The Pennant Group (NASDAQ: PNTG) has increased its revolving line of credit by $75 million to a total $150 million. The company indicated the bulk of the additional credit would be used for acquisitions, including hospice and home health assets.
Pennant, which owns and operates hospice provider Cornerstone Healthcare, was spun in 2019 off from The Ensign Group (NASDAQ: ENSG). Pennant retained Ensign’s hospice, home health and senior living operations.
“This amended credit facility improves our long-term capital structure and, together with our strong cash flow, expands our ability to continue growing our portfolio of health care operations opportunistically,” said Pennant CFO Jenn Freeman. “The continued confidence shown by our banking group is a testament to our healthy balance sheet and our strong start as a stand-alone public company.”
In addition to raising the company’s revolving credit, the move extends the facility’s termination date to 2026 and reduces the interest rates on drawn capital. To date, the company has used $18.3 million from this credit line.
Pennant invested heavily in the growth of its hospice business during 2020, with two start-up locations and four hospice acquisitions. The company last October bought Harmony Hospice in Las Vegas, which had been affiliated with two other hospices that Pennant purchased earlier in the year: Prime Hospice, located near Phoenix, and Harmony Hospice of Arizona. Financial terms of these deals were confidential.
In July of last year, Pennant also acquired hospice and home health assets of Signature Health Care at Home for an undisclosed sum, each with multiple locations throughout southeastern Idaho and northern Utah. Pennant also completed a number of home health acquisitions.
The company also launched two start-ups, one in Washington state and one in California.
“Our focus continues to be on the opportunistic acquisition of existing operations,” CEO Daniel Walker in an earnings conference call. “However, we do startup operations and joint ventures as additional tools available for us to drive similar long term results, depending on the unique needs of the community and our leadership pipeline.”
Pennant’s Home Health and Hospice Services segment brought in $64 million during the third quarter of 2020, up 16.7% from $9.2 million in Q3 2019. The health care giant expects to publish fourth quarter 2020 earnings later this week.
Pennant operates 65 home health and hospice agencies, 51 senior living operations, and mobile diagnostics and lab operations located across 14 states, with 23 of the senior living assets subject to leases with third-party landlords, as well as mobile diagnostic services and clinical laboratory operations. Pennant also manages 28 senior living communities pursuant to new, long-term triple-net leases with Ensign subsidiaries.
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