Though the Pennant Group Inc. (Nasdaq: PNTG) has entered into a new era of leadership, the company is doubling down on its core strategy and operational principles.
“Our differentiators are, one, our innovative operating model focused on empowering and developing strong local leaders,” Pennant CEO Brent Guerisoli said during a second quarter earnings call Tuesday. “Two, our disciplined growth strategy, and three, our ability to achieve quality care outcomes in lower cost settings.”
The Eagle, Idaho-based Pennant is a holding company of independent operating subsidiaries, with a network that includes 89 home health and hospice agencies and 49 senior living communities located throughout 14 states.
In the past, Pennant has been clear about its strategy of purchasing community-driven agencies with strong ties to their specific markets. Once these entities are part of Pennant, the company operates under a local leadership-driven model.
“This is in contrast to typical models where control and key decision making is centralized at the corporate level,” Guerisoli said.
During the call, Guerisoli further detailed the way Pennant’s strategy differs from other companies when it comes to leadership, and how its cluster model has contributed to the success the company has seen.
“The peer accountability that drives successful financial and clinical outcomes is implemented through our unique cluster model, where every operation is part of the defined cluster, which is a group of geographically proximate operations working together to allow leaders to communicate and provide support and accountability to each other,” he said. “This creates incentives for leaders to share best practices, real time data, and benchmark clinical and financial performance against their cluster partners.”
Guerisoli also touched on the company’s M&A activity, which has always been a key ingredient in Pennant’s larger strategy.
“Much of our historical growth can be attributed to our expertise in opportunistically acquiring strategic operations and transforming them into leaders in clinical quality staff competency and financial performance,” he said. “When evaluating potential home health and hospice acquisitions, we look for small- to medium-sized agencies with strong clinical and operational reputations that provide a platform for organic census growth and expense management.”
While Pennant’s leadership were light on details, Guerisoli did stress that the company would continue to try to both drive organic growth and acquire additional operations in existing and new markets.
“Acquisitions are part of the DNA of our leaders and our resources, and we’re ready to put more capital toward strategic growth,” Guerisoli said.
However, the company did shed some light on acquisitions that took place during Q2.
“During the quarter we acquired a startup home health agency in Montana, a state in which we currently provide hospice services — expanding the continuum of care we can offer patients and referral sources,” Derek Bunker, chief investment officer at Pennant, said during the call.
As far as Pennant’s operational performance, the company credited a 6.3% increase in Medicare home health admissions and a 3.5% increase in hospice admissions – each over the prior year quarter – for its strong top and bottom line results.
Overall, Pennant’s total revenue for the quarter was $116.3 million, an increase of $6 million or 5.4% compared to Q2 2021.
The company’s home health and hospice services segment revenue for Q2 was $85.3 million, an increase of $7.2 million, or 9.3%, compared to Q2 2021.
“Our home health revenue grew a strong 15.3% over the prior year quarter, as we continue to strengthen our relationships with partners across the health care communities we serve, and our acquisitions from 2021 performed better,” Pennant COO John J. Gochnour said during the call.
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