Q3 2023 The Pennant Group Inc Earnings Call
Yeah.
Good day and thank you for standing by welcome to the Petty Group third quarter 2023 earnings Conference call. At this time, all participants are in a listen only mode.
This presentation, there will be a question and answer session.
Ask a question during the session you will need to press star one on your phone you will then hear an automated message advising your hand is raised.
Your question. Please press star one one again.
Please be advised that today's conference is being recorded and I would now like to hand, the conference over to your speaker today, Mr. Kurt Chini. Sir Please go ahead.
Thank you, Chris and welcome everyone and thank you for joining US today here with me today I have Brent <unk>, our CEO, John Gardner, our president and CFO.
<unk> our CFO.
Before we begin I have a few housekeeping matters, we filed our earnings press release and 10-Q yesterday. This announcement is available on the Investor Relations. Thanks never website at Www Dot pennant group Dot com.
A replay of this call will also be available on our website until five PM Mountain on November eight 2024, we want to remind anyone who may be listening to a replay of this call that all statements made are as of today November eight 2023, and these statements have not been nor will they be updated after today's call.
Also any forward looking statements made today are based on management's current expectations.
And beliefs about our business and the environment in which we operate these statements are subject to risks and uncertainties that could cause our actual results to materially differ from those expressed or implied on today's call.
Listeners should not place undue reliance on forward looking statements and are encouraged to review our SEC filings for a more complete discussion of factors that could impact our results.
Except as required by federal Securities laws pennant and its affiliates do not undertake to publicly update or revise any forward looking statements where changes arise as a result of new information future events changing circumstances or for any other reason.
In addition, the pennant group Inc. At the holding company with no direct operating assets employees or revenues certain of our independent operating subsidiaries collectively referred to as a service center provide accounting payroll human resources information technology legal risk management and other services.
Other operating subsidiaries through contractual relationships with such subsidiaries.
Whereas pennant company we are.
And as you refer to the pennant group, Inc, and its consolidated subsidiaries.
All of our operating subsidiaries and the service center are operated by a separate independent companies that have their own management employees and assets references herein to the consolidated company its assets and activities as well as the use of the terms we us.
Our and similar terms used today are not meant to imply nor should be considered as meaning that the pennant group, Inc. Has direct operating assets employees or revenues or that any of the subsidiaries are operated by the pennant group.
So we supplement our GAAP reporting with non-GAAP metrics when viewed together with our GAAP results. We believe that these measures can provide a more complete understanding of our business, but they should not be relied upon to the exclusion of GAAP year to year.
non-GAAP reconciliation is available in yesterday's press release and is available in our 10-Q.
And with that I'll turn the call over to Gary <unk>, our CEO Brent.
Thanks, Kurt and welcome everyone to our third quarter 2023 earnings call.
First I'd like to recognize our remarkable local teams and service Center partners worked tirelessly to provide life changing service to our patients residents and clients each day.
The results we shared today are the culmination of the passion commitment and hard work of nearly 6000 talented individuals across the organization.
We truly appreciate your consistent contributions.
We are pleased to report another quarter of strong growth and solid execution.
Collectively our Q3 consolidated results reflect revenue of $140 2 million, an increase of $21 8 million or 18, 5% over the prior year quarter.
Adjusted EBITDA also grew significantly to $10 9 million, an increase of <unk> 3 million or 37, 8% over the prior year quarter.
Adjusted earnings per share for the quarter were 20.
An increase of <unk> or.
We're 42, 9% over the prior year quarter.
Also generated a healthy $12 $4 million of cash flow from operations in the third quarter, given our solid performance in both business segments. We are increasing our full year 2023 guidance to revenue of 526 million to $531 million adjusted EBITDA.
Of $39 4 million to $42 6 million and adjusted earnings per share of <unk> 69 to 75.
These gains are the result of our continued commitment to the five key focus areas. We have discussed throughout 2023 leadership development clinical excellence enhanced employee experience acquisitions and organic growth and margin improvement the.
The focused efforts of our local teams in clusters, which are at the heart of our unique operating model have generated steady progress across our home health hospice and the assisted living business lines.
Our strong operational results are exciting and we are just beginning to see the fruits of our investment in leadership.
As we have pursued this long term leadership initiative, we have seen positive impact in our local operations and culture turnover and quality outcomes, which in turn have established them as the local providers of choice and driven strong topline growth.
Building on the 140 basis point improvement in the second quarter, our consolidated adjusted EBITDA margin improved another 10 basis points sequentially in Q3.
We are driving bottom line improvement through the remainder of 2023 and beyond by prudently managing utilization and productivity.
Optimizing service line and reimbursement mix.
Originally addressing underperforming operations.
Home Health Hospice and senior living industries continued to experience change our operating model is ideally suited to excel in this environment, our model enables us to adapt and respond to changing circumstances and market needs on a macro and local level.
It also allows us to be nimble and take advantage of unique opportunities, including payer relationships preferred provider networks and localized reimbursement programs in this dynamic environment, our local leaders and clusters use technology and transparent data reporting.
Accelerate their clinical and financial results.
With momentum in our results and a one three times net debt to adjusted EBITDA leverage ratio, we are poised to pursue our disciplined acquisition strategy.
Which begins with answering the question first who then what a relentless focus on recruiting and developing talented leaders has created a bench.
Repaired CEO caliber leaders capable of stepping into transitions and driving immediate improvement through the principles of our operating model.
Next we grow in areas, where we have strong existing leaders operations and clusters prepared to wrap their arms around new operations to help improve clinical cultural and financial results.
Finally, we look at potential opportunities in the marketplace to meet our valuation criteria over the last decade, we have seen that our disciplined approach to pricing has created unique opportunities for local leaders to generate solid financial returns.
We are seeing more potential acquisitions that are consistent with our valuation expectations.
This existing strong alignment between April and eager local leaders and compelling acquisitions and growth opportunities will be a powerful catalyst for future growth under our model.
I'll turn the call over to John to provide more detail on our third quarter operational results. Thank.
Thank you Brent and good morning, everyone. We are pleased to report that our local leaders drove meaningful progress in each of our operating segments. During the third quarter, creating the opportunity for a strong finish to 2023 and putting us on pace for a solid execution in 2024 are.
Our home health and hospice business continued to progress with segment revenue of $101 5 million, an increase of 18, 3% over the prior year quarter. This improvement was driven by robust growth in our hospice business, where average daily census, increased 17, 7% and hospice revenue.
<unk> increased to $54 million.
24, 3% increase each over the prior year quarter, our home health business showed remarkable resiliency and despite the negative impacts of last year's rate adjustment home health revenue grew to $51 1 million, a 12, 7% increase on admissions growth of six 7% each over the <unk>.
Higher year quarter.
As census in revenue progress.
Is making its way to the bottom line as home health and Hospice segment adjusted EBITDA of $15 9 million increased by $1 7 million or 11, 9% over the prior year quarter, and $1 5 million or 10, 5% sequentially over Q2 home health and hospice adjusted.
<unk> margin also improved sequentially for the second consecutive quarter rising to 16, 1% from 15, 5% a 60 basis point increase is our strong revenue growth, we see additional opportunities for margin improvement.
<unk> to carefully manage productivity utilization and ancillary and indirect expense.
Last week CMS issued the 2024 home health PPS final rule, which includes a headline 8% increase in Medicare fee for service payments a significant improvement from the two 2% net reduction in the proposed rule based on our initial modeling we anticipate a net 1%.
Positive impact across our episodes of care.
In delaying some of the behavioral adjustment cut originally proposed CMS has acknowledged the financial headwinds home health provider space due to the current inflationary environment, while the final rule leave some level of uncertainty regarding future reimbursement, we will continue to work with CMS and policymakers to ensure that pace.
<unk> have access to high quality critically needed home health services as the lowest cost healthcare setting home health must be a key component of our nation strategy to improve health outcomes, while reducing aggregate national healthcare spend.
Given the attention home health reimbursement changes have received we think it is important to remind listeners that Medicare home health is only a portion of our diversified business, specifically Medicare home health revenue comprised of 17, 2% of tenants consolidated revenue and 23, 7% of our home health and hospice.
<unk> revenue, despite the flat Medicare home health rate update our growth profile is promising for several reasons first the 2020 for hospice rate adjustment, which will have a projected two 8% positive impact on our hospice revenue beginning in the fourth quarter of 2023.
Second favorable pricing updates with our managed care payers, where momentum continues and revenue per visit has increased six 9% year to date and third our local leaders ability to adapt to changing reimbursement through effective utilization and care planning and sounds natural management in.
Our senior living business, the leading indicators are strong performance continued to improve capable leaders, increasing occupancy and rising revenue per occupied unit senior living segment revenue of $38 7 million is up 18, 9% in senior living segment, adjusted EBITDA of $3 1 million.
Increased 109, 6% each over the prior year quarter same store occupancy edged closer to pre pandemic levels, reaching 81% an increase of 250 basis points and same store revenue per occupied unit increased by 11, 7%.
Each over the prior year quarter.
In Q3, our senior living adjusted EBITDA margin also tracked favorably increasing by 340 basis points compared to Q3 of 2022.
Our senior living leaders are laser focused on continuing to drive occupancy and revenue gains to the bottom line in the near and long term.
We continue to methodically and effectively execute on our acquisition strategy as we acquired five hospice provider numbers in new markets close to our existing operations since our last earnings call in.
In September we acquired Valor hospice care with locations in Sierra Vista, and Green Valley, Arizona This acquisition.
Two new Arizona geographies that complement our existing home health and hospice strength in southern Arizona.
After quarter end, we acquired Guardian hospice locations in Northern Texas, and Southern Oklahoma. These acquisitions expand our footprint in states, where we have had significant success, particularly in more rural geographies. We're excited to serve these new communities and become the provider of choice.
Finally, the complement and expand our existing Bay area operations. We also acquired a hospice license in Concord, California, allowing one of our most successful hospice agencies to expand its service area.
<unk> and Guardian acquisitions are examples of the attractive deals we're seeing in our sweet spot sized and priced appropriately in areas with strong leaders ready to step in and build and strong clusters ready to support over the last few months, we have seen changes to the market for home health hospice and senior living transactions that are creating.
More opportunities for disciplined growth is our <unk>.
<unk> balance sheet and improving cash flow, we expect to continue growing through the remainder of the fourth quarter and into next year.
I'll hand, it to learn that for a review of the financials whatnot.
Thank you John and good morning, everyone.
Detailed financial results for the three months ended September 32023 are contained in our 10-Q and press release filed yesterday.
For the quarter ended September 32023, we reported total GAAP revenue of $140 2 million, an increase of 21 8 million or 18, 5% over the prior year quarter. We also reported GAAP diluted earnings per share of 15, six 3% decrease over the prior year.
Quarter, and non-GAAP diluted earnings per share of <unk> 42, 9% increase over the prior year quarter.
Based on our strong year to date performance in both business segments. We are adjusting our full year 2023 guidance.
Our initial guidance issued in February 2023 included revenue of $503 million to $518 million.
Adjusted EBITDA of 38.4.
4 million to $42 $6 million and adjusted earnings per share of <unk>, 66% to 76%.
Dated guidance is as follows revenue of 526 million to $531 million.
Adjusted EBITDA of $39 4 million to $42 6 million and adjusted earnings per share of <unk> 69 to 75.
Key metrics for the three months ended September 32023 will include $53 $8 million outstanding on our $150 million revolving line of credit and $3 $4 million in cash on hand at quarter end.
One three times net debt to adjusted EBITDA and cash flow provided from operations at $12 4 million for the quarter and $27 9 million year to date.
We continue to expect healthy cash flow from operations based on organic revenue growth solid cash collections and continued bottom line improvement this will enable us to respond opportunistically at potential acquisitions, while maintaining a solid balance sheet.
I'd like to hand, it back to Brent to highlight some of our local leaders.
Thanks Lynette.
It's my pleasure to spotlight a few leaders in our organization who have achieved exceptional results.
Desert view senior living in Las Vegas, Nevada.
<unk> appointed CEO, Mike Trail future, Chief Wellness Officer, heavy Santos and future Chief Marketing Officer, Charlie World, driven impressive growth and success.
Mike Abbie, Charlie and team have established a culture of excellence that will become an employer and provider of choice in Las Vegas demonstrated by a 21% year over year reduction in turnover and 100% occupancy with a waitlist as the community increasingly turns to desert view.
As a trusted provider of assisted living services.
Desert view financial performance has followed with an 18, 4% increase in revenue and the 105, 2% increase in EBITDA year over year.
At emblem home health.
Future CEO, Chris Myers, and future CTO Lindsay severe.
Have built and continued to grow and impressive home health operation in the Phoenix Metro area.
Chris Lindsay and their team have made targeted investments in clinical leadership and enhancing the employee experience.
The strength of their leadership team has attracted additional talented staff.
<unk> exceptional clinical outcomes, including a double digit improvement in re hospitalization rates and.
<unk> clinical excellence has led to meaningful growth, which coupled with effective cost management resulted in a 10, 2% increase in revenue and a 197, 6% increase in EBITDA year over year.
These stories exemplify the power of our leadership model.
Grateful to these leaders and many others who own their operations in a way that benefits patients residents employees and community partners.
With that we'll open it up for questions. Chris can you. Please instruct the audience on the Q&A procedure.
Yes. Thank you.
As a reminder to ask a question. Please press star one on your phone and wait for your name to be announced to withdraw your question. Please press star one again.
Standby as we compile the Q&A roster.
And one moment for our first question.
Our first question will come from Ben Hendrix of RBC capital markets. Your line is open.
Thank you very much I just wanted to follow up on some of your comments about the investment in leadership seems like.
That's good.
Going fairly strong and it looks like based on kind of the segment margins in the M&A you've done maybe most of that is weighted towards.
Home health and hospice, but it seems like Youre getting good returns on that investment from what you just.
<unk> talked about with Desert view I'm wondering if you could.
Quantify how much investment youre doing annually on the leadership front and how that is segmented between the two business lines. Thanks.
Yes, it's a great question. So I mean, the leadership takes a number of different forms specifically with our Ceos in training. This.
This year our goal is to add 50, additional new leaders and so we're well on pace to be able to achieve that next year. The number will be similar.
And that division is pretty much 50, 50 between the business lines.
But we'll just continue and frankly a lot of this is kind of a roll up each of our portfolio companies they have goals and targets. They recognize they are the acquisition opportunities that are there. So there's a little bit I'm just trying to match up alright, we need to bring leader then in preparation we've got a strong operation So let's look for opportunities to expand and so it's not always.
Is going to be perfectly 50, 50, but as we've talked about in the past our goal and what we do.
Even shared on the call when we have success in local markets, that's where we're going to focus our on our leadership growth and development and those acquisition opportunities. So from that standpoint, we feel really good about the investments that we're making the development and the progress of the program and the leaders in the program.
And that's why we're very confident we're just at the beginning a lot of these leaders are still in development and so we can deploy them, whether it's in a new opportunity or an existing operations or in branch expansion. There's so many opportunities for those leaders to go out and have a meaningful impact in their local communities.
Thank you.
Thank you.
Again to ask a question. Please press star one on your phone and wait for your name to be announced.
To withdraw your question. Please press star one again.
Standby as we compile the Q&A roster.
Again to ask a question I'll make a comment please press star one on your phone.
Im seeing no further questions in the queue I would now like to turn the conference back to Brent Kevin solely for closing remarks.
Thank you Chris.
Thank you everyone for joining us today have a great day.
This concludes today's conference call. Thank you all for participating you may now disconnect and have a pleasant day.
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Good day and thank you for standing by welcome to the <unk> Group third quarter 2023 earnings Conference call. At this time, all participants are in a listen only mode.
This presentation, there will be a question and answer session to ask a question. During this session you will need to press star one on your phone you will then hear an automated message advising your hand is raised.
Your question. Please press star one again.
Please be advised that today's conference is being recorded and I would now like to hand, the conference over to your speak today, Mr. Kurt Chini. Sir Please go ahead.
Thank you, Chris and welcome everyone and thank you for joining US today here with me today I have Gary <unk>, our CEO, John Gardner, our president and CFO.
And Linda <unk> our CFO.
Before we begin I have a few housekeeping matters with how the earnings press release and 10-Q yesterday. This announcement is available on the Investor Relations section of our website at Www Dot pennant group Dot com.
A replay of this call will also be available on our website until five PM Mountain on November eight 2024, we want to remind anyone who may be listening to a replay of this call that all statements made are as of today November eight 2023, and these statements have not been nor will they be updated after today's call.
Also any forward looking statements made today are based on management's current expectations.
Beliefs about our business and the environment in which we operate these statements are subject to risks and uncertainties that could cause our actual results to materially differ from those expressed or implied on today's call.
Listeners should not place undue reliance on forward looking statements and I encourage you to review our SEC filings for a more complete discussion of factors that could impact our results.
That does required by federal Securities laws pennant and its affiliates do not undertake to publicly update or revise any forward looking statements where changes arise as a result of new information future events changing circumstances or for any other reason.
In addition, the pennant group, Inc. Is a holding company with no direct operating assets employees of revenues certain of our independent operating subsidiaries collectively referred to as a service center provide accounting payroll human resources information technology legal risk management and other services.
Other operating subsidiaries through contractual relationships with such subsidiaries.
The words pennant company we are.
And as you refer to the pennant group, Inc, and its consolidated subsidiaries.
All of our operating subsidiaries and the service center are operated by a separate independent companies that have their own management employees and assets references herein to the consolidated company its assets and activities as well.
The use of the terms, we are and similar terms used today are not meant to imply nor it should be considered as meaning that the pennant group, Inc. Has direct operating assets employees or revenues or that any of the subsidiaries are operated by the pennant group.
So we supplement our GAAP reporting with non-GAAP metrics when viewed together with our GAAP results. We believe that these measures can provide a more complete understanding of our business, but they should not be relied upon to the exclusion of GAAP for the year.
The GAAP to non-GAAP reconciliation is available in yesterday's press release and is available in our 10-Q.
And with that I'll turn the call over to Gary <unk>, our CEO Brent.
Thanks, Kurt and welcome everyone to our third quarter 2023 earnings call.
First I'd like to recognize our remarkable local teams and service Center partners, who worked tirelessly to provide life changing service to our patients residents and clients each day.
The results we shared today are the culmination of the passion commitment and hard work of nearly 6000 talented individuals across the organization.
We truly appreciate your consistent contributions.
We are pleased to report another quarter of strong growth and solid execution.
Collectively our Q3 consolidated results reflect revenue of $140 2 million, an increase of $21 8 million or 18, 5% over the prior year quarter.
Adjusted EBITDA also grew significantly to $10 9 million, an increase of $3 million or 37, 8% over the prior year quarter.
Adjusted earnings per share for the quarter were 20.
An increase of six or.
Our 42, 9% over the prior year quarter.
Also generated a healthy $12 $4 million of cash flow from operations in the third quarter, given our solid performance in both business segments. We are increasing our full year 2023 guidance to revenue of 526 million to $531 million adjusted EBITDA.
Of $39 4 million to $42 6 million and adjusted earnings per share of <unk> 69 to 75.
These gains are the result of our continued commitment to the five key focus areas. We have discussed throughout 2023 leadership development clinical excellence enhanced employee experience acquisitions and organic growth and margin improvement.
The focused efforts of our local teams in clusters, which are at the heart of our unique operating model have generated steady progress across our home health hospice and the assisted living business lines.
Our strong operational results are exciting and we are just beginning to see the fruits of our investment in leadership.
As we have pursued this long term leadership initiative, we have seen positive impact in our local operations and culture turnover and quality outcomes, which in turn have established them as the local providers of choice and driven strong topline growth.
Building on the 140 basis point improvement in the second quarter, our consolidated adjusted EBITDA margin improved another 10 basis points sequentially in Q3.
We are driving bottom line improvement through the remainder of 2023 and beyond by prudently managing utilization and productivity.
Optimizing service line and reimbursement mix.
Urgently addressing underperforming operations.
Is home health hospice and senior living industries continued to experience change our operating model is ideally suited to excel in this environment, our model enables us to adapt and respond to changing circumstances and market needs on a macro and local level.
It also allows us to be nimble and take advantage of unique opportunities, including payer relationships preferred provider networks and localized reimbursement programs in this dynamic environment, our local leaders and clusters use technology and transparent data reporting to accelerate their clinical and financial results.
With momentum in our results and a one three times net debt to adjusted EBITDA leverage ratio, we are poised to pursue our disciplined acquisition strategy.
Which begins with answering the question first who then what a relentless focus on recruiting and developing talented leaders has created a bench.
Repaired CEO caliber leaders capable of stepping into transitions and driving immediate improvement through the principles of our operating model.
Next we grow in areas, where we have strong existing leaders operations and clusters prepared to wrap their arms around new operations to help improve clinical cultural and financial results.
Finally, we look at potential opportunities in the marketplace to meet our valuation criteria over the last decade, we have seen that our disciplined approach to pricing has created unique opportunities for local leaders to generate solid financial returns.
We are seeing more potential acquisitions that are consistent with our valuation expectations.
This existing strong alignment between April and eager local leaders and compelling acquisitions and growth opportunities will be a powerful catalyst for future growth under our model.
I'll turn the call over to John to provide more detail on our third quarter operational results. Thank.
Thank you Brent and good morning, everyone. We are pleased to report that our local leaders drove meaningful progress in each of our operating segments. During the third quarter, creating the opportunity for a strong finish to 2023 and putting us on pace for a solid execution in 2024 are.
Our home health and hospice business continued to progress with segment revenue of $101 5 million, an increase of 18, 3% over the prior year quarter. This improvement was driven by robust growth in our hospice business, where average daily census, increased 17, 7% and hospice revenue.
<unk> increased to $54 million or 24, 3% increase each over the prior year quarter, our home health business showed remarkable resiliency and despite the negative impacts of last year's rate adjustment home health revenue grew to $51 1 million at 12, 7% increase on admissions.
Growth of six 7% each over the prior year quarter.
The census in revenue progress.
Is making its way to the bottom line as home health and Hospice segment adjusted EBITDA of $15 9 million increased by $1 7 million or 11, 9% over the prior year quarter, and $1 5 million or 10, 5% sequentially over Q2 <unk>.
Home health and hospice adjusted EBITDA margin also improved sequentially for the second consecutive quarter rising to 16, 1% from 15, 5% a 60 basis point increase with our strong revenue growth, we see additional opportunities for margin improvement by continuing to carefully manage productivity.
<unk> and ancillary and indirect expense.
Lastly, CMS issued the 2024 home health GPS final rule, which includes a headline 8% increase in Medicare fee for service payments a significant improvement from the two 2% net reduction in the proposed rule based on our initial modeling we anticipate a net 1% Pos.
The impact across our episodes of care.
The delay in some of the behavioral adjustment cut originally proposed CMS has acknowledged the financial headwinds home health provider space due to the current inflationary environment, while the final rule leave some level of uncertainty regarding future reimbursement, we will continue to work with CMS and policymakers to ensure that patients.
Have access to high quality critically needed home health services.
As the lowest cost healthcare setting home health must be a key component of our nation strategy to improve health outcomes, while reducing aggregate national healthcare spend.
Even the attention home health reimbursement changes have received we think it is important to remind listeners that Medicare home health is only a portion of our diversified business, specifically Medicare home health revenue comprised of 17, 2% of tenants consolidated revenue and 23, 7% of our home health and hospice.
Revenue, despite the flat Medicare home health rate update our growth profile is promising for several reasons.
The 2020 for hospice rate adjustment, which will have a projected two 8% positive impact on our hospice revenue beginning in the fourth quarter of 2023.
Favorable pricing updates with our managed care payers, where momentum continues and revenue per visit has increased six 9% year to date.
Third our local leaders ability to adapt to changing reimbursement through effective utilization and care planning and sounds by natural management.
In our senior living business, the leading indicators are strong performance continued to improve capable leaders, increasing occupancy and rising revenue per occupied unit senior living segment revenue of $38 7 million is up 18, 9%.
Your living segment adjusted EBITDA of $3 1 million increased 109, 6% each over the prior year quarter.
Same store occupancy edged closer to pre pandemic levels, reaching 81% an increase of 250 basis points and same store revenue per occupied unit increased by 11, 7% each.
Each over the prior year quarter.
In Q3, our senior living adjusted EBITDA margin also tracked favorably increasing by 340 basis points compared to Q3 of 2022 or.
Our senior living leaders are laser focused on continuing to drive occupancy and revenue gains to the bottom line in the near and long term.
We continue to methodically and effectively execute on our acquisition strategy as we acquired five hospice provider numbers in new markets close to our existing operations since our last earnings call in.
In September we acquired Valor hospice care with locations in Sierra Vista, and Green Valley, Arizona This acquisition.
Two new Arizona geographies that complement our existing home health and hospice strength in southern Arizona.
After quarter end, we acquired Guardian hospice locations in Northern Texas, and Southern Oklahoma. These acquisitions expand our footprint in states, where we have had significant success, particularly in more rural geographies. We're excited to serve these new communities and become the provider of choice.
Finally to complement and expand our existing Bay area operations. We also acquired a hospice license in Concord, California, allowing one of our most successful hospice agencies to expand its service area.
<unk> and Guardian acquisitions are examples of the attractive deals we're seeing in our sweet spot sized and priced appropriately in areas with strong leaders ready to step in and build and strong clusters ready to support over the last few months, we have seen changes to the market for our home health hospice and senior living transactions that are creating.
More opportunities for disciplined growth is.
With our strong balance sheet and improving cash flow, we expect to continue growing through the remainder of the fourth quarter and into next year does that I will hand, it to learn that for a review of the financials limit.
Thank you John and good morning, everyone.
Detailed financial results for the three months ended September 32023 are contained in our 10-Q and press release filed yesterday.
For the quarter ended September 32023, we reported total GAAP revenue of $140 2 million, an increase of $21 8 million or 18, 5% over the prior year quarter. We also reported GAAP diluted earnings per share of 15, six 3% decrease over the prior year.
Quarter, and non-GAAP diluted earnings per share of <unk> 42, 9% increase over the prior year quarter.
Based on our strong year to date performance in both business segments. We are adjusting our full year 2023 guidance.
Our initial guidance issued in February 2023 included revenue of $503 million to $518 million adjusted EBITDA of $38 four.
4 million to $42 6 million and adjusted earnings per share of <unk>, 66% to 76%.
Outdated guidance is as follows revenue of 526 million to $531 million.
Adjusted EBITDA of $39 4 million to $42 6 million and adjusted earnings per share of <unk> 69 to 75.
Key metrics for the three months ended September 32023 will include $53 $8 million outstanding on our $150 million revolving line of credit and $3 $4 million in cash on hand at quarter end.
One three times net debt to adjusted EBITDA and cash flow provided from operations at $12 4 million for the quarter and $27 9 million year to date.
We continue to expect healthy cash flow from operations based on organic revenue growth solid cash collections and continued bottom line improvement.
<unk> enable us to respond opportunistically at potential acquisitions, while maintaining a solid balance sheet.
I'd like to hand, it back to Brent to highlight some of our local leaders Brent.
Thanks Lynette.
It's my pleasure to spotlight a few leaders in our organization who have achieved exceptional results.
Desert view senior living in Las Vegas, Nevada.
<unk> appointed CEO, Mike Trail future, Chief Wellness Officer, heavy Santos and future Chief Marketing Officer, Charlie World, driven impressive growth and success.
Mike Abbie, Charlie and team have established a culture of excellence that would become an employer and provider of choice in Las Vegas demonstrated by a 21% year over year reduction in turnover and 100% occupancy with a wait list as the community increasingly turns to desert view.
As a trusted provider of assisted living services.
Desert view financial performance has followed with an 18, 4% increase in revenue and 105, 2% increase in EBITDA year over year.
At emblem home health.
Future CEO, Chris <unk> and future CTO Lindsay Sylvia.
We have built and continued to grow and impressive home health operation in the Phoenix Metro area.
Chris Lindsay and their team have made targeted investments in clinical leadership and enhancing the employee experience.
The strength of their leadership team has attracted additional talented staff, who have driven exceptional clinical outcomes, including a double digit improvement in re hospitalization rates.
<unk> clinical excellence has led to meaningful growth, which coupled with effective cost management resulted in a 10, 2% increase in revenue and a 197, 6% increase in EBITDA year over year.
These stories exemplify the power of our leadership model.
Right footed these leaders and many others who own their operations in a way that benefits patients residents employees and community partners.
That we will open it up for questions. Chris can you. Please instruct the audience on the Q&A procedure, yes.
Yes. Thank you.
As a reminder to ask a question. Please press star one on your phone and wait for your name to be announced to withdraw your question. Please press star one again.
Standby as we compile the Q&A roster.
And one moment for our first question.
Our first question will come from Ben Hendrix of RBC capital markets. Your line is open.
Thank you very much I just wanted to follow up on some of your comments about the investment in leadership seems like.
That's good.
<unk> fairly strong and it looks like based on kind of the segment margins in the M&A you've done maybe most of that is weighted towards.
Home health and hospice, but it seems like Youre getting good returns on that investment from what you just.
<unk> talked about with Desert view I'm wondering if you could.
Quantify how much investment youre doing annually on the leadership front and how that is segmented between the two business lines. Thanks.
Yes, it's a great question. So I mean, the leadership takes a number of different forms specifically with our Ceos in training. This.
This year, our goal was to add 50, additional new leaders and so we're well on pace to be able to achieve that next year. The number will be similar.
And that division is pretty much 50, 50 between the business lines.
But we will just continue and frankly a lot of this is kind of a roll up of each of our portfolio companies they have goals and targets. They recognize they are the acquisition opportunities that are there. So there's a little bit of just trying to match up alright, we need to bring leader then in preparation we've got a strong operation So let's look for opportunities to expand and so it's not always.
Going to be perfectly 50, 50, but as we've talked about in the past our goal and what we shared.
Shared on the call when we have success in local markets, that's where we're going to focus our when our leadership growth and development and those acquisition opportunities. So from that standpoint, we feel really good about the investments that we're making the development and the progress of the program and the leaders in the program.
And that's why we're very confident we are.
Just at the beginning a lot of these leaders are still in development and so we can deploy them, whether it's in a new opportunity or an existing operations or in branch expansions. There's so many opportunities for those leaders to go out and have a meaningful impact in their local communities.
Thank you.
Thank you.
Again to ask a question. Please press star one on your phone and wait for your name to be announced.
To withdraw your question. Please press star one again.
Yeah.
Standby as we compile the Q&A roster.
Again to ask a question I'll make a comment please press star one on your phone.
Im seeing no further questions in the queue I would now like to turn the conference back to Brent Kevin solely for closing remarks.
Thank you Chris.
Thank you everyone for joining us today have a great day.
This concludes today's conference call. Thank you all for participating you may now disconnect and have a pleasant day.