The Pennant (US:PNTG)2025-11-05 21:15Operations and Growth - As of September 30, 2025, the company operates 141 home health and hospice agencies and 61 senior living communities across 13 states[137] - The company added nine home health agencies, four hospice agencies, and four senior living communities during the nine months ended September 30, 2025[139] - The number of home health and hospice agencies increased to 141, up from 122, representing a 15.6% growth[194] - The number of home health and hospice agencies increased by 19, reaching a total of 141 agencies by September 30, 2025, representing a 15.6% growth[207] Revenue Growth - Total revenue for Q3 2025 was $229,039,000, an increase from $180,688,000 in Q3 2024, representing a growth of 26.8%[163] - Home Health and Hospice Services generated $173,545,000 in revenue for Q3 2025, up from $135,672,000 in Q3 2024, reflecting a growth of 28%[165] - Senior Living Services reported revenue of $53,880,000 for Q3 2025, compared to $45,016,000 in Q3 2024, marking an increase of 19.5%[165] - For the nine months ended September 30, 2025, total revenue reached $658,382,000, up from $506,348,000 in the same period of 2024, a growth of 30%[165] - Total revenue increased by $48.4 million, or 26.8%, to $229.0 million for the three months ended September 30, 2025, compared to $180.7 million in the same period of 2024[192] - Home health and hospice revenue grew by $37.9 million, or 27.9%, driven by a 36.2% increase in total home health admissions and a 16.6% increase in total hospice admissions[194] - Senior living revenue increased by $10.5 million, or 23.2%, attributed to a 7.4% rise in average monthly revenue per occupied unit and improved occupancy rates[195] - Total revenue for the nine months ended September 30, 2025, increased by $152.0 million, or 30.0%, compared to the same period in 2024, reaching $658,382,000[205] - Home health and hospice services revenue grew by $122.0 million, or 32.3%, to $499,455,000, driven by a 30.5% increase in total home health admissions and a 25.6% increase in Medicare home health admissions[208] - Senior living services revenue increased by $30.0 million, or 23.3%, to $158,927,000, primarily due to an 8.9% rise in average monthly revenue per occupied unit[209] Expenses and Costs - Total expenses for Q3 2025 were $218,801,000, compared to $169,894,000 in Q3 2024, resulting in an increase of 28.7%[163] - The cost of services as a percentage of total revenue increased to 81.0% in Q3 2025 from 80.0% in Q3 2024[163] - Total cost of services rose by $41.0 million, or 28.4%, with costs as a percentage of revenue increasing from 80.0% to 81.0%[196] - Total cost of services rose by $125.7 million, or 31.0%, to $531,450,000, with costs as a percentage of revenue increasing to 80.8% from 80.1%[210] - General and administrative expenses increased by $6.3 million, or 48.2%, from $13.0 million to $19.3 million, with the percentage of revenue rising from 7.2% to 8.4%[200][201] - General and administrative expenses increased by $15.4 million, or 42.4%, totaling $51.7 million, attributed to higher payroll and professional services related to acquisitions[214] - Rent—cost of services for Q3 2025 was $12,063,000, compared to $10,906,000 in Q3 2024, reflecting a 10.6% increase[171] - Rent expense increased by 10.6% to $12.1 million, while rent as a percentage of total revenue decreased from 6.0% to 5.3%[199] - Depreciation and amortization expense increased by $0.6 million, or 38.2%, due to higher property and equipment balances from acquisition activities[202] Income and Profitability - Income from operations decreased to $10,238,000 in Q3 2025 from $10,794,000 in Q3 2024, a decline of 5.2%[163] - Net income attributable to the company for Q3 2025 was $6,200,000, down from $6,100,000 in Q3 2024, reflecting a slight decrease of 1.6%[163] - Consolidated net income for Q3 2025 was $6,886,000, compared to $6,657,000 in Q3 2024, indicating a 3.4% increase[171] - The company reported an adjusted EBITDAR from operations of $44,378,000 for Q3 2025, compared to $37,135,000 in Q3 2024, indicating a growth of 19.5%[165] - Segment Adjusted EBITDAR from Operations for Q3 2025 was $44,378,000, up from $37,135,000 in Q3 2024, representing a 35.5% increase[166] - Consolidated Adjusted EBITDA for the nine months ended September 30, 2025, was $50,095,000, compared to $39,523,000 for the same period in 2024, reflecting a 27% growth[170] - Consolidated Adjusted EBITDAR for the nine months ended September 30, 2025, was $85,600,000, compared to $77,423,000 in 2024, a rise of 10.5%[171] Medicare and Reimbursement - Average Medicare revenue per 60-day completed episode for home health services rose to $3,793 in 2025 from $3,687 in 2024, an increase of 2.9%[149] - The proposed Medicare reimbursement reduction of -6.4% in the 2026 Home Health Prospective Payment System could lead to a decrease of $1.135 billion across all home health providers[144] - The Hospice Payment Final Rule for 2026 includes a payment update percentage of 2.6%, resulting in an estimated increase of $750 million in payments across all hospice providers[145] - The company monitors Medicare reimbursement closely due to adjustments related to billing documentation and payment caps, impacting revenue recognition[156] - The average Medicare revenue per 60-day completed episode increased by 5.1% to $3,782[207] Cash Flow and Financing - Net cash provided by operating activities increased by $8.6 million to $27,336,000, driven by a $5.6 million increase in net income[225] - Cash at the end of the period decreased to $2,336,000 from $4,464,000, reflecting a net decrease in cash of $21,910,000[224] - Net cash provided by financing activities decreased by approximately $20.3 million for the nine months ended September 30, 2025, compared to the same period in 2024[227] - The company had $219.8 million of available borrowing capacity on its Amended Revolving Credit Facility as of September 30, 2025[221] - The company has a borrowing capacity of $250.0 million under the Amended Credit Agreement with a syndicate of banks[230] - A 1.0% interest rate change would result in an annual change of approximately $0.3 million in interest expense based on outstanding long-term debt as of September 30, 2025[230] - The company continues to make draws and payments on its Amended Revolving Credit Facility[228] - There have been no material changes to total obligations outside of normal business operations during the reporting period[229] - The company has right-of-use assets obtained in exchange for new operating lease obligations[228] Acquisition and Integration - The company anticipates lower and fluctuating consolidated and segment margins during years of acquisition growth due to the integration of newly acquired operations[141] - Acquisition-related costs for Q3 2025 amounted to $3,047,000, significantly higher than $494,000 in Q3 2024[171] Non-GAAP Financial Measures - The company emphasizes the use of Non-GAAP Financial Measures to provide a clearer view of operational performance, excluding interest, taxes, and depreciation[177]