Q2 2024 The Pennant Group Inc Earnings Call
Operator: Good day, and thank you for standing by.
Good day, and thank you for standing by and welcome to the pennant group second quarter 2024 earnings Conference call.
Operator: Welcome to the Pennant Group 2nd quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode.
Speaker Change: At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
Operator: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press FAR 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press FAR 1-1 again.
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Kirk Cheney: Welcome to the Pennant Group second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. I would now like to hand the conference over to your first speaker today, Kirk Cheney, Corporate Secretary. Please go ahead.
Then here an automated message advising your hand is right.
Speaker Change: Withdraw your question. Please press star one again.
Operator: Please be advised that today's conference is being recorded.
Speaker Change: Please be advised that today's conference is being recorded.
Kirk Cheney: I would now like to hand the conference over to your first speaker today, Kirk Cheney, Corporate Secretary. Please go ahead.
Speaker Change: I would now like to hand, the conference over to your first speaker today Kirk Cheney Corporate Secretary. Please go ahead.
Kirk Cheney: Thank you, Rivka.
Kirk Cheney: Thank you Erica.
Kirk Cheney: Welcome everyone, and thank you for joining us today. Here with me today, I have Brent Guerisoli, our CEO; John Gochnour, our president and CEO; and Lynette Walbom, our CFO.
Kirk Cheney: Welcome everyone and thank you for joining us today.
Speaker Change: Here with me today I have Brent <unk>, our CEO, John Gardner, our president and CFO and then at Walden, Our CFO before we begin I have a few housekeeping matters.
Kirk Cheney: Before we begin, I have a few housekeeping matters. We filed our earnings press release in 10-Q yesterday. This announcement is available on the Investor Relations section of our website at www.pennantgroup.com. A replay of this call will also be available on our website until 5 p.m. Mountain time on August 6, 2025.
Speaker Change: We filed our earnings press release and 10-Q yesterday. This announcement is available on the Investor Relations section of our website at Www Dot pennant group dotcom.
Speaker Change: I play of this call will also be available on our website until five P. M Mountain time on August six 2025.
Kirk Cheney: We want to remind anyone who may be listening to a replay of this call that all statements made are as of today, August 7, 2024, and these statements will not be updated after today's call. Also, any forward-looking statements made today are based on maintenance, current expectations, assumptions, 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. This nurse should not place under 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.
Speaker Change: I want to remind anyone who may be listening to a replay of this call that all statements made are as of today August seven 2024, and these statements will not be updated after today's call.
Speaker Change: Also any forward looking statements made today are based on current.
Speaker Change: Current expectations assumptions and beliefs about our business and the environment in which we operate.
Kirk Cheney: 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. Certain of our independent subsidiaries, collectively referred to as the service center, provide accounting, payroll, human resources, information technology, legal risk management, and other services to other operating subsidiaries through contractual relationships. All of our operating subsidiaries and the service center are operated by separate independent companies that have their own management, employees, and assets.
Speaker Change: 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.
Speaker Change: 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.
Kirk Cheney: If this is required by federal securities laws, we do not undertake to publicly update or revise any forward-looking statements where it changes the rise for new information, future events, or for any other reason. In addition, the Pennant Group, Inc. is a holding company with no direct operating assets, employees, or revenues. Certain of our independent subsidiaries, collectively referred to as the management and other services to the other operating subsidiaries, through contractual relationship. Words, pennant, company, we, our, and us refer to the Pennant Group Inc. and its consolidated subsidiaries. All of our operating subsidiaries and the service center are operated by separate independent companies that have their own management, employees, and assets.
Speaker Change: As required by federal Securities laws, we do not undertake to publicly update or revise any forward looking statements where changes arise from new information future events or for any other reason.
In addition, the pennant group, Inc. Is a holding company with no direct operating assets employees or revenues.
Speaker Change: All of our independent subsidiaries collectively referred to as the service center provide accounting payroll human resources information technology legal risk management and other services to the other operating subsidiaries through contractual relationships.
Speaker Change: Whereas pennant company, we our and US refer to the pennant Group, Inc, and its consolidated consolidated subsidiaries.
Speaker Change: All of our operating subsidiaries and the service center are operated by a separate independent companies that have their own management employees and assets.
Kirk Cheney: References here into the consolidated company and its assets and activities, as well as the use of terms we, us, our, and similar terms, do not imply that the Pennant Group Inc.
Kirk Cheney: References herein to the consolidated company and its assets and activities, as well as the use of the terms we, us, our, and similar terms do not imply that the Pennant Group Inc. has Direct Operating Assets, Employees, or Revenue, or that any of the subsidiaries are operated by the Pennant Group. Also, 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 reports. The Gap to Non-Gap Reconciliation is available in yesterday's press release and is included in our 10K. With that, I'll turn the call over to Brent Guerisoli, our CEO.
Speaker Change: Francis herein to the consolidated company and its assets and activities as well as the use of the terms, we us our and similar terms do not imply that the pennant group, Inc. Has direct operating assets employees or revenue or that any of the subsidiaries are operated by the pennant group also we supplement our GAAP reporting with non-GAAP metrics.
Kirk Cheney: has direct operating assets, employees, or revenue, or that any of the subsidiaries are operated by the Pennant Group.
Kirk Cheney: Also, we supplement our gap reporting with non-GAAP metrics. When viewed together with our gap 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 reports. A gap to non-gap reconciliation is available in yesterday's press release and is available in our 10-K.
Speaker Change: Viewed together with our GAAP results. We believe that these measures can provide a more complete understanding of our business.
Speaker Change: Should not be relied upon to the exclusion of GAAP reports a GAAP to non-GAAP reconciliation is available in yesterday's press release and is available in our 10-K with that I'll turn the call over to Brent <unk> our CEO.
Brent Guerisoli: With that, I will turn the call over to Brent Garrissoli, our CEO. All right? Thanks, Kirk.
Brent: Thanks, Kurt and welcome everyone to our second quarter 2024 earnings call.
Brent Guerisoli: And welcome, everyone, to our second quarter 2024 earnings call. Following a robust first quarter, we are thrilled to report record-breaking second-quarter results that we continue to experience momentum across each of our service lines and create meaningful growth opportunities for local leaders and teams. Our financial performance and growth trajectory reflect the consistent effort we have applied to every aspect of our business through our five key focus areas: leadership development, clinical excellence, employee engagement, margin, and growth. We have been talking about these initiatives on our earnings calls for many quarters, but the tangible financial fruits of these efforts are now coming to bear.
Brent: Following a robust first quarter, we're thrilled to report record breaking second quarter results.
Brent: We continue to experience momentum across each of our service lines and create meaningful growth opportunities for local leaders and teams.
Speaker Change: Our financial performance and growth trajectory reflects the consistent effort, we've applied to every aspect of our business.
Speaker Change: Five key focus areas leadership development clinical excellence.
Speaker Change: Engagement margin and growth.
Speaker Change: We've been talking about these initiatives on our earnings calls for many quarters.
Brent Guerisoli: Thanks, Kirk, and welcome, everyone, to our second quarter 2024 earnings call. Following a robust first quarter, we are thrilled to report record-breaking second quarter results as we continue to experience momentum across each of our service lines and create meaningful growth opportunities for local leaders and teams. These results are the product of a relentless focus on fundamental, steady, incremental improvement and a prudent yet proactive approach to growth as we build a leadership pipeline.
Speaker Change: But the tangible financial fruits of these efforts are now coming to bear.
Brent Guerisoli: In Q2, we generated revenue of $168.7 million, a Justiti Bada of $13.2 million, and adjusted earnings per share of $0.24, each exceeding the top end of consensus. These results are the product of a relentless focus on fundamental steady incremental improvement and the prudent yet proactive approach to growth as we build a leadership pipeline. They also demonstrate the firm foundation we have laid over the last several years and upon which we are now positioned to build. We are experiencing an exciting time in our history as both organic and acquisitional growth are at all time highs. This period of expansion provides insight into our potential as a provider of choice in our local communities, a best-in-class operator across our industries, and a disciplined yet bold growth company with the sophistication and adaptability to become a key solution in the healthcare continuum.
Speaker Change: Q2.
Speaker Change: We generated revenue of $168 $7 million adjusted EBITDA of $13 2 million and adjusted earnings per share of <unk> 24.
Speaker Change: Each exceeding the top end of consensus these.
Speaker Change: These results are the product of our relentless focus on fundamentals.
Speaker Change: The incremental improvement and the prudent yet proactive approach to growth as we build our leadership pipeline.
Speaker Change: They also demonstrate the firm foundation, we have laid over the last several years and upon which we are now positioned to build.
Speaker Change: We are experiencing an exciting time in our history as both organic and acquisition growth are at all time highs.
Speaker Change: This period of expansion provides insight into our potential as a provider of choice in our local communities.
Speaker Change: Best in class operator across our industries.
And a disciplined yet bold growth company with the sophistication and adaptability to become a key solution in the healthcare continuum.
Brent Guerisoli: Since the beginning of the year, we have entered into the Mirror Home Health Joint Venture, closed an additional two home health and two hospice transactions, initiated a management agreement with Hartford Healthcare, announced the largest acquisition in our history in Signature Home Healthcare, and completed three senior living deals, two of which included the purchase of real estate assets. In the process, we've added more than 2,200 lives under the pen and umbrella through acquisitions in organic growth, along with approximately 4,000 lives under the Hartford Management Agreement. Collectively, this represents a greater than 50 percent increase in the number of lives we touch each day as compared to the end of 2023, and this does not include the impact of the signature transaction, which will add an additional 2,500 lives.
Since the beginning of the year, we have entered into the mirror home health joint venture closed an additional two home health and two hospice transactions.
Speaker Change: Initiated a management agreement with Hartford healthcare.
Speaker Change: <unk> the largest acquisition in our history and signature home healthcare and completed three senior living deals too.
Speaker Change: Two of which included the purchase of real estate assets.
Speaker Change: In the process, we've added more than 2200 lives under the pennant umbrella through acquisitions and organic growth along with approximately 4000 lives under the Hartford management agreement.
Brent Guerisoli: This period of expansion provides insight into our potential as a provider of choice in our local communities, a best-in-class operator across our industries, and a disciplined yet bold growth company with the sophistication and adaptability to become a key solution in the healthcare continuum. We initiated a management agreement with Hartford HealthCare, announced the largest acquisition in our history, Signature Home HealthCare, and completed three senior living deals. Collectively, this represents a greater than 50% increase in the number of lives we touch each day as compared to the end of 2023, and this does not include the impact of the signature transaction, which will add an additional 2500 lives.
Speaker Change: Collectively this represents a greater than 50% increase in the number of lives we touch each day as compared to the end of 2023 and this does not include the impact of the signature transaction, which will add an additional 2500 lives.
Brent Guerisoli: Last week, we also announced our newly upsized revolver, which increases our borrowing capacity to 250 million and improves the covenants in other loan terms. This amended facility further reinforces our balance sheet, and together with our strong operating cash flow, creates significant dry powder for future growth. This transaction was completed with a syndicate of banking partners whose commitment demonstrates their continued confidence in penance growth strategy. As announced in yesterday's press release, we are raising annual guidance based on the momentum in the business. The operations we have added or expanded and the significant upside we know remains in our existing operations.
Speaker Change: Last week, we also announced our newly Upsized revolver.
Speaker Change: Which increases our borrowing capacity to $250 million and improves the covenants and other loan terms.
Brent Guerisoli: Last week, we also announced our newly upsized revolver, which increases our borrowing capacity to $250 million and improves the covenants and other loan terms. The midpoint of $0.92 represents a 5.7% increase over our original 2024 guidance, a 26% increase over our 2023 adjusted earnings, and a 61.4% increase over our 2022 adjusted earnings. With solid performance across the portfolio, capable leaders ready to seize opportunities, and a healthy balance sheet, we are excited for the remainder of 2024 and beyond.
Speaker Change: This amended facility further reinforces our balance sheet and together with our strong operating cash flow creates significant dry powder for future growth.
Speaker Change: This transaction was completed with a syndicate of banking partners, whose commitment demonstrated their continued confidence in tennant's growth strategy.
Speaker Change: As announced in yesterday's press release, we are raising annual guidance based on the momentum in the business.
Speaker Change: The operations, we have added or expanded and the significant upside we know remains in our existing operations.
Brent Guerisoli: We anticipate full-year revenue in the range of $654 million to $694.5 million and adjusted earnings per share in the range of $0.89 to $0.95. The midpoint of 92 cents represents a 5.7% increase over our original 2024 guidance, a 26% increase over our 2023 adjusted earnings, and a 61.4% increase over our 2022 adjusted earnings.
Speaker Change: We anticipate full year revenue in the range of 654 million.
Speaker Change: $694 5 million and adjusted earnings per share in the range of 89 to 95.
Speaker Change: The midpoint of 92 represents a five 7% increase over our original 2024 guidance at 26% increase over our 2023 adjusted earnings and a 61, 4% increase over our 2022 adjusted earnings.
Brent Guerisoli: With solid performance across the portfolio, capable leaders ready to seize opportunities, and the healthy balance sheet, we are excited for the remainder of 2024 and beyond.
Speaker Change: With solid performance across the portfolio.
Speaker Change: Capable leaders ready to seize opportunities and a healthy balance sheet. We are excited for the remainder of 2024 and beyond.
John Gochnour: With that, I'll turn the call over to John to provide more detail on our second quarter operational results. Thank you, Brent, and good morning, everyone. We are pleased to report inspiring clinical and operational results driven by local leaders across Pennant. We have continued to execute at our existing operations even during a period of record-breaking growth. In our home health and hospice segment, we experienced strong organic growth, successful transitions, improving margin, and excellent clinical outcomes. Top-line segment revenue was $125.3 million, an increase of $30.3 million, or $31.9%. An adjusted EBITDAQ was $19.6 million, an increase of $5.2 million, or 36.3% each over the prior year quarter.
Speaker Change: With that I'll turn the call over to John to provide more detail on our second quarter operational results.
John: Thank you Brent and good morning, everyone. We are pleased to report inspiring clinical and operational results driven by local leaders across payment. We have continued to execute at our existing operations, even during a period of record breaking growth.
Brent Guerisoli: We have continued to execute at our existing operations, even during a period of record-breaking growth. In our Home Health and Hospice segment, we experienced strong organic growth, successful transitions, improving margin, and excellent clinical outcomes. On the hospice side, we continued to make exceptional progress. Hospice revenue was $59.3 million, an increase of $12.8 million, or 27.5% over the prior year quarter. Hospice admits rose 31.4%.
John: In our home health and Hospice segment, we experienced strong organic growth successful transitions improving margin and excellent clinical outcomes topline segment revenue was $125 3 million, an increase of $30 3 million or 31, 9% and adjusted EBITDA was $19 6 million.
John: An increase of $5 2 million or 36, 3% each over the prior year quarter.
John Gochnour: On the hospice site, we continued to make exceptional progress. Hospice revenue was $59.3 million, an increase of $12.8 million, or 27.5% over the prior year quarter. Hospice admits rose 31.4%, average daily census rose 29.1%, and length of stay increased 4.3% each over the prior year quarter, which more than offset a 2.6% reduction in revenue per day over the same period.
John: On the hospice side, we continued to make exceptional progress.
John: <unk> revenue was $59 3 million, an increase of $12 8 million or 27, 5% over the prior year quarter hospice admit rose 31, 4% average daily census, Rose 29, 1% and length of stay increased four 3% each over the prior year quarter, which more than offset a two.
Brent Guerisoli: Average daily census rose 29.4%, and Length of Stay increased 4.3% each over the prior year quarter, which more than offset a 2.6% reduction in revenue per day over the same period driven primarily by census growth in states with lower per day reimbursement. The growth flywheel continued to turn at our mature operations, as same-store admissions grew 15.3%, and ADC increased 14.8% each over the prior year quarter. This double-digit growth reflects the latent potential across our portfolio, as our mature operations continue to become a provider and employer of choice in the communities they serve.
John: Six per cent reduction in revenue per day over the same period, driven primarily by census growth in states with lower per day reimbursement the.
John Gochnour: Thurden primarily by census growth in states with lower per day reimbursement. The growth flywheel continued to turn at our mature operations, as same-store admissions grew 15.3%, and ADC increased 14.8% each over the prior year quarter. This double-digit growth reflects the latent potential across our portfolio, as our mature operations continued to become a provider and employer of choice in the communities they serve. Our home health business experienced similar progress. Home health revenue grew to $66 million, an increase of $17.5 million, or 36.1% over the prior year quarter. Codal home health admissions increased 35.4%, and Medicare admissions increased 18.3% each over the prior year quarter.
John: The growth fly will continue to turn at our mature operations as same store admissions grew 15, 3% and ADC increased 14, 8% each over the prior year quarter.
John: This double digit growth reflects the latent potential across our portfolio as our mature operations continued to become a provider and employer of choice in the communities they serve.
Brent Guerisoli: Our home health business experienced similar progress. Home health revenue grew to $66 million, an increase of $17.5 million, or 36.1% over the prior year quarter. Total home health admissions increased 35.4%, and Medicare admissions increased 18.3% each over the prior year quarter.
John: Our home health business experienced similar progress home health revenue grew to $66 million, an increase of $17 $5 million was 36, 1% over the prior year quarter total home health admissions increased 35, 4% and Medicare admissions increased 18, 3% each over the prior.
John: Year quarter revenue per episode increased six 6% over the prior year as we admitted more patients and higher reimbursement states along the west coast diversified our referral source pipelines and effectively managed episodes at the local level much like our hospice business are mature home health operations continued their impressive growth.
John Gochnour: Revenue prep episode increased 6.6% over the prior year, as we admitted more patients in higher reimbursement states along the West Coast, diversified our referral source pipelines, and effectively managed episodes at the local level. Much like our hospice business, our mature home health operations continued their impressive growth, as same-store admitts increased 18.6%, Medicare admitts increased 6%, and revenue per episode increased 2.9% each over the prior year quarter. Even as we welcome new operations with lower average quality ratings, our clinical quality remained excellent. With an average CMS star rating of 4.1 compared to the national average of 3.0, and a reported acute care hospitalization rate of 13.3%, which compares favorably to the national average of 14.1%.
Brent Guerisoli: Revenue per episode increased 6.6% over the prior year, as we admitted more patients in higher reimbursement states along the West Coast, diversified our referral source pipelines, and effectively managed episodes at the local level. Much like our hospice business, our mature home health operations continued their impressive growth, as same-store admits increased 18.6%, Medicare admits increased 6%, and revenue per episode increased 2.9% each over the prior year quarter. Even as we welcome new operations with lower average quality ratings, our clinical quality remains excellent with an average CMS star rating of 4.1 compared to the national average of 3.0 and a reported acute care hospitalization rate of 13.3%, which compares favorably to the national average of 14.1%.
Brent Guerisoli: We also remain focused on CMS's Home Health Value-Based Purchasing Program, where we are monitoring our performance against the value-based purchasing criteria and expect to experience positive revenue impact at our mature operations. On the regulatory front, CMS recently issued its final hospice rule with a 2.9% increase in revenue per day versus the 2.6% increase it initially proposed. As applied to Pennant, our modeling of the rules impact anticipates an increase in our revenue per day of 2.93%, yielding a projected net negative impact of 1.7 percent.
Brent Guerisoli: We are disappointed in CMS's proposal, which uses flawed methodology and does not reflect the ongoing and significant increases in the cost of providing valuable home health services. Since 2013, revenue per home health patient has grown approximately 10.2%, while the consumer price index has increased 36.5% over the same period. These conflicting trends have already begun to threaten access to care and push patients into more expensive and less appropriate care settings.
John: Our same store admits increased 18, 6% Medicare admits increased 6% and revenue per episode increased two 9% each over the prior year quarter.
John: Even as we welcome new operations with lower average quality ratings are clinical quality remained excellent with an average CMS star rating of $4, one compared to the national average of 3.0, and a reported acute care hospitalization rate of 13, 3%, which compares favorably to the national average of $14 one.
John: Percent.
John Gochnour: We also remained focused on CMS's home health value-based purchasing program, where we are monitoring our performance against the value-based purchasing criteria and expect to experience a positive revenue impact at our mature operations. On the regulatory front, CMS recently issued its final hospice rule with a 2.9 percent increase in revenue per day versus the 2.6 percent increase it initially proposed. As applied, the Pennant, our modeling of the rules impact, anticipates an increase in our revenue per day of 2.93%. In late June, CMS issued the proposed 20.5 home health rule, which applies a negative behavioral adjustment of 4.1 percent, offset by a market basket increase of 2.5 percent, yielding a projective net negative impact of 1.7 percent.
John: Also remained focus on CMS home health value based purchasing program, where we are monitoring our performance against the value based purchasing criteria and expect to experience positive revenue impact at our mature operations.
John: On the regulatory front CMS recently issued its final hospice rule with a two 9% increase in revenue per day versus the two 6% increase it initially proposed as applied dependent our modeling of the rules impact anticipates, an increase in our revenue per day of 293%.
In late June CMS issued the proposed 2025 home health rule, which applies a negative behavioral adjustment of four 1% offset by a market basket increase of two 5%, yielding a projected net negative impact of one 7%.
John Gochnour: We are disappointed in CMS's proposal, which uses flawed methodology and does not reflect the ongoing and significant increases in the costs of providing valuable home health services. Since 2013, revenue per home health patient has grown approximately 10.2 percent, while the Consumer Price Index has increased 36.5 percent over the same period. These conflicting trends have already begun to threaten access to care and push patients into more expensive and less appropriate care settings. Along with our industry partners, we will advocate aggressively for CMS to acknowledge the important role that home health services play in reducing the nation's aggregate Medicare spend.
Speaker Change: We are disappointed in Cms's proposal, which uses flawed methodology does not reflect the ongoing and significant increases in the cost of providing valuable home health services.
Speaker Change: Since 2013 revenue per home health patient has grown approximately 10, 2% while the consumer price index has increased 36, 5% over the same period. These conflicting trends have already begun to threaten access to care and push patients into more expensive and less appropriate care settings.
Along with our industry partners, we will advocate aggressively for CMS to acknowledge the important role that home health services play in reducing the nation's aggregate Medicare spend.
John Gochnour: As we address this challenge, we are mindful of the fact that CMS's 2024 proposed rule was similarly bleak, with an initial deep cut. After further consideration, CMS finalized a more reasonable and slightly net positive rate update.
Speaker Change: We address this challenge we are mindful of the fact that CMS is 'twenty 'twenty four proposed rule was similarly within initial deep cut.
Speaker Change: After further consideration CMS finalized a more reasonable and slightly net positive rate update.
John Gochnour: Whatever the result of the 2025 final rule may be, our local operators will remain focused on operating and controlling the things they can control. Our operating model has proven adaptable through periods of reimbursement challenge. We know the need for our services and the value that provide to our patients and the post-acute care continuum, and we will resolutely work to pull the right cost management levers and grow in this ever changing reimbursement environment. Our senior living segment is stable and growing, as revenue improved to 43.4 million, an increase of 6.2 million, or 16.6 percent over the prior year quarter.
Brent Guerisoli: Along with our industry partners, we will advocate aggressively for CMS to acknowledge the important role that home health services play in reducing the nation's aggregate Medicare spend. As we address this challenge, we are mindful of the fact that CMS's 2024 proposed rule was similarly bleak with an initial deep cut, but after further consideration, CMS finalized a more reasonable and slightly net positive rate. Whatever the result of the 2025 final rule may be, our local operators will remain focused on operating and controlling the things they can control.
Speaker Change: Never the result of the 2025 final rule, maybe our local operators will remain focused on operating and controlling the things. They can control. Our operating model has proven adaptable through periods of reimbursement challenge, we know the need for our services and the value they provide to our patients and the post acute care continue.
Brent Guerisoli: Our operating model has proven adaptable through periods of reimbursement challenge. We know the need for our services and the value they provide to our patients and the post-acute care team, and we will resolutely work to pull the right cost management levers and grow in this ever-changing reimbursement environment. As Brent discussed, in 2024, we have accelerated our pace of new acquisitions and partnerships; our ability to acquire and transition new operations, while also executing successfully at our existing operations, is made possible by the significant investment we have made to recruit and develop leaders and build strong clusters and markets. We rely on a decentralized model that encourages local leaders to make acquisition decisions with the support of expert resources. Robust local clusters facilitate growth because even as we transition new operations in one market, leaders in other markets have independent bandwidth to tackle additional opportunities.
Speaker Change: And we will resolutely work to pull the right cost management levers and grow in this ever changing reimbursement environment.
Speaker Change: Our senior living segment is stable and growing as revenue improved to $43 4 million, an increase of $6 2 million or 16, 6% over the prior year quarter, adjusted EBITDA improved to $4 1 million a.
John Gochnour: Adjusted EBITDA, who proved a 4.1 million, a 0.5 million or 14.8 percent increase over the prior year quarter. Same store occupancy remains strong at 79.2 percent. An average monthly revenue preoccupied room rose to 4,753, an increase of 363 or 8.3 percent over the prior year quarter. Our occupancy rate growth remains steady with an overall increase of 80 basis points and a slight softening in same-store occupancy of 40 basis points.
Speaker Change: $5 million or 14, 8% increase over the prior year quarter same store occupancy remains strong at 79, 2% and average monthly revenue per occupied room rose to 4753, an increase of 363 or eight 3% over the prior year quarter, our occupancy rate.
Speaker Change: Growth remained steady with an overall increase of 80 basis points and a slight softening in same store occupancy of 40 basis points each over the prior year quarter as we continued to focus on rate and revenue quality.
Speaker Change: Our investment in recruiting and developing strong local leaders underpins. These financial improvements contributed to the segment's operational maturity quality leadership is central to our operating model and as leaders deepen their experience and continue to execute on the fundamentals of the business, we expect ongoing acceleration and performance.
John Gochnour: of the United States and the United States. We expect ongoing acceleration in performance. As Brent discussed, in 2024 we have accelerated our pace of new acquisitions and partnerships, our ability to acquire and transition new operations while also executing successfully at our existing operations. It is made possible by the significant investment we have made to recruit and develop leaders and build strong clusters and markets. We do not have a typical centralized acquisition team. Instead, we rely on a decentralized model that encourages local leaders to make acquisition decisions with the support of expert resources. We'll bust local clusters, facilitate growth because even as we transition new operations in one market, leaders in other markets have independent bandwidth to tackle additional opportunities.
Speaker Change: As Brent discussed in 2024, we have accelerated our pace of new acquisitions and partnerships our ability to acquire and transitioned new operations. While also executing successfully at our existing operations.
Speaker Change: Is made possible by the significant investment we have made to recruit and develop leaders and build strong clusters in markets. We do not have a typical centralized acquisition team.
Ted: Ted we rely on a decentralized model that encourages local leaders to make acquisition decisions with the support of expert resources.
Ted: Bus local clusters facilitate growth.
Ted: Even as we transition new operations in one market leaders in other markets have independent bandwidth to tackle additional opportunities.
John Gochnour: Our management agreement with Hartford Healthcare represents an exciting step in our development as a key partner to leading health systems. Pennant will manage and support the Hartford Healthcare at Home business with over 1,000 employees and which generated more than 33,000 home health admissions and 4,000 hospice admissions over the 12 months preceding the agreement. Pennant will receive a management fee for its services, which will include the sharing of our unique operating model, training and development of leaders, implementation of our technology systems and operational best practices, along with support for IT, HR, and related back office functions.
Brent Guerisoli: Pennant will manage and support the Hartford HealthCare at Home business, which generated more than 33,000 home health admissions and 4,000 hospice admissions over the 12 months preceding the agreement. The scale of this collaboration is significant, and it allows us to meaningfully invest in creating an East Coast service. We also have the opportunity to share in the value we create and build a strong presence with the potential to expand to other communities in the eastern United States.
Ted: Our management agreement with Hartford healthcare represents an exciting step in our development as a key partner to leading health systems.
Ted: And then we'll manage and support the Hartford healthcare at home business with over 1000 employees, and which generated more than 33000 home health admissions and 4000 hospice admissions over the 12 months preceding the agreement.
Ted: And then we'll receive a management fee for it services, which will include the sharing of our unique operating model training and development of leaders implementation of our technology systems and operational best practices, along with support for IP HR and related back office functions. The scale of this collaboration is significant and it allows us to meaningful.
John Gochnour: The scale of this collaboration is significant, and it allows us to meaningfully invest in creating an East Coast Service Center. As we work with Hartford Healthcare to strengthen and grow its home health and hospice business, we also have the opportunity to share in the value we create and build a strong presence with the potential to expand to other communities in the Eastern United States. We look forward to collaborating with Hartford Healthcare to innovate and improve access to home health and hospice services in Connecticut.
Ted: We invest in creating an east Coast Service Center.
Ted: As we work with Hartford healthcare to strengthen and grow its home health and hospice business. We also have the opportunity to share in the value, we create and build a strong presence with the potential to expand to other communities in the eastern United States, We look forward to collaborating with Hartford healthcare.
Ted: And improve access to home health Hospice services in Connecticut.
John Gochnour: After quarter end, we announce the acquisition of Signature Healthcare at Home, a leading provider of home health and hospice services in the Pacific Northwest. The first stage of this transaction, which includes Signature's operations in Idaho and Washington, closed on August 1st, and the second stage, the Oregon operations, is expected to close on January 1st, 2025. After certain regulatory approvals are completed, we are excited to welcome the Signature operations to the Pennet family. We have a mentor respect for Signature and its leaders, in whom we have developed a relationship over several years, ultimately leading to this unique opportunity.
Brent Guerisoli: After quarter end, we announced the acquisition of Signature Healthcare at Home, a leading provider of home health and hospice services in the Pacific Northwest. The first stage of this transaction, which includes Signature's operations in Idaho and Washington, closed on August 1st, and the second stage, the Oregon operations, is expected to close on January 1st, 2025, after certain regulatory approvals are completed. We are excited to welcome the Signature operations to the Pennant family.
Speaker Change: After quarter end, we announced the acquisition of signature healthcare at home, a leading provider of home health and hospice services in the Pacific Northwest. The first stage of this transaction, which includes signatures operations in Idaho, and Washington closed on August one and the second stage. The Oregon operations is expected to close on January one 2025.
Speaker Change: After certain regulatory approvals are completed we are excited to welcome our signature operations to the pennant family. We have immense respect for signature and its leaders with whom we have developed a relationship over several years ultimately leading to this unique opportunity. This strategically important acquisition grows our presence in Washington, a certificate of need state.
Brent Guerisoli: We have immense respect for Signature and its leaders, with whom we have developed a relationship over several years, ultimately leading to this unique opportunity. This strategically important acquisition grows our presence in Washington, a deep state, and complements our existing footprint in Oregon and Idaho. Signature has a well-earned reputation for clinical excellence and is a prominent provider in its markets. The future is bright in the Pacific Northwest, as we combine Signature's legacy with Pennant's unique operating model and existing strength in the region. With that, I'll hand it over to Lynette for a review of the financials. Lynette. Thank you, John.
John Gochnour: This strategically important acquisition grows our presence in Washington, a certificate of deep state and compliments our existing footprint in Oregon and Idaho. Signature has a well-earned reputation for clinical excellence and is a prominent provider in its markets. The future is bright in the Pacific Northwest, as we combine Signature's legacy with Pennet's unique operating model and existing strength in the region.
Lynn: And complements our existing footprint in Oregon, and Idaho signature has a well earned reputation for clinical excellence and has a prominent provider in its markets. The future is bright and the Pacific northwest as we combined signatures legacy with tenants unique operating model and existing strength in the region with that I'll hand, it over to Lynn that pretty.
Lynette Walbom: With that, I'll hand it over to Pennet for a review of the financials. Pennet, thank you, John, and good morning, everyone. Details financial results for the three months ended June 30th, 2024, are contained in our 10-Q and press release file yesterday. For the quarter ended June 30th, 2024, we reported total gap revenue of 168.7 million, an increase of 36.4 million or 26.27.6 percent over the prior year quarter. Gap diluted earnings per share of 18 cents and adjusted diluted earnings per share of 24 cents. As a reminder, we do not issue quarterly guidance. But our 2024 full year guidance was total adjusted revenue between 596.8 million and 633.7 million.
Lynn: A review of the financials limit.
Lynette Walbom: Thank you, John, and good morning, everyone. Detailed financial results for the three months ended June 30, 2024 are contained in our 10-Q and press release filed yesterday. For the quarter ended June 30, 2024, we reported total GAAP revenue of $168.7 million, an increase of $36.4 million or 27.6% over the prior year quarter, GAAP diluted earnings per share of $0.18, and adjusted diluted earnings per share of $0.24. As a reminder, we do not issue quarterly guidance, but our 2024 full-year guidance was total adjusted revenue between $596.8 million and $633.7 million, adjusted earnings per diluted share between $0.82 and $0.91, and adjusted EBITDA between $46.2 million and $49.7 million.
Lynn: Thank you John and good morning, everyone detailed financial results for the three months ended June 32024 are contained in our 10-Q and press release filed yesterday for the quarter ended June 32024, we reported total GAAP revenue of $168 7 million, an increase of $36 4 million or 26.
Lynn: <unk> 2007, 6% over the prior year quarter GAAP diluted earnings per share at 18, and adjusted diluted earnings per share at 24.
Lynn: As a reminder, we do not issue quarterly guidance, but our 2020 for full year guidance was total adjusted revenue between $596 8 million and $633 7 million adjusted earnings per diluted share between <unk> 91, and adjusted EBITDA between 46.
Lynette Walbom: Adjusted earnings per day diluted share between 82 cents and 91 cents, and adjusted EBITDAW between 46.2 million and 49.7 million. Our year-to-date results put us on pace to exceed the top end of our full-year guidance.
Lynn: $2 million and $49 7 million our year to date results put us on pace to exceed the top end of our full year guidance. Accordingly, we are revising and raising our full year 2024 guidance as follows.
Lynette Walbom: Accordingly, we are revising and raising our full-year 2024 guidance as follows. Full year total revenue is anticipated to be between 654 million and 694.5 million. Full year adjusted earnings per diluted share is anticipated to be between 89 cents and 95 cents. And full year adjusted EBITDAW is anticipated to be between 50.7 million and 53.8 million. This updated guidance incorporates current operations and organic growth diluted weighted average shares outstanding of approximately 30.7 million and a 25.8 percent effective tax rate. It anticipates continued strong operating performance through the end of the year; hospice reimbursement rate adjustments, increased interest expense, and contributions from our joint ventures and management agreements.
Lynette Walbom: Our year-to-date results put us on pace to exceed the top end of our full year guidance. Accordingly, we are revising and raising our full year 2024 guidance as follows: full year total revenue is anticipated to be between $654 million. As detailed in our 8K filing dated August 1st, 2024, Pennant has entered into an amended and restated credit facility that, among other changes and improvements, increased the total amount of the facility from $150 million to $250 million.
Lynn: Full year total revenue is anticipated to be between $654 million.
Lynn: And $694 5 million full year adjusted earnings per diluted share is anticipated to be between 89 cents.
Lynn: 95.
Lynn: And full year adjusted EBITDA is anticipated to be between $58 7 million and $53 8 million.
Lynn: This updated guidance incorporates current operations and organic growth diluted weighted average shares outstanding of approximately $37 million and 25, 8% effective tax rate anticipates continued strong operating performance through the end of the year hospice reimbursement rate adjustments increased interest.
Lynn: And contributions from our joint ventures and management agreements.
Lynette Walbom: It excludes unannounced acquisitions, the announced purchase of signatures, organ assets, startups, share-based compensation, acquisition-related costs, or one-time implementation and unusual items. As detailed in our 8-K filing dated August 1, 2024, tenant has entered into an amended and restated credit facility that, among other changes and improvements, increases the total amount of the facility from 150 million to 250 million. The amended facility also reduces the interest rate for drawn loans by 50 basis points and increases the maximum leverage ratio from 2.5 times under the prior facility to 3.25 times under the amended facility. We anticipate that our leverage ratio after completing the signature acquisition on January 1, 2025, will remain well within our leverage covenants.
Lynn: <unk> unannounced acquisitions, the announced purchase of signatures, Oregon asset startups share based compensation acquisition related costs or one time implementation and unusual items.
Lynette Walbom: The amended facility also reduces the interest rate for drawn loans by 50 basis points and increases the maximum leverage ratio from 2.5 times under the prior facility to 3.25 times under the amended facility. We anticipate that our leverage ratio, after completing the signature acquisition on January 1st, 2025, will remain well within our leverage covenant. Key metrics for the three months ended June 30, 2024 include $83 million drawn on a revolving line of credit and $3 million in cash on hand at quarter end.
Lynn: As detailed in our 8-K filing dated August one 2024 tenant has entered into an amended and restated credit facility that among.
Lynn: Other changes and improvements increased the total amount of the facility from $150 million to $250 million. The amended facility also reduces the interest rate for drawn loans by 50 basis points.
Lynn: And increases the maximum leverage ratio from two five times under the prior facility to three to five times under the amended facility.
Lynn: We anticipate that our leverage ratio after completing the signature acquisition on January one 2025, we will remain well within our leverage covenants.
Lynette Walbom: Key metrics for the three months ended June 30, 2024, include 83 million drawn on a revolving line of credit and 3 million in cash on hand at quarter ends. 1.7 times net debt to adjusted EBITDA ratio and cash flows provided from operations of 11 million year to date, including 10.5 million in Q2.
Lynn: Key metrics for the three months ended June 32024 included $83 million, John on a revolving line of credit and $3 million in cash on hand at quarter end.
John: One seven times net debt to adjusted EBITDA ratio and cash flows.
Provided from operations of $11 million year to date, including $10 5 million in Q2.
Lynette Walbom: I would now like to spotlight a few leaders in our organization who have achieved exceptional results. Their stories demonstrate the remarkable progress that can occur when local leaders build strong culture to develop high performing teams of sea level leaders in their operations. C-C-C-E-O, Kelsey Sly; C-E-O, Tim Johnson; C-C-O, Tina McMahon; C-R-O, Rosacea McCabba; and C-M-O, Constance Houston, have driven remarkable progress at C-Port Scripps Home Health. Our joint venture with Scripps Health in San Diego, California. This joint venture shows how strong culture and dedicated partnership can drive clinical innovation, including the use of technology to reduce re-hospitalization, the development of specialized clinical programs, and the establishment of strong continuums of care to ensure quality outcomes and an excellent patient experience.
Speaker Change: I'd now like to spotlight a few leaders in our organization who have achieved exceptional results.
Speaker Change: Stories demonstrates the remarkable progress that can occur when local leaders build strong culture to develop high performing teams of C level leaders in their operations.
Speaker Change: Future CEO of healthy slide CEO, Tim Johnson, CCL genomic man Sciarra with HMA Cava, and CMO Constance Houston have driven a remarkable progress at seaport scratched home health.
Speaker Change: Joint venture with Scripps Health in San Diego, California.
Speaker Change: This joint venture shows how strong culture and dedicated partnership can drive clinical innovation, including the use of technology to reduce re hospitalization. The development of specialized clinical programs and the establishment of a strong continuum of care to ensure quality outcomes and an excellent patient patient experience.
Lynette Walbom: As a result, C-Port Scripps has become a critical community resource, driving excellent clinical results in organic growth, including a real-time star rating of 4.5, a 15 percent increase in admissions over the prior year quarter, and improved Medicare mix. In the first half of the year, the C-Port Scripps team weathered significant changes in the San Diego health care community, including the loss of a primary payer and changing referral source dynamics to emerge stronger than ever. In the second quarter, the team achieved a 30 percent increase in revenue and a 200 percent increase in EBITDA, each over the prior year quarter.
Speaker Change: As a result seaport Scripps has become a critical community resource driving excellent clinical results and organic growth, including our real time star rating of four five and.
Speaker Change: 15% increase in admissions over the prior year quarter and improved Medicare mix.
Lynette Walbom: Future CEO, Kelsey Sly, CEO, Tim Johnson, CCO, Tina McMahon, CRO, Jose Shimekawa, and CMO, Constance Houston, have driven remarkable progress at Seaport Scripps Home Health, our joint venture with Scripps Health in San Diego, California. This joint venture shows how strong culture and dedicated partnership can drive clinical innovation, including the use of technology to reduce re-hospitalizations, the development of specialized clinical programs, and the establishment of strong continuums of care to ensure quality outcomes and an excellent patient experience.
Speaker Change: In the first half of the year the seaport Scripps team, whether it's significant changes in the San Diego Health care community and getting a lots of a primary payer and changing refer other floris dynamics to emerge stronger than ever and the second quarter. The team achieved a six.
Speaker Change: 30% increase in revenue and a 200% increase in EBITDA each over the prior year quarter.
Lynette Walbom: In Wisconsin, future CEO, Jamie Seal, and clinical leaders, Brittany Stegman and Trisha Hoye, lead at a cluster of communities in the Fox Valley area of Central Wisconsin, which includes four smaller senior living buildings. Having previously served as a key clinical leader in these communities, Jamie steps into an operational leadership role in 2022. Jamie continues to drive substantial improvements in these mature operations and create value in the local community. By elevating culture and providing excellent care, they have become communities of choice, as demonstrated by their 98 percent occupancy rate, which has improved from 94 percent in Q2 of 2023.
Speaker Change: In Wisconsin, Future's, CEO, Jane ECL, and clinical leaders, Britney Steadman and Tricia Hoyt.
Speaker Change: Lead a cluster.
Speaker Change: Of communities and the Fox Valley area, Central, Wisconsin, which includes four smaller senior living buildings.
Speaker Change: Having previously served as a clinic key clinical leader in these community Jamie.
Speaker Change: And operational leadership role in 2022.
Speaker Change: Jamie continues to drive substantial improvements in these mature operations and create value in our local community.
Speaker Change: Elevating culture, and providing excellent care and become communities of choice as demonstrated by the 98% occupancy rate, which has improved from 94% in Q2 of 2023.
Lynette Walbom: Financial success has followed, with the revenue growth of 13 percent and EBITDA growth of 85 percent each over the prior year quarter. Jamie and her team have demonstrated the marked improvements that can occur, even at already well-performing operations, due to consistent focus on culture and the application of our operating model.
Jamie: Financial success, followed with the revenue growth of 13% EBITA growth of 85% each over the prior year quarter Jamie.
Jamie: Jamie and her team have demonstrated a marked improvement that can occur even already well performing operation.
Jamie: A consistent focus on culture and the application of our operating model with that I'll turn the call back over to Brent for concluding comments.
Brent Guerisoli: With that, I'll turn the call back over to Brent for concluding comments. Thanks, Lynette. Before we transition to questions, I want to take a moment to thank all our amazing employees across the organization. This period of exceptional growth would not be possible without the thousands of dedicated individuals across the pen- the pennant footprints, or at the heart of our success. We continue to demonstrate industry-leading clinical and financial performance because of their commitment to providing life-changing service each and every day.
Brent: Thanks Lynette.
Brent: Before we transition to questions I want to take a moment to thank all of our amazing employees across the organization.
Speaker Change: This period of exceptional growth would not be possible without the thousands of dedicated individuals across the <unk>.
Speaker Change: That footprint.
Speaker Change: We are at the heart of our success.
Speaker Change: We continue to demonstrate industry, leading clinical and financial performance because of their commitment to providing life changing service each and every day.
Operator: With that, we'll open it up for questions.
Operator: We continue to demonstrate industry-leading clinical and financial performance because of their commitment to providing life-changing service each and every day. With that, we'll open it up for questions. Rivka, can you please instruct the audience on the Q&A procedure? Thank you.
Speaker Change: With that we'll open it up for questions can.
Operator: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you'll need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A list.
Operator: Rebecca, can you please instruct the audience on the Q&A procedure? Thank you. At this time, we will conduct the question-and-answer session. As a reminder to ask a question, you'll need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by. We'll recompile the Q&A route.
Can you please instruct the audience on the Q&A procedure.
Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced.
Speaker Change: Withdraw your question. Please press star one again, please standby, while we compile the Q&A roster.
Operator: Director.
Benjamin Hendrix: Our first question comes from the line of Ben Hendrix of RBC Capital Markets.
Speaker Change: Our first question comes from the line of Ben Hendrix of RBC capital markets. Your line is now open.
Benjamin Hendrix: Your line is now open. Great, thank you very much.
Benjamin Hendrix: Great. Thank you very much. I was wondering if you could provide us with a little bit of context or your early thoughts on the timeline for the signature integration. I realize it's being done kind of in two slugs, and I just wanted to get your thoughts on kind of the big key milestones for integration, whether it be leadership implementation, G&A synergies, and kind of what are the key milestones for getting us from kind of a high single-digit margin to Thank you.
Great. Thank you very much I was wondering if you could provide us a little bit of context are your early thoughts on the timeline for the signature integration realize is being done kind of in two slugs and I just wanted to get your thoughts on kind of the big key milestones for integration.
Brent Guerisoli: I was wondering if you could provide us a little bit of context or your early thoughts on the timeline for the signature integration, realizing it's being done kind of in two slugs and just want to get your thoughts on kind of big key milestones for integration, whether it be leadership implementation, G&A synergies, and kind of what are the key milestones for getting it from kind of a high single digit margin to your kind of corporate run rate margin. Thank you.
Speaker Change: Whether it be leadership implementation G&A synergies and kind of what are the key milestones for getting us from kind of a high single digit margin to your kind of corporate run rate margin. Thank you.
Brent Guerisoli: Yeah, Ben, thanks for the question. We're so excited about this opportunity to partner with Signature in Washington, Oregon, and Idaho. The first phase of the transaction, which already closed August 1st, included the Washington and Idaho assets that added about a thousand home health patients and about 30 hospice patients across those that portfolio, and we're really focused right now on integrating from a system standpoint. And making sure that we have the right leaders in each seat on those first teams. And so that's the kind of first bedrock foundational thing that we're looking at is making sure that those first teams are constructed in a pen and model and that those leaders have the right training to be able to thrive.
Speaker Change: Yeah, Ben Thanks for the question. We're so excited about this opportunity to partner with signature in Washington, Oregon, and Idaho. The first phase of the transaction, which already closed August 1st included the Washington, and Idaho assets that added about 1000 home health patients in about 30 hospice patients across.
John Gochnour: Yeah, Ben, thanks for the question. We're so excited about this opportunity to partner with Signature in Washington, Oregon, and Idaho. The first phase of the transaction, which already closed on August 1st, included the Washington and Idaho assets that added about 1,000 home health patients and about 30 hospice patients across that portfolio. And we're really focused right now on integrating from a system standpoint and making sure that we have the right leaders in each seat on those first teams.
Speaker Change: Those that portfolio and we are really focused right now on integrating from a system standpoint, and making sure that we have the right leaders in each seat on those first teams and so thats the kind of first bedrock foundational.
John Gochnour: And so that's the kind of first bedrock foundational thing that we're looking at is making sure that those first teams are constructed in a Pennant model and that those leaders have the right training to be able to thrive. We will then move to sort of the implementation with the Oregon assets at the beginning of the new year, and that will kind of precipitate the larger system transition on the EMR side. And so that will be the big push during the first quarter of next year to make sure that all of those agencies transition effectively and successfully to a home care base.
Speaker Change: Thing that we're looking at is making sure that those first teams are constructed independent model in that those leaders have the right training to be able to thrive.
Brent Guerisoli: We will then move to sort of the implementation with the Oregon assets and at the beginning of the new year, and that will kind of precipitate the larger system transition on the EMR side. And so that will be the big push during the first quarter of next year is to make sure that all of those agencies transition effectively and successfully to home care home base. But really our focus right now is making sure that we have the right leaders, that those leaders are trained and prepared in the pen and model, and that they're ready to thrive.
Speaker Change: We will then move to sort of the <unk>.
Speaker Change: Patient with the Oregon assets and at the beginning of the new year and that will kind of precipitate the larger system transition on the EMR side and.
Speaker Change: And so that will be the big push during the first quarter of next year is to make sure that all of those agencies transition effectively and successfully to homecare homebase, but really our focus right now is making sure that we have the right leaders.
John Gochnour: But really, our focus right now is making sure that we have the right leaders, that those leaders are trained and prepared in the Pennant model, and that they're ready to thrive. And I think you'll start to see synergies and improvement in margin gradually through the end of the year and really accelerate as we implement our instance of home care home base and our technology stack in the first quarter of next year and into the second quarter.
Speaker Change: Those leaders are trained and prepared independent model and that they are ready to thrive and I think youll start youll begin to see synergies and improvement in margin gradually through the end of the year and really accelerating as we implement our instance of homecare Homebase and our technology stack.
Brent Guerisoli: And I think you'll start you'll begin to see synergies and improvement in margin, gradually through the end of the year and really accelerating as we implement our instance of home care home base and our technology stack in the first quarter of next year and into the second quarter. Thanks, just to clarify, is signature already on home care home base just a different instance? That's correct. They're on home care home base, just a different instance. And so that was an important part of this transition.
Speaker Change: In the first quarter of next year and into the second quarter.
Speaker Change: Thanks, and just to clarify is signature already on homecare Homebase just different incident.
Speaker Change: That's correct there on homecare Homebase, just a different instance, and so that's something that that was an important part of this transition.
Speaker Change: Great. Thank you very much.
Benjamin Hendrix: Great. Thank you very much.
Operator: As a reminder to ask a question, you'll need to press star one one on your telephone and wait for your name to be announced.
As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced.
Scott Fidel: Our next question comes from the line of Scott Fidel of Stevens; your line is now open. Great. Thanks. Hi everyone. I actually just wanted to keep on that same topic on signature, and just because there are the two trenches, and so there's a little bit of nuance in the modeling, and appreciate some of the stats that John already gave. But thought it might be helpful if you can maybe just sort of break down. You know, when thinking about the tranche one that's getting done this year and then the tranche two, what the revenue split is between the two.
Speaker Change: Our next question comes from the line of Scott Fidel of Stephens. Your line is now open.
Scott Fidel: Great. Thanks, Hi, everyone.
John Gochnour: Yeah, it's about two-thirds and one-third as far as revenue goes, with the bigger portion being the signature Oregon assets, that is, where you know, a similar number of hospices or a similar number of home health, and then a much larger portion of their hospice care is located down there in Oregon. And so that hopefully gives you some insight into the revenue split. You know, when we factor it into our guidance, I'll let Lynette speak a little bit about how we're factoring signature Washington into our guidance for the remainder of the second half of this year.
Speaker Change: I just wanted to keep on that same topic.
Speaker Change: Signature and just because there are the two tranches and so there is a little bit of nuance in the modeling and I. Appreciate some of the Scott John already Gabe, but thought it might be helpful.
Lynette Walbom: Yeah, for the remainder of the year, we have about $9 million in revenue factored into our current revenue guidance, with about an 8-9% EBITDA margin on that revenue.
John Gochnour: You know, Scott, as we looked at it, basically, what you have is we've had a real period of outperformance. We're significantly ahead of where we expected to be growing, you know, hospice census by 30%, home health census by nearly 30%. Our senior living business, our revenue there is up 16%. It's just really been an outstanding start to the year.
Speaker Change: You can maybe just sort of breakdown.
Speaker Change: When thinking about the tracks one that's getting done this year and then the tranche two what.
Speaker Change: What the revenue split is between the two.
Scott Fidel: And then also the EBITDA split, or maybe if you want to talk about sort of how the margins maybe vary between those two tranches at closing. Obviously, you're going to look to get the margins up to, you know, your standards across both of those tranches. But very soon, if you can just sort of give us the revenue and EBITDA sort of splits between the two tranches. of the United States. Yeah, it's about two thirds and one third as far as the revenue goes, with the bigger portion being the signature Oregon assets. That's where, you know, a similar number of hospice or a similar number of home health, and then a much larger portion of their hospice was located down there in Oregon.
Speaker Change: And then also the EBITDA split or maybe if you want to talk about sort of how the margins maybe Barry between those two tranches.
At closing, obviously, you're going to look to get the margins up.
Speaker Change: Our standards across ball.
Speaker Change: Both of those tranches, but curious if you could just sort of give us the revenue and EBITDA sort of splits between the two tranches.
Speaker Change: Okay.
Speaker Change: Yes, it's about two thirds and one third as far as the revenue goes with the bigger portion being the signature Oregon assets, that's where.
Speaker Change: A similar number of hospice or a similar number of home health and then a much larger portion of their hospice located down there in Oregon, and so that hopefully gives you some insight into the revenue split.
Lynette Walbom: And so that hopefully gives you some insight into the revenue split. You know, when we factor it into our guidance, I'll let Lynette speak to a little bit how we're factoring Signature Washington into our guidance for the remainder of the second half of this year. Yeah, for the remainder of the year, we have about nine million in revenue factored into our current revenue guidance with about an eight to nine percent margin, EBIT margin on that revenue. And Scott, I think you'll see a little higher margin from the Oregon portion of the business just because it has that hospice component that our goal is really to continue to move that business towards our traditional target margins.
Lynn: When we factor it into our guidance I'll, let lynn that speak to a little bit how we're factoring signature Washington into our guidance for the remainder of the.
Lynn: The second half of this year.
Lynn: Yes for the remainder of the year, we have about $9 million in revenue factored into our.
Lynn: Current revenue guidance.
Speaker Change: It was about a 8% to 9% margin.
Speaker Change: EBITDA margin on that revenue.
Speaker Change: And Scott I think Youll see a little higher margin from the <unk> portion of the business.
Scott Fidel: Just because it has that hospice component, but our goal is really to continue to move that business towards our traditional target margins.
Lynette Walbom: And the way we'll do that is through our sort of normal approach, right, first implementing our operating model supporting the exceptional leaders and the new leaders that will place with an outstanding group of resources helping to look at everything from the revenue side of the business to the expense management side of the business. And then, most importantly, helping them to grow and continue to become the employer of choice and provider of choice in each of those communities that they serve. So it doesn't happen overnight. We talk a lot about how our traditional process takes about nine months to optimize the business.
Speaker Change: And the way, we'll do that is through our sort of normal approach first implementing our operating model.
Speaker Change: According the exceptional leaders in the new leaders that will place.
Speaker Change: With an outstanding group of resources, helping to looked at everything from the revenue side of the business to the expense management side of the business and then most importantly, helping them to grow and continue to become the employer of choice and provider of choice in each of those communities that they serve so it doesn't happen overnight.
We talked a lot about how our traditional process takes about nine months to optimize the business. This is a healthy business. It's got a great team.
Lynette Walbom: This is a healthy business. It's got a great team to really fantastic clinicians dedicated. And so this will be an opportunity for us to come in and support them in a new way, provide them additional technology, provide them a unique operating model that will help them accelerate results. Okay, got it. A very helpful data points. Appreciate that. A follow-up question, then, just sort of thinking about the revised guidance for this year. And I think the detail you just gave us on signature really does reinforce how much of the race this year does seem to be coming from sort of the existing core operations.
Speaker Change: It really fantastic clinicians dedicated.
Speaker Change: And so this will be an opportunity for us to come in and support them in a new way provide them additional.
Technology provide them a unique operating model that will help them accelerate results.
Speaker Change: Okay got it very helpful data points I appreciate that.
Speaker Change: A follow up question, then just sort of thinking about the revised guidance for this year and I think Scott detail you just gave us on signature rarely does reinforce how much of the raise this year does seem to be coming from sort of the existing core operations and so on that note.
Lynette Walbom: And so on that note, you know, certainly seeing strength really across all three business lines. You know, hospice has been firing on all cylinders of field life, but the home health growth, you know, also very outsized first the market and then SL also showing the growth. So, you know, just thought it might be on pause. Well, when you sort of think about the raise to the existing business. If you can maybe sort of give us some nuance into how that maybe breaks down between the three business lines. You know, Scott, as we looked at it, basically what you have is we've had a real period of out performance where significantly ahead of where we expected to be growing, you know, hospice census by 30%, home health census by nearly 30%.
Speaker Change: Certainly seeing strength really across all three business lines.
Speaker Change: Hospice has been firing on all cylinders it feels like the home health growth also very outsized versus the market and then I'll also showing good growth so.
Speaker Change: Part of it might be helpful. As well when you sort of think about the rates to the existing business. If you could maybe sort of give us nuance into how that maybe the breakdown between the three business lines.
Speaker Change: Scott as we looked at it basically what you have is we've had a real period of outperformance were significantly ahead of where we expected to be growing hospice census by 30% home health census by nearly 30%.
Lynette Walbom: Our senior living business or revenue there is up 16%. It's just a really been an outstanding start to the year. And so, as we have modeled out the remainder of the year, our trends remain strong and our focus is on continued execution, continued execution on the transitions that we've been working on since really March of 2023 through now. We've closed nearly an acquisition a month. And that's all factored into our new store. And so you see this strong performance in our same store operations, which is really about half of our growth. And then we've layered on a creative transition that have really sort of shown the fact that for a while there during the pandemic, those turns were taking longer than they traditionally have for us.
Speaker Change: Our senior living business, our revenue there was up 16%. It's just really been an outstanding start to the year and so as we have modeled out the remainder of the year. Our trends remained strong and our focus is on continued execution continued execution on the transitions that we've been working on since really March of 2023.
Speaker Change: <unk> through now we've closed nearly an acquisition a month and.
Speaker Change: And that's all factored into our new store and so you see the strong performance in our same store operations.
Speaker Change: Which is really about half of our growth and then we've layered on accretive transitions.
Speaker Change: And that has really sort of shown the fact that for a while there during the pandemic those turns were taking longer than they traditionally have for us and I think what we've seen over the course of the past year as we've been able to move those businesses may be from underperforming or where they were at when we acquired them into performing assets that are contributing to our.
Lynette Walbom: And I think what we've seen over the course of the past year is we've been able to move those businesses maybe from underperforming or where they were at when we acquired them into performing assets that are contributing to our results. And so, as we look out, you know, we anticipate this momentum is going to continue. We continue to see strong admission momentum. We continue to see our agencies and operations being chosen as the provider of choice in our communities. We've also, we also anticipate that our senior living business is going to continue to get stronger.
Speaker Change: Our results and so as we look out.
Speaker Change: We anticipate this momentum is going to continue we continue to see strong admission momentum we continue to see our agencies and operations being chosen as the provider of choice in their communities.
Speaker Change: We've also we also anticipate that our senior living business is going to continue to get stronger.
Lynette Walbom: We've had really a remarkable run in that business over the last year and a half, as that group of operators, as we called out in the script, has really settled in and done making gradual progress towards our target margins. And so we see continued growth on the senior living side, with improved margin. As we go, we see continued growth on the home health and hospice side at our same store operations. We see the transition that we've done, particularly some of these larger deals sort of layering onto that. And that's what's contributing to the guidance raise.
Speaker Change: We've had really a remarkable run in that business over the last year and a half as that group of operators.
Speaker Change: We called out in the script has really settled in and done making gradual progress towards our target margins and so we see continued growth.
Speaker Change: On the senior living side with improved margin as we go we see continued growth on the home health and hospice side at our same store operations, we see the transitions that we've done, particularly some of these larger deals sort of layering on to that and that's what's contributing to.
Speaker Change: The guidance raise and we feel like in all honesty, there's there's still even more potential there and so we're going to we're going to keep working hard to execute through the growth.
Lynette Walbom: And we feel like, in all honesty, there's still even more potential there. And so we're going to we're going to keep working hard to execute through the growth. And so we're going to continue to see continued growth on the home health and hospice side at our same-store operations. Okay, great.
Speaker Change: Yes.
Speaker Change: Okay, Great and then just one last question if I can sneak it add but it also might be helpful. Just given some of the moving pieces.
Lynette Walbom: And then just one last question, if I can speak it in. Thought it also might be helpful just given some of the moving pieces if you wanted to give us some insight into sort of, you know, modeling the leverage ratio or just sort of how much of the tapping of the revolver you expect just as you fund these transactions as the but does going to, you know, be ramping. So, you know, to the extent that you maybe are thinking about where leverage sits at your end. And then, and then sort of how that evolves towards then, you know, sort of getting reduced effectively as you complete out the second tranche and drive, you know, those margins often.
Speaker Change: You wanted to give us some insight into.
Speaker Change: Sort of.
Speaker Change: Modeling the leverage ratio or just sort of how much of the tapping of the revolver. You expect just as you fund these transactions as the EBITDA is going to be ramping so.
Speaker Change: We're excited that you maybe are thinking about where leverage sits at year end and then.
Speaker Change: And then sort of how that evolves towards then.
Speaker Change: Sort of.
Speaker Change: Getting reduced effectively as you complete out.
Speaker Change: The second tranche and drive those margins up in.
Lynette Walbom: So sort of thinking about leverage at year and 24 and then, you know, at a steady state after the deal is fully fully completed for both tranches.
Speaker Change: So it's sort of piggyback leverage at year end 24, then at a steady state. After the deal is fully fully completed for both tranches.
Lynette Walbom: Thanks. Yeah, on the leverage front, I'm when we look at what will be at the beginning of 2025 when we complete that the rest of the signature signature transaction is kind of between that two times to 2.5 times leverage ratio again. Then, as we have strong cash flow from operations, what we're expecting that would continue to drop throughout the year. Back down to our more normalized under 2 times and continuing to go from there, we still plan on having, you know, incremental acquisitions through that time. And so that will play a piece in there.
Speaker Change: Yes on the leverage front.
Speaker Change: What will be at the beginning of 2025, when we complete that the rest of the signature signature transactions.
Speaker Change: Between that two times to two five times leverage ratio again, then as we go.
Speaker Change: Strong cash flow from operations, where we're expecting that we'll continue to drop.
Speaker Change: Throughout the year.
Speaker Change: That downtime and more normalized under two times and continuing to go from there we still plan on having incremental acquisition through that time, and so that will play a piece in there and again as we don't.
Lynette Walbom: And again, as we don't. Include those acquisitions in our model until they're going to happen, and we are very strategic as to what acquisitions we're going to do. There will be some impact on the operating cash flow. Use that operating cash flow to pay down as we bring on other acquisitions through that time frame as well.
Speaker Change: Include those acquisitions in our in our model until Theyre going to happen and we hear very strategic as to what acquisitions, we're going to do there will be some impact on the operating cash flow.
Speaker Change: Operating cash flow to pay down as we bring on other acquisitions through that timeframe as well.
Lynette Walbom: Okay, perfect. Thanks.
Speaker Change: Okay, perfect all right. Thanks.
Speaker Change: Okay, I am showing no further questions at this time I would like to turn it back to Brent Gareth Daly CEO for closing remarks.
Operator: I am showing no further questions at this time.
Brent Guerisoli: I would like to turn it back to Brent Garistoli, CEO, for closing remarks. Thank you, Ripka. And thank you, everyone, for joining us today. Have a great day.
Speaker Change: Thank you Rick and thank you everyone for joining us today.
Speaker Change: Have a great day.
Operator: Thank you for your participation in today's conference.
Speaker Change: Thank you for your participation in today's conference. This concludes the program you may now disconnect.
Operator: This concludes the program. You may now disconnect. Thank you.
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the Most Merciful, the Most Merciful, the Most Merciful, the Most Good day and thank you for standing by.
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Operator: To ask a question during this session, you will need to press SQR11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded.
John Gochnour: And so, as we have modeled out the remainder of the year, our trends remain strong, and our focus is on continued execution. Continued execution on the transitions that we've been working on since really March of 2023 through now. We've closed nearly an acquisition a month, and that's all factored into our new store. And so, you see this strong performance in our same store operations, which is really about half of our growth. And then we've layered on accretive transitions that have really sort of shown the fact that, for a while, during the pandemic, those turns were taking longer than they traditionally have for us.
Speaker Change: Good day and thank you for standing by welcome to the pennant group second quarter 2024 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
Operator: Welcome to the Pennant Group 2nd quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press FAR 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press FAR 1-1 again.
Speaker Change: To ask a question. During this session you will need to press one on your telephone you will then hear an automated message advising your hand as rates.
Speaker Change: So withdraw your question. Please press star one again, please be advised that today's conference is being recorded.
Operator: Please be advised that today's conference is being recorded.
Kirk Cheney: I would now like to hand the conference over to your first speaker today, Kirk Cheney, Corporate Secretary. Please go ahead.
John Gochnour: We filed our earnings press release in the 10Q yesterday. This announcement is available on the investor relations section of our website at www.pennantgroup.com. 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.
John Gochnour: And I think what we've seen over the course of the past year is we've been able to move those businesses maybe from underperforming or where they were at when we acquired them into performing assets that are contributing to our results. And so, as we look ahead, we anticipate this momentum is going to continue. We continue to see strong admission momentum. We continue to see our agencies and operations being chosen as the provider of choice in our communities.
Speaker Change: I would now like to hand, the conference over to your first speaker today, Kurt Cheney Corporate Secretary. Please go ahead.
Kirk Cheney: Thank you, Rivka.
Kurt Cheney: Thank you Erica.
Kirk Cheney: Welcome everyone, and thank you for joining us today. Here with me today, I have Brent Guerisoli, our CEO; John Gochnour, our president and CEO; and Lynette Walbom, our CFO.
Welcome everyone and thank you for joining us today.
Speaker Change: Here with me today, I have Gary <unk>, our CEO, John Gardner, our president and CFO and the net while them our CFO before we begin I have a few housekeeping matters.
Kirk Cheney: Before we begin, I have a few housekeeping matters. We filed our earnings press release in 10-Q yesterday. This announcement is available on the Investor Relations section of our website at www.penetgroup.com. A replay of this call will also be available on our website until 5 p.m. Mountain time on August 6th, 2025.
Speaker Change: We filed our 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.
Speaker Change: Replay of this call will also be available on our website until five PM Mountain time on August six 2025.
Kirk Cheney: We want to remind anyone who may be listening to a replay of this call that all statements made are as of today, August 7th, 2024, and these statements will not be updated after today's call. Also, any forward-looking statements made today are based on current expectations, assumptions, 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. This nurse should not place under 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.
Speaker Change: We want to remind anyone who may be listening to a replay of this call that all statements made are as of today August seven 2024, and these statements will not be updated after today's call.
Speaker Change: Also any forward looking statements made today are based on current.
Speaker Change: Current expectations assumptions and beliefs about our business and the environment in which we operate.
Speaker Change: 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.
Speaker Change: 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 cause.
Speaker Change: Could impact our results.
Kirk Cheney: We have to be required by our security laws. We do not undertake to publicly update or revise any forward-looking statements where it changes the rise for new information, future events, or for any other reason.
Speaker Change: Except as required by federal Securities laws, we do not undertake to publicly update or revise any forward looking statements where changes arise from new information future events or for any other reason.
Kirk Cheney: In addition, the Penet Group Inc. is a holding company with no direct operating assets, employees, or revenues. Certain of our independent subsidiaries, collectively referred to as the Service Center, provide accounting, payroll, human resources, information technology, legal risk management, and other services to the other operating subsidiaries through a contractual relationship. Words, Penet Company, we, our, and us refer to the Penet Group Inc. and its consolidated subsidiaries. All of our operating subsidiaries and the Service Center are operated by separate independent companies that have their own management, employees, and assets. Reference is here into the consolidated company and its assets and activities, as well as the use of the terms we, us, our and similar terms, do not imply that the Penet Group Inc.
Speaker Change: In addition, the pennant group, Inc. Is a holding company with no direct operating assets employees or revenues.
Speaker Change: Certain of our independent subsidiaries collectively referred to as the service center provide accounting payroll human resources information technology legal risk management and other services to the other operating subsidiaries through contractual relationships.
Speaker Change: Where it's pennant company, we our and US refer to the pennant Group, Inc, and its consolidated consolidated subsidiaries.
Speaker Change: All of our operating subsidiaries and the service center are operated by a separate independent companies that have their own management employees and assets.
Speaker Change: This here and to the consolidated company and its assets and activities as well as the use of the terms, we us our and similar terms do not imply that the pennant group, Inc. Has direct operating assets employees or revenue or that any of the subsidiaries are operated by the pennant group also we supplement our GAAP reporting with non-GAAP metrics when.
Kirk Cheney: has direct operating assets, employees, or revenue, or that any of the subsidiaries are operated by the Penet Group.
John Gochnour: In addition, Pennant Group Inc. is a holding company with no direct operating assets, employees, or revenue. References herein to the consolidated company and its assets and activities, as well as the use of the terms we, us, our, and similar terms do not imply that Pennant Group Inc. has Direct Operating Assets, Employees, or Revenue, or that any of the subsidiaries are operated by the Pennant Group. Also, 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 reports.
Kirk Cheney: Also, we supplement our gap reporting with non-GAAP metric. When viewed together with our gap 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 awards. A gap to non-gap reconciliation is available in yesterday's press release and is available in our 10-K.
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 reports.
Speaker Change: A GAAP to non-GAAP reconciliation is available in yesterday's press release and is available in our 10-K.
Kirk Cheney: With that, I'll turn the call over to Brent Guerisoli, our CEO, right? Thanks, Kirk, and welcome everyone to our second quarter 2024 earnings call. Following a robust first quarter, we are thrilled to report record-breaking second quarter results as we continue to experience momentum across each of our service lines and create meaningful growth opportunities for local leaders and teams. Our financial performance and growth trajectory reflect the consistent effort we have applied to every aspect of our business through our five key focus areas: leadership development, clinical excellence, employee engagement, margin, and growth. We have been talking about these initiatives on our earnings calls for many quarters, but the tangible financial fruits of these efforts are now coming to bear.
John Gochnour: We also anticipate that our senior living business is going to continue to get stronger. We've had a really remarkable run in that business over the last year and a half as that group of operators, as we called out in the script, have really settled in. And done, making gradual progress towards our target margins. And so we see continued growth on the senior living side with improved margins. As we go, we see continued growth on the home health and hospice side at our same store operations.
Speaker Change: With that I will turn the call over to Gary <unk>, our CEO Brent <unk>.
John Gochnour: But the tangible financial fruits of these efforts are now coming to bear, and Q2. These results are the product of a relentless focus on fundamentals. We are experiencing an exciting time in our history as both organic and acquisitional growth are at all-time highs. Collectively, this represents a greater than 50% increase in the number of lives we touch each day as compared to the end of 2023, and this does not include the impact of the signature transaction, which will add an additional 2,500 lives.
John Gochnour: We see the transitions that we've done, particularly some of these larger deals sort of layering onto that. And that's what's contributing to the guidance raise. And we feel like, in all honesty, there's still even more potential there. And so we're going to keep working hard to execute through the growth.
Thanks, Kurt and welcome everyone to our second quarter 2024 earnings call.
Scott Fidel: Okay, great. And then just one last question, if I could sneak it in, thought it also might be helpful, just given some of the moving pieces, if you wanted to give us some insight into sort of modeling the leverage ratio or just sort of how much of the tapping of the revolver you expect, just as you fund these transactions as EBITDA is going to be ramping. So, you know, to the extent that you maybe are thinking about where leverage sits at year-end and then sort of how that evolves towards then, you know, sort of getting reduced effectively as you complete out the second tranche and drive, you know, those margins up, and so sort of thinking about leverage at year-end, 24, and then, you know, at a steady state after the deal is fully completed for both tranches. Thank you.
Gary Brent: Following a robust first quarter, we're thrilled to report record breaking second quarter results as we continue to experience momentum across each of our service lines and create meaningful growth opportunities for local leaders and teams.
Operator: I am showing no further questions at this time. I would like to turn it back to Brent Guerisoli, CEO, for closing remarks.
Brent Guerisoli: Thank you, Rivka, and thank you everyone for joining us today.
Operator: Thank you for your participation in today's conference. This concludes the program. You may now disconnect.
Gary Brent: Our financial performance and growth trajectory reflects the consistent effort, we have applied to every aspect of our business.
Gary Brent: Five key focus areas leadership development clinical excellence employee engagement margin and growth we have been talking about these initiatives on our earnings calls for many quarters, but the tangible financial fruits of these efforts are now coming to bear.
Brent Guerisoli: In Q2, we generated revenue of $168.7 million, adjusted EBITDA of $13.2 million, and adjusted earnings per share of $0.24, each exceeding the top end of consensus. These results are the product of a relentless focus on fundamental steady incremental improvement and the prudent yet proactive approach to growth as we build a leadership pipeline. They also demonstrate the firm foundation we have laid over the last several years, upon which we are now positioned to build. We are experiencing an exciting time in our history as both organic and acquisitional growth are at all time highs. This period of expansion provides insight into our potential as a provider of choice in our local communities, a best-in-class operator across our industries, and a disciplined yet bold growth company with the sophistication and adaptability to become a key solution in the healthcare continuum.
Gary Brent: Q2.
Gary Brent: We generated revenue of $168 $7 million adjusted EBITDA of $13 2 million and adjusted earnings per share of <unk> 24.
Gary Brent: Each exceeding the top end of consensus these.
These results are the product of our relentless focus on fundamentals steady incremental improvement and the prudent yet proactive approach to growth as we build our leadership pipeline.
Gary Brent: They also demonstrate the firm foundation, we have laid over the last several years and upon which we are now positioned to build.
Gary Brent: We are experiencing an exciting time in our history as both organic and acquisition growth are at all time highs.
Gary Brent: This period of expansion provides insight into our potential as a provider of choice in our local communities.
Gary Brent: Best in class operator across our industries.
Gary Brent: And a disciplined yet bold growth company with the sophistication and adaptability to become a key solution in the healthcare continuum.
Brent Guerisoli: Since the beginning of the year, we have entered into the Mirror Home Health Joint Venture, closed an additional two home health and two hospice transactions, initiated a management agreement with Hartford Healthcare, announced the largest acquisition in our history in Signature Home Healthcare, and completed three senior living deals, two of which included the purchase of real estate assets. In the process, we've added more than 2,200 lives under the pen and umbrella through acquisitions in organic growth, along with approximately 4,000 lives under the Hartford Management Agreement. Collectively, this represents a greater than 50 percent increase in the number of lives we touch each day as compared to the end of 2023, and this does not include the impact of the Signature Transaction, which will add an additional 2,500 lives.
Gary Brent: Since the beginning of the year, we have entered into the mirror home health joint venture closed an additional two home health and two hospice transactions.
Gary Brent: Initiated a management agreement with Hartford healthcare and.
Gary Brent: <unk> the largest acquisition in our history and signature home healthcare and completed three senior living deals two of which included the purchase of real estate assets in.
Gary Brent: In the process, we've added more than 2200 lives under the pennant umbrella through acquisitions and organic growth along with approximately 4000 lives under the Hartford management agreement.
Gary Brent: Collectively this represents a greater than 50% increase in the number of lives we touch each day as compared to the end of 2023 and this does not include the impact of the signature transaction, which will add an additional 2500 lives.
Brent Guerisoli: Last week, we also announced our newly upsized revolver, which increases our borrowing capacity to 250 million and improves the covenants in other loan terms. This amended facility further reinforces our balance sheet, and together with our strong operating cash flow, creates significant dry powder for future growth. This transaction was completed with a syndicate of banking partners whose commitment demonstrates their continued confidence and penance growth strategy. As announced in yesterday's press release, we are raising annual guidance based on the momentum in the business. The operations we have added or expanded, and the significant upside we know remains in our existing operations.
John Gochnour: This amended facility further reinforces our balance sheet and, together with our strong operating cash flow, creates significant dry powder for future growth. This transaction was completed with a syndicate of banking partners whose commitment demonstrates their continued confidence in Pennant's growth strategy.
Gary Brent: Last week, we also announced our newly Upsized revolver.
Gary Brent: Which increases our borrowing capacity to $250 million and improves the covenants and other loan terms.
Gary Brent: This amended facility further reinforces our balance sheet and together with our strong operating cash flow creates significant dry powder for future growth.
Gary Brent: This transaction was completed with a syndicate of banking partners, whose commitment demonstrated their continued confidence in tennant's growth strategy.
Gary Brent: As announced in yesterday's press release, we are raising annual guidance based on the momentum in the business.
Gary Brent: The operations, we have added or expanded and the significant upside we know remains in our existing operations.
Brent Guerisoli: We anticipate full-year revenue in the range of 654 million to 694.5 million and adjusted earnings per share in the range of 89 cents to 95 cents. The midpoint of 92 cents represents a 5.7 percent increase over our original 2024 guidance, a 26 percent increase over our 2023 adjusted earnings, and a 61.4 percent increase over our 2022 adjusted earnings. With solid performance across the portfolio, capable leaders ready to seize opportunities, and the healthy balance sheet, we are excited for the remainder of 2024 and beyond.
Gary Brent: We anticipate full year revenue in the range of $654 million to $694 5 million and adjusted earnings per share in the range of 89 to 95.
Gary Brent: The midpoint of 92 represents a five 7% increase.
Gary Brent: Our original 2024 guidance at 26% increase over our 2023 adjusted earnings and a 61, 4% increase over our 2022 adjusted earnings.
Gary Brent: With solid performance across the portfolio capable leaders ready to seize opportunities and a healthy balance sheet. We are excited for the remainder of 2024 and beyond.
John Gochnour: With that, I'll turn the call over to John to provide more detail on our second quarter operational results.
Gary Brent: With that I'll turn the call over to John to provide more detail on our second quarter operational results.
John Gochnour: Thank you, Brent. Good morning, everyone. We are pleased to report inspiring, clinical, and operational results driven by local leaders across Pennant. We have continued to execute at our existing operations even during a period of record-breaking growth. In our home health and hospice segment, we experienced strong organic growth, successful transitions, improving margin, and excellent clinical outcomes. Top line segment revenue was 125.3 million, an increase of 30.3 million or 31.9 percent. An adjusted EBITDAQ was 19.6 million, an increase of 5.2 million or 36.3 percent each over the prior year quarter. On the hospice site, we continued to make exceptional progress.
John: Thank you Brent and good morning, everyone. We are pleased to report inspiring clinical and operational results driven by local leaders across payment. We have continued to execute at our existing operations, even during a period of record breaking growth.
John Gochnour: In our home health and hospice segment, we experienced strong organic growth, successful transitions, improving margins, and excellent clinical outcomes, and length of stay increased 4.3 percent each over the prior year quarter, which more than offset a 2.6 percent reduction in revenue per day over the same period driven primarily by census growth in states with lower per day reimbursement. The growth flywheel continued to turn at our mature operations, as same-store admissions grew 15.3 percent and ADC increased 14.8 percent each over the prior year quarter.
In our home health and Hospice segment, we experienced strong organic growth successful transitions improving margin and excellent clinical outcomes topline segment revenue was $125 3 million, an increase of $30 3 million or 31, 9% and adjusted EBITDA was $19 6 million.
John: An increase of $5 2 million or 36, 3% each over the prior year quarter.
John: On the hospice side, we continued to make exceptional progress hospice revenue was $59 3 million, an increase of $12 8 million or 27, 5% over the prior year quarter hospice admit rose 31, 4% average daily census, Rose 29, 1% and length of stay increased four three.
John Gochnour: Hospice revenue was 59.3 million, an increase of 12.8 million, or 27.5 percent over the prior year quarter. Hospice admits rose 31.4 percent, average daily census rose 29.1 percent, and length of stay increased 4.3 percent each over the prior year quarter, which more than offset a 2.6 percent reduction in revenue per day over the same period. Further than primarily by census growth in states with lower per day reimbursement. The growth flywheel continued to turn at our mature operations, as same-store admissions grew 15.3 percent, and ADC increased 14.8 percent each over the prior year quarter. This double-digit growth reflects the latent potential across our portfolio, as our mature operations continue to become a provider and employer of choice in the communities they serve.
John: Percent each over the prior year quarter, which more than offset a two six per cent reduction in revenue per day over the same period, driven primarily by census growth in states with lower per day reimbursement.
John: The growth flywheel continue to turn at our mature operations. Our same store admissions grew 15, 3% and ADC increased 14, 8% each over the prior year quarter.
John Gochnour: This double-digit growth reflects the latent potential across our portfolio as our mature operations continue to become a provider and employer of choice in the communities they serve. Our home health business experienced similar progress. Home health revenue grew to 66 million, an increase of 17.5 million, or 36.1 percent over the prior year quarter. Total home health admissions increased 35.4 percent, and Medicare admissions increased 18.3 percent each over the prior year quarter.
This double digit growth reflects the latent potential across our portfolio as our mature operations continued to become a provider and employer of choice in the communities they serve.
John Gochnour: Our home health business experienced similar progress. Home health revenue grew to 66 million, an increase of 17.5 million, or 36.1 percent over the prior year quarter. Total home health admissions increased 35.4 percent, and Medicare admissions increased 18.3 percent each over the prior year quarter. Revenue per episode increased 6.6 percent over the prior year, as we admitted more patients in higher reimbursement states along the West Coast, diversified our referral source pipelines, and effectively managed episodes at the local level. Much like our hospice business, our mature home health operations continued their impressive growth. As same-store admits increased 18.6 percent, Medicare admits increased 6 percent, and revenue per episode increased 2.9 percent each over the prior year quarter.
John: Our home health business experienced similar progress home health revenue grew to $66 million, an increase of $17 5 million or 36, 1% over the prior year quarter total home health admissions increased 35, 4% and Medicare admissions increased 18, 3% each over the prior.
John: Year quarter revenue per episode increased six 6% over the prior year as we admitted more patients and higher reimbursement states along the west coast diversified our referral source pipelines and effectively managed episodes at the local level much like our hospice business are mature home health operations continued their impressive growth.
John Gochnour: Revenue per episode increased 6.6 percent over the prior year, as we admitted more patients in higher reimbursement states along the West Coast, diversified our referral source pipeline, and effectively managed episodes at the local level. Much like our hospice business, our mature home health operations continued their impressive growth, as same-store admits increased 18.6 percent, Medicare admits increased 6 percent, and revenue per episode increased 2.9 percent each over the prior year quarter. Even as we welcome new operations with lower average quality ratings, our clinical quality remains excellent with an average CMS star rating of 4.1 compared to the national average of 3.0 and a reported acute care hospitalization rate of 13.3%, which compares favorably to the national average of 14.1%. Whatever the result of the 2025 final rule may be, our local operators will remain focused on operating and controlling the things they can control.
John Gochnour: Our operating model has proven adaptable through periods of reimbursement challenge. We know the need for our services and the value they provide to our patients and the post-acute care community. Our senior living segment is stable and growing, as revenue improved to $43.4 million, an increase of $6.2 million, or 16.6% over the prior year quarter. Adjusted EBITDA improved to $4.1 million, a $0.5 million, or 14.8% increase over the prior year quarter. Same store occupancy remains strong at 79.2%. Average monthly revenue per occupied room rose to $4,753, an increase of $363, or 8.3% over the prior year quarter.
John: Our same store admits increased 18, 6% Medicare admits increased 6% and revenue per episode increased two 9% each over the prior year quarter.
John Gochnour: Even as we welcome new operations with lower average quality ratings, our clinical quality remained excellent. With an average CMS star rating of 4.1 compared to the national average of 3.0, and a reported acute care hospitalization rate of 13.3%, which compares favorably to the national average of 14.1%. We also remained focused on CMS's home health value-based purchasing program, where we are monitoring our performance against a value-based purchasing criteria and expect to experience positive revenue impact at our mature operations. On the regulatory front, CMS recently issued its final hospice rule with a 2.9% increase in revenue per day versus the 2.6% increase it initially proposed.
John: Even as we welcome new operations with lower average quality ratings are clinical quality remained excellent with an average CMS star rating of $4, one compared to the national average of 3.0, and a reported acute care hospitalization rate of 13, 3%, which compares favorably to the national average of 2014 one.
John: 1%.
John: Also remained focus on CMS home health value based purchasing program, where we are monitoring our performance against the value based purchasing criteria and expect to experience positive revenue impact at our mature operations.
On the regulatory front CMS recently issued its final hospice rule with a two 9% increase in revenue per day versus the two 6% increase it initially proposed as applied dependent our modeling of the rules impact anticipates, an increase in our revenue per day of 293%.
John Gochnour: As applied, the Pennant, our modeling of the rules impact, anticipates an increase in our revenue per day of 2.93%. In late June, CMS issued the proposed 20.25 home health rule, which applies a negative behavioral adjustment of 4.1%, offset by a market basket increase of 2.5%, yielding a projective net negative impact of 1.7%. We are disappointed in CMS's proposal, which uses flawed methodology and does not reflect the ongoing and significant increases in the costs of providing valuable home health services. Since 2013, revenue per home health patient has grown approximately 10.2%, while the consumer price index has increased 36.5% over the same period.
John: In late June CMS issued the proposed 2025 home health rule, which applies a negative behavioral adjustment of $4, 1% offset by a market basket increase of two 5%, yielding a projected net negative impact of one 7%.
Speaker Change: We are disappointed in Cms's proposal, which uses flawed methodology and does not reflect the ongoing and significant increases in the costs of providing valuable home health services.
Speaker Change: Since 2013 revenue per home health patient has grown approximately 10, 2% while the consumer price index has increased 36, 5% over the same period. These conflicting trends have already begun to threaten access to care and push patients into more expensive and less appropriate care settings.
John Gochnour: These conflicting trends have already begun to threaten access to care and push patients into more expensive and less appropriate care settings. Along with our industry partners, we will advocate aggressively for CMS to acknowledge the important role that home health services play in reducing the nation's aggregate Medicare spend. As we address this challenge, we are mindful of the fact that CMS's 2024 proposed rule was similarly bleak, with an initial deep cut. After further consideration, CMS finalized a more reasonable and slightly net positive rate update. Whatever the result of the 2025 final rule may be, our local operators will remain focused on operating and controlling the things they can control.
Speaker Change: Along with our industry partners, we will advocate aggressively for CMS to acknowledge the important role that home health services play in reducing the nation's aggregate Medicare spend as we address this challenge we are mindful of the fact that CMS is 24 proposed rule was similarly within initial deep cut.
Speaker Change: After further consideration CMS finalized a more reasonable and slightly net positive rate update whatever the result of the 2025 final rule, maybe our local operators will remain focused on operating and controlling the things. They can control our operating model has proven adaptable through periods of <unk>.
John Gochnour: Our operating model has proven adaptable through periods of reimbursement challenge. We know the need for our services and the value that provide to our patients and the post-acute care continuum, and we will resolutely work to pull the right cost management levers and grow in this ever-changing reimbursement environment. Our senior living segment is stable and growing, as revenue improved to 43.4 million, an increase of 6.2 million, or 16.6% over the prior year quarter. Adjusted even that improved to 4.1 million, a 0.5 million or 14.8% increase over the prior year quarter. Same store occupancy remains strong at 79.2%. An average monthly revenue per occupied room rose to 4,753, an increase of 363 or 8.3% over the prior year quarter.
Speaker Change: Reimbursement challenge, we know the need for our services and the value they provide to our patients and the post acute care continuum, and we will resolutely work to pull the right cost management levers and grow in this ever changing reimbursement environment.
Speaker Change: Our senior living segment is stable and growing as revenue improved to $43 4 million, an increase of $6 2 million or 16, 6% over the prior year quarter, adjusted EBITDA improved to $4 $1 million or $5 million or 14, 8% increase over the prior year quarter same store occupancy.
Speaker Change: <unk> remained strong at 79, 2% and average monthly revenue per occupied room rose to 4753, an increase of 363 or eight 3% over the prior year quarter, our occupancy rate growth remained steady with an overall increase of 80 basis points and a slight softening in same store occupancy.
John Gochnour: Our occupancy rate growth remains steady with an overall increase of 80 basis points and a slight softening in same store occupancy of 40 basis points.
Speaker Change: C. A 40 basis points each over the prior year quarter as we continued to focus on rate and revenue quality.
Speaker Change: Our investment in recruiting and developing strong local leaders underpins. These financial improvements contributed to the segment's operational maturity quality leadership is central to our operating model and as leaders deepen their experience and continue to execute on the fundamentals of the business, we expect ongoing acceleration and performance.
John Gochnour: of the United States of America. As Brent discussed, in 2024, we have accelerated our pace of new acquisitions and partnerships, our ability to acquire and transition new operations while also executing successfully at our existing operations. It is made possible by the significant investment we have made to recruit and develop leaders and build strong clusters and markets. We do not have a typical centralized acquisition team. Instead, we rely on a decentralized model that encourages local leaders to make acquisition decisions with the support of expert resources. We'll bust local clusters, facilitate growth, because even as we transition new operations in one market, leaders in other markets have independent bandwidth to tackle additional opportunities.
Speaker Change: As Brent discussed in 2024, we have accelerated our pace of new acquisitions and partnerships our ability to acquire and transition new operations. While also executing successfully at our existing operations.
Speaker Change: Is made possible by the significant investment we have made to recruit and develop leaders and build strong clusters in markets. We do not have a typical centralized acquisition team instead, we rely on a decentralized model that encourages local leaders to make acquisition decisions with the support of expert resources.
John Gochnour: Our occupancy rate growth remains steady with an overall increase of 80 basis points and a slight softening in same store occupancy of 40 basis points. We rely on a decentralized model that encourages local leaders to make acquisition decisions with the support of expert resources. Robust local clusters facilitate growth because even as we transition new operations in one market, leaders in other markets have independent bandwidth to tackle additional opportunities. Our management agreement with Hartford HealthCare represents an exciting step in our development as a key partner to leading health systems, as we work with Hartford HealthCare to strengthen and grow its home health and hospital.
Speaker Change: Bus local clusters facilitate growth because even as we transition new operations in one market leaders in other markets have independent bandwidth to tackle additional opportunities.
John Gochnour: Our management agreement with Hartford Healthcare represents an exciting step in our development as a key partner to leading health systems. Pennant will manage and support the Hartford Healthcare at Home business with over 1,000 employees, in which generated more than 33,000 home health admissions and 4,000 hospice admissions over the 12 months preceding the agreement. Pennant will receive a management fee for its services, which will include the sharing of our unique operating model, training and development of leaders, implementation of our technology systems and operational best practices, along with support for IT, HR, and related back office functions.
Speaker Change: Our management agreement with Hartford healthcare represents an exciting step in our development as a key partner to leading health systems.
And then we'll manage and support the Hartford healthcare at home business with over 1000 employees, and which generated more than 33000 home health admissions and 4000 hospice admissions over the 12 months preceding the agreement.
Speaker Change: And then we'll receive a management fee for it services, which will include the sharing of our unique operating model training and development of leaders implementation of our technology systems and operational best practices, along with support for IP HR and related back office functions. The scale of this collaboration is significant and it allows us to meaningful.
John Gochnour: The scale of this collaboration is significant, and it allows us to meaningfully invest in creating an East Coast Service Center. As we work with Hartford Healthcare to strengthen and grow its home health and hospice business, we also have the opportunity to share in the value we create and build a strong presence with the potential to expand to other communities in the Eastern United States. We look forward to collaborating with Hartford Healthcare to innovate and improve access to home health and hospice services in Connecticut.
Speaker Change: We invest in creating an east Coast Service Center.
Speaker Change: As we work with Hartford healthcare to strengthen and grow its home health and hospice business. We also have the opportunity to share in the value, we create and build a strong presence with the potential to expand to other communities in the eastern United States, We look forward to collaborating with Hartford healthcare to.
Speaker Change: To innovate and improve access to home health and hospice services in Connecticut.
John Gochnour: After quarter end, we announced the acquisition of Signature Healthcare at Home, a leading provider of home health and hospice services in the Pacific Northwest. The first stage of this transaction, which includes Signature's operations in Idaho and Washington, closed on August 1st. In the second stage, the Oregon operations is expected to close on January 1st, 2025, after certain regulatory approvals are completed. We are excited to welcome the Signature Operations to the Pennant family. We have immense respect for Signature and its leaders, in whom we have developed a relationship over several years, ultimately leading to this unique opportunity.
John Gochnour: After quarter end, we announced the acquisition of Signature Healthcare at Home, a leading provider of home health and hospice services in the Pacific Northwest. The first stage of this transaction, which includes Signature's operations in Idaho and Washington, closed on August 1st, and the second stage, the Oregon operations, is expected to close on January 1st, 2025, after certain regulatory approvals are completed.
Speaker Change: After quarter end, we announced the acquisition of signature health care at home, a leading provider of home health and hospice services in the Pacific Northwest. The first stage of this transaction, which includes signatures operations in Idaho, and Washington closed on August one and the second stage. The Oregon operations is expected to close on January one 2025.
Speaker Change: After certain regulatory approvals are completed we are excited to welcome our signature operations to the pennant family. We have immense respect for signature and its leaders with whom we have developed a relationship over several years ultimately leading to this unique opportunity. This strategically important acquisition grows our presence in Washington, a certificate of need.
John Gochnour: We are excited to welcome the Signature operations to the Pennant family. We have immense respect for Signature and its leaders, with whom we have developed a relationship over several years, ultimately leading to this unique opportunity. This strategically important acquisition grows our presence in Washington, a certificate of need state, and complements our existing footprint in Oregon and Idaho. Signature has a well-earned reputation for clinical excellence and is a prominent provider in its markets. The future is bright in the Pacific Northwest as we combine Signature's legacy with Pennant's unique operating model and existing strength in the region.
John Gochnour: This strategically important acquisition grows our presence in Washington, a certificate of deep state, and complements our existing footprint in Oregon and Idaho. Signature has a well-earned reputation for clinical excellence and is a prominent provider in its markets. The future is bright in the Pacific Northwest as we combine Signature's legacy with Pennant's unique operating model and existing strength in the region.
Lynn: <unk> and complements our existing footprint in Oregon, and Idaho signature has a well earned reputation for clinical excellence and has a prominent provider in its markets. The future is bright and the Pacific northwest as we combined signatures legacy with tenants unique operating model and existing strength in the region with that I'll hand, it over to Lynn.
Lynette Walbom: With that, I'll hand it over to Lynette for a review of the financial. Lynette? Thank you, John, and good morning, everyone. Details financial results for the three months ended June 30, 2024, are contained in our 10-Q and press release file yesterday. For the quarter ended June 30, 2024, we reported total gap revenue of 168.7 million, an increase of 36.4 million or 26.27.6% over the prior year quarter. Gap diluted earnings per share of 18 cents and adjusted diluted earnings per share of 24 cents. As a reminder, we do not issue quarterly guidance, but our 2024 full year guidance was total adjusted revenue between 596.8 million and 633.7 million.
Lynn: For a review of the financials limit.
John Gochnour: Thank you, John, and good morning, everyone. Detailed financial results for the three months ended June 30, 2024, are contained in our 10-Q and press release filed yesterday. For the quarter ended June 30, 2024, we reported total GAAP revenue of $168.7 million, an increase of $36.4 million or 27.6% over the prior year quarter. GAAP diluted earnings per share of $0.18 and adjusted diluted earnings per share of $0.24.
Lynn: Thank you John and good morning, everyone detailed financial results for the three months ended June 32024 are contained in our 10-Q and press release filed yesterday.
Lynn: For the quarter ended June 32024, we reported total GAAP revenue of $168 7 million, an increase of $36 4 million or 26 two.
Lynn: <unk> 27, 6% over the prior year quarter GAAP diluted earnings per share at 18 fence and adjusted diluted earnings per share at 24.
John Gochnour: As a reminder, we do not issue quarterly guidance, but our 2024 full-year guidance was total adjusted revenue between $596.8 million and $633.7 million, adjusted earnings per diluted share between $0.82 and $0.91, and adjusted EBITDA between $46.2 million and $49.7 million. Our year-to-date results put us on pace to exceed the top end of our full-year guidance. Accordingly, we are revising and raising our full year 2024 guidance as follows: full year total revenue is anticipated to be between $654 million.
Lynn: As a reminder, we do not issue quarterly guidance, but our 2020 for full year guidance was total adjusted revenue between $596 8 million and $633 7 million adjusted earnings per diluted share between ADT and 91.
Lynette Walbom: Adjusted earnings per day's looted share between 82 cents and 91 cents, and adjusted EBITDAW between 46.2 million and 49.7 million. Our year-to-date results put us on pace to exceed the top end of our full-year guidance.
Lynn: <unk> EBITDA between $46 2 million and $49 7 million our year to date results put us on pace to exceed the top end of our full year guidance. Accordingly, we are revising and raising our full year 2024 guidance as follows full.
John Gochnour: This updated guidance incorporates current operations and organic growth, diluted weighted average shares outstanding of approximately $30.7 million, and a 25.8% effective tax rate. It anticipates continued strong operating performance through the end of the year, hospice reimbursement rate adjustments, increased interest expense, and contributions from our joint ventures and management agreements. It excludes unannounced acquisitions, the announced purchase of signatures, organ assets, startups, share-based compensation, acquisition-related costs for one-time implementation, and unusual items.
Lynette Walbom: Accordingly, we are revising and raising our full year 2024 guidance as follows. Full year total revenue is anticipated to be between 654 million and 694.5 million. Full year adjusted earnings per diluted share is anticipated to be between 89 cents and 95 cents, and full year adjusted EBITDAW is anticipated to be between 50.7 million and 53.8 million. This updated guidance incorporates current operations and organic growth. Diluted weighted average shares outstanding of approximately 30.7 million and a 25.8% effective tax rate. It anticipates continued strong operating performance through the end of the year; hospice reimbursement rate adjustments, increased interest expense, and contributions from our joint mentors and management agreements.
Lynn: Full year total revenue is anticipated to be between $654 million.
Lynn: And $694 5 million full year adjusted earnings per diluted share is anticipated to be between 89 cents.
Lynn: And 95.
Lynn: And full year adjusted EBITDA is anticipated to be between $58 7 million and $53 8 million.
Lynn: This updated guidance incorporates current operations and organic growth diluted weighted average shares outstanding of approximately $30 7 million a 25, 8% effective tax rate anticipates continued strong operating performance through the end of the year hospice reimbursement rate adjustments increased interest expense.
Lynn: And contributions from our joint ventures, and management agreements. It excludes unannounced acquisitions, the announced purchase of signatures, Oregon asset startups share based compensation acquisition related costs or one time implementation and unusual items.
Lynette Walbom: It excludes unannounced acquisitions, the announced purchase of signatures, organ assets, startups, share-based compensation, acquisition-related costs for one-time implementation, and unusual items. As detailed in our 8-K filing dated August 1, 2024, tenant has entered into an amended and restated credit facility that, among other changes and improvements, increases the total amount of a facility from 150 million to 250 million. The amended facility also reduces the interest rate for drawn loans by 50 basis points and increases the maximum leverage ratio from 2.5 times under the prior facility to 3.25 times under the amended facility. We anticipate that our leverage ratio after completing the signature acquisition on January 1, 2025, will remain well within our leverage covenants.
John Gochnour: As detailed in our 8K filing dated August 1st, 2024, Pennant has entered into an amended and restated credit facility that, among other changes and improvements, increased the total amount of the facility from $150 million to $250 million. The amended facility also reduces the interest rate for drawn loans by 50 basis points and increases the maximum leverage ratio from 2.5 times under the prior facility to 3.25 times under the amended facility. We anticipate that our leverage ratio, after completing the signature acquisition on January 1st, 2025, will remain well within our leverage covenant.
Lynn: Detailed in our 8-K filing dated August one 2020 for tenet has entered into an amended and restated credit facility that among other changes and improvements increased the total amount of the facility from 150 million to $250 million. The amended facility also reduces the interest rate for our drawn loans by 50 basis points.
Lynn: And increases the maximum leverage ratio from two five times under the prior facility to three to five times under the amended facility, we anticipate that our leverage ratio. After completing the signature acquisition on January one 2025, we will remain well within our leverage covenants.
Lynette Walbom: Key metrics for the three months ended June 30, 2024, include 83 million drawn on a revolving line of credit and 3 million in cash on hand at quarter ends. 1.7 times net debt to adjusted EBITDA ratio and cash flows provided from operations of 11 million year-to-date, including 10.5 million in Q2.
John Gochnour: Key metrics for the three months ended June 30, 2024 include $83 million drawn on a revolving line of credit and $3 million in cash on hand at quarter end, provided from operations of $11 million year to date, including $10.5 million in Q2. In the first half of the year, the Seaport Scripps team weathered significant changes in the San Diego healthcare community, including the loss of a primary payer and changing referral source dynamics, to emerge stronger than ever. In the second quarter, the team achieved a 30% increase in revenue and a 200% increase in EBITDA each over the prior year quarter.
Lynn: Key metrics for the three months ended June 32024 included 83 million drawn on our revolving line of credit and $3 million in cash on hand at quarter end.
John Gochnour: In Wisconsin, future CEO Jamie Thiel and clinical leaders Brittany Stegman and Tricia Hoyt of communities in the Fox Valley area of central Wisconsin, which includes four smaller senior living buildings. Having previously served as a key clinical leader in these communities, Jamie stepped into an operational leadership role in 2022. Jamie continues to drive substantial improvements in these mature operations and create value in the local community. By elevating culture and providing excellent care, they have become communities of choice, as demonstrated by their 98% occupancy rate, which has improved from 94% in Q2 of 2023.
Lynn: One seven times net debt to adjusted EBITDA ratio.
Lynn: And cash flows.
<unk> from operations of $11 million year to date, including $10 5 million in Q2.
Lynette Walbom: I would now like to spotlight a few leaders in our organization who have achieved exceptional results. Their stories demonstrate the remarkable progress that can occur when local leaders build strong culture to develop high-performing teams of sea level leaders in their operations. C-C-C-E-O, Calcy Fly, C-E-O, Tim Johnson, C-C-O, Tina McMahon, C-R-O, Rosacea McCabba, and CMO, Constance Houston, have driven remarkable progress at C-Port Scripps Home Health. Our joint venture with Scripps Health in San Diego, California, this joint venture shows how strong culture and dedicated partnership can drive medical innovation, including the use of technology to reduce re-hospitalization, the development of specialized clinical programs, and the establishment of strong continuums of care to ensure quality outcomes and an excellent patient experience.
Speaker Change: I would now like to spotlight a few leaders in our organization, who have achieved exceptional results. Their stories demonstrates the remarkable progress that can occur when local leaders build strong culture and develop high performing teams of C level leaders in their operations.
Tim Johnson: Future CEO of healthy fly CEO, Tim Johnson CCL genomic man.
Speaker Change: ROE was HMA cava, and CMO Constance Houston have driven a remarkable progress at seaport scratched home health, our joint venture with Scripps Health in San Diego, California.
Speaker Change: Joint venture shows how strong culture and dedicated partnership can drive clinical innovation, including the use of technology to reduce re hospitalization. The development of specialized clinical programs and the establishment of a strong continuum of care to ensure quality outcomes and an excellent peso and patient experience.
Lynette Walbom: As a result, C-Port Scripps has become a critical community resource, driving excellent clinical results in organic growth, including a real-time star rating of 4.5, a 15 percent increase in admissions over the prior year quarter, and improved Medicare mix. In the first half of the year, the C-Port Scripps team weathered significant changes in the San Diego health care community, including the loss of a primary payer and changing referral source dynamics to emerge stronger than ever. In the second quarter, the team achieved a 30 percent increase in revenue and a 200 percent increase in EBITDA, each over the prior year quarter.
Speaker Change: As a result seaport Scripps has become a critical community resource driving excellent clinical results and organic growth, including our real time star rating of four five.
Speaker Change: 15% increase in admissions over the prior year quarter and improved Medicare mix.
Speaker Change: In the first half of the year the seaport Scripps team, whether it's significant changes in the San Diego Health care community and getting a lots of a primary payer and changing them or for other forest dynamics to emerge stronger than ever and the <unk>.
Speaker Change: Quarter the team achieved there.
Speaker Change: 30% increase in revenue and a 200% increase in EBITDA each over the prior year quarter.
Lynette Walbom: In Wisconsin, future CEO, Jamie Seale, and clinical leaders, Brittany Stegman and Trisha Hoy, lead at a cluster of communities in the Fox Valley area of Central Wisconsin, which includes four smaller senior living buildings. Having previously served as a key clinical leader in these communities, Jamie stepped into an operational leadership role in 2022. Jamie continues to drive substantial improvements in these mature operations and create value in the local community. By elevating culture and providing excellent care, they have become communities of choice, as demonstrated by their 98 percent occupancy rate, which has improved from 94 percent in Q2 of 2023.
Speaker Change: In Wisconsin, future, CEO, Jamie UCL, and clinical leaders, Britney Steadman and Tricia Hawaii.
Lita cluster.
Speaker Change: Communities and the Fox Valley area, Central, Wisconsin, which includes four smaller senior living buildings.
Speaker Change: Having previously served as a clinic key clinical leader in these community Jamie and.
Speaker Change: In operational leadership role in 2022.
Speaker Change: Amy continues to drive substantial improvements in these mature operations and create value in our local community.
Speaker Change: Elevating culture, and providing excellent care and become communities of choice as demonstrated by their 98% occupancy rate, which has improved from 94% in Q2 of 2023.
Lynette Walbom: Financial success is followed with the revenue growth of 13 percent in EBITDA growth of 85 percent, each over the prior year quarter. Jamie and her team have demonstrated the marked improvements that can occur, even at already well-performing operations, due to consistent focus on culture and the application of our operating model.
Jamie: Financial successes, followed with the revenue growth of 13% and EBIT growth of 85% each over the prior year quarter Jamie.
Jamie: Jamie and her team have demonstrated a marked improvement mechanic or even an already well performing operation.
Jamie: Our consistent focus on culture, and the application of our operating model with that I'll turn the call back over to Brad for concluding comments.
Brent Guerisoli: With that, I'll turn the call back over to Brent for concluding comments. Thanks, Lynette. Before we transition to questions, I want to take a moment to thank all our amazing employees across the organization. This period of exceptional growth would not be possible without the thousands of dedicated individuals across the penit footprint, or at the heart of our success. We continue to demonstrate industry-leading clinical and financial performance because of their commitment to providing life-changing service each and every day.
Thanks, Lynette before.
Brad: Before we transition to questions I want to take a moment to thank all of our amazing employees across the organization.
Brad: This period of exceptional growth would not be possible without the thousands of dedicated individuals across the <unk>.
Speaker Change: It footprint.
Speaker Change: We are at the heart of our success.
Speaker Change: We continue to demonstrate industry, leading clinical and financial performance because of their commitment to providing life changing service each and everyday.
Operator: With that, we'll open it up for questions.
Speaker Change: With that we'll open it up for questions can.
Operator: Rebecca, can you please instruct the audience on the Q&A procedure? Thank you. At this time, we will conduct a question-and-answer session. As a reminder to ask a question, you'll need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A rough.
Speaker Change: Can you please instruct the audience on the Q&A procedure.
Operator: This period of exceptional growth would not be possible without the thousands of dedicated individuals across the Pennant footprint. With that, we'll open it up for questions. Rivka, can you please instruct the audience on the Q&A procedure?
Speaker Change: Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced.
Speaker Change: Withdraw your question. Please press star one again, please standby, while we compile the Q&A roster.
Operator: Officer.
Benjamin Hendrix: Our first question comes from the line of Ben Hendrix of RBC Capital Markets. Your line is now open. Great, thank you very much.
Speaker Change: Our first question comes from the line of Ben Hendrix of RBC capital market. Your line is now open.
Benjamin Hendrix: Great, thank you very much. I was wondering if you could provide us with a little bit of context or your early thoughts on the timeline for the signature integration. I realize it's being done kind of in two slugs, and I just want to get your thoughts on kind of the big key milestones for integration, whether it be leadership implementation, G&A synergies, and kind of what are the key milestones for getting us from kind of a high single-digit margin to your kind of corporate run rate margin. Thank you.
Ben Hendrix: Great. Thank you very much I was wondering if you could provide us a little bit of <unk>.
Brent Guerisoli: I was wondering if you could provide us a little bit of context or your early thoughts on the timeline for the signature integration, realizing it's being done kind of in two slugs and just want to get your thoughts on kind of big key milestones for integration, whether it be leadership implementation, G&A synergies, and kind of what are the key milestones for getting it from kind of a high single-digit margin to your kind of corporate run rate margin. Thank you. Ben, thanks for the question. We're so excited about this opportunity to partner with Signature in Washington, Oregon, and Idaho.
Ben Hendrix: Contacts are your early thoughts on the timeline for the signature integration realize is being done kind of in two slugs and I just wanted to get your thoughts on kind of the big key milestones for integration.
Speaker Change: Whether it be leadership implementation G&A synergies.
Speaker Change: And kind of what are the key milestones for getting us from kind of a high single digit margin to your kind of corporate run rate margin. Thank you.
John Gochnour: Yeah, Ben, thanks for the question. We're so excited about this opportunity to partner with Signature in Washington, Oregon, and Idaho. The first phase of the transaction, which already closed on August 1st, included the Washington and Idaho assets that added about 1,000 home health patients and about 30 hospice patients across that portfolio. And we're really focused right now on integrating from a system standpoint and making sure that we have the right leaders in each seat on those first teams.
Speaker Change: Yeah, Ben Thanks for the question. We're so excited about this opportunity to partner with signature in Washington, Oregon, and Idaho. The first phase of the transaction, which already closed August 1st included the Washington, and Idaho assets that added about 1000 home health patients in about 30 hospice patients across.
Brent Guerisoli: The first phase of the transaction, which already closed August 1st, included the Washington and Idaho assets that added about 1,000 home health patients and about 30 hospice patients across those that portfolio. And we're really focused right now on integrating from a system standpoint and making sure that we have the right leaders in each seat on those first teams. And so that's the kind of first bedrock foundational thing that we're looking at is making sure that those first teams are constructed in a pennant model and that those leaders have the right training to be able to thrive.
Speaker Change: Those that portfolio and we're really focused right now on integrating from a system standpoint, and making sure that we have the right leaders in each seat on those first teams and so that's the kind of first bedrock foundational.
John Gochnour: And so that's the kind of first bedrock foundational thing that we're looking at is making sure that those first teams are constructed in a pennant model and that those leaders have the right training to be able to thrive. We will then move to sort of the implementation with the Oregon assets at the beginning of the new year, and that will kind of precipitate the larger system transition on the EMR side. And so that will be the big push during the first quarter of next year to make sure that all of those agencies transition effectively and successfully to a home care base.
Speaker Change: The thing that we're looking at is making sure that those first teams are constructed independent model in that those leaders have the right training to be able to thrive.
Brent Guerisoli: We will then move to sort of the implementation with the Oregon assets at the beginning of the new year. And that will kind of precipitate the larger system transition on the EMR side. And so that will be the big push during the first quarter of next year is to make sure that all of those agencies transition effectively and successfully to home care home base. But really our focus right now is making sure that we have the right leaders, that those leaders are trained and prepared in the pennant model, and that they're ready to thrive. And I think you'll start you'll begin to see synergies and improvement in margin, gradually through the end of the year and really accelerating as we implement our instance of home care home base and our technology stack in the first quarter of next year and into the second quarter.
Speaker Change: We will then move to sort of the <unk>.
Speaker Change: Limitation with the Oregon assets and at the beginning of the new year and that will kind of precipitate the larger system transition on the EMR side.
Speaker Change: And so that will be the big push during the first quarter of next year is to make sure that all of those agencies transition effectively and successfully to homecare homebase, but really our focus right now is making sure that we have the right leaders.
John Gochnour: But really, our focus right now is making sure that we have the right leaders, that those leaders are trained and prepared in a pennant model, and that they're ready to thrive. And I think you'll start to see synergies and improvement in margin gradually through the end of the year and really accelerate as we implement our instance of home care home base and our technology stack in the first quarter of next year and into the second quarter.
Speaker Change: Those leaders are trained and prepared independent model and that they are ready to thrive and I think youll start youll begin to see synergies and improvement in margin gradually through the end of the year and really accelerating as we implement our instance of homecare Homebase and our technology stack in the first quarter of next year and into the second.
Speaker Change: <unk>.
Brent Guerisoli: Thanks just to clarify, is signature already on home care home base just different instance. That's correct. They're on home care home base, just a different instance, and so that's an important part of this transition. Great, thank you very much.
Speaker Change: Thanks, and just to clarify is signature already on homecare Homebase just a different instance.
Speaker Change: That's correct there on homecare Homebase, just a different instance, and so that's that was an important part of this site this transition.
Great. Thank you very much.
Scott Fidel: As a reminder to ask a question, you'll need to press star one one on your telephone and wait for your name to be announced. Our next question comes in the line of Scott Fidel of Stevens. Your line is now open. Great, thanks. Hi everyone, actually just wanted to keep on that same topic on signature, and just because there are the two trenches, and so there's a little bit of nuance in the modeling. I appreciate some of the stats that John already gave. But thought it might be helpful if you you you can maybe just sort of break down.
Speaker Change: As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced.
Speaker Change: Our next question comes from the line of Scott Fidel of Stephens. Your line is now open.
Scott Fidel: Great. Thanks, Hi, everyone.
Speaker Change: I just wanted to keep on that same topic.
Speaker Change: Signature and just because there are the two tranches and so there is a little bit of nuance in the modeling and I. Appreciate some of the Scott John Hardy, Gabe, but thought it might be helpful.
Speaker Change: You can maybe just sort of breakdown.
Scott Fidel: You know when thinking about the tranche one that's getting done this year and then the tranche two what the revenue split is between the two. And then also the EVA dot split or maybe if you want to talk about sort of how the margins maybe vary between those two tranches. Act closing, obviously you're going to look to get the margins up to, you know, your standards across both. Both of those tranches, but carries, if you can just sort of give us the revenue and EVA dot sort of splits between the two tranches. of Pennant Group of Pennant Group of Pennant Group of Pennant Group of Pennant Group of Pennant Group of Pennant Group of Pennant Group of Pennant Group of Pennant Group Washington into our guidance for the remainder of the, the second half of this year.
Speaker Change: When thinking about the tracks one that's getting done this year and then the tranche two what.
Speaker Change: What the revenue split is between the two.
Speaker Change: And then also the Ebitdas flat or maybe if you want to talk about sort of how the margins maybe Barry between those two tranches.
Speaker Change: At closing obviously, you are going to look to get the margins up to your standards across ball.
Speaker Change: Bulk of those tranches, but curious if you could just sort of give us the revenue and EBITDA sort of splits between the two tranches.
Speaker Change: Okay.
Speaker Change: Yes, it's about two thirds and one third as far as the revenue goes with the bigger portion being the signature Oregon assets, that's where.
Speaker Change: A similar number of hospice or a similar number of home health and then a much larger portion of their hospice located down there in Oregon, and so that hopefully gives you some insight into the revenue split.
Lynn: When we factor it into our guidance I'll, let lynn that speak to a little bit how we're factoring signature Washington into our guidance for the remainder of the.
Lynn: The second half of this year.
Lynette Walbom: Yeah, for the remainder of the year, we have about nine million revenue factored into our current revenue guidance with about an eight to nine percent margin, EBITDA margin on that revenue. And Scott, I think you'll see a little higher margin from the organ portion of the business just because it has that hospice component. But our goal is really to continue to move that business towards our traditional target margins. And the way we will do that is through our sort of normal approach, right? First, implementing our operating model, supporting the exceptional leaders and the new leaders that will place with an outstanding group of resources, helping to look at everything from the revenue side of the business to the expense management side of the business.
Lynn: Yes for the remainder of the year, we have about $9 million in revenue factored into our <unk>.
Lynn: Current revenue guidance.
Speaker Change: With about 8% to 9% margin.
Speaker Change: EBITDA margin on that revenue.
Speaker Change: And Scott I think Youll see a little higher margin from the <unk> portion of the business just because it has that hospice component, but our goal is really to continue to move that business towards our traditional target margins.
Speaker Change #100: And the way we will do that is through our sort of normal approach first implementing our operating model.
Speaker Change #101: Supporting the exceptional leaders in the new leaders that will place.
Speaker Change #101: With an outstanding group of resources, helping to look at everything from the revenue side of the business to the expense management side of the business and then most importantly, helping them to grow and continue to become the employer of choice and provider of choice in each of those communities that they serve so it doesn't happen overnight.
Lynette Walbom: And then, most importantly, helping them to grow and continue to become the employer of choice and provider of choice in each of those communities that they serve. So it doesn't happen overnight. We talk a lot about how our traditional process takes about nine months to optimize the business. This is a healthy business. It's got a great team to really fantastic clinicians dedicated. And so this will be an opportunity for us to come in and support them in a new way, provide them additional technology, provide them a unique operating model that will help them accelerate results.
We talk a lot about how our traditional process takes about nine months to optimize the business. This is a healthy business. It's got a great team.
Speaker Change #101: Really fantastic clinicians dedicated.
Speaker Change #101: And so this will be an opportunity for us to come in and support them in a new way provide them additional.
Speaker Change #101: Technology provide them a unique operating model that will help them accelerate results.
Lynette Walbom: Okay, got it. Very helpful data points. Appreciate that. A follow-up question, then, just sort of thinking about the revised guidance for this year. And I think the detail you just gave us on signature really does reinforce how much of the raise this year does seem to be coming from sort of the existing core operations. And so on that note, you know, certainly seeing strength really across all three business lines. You know, hospice has been firing on all cylinders. It feels like, but the home health growth, you know, also very outsized versus the market. And then SL also showing the growth.
Okay got it very helpful data point I appreciate that.
Speaker Change #102: Follow up question, then just sort of thinking about the.
Speaker Change #103: The revised guidance for this year and I think Scott detail you just gave us on signature rarely does reinforce how much of the raise this year does seem to be coming from sort of the existing core operations and so on that note.
Speaker Change #104: Certainly seeing strength really across all three business lines.
Speaker Change #105: Hospice has been firing on all cylinders it feels like the home health growth also very outsized versus the market and then I'll also showing good growth. So just thought it might be helpful. As well when you sort of think about the rates to the existing business. If you could maybe sort of give us nuance into how that maybe the breakdown between.
Lynette Walbom: So, you know, just thought it might be also well when you sort of think about the raise to the existing business, if you can maybe sort of give us some nuance into how that may break down between the three business lines. You know, Scott, as we look at it, basically what you have is we've had a real period of out performance where significantly ahead of where we expected to be growing, you know, hospice census by 30% home health census by nearly 30%. Our senior living business or revenue there is up 16%. It's just a really been an outstanding start to the year.
Speaker Change #106: The three business lines.
Speaker Change #106: Okay.
Speaker Change #106: Scott as we looked at it but basically what you have is we've had a real period of outperformance were significantly ahead of where we expected to be growing hospice census by 30% home health census by nearly 30% our senior living business our.
Speaker Change #106: <unk> there was up 16%, it's just really been an outstanding start to the year and so as we have modeled out the remainder of the year. Our trends remained strong and our focus is on continued execution continued execution on the transitions that we've been working on since really March of 2023 through now we've closed nearly <unk>.
Lynette Walbom: And so, as we have modeled out the remainder of the year, our trends remain strong. And our focus is on continued execution, continued execution on the transitions that we've been working on since really March of 2023. Through now, we've closed nearly an acquisition a month. And that's all factored into our new store. And so you see this strong performance in our same store operations, which is really about half of our growth. And then we've layered on a creative transition that have really sort of shown the fact that, for a while there during the pandemic, those turns were taking longer than they traditionally have for us.
Speaker Change #106: Acquisition a month.
Speaker Change #106: And that's all factored into our new store and so you see the strong performance in our same store operations.
Speaker Change #106: Which is really about half of our growth and then we've layered on accretive transitions.
Speaker Change #106: That has really sort of shown the fact that for a while there during the pandemic those turns were taking longer than they traditionally have for us and I think what we've seen over the course of the past year as we've been able to move those those businesses, maybe from underperforming or where they were at when we acquired them into performing assets that are contributing to our.
Lynette Walbom: And I think what we've seen over the course of the past year is we've been able to move those businesses maybe from under performing or where they were at when we acquired them into performing assets that are contributing to our results. And so, as we look out, you know, we anticipate this momentum is going to continue. We continue to see strong admission momentum. We continue to see our agencies and operations being chosen as the provider of choice in our communities. We've also we also anticipate that our senior living business is going to continue to get stronger.
Speaker Change #106: Our results and so as we look out.
Speaker Change #106: We anticipate this momentum is going to continue we continue to see strong admission momentum we continue to see our agencies and operations being chosen as the provider of choice in our communities.
Speaker Change #106: We've also we also anticipate that our senior living business is going to continue to get stronger.
Lynette Walbom: We've had really a remarkable run in that business over the last year and a half, as that group of operators, as we called out in the script, has really settled in and done making gradual progress towards our target margins. And so we see continued growth on the senior living side, with improved margin. As we go, we see continued growth on the home health and hospice side at our same store operations. We see the transitions that we've done, particularly some of these larger deals sort of layering onto that. And that's what's contributing to the guidance raise.
Speaker Change #106: We've had really a remarkable run in that business over the last year and a half as that group of operators.
Speaker Change #106: As we called out in the script has really settled in and done making gradual progress towards our target margins and so we see continued growth.
Speaker Change #106: On the senior living side with improved margin as we go we see continued growth on the home health and hospice side at our same store operations, we see the transitions that we've done, particularly some of these larger deals sort of layering on to that and that's what's contributing to.
Speaker Change #106: The guidance raise and we feel like in all honesty, there's there's still even more potential there and so we're going to we're going to keep working hard to execute through the growth.
Lynette Walbom: And we feel like, in all honesty, there's still even more potential there. And so we're going to we're going to keep working hard to execute through the growth.
Lynette Walbom: And so we're going to keep working hard to execute through the growth. Okay, great.
Speaker Change #106: Yes.
Speaker Change #107: Okay, Great and then just one last question if I can sneak it add sort of also might be helpful. Just given some of the moving pieces that you.
Scott Fidel: And then just one last question, if I could speak it in.
Scott Fidel: So it also might be helpful, just given some of the moving pieces, if you wanted to give us some insight into sort of, you know, modeling the leverage ratio or just sort of how much of the tapping of the revolver you expect just as you fund these transactions as the dive is going to, you know, be ramping. So, you know, to the extent that you maybe are thinking about where leverage sits at your end. And then, and then sort of how that evolves towards then, you know, sort of getting reduced effectively as you complete out the second tranche and drive, you know, those margins often.
Speaker Change #108: You wanted to give us some insight into.
Speaker Change #107: Sort of.
Speaker Change #109: Modeling the leverage ratio or just sort of how much of the tapping of the revolver. You expect just as you fund these transactions as the EBITDA is going to be ramping so to the.
Speaker Change #110: We're excited that you maybe are thinking about where leverage debt at year end and then.
Speaker Change #110: And then sort of how that evolves towards then.
Speaker Change #111: Sort of.
Getting reduced effectively ICU complete out.
Speaker Change #111: The second tranche and drive those margins up in.
Lynette Walbom: So sort of thinking about leverage at year and 24 and then, you know, at a steady state after the deal is fully fully completed for both tranches. Thanks. Yeah, on the leverage front, I'm when we look at what will be at the beginning of 2025 when we complete that the rest of the signature signature transactions kind of between that two times to 2.5 times leverage ratio again. Then, as we have strong cash flow from operations, what we're expecting that would continue to drop throughout the year. Back down to our more normalized under 2 times and continuing to go from there, we still plan on having, you know, incremental acquisitions through that time.
Speaker Change #111: So it's sort of piggyback leverage at year end 'twenty four and then you now at a steady state. After the deal is fully fully completed for both tranches.
Speaker Change #112: Yes on the leverage front.
Speaker Change #112: What will be at the beginning of 2025, when we complete that the rest of the signature signature transactions.
Speaker Change #112: Between that two times to two five times leverage ratio again, then as we have.
Speaker Change #112: Strong cash flow from operations, what we're expecting that we'll continue to drop.
Speaker Change #112: Throughout the year.
Speaker Change #112: Back down to our more normalized under two times and continuing to go from there we still plan on having incremental acquisition through that time, and so that will play a piece in there and again as we don't.
Lynette Walbom: And so that will play a piece in there. And again, as we don't. Include those acquisitions in our model until they're going to happen, and we are very strategic as to what acquisitions we're going to do. There will be some impact on the operating cash flow; use of operating cash flow to pay down as we bring on other acquisitions through that time frame as well.
Speaker Change #112: Include those acquisitions in our in our model until Theyre going to happen and we hear very strategic as to what acquisitions, we're going to do there will be some impact on the operating cash flow.
Speaker Change #112: Operating cash flow to pay down as we bring on other acquisitions through that timeframe as well.
Lynette Walbom: Okay, perfect. Thanks.
Speaker Change #113: Okay perfect alright. Thanks.
Operator: I am showing no further questions at this time.
Speaker Change #114: Okay, I am showing no further questions at this time I would like to turn it back to Brent Gareth Daly CEO for closing remarks.
Brent Guerisoli: I would like to turn it back to Brent Garistoli, CEO, for closing remarks. Thank you, Rip. And thank you, everyone, for joining us today. Have a great day. Thank you for your participation in today's conference.
Benjamin Hendrix: Thanks, and just to clarify, is Signature already on HomeCare HomeBase, or just a different instance?
Scott Fidel: Hi everyone. Actually, I just wanted to keep on that same topic in my signature. And just because there are the two tranches, and so there's a little bit of nuance in the modeling, and I appreciate some of the stats that John already gave, but thought it might be helpful if you could maybe just sort of break down, you know, when thinking about tranche one that's getting done this year and then tranche two, what the revenue split is between the two.
Speaker Change #115: Thank you Rebecca and thank you everyone for joining us today.
Scott Fidel: And then also the EBITDA split, or maybe you want to talk about sort of how the margins may be varied between those two tranches. At closing, obviously, you're going to look to get the margins up to, you know, your standards across both of those tranches. But I'm curious if you could just sort of give us the revenue and EBITDA sort of splits between the two tranches.
John Gochnour: Yeah, it's about two-thirds and one-third as far as revenue goes, with the bigger portion being the signature Oregon assets. That's where, you know, a similar number of hospices or a similar number of home health, and then a much larger portion of their hospice care is located down there in Oregon. And so that hopefully gives you some insight into the revenue split. You know, when we factor it into our guidance, I'll let Lynette speak a little bit about how we're factoring Signature Washington into our guidance for the remainder of the second half of this year.
Lynette Walbom: Yeah, on the leverage front, when we look at what it will be at the beginning of 2025 when we complete the rest of the signature signature transactions, kind of between that two times to 2.5 times leverage ratio, again, as we have strong cash flow from operations, what we're expecting, that would continue to drop throughout the year, back down to our more normalized under two times, and continuing to go from there, we still plan on having, you know, incremental acquisitions And so that will play a piece in here. And again, as we don't.
Speaker Change #115: Have a great day.
Operator: Thank you, Rivka, and thank you everyone for joining us today. Have a great day. Thank you for your participation in today's conference. This concludes the program. You may now disconnect. [music]
Speaker Change #117: Thank you for your participation in today's conference. This concludes the program you may now disconnect.
Operator: Thank you for your participation in today's conference. This concludes the program. You may now disconnect. Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music, [music] Good day, and thank you for standing by.
Operator: This concludes the program. You may now disconnect.