0001766400-23-000061 | 10-Q | XBRL Viewer

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current assets:
Cash	$ 2,952	$ 2,079
Accounts receivable—less allowance for doubtful accounts of $573 and $592, respectively	50,660	53,420
Prepaid expenses and other current assets	13,140	18,323
Total current assets	66,752	73,822
Property and equipment, net	26,947	26,621
Right-of-use assets	264,109	260,868
Deferred tax assets, net	1,372	2,149
Restricted and other assets	10,652	10,545
Goodwill	79,497	79,497
Other indefinite-lived intangibles	58,827	58,617
Total assets	508,156	512,119
Current liabilities:
Accounts payable	12,161	13,647
Accrued wages and related liabilities	20,495	23,283
Operating lease liabilities—current	16,856	16,633
Other accrued liabilities	16,116	16,684
Total current liabilities	65,628	70,247
Long-term operating lease liabilities—less current portion	250,041	247,042
Other long-term liabilities	6,240	6,281
Long-term debt, net	57,023	62,892
Total liabilities	378,932	386,462
Commitments and contingencies
Equity:
Common stock, $0.001 par value; 100,000 shares authorized; 30,203 and 29,729 shares issued and outstanding, respectively, at March 31, 2023; and 30,149 and 29,692 shares issued and outstanding, respectively, at December 31, 2022	29	29
Additional paid-in capital	101,334	99,764
Retained earnings	23,134	21,284
Treasury stock, at cost, 3 shares at March 31, 2023 and December 31, 2022	(65)	(65)
Total Pennant Group, Inc. stockholders’ equity	124,432	121,012
Noncontrolling interest	4,792	4,645
Total equity	129,224	125,657
Total liabilities and equity	$ 508,156	$ 512,119

GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS (Tables)

3 Months Ended

Mar. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of activity in goodwill by segment

The following table represents activity in goodwill by segment for the three months ended March 31, 2023:


	Home Health and Hospice Services		Senior Living Services		Total
December 31, 2022	$	75,855	$	3,642	$	79,497
Additions	—		—		—

March 31, 2023	$	75,855	$	3,642	$	79,497

Schedule of other indefinite-lived intangible assets

Other indefinite-lived intangible assets consist of the following:


	March 31, 2023		December 31, 2022
Trade name	$	1,385	$	1,385
Medicare and Medicaid licenses	57,442		57,232
Total	$	58,827	$	58,617

- Definition

Tabular disclosure of goodwill by reportable segment and in total which includes a rollforward schedule.

+ References

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+ Details

NET INCOME PER COMMON SHARE - RECONCILIATION (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Numerator:
Net income attributable to The Pennant Group, Inc.	$ 1,850	$ 1,014
Denominator:
Weighted average shares outstanding for basic net income per share (in shares)	29,751	28,572
Plus: assumed incremental shares from exercise of options and assumed conversion or vesting of restricted stock (in shares)	396	1,571
Adjusted weighted average common shares outstanding for diluted income per share (in shares)	30,147	30,143
Earnings Per Share:
Basic net income per common share (in dollars per share)	$ 0.06	$ 0.04
Diluted net income per common share (in dollars per share)	$ 0.06	$ 0.03
Anti-dilutive effect of common equivalent shares outstanding (in shares)	2,002	1,690

ACQUISITIONS (Details) $ in Thousands		3 Months Ended
ACQUISITIONS (Details) $ in Thousands	May 01, 2023 USD ($) agency	Mar. 31, 2023 USD ($) agency
Home Health Services \| Series of Individually Immaterial Business Acquisitions
Business Acquisition [Line Items]
Other indefinite-lived intangible assets \| $		$ 210
Home Health and Hospice Services \| Home Health Services
Business Acquisition [Line Items]
Number of businesses acquired and assets acquisitions		1
Home Health and Hospice Services \| Home Health Services \| Subsequent Event
Business Acquisition [Line Items]
Number of businesses acquired and assets acquisitions	1
Business combination, purchase price \| $	$ 875
Senior Living Services
Business Acquisition [Line Items]
Number of businesses acquired and assets acquisitions		2

BUSINESS SEGMENTS - INCOME FROM OPERATIONS (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Revenue, Major Customer [Line Items]
Segment Adjusted EBITDAR from Operations	$ 17,139	$ 15,234
Less: Depreciation and amortization	1,280	1,147
Rent—cost of services	9,597	10,051
Other expense	30	3
Less: Costs at start-up operations	203	131
Share-based compensation expense and related taxes	1,419	2,440
Acquisition related costs and credit allowances	32	0
Costs associated with transitioning operations	47	(757)
Unusual, non-recurring or redundant charges	398	37
Add: Net income attributable to noncontrolling interest	147	144
Condensed Consolidated Income from Operations	4,280	2,326
Transition Services Agreement \| Related party
Revenue, Major Customer [Line Items]
Fees incurred	$ 273	$ 643

COVER - shares	3 Months Ended
COVER - shares	Mar. 31, 2023	May 03, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2023
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 Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		29,740,003
Entity Central Index Key	0001766400
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Amendment Flag	false

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Statement [Abstract]
Revenue	$ 126,464	$ 113,910
Expense
Cost of services	102,602	90,261
Rent—cost of services	9,597	10,051
General and administrative expense	8,705	10,033
Depreciation and amortization	1,280	1,147
Loss on asset dispositions and impairment, net	0	92
Total expenses	122,184	111,584
Income from operations	4,280	2,326
Other income (expense):
Other income	30	3
Interest expense, net	(1,406)	(629)
Other (expense), net	(1,376)	(626)
Income before provision for income taxes	2,904	1,700
Provision for income taxes	907	542
Net income	1,997	1,158
Less: net income attributable to noncontrolling interest	147	144
Net income and other comprehensive income attributable to The Pennant Group, Inc.	$ 1,850	$ 1,014
Earnings per share:
Basic (in dollars per share)	$ 0.06	$ 0.04
Diluted (in dollars per share)	$ 0.06	$ 0.03
Weighted average common shares outstanding:
Basic (in shares)	29,751	28,572
Diluted (in shares)	30,147	30,143

OPTIONS AND AWARDS - NARRATIVE (Details) - USD ($) shares in Thousands, $ in Thousands		3 Months Ended
	Jul. 25, 2022	Mar. 31, 2023	Sep. 30, 2022	Mar. 31, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation		$ 1,367		$ 2,440
Restricted stock awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation		177		1,519
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation		$ 850		$ 842
The Ensign Plans
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Forfeited (in shares)		24
Share-based compensation			$ 3,812
The Ensign Plans \| Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Forfeited (in shares)	250
Vested (in shares)	943
The Ensign Plans \| Restricted stock awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period		5 years
The Ensign Plans \| Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options, vesting percent per year		20.00%
Options, expiration period		10 years

OTHER ACCRUED LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2023

Payables and Accruals [Abstract]

Schedule of other accrued liabilities

Other accrued liabilities consist of the following:


	March 31, 2023		December 31, 2022
Refunds payable	$	2,017	$	2,244
Deferred revenue	1,609		1,592
Resident deposits	3,663		4,315
Property taxes	1,129		1,027
Deferred state relief funds	909		1,479
Accrued self-insurance liabilities	4,076		3,546

Other	2,713		2,481
Other accrued liabilities	$	16,116	$	16,684

OPTIONS AND AWARDS - SHARE-BASED COMPENSATION (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation	$ 1,367	$ 2,440
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation	850	842
Restricted stock awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation	177	1,519
Restricted stock awards \| Non-employee directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation	$ 340	$ 79

REVENUE AND ACCOUNTS RECEIVABLE - ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Accounts Receivable [Abstract]
Accounts receivable, gross	$ 51,233	$ 54,012
Less: allowance for doubtful accounts	(573)	(592)
Accounts receivable, net	50,660	53,420
Medicare
Accounts Receivable [Abstract]
Accounts receivable, gross	29,814	31,321
Medicaid
Accounts Receivable [Abstract]
Accounts receivable, gross	9,603	10,700
Managed care
Accounts Receivable [Abstract]
Accounts receivable, gross	9,445	9,370
Private and other
Accounts Receivable [Abstract]
Accounts receivable, gross	$ 2,371	$ 2,621

COMMON STOCK REPURCHASE PROGRAM (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Dec. 12, 2022
Equity [Abstract]
Repurchase of common stock amount		$ 1,000
Stock repurchased (in shares)	0

GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS

The following table represents activity in goodwill by segment for the three months ended March 31, 2023:


	Home Health and Hospice Services		Senior Living Services		Total
December 31, 2022	$	75,855	$	3,642	$	79,497
Additions	—		—		—

March 31, 2023	$	75,855	$	3,642	$	79,497

Other indefinite-lived intangible assets consist of the following:


	March 31, 2023		December 31, 2022
Trade name	$	1,385	$	1,385
Medicare and Medicaid licenses	57,442		57,232
Total	$	58,827	$	58,617

No goodwill or intangible asset impairments were recorded during the three months ended March 31, 2023 and 2022.

LEASES - IMPACT OF NEW LEASES GUIDANCE (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Lease, Cost
Variable lease cost	$ 1,730	$ 1,575
Cost of services
Lease, Cost
Operating lease costs	9,597	10,051
Cost of services \| Community
Lease, Cost
Operating lease costs	8,274	8,789
Cost of services \| Office
Lease, Cost
Operating lease costs	1,323	1,262
General and administrative expense
Lease, Cost
Operating lease costs	$ 93	$ 81

NET INCOME PER COMMON SHARE (Tables)

3 Months Ended

Mar. 31, 2023

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:


	Three Months Ended March 31,
		2023		2022
Numerator:


Net income attributable to The Pennant Group, Inc.		$	1,850	$	1,014

Denominator:
Weighted average shares outstanding for basic net income per share		29,751		28,572
Plus: assumed incremental shares from exercise of options and assumed conversion or vesting of restricted stock(a)		396		1,571
Adjusted weighted average common shares outstanding for diluted income per share		30,147		30,143

Earnings Per Share:
Basic net income per common share		$	0.06	$	0.04
Diluted net income per common share		$	0.06	$	0.03


(a)						The diluted per share amounts do not reflect common equivalent shares outstanding of 2,002 for the three months ended March 31, 2023 and 1,690 for the three months ended March 31, 2022, because of their anti-dilutive effect.

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Mar. 31, 2023
Accounting Policies [Abstract]
Basis of Presentation	The accompanying unaudited condensed consolidated financial statements of the Company (the “Interim Financial Statements”) reflect the Company’s financial position, results of operations and cash flows of the business. The Interim Financial Statements 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”). Management believes that the Interim Financial Statements reflect, in all material respects, all adjustments which are of a normal and recurring nature necessary to present fairly the Company’s financial position, results of operations, and cash flows for the periods presented in conformity with GAAP. The results reported in these Interim Financial Statements are not necessarily indicative of results that may be expected for the entire year.
Consolidation	The Company consists of various limited liability companies and corporations established to operate home health, hospice, home care, and senior living operations. The Interim Financial Statements include the accounts of all entities controlled by the Company through its ownership of a majority voting interest. Certain prior quarter amounts have been reclassified from cost of sales to loss on asset dispositions and impairment of assets, net for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations in the current period or prior period.
Estimates and Assumptions	The preparation of the Interim 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 Interim Financial Statements and the reported amounts of revenue and expenses during the reporting periods. The most significant estimates in the Interim Financial Statements relate to revenue, intangible assets and goodwill, right-of-use assets and lease liabilities for leases greater than 12 months, self-insurance reserves, and income taxes. Actual results could differ from those estimates.
Revenue Recognition	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, Commercial and managed care programs (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. 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 the payor 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.

- Definition

Disclosure of accounting policy for revenue from contract with customer.

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+ Details

BUSINESS SEGMENTS - FINANCIAL DATA (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Segment Reporting Information [Line Items]
Revenue	$ 126,464	$ 113,910
Segment Adjusted EBITDAR from Operations	17,139	15,234
Senior Living Services
Segment Reporting Information [Line Items]
Revenue	35,385	33,435
Operating segments \| Home Health and Hospice Services
Segment Reporting Information [Line Items]
Revenue	91,079	80,475
Segment Adjusted EBITDAR from Operations	14,412	13,948
Operating segments \| Senior Living Services
Segment Reporting Information [Line Items]
Revenue	35,385	33,435
Segment Adjusted EBITDAR from Operations	10,241	9,432
All Other
Segment Reporting Information [Line Items]
Revenue	0	0
Segment Adjusted EBITDAR from Operations	$ (7,514)	$ (8,146)

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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+ Details

OPTIONS AND AWARDS - EMPLOYEE STOCK OPTION ACTIVITY (Details) - The Ensign Plans - $ / shares shares in Thousands	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Number of Options Outstanding
Beginning balance, outstanding (in shares)	2,219
Granted (in shares)	467
Exercised (in shares)	(25)
Forfeited (in shares)	(24)
Expired (in shares)	(24)
Ending balance, outstanding (in shares)	2,613
Weighted Average Exercise Price
Beginning of period, weighted average exercise price (in dollars per share)	$ 20.76
Granted (in dollars per share)	15.02
Exercised (in dollars per share)	7.95
Forfeited (in dollars per share)	21.67
Expired (in dollars per share)	19.58
End of period, weighted average exercise price (in dollars per share)	$ 19.70
Number of options vested (in shares)	1,008	973
Weighted average exercise price of options vested (in dollars per share)	$ 17.31	$ 16.90

DEBT

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

DEBT

Long-term debt, net consists of the following:


	March 31, 2023		December 31, 2022
Revolving Credit Facility	$	58,500	$	64,500
Less: unamortized debt issuance costs(a)	(1,477)		(1,608)
Long-term debt, net	$	57,023	$	62,892


(a)						Amortization expense for debt issuance costs was $130 for three months ended March 31, 2023 and $129 for the three months ended March 31, 2022, and is recorded in interest expense, net on the Condensed 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 March 31, 2023, the Company’s weighted average interest rate on its outstanding debt was 7.53%. As of March 31, 2023, the Company had available borrowing on the Revolving Credit Facility of $87,314, 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 March 31, 2023, the Company was compliant with all such financial covenants.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

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+ Details

OTHER ACCRUED LIABILITIES

3 Months Ended

Mar. 31, 2023

Payables and Accruals [Abstract]

OTHER ACCRUED LIABILITIES

Other accrued liabilities consist of the following:


	March 31, 2023		December 31, 2022
Refunds payable	$	2,017	$	2,244
Deferred revenue	1,609		1,592
Resident deposits	3,663		4,315
Property taxes	1,129		1,027
Deferred state relief funds	909		1,479
Accrued self-insurance liabilities	4,076		3,546

Other	2,713		2,481
Other accrued liabilities	$	16,116	$	16,684

Refunds payable includes payables related to overpayments, duplicate payments and credit balances from various payor sources. Deferred revenue occurs when the Company receives payments in advance of services provided. Resident deposits include refundable deposits to residents.

DESCRIPTION OF BUSINESS	3 Months Ended
DESCRIPTION OF BUSINESS	Mar. 31, 2023
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 March 31, 2023, the Company’s subsidiaries operated 96 home health, hospice and home care agencies and 51 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.

DEBT (Tables)

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Schedule of long-term debt

Long-term debt, net consists of the following:


	March 31, 2023		December 31, 2022
Revolving Credit Facility	$	58,500	$	64,500
Less: unamortized debt issuance costs(a)	(1,477)		(1,608)
Long-term debt, net	$	57,023	$	62,892


(a)						Amortization expense for debt issuance costs was $130 for three months ended March 31, 2023 and $129 for the three months ended March 31, 2022, and is recorded in interest expense, net on the Condensed Consolidated Statements of Income.

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

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-SubTopic 10
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-Paragraph 1
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+ Details

LEASES - FUTURE MINIMUM LEASE PAYMENTS (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Leases, Under Adoption of ASC 842 [Abstract]
2023 (Remainder)	$ 27,102
2024	35,658
2025	34,302
2026	33,249
2027	32,662
Thereafter	253,638
Total lease payments	416,611
Less: present value adjustments	(149,714)
Present value of total lease liabilities	266,897
Less: current lease liabilities	(16,856)	$ (16,633)
Long-term operating lease liabilities	$ 250,041	$ 247,042

DESCRIPTION OF BUSINESS (Details) - Mar. 31, 2023	agency	facility
Home Health and Hospice Services
Segment Reporting Information [Line Items]
Number of service providers	96
Senior Living Services
Segment Reporting Information [Line Items]
Number of properties under lease	51	51

TRANSACTIONS WITH ENSIGN (Details) $ in Thousands	3 Months Ended
TRANSACTIONS WITH ENSIGN (Details) $ in Thousands	Mar. 31, 2023 USD ($) agency	Mar. 31, 2022 USD ($) property	Mar. 31, 2023 property	Mar. 31, 2023 facility	Jan. 27, 2022 USD ($) facility
Affiliates of Ensign
Related Party Transaction [Line Items]
Escrow deposits					$ 6,500
Senior Living Services
Related Party Transaction [Line Items]
Number of properties under lease	51			51
Related party
Related Party Transaction [Line Items]
Cost of services	$ 940	$ 574
Related party \| Senior Living Services
Related Party Transaction [Line Items]
Number of operating facilities \| property		32	29
Number of properties under lease \| facility					5
Related party \| Transition Services Agreement
Related Party Transaction [Line Items]
Expenses from transactions with related party	$ 273	$ 643

NET INCOME PER COMMON SHARE

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

NET INCOME PER COMMON SHARE

Basic 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:


	Three Months Ended March 31,
		2023		2022
Numerator:


Net income attributable to The Pennant Group, Inc.		$	1,850	$	1,014

Denominator:
Weighted average shares outstanding for basic net income per share		29,751		28,572
Plus: assumed incremental shares from exercise of options and assumed conversion or vesting of restricted stock(a)		396		1,571
Adjusted weighted average common shares outstanding for diluted income per share		30,147		30,143

Earnings Per Share:
Basic net income per common share		$	0.06	$	0.04
Diluted net income per common share		$	0.06	$	0.03


(a)						The diluted per share amounts do not reflect common equivalent shares outstanding of 2,002 for the three months ended March 31, 2023 and 1,690 for the three months ended March 31, 2022, because of their anti-dilutive effect.

DEBT - SCHEDULE OF LONG-TERM DEBT (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Debt Instrument [Line Items]
Less: unamortized debt issuance costs	$ (1,477)		$ (1,608)
Long-term debt, net	57,023		62,892
Amortization of deferred financing fees	130	$ 129
Revolving Credit Facility \| Line of credit
Debt Instrument [Line Items]
Revolving Credit Facility	$ 58,500		$ 64,500

- Definition

Amount, excluding unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

OPTIONS AND AWARDS - OPTIONS GRANTED (Details) - The Ensign Plans - $ / shares shares in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted (in shares)	467
2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted (in shares)	467
Weighted average fair value of options (in dollars per share)	$ 7.25
2023 \| Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-Free Interest Rate	4.10%
Expected life	6 years 6 months
Expected volatility	41.50%
Dividend Yield	0.00%
2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted (in shares)		213
Weighted average fair value of options (in dollars per share)		$ 6.03
2022 \| Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-Free Interest Rate		1.90%
Expected life		6 years 6 months
Expected volatility		40.00%
Dividend Yield		0.00%

GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS - INDEFINITE-LIVED INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Indefinite-lived Intangible Assets [Line Items]
Other indefinite-lived intangibles	$ 58,827	$ 58,617
Trade name
Indefinite-lived Intangible Assets [Line Items]
Other indefinite-lived intangibles	1,385	1,385
Medicare and Medicaid licenses
Indefinite-lived Intangible Assets [Line Items]
Other indefinite-lived intangibles	$ 57,442	$ 57,232

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Treasury Stock	Non-controlling Interest
Equity, beginning balance, common stock (in shares) at Dec. 31, 2021		28,826
Equity, beginning balance at Dec. 31, 2021	$ 114,244	$ 28	$ 95,595	$ 14,641	$ (65)	$ 4,045
Equity, beginning balance, treasury stock (in shares) at Dec. 31, 2021					3
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income attributable to The Pennant Group, Inc.	1,014			1,014
Net income attributable to noncontrolling interests	144					144
Share-based compensation	2,440		2,440
Issuance of common stock from the exercise of stock options (in shares)		21
Issuance of common stock from the exercise of stock options	90	$ 1	89
Net issuance of restricted stock (in shares)		2
Equity, ending balance, common stock (in shares) at Mar. 31, 2022		28,849
Equity, ending balance at Mar. 31, 2022	$ 117,932	$ 29	98,124	15,655	$ (65)	4,189
Equity, ending balance, treasury stock (in shares) at Mar. 31, 2022					3
Equity, beginning balance, common stock (in shares) at Dec. 31, 2022	29,692	30,149
Equity, beginning balance at Dec. 31, 2022	$ 125,657	$ 29	99,764	21,284	$ (65)	4,645
Equity, beginning balance, treasury stock (in shares) at Dec. 31, 2022	3				3
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income attributable to The Pennant Group, Inc.	$ 1,850			1,850
Net income attributable to noncontrolling interests	147					147
Share-based compensation	1,367		1,367
Issuance of common stock from the exercise of stock options (in shares)		57
Issuance of common stock from the exercise of stock options	$ 203		203
Net issuance of restricted stock (in shares)		(3)
Equity, ending balance, common stock (in shares) at Mar. 31, 2023	29,729	30,203
Equity, ending balance at Mar. 31, 2023	$ 129,224	$ 29	$ 101,334	$ 23,134	$ (65)	$ 4,792
Equity, ending balance, treasury stock (in shares) at Mar. 31, 2023	3				3

COMMITMENTS AND CONTINGENCIES	3 Months Ended
COMMITMENTS AND CONTINGENCIES	Mar. 31, 2023
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, which may include suspension, termination, or revocation of participation in governmental programs for the payment of the services the Company provides. 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 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 Condensed 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 governmental healthcare program (such as Medicare) or commercial 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 March 31, 2023, nine 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 March 31, 2023, and through the filing of this Quarterly Report on Form 10-Q, 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 March 31, 2023, the total amount due from the government payor impacted by the suspension was $5,134 and was recorded in long-term other assets. The amounts suspended represent all Medicare payments due to the provider number during the suspension. 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 continued 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 March 31, 2023, 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 and Washington which are subject to state insurance and possess their own limits. The Company is self-insured for claims related to employee health, dental, and vision care. To protect itself against loss exposure, the Company has purchased individual stop-loss insurance coverage that insures individual health claims that exceed $350 for each covered person for fiscal year 2023 and fiscal year 2022.

ACQUISITIONS	3 Months Ended
ACQUISITIONS	Mar. 31, 2023
Business Combination and Asset Acquisition [Abstract]
ACQUISITIONS	ACQUISITIONS The Company’s is focused on acquiring 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 Interim Financial Statements subsequent to the date of acquisition. Acquisitions are accounted for using the acquisition method of accounting. 2023 Acquisitions During the three months ended March 31, 2023, the Company expanded its operations with the addition of one home health agency as well as two senior living communities. In connection with the addition of the two senior living communities, the Company entered into a new long-term “triple-net” lease. 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 one home health agency acquired was a Medicare license and is considered an asset acquisition. The fair value of the home health license acquired was $210 and was allocated to indefinite-lived intangible assets. Subsequent EventsOn May 1, 2023, the Company closed on the purchase of one home health agency that expands the Company’s footprint in Colorado. The purchase of the home health agency was $875. A subsidiary of the Company entered into an operations transfer agreement with the prior operator.

REVENUE AND ACCOUNTS RECEIVABLE (Tables)

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Schedule of revenue by major payor source

Revenue by payor for the three months ended March 31, 2023 and 2022, is summarized in the following tables:


	Three Months Ended March 31, 2023
	Home Health and Hospice Services
	Home Health Services		Hospice Services		Senior Living Services		Total Revenue		Revenue %
Medicare	$	23,376	$	37,380	$	—	$	60,756	48.0	%
Medicaid	2,191		4,598		10,842		17,631		14.0
Subtotal	25,567		41,978		10,842		78,387		62.0
Managed care	15,932		1,194		—		17,126		13.5
Private and other(a)	6,291		117		24,543		30,951		24.5
Total revenue	$	47,790	$	43,289	$	35,385	$	126,464	100.0	%


(a)						Private and other payors in the Company’s home health and hospice services segment includes revenue from all payors generated in the Company’s home care operations.


	Three Months Ended March 31, 2022
	Home Health and Hospice Services
	Home Health Services		Hospice Services		Senior Living Services		Total Revenue		Revenue %
Medicare	$	21,357	$	33,721	$	—	$	55,078	48.4	%
Medicaid	2,506		3,265		9,623		15,394		13.5
Subtotal	23,863		36,986		9,623		70,472		61.9
Managed care	13,252		784		—		14,036		12.3
Private and other(a)	5,537		53		23,812		29,402		25.8
Total revenue	$	42,652	$	37,823	$	33,435	$	113,910	100.0	%


(a)						Private and other payors in the Company’s home health and hospice services segment includes revenue from all payors generated in the Company’s home care operations.

Schedule of accounts receivable

Accounts receivable, net as of March 31, 2023 and December 31, 2022 is summarized in the following table:


	March 31, 2023		December 31, 2022
Medicare	$	29,814	$	31,321
Medicaid	9,603		10,700
Managed care	9,445		9,370
Private and other	2,371		2,621
Accounts receivable, gross	51,233		54,012
Less: allowance for doubtful accounts	(573)		(592)
Accounts receivable, net	$	50,660	$	53,420

GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS - NARRATIVE (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible asset impairments	$ 0	$ 0

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash flows from operating activities:
Net income	$ 1,997	$ 1,158
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	1,280	1,147
Amortization of deferred financing fees	130	129
Impairment of long-lived assets	0	97
Provision for doubtful accounts	151	184
Share-based compensation	1,367	2,440
Deferred income taxes	776	1,749
Change in operating assets and liabilities, net of acquisitions:
Accounts receivable	3,166	(3,161)
Prepaid expenses and other assets	4,317	(4,665)
Operating lease obligations	(18)	120
Accounts payable	(772)	367
Accrued wages and related liabilities	(2,788)	(794)
Other accrued liabilities	(1,077)	1,635
Contract liabilities (CARES Act advance payments)	0	(4,722)
Other long-term liabilities	467	245
Net cash provided by (used in) operating activities	8,996	(4,071)
Cash flows from investing activities:
Purchase of property and equipment	(2,314)	(2,392)
Other	(12)	(190)
Net cash used in investing activities	(2,326)	(2,582)
Cash flows from financing activities:
Proceeds from Revolving Credit Facility	40,500	11,000
Payments on Revolving Credit Facility	(46,500)	(6,000)
Issuance of common stock upon the exercise of options	203	90
Net cash (used in) provided by financing activities	(5,797)	5,090
Net increase (decrease) in cash	873	(1,563)
Cash beginning of period	2,079	5,190
Cash end of period	2,952	3,627
Cash paid (received) during the period for:
Interest	1,536	499
Income taxes	30
Income taxes		(55)
Lease liabilities	8,927	9,516
Right-of-use assets obtained in exchange for new operating lease obligations	7,489	631
Non-cash adjustment to right-of-use assets and lease liabilities from lease modifications	0	9,349
Non-cash adjustment to right-of-use assets and lease liabilities from lease terminations and assignments	0	(33,804)
Non-cash investing activity:
Capital expenditures in accounts payable	$ 566	$ 720

OTHER ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Other Accrued Liabilities, Current [Abstract]
Refunds payable	$ 2,017	$ 2,244
Deferred revenue	1,609	1,592
Resident deposits	3,663	4,315
Property taxes	1,129	1,027
Deferred state relief funds	909	1,479
Accrued self-insurance liabilities	4,076	3,546
Other	2,713	2,481
Other accrued liabilities	$ 16,116	$ 16,684

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	3 Months Ended
	Mar. 31, 2023
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 unaudited condensed consolidated financial statements of the Company (the “Interim Financial Statements”) reflect the Company’s financial position, results of operations and cash flows of the business. The Interim Financial Statements 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”). Management believes that the Interim Financial Statements reflect, in all material respects, all adjustments which are of a normal and recurring nature necessary to present fairly the Company’s financial position, results of operations, and cash flows for the periods presented in conformity with GAAP. The results reported in these Interim Financial Statements are not necessarily indicative of results that may be expected for the entire year. The Condensed Consolidated Balance Sheet as of December 31, 2022 is derived from the Company’s annual audited Consolidated Financial Statements for the fiscal year ended December 31, 2022, which should be read in conjunction with these Interim Financial Statements. Certain information in the accompanying footnote disclosures normally included in annual financial statements was condensed or omitted for the interim periods presented in accordance with GAAP. All significant intercompany transactions and balances between the various legal entities comprising the Company have been eliminated in consolidation. The Company presents noncontrolling interests within the equity section of its Condensed Consolidated Balance Sheets and the amount of consolidated net income that is attributable to the Company and the noncontrolling interest in its Condensed Consolidated Statements of Income. The Company consists of various limited liability companies and corporations established to operate home health, hospice, home care, and senior living operations. The Interim Financial Statements include the accounts of all entities controlled by the Company through its ownership of a majority voting interest. Certain prior quarter amounts have been reclassified from cost of sales to loss on asset dispositions and impairment of assets, net for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations in the current period or prior period. Estimates and Assumptions - The preparation of the Interim 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 Interim Financial Statements and the reported amounts of revenue and expenses during the reporting periods. The most significant estimates in the Interim Financial Statements relate to revenue, intangible assets and goodwill, right-of-use assets and lease liabilities for leases greater than 12 months, self-insurance reserves, and income taxes. Actual results could differ from those estimates. 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 the employer-paid portion of social security taxes, all of which was repaid by 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.

PROPERTY AND EQUIPMENT—NET

3 Months Ended

Mar. 31, 2023

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT—NET

Property and equipment, net consist of the following:


	March 31, 2023		December 31, 2022
Land	$	96	$	96
Building	1,890		1,890
Leasehold improvements	19,106		18,759
Equipment	26,659		25,532
Furniture and fixtures	1,223		1,151
	48,974		47,428
Less: accumulated depreciation	(22,027)		(20,807)
Property and equipment, net	$	26,947	$	26,621

Depreciation expense was 1,275 for the three months ended March 31, 2023 and $1,114 for the three months ended March 31, 2022.

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 immaterial impairments recorded during the three months ended March 31, 2023 and 2022.

COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands	1 Months Ended	3 Months Ended	12 Months Ended
COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands	May 31, 2022 USD ($) agency	Mar. 31, 2023 USD ($) review	Dec. 31, 2022 USD ($)
Concentration Risk [Line Items]
Number of operating subsidiaries with reviews scheduled \| review		9
Suspended payments		$ 5,134
Number of patient records under review \| agency	107
Period of review	10 months
Sampled and extrapolated overpayments	$ 5,134
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		$ 350	$ 350

OPTIONS AND AWARDS

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

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”, and together with the OIP, 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.

Total share-based compensation expense for all Plans for the three months ended March 31, 2023 and 2022 was:


	Three Months Ended March 31,
		2023		2022
Share-based compensation expense related to stock options		$	850	$	842
Share-based compensation expense related to Restricted Stock		177		1,519
Share-based compensation expense related to Restricted Stock to non-employee directors		340		79
Total share-based compensation		$	1,367	$	2,440

In future periods, the Company estimates it will recognize the following share-based compensation expense for unvested stock options and unvested Restricted Stock as of March 31, 2023:


	Unrecognized Compensation Expense		Weighted Average Recognition Period (in years)
Unvested Stock Options	$	12,339	3.5
Unvested Restricted Stock	2,931		4.2
Total unrecognized share-based compensation expense	$	15,270

On July 25, 2022 the Company modified certain outstanding RSUs granted to the former chief executive officer of the Company 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 outstanding RSUs and accelerated the vesting on the remaining 943 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 in the third quarter of 2022.

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 stock-based compensation expense for share-based payment awards under the Plans. Determining the appropriate fair-value model and calculating the fair value of stock-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 as of March 31:


Grant Year	Options Granted	Risk-Free Interest Rate		Expected Life(a)	Expected Volatility(b)		Dividend Yield		Weighted Average Fair Value of Options
2023	467	4.1	%	6.5	41.5	%	—	%	$	7.25
2022	213	1.9	%	6.5	40.0	%	—	%	$	6.03


(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 three months ended March 31, 2023:


	Number of Options Outstanding	Weighted Average Exercise Price		Number of Options Vested	Weighted Average Exercise Price of Options Vested
December 31, 2022	2,219	20.76		973	$	16.90
Granted	467	15.02
Exercised	(25)	7.95
Forfeited	(24)	21.67
Expired	(24)	19.58
March 31, 2023	2,613	$	19.70	1,008	$	17.31

Restricted Stock

A summary of the status of Pennant’s non-vested Restricted Stock, and changes during the three months ended March 31, 2023, is presented below:


	Non-Vested Restricted Stock	Weighted Average Grant Date Fair Value
December 31, 2022	418	$	14.26
Granted	32	10.80
Vested	(38)	11.12
Forfeited	(3)	15.63
March 31, 2023	409	$	14.28

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 573	$ 592
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)	30,203,000	30,149,000
Common stock, shares outstanding (in shares)	29,729,000	29,692,000
Treasury stock, at cost (in shares)	3,000	3,000

LEASES (Tables)

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

Schedule of operating lease cost

The components of operating lease cost, are as follows:


	Three Months Ended March 31,
		2023		2022
Operating Lease Costs:
Community Rent—cost of services		$	8,274	$	8,789
Office Rent—cost of services		1,323		1,262
Rent—cost of services		$	9,597	$	10,051

General and administrative expense		$	93	$	81
Variable lease cost (a)		$	1,730	$	1,575


(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 the Company’s triple net lease, and which is included in cost of services for the three months ended March 31, 2023 and 2022.

Schedule of future minimum lease payments

The following table shows the lease maturity analysis for all leases as of March 31, 2023, for the years ended December 31:


Year	Amount
2023 (Remainder)	$	27,102
2024	35,658
2025	34,302
2026	33,249
2027	32,662
Thereafter	253,638
Total lease payments	416,611
Less: present value adjustments	(149,714)
Present value of total lease liabilities	266,897
Less: current lease liabilities	(16,856)
Long-term operating lease liabilities	$	250,041

BUSINESS SEGMENTS - NARRATIVE (Details) - Mar. 31, 2023	agency	facility
Home Health and Hospice Services
Segment Reporting Information [Line Items]
Number of service providers	96
Senior Living Services
Segment Reporting Information [Line Items]
Number of properties under lease	51	51

PROPERTY AND EQUIPMENT—NET (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 48,974		$ 47,428
Less: accumulated depreciation	(22,027)		(20,807)
Property and equipment, net	26,947		26,621
Depreciation	1,275	$ 1,114
Land
Property, Plant and Equipment [Line Items]
Property and equipment, gross	96		96
Building
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,890		1,890
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	19,106		18,759
Equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	26,659		25,532
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 1,223		$ 1,151

BUSINESS SEGMENTS (Tables)

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Schedule of financial data combined by business segment

The following tables present certain financial information regarding the Company’s reportable segments, general and administrative expenses are not allocated to the reportable segments and are included in “All Other” for the three months ended March 31, 2023 and 2022:


	Home Health and Hospice Services		Senior Living Services		All Other		Total
Three Months Ended March 31, 2023
Revenue	$	91,079	$	35,385	$	—	$	126,464
Segment Adjusted EBITDAR from Operations	$	14,412	$	10,241	$	(7,514)	$	17,139
Three Months Ended March 31, 2022
Revenue	$	80,475	$	33,435	$	—	$	113,910
Segment Adjusted EBITDAR from Operations	$	13,948	$	9,432	$	(8,146)	$	15,234

Schedule of reconciliation of total combined adjusted EBITDAR from operations for our reportable segments to combined income from operations

This following table provides a reconciliation of Segment Adjusted EBITDAR from Operations to income from operations:


	Three Months Ended March 31,
		2023		2022
Segment Adjusted EBITDAR from Operations		$	17,139	$	15,234
Less: Depreciation and amortization		1,280		1,147
Rent—cost of services		9,597		10,051
Other expense		30		3
Adjustments to Segment EBITDAR from Operations:
Less: Costs at start-up operations(a)		203		131
Share-based compensation expense and related taxes(b)		1,419		2,440
Acquisition related costs and credit allowances(c)		32		—

Costs associated with transitioning operations(d)		47		(757)
Unusual, non-recurring or redundant charges(e)		398		37
Add: Net income attributable to noncontrolling interest		147		144
Condensed Consolidated Income from Operations		$	4,280	$	2,326


(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. 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)						During the three months ended March 31, 2023, an affiliate of the Company placed its memory care units into transition and is actively seeking to sublease the units to an unrelated third party. The amount above represents the net operating impact attributable to the units in transition. The amounts reported exclude rent and depreciation and amortization expense related to such operations. During January 2022, affiliates of the Company entered into 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 above represents the net impact on revenue and cost of service attributable to all of the transferred entities. The amounts reported exclude rent and depreciation and amortization expense related to such operations.


(e)						Represents unusual or non-recurring charges for legal services, implementation costs, integration costs, and consulting fees in general and administrative expenses. Costs identified as redundant or non-recurring incurred by the Company for additional services provided by Ensign. All amounts are included in general and administrative expense. Fees incurred were $273 for the three months ended March 31, 2023, and $643 for the three months ended March 31, 2022.

LEASES - NARRATIVE (Details) $ in Thousands	3 Months Ended
LEASES - NARRATIVE (Details) $ in Thousands	Mar. 31, 2023 USD ($)	Mar. 31, 2022 USD ($) property	Mar. 31, 2023 USD ($)	Mar. 31, 2023 agency	Mar. 31, 2023 property	Mar. 31, 2023 facility	Mar. 31, 2023	Mar. 31, 2023 arrangement	Apr. 01, 2022 lease	Jan. 27, 2022 facility
Lessee, Lease, Description [Line Items]
Non-cash adjustment to right-of-use assets and lease liabilities from lease modifications		$ 9,349	$ 0
Weighted average remaining lease term	12 years 6 months
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	$ 33,804
Non-cash adjustment to right-of-use assets and lease liabilities from lease modifications		9,349
Related party \| Operating lease, rent expense
Lessee, Lease, Description [Line Items]
Fees incurred	$ 3,416	$ 3,484
Senior Living Services
Lessee, Lease, Description [Line Items]
Number of properties under lease				51		51
Senior Living Services \| Related party
Lessee, Lease, Description [Line Items]
Number of properties under lease \| facility										5
Number of operating facilities \| property		32			29
Number of properties under lease, master lease agreement \| facility						14
Number of separate master lease arrangements \| arrangement								3
Number of terminated leases under master lease agreement \| lease									1
Senior Living Services \| Minimum
Lessee, Lease, Description [Line Items]
Lease term	15 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

LEASES

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

LEASES

The Company’s independent operating subsidiaries lease 51 senior living communities and its administrative offices under non-cancelable operating leases, most of which have initial lease terms ranging from 15 to 25 years. Most of these leases contain renewal options, most involve rent increases and none contain purchase options. The lease term excludes lease renewals because the renewal rents are not at a bargain, there are no economic penalties for the Company to renew the lease, and it is not reasonably certain that the Company will exercise the extension options. The Company’s independent operating subsidiaries leased 29 and 32 communities from subsidiaries of Ensign (the “Ensign Leases”) under a master lease arrangement as of March 31, 2023 and March 31, 2022, respectively. Each of the leases have an initial term of between 14 and 20 years from the lease commencement date. The total amount of rent expense included in rent - cost of services paid to subsidiaries of Ensign was $3,416 for the three months ended March 31, 2023 and $3,484 for the three months ended March 31, 2022. 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.

Fourteen of the Company’s affiliated senior living communities, excluding the communities that are operated under the Ensign Leases (as defined herein), are operated under three 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.

As further described in Note 3, on January 27, 2022, affiliates of the Company entered into Transfer Agreements with affiliates of Ensign, providing for the transfer of the operations of five 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 $33,804. One of the terminated leases was part of a master lease agreement. As a result of the transferred leases being removed from master lease arrangement, the remaining lease components under the master lease arrangement was modified which resulted in a net increase to the lease liability and ROU asset balance of $9,349 for the three months ended March 31, 2022.

The components of operating lease cost, are as follows:


	Three Months Ended March 31,
		2023		2022
Operating Lease Costs:
Community Rent—cost of services		$	8,274	$	8,789
Office Rent—cost of services		1,323		1,262
Rent—cost of services		$	9,597	$	10,051

General and administrative expense		$	93	$	81
Variable lease cost (a)		$	1,730	$	1,575


(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 the Company’s triple net lease, and which is included in cost of services for the three months ended March 31, 2023 and 2022.

The following table shows the lease maturity analysis for all leases as of March 31, 2023, for the years ended December 31:


Year	Amount
2023 (Remainder)	$	27,102
2024	35,658
2025	34,302
2026	33,249
2027	32,662
Thereafter	253,638
Total lease payments	416,611
Less: present value adjustments	(149,714)
Present value of total lease liabilities	266,897
Less: current lease liabilities	(16,856)
Long-term operating lease liabilities	$	250,041

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 March 31, 2023, the weighted average remaining lease term is 12.5 years and the weighted average discount rate is 7.6%.

REVENUE AND ACCOUNTS RECEIVABLE

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

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, Commercial and managed care programs (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 62.0% of the Company’s revenue for the three months ended March 31, 2023, and 61.9% for the three months ended March 31, 2022. 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 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.

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. 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 the payor 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, the Company records 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

Revenue by payor for the three months ended March 31, 2023 and 2022, is summarized in the following tables:


	Three Months Ended March 31, 2023
	Home Health and Hospice Services
	Home Health Services		Hospice Services		Senior Living Services		Total Revenue		Revenue %
Medicare	$	23,376	$	37,380	$	—	$	60,756	48.0	%
Medicaid	2,191		4,598		10,842		17,631		14.0
Subtotal	25,567		41,978		10,842		78,387		62.0
Managed care	15,932		1,194		—		17,126		13.5
Private and other(a)	6,291		117		24,543		30,951		24.5
Total revenue	$	47,790	$	43,289	$	35,385	$	126,464	100.0	%


(a)						Private and other payors in the Company’s home health and hospice services segment includes revenue from all payors generated in the Company’s home care operations.


	Three Months Ended March 31, 2022
	Home Health and Hospice Services
	Home Health Services		Hospice Services		Senior Living Services		Total Revenue		Revenue %
Medicare	$	21,357	$	33,721	$	—	$	55,078	48.4	%
Medicaid	2,506		3,265		9,623		15,394		13.5
Subtotal	23,863		36,986		9,623		70,472		61.9
Managed care	13,252		784		—		14,036		12.3
Private and other(a)	5,537		53		23,812		29,402		25.8
Total revenue	$	42,652	$	37,823	$	33,435	$	113,910	100.0	%


(a)						Private and other payors in the Company’s home health and hospice services segment includes revenue from all payors generated in the Company’s home care operations.

Balance Sheet Impact

Included in the Company’s Condensed 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, net as of March 31, 2023 and December 31, 2022 is summarized in the following table:


	March 31, 2023		December 31, 2022
Medicare	$	29,814	$	31,321
Medicaid	9,603		10,700
Managed care	9,445		9,370
Private and other	2,371		2,621
Accounts receivable, gross	51,233		54,012
Less: allowance for doubtful accounts	(573)		(592)
Accounts receivable, net	$	50,660	$	53,420

Concentrations - 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 76.9% and 77.8% of its total gross accounts receivable as of March 31, 2023 and December 31, 2022, respectively. Revenue from reimbursement under the Medicare and Medicaid programs accounted for 62.0% for the three months ended March 31, 2023, and 61.9% of the Company’s revenue for the three months ended March 31, 2022.

Practical Expedients and Exemptions

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.

OPTIONS AND AWARDS - RESTRICTED STOCK (Details) - The Ensign Plans - Restricted stock awards shares in Thousands	3 Months Ended
	Mar. 31, 2023 $ / shares shares
Non-Vested Restricted Stock
Beginning balance, outstanding (in shares) \| shares	418
Granted (in shares) \| shares	32
Vested (in shares) \| shares	(38)
Forfeited (in shares) \| shares	(3)
Ending balance, outstanding (in shares) \| shares	409
Weighted Average Grant Date Fair Value
Beginning of period, weighted average exercise price (in dollars per share) \| $ / shares	$ 14.26
Granted (in dollars per share) \| $ / shares	10.80
Vested (in dollars per share) \| $ / shares	11.12
Forfeited (in dollars per share) \| $ / shares	15.63
End of period, weighted average exercise price (in dollars per share) \| $ / shares	$ 14.28

COMMON STOCK REPURCHASE PROGRAM	3 Months Ended
COMMON STOCK REPURCHASE PROGRAM	Mar. 31, 2023
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 three months ended March 31, 2023.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-URI https://asc.fasb.org/topic&trid=2208762

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Topic 505
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-Section 50
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-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Paragraph 14
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
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-Subparagraph (SX 210.3-04)
-URI https://asc.fasb.org/extlink&oid=120397183&loc=d3e187085-122770

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
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-Paragraph 18
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-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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-Paragraph 18
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-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 16: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

OPTIONS AND AWARDS (Tables)

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of total share-based compensation expense

Total share-based compensation expense for all Plans for the three months ended March 31, 2023 and 2022 was:


	Three Months Ended March 31,
		2023		2022
Share-based compensation expense related to stock options		$	850	$	842
Share-based compensation expense related to Restricted Stock		177		1,519
Share-based compensation expense related to Restricted Stock to non-employee directors		340		79
Total share-based compensation		$	1,367	$	2,440

In future periods, the Company estimates it will recognize the following share-based compensation expense for unvested stock options and unvested Restricted Stock as of March 31, 2023:


	Unrecognized Compensation Expense		Weighted Average Recognition Period (in years)
Unvested Stock Options	$	12,339	3.5
Unvested Restricted Stock	2,931		4.2
Total unrecognized share-based compensation expense	$	15,270

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 as of March 31:


Grant Year	Options Granted	Risk-Free Interest Rate		Expected Life(a)	Expected Volatility(b)		Dividend Yield		Weighted Average Fair Value of Options
2023	467	4.1	%	6.5	41.5	%	—	%	$	7.25
2022	213	1.9	%	6.5	40.0	%	—	%	$	6.03


(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 three months ended March 31, 2023:


	Number of Options Outstanding	Weighted Average Exercise Price		Number of Options Vested	Weighted Average Exercise Price of Options Vested
December 31, 2022	2,219	20.76		973	$	16.90
Granted	467	15.02
Exercised	(25)	7.95
Forfeited	(24)	21.67
Expired	(24)	19.58
March 31, 2023	2,613	$	19.70	1,008	$	17.31

Schedule of non-vested restricted stock awards

A summary of the status of Pennant’s non-vested Restricted Stock, and changes during the three months ended March 31, 2023, is presented below:


	Non-Vested Restricted Stock	Weighted Average Grant Date Fair Value
December 31, 2022	418	$	14.26
Granted	32	10.80
Vested	(38)	11.12
Forfeited	(3)	15.63
March 31, 2023	409	$	14.28

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - CARES Act - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2020
Unusual or Infrequent Item, or Both [Line Items]
Accrued payroll taxes employer portion	$ 7,836
The coronavirus aid, relief, and economic security act, advance payments received		$ 27,997

DEBT - NARRATIVE (Details) - USD ($)	Feb. 23, 2021	Mar. 31, 2023
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		7.53%
Borrowing availability		$ 87,314,000
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

REVENUE AND ACCOUNTS RECEIVABLE - NARRATIVE (Details)	3 Months Ended		12 Months Ended
REVENUE AND ACCOUNTS RECEIVABLE - NARRATIVE (Details)	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
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, percent	100.00%	100.00%
Customer concentration risk \| Revenue \| Subtotal
Disaggregation of Revenue [Line Items]
Revenue, percent	62.00%	61.90%
Customer concentration risk \| Receivables \| Subtotal
Disaggregation of Revenue [Line Items]
Revenue, percent	76.90%		77.80%

BUSINESS SEGMENTS

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

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. The Company’s Chief Executive Officer, who is the Company’s Chief Operating Decision Maker (“CODM”), reviews financial information at the operating segment level. The Company also reports an “all other” category that includes general and administrative expense from the Company’s Service Center.

As of March 31, 2023, the Company provided services through 96 affiliated home health, hospice and home care agencies, and 51 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) the costs associated with transitioning operations, (5) unusual, non-recurring or redundant charges, and (6) net income 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.


	Home Health and Hospice Services		Senior Living Services		All Other		Total
Three Months Ended March 31, 2023
Revenue	$	91,079	$	35,385	$	—	$	126,464
Segment Adjusted EBITDAR from Operations	$	14,412	$	10,241	$	(7,514)	$	17,139
Three Months Ended March 31, 2022
Revenue	$	80,475	$	33,435	$	—	$	113,910
Segment Adjusted EBITDAR from Operations	$	13,948	$	9,432	$	(8,146)	$	15,234

This following table provides a reconciliation of Segment Adjusted EBITDAR from Operations to income from operations:


	Three Months Ended March 31,
		2023		2022
Segment Adjusted EBITDAR from Operations		$	17,139	$	15,234
Less: Depreciation and amortization		1,280		1,147
Rent—cost of services		9,597		10,051
Other expense		30		3
Adjustments to Segment EBITDAR from Operations:
Less: Costs at start-up operations(a)		203		131
Share-based compensation expense and related taxes(b)		1,419		2,440
Acquisition related costs and credit allowances(c)		32		—

Costs associated with transitioning operations(d)		47		(757)
Unusual, non-recurring or redundant charges(e)		398		37
Add: Net income attributable to noncontrolling interest		147		144
Condensed Consolidated Income from Operations		$	4,280	$	2,326


(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. 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)						During the three months ended March 31, 2023, an affiliate of the Company placed its memory care units into transition and is actively seeking to sublease the units to an unrelated third party. The amount above represents the net operating impact attributable to the units in transition. The amounts reported exclude rent and depreciation and amortization expense related to such operations. During January 2022, affiliates of the Company entered into 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 above represents the net impact on revenue and cost of service attributable to all of the transferred entities. The amounts reported exclude rent and depreciation and amortization expense related to such operations.


(e)						Represents unusual or non-recurring charges for legal services, implementation costs, integration costs, and consulting fees in general and administrative expenses. Costs identified as redundant or non-recurring incurred by the Company for additional services provided by Ensign. All amounts are included in general and administrative expense. Fees incurred were $273 for the three months ended March 31, 2023, and $643 for the three months ended March 31, 2022.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org/topic&trid=2134510

+ Details

REVENUE AND ACCOUNTS RECEIVABLE - REVENUE BY MAJOR PAYOR (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Disaggregation of Revenue [Line Items]
Revenue	$ 126,464	$ 113,910
Revenue \| Customer concentration risk
Disaggregation of Revenue [Line Items]
Revenue %	100.00%	100.00%
Medicare
Disaggregation of Revenue [Line Items]
Revenue	$ 60,756	$ 55,078
Medicare \| Revenue \| Customer concentration risk
Disaggregation of Revenue [Line Items]
Revenue %	48.00%	48.40%
Medicaid
Disaggregation of Revenue [Line Items]
Revenue	$ 17,631	$ 15,394
Medicaid \| Revenue \| Customer concentration risk
Disaggregation of Revenue [Line Items]
Revenue %	14.00%	13.50%
Subtotal
Disaggregation of Revenue [Line Items]
Revenue	$ 78,387	$ 70,472
Subtotal \| Revenue \| Customer concentration risk
Disaggregation of Revenue [Line Items]
Revenue %	62.00%	61.90%
Managed care
Disaggregation of Revenue [Line Items]
Revenue	$ 17,126	$ 14,036
Managed care \| Revenue \| Customer concentration risk
Disaggregation of Revenue [Line Items]
Revenue %	13.50%	12.30%
Private and other
Disaggregation of Revenue [Line Items]
Revenue	$ 30,951	$ 29,402
Private and other \| Revenue \| Customer concentration risk
Disaggregation of Revenue [Line Items]
Revenue %	24.50%	25.80%
Home Health and Hospice Services \| Home Health Services
Disaggregation of Revenue [Line Items]
Revenue	$ 47,790	$ 42,652
Home Health and Hospice Services \| Home Health Services \| Medicare
Disaggregation of Revenue [Line Items]
Revenue	23,376	21,357
Home Health and Hospice Services \| Home Health Services \| Medicaid
Disaggregation of Revenue [Line Items]
Revenue	2,191	2,506
Home Health and Hospice Services \| Home Health Services \| Subtotal
Disaggregation of Revenue [Line Items]
Revenue	25,567	23,863
Home Health and Hospice Services \| Home Health Services \| Managed care
Disaggregation of Revenue [Line Items]
Revenue	15,932	13,252
Home Health and Hospice Services \| Home Health Services \| Private and other
Disaggregation of Revenue [Line Items]
Revenue	6,291	5,537
Home Health and Hospice Services \| Hospice Services
Disaggregation of Revenue [Line Items]
Revenue	43,289	37,823
Home Health and Hospice Services \| Hospice Services \| Medicare
Disaggregation of Revenue [Line Items]
Revenue	37,380	33,721
Home Health and Hospice Services \| Hospice Services \| Medicaid
Disaggregation of Revenue [Line Items]
Revenue	4,598	3,265
Home Health and Hospice Services \| Hospice Services \| Subtotal
Disaggregation of Revenue [Line Items]
Revenue	41,978	36,986
Home Health and Hospice Services \| Hospice Services \| Managed care
Disaggregation of Revenue [Line Items]
Revenue	1,194	784
Home Health and Hospice Services \| Hospice Services \| Private and other
Disaggregation of Revenue [Line Items]
Revenue	117	53
Senior Living Services
Disaggregation of Revenue [Line Items]
Revenue	35,385	33,435
Senior Living Services \| Medicare
Disaggregation of Revenue [Line Items]
Revenue	0	0
Senior Living Services \| Medicaid
Disaggregation of Revenue [Line Items]
Revenue	10,842	9,623
Senior Living Services \| Subtotal
Disaggregation of Revenue [Line Items]
Revenue	10,842	9,623
Senior Living Services \| Managed care
Disaggregation of Revenue [Line Items]
Revenue	0	0
Senior Living Services \| Private and other
Disaggregation of Revenue [Line Items]
Revenue	$ 24,543	$ 23,812

TRANSACTIONS WITH ENSIGN	3 Months Ended
TRANSACTIONS WITH ENSIGN	Mar. 31, 2023
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”). Pennant and Ensign continue to partner in the provision of services along the healthcare continuum. The Company incurred costs of $273 for the three months ended March 31, 2023 and $643 for the three months ended March 31, 2022, that related primarily to shared services at proximate operations. Expenses related to room and board charges at Ensign skilled nursing facilities for hospice patients were $940 for the three months ended March 31, 2023 and $574 for the three months ended March 31, 2022, and are included in cost of services. The Company’s independent operating subsidiaries leased 29 and 32 communities from subsidiaries of Ensign under a master lease arrangement as of March 31, 2023 and March 31, 2022, respectively. See further discussion below at Note 8, Leases. 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 five senior living communities (the “Transaction”). The Transfer Agreements required one of the transferors to place $6,500 in escrow to cover post-closing capital expenditures and operating losses related to one of the communities, and such escrow was funded by an initial payment by the transferor at closing followed by eight equal monthly installments. The Transaction closed in April 2022.

PROPERTY AND EQUIPMENT—NET (Tables)

3 Months Ended

Mar. 31, 2023

Property, Plant and Equipment [Abstract]

Schedule of property and equipment, net

Property and equipment, net consist of the following:


	March 31, 2023		December 31, 2022
Land	$	96	$	96
Building	1,890		1,890
Leasehold improvements	19,106		18,759
Equipment	26,659		25,532
Furniture and fixtures	1,223		1,151
	48,974		47,428
Less: accumulated depreciation	(22,027)		(20,807)
Property and equipment, net	$	26,947	$	26,621

GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS - ACTIVITY IN GOODWILL (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($)
Goodwill [Roll Forward]
Goodwill, beginning balance	$ 79,497
Additions	0
Goodwill, ending balance	79,497
Home Health and Hospice Services
Goodwill [Roll Forward]
Goodwill, beginning balance	75,855
Additions	0
Goodwill, ending balance	75,855
Senior Living Services
Goodwill [Roll Forward]
Goodwill, beginning balance	3,642
Additions	0
Goodwill, ending balance	$ 3,642

- Definition

Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

+ References + Details

INCOME TAXES	3 Months Ended
INCOME TAXES	Mar. 31, 2023
Income Tax Disclosure [Abstract]
INCOME TAXES	INCOME TAXESThe Company recorded income tax expense of $907 and $542, or 31.2% and 31.9% of earnings before income taxes for the three months ended March 31, 2023 and 2022, respectively. The decrease in effective tax is primarily due to a decrease in non-deductible equity compensation.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
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-Paragraph 21
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

INCOME TAXES (Details) - USD ($) $ in Thousands	3 Months Ended
INCOME TAXES (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Mar. 31, 2022
Income Tax Disclosure [Abstract]
Income tax expense (benefit)	$ 907	$ 542
Effective income tax rate reconciliation, percent	31.20%	31.90%

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

OPTIONS AND AWARDS - UNVESTED STOCK OPTIONS AND RESTRICTED STOCK (Details) - The Ensign Plans $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized share-based compensation expense	$ 15,270
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unvested Stock Options	$ 12,339
Weighted Average Recognition Period (in years)	3 years 6 months
Restricted stock awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unvested Restricted Stock	$ 2,931
Weighted Average Recognition Period (in years)	4 years 2 months 12 days