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The Ensign Group Meets Earnings Guidance of $1.27 Per Share for 2015; Reaffirms 2016 Projections

Conference Call and Webcast Scheduled for Tomorrow, February 11, 2016 at 10:00 am PT

MISSION VIEJO, Calif., Feb. 10, 2016 (GLOBE NEWSWIRE) -- The Ensign Group, Inc. (Nasdaq:ENSG), the parent company of the Ensign™ group of skilled nursing, rehabilitative care services, home health, home care, hospice care, assisted living and urgent care companies, today reported operating results for the fourth quarter and full year 2015.

Quarter and Fiscal Year Highlights Include:

  • Adjusted earnings per share were $1.27 for the year, an increase of 16.4% over the prior year, and $0.35 for the quarter, an increase of 29.6% over the prior year quarter;
  • Consolidated adjusted net income climbed 31.6% over the prior year to $66.1 million, and 44.7% over the prior year quarter to $18.5 million;
  • Consolidated adjusted EBITDAR was $221.3 million for the year, an increase of 38.8%, and $63.1 million for the quarter, an increase of 43.5%;
  • Same-store revenue for all segments grew by 6.9% over the prior year, and by 7.9% over the prior year quarter, and same-store TSA revenue grew by 6.4% over the prior year, and by 7.5% over the prior year quarter;
  • Same store skilled revenue mix increased by 115 basis points over the prior year to 52.9%;
  • Cornerstone Healthcare, Inc., our home health and hospice subsidiary, grew its revenue by $35.8 million to $90.4 million for the year, an increase of 65.7% over the prior year; and
  • Consolidated revenues for the year were up $314.4 million or 30.6% over the prior year to $1.34 billion, and consolidated revenues for the quarter were up $96.3 million or 34.8% over the prior year quarter to $373.2 million.

Operating Results

“We are pleased to report that operating results met consensus and our annual earnings guidance, which was increased three times during 2015, with adjusted earnings per share of $1.27 for the year,” said Ensign’s President and Chief Executive Officer Christopher Christensen. He stated that “Although there were some temporary challenges in some operations, the overall strength inherent in Ensign’s local approach to healthcare continues to drive steady improvements in each distinct healthcare market.”  He credited the 2015 results to the local leaders and their teams, highlighting their ability to innovate in the midst of an ever-changing healthcare environment.

Mr. Christensen reiterated that as of December 31, 2015, the company had 68 operations in the recently acquired bucket, which is the highest number of operations in that category in the organization’s history. “While we are pleased with the contribution of a few of our newly acquired facilities to our 2015 results, most of our newly acquired operations have not yet contributed to our results in any meaningful way,” he said. He also noted that “our recent growth puts us in an unprecedented position for continued organic improvement in 2016 and beyond as these recently acquired operations begin to meet their potential, most of which we expect to occur towards the end of 2016.”

“We are also pleased to be reaffirming our annual guidance for 2016, projecting annual revenue of between $1.53 billion and $1.58 billion and annual earnings per share guidance between $1.43 and $1.50 per diluted share,” Christensen continued.  He also emphasized that, given the number of new operations acquired last year, management expects much of the increase in performance in 2016 to occur in the later part of the year, adding that it often takes several quarters for newly acquired facilities to perform. He also noted that, “As we often remind you, our results are not symmetrical from quarter to quarter, especially in periods of significant growth, but we have been able to project performance fairly accurately on an annual basis.” 

Chief Financial Officer Suzanne Snapper reported that Ensign’s balance sheet remains strong in spite of our record acquisition activity, with its conservative adjusted net-debt-to-EBITDAR ratio of 3.37x at year end.  Ms. Snapper added that “as a result of our ever improving discipline, we recently increased our revolving line of credit to $250 million, an increase of $100 million.” She further noted that as of December 31, 2015 the company had $41.6 million in cash on hand.

Ms. Snapper also reported that consolidated revenues in for the year were up 30.6% over the prior year to a record $1.34 billion and consolidated adjusted EBITDAR for the year grew by 38.8% to $221.3 million.  Fully diluted adjusted earnings per share were $0.35 for the quarter and adjusted net income was $18.5 million.  Fully diluted GAAP earnings per share were $1.06 for the year and $0.26 for the quarter.  

A discussion of the company's use of non-GAAP financial measures is set forth below. A reconciliation of net income to adjusted EBITDAR and adjusted EBITDA, as well as a reconciliation of GAAP earnings per share and net income to adjusted net earnings per share and adjusted net income, appear in the financial data portion of this release.

More complete information is contained in the Company’s 10-K, which was filed with the SEC today and can be viewed on the Company’s website at http://www.ensigngroup.net.

Quarter Highlights

During the quarter, Ensign paid a quarterly cash dividend of $0.04 per share of its common stock, an increase of 6.7% over the prior year. This is the thirteenth consecutive year Ensign has increased its dividend, signaling the board’s and management’s continued confidence in Ensign's operating model and its ability to return long-term value to shareholders. Ensign has been a dividend-paying company since 2002. 

In addition, the Company completed a 2 for 1 split of its outstanding stock, increasing the number of basic outstanding shares to approximately 51.4 million as of December 31, 2015. Mr. Christensen noted that the stock split made Ensign stock more affordable for a wider range of investors, increasing the liquidity and trading volumes.

On February 5, 2016, Ensign also increased its revolving credit facility by $100 million to an aggregate of $250 million, $111.8 million of which was drawn as of February 5, 2016.  The amendment reduced the LIBOR-based interest rate by 50 basis points and extended the termination date for the revolving commitment to February 5, 2021, among other things.

Also during the quarter and since, affiliates of Ensign acquired 7 skilled nursing facilities and opened 3 healthcare resorts, including:

  • In Kansas, The Healthcare Resort of Kansas City, featuring a 70-bed licensed transitional care operation and 30 private assisted living suites under a long-term lease;
  • In Chandler and Scottsdale, Arizona, Chandler Post Acute and Rehabilitation, a 120-bed skilled nursing operation, and Shea Post Acute Rehabilitation Center, a 105-bed skilled nursing operation under a long-term lease;
  • In West Columbia, South Carolina, the operations and real estate of Millennium Post Acute Rehabilitation, a 125-bed skilled nursing operation;
  • In Kansas, The Healthcare Resort of Shawnee Mission, featuring a 101-bed licensed transitional care operation and 24 private assisted living suites under a long-term lease;
  • In El Cajon, California, the underlying real estate of Somerset Subacute and Rehabilitation, a 46-bed skilled nursing operation that has been operated under a lease arrangement since December 2014;
  • In South Carolina, the operations and real estate of Compass Post Acute Rehabilitation, a 95-bed skilled nursing operation in Conway, Las Colinas Post Acute Rehabilitation, a 99-bed skilled nursing operation in Rock Hill, and Opus Post Acute Rehabilitation, a 100-bed skilled nursing operation in West Columbia; and
  • In Kansas, The Healthcare Resort of Olathe, featuring a 70-bed licensed transitional care operation and 30 private assisted living suites under a long-term lease;

These additions bring Ensign's growing portfolio to 187 healthcare operations, thirty-two of which are owned, fourteen hospice agencies, fifteen home health agencies, three home care businesses and seventeen urgent care clinics across 14 states.  Mr. Christensen reaffirmed that Ensign continues to actively seek transactions to acquire real estate and to lease both well-performing and struggling skilled nursing, assisted living and other healthcare related businesses in new and existing markets.

2016 Guidance Reaffirmed

Management also reaffirmed its 2016 guidance, projecting annual revenue of between $1.53 billion and $1.58 billion and earnings per share guidance to between $1.43 and $1.50 per diluted share for 2016.  Management’s guidance is based on diluted weighted average common shares outstanding of 53.3 million, which includes the impact of the 2 for 1 stock split completed in the fourth quarter of 2015.  In addition, the guidance assumes, among other things, anticipated Medicare and Medicaid reimbursement rate increases net of provider taxes, tax rates of 38.5% and acquisitions closed. It also excludes acquisition-related costs and amortization costs related to intangible assets acquired, stock based compensation, implementation costs for system improvements, costs incurred to recognize income tax credits and costs incurred for facilities currently being constructed and other start-up operations.

Conference Call

A live webcast will be held Thursday, February 11, 2016 at 10:00 a.m. Pacific time (1:00 p.m. Eastern time) to discuss Ensign’s fourth quarter and fiscal year 2015 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, March 25, 2016.

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, home health and hospice services, urgent care services and other rehabilitative and healthcare services at 187 facilities, fourteen hospice agencies, fifteen home health agencies, three home care businesses and seventeen urgent care clinics in California, Arizona, Texas, Washington, Utah, Idaho, Colorado, Nevada, Iowa, Nebraska, Oregon, Wisconsin, Kansas and South Carolina. More information about Ensign is available at http://www.ensigngroup.net.  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 terms, are not meant to imply that The Ensign Group, Inc. has direct operating assets, employees or revenue, or that any of the operations, the home health and hospice businesses, 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.

 

THE ENSIGN GROUP, INC.
GAAP and ADJUSTED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
                       
  Three Months Ended
December 31, 2015
  Year Ended
December 31, 2015
  As Reported   Non-GAAP Adj.   As Adjusted   As
Reported
  Non-GAAP Adj.   As
Adjusted
Revenue $ 373,155     $   (8,059 )   (5 ) $ 365,096        1,341,826     $ (28,066 )   (5 ) $ 1,313,760  
Expense:                               
Cost of services (exclusive of rent, general and administrative and depreciation and amortization expense shown separately below)   297,401         (11,322 ) (1)(3)
(5)(8)
  286,079       1,067,694       (35,321 ) (1)(3)(5) (8)   1,032,373  
Rent—cost of services     26,245         (1,190 )   (6)(8)     25,055         88,776         (2,746 )   (6)(8)     86,030  
General and administrative expense     17,246         (1,360 ) (1)(2)(3)(4)(9)     15,886         64,163         (4,249 ) (1)(2)(3) (4)(9)     59,914  
Depreciation and amortization     7,926         (585 )   (7 )     7,341         28,111         (2,279 )   (7 )     25,832  
Total expenses   348,818       (14,457 )     334,361       1,248,744       (44,595 )     1,204,149  
Income from operations     24,337         6,398         30,735         93,082       16,529       109,611  
Other income (expense):                               
Interest expense     (793 )       46         (747 )       (2,828 )       184         (2,644 )
Interest income     242         -          242         845         -          845  
Other expense, net     (551 )       46         (505 )       (1,983 )       184         (1,799 )
Income before provision for income taxes     23,786         6,444         30,230         91,099       16,713         107,812  
Tax Effect on Non-GAAP Adjustments             2,481                 6,434      
Tax True-up for Effective Tax Rate             (191 )               (109 )    
Provision for income taxes     9,349         2,290      (10
)
    11,639         35,182         6,325     (10  )     41,507  
Net income     14,437         4,154             18,591         55,917       10,388             66,305  
Less: net (loss) income attributable to noncontrolling interests     836         (784 )        52         485         (290 )       195  
Net income attributable to The Ensign Group, Inc. $   13,601         4,938     $   18,539     $   55,432       10,678     $   66,110  
Net income per share:                                              
Basic: $   0.27         $   0.36     $   1.10         $   1.31  
Diluted $   0.26         $   0.35     $   1.06         $   1.27  
Weighted average common shares outstanding:                           
Basic     51,308             51,308         50,316             50,316  
Diluted     53,193             53,193         52,210             52,210  
________________________                                      
(1)  Represents acquisition-related costs of $604 and $1,397 for the three months and year ended December 31, 2015, respectively. 
(2)  Represents costs of $131 and $267 for the three months and year ended December 31, 2015, respectively, incurred to recognize income tax credits and effect the stock-split in Q4 2015.
(3)  Represents stock-based compensation expense of $1,729 and $6,677 for the three months and year ended December 31, 2015, respectively. 
(4)  Represents costs of $567 and $2,550 for the three months and year ended December 31, 2015, respectively, incurred related to new systems implementation. 
(5)  Represents revenues and expenses incurred at urgent care centers, excluding rent expense recognized in note (6) below and depreciation expense recognized in note (7) below.
(6)  Represents straight-line rent amortization for urgent care centers included in Note (5) and Note (8). 
(7)  Represents depreciation expense at urgent care centers, facilities currently being constructed and start-up operations and amortization costs related to patient base intangible assets at skilled nursing and assisted living facilities.
(8)  Represents costs incurred for facilities currently being constructed and start-up operations during the three months and year ended December 31, 2015. 
(9)  Represents breakup fee, net of costs, received in connection with a public auction in which we were the priority bidder. 
(10)  Represents the adjustment to provision for income tax to our historical year to date effective tax rate of 38.5% for the three months ended and year ended December 31, 2015.

 

 

THE ENSIGN GROUP, INC.
GAAP and ADJUSTED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
       
                     
  Three Months Ended
December 31, 2014
  Year Ended
December 31, 2014
       
  As Reported   Non-GAAP Adj.   As Adjusted   As
Reported
  Non-GAAP Adj.   As
Adjusted
       
Revenue $   276,869         (4,409 ) (4)(5) $   272,460     $   1,027,406         (14,505 ) (4)(5) $  1,012,901          
Expense:                                                       
Cost of services (exclusive of rent, general and administrative and depreciation and amortization expense shown separately below)   221,137       (5,060 ) (1)(4)(5)   216,077         822,669       (16,966 ) (1)(4)(5)     805,703          
Rent—cost of services     18,480       (402 )   (6 )     18,078         48,488       (1,941 )   (6 )     46,547          
General and administrative expense     12,525       (200 ) (2)(3)(4)     12,325         56,895       (9,234 ) (2)(3)(4)     47,661          
Depreciation and amortization     5,087       (371 )   (7 )     4,716         26,430       (1,265 )   (7 )     25,165          
Total expenses   257,229       (6,033 )     251,196       954,482       (29,406 )     925,076          
Income from operations     19,640       1,624         21,264         72,924       14,901         87,825          
Other income (expense):                                                       
Interest expense     (486 )     46         (440 )       (12,976 )     6,517         (6,459 )        
Interest income     159         -          159         594         -          594          
Other expense, net     (327 )     46         (281 )       (12,382 )       6,517         (5,865 )        
Income before provision for income taxes     19,313       1,670         20,983         60,542         21,418         81,960          
Tax Effect on Non-GAAP Adjustments           643                       8,246                  
Tax True-up for Effective Tax Rate           (1,082 )                     (3,492 )                
Provision for income taxes     8,517       (439 )   (8 )     8,078         26,801       4,754     (8 )     31,555          
Net income     10,796         2,109         12,905         33,741         16,664         50,405          
Less: net (loss) income attributable to noncontrolling interests     (715 )     807         92         (2,209 )     2,370         161          
Net income attributable to The Ensign Group, Inc. $   11,511       1,302     $   12,813     $   35,950       14,294     $   50,244          
Net income per share                              
Basic: $   0.26         $   0.28     $   0.80         $   1.12          
Diluted: $   0.25         $   0.27     $   0.78         $   1.09          
Weighted average common shares outstanding:                               
Basic     45,038             45,038         44,682             44,682          
Diluted     46,756             46,756         46,190             46,190          
_____________________                
(1)  Represents acquisition-related costs of $453 and $672 for the three months and year ended ended December 31, 2014, respectively.         
(2)  Represents costs of $45 and $138 for the three months and year ended December 31, 2014, respectively, incurred to recognize income tax credits.         
(3)  Represents costs of $155 and $9,026 for the three months and year ended December 31, 2014, incurred related to the Company's spin-off of real estate assets to CareTrust REIT (CTRE) (the Spin-Off).   
(4)  Represents revenues and expenses incurred at the three independent living operations transferred to CTRE on June 1, 2014 in connection with the Spin Off, excluding rent expense recognized in note (6) below.  
(5)  Represents revenues and expenses incurred at newly opened urgent care centers, excluding rent expense recognized in note (6) below and depreciation expense recognized in note (7) below.      
(6)  Represents straight-line rent amortization for newly opened urgent care centers and the three independent living operations transferred to CTRE included in Note (4).        
(7)  Represents depreciation expense at newly opened urgent care centers and amortization costs related to patient base intangible assets at skilled nursing and assisted living facilities.      
(8)  Represents the adjustment to provision for income tax to our historical year to date effective tax rate of 38.6% for the three months ended and year ended December 31, 2014.      
                               

 

THE ENSIGN GROUP, INC.
RECONCILIATION OF NET INCOME TO EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR
(in thousands)
(Unaudited)
         
The table below reconciles net income to EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR for the periods presented:           
  Three Months Ended
December 31,
  Year Ended
December 31,
         
    2015       2014       2015       2014            
Consolidated Statements of Income Data:                        
Net income     14,437         10,796         55,917         33,741            
Less: net income (loss) attributable to noncontrolling interests     836         (715 )       485         (2,209 )          
Interest expense, net     551         327         1,983         12,382            
Provision for income taxes     9,349         8,517         35,182         26,801            
Depreciation and amortization     7,926         5,087         28,111         26,430            
EBITDA     31,427         25,442         120,708         101,563            
Facility rent—cost of services     26,245         18,480         88,776         48,488            
EBITDAR     57,672         43,922         209,484         150,051            
                         
EBITDA $   31,427     $   25,442     $   120,708     $   101,563            
Adjustments to EBITDA:                        
Spin-Off charges including results at three independent living facilities transferred to CareTrust(a)     -          155         -          8,904            
Urgent care center losses (earnings)(b)     850         (609 )       (1,132 )       (389 )          
Breakup fee, net of costs, received in connection with a public auction(c)     -          -          (1,019 )       -             
Acquisition related costs(d)     604         453         1,397         672            
Stock-based compensation expense(e)     1,729         -          6,677         -             
Costs incurred for facilities currently being constructed and other start-up operations(f)     1,528         -          3,054         -             
Costs incurred related to new systems implementation(g)     567         -          2,550         -             
Professional service fees(h)     131         45         267         138            
Rent related to items(a), (b), and (f) above     1,190         402         2,746         1,941            
Adjusted EBITDA $   38,026     $   25,888     $   135,248     $   112,829            
Facility rent—cost of services     26,245         18,480         88,776         48,488            
Less: rent related to items(a), (b) and (f) above     (1,190 )       (402 )       (2,746 )       (1,941 )          
Adjusted EBITDAR $   63,081     $   43,966     $   221,278     $   159,376            
                         
(a)  Spin-Off charges including results at three independent living facilities transferred to CareTrust in connection with the Spin-Off transaction.
         
(b)  Operating results at newly opened urgent care centers.  This amount excluded rent, depreciation, interest and income taxes. The results also excluded the net loss attributable to the variable interest entity associated with our urgent care business.
 
(c)  Breakup fee, net of costs, received in connection with a public auction.
         
(d)  Costs incurred to acquire an operation which are not capitalizable.
         
(e)  Stock-based compensation expense incurred during the three months and year ended December 31, 2015. Adjusted EBITDA and EBITDAR for the three months and year ended December 31, 2014 did not include non-GAAP adjustment related to stock-based compensation expense of $1.4 million and $5.2 million, respectively. If adjusted for stock-based compensation expense, Adjusted EBITDA for the three months and year ended December 31, 2014 would have been $27.3 million and $118.0 million, respectively, and Adjusted EBITDAR for the three months and year ended December 31, 2014 would have been $45.3 million and $164.6 million, respectively. EBITDA for the year ended December 31, 2014 reflects four month increase in rent expense as a result of the Spin-Off compared to twelve months increase in rent expense for the year ended December 31, 2015.
(f)  Costs incurred for facilities currently being constructed and other start-up operations.
         
(g)  Costs incurred related to new systems implementation.          
(h)  Professional service fees include costs incurred to recognize income tax credits which contributed to a decrease in effective tax rate and expenses incurred in connection with the stock-split effected in December 2015.           

 

THE ENSIGN GROUP, INC.
RECONCILIATION OF NET INCOME TO EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR
(in thousands)
(Unaudited)
 
The table below reconciles net income to EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR for each reportable segment for the periods presented:   
                                   
    Three Months Ended December 31,   Year Ended December 31,  
      2015       2014       2015       2014       2015       2014       2015       2014    
    TSA
Services
  Home Health
and Hospice
  TSA
Services
  Home Health
and Hospice
 
Statements of Income Data:                                  
Income from operations, excluding general and administrative expense(a)   $   39,615     $   30,445     $   3,846     $   2,909     $   148,207     $   126,011     $   13,584     $   9,701    
Depreciation and amortization       5,978         3,749         277         168         21,346         21,669         980         539    
EBITDA   $   45,593     $   34,194     $   4,123     $   3,077     $   169,553     $   147,680     $   14,564     $   10,240    
Rent—cost of services     25,266       17,811       369       211       85,216       45,955       1,235       779    
EBITDAR   $   70,859     $   52,005     $   4,492     $   3,288     $   254,769     $   193,635     $   15,799     $   11,019    
                                   
EBITDA   $   45,593     $   34,194     $   4,123     $   3,077     $   169,553     $   147,680     $   14,564     $   10,240    
Adjustments to EBITDA:                                  
Stock-based compensation expense(b)       1,043         -          60         -          3,933         -          241         -     
Costs at facilities currently being constructed and other start-up operations(c)       1,060         -          11         -          3,043         -          11         -     
Earnings at three operations transferred to REIT (d)       -          -          -          -          -          (122 )       -          -     
Acquisition related costs(e)       604         453         -          -          1,397         672         -          -     
Rent related to item(d) above(f)       644         -          5         -          644         406         5         -     
Adjusted EBITDA   $   48,944     $   34,647     $   4,199     $   3,077     $   178,570     $   148,636     $   14,821     $   10,240    
Rent—cost of services       25,266         17,811         369         211         85,216         45,955         1,235         779    
Less: rent related to items(d) above(f)       (644 )             (5 )             (644 )       (406 )       (5 )      -     
Adjusted EBITDAR   $   73,566     $   52,458     $   4,563     $   3,288     $   263,142     $   194,185     $   16,051     $   11,019    
_________________________  
(a) General and administrative expenses are not allocated to any segment for purposes of determining segment profit or loss.   
(b) Stock-based compensation expense incurred during the three months ended and year ended December 31, 2015.   
(c) Costs incurred for facilities currently being constructed and other start-up operations during the three months ended and year ended December 31, 2015.   
(d) Results at three independent living facilities which were transferred to CareTrust REIT as part of the Spin-Off transaction, excluding rent, depreciation, interest and income taxes.   
(e) Costs incurred to acquire operations which are not capitalizable.   
                                   

 

THE ENSIGN GROUP, INC.
CONSOLIDATED BALANCE SHEETS
 (In thousands)
 
  Year Ended December 31,  
    2015       2014    
Assets        
Current assets:        
Cash and cash equivalents $   41,569     $   50,408    
Restricted cash — current    —         5,082    
Accounts receivable — less allowance for doubtful accounts of $30,308 and $20,438 at December 31, 2015 and 2014, respectively     209,026         130,051    
Investments — current     2,004         6,060    
Prepaid income taxes     8,141         2,992    
Prepaid expenses and other current assets     18,827         8,434    
Deferred tax asset — current     15,403         10,615    
Total current assets     294,970         213,642    
Property and equipment, net     299,633         149,708    
Insurance subsidiary deposits and investments     32,713         17,873    
Escrow deposits     400         16,153    
Deferred tax asset     5,449         11,509    
Restricted and other assets     9,631         6,833    
Intangible assets, net     45,431         35,568    
Goodwill     40,886         30,269    
Other indefinite-lived intangibles     18,646         12,361    
Total assets $   747,759     $   493,916    
         
Liabilities and equity        
Current liabilities:        
Accounts payable     36,029         33,186    
Accrued wages and related liabilities     78,890         56,712    
Accrued self-insurance liabilities — current     18,122         15,794    
Other accrued liabilities     46,205         24,630    
Current maturities of long-term debt     620         111    
Total current liabilities     179,866         130,433    
Long-term debt — less current maturities     99,051         68,279    
Accrued self-insurance liabilities — less current portion     37,881         34,166    
Deferred rent and other long-term liabilities     3,976         3,235    
Total equity     426,985         257,803    
Total liabilities and equity $   747,759     $   493,916    
         
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,
    2015       2014    
Net cash provided by operating activities $   33,369     $   84,880    
Net cash used in investing activities   (168,538 )       (172,851 )  
Net cash provided by financing activities   126,330         72,624    
Net decrease in cash and cash equivalents   (8,839 )     (15,347 )  
Cash and cash equivalents at beginning of period     50,408         65,755    
Cash and cash equivalents at end of period $   41,569     $   50,408    

 

 

THE ENSIGN GROUP, INC.
REVENUE BY SEGMENTS
       
The following table sets forth our total revenue by segments and as a percentage of total revenue for the periods indicated:   
                           
    Three Months Ended December 31,     Year Ended Ended December 31,  
    2015     2014     2015     2014  
    Revenue
Dollars
  Revenue
Percentage
    Revenue
Dollars
  Revenue
Percentage
    Revenue
Dollars
  Revenue
Percentage
    Revenue
Dollars
  Revenue
Percentage
 
    (Dollars in thousands)
TSA Services:                                        
Skilled nursing facilities   $   306,733     82.2 %   $   240,654     86.9 %   $   1,126,388       83.9 %   $   901,470       87.7 %
Assisted and independent living facilities     30,213     8.1         13,134     4.8       88,129       6.6         48,848       4.8  
Total TSA services        336,946     90.3         253,788     91.7         1,214,517       90.5         950,318       92.5  
Home health and hospice services:                                        
Home health        13,503     3.6         8,639     3.1         47,955       3.6         29,577       2.9  
Hospice       13,344     3.6         7,442     2.7         42,401       3.2         24,939       2.4  
Total home health and hospice services       26,847     7.2         16,081     5.8         90,356       6.8         54,516       5.3  
All other (1)       9,362     2.5       7,000     2.5         36,953       2.7       22,572       2.2  
Total revenue   $   373,155     100.0 %   $   276,869     100.0 %   $   1,341,826       100.0 %   $   1,027,406       100.0 %
(1) Includes revenue from services provided at our urgent care clinics and mobile ancillary operations. 

 

THE ENSIGN GROUP, INC.
SELECT PERFORMANCE INDICATORS
(Unaudited)
               
The following tables summarize our selected performance indicators for our TSA services segment along with other statistics, for each of the dates or periods indicated:
               
  Three Months Ended
December 31,
       
    2015       2014          
  (Dollars in thousands)   Change   % Change
Total Facility Results:              
Skilled nursing revenue $   306,733     $   240,654     $   66,079         27.5 %
Assisted and independent living revenue     30,213         13,134         17,079         130.0 %
Total TSA services revenue $   336,946     $   253,788     $   83,158         32.8 %
Number of facilities at period end     186         136         50         36.8 %
Actual patient days     1,357,023         1,026,493         330,530         32.2 %
Occupancy percentage — Operational beds   77.2 %     78.2 %           (1.0 )%
Skilled mix by nursing days   30.9 %     27.8 %           3.1 %
Skilled mix by nursing revenue   51.8 %     50.4 %           1.4 %
  Three Months Ended
December 31,
       
    2015       2014          
  (Dollars in thousands)   Change   % Change
Same Facility Results(1):              
Skilled nursing revenue $   222,592     $   206,596     $   15,996         7.7 %
Assisted and independent living revenue     7,957         7,885         72         0.9 %
Total TSA services revenue $   230,549     $   214,481     $   16,068         7.5 %
Number of facilities at period end     101         101              — %
Actual patient days     836,313         840,922         (4,609 )       (0.5 )%
Occupancy percentage — Operational beds   80.5 %     81.0 %           (0.5 )%
Skilled mix by nursing days   30.3 %     28.4 %           1.9 %
Skilled mix by nursing revenue   51.1 %     51.2 %           (0.1 )%
  Three Months Ended
December 31,
       
    2015       2014          
  (Dollars in thousands)   Change   % Change
Transitioning Facility Results(2):              
Skilled nursing revenue $   17,387     $   16,157     $   1,230         7.6 %
Assisted and independent living revenue     3,227         3,126         101         3.2 %
Total TSA services revenue $   20,614     $   19,283     $   1,331         6.9 %
Number of facilities at period end     17         17             %
Actual patient days     102,317         102,723         (406 )       (0.4 )%
Occupancy percentage — Operational beds   68.7 %     68.1 %           0.6 %
Skilled mix by nursing days   21.2 %     20.0 %           1.2 %
Skilled mix by nursing revenue   42.5 %     39.9 %           2.6 %
  Three Months Ended
December 31,
       
    2015       2014          
  (Dollars in thousands)   Change   % Change
Recently Acquired Facility Results(3):              
Skilled nursing revenue $   66,754     $   17,901     $   48,853      NM 
Assisted and independent living revenue     19,029         2,123         16,906      NM 
Total TSA services revenue $   85,783     $   20,024     $   65,759      NM 
Number of facilities at period end     68         18         50      NM 
Actual patient days     418,393         82,848         335,545      NM 
Occupancy percentage — Operational beds   73.3 %     67.0 %        NM 
Skilled mix by nursing days   35.6 %     30.6 %        NM 
Skilled mix by nursing revenue   56.0 %     51.3 %        NM 
_______________________              
(1)  Same Facility results represent all facilities purchased prior to January 1, 2012. 
(2)  Transitioning Facility results represents all facilities purchased from January 1, 2012 to December 31, 2013. 
(3)  Recently Acquired Facility (or “Acquisitions”) results represent all facilities purchased on or subsequent to January 1, 2014. 
 
  Year Ended
December 31,
       
    2015       2014          
  (Dollars in thousands)   Change   % Change
Total Facility Results:              
Skilled nursing revenue $   1,126,388     $   901,470     $   224,918         25.0 %
Assisted and independent living revenue     88,129         48,848         39,281         80.4 %
Total TSA services revenue $   1,214,517     $   950,318     $   264,199         27.8 %
Number of facilities at period end     186         136         50         36.8 %
Actual patient days     4,872,742         3,921,758         950,984         24.2 %
Occupancy percentage — Operational beds   77.9 %     78.0 %           (0.1 )%
Skilled mix by nursing days   30.4 %     27.6 %           2.8 %
Skilled mix by nursing revenue   52.6 %     50.8 %           1.8 %
  Year Ended
December 31,
       
    2015       2014          
  (Dollars in thousands)   Change   % Change
Same Facility Results(1):              
Skilled nursing revenue $   856,276     $   803,173     $   53,103         6.6 %
Assisted and independent living revenue     31,783         31,495         288         0.9 %
Total TSA services revenue $   888,059     $   834,668     $   53,391         6.4 %
Number of facilities at period end     101         101             %
Actual patient days     3,316,461         3,324,948         (8,487 )       (0.3 )%
Occupancy percentage — Operational beds   80.9 %     80.7 %           0.2 %
Skilled mix by nursing days   30.3 %     28.4 %           1.9 %
Skilled mix by nursing revenue   52.9 %     51.7 %           1.2 %
  Year Ended
December 31,
       
    2015       2014          
  (Dollars in thousands)   Change   % Change
Transitioning Facility Results(2):              
Skilled nursing revenue $   66,823     $   61,955     $   4,868         7.9 %
Assisted and independent living revenue     12,795         11,759         1,036         8.8 %
Total TSA services revenue $   79,618     $   73,714     $   5,904         8.0 %
Number of facilities at period end     17         17             %
Actual patient days     406,476         397,461         9,015         2.3 %
Occupancy percentage — Operational beds   68.8 %     66.4 %           2.4 %
Skilled mix by nursing days   20.9 %     19.1 %           1.8 %
Skilled mix by nursing revenue   42.5 %     40.2 %           2.3 %
  Year Ended
December 31,
       
    2015       2014          
  (Dollars in thousands)   Change   % Change
Recently Acquired Facility Results(3):              
Skilled nursing revenue $   203,289     $   36,342     $   166,947     NM
Assisted and independent living revenue     43,551         4,347         39,204     NM
Total TSA services revenue $   246,840     $   40,689     $   206,151     NM
Number of facilities at period end     68         18         50     NM
Actual patient days     1,149,805         171,333         978,472     NM
Occupancy percentage — Operational beds   73.6 %     63.3 %       NM
Skilled mix by nursing days   34.2 %     28.7 %       NM
Skilled mix by nursing revenue   54.9 %     48.5 %       NM
  Year Ended
December 31,
       
    2015       2014          
  (Dollars in thousands)   Change   % Change
Transferred to CareTrust(4):              
Skilled nursing revenue $   -      $   -      $   -      NM
Assisted and independent living revenue     -          1,247         (1,247 )   NM
Total TSA services revenue $   -      $   1,247     $   (1,247 )   NM
Actual patient days     -          28,016         NM
Occupancy percentage — Operational beds     -        70.3 %       NM
_______________________              
(1)  Same Facility results represent all facilities purchased prior to January 1, 2012. 
(2)  Transitioning Facility results represents all facilities purchased from January 1, 2012 to December 31, 2013. 
(3)  Recently Acquired Facility (or “Acquisitions”) results represent all facilities purchased on or subsequent to January 1, 2014. 
(4)  Transferred to CareTrust results represent the results at three independent living facilities which were transferred to CareTrust as part of the Spin-Off on June 1, 2014.  These results were excluded from Same Facility for the nine months ended September 30, 2014 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 the 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    
    2015       2014       2015       2014       2015       2014       2015       2014      
Skilled Nursing Average Daily Revenue Rates:                                  
Medicare $ 574.76     $ 564.79     $ 487.80     $ 461.91     $ 517.23     $ 561.52     $ 556.02     $ 556.58          
Managed care     423.69         414.37         472.40         420.03         438.12         458.20         429.72         419.19          
Other skilled     434.17         449.96         355.05         -          357.56         335.63         414.07         436.62          
Total skilled revenue     494.90         493.66         481.99         447.91         456.37         465.21         484.53         488.76          
Medicaid     209.78         185.42         183.69         174.56         195.45         191.46         204.84         184.92          
Private and other payors     194.63         191.44         143.84         141.26         215.35         214.46         193.66         187.98          
Total skilled nursing revenue $ 295.27     $ 273.56     $ 240.73     $ 223.79     $ 290.21     $ 278.00     $ 290.52     $ 269.91          
                                   
  Year Ended December 31,  
  Same Facility   Transitioning   Acquisitions   Total    
    2015       2014       2015       2014       2015       2014       2015       2014      
Skilled Nursing Average Daily Revenue Rates:                                  
Medicare $ 568.08     $ 556.11     $ 485.63     $ 462.51     $ 524.90     $ 542.66     $ 555.50     $ 549.12      
Managed care     419.39         412.26         462.72         456.88         443.60         448.43         427.16         416.74      
Other skilled     456.62         447.26         331.93         253.00         361.20         321.73         436.41         437.08      
Total skilled revenue     497.93         491.22         476.58         460.42         463.92         446.07         490.07         487.55      
Medicaid     194.26         180.40         176.59         166.35         195.14         187.52         193.04         179.45      
Private and other payors     193.90         189.28         145.30         149.56         209.51         209.85         192.04         185.79      
Total skilled nursing revenue $ 286.65     $ 269.72     $ 234.36     $ 219.98     $ 288.53     $ 264.21     $ 283.31     $ 265.41      

 

The following tables set forth our percentage of skilled nursing patient revenue and days by payor source for the three months and year ended December 31, 2015 and 2014:
                                                   
  Three Months Ended December 31,    
  Same Facility   Transitioning   Acquisitions   Total    
  2015   2014   2015   2014   2015   2014   2015   2014    
Percentage of Skilled Nursing Revenue:                                                  
Medicare 27.4 %   28.8 %   28.7 %   27.4 %   25.5 %   19.5 %   27.1 %   28.0 %    
Managed care   16.1       15.5       13.6       12.5       23.2       24.0       17.5       15.9      
Other skilled   7.6       6.9       0.2       -        7.3       7.8       7.2       6.5      
Skilled mix   51.1       51.2       42.5       39.9       56.0       51.3       51.8       50.4      
Private and other payors   8.0       8.9       9.4       10.2       6.8       9.0       7.7       9.0      
Quality mix   59.1       60.1       51.9       50.1       62.8       60.3       59.5       59.4      
Medicaid   40.9       39.9       48.1       49.9       37.2       39.7       40.5       40.6      
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    
  2015   2014   2015   2014   2015   2014   2015   2014    
Percentage of Skilled Nursing Days:                                                  
Medicare   13.9 %     14.0 %     14.2 %     13.3 %     14.3 %     9.7 %     14.0 %     13.6 %    
Managed care   11.2       10.2       6.9       6.7       15.4       14.5       11.8       10.2      
Other skilled   5.2       4.2       0.1       -        5.9       6.4       5.1       4.0      
Skilled mix   30.3       28.4       21.2       20.0       35.6       30.6       30.9       27.8      
Private and other payors   12.2       12.7       15.7       16.1       9.2       11.8       11.7       13.0      
Quality mix   42.5       41.1       36.9       36.1       44.8       42.4       42.6       40.8      
Medicaid   57.5       58.9       63.1       63.9       55.2       57.6       57.4       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    
  2015   2014   2015   2014   2015   2014   2015   2014    
Percentage of Skilled Nursing Revenue:                                                  
Medicare 29.6 %   30.2 %   27.5 %   25.8 %   25.1 %   18.7 %   28.6 %   29.4 %    
Managed care   15.9       15.1       14.8       14.4       23.3       20.9       17.2       15.3      
Other skilled   7.4       6.4       0.2       -        6.5       8.9       6.8       6.1      
Skilled mix   52.9       51.7       42.5       40.2       54.9       48.5       52.6       50.8      
Private and other payors   8.1       9.0       9.7       11.4       8.0       8.6       8.2       9.1      
Quality mix   61.0       60.7       52.2       51.6       62.9       57.1       60.8       59.9      
Medicaid   39.0       39.3       47.8       48.4       37.1       42.9       39.2       40.1      
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    
  2015   2014   2015   2014   2015   2014   2015   2014    
Percentage of Skilled Nursing Days:                                                  
Medicare   14.9 %     14.6 %     13.3 %     12.2 %     13.8 %     9.1 %     14.6 %     14.2 %    
Managed care   10.8       9.9       7.5       6.9       15.2       12.3       11.4       9.7      
Other skilled   4.6       3.9       0.1       -        5.2       7.3       4.4       3.7      
Skilled mix   30.3       28.4       20.9       19.1       34.2       28.7       30.4       27.6      
Private and other payors   12.1       12.8       15.6       16.8       11.0       10.9       12.1       13.1      
Quality mix   42.4       41.2       36.5       35.9       45.2       39.6       42.5       40.7      
Medicaid   57.6       58.8       63.5       64.1       54.8       60.4       57.5       59.3      
Total skilled nursing   100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %    

 

THE ENSIGN GROUP, INC.
SELECT PERFORMANCE INDICATORS
(Unaudited)
               
The following tables summarize our selected performance indicators for our home health and hospice segment along with other statistics, for each of the dates or periods indicated:
               
  Three Months Ended  December 31,
    2015       2014     Change   % Change
  (Dollars in thousands)        
Results:              
Home health and hospice revenue              
Home health services: $   13,503     $   8,639     $   4,864         56.3 %
Hospice services:     13,344         7,442         5,902         79.3  
Total home health and hospice revenue $   26,847     $   16,081     $   10,766         66.9 %
Home health services:              
Medicare Episodic Admissions   2,191       1,768       423         23.9  %
Average Medicare Revenue per Completed Episode $   2,856     $   2,945     $   (89 )       (3.0 )%
Hospice services:              
Average Daily Census   842       493       349         70.8 %
               
  Year Ended December 31,
    2015       2014     Change   % Change
  (Dollars in thousands)        
Results:              
Home health and hospice revenue              
Home health services: $   47,955     $   29,577     $   18,378         62.1 %
Hospice services:     42,401         24,939         17,462         70.0  
Total home health and hospice revenue $   90,356     $   54,516     $   35,840         65.7 %
Home health services:              
Medicare Episodic Admissions   7,534       5,221       2,313         44.3 %
Average Medicare Revenue per Completed Episode  $   2,929     $   2,840     $   89         3.1 %
Hospice services:              
Average Daily Census   679       420       259         61.7 %

 

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,
 
  2015     2014     2015     2014
  $   %     $   %     $   %     $   %  
Revenue: (Dollars in thousands)     (Dollars in thousands)  
Medicaid $   123,388       33.1 %   $   97,133       35.1 %   $   439,996       32.8 %   $   358,119       34.9 %
Medicare   104,542       28.0       81,182       29.3       395,503       29.5       313,144       30.5  
Medicaid—skilled   20,698       5.5       14,583       5.3       71,905       5.4       51,157       5.0  
Total   248,628       66.6       192,898       69.7       907,404       67.7       722,420       70.4  
Managed care   58,395       15.6       40,480       14.6       206,770       15.4       145,796       14.2  
Private and other(1)   66,132       17.8       43,491       15.7       227,652       16.9       159,190       15.4  
Total revenue $   373,155       100.0 %   $   276,869       100.0 %   $   1,341,826       100.0 %   $   1,027,406       100.0 %
(1)  Private and other payors also includes revenue from urgent care centers and mobile ancillary operations.
 

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. EBITDAR consists of net income before (a) interest expense, net, (b) provisions for income taxes, (c) depreciation and amortization and (d) rent-cost of services. 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 being constructed and other start-up operations, excluding rent, depreciation, interest and income taxes, (e) Spin-Off charges including results at three independent living facilities transferred to CareTrust in connection with the Spin-Off transaction, excluding rent, depreciation, interest and income taxes, (f) stock-based compensation expense, (g) costs incurred related to new systems implementation, (h) breakup fee, net of costs, received in connection with a public auction in which we were the priority bidder, (i) professional service fees include costs incurred to recognize income tax credits which contributed to a decrease in effective tax rate and expenses incurred in connection with the stock-split effected in December 2015, (j) costs incurred to acquire operations which are not capitalized, and (k) operating results at urgent care centers,  excluding depreciation, interest and income taxes.  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 being constructed and other start-up operations, excluding rent, depreciation, interest and income taxes, (f) Spin-Off charges including results at three independent living facilities transferred to CareTrust in connection with the Spin-Off transaction, excluding rent, depreciation, interest and income taxes, (g) stock-based compensation expense, (h) costs incurred related to new systems implementation, (i) breakup fee, net of costs, received in connection with a public auction in which we were the priority bidder , (j) professional service fees include costs incurred to recognize income tax credits which contributed to a decrease in effective tax rate and expenses incurred in connection with the stock-split effected in December 2015, (k) costs incurred to acquire operations which are not capitalized and (l) operating results at urgent care centers,  excluding rent, depreciation, interest and income taxes. The company believes that the presentation of EBITDA, EBITDAR, adjusted EBITDA, adjusted EBITDAR, adjusted net income and adjusted earnings per share provides important supplemental information to management and investors to evaluate the company’s operating performance. The company believes disclosure of adjusted net income per share, EBITDA, EBITDAR, adjusted EBITDA and adjusted EBITDAR has economic 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. For further information regarding why the company believes that this non-GAAP measure provides useful information to investors, the specific manner in which management uses this measure, and some of the limitations associated with the use of this measure, 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

Contact Information
Investor/Media Relations, The Ensign Group, Inc., (949) 487-9500, ir@ensigngroup.net

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