XML 26 R15.htm IDEA: XBRL DOCUMENT v3.22.2
Business Segments
 6 Months Ended
Jun. 30, 2022
Segment Reporting [Abstract]  
BUSINESS SEGMENTS BUSINESS SEGMENTS
In conjunction with the formation Standard Bearer in January 2022, the Company's Chief Executive Officer, who is its chief operating decision maker, or CODM, began reviewing the results of Standard Bearer instead of all real estate properties. Accordingly, the Company revised its former real estate segment to include only real estate properties that are part of Standard Bearer. This change in organizational structure demonstrates that Standard Bearer's real estate is a core part of the Company's expansion of its real estate investment strategy. As of the first quarter of 2022, the Company has two reportable segments: (1) skilled services, which includes the operation of skilled nursing facilities and rehabilitation therapy services and (2) Standard Bearer, which is comprised of selected real estate properties owned by Standard Bearer and leased to skilled nursing and senior living operators. Segment information for prior periods has been recast to reflect the change of the Company’s segment structure.

As of June 30, 2022, the skilled services segment includes 215 skilled nursing operations and 25 campus operations that provide both skilled nursing and rehabilitative care services and senior living services. The Company's Standard Bearer segment consists of 95 owned real estate properties. These properties include 67 operations the Company operated and managed and 29 senior living operations that are leased to and operated by third parties. Of the 29 real estate operations leased to third parties, one senior living operation is located on the same real estate property as a skilled nursing facility that the Company owns and operates.

The Company also reports an “All Other” category that includes results from its senior living operations, which includes eleven stand-alone senior living operations and the senior living operations at 25 campus operations that provide both skilled nursing and rehabilitative care services and senior living services. In addition, the "All Other" category includes mobile diagnostics, medical transportation, other real estate and other ancillary operations. Services included in the “All Other” category are insignificant individually, and therefore do not constitute a reportable segment.

The Company’s reportable segments are significant operating segments that offer differentiated services. The Company's CODM reviews financial information for each operating segment to evaluate performance and allocate capital resources. This structure reflects its current operational and financial management and provides the best structure to maximize the quality of care and investment strategy provided, while maintaining financial discipline. The Company's CODM does not review assets by segment in his resource allocation and therefore assets by segment are not disclosed below.

The accounting policies of the reportable segments are the same as those described in Note 2, Summary of Significant Accounting Policies. Intercompany revenue is eliminated in consolidation, along with corresponding intercompany expenses. Segment income and loss is defined as profit or loss from operations before provision for income taxes, excluding gain or loss from sale of real estate, insurance recoveries and impairment charges from operations. Included in segment income for Standard Bearer is expense for intercompany services provided by the Service Center as described in Note 7, Standard Bearer, as it is part of the CODM financial information.
The following tables set forth financial information for the segments:
 Three Months Ended June 30, 2022
 Skilled ServicesStandard Bearer
All Other(1)
Intercompany EliminationTotal
Service revenue(2)
$702,478 $— $28,787 $(2,918)$728,347 
Rental revenue(3)
— 17,598 1,832 (15,291)4,139 
TOTAL REVENUE$702,478 $17,598 $30,619 $(18,209)$732,486 
Segment income (loss)102,266 6,838 (38,614)— 70,490 
Gain on sale of assets2,467 
Income before provision for income taxes $72,957 
Depreciation and amortization8,113 5,216 1,529 — 14,858 
Interest expense(4)
$— $3,743 $889 $(1,944)$2,688 
(1) All other primarily includes all ancillary operations, stand-alone senior living operations and the Service Center.
(2) Intercompany service revenue represents service revenue generated by ancillary operations provided to the Company's affiliated wholly-owned healthcare facilities and management service revenue generated by the Service Center with Standard Bearer. Intercompany service revenue is eliminated in consolidation along with corresponding intercompany cost of service.
(3) Intercompany rental revenue represents rental income generated by both Standard Bearer and other real estate properties with the Company's affiliated wholly-owned healthcare facilities. Intercompany rental revenue is eliminated in consolidation along with corresponding intercompany rent expense.
(4) Included in interest expense in Standard Bearer is interest expense incurred from intercompany debt arrangements between Standard Bearer and The Ensign Group, Inc. The intercompany interest expense is eliminated in the "Intercompany Elimination" column.

 Three Months Ended June 30, 2021
 Skilled ServicesStandard Bearer
All Other(1)
Intercompany EliminationTotal
Service revenue(2)
$612,882 $— $23,428 $(1,701)$634,609 
Rental revenue(3)
— 14,214 1,817 (12,104)3,927 
TOTAL REVENUE$612,882 $14,214 $25,245 $(13,805)$638,536 
Segment income (loss)90,010 7,906 (33,575)— 64,341 
Income before provision for income taxes $64,341 
Depreciation and amortization7,703 4,248 1,844 — 13,795 
Interest expense$— $1,634 $— $1,634 
(1) All other primarily includes all ancillary operations, stand-alone senior living operations and the Service Center.
(2) Intercompany service revenue represents service revenue generated by ancillary operations provided to the Company's affiliated wholly-owned healthcare facilities. Intercompany service revenue is eliminated in consolidation along with corresponding intercompany cost of service.
(3) Intercompany rental revenue represents rental income generated by both Standard Bearer and other real estate properties with the Company's affiliated wholly-owned healthcare facilities. Intercompany rental revenue is eliminated in consolidation along with corresponding intercompany rent expense.

 Six Months Ended June 30, 2022
 Skilled ServicesStandard Bearer
All Other(1)
Intercompany EliminationTotal
Service revenue(2)
$1,389,249 $— $54,254 $(6,000)$1,437,503 
Rental revenue(3)
— 34,791 3,695 (30,058)8,428 
TOTAL REVENUE$1,389,249 $34,791 $57,949 $(36,058)$1,445,931 
Segment income (loss)200,522 13,738 (77,544)— 136,716 
Gain on sale of assets2,467 
Income before provision for income taxes$139,183 
Depreciation and amortization16,014 10,237 3,283 — 29,534 
Interest expense(4)
$— $7,305 $1,247 $(3,796)$4,756 
(1) All other primarily includes all ancillary operations, stand-alone senior living operations and the Service Center.
(2) Intercompany service revenue represents service revenue generated by ancillary operations provided to the Company's affiliated wholly-owned healthcare facilities and management service revenue generated by the Service Center with Standard Bearer. Intercompany service revenue is eliminated in consolidation along with corresponding intercompany cost of service.
(3) Intercompany rental revenue represents rental income generated by both Standard Bearer and other real estate properties with the Company's affiliated wholly-owned healthcare facilities. Intercompany rental revenue is eliminated in consolidation along with corresponding intercompany rent expense.
(4) Included in interest expense in Standard Bearer is interest expense incurred from intercompany debt arrangements between Standard Bearer and The Ensign Group, Inc. The intercompany interest expense is eliminated in the "Intercompany Elimination" column.
 Six Months Ended June 30, 2021
 Skilled ServicesStandard Bearer
All Other(1)
Intercompany EliminationTotal
Service revenue(2)
$1,213,918 $— $47,347 $(3,380)$1,257,885 
Rental revenue(3)
— 28,283 3,627 (24,006)7,904 
TOTAL REVENUE$1,213,918 $28,283 $50,974 $(27,386)$1,265,789 
Segment income (loss)178,941 15,619 (67,873)— 126,687 
Gain on sale of assets440 
Income before provision for income taxes$127,127 
Depreciation and amortization15,178 8,403 3,873 — 27,454 
Interest expense$— $3,275 $— $— $3,275 
(1) All other primarily includes all ancillary operations, stand-alone senior living operations and the Service Center.
(2) Intercompany service revenue represents service revenue generated by ancillary operations provided to the Company's affiliated wholly-owned healthcare facilities. Intercompany service revenue is eliminated in consolidation along with corresponding intercompany cost of service.
(3) Intercompany rental revenue represents rental income generated by both Standard Bearer and other real estate properties with the Company's affiliated wholly-owned healthcare facilities. Intercompany rental revenue is eliminated in consolidation along with corresponding intercompany rent expense.
Service revenue by major payor source were as follows:
 Three Months Ended June 30, 2022
 Skilled ServicesAll OtherTotal Service RevenueRevenue %
Medicaid(1)
$287,827 $6,301 $294,128 40.4 %
Medicare190,494 — 190,494 26.2 
Medicaid-skilled49,763 — 49,763 6.8 
Subtotal528,084 6,301 534,385 73.4 
Managed care128,587 — 128,587 17.7 
Private and other(2)
45,807 19,568 65,375 8.9 
TOTAL SERVICE REVENUE$702,478 $25,869 $728,347 100.0 %
(1) Medicaid payor includes revenue generated from senior living operations and revenue related to FMAP.
(2) Private and other payors also includes revenue from senior living operations and all payors generated in other ancillary services.

 Three Months Ended June 30, 2021
 Skilled ServicesAll OtherTotal Service RevenueRevenue %
Medicaid(1)
$247,671 $3,784 $251,455 39.6 %
Medicare170,008 — 170,008 26.8 
Medicaid-skilled42,740 — 42,740 6.7 
Subtotal460,419 3,784 464,203 73.1 
Managed care112,963 — 112,963 17.8 
Private and other(2)
39,500 17,943 57,443 9.1 
TOTAL SERVICE REVENUE$612,882 $21,727 $634,609 100.0 %
(1) Medicaid payor includes revenue generated from senior living operations and revenue related to FMAP.
(2) Private and other payors also includes revenue from senior living operations and all payors generated in other ancillary services.
 Six Months Ended June 30, 2022
 Skilled ServicesOther Service Revenue Total Service RevenueRevenue %
Medicaid(1)
$549,414 $11,062 $560,476 39.0 %
Medicare398,905 — 398,905 27.7 
Medicaid-skilled95,712 — 95,712 6.7 
Subtotal1,044,031 11,062 1,055,093 73.4 
Managed care256,373 — 256,373 17.8 
Private and other(2)
88,845 37,192 126,037 8.8 
TOTAL SERVICE REVENUE$1,389,249 $48,254 $1,437,503 100.0 %
(1) Medicaid payor includes revenue generated from senior living operations and revenue related to FMAP.
(2) Private and other payors also includes revenue from senior living operations and all payors generated in other ancillary services.

 Six Months Ended June 30, 2021
 Skilled ServicesOther Service Revenue Total Service RevenueRevenue %
Medicaid(1)
$475,412 $7,401 $482,813 38.4 %
Medicare360,311 — 360,311 28.6 
Medicaid-skilled82,733 — 82,733 6.6 
Subtotal918,456 7,401 925,857 73.6 
Managed care221,308 — 221,308 17.6 
Private and other(2)
74,154 36,566 110,720 8.8 
TOTAL SERVICE REVENUE$1,213,918 $43,967 $1,257,885 100.0 %
(1) Medicaid payor includes revenue generated from senior living operations and revenue related to FMAP.
(2) Private and other payors also includes revenue from senior living operations and all payors generated in other ancillary services.
In addition to the service revenue above, the Company's rental revenue derived from triple-net lease arrangements with third parties is $4,139 and $8,428, respectively, for the three and six months ended June 30, 2022 and $3,927 and $7,904, respectively, for the three and six months ended June 30, 2021. This revenue is included in both Standard Bearer and the all other category.