||||||||||||||||
Segment Adjusted EBITDAR from Operations | $ | 11,245 | $ | 13,492 | $ | (3,999) | $ | 20,738 |
Home Health and Hospice Services | Senior Living Services | All Other | Total | |||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
Segment GAAP Financial Measures: | ||||||||||||||||||||||||||
Six Months Ended June 30, 2021 | ||||||||||||||||||||||||||
Revenue | $ | 152,712 | $ | 63,296 | $ | — | $ | 216,008 | ||||||||||||||||||
Segment Adjusted EBITDAR from Operations | $ | 28,722 | $ | 18,586 | $ | (12,466) | $ | 34,842 | ||||||||||||||||||
Six Months Ended June 30, 2020 | ||||||||||||||||||||||||||
Revenue | $ | 114,746 | $ | 69,843 | $ | — | $ | 184,589 | ||||||||||||||||||
Segment Adjusted EBITDAR from Operations | $ | 21,151 | $ | 25,989 | $ | (8,781) | $ | 38,359 | ||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Segment Adjusted EBITDAR from Operations(a) | $ | 18,615 | $ | 20,738 | $ | 34,842 | $ | 38,359 | |||||||||||||||
Less: Depreciation and amortization | 1,170 | 1,201 | 2,345 | 2,222 | |||||||||||||||||||
Rent—cost of services | 10,156 | 9,767 | 20,121 | 19,473 | |||||||||||||||||||
Other Expense | (24) | — | (24) | — | |||||||||||||||||||
Adjustments to Segment EBITDAR from Operations: | |||||||||||||||||||||||
Less: Costs at start-up operations(b) | 347 | 473 | 459 | 705 | |||||||||||||||||||
Share-based compensation expense(c) | 2,499 | 1,959 | 4,915 | 3,915 | |||||||||||||||||||
Acquisition related costs(d) | 30 | — | 37 | — | |||||||||||||||||||
Transition services costs(e) | 687 | 380 | 1,589 | 537 | |||||||||||||||||||
Net COVID-19 related costs(f) | — | 883 | — | 1,160 | |||||||||||||||||||
Add: Net loss attributable to noncontrolling interest | (181) | — | (218) | — | |||||||||||||||||||
Condensed Consolidated Income from Operations | $ | 3,569 | $ | 6,075 | $ | 5,182 | $ | 10,347 |
(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, (4) redundant and nonrecurring costs associated with the Transition Services Agreement, and (5) net loss 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 incurred which is included in cost of services and general and administrative expense. | |||||||
(d) | Acquisition related costs related to business combinations completed during the periods. | |||||||
(e) | A portion of the costs incurred under the Transition Services Agreement identified as redundant or nonrecurring that are included in general and administrative expense. Fees incurred under the Transition Services agreement, net of the Company’s payroll reimbursement, were $747 and $1,735 for the three and six months ended June 30, 2021, and $1,525 and $2,861 for the three and six months ended June 30, 2020, respectively. During the fourth quarter of fiscal 2020, we updated our Transition service costs adjustment to include duplicate software costs. The prior year transition service costs adjustment has been recast to reflect the change. The adjustment to the prior year transition service costs was $113 and $220 for the duplicative software costs for the three and six months ended June 30, 2020 that were included in the 2020 full year amount in the Company’s as filed Form 10-K. | |||||||
(f) | Beginning in the first quarter of fiscal year 2021, we updated our definition of Segment Adjusted EBITDAR to no longer include an adjustment for COVID-19 expenses offset by the amount of sequestration relief. COVID-19 expenses continue to be part of daily operations for which less specific identification is visible. Furthermore, the sequestration relief has been extended through December 31, 2021. Sequestration relief was $870 and $1,818 for the three and six months ended June 30, 2021, respectively. The 2020 amounts represent incremental costs incurred as part of the Company's response to COVID-19 including direct medical supplies, labor, and other expenses, net of $554 in increased revenue related to the 2% payment increase in Medicare reimbursements for sequestration relief for both the three and six months ended June 30, 2020. The COVID-19 costs do not include $277 in costs for the three months ended March 31, 2020 that were included in the 2020 full year amount. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Consolidated Non-GAAP Financial Measures: | |||||||||||||||||||||||
Performance Metrics | |||||||||||||||||||||||
Consolidated EBITDA | $ | 4,896 | $ | 7,276 | $ | 7,721 | $ | 12,569 | |||||||||||||||
Consolidated Adjusted EBITDA | $ | 8,624 | $ | 11,007 | $ | 14,920 | $ | 18,935 | |||||||||||||||
Valuation Metric | |||||||||||||||||||||||
Consolidated Adjusted EBITDAR | $ | 18,615 | $ | 34,842 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Segment Non-GAAP Measures:(a) | |||||||||||||||||||||||
Segment Adjusted EBITDA from Operations | |||||||||||||||||||||||
Home health and hospice services | $ | 13,867 | $ | 10,387 | $ | 26,642 | $ | 19,456 | |||||||||||||||
Senior living services | $ | 825 | $ | 4,619 | $ | 744 | $ | 8,260 |
(a) | General and administrative expenses are not allocated to any segment for purposes of determining segment profit or loss. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Consolidated Net income | $ | 2,469 | $ | 4,337 | $ | 3,382 | $ | 7,317 | |||||||||||||||
Less: Net loss attributable to noncontrolling interest | (181) | — | (218) | — | |||||||||||||||||||
Add: Provision for income taxes | 604 | 1,437 | 944 | 2,326 | |||||||||||||||||||
Interest expense, net | 472 | 301 | 832 | 704 | |||||||||||||||||||
Depreciation and amortization | 1,170 | 1,201 | 2,345 | 2,222 | |||||||||||||||||||
Consolidated EBITDA | 4,896 | 7,276 | 7,721 | 12,569 | |||||||||||||||||||
Adjustments to Consolidated EBITDA | |||||||||||||||||||||||
Add: Costs at start-up operations(a) | 347 | 473 | 459 | 705 | |||||||||||||||||||
Share-based compensation expense(b) | 2,499 | 1,959 | 4,915 | 3,915 | |||||||||||||||||||
Acquisition related costs(c) | 30 | — | 37 | — | |||||||||||||||||||
Transition services costs(d) | 687 | 380 | 1,589 | 537 | |||||||||||||||||||
Net COVID-19 related costs(e) | — | 883 | — | 1,160 | |||||||||||||||||||
Rent related to item (a) above | 165 | 36 | 199 | 49 | |||||||||||||||||||
Consolidated Adjusted EBITDA | 8,624 | 11,007 | 14,920 | 18,935 | |||||||||||||||||||
Rent—cost of services | 10,156 | 9,767 | 20,121 | 19,473 | |||||||||||||||||||
Rent related to item (a) above | (165) | (36) | (199) | (49) | |||||||||||||||||||
Adjusted rent—cost of services | 9,991 | 9,731 | 19,922 | 19,424 | |||||||||||||||||||
Consolidated Adjusted EBITDAR | $ | 18,615 | $ | 34,842 |
(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 incurred which is included in cost of services and general and administrative expense. | |||||||
(c) | Acquisition related costs related to business combinations completed during the periods. | |||||||
(d) | A portion of the costs incurred under the Transition Services Agreement identified as redundant or nonrecurring that are included in general and administrative expense. Fees incurred under the Transition Services agreement, net of the Company’s payroll reimbursement, were $747 and $1,735 for the three and six months ended June 30, 2021, and $1,525 and $2,861 for the three and six months ended June 30, 2020, respectively. During the fourth quarter of fiscal 2020, we updated our Transition service costs adjustment to include duplicate software costs. The prior year transition service costs adjustment has been recast to reflect the change. The adjustment to the prior year transition service costs was $113 and $220 for the duplicative software costs for the three and six months ended June 30, 2020 that were included in the 2020 full year amount in the Company’s as filed Form 10-K. | |||||||
(e) | Beginning in the first quarter of fiscal year 2021, we updated our definition of Segment Adjusted EBITDAR to no longer include an adjustment for COVID-19 expenses offset by the amount of sequestration relief. COVID-19 expenses continue to be part of daily operations for which less specific identification is visible. Furthermore, the sequestration relief has been extended through December 31, 2021. Sequestration relief was $870 and $1,818 for the three and six months ended June 30, 2021, respectively. The 2020 amounts represent incremental costs incurred as part of the Company's response to COVID-19 including direct medical supplies, labor, and other expenses, net of $554 in increased revenue related to the 2% payment increase in Medicare reimbursements for sequestration relief for both the three and six months ended June 30, 2020. The COVID-19 costs do not include $277 in costs for the three months ended March 31, 2020 that were included in the 2020 full year amount. |
Three Months Ended June 30, | |||||||||||||||||||||||
Home Health and Hospice | Senior Living | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Segment Adjusted EBITDAR from Operations | $ | 14,931 | $ | 11,245 | $ | 9,752 | $ | 13,492 | |||||||||||||||
Less: Rent—cost of services | 1,199 | 874 | 8,957 | 8,893 | |||||||||||||||||||
Rent related to start-up operations | (135) | (16) | (30) | (20) | |||||||||||||||||||
Segment Adjusted EBITDA from Operations | $ | 13,867 | $ | 10,387 | $ | 825 | $ | 4,619 |
Six Months Ended June 30, | |||||||||||||||||||||||
Home Health and Hospice | Senior Living | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Segment Adjusted EBITDAR from Operations | $ | 28,722 | $ | 21,151 | $ | 18,586 | $ | 25,989 | |||||||||||||||
Less: Rent—cost of services | 2,329 | 1,724 | 17,792 | 17,749 | |||||||||||||||||||
Rent related to start-up operations | (249) | (29) | 50 | (20) | |||||||||||||||||||
Segment Adjusted EBITDA from Operations | $ | 26,642 | $ | 19,456 | $ | 744 | $ | 8,260 |
Three Months Ended June 30, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Revenue Dollars | Revenue Percentage | Revenue Dollars | Revenue Percentage | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Home health and hospice services | |||||||||||||||||||||||
Home health | $ | 35,287 | 32.0 | % | $ | 20,824 | 22.4 | % | |||||||||||||||
Hospice | 36,838 | 33.4 | 32,623 | 35.2 | |||||||||||||||||||
Home care and other(a) | 5,980 | 5.4 | 4,537 | 4.9 | |||||||||||||||||||
Total home health and hospice services | 78,105 | 70.8 | 57,984 | 62.5 | |||||||||||||||||||
Senior living services | 32,240 | 29.2 | 34,756 | 37.5 | |||||||||||||||||||
Total revenue | $ | 110,345 | 100.0 | % | $ | 92,740 | 100.0 | % |
(a) | Home care and other revenue is included with home health revenue in other disclosures in this Quarterly Report. |
Three Months Ended June 30, | |||||||||||||||||||||||
2021 | 2020 | Change | % Change | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Home health and hospice revenue | |||||||||||||||||||||||
Home health services | $ | 35,287 | $ | 20,824 | $ | 14,463 | 69.5 | % | |||||||||||||||
Hospice services | 36,838 | 32,623 | 4,215 | 12.9 | |||||||||||||||||||
Home care and other | 5,980 | 4,537 | 1,443 | 31.8 | |||||||||||||||||||
Total home health and hospice revenue | $ | 78,105 | $ | 57,984 | $ | 20,121 | 34.7 | % | |||||||||||||||
Three Months Ended June 30, | |||||||||||||||||||||||
2021 | 2020 | Change | % Change | ||||||||||||||||||||
Home health services: | |||||||||||||||||||||||
Total home health admissions | 10,069 | 5,259 | 4,810 | 91.5 | % | ||||||||||||||||||
Total Medicare home health admissions | 4,406 | 2,459 | 1,947 | 79.2 | |||||||||||||||||||
Average Medicare revenue per 60-day completed episode(a) | $ | 3,441 | $ | 3,412 | $ | 29 | 0.8 | ||||||||||||||||
Hospice services: | |||||||||||||||||||||||
Total hospice admissions | 2,047 | 1,954 | 93 | 4.8 | |||||||||||||||||||
Average daily census | 2,296 | 1,979 | 317 | 16.0 | |||||||||||||||||||
Hospice Medicare revenue per day | $ | 171 | $ | 164 | $ | 7 | 4.3 | ||||||||||||||||
Number of home health and hospice agencies at period end | 86 | 67 | 19 | 28.4 |
(a) | Recast prior period based upon current methodology. |
Three Months Ended June 30, | |||||||||||||||||||||||
2021 | 2020 | Change | % Change | ||||||||||||||||||||
Revenue (in thousands) | $ | 32,240 | $ | 34,756 | $ | (2,516) | (7.2) | % | |||||||||||||||
Number of communities at period end | 54 | 54 | — | — | |||||||||||||||||||
Occupancy | 72.7 | % | 78.5 | % | (5.8) | % | |||||||||||||||||
Average monthly revenue per occupied unit | $ | 3,176 | $ | 3,204 | $ | (28) | (0.9) |
Three Months Ended June 30, | |||||||||||||||||||||||
2021 | 2020 | Change | % Change | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Home Health and Hospice | $ | 64,107 | $ | 46,109 | $ | 17,998 | 39.0 | % | |||||||||||||||
Senior Living | 22,560 | 22,050 | 510 | 2.3 | |||||||||||||||||||
Total cost of services | $ | 86,667 | $ | 68,159 | $ | 18,508 | 27.2 | % |
Three Months Ended June 30, | |||||||||||||||||||||||
2021 | 2020 | Change | % Change | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Cost of service | $ | 64,107 | $ | 46,109 | $ | 17,998 | 39.0 | % | |||||||||||||||
Cost of services as a percentage of revenue | 82.1 | % | 79.5 | % | 2.6 | % |
Three Months Ended June 30, | |||||||||||||||||||||||
2021 | 2020 | Change | % Change | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Cost of service | $ | 22,560 | $ | 22,050 | $ | 510 | 2.3 | % | |||||||||||||||
Cost of services as a percentage of revenue | 70.0 | % | 63.4 | % | 6.6 | % |
Six Months Ended June 30, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Revenue Dollars | Revenue Percentage | Revenue Dollars | Revenue Percentage | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Home health and hospice services | |||||||||||||||||||||||
Home health | $ | 68,491 | 31.7 | % | $ | 42,268 | 22.9 | % | |||||||||||||||
Hospice | 73,752 | 34.1 | 63,063 | 34.2 | |||||||||||||||||||
Home care and other(a) | 10,469 | 4.9 | 9,415 | 5.1 | |||||||||||||||||||
Total home health and hospice services | 152,712 | 70.7 | 114,746 | 62.2 | |||||||||||||||||||
Senior living services | 63,296 | 29.3 | 69,843 | 37.8 | |||||||||||||||||||
Total revenue | $ | 216,008 | 100.0 | % | $ | 184,589 | 100.0 | % |
(a) | Home care and other revenue is included with home health revenue in other disclosures in this Quarterly Report. |
Six Months Ended June 30, | |||||||||||||||||||||||
2021 | 2020 | Change | % Change | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Home health and hospice revenue | |||||||||||||||||||||||
Home health services | $ | 68,491 | $ | 42,268 | $ | 26,223 | 62.0 | % | |||||||||||||||
Hospice services | 73,752 | 63,063 | 10,689 | 16.9 | |||||||||||||||||||
Home care and other | 10,469 | 9,415 | 1,054 | 11.2 | |||||||||||||||||||
Total home health and hospice revenue | $ | 152,712 | $ | 114,746 | $ | 37,966 | 33.1 | % | |||||||||||||||
Six Months Ended June 30, | |||||||||||||||||||||||
2021 | 2020 | Change | % Change | ||||||||||||||||||||
Home health services: | |||||||||||||||||||||||
Total home health admissions | 19,166 | 11,395 | 7,771 | 68.2 | % | ||||||||||||||||||
Total Medicare home health admissions | 8,904 | 5,268 | 3,636 | 69.0 | |||||||||||||||||||
Average Medicare revenue per 60-day completed episode | $ | 3,424 | $ | 3,232 | $ | 192 | 5.9 | ||||||||||||||||
Hospice services: | |||||||||||||||||||||||
Total hospice admissions | 4,201 | 3,630 | 571 | 15.7 | |||||||||||||||||||
Average daily census | 2,301 | 1,925 | 376 | 19.5 | |||||||||||||||||||
Hospice Medicare revenue per day | $ | 172 | $ | 163 | $ | 9 | 5.5 | ||||||||||||||||
Number of home health and hospice agencies at period end | 86 | 67 | 19 | 28.4 |
Six Months Ended June 30, | |||||||||||||||||||||||
2021 | 2020 | Change | % Change | ||||||||||||||||||||
Revenue (in thousands) | $ | 63,296 | $ | 69,843 | $ | (6,547) | (9.4) | % | |||||||||||||||
Number of communities at period end | 54 | 54 | — | — | |||||||||||||||||||
Occupancy | 72.4 | % | 79.3 | % | (6.9) | % | |||||||||||||||||
Average monthly revenue per occupied unit | $ | 3,181 | $ | 3,205 | $ | (24) | (0.7) |
Six Months Ended June 30, | |||||||||||||||||||||||
2021 | 2020 | Change | % Change | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Home Health and Hospice | $ | 125,593 | $ | 93,497 | $ | 32,096 | 34.3 | % | |||||||||||||||
Senior Living | 44,696 | 44,851 | (155) | (0.3) | |||||||||||||||||||
Total cost of services | $ | 170,289 | $ | 138,348 | $ | 31,941 | 23.1 | % |
Six Months Ended June 30, | |||||||||||||||||||||||
2021 | 2020 | Change | % Change | ||||||||||||||||||||
Cost of service (in thousands) | $ | 125,593 | $ | 93,497 | $ | 32,096 | 34.3 | % | |||||||||||||||
Cost of services as a percentage of revenue | 82.2 | % | 81.5 | % | 0.7 | % |
Six Months Ended June 30, | |||||||||||||||||||||||
2021 | 2020 | Change | % Change | ||||||||||||||||||||
Cost of service (in thousands) | $ | 44,696 | $ | 44,851 | $ | (155) | (0.3) | % | |||||||||||||||
Cost of services as a percentage of revenue | 70.6 | % | 64.2 | % | 6.4 | % |
Six Months Ended June 30, | |||||||||||
2021 | 2020 | ||||||||||
(In thousands) | |||||||||||
Net cash (used in) provided by operating activities | $ | (11,806) | $ | 43,398 | |||||||
Net cash used in investing activities | (15,477) | (13,803) | |||||||||
Net cash provided by (used in) financing activities | 30,119 | (17,868) | |||||||||
Net increase in cash | 2,836 | 11,727 | |||||||||
Cash at beginning of year | 43 | 402 | |||||||||
Cash at end of year | $ | 2,879 | $ | 12,129 |
Exhibit | Description | |||||||
Amended and Restated Certificate of Incorporation of The Pennant Group, Inc., effective as of September 27, 2019 (incorporated by reference to Exhibit 3.1 to The Pennant Group, Inc.’s Current Report on Form 8-K (File No. 001-38900) filed with the SEC on October 3, 2019). | ||||||||
Amended and Restated By-laws of The Pennant Group, Inc. (incorporated by reference to Exhibit 3.2 to The Pennant Group, Inc.’s Current Report on Form 8-K (File No. 001-38900) filed with the SEC on October 3, 2019). | ||||||||
Pennant Services Nonqualified Deferred Compensation Plan (incorporated by reference to Exhibit 10.1 to The Pennant Group, Inc.’s Current Report on Form 8-K (File No. 001-38900) filed with the SEC on May 28, 2021). | ||||||||
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||||||||
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||||||||
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||||||||
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||||||||
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101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
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101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
The Pennant Group, Inc. | ||||||||
Dated: August 9, 2021 | BY: | /s/ JENNIFER L. FREEMAN | ||||||
Jennifer L. Freeman | ||||||||
Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer) |
/s/ DANIEL H WALKER | ||||||||||||||
Name: | Daniel H Walker | |||||||||||||
Title: | Chairman and Chief Executive Officer (Principal Executive Officer) |
/s/ JENNIFER L. FREEMAN | |||||||||||||||||||||||||||||
Name: | Jennifer L. Freeman | ||||||||||||||||||||||||||||
Title: | Chief Financial Officer (Principal Financial Officer, Principal Accounting Officer and Duly Authorized Officer) |
1 | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||||||||||||||||||||||
2 | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. | ||||||||||||||||||||||
/s/ DANIEL H WALKER | |||||||||||||||||||||||
Name: | Daniel H Walker | ||||||||||||||||||||||
Title: | Chairman and Chief Executive Officer (Principal Executive Officer) | ||||||||||||||||||||||
August 9, 2021 |
1 | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||||||||||||||||||||||
2 | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. | ||||||||||||||||||||||
/s/ JENNIFER L. FREEMAN | |||||||||||||||||||||||
Name: | Jennifer L. Freeman | ||||||||||||||||||||||
Title: | Chief Financial Officer (Principal Financial Officer, Principal Accounting Officer and Duly Authorized Officer) | ||||||||||||||||||||||
August 9, 2021 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
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Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 914 | $ 643 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 28,759,000 | 28,696,000 |
Common stock, shares outstanding (in shares) | 28,355,000 | 28,243,000 |
Treasury stock, at cost (in shares) | 3,000 | 3,000 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
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Income Statement [Abstract] | ||||
Revenue | $ 110,345 | $ 92,740 | $ 216,008 | $ 184,589 |
Expense | ||||
Cost of services | 86,667 | 68,159 | 170,289 | 138,348 |
Rent—cost of services | 10,156 | 9,767 | 20,121 | 19,473 |
General and administrative expense | 8,783 | 7,538 | 18,071 | 14,199 |
Depreciation and amortization | 1,170 | 1,201 | 2,345 | 2,222 |
Total expenses | 106,776 | 86,665 | 210,826 | 174,242 |
Income from operations | 3,569 | 6,075 | 5,182 | 10,347 |
Other expense: | ||||
Other expense | (24) | 0 | (24) | 0 |
Interest expense, net | (472) | (301) | (832) | (704) |
Other expense, net | (496) | (301) | (856) | (704) |
Income before provision for income taxes | 3,073 | 5,774 | 4,326 | 9,643 |
Provision for income taxes | 604 | 1,437 | 944 | 2,326 |
Net income | 2,469 | 4,337 | 3,382 | 7,317 |
Net loss attributable to Non-Controlling Interests | (181) | 0 | (218) | 0 |
Net income and other comprehensive income attributable to The Pennant Group, Inc. | $ 2,650 | $ 4,337 | $ 3,600 | $ 7,317 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.09 | $ 0.16 | $ 0.13 | $ 0.26 |
Diluted (in dollars per share) | $ 0.09 | $ 0.15 | $ 0.12 | $ 0.25 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 28,356 | 27,952 | 28,324 | 27,922 |
Diluted (in shares) | 30,647 | 29,662 | 30,785 | 29,780 |
DESCRIPTION OF BUSINESS |
6 Months Ended |
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Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of business | DESCRIPTION OF BUSINESS The Pennant Group, Inc. (herein referred to as “Pennant,” the “Company,” “it,” or “its”), is a holding company with no direct operating assets, employees or revenue. The Company, through its independent operating subsidiaries, provides healthcare services across the post-acute care continuum. As of June 30, 2021, the Company’s subsidiaries operated 86 home health, hospice and home care agencies and 54 senior living communities located in Arizona, California, Colorado, Idaho, Iowa, Montana, Nevada, Oklahoma, Oregon, Texas, Utah, Washington, Wisconsin and Wyoming. On October 1, 2019, The Ensign Group, Inc. (NASDAQ: ENSG) (“Ensign” or the “Parent”) completed the separation of Pennant (the “Spin-Off”). To accomplish the Spin-Off, Ensign contributed all of its home health and hospice and substantially all of its senior living businesses into Pennant. Each Ensign stockholder received a distribution of one share of Pennant’s common stock for every two shares of Ensign’s common stock, plus cash in lieu of fractional shares. The noncontrolling interest was converted into shares of Pennant at the established conversion ratio. As a result of the Spin-Off on October 1, 2019, Pennant began trading as an independent company on the NASDAQ under the symbol “PNTG.” Certain of the Company’s subsidiaries, collectively referred to as the Service Center, provide accounting, payroll, human resources, information technology, legal, risk management, and other services to the operations through contractual relationships. Each of the Company’s affiliated operations are operated by separate, independent subsidiaries that have their own management, employees and assets. References herein to the consolidated “Company” and “its” assets and activities is not meant to imply, nor should it be construed as meaning, that Pennant has direct operating assets, employees or revenue, or that any of the subsidiaries are operated by Pennant.
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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
6 Months Ended |
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Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of presentation and summary of significant accounting policies | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation - The accompanying unaudited condensed consolidated financial statements of the Company (the “Interim Financial Statements”) reflect the Company’s financial position, results of operations and cash flows of the business. The Interim Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the regulations of the Securities and Exchange Commission (“SEC”). Management believes that the Interim Financial Statements reflect, in all material respects, all adjustments which are of a normal and recurring nature necessary to present fairly the Company’s financial position, results of operations, and cash flows for the periods presented in conformity with GAAP. The results reported in these Interim Financial Statements are not necessarily indicative of results that may be expected for the entire year. The Condensed Consolidated Balance Sheet as of December 31, 2020 is derived from the Company’s annual audited Consolidated Financial Statements for the fiscal year ended December 31, 2020 which should be read in conjunction with these Interim Financial Statements. Certain information in the accompanying footnote disclosures normally included in annual financial statements was condensed or omitted for the interim periods presented in accordance with GAAP. All intercompany transactions and balances between the various legal entities comprising the Company have been eliminated in consolidation. The Company presents noncontrolling interests within the equity section of its Condensed Consolidated Balance Sheets and the amount of consolidated net income that is attributable to the Company and the noncontrolling interest in its Condensed Consolidated Statements of Income. The Company consists of various limited liability companies and corporations established to operate home health, hospice, home care, and senior living operations. The Interim Financial Statements include the accounts of all entities controlled by the Company through its ownership of a majority voting interest. Estimates and Assumptions - The preparation of the Interim Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Interim Financial Statements and the reported amounts of revenue and expenses during the reporting periods. The most significant estimates in the Interim Financial Statements relate to revenue, intangible assets and goodwill, right-of-use assets and lease liabilities for leases greater than 12 months, self-insurance reserves, and income taxes. Actual results could differ from those estimates. CARES Act: The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted on March 27, 2020 in the United States. The CARES Act allowed for deferred payment of the employer-paid portion of social security taxes through the end of 2020, with 50% due on December 31, 2021 and the remainder due on December 31, 2022. As of June 30, 2021, the Company deferred approximately $7,836 of the employer-paid portion of social security taxes, of which $3,918 is included in other long-term liabilities and the current portion of $3,918 in accrued wages and related liabilities. The CARES Act also expanded the Centers for Medicare & Medicaid Services’ (“CMS”) ability to provide accelerated/advance payments intended to increase the cash flow of healthcare providers and suppliers impacted by COVID-19. During the prior year, the Company applied for and received $27,997 in funds under the Accelerated and Advance Payment (“AAP”) Program, of which $7,096 had been recouped as of June 30, 2021. See Note 10, Other Accrued Liabilities for further discussion of the AAP. The American Rescue Plan Act of 2021 (the “ARP Act”) was enacted on March 11, 2021 in the United States. The ARP Act was designed to assist the country with the effects of the COVID-19 pandemic and included a number of tax components. The ARP Act’s primary tax impact on the Company is a new revenue raising provision that requires the Company to include the next five highest paid employees to the list of covered officers already subject to the IRC Section 162(m) wage limitation beginning in the 2027 tax year. The Company will continue to assess the effect of the ARP Act and ongoing other government legislation related to the COVID-19 pandemic that may be issued. Recent Accounting Standards Adopted by the Company FASB Accounting Standards Update, or ASU, ASU 2021-01 “Reference Rate Reform (Topic 848): Scope” or ASU 2020-4 - On January 7, 2021, the FASB issued ASU 2021-01 to amend the scope of the guidance in ASU 2020-04 “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” or ASU 2020-4. Specifically, the amendments in ASU 2021-01 clarify that “certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.” The amendment in ASU 2021-1 is available to all entities: (i) on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 through the date that the final update to the standard was issued or (ii) on a prospective basis for new contract modifications through December 31, 2022. The Company has adopted ASU 2021-01 on a prospective basis effective as of January 7, 2021. There was no material impact to the Company’s Interim Financial Statements or related disclosures as a result of the adoption of ASU 2021-01.
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RELATED PARTY TRANSACTIONS |
6 Months Ended |
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Jun. 30, 2021 | |
Related Party Transactions [Abstract] | |
Related party transactions | RELATED PARTY TRANSACTIONS The Company leases 31 of its senior living communities from subsidiaries of Ensign, and each of the leases have a term of between 14 and 20 years from the lease commencement date. The total amount of rent expense included in Rent - cost of services paid to subsidiaries of Ensign was $3,173 and $6,246 for the three and six months ended June 30, 2021, respectively, and $3,071 and $6,172 for the three and six months ended June 30, 2020, respectively. The Company’s subsidiaries received services from Ensign’s subsidiaries. Services included in cost of services were $749 and $1,617 for the three and six months ended June 30, 2021 and $1,166 and $2,188 for the three and six months ended June 30, 2020, respectively. On October 1, 2019, in connection with the Spin-Off, Pennant entered into several agreements with Ensign that set forth the principal actions taken or to be taken in connection with the Spin-Off and govern the relationship of the parties following the Spin-Off. The Company has incurred costs of $747 and $1,735 for the three and six months ended June 30, 2021, respectively, and $1,525 and $2,861 for the three and six months ended June 30, 2020, respectively, which
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COMPUTATION OF NET INCOME PER COMMON SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of net income per common share | COMPUTATION OF NET INCOME PER COMMON SHAREBasic net income per share is computed by dividing net income attributable to stockholders of the Company by the weighted average number of outstanding common shares for the period. The computation of diluted net income per share is similar to the computation of basic net income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. The following table sets forth the computation of basic and diluted net income per share for the periods presented:
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REVENUE AND ACCOUNTS RECEIVABLE |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue and accounts receivable | REVENUE AND ACCOUNTS RECEIVABLE Revenue is recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled from patients and third-party payors, including Medicaid, Medicare and insurers (private, Medicare Advantage and Medicare replacement plans), in exchange for providing patient care. The healthcare services in home health and hospice patient contracts include routine services in exchange for a contractual agreed-upon amount or rate. Routine services are treated as a single performance obligation satisfied over time as services are rendered. As such, patient care services represent a bundle of services that are not capable of being distinct within the context of the contract. Additionally, there may be ancillary services which are not included in the rates for routine services, but instead are treated as separate performance obligations satisfied at a point in time, if and when those services are rendered. Revenue recognized from healthcare services are adjusted for estimates of variable consideration to arrive at the transaction price. The Company determines the transaction price based on contractually agreed-upon amounts or rate, adjusted for estimates of variable consideration. The Company uses the expected value method in determining the variable component that should be used to arrive at the transaction price, using contractual agreements and historical reimbursement experience within each payor type. The amount of variable consideration which is included in the transaction price may be constrained, and is included in the net revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If actual amounts of consideration ultimately received differ from the Company’s estimates, the Company adjusts these estimates, which would affect net service revenue in the period such variances become known. Revenue from the Medicare and Medicaid programs accounted for 61.7% and 62.8% of the Company’s revenue, for the three and six months ended June 30, 2021, and 59.4% and 58.7% for the three and six months ended June 30, 2020, respectively. The Company records revenue from these governmental and managed care programs as services are performed at their expected net realizable amounts under these programs. The Company’s revenue from governmental and managed care programs is subject to audit and retroactive adjustment by governmental and third-party agencies. Consistent with healthcare industry accounting practices, any changes to these governmental revenue estimates are recorded in the period the change or adjustment becomes known based on final settlement. Disaggregation of Revenue The Company disaggregates revenue from contracts with its patients by reportable operating segments and payors. The Company has determined that disaggregating revenue into these categories achieves the disclosure objectives to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The Company’s service specific revenue recognition policies are as follows: Home Health Revenue Medicare Revenue For Medicare episodes that began after January 1, 2020, net service revenue is recognized in accordance with the Patient Driven Groupings Model (“PDGM”). This new reimbursement structure involves case mix calculation methodology refinements, changes to low-utilization payment adjustment (“LUPA”) thresholds, the elimination of therapy thresholds, a change to the unit of payment from a 60-day episode to a 30-day payment period, and reduction of requests for anticipated payments (“RAPs”) to 20% of the estimated payment for a patient’s initial or subsequent period of care up-front (after the initial assessment is completed and upon initial billing). The RAPs were phased out effective January 1, 2021. Under PDGM, Medicare provides agencies with payments for each 30-day payment period provided to beneficiaries. If a beneficiary is still eligible for care after the end of the first 30-day payment period, a second 30-day payment period can begin. There are no limits to the number of periods of care a beneficiary who remains eligible for the home health benefit can receive. While payment for each 30-day payment period is adjusted to reflect the beneficiary’s health condition and needs, a special outlier provision exists to ensure appropriate payment for those beneficiaries that have the most expensive care needs. The payment under the Medicare program is also adjusted for certain variables including, but not limited to: (a) a LUPA if the number of visits is below an established threshold that varies based on the diagnosis of a beneficiary; (b) a partial payment if the patient transferred to another provider or the Company received a patient from another provider before completing the period of care; (c) adjustment to the admission source of claim if it is determined that the patient had a qualifying stay in a post-acute care setting within 14 days prior to the start of a 30-day payment period; (d) the timing of the 30-day payment period provided to a patient in relation to the admission date, regardless of whether the same home health provider provided care for the entire series of episodes; (e) changes to the acuity of the patient during the previous 30-day payment period; (f) changes in the base payments established by the Medicare program; (g) adjustments to the base payments for case mix and geographic wages; and (h) recoveries of overpayments. For all episodes that began prior to January 1, 2020, net service revenue was recorded under the Medicare prospective payment system based on a 60-day episode payment rate that is subject to adjustment based on certain variables including, but not limited to: (a) an outlier payment if the patient’s care was unusually costly; (b) a LUPA if the number of visits was fewer than five; (c) a partial payment if the patient transferred to another provider or transferred from another provider before completing the episode; (d) a payment adjustment based upon the level of covered therapy services; (e) the number of episodes of care provided to a patient, regardless of whether the same home health provider provided care for the entire series of episodes; (f) changes in the base episode payments established by the Medicare program; (g) adjustments to the base episode payments for case mix and geographic wages; and (h) recoveries of overpayments. The Company adjusts Medicare revenue on completed episodes to reflect differences between estimated and actual payment amounts, an inability to obtain appropriate billing documentation and other reasons unrelated to credit risk. Therefore, the Company believes that its reported net service revenue and patient accounts receivable will be the net amounts to be realized from Medicare for services rendered. In addition to revenue recognized on completed episodes and periods, the Company also recognizes a portion of revenue associated with episodes and periods in progress. Episodes in progress are 30-day payment periods, if the episode started after January 1, 2020, or 60-day episodes of care, if the episode started prior to January 1, 2020, that begin during the reporting period but were not completed as of the end of the period. As such, the Company estimates revenue and recognizes it on a daily basis. The primary factors underlying this estimate are the number of episodes in progress at the end of the reporting period, expected Medicare revenue per period of care or episode of care and the Company’s estimate of the average percentage complete based on the scheduled end of period and end of episode dates. Non-Medicare Revenue Episodic Based Revenue - The Company recognizes revenue in a similar manner as it recognizes Medicare revenue for episodic-based rates that are paid by other insurance carriers, including Medicare Advantage programs. These rates can vary based upon the negotiated terms. Non-episodic Based Revenue - Revenue is recognized on an accrual basis based upon the date of service at amounts equal to its established or estimated per visit rates, as applicable. Hospice Revenue Revenue is recognized on an accrual basis based upon the date of service at amounts equal to the estimated payment rates. The estimated payment rates are calculated as daily rates for each of the levels of care the Company delivers. Revenue is adjusted for an inability to obtain appropriate billing documentation or authorizations acceptable to the payor and other reasons unrelated to credit risk. Additionally, as Medicare hospice revenue is subject to an inpatient cap and an overall payment cap, the Company monitors its provider numbers and estimates amounts due back to Medicare if a cap has been exceeded. The Company regularly evaluates and records these adjustments as a reduction to revenue and an increase to other accrued liabilities. Senior Living Revenue The Company has elected the lessor practical expedient within ASC Topic 842, Leases (“ASC 842”) and therefore recognizes, measures, presents, and discloses the revenue for services rendered under the Company’s senior living residency agreements based upon the predominant component, either the lease or non-lease component, of the contracts. The Company has determined that the services included under the Company’s senior living residency agreements each have the same timing and pattern of transfer. The Company recognizes revenue under ASC Topic 606, Revenue from Contracts with Customers for its senior residency agreements, for which it has determined that the non-lease components of such residency agreements are the predominant component of each such contract. The Company’s senior living revenue consists of fees for basic housing and assisted living care. Accordingly, the Company records revenue when services are rendered on the date services are provided at amounts billable to individual residents. Residency agreements are generally for a term of 30 days, with resident fees billed monthly in advance. For residents under reimbursement arrangements with Medicaid, revenue is recorded based on contractually agreed-upon amounts or rates on a per resident, daily basis or as services are rendered. Revenue By Payor Revenue by payor for the three months ended June 30, 2021 and 2020, is summarized in the following tables:
Revenue by payor for the six months ended June 30, 2021 and 2020, is summarized in the following tables:
Balance Sheet Impact Included in the Company’s Condensed Consolidated Balance Sheets are contract assets, comprised of billed accounts receivable and unbilled receivables, which are the result of the timing of revenue recognition, billings and cash collections, as well as, contract liabilities, which primarily represent payments the Company receives in advance of services provided. As of June 30, 2021, the Company had contract liabilities in the amount of $20,901 related to Advance Payments received in connection with the CARES Act reported in other current liabilities. As further discussed in Note 10, Other Accrued Liabilities, the repayment terms for Medicare advance payments were modified through the passage of the Continuing Appropriations Act, 2021 and Other Extensions Act on October 1, 2020. Accounts receivable, net as of June 30, 2021 and December 31, 2020 is summarized in the following table:
Practical Expedients and Exemptions As the Company’s contracts have an original duration of one year or less, the Company uses the practical expedient applicable to its contracts and does not consider the time value of money. Further, because of the short duration of these contracts, the Company has not disclosed the transaction price for the remaining performance obligations as of the end of each reporting period or when the Company expects to recognize this revenue. In addition, the Company has applied the practical expedient provided by ASC 340, Other Assets and Deferred Costs (“ASC 340”), and all incremental customer contract acquisition costs are expensed as they are incurred because the amortization period would have been one year or less.
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BUSINESS SEGMENTS |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business segments | BUSINESS SEGMENTS The Company classifies its operations into the following reportable operating segments: (1) home health and hospice services, which includes the Company’s home health, hospice and home care businesses; and (2) senior living services, which includes the operation of assisted living, independent living and memory care communities. The reporting segments are business units that offer different services and are managed separately to provide greater visibility into those operations. Our Chief Executive Officer, who is our Chief Operating Decision Maker (“CODM”), reviews financial information at the operating segment level. We also report an “all other” category that includes general and administrative expense from our Service Center. As of June 30, 2021, the Company provided services through 86 affiliated home health, hospice and home care agencies, and 54 affiliated senior living operations. The Company evaluates performance and allocates capital resources to each segment based on an operating model that is designed to maximize the quality of care provided and profitability. The Company’s Service Center provides various services to all lines of business. The Company does not review assets by segment and therefore assets by segment are not disclosed below. The CODM uses Segment Adjusted EBITDAR from Operations as the primary measure of profit and loss for the Company's reportable segments and to compare the performance of its operations with those of its competitors. 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, (4) redundant and nonrecurring costs associated with the Transition Services Agreement, and (5) net loss 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. The following tables 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” for the three and six months ended June 30, 2021 and 2020:
This following table provides a reconciliation of Segment Adjusted EBITDAR from Operations to income from operations:
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ACQUISITIONS |
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Jun. 30, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | ACQUISITIONS The Company’s acquisition focus is to purchase or lease operations that are complementary to the Company’s current businesses, accretive to the Company’s business or otherwise advance the Company’s strategy. The results of all the Company’s independent operating subsidiaries are included in the Interim Financial Statements subsequent to the date of acquisition. Acquisitions are accounted for using the acquisition method of accounting. 2021 Acquisitions During the six months ended June 30, 2021, the Company expanded its operations with the addition of five home health, three hospice and two home care agencies. The aggregate purchase price for these acquisitions was $13,385. A subsidiary of the Company entered into a separate operations transfer agreement with the prior operator of each acquired operation as part of each transaction. The fair value of assets for home health, hospice and home care acquisitions was mostly concentrated in goodwill and intangible assets and as such, these transactions were classified as business combinations in accordance with ASC Topic 805, Business Combinations (“ASC 805”). The purchase price for the business combinations was $12,800, which consisted of equipment and other assets of $64, goodwill of $6,920, and indefinite-lived intangible assets of $5,816 related to Medicare and Medicaid licenses. The Company anticipates that the total goodwill recognized will be fully deductible for tax purposes. There were no material acquisition costs that were expensed related to the business combinations during the six months ended June 30, 2021. Two of the hospice agencies were acquired Medicare licenses and are considered asset acquisitions. The fair value of assets for the hospice licenses acquired totaled $585 and was allocated to indefinite-lived intangible assets. 2020 Acquisitions During the six months ended June 30, 2020, the Company expanded its operations with the addition of one home health agency, three hospice agencies, and two senior living communities. The aggregate purchase price for these acquisitions was $7,268. In connection with the addition of the senior living communities, the Company entered into new long-term “triple-net” leases with subsidiaries of Ensign. The addition of these operations added a total of 164 operational senior living units to be operated by the Company’s independent operating subsidiaries. A subsidiary of the Company entered into a separate operations transfer agreement with the prior operator of each acquired operation as part of each transaction. The fair value of assets for all home health, hospice and home care acquisitions was concentrated in goodwill and as such, these transactions were classified as business combinations in accordance with ASC 805. The purchase price for the business combinations was $7,268, which mostly consisted of equipment of $44, goodwill of $4,139, indefinite-lived intangible assets of $3,166 related to Medicare and Medicaid licenses, net of assumed liabilities of $81. The majority of total goodwill recognized is fully deductible for tax purposes. There were no acquisition costs that were expensed related to the business combinations of home health, hospice, and home care during the six months ended June 30, 2020.
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PROPERTY AND EQUIPMENT—NET |
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Property and equipment - net | PROPERTY AND EQUIPMENT—NET Property and equipment, net consist of the following:
Depreciation expense was $1,167 and $2,338 for the three and six months ended June 30, 2021, respectively, and $1,197 and $2,215 for the three and six months ended June 30, 2020, respectively. The Company measures certain assets at fair value on a non-recurring basis, including long-lived assets, which are evaluated for impairment. Long-lived assets include assets such as property and equipment, operating lease assets and certain intangible assets. The inputs used to determine the fair value of long-lived assets and a reporting unit are considered Level 3 measurements due to their subjective nature. Management has evaluated its long-lived assets and determined there was no impairment during the three and six months ended June 30, 2021 and 2020.
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GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS |
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Goodwill and other indefinite-lived intangible assets | GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS The following table represents activity in goodwill by segment for the six months ended June 30, 2021:
Other indefinite-lived intangible assets consist of the following:
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OTHER ACCRUED LIABILITIES |
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OTHER ACCRUED LIABILITIES | OTHER ACCRUED LIABILITIES Other accrued liabilities consist of the following:
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DEBT |
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DEBT | DEBT Long-term debt, net consists of the following:
On February 23, 2021, Pennant entered into an amendment to its existing credit agreement (as amended, the “Credit Agreement”), which provides for an increased revolving credit facility with a syndicate of banks with a borrowing capacity of $150,000 (the “Revolving Credit Facility”). The interest rates applicable to loans under the Revolving Credit Facility are, at the Company’s election, either (i) Adjusted LIBOR (as defined in the Credit Agreement) plus a margin ranging from 2.3% to 3.3% per annum or (ii) Base Rate plus a margin ranging from 1.3% to 2.3% per annum, in each case based on the ratio of Consolidated Total Net Debt to Consolidated EBITDA (each, as defined in the Credit Agreement). In addition, Pennant pays a commitment fee on the undrawn portion of the commitments under the Revolving Credit Facility which ranges from 0.35% to 0.50% per annum, depending on the Consolidated Total Net Debt to Consolidated EBITDA ratio of the Company and its subsidiaries. The Company is not required to repay any loans under the Credit Agreement prior to maturity in 2026, other than to the extent the outstanding borrowings exceed the aggregate commitments under the Credit Agreement. As of June 30, 2021, the Company’s weighted average interest rate on its outstanding debt was 2.91%. As of June 30, 2021, the Company had available borrowing on the Revolving Credit Facility of $106,164, which is net of outstanding letters of credit of $3,336. The fair value of the Revolving Credit Facility approximates carrying value, due to the short-term nature and variable interest rates. The fair value of this debt is categorized within Level 2 of the fair value hierarchy based on the observable market borrowing rates. The Credit Agreement is guaranteed, jointly and severally, by certain of the Company’s independent operating subsidiaries, and is secured by a pledge of stock of the Company's material independent operating subsidiaries as well as a first lien on substantially all of each material operating subsidiary's personal property. The Credit Agreement contains customary covenants that, among other things, restrict, subject to certain exceptions, the ability of the Company and its independent operating subsidiaries to grant liens on their assets, incur indebtedness, sell assets, make investments, engage in acquisitions, mergers or consolidations, amend certain material agreements and pay certain dividends and other restricted payments. Financial covenants require compliance with certain levels of leverage ratios that impact the amount of interest. As of June 30, 2021, the Company was compliant with all such financial covenants.
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OPTIONS AND AWARDS |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Options and awards | OPTIONS AND AWARDS Outstanding options held by employees of the Company under the Ensign stock plans (collectively the “Ensign Plans”) and outstanding options and restricted stock awards under the Company Subsidiary Equity Plan (together with the Ensign Plans the “Pre-Spin Plans”) were modified and replaced with Pennant awards under the Pennant Plans at the Spin-Off date. Additionally, in connection with the Spin-Off, the Company issued new options and restricted stock awards to Pennant and Ensign employees under the 2019 Omnibus Incentive Plan (the “OIP”) and Long-Term Incentive Plan (the “LTIP”, together referred to as the “Pennant Plans”). Under the Ensign Plans and the Pennant Plans, stock-based payment awards, including employee stock options, restricted stock awards (“RSA”), and restricted stock units (“RSU” and together with RSA, “Restricted Stock”) are issued based on estimated fair value. The following disclosures represent share-based compensation expense relating to employees of the Company’s subsidiaries and non-employee directors who have awards under the Ensign and Pennant Plans. Total share-based compensation expense for all Plans for the three and six months ended June 30, 2021 and 2020 was:
In future periods, the Company estimates it will recognize the following share-based compensation expense for unvested stock options and unvested Restricted Stock, which were unvested as of June 30, 2021:
Stock Options Under the Pennant Plans, options granted to employees of the subsidiaries of Pennant generally vest over five years at 20% per year on the anniversary of the grant date. Options expire ten years after the date of grant. The Company uses the Black-Scholes option-pricing model to recognize the value of stock-based compensation expense for share-based payment awards under the Plans. Determining the appropriate fair-value model and calculating the fair value of stock-based awards at the grant date requires considerable judgment, including estimating stock price volatility and expected option life. The Company develops estimates based on historical data and market information, which can change significantly over time. The fair value of each option is estimated on the grant date using a Black-Scholes option-pricing model with the following weighted average assumptions for stock options granted:
The following table represents the employee stock option activity during the six months ended June 30, 2021:
Restricted Stock A summary of the status of Pennant’s non-vested Restricted Stock, and changes during the six months ended June 30, 2021, is presented below:
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LEASES |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | LEASESThe Company’s independent operating subsidiaries lease 54 senior living communities and its administrative offices under non-cancelable operating leases, most of which have initial lease terms ranging from to 21 years. Most of these leases contain renewal options, most involve rent increases and none contain purchase options. The lease term excludes lease renewals because the renewal rents are not at a bargain, there are no economic penalties for the Company to renew the lease, and it is not reasonably certain that the Company will exercise the extension options. As of June 30, 2021, the Company’s independent operating subsidiaries leased 31 communities from subsidiaries of Ensign (the “Ensign Leases”) under a master lease arrangement. The existing leases with subsidiaries of Ensign are generally for initial terms of between 14 to 20 years. In addition to rent, each of the operating companies are required to pay the following: (1) all impositions and taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor); (2) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties; (3) all insurance required in connection with the leased properties and the business conducted on the leased properties; (4) all community maintenance and repair costs; and (5) all fees in connection with any licenses or authorizations necessary or appropriate for the leased properties and the business conducted on the leased properties. Fifteen of the Company’s affiliated senior living communities, excluding the communities that are operated under the Ensign Leases (as defined herein), are operated under two separate master lease arrangements. Under these master leases, a breach at a single community could subject one or more of the other communities covered by the same master lease to the same default risk. Failure to comply with Medicare and Medicaid provider requirements is a default under several of the Company’s leases and master leases. With an indivisible lease, it is difficult to restructure the composition of the portfolio or economic terms of the master lease without the consent of the landlord. The components of operating lease cost, are as follows:
The following table shows the lease maturity analysis for all leases as of June 30, 2021, for the years ended December 31:
Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used its incremental borrowing rate based on the information available at each lease’s commencement date to determine each lease's operating lease liability. As of June 30, 2021, the weighted average remaining lease term is 14.5 years and the weighted average discount rate is 8.2%.
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INCOME TAXES |
6 Months Ended |
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Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income taxes | INCOME TAXESThe Company recorded income tax expense of $604 and $944 or 19.7% and 21.8% of earnings before income taxes for the three and six months ended June 30, 2021, respectively and income tax expense of $1,437 and $2,326 or 24.9% and 24.1% of earnings before income taxes for the three and six months ended June 30, 2020, respectively. The effective tax rate for both three and six month periods includes excess tax benefits from share-based compensation which were offset by non-deductible expenses including non-deductible compensation. |
COMMITMENTS AND CONTINGENCIES |
6 Months Ended |
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Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Regulatory Matters - The Company provides services in complex and highly regulated industries. The Company’s compliance with applicable U.S. federal, state and local laws and regulations governing these industries may be subject to governmental review and adverse findings may result in significant regulatory action, which could include sanctions, damages, fines, penalties (many of which may not be covered by insurance), and even exclusion from government programs. The Company is a party to various regulatory and other governmental audits and investigations in the ordinary course of business and cannot predict the ultimate outcome of any federal or state regulatory survey, audit or investigation. While governmental audits and investigations are the subject of administrative appeals, the appeals process, even if successful, may take several years to resolve. The Department of Justice, CMS, or other federal and state enforcement and regulatory agencies may conduct additional investigations related to the Company's businesses. The Company believes that it is presently in compliance in all material respects with all applicable laws and regulations. Cost-Containment Measures - Government and third-party payors have instituted cost-containment measures designed to limit payments made to providers of healthcare services, and there can be no assurance that future measures designed to limit payments made to providers will not adversely affect the Company. Indemnities - From time to time, the Company enters into certain types of contracts that contingently require the Company to indemnify parties against third-party claims. These contracts primarily include (i) certain real estate leases, under which the Company may be required to indemnify property owners or prior operators for post-transfer environmental or other liabilities and other claims arising from the Company’s use of the applicable premises, (ii) operations transfer agreements, in which the Company agrees to indemnify past operators of agencies and communities the Company acquires against certain liabilities arising from the transfer of the operation and/or the operation thereof after the transfer, (iii) certain Ensign lending agreements, and (iv) certain agreements with management, directors and employees, under which the subsidiaries of the Company may be required to indemnify such persons for liabilities arising out of their employment relationships. The terms of such obligations vary by contract and, in most instances, a specific or maximum dollar amount is not explicitly stated therein. Generally, amounts under these contracts cannot be reasonably estimated until a specific claim is asserted. Consequently, because no claims have been asserted, no liabilities have been recorded for these obligations on the Company’s Condensed Consolidated Balance Sheets for any of the periods presented. Litigation - The Company’s businesses involve a significant risk of liability given the age and health of the patients and residents served by its independent operating subsidiaries. The Company, its operating companies, and others in the industry may be subject to a number of claims and lawsuits, including professional liability claims, alleging that services provided have resulted in personal injury, elder abuse, wrongful death or other related claims. Healthcare litigation (including class action litigation) is common and is filed based upon a wide variety of claims and theories, and the Company is routinely subjected to these claims in the ordinary course of business, including potential claims related to patient care and treatment, and professional negligence, as well as employment related claims. If there were a significant increase in the number of these claims or an increase in amounts owing should plaintiffs be successful in their prosecution of these claims, this could materially adversely affect the Company’s business, financial condition, results of operations and cash flows. In addition, the defense of these lawsuits may result in significant legal costs, regardless of the outcome, and may result in large settlement amounts or damage awards. In addition to the potential lawsuits and claims described above, the Company is also subject to potential lawsuits under the False Claims Act (the “FCA”) and comparable state laws alleging submission of fraudulent claims for services to any healthcare program (such as Medicare) or payor. A violation may provide the basis for exclusion from federally funded healthcare programs. Such exclusions could have a correlative negative impact on the Company’s financial performance. Some states, including California, Arizona and Texas, have enacted similar whistleblower and false claims laws and regulations. In addition, the Deficit Reduction Act of 2005 created incentives for states to enact anti-fraud legislation modeled on the FCA. As such, the Company could face increased scrutiny, potential liability and legal expenses and costs based on claims under state false claims acts in markets in which it conducts business. Under the Fraud Enforcement and Recovery Act (“FERA”) and its associated rules, healthcare providers face significant penalties for the knowing retention of government overpayments, even if no false claim was involved. Providers have an obligation to proactively exercise “reasonable diligence” to identify overpayments and return those overpayments to CMS within 60 days of “identification” or the date any corresponding cost report is due, whichever is later. Retention of overpayments beyond this period may create liability under the FCA. In addition, FERA protects whistleblowers (including employees, contractors, and agents) from retaliation. The Company cannot predict or provide any assurance as to the possible outcome of any litigation. If any litigation were to proceed, and the Company and its operating companies are subjected to, alleged to be liable for, or agree to a settlement of, claims or obligations under federal Medicare statutes, the FCA, or similar state and federal statutes and related regulations, the Company’s business, financial condition and results of operations and cash flows could be materially and adversely affected. Among other things, any settlement or litigation could involve the payment of substantial sums to settle any alleged civil violations, and may also include the assumption of specific procedural and financial obligations by the Company or its independent operating subsidiaries going forward under a corporate integrity agreement and/or other arrangement with the government. Medicare Revenue Recoupments - The Company is subject to probe reviews relating to Medicare services, billings and potential overpayments by Unified Program Integrity Contractors (“UPIC”), Recovery Audit Contractors (“RAC”), Zone Program Integrity Contractors (“ZPIC”), Program Safeguard Contractors (“PSC”), Supplemental Medical Review Contractors (“SMRC”) and Medicaid Integrity Contributors (“MIC”) programs, each of the foregoing collectively referred to as “Reviews.” As of June 30, 2021, eight of the Company’s independent operating subsidiaries had Reviews scheduled, on appeal or in dispute resolution process, both pre- and post-payment. If an operation fails an initial or subsequent Review, the operation could then be subject to extended Review, suspension of payment, or extrapolation of the identified error rate to all billing in the same time period. As of June 30, 2021, and through the filing of this Quarterly Report on Form 10-Q, the Company’s independent operating subsidiaries have responded to the Reviews that are currently ongoing, on appeal or in dispute resolution process and the Company has no material probable or estimable contingencies. Insurance - The Company retains risk for a substantial portion of potential claims for general and professional liability, workers’ compensation and automobile liability. The Company does not retain risk related to its employee health plans. The Company recognizes obligations associated with these costs, up to specified deductible limits in the period in which a claim is incurred, including with respect to both reported claims and claims incurred but not reported. The general and professional liability insurance has a retention limit of $150 per claim with a $500 corridor as an additional out-of-pocket retention we must satisfy for claims within the policy year before the carrier will reimburse losses. The workers’ compensation insurance has a retention limit of $250 per claim, except for policies held in Texas and Washington which are subject to state insurance and possess their own limits. Concentrations Credit Risk - The Company has significant accounts receivable balances, the collectability of which is dependent on the availability of funds from certain governmental programs, primarily Medicare and Medicaid. These receivables represent the only significant concentration of credit risk for the Company. The Company does not believe there are significant credit risks associated with these governmental programs. The Company believes that an appropriate allowance has been recorded for the possibility of these receivables proving uncollectible, and continually monitors and adjusts these allowances as necessary. The Company’s gross receivables from the Medicare and Medicaid programs accounted for approximately 70.8% and 75.7% of its total gross accounts receivable as of June 30, 2021 and December 31, 2020, respectively. Revenue from reimbursement under the Medicare and Medicaid programs accounted for 61.7% and 62.8% for the three and six months ended June 30, 2021, and 59.4% and 58.7% of the Company’s revenue for the three and six months ended June 30, 2020.
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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
6 Months Ended |
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Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation - The accompanying unaudited condensed consolidated financial statements of the Company (the “Interim Financial Statements”) reflect the Company’s financial position, results of operations and cash flows of the business. The Interim Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the regulations of the Securities and Exchange Commission (“SEC”). Management believes that the Interim Financial Statements reflect, in all material respects, all adjustments which are of a normal and recurring nature necessary to present fairly the Company’s financial position, results of operations, and cash flows for the periods presented in conformity with GAAP. The results reported in these Interim Financial Statements are not necessarily indicative of results that may be expected for the entire year. |
Consolidation | The Company consists of various limited liability companies and corporations established to operate home health, hospice, home care, and senior living operations. The Interim Financial Statements include the accounts of all entities controlled by the Company through its ownership of a majority voting interest. |
Estimates and Assumptions | Estimates and Assumptions - The preparation of the Interim Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Interim Financial Statements and the reported amounts of revenue and expenses during the reporting periods. The most significant estimates in the Interim Financial Statements relate to revenue, intangible assets and goodwill, right-of-use assets and lease liabilities for leases greater than 12 months, self-insurance reserves, and income taxes. Actual results could differ from those estimates. |
Recent Accounting Pronouncements | Recent Accounting Standards Adopted by the Company FASB Accounting Standards Update, or ASU, ASU 2021-01 “Reference Rate Reform (Topic 848): Scope” or ASU 2020-4 - On January 7, 2021, the FASB issued ASU 2021-01 to amend the scope of the guidance in ASU 2020-04 “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” or ASU 2020-4. Specifically, the amendments in ASU 2021-01 clarify that “certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.” The amendment in ASU 2021-1 is available to all entities: (i) on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 through the date that the final update to the standard was issued or (ii) on a prospective basis for new contract modifications through December 31, 2022. The Company has adopted ASU 2021-01 on a prospective basis effective as of January 7, 2021. There was no material impact to the Company’s Interim Financial Statements or related disclosures as a result of the adoption of ASU 2021-01. |
Revenue Recognition | Revenue is recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled from patients and third-party payors, including Medicaid, Medicare and insurers (private, Medicare Advantage and Medicare replacement plans), in exchange for providing patient care. The healthcare services in home health and hospice patient contracts include routine services in exchange for a contractual agreed-upon amount or rate. Routine services are treated as a single performance obligation satisfied over time as services are rendered. As such, patient care services represent a bundle of services that are not capable of being distinct within the context of the contract. Additionally, there may be ancillary services which are not included in the rates for routine services, but instead are treated as separate performance obligations satisfied at a point in time, if and when those services are rendered. Revenue recognized from healthcare services are adjusted for estimates of variable consideration to arrive at the transaction price. The Company determines the transaction price based on contractually agreed-upon amounts or rate, adjusted for estimates of variable consideration. The Company uses the expected value method in determining the variable component that should be used to arrive at the transaction price, using contractual agreements and historical reimbursement experience within each payor type. The amount of variable consideration which is included in the transaction price may be constrained, and is included in the net revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If actual amounts of consideration ultimately received differ from the Company’s estimates, the Company adjusts these estimates, which would affect net service revenue in the period such variances become known. Revenue from the Medicare and Medicaid programs accounted for 61.7% and 62.8% of the Company’s revenue, for the three and six months ended June 30, 2021, and 59.4% and 58.7% for the three and six months ended June 30, 2020, respectively. The Company records revenue from these governmental and managed care programs as services are performed at their expected net realizable amounts under these programs. The Company’s revenue from governmental and managed care programs is subject to audit and retroactive adjustment by governmental and third-party agencies. Consistent with healthcare industry accounting practices, any changes to these governmental revenue estimates are recorded in the period the change or adjustment becomes known based on final settlement. Disaggregation of Revenue The Company disaggregates revenue from contracts with its patients by reportable operating segments and payors. The Company has determined that disaggregating revenue into these categories achieves the disclosure objectives to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The Company’s service specific revenue recognition policies are as follows: Home Health Revenue Medicare Revenue For Medicare episodes that began after January 1, 2020, net service revenue is recognized in accordance with the Patient Driven Groupings Model (“PDGM”). This new reimbursement structure involves case mix calculation methodology refinements, changes to low-utilization payment adjustment (“LUPA”) thresholds, the elimination of therapy thresholds, a change to the unit of payment from a 60-day episode to a 30-day payment period, and reduction of requests for anticipated payments (“RAPs”) to 20% of the estimated payment for a patient’s initial or subsequent period of care up-front (after the initial assessment is completed and upon initial billing). The RAPs were phased out effective January 1, 2021. Under PDGM, Medicare provides agencies with payments for each 30-day payment period provided to beneficiaries. If a beneficiary is still eligible for care after the end of the first 30-day payment period, a second 30-day payment period can begin. There are no limits to the number of periods of care a beneficiary who remains eligible for the home health benefit can receive. While payment for each 30-day payment period is adjusted to reflect the beneficiary’s health condition and needs, a special outlier provision exists to ensure appropriate payment for those beneficiaries that have the most expensive care needs. The payment under the Medicare program is also adjusted for certain variables including, but not limited to: (a) a LUPA if the number of visits is below an established threshold that varies based on the diagnosis of a beneficiary; (b) a partial payment if the patient transferred to another provider or the Company received a patient from another provider before completing the period of care; (c) adjustment to the admission source of claim if it is determined that the patient had a qualifying stay in a post-acute care setting within 14 days prior to the start of a 30-day payment period; (d) the timing of the 30-day payment period provided to a patient in relation to the admission date, regardless of whether the same home health provider provided care for the entire series of episodes; (e) changes to the acuity of the patient during the previous 30-day payment period; (f) changes in the base payments established by the Medicare program; (g) adjustments to the base payments for case mix and geographic wages; and (h) recoveries of overpayments. For all episodes that began prior to January 1, 2020, net service revenue was recorded under the Medicare prospective payment system based on a 60-day episode payment rate that is subject to adjustment based on certain variables including, but not limited to: (a) an outlier payment if the patient’s care was unusually costly; (b) a LUPA if the number of visits was fewer than five; (c) a partial payment if the patient transferred to another provider or transferred from another provider before completing the episode; (d) a payment adjustment based upon the level of covered therapy services; (e) the number of episodes of care provided to a patient, regardless of whether the same home health provider provided care for the entire series of episodes; (f) changes in the base episode payments established by the Medicare program; (g) adjustments to the base episode payments for case mix and geographic wages; and (h) recoveries of overpayments. The Company adjusts Medicare revenue on completed episodes to reflect differences between estimated and actual payment amounts, an inability to obtain appropriate billing documentation and other reasons unrelated to credit risk. Therefore, the Company believes that its reported net service revenue and patient accounts receivable will be the net amounts to be realized from Medicare for services rendered. In addition to revenue recognized on completed episodes and periods, the Company also recognizes a portion of revenue associated with episodes and periods in progress. Episodes in progress are 30-day payment periods, if the episode started after January 1, 2020, or 60-day episodes of care, if the episode started prior to January 1, 2020, that begin during the reporting period but were not completed as of the end of the period. As such, the Company estimates revenue and recognizes it on a daily basis. The primary factors underlying this estimate are the number of episodes in progress at the end of the reporting period, expected Medicare revenue per period of care or episode of care and the Company’s estimate of the average percentage complete based on the scheduled end of period and end of episode dates. Non-Medicare Revenue Episodic Based Revenue - The Company recognizes revenue in a similar manner as it recognizes Medicare revenue for episodic-based rates that are paid by other insurance carriers, including Medicare Advantage programs. These rates can vary based upon the negotiated terms. Non-episodic Based Revenue - Revenue is recognized on an accrual basis based upon the date of service at amounts equal to its established or estimated per visit rates, as applicable. Hospice Revenue Revenue is recognized on an accrual basis based upon the date of service at amounts equal to the estimated payment rates. The estimated payment rates are calculated as daily rates for each of the levels of care the Company delivers. Revenue is adjusted for an inability to obtain appropriate billing documentation or authorizations acceptable to the payor and other reasons unrelated to credit risk. Additionally, as Medicare hospice revenue is subject to an inpatient cap and an overall payment cap, the Company monitors its provider numbers and estimates amounts due back to Medicare if a cap has been exceeded. The Company regularly evaluates and records these adjustments as a reduction to revenue and an increase to other accrued liabilities. Senior Living Revenue The Company has elected the lessor practical expedient within ASC Topic 842, Leases (“ASC 842”) and therefore recognizes, measures, presents, and discloses the revenue for services rendered under the Company’s senior living residency agreements based upon the predominant component, either the lease or non-lease component, of the contracts. The Company has determined that the services included under the Company’s senior living residency agreements each have the same timing and pattern of transfer. The Company recognizes revenue under ASC Topic 606, Revenue from Contracts with Customers for its senior residency agreements, for which it has determined that the non-lease components of such residency agreements are the predominant component of each such contract. The Company’s senior living revenue consists of fees for basic housing and assisted living care. Accordingly, the Company records revenue when services are rendered on the date services are provided at amounts billable to individual residents. Residency agreements are generally for a term of 30 days, with resident fees billed monthly in advance. For residents under reimbursement arrangements with Medicaid, revenue is recorded based on contractually agreed-upon amounts or rates on a per resident, daily basis or as services are rendered.
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Earnings Per Share | Basic net income per share is computed by dividing net income attributable to stockholders of the Company by the weighted average number of outstanding common shares for the period. The computation of diluted net income per share is similar to the computation of basic net income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. |
COMPUTATION OF NET INCOME PER COMMON SHARE (Tables) |
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of basic and diluted net income per share | The following table sets forth the computation of basic and diluted net income per share for the periods presented:
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REVENUE AND ACCOUNTS RECEIVABLE (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue by major payor source | Revenue by payor for the three months ended June 30, 2021 and 2020, is summarized in the following tables:
Revenue by payor for the six months ended June 30, 2021 and 2020, is summarized in the following tables:
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Schedule of accounts receivable | Accounts receivable, net as of June 30, 2021 and December 31, 2020 is summarized in the following table:
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BUSINESS SEGMENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial data combined by business segment | The following tables 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” for the three and six months ended June 30, 2021 and 2020:
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Reconciliation of total Combined Adjusted EBITDAR from Operations for our reportable segments to Combined Income from Operations | This following table provides a reconciliation of Segment Adjusted EBITDAR from Operations to income from operations:
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PROPERTY AND EQUIPMENT—NET (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of property and equipment, net | Property and equipment, net consist of the following:
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GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity in goodwill by segment | The following table represents activity in goodwill by segment for the six months ended June 30, 2021:
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Other indefinite-lived intangible assets | Other indefinite-lived intangible assets consist of the following:
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OTHER ACCRUED LIABILITIES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other accrued liabilities | Other accrued liabilities consist of the following:
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DEBT (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt | Long-term debt, net consists of the following:
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OPTIONS AND AWARDS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total share-based compensation expense | Total share-based compensation expense for all Plans for the three and six months ended June 30, 2021 and 2020 was:
In future periods, the Company estimates it will recognize the following share-based compensation expense for unvested stock options and unvested Restricted Stock, which were unvested as of June 30, 2021:
|
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Stock options granted fair value assumptions | The fair value of each option is estimated on the grant date using a Black-Scholes option-pricing model with the following weighted average assumptions for stock options granted:
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Employee stock option activity | The following table represents the employee stock option activity during the six months ended June 30, 2021:
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Summary of non-vested restricted stock awards | A summary of the status of Pennant’s non-vested Restricted Stock, and changes during the six months ended June 30, 2021, is presented below:
|
LEASES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of operating lease cot | The components of operating lease cost, are as follows:
|
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Future minimum lease payments | The following table shows the lease maturity analysis for all leases as of June 30, 2021, for the years ended December 31:
|
DESCRIPTION OF BUSINESS (Details) |
Jun. 30, 2021
agency
|
Oct. 01, 2019 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Spin-off transaction, distribution ratio | 0.50 | |
Home Health and Hospice Services | ||
Segment Reporting Information [Line Items] | ||
Number of service providers | 86 | |
Senior Living Services | ||
Segment Reporting Information [Line Items] | ||
Number of properties under lease | 54 |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Unusual or Infrequent Item, or Both [Line Items] | ||
Accrued payroll taxes employer portion | $ 7,836 | |
Contract Liabilities (CARES Act advance payments) | $ 27,997 | |
Amount recouped | 7,096 | |
Other long-term liabilities | ||
Unusual or Infrequent Item, or Both [Line Items] | ||
Accrued payroll taxes employer portion | 3,918 | |
Accrued Wages and Related Liabilities | ||
Unusual or Infrequent Item, or Both [Line Items] | ||
Accrued payroll taxes employer portion | $ 3,918 |
REVENUE AND ACCOUNTS RECEIVABLE - NARRATIVE (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
Dec. 31, 2020 |
|
Disaggregation of Revenue [Line Items] | |||||
Contract Liabilities (CARES Act advance payments) | $ 27,997 | ||||
Other Current Liabilities | |||||
Disaggregation of Revenue [Line Items] | |||||
Contract Liabilities (CARES Act advance payments) | $ 20,901 | $ 20,901 | |||
Senior Living Services | |||||
Disaggregation of Revenue [Line Items] | |||||
Payment terms | Residency agreements are generally for a term of 30 days, with resident fees billed monthly in advance. For residents under reimbursement arrangements with Medicaid, revenue is recorded based on contractually agreed-upon amounts or rates on a per resident, daily basis or as services are rendered. | ||||
Customer concentration risk | Revenue | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue % | 100.00% | 100.00% | 100.00% | 100.00% | |
Customer concentration risk | Revenue | Medicare And Medicaid | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue % | 61.70% | 59.40% | 62.80% | 58.70% |
REVENUE AND ACCOUNTS RECEIVABLE - ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Accounts Receivable [Abstract] | ||
Accounts receivable, gross | $ 53,050 | $ 47,864 |
Less: allowance for doubtful accounts | (914) | (643) |
Accounts receivable, net | 52,136 | 47,221 |
Medicare | ||
Accounts Receivable [Abstract] | ||
Accounts receivable, gross | 29,331 | 28,569 |
Medicaid | ||
Accounts Receivable [Abstract] | ||
Accounts receivable, gross | 8,233 | 7,669 |
Managed care | ||
Accounts Receivable [Abstract] | ||
Accounts receivable, gross | 10,858 | 7,590 |
Private and other | ||
Accounts Receivable [Abstract] | ||
Accounts receivable, gross | $ 4,628 | $ 4,036 |
BUSINESS SEGMENTS - NARRATIVE (Details) |
Jun. 30, 2021
agency
|
---|---|
Home Health and Hospice Services | |
Segment Reporting Information [Line Items] | |
Number of service providers | 86 |
Senior Living Services | |
Segment Reporting Information [Line Items] | |
Number of properties under lease | 54 |
BUSINESS SEGMENTS - FINANCIAL DATA (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Segment Reporting Information [Line Items] | ||||
Revenue | $ 110,345 | $ 92,740 | $ 216,008 | $ 184,589 |
Segment Adjusted EBITDAR from Operations | 18,615 | 20,738 | 34,842 | 38,359 |
Senior Living Services | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 32,240 | 34,756 | 63,296 | 69,843 |
Operating segments | Home Health and Hospice Services | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 78,105 | 57,984 | 152,712 | 114,746 |
Segment Adjusted EBITDAR from Operations | 14,931 | 11,245 | 28,722 | 21,151 |
Operating segments | Senior Living Services | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 32,240 | 34,756 | 63,296 | 69,843 |
Segment Adjusted EBITDAR from Operations | 9,752 | 13,492 | 18,586 | 25,989 |
All Other | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Segment Adjusted EBITDAR from Operations | $ (6,068) | $ (3,999) | $ (12,466) | $ (8,781) |
PROPERTY AND EQUIPMENT—NET (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
Dec. 31, 2020 |
|
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 36,044 | $ 36,044 | $ 33,590 | ||
Less: accumulated depreciation | (18,075) | (18,075) | (15,706) | ||
Property and equipment, net | 17,969 | 17,969 | 17,884 | ||
Depreciation | 1,167 | $ 1,197 | 2,338 | $ 2,215 | |
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 11,091 | 11,091 | 9,984 | ||
Equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 23,770 | 23,770 | 22,420 | ||
Furniture and fixtures | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 1,183 | $ 1,183 | $ 1,186 |
GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS - ACTIVITY IN GOODWILL (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2021
USD ($)
| |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 66,444 |
Additions | 6,920 |
Goodwill, ending balance | 73,364 |
Home Health and Hospice Services | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 62,802 |
Additions | 6,920 |
Goodwill, ending balance | 69,722 |
Senior Living Services | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 3,642 |
Additions | 0 |
Goodwill, ending balance | $ 3,642 |
GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS - INDEFINITE-LIVED INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Indefinite-lived Intangible Assets [Line Items] | ||
Other indefinite-lived intangibles | $ 53,889 | $ 47,488 |
Trade name | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Other indefinite-lived intangibles | 1,355 | 1,355 |
Medicare and Medicaid licenses | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Other indefinite-lived intangibles | $ 52,534 | $ 46,133 |
OTHER ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Other Accrued Liabilities, Current [Abstract] | ||
Refunds payable | $ 2,674 | $ 2,664 |
Deferred revenue | 1,501 | 1,271 |
Resident deposits | 5,571 | 5,647 |
Contract Liabilities (CARES Act advance payments) | 20,901 | 22,771 |
Property taxes | 897 | 982 |
Accrued self-insurance liabilities - current portion | 2,350 | 1,354 |
Other | 3,518 | 3,586 |
Other accrued liabilities | $ 37,412 | $ 38,275 |
OTHER ACCRUED LIABILITIES - NARRATIVE (Details) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Payables and Accruals [Abstract] | ||
Contract Liabilities (CARES Act advance payments) | $ 27,997 | |
Amount recouped | $ 7,096 |
DEBT - SCHEDULE OF LONG-TERM DEBT (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
Dec. 31, 2020 |
|
Debt Instrument [Line Items] | |||||
Less: unamortized debt issuance costs | $ (2,387) | $ (2,387) | $ (1,223) | ||
Long-term debt, net | 38,113 | 38,113 | 8,277 | ||
Amortization of deferred financing fees | 142 | $ 80 | 229 | $ 162 | |
Revolving credit facility | Line of credit | |||||
Debt Instrument [Line Items] | |||||
Revolving Credit Facility | $ 40,500 | $ 40,500 | $ 9,500 |
DEBT - NARRATIVE (Details) - USD ($) |
Feb. 23, 2021 |
Jun. 30, 2021 |
---|---|---|
Debt Instrument [Line Items] | ||
Borrowing capacity | $ 150,000,000 | |
Minimum | LIBOR | ||
Debt Instrument [Line Items] | ||
Margin | 2.30% | |
Minimum | Base Rate | ||
Debt Instrument [Line Items] | ||
Margin | 1.30% | |
Minimum | Revolving credit facility | ||
Debt Instrument [Line Items] | ||
Margin | 0.35% | |
Maximum | LIBOR | ||
Debt Instrument [Line Items] | ||
Margin | 3.30% | |
Maximum | Base Rate | ||
Debt Instrument [Line Items] | ||
Margin | 2.30% | |
Maximum | Revolving credit facility | ||
Debt Instrument [Line Items] | ||
Margin | 0.50% | |
Revolving credit facility | Line of credit | ||
Debt Instrument [Line Items] | ||
Weighted average interest rate | 2.91% | |
Borrowing availability | $ 106,164,000 | |
Letters of credit | Line of credit | ||
Debt Instrument [Line Items] | ||
Letters of credit outstanding | $ 3,336,000 |
OPTIONS AND AWARDS - SHARE-BASED COMPENSATION (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation | $ 2,499 | $ 1,959 | $ 4,915 | $ 3,915 |
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation | 745 | 343 | 1,382 | 632 |
Restricted stock awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation | 1,530 | 1,542 | 3,050 | 3,085 |
Restricted stock awards | Non-employee director | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation | $ 224 | $ 74 | $ 483 | $ 198 |
OPTIONS AND AWARDS - SHARE-BASED COMPENSATION EXPENSE AND NARRATIVE (Details) - The Ensign Plans $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2021
USD ($)
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Total unrecognized share-based compensation expense | $ 20,796 |
Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unvested Stock Options | $ 12,919 |
Unvested options and stock awards, cost net yet recognized, period for recognition | 4 years 1 month 6 days |
Options, vesting percent per year | 20.00% |
Options, expiration period | 10 years |
Restricted stock awards | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unvested Restricted Stock | $ 7,877 |
Unvested options and stock awards, cost net yet recognized, period for recognition | 1 year 3 months 18 days |
Vesting period | 5 years |
OPTIONS AND AWARDS - EMPLOYEE STOCK OPTION ACTIVITY (Details) - The Ensign Plans shares in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2021
$ / shares
shares
|
Dec. 31, 2020
$ / shares
shares
|
|
Number of Options Outstanding | ||
Beginning balance, outstanding (in shares) | shares | 1,982 | |
Granted (in shares) | shares | 304 | |
Exercised (in shares) | shares | (56) | |
Forfeited & Expired (in shares) | shares | (50) | |
Ending balance, outstanding (in shares) | shares | 2,180 | |
Weighted Average Exercise Price | ||
Beginning of period, weighted average exercise price (in dollars per share) | $ / shares | $ 17.48 | |
Granted (in dollars per share) | $ / shares | 39.32 | |
Exercised (in dollars per share) | $ / shares | 9.14 | |
Forfeited & Expired (in dollars per share) | $ / shares | 23.07 | |
End of period, weighted average exercise price (in dollars per share) | $ / shares | $ 20.61 | |
Number of Options Vested (in shares) | shares | 687 | 615 |
Weighted Average Exercise Price of Options Vested (in dollars per share) | $ / shares | $ 8.96 | $ 7.52 |
OPTIONS AND AWARDS - RESTRICTED STOCK AWARDS ACTIVITY (Details) - The Ensign Plans - Restricted stock awards shares in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2021
$ / shares
shares
| |
Non-Vested Restricted Stock | |
Beginning balance, outstanding (in shares) | shares | 1,635 |
Granted (in shares) | shares | 10 |
Vested (in shares) | shares | (65) |
Forfeited (in shares) | shares | (3) |
Ending balance, outstanding (in shares) | shares | 1,577 |
Weighted Average Grant Date Fair Value | |
Beginning of period, weighted average exercise price (in dollars per share) | $ / shares | $ 14.80 |
Granted (in dollars per share) | $ / shares | 49.58 |
Vested (in dollars per share) | $ / shares | 16.92 |
Forfeited (in dollars per share) | $ / shares | 14.55 |
End of period, weighted average exercise price (in dollars per share) | $ / shares | $ 14.93 |
LEASES - IMPACT OF NEW LEASES GUIDANCE (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Lease, Cost [Abstract] | ||||
Sublease Income | $ 0 | $ (74) | $ 0 | $ (74) |
Variable lease cost | 1,490 | 1,347 | 2,989 | 2,676 |
Cost of services | ||||
Lease, Cost [Abstract] | ||||
Operating lease costs | 10,156 | 9,767 | 20,121 | 19,473 |
Cost of services | Facility | ||||
Lease, Cost [Abstract] | ||||
Operating lease costs | 8,957 | 8,892 | 17,792 | 17,748 |
Cost of services | Office | ||||
Lease, Cost [Abstract] | ||||
Operating lease costs | 1,199 | 949 | 2,329 | 1,799 |
General and administrative expense | ||||
Lease, Cost [Abstract] | ||||
Operating lease costs | $ 77 | $ 27 | $ 141 | $ 57 |
LEASES - FUTURE MINIMUM LEASE PAYMENTS (Details) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Leases, Under Adoption of ASC 842 [Abstract] | ||
2021 (Remainder) | $ 19,603 | |
2022 | 38,630 | |
2023 | 37,673 | |
2024 | 36,663 | |
2025 | 35,739 | |
Thereafter | 356,870 | |
Total lease payments | 525,178 | |
Less: present value adjustments | (218,785) | |
Present value of total lease liabilities | 306,393 | |
Less: current lease liabilities | (15,233) | $ (14,106) |
Long-term operating lease liabilities | $ 291,160 | $ 296,615 |
INCOME TAXES - NARRATIVE (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Income Tax Disclosure [Abstract] | ||||
Provision for income taxes | $ 604 | $ 1,437 | $ 944 | $ 2,326 |
Effective tax rate | 19.70% | 24.90% | 21.80% | 24.10% |
COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2021
USD ($)
review
|
Jun. 30, 2020 |
Jun. 30, 2021
USD ($)
review
|
Jun. 30, 2020 |
Dec. 31, 2020 |
|
Commitments and Contingencies Disclosure [Abstract] | |||||
Number of operating subsidiaries with reviews scheduled | review | 8 | 8 | |||
Concentration Risk [Line Items] | |||||
General and professional liability, retention limit | $ 150 | $ 150 | |||
Out-of-pocket retention | 500 | 500 | |||
Workers' compensation, retention limit | $ 250 | $ 250 | |||
Revenue | Customer concentration risk | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percent | 100.00% | 100.00% | 100.00% | 100.00% | |
Medicare And Medicaid | Receivables | Customer concentration risk | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percent | 70.80% | 75.70% | |||
Medicare And Medicaid | Revenue | Customer concentration risk | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percent | 61.70% | 59.40% | 62.80% | 58.70% |
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