The Pennant Group, Inc. (NASDAQ: PNTG) has purchased California-based Ardent Hospice and Palliative Care in the San Diego area for an undisclosed amount.
Ardent, which also offers home health care, serves between 20 and 50 hospice patients per day, according to National Hospice Locator. The company received its Medicare certification in 2013.
“We are very excited to expand the reach of our hospice operations in California,” said Pennant CEO Brent Guerisoli in a statement. “This off-market acquisition opens the door to new service areas in Palm Springs and the Central Valley, and further strengthens our presence in San Diego.”
California’s booming senior population is drawing hospices and other health care and aging services providers to the state. A moratorium on new hospice licenses implemented in California last year makes acquisitions more of a sure-footed pathway for expanding in the state.
Seniors currently represent nearly 15% of California’s overall population, according to the U.S. Census Bureau.
The number of adults 60 and older is expected to double by 2060, accounting for 30% of the population, according to a report from the California Department of Aging. The agency also indicated that a majority of the state’s counties would see increases of more than 100% in this age group.
Hospice utilization reached 46.1% in California in 2018, according to the National Hospice and Palliative Care Organization (NHPCO). This trailed behind the national average of 50.3% that year reported by Medicare Payment Advisory Commission.
Pennant Group has recently signaled that it will be moving forward on hospice and home health deals during the second half of 2022 and early 2023.
After two years of staying aggressive on acquisitions, Pennant took a breather during the first and second quarters of the year to integrate its most recently acquired assets and accumulate capital.
But the company in the near term will deploy more dollars to fuel transactions, targeting small- to medium-sized companies with a positive clinical and operational track record and strong potential for growth, Guerisoli indicated in a Q2 earnings call.
“We’ve been building momentum over the course of this year, and improving our cash flow and balance sheet,” Guerisoli said. “And we are poised to return to a brisk pace of strategic acquisition that will propel our growth over the next several years and beyond.”
Pennant, which owns and operates hospice provider Cornerstone Healthcare, was spun off in 2019 from The Ensign Group (NASDAQ: ENSG). Pennant retained Ensign’s hospice, home health and senior living operations.
The company’s consolidated revenue in Q2 totaled $116.3 million, up 5.4% from the prior year’s quarter. Its home health and hospice segment accounted for $85.3 million, a 9.3% increase from Q2 2021.
