• Adjusted Earnings Per Share (EPS) Q4 2024: $0.24
• Full Year 2024 Adjusted EPS: $0.94
• Full Year 2024 Revenue: $695.2 million, a 27.6% increase over the prior year
• Full Year 2024 Adjusted EBITDA: $53.3 million, a 30.9% increase over the prior year
• Home Health and Hospice Full Year Revenue: $519.5 million, a 31.7% increase over the prior year
• Home Health and Hospice Q4 Revenue: $142 million, a 32.9% increase over the prior year quarter
• Home Health and Hospice Full Year Adjusted EBITDA: $80.7 million, a 34.1% increase over the prior year
• Home Health Admissions Q4: 15,959, a 40.9% increase
• Medicare Admissions Q4: 6,443, a 30.1% increase
• Senior Living Full Year Revenue: $175.8 million, a 16.8% increase over the prior year
• Senior Living Q4 Revenue: $46.9 million, a 20% increase over the prior year quarter
• Senior Living Full Year Adjusted EBITDA: $16.2 million, a 31.9% increase over the prior year
• Cash Flow from Operations 2024: $39.3 million
• Cash on Hand at Year-End 2024: $24.2 million
• 2025 Revenue Guidance: $800 million to $865 million
• 2025 Adjusted EPS Guidance: $1.03 to $1.11
• 2025 Adjusted EBITDA Guidance: $63.1 million to $68.2 million

• Warning! GuruFocus has detected 7 Warning Signs with PNTG.

Release Date: February 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Pennant Group Inc (NASDAQ:PNTG) reported a strong fourth quarter with adjusted earnings per share of $0.24, contributing to a full-year adjusted EPS of $0.94, exceeding their guidance midpoint.
• The company achieved a 27.6% increase in revenue for 2024, reaching $695.2 million, and a 30.9% improvement in adjusted EBITDA to $53.3 million.
• Significant growth in the Home Health and Hospice segment, with a 31.7% increase in full-year revenue and a 34.1% rise in adjusted EBITDA.
• Successful strategic acquisitions, including the $80 million purchase of Signature Healthcare at Home, enhancing their presence in the Pacific Northwest.
• Strong cash generation with $20.6 million in net cash from operating activities and $17.2 million in free cash flow in the fourth quarter, positioning the company well for future growth.

Negative Points

• The company faces potential margin pressure due to the integration of newly acquired operations, which may affect short-term profitability.
• Atypical hospice cap expense of $1.7 million in the fourth quarter impacted margins, with potential continued drag expected in 2025.
• The Medicaid mix, primarily in the Senior Living segment, poses a risk due to potential legislative changes affecting funding.
• The company anticipates a more aggressive earnings ramp in 2025, with lighter performance expected at the beginning of the year due to integration efforts.
• Despite strong growth, the Senior Living segment's occupancy rate only rose by 30 basis points to 78.8%, indicating room for improvement.

Q & A Highlights

Q: Can you provide details on the expectations for same-store revenue growth in 2025 for home health, hospice, and senior living? A: Lynette Walbom, CFO, stated that they are projecting about a 7% increase in revenue for same-store operations, excluding the Signature Healthcare acquisition. John Gochnour, COO, added that recent trends suggest opportunities for improvement, particularly in home health and hospice, with optimism for continued growth in both segments.

Q: How does the legislative funding environment in Washington impact your business, particularly with Medicaid exposure? A: John Gochnour, COO, explained that Medicaid primarily affects their senior living business, accounting for about 15% of their revenue. He expressed optimism that essential services like home health and hospice, which offer cost-effective care, will not face significant cuts. The company is prepared to adjust to any changes, with a resilient model and transparent visibility for local operators.

Q: Is there a different level or magnitude of earnings ramp expected in 2025 compared to previous years? A: Brent Guerisoli, CEO, indicated that while they expect a similar ramp to previous years, the integration of new acquisitions might result in a more aggressive ramp throughout the year, with a lighter start and stronger finish.

Q: What are the drivers of EBITDA margin improvement in 2025, particularly regarding recently acquired assets and same-store trends? A: Lynette Walbom, CFO, noted that margin improvements will be influenced by integrating new acquisitions and improving cost control measures. They expect home health margins to remain similar to 2024, while senior living margins are anticipated to increase as occupancy and cost controls improve.

Q: How are you addressing the hospice cap issue, and what impact might it have in 2025? A: John Gochnour, COO, explained that the hospice cap issue is primarily in California due to reimbursement rates. The company is focusing on adjusting referral patterns to manage the cap impact, expecting some continued drag in 2025 but aiming to minimize it significantly.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.