Document


 
 
 
 
 
 
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): October 31, 2018
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))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
 
 
 
 
 






Item 2.02. Results of Operations and Financial Condition.
On October 31, 2018, The Ensign Group, Inc. (the Company) issued a press release reporting the financial results of the Company for its third quarter ended September 30, 2018. 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, Adjusted EBITDA and Adjusted EBITDAR. EBITDA, 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) earnings related to operations currently being constructed and other start-up operations, excluding depreciation, interest and income taxes, (e) results of closed operations and facilities not at full operation, excluding depreciation, interest and income taxes, (f) share-based compensation expense, (g) return of unclaimed class action settlement and charges related to class action lawsuit, (h) business interruption recoveries, (i) impairment of goodwill and intangible assets, (j) losses related to Hurricane Harvey on impacted operations and (k) transaction-related costs. 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) earnings related to facilities currently being constructed and other start-up operations, excluding rent, depreciation, interest and income taxes, (f) results of closed operation and facilities not at full operation, excluding rent, depreciation, interest and income taxes, (g) share-based compensation expense, (h) return of unclaimed class action settlement and charges related to class action lawsuit, (i) business interruption recoveries, (j) impairment of goodwill and intangible assets, (k) losses related to Hurricane Harvey on impacted operations and (l) transaction-related costs. The company believes that the presentation of EBITDA, 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, adjusted net income per share, EBITDA, 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.









Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
 
 
 
Exhibit No.
 
Description
 
 
 
 
Press Release of the Company dated October 31, 2018








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 6, 2018
THE ENSIGN GROUP, INC.
 
 
By:  
/s/ Suzanne D. Snapper  
 
 
 
Suzanne D. Snapper 
 
 
 
Chief Financial Officer 
 
 







EXHIBIT INDEX
 
 
 
Exhibit No.
 
Description
 
 
 
 
Press Release of the Company dated October 31, 2018



Exhibit


http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12533295&doc=3

The Ensign Group Reports Third Quarter 2018 Results

Conference Call and Webcast Scheduled for tomorrow, November 1, 2018 at 10:00 am PT

MISSION VIEJO, Calif., October 31, 2018 (GLOBE NEWSWIRE) --

The Ensign Group, Inc. (Nasdaq: ENSG), the parent company of the Ensign™ group of skilled nursing, rehabilitative care services, assisted living, home health, home care and hospice care companies, today announced its operating results for the third quarter of 2018, reporting GAAP diluted earnings per share for the quarter of $0.38 and adjusted earnings per share for the quarter of $0.46 (1).
Highlights Include:

GAAP earnings per share for the quarter was up 40.7% over the prior year quarter to $0.38 per diluted share, and adjusted earnings per share was up 27.8% over the prior year quarter to a record $0.46 per diluted share(1)(2);

Consolidated GAAP Net Income for the quarter was $20.9 million, an increase of 46.8% over the prior year quarter, and consolidated adjusted Net Income was $25.0 million, an increase of 32.6% over the prior year quarter(1)(2);

Total Transitional and Skilled Services segment income was $46.4 million for the quarter, an increase of 25.7% over the prior year quarter and an increase of 7.3% sequentially over the second quarter;

Overall skilled services occupancy was 77.3%, an increase of 165 basis points over the prior year quarter and transitioning skilled services occupancy was 75.0%, an increase of 281 basis points over the prior year quarter;

Total Assisted Living Services segment revenue was up 7.3% to $38.1 million and Assisted Living Services segment income was up 9.0% to $4.7 million, both over the prior year quarter; and

Total Home Health and Hospice Services segment revenue was up 23.1% to $44.3 million and segment income was up 55.4% to $7.3 million, both over the prior year quarter(3).

(1) See "Reconciliation of GAAP to Non-GAAP Financial Information".
(2) Adjusted earnings per share and Consolidated Adjusted Net Income increased by 12.2% and 13.9%, respectively, over the prior year quarter if we applied a 25% tax rate to both periods.
(3) Excludes the impact of ASC 606.

Operating Results

Ensign’s President and Chief Executive Officer Christopher Christensen said, “We are very pleased to report strong third-quarter results as the momentum we have experienced over the last several quarters continued into the third quarter.” He added, “We again saw significant improvement in GAAP earnings per share and consolidated GAAP net income, which increased by 40.7% and 46.8%, respectively, over the prior year quarter.”
While emphasizing the positive trends in the Transitional Skilled Services segment, Mr. Christensen noted an increase of 25.7% in segment income over the prior year quarter and an increase in occupancy of 281 basis points in the Company’s transitioning operations over the prior year quarter. “Even with our recent improvements, we believe that each of our carefully-selected acquisitions still have enormous unrealized potential as they continue the multi-year process of becoming like our most mature operations. Over the next several years, as demographics improve and quality providers are rewarded with higher volumes, we are positioned to capitalize on the significant organic growth potential inherent in our core skilled nursing business,” he said.





Management also increased its 2018 annual earnings per share guidance to $1.83 to $1.88 per diluted share, which represents a 32.4% increase over the Company’s annual earnings for 2017. Christensen also indicated that even after the impact of our 2018 tax adjustment, the midpoint of management’s guidance represents a 16.8% increase over 2017 results. “Because we are ahead of schedule on our results this year and fourth quarter tends to be one of our strongest quarters, we determined a slight adjustment was necessary. We are very excited about the fourth quarter and the coming year and are confident that as our local leaders continue to push on the flywheel in both new and mature operations, and as we continue our disciplined growth strategy, Ensign’s near-term and long-term outlook is very bright” he added.
“We continue to build significant value in our other lines of business, including home health and hospice care, assisted living, mobile diagnostics and other post-acute care services. Each of these profitable business lines, under the direction of key leaders and their dedicated Service Center resources, achieved consistent clinical and financial results, while simultaneously bolstering our core skilled nursing operations,” Christensen stated. “During the quarter, Cornerstone Healthcare, Inc., our home health and hospice portfolio subsidiary, grew its segment revenue and income by 23.1% and 55.4%, respectively, over the prior year quarter. As each segment’s leadership team continues to independently drive their respective businesses to achieve outstanding results, we continue to evaluate ways in which we can enhance operational synergies, while also ensuring that all of our affiliated operations will continue to create long-term shareholder value,” he said.
Pointing to the underlying value being created in Ensign’s owned real estate, Mr. Christensen noted that the Company continues to methodically add value to its real estate portfolio by improving the operating results in our owned operations and by acquiring additional real estate assets. “We now own 70 real estate assets, including the new Service Center location. We believe that our shareholders have received little to no credit in the past for the incredible amount of underlying value in our real estate and that its value is again being overlooked. We will always be an operationally-driven organization first, but we also believe it’s important to recognize the growing underlying value in our owned real estate and the flexibility that ownership gives us in the future,” he said.
Chief Financial Officer Suzanne Snapper reported that, “Our liquidity remains strong with approximately $295 million of availability as of today on Ensign’s $450 million credit facility, which also has a built-in expansion option, and 50 unlevered real estate assets that add additional borrowing capacity.” She also noted that the Company’s net-debt-to-EBITDAR ratio went down again this quarter to 3.8x in spite of acquiring additional real estate assets during the quarter. She also indicated that cash generated from operations was $157.3 million in the nine months ended September 30, 2018, which was primarily driven by an increase in operating results, stronger collections and lower taxes.
A discussion of the company's use of non-GAAP financial measures is set forth below. A reconciliation of net income to EBITDA, adjusted EBITDAR and adjusted EBITDA, as well as a reconciliation of GAAP earnings per share, 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, which is expected to be filed with the SEC today and can be viewed on the company’s website at http://www.ensigngroup.net.

Quarter Highlights

During the quarter, the Company paid a quarterly cash dividend of $0.045 per share of Ensign common stock. Ensign has been a dividend-paying company since 2002 and has increased its dividend every year for 16 years.
In July, Ensign announced that Pennant Healthcare, Inc., its Northwest-based portfolio subsidiary, acquired the real estate and operations of McCall Rehabilitation and Care Center, a 40-bed skilled nursing facility located in McCall, Idaho. “Our history and track record of successful acquisitions, together with the talented leaders and staff in Idaho that seek to be the provider of choice in their respective communities, give us the confidence to pursue opportunities in the state both big and small,” Christensen said. 
In October, Ensign also announced that Bridgestone Living LLC, Ensign’s assisted living and independent living portfolio company, acquired the real estate and operations of Villa Court Assisted Living and Memory Care, a 53-unit assisted living and 20-unit memory care facility located in Las Vegas, Nevada. “We are thrilled to expand our senior housing footprint in Las Vegas. It’s a market in which we anticipate growing as we rely on the talented leaders there that each seek to become the community of choice in their area,” Christensen added.
Also during the quarter, Cornerstone Healthcare Inc., acquired two home health agencies, one hospice agency and one home care agency in Washington and Colorado, and a new footprint in Wyoming.  “We continue to see attractive growth opportunities in home health and hospice and assisted living and will opportunistically acquire when our leadership availability, geography and pricing align,” Christensen added.





These additions bring Ensign's growing portfolio to 185 skilled nursing operations, 22 of which also include assisted living operations, 52 assisted and independent living operations, 21 hospice agencies, 22 home health agencies and six home care businesses across sixteen states.  Ensign owns the real estate at 69 of its 237 healthcare facilities.  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.

2018 EPS Guidance Increase

Management increased its annual earnings per share guidance to $1.83 to $1.88 per diluted share from $1.80 to $1.87 per diluted share. This guidance assumes, among other things, normalized health insurance costs, anticipated Medicare and Medicaid reimbursement rate increases net of provider taxes. It excludes transaction-related costs and amortization costs related to intangible assets acquired, share-based compensation and costs incurred to recognize income tax credits and costs incurred for start-up operations.

Conference Call

A live webcast will be held Thursday, November 1, 2018 at 10:00 a.m. Pacific time (1:00 p.m. Eastern time) to discuss Ensign’s third quarter 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 30, 2018.

About EnsignTM 

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 and other healthcare services at 237 healthcare facilities, 21 hospice agencies, 22 home health agencies and six home care businesses in California, Arizona, Texas, Washington, Utah, Idaho, Colorado, Nevada, Iowa, Nebraska, Oregon, Wisconsin, Kansas, South Carolina, Oklahoma, and Wyoming. 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, hospice and assisted living 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.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share data)
(Unaudited)


Three Months Ended September 30,

Nine Months Ended September 30,

2018
 
2018
Pro forma (1)

2017

2018
 
2018
Pro forma (1)

2017
Revenue
 
 
 
 
 
 
 
 
 
 
 
Service revenue
$
476,306

 
$
484,160

 
$
436,139

 
$
1,391,549

 
$
1,417,285

 
$
1,260,802

Assisted and independent living revenue
38,058

 
38,058

 
35,455

 
111,335

 
111,335

 
100,810

Total revenue
514,364

 
522,218


471,594


$
1,502,884

 
1,528,620


$
1,361,612

Expense

 





 



Cost of services
413,723

 
421,577


381,544


1,200,098

 
1,225,834


1,103,976

(Return of unclaimed class action settlement)/charges related to class action lawsuit

 




(1,664
)
 
(1,664
)

11,000

Losses related to divestitures

 





 


2,731

Rent—cost of services
34,851

 
34,851


33,782


103,173

 
103,173


98,267

General and administrative expense
24,601

 
24,601


19,261


72,091

 
72,091


57,784

Depreciation and amortization
11,902

 
11,902


11,448


35,145

 
35,145


32,712

Total expenses
485,077

 
492,931


446,035


1,408,843

 
1,434,579


1,306,470

Income from operations
29,287

 
29,287


25,559


94,041

 
94,041


55,142

Other income (expense):

 
 
 
 
 
 
 
 


Interest expense
(3,989
)
 
(3,989
)

(3,519
)

(11,471
)
 
(11,471
)

(10,017
)
Interest income
467

 
467


395


1,477

 
1,477


973

Other expense, net
(3,522
)
 
(3,522
)

(3,124
)

(9,994
)
 
(9,994
)

(9,044
)
Income before provision for income taxes
25,765

 
25,765


22,435


84,047

 
84,047


46,098

Provision for income taxes
5,415

 
5,415


8,160


18,078

 
18,078


16,487

Net income
20,350

 
20,350


14,275


65,969

 
65,969


29,611

Less: net (loss)/income attributable to noncontrolling interests
(511
)
 
(511
)

63


(35
)
 
(35
)

342

Net income attributable to The Ensign Group, Inc.
$
20,861

 
$
20,861


$
14,212


$
66,004

 
$
66,004


$
29,269



 





 



Net income per share attributable to The Ensign Group, Inc.:

 





 



Basic
$
0.40

 
$
0.40


$
0.28


$
1.27

 
$
1.27


$
0.58

Diluted
$
0.38

 
$
0.38


$
0.27


$
1.22

 
$
1.22


$
0.56

 

 





 



Weighted average common shares outstanding:

 





 



Basic
52,139

 
52,139


50,911


51,870

 
51,870


50,795

Diluted
54,632

 
54,632


52,828


54,176

 
54,176


52,674

 


 








 





Dividends per share
$
0.0450

 
$
0.0450


$
0.0425


$
0.1350

 
$
0.1350


$
0.1275




 
 






 
 


(1) The pro forma amounts in the table demonstrate the impact of adopting Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606), for the three and nine months ended September 30, 2018 by presenting the dollars as if the previous accounting guidance was still in effect.






THE ENSIGN GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)


September 30, 2018

December 31, 2017
Assets
 

 
Current assets:
 

 
Cash and cash equivalents
$
45,657


$
42,337

Accounts receivable—less allowance for doubtful accounts of $2,484 and $43,961 at September 30, 2018 and December 31, 2017, respectively
261,454


265,068

Investments—current
9,688


13,092

Prepaid income taxes
6,509


19,447

Prepaid expenses and other current assets
25,105


28,132

Total current assets
348,413


368,076

Property and equipment, net
593,088


537,084

Insurance subsidiary deposits and investments
32,487


28,685

Escrow deposits
660


228

Deferred tax assets
12,035


12,745

Restricted and other assets
20,459


16,501

Intangible assets, net
31,620


32,803

Goodwill
78,612


81,062

Other indefinite-lived intangibles
26,201


25,249

Total assets
$
1,143,575


$
1,102,433

 



Liabilities and equity
 

 
Current liabilities:
 

 
Accounts payable
$
41,323


$
39,043

Accrued wages and related liabilities
99,047


90,508

Accrued self-insurance liabilities—current
23,113


22,516

Other accrued liabilities
74,297


63,815

Current maturities of long-term debt
10,080


9,939

Total current liabilities
247,860


225,821

Long-term debt—less current maturities
245,604


302,990

Accrued self-insurance liabilities—less current portion
54,704


50,220

Deferred rent and other long-term liabilities
11,450


11,268

Deferred gain related to sale-leaseback
11,581


12,075

Total equity
572,376


500,059

Total liabilities and equity
$
1,143,575


$
1,102,433



















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

The following table presents selected data from our consolidated statements of cash flows for the periods presented:

Nine Months Ended September 30,

2018

2017
Net cash provided by operating activities
157,277


63,249

Net cash used in investing activities
(95,269
)

(83,066
)
Net cash (used in)/provided by financing activities
(58,688
)

2,166

Net increase (decrease) in cash and cash equivalents
3,320


(17,651
)
Cash and cash equivalents beginning of period
42,337


57,706

Cash and cash equivalents end of period
$
45,657


$
40,055



 
THE ENSIGN GROUP, INC.
 
 
REVENUE BY SEGMENT
 

The following tables sets forth our total revenue by segment and as a percentage of total revenue for the periods indicated:
 


Three Months Ended September 30,
 


2018 (As Reported)
 
2018 (Pro Forma (2))

2017
 


$

%
 
$

%

$

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


(Dollars in thousands)
 
Transitional and skilled services

$
421,764


82.0
%
 
$
429,188


82.2
%

$
394,121


83.6
%
 
Assisted and independent living services

38,058


7.4

 
38,058


7.3


35,455


7.5

 
Home health and hospice services:




 







 
Home health

22,260


4.3

 
22,549


4.3


18,076


3.8

 
Hospice

21,577


4.2

 
21,718


4.2


17,889


3.8

 
Total home health and hospice services

43,837


8.5

 
44,267


8.5


35,965


7.6

 
All other (1)

10,705


2.1

 
10,705


2.0


6,053


1.3

 
Total revenue

$
514,364


100.0
%
 
$
522,218


100.0
%

$
471,594


100.0
%
 
(1) Includes revenue from services generated by our other ancillary services.
 
(2) The pro forma amounts in the table demonstrate the impact of adopting ASC 606 for the three months ended September 30, 2018 by presenting the dollars and percentages as if the previous accounting guidance was still in effect.
 
 
 
 
 
 
 
 
 
 
 
 
 
 






 
 
Nine Months Ended September 30,
 
 
2018 (As Reported)
 
2018 Pro Forma (2)
 
2017
 
 
$
 
%
 
$
 
%
 
$
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
Transitional and skilled services
 
$
1,237,298


82.3
%

$
1,261,470


82.5
%

$
1,141,677


83.8
%
Assisted and independent living services
 
111,335


7.4


111,335


7.3


100,810


7.4

Home health and hospice services:
 











Home health
 
63,765


4.2


64,846


4.2


52,997


3.9

Hospice
 
61,079


4.1


61,562


4.0


49,722


3.7

Total home health and hospice services
 
124,844


8.3


126,408


8.2


102,719


7.6

All other (1)
 
29,407


2.0


29,407


2.0


16,406


1.2

Total revenue
 
$
1,502,884


100.0
%

$
1,528,620


100.0
%

$
1,361,612


100.0
%
(1) Includes revenue from services generated by our other ancillary services.
(2) The pro forma amounts in the table demonstrate the impact of adopting ASC 606 for the nine months ended September 30, 2018 by presenting the dollars and percentages as if the previous accounting guidance was still in effect.
 
 
 
 
 
 
 
 
 
 
 
 
 


 
THE ENSIGN GROUP, INC.
 
 
SELECT PERFORMANCE INDICATORS
 
 
(Unaudited)
 

The following tables summarize our selected performance indicators for our transitional and skilled services segment along with other statistics, for each of the dates or periods indicated:

Three Months Ended September 30,




 
2018

2017

Change

% Change
 
 
 
 
 
 
 
 
 
(Dollars in thousands)




Total Facility Results:
 

 

 

 
Transitional and skilled revenue (As Reported)
$
421,764


$
394,121


$
27,643


7.0
 %
Transitional and skilled revenue (Pro forma (4))
429,188

 
394,121

 
35,067

 
8.9
 %
Number of facilities at period end
163


159


4


2.5
 %
Number of campuses at period end*
22


21


1


4.8
 %
Actual patient days
1,367,142


1,292,787


74,355


5.8
 %
Occupancy percentage — Operational beds
77.3
%

75.7
%

 

1.6
 %
Skilled mix by nursing days
28.3
%

29.4
%

 

(1.1
)%
Skilled mix by nursing revenue
47.9
%

49.8
%

 

(1.9
)%






Three Months Ended September 30,




 
2018

2017

Change

% Change
 
 
 
 
 
 
 
 
 
(Dollars in thousands)




Same Facility Results(1):
 

 

 

 
Transitional and skilled revenue (As Reported)
$
285,602


$
279,167


$
6,435


2.3
 %
Transitional and skilled revenue (Pro forma (4))
290,630

 
279,167

 
11,463

 
4.1
 %
Number of facilities at period end
108


108




 %
Number of campuses at period end*
11


11




 %
Actual patient days
882,069


876,255


5,814


0.7
 %
Occupancy percentage — Operational beds
78.6
%

78.1
%

 

0.5
 %
Skilled mix by nursing days
29.7
%

30.2
%

 

(0.5
)%
Skilled mix by nursing revenue
49.8
%

50.6
%

 

(0.8
)%

Three Months Ended September 30,




 
2018

2017

Change

% Change
 
 
 
 
 
 
 
 
 
(Dollars in thousands)




Transitioning Facility Results(2):
 

 

 

 
Transitional and skilled revenue (As Reported)
$
99,126


$
95,635


$
3,491


3.7
 %
Transitional and skilled revenue (Pro forma (4))
100,949

 
95,635

 
5,314

 
5.6
 %
Number of facilities at period end
40


40




 %
Number of campuses at period end*
9


9




 %
Actual patient days
357,894


346,539


11,355


3.3
 %
Occupancy percentage — Operational beds
75.0
%

72.2
%

 

2.8
 %
Skilled mix by nursing days
27.4
%

29.2
%

 

(1.8
)%
Skilled mix by nursing revenue
46.7
%

50.2
%

 

(3.5
)%

Three Months Ended September 30,




 
2018

2017

Change

% Change
 
 
 
 
 
 
 
 
 
(Dollars in thousands)




Recently Acquired Facility Results(3):


 

 

 
Transitional and skilled revenue (As Reported)
$
37,036


$
19,319


$
17,717


NM
Transitional and skilled revenue (Pro forma (4))
37,609

 
19,319

 
18,290

 
NM
Number of facilities at period end
15


11


4


NM
Number of campuses at period end*
2


1


1


NM
Actual patient days
127,179


69,993


57,186


NM
Occupancy percentage — Operational beds
75.6
%

66.0
%




NM
Skilled mix by nursing days
21.1
%

19.4
%

 


NM
Skilled mix by nursing revenue
36.7
%

35.5
%

 


NM
* Campus represents a facility that offers both skilled nursing and assisted and/or independent living services. Revenue and expenses related to skilled nursing, assisted and independent living services have been allocated and recorded in the respective reportable segment.
(1)
Same Facility results represent all facilities purchased prior to January 1, 2015.
(2)
Transitioning Facility results represents all facilities purchased from January 1, 2015 to December 31, 2016.
(3)
Recently Acquired Facility (Acquisitions) results represent all facilities purchased on or subsequent to January 1, 2017.
(4)
The pro forma amounts in the table demonstrate the impact of adopting ASC 606 for the three months ended September 30, 2018 by presenting the dollars and percentages as if the previous accounting guidance was still in effect.






 
Nine Months Ended
September 30,
 
 
 
 
 
2018
 
2017
 
Change
 
% Change
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
Total Facility Results:
 

 

 

 
Transitional and skilled revenue (As Reported)
$
1,237,298


$
1,141,677


$
95,621


8.4
 %
Transitional and skilled revenue (Pro forma (5))
1,261,470


1,141,677


119,793


10.5
 %
Number of facilities at period end
163


159


4


2.5
 %
Number of campuses at period end*
22


21


1


4.8
 %
Actual patient days
4,012,169


3,734,893


277,276


7.4
 %
Occupancy percentage — Operational beds
77.2
%

75.1
%

 

2.1
 %
Skilled mix by nursing days
29.9
%

30.7
%

 

(0.8
)%
Skilled mix by nursing revenue
50.1
%

51.7
%

 

(1.6
)%
 
Nine Months Ended
September 30,
 
 
 
 
 
2018
 
2017
 
Change
 
% Change
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
Same Facility Results(1):
 

 

 

 
Transitional and skilled revenue (As Reported)
$
846,326


$
827,577


$
18,749


2.3
 %
Transitional and skilled revenue (Pro forma (5))
862,800


827,577


35,223


4.3
 %
Number of facilities at period end
108


108




 %
Number of campuses at period end*
11


11




 %
Actual patient days
2,623,627


2,606,778


16,849


0.6
 %
Occupancy percentage — Operational beds
78.7
%

78.2
%

 

0.5
 %
Skilled mix by nursing days
31.1
%

31.1
%

 

 %
Skilled mix by nursing revenue
51.7
%

51.9
%

 

(0.2
)%
 
Nine Months Ended
September 30,
 
 
 
 
 
2018
 
2017
 
Change
 
% Change
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
Transitioning Facility Results(2):
 

 

 

 
Transitional and skilled revenue (As Reported)
$
297,663


$
284,240


$
13,423


4.7
 %
Transitional and skilled revenue (Pro forma (5))
303,605


284,240


19,365


6.8
 %
Number of facilities at period end
40


40




 %
Number of campuses at period end*
9


9




 %
Actual patient days
1,063,086


1,019,318


43,768


4.3
 %
Occupancy percentage — Operational beds
74.8
%

71.6
%

 

3.2
 %
Skilled mix by nursing days
29.4
%

30.5
%

 

(1.1
)%
Skilled mix by nursing revenue
49.2
%

52.2
%

 

(3.0
)%





 
Nine Months Ended
September 30,
 
 
 
 
 
2018
 
2017
 
Change
 
% Change
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
Recently Acquired Facility Results(3):


 

 

 
Transitional and skilled revenue (As Reported)
$
93,309


$
27,992


$
65,317


NM
Transitional and skilled revenue (Pro forma (5))
95,065


27,992


67,073


NM
Number of facilities at period end
15


11


4


NM
Number of campuses at period end*
2


1


1


NM
Actual patient days
325,456


103,222


222,234


NM
Occupancy percentage — Operational beds
74.0
%

52.1
%




NM
Skilled mix by nursing days
21.9
%

20.6
%

 


NM
Skilled mix by nursing revenue
38.5
%

38.3
%

 


NM
 
Nine Months Ended
September 30,
 
 
 
 
 
2018
 
2017
 
Change
 
% Change
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
Facility Closed Results(4):


 

 

 
Skilled nursing revenue
$


$
1,868


$
(1,868
)

NM
Actual patient days


5,575


(5,575
)

NM
Occupancy percentage — Operational beds
%

34.3
%

 

NM
Skilled mix by nursing days
%

46.7
%

 

NM
Skilled mix by nursing revenue
%

71.6
%

 

NM
 
 
 
 
 
 
 
 
* Campus represents a facility that offers both skilled nursing and assisted and/or independent living services. Revenue and expenses related to skilled nursing, assisted and independent living services have been allocated and recorded in the respective reportable segment.
(1)
Same Facility results represent all facilities purchased prior to January 1, 2015.
(2)
Transitioning Facility results represents all facilities purchased from January 1, 2015 to December 31, 2016.
(3)
Recently Acquired Facility (Acquisitions) results represent all facilities purchased on or subsequent to January 1, 2017.
(4)
Facility Closed results represents closed operations during the nine months ended September 30, 2017, which were excluded from Same Store and Transitioning results for the nine months ended September 30, 2017, for comparison purposes.
(5)
The pro forma amounts in the table demonstrate the impact of adopting ASC 606 for the nine months ended September 30, 2018 by presenting the dollars and percentages as if the previous accounting guidance was still in effect.

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, and revenue associated with these metrics are generated based on contractually agreed-upon amounts or rate, excluding the estimates of variable consideration under ASC 606:

 
Three Months Ended September 30,
 
Same Facility

Transitioning

Acquisitions

Total
 
2018

2017

2018

2017

2018

2017

2018

2017
Skilled Nursing Average Daily Revenue Rates:
 
 
 
 
 
 
 
 
 
 
 

 

 
Medicare
$
610.37


$
604.15


$
517.25


$
511.43


$
528.30


$
501.20


$
577.09


$
570.52

Managed care
469.41


451.68


413.09


410.85


410.57


416.01


450.07


439.53

Other skilled
500.03


473.68


348.94


361.87


506.07


513.29


480.62


457.72

Total skilled revenue
530.74


517.32


455.33


455.60


482.70


482.32


508.31


499.62

Medicaid
228.53


220.38


195.87


185.44


224.14


208.78


219.54


210.58

Private and other payors
223.36


199.64


198.57


188.23


225.74


217.33


216.49


197.46

Total skilled nursing revenue
$
318.15


$
307.13


$
267.32


$
264.58


$
279.19


$
263.28


$
301.19


$
293.38






 
Nine Months Ended September 30,
 
Same Facility
 
Transitioning
 
Acquisitions
 
Total
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
Skilled Nursing Average Daily Revenue Rates:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare
$
612.16

 
$
600.33

 
$
516.16

 
$
506.22

 
$
527.83

 
$
499.13

 
$
577.88

 
$
567.50

Managed care
463.42

 
449.87

 
410.76

 
416.15

 
416.84

 
403.24

 
446.17

 
440.15

Other skilled
489.76

 
463.83

 
354.31

 
369.18

 
478.90

 
537.77

 
471.84

 
450.38

Total skilled revenue
527.98

 
514.92

 
456.22

 
458.61

 
484.53

 
480.92

 
506.68

 
498.94

Medicaid
223.88

 
216.18

 
194.61

 
181.56

 
217.20

 
198.73

 
215.68

 
206.43

Private and other payors
224.79

 
202.85

 
201.39

 
194.72

 
227.96

 
209.46

 
217.91

 
200.55

Total skilled nursing revenue
$
318.84

 
$
307.17

 
$
272.50

 
$
267.88

 
$
277.67

 
$
258.78

 
$
303.20

 
$
295.15


The following tables set forth our percentage of skilled nursing patient revenue and days by payor source for the three and nine months September 30, 2018 and 2017:

 
Three Months Ended September 30,
 
Same Facility

Transitioning

Acquisitions

Total
 
2018

2017

2018

2017

2018

2017

2018

2017
Percentage of Skilled Nursing Revenue:
 

 

 

 

 

 

 

 
Medicare
22.2
%

23.8
%

24.5
%

27.6
%

20.9
%

25.5
%

22.6
%

24.8
%
Managed care
17.5


17.7


19.0


18.9


11.4


7.1


17.3


17.5

Other skilled
10.1


9.1


3.2


3.7


4.4


2.9


8.0


7.5

Skilled mix
49.8


50.6


46.7


50.2


36.7


35.5


47.9


49.8

Private and other payors
7.9


8.0


9.9


10.4


11.9


14.0


8.8


8.8

Quality mix
57.7


58.6


56.6


60.6


48.6


49.5


56.7


58.6

Medicaid
42.3


41.4


43.4


39.4


51.4


50.5


43.3


41.4

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
 
2018

2017

2018

2017

2018

2017

2018

2017
Percentage of Skilled Nursing Days:
 

 

 

 

 

 

 

 
Medicare
11.5
%

12.2
%

12.6
%

14.3
%

11.0
%

13.4
%

11.8
%

12.8
%
Managed care
11.8


12.1


12.3


12.2


7.7


4.5


11.5


11.7

Other skilled
6.4


5.9


2.5


2.7


2.4


1.5


5.0


4.9

Skilled mix
29.7


30.2


27.4


29.2


21.1


19.4


28.3


29.4

Private and other payors
11.7


11.7


13.4


14.6


15.2


16.9


12.5


12.7

Quality mix
41.4


41.9


40.8


43.8


36.3


36.3


40.8


42.1

Medicaid
58.6


58.1


59.2


56.2


63.7


63.7


59.2


57.9

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
 
2018

2017

2018

2017

2018

2017

2018

2017
Percentage of Skilled Nursing Revenue:
 

 

 

 

 

 

 

 
Medicare
23.9
%

25.2
%

26.5
%

29.6
%

23.2
%

28.9
%

24.4
%

26.4
%
Managed care
18.2


18.3


19.7


19.1


11.4


6.9


18.0


18.2

Other skilled
9.6


8.4


3.0


3.5


3.9


2.5


7.7


7.1

Skilled mix
51.7


51.9


49.2


52.2


38.5


38.3


50.1


51.7

Private and other payors
7.6


7.9


10.2


10.4


11.5


13.9


8.5


8.6

Quality mix
59.3


59.8


59.4


62.6


50.0


52.2


58.6


60.3

Medicaid
40.7


40.2


40.6


37.4


50.0


47.8


41.4


39.7

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
 
2018

2017

2018

2017

2018

2017

2018

2017
Percentage of Skilled Nursing Days:
 

 

 

 

 

 

 

 
Medicare
12.4
%

12.9
%

13.9
%

15.7
%

12.1
%

15.0
%

12.8
%

13.8
%
Managed care
12.4


12.5


13.0


12.3


7.6


4.4


12.2


12.2

Other skilled
6.3


5.7


2.5


2.5


2.2


1.2


4.9


4.7

Skilled mix
31.1


31.1


29.4


30.5


21.9


20.6


29.9


30.7

Private and other payors
11.2


11.5


13.9


14.3


14.5


17.2


12.2


12.4

Quality mix
42.3


42.6


43.3


44.8


36.4


37.8


42.1


43.1

Medicaid
57.7


57.4


56.7


55.2


63.6


62.2


57.9


56.9

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 assisted and independent living segment along with other statistics, for each of the dates or periods indicated:
 
 
 
 
 
 
 
 
 
 
 
 


Three Months Ended
September 30,




 
2018

2017

Change

% Change
 
 
 
 
 
 
 
 

(Dollars in thousands)




Resident fee revenue
$
38,058


$
35,455


$
2,603


7.3
%
Number of facilities at period end
51


49


2


4.1
%
Number of campuses at period end
22


21


1


4.8
%
Occupancy percentage (units)
76.0
%

75.7
%

 

0.3
%
Average monthly revenue per unit
$
2,855


$
2,774


$
81


2.9
%





 
Nine Months Ended
September 30,
 
 
 
 
 
2018
 
2017
 
Change
 
% Change
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
Resident fee revenue
$
111,335


$
100,810


$
10,525


10.4
 %
Number of facilities at period end
51


49


2


4.1
 %
Number of campuses at period end
22


21


1


4.8
 %
Occupancy percentage (units)
75.6
%

76.6
%

 

(1.0
)%
Average monthly revenue per unit
$
2,858


$
2,803


$
55


2.0
 %


 
THE ENSIGN GROUP, INC.