Item 1.01. Entry into a Material Definitive Agreement.
OnJanuary 27, 2022 , affiliates ofThe Pennant Group, Inc. (the "Company"), entered into certain operations transfer agreements (collectively, the "Transfer Agreements") with affiliates of The Ensign Group, Inc. ("Ensign"), providing for the transfer of the operations of five senior living communities (the "Transaction"). The Transfer Agreements require one of the transferors to place in escrow$6.5 million to cover post-closing capital expenditures and operating losses related to one of the communities. The closing of the Transaction is anticipated to occur in the first half of 2022, subject to receipt of applicable regulatory approvals and satisfaction of other customary closing conditions set forth in the Transfer Agreements. In 2019, Pennant and Ensign completed a transaction in which Ensign contributed all of its home health and hospice and substantially all of its senior living businesses into Pennant, and Pennant was spun out into a public company. Pennant currently leases senior living communities from subsidiaries of Ensign and receives certain services from Ensign. The foregoing description of the Transfer Agreements does not purport to be complete and is qualified in its entirety by reference to the Transfer Agreements, a copy of which is filed herewith as Exhibit 2.1 and incorporated herein by reference in this Item 1.01. The Transfer Agreements have been included as an exhibit hereto solely to provide investors and security holders with information regarding their terms. They are not intended to be a source of financial, business or operational information about the Company, Ensign, or their respective subsidiaries or affiliates. The representations, warranties and covenants contained in the Transfer Agreements are made only for purposes of the Transfer Agreements and are made as of specific dates; are solely for the benefit of the parties; may be subject to qualifications and limitations agreed upon by the parties in connection with negotiating the terms of the Transfer Agreements, including being qualified by confidential disclosures made for the purpose of allocating contractual risk between the parties rather than establishing matters as fact; and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors or security holders. Investors and security holders should not rely on the representations, warranties and covenants or any description thereof as characterizations of the actual state of facts or condition of the Company, Ensign, or their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Transfer Agreements, which subsequent information may or may not be fully reflected in public disclosures. The Company acknowledges that, notwithstanding the inclusion of the foregoing cautionary and qualifying statements, it is responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this Current Report on Form 8-K not misleading.
Item 7.01 Regulation FD Disclosure.
A copy of the press release issued by the Company regarding the Transfer Agreements and the Transaction is attached hereto as Exhibit 99.1.
-------------------------------------------------------------------------------- Item 9.01. Financial Statements and Exhibits. (d) Exhibits. Exhibit No. Description 2.1 * Form of Operations Transfer Agreement, dated as
of
affiliates of the Company and affiliates of
Ensign for the transfer of five senior
living communities. 99.1 Press release datedJanuary 27, 2022 Cover Page Interactive Data File - the cover page XBRL tags are embedded within the 104 Inline XBRL document. * Schedules and exhibits have been omitted pursuant
to Item 601 of Regulation S-K. The
Company hereby undertakes to furnish
supplementally a copy of any of the omitted
schedules and exhibits upon request by the
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