The Pennant Group intends to pick up the pace in acquisitions after a slowdown in the last quarter of 2021.

After staying aggressive on acquisitions for the past two years, the company took a break to integrate and financially recharge recently purchased assets amid COVID headwinds.

Pennant completed 11 acquisitions during 2021 in addition to 15 in 2020. Though executives are optimistic about the acquired locations’ long-term performance, the potential of some of these operations is building more slowly than anticipated, according to CEO Danny Walker.

“The development of certain recently acquired agencies has been slower than we expected,” Walker said during a fourth quarter earnings call. “As we work to identify the right leaders for each operation and support them as they build culture and establish rigor around best practices, we are confident these deals are fundamentally sound and we look forward to driving the growth in 2022.”

Among the factors affecting the acquired assets are the falling hospice average daily census that many companies in the space have experienced during the pandemic.

A large contingent of patients has foregone or delayed health care further upstream in the continuum and sought to avoid institutional care. The result is that many patients are receiving hospice referrals later in their disease process. Also due to COVID, many patients are dying more quickly after entering hospice.

These factors contributed to a 2.3% decline in hospice average daily census during the fourth quarter, for a total of 2,256 patients.

The surge in Delta and Omicron cases in the latter half of 2021 strengthened headwinds in a number of markets, including the census reductions and industry-wide labor pressures.

Pennant’s home health and hospice segment saw a 22% revenue increase to $309.6 million for full-year 2021. But the segment’s adjusted EBITDA from operations was $12.4 million for Q4, down 16.1% from the prior year quarter.

“The decline in hospice ADC is largely the result of a modest decline in admissions as well as a higher mix of referrals for more acute settings that tend to have a lower average length of stay,” Pennant Group President Brent Guerisoli said on the earnings call. “This softness was concentrated in a handful of markets more acutely impacted by the effects of higher COVID-19 cases and other operational headwinds, which have continued into the first quarter.”

The company is working to strengthen relationships with new and current partners and hire new talent for key positions, executives indicated, which Pennant expects to drive positive results as pandemic conditions subside.

“We are anticipating a seven to 10% increase in our home health and hospice revenue [in 2022],” CFO Jennifer Freeman said on the earnings call. “Our revised guidance reflects confidence that the actions we are taking to emphasize our core opportunities in both lines of business and strengthen the principles of our unique offering model will lead to improvement in our recently acquired agencies, growth in our same store operations and healthier performance and our senior living business.”