Ensign Names CFO for Pennant Group Spinoff

The Ensign Group (Nasdaq: ENSG) hired a new chief financial officer for its coming senior living, home health and hospice spinoff.

The Mission Viejo, California-based owner and operator on Tuesday named Jennifer Freeman as CFO of The Pennant Group. She was previously in the same role at Cornerstone Healthcare, Ensign’s home health and hospice arm, which she joined earlier this year.

Freeman’s immediate task will be to guide Pennant through its spinoff, which is expected to be completed later this year, including overseeing financial operations, as well as tax, financial, accounting and treasury reporting.

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Freeman hit the ground running with Cornerstone, and went above and beyond the expectations of Ensign’s executive team, Pennant Chairman and CEO Danny Walker said in a statement.

“We are confident Jenn is the right person to lead Pennant’s finance and accounting teams and to provide expansive influence throughout the organization as we seek to become the home health, hospice and senior living providers of choice in the communities we serve,” he said.

Prior to joining Cornerstone, Freeman was CFO at Northpoint Recovery Holdings, a regional provider of drug and alcohol treatment services. She also served in CFO roles at health care consulting firm Qualis Health and Molina Healthcare of Washington, a regional managed care company covering the Pacific Northwest.

Ensign announced in May it would spin off its home health and hospice portfolios, and the majority of its senior living assets, to Pennant. As of the second quarter of 2019, Ensign owns 60 home health, home care and hospice operations, 56 senior living facilities and diagnostic facilities and mobile labs in 13 states.

The Ensign Group’s portfolio, post-spinoff, will include skilled nursing facilities, health care campuses, rehabilitative care services, and new business ventures and relationships related to post-acute care.

Former Ensign Group CEO Christopher Christensen said during the company’s Q1 2019 earnings call the goal of the spinoff is to create two healthy, profitable companies; provide a more focused foundation of support for its senior housing portfolio; unlock untapped earnings potential and identify new acquisition opportunities.

“We believe the [spinoff] will accelerate the growth of businesses while allowing our shareholders direct access to inherent value in these lines of businesses,” he said.

As part of the spinoff, Ensign and Pennant are launching a preferred provider network, the Ensign-Pennant Care Continuum. The locations that opt in to the network will work together to share data and create care pathways designed by clinicians to achieve the highest possible outcomes in transitions between care settings.

Ensign hopes to repeat the success of its 2014 spinoff of 94 real estate assets into CareTrust (Nasdaq: CTRE), a real estate investment trust that now has a portfolio of 213 properties in 28 states, managed by 22 operators.

The spinoff is expected to be completed by year-end, and analysts are optimistic that Ensign can unlock value with Pennant Group. Pennant can grow its base 2018 EBITDA by 15% in 2019 and 2020 to $28.4 million and $32.6 million, respectively, Stephens analyst Dana Hambly estimated.

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