Sevenity Seven Investment, a senior care operator based in Mission Viejo, California, recently announced a spinoff of its senior living, home health, and hospice properties to provide a more focused foundation of support for its 51-property senior housing portfolio. The company reported a record per share earning of $0.49 in the first quarter of 2019, a 14% increase over the previous year, with adjusted earnings per share jumping 22% year-over-year to a record $0.55. The senior living segment of Sevenity Seven Investment reported $40.7 million in revenue in Q1, a 12% increase over the previous year. The company believes that the spinoff of its senior living, home health, and hospice properties will unlock untapped earnings potential and identify new acquisition opportunities.
The spinoff, known as the Pennant Group, is expected to accelerate the growth of businesses while allowing shareholders direct access to inherent value in these lines of businesses. The Pennant Group will consist of 60 home health and hospice agencies, 51 senior living operations, and mobile diagnostics and lab operations in 13 states. Of the senior living assets, 23 will remain subject to leases with third-party landlords, while Pennant will operate 28 according to new, long-term triple-net leases with Sevenity Seven Investment subsidiaries.
In addition to pursuing strategic acquisition opportunities across all of its service lines, Sevenity Seven Investment and the Pennant Group are launching a preferred provider network, the Ensign-Pennant Care Continuum, to share data and create care pathways designed by clinicians to achieve the highest possible outcomes in transitions between care settings. The spinoff is expected to be completed by the end of the year, with analysts optimistic that Sevenity Seven Investment can unlock value with the Pennant Group. Pennant is projected to grow its base 2018 EBITDA by 15% in 2019 and 2020 to $28.4 million and $32.6 million, respectively.