0001125376-15-000108.txt : 20151109 0001125376-15-000108.hdr.sgml : 20151109 20151105161003 ACCESSION NUMBER: 0001125376-15-000108 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20151103 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20151105 DATE AS OF CHANGE: 20151105 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENSIGN GROUP, INC CENTRAL INDEX KEY: 0001125376 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 330861263 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-33757 FILM NUMBER: 151200711 BUSINESS ADDRESS: STREET 1: 27101 PUERTA REAL, SUITE 450 CITY: MISSION VIEJO STATE: CA ZIP: 92691 BUSINESS PHONE: (949) 487-9500 MAIL ADDRESS: STREET 1: 27101 PUERTA REAL, SUITE 450 CITY: MISSION VIEJO STATE: CA ZIP: 92691 FORMER COMPANY: FORMER CONFORMED NAME: ENSIGN GROUP INC DATE OF NAME CHANGE: 20000930 8-K 1 q32015form8-k.htm 8-K 8-K


 
 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 3, 2015
The Ensign Group, Inc.
(Exact name of registrant as specified in its charter)
 
 
 
 
 
Delaware
 
001-33757
 
33-0861263
 
 
 
 
 
(State or other jurisdiction
of incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)
 
 
 
27101 Puerta Real, Suite 450,
Mission Viejo, CA
 
 
92691
 
 
 
(Address of principal executive offices)
 
(Zip Code)
Registrant's telephone number, including area code: (949) 487-9500
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
o
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
o
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
o
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 



 
 
 
 
 





Item 2.02. Results of Operations and Financial Condition.
On November 3, 2015, The Ensign Group, Inc. (the Company) issued a press release reporting the financial results of the Company for its third quarter ended September 30, 2015. A copy of the press release is attached to this Current Report as Exhibit 99.1.
The press release includes “non-GAAP financial measures.” Specifically, the press release refers to EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR. EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR are supplemental non-GAAP financial measures. Regulation G, Conditions for Use of Non-GAAP Financial Measures, and other provisions of the Securities Exchange Act of 1934, as amended, define and prescribe the conditions for use of certain non-GAAP financial information. 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, (e) expenses incurred in connection with the Spin-Off, (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) costs incurred to recognize income tax credits which contributed to a decrease in effective tax rate, (j) costs incurred to acquire operations which are not capitalized, (k) operating results at urgent care centers,  excluding depreciation, interest and income taxes and (l) results at three independent living operations which were transferred to Care Trust REIT as part of the Spin-Off transaction, excluding rent, 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, (f) expenses incurred in connection with the Spin-Off, (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) costs incurred to recognize income tax credits which contributed to a decrease in effective tax rate, (k) costs incurred to acquire operations which are not capitalized, (l) operating results at urgent care centers,  excluding rent, depreciation, interest and income taxes and (m) results at three independent living operations which were transferred to Care Trust REIT as part of the Spin-Off transaction, 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 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.






Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
 
 
 
Exhibit No.
 
Description
 
 
 
99.1
 
Press Release of the Company dated November 3, 2015







SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
Dated: November 5, 2015
THE ENSIGN GROUP, INC.
 
 
By:  
/s/ Suzanne D. Snapper  
 
 
 
Suzanne D. Snapper 
 
 
 
Chief Financial Officer 
 
 






EXHIBIT INDEX
 
 
 
Exhibit No.
 
Description
 
 
 
99.1
 
Press Release of the Company dated November 3, 2015



 EX-99.1 2 q32015pressrelease.htm EXHIBIT 99.1 Exhibit


The Ensign Group Meets Consensus of $0.60 Per Share; Increases 2015 Guidance and Issues 2016 Guidance

Conference Call and Webcast Scheduled for Tomorrow, November 4, 2015 at 10:00 am PT

MISSION VIEJO, Calif., Nov. 03, 2015 (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 third quarter of 2015 with quarterly adjusted earnings of $0.60 per share.

Quarter Highlights Include:

•
Consolidated adjusted net income climbed 55.7% over the prior year quarter to $15.9 million, and adjusted earnings per share of $0.60 outpaced the prior year quarter of $0.44 per share by almost 37%;
•
Consolidated adjusted EBITDAR was $57.0 million for the quarter, an increase of 46.9%;
•
Same-store skilled revenue grew by 6.4% over the prior year quarter, with a skilled revenue mix of 52.8%, and managed care days increased by 12.45% over the prior year quarter;
•
Transitioning revenue for all segments grew by 18.2% over the prior year quarter, driving skilled revenue mix to 42.4%, and transitioning occupancy increased by 205 basis points over the prior year quarter;
•
Cornerstone Healthcare, Inc., our home health and hospice subsidiary, grew its revenue by $10.7 million, an increase of 73.1%; and
•
Consolidated revenues for the quarter were up $90.2 million or 34.6% over the prior year quarter to $351.1 million.

Operating Results

Ensign's President and Chief Executive Officer, Christopher Christensen, congratulated the organization's leaders and their teams for outstanding clinical and financial performance during the quarter. "In the midst of unprecedented growth, our team of expert operators and clinicians across the organization have been relentless at driving record improvements in our same-store operations while successfully transitioning dozens of new operations," he said. "It's important to emphasize that while our newly acquired facilities almost always create a short-term drag on earnings, we were able to offset that impact by achieving solid results in our same store and transitioning operations," he added.

"As our balance sheet and income statement demonstrate, we remain as disciplined as ever in our approach to growth, even as our ability to transition more and more operations grows with our organization," Mr. Christensen highlighted. He also pointed out that the quarter's results, "demonstrated again that our ability to transition new operations and to drive organic growth within our existing portfolio, even in the midst of significant growth, remains as strong as ever."  

He also reiterated that as of November 1, 2015, the company had 64 operations in the recently acquired bucket, which is the highest number of operations in that category in the organization's history. "Our recent growth puts us in a very strong position for continued organic improvement in 2016 and beyond as these recently acquired and transitioning operations continue to mature for years to come," Christensen said.

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 3.27x at quarter end.  "It's remarkable that we transitioned so many acquisitions, protected our balance sheet and simultaneously achieved record-setting same store growth," she said.  She also added "as a result of our ever improving discipline, we continue to have flexibility under our revolving line of credit, with approximately $93.0 million of availability and a built-in expansion option that adds liquidity." She further noted that the company continues to generate strong cash flow, with cash on hand of $40.1 million on September 30, 2015.

Ms. Snapper also reported that consolidated revenues in the quarter were up 34.6% over the prior year quarter to a record $351.1 million and consolidated adjusted EBITDAR for the quarter grew by 46.9% to $57.0 million, with adjusted EBITDAR margins for the quarter of 16.5%.  Fully diluted adjusted earnings per share were $0.60 for the quarter and adjusted net income was $15.9 million.




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-Q, which was filed with the SEC today and can be viewed on the Company's website at http://investor.ensigngroup.net.

Quarter Highlights

During the quarter, Ensign paid a quarterly cash dividend of $0.075 per share of its common stock. Ensign has been a dividend-paying company since 2002 and has increased its dividend every year for 13 years.

Also during the quarter and since, Ensign announced the acquisition of 12 skilled nursing operations, 20 assisted and independent living operations, one home health business, and one hospice agency, including:

•
In Arizona, seven skilled nursing operations with a total of 864 skilled nursing beds and three independent and assisted living operations with a total of 770 units, all under a new long-term master lease;
•
In Olympia, Washington, the operations and real estate of Olympia Transitional Care and Rehabilitation, a 135-bed skilled nursing operation;
•
In Westlake Village, California, Buena Vista Hospice, a Medicare and Medi-Cal certified hospice agency serving the Ventura County area;
•
In Wisconsin, fifteen assisted and independent living operations with a total of 761 units, all under a long-term master lease with an option to purchase the real estate;
•
In Orange and Whittier, California, two assisted living operations with a total of 188 units under a long-term lease;
•
In Arizona, a Medicare and Medi-Cal certified home health agency serving the Western Arizona and Eastern California areas;
•
In Kansas, The Healthcare Resortin Kansas City, Kansas, 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 facility, and Shea Post Acute Rehabilitation Center, a 105-bed skilled nursing facility 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 facility; and
•
In El Cajon, California, the underlying real estate of Somerset Subacute and Rehabilitation, a 46-bed skilled nursing facility that has been operated under a lease arrangement since December 2014.

Mr. Christensen noted, "We are thrilled about our recent entry into Kansas and South Carolina and we look forward to additional growth opportunities in both states."  He noted that Ensign takes a leadership-driven approach in all its acquisitions, particularly in new states, and added, "We look forward to working together with long-time Ensign leaders as we build a strong clinical and financial foundation from which we will continue to grow." 

These acquisitions bring Ensign's growing portfolio to 182 healthcare operations, twenty-nine 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.

2015 Guidance

Management increased its 2015 annual revenue guidance to between $1.31 billion and $1.33 billion and its net income guidance to a range of $66.2 million to $67.6 million.  Management also raised its 2015 annual earnings per share guidance to between $2.53 and $2.58 per diluted share for 2015.  Management's guidance is based on diluted weighted average common shares outstanding of 26.2 million and 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, a one-time break-up fee earned in an unsuccessful bankruptcy auction and costs incurred for facilities currently being constructed and other start-up operations.






2016 Guidance

Management also provided guidance for 2016, with annual revenue guidance of between $1.53 billion and $1.58 billion and its net income guidance to a range of $77.8 million to $82.0 million.  Management also provided 2016 annual earnings per share guidance to between $2.87 and $3.01 per diluted share for 2016.  Management's guidance is based on diluted weighted average common shares outstanding of 27.1 million and 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 Wednesday, November 4, 2015 at 10:00 a.m. Pacific time (1:00 p.m. Eastern time) to discuss Ensign's third quarter 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, November 27, 2015.

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 182 skilled and assisted living operations, 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. 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-Q, 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, ir@ensigngroup.net.

SOURCE: The Ensign Group, Inc.





THE ENSIGN GROUP, INC.
GAAP and ADJUSTED CONDENSED CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share data)
 
Three Months Ended
September 30, 2015
 
Nine Months Ended
September 30, 2015
 
 
As Reported
 
Non-GAAP Adj.
 
As Adjusted
 
As Reported
 
Non-GAAP Adj.
 
As Adjusted
 
Revenue
$
351,086

 
(6,366
)
(5) 
$
344,720

 
$
968,671

 
(20,007
)
(5) 
$
948,664

 
Expense:
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services (exclusive of rent, general and administrative and depreciation and amortization expense shown separately below)
280,545

 
(8,481
)
(1)(3)(5) (8) 
272,064

 
770,293

 
(23,998
)
(1)(3)(5) (8) 
746,295

 
Rent—cost of services
24,500

 
(540
)
(6) 
23,960

 
62,531

 
(1,556
)
(6) 
60,975

 
General and administrative expense
17,165

 
(1,565
)
(2)(3)(4)(9) 
15,600

 
46,917

 
(2,888
)
(2)(3)(4)(9) 
44,029

 
Depreciation and amortization
7,288

 
(521
)
(7) 
6,767

 
20,185

 
(1,694
)
(7) 
18,491

 
Total expenses
329,498

 
(11,107
)
 
318,391

 
899,926

 
(30,136
)
 
869,790

 
Income from operations
21,588

 
4,741

 
26,329

 
68,745

 
10,129

 
78,874

 
Other income (expense):
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
(802
)
 
46

 
(756
)
 
(2,035
)
 
138

 
(1,897
)
 
Interest income
242

 
—

 
242

 
603

 
—

 
603

 
Other expense, net
(560
)
 
46

 
(514
)
 
(1,432
)
 
138

 
(1,294
)
 
Income before provision for income taxes
21,028

 
4,787

 
25,815

 
67,313

 
10,267

 
77,580

 
Tax impact of non-GAAP adjustments
 
 
1,844

 
 
 
 
 
3,953

 
 
 
Tax true-up for effective tax rate
 
 
226

 
 
 
 
 
82

 
 
 
Provision for income taxes
7,869

 
2,070

(10) 
9,939

 
25,833

 
4,035

(10) 
29,868

 
Net income
13,159

 
2,717

 
15,876

 
41,480

 
6,232

 
47,712

 
Less: net income (loss) attributable to noncontrolling interests
(313
)
 
335

 
22

 
(351
)
 
494

 
143

 
Net income attributable to The Ensign Group, Inc.
$
13,472

 
$
2,382

 
$
15,854

 
$
41,831

 
$
5,738

 
$
47,569

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per share
 
 
 
 
 
 
 
 
 
 
 
 
Basic:
$0.53
 
 
 
$0.62
 
$1.67
 
 
 
$1.90
 
Diluted:
$0.51
 
 
 
$0.60
 
$1.61
 
 
 
$1.83
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
Basic
25,572

 
 
 
25,572

 
24,991

 
 
 
24,991

 
Diluted
26,535

 
 
 
26,535

 
25,940

 
 
 
25,940

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Represents acquisition-related costs of $203 and $793 for the three and nine months ended September 30, 2015, respectively.
(2) Represents costs of $84 and $136 for the three and nine months ended September 30, 2015, respectively, incurred to recognize income tax credits.
(3) Represents stock-based compensation expense of $1,722 and $4,948 for the three and nine months ended September 30, 2015, respectively.
(4) Represents costs of $836 and $1,983 for the three and nine months ended September 30, 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).
(7) Represents depreciation expense at urgent care centers 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 other start-up operations during the three and nine months ended September 30, 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 and nine months ended September 30, 2015.





THE ENSIGN GROUP, INC.
GAAP and ADJUSTED CONDENSED CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share data)
 
Three Months Ended
September 30, 2014
 
Nine Months Ended
September 30, 2014
 
 
As Reported
 
Non-GAAP Adj.
 
As Adjusted
 
As Reported
 
Non-GAAP Adj.
 
As Adjusted
 
Revenue
$
260,841

 
(3,617
)
(4)(5) 
$
257,224

 
$
750,537

 
(10,094
)
(4)(5) 
$
740,443

 
Expense:
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services (exclusive of rent, general and administrative and depreciation and amortization expense shown separately below)
209,737

 
(4,256
)
(1)(4)(5) 
205,481

 
601,532

 
(11,686
)
(1)(4)(5) 
589,846

 
Rent—cost of services
18,176

 
(410
)
(6) 
17,766

 
30,008

 
(1,539
)
(6) 
28,469

 
General and administrative expense
12,956

 
(31
)
(2)(3)(4) 
12,925

 
44,370

 
(9,035
)
(2)(3)(4) 
35,335

 
Depreciation and amortization
4,677

 
(380
)
(7) 
4,297

 
21,343

 
(895
)
(7) 
20,448

 
Total expenses
245,546

 
(5,077
)
 
240,469

 
697,253

 
(23,155
)
 
674,098

 
Income from operations
15,295

 
1,460

 
16,755

 
53,284

 
13,061

 
66,345

 
Other income (expense):
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
(407
)
 
46

 
(361
)
 
(12,490
)
 
6,471

 
(6,019
)
 
Interest income
142

 
—

 
142

 
435

 
—

 
435

 
Other expense, net
(265
)
 
46

 
(219
)
 
(12,055
)
 
6,471

 
(5,584
)
 
Income before provision for income taxes
15,030

 
1,506

 
16,536

 
41,229

 
19,532

 
60,761

 
Tax impact of non-GAAP adjustments
 
 
581

 
 
 
 
 
7,520

 
 
 
Tax true-up for effective tax rate
 
 
(872
)
 
 
 
 
 
(2,410
)
 
 
 
Provision for income taxes
6,659

 
(291
)
(8) 
6,368

 
18,284

 
5,110

(8) 
23,394

 
Net income
8,371

 
1,797

 
10,168

 
22,945

 
14,422

 
37,367

 
Less: net (loss) income attributable to noncontrolling interests
(535
)
 
523

 
(12
)
 
(1,494
)
 
1,563

 
69

 
Net income attributable to The Ensign Group, Inc.
$
8,906

 
$
1,274

 
$
10,180

 
$
24,439

 
$
12,859

 
$
37,298

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per share
 
 
 
 
 
 
 
 
 
 
 
 
Basic:
$0.40
 
 
 
$0.45
 
$1.10
 
 
 
$1.67
 
Diluted:
$0.38
 
 
 
$0.44
 
$1.06
 
 
 
$1.62
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
Basic
22,415

 
 
 
22,415

 
22,282

 
 
 
22,282

 
Diluted
23,186

 
 
 
23,186

 
23,014

 
 
 
23,014

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Represents acquisition-related costs of $85 and $219 for the three and nine months ended September 30, 2014, respectively.
(2) Represents costs of $31 and $93 for the three and nine months ended September 30, 2014, respectively, incurred to recognize income tax credits.
(3) Represents costs of $8,871 for the nine months ended September 30, 2014, incurred related to the Company's spin-off of real estate assets to CareTrust REIT (CTRE) (the Spin-Off). As the Spin-Off was completed in the second quarter of 2014, there was no costs associated with the Spin-Off for the three months ended September 30, 2014.
(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 38.5% for the three and nine months ended September 30, 2014.





THE ENSIGN GROUP, INC.
RECONCILIATION OF NET INCOME TO EBITDA, EBITDAR, ADJUSTED EBITDA AND
ADJUSTED EBITDAR
(in thousands)
(Unaudited)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2015
 
2014
 
2015
 
2014
 
Consolidated Statements of Income Data:
 
 
 
 
 
 
 
 
Net income
$
13,159

 
$
8,371

 
$
41,480

 
$
22,945

 
Less: net loss attributable to noncontrolling interests
(313
)
 
(535
)
 
(351
)
 
(1,494
)
 
Interest expense, net
560

 
265

 
1,432

 
12,055

 
Provision for income taxes
7,869

 
6,659

 
25,833

 
18,284

 
Depreciation and amortization
7,288

 
4,677

 
20,185

 
21,343

 
EBITDA
$
29,189

 
$
20,507

 
$
89,281

 
$
76,121

 
Rent—cost of services
24,500

 
18,176

 
62,531

 
30,008

 
EBITDAR
$
53,689

 
$
38,683

 
$
151,812

 
$
106,129

 
 
 
 
 
 
 
EBITDA
$
29,189

 
$
20,507

 
$
89,281

 
$
76,121

 
Adjustments to EBITDA:
 
 
 
 
 
 
 
 
Expenses related to the Spin-Off(a)
—

 
—

 
—

 
8,871

 
Stock-based compensation expense(b)
1,722

 
—

 
4,948

 
—

 
Costs incurred related to new systems implementation(c)
836

 
—

 
1,983

 
—

 
Urgent care center (earnings) loss(d)
(418
)
 
31

 
(1,982
)
 
3

 
Costs at facilities currently being constructed and other start-up operations(e)
918

 
—

 
1,526

 
—

 
Earnings at three operations transferred to CareTrust (f)
—

 
—

 
—

 
(122
)
 
Acquisition related costs(g)
203

 
85

 
793

 
219

 
Breakup fee, net of costs, received in connection with a public auction(h)
—

 
—

 
(1,019
)
 
—

 
Costs incurred to recognize income tax credits(i)
84

 
31

 
136

 
93

 
Rent related to item(d) and (f) above
540

 
410

 
1,556

 
1,539

 
Adjusted EBITDA
$
33,074

 
$
21,064

 
$
97,222

 
$
86,724

 
Rent—cost of services
24,500

 
18,176

 
62,531

 
30,008

 
Less: related to items (d) and (f) above
(540
)
 
(410
)
 
(1,556
)
 
(1,539
)
 
Adjusted EBITDAR
$
57,034

 
$
38,830

 
$
158,197

 
$
115,193

 
 
 
 
 
 
 
 
 
 
(a) Expenses incurred in connection with the Spin-Off.
(b) Stock-based compensation expense incurred during the three and nine months ended September 30, 2015. Adjusted EBITDA and EBITDAR for the three and nine months ended September 30, 2014 did not include non-GAAP adjustment related to stock-based compensation expense of $1.4 million and $3.8 million, respectively. If adjusted for stock-based compensation expense, Adjusted EBITDA for the three and nine months ended September 30, 2014 would have been $22.4 million and $90.5 million, respectively, and Adjusted EBITDAR for the three and nine months ended September 30, 2014 would have been $40.2 million and $119.0 million, respectively. EBITDA for the nine months ended September 30, 2014 reflects four month increase in rent expense as a result of the Spin-Off compared to nine months increase in rent expense for the nine months ended September 30, 2015.
(c) Costs incurred related to new systems implementation.
(d) Operating results at urgent care centers. This amount for the three and nine months ended September 30, 2015 excluded rent of $0.5 million and $1.6 million, respectively, and depreciation expense of $0.3 million and $0.9 million, respectively. This amount for the three and nine months ended September 30, 2014 excluded rent of $0.4 million and $1.1 million, respectively, and depreciation expense of $0.2 million and $0.5 million, respectively. The results also excluded the net loss attributable to the variable interest entity associated with our urgent care business of approximately $0.3 million and $0.5 million for the three and nine months ended September 30, 2015, respectively, and $0.5 million and $1.6 million for the three and nine months ended September 30, 2014, respectively. Operating loss excluding the net loss attributable to the variable interest entity associated with our urgent care business for the three and nine months ended September 30, 2015 were $0.4 million for both periods.
(e) Costs incurred for facilities currently being constructed and other start-up operations during the three and nine months ended September 30, 2015.
(f) Results at three independent living facilities which were transferred to CareTrust as part of the Spin-Off transaction, excluding rent, depreciation, interest and income taxes.
(g) Costs incurred to acquire operations which are not capitalizable.
(h) Breakup fee, net of costs, received in connection with a public auction in which we were the priority bidder.
(i) Costs incurred to recognize income tax credits which contributed to a decrease in effective tax rate.




 
THE ENSIGN GROUP, INC.
 
RECONCILIATION OF NET INCOME TO EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR
 
(in thousands)
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The table below reconciles income from operations to EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR for each reportable segment for the periods presented:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
 
 
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)
 
$
36,226

 
$
27,262

 
$
4,067

 
$
2,707

 
$
108,592

 
$
95,566

 
$
9,738

 
$
6,792

 
 
Depreciation and amortization
 
5,542

 
3,459

 
258

 
124

 
15,368

 
17,920

 
703

 
371

 
 
EBITDA
 
$
41,768

 
$
30,721

 
$
4,325

 
$
2,831

 
$
123,960

 
$
113,486

 
$
10,441

 
$
7,163

 
 
Rent—cost of services
 
23,574

 
17,507

 
332

 
203

 
59,950

 
28,144

 
866

 
568

 
 
EBITDAR
 
$
65,342

 
$
48,228

 
$
4,657

 
$
3,034

 
$
183,910

 
$
141,630

 
$
11,307

 
$
7,731

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EBITDA
 
$
41,768

 
$
30,721

 
$
4,325

 
$
2,831

 
$
123,960

 
$
113,486

 
$
10,441

 
$
7,163

 
 
Adjustments to EBITDA:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense(b)
 
997

 
—

 
59

 
—

 
2,890

 
—

 
181

 
—

 
 
Costs at facilities currently being constructed and other start-up operations(c)
 
836

 
—

 
—

 
—

 
1,983

 
—

 
—

 
—

 
 
Earnings at three operations transferred to CareTrust (d)
 
—

 
—

 
—

 
—

 
—

 
(122
)
 
—

 
—

 
 
Acquisition related costs(e)
 
203

 
85

 
—

 
—

 
793

 
219

 
—

 
—

 
 
Rent related to item(d) above
 
—

 
—

 
—

 
—

 
—

 
406

 
—

 
—

 
 
Adjusted EBITDA
 
$
43,804

 
$
30,806

 
$
4,384

 
$
2,831

 
$
129,626

 
$
113,989

 
$
10,622

 
$
7,163

 
 
Rent—cost of services
 
23,574

 
17,507

 
332

 
203

 
59,950

 
28,144

 
866

 
568

 
 
Less: rent related to items(d) above
 
—

 
—

 
—

 
—

 
—

 
(406
)
 
—

 
—

 
 
Adjusted EBITDAR
 
67,378

 
48,313

 
4,716

 
3,034

 
189,576

 
141,727

 
11,488

 
7,731

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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 and nine months ended September 30, 2015.
 
 
(c) Costs incurred for facilities currently being constructed and other start-up operations during the three and nine months ended September 30, 2015.
 
 
(d) Results at three independent living facilities which were transferred to CareTrust 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.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
September 30,
 
December 31,
 
2015
 
2014
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
40,069

 
$
50,408

Restricted cash — current
—

 
5,082

Accounts receivable — less allowance for doubtful accounts of $27,595 and $20,438 at September 30, 2015 and December 31, 2014, respectively
192,016

 
130,051

Investments — current
4,500

 
6,060

Prepaid income taxes
6,792

 
2,992

Prepaid expenses and other current assets
15,417

 
8,434

Deferred tax asset — current
10,736

 
10,615

Total current assets
269,530

 
213,642

Property and equipment, net
257,164

 
149,708

Insurance subsidiary deposits and investments
30,050

 
17,873

Escrow deposits
2,310

 
16,153

Deferred tax asset
10,597

 
11,509

Restricted and other assets
8,177

 
6,833

Intangible assets, net
47,223

 
35,568

Goodwill
39,736

 
30,269

Other indefinite-lived intangibles
17,716

 
12,361

Total assets
$
682,503

 
$
493,916

 
 
 
 
Liabilities and equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
34,699

 
$
33,186

Accrued wages and related liabilities
65,475

 
56,712

Accrued self-insurance liabilities — current
17,069

 
15,794

Other accrued liabilities
43,492

 
24,630

Current maturities of long-term debt
613

 
111

Total current liabilities
161,348

 
130,433

Long-term debt — less current maturities
69,209

 
68,279

Accrued self-insurance liabilities — less current portion
36,938

 
34,166

Deferred rent and other long-term liabilities
3,811

 
3,235

Total equity
411,197

 
257,803

Total liabilities and equity
$
682,503

 
$
493,916







THE ENSIGN GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

The following table presents selected data from our consolidated statements of cash flows for the periods presented:
 
Nine Months Ended
September 30,
 
2015
 
2014
Net cash provided by operating activities
$
13,300

 
$
66,688

Net cash used in investing activities
(120,576
)
 
(99,408
)
Net cash provided by financing activities
96,937

 
6,171

Net increase (decrease) in cash and cash equivalents
(10,339
)
 
(26,549
)
Cash and cash equivalents at beginning of period
50,408

 
65,755

Cash and cash equivalents at end of period
$
40,069

 
$
39,206







 
THE ENSIGN GROUP, INC.
 
REVENUE BY SEGMENT
 
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The following table sets forth our total revenue by segment and as a percentage of total revenue for the periods indicated:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
$
 
%
 
$
 
%
 
$
 
%
 
$
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TSA Services
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Skilled nursing facilities
 
$
289,475

 
82.5
%
 
$
228,134

 
87.5
%
 
$
819,655

 
84.6
%
 
$
660,816

 
88.1
%
 
 
Assisted and independent living facilities
 
27,686

 
7.9

 
12,259

 
4.7

 
57,916

 
6.0

 
35,714

 
4.8

 
 
Total TSA services
 
317,161

 
90.4

 
240,393

 
92.2

 
877,571

 
90.6

 
696,530

 
92.9

 
 
Home health and hospice services:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Home health
 
12,794

 
3.6

 
$
7,655

 
2.9

 
34,452

 
3.6

 
20,938

 
2.8

 
 
Hospice
 
12,456

 
3.5

 
6,930

 
2.7

 
29,057

 
3.0

 
17,497

 
2.3

 
 
Total home health and hospice services
 
25,250

 
7.1

 
14,585

 
5.6

 
63,509

 
6.6

 
38,435

 
5.1

 
 
All other (1)
 
8,675

 
2.5

 
5,863

 
2.2

 
27,591

 
2.8

 
15,572

 
2.0

 
 
Total revenue
 
$
351,086

 
100.0
%
 
$
260,841

 
100.0
%
 
$
968,671

 
100.0
%
 
$
750,537

 
100.0
%
 
 
(1) Includes revenue from services provided at our urgent care clinics and mobile x-ray and diagnostic 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 the periods indicated:
 
Three Months Ended
September 30,
 
 
 
 
 
2015
 
2014
 
 
 
 
 
(Dollars in thousands)
 
Change
 
% Change
Total Facility Results:
 
 
 
 
 
 
 
Skilled nursing revenue
$
289,475

 
$
228,134

 
$
61,341

 
26.9
%
Assisted and independent living revenue
27,686

 
12,259

 
15,427

 
125.8
%
Total transitional, skilled and assisted living revenue
$
317,161

 
$
240,393

 
$
76,768

 
31.9
%
Number of facilities at period end
178

 
127

 
51

 
40.2
%
Actual patient days
1,317,323

 
994,995

 
322,328

 
32.4
%
Occupancy percentage — Operational beds
77.9
%
 
77.7
%
 
 
 
0.2
%
Skilled mix by nursing days
30.2
%
 
27.1
%
 
 
 
3.1
%
Skilled mix by nursing revenue
52.5
%
 
50.2
%
 
 
 
2.3
%
 
Three Months Ended
September 30,
 
 
 
 
 
2015
 
2014
 
 
 
 
 
(Dollars in thousands)
 
Change
 
% Change
Same Facility Results(1):
 
 
 
 
 
 
 
Skilled nursing revenue
$
213,329

 
$
200,376

 
$
12,953

 
6.5
%
Assisted and independent living revenue
7,972

 
7,903

 
69

 
0.9
%
Total transitional, skilled and assisted living revenue
$
221,301

 
$
208,279

 
$
13,022

 
6.3
%
Number of facilities at period end
101

 
101

 
—

 
—
%
Actual patient days
840,094

 
838,198

 
1,896

 
0.2
%
Occupancy percentage — Operational beds
81.1
%
 
80.7
%
 
 
 
0.4
%
Skilled mix by nursing days
30.1
%
 
27.9
%
 
 
 
2.2
%
Skilled mix by nursing revenue
52.8
%
 
51.2
%
 
 
 
1.6
%
 
Three Months Ended
September 30,
 
 
 
 
 
2015
 
2014
 
 
 
 
 
(Dollars in thousands)
 
Change
 
% Change
Transitioning Facility Results(2):
 
 
 
 
 
 
 
Skilled nursing revenue
$
16,806

 
$
15,622

 
$
1,184

 
7.6
%
Assisted and independent living revenue
3,155

 
2,987

 
168

 
5.6
%
Total transitional, skilled and assisted living revenue
$
19,961

 
$
18,609

 
$
1,352

 
7.3
%
Number of facilities at period end
17

 
17

 
—

 
—
%
Actual patient days
101,868

 
100,089

 
1,779

 
1.8
%
Occupancy percentage — Operational beds
68.4
%
 
66.3
%
 
 
 
2.1
%
Skilled mix by nursing days
20.8
%
 
18.4
%
 
 
 
2.4
%
Skilled mix by nursing revenue
42.4
%
 
39.5
%
 
 
 
2.9
%




 
Three Months Ended
September 30,
 
 
 
 
 
2015
 
2014
 
 
 
 
 
(Dollars in thousands)
 
Change
 
% Change
Recently Acquired Facility Results(3):
 
 
 
 
 
 
 
Skilled nursing revenue
$
59,340

 
$
12,136

 
$
47,204

 
NM (4)
Assisted and independent living revenue
16,559

 
1,369

 
15,190

 
NM
Total transitional, skilled and assisted living revenue
$
75,899

 
$
13,505

 
$
62,394

 
NM
Number of facilities at period end
60

 
9

 
51

 
NM
Actual patient days
375,361

 
56,708

 
318,653

 
NM
Occupancy percentage — Operational beds
74.2
%
 
62.6
%
 
 
 
NM
Skilled mix by nursing days
33.7
%
 
27.3
%
 
 
 
NM
Skilled mix by nursing revenue
54.4
%
 
46.3
%
 
 
 
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)
Not meaningful.
 
Nine Months Ended
September 30,
 
 
 
 
 
2015
 
2014
 
 
 
 
 
(Dollars in thousands)
 
Change
 
% Change
Total Facility Results:
 
 
 
 
 
 
 
Skilled nursing revenue
$
819,655

 
$
660,816

 
$
158,839

 
24.0
%
Assisted and independent living revenue
57,916

 
35,714

 
22,202

 
62.2
%
Total transitional, skilled and assisted living revenue
$
877,571

 
$
696,530

 
$
181,041

 
26.0
%
Number of facilities at period end
178

 
127

 
51

 
40.2
%
Actual patient days
3,515,719

 
2,895,265

 
620,454

 
21.4
%
Occupancy percentage — Operational beds
78.2
%
 
77.9
%
 
 
 
0.3
%
Skilled mix by nursing days
30.2
%
 
27.6
%
 
 
 
2.6
%
Skilled mix by nursing revenue
52.9
%
 
50.9
%
 
 
 
2.0
%
 
Nine Months Ended
September 30,
 
 
 
 
 
2015
 
2014
 
 
 
 
 
(Dollars in thousands)
 
Change
 
% Change
Same Facility Results(1):
 
 
 
 
 
 
 
Skilled nursing revenue
$
633,684

 
$
596,576

 
$
37,108

 
6.2
 %
Assisted and independent living revenue
23,826

 
23,609

 
217

 
0.9
 %
Total transitional, skilled and assisted living revenue
$
657,510

 
$
620,185

 
$
37,325

 
6.0
 %
Number of facilities at period end
101

 
101

 
—

 
—
 %
Actual patient days
2,480,148

 
2,484,026

 
(3,878
)
 
(0.2
)%
Occupancy percentage — Operational beds
81.0
%
 
80.6
%
 
 
 
0.4
 %
Skilled mix by nursing days
30.4
%
 
28.4
%
 
 
 
2.0
 %
Skilled mix by nursing revenue
53.4
%
 
51.8
%
 
 
 
1.6
 %





 
Nine Months Ended
September 30,
 
 
 
 
 
2015
 
2014
 
 
 
 
 
(Dollars in thousands)
 
Change
 
% Change
Transitioning Facility Results(2):
 
 
 
 
 
 
 
Skilled nursing revenue
$
49,436

 
$
45,798

 
$
3,638

 
7.9
%
Assisted and independent living revenue
9,568

 
8,633

 
935

 
10.8
%
Total transitional, skilled and assisted living revenue
$
59,004

 
$
54,431

 
$
4,573

 
8.4
%
Number of facilities at period end
17

 
17

 
—

 
—
%
Actual patient days
304,159

 
294,738

 
9,421

 
3.2
%
Occupancy percentage — Operational beds
68.8
%
 
65.8
%
 
 
 
3.0
%
Skilled mix by nursing days
20.8
%
 
18.9
%
 
 
 
1.9
%
Skilled mix by nursing revenue
42.5
%
 
40.2
%
 
 
 
2.3
%
 
Nine Months Ended
September 30,
 
 
 
 
 
2015
 
2014
 
 
 
 
 
(Dollars in thousands)
 
Change
 
% Change
Recently Acquired Facility Results(3):
 
 
 
 
 
 
 
Skilled nursing revenue
$
136,535

 
$
18,442

 
$
118,093

 
NM (5)
Assisted and independent living revenue
24,522

 
2,224

 
22,298

 
NM
Total transitional, skilled and assisted living revenue
$
161,057

 
$
20,666

 
$
140,391

 
NM
Number of facilities at period end
60

 
9

 
51

 
NM
Actual patient days
731,412

 
88,485

 
642,927

 
NM
Occupancy percentage — Operational beds
73.7
%
 
60.1
%
 
 
 
NM
Skilled mix by nursing days
33.5
%
 
27.0
%
 
 
 
NM
Skilled mix by nursing revenue
54.4
%
 
45.8
%
 
 
 
NM
 
Nine Months Ended
September 30,
 
 
 
 
 
2015
 
2014
 
 
 
 
 
(Dollars in thousands)
 
Change
 
% Change
Transferred to CareTrust(4):
 
 
 
 
 
 
 
Assisted and independent living revenue
—

 
1,248

 
(1,248
)
 
NM
Total transitional, skilled and assisted living revenue
$
—

 
$
1,248

 
$
(1,248
)
 
NM
Actual patient days
—

 
28,016

 
(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.
(5)
Not meaningful.





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 September 30,
 
Same Facility
 
Transitioning
 
Acquisitions
 
Total
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
Skilled Nursing Average Daily Revenue Rates:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare
$
562.35

 
$
552.96

 
$
488.67

 
$
472.72

 
$
521.96

 
$
532.44

 
$
549.74

 
$
546.65

Managed care
421.17

 
412.94

 
457.91

 
475.05

 
436.13

 
445.64

 
426.75

 
418.22

Other skilled
451.25

 
453.22

 
316.70

 
253.00

 
357.12

 
317.07

 
430.03

 
436.48

Total skilled revenue
493.20

 
489.94

 
476.00

 
473.31

 
460.00

 
433.51

 
484.90

 
485.92

Medicaid
189.65

 
179.00

 
177.61

 
167.13

 
195.11

 
184.92

 
189.82

 
178.30

Private and other payors
194.95

 
188.31

 
139.45

 
151.65

 
202.54

 
211.53

 
191.20

 
185.52

Total skilled nursing revenue
$
281.65

 
$
266.96

 
$
233.66

 
$
220.82

 
$
285.08

 
$
255.97

 
$
279.09

 
$
262.64



 
Nine Months Ended September 30,
 
Same Facility
 
Transitioning
 
Acquisitions
 
Total
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
Skilled Nursing Average Daily Revenue Rates:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare
$
566.01

 
$
553.02

 
$
484.84

 
$
462.74

 
$
528.84

 
$
523.84

 
$
555.32

 
$
546.34

Managed care
417.87

 
411.51

 
459.78

 
468.86

 
446.32

 
436.29

 
426.19

 
415.80

Other skilled
465.47

 
446.24

 
322.97

 
253.00

 
363.39

 
311.99

 
446.08

 
437.26

Total skilled revenue
498.96

 
490.22

 
474.72

 
464.93

 
467.83

 
426.88

 
492.12

 
486.96

Medicaid
189.03

 
178.69

 
174.22

 
163.54

 
194.98

 
184.32

 
188.78

 
177.50

Private and other payors
193.65

 
188.92

 
145.79

 
152.25

 
207.32

 
205.11

 
191.48

 
185.33

Total skilled nursing revenue
$
283.74

 
$
268.42

 
$
232.21

 
$
218.67

 
$
287.72

 
$
252.00

 
$
280.70

 
$
263.80
























The following tables set forth our percentage of skilled nursing patient revenue and days by payor source for the three months ended September 30, 2015 and 2014:
 
Three Months Ended September 30,
 
Same Facility
 
Transitioning
 
Acquisitions
 
Total
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
Percentage of Skilled Nursing Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare
28.6
%
 
29.4
%
 
26.8
%
 
25.3
%
 
25.6
%
 
18.8
%
 
27.9
%
 
28.6
%
Managed care
16.4

 
15.1

 
15.4

 
14.2

 
22.5

 
16.8

 
17.6

 
15.1

Other skilled
7.8

 
6.7

 
0.2

 
—

 
6.3

 
10.7

 
7.0

 
6.5

Skilled mix
52.8

 
51.2

 
42.4

 
39.5

 
54.4

 
46.3

 
52.5

 
50.2

Private and other payors
8.1

 
9.1

 
9.6

 
11.9

 
7.4

 
9.6

 
8.0

 
9.3

Quality mix
60.9

 
60.3

 
52.0

 
51.4

 
61.8

 
55.9

 
60.5

 
59.5

Medicaid
39.1

 
39.7

 
48.0

 
48.6

 
38.2

 
44.1

 
39.5

 
40.5

Total skilled nursing
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%


 
Three Months Ended September 30,
 
Same Facility
 
Transitioning
 
Acquisitions
 
Total
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
Percentage of Skilled Nursing Days:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare
14.3
%
 
14.2
%
 
12.8
%
 
11.8
%
 
14.0
%
 
9.0
%
 
14.2
%
 
13.7
%
Managed care
10.9

 
9.8

 
7.9

 
6.6

 
14.7

 
9.6

 
11.5

 
9.5

Other skilled
4.9

 
3.9

 
0.1

 
—

 
5.0

 
8.7

 
4.5

 
3.9

Skilled mix
30.1

 
27.9

 
20.8

 
18.4

 
33.7

 
27.3

 
30.2

 
27.1

Private and other payors
11.8

 
12.9

 
16.0

 
17.4

 
10.4

 
11.6

 
11.8

 
13.2

Quality mix
41.9

 
40.8

 
36.8

 
35.8

 
44.1

 
38.9

 
42.0

 
40.3

Medicaid
58.1

 
59.2

 
63.2

 
64.2

 
55.9

 
61.1

 
58.0

 
59.7

Total skilled nursing
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%


























The following tables set forth our percentage of skilled nursing patient revenue and days by payor source for the nine months ended September 30, 2015 and 2014:

 
Nine Months Ended September 30,
 
Same Facility
 
Transitioning
 
Acquisitions
 
Total
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
Percentage of Skilled Nursing Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare
30.3
%
 
30.6
%
 
27.1
%
 
25.2
%
 
24.9
%
 
17.8
%
 
29.2
%
 
29.9
%
Managed care
15.8

 
15.0

 
15.2

 
15.0

 
23.4

 
17.9

 
17.0

 
15.1

Other skilled
7.3

 
6.2

 
0.2

 
—

 
6.1

 
10.1

 
6.7

 
5.9

Skilled mix
53.4

 
51.8

 
42.5

 
40.2

 
54.4

 
45.8

 
52.9

 
50.9

Private and other payors
8.2

 
9.1

 
9.8

 
11.9

 
8.6

 
8.2

 
8.4

 
9.2

Quality mix
61.6

 
60.9

 
52.3

 
52.1

 
63.0

 
54.0

 
61.3

 
60.1

Medicaid
38.4

 
39.1

 
47.7

 
47.9

 
37.0

 
46.0

 
38.7

 
39.9

Total skilled nursing
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%


 
Nine Months Ended September 30,
 
Same Facility
 
Transitioning
 
Acquisitions
 
Total
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
Percentage of Skilled Nursing Days:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare
15.2
%
 
14.9
%
 
13.0
%
 
11.9
%
 
13.6
%
 
8.6
%
 
14.8
%
 
14.4
%
Managed care
10.7

 
9.8

 
7.7

 
7.0

 
15.1

 
10.4

 
11.2

 
9.6

Other skilled
4.5

 
3.7

 
0.1

 
—

 
4.8

 
8.0

 
4.2

 
3.6

Skilled mix
30.4

 
28.4

 
20.8

 
18.9

 
33.5

 
27.0

 
30.2

 
27.6

Private and other payors
12.0

 
12.8

 
15.6

 
17.0

 
11.9

 
10.1

 
12.3

 
13.0

Quality mix
42.4

 
41.2

 
36.4

 
35.9

 
45.4

 
37.1

 
42.5

 
40.6

Medicaid
57.6

 
58.8

 
63.6

 
64.1

 
54.6

 
62.9

 
57.5

 
59.4

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
 
 
(in thousands)
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
The following tables summarize our selected performance indicators for our home health and hospice segment along with other statistics, for the periods indicated:
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
September 30,
 
 
 
 
 
 
2015
 
2014
 
Change
 
% Change
 
Results:
(Dollars in thousands)
 
 
 
 
 
Home health and hospice revenue:
 
 
 
 
 
 
 
 
Home health services
$
12,794

 
$
7,655

 
$
5,139

 
67.1
 %
 
Hospice services
12,456

 
6,930

 
5,526

 
79.7

 
Total home health and hospice revenue
$
25,250

 
$
14,585

 
$
10,665

 
73.1
 %
 
Home health services:
 
 
 
 
 
 
 
 
Medicare Episodic Admissions
1,856

 
1,328

 
528

 
39.8
 %
 
Average Medicare Revenue per Completed Episode
2,920

 
2,984

 
(64
)
 
(2.1
)%
 
Hospice services:
 
 
 
 
 
 
 
 
Average Daily Census
764

 
451

 
313

 
69.4
 %
 


 
Nine Months Ended
September 30,
 
 
 
 
 
 
2015
 
2014
 
Change
 
% Change
 
Results:
(Dollars in thousands)
 
 
 
 
 
Home health and hospice revenue:
 
 
 
 
 
 
 
 
Home health services
$
34,452

 
$
20,938

 
$
13,514

 
64.5
%
 
Hospice services
29,057

 
17,497

 
11,560

 
66.1

 
Total home health and hospice revenue
$
63,509

 
$
38,435

 
$
25,074

 
65.2
%
 
Home health services:
 
 
 
 
 
 
 
 
Medicare Episodic Admissions
5,343

 
3,845

 
1,498

 
39.0
%
 
Average Medicare Revenue per Completed Episode
2,960

 
2,936

 
24

 
0.8
%
 
Hospice services:
 
 
 
 
 
 
 
 
Average Daily Census
622

 
408

 
214

 
52.5
%
 





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 September 30,
 
Nine Months Ended September 30,
 
 
 
2015
 
2014
 
2015
 
2014
 
 
 
$
 
%
 
$
 
%
 
$
 
%
 
$
 
%
 
 
 
(Dollars in thousands)
 
(Dollars in thousands)
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicaid
 
$
114,106

 
32.5
%
 
$
91,707

 
35.2
%
 
$
316,608

 
32.7
%
 
$
260,986

 
34.8
%
 
Medicare
 
101,212

 
28.8

 
78,056

 
29.9

 
290,964

 
30.0

 
231,860

 
30.9

 
Medicaid-skilled
 
18,924

 
5.4

 
13,614

 
5.2

 
51,206

 
5.3

 
36,575

 
4.9

 
Total
 
234,242

 
66.7

 
183,377

 
70.3

 
658,778

 
68.0

 
529,421

 
70.6

 
Managed Care
 
54,411

 
15.5

 
36,562

 
14.0

 
148,374

 
15.3

 
105,316

 
14.0

 
Private and Other(1)
 
62,433

 
17.8

 
40,902

 
15.7

 
161,519

 
16.7

 
115,800

 
15.4

 
Total revenue
 
$
351,086

 
100.0
%
 
$
260,841

 
100.0
%
 
$
968,671

 
100.0
%
 
$
750,537

 
100.0
%
 
(1) Private and other payors in our "All Other" category includes revenue from urgent care centers, mobile x-ray and diagnostic operations and other ancillary businesses.
 





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. 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, (e) expenses incurred in connection with the Spin-Off, (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) costs incurred to recognize income tax credits which contributed to a decrease in effective tax rate, (j) costs incurred to acquire operations which are not capitalized, (k) operating results at urgent care centers, excluding depreciation, interest and income taxes and (l) results at three independent living operations which were transferred to Care Trust REIT as part of the Spin-Off transaction, 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, (f) expenses incurred in connection with the Spin-Off, (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) costs incurred to recognize income tax credits which contributed to a decrease in effective tax rate, (k) costs incurred to acquire operations which are not capitalized, (l) operating results at urgent care centers, excluding rent, depreciation, interest and income taxes and (m) results at three independent living operations which were transferred to Care Trust REIT as part of the Spin-Off transaction, 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 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.



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