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): February 6, 2019
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 February 6, 2019 The Ensign Group, Inc. (the Company) issued a press release reporting the financial results of the Company for its year ended December 31, 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. 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 and amortization, interest and income taxes, (e) results of closed operations and facilities not at full operation, excluding depreciation and amortization, interest and income taxes, (f) share-based compensation expense, (g) return of unclaimed class action settlement and charges related to class action lawsuit, (h) losses and business interruption recoveries related to Hurricane Harvey and the California fires, (i) impairment of goodwill and long-lived assets, (j) bonus accrual as a result of the Tax Act, (k) professional fees associated with income tax credits, tax reform impacts and adoption of the new revenue recognition standard and (l) 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 and amortization, interest and income taxes, (f) results of closed operation and facilities not at full operation, excluding rent, depreciation and amortization, interest and income taxes, (g) share-based compensation expense, (h) return of unclaimed class action settlement and charges related to class action lawsuit, (i) losses and business interruption recoveries related to Hurricane Harvey and the California fires, (j) impairment of goodwill and long-lived assets, (k) bonus accrual as a result off the Tax Act, (l) professional fees associated with income tax credits, tax reform impacts and adoption of the new revenue recognition standard and (m) 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 they 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 February 6, 2019








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: February 12, 2019
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 February 6, 2019



Exhibit


http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12697156&doc=3

The Ensign Group Reports Fourth Quarter and Fiscal Year 2018 Results

Conference Call and Webcast scheduled for tomorrow, February 7, 2019 at 10:00 am PT

MISSION VIEJO, California - February 6, 2019 - 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 and assisted living companies, today announced its operating results for the fourth quarter and full year 2018, reporting record GAAP diluted earnings per share of $0.48 for the quarter and $1.70 for the year and record adjusted earnings per share of $0.54 for the quarter and $1.88 for the year(1).
Highlights Include:

GAAP earnings per share for the year was $1.70, an increase of 120.8% over the prior year, and adjusted earnings per share was $1.88, up 34.3% over the prior year(1)(2);

GAAP earnings per share for the fourth quarter was $0.48, an increase of 128.6% from the prior year quarter, and adjusted earnings per share was $0.54, an increase of 35.0% over the prior year quarter(1)(2);

Consolidated GAAP Net Income for the year was $92.4 million, an increase of 128.2% over the prior year, and consolidated adjusted Net Income for the year was $102.1 million, an increase of 38.3% over the prior year (1)(2);

Consolidated GAAP Net Income for the fourth quarter was $26.4 million, an increase of 135.2% from the prior year quarter, and adjusted Net Income was $29.4 million, an increase of 39.5% from the prior year quarter(1)(2);

Total Transitional and Skilled Services segment income was $190.9 million for the year, an increase of 36.1% over the prior year, and was $55.2 million for the quarter, an increase of 38.2% over the prior year quarter and 19% sequentially over the third quarter;

Same store skilled services occupancy was 78.8%, an increase of 63 basis points over the prior year, and transitioning skilled services occupancy was 75.0%, an increase of 296 basis points over the prior year;

Total Home Health and Hospice Services segment revenue for the year was up 20.0% over the prior year to $170.9 million and segment income for the year was up 32.5% over the prior year to $26.1 million(3); and

Total Assisted Living Services segment revenue for the year was up 11.1% over the prior year to $151.8 million and adjusted EBITDAR for the year was up 9.1% over the prior year to $52.8 million.

(1) See "Reconciliation of GAAP to Non-GAAP Financial Information".
(2) Adjusted earnings per share and Consolidated Adjusted Net Income increased by 15.3% and 18.8%, respectively, over the prior year if we applied a 25% tax rate to both periods. Adjusted earnings per share and Consolidated Adjusted Net Income increased by 17.4% and 20.0%, respectively, over the prior year quarter if we applied a 25% tax rate to both periods.
(3) Excludes the impact for the adoption of ASC 606.

Operating Results

“We are thrilled to report a record quarter as we achieved our highest adjusted earnings per share in our history,” said Ensign’s President and Chief Executive Officer Christopher Christensen. “The improvement we have been expecting in many of our operations, especially in Texas and Utah, is now materializing and making a meaningful contribution to our performance. However, we have many operations across all of our different buckets in all our geographies that still have tremendous organic upside, even in some of our most mature markets,” he added. He credited the local operational and clinical leadership teams and all of their field-based and Service Center partners for continuing their relentless focus on clinical and financial performance while they continued to integrate 148 transitioning and newly acquired operations into the organization.





“Our other lines of business continue to quietly create significant value,” Christensen stated. He noted that Cornerstone Healthcare, Inc., Ensign’s home health and hospice portfolio subsidiary, grew its segment revenue and income by 20.0% and 32.5%, respectively, over the prior year. Similarly, he said that Ensign’s assisted living and independent living portfolio company, which provides senior living services in 12 states, grew its segment revenue and adjusted EBITDAR by 11.1% and 9.1%, respectively, over the prior year. Collectively, these two business segments now represent 15.7% of Ensign’s consolidated revenue. “We are making progress in our evaluation of a long-term strategic opportunity involving our new venture businesses. Just as with our real estate transaction in 2014, our goal has been, and will be, to ensure that these businesses will benefit our shareholders over the long run,” he added.
Management also provided its 2019 annual guidance with earnings of between $2.17 and $2.26 per diluted share and annual revenue between $2.29 billion and $2.35 billion. Overall, the midpoint of this guidance represents a 19%, or $0.36 per share, increase from the midpoint of management’s annual earnings guidance for 2018. “We are very excited about the coming year and our guidance demonstrates our optimism for the future,” he said.
Chief Financial Officer Suzanne Snapper reported that, “Our liquidity remains strong with approximately $307.1 million of availability on Ensign’s $450 million credit facility, which also has a built-in expansion option, and 52 unlevered real estate assets that add additional liquidity.” She also reported that, even after some significant acquisition activity in the quarter, the Company’s lease-adjusted net-debt-to-adjusted EBITDAR ratio decreased again to 3.77x at year end, down from 4.2x at the end of the prior year. She attributed this trend to the fact that EBITDAR from transitioning and newly acquired operations has continued to grow. She also indicated that cash generated from operations was $210.3 million for the year, 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 Annual Report on Form 10-K for the year ended December 31, 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 $0.0475 per share of Ensign common stock. “We are pleased to announce our sixteenth consecutive annual dividend increase, which reflects our strong market position and continued commitment to return value to our shareholders,” Christensen commented.
In October, Ensign announced that its senior 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.
In November, Ensign announced that its affiliate acquired the real estate and operations of Rock Creek of Ottawa, a post-acute care retirement campus with 93 skilled nursing beds, 71 assisted living units and 24 independent living units located in Ottawa, Kansas. This acquisition represented the fourth transition from a non-profit seller in 2018, demonstrating Ensign’s continued success in working with non-profit operators that are looking to reposition their assets.
Also in November, Ensign acquired the real estate and operations of Creekside Transitional Care and Rehabilitation, a 139-bed skilled nursing and 21-unit assisted living facility located in Meridian, Idaho, and Bennett Hills Rehabilitation and Care Center, a 44-bed skilled nursing facility located in Gooding, Idaho. These acquisitions bring the number of skilled nursing operations in Idaho to 10, further demonstrating Ensign’s strategy of developing strong clusters in each local healthcare market.
Ensign’s senior living portfolio company also acquired the operations of four assisted living facilities in the Dallas-Fort Worth area of Texas, including: Canyon Creek Memory Care, a 52-unit memory care facility located in Temple, Texas; Bridgewater Memory Care, a 52-unit memory care facility located in Granbury, Texas; Lakeshore Assisted Living and Memory Care, a 46-unit assisted living and 30-unit memory care community located in Rockwall, Texas; and Windsor Court Senior Living, a retirement community with 36 independent living units, 16 memory care units, and seven assisted living units located in Weatherford, Texas.
Also during the quarter, Cornerstone Healthcare Inc., acquired the following: Alpha Nursing, a home health agency in Washington; Cornerstone Home Health and Hospice in Utah; and Sequoia Hospice in California.  “Each of these acquisitions are small agencies that we purchased from small business owners that were looking to exit the space. We continue to see attractive growth opportunities like these and will opportunistically acquire when our leadership talent, geography and pricing align,” Christensen added.





Lastly, in January, the Company announced that it acquired the real estate and operations of Cedar Health and Rehabilitation, a skilled nursing facility with 120 skilled nursing beds located in Cedar City, Utah. “As is the case with all of our acquisition efforts, we pursued these operations because our local leaders see a pathway to meaningfully impact the quality of the healthcare services delivered to their residents and resulting occupancy improvements,” Christensen added. 
These additions bring Ensign's growing portfolio to 189 skilled nursing operations, 24 of which also include assisted living operations, 55 assisted and independent living operations, 23 hospice agencies, 24 home health agencies and seven home care businesses across sixteen states.  Ensign owns the real estate at 72 of its 244 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.
2019 Guidance
Management provided guidance for 2019, with annual revenue guidance of $2.29 billion to $2.35 billion and annual earnings per share guidance of $2.17 to $2.26 per diluted share for 2019. This guidance represents a 19%, or $0.36 per share, increase from the midpoint of management’s previous annual earnings guidance for 2018. Management’s guidance is based on diluted weighted average common shares outstanding of approximately 56.7 million and a 25% tax rate. In addition, the guidance assumes, among other things, normalized health insurance costs, anticipated Medicare and Medicaid reimbursement rate increases, net of provider taxes and acquisitions closed in the first half of 2019. It also excludes acquisition-related costs and amortization costs related to intangible assets acquired, share-based compensation and start-up losses.
Conference Call
A live webcast will be held Thursday, February 7, 2019 at 10:00 a.m. Pacific time (1:00 p.m. Eastern time) to discuss Ensign’s fourth quarter and fiscal year 2018 financial results. To listen to the webcast, or to view any financial or statistical information required by SEC Regulation G, please visit the Investors Relations section of Ensign’s website at http://investor.ensigngroup.net. The webcast will be recorded, and will be available for replay via the website until 5:00 p.m. Pacific Time on Friday, March 1, 2019.
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 and other rehabilitative and healthcare services at 244 healthcare facilities, 23 hospice agencies, 24 home health agencies and seven 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 and hospice businesses, the Service Center or the captive insurance subsidiary are operated by the same entity. More information about Ensign is available at http://www.ensigngroup.net.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
This press release contains, and the related conference call and webcast will include, forward-looking statements that are based on management’s current expectations, assumptions and beliefs about its business, financial performance, operating results, the industry in which it operates and other future events. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. These forward-looking statements include, but are not limited to, statements regarding growth prospects, future operating and financial performance, and acquisition activities. They are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to materially and adversely differ from those expressed in any forward-looking statement.
These risks and uncertainties relate to the company’s business, its industry and its common stock and include: reduced prices and reimbursement rates for its services; its ability to acquire, develop, manage or improve operations, its ability to manage its increasing borrowing costs as it incurs additional indebtedness to fund the acquisition and development of operations; its ability to access capital on a cost-effective basis to continue to successfully implement its growth strategy; its operating margins and profitability could suffer if it is unable to grow and manage effectively its increasing number of operations; competition from other companies in the acquisition, development and operation of facilities; its ability to defend claims and lawsuits, including





professional liability claims alleging that our services resulted in personal injury, and other regulatory-related claims; and the application of existing or proposed government regulations, or the adoption of new laws and regulations, that could limit its business operations, require it to incur significant expenditures or limit its ability to relocate its operations if necessary. Readers should not place undue reliance on any forward-looking statements and are encouraged to review the company’s periodic filings with the Securities and Exchange Commission, including its Form 10-K, for a more complete discussion of the risks and other factors that could affect Ensign’s business, prospects and any forward-looking statements. Except as required by the federal securities laws, Ensign does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changing circumstances or any other reason after the date of this press release.
Contact Information
Investor/Media Relations, The Ensign Group, Inc., (949) 487-9500, ir@ensigngroup.net.
SOURCE: The Ensign Group, Inc.

















THE ENSIGN GROUP, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share data)

Three Months Ended December 31,
 
Year Ended December 31,

2018
 
2018
adjusted to reflect prior revenue guidance
 
2017
 
2018
 
2018
adjusted to reflect prior revenue guidance

2017
Revenue
 
 
 
 
 
 
 
 
 
 
 
Service revenue
$
497,313

 
$
504,387

 
$
451,869

 
$
1,888,862

 
$
1,921,672

 
$
1,712,670

Assisted and independent living revenue
40,462

 
40,462

 
35,836

 
151,797

 
151,797

 
136,647

Total revenue
537,775

 
544,849

 
487,705

 
2,040,659

 
2,073,469


1,849,317

Expense
 
 
 
 
 
 

 


 
Cost of services
427,574

 
434,648

 
393,727

 
1,627,672

 
1,660,482


1,497,703

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

 

 

 
(1,664
)
 
(1,664
)

11,000

(Gains) losses related to divestitures

 

 
(410
)
 

 


2,321

Rent—cost of services
35,339

 
35,339

 
33,652

 
138,512

 
138,512


131,919

General and administrative expense
28,216

 
28,216

 
22,833

 
100,307

 
100,307


80,617

Depreciation and amortization
12,199

 
12,199

 
11,760

 
47,344

 
47,344


44,472

Total expenses
503,328

 
510,402

 
461,562

 
1,912,171

 
1,944,981


1,768,032

Income from operations
34,447

 
34,447

 
26,143

 
128,488

 
128,488


81,285

Other income (expense):
 
 
 
 
 
 

 
 
 
 
Interest expense
(3,711
)
 
(3,711
)
 
(3,599
)
 
(15,182
)
 
(15,182
)

(13,616
)
Interest income
586

 
586

 
636

 
2,063

 
2,063


1,609

Other expense, net
(3,125
)
 
(3,125
)
 
(2,963
)
 
(13,119
)
 
(13,119
)

(12,007
)
Income before provision for income taxes
31,322

 
31,322

 
23,180

 
115,369

 
115,369


69,278

Provision for income taxes
4,763

 
4,763

 
11,958

 
22,841

 
22,841


28,445

Net income
26,559

 
26,559

 
11,222

 
92,528

 
92,528


40,833

Less: net income attributable to noncontrolling interests
199

 
199

 
16

 
164

 
164


358

Net income attributable to The Ensign Group, Inc.
$
26,360

 
$
26,360

 
$
11,206

 
$
92,364

 
$
92,364


$
40,475


 
 
 
 
 
 

 


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

 


 
Basic
$
0.50

 
$
0.50

 
$
0.22

 
$
1.78

 
$
1.78


$
0.79

Diluted
$
0.48

 
$
0.48

 
$
0.21

 
$
1.70

 
$
1.70


$
0.77

 
 
 
 
 
 
 

 


 
Weighted average common shares outstanding:
 
 
 
 
 
 

 


 
Basic
52,449

 
52,449

 
51,250

 
52,016

 
52,016


50,932

Diluted
54,967

 
54,967

 
53,176

 
54,397

 
54,397


52,829

 
 
 
 
 
 
 
 
 



 

 
 
 
 
 
 


 
 









THE ENSIGN GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
 
December 31,
 
2018
 
2017
Assets
 

 
Current assets:
 

 
Cash and cash equivalents
$
31,083


$
42,337

Accounts receivable—less allowance for doubtful accounts of $2,886 and $43,961 at December 31, 2018 and 2017, respectively
276,099


265,068

Investments—current
8,682


13,092

Prepaid income taxes
6,219


19,447

Prepaid expenses and other current assets
24,130


28,132

Assets held for sale - current
1,859

 

Total current assets
348,072


368,076

Property and equipment, net
618,874


537,084

Insurance subsidiary deposits and investments
36,168


28,685

Escrow deposits
7,271


228

Deferred tax assets
11,650


12,745

Restricted and other assets
20,844


16,501

Intangible assets, net
31,000


32,803

Goodwill
80,477


81,062

Other indefinite-lived intangibles
27,602


25,249

Total assets
$
1,181,958


$
1,102,433

 



Liabilities and equity
 

 
Current liabilities:
 

 
Accounts payable
$
44,236


$
39,043

Accrued wages and related liabilities
119,656


90,508

Accrued self-insurance liabilities—current
25,446


22,516

Other accrued liabilities
69,784


63,815

Current maturities of long-term debt
10,105


9,939

Total current liabilities
269,227


225,821

Long-term debt—less current maturities
233,135


302,990

Accrued self-insurance liabilities—less current portion
54,605


50,220

Deferred rent and other long-term liabilities
11,234


11,268

Deferred gain related to sale-leaseback
11,417


12,075

Total equity
602,340


500,059

Total liabilities and equity
$
1,181,958


$
1,102,433



















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

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

Year Ended December 31,

2018

2017
Net cash provided by operating activities
210,302


72,952

Net cash used in investing activities
(151,211
)

(106,593
)
Net cash (used in)/provided by financing activities
(70,345
)

18,272

Net decrease in cash and cash equivalents
(11,254
)

(15,369
)
Cash and cash equivalents beginning of period
42,337


57,706

Cash and cash equivalents end of period
$
31,083


$
42,337



 
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 December 31,
 


2018 (As Reported)
 
2018 adjusted to reflect prior revenue guidance

2017
 


$
 
%
 
$
 
%
 
$
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


(Dollars in thousands)
 
Transitional and skilled services

$
441,714


82.1
%
 
$
448,518


82.3
%

$
403,533


82.7
%
 
Assisted and independent living services

40,462


7.5
%
 
40,462


7.4
%

35,836


7.4

 
Home health and hospice services:



 
 
 

 




 
Home health

22,614


4.2

 
22,882


4.2
%

20,048


4.1

 
Hospice

21,579


4.0

 
21,581


4.0
%

19,636


4.0

 
Total home health and hospice services

44,193


8.2

 
44,463


8.2


39,684


8.1
%
 
All other (1)

11,406


2.2

 
11,406


2.1
%

8,652


1.8

 
Total revenue

$
537,775


100.0
%
 
$
544,849


100.0
%

$
487,705


100.0
%
 
(1) Includes revenue from services generated in our other ancillary services.






 
 
Year Ended December 31,
 
 
2018 (As Reported)
 
2018 adjusted to reflect prior revenue guidance
 
2017
 
 
$
 
%
 
$
 
%
 
$
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
Transitional and skilled services
 
$
1,679,012


82.3
%

$
1,709,988


82.5
%

$
1,545,210


83.6
%
Assisted and independent living services
 
151,797


7.4
%

151,797


7.3


136,646


7.4

Home health and hospice services:
 
 
 

 
 
 
 
 
 
 
 
Home health
 
86,379


4.2
%

87,728


4.2


73,045


3.9

Hospice
 
82,658


4.1
%

83,143


4.0


69,358


3.8

Total home health and hospice services
 
169,037


8.3


170,871


8.2


142,403


7.7

All other (1)
 
40,813


2.0
%

40,813


2.0


25,058


1.3

Total revenue
 
$
2,040,659


100.0
%

$
2,073,469


100.0
%

$
1,849,317


100.0
%
(1) Includes revenue from services generated by our other ancillary services.


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

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

Three Months Ended December 31,




 
2018
 
2017
 
Change

% Change
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
Total Facility Results:
 
 
 
 
 
 
 
Transitional and skilled revenue (as reported)
$
441,714

 
$
403,533


$
38,181

 
9.5
 %
Transitional and skilled revenue (adjusted to reflect prior revenue guidance)
448,518

 
403,533

 
44,985

 
11.1
 %
Number of facilities at period end
164

 
160


4

 
2.5
 %
Number of campuses at period end*
24

 
21


3

 
14.3
 %
Actual patient days
1,393,783

 
1,315,247


78,536

 
6.0
 %
Occupancy percentage — Operational beds
77.9
%
 
76.2
%

 
 
1.7
 %
Skilled mix by nursing days
28.6
%
 
29.1
%

 
 
(0.5
)%
Skilled mix by nursing revenue
48.1
%
 
49.3
%

 
 
(1.2
)%







Three Months Ended December 31,




 
2018
 
2017
 
Change
 
% Change
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
Same Facility Results(1):
 
 
 
 
 
 
 
Transitional and skilled revenue (as reported)
$
297,587

 
$
281,245

 
$
16,342

 
5.8
 %
Transitional and skilled revenue (adjusted to reflect prior revenue guidance)
302,130

 
281,245

 
20,885

 
7.4
 %
Number of facilities at period end
108

 
108

 

 

Number of campuses at period end*
11

 
11

 

 

Actual patient days
891,520

 
878,417

 
13,103

 
1.5
 %
Occupancy percentage — Operational beds
79.3
%
 
78.4
%
 
 
 
0.9
 %
Skilled mix by nursing days
30.4
%
 
30.0
%
 
 
 
0.4
 %
Skilled mix by nursing revenue
50.3
%
 
50.4
%
 
 
 
(0.1
)%

Three Months Ended December 31,




 
2018

2017

Change

% Change
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
Transitioning Facility Results(2):
 
 
 
 
 
 
 
Transitional and skilled revenue (as reported)
$
102,084

 
$
98,565

 
$
3,519

 
3.6
 %
Transitional and skilled revenue (adjusted to reflect prior revenue guidance)
103,746

 
98,565

 
5,181

 
5.3
 %
Number of facilities at period end
40

 
40

 

 

Number of campuses at period end*
9

 
9

 

 

Actual patient days
361,477

 
352,451

 
9,026

 
2.6
 %
Occupancy percentage — Operational beds
75.6
%
 
73.5
%
 
 
 
2.1
 %
Skilled mix by nursing days
27.0
%
 
29.1
%
 
 
 
(2.1
)%
Skilled mix by nursing revenue
46.0
%
 
49.4
%
 
 
 
(3.4
)%

Three Months Ended December 31,




 
2018
 
2017
 
Change
 
% Change
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
Recently Acquired Facility Results(3):
 
 
 
 
 
 
 
Transitional and skilled revenue (as reported)
$
42,043

 
$
23,723

 
$
18,320

 
NM
Transitional and skilled revenue (adjusted to reflect prior revenue guidance)
42,642

 
23,723

 
18,919

 
NM
Number of facilities at period end
16

 
12

 
4

 
NM
Number of campuses at period end*
4

 
1

 
3

 
NM
Actual patient days
140,786

 
84,379

 
56,407

 
NM
Occupancy percentage — Operational beds
75.0
%
 
67.4
%
 
 
 
NM
Skilled mix by nursing days
21.8
%
 
20.3
%
 
 

 
NM
Skilled mix by nursing revenue
37.0
%
 
36.1
%
 
 

 
NM
* Campus represents a facility that offers both skilled nursing, 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.







 
Year Ended December 31,
 
 
 
 
 
2018
 
2017
 
Change
 
% Change
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
Total Facility Results:
 

 

 

 
Transitional and skilled revenue (as reported)
$
1,679,012

 
$
1,545,210

 
$
133,802

 
8.7
 %
Transitional and skilled revenue (adjusted to reflect prior revenue guidance)
1,709,988

 
1,545,210

 
164,778

 
10.7
 %
Number of facilities at period end
164

 
160

 
4

 
2.5
 %
Number of campuses at period end*
24

 
21

 
3

 
14.3
 %
Actual patient days
5,405,952

 
5,050,140

 
355,812

 
7.0
 %
Occupancy percentage — Operational beds
77.4
%
 
75.4
%
 
 
 
2.0
 %
Skilled mix by nursing days
29.5
%
 
30.3
%
 
 
 
(0.8
)%
Skilled mix by nursing revenue
49.6
%
 
51.1
%
 
 
 
(1.5
)%

 
Year Ended December 31,
 
 
 
 
 
2018
 
2017
 
Change
 
% Change
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
Same Facility Results(1):
 

 

 

 
Transitional and skilled revenue (as reported)
$
1,143,913


$
1,108,822


$
35,091

 
3.2
 %
Transitional and skilled revenue (adjusted to reflect prior revenue guidance)
1,164,930


1,108,822


56,108

 
5.1
 %
Number of facilities at period end
108


108



 
 %
Number of campuses at period end*
11


11



 
 %
Actual patient days
3,515,147


3,485,195


29,952

 
0.9
 %
Occupancy percentage — Operational beds
78.8
%

78.2
%

 
 
0.6
 %
Skilled mix by nursing days
30.9
%

30.8
%

 
 
0.1
 %
Skilled mix by nursing revenue
51.3
%

51.5
%

 
 
(0.2
)%
 
Year Ended December 31,
 
 
 
 
 
2018
 
2017
 
Change
 
% Change
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
Transitioning Facility Results(2):
 

 

 

 
Transitional and skilled revenue (as reported)
$
399,747


$
382,805


$
16,942


4.4
 %
Transitional and skilled revenue (adjusted to reflect prior revenue guidance)
407,351


382,805


24,546


6.4
 %
Number of facilities at period end
40


40



 

Number of campuses at period end*
9


9



 

Actual patient days
1,424,563


1,371,769


52,794


3.8
 %
Occupancy percentage — Operational beds
75.0
%
 
72.1
%

 

2.9
 %
Skilled mix by nursing days
28.8
%
 
30.1
%

 

(1.3
)%
Skilled mix by nursing revenue
48.4
%
 
51.5
%

 

(3.1
)%





 
Year Ended December 31,
 
 
 
 
 
2018
 
2017
 
Change
 
% Change
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
Recently Acquired Facility Results(3):


 

 

 
Transitional and skilled revenue (as reported)
$
135,352


$
51,715


$
83,637


NM
Transitional and skilled revenue (adjusted to reflect prior revenue guidance)
137,707


51,715


85,992


NM
Number of facilities at period end
16


12


4


NM
Number of campuses at period end*
4


1


3


NM
Actual patient days
466,242


187,601


278,641


NM
Occupancy percentage — Operational beds
74.3
%
 
58.1
%




NM
Skilled mix by nursing days
21.9
%
 
20.5
%

 


NM
Skilled mix by nursing revenue
38.0
%
 
37.3
%

 


NM
 
Year Ended December 31,
 
 
 
 
 
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
%
 
71.5
%
 
 

NM
 
 
 
 
 
 
 
 
* Campus represents a facility that offers both skilled nursing, 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 year ended December 31, 2017, which were excluded from Same Store and Transitioning results for the year ended December 31, 2017, for comparison purposes.


THE ENSIGN GROUP, INC.
SKILLED NURSING AVERAGE DAILY REVENUE RATES AND
PERCENT OF SKILLED NURSING REVENUE AND DAYS BY PAYOR

The following table reflects the change in skilled nursing average daily revenue rates by payor source, excluding services that are not covered by the daily rate, 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 December 31,
 
Same Facility
 
Transitioning
 
Acquisitions
 
Total
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
Skilled Nursing Average Daily Revenue Rates:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare
$
625.29

 
$
612.89

 
$
525.44

 
$
514.34

 
$
531.75

 
$
517.26

 
$
590.27

 
$
576.93

Managed care
469.53

 
455.55

 
417.66

 
409.54

 
412.85

 
426.99

 
450.91

 
441.71

Other skilled
504.67

 
471.08

 
354.42

 
351.02

 
517.34

 
425.31

 
486.26

 
453.31

Total skilled revenue
539.91

 
520.39

 
461.99

 
455.88

 
481.67

 
478.03

 
516.35

 
501.22

Medicaid
234.66

 
221.23

 
201.70

 
191.97

 
231.08

 
215.32

 
225.68

 
213.31

Private and other payors
229.13

 
200.39

 
199.94

 
184.56

 
223.75

 
211.38

 
219.89

 
210.57

Total skilled nursing revenue
$
327.17

 
$
307.86

 
$
271.87

 
$
267.20

 
$
284.91

 
$
267.93

 
$
308.52

 
$
297.12







 
Year Ended December 31,
 
Same Facility

Transitioning

Acquisitions

Total
 
2018

2017

2018

2017

2018

2017

2018

2017
Skilled Nursing Average Daily Revenue Rates:
 
 
 
 
 
 
 
 
 
 
 

 

 
Medicare
$
615.47


$
603.28


$
518.33


$
508.15


$
528.92


$
506.12


$
580.96


$
569.77

Managed care
464.89


451.28


412.42


414.44


415.49


416.25


447.34


440.55

Other skilled
493.63


465.72


354.34


364.65


489.66


470.51


475.59


451.16

Total skilled revenue
530.95


516.26


457.59


457.93


483.67


479.63


509.10


499.51

Medicaid
226.64


217.47


196.47


184.24


221.42


206.32


218.30


208.24

Private and other payors
225.89


202.22


201.03


191.92


226.71


210.28


218.42


209.72

Total skilled nursing revenue
$
320.96


$
307.35


$
272.34


$
267.71


$
279.86


$
262.90


$
304.57


$
296.84


The following tables set forth our percentage of skilled nursing patient revenue and days by payor source for the three months and year ended December 31, 2018 and 2017:
 
Three Months Ended December 31,
 
Same Facility
 
Transitioning
 
Acquisitions
 
Total
 
2018

2017

2018

2017

2018

2017

2018

2017
Percentage of Skilled Nursing Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare
23.6
%

23.3
%

24.2
%

27.2
%

20.3
%

22.2
%

23.4
%

24.2
%
Managed care
16.8


18.1


18.6


19.0


13.0


10.4


16.9


17.8

Other skilled
9.9


9.0


3.2


3.2


3.7


3.5


7.8


7.3

Skilled mix
50.3


50.4


46.0


49.4


37.0


36.1


48.1


49.3

Private and other payors
7.6


7.8


9.8


10.9


10.7


12.3


8.4


8.9

Quality mix
57.9


58.2


55.8


60.3


47.7


48.4


56.5


58.2

Medicaid
42.1


41.8


44.2


39.7


52.3


51.6


43.5


41.8

Total skilled nursing
100.0
%

100.0
%

100.0
%

100.0
%

100.0
%

100.0
%

100.0
%

100.0
%

 
Three Months Ended December 31,
 
Same Facility
 
Transitioning
 
Acquisitions
 
Total
 
2018

2017

2018

2017

2018

2017

2018

2017
Percentage of Skilled Nursing Days:
 

 

 

 

 

 

 

 
Medicare
12.3
%

11.8
%

12.5
%

14.2
%

10.8
%

11.5
%

12.2
%

12.4
%
Managed care
11.6


12.3


12.1


12.4


8.9


6.5


11.5


11.9

Other skilled
6.5


5.9


2.4


2.5


2.1


2.3


4.9


4.8

Skilled mix
30.4


30.0


27.0


29.1


21.8


20.3


28.6


29.1

Private and other payors
11.2


11.6


13.5


15.4


14.0


15.5


12.2


12.9

Quality mix
41.6


41.6


40.5


44.5


35.8


35.8


40.8


42.0

Medicaid
58.4


58.4


59.5


55.5


64.2


64.2


59.2


58.0

Total skilled nursing
100.0
%

100.0
%

100.0
%

100.0
%

100.0
%

100.0
%

100.0
%

100.0
%







 
Year Ended December 31,
 
Same Facility
 
Transitioning
 
Acquisitions
 
Total
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
Percentage of Skilled Nursing Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare
23.8
%
 
24.7
%
 
25.9
%
 
29.0
%
 
22.3
%
 
25.8
%
 
24.2
%
 
25.8
%
Managed care
17.8

 
18.2

 
19.4

 
19.1

 
11.9

 
8.5

 
17.7

 
18.1

Other skilled
9.7

 
8.6

 
3.1

 
3.4

 
3.8

 
3.0

 
7.7

 
7.2

Skilled mix
51.3

 
51.5

 
48.4

 
51.5

 
38.0

 
37.3

 
49.6

 
51.1

Private and other payors
7.7

 
7.9

 
10.1

 
10.5

 
11.3

 
13.2

 
8.5

 
8.6

Quality mix
59.0

 
59.4

 
58.5

 
62.0

 
49.3

 
50.5

 
58.1

 
59.7

Medicaid
41.0

 
40.6

 
41.5

 
38.0

 
50.7

 
49.5

 
41.9

 
40.3

Total skilled nursing
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
Year Ended December 31,
 
Same Facility
 
Transitioning
 
Acquisitions
 
Total
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
Percentage of Skilled Nursing Days:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare
12.3
%
 
12.6
%
 
13.6
%
 
15.3
%
 
11.7
%
 
13.4
%
 
12.6
%
 
13.4
%
Managed care
12.2

 
12.5

 
12.8

 
12.3

 
8.0

 
5.4

 
12.0

 
12.2

Other skilled
6.4

 
5.7

 
2.4

 
2.5

 
2.2

 
1.7

 
4.9

 
4.7

Skilled mix
30.9

 
30.8

 
28.8

 
30.1

 
21.9

 
20.5

 
29.5

 
30.3

Private and other payors
11.2

 
11.6

 
13.8

 
14.6

 
14.3

 
16.4

 
12.2

 
12.5

Quality mix
42.1

 
42.4

 
42.6

 
44.7

 
36.2

 
36.9

 
41.7

 
42.8

Medicaid
57.9

 
57.6

 
57.4

 
55.3

 
63.8

 
63.1

 
58.3

 
57.2

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
December 31,




 
2018

2017

Change
 
% Change
 
 
 
 
 
 
 
 

(Dollars in thousands)

 
 
 
Resident fee revenue
$
40,462


$
35,836


$
4,626


12.9
%
Number of facilities at period end
56


49


7


14.3
%
Number of campuses at period end
24


21


3


14.3
%
Occupancy percentage (units)
75.9
%

75.8
%

 

0.1
%
Average monthly revenue per unit
$
2,866


$
3


$
74


2.7
%





 
Year Ended December 31,
 
 
 
 
 
2018
 
2017
 
Change
 
% Change
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
Resident fee revenue
$
151,797

 
$
136,646

 
$
15,151

 
11.1
 %
Number of facilities at period end
56

 
49

 
7

 
14.3
 %
Number of campuses at period end
24

 
21

 
3

 
14.3
 %
Occupancy percentage (units)
75.7
%
 
76.4
%
 
 
 
(0.7
)%
Average monthly revenue per unit
$
2,861

 
$
2,800

 
$
61

 
2.2
 %


 
THE ENSIGN GROUP, INC.
 
 
SELECT PERFORMANCE INDICATORS