News Release Details
The Ensign Group Reports First Quarter 2012 Adjusted Earnings of $0.61 per Share
(Logo: http://photos.prnewswire.com/prnh/20071213/LATH168LOGO)
Financial highlights for the First Quarter include:
- Consolidated revenues were a record
$202.2 million , up 10.5%; - Consolidated EBITDAR was a record
$33.6 million , an increase of 3.9% over the prior year quarter and an increase of 16.8% sequentially, in spite of the 11.1%October 1 Medicare cuts and changes to therapy regulations which increased therapy costs; - Consolidated EBITDA was a record
$30.3 million , an increase of 5.4% over the prior year quarter and an increase of 19.1% sequentially; - Adjusted net income climbed 230 basis points to
$13.2 million , while adjusted earnings per share exceeded the prior year quarter at$0.61 per share compared to$0.60 per share, and were up 26.6% sequentially, compared to$0.48 per share in Q4, while GAAP results were up 124 basis points to$12.9 million , matching Q1 2011 at$0.59 , and up 24.6% from$0.48 in the immediately preceding quarter; and - Same-store occupancy grew by 44 basis points over the prior year quarter, and by 169 basis points sequentially, to 83.6%, with
Medicare days increasing by 363 basis points over the prior year quarter.
Operating Results
Ensign posted record operating results across most metrics despite the recent and unprecedented 11.1% reduction in
"Although the work of mitigating the October Medicare cuts and therapy changes is far from over, we are gratified that our facilities and their residents have benefitted from the concerted and unified efforts of the finest operational leaders and teams in the profession, who have already made up much of the ground lost last year," said Ensign's President and Chief Executive Officer
In other results, Chief Financial Officer
She added that, notwithstanding the quarter-over-quarter decline in same-store skilled revenue, the same store-store facilities have shown marked progress in mitigating the 11.1% cut to
She also highlighted same-store revenue, which was only off by 1.4% in the quarter, despite the October Medicare cuts. "Increased occupancy in our same-store portfolio, especially as we grew
Fully diluted GAAP earnings per share were
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
2012 Guidance Affirmed
Management reaffirmed 2012 annual guidance, projecting revenues of
Quarter Highlights
Dividend Declared
During the quarter, the company's Board of Directors declared a quarterly cash dividend of
Growth by Acquisition
Also during the quarter and since, the company announced the acquisition of one skilled nursing facility, one assisted living facility, two home health businesses and a hospice business, in four separate transactions. The facilities and businesses were purchased with cash, and include:
- In
Idaho , Monte Vista Hills Healthcare Center, a 113-bed skilled nursing facility located in the growingPocatello market. - Also in
Nevada , Park Place Assisted Living, a 60-unit assisted living facility in the growingReno market. - In
Oregon ,Connected Home Health , a home health agency based inPortland . This acquisition represents Ensign's first foray into theOregon healthcare market. - In
Utah , Zion'sWay Home Health & Hospice , a thriving home care provider with multiple agencies inSouthern Utah andPage, Arizona .
The acquisitions brought Ensign's growing portfolio to 104 facilities, 79 of which are Ensign-owned, with Ensign affiliates holding purchase options on five of Ensign's 25 leased facilities, as well as four hospice companies and six home health businesses, spread over 11 states. Management reaffirmed that Ensign is actively seeking additional opportunities to acquire both well-performing and struggling long-term care, home health and hospice operations across
Urgent Care Joint Venture
In
On
Conference Call
A live webcast will be held on
About Ensign™
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
GAAP and ADJUSTED CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share data)
Three Months Ended | ||||||
| ||||||
Non- |
||||||
As |
GAAP |
As | ||||
Reported |
Adjust. |
Adjusted | ||||
Revenue |
$ 202,160 |
$ 202,160 | ||||
Expense: |
||||||
Cost of services (exclusive of facility rent and depreciation and amortization shown separately below) |
160,829 |
(315) |
(1)(2) |
160,514 | ||
Facility rent - cost of services |
3,321 |
(171) |
(3) |
3,150 | ||
General and administrative expense |
7,697 |
(256) |
(4) |
7,441 | ||
Depreciation and amortization |
6,924 |
(184) |
(5) |
6,740 | ||
Total Expense |
178,771 |
(926) |
177,845 | |||
Income from operations |
23,389 |
926 |
24,315 | |||
Other income (expense): |
||||||
Interest expense |
(2,925) |
(2,925) | ||||
Interest income |
51 |
51 | ||||
Other expense, net |
(2,874) |
(2,874) | ||||
Income before provision for income taxes |
20,515 |
926 |
21,441 | |||
Tax effect on Non-GAAP adjustments |
358 |
(6) |
||||
Tax true-up for effective tax rate |
252 |
(7) |
||||
Provision for income taxes |
7,687 |
610 |
8,297 | |||
Net Income |
12,828 |
316 |
13,144 | |||
Less: net (loss) attributable to noncontrolling interest |
(76) |
(76) | ||||
Net income attributable to |
12,904 |
316 |
13,220 | |||
Net income per share: |
||||||
|
$ 0.61 |
$ 0.62 | ||||
Diluted |
$ 0.59 |
$ 0.61 | ||||
Weighted average common shares outstanding: |
||||||
|
21,251 |
21,251 | ||||
Diluted |
21,796 |
21,796 |
(1) |
Represents acquisition-related costs of |
(2) |
Represents costs of |
(3) |
Represents normalized rent for a facility under an operating lease which the Company has begun construction activities, but has not commenced skilled nursing operations. |
(4) |
Represents legal costs incurred in connection with the ongoing investigation into the billing and reimbursement processes of some of our subsidiaries being conducted by the |
(5) |
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. |
(6) |
Represents the tax impact of non-GAAP adjustments noted in (1) — (5) at a normalized rate of approximately 39%. |
(7) |
In FY 2011 and 2010, the Company's effective tax rate was 38.3% and 39.3%, respectively. Therefore, this represents an adjustment to the provision for income taxes to normalize our current quarter effective rate to approximately 39%. |
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 | ||||||||
March 31, | ||||||||
2012 |
2011 | |||||||
Consolidated Statement of Income Data: |
||||||||
Net income attributable to |
$ |
12,904 |
$ |
12,746 |
||||
Net income (loss) attributable to noncontrolling interest |
(76) |
— |
||||||
Interest expense, net |
2,874 |
2,672 |
||||||
Provision for income taxes |
7,687 |
8,294 |
||||||
Depreciation and amortization |
6,924 |
5,059 |
||||||
EBITDA |
$ |
30,313 |
$ |
28,771 |
||||
Facility rent-cost of services |
3,321 |
3,616 |
||||||
EBITDAR |
$ |
33,634 |
$ |
32,387 |
||||
CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF CASH FLOWS
(In thousands)
|
December 31, | |||||||
2012 |
2011 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ |
32,618 |
$ |
29,584 |
||||
Accounts receivable-less allowance for doubtful accounts of |
94,050 |
86,311 |
||||||
Prepaid income taxes |
246 |
5,882 |
||||||
Prepaid expenses and other current assets |
7,373 |
7,667 |
||||||
Deferred tax asset-current |
8,676 |
11,195 |
||||||
Total current assets |
142,963 |
140,639 |
||||||
Property and equipment, net |
410,773 |
403,862 |
||||||
Insurance subsidiary deposits and investments |
17,168 |
16,752 |
||||||
Escrow deposits |
2,940 |
175 |
||||||
Deferred tax asset |
4,380 |
3,514 |
||||||
Restricted and other assets |
11,975 |
10,418 |
||||||
Intangible assets, net |
5,197 |
2,321 |
||||||
Goodwill |
19,901 |
17,177 |
||||||
Other indefinite-lived intangibles |
9,911 |
1,481 |
||||||
Total assets |
$ |
625,208 |
$ |
596,339 |
||||
Liabilities and stockholders' equity Current liabilities: |
||||||||
Accounts payable |
$ |
16,603 |
$ |
21,169 |
||||
Accrued wages and related liabilities |
33,565 |
41,958 |
||||||
Accrued self-insurance liabilities-current |
12,946 |
12,369 |
||||||
Other accrued liabilities |
16,912 |
18,577 |
||||||
Current maturities of long-term debt |
7,028 |
6,314 |
||||||
Total current liabilities |
87,054 |
100,387 |
||||||
Long-term debt-less current maturities |
195,826 |
181,556 |
||||||
Accrued self-insurance liabilities-less current portion |
32,942 |
31,904 |
||||||
Fair value of interest rate swap |
2,150 |
2,143 |
||||||
Deferred rent and other long-term liabilities |
3,206 |
2,864 |
||||||
Total Liabilities |
321,178 |
318,854 |
||||||
Temporary equity - redeemable noncontrolling interest |
11,581 |
— |
||||||
Stockholders' equity |
292,449 |
277,485 |
||||||
Total liabilities and stockholders' equity |
$ |
625,208 |
$ |
596,339 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
The following table presents selected data from our condensed consolidated statement of cash flows for the periods presented:
Three Months Ended | ||||||||
March 31, | ||||||||
2012 |
2011 | |||||||
Net cash provided by operating activities |
$ |
5,318 |
$ |
18,689 |
||||
Net cash used in investing activities |
(18,321) |
(39,219) |
||||||
Net cash provided by financing activities |
16,037 |
(585) |
||||||
Net increase (decrease) in cash and cash equivalents |
3,034 |
(21,115) |
||||||
Cash and cash equivalents at beginning of period |
29,584 |
72,088 |
||||||
Cash and cash equivalents at end of period |
$ |
32,618 |
$ |
50,973 |
SELECT PERFORMANCE INDICATORS
(Dollars in thousands)
The following tables summarize our selected performance indicators, along with other statistics, for each of the dates or periods indicated:
Three Months Ended |
|||||||||||||||
March 31, |
|||||||||||||||
2012 |
2011 |
||||||||||||||
(Dollars in thousands) |
Change |
% Change | |||||||||||||
Total Facility Results: |
|||||||||||||||
Revenue |
$ |
202,160 |
$ |
182,943 |
$ |
19,217 |
10.5 |
% | |||||||
Number of facilities at period end |
104 |
86 |
18 |
20.9 |
% | ||||||||||
Actual patient days |
851,511 |
731,485 |
120,026 |
16.4 |
% | ||||||||||
Occupancy percentage - Operational beds |
79.8 |
% |
80.6 |
% |
(0.8) |
% | |||||||||
Skilled mix by nursing days |
26.3 |
% |
26.2 |
% |
0.1 |
% | |||||||||
Skilled mix by nursing revenue |
50.5 |
% |
52.8 |
% |
(2.3) |
% | |||||||||
Three Months Ended |
|||||||||||||||
March 31, |
|||||||||||||||
2012 |
2011 |
||||||||||||||
(Dollars in thousands) |
Change |
% Change | |||||||||||||
Same Facility Results(1): |
|||||||||||||||
Revenue |
$ |
141,313 |
$ |
143,333 |
$ |
(2,020) |
(1.4) |
% | |||||||
Number of facilities at period end |
62 |
62 |
— |
— |
% | ||||||||||
Actual patient days |
540,265 |
533,537 |
6,728 |
1.3 |
% | ||||||||||
Occupancy percentage - Operational beds |
83.5 |
% |
83.1 |
% |
0.4 |
% | |||||||||
Skilled mix by nursing days |
29.9 |
% |
29.5 |
% |
0.4 |
% | |||||||||
Skilled mix by nursing revenue |
54.5 |
% |
56.6 |
% |
(2.1) |
% | |||||||||
Three Months Ended |
|||||||||||||||
March 31, |
|||||||||||||||
2012 |
2011 |
||||||||||||||
(Dollars in thousands) |
Change |
% Change | |||||||||||||
Transitioning Facility Results(2): |
|||||||||||||||
Revenue |
$ |
35,843 |
$ |
34,309 |
$ |
1,534 |
4.5 |
% | |||||||
Number of facilities at period end |
20 |
20 |
— |
— |
% | ||||||||||
Actual patient days |
161,983 |
161,275 |
708 |
0.4 |
% | ||||||||||
Occupancy percentage - Operational beds |
73.7 |
% |
74.2 |
% |
(0.5) |
% | |||||||||
Skilled mix by nursing days |
17.8 |
% |
15.3 |
% |
2.5 |
% | |||||||||
Skilled mix by nursing revenue |
38.2 |
% |
36.2 |
% |
2.0 |
% | |||||||||
Three Months Ended |
|||||||||||||||
March 31, |
|||||||||||||||
2012 |
2011 |
||||||||||||||
(Dollars in thousands) |
Change |
% Change | |||||||||||||
Recently Acquired Facility Results(3): |
|||||||||||||||
Revenue |
$ |
25,004 |
$ |
5,301 |
$ |
19,703 |
NM | ||||||||
Number of facilities at period end |
22 |
4 |
18 |
NM | |||||||||||
Actual patient days |
149,263 |
36,673 |
112,590 |
NM | |||||||||||
Occupancy percentage - Operational beds |
74.4 |
% |
75.6 |
% |
NM | ||||||||||
Skilled mix by nursing days |
18.0 |
% |
15.7 |
% |
NM | ||||||||||
Skilled mix by nursing revenue |
40.6 |
% |
36.8 |
% |
NM |
(1) |
Same Facility results represent all facilities purchased prior to January 1, 2009. |
(2) |
Transitioning Facility results represents all facilities purchased from January 1, 2009 to December 31, 2010. |
(3) |
Recently Acquired Facility (or "Acquisitions") results represent all facilities purchased on or subsequent to January 1, 2011. |
SKILLED NURSING AVERAGE DAILY REVENUE RATES AND
PERCENT OF SKILLED NURSING REVENUE AND DAYS BY PAYOR
The following table reflects the change in the skilled nursing average daily revenue rates by payor source, excluding services that are not covered by the daily rate:
Three Months Ended | |||||||||||||||||||||||||||||||||||
Same Facility |
Transitioning |
Acquisitions |
Total |
% | |||||||||||||||||||||||||||||||
2012 |
2011 |
2012 |
2011 |
2012 |
2011 |
2012 |
2011 |
Change | |||||||||||||||||||||||||||
Skilled Nursing Average Daily Revenue Rates: |
|||||||||||||||||||||||||||||||||||
|
$ |
560.38 |
$ |
637.92 |
$ |
485.50 |
$ |
524.47 |
$ |
476.76 |
$ |
448.34 |
$ |
540.27 |
$ |
615.61 |
(12.2) |
% | |||||||||||||||||
Managed care |
365.30 |
367.48 |
411.41 |
425.79 |
441.12 |
477.61 |
372.48 |
372.22 |
0.1 |
% | |||||||||||||||||||||||||
Other skilled |
568.25 |
534.66 |
568.36 |
517.62 |
— |
— |
568.27 |
533.65 |
6.5 |
% | |||||||||||||||||||||||||
Total skilled revenue |
488.49 |
527.95 |
470.90 |
502.37 |
471.35 |
450.79 |
484.89 |
523.61 |
(7.4) |
% | |||||||||||||||||||||||||
|
169.90 |
166.60 |
163.92 |
158.23 |
144.05 |
131.22 |
166.28 |
163.86 |
1.5 |
% | |||||||||||||||||||||||||
Private and other payors |
199.62 |
186.91 |
171.95 |
170.54 |
162.60 |
160.64 |
183.52 |
180.95 |
1.4 |
% | |||||||||||||||||||||||||
Total skilled nursing revenue |
$ |
268.20 |
$ |
275.46 |
$ |
219.60 |
$ |
212.67 |
$ |
209.49 |
$ |
191.84 |
$ |
252.29 |
$ |
260.25 |
(3.1) |
% |
The following tables set forth our percentage of skilled nursing patient revenue and days by payor source for the three months ended
Three Months Ended | ||||||||||||||||||||||||
Same Facility |
Transitioning |
Acquisitions |
Total | |||||||||||||||||||||
2012 |
2011 |
2012 |
2011 |
2012 |
2011 |
2012 |
2011 | |||||||||||||||||
Percentage of Skilled Nursing Revenue: |
||||||||||||||||||||||||
|
35.5 |
% |
38.2 |
% |
27.1 |
% |
28.5 |
% |
34.8 |
% |
33.6 |
% |
34.0 |
% |
36.5 |
% | ||||||||
Managed care |
15.1 |
15.2 |
8.6 |
6.8 |
5.8 |
3.2 |
13.2 |
13.6 |
||||||||||||||||
Other skilled |
3.9 |
3.2 |
2.5 |
0.9 |
— |
— |
3.3 |
2.7 |
||||||||||||||||
Skilled mix |
54.5 |
56.6 |
38.2 |
36.2 |
40.6 |
36.8 |
50.5 |
52.8 |
||||||||||||||||
Private and other payors |
7.2 |
7.2 |
9.6 |
10.8 |
26.7 |
30.1 |
9.5 |
8.3 |
||||||||||||||||
Quality mix |
61.7 |
63.8 |
47.8 |
47.0 |
67.3 |
66.9 |
60.0 |
61.1 |
||||||||||||||||
|
38.3 |
36.2 |
52.2 |
53.0 |
32.7 |
33.1 |
40.0 |
38.9 |
||||||||||||||||
Total skilled nursing |
100.0 |
% |
100.0 |
% |
100.0 |
% |
100.0 |
% |
100.0 |
% |
100.0 |
% |
100.0 |
% |
100.0 |
% | ||||||||
Three Months Ended | ||||||||||||||||||||||||
Same Facility |
Transitioning |
Acquisitions |
Total | |||||||||||||||||||||
2012 |
2011 |
2012 |
2011 |
2012 |
2011 |
2012 |
2011 | |||||||||||||||||
Percentage of Skilled Nursing Days: |
||||||||||||||||||||||||
|
17.0 |
% |
16.5 |
% |
12.2 |
% |
11.5 |
% |
15.3 |
% |
14.4 |
% |
15.9 |
% |
15.4 |
% | ||||||||
Managed care |
11.1 |
11.4 |
4.6 |
3.4 |
2.7 |
1.3 |
8.9 |
9.4 |
||||||||||||||||
Other skilled |
1.8 |
1.6 |
1.0 |
0.4 |
— |
— |
1.5 |
1.4 |
||||||||||||||||
Skilled mix |
29.9 |
29.5 |
17.8 |
15.3 |
18.0 |
15.7 |
26.3 |
26.2 |
||||||||||||||||
Private and other payors |
9.8 |
10.7 |
12.2 |
13.5 |
34.5 |
35.9 |
13.0 |
12.0 |
||||||||||||||||
Quality mix |
39.7 |
40.2 |
30.0 |
28.8 |
52.5 |
51.6 |
39.3 |
38.2 |
||||||||||||||||
|
60.3 |
59.8 |
70.0 |
71.2 |
47.5 |
48.4 |
60.7 |
61.8 |
||||||||||||||||
Total skilled nursing |
100.0 |
% |
100.0 |
% |
100.0 |
% |
100.0 |
% |
100.0 |
% |
100.0 |
% |
100.0 |
% |
100.0 |
% | ||||||||
REVENUE BY PAYOR SOURCE
The following table sets forth our total revenue by payor source and as a percentage of total revenue for the periods indicated:
Three Months Ended March 31, | ||||||||||||||
2012 |
2011 | |||||||||||||
$ |
% |
$ |
% | |||||||||||
Revenue: |
||||||||||||||
|
$ |
73,583 |
36.4 |
% |
$ |
66,225 |
36.2 |
% | ||||||
|
69,794 |
34.5 |
67,643 |
37.0 |
||||||||||
|
5,861 |
2.9 |
4,411 |
2.4 |
||||||||||
Total |
149,238 |
73.8 |
138,279 |
75.6 |
||||||||||
Managed Care |
25,692 |
12.7 |
24,141 |
13.2 |
||||||||||
Private and Other |
27,230 |
13.5 |
20,523 |
11.2 |
||||||||||
Total revenue |
$ |
202,160 |
100.0 |
% |
$ |
182,943 |
100.0 |
% | ||||||
Discussion of Non-GAAP Financial Measures
EBITDA consists of net income before (a) net losses attributable to noncontrolling interest (b) interest expense, net, (c) provisions for income taxes, and (d) depreciation and amortization. EBITDAR consists of EBITDA less 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
SOURCE
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