Conference Call and Webcast scheduled for tomorrow, February 6, 2020 at 10:00 am PT
SAN JUAN CAPISTRANO, Calif., Feb. 05, 2020 (GLOBE NEWSWIRE) -- The Ensign Group, Inc. (Nasdaq: ENSG), the parent company of the Ensign(TM) group of companies, which provide skilled nursing services, senior living services, rehabilitative care services and other healthcare services, announced its operating results for the fourth quarter and full year 2019, reporting record GAAP diluted earnings per share of $0.49 and $1.97 for the quarter and year ended December 31, 2019, respectively. Ensign also reported a record adjusted earnings per share of $0.60 for the quarter and $2.24 for the year(2).
Highlights Include:
- GAAP diluted earnings per share for the quarter was $0.49, representing a 48.5%(1) increase over the prior year quarter; and spin-adjusted diluted earnings per share for the fourth quarter was $0.60(2), an increase of 39.5%(3) from prior year quarter and an increase of 33.3%(3) sequentially over the third quarter.
- GAAP diluted earnings per share for the year was $1.97 and adjusted diluted earnings per share for the year was $2.24(2), an increase of 29.5%(4) over the prior year.
- Consolidated GAAP revenues for the year were $2.29 billion and consolidated adjusted revenues for the year were $2.28 billion(2), an increase of 19.9%(4) over the prior year.
- Total skilled services revenue was $1.9 billion for the year, an increase of 15.2% over the prior year, and was $530.2 million for the quarter, an increase of 20.0% over the prior year quarter and 9.1% sequentially over the third quarter(5).
- Same store occupancy was 80.3%, an increase of 216 basis points over the prior year; and same store skilled managed care and Medicare revenue was up 8.4% and 4.9%, respectively.
- Transitioning occupancy was 78.1%, an increase of 279 basis points over the prior year; and transitioning skilled managed care revenue was up 15.7%.
- Same store skilled days increased by 3.0% and transitioning skilled days increased by 4.9%, both for the year.
- Same store skilled days increased by 8.8% and total same store skilled days increased by 3.1% basis points, both sequentially over the third quarter;
- GAAP net income was $91.7 million(1), an increase of 54.1%(1) over the prior year, and spin-adjusted net income for the year was $109.0 million(3), an increase of 40.5%(3) over the prior year. 1. Represents GAAP continued operations which excluding operating results for the recently spun-out The Pennant Group, Inc. in accordance with the discontinued operation guidance in GAAP 2. See "Reconciliation of GAAP to Non-GAAP Financial Information". 3. Unaudited pro forma Non-GAAP results include adjustments of rental income, savings of general and administrative expense and interest as if the Spin-Off has occurred at the beginning of the period reported. 4. Unaudited pro forma Non-GAAP results include results of continuing operations for four quarters and three quarters of discontinuing operations to be comparable to 2019 Non-GAAP results. 5. Our Transitional and Skilled Services Segment is defined and outlined in Note 7 on Form 10-K.
Operating Results
“We are thrilled to report a record quarter as we achieved our highest adjusted earnings per share in our history,” said Ensign’s Chief Executive Officer Barry Port. He credited the local operational and clinical leadership teams and all of their field-based and Service Center partners for achieving these impressive clinical and financial results even in the midst of completing a transformative spin-off transaction and implementing a brand new reimbursement system. “We are proud that our amazing operators were able to achieve these record results in the midst of potential distractions. We also want to remind you that we can see tremendous organic growth potential in our 73 transitioning and newly acquired operations and in same store operations. We are very excited about our continued operational momentum and expect it to continue into 2020,” he added.
Port noted that much of the improvement came from strong quarter over quarter improvements in occupancy and both skilled mix days and revenue across same store, transitioning and newly acquired operations. He added, “We are excited about the positive trends we continue to see in occupancy, as this is the fourth quarter in a row where we have experienced an increase of over 150 basis points in occupancy in both same store and transitioning operations, quarter over quarter.”
Mr. Port also commented on the organization’s experience in its first quarter of operations under CMS’s Patient Driven Payment Model (“PDPM”). Complimenting CMS on the new system, he said, “We believe PDPM is an excellent long-term, patient-centered program that rewards operators that achieve high quality outcomes.” Port noted, “After adjusting for the recent market basket increase, we experienced a range of rate growth from approximately 3% for our transitioning operations to approximately 6% for our same store operations, which generally serve a higher acuity patient as they mature into clinically complex operations. Our locally-driven model of improving our clinical capabilities has always been focused on increasing our acuity, which has resulted in consistent improvement in earnings, independent of the current rate environment. While we experienced a modest rate improvement in our first quarter under the new system, the lion’s share of our performance during the quarter is totally unrelated to the PDPM impact.”
Ensign also announced a 12.4% increase from its initial 2020 annual earnings guidance. “Given the strength of the quarter and our expectations for continued improvement over the next few quarters, we are raising our 2020 annual earnings guidance to $2.50 to $2.58 per diluted share and annual revenue guidance to $2.42 billion to $2.45 billion. We are very optimistic that with the continued upside that is inherent in our portfolio and the attractive acquisitions on the horizon, that we will be able to continue to meet or exceed our historic growth rates. To underline this confidence, the midpoint of our 2020 guidance represents an increase of 30.3% over our 2019 spin adjusted results, which was $1.95(3) per diluted share when adjusting for the full-year impact of the Pennant spin-off. In addition, this guidance represents an increase of 13.4% over our adjusted diluted 2019 results of $2.24(2), which includes Pennant results for the first nine months of 2019,” Port said.
“We are very excited about our performance this year and are confident that as our local leaders continue to stay true to our operating model, our operational strength will continue into 2020 and beyond,” he added. “In the fourth quarter, we more than replaced Pennant’s historical earnings, much sooner than anticipated, and we expect that trend to accelerate into 2020. We have not even come close to reaching our full potential, and to do so it will take a relentless commitment to our culture and the repetitious adherence to sound fundamentals,” Port said.
Chief Financial Officer, Suzanne Snapper reported that the company’s liquidity remains strong with approximately $135 million of availability on its new $350 million credit facility, which also has a built-in expansion option, and 72 unlevered real estate assets that add additional liquidity. Snapper also indicated that the company maintained a lease-adjusted net-debt-to-adjusted EBITDAR ratio of 3.95x at quarter end a decrease from 4.14x(1) (when adjusting for the Spin-off), even after heavy acquisitions during the fourth quarter, which tend to temporarily raise the ratio while EBITDAR from new acquisitions catches up.
A discussion of the company's use of non-GAAP and proforma financial measures is set forth below. A reconciliation of net income to EBITDA, adjusted EBITDAR, adjusted EBITDA, as well as a reconciliation of GAAP earnings per share, net income to adjusted net income and adjusted net earnings per share, and proforma metrics appear in the financial data portion of this release. More complete information is contained in the company’s Annual Report on Form 10-K for the year ended December 31, 2019, which is expected to be filed with the SEC today and can be viewed on the company’s website at http://www.ensigngroup.net.
Quarterly Growth
During the quarter, the Company paid a quarterly cash dividend of $0.05 per share of Ensign common stock. “We are pleased to announce our seventeenth consecutive annual dividend increase, which reflects our strong market position and continued commitment to return value to our shareholders,” said Chad Keetch, Ensign’s Chief Investment Officer.
Also during the quarter and since, Ensign’s affiliates acquired the following skilled nursing and healthcare campus operations:
- St. Joseph’s Villa Independent Living, a 58-unit independent living operation in Salt Lake City, Utah;
- Treasure Hills Healthcare and Rehabilitation Center, a skilled nursing facility with 110 skilled nursing beds, located in Harlingen, Texas;
- Keller Oaks Healthcare Center, a skilled nursing facility with 146 skilled nursing beds, located in Keller, Texas;
- Kirkwood Manor, a skilled nursing facility with 162 skilled nursing beds, located in New Braunfels, Texas;
- Hunters Pond Rehabilitation and Healthcare, a skilled nursing facility with 128 skilled nursing beds, located in San Antonio, Texas;
- Pecan Valley Rehabilitation and Healthcare, a skilled nursing facility with 124 skilled nursing beds, located in San Antonio, Texas;
- Westover Hills Rehabilitation and Healthcare, a skilled nursing facility with 124 skilled nursing beds, located in San Antonio, Texas;
- Crestwood Health and Rehabilitation Center, a skilled nursing facility with 112 skilled nursing beds and an assisted living center with 36 assisted living units, located in Willis Point, Texas;
- Beacon Harbor Healthcare and Rehabilitation, a skilled nursing facility with 190 skilled nursing beds, located in Rockwall, Texas;
- Rowlett Health and Rehabilitation Center, a skilled nursing facility with 150 skilled nursing beds, located in Rowlett, Texas;
- Pleasant Manor Healthcare and Rehabilitation, a skilled nursing facility with 126 skilled nursing beds, located in Waxahachie, Texas;
- Mission Palms Post Acute, a skilled nursing facility with 160 skilled nursing beds located in Mesa, Arizona; and
- The Healthcare Center at Patriot Heights, a healthcare campus with 59 skilled nursing beds and 158 independent living units located in San Antonio, Texas.
“As we saw last quarter, the pipeline for our typical turnaround opportunities and well-priced strategic deals remains strong. We are still being very selective and are keeping plenty of dry powder on hand for what we believe will continue to be an attractive buyer’s market,” said Keetch. “We look forward to growing within our existing geographical footprint and will do so as we see significant advantages to adding strength in markets we know well, including some of our newer emerging markets as they continue to mature and prepare for growth. We remain confident that there are and will be many, many opportunities to be had at the right prices,” he added.
These additions bring Ensign's growing portfolio to 225 skilled nursing operations, 23 of which also include senior living operations across fourteen states. Ensign now owns 92 real estate assets, 62 of which it operates. Keetch reaffirmed that Ensign continues to actively seek transactions to acquire real estate and to lease both well-performing and struggling skilled nursing, senior living and other healthcare related businesses in new and existing markets.
Increased 2020 Guidance
Management raised guidance for 2020, with annual earnings per share guidance to $2.50 to 2.58 per diluted share and annual revenue guidance to $2.42 billion to $2.45 billion. The midpoint of this 2020 guidance represents an increase of 30.3% over 2019 spin adjusted results, which was $1.95 per diluted share when adjusting for the full-year impact of the Pennant spin-off. Management’s guidance is based on diluted weighted average common shares outstanding of approximately 57.6 million and a 25% tax rate. In addition, the guidance assumes, among other things, normalized health insurance costs, normal anticipated Medicare and Medicaid reimbursement rate increases, net of provider taxes, and acquisitions closed in the first half of 2020. It also excludes acquisition-related costs and amortization costs related to intangible assets acquired, share-based compensation and start-up losses.
Conference Call
A live webcast will be held Thursday, February 6, 2020 at 10:00 a.m. Pacific time (1:00 p.m. Eastern time) to discuss Ensign’s fourth quarter and fiscal year 2019 financial results. To listen to the webcast, or to view any financial or statistical information required by SEC Regulation G, please visit the Investors Relations section of Ensign’s website at http://investor.ensigngroup.net. The webcast will be recorded, and will be available for replay via the website until 5:00 p.m. Pacific Time on Friday, February 28, 2020.
About Ensign™
The Ensign Group, Inc.'s independent operating subsidiaries provide a broad spectrum of skilled nursing and assisted living services, physical, occupational and speech therapies and other rehabilitative and healthcare services at 225 healthcare facilities in Arizona, California, Colorado, Idaho, Iowa, Kansas, Nebraska, Nevada, South Carolina, Texas, Utah, Washington and Wisconsin. Ensign’s new business venture operating subsidiaries also offer several other post-acute-related services, including mobile x-ray, lab, non-emergency transportation services and other consulting services also across several states. Each of these operations is operated by a separate, independent operating subsidiary that has its own management, employees and assets. References herein to the consolidated "company" and "its" assets and activities, as well as the use of the terms "we," "us," "its" and similar verbiage, are not meant to imply that The Ensign Group, Inc. has direct operating assets, employees or revenue, or that any of the facilities, the Service Center or the captive insurance subsidiary are operated by the same entity. More information about Ensign is available at http://www.ensigngroup.net. Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
This press release contains, and the related conference call and webcast will include, 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. 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 growth prospects, future operating and financial performance, and acquisition activities. 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 the company’s business, its industry and its common stock and include: reduced prices and reimbursement rates for its services; its ability to acquire, develop, manage or improve operations, its ability to manage its increasing borrowing costs as it incurs additional indebtedness to fund the acquisition and development of operations; its ability to access capital on a cost-effective basis to continue to successfully implement its growth strategy; its operating margins and profitability could suffer if it is unable to grow and manage effectively its increasing number of operations; competition from other companies in the acquisition, development and operation of facilities; its ability to defend claims and lawsuits, including professional liability claims alleging that our services resulted in personal injury, and other regulatory-related claims; and the application of existing or proposed government regulations, or the adoption of new laws and regulations, that could limit its business operations, require it to incur significant expenditures or limit its ability to relocate its operations if necessary. Readers should not place undue reliance on any forward-looking statements and are encouraged to review the company’s periodic filings with the Securities and Exchange Commission, including its Form 10-K, for a more complete discussion of the risks and other factors that could affect Ensign’s business, prospects and any forward-looking statements. Except as required by the federal securities laws, Ensign 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/Media Relations, The Ensign Group, Inc., (949) 487-9500, [email protected].
SOURCE: The Ensign Group, Inc.
| The following tables have been adjusted to reflect the operations transferred to The Pennant Group, Inc. as part of the Spin-Off as discontinued operations. Accordingly, the results are displayed using continuing and discontinued operations format. Supplemental data that outlines the impact of continuing and discontinued operations has been provided. | ||||||||||||||||||
| THE ENSIGN GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) | ||||||||||||||||||
| Three Months Ended December 31, | Years Ended December 31, | |||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||||
| Revenue from continuing operations | $ | 560,191 | $ | 462,439 | $ | 2,036,524 | $ | 1,754,601 | ||||||||||
| Expense from continuing operations | ||||||||||||||||||
| Cost of services | 443,382 | 372,066 | 1,620,628 | 1,418,249 | ||||||||||||||
| Return of unclaimed class action settlement | - | - | - | (1,664 | ) | |||||||||||||
| Rent—cost of services | 31,511 | 29,898 | 124,789 | 117,676 | ||||||||||||||
| General and administrative expense | 32,251 | 25,013 | 110,873 | 90,563 | ||||||||||||||
| Depreciation and amortization | 13,354 | 11,544 | 51,054 | 44,864 | ||||||||||||||
| Total expenses | 520,498 | 438,521 | 1,907,344 | 1,669,688 | ||||||||||||||
| Income from operations from continuing operations | 39,693 | 23,918 | 129,180 | 84,913 | ||||||||||||||
| Other income (expense): | ||||||||||||||||||
| Interest expense | (4,149 | ) | (3,711 | ) | (15,662 | ) | (15,182 | ) | ||||||||||
| Interest income | 792 | 549 | 2,649 | 2,016 | ||||||||||||||
| Other expense, net | (3,357 | ) | (3,162 | ) | (13,013 | ) | (13,166 | ) | ||||||||||
| Income before provision for income taxes | 36,336 | 20,756 | 116,167 | 71,747 | ||||||||||||||
| Provision for income taxes | 9,010 | 2,653 | 23,954 | 12,685 | ||||||||||||||
| Net income from continuing operations, net of tax | 27,326 | 18,103 | 92,213 | 59,062 | ||||||||||||||
| Net income from discontinued operations, net of tax | - | 8,456 | 19,473 | 33,466 | ||||||||||||||
| Net income | 27,326 | 26,559 | 111,686 | 92,528 | ||||||||||||||
| Less: | ||||||||||||||||||
| Net (loss)/income attributable to noncontrolling interests in continuing operations | (68 | ) | 16 | 523 | (431 | ) | ||||||||||||
| Net income attributable to noncontrolling interests in discontinued operations | - | 183 | 629 | 595 | ||||||||||||||
| Net (loss)/ income attributable to noncontrolling interests | (68 | ) | 199 | 1,152 | 164 | |||||||||||||
| Net income attributable to The Ensign Group, Inc. | $ | 27,394 | $ | 26,360 | $ | 110,534 | $ | 92,364 | ||||||||||
| Amounts attributable to The Ensign Group, Inc. | ||||||||||||||||||
| Income from continuing operations attributable to The Ensign Group, Inc. | 27,394 | 18,087 | 91,690 | 59,493 | ||||||||||||||
| Income from discontinued operations, net of income tax | - | 8,273 | 18,844 | 32,871 | ||||||||||||||
| Net income attributable to The Ensign Group, Inc. | $ | 27,394 | $ | 26,360 | $ | 110,534 | $ | 92,364 | ||||||||||
| Net income per share attributable to The Ensign Group, Inc.: | ||||||||||||||||||
| Basic: | ||||||||||||||||||
| Continuing operations | $ | 0.51 | $ | 0.34 | $ | 1.72 | $ | 1.14 | ||||||||||
| Discontinued operations | $ | - | $ | 0.16 | $ | 0.35 | $ | 0.64 | ||||||||||
| Basic income per share attributable to The Ensign Group, Inc. | $ | 0.51 | $ | 0.50 | $ | 2.07 | $ | 1.78 | ||||||||||
| Diluted: | ||||||||||||||||||
| Continuing operations | $ | 0.49 | $ | 0.33 | $ | 1.64 | $ | 1.09 | ||||||||||
| Discontinued operations | $ | - | $ | 0.15 | $ | 0.33 | $ | 0.61 | ||||||||||
| Diluted income per share attributable to The Ensign Group, Inc. | $ | 0.49 | $ | 0.48 | $ | 1.97 | $ | 1.70 | ||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||||
| Basic | 53,397 | 52,449 | 53,452 | 52,016 | ||||||||||||||
| Diluted | 55,760 | 54,967 | 55,981 | 54,397 | ||||||||||||||
| THE ENSIGN GROUP, INC. | ||||||||||||||||||||
| GAAP, NON-GAAP AND PRO FORMA INFORMATION | ||||||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| The following table sets forth GAAP, Non-GAAP and pro forma results for our revenue, net income, diluted EPS, EBITDA and EBITDAR for the periods indicated: | ||||||||||||||||||||
| Three Months Ended December 31, 2019 | Three Months Ended December 31, 2018 | Three Months Ended September 30, 2019 | ||||||||||||||||||
| GAAP | Non-GAAP(1) | Pro Forma Non-GAAPAdjustments(2) | GAAP | Non-GAAP(1) | Pro Forma Non-GAAPAdjustments(2) | GAAP | Non-GAAP(1) | Pro Forma Non-GAAPAdjustments(2) | ||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||
| Net revenue - continuing operations | $ | 560,191 | $ | 555,979 | $ | 555,979 | $ | 462,439 | $ | 445,455 | $ | 448,293 | $ | 512,109 | $ | 509,541 | $ | 512,582 | ||
| Net revenue - discontinued operations | - | - | 75,336 | 75,291 | 88,398 | 88,325 | ||||||||||||||
| Net revenue | $ | 560,191 | $ | 555,979 | $ | 537,775 | $ | 520,746 | $ | 600,507 | $ | 597,866 | ||||||||
| Net income - continuing operations | $ | 27,394 | $ | 33,529 | $ | 33,529 | $ | 18,087 | $ | 21,254 | $ | 23,569 | $ | 22,148 | $ | 22,447 | $ | 25,487 | ||
| Net income - discontinued operations | - | - | 8,273 | 8,156 | 5,011 | 8,496 | ||||||||||||||
| Net income | $ | 27,394 | $ | 33,529 | $ | 26,360 | $ | 29,410 | $ | 27,159 | $ | 30,943 | ||||||||
| Fully diluted EPS - continuing operations | $ | 0.49 | $ | 0.60 | $ | 0.60 | $ | 0.33 | $ | 0.39 | $ | 0.43 | $ | 0.39 | $ | 0.40 | $ | 0.45 | ||
| Fully diluted EPS - discontinued operations | - | - | 0.15 | 0.15 | 0.09 | 0.15 | ||||||||||||||
| Fully diluted EPS | $ | 0.49 | $ | 0.60 | $ | 0.48 | $ | 0.54 | $ | 0.48 | $ | 0.55 | ||||||||
| EBITDA - continuing operations | $ | 53,115 | $ | 60,430 | $ | 60,430 | $ | 35,446 | $ | 42,728 | $ | 45,973 | $ | 43,814 | $ | 46,160 | $ | 50,286 | ||
| EBITDA - discontinued operations | - | - | 11,001 | 11,543 | 8,781 | 12,324 | ||||||||||||||
| EBITDA | $ | 53,115 | $ | 60,430 | $ | 46,447 | $ | 54,271 | $ | 52,595 | $ | 58,484 | ||||||||
| EBITDAR - continuing operations | $ | 91,498 | $ | 91,498 | $ | 77,740 | $ | 81,866 | ||||||||||||
| EBITDAR - discontinued operations | - | 18,173 | ||||||||||||||||||
| EBITDAR | $ | 91,498 | $ | 95,913 | ||||||||||||||||
| (1) Refer to our reconciliation of GAAP to Non-GAAP financial information. | ||||||||||||||||||||
| (2) Unaudited pro forma Non-GAAP results include adjustments of rental income and savings of general and administrative and interest expense as if the Spin-Off has occurred at the beginning of the period reported. | ||||||||||||||||||||
| THE ENSIGN GROUP, INC. | ||||||||||||||||||
| GAAP, NON-GAAP AND PRO FORMA INFORMATION | ||||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| The following table sets forth GAAP, Non-GAAP and pro forma results for our revenue, net income, diluted EPS, EBITDA and EBITDAR for the periods indicated: | ||||||||||||||||||
| Year Ended December 31, 2019 | Year Ended December 31, 2018 | |||||||||||||||||
| GAAP | Non-GAAP(1) | Pro Forma Non-GAAPAdjustments(2) | GAAP | Non-GAAP(1) | Pro Forma Non-GAAPAdjustments(2) | Pro Forma Non-GAAPAdjustments(3) | ||||||||||||
| (In thousands, except per share data) | (In thousands, except per share data) | |||||||||||||||||
| Net revenue - continuing operations | $ | 2,036,524 | $ | 2,027,915 | $ | 2,037,010 | $ | 1,754,601 | $ | 1,688,214 | $ | 1,699,568 | $ | 1,688,214 | ||||
| Net revenue - discontinued operations | 249,039 | 248,713 | 286,058 | 285,838 | 210,546 | |||||||||||||
| Net revenue | $ | 2,285,563 | $ | 2,276,628 | $ | 2,040,659 | $ | 1,974,052 | $ | 1,898,760 | ||||||||
| Net income - continuing operations | $ | 91,690 | $ | 99,869 | $ | 108,990 | $ | 59,493 | $ | 68,319 | $ | 77,584 | $ | 68,319 | ||||
| Net income - discontinued operations | 18,844 | 25,688 | 32,871 | 33,812 | 25,654 | |||||||||||||
| Net income | $ | 110,534 | $ | 125,557 | $ | 92,364 | $ | 102,131 | $ | 93,973 | ||||||||
| Fully diluted EPS - continuing operations | $ | 1.64 | $ | 1.78 | $ | 1.95 | $ | 1.09 | $ | 1.26 | $ | 1.43 | $ | 1.26 | ||||
| Fully diluted EPS - discontinued operations | 0.33 | 0.46 | 0.61 | 0.62 | 0.47 | |||||||||||||
| Fully diluted EPS | $ | 1.97 | $ | 2.24 | $ | 1.70 | $ | 1.88 | $ | 1.73 | ||||||||
| EBITDA - continuing operations | $ | 179,711 | $ | 195,645 | $ | 207,805 | $ | 130,208 | $ | 147,988 | $ | 160,968 | $ | 147,988 | ||||
| EBITDA - discontinued operations | 26,883 | 36,801 | 45,460 | 47,627 | 36,083 | |||||||||||||
| EBITDA | $ | 206,594 | $ | 232,446 | $ | 175,668 | $ | 195,615 | $ | 184,071 | ||||||||
| EBITDAR - continuing operations | $ | 319,513 | $ | 331,674 | ||||||||||||||
| EBITDAR - discontinued operations | 54,084 | |||||||||||||||||
| EBITDAR | $ | 373,597 | ||||||||||||||||
| (1) Refer to our reconciliation of GAAP to Non-GAAP financial information. | ||||||||||||||||||
| (2) Unaudited pro forma Non-GAAP results include adjustments of rental income, savings of general and administrative and interest expense as if the Spin-Off had occurred at the beginning of the period reported. | ||||||||||||||||||
| (3) Unaudited pro forma Non-GAAP results include results of continuing operations for four quarters and three quarters of discontinued operations to be comparable to 2019 Non-GAAP results. | ||||||||||||||||||
| THE ENSIGN GROUP, INC. CONSOLIDATED BALANCE SHEETS (In thousands) | ||||||||
| December 31, | ||||||||
| 2019 | 2018 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 59,175 | $ | 31,042 | ||||
| Accounts receivable—less allowance for doubtful accounts of $2,472 and $2,270 at December 31, 2019 and 2018, respectively | 308,985 | 251,915 | ||||||
| Investments—current | 17,754 | 8,682 | ||||||
| Prepaid income taxes | 739 | 6,219 | ||||||
| Prepaid expenses and other current assets | 24,428 | 19,576 | ||||||
| Assets held for sale - current | - | 1,859 | ||||||
| Current assets of discontinued operations | - | 28,779 | ||||||
| Total current assets | 411,081 | 348,072 | ||||||
| Property and equipment, net | 767,565 | 608,416 | ||||||
| Right-of-use assets | 1,046,901 | - | ||||||
| Insurance subsidiary deposits and investments | 30,571 | 36,168 | ||||||
| Escrow deposits | 14,050 | 7,271 | ||||||
| Deferred tax assets | 4,615 | 11,749 | ||||||
| Restricted and other assets | 26,207 | 18,459 | ||||||
| Intangible assets, net | 3,382 | 30,922 | ||||||
| Goodwill | 54,469 | 49,585 | ||||||
| Other indefinite-lived intangibles | 3,068 | 2,466 | ||||||
| Long-term assets of discontinued operations | - | 68,850 | ||||||
| Total assets | $ | 2,361,909 | $ | 1,181,958 | ||||
| Liabilities and equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 44,973 | $ | 39,846 | ||||
| Accrued wages and related liabilities | 151,009 | 106,870 | ||||||
| Lease liabilities—current | 44,964 | - | ||||||
| Accrued self-insurance liabilities—current | 29,252 | 25,446 | ||||||
| Other accrued liabilities | 70,273 | 56,711 | ||||||
| Current maturities of long-term debt | 2,702 | 10,105 | ||||||
| Current liabilities of discontinued operations | - | 30,249 | ||||||
| Total current liabilities | 343,173 | 269,227 | ||||||
| Long-term debt—less current maturities | 325,217 | 233,135 | ||||||
| Long-term lease liabilities—less current portion | 973,983 | - | ||||||
| Accrued self-insurance liabilities—less current portion | 58,114 | 54,605 | ||||||
| Other long-term liabilities | 5,278 | 7,918 | ||||||
| Deferred gain related to sale-leaseback | - | 11,417 | ||||||
| Long-term liabilities of discontinued operations | - | 3,316 | ||||||
| Total equity | 656,144 | 602,340 | ||||||
| Total liabilities and equity | $ | 2,361,909 | $ | 1,181,958 | ||||
| THE ENSIGN GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) | ||||||||
| The following table presents selected data from our consolidated statements of cash flows for the periods presented: | ||||||||
| Year Ended December 31, | ||||||||
| 2019 | 2018 | |||||||
| Net cash provided by (used in): | ||||||||
| Continuing operating activities | $ | 168,927 | $ | 170,152 | ||||
| Continuing investing activities | (224,030 | ) | (141,340 | ) | ||||
| Continuing financing activities | 83,278 | (70,345 | ) | |||||
| Net (decrease) increase in cash and cash equivalents from discontinued operations | (83 | ) | 30,279 | |||||
| Net increase (decrease) in cash and cash equivalents | 28,092 | (11,254 | ) | |||||
| Cash and cash equivalents beginning of period, including cash of discontinued operations | 31,083 | 42,337 | ||||||
| Cash and cash equivalents end of period, including cash of discontinued operations | $ | 59,175 | $ | 31,083 | ||||
| Less cash of discontinued operations at end of period | - | 41 | ||||||
| Cash and cash equivalents at end of period | 59,175 | 31,042 | ||||||
| THE ENSIGN GROUP, INC. | ||||||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION | ||||||||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP NET INCOME | ||||||||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||
| Net income from continuing operations | $ | 27,394 | $ | 18,087 | $ | 91,690 | $ | 59,493 | ||||||||||||||
| Net income from discontinued operations, net of tax | - | 8,273 | 18,844 | 32,871 | ||||||||||||||||||
| Net income attributable to The Ensign Group, Inc. | 27,394 | 26,360 | 110,534 | 92,364 | ||||||||||||||||||
| Non-GAAP adjustments for continuing operations: | ||||||||||||||||||||||
| Results related to operations in the start-up phase(a) | - | 449 | - | 3,682 | ||||||||||||||||||
| Return of unclaimed class action settlement | - | - | - | (1,664 | ) | |||||||||||||||||
| Share-based compensation expense(b) | 3,107 | 2,211 | 11,322 | 8,367 | ||||||||||||||||||
| Results related to closed operations and operations not at full capacity(c) | 1,311 | 222 | 3,505 | 933 | ||||||||||||||||||
| Acquisition related costs(d) | 132 | 10 | 277 | 322 | ||||||||||||||||||
| Depreciation and amortization - patient base(e) | 260 | 79 | 521 | 154 | ||||||||||||||||||
| General and administrative - Spin-Off transaction costs(f) | 464 | - | 464 | - | ||||||||||||||||||
| COS - impairment charges to fixed assets(g) | 1,732 | 4,632 | 329 | 4,632 | ||||||||||||||||||
| COS - business interruption gains(h) | - | - | - | (675 | ) | |||||||||||||||||
| COS - impairment of goodwill and intangibles(i) | 941 | - | 941 | 3,177 | ||||||||||||||||||
| Interest expense - write off of deferred financing fee(j) | 329 | - | 329 | - | ||||||||||||||||||
| Provision for income taxes on Non-GAAP adjustments(k) | (2,141 | ) | (4,436 | ) | (9,509 | ) | (10,102 | ) | ||||||||||||||
| Non-GAAP income from continuing operations | 33,529 | 21,254 | 99,869 | 68,319 | ||||||||||||||||||
| Non-GAAP income from discontinued operations(l) | - | 8,156 | 25,688 | 33,812 | ||||||||||||||||||
| Non-GAAP Net Income | $ | 33,529 | $ | 29,410 | $ | 125,557 | $ | 102,131 | ||||||||||||||
| Average number of shares outstanding | 55,760 | 54,967 | 55,981 | 54,397 | ||||||||||||||||||
| Diluted Earnings Per Share As Reported | ||||||||||||||||||||||
| Continuing operations | $ | 0.49 | $ | 0.33 | $ | 1.64 | $ | 1.09 | ||||||||||||||
| Discontinued operations | $ | - | $ | 0.15 | $ | 0.33 | $ | 0.61 | ||||||||||||||
| Diluted income per share attributable to The Ensign Group, Inc. | $ | 0.49 | $ | 0.48 | $ | 1.97 | $ | 1.70 | ||||||||||||||
| Adjusted Diluted Earnings Per Share | ||||||||||||||||||||||
| Continuing operations | $ | 0.60 | $ | 0.39 | $ | 1.78 | $ | 1.26 | ||||||||||||||
| Discontinued operations | $ | - | $ | 0.15 | $ | 0.46 | $ | 0.62 | ||||||||||||||
| Net Income | $ | 0.60 | $ | 0.54 | $ | 2.24 | $ | 1.88 | ||||||||||||||
| Footnotes: | ||||||||||||||||||||||
| (a) Represents operating results for start-up operations. | ||||||||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||
| Revenue | $ | - | $ | (16,984 | ) | $ | - | $ | (66,386 | ) | ||||||||||||
| Cost of services | - | 13,581 | - | 54,758 | ||||||||||||||||||
| Rent | - | 3,619 | - | 14,347 | ||||||||||||||||||
| Depreciation and amortization | - | 233 | - | 963 | ||||||||||||||||||
| Total Non-GAAP adjustment | $ | - | $ | 449 | $ | - | $ | 3,682 | ||||||||||||||
| (b) Represents share-based compensation expense incurred. | ||||||||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||
| Cost of services | $ | 2,001 | $ | 1,379 | $ | 7,036 | $ | 5,183 | ||||||||||||||
| General and administrative | 1,106 | 832 | 4,286 | 3,184 | ||||||||||||||||||
| Total Non-GAAP adjustment | $ | 3,107 | $ | 2,211 | $ | 11,322 | $ | 8,367 | ||||||||||||||
| (c) Represents results at closed operations and operations not at full capacity | ||||||||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||
| Revenue | $ | (4,212 | ) | $ | - | $ | (8,609 | ) | $ | - | ||||||||||||
| Cost of services | 4,708 | 137 | 10,289 | 601 | ||||||||||||||||||
| Rent | 443 | 76 | 921 | 301 | ||||||||||||||||||
| Depreciation and amortization | 372 | 9 | 904 | 31 | ||||||||||||||||||
| Total Non-GAAP adjustment | $ | 1,311 | $ | 222 | $ | 3,505 | $ | 933 | ||||||||||||||
| (d) Represents costs incurred to acquire an operation which are not capitalizable. | ||||||||||||||||||||||
| (e) Included in depreciation and amortization are expenses related to patient base intangible assets at newly acquired skilled nursing and senior living facilities. | ||||||||||||||||||||||
| (f) Included in general and administrative expense are costs incurred in connection with the completed Spin-Off of our home health and hospice operations and substantially all of our senior living operations to a newly formed publicly traded company subsequent to the Spin-Off date. Expenses incurred prior to Spin-Off date are included in discontinued operations as an adjustment. | ||||||||||||||||||||||
| (g) Impairment charges to fixed assets includes impairment charges of $1.7 million at a leased skilled nursing operation during the three months ended December 31, 2019. Additionally, included in the year ended December 31, 2019, impairment charges of $1.5 million at two of our senior living operations and at the skilled nursing operation mentioned, offset by the gain recognized for the sale of real estate of $2.9 million. | ||||||||||||||||||||||
| (h) Business interruption recoveries related to insurance claims of the California fires that occurred in the fourth quarter of 2017. | ||||||||||||||||||||||
| (i) Impairment charges to goodwill and intangible assets at our other ancillary operations and a skilled nursing operation. | ||||||||||||||||||||||
| (j) Represents the write off of deferred financing fees associated with the amendment of the credit facility. | ||||||||||||||||||||||
| (k) Represents an adjustment to the provision for income tax to our historical year to date effective tax rate of 25.0% for the three months and years ended December 31, 2019 and 2018. | ||||||||||||||||||||||
| (l) Represents results of the home health, hospice and senior living operations we transferred to the Pennant Group, Inc. as a result of the Spin-Off. | ||||||||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||
| Revenue | $ | - | $ | 75,291 | $ | 248,713 | $ | 285,838 | ||||||||||||||
| Cost of services | - | (55,314 | ) | (185,963 | ) | (208,585 | ) | |||||||||||||||
| General and administrative expenses | - | (2,819 | ) | (8,037 | ) | (8,225 | ) | |||||||||||||||
| Rent | - | (5,432 | ) | (17,283 | ) | (20,805 | ) | |||||||||||||||
| Depreciation and amortization | - | (643 | ) | (2,367 | ) | (2,392 | ) | |||||||||||||||
| Interest income, net | - | 36 | 26 | 47 | ||||||||||||||||||
| Provision for income taxes | - | (2,780 | ) | (8,772 | ) | (11,471 | ) | |||||||||||||||
| Non-controlling interest | - | (183 | ) | (629 | ) | (595 | ) | |||||||||||||||
| Non-GAAP net income from discontinued operations | $ | - | $ | 8,156 | $ | 25,688 | $ | 33,812 | ||||||||||||||
| THE ENSIGN GROUP, INC. | ||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION | ||||||||||||||||
| (In thousands) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| The table below reconciles net income to EBITDA, Adjusted EBITDA and Adjusted EBITDAR for the periods presented: | ||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Consolidated Statements of Income Data: | ||||||||||||||||
| Net income attributable to The Ensign Group, Inc. | $ | 27,326 | $ | 26,559 | $ | 111,686 | $ | 92,528 | ||||||||
| Less: net (loss)/income attributable to noncontrolling interests in continuing operations | (68 | ) | 16 | 523 | (431 | ) | ||||||||||
| Less: net income from discontinued operations, net of tax | - | 8,456 | 19,473 | 33,466 | ||||||||||||
| Add: Interest expense, net | 3,357 | 3,162 | 13,013 | 13,166 | ||||||||||||
| Provision for income taxes | 9,010 | 2,653 | 23,954 | 12,685 | ||||||||||||
| Depreciation and amortization | 13,354 | 11,544 | 51,054 | 44,864 | ||||||||||||
| EBITDA from continuing operations | 53,115 | 35,446 | 179,711 | 130,208 | ||||||||||||
| EBITDA from discontinued operations (g) | - | 11,001 | 26,883 | 45,460 | ||||||||||||
| EBITDA | $ | 53,115 | $ | 46,447 | $ | 206,594 | $ | 175,668 | ||||||||
| Adjustments to EBITDA: | ||||||||||||||||
| Earnings related to operations in the start-up phase (a) | - | (3,403 | ) | - | (11,628 | ) | ||||||||||
| Return of unclaimed class action settlement | - | - | - | (1,664 | ) | |||||||||||
| Share-based compensation expense | 3,107 | 2,211 | 11,322 | 8,367 | ||||||||||||
| Results related to closed operations and operations not at full capacity(b) | 496 | 137 | 1,680 | 601 | ||||||||||||
| Acquisition related costs(c) | 132 | 10 | 277 | 322 | ||||||||||||
| Spin-Off transaction costs(d) | 464 | - | 464 | - | ||||||||||||
| Impairment charges to fixed assets, net of gain on sale(e) | 1,732 | 4,632 | 329 | 4,632 | ||||||||||||
| Business interruption recoveries related to Hurricane Harvey and California fires | - | - | - | (675 | ) | |||||||||||
| Impairment of goodwill and intangible assets(f) | 941 | - | 941 | 3,177 | ||||||||||||
| Rent related to items above | 443 | 3,695 | 921 | 14,648 | ||||||||||||
| Adjusted EBITDA from continuing operations | 60,430 | 42,728 | 195,645 | 147,988 | ||||||||||||
| Adjusted EBITDA from discontinued operations(g) | - | 11,543 | 36,801 | 47,627 | ||||||||||||
| Adjusted EBITDA | $ | 60,430 | $ | 54,271 | $ | 232,446 | $ | 195,615 | ||||||||
| Rent—cost of services | 31,511 | 29,898 | 124,789 | 117,676 | ||||||||||||
| Less: rent related to items above | (443 | ) | (3,695 | ) | (921 | ) | (14,648 | ) | ||||||||
| Adjusted rent—cost of services | 31,068 | 26,203 | - | 123,868 | 103,028 | |||||||||||
| Adjusted rent included in discontinued operations | - | 5,432 | 17,283 | 20,805 | ||||||||||||
| Adjusted EBITDAR from continuing operations | $ | 91,498 | $ | 319,513 | ||||||||||||
| Adjusted EBITDAR | $ | 91,498 | - | $ | 373,597 | |||||||||||
| (a) Represents results related to facilities currently in the start-up phase after construction was completed. This amount excludes rent, depreciation and interest expense. | ||||||||||||||||
| (b) Results at closed operations and operations not at full capacity during the periods presented. | ||||||||||||||||
| (c) Costs incurred to acquire operations which are not capitalizable. | ||||||||||||||||
| (d) Costs incurred in connection with the completed Spin-Off transaction of our home health and hospice operations and substantially all of our senior living operations to a newly formed publicly traded company. Transaction costs incurred prior to Spin-Off date are included in discontinued operations as an adjustment. | ||||||||||||||||
| (e) Impairment charges to fixed assets includes impairment charges of $1.7 million at a leased skilled nursing operation during the three months ended December 31, 2019. Additionally, included in the year ended December 31, 2019, impairment charges of $1.5 million at two of our senior living operations and at the skilled nursing operation mentioned, offset by the gain recognized for the sale of real estate of $2.9 million. | ||||||||||||||||
| (f) Impairment charges to goodwill and intangible assets at our other ancillary operations and a skilled nursing operation. | ||||||||||||||||
| (g) All adjustments included in the table below are presented within net income from discontinued operations, net of tax within the consolidated statements of income for the periods presented. | ||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Consolidated Statements of Income Data: | ||||||||||||||||
| Net income from discontinued operations, net of tax | $ | - | $ | 8,456 | $ | 19,473 | $ | 33,466 | ||||||||
| Less: net income attributable to noncontrolling interests in discontinued operations | - | 183 | 629 | 595 | ||||||||||||
| Add: Interest income, net | $ | - | $ | (37 | ) | $ | (26 | ) | $ | (47 | ) | |||||
| Provision for income taxes | - | 2,110 | 5,663 | 10,156 | ||||||||||||
| Depreciation and amortization | - | 655 | 2,402 | 2,480 | ||||||||||||
| EBITDA from discontinued operations | $ | - | $ | 11,001 | $ | 26,883 | $ | 45,460 | ||||||||
| Adjustments to EBITDA from discontinued operations: | ||||||||||||||||
| Earnings related to operations in the start-up phase | - | 35 | 377 | 128 | ||||||||||||
| Share-based compensation expense | - | 486 | 1,018 | 1,970 | ||||||||||||
| Spin-Off transaction costs | - | 13 | 7,909 | - | ||||||||||||
| Acquisition related costs | - | - | 603 | 39 | ||||||||||||
| Rent related to items above | - | 8 | 11 | 30 | ||||||||||||
| Adjusted EBITDA from discontinued operations | $ | - | $ | 11,543 | $ | 36,801 | $ | 47,627 | ||||||||
| THE ENSIGN GROUP, INC. | |||||||||||
| SELECT PERFORMANCE INDICATORS | |||||||||||
| (Unaudited) | |||||||||||
| The following tables summarize our selected performance indicators for our transitional and skilled services segment along with other statistics, for each of the dates or periods indicated: | |||||||||||
| Three Months Ended December 31, | |||||||||||
| 2019 | 2018 | Change | % Change | ||||||||
| (Dollars in thousands) | |||||||||||
| Total Facility Results: | |||||||||||
| Transitional and skilled revenue | $ | 530,171 | $ | 441,714 | $ | 88,457 | 20.0 | % | |||
| Number of facilities at period end | 190 | 168 | 22 | 13.1 | % | ||||||
| Number of campuses at period end* | 23 | 19 | 4 | 21.1 | % | ||||||
| Actual patient days | 1,591,163 | 1,393,783 | 197,380 | 14.2 | % | ||||||
| Occupancy percentage — Operational beds | 79.1 | % | 77.9 | % | 1.2 | % | |||||
| Skilled mix by nursing days | 28.7 | % | 28.6 | % | 0.1 | % | |||||
| Skilled mix by nursing revenue | 49.2 | % | 48.1 | % | 1.1 | % | |||||
| Three Months Ended December 31, | |||||||||||
| 2019 | 2018 | Change | % Change | ||||||||
| (Dollars in thousands) | |||||||||||
| Same Facility Results(1): | |||||||||||
| Transitional and skilled revenue | $ | 372,507 | $ | 339,210 | $ | 33,297 | 9.8 | % | |||
| Number of facilities at period end | 131 | 131 | - | - | % | ||||||
| Number of campuses at period end* | 9 | 9 | - | - | % | ||||||
| Actual patient days | 1,065,825 | 1,032,926 | 32,899 | 3.2 | % | ||||||
| Occupancy percentage — Operational beds | 80.6 | % | 78.7 | % | 1.9 | % | |||||
| Skilled mix by nursing days | 31.2 | % | 30.4 | % | 0.8 | % | |||||
| Skilled mix by nursing revenue | 52.0 | % | 49.9 | % | 2.1 | % | |||||
| Three Months Ended December 31, | |||||||||||
| 2019 | 2018 | Change | % Change | ||||||||
| (Dollars in thousands) | |||||||||||
| Transitioning Facility Results(2): | |||||||||||
| Transitional and skilled revenue | $ | 94,778 | $ | 86,516 | $ | 8,262 | 9.5 | % | |||
| Number of facilities at period end | 33 | 33 | - | - | % | ||||||
| Number of campuses at period end* | 7 | 7 | - | - | % | ||||||
| Actual patient days | 313,281 | 307,367 | 5,914 | 1.9 | % | ||||||
| Occupancy percentage — Operational beds | 77.7 | % | 76.2 | % | 1.5 | % | |||||
| Skilled mix by nursing days | 25.4 | % | 24.4 | % | 1.0 | % | |||||
| Skilled mix by nursing revenue | 45.5 | % | 43.8 | % | 1.7 | % | |||||
| Three Months Ended December 31, | |||||||||||
| 2019 | 2018 | Change | % Change | ||||||||
| (Dollars in thousands) | |||||||||||
| Recently Acquired Facility Results(3): | |||||||||||
| Transitional and skilled revenue | $ | 62,010 | $ | 13,017 | $ | 48,993 | NM | ||||
| Number of facilities at period end | 26 | 4 | 22 | NM | |||||||
| Number of campuses at period end* | 7 | 3 | 4 | NM | |||||||
| Actual patient days | 209,255 | 43,387 | 165,868 | NM | |||||||
| Occupancy percentage — Operational beds | 74.2 | % | 72.4 | % | NM | ||||||
| Skilled mix by nursing days | 20.9 | % | 19.8 | % | NM | ||||||
| Skilled mix by nursing revenue | 38.1 | % | 32.2 | % | NM | ||||||
| Three Months Ended December 31, | |||||||||||
| 2019 | 2018 | Change | % Change | ||||||||
| (Dollars in thousands) | |||||||||||
| Facility Closed Results(4): | |||||||||||
| Transitional and skilled revenue | $ | 876 | $ | 2,971 | $ | (2,095 | ) | NM | |||
| Actual patient days | 2,802 | 10,103 | (7,301 | ) | NM | ||||||
| Occupancy percentage — Operational beds | 60.7 | % | 73.7 | % | NM | ||||||
| Skilled mix by nursing days | 13.7 | % | 15.1 | % | NM | ||||||
| Skilled mix by nursing revenue | 27.8 | % | 29.9 | % | NM | ||||||
| * Campus represents a facility that offers both skilled nursing and senior living services. Revenue and expenses related to skilled nursing and senior living services have been allocated and recorded in the respective reportable segment. | |||||||||||
| (1) Same Facility results represent all facilities purchased prior to January 1, 2016. | |||||||||||
| (2) Transitioning Facility results represent all facilities purchased from January 1, 2016 to December 31, 2017. | |||||||||||
| (3) Recently Acquired Facility (Acquisitions) results represent all facilities purchased on or subsequent to January 1, 2018. | |||||||||||
| (4) Facility Closed results represents closed operations during the three months ended December 31, 2019, which were excluded from Same Facilities results for the three months ended December 31, 2019 and 2018 for comparison purposes. | |||||||||||
| Year Ended December 31, | |||||||||||
| 2019 | 2018 | Change | % Change | ||||||||
| (Dollars in thousands) | |||||||||||
| Total Facility Results: | |||||||||||
| Transitional and skilled revenue | $ | 1,934,640 | $ | 1,679,012 | $ | 255,628 | 15.2 | % | |||
| Number of facilities at period end | 190 | 168 | 22 | 13.1 | % | ||||||
| Number of campuses at period end* | 23 | 19 | 4 | 21.1 | % | ||||||
| Actual patient days | 5,987,027 | 5,405,952 | 581,075 | 10.7 | % | ||||||
| Occupancy percentage — Operational beds | 79.2 | % | 77.4 | % | 1.8 | % | |||||
| Skilled mix by nursing days | 29.0 | % | 29.5 | % | (0.5 | )% | |||||
| Skilled mix by nursing revenue | 48.8 | % | 49.6 | % | (0.8 | )% | |||||
| Year Ended December 31, | |||||||||||
| 2019 | 2018 | Change | % Change | ||||||||
| (Dollars in thousands) | |||||||||||
| Same Facility Results(1): | |||||||||||
| Transitional and skilled revenue | $ | 1,410,718 | $ | 1,307,882 | $ | 102,836 | 7.9 | % | |||
| Number of facilities at period end | 131 | 131 | - | - | % | ||||||
| Number of campuses at period end* | 9 | 9 | - | - | % | ||||||
| Actual patient days | 4,199,374 | 4,070,122 | 129,252 | 3.2 | % | ||||||
| Occupancy percentage — Operational beds | 80.3 | % | 78.2 | % | 2.1 | % | |||||
| Skilled mix by nursing days | 31.1 | % | 31.2 | % | (0.1 | )% | |||||
| Skilled mix by nursing revenue | 51.2 | % | 51.1 | % | 0.1 | % | |||||
| Year Ended December 31, | |||||||||||
| 2019 | 2018 | Change | % Change | ||||||||
| (Dollars in thousands) | |||||||||||
| Transitioning Facility Results(2): | |||||||||||
| Transitional and skilled revenue | $ | 364,337 | $ | 330,795 | $ | 33,542 | 10.1 | % | |||
| Number of facilities at period end | 33 | 33 | - | - | % | ||||||
| Number of campuses at period end* | 7 | 7 | - | - | % | ||||||
| Actual patient days | 1,247,573 | 1,201,138 | 46,435 | 3.9 | % | ||||||
| Occupancy percentage — Operational beds | 78.1 | % | 75.3 | % | 2.8 | % | |||||
| Skilled mix by nursing days | 25.5 | % | 25.2 | % | 0.3 | % | |||||
| Skilled mix by nursing revenue | 44.9 | % | 45.2 | % | (0.3 | )% | |||||
| Year Ended December 31, | |||||||||||
| 2019 | 2018 | Change | % Change | ||||||||
| (Dollars in thousands) | |||||||||||
| Recently Acquired Facility Results(3): | |||||||||||
| Transitional and skilled revenue | $ | 149,995 | $ | 28,580 | $ | 121,415 | NM | ||||
| Number of facilities at period end | 26 | 4 | 22 | NM | |||||||
| Number of campuses at period end* | 7 | 3 | 4 | NM | |||||||
| Actual patient days | 510,541 | 95,034 | 415,507 | NM | |||||||
| Occupancy percentage — Operational beds | 74.0 | % | 73.9 | % | NM | ||||||
| Skilled mix by nursing days | 20.9 | % | 20.5 | % | NM | ||||||
| Skilled mix by nursing revenue | 36.4 | % | 33.4 | % | NM | ||||||
| Year Ended December 31, | |||||||||||
| 2019 | 2018 | Change | % Change | ||||||||
| (Dollars in thousands) | |||||||||||
| Facility Closed Results(4): | |||||||||||
| Transitional and skilled revenue | $ | 9,590 | $ | 11,755 | $ | (2,165 | ) | NM | |||
| Actual patient days | 29,539 | 39,658 | (10,119 | ) | NM | ||||||
| Occupancy percentage — Operational beds | 65.2 | % | 72.9 | % | NM | ||||||
| Skilled mix by nursing days | 17.0 | % | 16.1 | % | NM | ||||||
| Skilled mix by nursing revenue | 34.4 | % | 33.4 | % | NM | ||||||
| * Campus represents a facility that offers both skilled nursing and senior living services. Revenue and expenses related to skilled nursing and senior living services have been allocated and recorded in the respective reportable segment. | |||||||||||
| (1) Same Facility results represent all facilities purchased prior to January 1, 2016. | |||||||||||
| (2) Transitioning Facility results represent all facilities purchased from January 1, 2016 to December 31, 2017. | |||||||||||
| (3) Recently Acquired Facility (Acquisitions) results represent all facilities purchased on or subsequent to January 1, 2018. | |||||||||||
| (4) Facility Closed results represents closed operations during the year ended December 31, 2019, which were excluded from Same Facilities results for the year ended December 31, 2019 and 2018 for comparison purposes. | |||||||||||
| THE ENSIGN GROUP, INC. | ||||||||||||||||
| SKILLED NURSING AVERAGE DAILY REVENUE RATES AND | ||||||||||||||||
| PERCENT OF SKILLED NURSING REVENUE AND DAYS BY PAYOR | ||||||||||||||||
| The following table reflects the change in skilled nursing average daily revenue rates by payor source, excluding services that are not covered by the daily rate: | ||||||||||||||||
| Three Months Ended December 31, | ||||||||||||||||
| Same Facility | Transitioning | Acquisitions | Total | |||||||||||||
| 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||||||||
| Skilled Nursing Average Daily Revenue Rates: | ||||||||||||||||
| Medicare | $ | 669.99 | $ | 611.29 | $ | 566.96 | $ | 529.04 | $ | 615.07 | $ | 520.12 | $ | 642.11 | $ | 590.27 |
| Managed care | 486.07 | 461.46 | 429.96 | 415.66 | 439.18 | 424.28 | 470.83 | 450.91 | ||||||||
| Other skilled | 511.16 | 485.01 | 495.11 | 581.69 | 323.27 | 249.05 | 501.46 | 486.26 | ||||||||
| Total skilled revenue | 563.23 | 526.39 | 502.37 | 480.00 | 518.43 | 458.20 | 548.33 | 516.35 | ||||||||
| Medicaid | 237.78 | 232.72 | 208.42 | 200.45 | 224.69 | 240.55 | 230.12 | 225.68 | ||||||||
| Private and other payors | 226.89 | 228.35 | 195.88 | 194.95 | 211.72 | 237.21 | 216.97 | 219.89 | ||||||||
| Total skilled nursing revenue | $ | 338.08 | $ | 321.86 | $ | 281.18 | $ | 268.05 | $ | 284.27 | $ | 283.32 | $ | 319.72 | $ | 308.52 |
| Year Ended December 31, | ||||||||||||||||
| Same Facility | Transitioning | Acquisitions | Total | |||||||||||||
| 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||||||||
| Skilled Nursing Average Daily Revenue Rates: | ||||||||||||||||
| Medicare | $ | 628.20 | $ | 600.65 | $ | 542.67 | $ | 520.85 | $ | 594.74 | $ | 528.11 | $ | 607.24 | $ | 580.96 |
| Managed care | 470.85 | 457.09 | 420.48 | 410.87 | 432.41 | 423.94 | 458.26 | 447.34 | ||||||||
| Other skilled | 496.37 | 475.12 | 491.15 | 522.24 | 327.22 | 246.85 | 490.93 | 475.59 | ||||||||
| Total skilled revenue | 537.00 | 517.86 | 484.13 | 473.60 | 501.13 | 460.52 | 525.41 | 509.10 | ||||||||
| Medicaid | 232.41 | 225.48 | 203.99 | 193.18 | 231.46 | 235.70 | 226.43 | 218.30 | ||||||||
| Private and other payors | 231.87 | 225.31 | 202.19 | 198.33 | 229.17 | 237.61 | 223.97 | 218.42 | ||||||||
| Total skilled nursing revenue | $ | 327.48 | $ | 317.01 | $ | 275.25 | $ | 264.81 | $ | 287.52 | $ | 282.07 | $ | 313.11 | $ | 304.57 |
| The following tables set forth our percentage of skilled nursing patient revenue and days by payor source for the three months and years ended December 31, 2019 and 2018: | |||||||||||||||||
| Three Months Ended December 31, | |||||||||||||||||
| Same Facility | Transitioning | Acquisitions | Total | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||
| Percentage of Skilled Nursing Revenue: | |||||||||||||||||
| Medicare | 24.2 | % | 23.2 | % | 26.0 | % | 25.2 | % | 22.8 | % | 17.4 | % | 24.3 | % | 23.4 | % | |
| Managed care | 17.9 | 17.0 | 17.4 | 17.0 | 13.2 | 13.6 | 17.3 | 16.9 | |||||||||
| Other skilled | 9.9 | 9.7 | 2.1 | 1.6 | 2.1 | 1.2 | 7.6 | 7.8 | |||||||||
| Skilled mix | 52.0 | 49.9 | 45.5 | 43.8 | 38.1 | 32.2 | 49.2 | 48.1 | |||||||||
| Private and other payors | 7.4 | 7.5 | 11.1 | 11.0 | 9.8 | 13.1 | 8.4 | 8.4 | |||||||||
| Medicaid | 40.6 | 42.6 | 43.4 | 45.2 | 52.1 | 54.7 | 42.4 | 43.5 | |||||||||
| Total skilled nursing | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |
| Three Months Ended December 31, | |||||||||||||||||
| Same Facility | Transitioning | Acquisitions | Total | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||
| Percentage of Skilled Nursing Days: | |||||||||||||||||
| Medicare | 12.2 | % | 12.2 | % | 12.9 | % | 12.8 | % | 10.6 | % | 9.5 | % | 12.1 | % | 12.2 | % | |
| Managed care | 12.5 | 11.8 | 11.4 | 10.9 | 8.6 | 9.0 | 11.7 | 11.5 | |||||||||
| Other skilled | 6.5 | 6.4 | 1.1 | 0.7 | 1.7 | 1.3 | 4.9 | 4.9 | |||||||||
| Skilled mix | 31.2 | 30.4 | 25.4 | 24.4 | 20.9 | 19.8 | 28.7 | 28.6 | |||||||||
| Private and other payors | 11.1 | 11.0 | 16.1 | 15.2 | 13.2 | 16.0 | 12.3 | 12.2 | |||||||||
| Medicaid | 57.7 | 58.6 | 58.5 | 60.4 | 65.9 | 64.2 | 59.0 | 59.2 | |||||||||
| Total skilled nursing | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |
| Year Ended December 31, | |||||||||||||||||
| Same Facility | Transitioning | Acquisitions | Total | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||
| Percentage of Skilled Nursing Revenue: | |||||||||||||||||
| Medicare | 23.2 | % | 23.6 | % | 25.1 | % | 26.8 | % | 20.6 | % | 17.9 | % | 23.4 | % | 24.2 | % | |
| Managed care | 18.4 | 18.1 | 18.1 | 16.9 | 13.8 | 14.4 | 17.9 | 17.7 | |||||||||
| Other skilled | 9.6 | 9.4 | 1.7 | 1.5 | 2.0 | 1.1 | 7.5 | 7.7 | |||||||||
| Skilled mix | 51.2 | 51.1 | 44.9 | 45.2 | 36.4 | 33.4 | 48.8 | 49.6 | |||||||||
| Private and other payors | 7.5 | 7.6 | 11.3 | 11.5 | 11.0 | 14.1 | 8.5 | 8.5 | |||||||||
| Medicaid | 41.3 | 41.3 | 43.8 | 43.3 | 52.6 | 52.5 | 42.7 | 41.9 | |||||||||
| Total skilled nursing | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |
| Year Ended December 31, | |||||||||||||||||
| Same Facility | Transitioning | Acquisitions | Total | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||
| Percentage of Skilled Nursing Days: | |||||||||||||||||
| Medicare | 12.1 | % | 12.4 | % | 12.7 | % | 13.6 | % | 10.0 | % | 9.5 | % | 12.0 | % | 12.6 | % | |
| Managed care | 12.7 | 12.5 | 11.8 | 10.8 | 9.2 | 9.6 | 12.2 | 12.0 | |||||||||
| Other skilled | 6.3 | 6.3 | 1.0 | 0.8 | 1.7 | 1.4 | 4.8 | 4.9 | |||||||||
| Skilled mix | 31.1 | 31.2 | 25.5 | 25.2 | 20.9 | 20.5 | 29.0 | 29.5 | |||||||||
| Private and other payors | 10.8 | 11.0 | 15.6 | 15.6 | 13.9 | 16.8 | 12.1 | 12.2 | |||||||||
| Medicaid | 58.1 | 57.8 | 58.9 | 59.2 | 65.2 | 62.7 | 58.9 | 58.3 | |||||||||
| Total skilled nursing | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |
| THE ENSIGN GROUP, INC. | |||||||||||||||||||
| REVENUE BY PAYOR SOURCE | |||||||||||||||||||
| The following table sets forth our total revenue by payor source and as a percentage of total revenue for the periods indicated: | |||||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||
| $ | % | $ | % | $ | % | $ | % | ||||||||||||
| (Dollars in thousands) | (Dollars in thousands) | ||||||||||||||||||
| Revenue: | |||||||||||||||||||
| Medicaid | $ | 216,729 | 38.7 | % | $ | 188,058 | 40.7 | % | $ | 802,952 | 39.4 | % | $ | 691,276 | 39.4 | % | |||
| Medicare | 144,213 | 25.7 | 112,884 | 24.4 | 499,353 | 24.5 | 436,580 | 24.9 | |||||||||||
| Medicaid-skilled | 36,567 | 6.5 | 31,662 | 6.9 | 132,889 | 6.5 | 117,686 | 6.7 | |||||||||||
| Total Medicaid and Medicare | 397,509 | 70.9 | 332,604 | 72.0 | 1,435,194 | 70.4 | 1,245,542 | 71.0 | |||||||||||
| Managed Care | 92,849 | 16.6 | 76,002 | 16.4 | 351,054 | 17.2 | 301,866 | 17.2 | |||||||||||
| Private and Other(1) | 69,833 | 12.5 | 53,833 | 11.6 | 250,276 | 12.4 | 207,193 | 11.8 | |||||||||||
| Revenue | $ | 560,191 | 100.0 | % | $ | 462,439 | 100.0 | % | $ | 2,036,524 | 100.0 | % | $ | 1,754,601 | 100.0 | % | |||
| (1) Private and other payors also includes revenue from all payors generated in our other ancillary services for the three months and years ended December 31, 2019 and 2018. During the fiscal year 2019, private and other payors includes $5,812 of rental income. | |||||||||||||||||||
| THE ENSIGN GROUP, INC. | |||||||||||||||||||||||
| SUPPLEMENTAL RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION BY QUARTER | |||||||||||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP NET INCOME | |||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||
| 3/31/19 | 6/30/19 | 9/30/19 | 12/31/19 | ||||||||||||||||||||
| Net income from continuing operations | $ | 21,480 | $ | 20,668 | $ | 22,148 | $ | 27,394 | |||||||||||||||
| Net income from discontinued operations, net of tax | 5,892 | 7,941 | 5,011 | - | |||||||||||||||||||
| Net income attributable to The Ensign Group, Inc. | 27,372 | 28,609 | 27,159 | 27,394 | |||||||||||||||||||
| Non-GAAP adjustments for continuing operations: | |||||||||||||||||||||||
| Share-based compensation expense(a) | 2,456 | 2,930 | 2,829 | 3,107 | |||||||||||||||||||
| Results related to closed operations and operations not at full capacity(b) | 349 | 626 | 1,219 | 1,311 | |||||||||||||||||||
| Acquisition related costs(c) | 26 | 49 | 69 | 132 | |||||||||||||||||||
| Depreciation and amortization - patient base(d) | 70 | 87 | 104 | 260 | |||||||||||||||||||
| General and administrative - Spin-Off transaction costs(e) | - | - | - | 464 | |||||||||||||||||||
| COS - (gain on sale)/impairment charges to fixed assets(f) | - | - | (1,402 | ) | 1,732 | ||||||||||||||||||
| COS - impairment of goodwill and intangibles(g) | - | - | - | 941 | |||||||||||||||||||
| Interest expense - write off of deferred financing fee(h) | - | - | - | 329 | |||||||||||||||||||
| Provision for income taxes on Non-GAAP adjustments(i) | (2,161 | ) | (2,687 | ) | (2,520 | ) | (2,141 | ) | |||||||||||||||
| Non-GAAP income from continuing operations | 22,220 | 21,673 | 22,447 | 33,529 | |||||||||||||||||||
| Non-GAAP income from discontinued operations(j) | 8,583 | 8,609 | 8,496 | - | |||||||||||||||||||
| Non-GAAP Net Income | $ | 30,803 | $ | 30,282 | $ | 30,943 | $ | 33,529 | |||||||||||||||
| Average number of shares outstanding | 55,698 | 56,078 | 56,364 | 55,760 | |||||||||||||||||||
| Diluted Earnings Per Share As Reported | |||||||||||||||||||||||
| Continuing operations | $ | 0.39 | $ | 0.37 | $ | 0.39 | $ | 0.49 | |||||||||||||||
| Discontinued operations | $ | 0.10 | $ | 0.14 | $ | 0.09 | $ | - | |||||||||||||||
| Diluted income per share attributable to The Ensign Group, Inc. | $ | 0.49 | $ | 0.51 | $ | 0.48 | $ | 0.49 | |||||||||||||||
| Adjusted Diluted Earnings Per Share | |||||||||||||||||||||||
| Continuing operations | $ | 0.40 | $ | 0.39 | $ | 0.40 | $ | 0.60 | |||||||||||||||
| Discontinued operations | $ | 0.15 | $ | 0.15 | $ | 0.15 | $ | - | |||||||||||||||
| Net Income | $ | 0.55 | $ | 0.54 | $ | 0.55 | $ | 0.60 | |||||||||||||||
| Footnotes: | |||||||||||||||||||||||
| (a) Represents share-based compensation expense incurred. | |||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||
| 3/31/19 | 6/30/19 | 9/30/19 | 12/31/19 | ||||||||||||||||||||
| Cost of services | $ | 1,516 | $ | 1,779 | $ | 1,740 | $ | 2,001 | |||||||||||||||
| General and administrative | 940 | 1,151 | 1,089 | 1,106 | |||||||||||||||||||
| Total Non-GAAP adjustment | $ | 2,456 | $ | 2,930 | $ | 2,829 | $ | 3,107 | |||||||||||||||
| (b) Represents results at closed operations and operations not at full capacity | |||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||
| 3/31/19 | 6/30/19 | 9/30/19 | 12/31/19 | ||||||||||||||||||||
| Revenue | $ | - | $ | (1,830 | ) | $ | (2,567 | ) | $ | (4,212 | ) | ||||||||||||
| Cost of services | 264 | 2,195 | 3,122 | 4,708 | |||||||||||||||||||
| Rent | 76 | 107 | 295 | 443 | |||||||||||||||||||
| Depreciation and amortization | 9 | 154 | 369 | 372 | |||||||||||||||||||
| Total Non-GAAP adjustment | $ | 349 | $ | 626 | $ | 1,219 | $ | 1,311 | |||||||||||||||
| (c) Represents costs incurred to acquire an operation which are not capitalizable. | |||||||||||||||||||||||
| (d) Included in depreciation and amortization are expenses related to patient base intangible assets at newly acquired skilled nursing and senior living facilities. | |||||||||||||||||||||||
| (e) Included in general and administrative expense are costs incurred in connection with the completed Spin-Off of our home health and hospice operations and substantially all of our senior living operations to a newly formed publicly traded company. | |||||||||||||||||||||||
| (f) Impairment charges to fixed assets includes impairment charges of $1.7 million at a leased skilled nursing operations during the three months ended December 31, 2019. Included in the three months ended September 30, 2019, impairment charges of $1.5 million at two of our senior living operations, offset by the gain recognized for the sale of real estate of $2.9 million. | |||||||||||||||||||||||
| (g) Impairment charges to goodwill and intangible assets at our other ancillary operations and a skilled nursing operation. | |||||||||||||||||||||||
| (h) Represents the write off of deferred financing fees associated with the amendment of the credit facility. | |||||||||||||||||||||||
| (i) Represents an adjustment to the provision for income tax to our historical year to date effective tax rate of 25.0% for the periods presented. | |||||||||||||||||||||||
| (j) Represents results of the home health, hospice and senior living operations we transferred to the Pennant Group, Inc. as a result of the Spin-Off. | |||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||
| 3/31/19 | 6/30/19 | 9/30/19 | 12/31/19 | ||||||||||||||||||||
| Revenue | $ | 77,730 | $ | 82,658 | $ | 88,325 | $ | - | |||||||||||||||
| Cost of services | (57,448 | ) | (61,534 | ) | (66,981 | ) | - | ||||||||||||||||
| General and administrative expenses | (2,393 | ) | (2,752 | ) | (2,892 | ) | - | ||||||||||||||||
| Rent | (5,598 | ) | (5,836 | ) | (5,849 | ) | - | ||||||||||||||||
| Depreciation and amortization | (658 | ) | (800 | ) | (909 | ) | - | ||||||||||||||||
| Interest income, net | 11 | 9 | 6 | - | |||||||||||||||||||
| Provision for income taxes | (2,911 | ) | (2,936 | ) | (2,925 | ) | - | ||||||||||||||||
| Non-controlling interest | (150 | ) | (200 | ) | (279 | ) | - | ||||||||||||||||
| Non-GAAP net income from discontinued operations | $ | 8,583 | $ | 8,609 | $ | 8,496 | $ | - | |||||||||||||||
| THE ENSIGN GROUP, INC. | |||||||||||||||||
| SUPPLEMENTAL RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION BY QUARTER | |||||||||||||||||
| (In thousands) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| The table below reconciles net income to EBITDA, Adjusted EBITDA and Adjusted EBITDAR for the periods presented: | |||||||||||||||||
| Three Months Ended | |||||||||||||||||
| 3/31/19 | 6/30/19 | 9/30/19 | 12/31/19 | ||||||||||||||
| Consolidated Statements of Income Data: | |||||||||||||||||
| Net income attributable to The Ensign Group, Inc. | $ | 27,607 | $ | 28,925 | $ | 27,828 | $ | 27,326 | |||||||||
| Less: net income/(loss) attributable to noncontrolling interests in continuing operations | 85 | 116 | 390 | (68 | ) | ||||||||||||
| Less: net income from discontinued operations, net of tax | 6,042 | 8,141 | 5,290 | - | |||||||||||||
| Add: Interest expense, net | 3,109 | 3,379 | 3,168 | 3,357 | |||||||||||||
| Provision for income taxes | 5,275 | 4,576 | 5,093 | 9,010 | |||||||||||||
| Depreciation and amortization | 11,929 | 12,366 | 13,405 | 13,354 | |||||||||||||
| EBITDA from continuing operations | 41,793 | 40,989 | 43,814 | 53,115 | |||||||||||||
| EBITDA from discontinued operations(f) | 8,374 | 9,725 | 8,781 | - | |||||||||||||
| EBITDA | $ | 50,167 | $ | 50,714 | $ | 52,595 | $ | 53,115 | |||||||||
| Adjustments to EBITDA: | |||||||||||||||||
| Share-based compensation expense | 2,456 | 2,930 | 2,829 | 3,107 | |||||||||||||
| Results related to closed operations and operations not at full capacity(a) | 264 | 365 | 555 | 496 | |||||||||||||
| Acquisition related costs(b) | 26 | 49 | 69 | 132 | |||||||||||||
| Spin-Off transaction costs(c) | - | - | - | 464 | |||||||||||||
| (Gain on sale)/impairment charges to fixed assets(d) | - | - | (1,402 | ) | 1,732 | ||||||||||||
| Impairment of goodwill and intangible assets(e) | - | - | - | 941 | |||||||||||||
| Rent related to items above | 76 | 107 | 295 | 443 | |||||||||||||
| Adjusted EBITDA from continuing operations | 44,615 | 44,440 | 46,160 | 60,430 | |||||||||||||
| Adjusted EBITDA from discontinued operations(f) | 12,141 | 12,336 | 12,324 | - | |||||||||||||
| Adjusted EBITDA | $ | 56,756 | $ | 56,776 | $ | 58,484 | $ | 60,430 | |||||||||
| Rent—cost of services | 30,181 | 31,222 | 31,875 | 31,511 | |||||||||||||
| Less: rent related to items above | (76 | ) | (107 | ) | (295 | ) | (443 | ) | |||||||||
| Adjusted rent—cost of services | 30,105 | 31,115 | 31,580 | 31,068 | |||||||||||||
| Adjusted rent included in discontinued operations | 5,598 | 5,836 | 5,849 | - | |||||||||||||
| Adjusted EBITDAR from continuing operations | 74,720 | 75,555 | 77,740 | 91,498 | |||||||||||||
| Adjusted EBITDAR | $ | 92,459 | $ | 93,727 | $ | 95,913 | $ | 91,498 | |||||||||
| (a) Results at closed operations and operations not at full capacity during the periods presented. | |||||||||||||||||
| (b) Costs incurred to acquire operations which are not capitalizable. | |||||||||||||||||
| (c) Costs incurred in connection with the completed Spin-Off transaction of our home health and hospice operations and substantially all of our senior living operations to a newly formed publicly traded company. | |||||||||||||||||
| (d) Impairment charges to fixed assets includes impairment charges of $1.7 million at a leased skilled nursing operations during the three months ended December 31, 2019. Included in the three months ended September 30, 2019, we recorded an impairment charges of $1.5 million at two of our senior living operations, offset by the gain recognized for the sale of real estate of $2.9 million. | |||||||||||||||||
| (e) Impairment charges to goodwill and intangible assets at our other ancillary operations and a skilled nursing operation. | |||||||||||||||||
| (f) All adjustments included in the table below are presented within net income from discontinued operations, net of tax within the consolidated statements of income for the periods presented. | |||||||||||||||||
| Three Months Ended | |||||||||||||||||
| 3/31/19 | 6/30/19 | 9/30/19 | 12/31/19 | ||||||||||||||
| Consolidated Statements of Income Data: | |||||||||||||||||
| Net income from discontinued operations, net of tax | $ | 6,042 | $ | 8,141 | $ | 5,290 | $ | - | |||||||||
| Less: net income attributable to noncontrolling interests in discontinued operations | 150 | 200 | 279 | - | |||||||||||||
| Add: Interest income, net | (12 | ) | (10 | ) | (4 | ) | - | ||||||||||
| Provision for income taxes | 1,825 | 976 | 2,860 | - | |||||||||||||
| Depreciation and amortization | 669 | 818 | 914 | - | |||||||||||||
| EBITDA from discontinued operations | $ | 8,374 | $ | 9,725 | $ | 8,781 | $ | - | |||||||||
| Adjustments to EBITDA from discontinued operations: | |||||||||||||||||
| Earnings related to operations in the start-up phase | 236 | 82 | 59 | - | |||||||||||||
| Share-based compensation expense | 497 | 372 | 149 | - | |||||||||||||
| Spin-Off transaction costs | 2,990 | 1,658 | 3,261 | - | |||||||||||||
| Acquisition related costs | 36 | 497 | 70 | - | |||||||||||||
| Rent related to items above | 8 | 2 | 4 | - | |||||||||||||
| Adjusted EBITDA from discontinued operations | $ | 12,141 | $ | 12,336 | $ | 12,324 | $ | - | |||||||||
Discussion of Non-GAAP Financial Measures
EBITDA consists of net income before (a) interest expense, net, (b) provisions for income taxes and (c) depreciation and amortization. Adjusted EBITDA consists of net income before (a) interest expense, net, (b) provisions for income taxes, (c) depreciation and amortization, (d) costs incurred for operations currently in start-up phase, excluding depreciation, interest and income taxes, (e) return of unclaimed class action settlement; (f) share-based compensation expense; (g) results of operations not at full capacity, excluding depreciation, interest and income taxes, (h) acquisition related costs; (i) spin-off transaction costs, (j) impairment charges to fixed assets, net of gain on sale of assets; (k) business interruption recoveries; and (l) impairment of intangible assets and goodwill. Adjusted EBITDAR consists of net income before (a) interest expense, net, (b) provisions for income taxes, (c) depreciation and amortization, (d) rent-cost of services, (e) costs incurred for facilities currently in start-up phase, excluding rent, depreciation, interest and income taxes, (f) return of unclaimed class action settlement; (g) share-based compensation expense; (h) results of operations not at full capacity, excluding rent, depreciation, interest and income taxes, (i) return of unclaimed class action settlement; (j) spin-off transaction costs, (k) impairment charges to fixed assets, net of gain on sale of assets; (l) business interruption recoveries; and (m) impairment of intangible assets and goodwill. The company believes that the presentation of EBITDA, adjusted EBITDA, adjusted net income and adjusted earnings per share provides important supplemental information to management and investors to evaluate the company’s operating performance. Adjusted EBITDAR is a financial valuation measure that is not specified in GAAP. This measure is not displayed as a performance measure as it excludes rent expense, which is a normal and recurring operating expense. The company believes disclosure of adjusted net income, adjusted net income per share, EBITDA, adjusted EBITDA and adjusted EBITDAR has substance because the excluded revenues and expenses are infrequent in nature and are variable in nature, or do not represent current revenues or cash expenditures. A material limitation associated with the use of these measures as compared to the GAAP measures of net income and diluted earnings per share is that they may not be comparable with the calculation of net income and diluted earnings per share for other companies in the company's industry. These non-GAAP financial measures should not be relied upon to the exclusion of GAAP financial measures.
We have included unaudited pro forma financials. The unaudited pro forma consolidated financial information were not prepared in accordance with Article 11 of Regulation S-X. The historical financial data has also been adjusted to give pro forma effect to events that are directly attributable to the Spin-Off transaction and have an ongoing effect on Ensign’s statement of operations. The unaudited pro forma consolidated financial statements include: (1) rental income generated from a master lease with Pennant; (2) reduction in estimated historical general and administrative expenses related to Pennant; (3) amendment of the credit facility in connection with the spin-off; and (4) the discontinued operation effect of the spin-off. For further information regarding why the company believes that this non-GAAP and pro forma measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the company's periodic filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Report on Form 10-Q. The company’s periodic filings are available on the SEC's website at www.sec.gov or under the "Financial Information" link of the Investor Relations section on Ensign’s website at http://www.ensigngroup.net.
