Hospice Momentum, CEO Pipeline Has Pennant Riding High

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High-quality care, leadership development, margin improvement and overall business growth helped The Pennant Group Inc. (NASDAQ: PNTG) close out 2024 with a bang.

The Eagle, Idaho-based company saw particularly strong financial and operational results across its home health and hospice business. The Pennant Group and its independent operating subsidiaries provide health care services through 111 home health and hospice agencies and 51 senior living communities throughout several states.


“As we’ve outlined on prior quarterly calls, we saw progress in each of these areas throughout the year, and our positive financial results are the outcome of these efforts,” Pennant CEO Brent Guerisoli said Thursday during the company’s fourth quarter earnings call.

No priority for Pennant has been more important to its success than its unique leadership-development strategy, Guerisoli noted. Broadly, Pennant likes to have local CEOs lead operations in their markets, with locations led by a CEO typically outperforming non-CEO peers.

“During the year, we added over 50 CEOs in training, or CITs, and 38 local leaders earned C-level designations in their operations, including 11 local CEOs,” Guerisoli continued. “As we’ve explained before, CEOs and other C-level leaders earned this designation by acting as true owners and creating significant financial, clinical and cultural value.”


Pennant has found that CEOs typically generate roughly $1 million more in annual earnings than non-CEO executive directors, in addition to better clinical and “cultural outcomes.”

“These most recent C-level recipients, along with our current C-level leaders and new CITs, will be the foundation of our success moving forward,” Guerisoli said. “Their contributions are reflected in our 2023 results.”

Highlighting hospice, home health growth

The Pennant Group’s total revenue for the full-year 2023 was $544.9 million, an increase of $71.7 million, or 15.1%, over the prior year. For the fourth quarter, Pennant’s revenue was $146.0 million, an increase of $21.3 million, or 17.1%, over the previous year’s same period.

The company’s home health and hospice services segment revenue for all of 2023 was $394.5 million, an increase of $52.2 million, or 15.3%, over the prior year. Q4 revenue was $106.9 million, an increase of $16.2 million, or 17.9%, over the previous year’s same period.

“This growth was a result of continued momentum in our hospice business, where a 17.8% increase in hospice ADC, a 13.1% increase in hospice admissions and continued normalization in our length of stay resulted in revenue growth of $11.6 million, or 27.1%, over the prior year’s quarter,” President and COO John Gochnour said during the call.

The Pennant Group’s hospice average daily census for 2023 was 2,607, an increase of 311 patients over 2022. ADC growth accelerated in Q4, contributing to Pennant’s leadership team feeling bullish on the company’s 2024 outlook.

Looking ahead, Pennant will continue to pursue strategic M&A to fuel home health and hospice growth even further, according to the company.

Pennant acquired Southwestern Palliative Care & Hospice in December. Prior to that, it completed hospice-related deals in Texas and Oklahoma, too.

“We remain focused on our disciplined strategy of acquiring operations at attractive valuations in locations where we have strong peer operating clusters and talented leaders ready to drive results,” Gochnour said.

Historically, Pennant has focused on underperforming M&A targets with high turnaround upside. The company has likewise targeted operations in more rural areas.

“Our historical strength in operating in rural areas demonstrates the unique advantage of our operating model, where decisions driven by local leaders meet the needs of their patients and community partners,” Gochnour said.

The value of local leaders

During Thursday’s earnings call, Guerisoli offered multiple examples of how its local-leaders strategy and CEO pipeline translates into tangible benefits.

Alpha Home Health and Hospice in Everett, Washington, led by Future CEO George Gitungo, is just one example.

“Alpha’s leaders have set a compelling vision to meet the unique needs of their community and establish themselves as a premier home health and hospice provider,” Guerisoli said.

For starters, Alpha’s turnover rate is “exceptionally low,” the CEO said. The provider has also achieved a 5-star rating with the U.S. Centers for Medicare & Medicaid Services (CMS) and a rehospitalization rate that’s lower than the national average.

Financial results have followed those accomplishments. Alpha in 2023 had a 49.6% year-over-year earnings before interest and taxes (EBIT) increase and a 30.4% increase in revenue, according to Guerisoli.

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