COVER
COVER - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Feb. 22, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 001-38900 | ||
Entity Registrant Name | THE PENNANT GROUP, INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 83-3349931 | ||
Entity Address, Address Line One | 1675 East Riverside Drive | ||
Entity Address, Address Line Two | Suite 150 | ||
Entity Address, City or Town | Eagle | ||
Entity Address, State or Province | ID | ||
Entity Address, Postal Zip Code | 83616 | ||
City Area Code | (208) | ||
Local Phone Number | 506-6100 | ||
Title of 12(b) Security | Common Stock, par value $0.001 per share | ||
Trading Symbol | PNTG | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 29,705,640 | ||
Entity Public Float | $ 361,547,000 | ||
Documents Incorporated by Reference | Part III of this Form 10-K incorporates information by reference from the Registrant's definitive proxy statement on Schedule 14A for the Registrant's 2023 Annual Meeting of Stockholders to be filed within 120 days after the close of the fiscal year covered by this annual report. | ||
Entity Central Index Key | 0001766400 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
AUDIT INFORMATION
AUDIT INFORMATION | 12 Months Ended |
Dec. 31, 2022 | |
Audit Information [Abstract] | |
Auditor Firm ID | 34 |
Auditor Name | DELOITTE & TOUCHE LLP |
Auditor Location | Boise, ID |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash | $ 2,079 | $ 5,190 |
Accounts receivable—less allowance for doubtful accounts of $592 and $902, respectively | 53,420 | 53,940 |
Prepaid expenses and other current assets | 18,323 | 16,711 |
Total current assets | 73,822 | 75,841 |
Property and equipment, net | 26,621 | 16,788 |
Right-of-use assets | 260,868 | 300,997 |
Deferred tax assets, net | 2,149 | 3,848 |
Restricted and other assets | 10,545 | 4,828 |
Goodwill | 79,497 | 74,265 |
Other indefinite-lived intangibles | 58,617 | 53,730 |
Total assets | 512,119 | 530,297 |
Current liabilities: | ||
Accounts payable | 13,647 | 10,553 |
Accrued wages and related liabilities | 23,283 | 23,480 |
Operating lease liabilities—current | 16,633 | 16,118 |
Other accrued liabilities | 16,684 | 21,484 |
Total current liabilities | 70,247 | 71,635 |
Long-term operating lease liabilities—less current portion | 247,042 | 287,753 |
Other long-term liabilities | 6,281 | 5,293 |
Long-term debt, net | 62,892 | 51,372 |
Total liabilities | 386,462 | 416,053 |
Commitments and contingencies | ||
Equity: | ||
Common stock, $0.001 par value; 100,000 shares authorized; 30,149 and 29,692 shares issued and outstanding at December 31, 2022, respectively, and 28,826 and 28,499 shares issued and outstanding at December 31, 2021, respectively | 29 | 28 |
Additional paid-in capital | 99,764 | 95,595 |
Retained earnings | 21,284 | 14,641 |
Treasury stock, at cost, 3 shares at December 31, 2022 and 2021 | (65) | (65) |
Total Pennant Group, Inc. stockholders' equity | 121,012 | 110,199 |
Noncontrolling interest | 4,645 | 4,045 |
Total equity | 125,657 | 114,244 |
Total liabilities and equity | $ 512,119 | $ 530,297 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 592 | $ 902 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 30,149,000 | 28,826,000 |
Common stock, shares outstanding (in shares) | 29,692,000 | 28,499,000 |
Treasury stock, at cost (in shares) | 3,000 | 3,000 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | |||
Revenue | $ 473,241 | $ 439,694 | $ 390,953 |
Expense: | |||
Cost of services | 376,638 | 350,236 | 296,874 |
Rent—cost of services | 38,018 | 40,863 | 39,191 |
General and administrative expense | 33,981 | 36,259 | 31,296 |
Depreciation and amortization | 4,900 | 4,784 | 4,675 |
Loss on asset dispositions and impairment, net | 6,965 | 2,857 | 0 |
Total expenses | 460,502 | 434,999 | 372,036 |
Income from operations | 12,739 | 4,695 | 18,917 |
Other (expense) income: | |||
Other (expense) income | (31) | (24) | 225 |
Interest expense, net | (3,816) | (1,941) | (1,239) |
Other expense, net | (3,847) | (1,965) | (1,014) |
Income before provision for income taxes | 8,892 | 2,730 | 17,903 |
Provision for income taxes | 1,649 | 582 | 2,350 |
Net income | 7,243 | 2,148 | 15,553 |
Less: net income (loss) attributable to noncontrolling interest | 600 | (548) | (191) |
Net income and other comprehensive income attributable to The Pennant Group, Inc. | $ 6,643 | $ 2,696 | $ 15,744 |
Earnings per share: | |||
Basic (in dollars per share) | $ 0.23 | $ 0.09 | $ 0.56 |
Diluted (in dollars per share) | $ 0.22 | $ 0.09 | $ 0.52 |
Weighted average common shares outstanding: | |||
Basic (in shares) | 29,064 | 28,406 | 28,029 |
Diluted (in shares) | 30,159 | 30,642 | 30,228 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Retained Earnings/ (Accumulated Deficit) | Treasury Stock | Non-Controlling Interest |
Equity, beginning balance (in shares) at Dec. 31, 2019 | 28,435 | |||||
Equity, beginning balance at Dec. 31, 2019 | $ 71,111 | $ 28 | $ 74,882 | $ (3,799) | $ 0 | $ 0 |
Equity, beginning balance (in shares) at Dec. 31, 2019 | 0 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Noncontrolling interests assumed related to acquisitions | 4,646 | 4,646 | ||||
Sale of noncontrolling interests, net of tax | 451 | 313 | 138 | |||
Net income (loss) attributable to Non-Controlling interests | (191) | (191) | ||||
Net income attributable to The Pennant Group, Inc. | 15,744 | 15,744 | ||||
Share-based compensation | 8,335 | 8,335 | ||||
Issuance of common stock from the exercise of stock options (in shares) | 238 | |||||
Issuance of common stock from the exercise of stock options | 1,141 | 1,141 | ||||
Net issuance of restricted stock (in shares) | 26 | |||||
Shares of common stock withheld to satisfy tax withholding obligations (in shares) | (3) | 3 | ||||
Shares of common stock withheld to satisfy tax withholding obligations | (65) | $ (65) | ||||
Equity, ending balance (in shares) at Dec. 31, 2020 | 28,696 | |||||
Equity, ending balance at Dec. 31, 2020 | 101,172 | $ 28 | 84,671 | 11,945 | $ (65) | 4,593 |
Equity, ending balance (in shares) at Dec. 31, 2020 | 3 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) attributable to Non-Controlling interests | (548) | (548) | ||||
Net income attributable to The Pennant Group, Inc. | 2,696 | 2,696 | ||||
Share-based compensation | 10,040 | 10,040 | ||||
Issuance of common stock from the exercise of stock options (in shares) | 115 | |||||
Issuance of common stock from the exercise of stock options | $ 884 | 884 | ||||
Net issuance of restricted stock (in shares) | 15 | |||||
Equity, ending balance (in shares) at Dec. 31, 2021 | 28,499 | 28,826 | ||||
Equity, ending balance at Dec. 31, 2021 | $ 114,244 | $ 28 | 95,595 | 14,641 | $ (65) | 4,045 |
Equity, ending balance (in shares) at Dec. 31, 2021 | 3 | 3 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) attributable to Non-Controlling interests | $ 600 | 600 | ||||
Net income attributable to The Pennant Group, Inc. | 6,643 | 6,643 | ||||
Share-based compensation | 3,086 | 3,086 | ||||
Issuance of common stock from the exercise of stock options (in shares) | 125 | |||||
Issuance of common stock from the exercise of stock options | $ 1,084 | $ 1 | 1,083 | |||
Net issuance of restricted stock (in shares) | 1,198 | |||||
Equity, ending balance (in shares) at Dec. 31, 2022 | 29,692 | 30,149 | ||||
Equity, ending balance at Dec. 31, 2022 | $ 125,657 | $ 29 | $ 99,764 | $ 21,284 | $ (65) | $ 4,645 |
Equity, ending balance (in shares) at Dec. 31, 2022 | 3 | 3 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | |||
Net income | $ 7,243 | $ 2,148 | $ 15,553 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 4,900 | 4,784 | 4,675 |
Amortization of deferred financing fees | 520 | 488 | 330 |
Provision for doubtful accounts | 881 | 616 | 560 |
Share-based compensation | 3,086 | 10,040 | 8,335 |
Deferred income taxes | 1,700 | (1,752) | (2,201) |
Impairment of long-lived assets | 218 | 2,835 | 0 |
Change in operating assets and liabilities: | |||
Accounts receivable | (361) | (7,335) | (15,712) |
Prepaid expenses and other assets | (7,426) | (4,624) | (7,435) |
Operating lease obligations | (67) | 803 | 2,068 |
Accounts payable | 2,368 | 562 | 993 |
Accrued wages and related liabilities | (197) | (3,864) | 10,538 |
Other accrued liabilities | 1,856 | 2,570 | 2,427 |
Advance payments | (6,211) | (21,786) | 27,997 |
Other long-term liabilities | 534 | (3,708) | 2,076 |
Net cash provided by (used in) operating activities | 9,044 | (18,223) | 50,204 |
Cash flows from investing activities: | |||
Purchase of property and equipment | (14,170) | (6,303) | (7,253) |
Cash payments for business acquisitions | (10,130) | (13,550) | (33,193) |
Escrow deposits | (49) | 0 | (525) |
Restricted and other assets | 110 | (267) | (645) |
Net cash used in investing activities | (24,239) | (20,120) | (41,616) |
Cash flows from financing activities: | |||
Sale of noncontrolling interest | 0 | 0 | 555 |
Proceeds from revolver agreement | 129,500 | 125,500 | 52,700 |
Payments on revolver agreement | (118,500) | (81,500) | (63,200) |
Repurchase of shares of common stock to satisfy tax withholding obligations | 0 | 0 | (65) |
Payments for deferred financing costs | 0 | (1,394) | (78) |
Issuance of common stock upon the exercise of options | 1,084 | 884 | 1,141 |
Net cash provided by (used in) financing activities | 12,084 | 43,490 | (8,947) |
Net increase (decrease) in cash | (3,111) | 5,147 | (359) |
Cash beginning of period | 5,190 | 43 | 402 |
Cash end of period | 2,079 | 5,190 | 43 |
Cash paid during the period for: | |||
Interest | 3,027 | 1,448 | 1,116 |
Income taxes | 99 | 2,616 | 7,865 |
Operating lease liabilities | 35,994 | 39,151 | 35,853 |
Right-of-use assets obtained in exchange for new operating lease obligations | 12,645 | 3,230 | 5,451 |
Non-cash adjustment to right-of-use assets and lease liabilities from lease modifications | 6,270 | 4,674 | 1,939 |
Non-cash adjustment to right-of-use assets and lease liabilities from lease terminations and assignments | (43,136) | 0 | 0 |
Non-cash investing activity: | |||
Capital expenditures in accounts payable | $ 1,280 | $ 730 | $ 560 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | DESCRIPTION OF BUSINESS The Pennant Group, Inc. (herein referred to as “Pennant,” the “Company,” “it,” or “its”), is a holding company with no direct operating assets, employees or revenue. The Company, through its independent operating subsidiaries, provides healthcare services across the post-acute care continuum. As of December 31, 2022, the Company’s subsidiaries operated 95 home health, hospice and home care agencies and 49 senior living communities located in Arizona, California, Colorado, Idaho, Iowa, Montana, Nevada, Oklahoma, Oregon, Texas, Utah, Washington, Wisconsin and Wyoming. Certain of the Company’s subsidiaries, collectively referred to as the Service Center, provide accounting, payroll, human resources, information technology, legal, risk management, and other services to the operations through contractual relationships. Each of the Company’s affiliated operations are operated by separate, independent subsidiaries that have their own management, employees and assets. References herein to the consolidated “Company” and “its” assets and activities is not meant to imply, nor should it be construed as meaning, that Pennant has direct operating assets, employees or revenue, or that any of the subsidiaries, are operated by Pennant. |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation - The accompanying consolidated financial statements of the Company (the “Financial Statements”) reflect the Company’s financial position for the years ended December 31, 2022 and 2021, and the Company’s results of operations and cash flows for the years ended December 31, 2022, 2021 and 2020 and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the regulations of the Securities and Exchange Commission (“SEC”). The Company presents noncontrolling interests within the equity section of its consolidated balance sheets and the amount of consolidated net income (loss) that is attributable to The Pennant Group, Inc. and the noncontrolling interest in its consolidated statements of income. All intercompany transactions and balances between the various legal entities comprising the Company have been eliminated in consolidation. The consolidated statements of income reflect income that is attributable to the Company and the noncontrolling interest. The Company consists of various limited liability companies and corporations established to operate home health, hospice, home care, and senior living operations. The Financial Statements include the accounts of all entities controlled by the Company through its ownership of a majority voting interest. Revenue was derived from transactional information specific to the Company’s services provided. The costs in the consolidated statements of income reflect direct costs and allocated costs prior to the Spin-Off. Estimates and Assumptions - The preparation of the Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Financial Statements and the reported amounts of revenue and expenses during the reporting periods. The most significant estimates in the Financial Statements relate to self-insurance reserves, revenue, intangible assets and goodwill, right-of-use assets and lease liabilities for leases greater than 12 months, and income taxes. Actual results could differ from those estimates. Revenue Recognition - Revenues are recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled from patients and third-party payors, including Medicaid, Medicare and insurers (private and Medicare replacement plans), in exchange for providing patient care. Revenue recognized from healthcare services are adjusted for estimates of variable consideration to arrive at the transaction price. The Company determines the transaction price based on contractually agreed-upon amounts or rate, adjusted for estimates of variable consideration. The Company uses the expected value method in determining the variable component that should be used to arrive at the transaction price, using contractual agreements and historical reimbursement experience within each payor type. The amount of variable consideration which is included in the transaction price may be constrained, and is included in the net revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If actual amounts of consideration ultimately received differ from the Company’s estimates, the Company adjusts these estimates, which would effect net service revenue in the period such variances become known. As the Company’s contracts have an original duration of one year or less, the Company uses the practical expedient applicable to its contracts and does not consider the time value of money. Further, because of the short duration of these contracts, the Company has not disclosed the transaction price for the remaining performance obligations as of the end of each reporting period or when the Company expects to recognize this revenue. In addition, the Company has applied the practical expedient provided by ASC 340, Other Assets and Deferred Costs (“ASC 340”), and all incremental customer contract acquisition costs are expensed as they are incurred because the amortization period would have been one year or less. See Note 5 , Revenue and Accounts Receivable . CARES Act : The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted on March 27, 2020 in the United States. The CARES Act allowed for deferred payment of the employer-paid portion of social security taxes through the end of 2020, with 50% due on December 31, 2021 and the remainder due on December 31, 2022. The Company deferred approximately $7,836 of employer-paid portion of social security tax, all of which was repaid as of December 31, 2022. The CARES Act also expanded the Centers for Medicare & Medicaid Services’ (“CMS”) ability to provide accelerated/advance payments intended to increase the cash flow of healthcare providers and suppliers impacted by COVID-19. During 2020, the Company applied for and received $27,997 in funds under the Accelerated and Advance Payment (“AAP”) Program, all of which was recouped as of June 23, 2022. Cash - Cash consists of petty cash and bank deposits and therefore approximates fair value. The Company places its cash with high credit quality financial institutions. Accounts Receivable and Allowance for Doubtful Accounts - Accounts receivable consist primarily of amounts due from Medicare and Medicaid programs, other government programs, managed care health plans and private payor sources, net of estimates for variable consideration. The allowance for doubtful accounts is the Company’s best estimate of current expected credit losses in the accounts receivable balance. Property and Equipment - Property and equipment are initially recorded at their historical cost. Repairs and maintenance are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the depreciable assets (ranging from three Impairment of Long-Lived Assets - The Company reviews the carrying value of long-lived assets that are held and used in the independent operating subsidiaries for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of these assets is determined based upon expected undiscounted future net cash flows from the operating subsidiary to which the assets relate, utilizing management’s best estimate, appropriate assumptions, and projections at the time. If the carrying value is determined to be unrecoverable from future operating cash flows, the asset is deemed impaired and an impairment loss would be recognized to the extent the carrying value exceeded the estimated fair value of the asset. The Company estimates the fair value of assets based on the estimated future discounted cash flows of the asset. Management evaluated its long-lived assets and the Company identified $218 and $2,835 in long-lived asset impairments related to six senior living communities for the years ended December 31, 2022 and 2021, respectively. Management did not identify any asset impairment during the year ended December 31, 2020. See further discussion at Note 8, Property and Equipment, Net. Intangible Assets and Goodwill - The Company’s indefinite-lived intangible assets consist of trade names and Medicare and Medicaid licenses. The Company tests indefinite-lived intangible assets for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable. The Company did not identify any indefinite-lived intangible asset impairment during the years ended December 31, 2022, 2021 and 2020. Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations. Goodwill is subject to annual test for impairment as of the beginning of the fourth quarter or more frequently if events or changes indicate that the Company's goodwill might be impaired. The Company assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then it is required to perform a quantitative impairment test by comparing the fair value with the carrying amount of the reporting unit. If the carrying amount of a reporting unit exceeds its fair value, then the Company records an impairment of goodwill equal to the amount that the carrying amount of a reporting unit exceeds its fair value. As of December 31, 2022, we evaluated potential triggering events that might be indicators that our goodwill and indefinite lived intangibles were impaired. As a result of our evaluation, no goodwill or indefinite intangible asset impairments were recorded during the years ended December 31, 2022, 2021 and 2020. See further discussion at Note 9, Goodwill and Intangible Assets, Net. Self-Insurance Reserve - The Company retains risk for a substantial portion of potential claims for general and professional liability and workers’ compensation. The Company recognizes obligations associated with these costs, up to specified deductible limits in the period in which a claim is incurred, including with respect to both reported claims and claims incurred but not reported. The Company evaluates the adequacy of the self insurance reserves in conjunction with an independent actuarial assessment. As of December 31, 2022 the general and professional liability insurance has a retention limit of $150 per claim with a $500 corridor as an additional out-of-pocket retention we must satisfy for claims within the policy year before the carrier will reimburse losses. The workers’ compensation insurance has a retention limit of $250 per claim, except for policies held in Texas, Washington, and Wyoming which are subject to state insurance and possess their own limits. These costs have generally been estimated based on historical data of our claims experience. Such estimates, and the resulting reserves, are reviewed and updated by us on a quarterly basis. Additionally, the Company has partially indemnified Ensign for general and professional liabilities incurred prior to the Spin-off but not reported until after that date and included that amount in its accrual below. The following table presents details of the Company's general and professional liability and worker’s compensation, including amounts accrued for the periods indicated in other accrued liabilities and other long-term liabilities in our accompanying balance sheets. The amounts accrued below represent the total estimated liability for individual claims that are less than our noted insurance coverage amounts, which includes outstanding claims and claims incurred but not reported. The amounts are reported gross of reinsurance receivable of $1,561 and $927 included in restricted and other assets for the years ended December 31, 2022 and 2021, respectively and $188 included in prepaid expenses and other current assets for the year ended December 31, 2022. December 31, 2022 2022 2021 Type of Insurance General and professional liability $ 3,690 $ 2,007 Workers’ compensation 3,810 4,899 Total estimated liability 7,500 6,906 Less: long-term portion, included in other long-term liabilities (5,748) (5,293) Current portion of estimated liability, included in other accrued liabilities $ 1,752 $ 1,613 Beginning on January 1, 2022 the Company transitioned its employee health plans to a self insurance model. Prior to that date the Company did not retain risk related to its employee health plans. The Company self-funds medical, including prescription drugs, dental healthcare, and vision benefits for its employees. The Company is fully liable for all financial and legal aspects of these benefit plans. To protect itself against loss exposure with this policy,the Company has purchased individual stop-loss insurance coverage that insures individual claims that exceed $325 for each covered person for fiscal 2022. As of December 31, 2022 our medical benefits liability was $1,794 recorded as a component of other accrued liabilities. Fair Value of Financial Instruments - The Company’s financial instruments consist principally of cash, accounts receivable, accounts payable, accrued liabilities, and debt. The Company believes all of the financial instruments’ recorded values approximate fair values because of their nature or respective short durations. The Company determines fair value measurements based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. These tiers include: Level 1, defined as observable inputs such as quoted market prices in active markets; Level 2, defined as inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions. Income Taxes - Deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities at tax rates in effect when such temporary differences are expected to reverse. The Company generally expects to fully utilize its deferred tax assets; however, when necessary, the Company records a valuation allowance to reduce its net deferred tax assets to the amount that is more likely than not to be realized. In determining the need for a valuation allowance or the need for and magnitude of liabilities for uncertain tax positions, the Company makes certain estimates and assumptions. These estimates and assumptions are based on, among other things, knowledge of operations, markets, historical trends and likely future changes and, when appropriate, the opinions of advisors with knowledge and expertise in certain fields. Due to certain risks associated with the Company’s estimates and assumptions, actual results could differ. Noncontrolling Interest - The noncontrolling interest in a subsidiary is initially recognized at estimated fair value on the acquisition date and is presented within total equity in the Company's consolidated balance sheets. The Company presents the noncontrolling interest and the amount of consolidated net income (loss) attributable to The Pennant Group, Inc. in its consolidated statements of income. Net income per share is calculated based on net income (loss) attributable to The Pennant Group, Inc.'s stockholders. The carrying amount of the noncontrolling interest is adjusted based on an allocation of subsidiary earnings based on ownership interest. Share-Based Compensation - The Company measures and recognizes compensation expense for all share-based payment awards, including employee stock options and restricted stock, made to employees and Pennant’s directors based on estimated fair values, ratably over the requisite service period of the award. The Company accounts for forfeitures as they occur. Net income has been reduced as a result of the recognition of the fair value of all stock options and restricted stock awards issued, the amount of which is contingent upon the number of future grants and other variables. The total amount of share-based compensation was $3,086, $10,040, and $8,335 for the years ended December 31, 2022, 2021 and 2020, respectively, of which $647, $7,964 and $7,222, respectively, was recorded in general and administrative expense, with the difference being recorded in cost of services. For further discussion see Note 12, Options and Awards. |
TRANSACTIONS WITH ENSIGN
TRANSACTIONS WITH ENSIGN | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
TRANSACTIONS WITH ENSIGN | TRANSACTIONS WITH ENSIGN On October 1, 2019, The Ensign Group, Inc. (“Ensign”) completed the separation of Pennant (the “Spin-Off”). In connection with the Spin-Off, Pennant entered into several agreements with Ensign that set forth the principal actions taken or to be taken in connection with the Spin-Off and to govern the relationship of the parties following the Spin-Off. The Transitions Services Agreement with Ensign (the “Transition Services Agreement”) primarily provided Pennant with administrative support. The Transitions Services Agreement expired two years after the Spin-Off date. The Company has incurred $1,561, $3,124, and $5,536 in costs related to the Transitions Services Agreement for the years ended December 31, 2022, 2021 and 2020, respectively that related primarily to shared administrative support and other services at proximate operations. Services included in cost of services were $3,211, $3,084, and $4,205 for the years ended December 31, 2022, 2021 and 2020, respectively. that related primarily to room and board charges at skilled nursing facilities for hospice patients. Additionally, the Company’s independent operating subsidiaries leased 29 of its senior living communities from subsidiaries of Ensign under a master lease arrangement as of year ended December 31, 2022. See further discussion below at Note 13., Leases . |
COMPUTATION OF NET INCOME PER C
COMPUTATION OF NET INCOME PER COMMON SHARE | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
COMPUTATION OF NET INCOME PER COMMON SHARE | COMPUTATION OF NET INCOME PER COMMON SHAREBasic net income per share is computed by dividing net income attributable to stockholders of the Company by the weighted average number of outstanding common shares for the period. The computation of diluted net income per share is similar to the computation of basic net income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. The following table sets forth the computation of basic and diluted net income per share for the periods presented: Year Ended December 31, 2022 2021 2020 Numerator: Net income $ 7,243 $ 2,148 $ 15,553 Less: net income (loss) attributable to noncontrolling interests 600 (548) (191) Net income attributable to The Pennant Group, Inc. $ 6,643 $ 2,696 $ 15,744 Denominator: Weighted average shares outstanding for basic net income per share 29,064 28,406 28,029 Plus: incremental shares from assumed conversion (a) 1,095 2,236 2,199 Adjusted weighted average common shares outstanding for diluted income per share 30,159 30,642 30,228 Earnings Per Share: Basic net income per common share $ 0.23 $ 0.09 $ 0.56 Diluted net income per common share $ 0.22 $ 0.09 $ 0.52 (a) The calculation of dilutive shares outstanding excludes out-of-the-money stock options (i.e., such options’ exercise prices were greater than the average market price of our common shares for the period) because their inclusion would have been antidilutive. Options outstanding which are anti-dilutive and therefore not factored into the weighted average common shares amount above were 1,860, 478, and 93 for the years ended December 31, 2022, 2021 and 2020, respectively. |
REVENUE AND ACCOUNTS RECEIVABLE
REVENUE AND ACCOUNTS RECEIVABLE | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE AND ACCOUNTS RECEIVABLE | REVENUE AND ACCOUNTS RECEIVABLE Revenue is recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled from patients and third-party payors, including Medicaid, Medicare and managed care programs (Commercial, Medicare Advantage and Managed Medicaid plans), in exchange for providing patient care. The healthcare services in home health and hospice patient contracts include routine services in exchange for a contractual agreed-upon amount or rate. Routine services are treated as a single performance obligation satisfied over time as services are rendered. As such, patient care services represent a bundle of services that are not capable of being distinct within the context of the contract. Additionally, there may be ancillary services which are not included in the rates for routine services, but instead are treated as separate performance obligations satisfied at a point in time, if and when those services are rendered. Revenue recognized from healthcare services are adjusted for estimates of variable consideration to arrive at the transaction price. The Company determines the transaction price based on contractually agreed-upon amounts or rate, adjusted for estimates of variable consideration. The Company uses the expected value method in determining the variable component that should be used to arrive at the transaction price, using contractual agreements and historical reimbursement experience within each payor type. The amount of variable consideration which is included in the transaction price may be constrained, and is included in the net revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If actual amounts of consideration ultimately received differ from the Company’s estimates, the Company adjusts these estimates, which would affect net service revenue in the period such variances become known. Revenue from the Medicare and Medicaid programs accounted for 62.3%, 62.6%, and 60.1% of the Company’s revenue for the years ended December 31, 2022, 2021 and 2020, respectively. The Company records revenue from these governmental and managed care programs as services are performed at their expected net realizable amounts under these programs. The Company’s revenue from governmental and managed care programs is subject to audit and retroactive adjustment by governmental and third-party agencies. Consistent with healthcare industry accounting practices, any changes to these governmental revenue estimates are recorded in the period the change or adjustment becomes known based on final settlement. Disaggregation of Revenue The Company disaggregates revenue from contracts with its patients or residents by reportable operating segments and payors. The Company has determined that disaggregating revenue into these categories achieves the disclosure objectives to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. A reconciliation of disaggregated revenue to segment revenue as well as revenue by payor is provided below. The Company’s service specific revenue recognition policies are as follows: Home Health Revenue Medicare Revenue Net service revenue is recognized in accordance with the Patient Driven Groupings Model (“PDGM”). Under PDGM, Medicare provides agencies with payments for each 30-day payment period provided to beneficiaries. If a beneficiary is still eligible for care after the end of the first 30-day payment period, a second 30-day payment period can begin. There are no limits to the number of periods of care a beneficiary who remains eligible for the home health benefit can receive. While payment for each 30-day payment period is adjusted to reflect the beneficiary’s health condition and needs, a special outlier provision exists to ensure appropriate payment for those beneficiaries that have the most expensive care needs. The payment under the Medicare program is also adjusted for certain variables including, but not limited to: (a) a low utilization payment adjustment if the number of visits is below an established threshold that varies based on the diagnosis of a beneficiary; (b) a partial payment if the patient transferred to another provider or the Company received a patient from another provider before completing the period of care; (c) adjustment to the admission source of claim if it is determined that the patient had a qualifying stay in a post-acute care setting within 14 days prior to the start of a 30-day payment period; (d) the timing of the 30-day payment period provided to a patient in relation to the admission date, regardless of whether the same home health provider provided care for the entire series of episodes; (e) changes to the acuity of the patient during the previous 30-day payment period; (f) changes in the base payments established by the Medicare program; (g) adjustments to the base payments for case mix and geographic wages; and (h) recoveries of overpayments. The Company adjusts Medicare revenue on completed episodes to reflect differences between estimated and actual payment amounts, an inability to obtain appropriate billing documentation and other reasons unrelated to credit risk. Therefore, the Company believes that its reported net service revenue and patient accounts receivable will be the net amounts to be realized from Medicare for services rendered. In addition to revenue recognized on completed episodes and periods, the Company also recognizes a portion of revenue associated with episodes and periods in progress. Episodes in progress are 30-day payment periods that begin during the reporting period but were not completed as of the end of the period. As such, the Company estimates revenue and recognizes it on a daily basis. The primary factors underlying this estimate are the number of episodes in progress at the end of the reporting period, expected Medicare revenue per period of care or episode of care and the Company’s estimate of the average percentage complete based on the scheduled end of period and end of episode dates. Non-Medicare Revenue Episodic Based Revenue - The Company recognizes revenue in a similar manner as it recognizes Medicare revenue for episodic-based rates that are paid by other insurance carriers, including Medicare Advantage programs; however, these rates can vary based upon the negotiated terms. Non-episodic Based Revenue - Revenue is recognized on an accrual basis based upon the date of service at amounts equal to its established or estimated per visit rates, as applicable. Hospice Revenue Revenue is recognized on an accrual basis based upon the date of service at amounts equal to the estimated payment rates. The estimated payment rates are calculated as daily rates for each of the levels of care the Company delivers. Revenue is adjusted for an inability to obtain appropriate billing documentation or authorizations acceptable to Medicare and other reasons unrelated to credit risk. Additionally, as Medicare hospice revenue is subject to an inpatient cap and an overall payment cap, the Company monitors its provider numbers and estimates amounts due back to Medicare if a cap has been exceeded. The Company regularly evaluates and records these adjustments as a reduction to revenue and an increase to other accrued liabilities. Senior Living Revenue The Company has elected the lessor practical expedient within ASC Topic 842, Leases (“ASC 842”) and therefore recognizes, measures, presents, and discloses the revenue for services rendered under the Company’s senior living residency agreements based upon the predominant component, either the lease or non-lease component, of the contracts. The Company has determined that the services included under the Company’s senior living residency agreements each have the same timing and pattern of transfer. The Company recognizes revenue under ASC Topic 606, Revenue from Contracts with Customers for its senior residency agreements, for which it has determined that the non-lease components of such residency agreements are the predominant component of each such contract. The Company’s senior living revenue consists of fees for basic housing and assisted living care. Accordingly, we record revenue when services are rendered on the date services are provided at amounts billable to individual residents. Residency agreements are generally for a term of 30 days, with resident fees billed monthly in advance. For residents under reimbursement arrangements with Medicaid, revenue is recorded based on contractually agreed-upon amounts or rates on a per resident, daily basis or as services are rendered. Revenue by payor for the years ended December 31, 2022, 2021 and 2020, is summarized in the following tables: Year Ended December 31, 2022 Home Health and Hospice Services Home Health Services Hospice Services Senior Living Services Total Revenue Revenue % Medicare $ 91,415 $ 140,338 $ — $ 231,753 49.0 % Medicaid 9,749 15,568 37,617 62,934 13.3 Subtotal 101,164 155,906 37,617 294,687 62.3 Managed care 57,824 4,277 — 62,101 13.1 Private and other (a) 22,741 337 93,375 116,453 24.6 Total revenue $ 181,729 $ 160,520 $ 130,992 $ 473,241 100.0 % (a) Private and other payors in our home health and hospice services segment includes revenue from all payors generated in our home care operations. Year Ended December 31, 2021 Home Health and Hospice Services Home Health Services Hospice Services Senior Living Services Total Revenue Revenue % Medicare $ 80,849 $ 135,939 $ — $ 216,788 49.3 % Medicaid 8,935 12,103 37,317 58,355 13.3 Subtotal 89,784 148,042 37,317 275,143 62.6 Managed care 46,167 3,196 — 49,363 11.2 Private and other (a) 22,007 374 92,807 115,188 26.2 Total revenue $ 157,958 $ 151,612 $ 130,124 $ 439,694 100.0 % (a) Private and other payors in our home health and hospice services segment includes revenue from all payors generated in our home care operations. Year Ended December 31, 2020 Home Health and Hospice Services Home Health Services Hospice Services Senior Living Services Total Revenue Revenue % Medicare $ 58,399 $ 119,873 $ — $ 178,272 45.6 % Medicaid 7,645 12,462 36,780 56,887 14.5 Subtotal 66,044 132,335 36,780 235,159 60.1 Managed care 31,572 1,546 — 33,118 8.5 Private and other (a) 21,968 194 100,514 122,676 31.4 Total revenue $ 119,584 $ 134,075 $ 137,294 $ 390,953 100.0 % (a) Private and other payors in our home health and hospice services segment includes revenue from all payors generated in our home care operations. Balance Sheet Impact Included in the Company’s consolidated balance sheets are contract assets, comprised of billed accounts receivable and unbilled receivables, which are the result of the timing of revenue recognition, billings and cash collections, as well as, contract liabilities, which primarily represent payments the Company receives in advance of services provided. Accounts receivable as of December 31, 2022 and December 31, 2021 is summarized in the following table: December 31, 2022 December 31, 2021 Medicare $ 31,321 $ 31,327 Medicaid 10,700 11,793 Managed care 9,370 7,901 Private and other 2,621 3,821 Accounts receivable, gross 54,012 54,842 Less: allowance for doubtful accounts (592) (902) Accounts receivable, net $ 53,420 $ 53,940 The following table summarizes the activity for our allowance for doubtful accounts for the years ended December 31, 2022, 2021 and 2020: Year Ended December 31, 2022 2021 2020 Balance at beginning of period $ 902 $ 643 $ 677 Additions to bad debt expense 881 616 560 Write-offs of uncollectible accounts (1,191) (357) (594) Balance at end of period $ 592 $ 902 $ 643 Concentrations- Credit Risk Credit Risk - The Company has significant accounts receivable balances, the collectability of which is dependent on the availability of funds from certain governmental programs, primarily Medicare and Medicaid. These receivables represent the only significant concentration of credit risk for the Company. The Company does not believe there are significant credit risks associated with these governmental programs. The Company believes that an appropriate allowance has been recorded for the possibility of these receivables proving uncollectible, and continually monitors and adjusts these allowances as necessary. The Company’s gross receivables from the Medicare and Medicaid programs accounted for approximately 77.8% and 78.6% of its total gross accounts receivable as of December 31, 2022 and December 31, 2021, respectively. Revenue from reimbursement under the Medicare and Medicaid programs accounted for 62.3%, 62.6%, and 60.1% of the Company's revenue for the years ended December 31, 2022, 2021 and 2020, respectively. |
BUSINESS SEGMENTS
BUSINESS SEGMENTS | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
BUSINESS SEGMENTS | BUSINESS SEGMENTS The Company classifies its operations into the following reportable operating segments: (1) home health and hospice services, which includes the Company’s home health, hospice and home care businesses; and (2) senior living services, which includes the operation of assisted living, independent living and memory care communities. The reporting segments are business units that offer different services and are managed separately to provide greater visibility into those operations. Our Chief Executive Officer and President, who is our Chief Operating Decision Maker (“CODM”), reviews financial information at the operating segment level. We also report an “all other” category that includes general and administrative expense from our Service Center. As of December 31, 2022, the Company provided services through 95 affiliated home health, hospice and home care agencies, and 49 affiliated senior living operations. The Company evaluates performance and allocates capital resources to each segment based on an operating model that is designed to maximize the quality of care provided and profitability. The Company’s Service Center provides various services to all lines of business. The Company does not review assets by segment and therefore assets by segment are not disclosed below. The CODM uses Segment Adjusted EBITDAR from Operations as the primary measure of profit and loss for the Company's reportable segments and to compare the performance of its operations with those of its competitors. Segment Adjusted EBITDAR from Operations is net income attributable to the Company's reportable segments excluding interest expense, provision for income taxes, depreciation and amortization expense, rent, and, in order to view the operations performance on a comparable basis from period to period, certain adjustments including: (1) costs at start-up operations, (2) share-based compensation, (3) acquisition related costs and credit allowances, (4) redundant and nonrecurring costs associated with the Transition Services Agreement, (5) loss related to senior living operations transferred to Ensign, (6) unusual or non-recurring charges, and (7) net income (loss) attributable to noncontrolling interest. General and administrative expenses are not allocated to the reportable segments, and are included as “All Other”, accordingly the segment earnings measure reported is before allocation of corporate general and administrative expenses. The Company's segment measures may be different from the calculation methods used by other companies and, therefore, comparability may be limited. The following table presents certain financial information regarding our reportable segments, general and administrative expenses are not allocated to the reportable segments and are included in “All Other”. Home Health and Hospice Services Senior Living Services All Other Total Year Ended December 31, 2022 Revenue $ 342,249 $ 130,992 $ — $ 473,241 Segment Adjusted EBITDAR from Operations $ 61,827 $ 37,563 $ (31,435) $ 67,955 Year Ended December 31, 2021 Revenue $ 309,570 $ 130,124 $ — $ 439,694 Segment Adjusted EBITDAR from Operations $ 55,565 $ 37,517 $ (26,208) $ 66,874 Year Ended December 31, 2020 Revenue $ 253,659 $ 137,294 $ — $ 390,953 Segment Adjusted EBITDAR from Operations $ 49,501 $ 48,309 $ (22,762) $ 75,048 The table below provides a reconciliation of Segment Adjusted EBITDAR from Operations above to income from operations: Year Ended December 31, 2022 2021 2020 Segment Adjusted EBITDAR from Operations $ 67,955 $ 66,874 $ 75,048 Less: Depreciation and amortization 4,900 4,784 4,675 Rent—cost of services 38,018 40,863 39,191 Other income (31) (24) 225 Adjustments to Segment EBITDAR from Operations: Less: Costs at start-up operations (a) 1,435 1,045 1,787 Share-based compensation expense (b) 3,363 10,040 8,335 Acquisition related costs and credit allowances (c) 731 80 99 Transition services costs (d) 77 2,008 1,181 COVID-19 Related costs and supplies (e) — — 447 Loss related to senior living operations transferred to Ensign (f) 6,103 2,835 — Unusual or non-recurring charges (g) 1,220 — — Add: Net income (loss) attributable to noncontrolling interest 600 (548) (191) Consolidated Income from operations $ 12,739 $ 4,695 $ 18,917 (a) Represents results related to start-up operations. This amount excludes rent and depreciation and amortization expense related to such operations. (b) Share-based compensation expense and related payroll taxes incurred, including the impact of the modification of certain restricted stock units described below in Note 12, Options and Award s, to the Consolidated Financial Statements. Share-based compensation expense and related payroll taxes are included in cost of services and general and administrative expense. (c) Non-capitalizable costs associated with acquisitions and credit allowances for amounts in dispute with the prior owners of certain acquired operations. (d) Costs identified as redundant or non-recurring incurred by the Company as a result of the Spin-off. The 2021 amounts represents part of the costs incurred under the Transition Services Agreement. All amounts are included in general and administrative expense. Fees incurred under the Transition Services Agreement were $1,561, $3,124, and $5,536 for the year ended December 31, 2022, 2021 and 2020, respectively. (e) Beginning in the first quarter of fiscal year 2021, we updated our definition of Segment Adjusted EBITDAR to no longer include an adjustment for COVID-19 expenses offset by the amount of sequestration relief. COVID-19 expenses continue to be part of daily operations for which less specific identification is visible. Furthermore, the sequestration relief was extended through December 31, 2021. Sequestration relief was $3,555 for the year ended December 31, 2021. The 2020 amount represents incremental costs incurred as part of the Company's response to COVID-19 including direct medical supplies, labor, and other expenses, net of $2,765 in increased revenue related to the 2% payment increase in Medicare reimbursements for sequestration relief for the year ended December 31, 2020. (f) On January 27, 2022, affiliates of the Company, entered into certain operations transfer agreements (collectively, the “Transfer Agreements”) with affiliates of Ensign, providing for the transfer of the operations of certain senior living communities (the “Transaction”) from affiliates of the Company to affiliates of Ensign. The closing of the Transaction was completed in two phases with the transfer of two operations on March 1, 2022 and the remainder transferred on April 1, 2022. The amount includes $6,500 for the year ended December 31, 2022 to cover post-closing capital expenditures and operating losses related to one of the communities transferred on April 1, 2022. The amount above also includes an offset of $397 for the year ended December 31, 2022, for the related net impact on revenue and cost of service attributable to the transferred entities. This amount excludes rent and depreciation and amortization expense related to such operations. During year ended December 31, 2021, the Company impaired certain leasehold improvements included in property and equipment totaling $2,835 primarily related to the operations included in the transaction with Ensign. (g) Represents unusual or non-recurring charges for legal services, implementation costs, integration costs, and consulting fees including $958 in general and administrative expenses and $262 in cost of services for the year ended December 31, 2022. |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
ACQUISITIONS | ACQUISITIONSThe Company’s acquisition focus is to purchase or lease operations that are complementary to the Company’s current businesses, accretive to the Company’s business or otherwise advance the Company’s strategy. The results of all the Company’s independent operating subsidiaries are included in the Financial Statements subsequent to the date of acquisition. Acquisitions are accounted for using the acquisition method of accounting. 2022 Acquisitions During the year ended December 31, 2022, the Company expanded its operations with the addition of three home health and four hospice agencies as well as one senior living community. A subsidiary of the Company entered into a separate operations transfer agreement with the prior operator of each acquired operation as part of each transaction. The fair value of assets for the Company’s home health and hospice acquisitions was mostly concentrated in goodwill and intangible assets and as such, these transactions were classified as a business combination in accordance with ASC Topic 805, Business Combinations (“ASC 805”). The purchase price for the business combinations was $10,130, which consisted of equipment and other assets of $188, goodwill of $5,232, and indefinite-lived intangible assets of $4,887 related to Medicare and Medicaid licenses, other intangible assets of $10, and less assumed liabilities of $187. The acquisitions contributed $3,242 in revenue and operating loss of $50 during the year ended December 31, 2022. The Company anticipates that the total goodwill recognized will be fully deductible for tax purposes. There were no material acquisition costs that were expensed related to the business combination during the year ended December 31, 2022. 2021 Acquisitions During the year ended December 31, 2021, the Company expanded its operations with the addition of five home health agencies, four hospice agencies, and two home care agencies. The aggregate purchase price for these acquisitions was $14,135. A subsidiary of the Company entered into a separate operations transfer agreement with the prior operator of each acquired operation as part of each transaction. The goodwill was primarily attributable to intangible assets that do not qualify for separate recognition and to synergies the Company expects to achieve related to the acquisition and was allocated to the Company's operating segments which are its reporting units. The Company anticipates that the total goodwill recognized will be fully deductible for tax purposes. Acquisition costs related to the business combinations of home health, hospice, and home care acquisitions of $80 were expensed related to the business combinations during the year ended December 31, 2021. Two of the hospice agencies were acquired Medicare licenses and are considered asset acquisitions. The fair value of assets for the hospice licenses acquired totaled $585 and was allocated to indefinite-lived intangible assets. 2020 Acquisitions During the year ended December 31, 2020, the Company expanded its operations with the addition of six home health agencies, six hospice agencies, and two senior living operations. The aggregate purchase price for these acquisitions was $39,239. In connection with the acquisition of the senior living communities, the Company entered into a new long-term “triple-net” lease with a subsidiary of Ensign. The addition of these operations added a total of 164 operational senior living units to be operated by the Company’s independent operating subsidiaries. A subsidiary of the Company entered into a separate operations transfer agreement with the prior operator of each acquired operation as part of each transaction. The goodwill was primarily attributable intangible assets that do not qualify for separate recognition and to synergies the Company expects to achieve related to the acquisition and was allocated to the Company's operating segments which are its reporting units. The Company anticipates that the total goodwill recognized will be fully deductible for tax purposes. Acquisition costs related to the business combinations of home health, hospice, and home care acquisitions of $99 were expensed related to the business combinations during the year ended December 31, 2020. In October 2020, the Company announced it closed on a home health joint venture and hospice joint venture with Scripps Health (“Scripps”), a leading nonprofit integrated health system based in San Diego, California. The closing was effective October 1, 2020. The resulting joint ventures, which combined certain assets and the operations of Scripps’ home health business and the assets and operations of the local Pennant-affiliated home health and hospice agencies, are majority-owned and managed by an independent operating subsidiary of the Company and provide home health and hospice services to patients throughout San Diego County. The fair value of assets contributed by Scripps to the home health joint venture were included in the total value of assets acquired as described above and in the summary table below. The Company paid Scripps $6,200 in cash and contributed assets from the local Pennant-affiliated home health agency with a net book value of $614. The Company acquired 60.0% ownership interest in the joint venture. The contributions of assets by Scripps to the joint venture, resulted in the Company recording a noncontrolling interest with a fair value of $4,646. The fair value of the noncontrolling interest was determined using discounted cash flow models. As part of the transaction with Scripps, the Company contributed the assets of the local Pennant-affiliated hospice agency to another joint venture. The Company sold Scripps a noncontrolling interest in the hospice joint venture for $555 in cash. The company retained an 80.0% ownership interest in the hospice joint venture. The transaction resulted in the Company recognizing a noncontrolling interest of $138 and a contribution to additional paid in capital of $313, net of $104 of the income tax effect. The fair value of assets for home health and hospice acquisitions was mostly concentrated in goodwill and as such, these transactions were classified as business combinations in accordance with ASC Topic 805, Business Combinations (“ASC 805”). The table below presents the allocation of the purchase price for the operations acquired in acquisitions during the years ended December 31, 2022, 2021 and 2020 as noted above: December 31, 2021 2022 2021 2020 Equipment, furniture, and fixtures $ 188 $ 62 $ 174 Goodwill 5,232 7,821 25,211 Other indefinite-lived intangible assets 4,887 6,242 14,026 Intangible Assets 10 — — Other assets — 10 — Liabilities assumed (187) — (172) Total acquisitions $ 10,130 $ 14,135 $ 39,239 Less: noncontrolling interest and additional paid in capital (a) — — (4,646) Less: cash paid in prior year (held in escrow) (b) — (585) (1,400) Total cash paid for acquisitions $ 10,130 $ 13,550 $ 33,193 (a) Consists of the of noncontrolling interest related to Scripps contribution of assets to the joint venture. (b) Total cash paid for acquisitions for the year ended December 31, 2021 and the year ended December 31, 2020 includes $585 and $1,400 as an escrow deposit that was paid in the prior year. |
PROPERTY AND EQUIPMENT_NET
PROPERTY AND EQUIPMENT—NET | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT—NET | PROPERTY AND EQUIPMENT—NET Property and equipment, net consist of the following: December 31, 2021 2022 2021 Land $ 96 $ — Building 1,890 — Leasehold improvements 18,759 11,660 Equipment 25,532 22,415 Furniture and fixtures 1,151 1,199 47,428 35,274 Less: accumulated depreciation (20,807) (18,486) Property and equipment, net $ 26,621 $ 16,788 Depreciation expense was $4,856, $4,751 and $4,661 for the years ended December 31, 2022, 2021 and 2020, respectively. The Company acquired one building and related assets during the year ended December 31, 2022 associated with an existing senior living community operation. The total acquisition price of the land, building and related equipment was $2,007. Asset Impairment. The Company measures certain assets at fair value on a non-recurring basis, including long-lived assets, which are evaluated for impairment. Long-lived assets include assets such as property and equipment, operating lease assets and certain intangible assets. The inputs used to determine the fair value of long-lived assets and a reporting unit are considered Level 3 measurements due to their subjective nature. Management has evaluated its long-lived assets and determined there were $218 and $2,835 for the years ended December 31, 2022 and 2021, respectively, in loss on asset dispositions and impairment, net in the consolidated statements of income. |
GOODWILL AND INTANGIBLE ASSETS_
GOODWILL AND INTANGIBLE ASSETS—NET | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS—NET | GOODWILL AND INTANGIBLE ASSETS—NET The Company tests goodwill during the fourth quarter of each year and also if events or changes in circumstances indicate the occurrence of a triggering event which might indicate there may be impairment. The Company performs its goodwill impairment analysis for each reporting unit that constitutes a component for which (1) discrete financial information is available and (2) segment management regularly reviews the operating results of that component, in accordance with the provisions of ASC Topic 350, Intangibles-Goodwill and Other (“ASC 350”). The Company reviews goodwill for impairment by initially considering qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill, as a basis for determining whether it is necessary to perform a quantitative analysis. If it is determined that it is more likely than not that the fair value of reporting unit is less than its carrying amount, a quantitative analysis is performed to identify goodwill impairment. If it is determined that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, it is unnecessary to perform a quantitative analysis. The Company may elect to bypass the qualitative assessment and proceed directly to performing a quantitative analysis. Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value. An impairment loss is recognized for the amount that the carrying amount of the reporting unit, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit. The Company did not identify any impairment charge during the years ended December 31, 2022, 2021 and 2020. The following table represents activity in goodwill by segment as of and for the year ended December 31, 2022: Home Health and Hospice Services Senior Living Services Total December 31, 2020 $ 62,802 $ 3,642 $ 66,444 Additions 7,821 — 7,821 December 31, 2021 70,623 3,642 74,265 Additions 5,232 — 5,232 December 31, 2022 $ 75,855 $ 3,642 $ 79,497 Other indefinite-lived intangible assets consist of the following: December 31, 2022 2021 Trade name $ 1,385 $ 1,355 Medicare and Medicaid licenses 57,232 52,375 Total $ 58,617 $ 53,730 |
OTHER ACCRUED LIABILITIES
OTHER ACCRUED LIABILITIES | 12 Months Ended |
Dec. 31, 2022 | |
Payables and Accruals [Abstract] | |
OTHER ACCRUED LIABILITIES | OTHER ACCRUED LIABILITIES Other accrued liabilities consist of the following: December 31, 2022 December 31, 2021 Refunds payable $ 2,244 $ 3,095 Deferred revenue 1,592 1,456 Resident deposits 4,315 5,111 Contract liabilities (CARES Act advance payments) — 6,211 Property taxes 1,027 1,102 Deferred state relief funds 1,479 — Accrued self-insurance liabilities 3,546 1,613 Other 2,481 2,896 Other accrued liabilities $ 16,684 $ 21,484 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Long-term debt, net consists of the following: December 31, 2022 2022 2021 Revolving credit facility $ 64,500 $ 53,500 Less: unamortized debt issuance costs (a) (1,608) (2,128) Long-term debt, net $ 62,892 $ 51,372 (a) Amortization expense for debt issuance costs was $520, $488, and $330 for the years ended December 31, 2022, 2021 and 2020, respectively, and is recorded in interest expense, net on the consolidated statements of income. On February 23, 2021, Pennant entered into an amendment to its existing credit agreement (as amended, the “Credit Agreement”), which provides for an increased revolving credit facility with a syndicate of banks with a borrowing capacity of $150,000 (the “Revolving Credit Facility”). The interest rates applicable to loans under the Revolving Credit Facility are, at the Company’s election, either (i) Adjusted LIBOR (as defined in the Credit Agreement) plus a margin ranging from 2.3% to 3.3% per annum or (ii) Base Rate plus a margin ranging from 1.3% to 2.3% per annum, in each case based on the ratio of Consolidated Total Net Debt to Consolidated EBITDA (each, as defined in the Credit Agreement). In addition, Pennant pays a commitment fee on the undrawn portion of the commitments under the Revolving Credit Facility which ranges from 0.35% to 0.50% per annum, depending on the Consolidated Total Net Debt to Consolidated EBITDA ratio of the Company and its subsidiaries. The Company is not required to repay any loans under the Credit Agreement prior to maturity in 2026, other than to the extent the outstanding borrowings exceed the aggregate commitments under the Credit Agreement. As of December 31, 2022, the Company’s weighted average interest rate on its outstanding debt was 7.0%. As of December 31, 2022, the Company had available borrowing on the Revolving Credit Facility of $81,314, which is net of outstanding letters of credit of $4,186. The fair value of the Revolving Credit Facility approximates carrying value, due to the short-term nature and variable interest rates. The fair value of this debt is categorized within Level 2 of the fair value hierarchy based on the observable market borrowing rates. The Credit Agreement is guaranteed, jointly and severally, by certain of the Company’s independent operating subsidiaries, and is secured by a pledge of stock of the Company's material independent operating subsidiaries as well as a first lien on substantially all of each material operating subsidiary's personal property. The Credit Agreement contains customary covenants that, among other things, restrict, subject to certain exceptions, the ability of the Company and its independent operating subsidiaries to grant liens on their assets, incur indebtedness, sell assets, make investments, engage in acquisitions, mergers or consolidations, amend certain material agreements and pay certain dividends and other restricted payments. Financial covenants require compliance with certain levels of leverage ratios that impact the amount of interest. As of December 31, 2022, the Company was compliant with all such financial covenants. |
OPTIONS AND AWARDS
OPTIONS AND AWARDS | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
OPTIONS AND AWARDS | OPTIONS AND AWARDS Outstanding options and restricted stock awards of the Company were granted under the 2019 Omnibus Incentive Plan (the “OIP”) and Long-Term Incentive Plan (the “LTIP”), together referred to as the “Pennant Plans”). Under the Pennant Plans, stock-based payment awards, including employee stock options, restricted stock awards (“RSA”), and restricted stock units (“RSU” and together with RSA, “Restricted Stock”) are issued based on estimated fair value. The following disclosures represent share-based compensation expense relating to employees of the Company’s subsidiaries and non-employee directors who have awards under the Pennant Plans. Share-Based Compensation The following disclosures represent share-based compensation expense relating to the Pennant Plans, including awards to employees of the Company’s subsidiaries. Total share-based compensation expense for all of the Plans for the years ended December 31, 2022, 2021 and 2020: Year Ended December 31, 2022 2021 2020 Share-based compensation expense related to stock options 3,266 3,093 1,660 Share-based compensation expense related to Restricted Stock (467) 6,141 6,200 Share-based compensation expense related to Restricted Stock to non-employee directors 287 806 475 Total share-based compensation $ 3,086 $ 10,040 $ 8,335 In future periods, the Company estimates it will recognize the following share-based compensation expense for unvested stock options and unvested Restricted Stock, which were unvested as of December 31, 2022: Unrecognized Compensation Expense Weighted Average Recognition Period (in years) Unvested stock options $ 10,005 3.3 Unvested Restricted Stock 3,126 4.5 Total unrecognized share-based compensation expense $ 13,131 On July 25, 2022 the Company modified certain outstanding RSUs granted to the former chief executive officer in connection with the Spin-off. All the RSUs had an original vesting date of October 1, 2022. The modification resulted in the forfeiture of 250,000 outstanding RSUs and accelerated the vesting on the remaining 942,842 RSUs from October 1, 2022 to July 31, 2022. The modification of the award resulted in a net reduction of share-based compensation expense related to the awards of $3,812 recorded in general and administrative expense during the year. Stock Options Under the Pennant Plans, options granted to employees of the subsidiaries of Pennant generally vest over five years at 20% per year on the anniversary of the grant date. Options expire ten years after the date of grant. The Company uses the Black-Scholes option-pricing model to recognize the value of share-based compensation expense for share-based payment awards under the Plans. Determining the appropriate fair-value model and calculating the fair value of share-based awards at the grant date requires considerable judgment, including estimating stock price volatility and expected option life. The Company develops estimates based on historical data and market information, which can change significantly over time. The fair value of each option is estimated on the grant date using a Black-Scholes option-pricing model with the following weighted average assumptions for stock options granted after the Spin-Off: Grant Year Options Granted Risk-Free Interest Rate Expected Life (a) Expected Volatility (b) Dividend Yield Weighted Average Fair Value of Options 2022 448 2.7 % 6.5 39.8 % — % $ 6.35 2021 454 1.1 % 6.5 38.4 % — % $ 13.84 2020 693 0.5 % 6.5 35.9 % — % $ 11.05 (a) Under the midpoint method, the expected option life is the midpoint between the contractual option life and the average vesting period for the options being granted. This resulted in an expected option life of 6.5 years for the options granted. (b) Because the Company’s equity shares have been traded for a relatively short period of time, expected volatility assumption was based on the volatility of related industry stocks. The following table represents the employee stock option activity during the year ended December 31, 2022: Number of Options Outstanding Weighted Average Exercise Price Number of Options Vested Weighted Average Exercise Price of Options Vested December 31, 2021 2,242 $ 21.38 840 $ 12.28 Granted 448 $ 14.39 Exercised (125) $ 8.69 Forfeited (245) $ 23.54 Expired (101) $ 14.03 December 31, 2022 2,219 $ 20.76 973 $ 16.90 The aggregate intrinsic value of options outstanding, vested, unvested and exercised as of and for the period ended December 31, 2022 is as follows: Options December 31, 2022 Outstanding $ 2,049 Vested 1,971 Unvested 78 Exercised 902 The intrinsic value is calculated as the difference between the market value of the underlying common stock and the exercise price of the options. There were 1,246 unvested and outstanding options at December 31, 2022. The weighted average contractual life for options outstanding, vested and expected to vest at December 31, 2022 was 6.95 years. Restricted Stock Under the Pennant Plans, the Company granted Restricted Stock to Pennant employees, Ensign employees, and to non-employee directors. All awards generally vest between three Non-Vested Restricted Awards Weighted Average Grant Date Fair Value December 31, 2021 1,493 $ 15.00 Granted 281 13.55 Vested (1,079) 14.92 Forfeited (277) 14.93 December 31, 2022 418 $ 14.26 |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
LEASES | LEASES The Company’s independent operating subsidiaries lease 49 senior living communities and its administrative offices under non-cancelable operating leases, most of which have initial lease terms ranging from 14 to 25 years. The Company’s independent operating subsidiaries also lease the administrative offices of 95 home health and hospice agencies which generally range from one . The existing leases with subsidiaries of Ensign are for initial terms of between 14 to 20 years. The total amount of rent expense included in Rent - cost of services paid to subsidiaries of Ensign was $13,595, $12,773, and 12,536, for the years ended December 31, 2022, 2021 and 2020, respectively. In addition to rent, each of the operating companies are required to pay the following: (1) all impositions and taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor); (2) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties; (3) all insurance required in connection with the leased properties and the business conducted on the leased properties; (4) all community maintenance and repair costs; and (5) all fees in connection with any licenses or authorizations necessary or appropriate for the leased properties and the business conducted on the leased properties. Twelve of the Company’s affiliated senior living communities, excluding the communities that are operated under the Ensign Leases (as defined herein), are operated under two separate master lease arrangements. Under these master leases, a breach at a single community could subject one or more of the other communities covered by the same master lease to the same default risk. Failure to comply with Medicare and Medicaid provider requirements is a default under several of the Company’s leases and master leases. With an indivisible lease, it is difficult to restructure the composition of the portfolio or economic terms of the master lease without the consent of the landlord. On January 27, 2022, affiliates of the Company, entered into Transfer Agreements with affiliates of Ensign, providing for the transfer of the operations of senior living communities. The closing of the Transaction was completed in two phases with the transfer of two operations on March 1, 2022 and the remainder transferred on April 1, 2022. As a result of the lease terminations, the Company reduced both the right of use assets and the lease liabilities by $42,506. Four of the terminated leases were part of master lease agreements. As a result of the transferred leases being removed from master lease arrangements, the remaining lease components under the master lease arrangements were modified which resulted in a net increase to the lease liability and ROU asset balance of $6,161 for the year ended December 31, 2022. The components of operating lease cost, are as follows: Year Ended December 31, 2022 2021 2020 Operating lease costs: Facility rent—cost of services $ 32,958 $ 35,958 $ 35,562 Office rent—cost of services 5,060 4,905 3,772 Sublease income — — (143) Rent—cost of services $ 38,018 $ 40,863 $ 39,191 General and administrative expense $ 370 $ 276 295 Variable lease cost (a) $ 6,281 $ 6,248 5,330 (a) Represents variable lease cost for operating leases, which costs include property taxes and insurance, common area maintenance, and consumer price index increases, incurred as part of our triple net lease, and which is included in cost of services for the years ended December 31, 2022, 2021 and 2020. The following table shows the lease maturity analysis for all leases as of December 31, 2022: Year Amount 2023 $ 35,553 2024 34,773 2025 33,358 2026 32,315 2027 31,732 Thereafter 245,181 Total lease payments 412,912 Less: present value adjustments (149,237) Present value of total lease liabilities 263,675 Less: current lease liabilities (16,633) Long-term operating lease liabilities $ 247,042 Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used its incremental borrowing rate based on the information available at each lease’s commencement date to determine each lease's operating lease liability. As of December 31, 2022, the weighted average remaining lease term is 12.7 years and the weighted average discount rate is 7.6%. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The provision for income tax expense for the years ended December 31, 2022, 2021 and 2020 is summarized as follows: Year Ended December 31, 2022 2021 2020 Current: Federal $ (193) $ 1,768 $ 5,058 State 146 566 1,478 Total current (47) 2,334 6,536 Deferred: Federal 1,334 (1,360) (3,348) State 362 (392) (838) Total deferred 1,696 (1,752) (4,186) Total income tax expense $ 1,649 $ 582 $ 2,350 A reconciliation of the federal statutory rate to the effective tax rate for income from continuing operations for the years ended December 31, 2022, 2021 and 2020, respectively, is comprised as follows: Year Ended December 31, 2022 2021 2020 Income tax expense at statutory rate 21.0 % 21.0 % 21.0 % State income taxes - net of federal benefit 4.7 3.9 2.7 Non-deductible meals and entertainment 0.6 1.8 0.3 Non-deductible equity compensation (a) (6.1) 19.4 — Section 162(m) limitation 0.6 2.1 — Non-deductible accrued bonus — 2.7 — Other non-deductible expenses 0.2 0.7 0.1 Deductible equity compensation (b) (0.8) (34.1) (10.8) Noncontrolling interest (1.7) 5.0 0.3 Other adjustments — (1.2) (0.5) Total income tax provision 18.5 % 21.3 % 13.1 % (a) During the year ended December 31, 2022, as a result of award modifications, approximately $2,567 of the share-based compensation expense related to restricted stock that originally did not result in a deferred tax asset because it would be subject to future limitation under IRC Section 162(m) resulted in a deferred tax asset. (b) During the year ended December 31, 2022, employees exercised stock options representing approximately 125 shares. During the year ended December 31, 2021, employees exercised stock options representing approximately 115 shares. During the year ended December 31, 2020, employees exercised stock options representing approximately 239 shares. These exercises and vestings resulted in tax benefits that reduced the Company's effective tax rate significantly in the years ended December 31, 2021 and December 31, 2020. The Company’s deferred tax assets and liabilities for the years ended December 31, 2022 and 2021 are summarized below. Year Ended December 31, 2022 2021 Deferred tax assets (liabilities): Accrued compensation $ 7,681 $ 6,402 Allowance for doubtful accounts 1,088 1,728 Net operating losses 2,537 — Lease liabilities 68,676 79,575 Insurance 961 953 Other 1,564 3,427 Gross deferred tax assets 82,507 92,085 Less: valuation allowance (29) (25) Net deferred tax assets 82,478 92,060 Depreciation and amortization (11,618) (8,432) Prepaid expenses (781) (907) Right of use asset (67,765) (78,656) State taxes (165) (217) Total deferred tax liabilities (80,329) (88,212) Net deferred tax assets (liabilities) $ 2,149 $ 3,848 As of December 31, 2022, the Company has federal and state net operating loss carryforwards available to offset future taxable income of $9,865 and $9,211, respectively. The federal net operating loss carryfoward does not expire, but is limited to 80% of taxable income in any given year. The state NOL carryforwards, if not utilized, will expire in years ending between December 31, 2027 and December 31, 2042. The Company believes that it is more likely than not that the benefit from the state NOL carryforwards in certain jurisdictions where we do not file a consolidated return will not be realized. In recognition of this risk, as of December 31, 2022, the Company has provided a valuation allowance of $29 on the deferred tax assets related to these states for the tax effect of the NOL carryforwards that will not be realized. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Year Ended December 31, 2022 2021 2020 Balance at January 1 $ 65 $ — $ — Additions for tax positions of prior years — 188 — Reductions for tax positions related to the current year (65) (123) — Balance at December 31 $ — $ 65 $ — None of unrecognized tax benefits net of their state benefits would affect the Company’s effective tax rate for the years ended December 31, 2022 and 2021. The Company classifies interest and/or penalties on income tax liabilities or refunds as additional income tax expense or income. Such amounts are not material. As of December 31, 2022, the Company is no longer subject to federal tax examinations for the fiscal years prior to 2019, and in most states, is no longer subject to state income tax examinations for fiscal years before 2018. The lapses for the years ended December 31, 2022 and 2021 had no impact on the Company’s unrecognized tax benefits. On December 29, 2022, the Consolidated Appropriations Act, 2023 was enacted. Among other things, the Consolidated Appropriations Act, 2023 introduced certain retirement plan changes and some limited income tax changes. The Company does not anticipate the Consolidated Appropriations Act, 2023 will have any impact on the Company’s income taxes. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Regulatory Matters - The Company provides services in complex and highly regulated industries. The Company’s compliance with applicable U.S. federal, state and local laws and regulations governing these industries may be subject to governmental review and adverse findings may result in significant regulatory action, which could include sanctions, damages, fines, penalties (many of which may not be covered by insurance), and even exclusion from government programs. The Company is a party to various regulatory and other governmental audits and investigations in the ordinary course of business and cannot predict the ultimate outcome of any federal or state regulatory survey, audit or investigation. While governmental audits and investigations are the subject of administrative appeals, the appeals process, even if successful, may take several years to resolve and penalties subject to appeal may remain in place during such appeals. The Department of Justice, CMS, or other federal and state enforcement and regulatory agencies may conduct additional investigations related to the Company's businesses. The Company believes that it is presently in compliance in all material respects with all applicable laws and regulations. Cost-Containment Measures - Government and third-party payors have instituted cost-containment measures designed to limit payments made to providers of healthcare services, may propose future cost-containment measures, and there can be no assurance that future measures designed to limit payments made to providers will not adversely affect the Company. Indemnities - From time to time, the Company enters into certain types of contracts that contingently require the Company to indemnify parties against third-party claims. These contracts primarily include (i) certain real estate leases, under which the Company may be required to indemnify property owners or prior operators for post-transfer environmental or other liabilities and other claims arising from the Company’s use of the applicable premises, (ii) operations transfer agreements, in which the Company agrees to indemnify past operators of agencies and communities the Company acquires against certain liabilities arising from the transfer of the operation and/or the operation thereof after the transfer, (iii) certain Ensign lending agreements, and (iv) certain agreements with management, directors and employees, under which the subsidiaries of the Company may be required to indemnify such persons for liabilities arising out of their employment relationships. The terms of such obligations vary by contract and, in most instances, a specific or maximum dollar amount is not explicitly stated therein. Generally, amounts under these contracts cannot be reasonably estimated until a specific claim is asserted. Consequently, because no claims have been asserted, no liabilities have been recorded for these obligations on the Company’s consolidated balance sheets for any of the periods presented. Litigation - The Company’s businesses involve a significant risk of liability given the age and health of the patients and residents served by its independent operating subsidiaries. The Company, its operating companies, and others in the industry may be subject to a number of claims and lawsuits, including professional liability claims, alleging that services provided have resulted in personal injury, elder abuse, wrongful death or other related claims. Healthcare litigation (including class action litigation) is common and is filed based upon a wide variety of claims and theories, and the Company is routinely subjected to these claims in the ordinary course of business, including potential claims related to patient care and treatment, and professional negligence, as well as employment related claims. If there were a significant increase in the number of these claims or an increase in amounts owing should plaintiffs be successful in their prosecution of these claims, this could materially adversely affect the Company’s business, financial condition, results of operations and cash flows. In addition, the defense of these lawsuits may result in significant legal costs, regardless of the outcome, and may result in large settlement amounts or damage awards. In addition to the potential lawsuits and claims described above, the Company is also subject to potential lawsuits under the False Claims Act (the “FCA”) and comparable state laws alleging submission of fraudulent claims for services to any healthcare program (such as Medicare) or payor. A violation may provide the basis for exclusion from federally funded healthcare programs. Such exclusions could have a correlative negative impact on the Company’s financial performance. Some states, including California, Arizona and Texas, have enacted similar whistleblower and false claims laws and regulations. In addition, the Deficit Reduction Act of 2005 created incentives for states to enact anti-fraud legislation modeled on the FCA, for which 18 states have qualified, including California and Texas, where we conduct business. As such, the Company could face increased scrutiny, potential liability and legal expenses and costs based on claims under state false claims acts in markets in which it conducts business. Under the Fraud Enforcement and Recovery Act (“FERA”) and its associated rules, healthcare providers face significant penalties for the knowing retention of government overpayments, even if no false claim was involved. Providers have an obligation to proactively exercise “reasonable diligence” to identify overpayments and return those overpayments to CMS within 60 days of “identification” or the date any corresponding cost report is due, whichever is later. Retention of overpayments beyond this period may create liability under the FCA. In addition, FERA protects whistleblowers (including employees, contractors, and agents) from retaliation. The Company cannot predict or provide any assurance as to the possible outcome of any litigation. If any litigation were to proceed, and the Company and its operating companies are subjected to, alleged to be liable for, or agree to a settlement of, claims or obligations under federal Medicare statutes, the FCA, or similar state and federal statutes and related regulations, the Company’s business, financial condition and results of operations and cash flows could be materially and adversely affected. Among other things, any settlement or litigation could involve the payment of substantial sums to settle any alleged civil violations, and may also include the assumption of specific procedural and financial obligations by the Company or its independent operating subsidiaries going forward under a corporate integrity agreement and/or other arrangement with the government. Medicare Revenue Recoupments - The Company is subject to probe reviews relating to Medicare services, billings and potential overpayments by Unified Program Integrity Contractors (“UPIC”), Recovery Audit Contractors (“RAC”), Zone Program Integrity Contractors (“ZPIC”), Program Safeguard Contractors (“PSC”), Supplemental Medical Review Contractors (“SMRC”) and Medicaid Integrity Contributors (“MIC”) programs, each of the foregoing collectively referred to as “Reviews.” As of December 31, 2022, eight of the Company’s independent operating subsidiaries had Reviews scheduled, on appeal or in dispute resolution process, both pre- and post-payment. If an operation fails an initial or subsequent Review, the operation could then be subject to extended Review, suspension of payment, or extrapolation of the identified error rate to all billing in the same time period. The Company, from time to time, receives record requests in Reviews which have resulted in claim denials on paid claims. The Company has appealed substantially all denials arising from these Reviews using the applicable appeals process. As of December 31, 2022, and through the filing of this Annual Report on Form 10-K, the Company’s independent operating subsidiaries have responded to the Reviews that are currently ongoing, on appeal or in dispute resolution process. The Company cannot predict the ultimate outcome of any regulatory and other governmental Reviews. While such reviews are the subject of administrative appeals, the appeals process, even if successful, may take several years to resolve. The costs to respond to and defend such Reviews may be significant and an adverse determination in such reviews may subject the Company to sanctions, damages, extrapolation of damage findings, additional recoupments, fines, other penalties (some of which may not be covered by insurance), and termination from Medicare programs which may, either individually or in the aggregate, have a material adverse effect on the Company's business and financial condition. From June 2021 to May 2022, one hospice provider number was subject to a Medicare payment suspension imposed by a UPIC. As of December 31, 2022, the total amount due from the government payor impacted by the suspension was $5,134 and was recorded in long-term other assets. In May 2022, the Company received communication that the Medicare payment suspension was terminated and the UPIC’s review was complete. The UPIC reviewed 107 patient records covering a 10-month period to determine whether, in its view, a Medicare overpayment was made. Based on the results of the review, the UPIC has alleged sampled and extrapolated overpayments of $5,134, and has withheld that amount through recoupment of Medicare payments. The Company is pursuing its appeal rights through the administrative appeals process, including contesting the methodology used by the UPIC to perform statistical extrapolation. At this stage of the review, based on the information currently available to the Company, the Company cannot predict the timing or the ultimate outcome of this review. As of December 31, 2022, we have an accrued liability that is immaterial for this Review which was recorded as an offset to revenue. Insurance - The Company retains risk for a substantial portion of potential claims for general and professional liability, workers’ compensation and automobile liability. The Company recognizes obligations associated with these costs, up to specified deductible limits in the period in which a claim is incurred, including with respect to both reported claims and claims incurred but not reported. The general and professional liability insurance has a retention limit of $150 per claim with a $500 corridor as an additional out-of-pocket retention we must satisfy for claims within the policy year before the carrier will reimburse losses. The workers’ compensation insurance has a retention limit of $250 per claim, except for policies held in Texas, Washington and Wyoming which are subject to state insurance and possess their own limits. |
COMMON STOCK REPURCHASE PROGRAM
COMMON STOCK REPURCHASE PROGRAM | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
COMMON STOCK REPURCHASE PROGRAM | COMMON STOCK REPURCHASE PROGRAMOn December 12, 2022, the Board of the Directors of the Company approved a share repurchase program under which the Company may repurchase up to $1,000 of its common stock. Under the share repurchase program, the Company may repurchase shares from time to time through open market purchases, including through the use of trading plans intended to comply with Rule 10b5-1 under the Securities Exchange Act of 1934. The timing and total amount of stock repurchases will depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, and other considerations. The authorization expires on December 12, 2023, and may be suspended or discontinued at any time and does not obligate the company to acquire any amount of common stock. No shares were repurchased during the year ended December 31, 2022. |
BASIS OF PRESENTATION AND SUM_2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying consolidated financial statements of the Company (the “Financial Statements”) reflect the Company’s financial position for the years ended December 31, 2022 and 2021, and the Company’s results of operations and cash flows for the years ended December 31, 2022, 2021 and 2020 and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the regulations of the Securities and Exchange Commission (“SEC”). The Company presents noncontrolling interests within the equity section of its consolidated balance sheets and the amount of consolidated net income (loss) that is attributable to The Pennant Group, Inc. and the noncontrolling interest in its consolidated statements of income. |
Consolidation | All intercompany transactions and balances between the various legal entities comprising the Company have been eliminated in consolidation. The consolidated statements of income reflect income that is attributable to the Company and the noncontrolling interest. The Company consists of various limited liability companies and corporations established to operate home health, hospice, home care, and senior living operations. The Financial Statements include the accounts of all entities controlled by the Company through its ownership of a majority voting interest. Revenue was derived from transactional information specific to the Company’s services provided. The costs in the consolidated statements of income reflect direct costs and allocated costs prior to the Spin-Off. |
Estimates and Assumptions | The preparation of the Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Financial Statements and the reported amounts of revenue and expenses during the reporting periods. The most significant estimates in the Financial Statements relate to self-insurance reserves, revenue, intangible assets and goodwill, right-of-use assets and lease liabilities for leases greater than 12 months, and income taxes. Actual results could differ from those estimates. |
Revenue Recognition | Revenues are recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled from patients and third-party payors, including Medicaid, Medicare and insurers (private and Medicare replacement plans), in exchange for providing patient care. Revenue recognized from healthcare services are adjusted for estimates of variable consideration to arrive at the transaction price. The Company determines the transaction price based on contractually agreed-upon amounts or rate, adjusted for estimates of variable consideration. The Company uses the expected value method in determining the variable component that should be used to arrive at the transaction price, using contractual agreements and historical reimbursement experience within each payor type. The amount of variable consideration which is included in the transaction price may be constrained, and is included in the net revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If actual amounts of consideration ultimately received differ from the Company’s estimates, the Company adjusts these estimates, which would effect net service revenue in the period such variances become known. Revenue is recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled from patients and third-party payors, including Medicaid, Medicare and managed care programs (Commercial, Medicare Advantage and Managed Medicaid plans), in exchange for providing patient care. The healthcare services in home health and hospice patient contracts include routine services in exchange for a contractual agreed-upon amount or rate. Routine services are treated as a single performance obligation satisfied over time as services are rendered. As such, patient care services represent a bundle of services that are not capable of being distinct within the context of the contract. Additionally, there may be ancillary services which are not included in the rates for routine services, but instead are treated as separate performance obligations satisfied at a point in time, if and when those services are rendered. Revenue recognized from healthcare services are adjusted for estimates of variable consideration to arrive at the transaction price. The Company determines the transaction price based on contractually agreed-upon amounts or rate, adjusted for estimates of variable consideration. The Company uses the expected value method in determining the variable component that should be used to arrive at the transaction price, using contractual agreements and historical reimbursement experience within each payor type. The amount of variable consideration which is included in the transaction price may be constrained, and is included in the net revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If actual amounts of consideration ultimately received differ from the Company’s estimates, the Company adjusts these estimates, which would affect net service revenue in the period such variances become known. Medicare Revenue Net service revenue is recognized in accordance with the Patient Driven Groupings Model (“PDGM”). Under PDGM, Medicare provides agencies with payments for each 30-day payment period provided to beneficiaries. If a beneficiary is still eligible for care after the end of the first 30-day payment period, a second 30-day payment period can begin. There are no limits to the number of periods of care a beneficiary who remains eligible for the home health benefit can receive. While payment for each 30-day payment period is adjusted to reflect the beneficiary’s health condition and needs, a special outlier provision exists to ensure appropriate payment for those beneficiaries that have the most expensive care needs. The payment under the Medicare program is also adjusted for certain variables including, but not limited to: (a) a low utilization payment adjustment if the number of visits is below an established threshold that varies based on the diagnosis of a beneficiary; (b) a partial payment if the patient transferred to another provider or the Company received a patient from another provider before completing the period of care; (c) adjustment to the admission source of claim if it is determined that the patient had a qualifying stay in a post-acute care setting within 14 days prior to the start of a 30-day payment period; (d) the timing of the 30-day payment period provided to a patient in relation to the admission date, regardless of whether the same home health provider provided care for the entire series of episodes; (e) changes to the acuity of the patient during the previous 30-day payment period; (f) changes in the base payments established by the Medicare program; (g) adjustments to the base payments for case mix and geographic wages; and (h) recoveries of overpayments. The Company adjusts Medicare revenue on completed episodes to reflect differences between estimated and actual payment amounts, an inability to obtain appropriate billing documentation and other reasons unrelated to credit risk. Therefore, the Company believes that its reported net service revenue and patient accounts receivable will be the net amounts to be realized from Medicare for services rendered. In addition to revenue recognized on completed episodes and periods, the Company also recognizes a portion of revenue associated with episodes and periods in progress. Episodes in progress are 30-day payment periods that begin during the reporting period but were not completed as of the end of the period. As such, the Company estimates revenue and recognizes it on a daily basis. The primary factors underlying this estimate are the number of episodes in progress at the end of the reporting period, expected Medicare revenue per period of care or episode of care and the Company’s estimate of the average percentage complete based on the scheduled end of period and end of episode dates. Non-Medicare Revenue Episodic Based Revenue - The Company recognizes revenue in a similar manner as it recognizes Medicare revenue for episodic-based rates that are paid by other insurance carriers, including Medicare Advantage programs; however, these rates can vary based upon the negotiated terms. Non-episodic Based Revenue - Revenue is recognized on an accrual basis based upon the date of service at amounts equal to its established or estimated per visit rates, as applicable. Hospice Revenue Revenue is recognized on an accrual basis based upon the date of service at amounts equal to the estimated payment rates. The estimated payment rates are calculated as daily rates for each of the levels of care the Company delivers. Revenue is adjusted for an inability to obtain appropriate billing documentation or authorizations acceptable to Medicare and other reasons unrelated to credit risk. Additionally, as Medicare hospice revenue is subject to an inpatient cap and an overall payment cap, the Company monitors its provider numbers and estimates amounts due back to Medicare if a cap has been exceeded. The Company regularly evaluates and records these adjustments as a reduction to revenue and an increase to other accrued liabilities. Senior Living Revenue The Company has elected the lessor practical expedient within ASC Topic 842, Leases (“ASC 842”) and therefore recognizes, measures, presents, and discloses the revenue for services rendered under the Company’s senior living residency agreements based upon the predominant component, either the lease or non-lease component, of the contracts. The Company has determined that the services included under the Company’s senior living residency agreements each have the same timing and pattern of transfer. The Company recognizes revenue under ASC Topic 606, Revenue from Contracts with Customers for its senior residency agreements, for which it has determined that the non-lease components of such residency agreements are the predominant component of each such contract. |
Cash | Cash consists of petty cash and bank deposits and therefore approximates fair value. The Company places its cash with high credit quality financial institutions. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts receivable consist primarily of amounts due from Medicare and Medicaid programs, other government programs, managed care health plans and private payor sources, net of estimates for variable consideration. The allowance for doubtful accounts is the Company’s best estimate of current expected credit losses in the accounts receivable balance. |
Property and Equipment | Property and equipment are initially recorded at their historical cost. Repairs and maintenance are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the depreciable assets (ranging from three |
Impairment of Long-Lived Assets | The Company reviews the carrying value of long-lived assets that are held and used in the independent operating subsidiaries for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of these assets is determined based upon expected undiscounted future net cash flows from the operating subsidiary to which the assets relate, utilizing management’s best estimate, appropriate assumptions, and projections at the time. If the carrying value is determined to be unrecoverable from future operating cash flows, the asset is deemed impaired and an impairment loss would be recognized to the extent the carrying value exceeded the estimated fair value of the asset. The Company estimates the fair value of assets based on the estimated future discounted cash flows of the asset. |
Intangible Assets and Goodwill | The Company’s indefinite-lived intangible assets consist of trade names and Medicare and Medicaid licenses. The Company tests indefinite-lived intangible assets for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable. The Company did not identify any indefinite-lived intangible asset impairment during the years ended December 31, 2022, 2021 and 2020.Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations. Goodwill is subject to annual test for impairment as of the beginning of the fourth quarter or more frequently if events or changes indicate that the Company's goodwill might be impaired. The Company assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then it is required to perform a quantitative impairment test by comparing the fair value with the carrying amount of the reporting unit. If the carrying amount of a reporting unit exceeds its fair value, then the Company records an impairment of goodwill equal to the amount that the carrying amount of a reporting unit exceeds its fair value. As of December 31, 2022, we evaluated potential triggering events that might be indicators that our goodwill and indefinite lived intangibles were impaired. As a result of our evaluation, no goodwill or indefinite intangible asset impairments were recorded during the years ended December 31, 2022, 2021 and 2020. See further discussion at Note 9, Goodwill and Intangible Assets, Net. |
Fair Value of Financial Instruments | The Company’s financial instruments consist principally of cash, accounts receivable, accounts payable, accrued liabilities, and debt. The Company believes all of the financial instruments’ recorded values approximate fair values because of their nature or respective short durations. The Company determines fair value measurements based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. These tiers include: Level 1, defined as observable inputs such as quoted market prices in active markets; Level 2, defined as inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions. |
Income Taxes | Deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities at tax rates in effect when such temporary differences are expected to reverse. The Company generally expects to fully utilize its deferred tax assets; however, when necessary, the Company records a valuation allowance to reduce its net deferred tax assets to the amount that is more likely than not to be realized. In determining the need for a valuation allowance or the need for and magnitude of liabilities for uncertain tax positions, the Company makes certain estimates and assumptions. These estimates and assumptions are based on, among other things, knowledge of operations, markets, historical trends and likely future changes and, when appropriate, the opinions of advisors with knowledge and expertise in certain fields. Due to certain risks associated with the Company’s estimates and assumptions, actual results could differ. |
Noncontrolling Interest | The noncontrolling interest in a subsidiary is initially recognized at estimated fair value on the acquisition date and is presented within total equity in the Company's consolidated balance sheets. The Company presents the noncontrolling interest and the amount of consolidated net income (loss) attributable to The Pennant Group, Inc. in its consolidated statements of income. Net income per share is calculated based on net income (loss) attributable to The Pennant Group, Inc.'s stockholders. The carrying amount of the noncontrolling interest is adjusted based on an allocation of subsidiary earnings based on ownership interest. |
Share-Based Compensation | The Company measures and recognizes compensation expense for all share-based payment awards, including employee stock options and restricted stock, made to employees and Pennant’s directors based on estimated fair values, ratably over the requisite service period of the award. The Company accounts for forfeitures as they occur. Net income has been reduced as a result of the recognition of the fair value of all stock options and restricted stock awards issued, the amount of which is contingent upon the number of future grants and other variables. |
BASIS OF PRESENTATION AND SUM_3
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of insurance liability | The following table presents details of the Company's general and professional liability and worker’s compensation, including amounts accrued for the periods indicated in other accrued liabilities and other long-term liabilities in our accompanying balance sheets. The amounts accrued below represent the total estimated liability for individual claims that are less than our noted insurance coverage amounts, which includes outstanding claims and claims incurred but not reported. The amounts are reported gross of reinsurance receivable of $1,561 and $927 included in restricted and other assets for the years ended December 31, 2022 and 2021, respectively and $188 included in prepaid expenses and other current assets for the year ended December 31, 2022. December 31, 2022 2022 2021 Type of Insurance General and professional liability $ 3,690 $ 2,007 Workers’ compensation 3,810 4,899 Total estimated liability 7,500 6,906 Less: long-term portion, included in other long-term liabilities (5,748) (5,293) Current portion of estimated liability, included in other accrued liabilities $ 1,752 $ 1,613 |
COMPUTATION OF NET INCOME PER_2
COMPUTATION OF NET INCOME PER COMMON SHARE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of basic and diluted net income per share | The following table sets forth the computation of basic and diluted net income per share for the periods presented: Year Ended December 31, 2022 2021 2020 Numerator: Net income $ 7,243 $ 2,148 $ 15,553 Less: net income (loss) attributable to noncontrolling interests 600 (548) (191) Net income attributable to The Pennant Group, Inc. $ 6,643 $ 2,696 $ 15,744 Denominator: Weighted average shares outstanding for basic net income per share 29,064 28,406 28,029 Plus: incremental shares from assumed conversion (a) 1,095 2,236 2,199 Adjusted weighted average common shares outstanding for diluted income per share 30,159 30,642 30,228 Earnings Per Share: Basic net income per common share $ 0.23 $ 0.09 $ 0.56 Diluted net income per common share $ 0.22 $ 0.09 $ 0.52 (a) The calculation of dilutive shares outstanding excludes out-of-the-money stock options (i.e., such options’ exercise prices were greater than the average market price of our common shares for the period) because their inclusion would have been antidilutive. Options outstanding which are anti-dilutive and therefore not factored into the weighted average common shares amount above were 1,860, 478, and 93 for the years ended December 31, 2022, 2021 and 2020, respectively. |
REVENUE AND ACCOUNTS RECEIVAB_2
REVENUE AND ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of revenue by major payor source | Revenue by payor for the years ended December 31, 2022, 2021 and 2020, is summarized in the following tables: Year Ended December 31, 2022 Home Health and Hospice Services Home Health Services Hospice Services Senior Living Services Total Revenue Revenue % Medicare $ 91,415 $ 140,338 $ — $ 231,753 49.0 % Medicaid 9,749 15,568 37,617 62,934 13.3 Subtotal 101,164 155,906 37,617 294,687 62.3 Managed care 57,824 4,277 — 62,101 13.1 Private and other (a) 22,741 337 93,375 116,453 24.6 Total revenue $ 181,729 $ 160,520 $ 130,992 $ 473,241 100.0 % (a) Private and other payors in our home health and hospice services segment includes revenue from all payors generated in our home care operations. Year Ended December 31, 2021 Home Health and Hospice Services Home Health Services Hospice Services Senior Living Services Total Revenue Revenue % Medicare $ 80,849 $ 135,939 $ — $ 216,788 49.3 % Medicaid 8,935 12,103 37,317 58,355 13.3 Subtotal 89,784 148,042 37,317 275,143 62.6 Managed care 46,167 3,196 — 49,363 11.2 Private and other (a) 22,007 374 92,807 115,188 26.2 Total revenue $ 157,958 $ 151,612 $ 130,124 $ 439,694 100.0 % (a) Private and other payors in our home health and hospice services segment includes revenue from all payors generated in our home care operations. Year Ended December 31, 2020 Home Health and Hospice Services Home Health Services Hospice Services Senior Living Services Total Revenue Revenue % Medicare $ 58,399 $ 119,873 $ — $ 178,272 45.6 % Medicaid 7,645 12,462 36,780 56,887 14.5 Subtotal 66,044 132,335 36,780 235,159 60.1 Managed care 31,572 1,546 — 33,118 8.5 Private and other (a) 21,968 194 100,514 122,676 31.4 Total revenue $ 119,584 $ 134,075 $ 137,294 $ 390,953 100.0 % (a) Private and other payors in our home health and hospice services segment includes revenue from all payors generated in our home care operations. |
Schedule of accounts receivable | Accounts receivable as of December 31, 2022 and December 31, 2021 is summarized in the following table: December 31, 2022 December 31, 2021 Medicare $ 31,321 $ 31,327 Medicaid 10,700 11,793 Managed care 9,370 7,901 Private and other 2,621 3,821 Accounts receivable, gross 54,012 54,842 Less: allowance for doubtful accounts (592) (902) Accounts receivable, net $ 53,420 $ 53,940 |
Allowance for doubtful accounts | The following table summarizes the activity for our allowance for doubtful accounts for the years ended December 31, 2022, 2021 and 2020: Year Ended December 31, 2022 2021 2020 Balance at beginning of period $ 902 $ 643 $ 677 Additions to bad debt expense 881 616 560 Write-offs of uncollectible accounts (1,191) (357) (594) Balance at end of period $ 592 $ 902 $ 643 Concentrations- Credit Risk Credit Risk - The Company has significant accounts receivable balances, the collectability of which is dependent on the availability of funds from certain governmental programs, primarily Medicare and Medicaid. These receivables represent the only significant concentration of credit risk for the Company. The Company does not believe there are significant credit risks associated with these governmental programs. The Company believes that an appropriate allowance has been recorded for the possibility of these receivables proving uncollectible, and continually monitors and adjusts these allowances as necessary. The Company’s gross receivables from the Medicare and Medicaid programs accounted for approximately 77.8% and 78.6% of its total gross accounts receivable as of December 31, 2022 and December 31, 2021, respectively. Revenue from reimbursement under the Medicare and Medicaid programs accounted for 62.3%, 62.6%, and 60.1% of the Company's revenue for the years ended December 31, 2022, 2021 and 2020, respectively. |
BUSINESS SEGMENTS (Tables)
BUSINESS SEGMENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Schedule of financial data combined by business segment | The following table presents certain financial information regarding our reportable segments, general and administrative expenses are not allocated to the reportable segments and are included in “All Other”. Home Health and Hospice Services Senior Living Services All Other Total Year Ended December 31, 2022 Revenue $ 342,249 $ 130,992 $ — $ 473,241 Segment Adjusted EBITDAR from Operations $ 61,827 $ 37,563 $ (31,435) $ 67,955 Year Ended December 31, 2021 Revenue $ 309,570 $ 130,124 $ — $ 439,694 Segment Adjusted EBITDAR from Operations $ 55,565 $ 37,517 $ (26,208) $ 66,874 Year Ended December 31, 2020 Revenue $ 253,659 $ 137,294 $ — $ 390,953 Segment Adjusted EBITDAR from Operations $ 49,501 $ 48,309 $ (22,762) $ 75,048 |
Schedule of reconciliation of total combined adjusted EBITDAR from operations for our reportable segments to combined income from operations | The table below provides a reconciliation of Segment Adjusted EBITDAR from Operations above to income from operations: Year Ended December 31, 2022 2021 2020 Segment Adjusted EBITDAR from Operations $ 67,955 $ 66,874 $ 75,048 Less: Depreciation and amortization 4,900 4,784 4,675 Rent—cost of services 38,018 40,863 39,191 Other income (31) (24) 225 Adjustments to Segment EBITDAR from Operations: Less: Costs at start-up operations (a) 1,435 1,045 1,787 Share-based compensation expense (b) 3,363 10,040 8,335 Acquisition related costs and credit allowances (c) 731 80 99 Transition services costs (d) 77 2,008 1,181 COVID-19 Related costs and supplies (e) — — 447 Loss related to senior living operations transferred to Ensign (f) 6,103 2,835 — Unusual or non-recurring charges (g) 1,220 — — Add: Net income (loss) attributable to noncontrolling interest 600 (548) (191) Consolidated Income from operations $ 12,739 $ 4,695 $ 18,917 (a) Represents results related to start-up operations. This amount excludes rent and depreciation and amortization expense related to such operations. (b) Share-based compensation expense and related payroll taxes incurred, including the impact of the modification of certain restricted stock units described below in Note 12, Options and Award s, to the Consolidated Financial Statements. Share-based compensation expense and related payroll taxes are included in cost of services and general and administrative expense. (c) Non-capitalizable costs associated with acquisitions and credit allowances for amounts in dispute with the prior owners of certain acquired operations. (d) Costs identified as redundant or non-recurring incurred by the Company as a result of the Spin-off. The 2021 amounts represents part of the costs incurred under the Transition Services Agreement. All amounts are included in general and administrative expense. Fees incurred under the Transition Services Agreement were $1,561, $3,124, and $5,536 for the year ended December 31, 2022, 2021 and 2020, respectively. (e) Beginning in the first quarter of fiscal year 2021, we updated our definition of Segment Adjusted EBITDAR to no longer include an adjustment for COVID-19 expenses offset by the amount of sequestration relief. COVID-19 expenses continue to be part of daily operations for which less specific identification is visible. Furthermore, the sequestration relief was extended through December 31, 2021. Sequestration relief was $3,555 for the year ended December 31, 2021. The 2020 amount represents incremental costs incurred as part of the Company's response to COVID-19 including direct medical supplies, labor, and other expenses, net of $2,765 in increased revenue related to the 2% payment increase in Medicare reimbursements for sequestration relief for the year ended December 31, 2020. (f) On January 27, 2022, affiliates of the Company, entered into certain operations transfer agreements (collectively, the “Transfer Agreements”) with affiliates of Ensign, providing for the transfer of the operations of certain senior living communities (the “Transaction”) from affiliates of the Company to affiliates of Ensign. The closing of the Transaction was completed in two phases with the transfer of two operations on March 1, 2022 and the remainder transferred on April 1, 2022. The amount includes $6,500 for the year ended December 31, 2022 to cover post-closing capital expenditures and operating losses related to one of the communities transferred on April 1, 2022. The amount above also includes an offset of $397 for the year ended December 31, 2022, for the related net impact on revenue and cost of service attributable to the transferred entities. This amount excludes rent and depreciation and amortization expense related to such operations. During year ended December 31, 2021, the Company impaired certain leasehold improvements included in property and equipment totaling $2,835 primarily related to the operations included in the transaction with Ensign. (g) Represents unusual or non-recurring charges for legal services, implementation costs, integration costs, and consulting fees including $958 in general and administrative expenses and $262 in cost of services for the year ended December 31, 2022. |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of operations acquired in business combinations | The table below presents the allocation of the purchase price for the operations acquired in acquisitions during the years ended December 31, 2022, 2021 and 2020 as noted above: December 31, 2021 2022 2021 2020 Equipment, furniture, and fixtures $ 188 $ 62 $ 174 Goodwill 5,232 7,821 25,211 Other indefinite-lived intangible assets 4,887 6,242 14,026 Intangible Assets 10 — — Other assets — 10 — Liabilities assumed (187) — (172) Total acquisitions $ 10,130 $ 14,135 $ 39,239 Less: noncontrolling interest and additional paid in capital (a) — — (4,646) Less: cash paid in prior year (held in escrow) (b) — (585) (1,400) Total cash paid for acquisitions $ 10,130 $ 13,550 $ 33,193 (a) Consists of the of noncontrolling interest related to Scripps contribution of assets to the joint venture. (b) Total cash paid for acquisitions for the year ended December 31, 2021 and the year ended December 31, 2020 includes $585 and $1,400 as an escrow deposit that was paid in the prior year. |
PROPERTY AND EQUIPMENT_NET (Tab
PROPERTY AND EQUIPMENT—NET (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment, net | Property and equipment, net consist of the following: December 31, 2021 2022 2021 Land $ 96 $ — Building 1,890 — Leasehold improvements 18,759 11,660 Equipment 25,532 22,415 Furniture and fixtures 1,151 1,199 47,428 35,274 Less: accumulated depreciation (20,807) (18,486) Property and equipment, net $ 26,621 $ 16,788 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS—NET (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of activity in goodwill by segment | The following table represents activity in goodwill by segment as of and for the year ended December 31, 2022: Home Health and Hospice Services Senior Living Services Total December 31, 2020 $ 62,802 $ 3,642 $ 66,444 Additions 7,821 — 7,821 December 31, 2021 70,623 3,642 74,265 Additions 5,232 — 5,232 December 31, 2022 $ 75,855 $ 3,642 $ 79,497 |
Schedule of other indefinite-lived intangible assets | Other indefinite-lived intangible assets consist of the following: December 31, 2022 2021 Trade name $ 1,385 $ 1,355 Medicare and Medicaid licenses 57,232 52,375 Total $ 58,617 $ 53,730 |
OTHER ACCRUED LIABILITIES (Tabl
OTHER ACCRUED LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of other accrued liabilities | Other accrued liabilities consist of the following: December 31, 2022 December 31, 2021 Refunds payable $ 2,244 $ 3,095 Deferred revenue 1,592 1,456 Resident deposits 4,315 5,111 Contract liabilities (CARES Act advance payments) — 6,211 Property taxes 1,027 1,102 Deferred state relief funds 1,479 — Accrued self-insurance liabilities 3,546 1,613 Other 2,481 2,896 Other accrued liabilities $ 16,684 $ 21,484 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | Long-term debt, net consists of the following: December 31, 2022 2022 2021 Revolving credit facility $ 64,500 $ 53,500 Less: unamortized debt issuance costs (a) (1,608) (2,128) Long-term debt, net $ 62,892 $ 51,372 (a) Amortization expense for debt issuance costs was $520, $488, and $330 for the years ended December 31, 2022, 2021 and 2020, respectively, and is recorded in interest expense, net on the consolidated statements of income. |
OPTIONS AND AWARDS (Tables)
OPTIONS AND AWARDS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of total share-based compensation expense | Total share-based compensation expense for all of the Plans for the years ended December 31, 2022, 2021 and 2020: Year Ended December 31, 2022 2021 2020 Share-based compensation expense related to stock options 3,266 3,093 1,660 Share-based compensation expense related to Restricted Stock (467) 6,141 6,200 Share-based compensation expense related to Restricted Stock to non-employee directors 287 806 475 Total share-based compensation $ 3,086 $ 10,040 $ 8,335 In future periods, the Company estimates it will recognize the following share-based compensation expense for unvested stock options and unvested Restricted Stock, which were unvested as of December 31, 2022: Unrecognized Compensation Expense Weighted Average Recognition Period (in years) Unvested stock options $ 10,005 3.3 Unvested Restricted Stock 3,126 4.5 Total unrecognized share-based compensation expense $ 13,131 |
Schedule of stock options granted fair value assumptions | The fair value of each option is estimated on the grant date using a Black-Scholes option-pricing model with the following weighted average assumptions for stock options granted after the Spin-Off: Grant Year Options Granted Risk-Free Interest Rate Expected Life (a) Expected Volatility (b) Dividend Yield Weighted Average Fair Value of Options 2022 448 2.7 % 6.5 39.8 % — % $ 6.35 2021 454 1.1 % 6.5 38.4 % — % $ 13.84 2020 693 0.5 % 6.5 35.9 % — % $ 11.05 (a) Under the midpoint method, the expected option life is the midpoint between the contractual option life and the average vesting period for the options being granted. This resulted in an expected option life of 6.5 years for the options granted. (b) Because the Company’s equity shares have been traded for a relatively short period of time, expected volatility assumption was based on the volatility of related industry stocks. |
Schedule of employee stock option activity | The following table represents the employee stock option activity during the year ended December 31, 2022: Number of Options Outstanding Weighted Average Exercise Price Number of Options Vested Weighted Average Exercise Price of Options Vested December 31, 2021 2,242 $ 21.38 840 $ 12.28 Granted 448 $ 14.39 Exercised (125) $ 8.69 Forfeited (245) $ 23.54 Expired (101) $ 14.03 December 31, 2022 2,219 $ 20.76 973 $ 16.90 |
Schedule of aggregate intrinsic value of options outstanding, vested, expected to vest and exercisable | The aggregate intrinsic value of options outstanding, vested, unvested and exercised as of and for the period ended December 31, 2022 is as follows: Options December 31, 2022 Outstanding $ 2,049 Vested 1,971 Unvested 78 Exercised 902 |
Summary of non-vested restricted stock awards | A summary of the status of Pennant’s non-vested Restricted Stock, and changes during the period ended December 31, 2022, is presented below: Non-Vested Restricted Awards Weighted Average Grant Date Fair Value December 31, 2021 1,493 $ 15.00 Granted 281 13.55 Vested (1,079) 14.92 Forfeited (277) 14.93 December 31, 2022 418 $ 14.26 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Schedule of operating lease cost | The components of operating lease cost, are as follows: Year Ended December 31, 2022 2021 2020 Operating lease costs: Facility rent—cost of services $ 32,958 $ 35,958 $ 35,562 Office rent—cost of services 5,060 4,905 3,772 Sublease income — — (143) Rent—cost of services $ 38,018 $ 40,863 $ 39,191 General and administrative expense $ 370 $ 276 295 Variable lease cost (a) $ 6,281 $ 6,248 5,330 (a) Represents variable lease cost for operating leases, which costs include property taxes and insurance, common area maintenance, and consumer price index increases, incurred as part of our triple net lease, and which is included in cost of services for the years ended December 31, 2022, 2021 and 2020. |
Schedule of future minimum lease payments | The following table shows the lease maturity analysis for all leases as of December 31, 2022: Year Amount 2023 $ 35,553 2024 34,773 2025 33,358 2026 32,315 2027 31,732 Thereafter 245,181 Total lease payments 412,912 Less: present value adjustments (149,237) Present value of total lease liabilities 263,675 Less: current lease liabilities (16,633) Long-term operating lease liabilities $ 247,042 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of provision for income taxes on continuing operations | The provision for income tax expense for the years ended December 31, 2022, 2021 and 2020 is summarized as follows: Year Ended December 31, 2022 2021 2020 Current: Federal $ (193) $ 1,768 $ 5,058 State 146 566 1,478 Total current (47) 2,334 6,536 Deferred: Federal 1,334 (1,360) (3,348) State 362 (392) (838) Total deferred 1,696 (1,752) (4,186) Total income tax expense $ 1,649 $ 582 $ 2,350 |
Reconciliation of federal statutory rate to effective tax rate | A reconciliation of the federal statutory rate to the effective tax rate for income from continuing operations for the years ended December 31, 2022, 2021 and 2020, respectively, is comprised as follows: Year Ended December 31, 2022 2021 2020 Income tax expense at statutory rate 21.0 % 21.0 % 21.0 % State income taxes - net of federal benefit 4.7 3.9 2.7 Non-deductible meals and entertainment 0.6 1.8 0.3 Non-deductible equity compensation (a) (6.1) 19.4 — Section 162(m) limitation 0.6 2.1 — Non-deductible accrued bonus — 2.7 — Other non-deductible expenses 0.2 0.7 0.1 Deductible equity compensation (b) (0.8) (34.1) (10.8) Noncontrolling interest (1.7) 5.0 0.3 Other adjustments — (1.2) (0.5) Total income tax provision 18.5 % 21.3 % 13.1 % (a) During the year ended December 31, 2022, as a result of award modifications, approximately $2,567 of the share-based compensation expense related to restricted stock that originally did not result in a deferred tax asset because it would be subject to future limitation under IRC Section 162(m) resulted in a deferred tax asset. (b) During the year ended December 31, 2022, employees exercised stock options representing approximately 125 shares. During the year ended December 31, 2021, employees exercised stock options representing approximately 115 shares. During the year ended December 31, 2020, employees exercised stock options representing approximately 239 shares. These exercises and vestings resulted in tax benefits that reduced the Company's effective tax rate significantly in the years ended December 31, 2021 and December 31, 2020. |
Schedule of deferred tax assets and liabilities | The Company’s deferred tax assets and liabilities for the years ended December 31, 2022 and 2021 are summarized below. Year Ended December 31, 2022 2021 Deferred tax assets (liabilities): Accrued compensation $ 7,681 $ 6,402 Allowance for doubtful accounts 1,088 1,728 Net operating losses 2,537 — Lease liabilities 68,676 79,575 Insurance 961 953 Other 1,564 3,427 Gross deferred tax assets 82,507 92,085 Less: valuation allowance (29) (25) Net deferred tax assets 82,478 92,060 Depreciation and amortization (11,618) (8,432) Prepaid expenses (781) (907) Right of use asset (67,765) (78,656) State taxes (165) (217) Total deferred tax liabilities (80,329) (88,212) Net deferred tax assets (liabilities) $ 2,149 $ 3,848 |
Schedule of unrecognized tax benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Year Ended December 31, 2022 2021 2020 Balance at January 1 $ 65 $ — $ — Additions for tax positions of prior years — 188 — Reductions for tax positions related to the current year (65) (123) — Balance at December 31 $ — $ 65 $ — |
DESCRIPTION OF BUSINESS (Detail
DESCRIPTION OF BUSINESS (Details) | Dec. 31, 2022 agency |
Home Health and Hospice Services | |
Segment Reporting Information [Line Items] | |
Number of service providers | 95 |
Senior Living Services | |
Segment Reporting Information [Line Items] | |
Number of properties under lease | 49 |
BASIS OF PRESENTATION AND SUM_4
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - NARRATIVE (Details) | 12 Months Ended | ||
Dec. 31, 2022 USD ($) community | Dec. 31, 2021 USD ($) community | Dec. 31, 2020 USD ($) | |
Unusual or Infrequent Item, or Both [Line Items] | |||
Impairment of long-lived assets | $ 218,000 | $ 2,835,000 | $ 0 |
Number of communities impaired | community | 6 | 6 | |
Intangible asset impairments | $ 0 | $ 0 | 0 |
General and professional liability, retention limit | 150,000 | ||
Out-of-pocket retention | 500,000 | ||
Workers' compensation, retention limit | 250,000 | ||
Reinsurance receivables | 1,561,000 | 927,000 | |
Individual stop-loss insurance coverage | 325,000 | ||
Medical benefits liability | 1,794,000 | ||
Share-based compensation | 3,086,000 | 10,040,000 | 8,335,000 |
General and administrative expense | |||
Unusual or Infrequent Item, or Both [Line Items] | |||
Share-based compensation | 647,000 | $ 7,964,000 | 7,222,000 |
Prepaid Expenses and Other Current Assets | |||
Unusual or Infrequent Item, or Both [Line Items] | |||
Reinsurance receivables | $ 188,000 | ||
Minimum | |||
Unusual or Infrequent Item, or Both [Line Items] | |||
Property and equipment estimated useful lives | 3 years | ||
Maximum | |||
Unusual or Infrequent Item, or Both [Line Items] | |||
Property and equipment estimated useful lives | 40 years | ||
CARES Act | |||
Unusual or Infrequent Item, or Both [Line Items] | |||
Accrued payroll taxes employer portion | $ 7,836,000 | ||
The coronavirus aid, relief, and economic security act, advance payments received | $ 27,997,000 |
BASIS OF PRESENTATION AND SUM_5
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - SUMMARY OF INSURANCE LIABILITY (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Accounting Policies [Abstract] | ||
General and professional liability | $ 3,690 | $ 2,007 |
Workers’ compensation | 3,810 | 4,899 |
Total estimated liability | 7,500 | 6,906 |
Less: long-term portion, included in other long-term liabilities | (5,748) | (5,293) |
Current portion of estimated liability, included in other accrued liabilities | $ 1,752 | $ 1,613 |
TRANSACTIONS WITH ENSIGN (Detai
TRANSACTIONS WITH ENSIGN (Details) $ in Thousands | 12 Months Ended | ||||
Jan. 01, 2022 | Dec. 31, 2022 USD ($) property | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Jan. 27, 2022 USD ($) | |
Affiliates Of Ensign | |||||
Related Party Transaction [Line Items] | |||||
Escrow deposits | $ 6,500 | $ 6,500 | |||
Related party | |||||
Related Party Transaction [Line Items] | |||||
Cost of services | $ 3,211 | $ 3,084 | $ 4,205 | ||
Related party | Senior Living Services | |||||
Related Party Transaction [Line Items] | |||||
Number of operating facilities | property | 29 | ||||
Related party | Transition Services Agreement | |||||
Related Party Transaction [Line Items] | |||||
Expiration period | 2 years | ||||
Expenses from transactions with related party | $ 1,561 | $ 3,124 | $ 5,536 |
COMPUTATION OF NET INCOME PER_3
COMPUTATION OF NET INCOME PER COMMON SHARE - RECONCILIATION (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Numerator: | |||
Net income | $ 7,243 | $ 2,148 | $ 15,553 |
Less: net income (loss) attributable to noncontrolling interest | 600 | (548) | (191) |
Net income and other comprehensive income attributable to The Pennant Group, Inc. | $ 6,643 | $ 2,696 | $ 15,744 |
Denominator: | |||
Weighted average shares outstanding for basic net income per share (in shares) | 29,064 | 28,406 | 28,029 |
Plus: incremental shares from assumed conversion (in shares) | 1,095 | 2,236 | 2,199 |
Adjusted weighted average common shares outstanding for diluted income per share (in share) | 30,159 | 30,642 | 30,228 |
Earnings Per Share: | |||
Basic net income per common share (in dollars per share) | $ 0.23 | $ 0.09 | $ 0.56 |
Diluted net income per common share (in dollars per share) | $ 0.22 | $ 0.09 | $ 0.52 |
Anti-dilutive effect of common equivalent shares outstanding (in shares) | 1,860 | 478 | 93 |
REVENUE AND ACCOUNTS RECEIVAB_3
REVENUE AND ACCOUNTS RECEIVABLE - NARRATIVE (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||
Payment terms | Residency agreements are generally for a term of 30 days, with resident fees billed monthly in advance. For residents under reimbursement arrangements with Medicaid, revenue is recorded based on contractually agreed-upon amounts or rates on a per resident, daily basis or as services are rendered. | ||
Customer concentration risk | Revenue | |||
Disaggregation of Revenue [Line Items] | |||
Revenue % | 100% | 100% | 100% |
Customer concentration risk | Revenue | Medicare And Medicaid | |||
Disaggregation of Revenue [Line Items] | |||
Revenue % | 62.30% | 62.60% | 60.10% |
Customer concentration risk | Receivables | Medicare And Medicaid | |||
Disaggregation of Revenue [Line Items] | |||
Revenue % | 77.80% | 78.60% |
REVENUE AND ACCOUNTS RECEIVAB_4
REVENUE AND ACCOUNTS RECEIVABLE - REVENUE BY MAJOR PAYOR (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||
Revenue | $ 473,241 | $ 439,694 | $ 390,953 |
Revenue | Customer concentration risk | |||
Disaggregation of Revenue [Line Items] | |||
Revenue % | 100% | 100% | 100% |
Medicare | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | $ 231,753 | $ 216,788 | $ 178,272 |
Medicare | Revenue | Customer concentration risk | |||
Disaggregation of Revenue [Line Items] | |||
Revenue % | 49% | 49.30% | 45.60% |
Medicaid | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | $ 62,934 | $ 58,355 | $ 56,887 |
Medicaid | Revenue | Customer concentration risk | |||
Disaggregation of Revenue [Line Items] | |||
Revenue % | 13.30% | 13.30% | 14.50% |
Subtotal | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | $ 294,687 | $ 275,143 | $ 235,159 |
Subtotal | Revenue | Customer concentration risk | |||
Disaggregation of Revenue [Line Items] | |||
Revenue % | 62.30% | 62.60% | 60.10% |
Managed care | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | $ 62,101 | $ 49,363 | $ 33,118 |
Managed care | Revenue | Customer concentration risk | |||
Disaggregation of Revenue [Line Items] | |||
Revenue % | 13.10% | 11.20% | 8.50% |
Private and other | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | $ 116,453 | $ 115,188 | $ 122,676 |
Private and other | Revenue | Customer concentration risk | |||
Disaggregation of Revenue [Line Items] | |||
Revenue % | 24.60% | 26.20% | 31.40% |
Home Health and Hospice Services | Home Health Services | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | $ 181,729 | $ 157,958 | $ 119,584 |
Home Health and Hospice Services | Home Health Services | Medicare | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 91,415 | 80,849 | 58,399 |
Home Health and Hospice Services | Home Health Services | Medicaid | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 9,749 | 8,935 | 7,645 |
Home Health and Hospice Services | Home Health Services | Subtotal | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 101,164 | 89,784 | 66,044 |
Home Health and Hospice Services | Home Health Services | Managed care | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 57,824 | 46,167 | 31,572 |
Home Health and Hospice Services | Home Health Services | Private and other | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 22,741 | 22,007 | 21,968 |
Home Health and Hospice Services | Hospice Services | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 160,520 | 151,612 | 134,075 |
Home Health and Hospice Services | Hospice Services | Medicare | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 140,338 | 135,939 | 119,873 |
Home Health and Hospice Services | Hospice Services | Medicaid | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 15,568 | 12,103 | 12,462 |
Home Health and Hospice Services | Hospice Services | Subtotal | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 155,906 | 148,042 | 132,335 |
Home Health and Hospice Services | Hospice Services | Managed care | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 4,277 | 3,196 | 1,546 |
Home Health and Hospice Services | Hospice Services | Private and other | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 337 | 374 | 194 |
Senior Living Services | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 130,992 | 130,124 | 137,294 |
Senior Living Services | Medicare | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 0 | 0 | 0 |
Senior Living Services | Medicaid | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 37,617 | 37,317 | 36,780 |
Senior Living Services | Subtotal | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 37,617 | 37,317 | 36,780 |
Senior Living Services | Managed care | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 0 | 0 | 0 |
Senior Living Services | Private and other | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | $ 93,375 | $ 92,807 | $ 100,514 |
REVENUE AND ACCOUNTS RECEIVAB_5
REVENUE AND ACCOUNTS RECEIVABLE - ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Accounts Receivable [Abstract] | ||
Accounts receivable, gross | $ 54,012 | $ 54,842 |
Less: allowance for doubtful accounts | (592) | (902) |
Accounts receivable, net | 53,420 | 53,940 |
Medicare | ||
Accounts Receivable [Abstract] | ||
Accounts receivable, gross | 31,321 | 31,327 |
Medicaid | ||
Accounts Receivable [Abstract] | ||
Accounts receivable, gross | 10,700 | 11,793 |
Managed care | ||
Accounts Receivable [Abstract] | ||
Accounts receivable, gross | 9,370 | 7,901 |
Private and other | ||
Accounts Receivable [Abstract] | ||
Accounts receivable, gross | $ 2,621 | $ 3,821 |
REVENUE AND ACCOUNTS RECEIVAB_6
REVENUE AND ACCOUNTS RECEIVABLE - ALLOWANCE FOR DOUBTFUL ACCOUNTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |||
Balance at beginning of period | $ 902 | $ 643 | $ 677 |
Additions to bad debt expense | 881 | 616 | 560 |
Write-offs of uncollectible accounts | (1,191) | (357) | (594) |
Balance at end of period | $ 592 | $ 902 | $ 643 |
BUSINESS SEGMENTS - NARRATIVE (
BUSINESS SEGMENTS - NARRATIVE (Details) | Dec. 31, 2022 agency |
Home Health and Hospice Services | |
Segment Reporting Information [Line Items] | |
Number of service providers | 95 |
Senior Living Services | |
Segment Reporting Information [Line Items] | |
Number of properties under lease | 49 |
BUSINESS SEGMENTS - FINANCIAL D
BUSINESS SEGMENTS - FINANCIAL DATA (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Segment Reporting Information [Line Items] | |||
Revenue | $ 473,241 | $ 439,694 | $ 390,953 |
Segment Adjusted EBITDAR from Operations | 67,955 | 66,874 | 75,048 |
Senior Living Services | |||
Segment Reporting Information [Line Items] | |||
Revenue | 130,992 | 130,124 | 137,294 |
Operating segments | Home Health and Hospice Services | |||
Segment Reporting Information [Line Items] | |||
Revenue | 342,249 | 309,570 | 253,659 |
Segment Adjusted EBITDAR from Operations | 61,827 | 55,565 | 49,501 |
Operating segments | Senior Living Services | |||
Segment Reporting Information [Line Items] | |||
Revenue | 130,992 | 130,124 | 137,294 |
Segment Adjusted EBITDAR from Operations | 37,563 | 37,517 | 48,309 |
All Other | |||
Segment Reporting Information [Line Items] | |||
Revenue | 0 | 0 | 0 |
Segment Adjusted EBITDAR from Operations | $ (31,435) | $ (26,208) | $ (22,762) |
BUSINESS SEGMENTS - INCOME FROM
BUSINESS SEGMENTS - INCOME FROM OPERATIONS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue, Major Customer [Line Items] | |||
Segment Adjusted EBITDAR from Operations | $ 67,955 | $ 66,874 | $ 75,048 |
Less: Depreciation and amortization | 4,900 | 4,784 | 4,675 |
Rent—cost of services | 38,018 | 40,863 | 39,191 |
Other income | (31) | (24) | 225 |
Less: Costs at start-up operations | 1,435 | 1,045 | 1,787 |
Share-based compensation expense | 3,363 | 10,040 | 8,335 |
Acquisition related costs and credit allowances | 731 | 80 | 99 |
Transaction services costs | 77 | 2,008 | 1,181 |
COVID-19 Related costs and supplies | 0 | 0 | 447 |
Loss related to senior living operations transferred to Ensign | 6,103 | 2,835 | 0 |
Unusual or non-recurring charges | 1,220 | 0 | 0 |
Add: Net income (loss) attributable to noncontrolling interest | 600 | (548) | (191) |
Consolidated Income from operations | 12,739 | 4,695 | 18,917 |
Sequestration relief | 3,555 | ||
Direct medical supplies, labor, and other expenses | 2,765 | ||
General and administrative expense | |||
Revenue, Major Customer [Line Items] | |||
Unusual or non-recurring charges | 958 | ||
Cost of services | |||
Revenue, Major Customer [Line Items] | |||
Unusual or non-recurring charges | 262 | ||
Transition Services Agreement | Related party | |||
Revenue, Major Customer [Line Items] | |||
Fees incurred | 1,561 | $ 3,124 | $ 5,536 |
Transfer Agreements | Related party | Affiliates Of Ensign | |||
Revenue, Major Customer [Line Items] | |||
Post-closing capital expenditures and operating losses | 6,500 | ||
Impact on revenue and service cost | $ (397) |
ACQUISITIONS - NARRATIVE (Detai
ACQUISITIONS - NARRATIVE (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Oct. 31, 2020 USD ($) | Dec. 31, 2022 USD ($) agency | Dec. 31, 2021 USD ($) agency | Dec. 31, 2020 USD ($) agency | |
Business Acquisition [Line Items] | ||||
Goodwill | $ 79,497 | $ 74,265 | $ 66,444 | |
Operating loss | 12,739 | 4,695 | 18,917 | |
Acquire interest in joint venture | $ 6,200 | |||
Net book value | 614 | |||
Sale of noncontrolling interests, net of tax | 451 | |||
Additional paid-in capital | 99,764 | 95,595 | ||
Scripps Health | ||||
Business Acquisition [Line Items] | ||||
Sale of noncontrolling interests, net of tax | 4,646 | |||
Cash from sale of noncontrolling interest | 555 | |||
Noncontrolling interest to scripps | 138 | |||
Additional paid-in capital | 313 | |||
Income tax effect | $ 104 | |||
Scripps Health | Home Health Joint Venture | ||||
Business Acquisition [Line Items] | ||||
Ownership interest | 60% | |||
Scripps Health | Hospice Join Venture | ||||
Business Acquisition [Line Items] | ||||
Ownership interest | 80% | |||
Series of Individually Immaterial Business Acquisitions | ||||
Business Acquisition [Line Items] | ||||
Business combination, purchase price | 10,130 | 14,135 | 39,239 | |
Equipment and other assets | 188 | |||
Goodwill | 5,232 | 7,821 | 25,211 | |
Other indefinite-lived intangible assets | 4,887 | 6,242 | 14,026 | |
Other intangible assets | 10 | 0 | 0 | |
Liabilities assumed | 187 | 0 | 172 | |
Revenues | 3,242 | |||
Operating loss | (50) | |||
Acquisition costs | 0 | 80 | $ 99 | |
Number of units (in units) | agency | 164 | |||
Hospice Services | Series of Individually Immaterial Business Acquisitions | ||||
Business Acquisition [Line Items] | ||||
Other indefinite-lived intangible assets | 585 | |||
Home Health and Hospice Services | ||||
Business Acquisition [Line Items] | ||||
Goodwill | $ 75,855 | $ 70,623 | $ 62,802 | |
Home Health and Hospice Services | Home Health Services | ||||
Business Acquisition [Line Items] | ||||
Number of businesses acquired and assets acquisitions | agency | 3 | 5 | 6 | |
Home Health and Hospice Services | Hospice Services | ||||
Business Acquisition [Line Items] | ||||
Number of businesses acquired and assets acquisitions | agency | 4 | 4 | 6 | |
Home Health and Hospice Services | Hospice Services | Series of Individually Immaterial Business Acquisitions | ||||
Business Acquisition [Line Items] | ||||
Number of businesses acquired and assets acquisitions | agency | 2 | |||
Home Health and Hospice Services | Home Care Agencies | ||||
Business Acquisition [Line Items] | ||||
Number of businesses acquired and assets acquisitions | agency | 2 | |||
Senior Living Services | ||||
Business Acquisition [Line Items] | ||||
Number of businesses acquired and assets acquisitions | agency | 1 | 2 | ||
Goodwill | $ 3,642 | $ 3,642 | $ 3,642 |
ACQUISITIONS - SCHEDULE OF OPER
ACQUISITIONS - SCHEDULE OF OPERATIONS ACQUIRED IN BUSINESS COMBINATIONS (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Business Acquisition [Line Items] | |||
Goodwill | $ 79,497 | $ 74,265 | $ 66,444 |
Series of Individually Immaterial Business Acquisitions | |||
Business Acquisition [Line Items] | |||
Equipment, furniture, and fixtures | 188 | 62 | 174 |
Goodwill | 5,232 | 7,821 | 25,211 |
Other indefinite-lived intangible assets | 4,887 | 6,242 | 14,026 |
Intangible Assets | 10 | 0 | 0 |
Other assets | 0 | 10 | 0 |
Liabilities assumed | (187) | 0 | (172) |
Total acquisitions | 10,130 | 14,135 | 39,239 |
Less: noncontrolling interest and additional paid in capital | 0 | 0 | (4,646) |
Less: cash paid in prior year (held in escrow) | 0 | (585) | (1,400) |
Total cash paid for acquisitions | $ 10,130 | $ 13,550 | $ 33,193 |
PROPERTY AND EQUIPMENT_NET (Det
PROPERTY AND EQUIPMENT—NET (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 USD ($) building | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 47,428 | $ 35,274 | |
Less: accumulated depreciation | (20,807) | (18,486) | |
Property and equipment, net | 26,621 | 16,788 | |
Depreciation | $ 4,856 | 4,751 | $ 4,661 |
Number of building acquired | building | 1 | ||
Real estate and personal property acquired | $ 2,007 | ||
Impairment of long-lived assets | 218 | 2,835 | $ 0 |
Land | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 96 | 0 | |
Building | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 1,890 | 0 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 18,759 | 11,660 | |
Equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 25,532 | 22,415 | |
Furniture and fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 1,151 | $ 1,199 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS—NET - NARRATIVE (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Impairment charges | $ 0 | $ 0 | $ 0 |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS—NET - ACTIVITY IN GOODWILL (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | $ 74,265 | $ 66,444 |
Additions | 5,232 | 7,821 |
Goodwill, ending balance | 79,497 | 74,265 |
Home Health and Hospice Services | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 70,623 | 62,802 |
Additions | 5,232 | 7,821 |
Goodwill, ending balance | 75,855 | 70,623 |
Senior Living Services | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 3,642 | 3,642 |
Additions | 0 | 0 |
Goodwill, ending balance | $ 3,642 | $ 3,642 |
GOODWILL AND INTANGIBLE ASSET_5
GOODWILL AND INTANGIBLE ASSETS—NET - INDEFINITE-LIVED INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Indefinite-lived Intangible Assets [Line Items] | ||
Other indefinite-lived intangibles | $ 58,617 | $ 53,730 |
Trade name | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Other indefinite-lived intangibles | 1,385 | 1,355 |
Medicare and Medicaid licenses | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Other indefinite-lived intangibles | $ 57,232 | $ 52,375 |
OTHER ACCRUED LIABILITIES (Deta
OTHER ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Other Accrued Liabilities, Current [Abstract] | ||
Refunds payable | $ 2,244 | $ 3,095 |
Deferred revenue | 1,592 | 1,456 |
Resident deposits | 4,315 | 5,111 |
Contract liabilities (CARES Act advance payments) | 0 | 6,211 |
Property taxes | 1,027 | 1,102 |
Deferred state relief funds | 1,479 | 0 |
Accrued self-insurance liabilities | 3,546 | 1,613 |
Other | 2,481 | 2,896 |
Other accrued liabilities | $ 16,684 | $ 21,484 |
DEBT - SCHEDULE OF LONG-TERM DE
DEBT - SCHEDULE OF LONG-TERM DEBT (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Debt Instrument [Line Items] | |||
Less: unamortized debt issuance costs | $ (1,608) | $ (2,128) | |
Long-term debt, net | 62,892 | 51,372 | |
Amortization of deferred financing fees | 520 | 488 | $ 330 |
Revolving credit facility | Line of credit | |||
Debt Instrument [Line Items] | |||
Revolving credit facility | $ 64,500 | $ 53,500 |
DEBT - NARRATIVE (Details)
DEBT - NARRATIVE (Details) - USD ($) | Feb. 23, 2021 | Dec. 31, 2022 |
Revolving credit facility | ||
Debt Instrument [Line Items] | ||
Borrowing capacity | $ 150,000,000 | |
Revolving credit facility | Line of credit | ||
Debt Instrument [Line Items] | ||
Weighted average interest rate | 7% | |
Borrowing availability | $ 81,314,000 | |
Revolving credit facility | Minimum | ||
Debt Instrument [Line Items] | ||
Margin | 0.35% | |
Revolving credit facility | Minimum | LIBOR | ||
Debt Instrument [Line Items] | ||
Margin | 2.30% | |
Revolving credit facility | Minimum | Base Rate | ||
Debt Instrument [Line Items] | ||
Margin | 1.30% | |
Revolving credit facility | Maximum | ||
Debt Instrument [Line Items] | ||
Margin | 0.50% | |
Revolving credit facility | Maximum | LIBOR | ||
Debt Instrument [Line Items] | ||
Margin | 3.30% | |
Revolving credit facility | Maximum | Base Rate | ||
Debt Instrument [Line Items] | ||
Margin | 2.30% | |
Letters of credit | Line of credit | ||
Debt Instrument [Line Items] | ||
Letters of credit outstanding | $ 4,186,000 |
OPTIONS AND AWARDS - SHARE-BASE
OPTIONS AND AWARDS - SHARE-BASED COMPENSATION (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation | $ 3,086 | $ 10,040 | $ 8,335 |
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation | 3,266 | 3,093 | 1,660 |
Restricted stock awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation | (467) | 6,141 | 6,200 |
Restricted stock awards | Non-employee director | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation | $ 287 | $ 806 | $ 475 |
OPTIONS AND AWARDS - SHARE-BA_2
OPTIONS AND AWARDS - SHARE-BASED COMPENSATION EXPENSE AND NARRATIVE (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Jul. 25, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation | $ 3,086 | $ 10,040 | $ 8,335 | |
Weighted average contractual life for options outstanding, vested and expected to vest | 6 years 11 months 12 days | |||
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation | $ 3,266 | 3,093 | 1,660 | |
Restricted stock awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation | $ (467) | $ 6,141 | $ 6,200 | |
Restricted stock awards | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
Restricted stock awards | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 5 years | |||
The Ensign Plans | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total unrecognized share-based compensation expense | $ 13,131 | |||
Share-based compensation | $ 3,812 | |||
Options, unvested and outstanding (in shares) | 1,246,000 | |||
The Ensign Plans | Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unvested stock options | $ 10,005 | |||
Weighted Average Recognition Period (in years) | 3 years 3 months 18 days | |||
Options, vesting percent per year | 20% | |||
Options, expiration period | 10 years | |||
The Ensign Plans | Restricted stock awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unvested Restricted Stock | $ 3,126 | |||
Weighted Average Recognition Period (in years) | 4 years 6 months | |||
Vesting period | 5 years | |||
The Ensign Plans | RSU | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Forfeited (in shares) | 250,000 | |||
Vested (in shares) | 942,842 |
OPTIONS AND AWARDS - OPTIONS GR
OPTIONS AND AWARDS - OPTIONS GRANTED (Details) - The Ensign Plans - $ / shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted (in shares) | 448 | ||
2022 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted (in shares) | 448 | ||
Weighted average fair value of options (in dollars per share) | $ 6.35 | ||
2022 | Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk-Free Interest Rate | 2.70% | ||
Expected life | 6 years 6 months | ||
Expected volatility | 39.80% | ||
Dividend Yield | 0% | ||
2021 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted (in shares) | 454 | ||
Weighted average fair value of options (in dollars per share) | $ 13.84 | ||
2021 | Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk-Free Interest Rate | 1.10% | ||
Expected life | 6 years 6 months | ||
Expected volatility | 38.40% | ||
Dividend Yield | 0% | ||
2020 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted (in shares) | 693 | ||
Weighted average fair value of options (in dollars per share) | $ 11.05 | ||
2020 | Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk-Free Interest Rate | 0.50% | ||
Expected life | 6 years 6 months | ||
Expected volatility | 35.90% | ||
Dividend Yield | 0% |
OPTIONS AND AWARDS - EMPLOYEE S
OPTIONS AND AWARDS - EMPLOYEE STOCK OPTION ACTIVITY (Details) - The Ensign Plans - $ / shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Number of Options Outstanding | |||
Beginning balance, outstanding (in shares) | 2,242 | ||
Granted (in shares) | 448 | ||
Exercised (in shares) | (125) | (115) | (239) |
Forfeited (in shares) | (245) | ||
Expired (in shares) | (101) | ||
Ending balance, outstanding (in shares) | 2,219 | 2,242 | |
Weighted Average Exercise Price | |||
Beginning of period, weighted average exercise price (in dollars per share) | $ 21.38 | ||
Granted (in dollars per share) | 14.39 | ||
Exercised (in dollars per share) | 8.69 | ||
Forfeited (in dollars per share) | 23.54 | ||
Expired (in dollars per share) | 14.03 | ||
End of period, weighted average exercise price (in dollars per share) | $ 20.76 | $ 21.38 | |
Number of options vested (in shares) | 973 | 840 | |
Weighted average exercise price of options vested (in dollars per share) | $ 16.90 | $ 12.28 |
OPTIONS AND AWARDS - AGGREGATE
OPTIONS AND AWARDS - AGGREGATE INTRINSIC VALUE OF OPTIONS (Details) - The Ensign Plans $ in Thousands | Dec. 31, 2022 USD ($) |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding | $ 2,049 |
Vested | 1,971 |
Unvested | 78 |
Exercised | $ 902 |
OPTIONS AND AWARDS - RESTRICTED
OPTIONS AND AWARDS - RESTRICTED STOCK (Details) - The Ensign Plans - Restricted stock awards shares in Thousands | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Non-Vested Restricted Awards | |
Beginning balance, outstanding (in shares) | shares | 1,493 |
Granted (in shares) | shares | 281 |
Vested (in shares) | shares | (1,079) |
Forfeited (in shares) | shares | (277) |
Ending balance, outstanding (in shares) | shares | 418 |
Weighted Average Grant Date Fair Value | |
Beginning of period, weighted average exercise price (in dollars per share) | $ / shares | $ 15 |
Granted (in dollars per share) | $ / shares | 13.55 |
Vested (in dollars per share) | $ / shares | 14.92 |
Forfeited (in dollars per share) | $ / shares | 14.93 |
End of period, weighted average exercise price (in dollars per share) | $ / shares | $ 14.26 |
LEASES - NARRATIVE (Details)
LEASES - NARRATIVE (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 USD ($) property arrangement facility agency | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Apr. 01, 2022 lease | |
Lessee, Lease, Description [Line Items] | ||||
Non-cash adjustment to right-of-use assets and lease liabilities from lease modifications | $ 6,270 | $ 4,674 | $ 1,939 | |
Weighted average remaining lease term | 12 years 8 months 12 days | |||
Weighted average discount rate | 7.60% | |||
Related party | ||||
Lessee, Lease, Description [Line Items] | ||||
Non-cash adjustment to right-of-use assets and lease liabilities from lease terminations and assignments | $ 42,506 | |||
Non-cash adjustment to right-of-use assets and lease liabilities from lease modifications | 6,161 | |||
Related party | Operating lease, rent expense | ||||
Lessee, Lease, Description [Line Items] | ||||
Fees incurred | $ 13,595 | $ 12,773 | $ 12,536 | |
Senior Living Services | ||||
Lessee, Lease, Description [Line Items] | ||||
Number of properties under lease | agency | 49 | |||
Senior Living Services | Related party | ||||
Lessee, Lease, Description [Line Items] | ||||
Number of operating facilities | property | 29 | |||
Number of properties under lease, master lease agreement | facility | 12 | |||
Number of separate master lease arrangements | arrangement | 2 | |||
Number of terminated leases under master lease agreement | lease | 4 | |||
Senior Living Services | Minimum | ||||
Lessee, Lease, Description [Line Items] | ||||
Lease term | 14 years | |||
Senior Living Services | Minimum | Related party | ||||
Lessee, Lease, Description [Line Items] | ||||
Lease term | 14 years | |||
Senior Living Services | Maximum | ||||
Lessee, Lease, Description [Line Items] | ||||
Lease term | 25 years | |||
Senior Living Services | Maximum | Related party | ||||
Lessee, Lease, Description [Line Items] | ||||
Lease term | 20 years | |||
Home Health and Hospice Services | ||||
Lessee, Lease, Description [Line Items] | ||||
Number of service providers | agency | 95 | |||
Home Health and Hospice Services | Minimum | ||||
Lessee, Lease, Description [Line Items] | ||||
Lease term | 1 year | |||
Home Health and Hospice Services | Maximum | ||||
Lessee, Lease, Description [Line Items] | ||||
Lease term | 11 years |
LEASES - IMPACT OF NEW LEASES G
LEASES - IMPACT OF NEW LEASES GUIDANCE (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Lease, Cost [Abstract] | |||
Sublease income | $ 0 | $ 0 | $ (143) |
Variable lease cost | 6,281 | 6,248 | 5,330 |
Cost of services | |||
Lease, Cost [Abstract] | |||
Operating lease costs | 38,018 | 40,863 | 39,191 |
Cost of services | Facility | |||
Lease, Cost [Abstract] | |||
Operating lease costs | 32,958 | 35,958 | 35,562 |
Cost of services | Office | |||
Lease, Cost [Abstract] | |||
Operating lease costs | 5,060 | 4,905 | 3,772 |
General and administrative expense | |||
Lease, Cost [Abstract] | |||
Operating lease costs | $ 370 | $ 276 | $ 295 |
LEASES - FUTURE MINIMUM LEASE P
LEASES - FUTURE MINIMUM LEASE PAYMENTS (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Leases, Under Adoption of ASC 842 [Abstract] | ||
2023 | $ 35,553 | |
2024 | 34,773 | |
2025 | 33,358 | |
2026 | 32,315 | |
2027 | 31,732 | |
Thereafter | 245,181 | |
Total lease payments | 412,912 | |
Less: present value adjustments | (149,237) | |
Present value of total lease liabilities | 263,675 | |
Less: current lease liabilities | (16,633) | $ (16,118) |
Long-term operating lease liabilities | $ 247,042 | $ 287,753 |
INCOME TAXES - PROVISION FOR IN
INCOME TAXES - PROVISION FOR INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Current: | |||
Federal | $ (193) | $ 1,768 | $ 5,058 |
State | 146 | 566 | 1,478 |
Total current | (47) | 2,334 | 6,536 |
Deferred: | |||
Federal | 1,334 | (1,360) | (3,348) |
State | 362 | (392) | (838) |
Total deferred | 1,696 | (1,752) | (4,186) |
Total income tax expense | $ 1,649 | $ 582 | $ 2,350 |
INCOME TAXES - TAX RATE RECONCI
INCOME TAXES - TAX RATE RECONCILIATION (Details) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Contingency [Line Items] | |||
Income tax expense at statutory rate | 21% | 21% | 21% |
State income taxes - net of federal benefit | 4.70% | 3.90% | 2.70% |
Non-deductible meals and entertainment | 0.60% | 1.80% | 0.30% |
Non-deductible equity compensation | (6.10%) | 19.40% | 0% |
Section 162(m) limitation | 0.60% | 2.10% | 0% |
Non-deductible accrued bonus | 0% | 2.70% | 0% |
Other non-deductible expenses | 0.20% | 0.70% | 0.10% |
Deductible equity compensation | (0.80%) | (34.10%) | (10.80%) |
Noncontrolling interest | (1.70%) | 5% | 0.30% |
Other adjustments | 0% | (1.20%) | (0.50%) |
Total income tax provision | 18.50% | 21.30% | 13.10% |
Share-based compensation | $ (3,086) | $ (10,040) | $ (8,335) |
The Ensign Plans | |||
Income Tax Contingency [Line Items] | |||
Exercised (in shares) | 125 | 115 | 239 |
Restricted stock awards | |||
Income Tax Contingency [Line Items] | |||
Share-based compensation | $ (2,567) |
INCOME TAXES - DEFERRED TAX ASS
INCOME TAXES - DEFERRED TAX ASSETS AND LIABILITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred Tax Assets, Net [Abstract] | ||
Accrued compensation | $ 7,681 | $ 6,402 |
Allowance for doubtful accounts | 1,088 | 1,728 |
Net operating losses | 2,537 | 0 |
Lease liabilities | 68,676 | 79,575 |
Insurance | 961 | 953 |
Other | 1,564 | 3,427 |
Gross deferred tax assets | 82,507 | 92,085 |
Less: valuation allowance | (29) | (25) |
Net deferred tax assets | 82,478 | 92,060 |
Depreciation and amortization | (11,618) | (8,432) |
Prepaid expenses | (781) | (907) |
Right of use asset | (67,765) | (78,656) |
State taxes | (165) | (217) |
Total deferred tax liabilities | (80,329) | (88,212) |
Net deferred tax assets (liabilities) | $ 2,149 | $ 3,848 |
INCOME TAXES - NARRATIVE (Detai
INCOME TAXES - NARRATIVE (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Federal tax authority | |
Income Tax Contingency [Line Items] | |
Operating loss carryforwards | $ 9,865 |
State and Local Jurisdiction | |
Income Tax Contingency [Line Items] | |
Operating loss carryforwards | 9,211 |
Operating loss carryforwards, valuation allowance | $ 29 |
INCOME TAXES - UNRECOGNIZED TAX
INCOME TAXES - UNRECOGNIZED TAX BENEFITS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Balance at January 1 | $ 65 | $ 0 | $ 0 |
Additions for tax positions of prior years | 0 | 188 | 0 |
Reductions for tax positions related to the current year | (65) | (123) | 0 |
Balance at December 31 | $ 0 | $ 65 | $ 0 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | |
May 02, 2022 agency | May 31, 2022 USD ($) | Dec. 31, 2022 USD ($) review | |
Concentration Risk [Line Items] | |||
Number of operating subsidiaries with reviews scheduled | review | 8 | ||
Sampled and extrapolated overpayments | $ 5,134 | $ 5,134 | |
Number of patient records under review | agency | 107 | ||
Period of review | 10 months | ||
General and professional liability, retention limit | 150 | ||
Out-of-pocket retention | 500 | ||
Workers' compensation, retention limit | 250 | ||
Maximum | |||
Concentration Risk [Line Items] | |||
Self insurance, individual coverage limit | $ 325 |
COMMON STOCK REPURCHASE PROGR_2
COMMON STOCK REPURCHASE PROGRAM (Details) - Stock Repurchase Program - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 12, 2022 | |
Equity, Class of Treasury Stock [Line Items] | ||
Stock repurchased (in shares) | 0 | |
Common stock | ||
Equity, Class of Treasury Stock [Line Items] | ||
Stock repurchased authorize amount | $ 1,000,000 |