The Pennant Group Announces Pricing of Public Offering of Common Stock

Rhea-AI Summary

The Pennant Group (NASDAQ: PNTG) announced the pricing of an underwritten public offering of 3,500,000 shares of its common stock at $31.00 per share, aiming to raise $108.5 million before deducting underwriting discounts, commissions, and expenses. The underwriters have a 30-day option to purchase an additional 525,000 shares. The company plans to use the net proceeds to repay outstanding debt under its revolving credit facility and for general corporate purposes. The offering is expected to close around October 4, 2024, subject to customary conditions. Citigroup and Truist Securities are the lead book-running managers, with Wells Fargo Securities and RBC Capital Markets as joint book-running managers. Oppenheimer & Co. and Stephens Inc. are co-managers. The offering is being made under an effective shelf registration statement filed with the SEC. A preliminary prospectus supplement was filed on September 30, 2024, and the final prospectus supplement will be filed with the SEC.

Positive

• Expected gross proceeds of $108.5 million from the offering.
• Net proceeds to be used for repaying debt and general corporate purposes.

Negative

• Potential shareholder dilution due to the issuance of 3,500,000 new shares and an additional 525,000 shares option.

Insights

Financial Analyst

The Pennant Group's public offering of 3.5 million shares at $31.00 per share is a significant capital raise, potentially bringing in $108.5 million in gross proceeds. This move suggests the company is looking to strengthen its financial position, primarily by reducing debt. The use of proceeds to repay outstanding indebtedness under their revolving credit facility indicates a strategic focus on improving their balance sheet.

The pricing at $31.00 per share is noteworthy, as it represents a 3.1% discount to the previous day's closing price of $32.00. This slight discount is typical for secondary offerings to ensure full subscription. The additional 30-day option for underwriters to purchase up to 525,000 more shares provides flexibility to meet excess demand if present.

The involvement of major underwriters like Citigroup, Truist Securities, Wells Fargo Securities and RBC Capital Markets lends credibility to the offering and suggests strong institutional interest. This capital raise, while dilutive to existing shareholders, could position Pennant Group for future growth opportunities and improved financial flexibility.

Market Research Analyst

The timing of this offering is intriguing, coming amidst a challenging market environment for healthcare services companies. Pennant Group, operating in the home health and hospice sectors, is likely capitalizing on investor interest in these resilient healthcare segments that have shown strength during economic uncertainties.

The size of the offering, potentially increasing the company's outstanding shares by about 11.7% (excluding the overallotment option), is substantial. This could impact the stock's liquidity positively, potentially attracting more institutional investors. However, it's important to monitor how the market absorbs this increased float.

The use of proceeds for debt repayment rather than acquisitions or expansion might signal a more conservative approach in the near term. This could be viewed positively by investors concerned about overleverage in the healthcare services sector. The improved balance sheet could provide Pennant with more flexibility for future strategic moves, potentially including M&A activity once market conditions stabilize.

EAGLE, Idaho, Oct. 02, 2024 (GLOBE NEWSWIRE) -- The Pennant Group, Inc. (NASDAQ: PNTG) (the “Company”) today announced the pricing of an underwritten public offering of 3,500,000 shares of its common stock at a public offering price of $31.00 per share. The gross proceeds from the offering, before deducting underwriting discounts and commissions and offering expenses, are expected to be $108.5 million. In addition, the Company has granted the underwriters a 30-day option to purchase up to an additional 525,000 shares of common stock. The Company expects to use the net proceeds from the offering to repay outstanding indebtedness under the Company’s revolving credit facility and any remaining for general corporate purposes. The offering is expected to close on or about October 4, 2024, subject to customary closing conditions.

Citigroup and Truist Securities are acting as the lead book-running managers for the offering. Wells Fargo Securities and RBC Capital Markets are acting as joint book-running managers. Oppenheimer & Co. and Stephens Inc. are acting as co-managers. The offering of the common stock is being made pursuant to the Company’s effective shelf registration statement filed with the Securities and Exchange Commission (the “SEC”). A preliminary prospectus supplement and accompanying prospectus relating to and describing the terms of the offering was filed with the SEC on September 30, 2024. The final prospectus supplement and accompanying prospectus relating to the offering will be filed with the SEC. When available, a copy of the prospectus supplement and accompanying prospectus relating to the offering may be obtained from: Citigroup, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, New York 11717, or by telephone at (800) 831-9146; and Truist Securities, Inc., Attention: Prospectus Department, 3333 Peachtree Road NE, 9th Floor, Atlanta, GA 30326, by telephone at (800) 685-4786, or by email at TruistSecurities.prospectus@Truist.com.

This press release does not constitute an offer to sell or the solicitation of an offer to buy nor will there be any sale of these securities in any state or other jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About The Pennant Group, Inc.

The Pennant Group, Inc. is a holding company of independent operating subsidiaries that provide healthcare services through 117 home health and hospice agencies and 54 senior living communities located throughout Arizona, California, Colorado, Idaho, Montana, Nevada, Oklahoma, Oregon, Texas, Utah, Washington, Wisconsin and Wyoming. Each of these businesses is operated by a separate, independent operating subsidiary that has its own management, employees and assets.

Forward-Looking Statements

This press release contains forward-looking statements that are based on management’s current expectations, assumptions and beliefs about its business, financial performance, operating results, the industry in which it operates and other future events, made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements can often be identified by words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing,” similar expressions, and variations or negatives of these words. These forward-looking statements include, but are not limited to, statements regarding future events, including the completion and timing of the offering, the gross proceeds expected to be received from the offering and the anticipated use of the net proceeds from the offering. They are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to materially and adversely differ from those expressed in any forward-looking statement. These risks and uncertainties relate to fluctuations in the Company’s stock price, changes in market conditions and satisfaction of customary closing conditions related to the public offering, as well as the other factors discussed in the “Risk Factors” section in the prospectus supplement and registration statement referenced above and in the Company’s most recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q, as well as other risks detailed in the Company’s filings with the SEC. All information in this press release is as of the date of the release and should not be relied upon as representing its views as of any subsequent date. Except as required by the federal securities laws, the Company does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changing circumstances or any other reason after the date of this press release.

Contact Information

Investor Relations
The Pennant Group, Inc.
(208) 506-6100
ir@pennantgroup.com

SOURCE: The Pennant Group, Inc.

FAQ

What is the purpose of Pennant Group's public offering of common stock?

The net proceeds from the public offering will be used to repay outstanding indebtedness under the company's revolving credit facility and for general corporate purposes.

How many shares are being offered in Pennant Group's public offering?

Pennant Group is offering 3,500,000 shares of its common stock, with an option for underwriters to purchase an additional 525,000 shares.

What is the pricing of Pennant Group's public offering of common stock?

The shares are priced at $31.00 per share.

When is the expected closing date for Pennant Group's public offering?

The offering is expected to close on or about October 4, 2024, subject to customary closing conditions.

Which firms are managing Pennant Group's public offering?

Citigroup and Truist Securities are the lead book-running managers, with Wells Fargo Securities and RBC Capital Markets as joint book-running managers, and Oppenheimer & Co. and Stephens Inc. as co-managers.