August 6, 2010

The Ensign Group Reports Record Quarter; Raises Guidance

Conference Call and Webcast Scheduled for August 10, 2010 at 8:00 am PT

MISSION VIEJO, Calif., Aug 06, 2010 /PRNewswire via COMTEX News Network/ -- The Ensign Group, Inc. (Nasdaq: ENSG), the parent company of the Ensign(TM) group of skilled nursing, rehabilitative care services, home health, hospice care and assisted living companies, today reported record results for the second quarter of 2010.

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Financial Highlights Include:

  • Adjusted earnings were a record $0.46 per diluted share, up 15.0% over the second quarter of 2009;
  • Total revenue was a record $157.9 million, up 19.5% on a consolidated basis;
  • Same-store skilled mix increased by 284 basis points to 52.9%;
  • Same-store skilled revenue increased by 10.4%;
  • Consolidated EBITDAR climbed 19.9% to $25.7 million, with consolidated EBITDAR margins of 16.3%; and
  • Net income rose 17.5% to $9.6 million for the quarter.

Operating Results

Ensign's President and Chief Executive Officer Christopher Christensen praised Ensign's operational leaders and their teams for the outstanding quality standards maintained during the quarter, noting that financial performance follows clinical excellence. "We understand that our patients, our staff and our business all benefit from one essential thing: high quality care," he said.

He also remarked on progress in the 19 facility acquisitions completed by the Company in 2009 and 2010 to date, noting that all but one are already profitable, and nearly all are running at or ahead of proforma since acquisition. He also reported that Horizon Home Health and Hospice, Ensign's Idaho home health and hospice business which was acquired on May 1, is seeing a surge in census and is also running ahead of proforma.

Mr. Christensen also referenced Ensign's balance sheet and its industry-low adjusted net-debt-to-EBITDAR ratio of approximately 2.1x. He further noted that the company continues to generate strong cash flow, with net cash from operations of $14.9 million through June 30, 2010. "Our balance sheet, together with our accumulated operating and turnaround expertise, position us well to continue our pattern of disciplined growth," he added.

Fully diluted GAAP earnings per share were $0.46 for the quarter, compared to $0.39 per share in the prior year. Excluding $0.1 million in acquisition expenses and amortization of recently-acquired patient bases, adjusted net income was $9.7 million or $0.46 per diluted share for the quarter.

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

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

2010 Guidance Increased

Management increased its 2010 annual guidance, projecting revenues of $628 million to $638 million, and net income of $1.79 to $1.83 per diluted share for the year. The guidance is based on diluted weighted average common shares outstanding of 21.4 million and assumes, among other things, no additional acquisitions or dispositions beyond those made to date, and an aggregate 1.0% projected decline in overall reimbursement rates. It also assumes that tax rates do not materially increase, and no negative impact associated with the implementation of RUGs IV and MDS 3.0.

Quarter Highlights

During the quarter, the company's Board of Directors declared a quarterly cash dividend of $0.05 per share of Ensign common stock. Ensign has been a dividend-paying company since 2002.

The company also announced the acquisition of two long-term care facilities and a home health and hospice business in two separate transactions during the quarter. The real estate and operations were purchased with cash, and include:

  • In Texas, Heritage Gardens Healthcare Center, a 140-bed skilled nursing facility in Carrollton, Texas, and Silver Springs Healthcare Center, a 144-bed skilled nursing facility in Houston, Texas, on May 1, 2010.
  • And in Idaho, Horizon Home Health and Hospice, a well-regarded home health and hospice agency based in Meridian, Idaho, also on May 1, 2010.

The two facility acquisitions brought Ensign's growing portfolio to 81 facilities, 51 of which are Ensign-owned, with Ensign affiliates holding purchase options on eight of Ensign's 30 leased facilities. Ensign also owns one home health and two hospice businesses. Management reaffirmed that Ensign is actively seeking additional opportunities to acquire both well-performing and struggling long-term care operations across the Western United States.

Conference Call

A live webcast will be held on Tuesday, August 10, 2010, at 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time) to discuss Ensign's second quarter results. To listen to the webcast, or to view any financial or statistical information required by SEC Regulation G, please visit the Investors section of the Ensign 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 Tuesday, August 17, 2010.

About Ensign(TM)

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 for both long-term residents and short-stay rehabilitation patients at 81 facilities, two hospice companies and a home health business in California, Arizona, Texas, Washington, Utah, Idaho and Colorado. Each of these facilities is operated by a separate, wholly-owned 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 verbiage are not meant to imply that The Ensign Group, Inc. has direct operating assets, employees or revenue, or that any of the facilities, the hospice business, 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. 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 facilities, its ability to manage its increasing borrowing costs as it incurs additional indebtedness to fund the acquisition and development of facilities; 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 facilities; competition from other companies in the acquisition, development and operation of facilities; 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 facilities 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, which was filed today, for a more complete discussion of the risks and other factors that could affect Ensign's business, prospects and any forward-looking statements. Except as required by the federal securities laws, Ensign does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changing circumstances or any other reason after the date of this press release.


                        THE ENSIGN GROUP, INC.
    GAAP AND ADJUSTED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                (In thousands, except per share data)


                                Three Months Ended
                                  June 30, 2010
                                  -------------
                                                               As
                                 As         Non-             Adjusted
                              Reported      GAAP            ---------
                              --------      Adj.
                                            ----
    Revenue                   $157,948                            $157,948
    Expense:
      Cost of services
       (exclusive of
       facility rent and
       depreciation and
       amortization shown
       separately below)       125,808     (37)(1)                125,771
      Facility rent--cost of
       services                  3,616                               3,616
      General and
       administrative
       expense                   6,407                               6,407
      Depreciation and
       amortization              4,023      (114)(2)                3,909
                                 -----    ------------                -----
       Total expenses          139,854           (151)              139,703
    Income from operations      18,094             151               18,245
    Other income
     (expense):
      Interest expense          (2,308)                            (2,308)
      Interest income               63                                  63
                                   ---                                 ---
       Other expense, net       (2,245)                            (2,245)
    Income before
     provision for income
     taxes                      15,849             151               16,000
    Provision for income
     taxes                       6,230           60(3)                6,290
                                 -----           -----                -----
    Net income                  $9,619              91               $9,710
                                ======             ===               ======
    Net income per share:
      Basic                      $0.46                               $0.47
                                 =====                               =====
      Diluted                    $0.46                               $0.46
                                 =====                               =====
    Weighted average
     common shares
     outstanding:
      Basic                     20,741                              20,741
                                ======                              ======
      Diluted                   21,126                              21,126
                                ======                              ======


                                  Six Months Ended
                                   June 30, 2010
                                   -------------
                                                                 As
                                 As           Non-             Adjusted
                              Reported        GAAP            ---------
                              --------        Adj.
                                              ----
    Revenue                   $312,122                              $312,122
    Expense:
      Cost of services
       (exclusive of
       facility rent and
       depreciation and
       amortization shown
       separately below)       248,991         (89)(1)              248,902
      Facility rent--cost of
       services                  7,191                                 7,191
      General and
       administrative
       expense                  12,181                                12,181
      Depreciation and
       amortization              7,978          (369)(2)                7,609
                                 -----        ----------                -----
       Total expenses          276,341             (458)              275,883
    Income from operations      35,781               458               36,239
    Other income
     (expense):
      Interest expense          (4,588)                              (4,588)
      Interest income              130                                   130
                                   ---                                   ---
       Other expense, net       (4,458)                              (4,458)
    Income before
     provision for income
     taxes                      31,323               458               31,781
    Provision for income                             181
     taxes                      12,356               (3)               12,537
                                ------            ------               ------
    Net income                 $18,967               277              $19,244
                               =======               ===              =======
    Net income per share:
      Basic                      $0.92                                 $0.93
                                 =====                                 =====
      Diluted                    $0.90                                 $0.91
                                 =====                                 =====
    Weighted average
     common shares
     outstanding:
      Basic                     20,713                                20,713
                                ======                                ======
      Diluted                   21,103                                21,103
                                ======                                ======


    (1) Represents acquisition-related costs expenses.
    (2) Represents amortization costs related to patient base intangible
    assets acquired.  Patient base intangible assets are amortized over
    a period of four to eight months, depending on the classification of
    the patients and the level of occupancy in a new acquisition on the
    acquisition date.
    (3) Represents the tax impact of acquisition costs and patient base
    non-GAAP adjustments represented in entries (1) and (2).


                           THE ENSIGN GROUP, INC.
              RECONCILIATION OF NET INCOME TO EBITDA AND EBITDAR
                               (in thousands)
     The table below reconciles net income to EBITDA and EBITDAR for the
                             periods presented:


                                                    Three Months Ended
                                                            June 30,
                                                    ------------------
                                                 2010               2009
                                                 ----               ----
    Consolidated Statement of Income
     Data:
    Net income                                 $9,619             $8,184
    Interest expense, net                       2,245              1,072
    Provision for income taxes                  6,230              5,282
    Depreciation and amortization               4,023              3,209
                                                -----              -----
    EBITDA                                    $22,117            $17,747
                                              =======            =======
    Facility rent--cost of services              3,616              3,724
                                                -----              -----
    EBITDAR                                   $25,733            $21,471
                                              =======            =======


                                                     Six Months Ended
                                                           June 30,
                                                     ----------------
                                                 2010               2009
                                                 ----               ----
    Consolidated Statement of Income
     Data:
    Net income                                $18,967            $16,107
    Interest expense, net                       4,458              2,330
    Provision for income taxes                 12,356             10,560
    Depreciation and amortization               7,978              6,174
                                                -----              -----
    EBITDA(1)                                 $43,759            $35,171
                                              =======            =======
    Facility rent--cost of services              7,191              7,425
                                                -----              -----
    EBITDAR(1)                                $50,950            $42,596
                                              =======            =======

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


                                                                December
                                                     June 30,            31,
                                                           2010     2009
                                                           ----     ----
    Assets
    Current assets:
      Cash and cash equivalents                         $26,353  $38,855
      Accounts receivable                                72,678   62,606
      Prepaid income taxes                                1,245    1,242
      Prepaid expenses and other current assets           6,695    6,498
      Deferred tax asset-current                          8,868    8,126
                                                          -----    -----
        Total current assets                            115,839  117,327
    Property and equipment, net                         251,320  230,774
    Insurance subsidiary deposits and
     investments                                         15,397   13,810
    Escrow deposits                                           -    7,595
    Deferred tax asset                                    6,659    4,262
    Restricted and other assets                           6,036    5,650
    Intangible assets, net                                4,288    4,498
    Goodwill                                             10,524    7,432
    Other indefinite-lived intangibles                      672        -
                                                            ---      ---
        Total assets                                   $410,735 $391,348
                                                       ======== ========

    Liabilities and stockholders' equity
    Current liabilities:
      Accounts payable                                  $16,267  $15,498
      Accrued wages and related liabilities              27,538   28,756
      Accrued self-insurance
       liabilities-current                               10,500   10,074
      Other accrued liabilities                          13,442   15,375
      Current maturities of long-term debt                2,125    2,065
                                                          -----    -----
        Total current liabilities                        69,872   71,768
    Long-term debt-less current maturities              106,363  107,401
    Accrued self-insurance liabilities-less
     current portion                                     25,059   22,096
    Deferred rent and other long-term
     liabilities                                          2,897    2,524
    Stockholders' equity                                206,544  187,559
                                                        -------  -------
          Total liabilities and stockholders' equity   $410,735 $391,348
                                                       ======== ========



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

                                                   Six Months Ended
                                                       June 30,
                                                       --------
                                                  2010                  2009
                                                  ----                  ----
                                                    (In thousands)
    Net cash provided by operating activities  $14,903               $18,700
    Net cash used in investing activities      (25,153)             (24,072)
    Net cash used in financing activities       (2,252)               (2,267)
                                                ------                ------
    Net decrease in cash and cash equivalents  (12,502)               (7,639)
    Cash and cash equivalents at beginning of
     period                                     38,855                41,326
                                                ------                ------
    Cash and cash equivalents at end of period $26,353               $33,687
                                               =======               =======



                            THE ENSIGN GROUP, INC.
                        SELECT PERFORMANCE INDICATORS
                            (Dollars in thousands)
     The following table summarizes our selected performance indicators,
        along with other statistics, for each of the dates or periods
                                  indicated:


                                 Three Months Ended
                                      June 30,
                                      --------
                                 2010                2009  Change  % Change
                                 ----                ----  ------  --------
                                     (Dollars in
                                     thousands)
    Total Facility
     Results:
      Revenue                $157,948            $132,178  $25,770   19.5%
      Number of facilities
       at period end               81                  70       11   15.7%
      Actual patient days     667,858             576,738   91,120   15.8%
      Occupancy percentage -
       Operational beds          79.3%               79.4%          (0.1)%
      Skilled mix by nursing
       days                      24.8%               24.3%            0.5%
      Skilled mix by nursing
       revenue                   48.2%               48.0%            0.2%




                               Three Months Ended
                                    June 30,
                                    --------
                               2010                2009  Change  % Change
                               ----                ----  ------  --------
                                   (Dollars in
                                   thousands)
    Same Facility
     Results(1):
      Revenue              $120,899            $116,296   $4,603    4.0%
      Number of facilities
       at period end             56                  56        -      -  %
      Actual patient days   488,508             495,981  (7,473)  (1.5)%
      Occupancy percentage
       - Operational beds      82.5%               81.6%            0.9%
      Skilled mix by
       nursing days            28.6%               25.9%            2.7%
      Skilled mix by
       nursing revenue         52.9%               50.1%            2.8%




                                 Three Months Ended
                                      June 30,
                                      --------
                                2010               2009  Change  % Change
                                ----               ----  ------  --------
                                     (Dollars in
                                     thousands)
    Transitioning Facility
     Results(2):
      Revenue                 $8,753             $7,924     $829   10.5%
      Number of facilities at
       period end                  6                  6        -      -  %
      Actual patient days     40,901             39,249    1,652    4.2%
      Occupancy percentage -
       Operational beds         70.6%              67.7%            2.9%
      Skilled mix by nursing
       days                     18.5%              18.2%            0.3%
      Skilled mix by nursing
       revenue                  39.7%              41.7%          (2.0)%




                                  Three Months Ended
                                       June 30,
                                       --------
                                 2010               2009  Change  % Change
                                 ----               ----  ------  --------
                                      (Dollars in
                                      thousands)
    Recently Acquired
     Facility Results(3):
      Revenue                 $28,296             $7,958  $20,338     NM  %
      Number of facilities at
       period end                  19                  7       12     NM  %
      Actual patient days     138,449             41,508   96,941     NM  %
      Occupancy percentage -
       Operational beds          72.2%              68.1%            4.1%
      Skilled mix by nursing
       days                      13.5%              10.8%            2.7%
      Skilled mix by nursing
       revenue                   29.5%              23.3%            6.2%



             Same Facility results represent all facilities purchased prior to
             January 1, 2007. Same Facility results for 2009 include the
             results of operations through June 30, 2009 of our assisted
             living facility in Arizona. We decided not to exercise our
             renewal option on the lease which expired on September 30, 2009.
              The reduction in the number of actual and available patient
    (1)       days primarily relates to the non-renewal of this lease.

             Transitioning Facility results represents all facilities
    (2)      purchased from January 1, 2007 to December 31, 2008.

             Recently Acquired Facility (or "Acquisitions") results represent
    (3)      all facilities purchased on or subsequent to January 1, 2009.



                            THE ENSIGN GROUP, INC.
                        SELECT PERFORMANCE INDICATORS
                            (Dollars in thousands)
     The following table summarizes our selected performance indicators,
        along with other statistics, for each of the dates or periods
                                  indicated:


                                Six Months Ended
                                    June 30,
                                    --------
                                2010                 2009  Change  % Change
                                ----                 ----  ------  --------
                                   (Dollars in
                                   thousands)
    Total Facility
     Results:
      Revenue               $312,122             $262,463  $49,659   18.9%
      Number of facilities
       at period end              81                   70        9   12.9%
      Actual patient days  1,316,942            1,143,357  173,585   15.2%
      Occupancy percentage
       - Operational beds       79.4%                79.6%          (0.2)%
      Skilled mix by
       nursing days             25.4%                24.8%            0.6%
      Skilled mix by
       nursing revenue          49.0%                48.3%            0.7%




                          Six Months Ended
                              June 30,
                              --------
                         2010                2009  Change     % Change
                         ----                ----  ------     --------
                             (Dollars in
                             thousands)
    Same Facility
     Results(1):
      Revenue        $242,049            $232,600     $9,449       4.1%
      Number of
       facilities at
       period end          56                  56          -         -  %
      Actual patient
       days           974,009             992,838    (18,829)    (1.9)%
      Occupancy
       percentage -
       Operational
       beds              82.6%               82.0%                 0.6%
      Skilled mix by
       nursing days      29.0%               26.3%                 2.7%
      Skilled mix by
       nursing
       revenue           53.5%               50.2%                 3.3%




                                  Six Months Ended
                                      June 30,
                                      --------
                                2010               2009  Change  % Change
                                ----               ----  ------  --------
                                     (Dollars in
                                     thousands)
    Transitioning Facility
     Results(2):
      Revenue                $16,917            $16,164     $753    4.7%
      Number of facilities
       at period end               6                  6        -      -  %
      Actual patient days     80,878             78,041    2,837    3.6%
      Occupancy percentage -
       Operational beds         70.2%              67.7%            2.5%
      Skilled mix by nursing
       days                     18.7%              18.7%              -  %
      Skilled mix by nursing
       revenue                  40.0%              43.2%          (3.2)%




                                   Six Months Ended
                                       June 30,
                                       --------
                                 2010               2009  Change  % Change
                                 ----               ----  ------  --------
                                      (Dollars in
                                      thousands)
    Recently Acquired
     Facility Results(3):
      Revenue                 $53,156            $13,699  $39,457     NM  %
      Number of facilities at
       period end                  19                  7       12     NM  %
      Actual patient days     262,055             72,478  189,577     NM  %
      Occupancy percentage -
       Operational beds          71.8%              65.9%            5.9%
      Skilled mix by nursing
       days                      14.2%               9.6%            4.6%
      Skilled mix by nursing
       revenue                   30.6%              20.8%            9.8%




             Same Facility results represent all facilities purchased prior
             to January 1, 2007. Same Facility results for 2009 include the
             results of operations through June 30, 2009 of our assisted
             living facility in Arizona. We decided not to exercise our
             renewal option on the lease which expired on September 30,
             2009.  The reduction in the number of actual and available
             patient days primarily relates to the non-renewal of this
    (1)      lease.
             Transitioning Facility results represents all facilities
    (2)      purchased from January 1, 2007 to December 31, 2008.
             Recently Acquired Facility (or "Acquisitions") results represent
    (3)      all facilities purchased on or subsequent to January 1, 2009.




                           THE ENSIGN GROUP, INC.
      SKILLED NURSING AVERAGE DAILY REVENUE RATES AND REVENUE BY PAYOR
       The following table reflects the change in the skilled nursing
     average daily revenue rates by payor source, excluding therapy and
      other ancillary services that are not covered by the daily rate:



                                    Three Months Ended
                                         June 30,
                                         --------
                                       Same Facility
                                       -------------
                                                           %
                              2010                    2009             Change
    Skilled Nursing
     Average Daily
     Revenue Rates:
    Medicare                $551.53         $552.06               --  %
    Managed care             343.52          340.15             1.0%
    Other skilled            543.60          620.88          (12.4)%
      Total skilled revenue  469.43          470.83           (0.3)%
    Medicaid                 163.44          160.44             1.9%
    Private and other
     payors                  189.80          185.21             2.5%
      Total skilled nursing
       revenue              $253.53         $243.42             4.2%



                                     Six Months Ended
                                         June 30,
                                         --------
                                       Same Facility
                                       -------------
                                                           %
                               2010                   2009           Change
    Skilled Nursing Average
     Daily Revenue Rates:
    Medicare                 $553.30        $543.66             1.8%
    Managed care              341.68         334.46             2.2%
    Other skilled             547.19         632.38          (13.5)%
      Total skilled revenue   469.74         463.42             1.4%
    Medicaid                  163.86         160.95             1.8%
    Private and other payors  187.63         183.81             2.1%
      Total skilled nursing
       revenue               $254.99        $243.14             4.9%


    The following table sets forth our total revenue by payor source and
    as a percentage of total revenue for the periods indicated:


                          Three Months Ended
                               June 30,
                               --------
                                 2010                  2009
                                 ----                  ----
                        $         %                 $  %
                      ---       ---               --- ---
    Revenue:
    Medicaid      $64,002        40.5%        $53,603  40.6%
    Medicare       50,589        32.1          43,156  32.7
    Medicaid-
     skilled        4,624         2.9           2,705   2.0
                    -----         ---           -----   ---
      Total       119,215        75.5          99,464  75.3
    Managed Care   20,222        12.8          17,182  13.0
    Private and
     Other         18,511        11.7          15,532  11.7
                   ------        ----          ------  ----
      Total
       revenue   $157,948       100.0%       $132,178 100.0%
                 ========       =====        ======== =====



                          Six Months Ended
                              June 30,
                              --------
                              2010                   2009
                              ----                   ----
                        $   %                     $   %
                      --- ---                   ---  ---
    Revenue:
    Medicaid     $125,656  40.3     %      $105,839  40.3%
    Medicare      101,711  32.6              86,362  32.9
    Medicaid-
     skilled        9,041   2.9               4,988   1.9
                    -----   ---               -----   ---
      Total       236,408  75.8             197,189  75.1
    Managed Care   40,791  13.0              34,679  13.2
    Private and
     Other         34,923  11.2              30,595  11.7
                   ------  ----              ------  ----
      Total
       revenue   $312,122 100.0     %      $262,463 100.0%
                 ======== =====            ======== =====

Discussion of Non-GAAP Financial Measures

EBITDA consists of net income before (a) interest expense, net, (b) provisions for income taxes, and (c) depreciation and amortization. EBITDAR consists of net income before (a) interest expense, net, (b) provisions for income taxes, (c) depreciation and amortization, and (d) facility rent-cost of services. The Company believes that the presentation of EBITDA and EBITDAR provides important supplemental information to management and investors to evaluate the Company's operating performance. The Company believes disclosure of adjusted non-GAAP net income and non-GAAP diluted earnings per share has economic substance because the excluded expenses are infrequent in nature and are variable in nature, or do not represent current 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 Report on Form 10-Q filed today with the SEC. The Form 10-Q is 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.

SOURCE The Ensign Group, Inc.

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