Strategic Acquisition Fuels Pennant’s Growth Trajectory

Last month, Pennant finalized the purchase of home health and hospice agencies previously owned by Amedisys and LHC Group, both of which were sold as part of UnitedHealth’s broader portfolio adjustments. The transaction, valued at $187 million in annual revenue, encompasses 54 locations, with approximately 70% focused on home health services and 30% on hospice care. This acquisition significantly bolsters Pennant’s existing network, bringing its total to 141 home health and hospice agencies and 61 senior living communities.

The appeal of this deal, according to John J. Gochnour, Pennant’s president and chief operating officer, lay in its strategic geography and the strength of the existing operational teams. “We would never have bought all of Amedisys,” Gochnour explained to Home Health Care News. “It would have been way too big for us, but we had this unique opportunity to purchase a solid group of assets that stretch geographically from the Tri Cities in northeastern Tennessee, all the way to Memphis and southwestern Tennessee, all the way down to Chattanooga in the southeastern corner.”

Eagle, Idaho-based Pennant has cultivated a reputation as an active acquirer, but its strategy extends beyond simple expansion. The company’s core philosophy centers on a localized approach to healthcare, empowering local leaders to make decisions tailored to their communities. This model, Gochnour believes, is key to successfully integrating the newly acquired assets.

“Our operating model is unique,” Gochnour stated. “It’s focused on local ownership and empowering local leaders to make decisions. When we bring on new operations, we need strong operations to implement our model and help transition those operations.”

Leveraging the Signature Healthcare Integration as a Blueprint

Pennant is employing a phased integration process, drawing heavily on its successful integration of Signature Healthcare at Home. CEO Brent Guerisoli highlighted this acquisition as a valuable learning experience. “The Signature acquisition was similar, in many respects, to this most recent deal,” Guerisoli said during the company’s Q3 earnings call. “Signature enjoyed a deserved reputation as a quality operator, and we saw that we could build on their legacy through the Pennant model. Signature’s transition has been a tremendous success.”

The Signature deal, previously the company’s largest, served as a proving ground, forcing Pennant to refine its integration capabilities. “The Signature deal required new things of us, as an organization, and we grew because of it,” Gochnour added. “Now, we’re again doing something that is larger than what we’ve done previously, but is consistent with our disciplined approach. We believe that, right now, this continues to push a flywheel.”

The current integration plan is structured around three key phases: implementing Pennant’s operating model, rebranding the acquired assets, and transitioning existing systems. Pennant has proactively identified potential challenges and is working closely with UnitedHealth and Amedisys to navigate them effectively. “UnitedHealth and Amedisys have been great partners through that process, so we have been able to respond and adapt to the unique challenges that we faced,” Gochnour noted.

What role will data analytics play in optimizing care delivery within Pennant’s expanded network? And how will the company balance standardization with the need for localized care approaches?

Gochnour emphasized Pennant’s unwavering commitment to its core mission: providing life-changing services to patients and creating opportunities for healthcare professionals. “If there’s a single side opportunity that fits that criteria, we’re going to jump on it,” he said. “If there’s a multi-site opportunity that fits that criteria, and it makes sense, we’re going to do that too.”

Further reading on the evolving landscape of home healthcare mergers and acquisitions can be found at McKinsey & Company and Deloitte.

Frequently Asked Questions About Pennant Group’s Acquisition

• What is the primary focus of Pennant Group’s acquisition strategy?

  Pennant Group prioritizes acquisitions that align with its localized operating model, empowering local leaders and providing life-changing services to patients.

• How does Pennant Group approach integrating newly acquired home health and hospice agencies?

  Pennant utilizes a three-phase integration process: implementing its operating model, rebranding assets, and transitioning systems, leveraging lessons learned from previous acquisitions like Signature Healthcare at Home.

• What geographic areas are covered by the recent Amedisys and LHC Group asset acquisition?

  The acquired assets span a region in Tennessee, from the Tri Cities in the northeast to Memphis in the southwest, and extending down to Chattanooga in the southeast.

• What percentage of the acquired revenue comes from home health versus hospice services?

  Approximately 70% of the $187 million in annual revenue is generated from home health services, while the remaining 30% comes from hospice care.

• How does Pennant Group’s operating model differ from other home healthcare providers?

  Pennant’s model emphasizes local ownership and decision-making, empowering local leaders to tailor care to the specific needs of their communities.