News Release Details
The Ensign Group Reports Fourth Quarter and Fiscal Year 2018 Results
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 .
- See "Reconciliation of GAAP to Non-GAAP Financial Information".
- 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.
- 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
“Our other lines of business continue to quietly create significant value,” Christensen stated. He noted that
Management also provided its 2019 annual guidance with earnings of between
Chief Financial Officer
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
Quarter Highlights
During the quarter, the Company paid a quarterly cash dividend of
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,
Ensign’s senior living portfolio company also acquired the operations of four assisted living facilities in the
Also during the quarter,
Lastly, in January, the Company announced that it acquired the real estate and operations of
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
Conference Call
A live webcast will be held
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
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
Contact Information
Investor/Media Relations, The
SOURCE: The
THE ENSIGN GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) |
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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) |
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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) |
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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 table sets forth our total revenue by segment and as a percentage of total revenue for the periods indicated: | |||||||||||||||||||||||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||||||||||||||
2018 (As Reported) | 2018 adjusted to reflect prior revenue guidance |
2017 |
2018 (As Reported) | 2018 adjusted to reflect prior revenue guidance |
2017 |
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$ | % | $ | % | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | ||||||||||||||||||||||||||||||||||
Transitional and skilled services | $ | 441,714 | 82.1 | % | $ | 448,518 | 82.3 | % | $ | 403,533 | 82.7 | % | $ | 1,679,012 | 82.3 | % | $ | 1,709,988 | 82.5 | % | $ | 1,545,210 | 83.6 | % | |||||||||||
Assisted and independent living services | 40,462 | 7.5 | % | 40,462 | 7.4 | % | 35,836 | 7.4 | % | 151,797 | 7.4 | % | 151,797 | 7.3 | % | 136,646 | 7.4 | % | |||||||||||||||||
Home health and hospice services: | |||||||||||||||||||||||||||||||||||
Home health | 22,614 | 4.2 | % | 22,882 | 4.2 | % | 20,048 | 4.1 | % | 86,379 | 4.2 | % | 87,728 | 4.2 | % | 73,045 | 3.9 | % | |||||||||||||||||
Hospice | 21,579 | 4.0 | % | 21,581 | 4.0 | % | 19,636 | 4.0 | % | 82,658 | 4.1 | % | 83,143 | 4.0 | % | 69,358 | 3.8 | % | |||||||||||||||||
Total home health and hospice services | 44,193 | 8.2 | % | 44,463 | 8.2 | % | 39,684 | 8.1 | % | 169,037 | 8.3 | % | 170,871 | 8.2 | % | 142,403 | 7.7 | % | |||||||||||||||||
All other (1) | 11,406 | 2.2 | % | 11,406 | 2.1 | % | 8,652 | 1.8 | % | 40,813 | 2.0 | % | 40,813 | 2.0 | % | 25,058 | 1.3 | % | |||||||||||||||||
Total revenue | $ | 537,775 | 100.0 | % | $ | 544,849 | 100.0 | % | $ | 487,705 | 100.0 | % | $ | 2,040,659 | 100.0 | % | $ | 2,073,469 | 100.0 | % | $ | 1,849,317 | 100.0 | % | |||||||||||
(1) Includes revenue from services generated in 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 | |||||||||||||
(Dollars in thousands) | Change | % Change | ||||||||||||
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 | |||||||||||||
(Dollars in thousands) | Change | % Change | ||||||||||||
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 | |||||||||||||
(Dollars in thousands) | Change | % Change | ||||||||||||
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 | |||||||||||||
(Dollars in thousands) | Change | % Change | ||||||||||||
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 independently 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. |
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(2) Transitioning Facility results represents all facilities purchased from January 1, 2015 to December 31, 2016. |
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(3) Recently Acquired Facility (Acquisitions) results represent all facilities purchased on or subsequent to January 1, 2017. |
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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 | 0.0 | % | 34.3 | % | NM | |||||||||
Skilled mix by nursing days | 0.0 | % | 46.7 | % | NM | |||||||||
Skilled mix by nursing revenue | 0.0 | % | 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. |
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(2) Transitioning Facility results represent all facilities purchased from January 1, 2015 to December 31, 2016. |
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(3) Recently Acquired Facility (Acquisitions) results represent all facilities purchased on or subsequent to January 1, 2017. |
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(4) Facility Closed results represent 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: | |||||||||||||||||||||||
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 ended 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 periods indicated: | |||||||||||||
Three Months Ended December 31, | |||||||||||||
2018 | 2017 | Change | % Change | ||||||||||
(Dollars in thousands) | |||||||||||||
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 | $ | 2,792 | $ | 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 | ||||||||||||
(Unaudited) | ||||||||||||
The following tables summarize our selected performance indicators for our home health and hospice segment along with other statistics, for each of the periods indicated: | ||||||||||||
Three Months Ended December 31, | ||||||||||||
2018 | 2017 | Change | % Change | |||||||||
(Dollars in thousands) | ||||||||||||
Home health and hospice revenue: | ||||||||||||
Home health services | $ | 22,614 | $ | 20,048 | $ | 2,566 | 12.8 | % | ||||
Hospice services | 21,579 | 19,636 | 1,943 | 9.9 | % | |||||||
Total home health and hospice revenue | $ | 44,193 | $ | 39,684 | $ | 4,509 | 11.4 | % | ||||
Adjusted to reflect prior revenue guidance | ||||||||||||
Home health and hospice revenue | ||||||||||||
Home health services | $ | 22,882 | $ | 20,048 | $ | 2,834 | 14.1 | % | ||||
Hospice services | 21,581 | 19,636 | 1,945 | 9.9 | % | |||||||
Total home health and hospice revenue | $ | 44,463 | $ | 39,684 | $ | 4,779 | 12.0 | % | ||||
Home health services: | ||||||||||||
Average medicare revenue per completed episode | $ | 3,027 | $ | 2,985 | $ | 42 | 1.4 | % | ||||
Hospice services: | ||||||||||||
Average daily census | 1,386 | 1,229 | 157 | 12.8 | % | |||||||
Home health and hospice agencies | 54 | 46 | 8 | 17.4 | % | |||||||
Year Ended December 31, | ||||||||||||
2018 | 2017 | Change | % Change | |||||||||
(Dollars in thousands) | ||||||||||||
Home health and hospice revenue | ||||||||||||
Home health services | $ | 86,379 | $ | 73,045 | $ | 13,334 | 18.3 | % | ||||
Hospice services | 82,658 | 69,358 | 13,300 | 19.2 | % | |||||||
Total home health and hospice revenue | $ | 169,037 | $ | 142,403 | $ | 26,634 | 18.7 | % | ||||
Adjusted to reflect prior revenue guidance | ||||||||||||
Home health and hospice revenue | ||||||||||||
Home health services | $ | 87,728 | $ | 73,045 | $ | 14,683 | 20.1 | % | ||||
Hospice services | 83,143 | 69,358 | 13,785 | 19.9 | % | |||||||
Total home health and hospice revenue | $ | 170,871 | $ | 142,403 | $ | 28,468 | 20.0 | % | ||||
Home health services: | ||||||||||||
Average medicare revenue per completed episode | $ | 2,982 | $ | 3,028 | $ | (46 | ) | -1.5 | % | |||
Hospice services: | ||||||||||||
Average daily census | 1,329 | 1,102 | 227 | 20.6 | % | |||||||
Home health and hospice agencies | 54 | 46 | 8 | 17.4 | % | |||||||
THE ENSIGN GROUP, INC. | ||||||||||||||||||||||||||||||||||||
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 December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||||||||
2018 As Reported | 2018 adjusted to reflect prior revenue guidance |
2017 |
2018 As Reported | 2018 adjusted to reflect prior revenue guidance |
2017 |
|||||||||||||||||||||||||||||||
$ | % | $ | % | $ | % | $ | % | $ | % | $ | % | |||||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||||||||||||
Medicaid | $ | 198,030 | 36.8 | % | $ | 200,289 | 36.8 | % | $ | 174,795 | 35.8 | % | $ | 727,310 | 35.6 | % | $ | 738,179 | 35.6 | % | $ | 644,803 | 34.9 | % | ||||||||||||
Medicare | 142,896 | 26.6 | % | 143,081 | 26.3 | % | 130,465 | 26.8 | % | 552,577 | 27.1 | % | 556,159 | 26.8 | % | 515,884 | 27.9 | % | ||||||||||||||||||
Medicaid-skilled | 31,662 | 5.9 | % | 32,073 | 5.8 | % | 27,208 | 5.6 | % | 117,686 | 5.8 | % | 119,667 | 5.8 | % | 102,875 | 5.6 | % | ||||||||||||||||||
Total | 372,588 | 69.3 | % | 375,443 | 68.9 | % | 332,468 | 68.2 | % | 1,397,573 | 68.5 | % | 1,414,005 | 68.2 | % | 1,263,562 | 68.4 | % | ||||||||||||||||||
Managed Care | 82,263 | 15.3 | % | 83,485 | 15.3 | % | 78,176 | 16.0 | % | 326,325 | 16.0 | % | 333,197 | 16.1 | % | 303,386 | 16.4 | % | ||||||||||||||||||
Private and Other(1) | 82,924 | 15.4 | % | 85,921 | 15.8 | % | 77,061 | 15.8 | % | 316,761 | 15.5 | % | 326,267 | 15.7 | % | 282,369 | 15.2 | % | ||||||||||||||||||
Total revenue | $ | 537,775 | 100.0 | % | $ | 544,849 | 100.0 | % | $ | 487,705 | 100.0 | % | $ | 2,040,659 | 100.0 | % | $ | 2,073,469 | 100.0 | % | $ | 1,849,317 | 100.0 | % | ||||||||||||
(1) Private and other payors also includes revenue from all payors generated in our other ancillary services for the three months ended and year ended December 31, 2018 and 2017. | ||||||||||||||||||||||||||||||||||||
THE ENSIGN GROUP, INC. |
|||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION | |||||||||||||||
(In thousands, except per share data) | |||||||||||||||
(Unaudited) | |||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME | |||||||||||||||
Three Months Ended December 31, |
Year Ended December 31, |
||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income attributable to The Ensign Group, Inc. | $ | 26,360 | $ | 11,206 | $ | 92,364 | $ | 40,475 | |||||||
Non-GAAP adjustments | |||||||||||||||
Results related to facilities currently being constructed and other start-up operations(a) | 492 | 2,374 | 3,840 | 13,378 | |||||||||||
Charges related to the settlement/(return of unclaimed class action settlement) of the class action lawsuit | - | 14 | (1,664 | ) | 11,177 | ||||||||||
Share-based compensation expense(b) | 2,697 | 2,941 | 10,337 | 9,695 | |||||||||||
Results related to closed operations and operations not at full capacity, including continued obligations and closing expense(c) | 222 | 4 | 933 | 5,602 | |||||||||||
Bonus accrual as a result of the Tax Act(d) | - | 3,100 | - | 3,100 | |||||||||||
Losses/(business interruption gains) related to Hurricane Harvey and California fires(e) | - | 741 | (675 | ) | 1,299 | ||||||||||
Depreciation and amortization - patient base(f) | 91 | 180 | 242 | 733 | |||||||||||
General and administrative - transaction-related costs(g) | 23 | 100 | 361 | 717 | |||||||||||
COS - business interruption gains(h) | - | - | - | ||||||||||||
COS - Goodwill and long-lived assets impairment(h) | 4,632 | - | 7,809 | - | |||||||||||
Professional service fees(i) | - | 80 | - | 80 | |||||||||||
Provision for income taxes on non-GAAP adjustments(j) | (5,107 | ) | 344 | (11,416 | ) | (12,399 | ) | ||||||||
Non-GAAP net income | $ | 29,410 | $ | 21,084 | $ | 102,131 | $ | 73,857 | |||||||
Diluted Earnings Per Share As Reported | |||||||||||||||
Net income | $ | 0.48 | $ | 0.21 | $ | 1.70 | $ | 0.77 | |||||||
Average number of shares outstanding | 54,967 | 53,176 | 54,397 | 52,829 | |||||||||||
Adjusted Diluted Earnings Per Share | |||||||||||||||
Net income | 0.54 | 0.40 | 1.88 | 1.40 | |||||||||||
Average number of shares outstanding | 54,967 | 53,176 | 54,397 | 52,829 | |||||||||||
Footnotes: | |||||||||||||||
(a) Represents operating results for facilities currently being constructed and other start-up operations. | |||||||||||||||
Three Months Ended December 31, |
Year Ended December 31, |
||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenue | $ | (17,029 | ) | $ | (17,480 | ) | $ | (66,606 | ) | $ | (62,686 | ) | |||
Cost of services | 13,661 | 15,726 | 55,106 | 59,424 | |||||||||||
Rent | 3,627 | 3,865 | 14,377 | 15,559 | |||||||||||
Depreciation and amortization | 233 | 263 | 963 | 1,081 | |||||||||||
Total Non-GAAP adjustment | $ | 492 | $ | 2,374 | $ | 3,840 | $ | 13,378 | |||||||
(b) Represents share-based compensation expense incurred. | |||||||||||||||
Three Months Ended December 31, |
Year Ended December 31, |
||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Cost of services | $ | 1,494 | $ | 1,219 | $ | 5,665 | $ | 4,988 | |||||||
General and administrative | 1,203 | 1722 | 4,672 | 4,707 | |||||||||||
Total Non-GAAP adjustment | $ | 2,697 | $ | 2,941 | $ | 10,337 | $ | 9,695 | |||||||
(c) Represents results at closed operations and operations not at full capacity, including the fair value of continued obligation under the lease agreement and related closing expenses of $4.0 million for the year ended December 31, 2017. Included in the three months and year ended December 31, 2017 results is the loss recovery of $1.3 million of certain losses related to a closed facility in the prior year. | |||||||||||||||
Three Months Ended December 31, |
Year Ended December 31, |
||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenue | $ | - | $ | - | $ | - | $ | (2,805 | ) | ||||||
(Gains)/Losses related to operational closures | - | (410 | ) | - | 2,321 | ||||||||||
Cost of services | 137 | 321 | 601 | 5,115 | |||||||||||
Rent | 76 | 93 | 301 | 885 | |||||||||||
Depreciation and amortization | 9 | - | 31 | 86 | |||||||||||
Total Non-GAAP adjustment | $ | 222 | $ | 4 | $ | 933 | $ | 5,602 | |||||||
(d) Represent bonus accrual as a result of the Tax Act. | |||||||||||||||
Three Months Ended December 31, |
Year Ended December 31, |
||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Cost of services | - | 600 | - | 600 | |||||||||||
General and administrative | - | 2,500 | - | 2,500 | |||||||||||
Total Non-GAAP adjustment | $ | - | $ | 3,100 | $ | - | $ | 3,100 | |||||||
(e) Losses and business interruption recoveries related to Hurricane Harvey and California fires. | |||||||||||||||
Three Months Ended December 31, |
Year Ended December 31, |
||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenue | $ | - | $ | 870 | $ | - | $ | 638 | |||||||
Cost of services | - | (129 | ) | (675 | ) | 604 | |||||||||
Rent | - | - | - | 50 | |||||||||||
Depreciation and amortization | - | - | - | 7 | |||||||||||
Total Non-GAAP adjustment | $ | - | $ | 741 | $ | (675 | ) | $ | 1,299 | ||||||
(f) Included in depreciation and amortization are amortization expenses related to patient base intangible assets at newly acquired skilled nursing and assisted living facilities. | |||||||||||||||
(g) Included in general and administrative expense are costs incurred to acquire an operation which are not capitalizable. | |||||||||||||||
(h) Impairment charges to goodwill and long-lived assets at one of our other ancillary operations and two assisted living facilities. | |||||||||||||||
Three Months Ended December 31, |
Year Ended December 31, |
||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Cost of services | 4,632 | - | 8,285 | - | |||||||||||
Non-controlling interest | - | - | (476 | ) | - | ||||||||||
Total Non-GAAP adjustment | $ | 4,632 | $ | - | $ | 7,809 | $ | - | |||||||
(i) Included in general and administrative expense are professional fees associated with income tax rate credits, tax reform impacts and adoption of the new revenue recognition standard. | |||||||||||||||
(j) Represents an adjustment to the provision for income tax to our historical year to date effective tax rate of 25.0%, resulting from the adoption of the Tax Cuts and Jobs Act, for the three months and year ended December 31, 2018 and 35.5% for the three months and year ended December 31, 2017. | |||||||||||||||
THE ENSIGN GROUP, INC. | |||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION | |||||||||||||||
(In thousands) | |||||||||||||||
(Unaudited) | |||||||||||||||
The table below reconciles net income to EBITDA, Adjusted EBITDA and Adjusted EBITDAR for the periods presented: | |||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Consolidated Statements of Income Data: | |||||||||||||||
Net income | $ | 26,559 | $ | 11,222 | $ | 92,528 | $ | 40,833 | |||||||
Less: net income attributable to noncontrolling interests | 199 | 16 | 164 | 358 | |||||||||||
Interest expense, net | 3,125 | 2,963 | 13,119 | 12,007 | |||||||||||
Provision for income taxes | 4,763 | 11,958 | 22,841 | 28,445 | |||||||||||
Depreciation and amortization | 12,199 | 11,760 | 47,344 | 44,472 | |||||||||||
EBITDA | $ | 46,447 | $ | 37,887 | $ | 175,668 | $ | 125,399 | |||||||
Adjustments to EBITDA: | |||||||||||||||
Earnings related to operations in the start-up phase | (3,368 | ) | (1,753 | ) | (11,500 | ) | (3,261 | ) | |||||||
Charges related to the settlement/(return of unclaimed class action settlement) of the class action lawsuit and insurance claims | - | 14 | (1,664 | ) | 11,177 | ||||||||||
Share-based compensation expense | 2,697 | 2,941 | 10,337 | 9,695 | |||||||||||
Results related to closed operations and operations not at full capacity(a) | 137 | (88 | ) | 601 | 4,632 | ||||||||||
Bonus accrual as a result of the Tax Act | - | 3,100 | - | 3,100 | |||||||||||
Losses/(business insurance recoveries) related to Hurricane Harvey and California fires | - | 741 | (675 | ) | 1,242 | ||||||||||
Transaction-related costs(b) | 23 | 100 | 361 | 717 | |||||||||||
Professional service fee(c) | - | 80 | - | 80 | |||||||||||
Impairment of long-lived assets and goodwill(d) | 4,632 | - | 7,809 | - | |||||||||||
Rent related to items above | 3,703 | 3,959 | 14,678 | 16,495 | |||||||||||
Adjusted EBITDA | $ | 54,271 | $ | 46,981 | $ | 195,615 | $ | 169,276 | |||||||
Rent—cost of services | 35,339 | 33,652 | 138,512 | 131,919 | |||||||||||
Less: rent related to items above | (3,703 | ) | (3,959 | ) | (14,678 | ) | (16,495 | ) | |||||||
Adjusted EBITDAR | $ | 85,907 | $ | 76,674 | $ | 319,449 | $ | 284,700 | |||||||
(a) Represents results at closed operations and operations not at full capacity during the years ended December 31, 2018 and 2017; including the fair value of continued obligation under the lease agreement and related closing expenses of $4.0 million for the year ended December 31, 2017. Included in the year ended December 31, 2017 results is the loss recovery of $1.3 million of certain losses related to a closed facility in 2016. |
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(b) Costs incurred to acquire operations which are not capitalizable. | |||||||||||||||
(c) Professional fees associated with income tax credits, tax reform impacts and adoption of the new revenue recognition standard. |
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(d) Impairment charges of long-lived assets and goodwill during year ended December 31, 2018, excluding the impact of non-controlling interest of $0.5 million. Including the impact of noncontrolling interest, the impairment charge is $8.3 million. |
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THE ENSIGN GROUP, INC. | ||||||||||||||||||||||||||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION | ||||||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||
The table below reconciles net income from operations to EBITDA, Adjusted EBITDA and Adjusted EBITDAR for each reportable segment for the periods presented: | ||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||
Transitional and Skilled Services | Assisted and Independent Services | Home Health and Hospice |
Transitional and Skilled Services | Assisted and Independent Services | Home Health and Hospice |
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2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||||||||||||||
Statements of Income Data: | ||||||||||||||||||||||||||||||||||||||||||||||||
Income from operations, excluding general and administrative expense(a) | $ | 55,169 | $ | 39,910 | $ | 1,065 | $ | 4,298 | $ | 6,494 | $ | 5,805 | $ | 190,924 | $ | 140,272 | $ | 15,426 | $ | 16,736 | $ | 26,117 | $ | 19,717 | ||||||||||||||||||||||||
Less: net income attributable to noncontrolling interests | - | - | - | - | 183 | 27 | - | - | - | - | 595 | 160 | ||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 8,360 | 7,890 | 1,920 | 1,647 | 256 | 245 | 31,931 | 29,928 | 7,282 | 6,334 | 1,045 | 945 | ||||||||||||||||||||||||||||||||||||
EBITDA | $ | 63,529 | $ | 47,800 | $ | 2,985 | $ | 5,945 | $ | 6,567 | $ | 6,023 | $ | 222,855 | $ | 170,200 | $ | 22,708 | $ | 23,070 | $ | 26,567 | $ | 20,502 | ||||||||||||||||||||||||
Adjustments to EBITDA: | ||||||||||||||||||||||||||||||||||||||||||||||||
Results related to operations in the start-up phase | (3,455 | ) | (2,046 | ) | 52 | 117 | 35 | 175 | (11,924 | ) | (4,431 | ) | 295 | 693 | 129 | 478 | ||||||||||||||||||||||||||||||||
Results related to closed operations and operations not at full capacity | 137 | (87 | ) | - | (2 | ) | - | - | 601 | 3,801 | - | - | - | 728 | ||||||||||||||||||||||||||||||||||
Losses/(business interruption recoveries) related to Hurricane Harvey and California fires | - | 741 | - | - | - | - | (675 | ) | 1,242 | - | - | - | - | |||||||||||||||||||||||||||||||||||
Share-based compensation expense | 1,256 | 948 | 74 | 159 | 132 | 87 | 4,516 | 3,909 | 595 | 627 | 446 | 345 | ||||||||||||||||||||||||||||||||||||
Long-lived assets impairment(b) | - | - | 4,632 | - | - | - | - | - | 4,632 | - | - | - | ||||||||||||||||||||||||||||||||||||
Bonus related to the Tax Act | - | 575 | - | 25 | - | - | - | 575 | - | 25 | - | - | ||||||||||||||||||||||||||||||||||||
Rent related to item above | 2,916 | 3,078 | 778 | 872 | 9 | 9 | 11,220 | 12,765 | 3,428 | 3,540 | 30 | 190 | ||||||||||||||||||||||||||||||||||||
Adjusted EBITDA | 64,383 | 51,009 | 8,521 | 7,116 | 6,743 | 6,294 | 226,593 | 188,061 | 31,658 | 27,955 | 27,172 | 22,243 | ||||||||||||||||||||||||||||||||||||
Rent—cost of services | 28,301 | 26,624 | 6,230 | 6,354 | 609 | 528 | 110,999 | 105,520 | 24,553 | 23,950 | 2281 | 1977 | ||||||||||||||||||||||||||||||||||||
Less: rent related to items above | (2,916 | ) | (3,078 | ) | (778 | ) | (872 | ) | (9 | ) | (9 | ) | (11,220 | ) | (12,765 | ) | (3,428 | ) | (3,540 | ) | (30 | ) | (190 | ) | ||||||||||||||||||||||||
Adjusted EBITDAR | $ | 89,768 | $ | 74,555 | $ | 13,973 | $ | 12,598 | $ | 7,343 | $ | 6,813 | $ | 326,372 | $ | 280,816 | $ | 52,783 | $ | 48,365 | $ | 29,423 | $ | 24,030 | ||||||||||||||||||||||||
(a) General and administrative expenses are not allocated to any segment for purposes of determining segment profit or loss. | ||||||||||||||||||||||||||||||||||||||||||||||||
(b) Impairment charges to long-lived assets for two of our assisted living facilities. | ||||||||||||||||||||||||||||||||||||||||||||||||
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) rent-cost of services. Adjusted EBITDA consists of net income before (a) interest expense, net, (b) provisions for income taxes, (c) depreciation and amortization, (d) earnings related to operations currently being constructed and other start-up operations, excluding depreciation, interest and income taxes, (e) results of closed operations and facilities not at full operation, excluding depreciation, interest and income taxes, (f) share-based compensation expense, (g) return of unclaimed class action settlement and charges related to class action lawsuit, (h) losses and business interruption recoveries related to Hurricane Harvey and the
Source: The Ensign Group, Inc.