The Pennant (US:PNTG)2023-02-24 21:41Financial Data and Key Metrics Changes - For the full year 2022, the company reported revenue of $473.2 million, an increase of $33.5 million or 7.6% over the prior year, and adjusted EBITDA improved by $5.1 million or 19.5% [4][24] - In Q4 2022, revenue increased by $12.9 million to $124.7 million, with adjusted EBITDA improving by $4.9 million or 98.3% over the prior year [4][24] - The company provided guidance for 2023, anticipating revenue between $503.5 million and $518.4 million, and adjusted EBITDA of $38.4 million to $42.6 million [25][41] Business Line Data and Key Metrics Changes - The home health and hospice segment saw admissions grow by 6.4% for the full year and 2.4% in Q4, with average daily census growing 5.2% year-over-year [16][44] - The senior living segment's same-store revenue improved to $126.8 million, an increase of $12.8 million or 11.2% over the prior year, with occupancy reaching 78.6%, a 330 basis-point improvement [18][19] - Adjusted EBITDA for the senior living segment improved to $6 million, up 282% over the prior year [48] Market Data and Key Metrics Changes - The company reported strong performance in historically strong markets like Arizona and Texas, despite challenges, and expects these markets to rebound [17][64] - The average monthly revenue per occupied room rose to $3,670, an increase of $282 or 8.3% year-over-year [19] Company Strategy and Development Direction - The company is focused on enhancing leadership development, aiming to triple the number of CEOs within three years [12] - There is a robust pipeline of acquisition opportunities in home health, hospice, and senior living, with a disciplined approach to executing growth strategies [21] - The company emphasizes improving clinical outcomes, operating margins, and employee experience as key areas for growth [5][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth momentum from Q4 2022 carrying into 2023, despite some expected challenges in Q1 [30][60] - The company anticipates a ramp-up in performance in the second half of 2023, with a focus on leadership development and operational efficiencies [26][41] - Management acknowledged the impact of inflation and labor costs but remains confident in the potential for margin improvement [13][72] Other Important Information - The company reported a net debt to adjusted EBITDA ratio of 1.93 times and cash flows from operations of $9 million for the year [54] - The company is committed to creating a life-changing employee experience to address elevated turnover levels and staffing shortages [20][50] Q&A Session Summary Question: What is the outlook for revenue growth and margin improvement in 2023? - Management anticipates stable but solid growth in revenue and incremental margin improvement, with conservative estimates built into the guidance [60][80] Question: Can you discuss the hospice side and the normalization of length of stay? - Management noted a 10% increase in length of stay and expects continued normalization, particularly in key markets like Arizona and Texas [63][64] Question: What are the expectations for rate increases and occupancy trends in senior living? - The company expects a 10% increase in top-line growth for senior living, with 2% to 3% from rate increases and 7% to 8% from occupancy growth [69] Question: How is the company addressing cash flow and capital expenditures? - Management expects capital expenditures to decrease to $8 million to $10 million in 2023, with improved operating cash flow anticipated due to the absence of one-time expenditures [70][71] Question: What is the strategy for margin expansion across segments? - Management indicated that margin expansion is expected across all segments, with a focus on operational efficiencies and reducing employee turnover [72][73]