News Release Details
The Ensign Group Reports Quarterly Earnings; Meets Consensus of $0.34 per Share and Increases 2016 Projections
Quarter Highlights Include:
- Consolidated GAAP net income for the quarter was
$9.2 million and consolidated adjusted net income was$17.8 million (1); - Consolidated GAAP EBITDAR for the quarter was
$51.5 million , an increase of 1.5%, and consolidated adjusted EBITDAR was$62.6 million , an increase of 23.1% over the prior year quarter(1); - Transitioning skilled revenue mix increased by 300 basis points over the prior year quarter to 56.8% and same-store skilled revenue mix increased by 29 basis points over the prior year quarter to 53.6%;
- Transitioning revenue for all segments grew by 9.7% over the prior year quarter, and transitioning
TSA revenue grew by 8.0% over the prior year quarter; Cornerstone Healthcare, Inc. , our home health and hospice subsidiary, grew its segment income by 18.7% and revenue by$8.4 million to$26.7 million for the quarter, an increase of 45.6% over the prior year quarter; and- Consolidated revenues for the quarter were up
$76.7 million or 25.0% over the prior year quarter to$383.2 million .
(1) See "Reconciliation of GAAP to Non-GAAP Financial Information".
Operating Results
"We are grateful to our experienced teams of local leaders across the organization for
working tirelessly to transition all of our recently acquired operations, including eighteen new operations in
"While we are pleased with the first quarter contribution of some of our recently acquired operations, the majority of our newer operations still have significant upside. For example, after removing the boost that we received from the performing assets we recently acquired, 75% of our operations in the recently acquired bucket are traditional turnaround opportunities with an average occupancy of 65.0% and an average skilled revenue mix of 45.7%, which is substantially below the average occupancy of 80.1% and 53.6% skilled revenue mix, respectively, in our same store operations," Christensen said. "Even with mild operational improvements, we expect most of our newly acquired operations to make a meaningful contribution to the bottom line in the latter half of 2016 and beyond," he added.
Chief Financial Officer
GAAP diluted earnings per share were
More complete information is contained in the Company's 10-Q, which was filed with the
Quarter Highlights
During the quarter, the Company paid a quarterly cash dividend of
Also during the quarter and since, the company announced the acquisition of eighteen skilled nursing operations, one healthcare resort, two hospice agencies and one home health business. The following skilled nursing operations are subject to long-term leases:
The Healthcare Resort ofOlathe , featuring a 70-bed licensed transitional care operation and 30 private assisted living suites under a long-term lease located inOlathe, Kansas ;Legend Oaks Healthcare and Rehabilitation -Greenville , a 126-bed skilled nursing facility located inGreenville, Texas ;Legend Oaks Healthcare and Rehabilitation -Euless , a 140-bed skilled nursing facility located inEuless, Texas ;Legend Oaks Healthcare and Rehabilitation Center -Gladewater , a 100-bed skilled nursing facility located inGladewater, Texas ;Legend Oaks Healthcare and Rehabilitation -North Austin , a 124-bed skilled nursing facility located inAustin, Texas ;Legend Healthcare and Rehabilitation -Ennis , a 124-bed skilled nursing facility located inEnnis, Texas ;Granite Mesa Health Center , a 124-bed skilled nursing facility located inMarble Falls, Texas ;Legend Oaks Healthcare and Rehabilitation -Katy , a 125-bed skilled nursing facility located inKaty, Texas ;Legend Oaks Healthcare and Rehabilitation -Kyle , a 126-bed skilled nursing facility located inKyle, Texas ;Legend Oaks Healthcare and Rehabilitation North Willowbrook, a 124-bed skilled nursing facility located inHouston, Texas ;Sonterra Health Center , a 124-bed skilled nursing facility located inSan Antonio, Texas ;Legend Oaks Healthcare and Rehabilitation -San Antonio , a 126-bed skilled nursing facility located inSan Antonio, Texas ;Legend Oaks Healthcare and Rehabilitation -West Houston , a 124-bed skilled nursing facility located inHouston, Texas ;Legend Oaks Healthcare and Rehabilitation -West San Antonio , a 124-bed skilled nursing facility located inSan Antonio, Texas ;McAllen Transitional Care Center , a 70-bed skilled nursing facility located inMcAllen, Texas ;Legend Oaks Healthcare and Rehabilitation Center -Northwest Houston , a 125-bed skilled nursing facility located inHouston, Texas ; andLegend Oaks Healthcare and Rehabilitation -New Braunfels , a 126-bed skilled nursing facility located inNew Braunfels, Texas .
In addition, Ensign acquired the real estate and operations for the following skilled nursing operations:
Legend Healthcare and Rehabilitation -Paris , a 120-bed skilled nursing facility located inParis, Texas ; andLegend Oaks Healthcare and Rehabilitation Center , a 125-bed skilled nursing facility located inHouston, Texas .
These additions bring Ensign's growing portfolio to 204 healthcare operations, thirty-four of which are
owned, sixteen hospice agencies, sixteen home health agencies, three home care businesses and seventeen urgent care clinics across 14 states.
2016 Guidance Information
Management's increased guidance is based on diluted weighted average common shares outstanding of 52.6 million, which includes the impact of the 2 for 1 stock split completed in the fourth quarter of 2015 and the stock repurchases in the first quarter of 2016. In addition, the guidance assumes, among other things, anticipated
Conference Call
A live webcast will be held
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, 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
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) | ||||||||
Three Months Ended | ||||||||
2016 | 2015 | |||||||
Revenue | $ | 383,234 | $ | 306,529 | ||||
Expense: | ||||||||
Cost of services (exclusive of rent, general and administrative and depreciation and amortization expense shown separately below) | 306,308 | 241,456 | ||||||
Losses related to operational closure | 7,935 | - | ||||||
Rent—cost of services | 26,991 | 18,966 | ||||||
General and administrative expense | 17,387 | 14,416 | ||||||
Depreciation and amortization | 8,298 | 6,517 | ||||||
Total expenses | 366,919 | 281,355 | ||||||
Income from operations | 16,315 | 25,174 | ||||||
Other income (expense): | ||||||||
Interest expense | (1,370 | ) | (667 | ) | ||||
Interest income | 234 | 166 | ||||||
Other expense, net | (1,136 | ) | (501 | ) | ||||
Income before provision for income taxes | 15,179 | 24,673 | ||||||
Provision for income taxes | 5,889 | 9,585 | ||||||
Net income | 9,290 | 15,088 | ||||||
Less: net (loss) income attributable to noncontrolling interests | 118 | (82 | ) | |||||
Net income attributable to | $ | 9,172 | $ | 15,170 | ||||
Net income per share: | ||||||||
Basic: | $ | 0.18 | $ | 0.32 | ||||
Diluted | $ | 0.18 | $ | 0.31 | ||||
Weighted average common shares outstanding: | ||||||||
Basic | 50,679 | 47,815 | ||||||
Diluted | 52,334 | 49,652 | ||||||
Dividends per share | $ | 0.0400 | $ | 0.0375 | ||||
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 51,370 | $ | 41,569 | ||||
Accounts receivable — less allowance for doubtful accounts of | 217,171 | 209,026 | ||||||
Investments — current | 2,003 | 2,004 | ||||||
Prepaid income taxes | 3,254 | 8,141 | ||||||
Prepaid expenses and other current assets | 19,441 | 18,827 | ||||||
Total current assets | 293,239 | 279,567 | ||||||
Property and equipment, net | 311,479 | 299,633 | ||||||
Insurance subsidiary deposits and investments | 30,955 | 32,713 | ||||||
Escrow deposits | 1,646 | 400 | ||||||
Deferred tax asset | 20,823 | 20,852 | ||||||
Restricted and other assets | 11,165 | 9,631 | ||||||
Intangible assets, net | 44,444 | 45,431 | ||||||
41,034 | 40,886 | |||||||
Other indefinite-lived intangibles | 18,896 | 18,646 | ||||||
Total assets | $ | 773,681 | $ | 747,759 | ||||
Liabilities and equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | 35,695 | 36,029 | ||||||
Accrued wages and related liabilities | 67,567 | 78,890 | ||||||
Accrued self-insurance liabilities — current | 18,204 | 18,122 | ||||||
Other accrued liabilities | 46,018 | 46,205 | ||||||
Current maturities of long-term debt | 627 | 620 | ||||||
Total current liabilities | 168,111 | 179,866 | ||||||
Long-term debt — less current maturities | 145,642 | 99,051 | ||||||
Accrued self-insurance liabilities — less current portion | 39,872 | 37,881 | ||||||
Deferred rent and other long-term liabilities | 9,860 | 3,976 | ||||||
Total equity | 410,196 | 426,985 | ||||||
Total liabilities and equity | $ | 773,681 | $ | 747,759 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) | ||||||||
The following table presents selected data from our consolidated statements of cash flows for the periods presented: | ||||||||
Three Months Ended | ||||||||
2016 | 2015 | |||||||
Net cash provided by operating activities | $ | 12,695 | $ | 5,860 | ||||
Net cash used in investing activities | (20,104 | ) | (36,455 | ) | ||||
Net cash provided by financing activities | 17,210 | 42,796 | ||||||
Net increase in cash and cash equivalents | 9,801 | 12,201 | ||||||
Cash and cash equivalents at beginning of period | 41,569 | 50,408 | ||||||
Cash and cash equivalents at end of period | $ | 51,370 | $ | 62,609 | ||||
REVENUE BY SEGMENTS | |||||||||||||||
The following table sets forth our total revenue by segments and as a percentage of total revenue for the periods indicated: | |||||||||||||||
Three Months Ended | |||||||||||||||
2016 | 2015 | ||||||||||||||
Revenue Dollars | Revenue Percentage | Revenue Dollars | Revenue Percentage | ||||||||||||
(Dollars in thousands) | |||||||||||||||
TSA Services: | |||||||||||||||
Skilled nursing facilities | $ | 315,212 | 82.3 | % | $ | 264,471 | 86.3 | % | |||||||
Assisted and independent living facilities | 30,171 | 7.9 | 14,303 | 4.6 | |||||||||||
Total | 345,383 | 90.2 | 278,774 | 90.9 | |||||||||||
Home health and hospice services: | |||||||||||||||
Home health | 13,908 | 3.6 | 10,363 | 3.4 | |||||||||||
Hospice | 12,758 | 3.3 | 7,952 | 2.6 | |||||||||||
Total home health and hospice services | 26,666 | 6.9 | 18,315 | 6.0 | |||||||||||
All other (1) | 11,185 | 2.9 | 9,440 | 3.1 | |||||||||||
Total revenue | $ | 383,234 | 100.0 | % | $ | 306,529 | 100.0 | % | |||||||
(1) Includes revenue from services provided at our urgent care clinics and other ancillary operations. | |||||||||||||||
SELECT PERFORMANCE INDICATORS | ||||||||||||||||
The following tables summarize our selected performance indicators for our | ||||||||||||||||
Three Months Ended | ||||||||||||||||
2016 | 2015 | |||||||||||||||
(Dollars in thousands) | Change | % Change | ||||||||||||||
Total Facility Results: | ||||||||||||||||
Skilled nursing revenue | $ | 315,212 | $ | 264,471 | $ | 50,741 | 19.2 | % | ||||||||
Assisted and independent living revenue | 30,171 | 14,303 | 15,868 | 110.9 | % | |||||||||||
Total | $ | 345,383 | $ | 278,774 | $ | 66,609 | 23.9 | % | ||||||||
Number of facilities at period end | 186 | 143 | 43 | 30.1 | % | |||||||||||
Actual patient days | 1,376,879 | 1,077,238 | 299,641 | 27.8 | % | |||||||||||
Occupancy percentage — Operational beds | 77.1 | % | 78.8 | % | (1.7 | )% | ||||||||||
Skilled mix by nursing days | 32.5 | % | 30.3 | % | 2.2 | % | ||||||||||
Skilled mix by nursing revenue | 54.6 | % | 52.9 | % | 1.7 | % | ||||||||||
Three Months Ended | ||||||||||||||||
2016 | 2015 | |||||||||||||||
(Dollars in thousands) | Change | % Change | ||||||||||||||
Same Facility Results(1): | ||||||||||||||||
Skilled nursing revenue | $ | 223,757 | $ | 215,556 | $ | 8,201 | 3.8 | % | ||||||||
Assisted and independent living revenue | 9,107 | 9,063 | 44 | 0.5 | % | |||||||||||
Total | $ | 232,864 | $ | 224,619 | $ | 8,245 | 3.7 | % | ||||||||
Number of facilities at period end | 106 | 106 | — | — | % | |||||||||||
Actual patient days | 856,247 | 845,502 | 10,745 | 1.3 | % | |||||||||||
Occupancy percentage — Operational beds | 80.1 | % | 80.5 | % | (0.4 | )% | ||||||||||
Skilled mix by nursing days | 31.3 | % | 30.6 | % | 0.7 | % | ||||||||||
Skilled mix by nursing revenue | 53.6 | % | 53.3 | % | 0.3 | % | ||||||||||
Three Months Ended | ||||||||||||||||
2016 | 2015 | |||||||||||||||
(Dollars in thousands) | Change | % Change | ||||||||||||||
Transitioning Facility Results(2): | ||||||||||||||||
Skilled nursing revenue | $ | 43,938 | $ | 40,571 | $ | 3,367 | 8.3 | % | ||||||||
Assisted and independent living revenue | 4,588 | 4,367 | 221 | 5.1 | % | |||||||||||
Total | $ | 48,526 | $ | 44,938 | $ | 3,588 | 8.0 | % | ||||||||
Number of facilities at period end | 29 | 29 | — | — | % | |||||||||||
Actual patient days | 188,249 | 181,847 | 6,402 | 3.5 | % | |||||||||||
Occupancy percentage — Operational beds | 74.1 | % | 71.8 | % | 2.3 | % | ||||||||||
Skilled mix by nursing days | 34.9 | % | 31.1 | % | 3.8 | % | ||||||||||
Skilled mix by nursing revenue | 56.8 | % | 53.8 | % | 3.0 | % | ||||||||||
Three Months Ended | ||||||||||||||||
2016 | 2015 | |||||||||||||||
(Dollars in thousands) | Change | % Change | ||||||||||||||
Recently Acquired Facility Results(3): | ||||||||||||||||
Skilled nursing revenue | $ | 46,897 | $ | 6,447 | $ | 40,450 | NM | |||||||||
Assisted and independent living revenue | 16,476 | 873 | 15,603 | NM | ||||||||||||
Total | $ | 63,373 | $ | 7,320 | $ | 56,053 | NM | |||||||||
Number of facilities at period end | 51 | 7 | 44 | NM | ||||||||||||
Actual patient days | 329,138 | 40,696 | 288,442 | NM | ||||||||||||
Occupancy percentage — Operational beds | 71.8 | % | 77.6 | % | NM | |||||||||||
Skilled mix by nursing days | 36.7 | % | 20.8 | % | NM | |||||||||||
Skilled mix by nursing revenue | 57.8 | % | 39.8 | % | NM | |||||||||||
Three Months Ended | ||||||||||||||||
2016 | 2015 | |||||||||||||||
(Dollars in thousands) | Change | % Change | ||||||||||||||
Facility Closed(4): | ||||||||||||||||
Skilled nursing revenue | $ | 620 | $ | 1,897 | $ | (1,277 | ) | NM | ||||||||
Assisted and independent living revenue | - | - | - | NM | ||||||||||||
Total | $ | 620 | $ | 1,897 | $ | (1,277 | ) | NM | ||||||||
Actual patient days | 3,245 | 9,193 | (5,948 | ) | NM | |||||||||||
Occupancy percentage — Operational beds | 70.7 | % | 74.6 | % | NM | |||||||||||
Skilled mix by nursing days | 9.6 | % | 15.4 | % | NM | |||||||||||
Skilled mix by nursing revenue | 14.0 | % | 36.0 | % | NM | |||||||||||
_______________________ | ||||||||||||||||
(1) Same
Facility results represent all facilities purchased prior to | ||||||||||||||||
(2) Transitioning Facility results represents all facilities purchased from | ||||||||||||||||
(3) Recently Acquired Facility (Acquisitions) results represent all facilities purchased on or subsequent to | ||||||||||||||||
(4) Facility Closed represent the result of one facility closed during the three months ended | ||||||||||||||||
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 | |||||||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||||
Skilled Nursing Average Daily Revenue Rates: | ||||||||||||||||||||||||||||||||
$ | 578.81 | $ | 566.27 | $ | 557.05 | $ | 557.14 | $ | 488.89 | $ | 447.71 | $ | 558.04 | $ | 561.71 | |||||||||||||||||
Managed care | 421.54 | 411.53 | 465.94 | 464.09 | 410.77 | 370.04 | 427.87 | 422.79 | ||||||||||||||||||||||||
Other skilled | 466.22 | 479.49 | 349.83 | 325.21 | 394.25 | 672.04 | 438.70 | 464.13 | ||||||||||||||||||||||||
Total skilled revenue | 500.30 | 501.46 | 478.46 | 484.83 | 449.86 | 464.48 | 488.13 | 497.92 | ||||||||||||||||||||||||
196.98 | 194.31 | 188.19 | 183.51 | 187.25 | 182.39 | 194.12 | 191.69 | |||||||||||||||||||||||||
Private and other payors | 199.63 | 190.40 | 234.49 | 210.98 | 208.45 | 186.80 | 206.05 | 193.42 | ||||||||||||||||||||||||
Total skilled nursing revenue | $ | 292.15 | $ | 287.85 | $ | 294.41 | $ | 280.61 | $ | 285.97 | $ | 242.06 | $ | 291.17 | $ | 284.54 | ||||||||||||||||
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 | |||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||
Percentage of Skilled Nursing Revenue: | ||||||||||||||||||||||||
28.3 | % | 31.5 | % | 22.7 | % | 23.1 | % | 32.9 | % | 24.8 | % | 28.2 | % | 30.0 | % | |||||||||
Managed care | 17.4 | 15.1 | 27.4 | 27.0 | 19.3 | 6.6 | 19.1 | 16.6 | ||||||||||||||||
Other skilled | 7.9 | 6.7 | 6.7 | 3.7 | 5.6 | 8.4 | 7.3 | 6.3 | ||||||||||||||||
Skilled mix | 53.6 | 53.3 | 56.8 | 53.8 | 57.8 | 39.8 | 54.6 | 52.9 | ||||||||||||||||
Private and other payors | 7.9 | 8.0 | 8.3 | 9.1 | 7.7 | 19.5 | 8.0 | 8.5 | ||||||||||||||||
Quality mix | 61.5 | 61.3 | 65.1 | 62.9 | 65.5 | 59.3 | 62.6 | 61.4 | ||||||||||||||||
38.5 | 38.7 | 34.9 | 37.1 | 34.5 | 40.7 | 37.4 | 38.6 | |||||||||||||||||
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 | |||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||
Percentage of Skilled | ||||||||||||||||||||||||
14.2 | % | 16.0 | % | 12.0 | % | 11.6 | % | 19.2 | % | 13.4 | % | 14.7 | % | 15.2 | % | |||||||||
Managed care | 12.0 | 10.5 | 17.3 | 16.3 | 13.5 | 4.3 | 13.0 | 11.2 | ||||||||||||||||
Other skilled | 5.1 | 4.1 | 5.6 | 3.2 | 4.0 | 3.1 | 4.8 | 3.9 | ||||||||||||||||
Skilled mix | 31.3 | 30.6 | 34.9 | 31.1 | 36.7 | 20.8 | 32.5 | 30.3 | ||||||||||||||||
Private and other payors | 11.6 | 12.1 | 10.4 | 12.2 | 10.6 | 25.1 | 11.4 | 12.5 | ||||||||||||||||
Quality mix | 42.9 | 42.7 | 45.3 | 43.3 | 47.3 | 45.9 | 43.9 | 42.8 | ||||||||||||||||
57.1 | 57.3 | 54.7 | 56.7 | 52.7 | 54.1 | 56.1 | 57.2 | |||||||||||||||||
Total skilled nursing | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
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 dates or periods indicated: | |||||||||||||||
Three Months Ended | |||||||||||||||
2016 | 2015 | Change | % Change | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Results: | |||||||||||||||
Home health and hospice revenue | |||||||||||||||
Home health services: | $ | 13,908 | $ | 10,363 | $ | 3,545 | 34.2 | % | |||||||
Hospice services: | 12,758 | 7,952 | 4,806 | 60.4 | |||||||||||
Total home health and hospice revenue | $ | 26,666 | $ | 18,315 | $ | 8,351 | 45.6 | % | |||||||
Home health services: | |||||||||||||||
Medicare Episodic Admissions | 2,157 | 1,384 | 773 | 55.9 | % | ||||||||||
Average Medicare Revenue per Completed Episode | $ | 2,923 | $ | 2,861 | $ | 62 | 2.2 | % | |||||||
Hospice services: | |||||||||||||||
Average Daily Census | 843 | 536 | 307 | 57.3 | % | ||||||||||
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 | ||||||||||||||
2016 | 2015 | |||||||||||||
$ | % | $ | % | |||||||||||
Revenue: | (Dollars in thousands) | |||||||||||||
$ | 117,575 | 30.7 | % | $ | 101,628 | 33.2 | % | |||||||
110,278 | 28.8 | 94,356 | 30.8 | |||||||||||
Medicaid—skilled | 21,665 | 5.7 | 15,537 | 5.1 | ||||||||||
Total | 249,518 | 65.2 | 211,521 | 69.1 | ||||||||||
Managed care | 64,543 | 16.8 | 46,330 | 15.1 | ||||||||||
Private and other(1) | 69,173 | 18.0 | 48,678 | 15.8 | ||||||||||
Total revenue | $ | 383,234 | 100.0 | % | $ | 306,529 | 100.0 | % | ||||||
(1) Private and other payors also includes revenue from urgent care centers and other ancillary operations. | ||||||||||||||
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 | ||||||||
2016 | 2015 | |||||||
Net income attributable to | $ | 9,172 | $ | 15,170 | ||||
Non-GAAP adjustments | ||||||||
Results at urgent care centers, including noncontrolling interests(a) | (195 | ) | (169 | ) | ||||
Costs incurred for facilities currently being constructed and other start-up operations(b) | 2,798 | 146 | ||||||
Results at closed facility, including continued obligations and closing expenses(c) | 8,184 | - | ||||||
Acquisition related costs(d) | 145 | 152 | ||||||
Patient base amortization(e) | 276 | 284 | ||||||
Stock-based compensation expense(f) | 1,885 | 1,493 | ||||||
Professional service fees(g) | - | 26 | ||||||
Write off of deferred financing fee(h) | 197 | - | ||||||
Amortization of deferred financing fee related to Spin-Off debt(i) | 28 | 46 | ||||||
Costs incurred related to new systems implementation(j) | 678 | 287 | ||||||
Break up fee, net of costs, received in connection with a public auction(k) | - | (1,019 | ) | |||||
Tax effect on Non-GAAP adjustments(l) | (5,337 | ) | (454 | ) | ||||
Non-GAAP Net Income | $ | 17,831 | $ | 15,962 | ||||
Diluted Earnings Per Share As Reported | ||||||||
Net Income | $ | 0.18 | $ | 0.31 | ||||
Average number of shares outstanding | 52,334 | 49,652 | ||||||
Adjusted Diluted Earnings Per Share | ||||||||
Net Income | $ | 0.34 | $ | 0.32 | ||||
Average number of shares outstanding | 52,334 | 49,652 | ||||||
________________________________________________________ | ||||||||
(a) Represent operating results at newly opened urgent care centers, including noncontrolling interest | ||||||||
(b) Represent costs incurred for facilities currently being constructed and other start-up operations. | ||||||||
(c) Represent results at closed facility during three months ended | ||||||||
(d) Represent costs incurred to acquire an operation which are not capitalizable. | ||||||||
(e) Represent amortization costs related to patient base intangible assets at skilled nursing and assisted living facilities. | ||||||||
(f) Represent stock-based compensation expense incurred. | ||||||||
(g) Represent professional service fees include costs incurred to recognize income tax credits which contributed to a decrease in effective tax rate. | ||||||||
(h) Represent write off of deferred financing fee associated with the amendment of credit revolver. | ||||||||
(i) Represent amortization of deferred financing fee related to the former revolver debt costs as part of the spin-off transaction. | ||||||||
(j) Represent costs incurred related to new systems implementation. | ||||||||
(k) Represent breakup fee, net of costs, received in connection with a public auction. | ||||||||
(l) Represent adjustment to provision for income tax to our historical year to date effective tax rate of 38.5% | ||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION (In thousands) (Unaudited) | ||||||||
The table below reconciles net income to EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR for the periods presented: | ||||||||
Three Months Ended | ||||||||
2016 | 2015 | |||||||
Consolidated Statements of Income Data: | ||||||||
Net income | 9,290 | 15,088 | ||||||
Less: net income (loss) attributable to noncontrolling interests | 118 | (82 | ) | |||||
Interest expense, net | 1,136 | 501 | ||||||
Provision for income taxes | 5,889 | 9,585 | ||||||
Depreciation and amortization | 8,298 | 6,517 | ||||||
EBITDA | 24,495 | 31,773 | ||||||
Facility rent—cost of services | 26,991 | 18,966 | ||||||
EBITDAR | 51,486 | 50,739 | ||||||
EBITDA | $ | 24,495 | $ | 31,773 | ||||
Adjustments to EBITDA: | ||||||||
Urgent care center earnings(a) | (1,057 | ) | (940 | ) | ||||
Breakup fee, net of costs, received in connection with a public auction(b) | - | (1,019 | ) | |||||
Acquisition related costs(c) | 145 | 152 | ||||||
Stock-based compensation expense(d) | 1,885 | 1,493 | ||||||
Costs incurred for facilities currently being constructed and other start-up operations(e) | 1,363 | 146 | ||||||
Costs incurred related to new systems implementation(f) | 678 | 287 | ||||||
Professional service fees(g) | - | 26 | ||||||
Results at closed facility, including continued obligations and closing expenses (h) | 8,125 | - | ||||||
Rent related to items(a), (e), and (h) above | 1,940 | 489 | ||||||
Adjusted EBITDA | $ | 37,574 | $ | 32,407 | ||||
Facility rent—cost of services | 26,991 | 18,966 | ||||||
Less: rent related to items(a), (e) and (h) above | (1,940 | ) | (489 | ) | ||||
Adjusted EBITDAR | $ | 62,625 | $ | 50,884 | ||||
________________________________________________________ | ||||||||
(a) Operating results at urgent care centers. This amount excluded rent, depreciation, and interest of | ||||||||
(b) Breakup fee, net of costs, received in connection with a public auction. | ||||||||
(c) Costs incurred to acquire an operation which are not capitalizable. | ||||||||
(d) Stock-based compensation expense incurred during the three months ended | ||||||||
(e) Costs incurred for facilities currently being constructed and other start-up operations. This amount excluded rent, depreciation and interest of | ||||||||
(f) Costs incurred related to new systems implementation. | ||||||||
(g) Professional service fees include costs incurred to recognize income tax credits which contributed to a decrease in effective tax rate. | ||||||||
(h) Results at closed facility during three months ended | ||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION (In thousands) (Unaudited) | |||||||||||||||||
The table below reconciles net income to EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR for each reportable segment for the periods presented: | |||||||||||||||||
Three Months Ended | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
TSA Services | |||||||||||||||||
Statements of Income Data: | |||||||||||||||||
Income from operations, excluding general and administrative expense(a) | $ | 30,856 | $ | 37,298 | $ | 3,176 | $ | 2,675 | |||||||||
Depreciation and amortization | 6,302 | 4,949 | 268 | 221 | |||||||||||||
EBITDA | $ | 37,158 | $ | 42,247 | $ | 3,444 | $ | 2,896 | |||||||||
Rent—cost of services | 25,987 | 18,163 | 378 | 258 | |||||||||||||
EBITDAR | $ | 63,145 | $ | 60,410 | $ | 3,822 | $ | 3,154 | |||||||||
EBITDA | $ | 37,158 | $ | 42,247 | $ | 3,444 | $ | 2,896 | |||||||||
Adjustments to EBITDA: | |||||||||||||||||
Stock-based compensation expense(b) | 1,121 | 880 | 66 | 61 | |||||||||||||
Costs at facilities currently being constructed and other start-up operations(c) | 1,332 | 146 | 31 | - | |||||||||||||
Acquisition related costs(d) | 145 | 152 | - | - | |||||||||||||
Results at closed facility, including continued obligations and closing expenses (e) | 8,125 | - | - | - | |||||||||||||
Rent related to item(c) and (e)above | 1,369 | - | 9 | - | |||||||||||||
Adjusted EBITDA | $ | 49,250 | $ | 43,425 | $ | 3,550 | $ | 2,957 | |||||||||
Rent—cost of services | 25,987 | 18,163 | 378 | 258 | |||||||||||||
Less: rent related to items(c) and (e)above | (1,369 | ) | - | (9 | ) | - | |||||||||||
Adjusted EBITDAR | $ | 73,868 | $ | 61,588 | $ | 3,919 | $ | 3,215 | |||||||||
________________________________________________________ | |||||||||||||||||
(a) General and administrative expenses are not allocated to any segment for purposes of determining segment profit or loss. | |||||||||||||||||
(b) Stock-based compensation expense incurred during the three months ended | |||||||||||||||||
(c) Costs incurred for facilities currently being constructed and other start-up operations. This amount excluded rent, depreciation and interest of | |||||||||||||||||
(d) Costs incurred to acquire operations which are not capitalizable. | |||||||||||||||||
(e) Results at closed facility during three months ended | |||||||||||||||||
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) costs incurred for operations currently being constructed and other start-up operations, excluding rent, depreciation, interest and income taxes, (e) results of a single closed operation, (f) stock-based compensation expense, (g) costs incurred related to new systems implementation, (h) breakup fee, net of costs, received in connection with a public auction in which we were the priority bidder, (i) professional service fees include costs incurred to recognize income
tax credits which contributed to a decrease in effective tax rate, (j) costs incurred to acquire operations which are not capitalized, and (k) operating results at urgent care centers, excluding depreciation, interest and income taxes. Adjusted EBITDAR consists of net income before (a) interest expense, net, (b)provisions for income taxes, (c) depreciation and amortization, (d) rent-cost of services, (e) costs incurred for facilities currently being constructed and other start-up operations, excluding rent, depreciation, interest and income taxes, (f) results of a single closed operation, (g) stock-based compensation expense, (h) costs incurred related to new systems implementation, (i) breakup fee, net of costs, received in connection with a public auction in which we were the priority bidder , (j) professional service fees include costs incurred to recognize income tax credits which
contributed to a decrease in effective tax rate, (k) costs incurred to acquire operations which are not capitalized and (l) operating results at urgent care centers, excluding rent, depreciation, interest and income taxes. The company believes that the presentation of EBITDA, EBITDAR, adjusted EBITDA, adjusted EBITDAR, adjusted net income and adjusted earnings per share provides important supplemental information to management and investors to evaluate the company's operating performance. The company believes disclosure of adjusted net income per share, EBITDA, EBITDAR, adjusted EBITDA and adjusted EBITDAR has economic substance because the excluded revenues and expenses are infrequent in nature and are variable in nature, or do not represent current revenues or cash expenditures. A material limitation associated with the use of these measures as compared to the GAAP measures of net
income and diluted earnings per share is that they may not be comparable with the calculation of net income and diluted earnings per share for other companies in the company's industry. These non-GAAP financial measures should not be relied upon to the exclusion of GAAP financial measures. For further information regarding why the company believes that this non-GAAP measure provides useful information to investors, the specific manner in which management uses this measure, and some of the limitations associated with the use of this measure, please refer to the company's periodic filings with the
Contact Information Investor/Media Relations,Source:The Ensign Group, Inc. , (949) 487-9500, ir@ensigngroup.net.
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