Pennant Group acquires Signature Healthcare at Home for $80 million

Pennant Group Inc. (NASDAQ PNTG) has entered into an agreement to acquire the hospice and home care assets of Signature Healthcare at Home for $80 million.

Pennant is the holding company for a group of independent providers of hospice, home care and senior care services located in 13 states. The company announced the deal in a statement Thursday.

The decision to buy Signature’s assets was a key part of Pennant’s strategic growth plans, according to CEO Brent Guerisoli. The quality of the hospice and home care provider’s performance and organizational culture played a big role in the acquisition, Guerisoli said.

“This is a significant acquisition in Pennant’s history,” Guerisoli said in a statement. “We are excited to make this investment because of the quality of Signature’s people and operations. Its locations, philosophy and culture perfectly complement our existing operations in the Pacific Northwest. A key tenet of Pennant’s disciplined growth strategy is that we make acquisitions on a foundation of strength, where we have solid existing leaders and thriving operations. This transaction is a great example of that.”

The transaction comprises two separate purchase agreements, one of which is expected to close by August 1 and the other by January 1, subject to customary closing conditions and regulatory approvals.

The acquisition of Signature will expand Pennant’s current presence in three states. The purchase adds seven locations to the company’s footprint in Oregon, as well as multiple locations in four cities in Washington state and two cities in southwest Idaho.

“As we transition these operations to Pennant, we are pleased to expand our presence in these key states and provide Signature leaders and employees the opportunity to benefit from our innovative operating model and leadership development programs, as well as implement clinical and operational best practices that will benefit patients and their communities,” said John Gochnour, president and chief operating officer of Pennant.

Pennant will continue to pursue growth opportunities in hospice, home care and senior living, targeting strategic and underperforming operations of all sizes, Gochnour added. The company currently has 115 hospice and home care agencies and 54 senior living providers as independent subsidiaries.

Signature Healthcare at Home has an average of 300 hospice patients per day (ADC), and home hospice admissions have exceeded 12,000 patients in the past year. The hospice and home care provider has annual revenue of approximately $78 million. Signature also offers palliative and primary care services.

According to Stephens analyst Scott Fidel in his research note, the deal is expected to contribute to Pennant’s revenue growth of 13 percent, as well as a 25 percent increase in home care admissions and a 3 percent increase in the number of hospices receiving revenue from day care.

According to Signature CEO Mary Kofstad, the agreement will help expand career development opportunities for current and future employees.

Signature and The Pennant Group are aligned in terms of shared missions, values ​​and strategic growth goals, Kofstad said. The companies’ similar strategies regarding retention and career development were also a factor in considering the deal, she said.

“After 25 years of serving communities throughout the Pacific Northwest, we are thrilled to be acquired by Pennant,” Kofstad said in the announcement. “This transition represents significant professional and personal growth opportunities for our Signature associates whose inspiring dedication and work ethic have made us what we are, and who will continue to write new chapters in Signature’s history with the additional support and resources provided by The Pennant Group.”