News Release Details
The Ensign Group Reports Record Third Quarter
MISSION VIEJO, Calif., Oct 28, 2010 /PRNewswire via COMTEX News Network/ -- The Ensign Group, Inc. (Nasdaq: ENSG), the parent company of the Ensign(TM) group of skilled nursing, rehabilitative care services, home health, hospice care and assisted living companies, today reported record results for the third quarter of 2010.
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Financial Highlights Include:
- Overall occupancy grew to 80.1% over the third quarter of 2009, and same-store occupancy increased by 216 basis points to a record 83.3%;
- Total revenue was a record $164.7 million, up 23.9% on a consolidated basis;
- Same-store skilled mix increased by 198 basis points to 52.4%;
- Consolidated EBITDAR climbed 27.4% to $26.5 million, with consolidated EBITDAR margins of 16.1%;
- Net income rose 28.6% to $9.9 million for the quarter; and
- GAAP earnings were a record $0.47 per diluted share, up 27%.
Operating Results
Citing the marked improvements in both same-store and overall occupancy in the quarter, Ensign's President and Chief Executive Officer Christopher Christensen said, "We are especially gratified that our operators would not only grow occupancy year over year, but actually grow it sequentially over Q2, which is unprecedented for a third quarter in our census-cyclical business."
After adding 19 new facilities and a home health business since January 2009, Mr. Christensen noted that the third quarter was "time to take a short breather" from the aggressive acquisition pace, and focus on improving both the recently-acquired and existing operations. He added that "these results represent a strong validation of Ensign's business model, and demonstrate robust momentum heading into 2011."
Ensign's balance sheet further improved, with its industry-low adjusted net-debt-to-EBITDAR ratio of 1.9x, and net cash from operations of $34.5 million through September 30, 2010. Fully diluted GAAP earnings per share were $0.47 for the quarter, compared to $0.37 per share in the prior year. Excluding $0.1 million in acquisition expenses and amortization of recently-acquired patient bases, adjusted net income was $9.9 million or $0.47 per diluted share for the quarter.
A discussion of the company's use of non-GAAP financial measures is set forth below. A reconciliation of net income to EBITDAR and EBITDA, as well as a reconciliation of GAAP earnings per share and net income to adjusted net earnings per share and adjusted net income, appear in the financial data portion of this release.
More complete information is contained in the Company's 10-Q, which was filed with the SEC today and can be viewed on the Company's website at http://www.ensigngroup.net.
2010 Guidance Affirmed
Management affirmed its 2010 annual guidance, projecting revenues of $628 million to $638 million, and net income of $1.79 to $1.83 per diluted share for the year. The guidance is based on diluted weighted average common shares outstanding of 21.4 million and assumes, among other things, no additional acquisitions or dispositions beyond those made to date, and an aggregate 1.0% projected decline in overall reimbursement rates. It also assumes that tax rates do not materially increase, and no negative impact associated with the implementation of RUGs-IV and MDS 3.0.
Quarter Highlights
During the quarter, the company's Board of Directors declared a quarterly cash dividend of $0.05 per share of Ensign common stock. Ensign has been a dividend-paying company since 2002.
With no new additions to Ensign's existing portfolio, the company nevertheless experienced significant growth in census, margins and earnings. Ensign's portfolio includes 81 facilities, 51 of which are Ensign-owned, with Ensign affiliates holding purchase options on eight of Ensign's 30 leased facilities. Ensign also owns one home health and two hospice businesses. Management reaffirmed that Ensign is actively seeking additional opportunities to acquire both well-performing and struggling long-term care operations across the Western United States.
Conference Call
A live webcast will be held on Friday, October 29, 2010, at 10:00 a.m. Pacific Time (1:00 p.m. Eastern Time) to discuss Ensign's third quarter results. To listen to the webcast, or to view any financial or statistical information required by SEC Regulation G, please visit the Investors section of the Ensign website at http://investor.ensigngroup.net. The webcast will be recorded, and will be available for replay via the website until 5:00 p.m. Pacific Time on Friday, November 5, 2010.
About Ensign(TM)
The Ensign Group, Inc.'s independent operating subsidiaries provide a broad spectrum of skilled nursing and assisted living services, physical, occupational and speech therapies, home health and hospice services, and other rehabilitative and healthcare services for both long-term residents and short-stay rehabilitation patients at 81 facilities, two hospice companies and a home health business in California, Arizona, Texas, Washington, Utah, Idaho and Colorado. Each of these facilities is operated by a separate, wholly-owned independent operating subsidiary that has its own management, employees and assets. References herein to the consolidated "Company" and "its" assets and activities, as well as the use of the terms "we," "us," "its" and similar verbiage are not meant to imply that The Ensign Group, Inc. has direct operating assets, employees or revenue, or that any of the facilities, the hospice business, the Service Center or the captive insurance subsidiary are operated by the same entity. More information about Ensign is available at http://www.ensigngroup.net.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
This press release contains, and the related conference call and webcast will include, forward-looking statements that are based on management's current expectations, assumptions and beliefs about its business, financial performance, operating results, the industry in which it operates and other future events. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. These forward-looking statements include, but are not limited to, statements regarding growth prospects, future operating and financial performance. They are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to materially and adversely differ from those expressed in any forward-looking statement.
These risks and uncertainties relate to the company's business, its industry and its common stock and include: reduced prices and reimbursement rates for its services; its ability to acquire, develop, manage or improve facilities, its ability to manage its increasing borrowing costs as it incurs additional indebtedness to fund the acquisition and development of facilities; its ability to access capital on a cost-effective basis to continue to successfully implement its growth strategy; its operating margins and profitability could suffer if it is unable to grow and manage effectively its increasing number of facilities; competition from other companies in the acquisition, development and operation of facilities; and the application of existing or proposed government regulations, or the adoption of new laws and regulations, that could limit its business operations, require it to incur significant expenditures or limit its ability to relocate its facilities if necessary. Readers should not place undue reliance on any forward-looking statements and are encouraged to review the company's periodic filings with the Securities and Exchange Commission, including its Form 10-Q, which was filed today, for a more complete discussion of the risks and other factors that could affect Ensign's business, prospects and any forward-looking statements. Except as required by the federal securities laws, Ensign does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changing circumstances or any other reason after the date of this press release.
THE ENSIGN GROUP, INC.
GAAP AND ADJUSTED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three Months Ended
------------------
September 30, 2010
------------------
As As
Reported Non- Adjusted
--------- ---- ---------
GAAP
----
Adj.
----
Revenue $164,653 $164,653
Expense:
Cost of services
(exclusive of
facility rent and
depreciation and
amortization shown (1)
separately below) 131,460 (7) 131,453
Facility rent-cost of
services 3,631 3,631
General and
administrative
expense 6,713 6,713
Depreciation and (84)
amortization 4,260 (2) 4,176
----- ------- -----
Total expenses 146,064 (91) 145,973
Income from operations 18,589 91 18,680
Other income
(expense):
Interest expense (2,283) (2,283)
Interest income 58 58
--- ---
Other expense, net (2,225) (2,225)
Income before
provision for income
taxes 16,364 91 16,455
Provision for income 36
taxes 6,477 (3) 6,513
----- ----- -----
Net income $9,887 55 $9,942
====== === ======
Net income per share:
Basic $0.48 $0.48
===== =====
Diluted $0.47 $0.47
===== =====
Weighted average
common shares
outstanding:
Basic 20,756 20,756
====== ======
Diluted 21,147 21,147
====== ======
Nine Months Ended
-----------------
September 30, 2010
------------------
As As
Reported Non- Adjusted
--------- ---- ---------
GAAP
----
Adj.
----
Revenue $476,775 $476,775
Expense:
Cost of services
(exclusive of
facility rent and
depreciation and
amortization shown (1)
separately below) 380,451 (96) 380,355
Facility rent-cost of
services 10,822 10,822
General and
administrative
expense 18,894 18,894
Depreciation and (453)
amortization 12,238 (2) 11,785
------ ------- ------
Total expenses 422,405 (549) 421,856
Income from operations 54,370 549 54,919
Other income
(expense):
Interest expense (6,871) (6,871)
Interest income 188 188
--- ---
Other expense, net (6,683) (6,683)
Income before
provision for income
taxes 47,687 549 48,236
Provision for income 217
taxes 18,833 (3) 19,050
------ ------ ------
Net income $28,854 332 $29,186
======= === =======
Net income per share:
Basic $1.39 $1.41
===== =====
Diluted $1.37 $1.38
===== =====
Weighted average
common shares
outstanding:
Basic 20,728 20,728
====== ======
Diluted 21,123 21,123
====== ======
(1) Represents acquisition-related costs expenses.
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
(2) acquisition on the acquisition date.
Represents the tax impact of acquisition costs and
patient base non-GAAP adjustments represented in
(3) entries (1) and (2).
THE ENSIGN GROUP, INC.
RECONCILIATION OF NET INCOME TO EBITDA AND EBITDAR
(in thousands)
The table below reconciles net income to EBITDA and EBITDAR for the
periods presented:
Three Months Ended
September 30,
-------------
2010 2009
---- ----
Consolidated Statement of Income
Data:
Net income $9,887 $7,686
Interest expense, net 2,225 1,168
Provision for income taxes 6,477 4,977
Depreciation and amortization 4,260 3,239
----- -----
EBITDA(1) $22,849 $17,070
======= =======
Facility rent-cost of services 3,631 3,707
----- -----
EBITDAR(1) $26,480 $20,777
======= =======
Nine Months Ended
September 30,
-------------
2010 2009
---- ----
Consolidated Statement of Income
Data:
Net income $28,854 $23,793
Interest expense, net 6,683 3,498
Provision for income taxes 18,833 15,537
Depreciation and amortization 12,238 9,413
------ -----
EBITDA(1) $66,608 $52,241
======= =======
Facility rent-cost of services 10,822 11,132
------ ------
EBITDAR(1) $77,430 $63,373
======= =======
THE ENSIGN GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF CASH FLOWS
(In thousands)
September December
30, 31,
2010 2009
---- ----
Assets
Current assets:
Cash and cash equivalents $36,926 $38,855
Accounts receivable-less allowance
for doubtful accounts of $9,254 and
$7,575 at September 30, 2010 and
December 31, 2009, respectively 72,083 62,606
Prepaid income taxes 397 1,242
Prepaid expenses and other current
assets 6,953 6,498
Deferred tax asset-current 10,707 8,126
------ -----
Total current assets 127,066 117,327
Property and equipment, net 254,192 230,774
Insurance subsidiary deposits and
investments 15,845 13,810
Escrow deposits 250 7,595
Deferred tax asset 6,392 4,262
Restricted and other assets 6,067 5,650
Intangible assets, net 4,131 4,498
Goodwill 10,524 7,432
Other indefinite-lived intangibles 672 -
--- ---
Total assets $425,139 $391,348
======== ========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $17,616 $15,498
Accrued wages and related liabilities 30,835 28,756
Accrued self-insurance
liabilities-current 10,672 10,074
Other accrued liabilities 13,247 15,375
Current maturities of long-term debt 2,165 2,065
----- -----
Total current liabilities 74,535 71,768
Long-term debt-less current
maturities 105,847 107,401
Accrued self-insurance
liabilities-less current portion 25,393 22,096
Deferred rent and other long-term
liabilities 2,951 2,524
Stockholders' equity 216,413 187,559
Total liabilities and stockholders'
equity $425,139 $391,348
======== ========
The following table presents selected data from our condensed
consolidated statement of cash flows for the periods presented:
Nine Months Ended
September 30,
-------------
2010 2009
---- ----
(In thousands)
Net cash provided by operating
activities $34,460 $28,683
Net cash used in investing
activities (32,758) (45,441)
Net cash used in financing
activities (3,631) (3,203)
------ ------
Net decrease in cash and cash
equivalents (1,929) (19,961)
Cash and cash equivalents at
beginning of period 38,855 41,326
------ ------
Cash and cash equivalents at
end of period $36,926 $21,365
======= =======
THE ENSIGN GROUP, INC.
SELECT PERFORMANCE INDICATORS
(Dollars in thousands)
The following table summarizes our selected performance indicators,
along with other statistics, for each of the dates or periods
indicated:
Three Months Ended
September 30,
-------------
2010 2009
---- ----
(Dollars in
thousands)
Total Facility Results :
Revenue $164,653 $132,924
Number of facilities at
period end 81 70
Actual patient days 688,617 581,041
Occupancy percentage -
Operational beds 80.1% 79.5%
Skilled mix by nursing days 24.5% 24.5%
Skilled mix by nursing
revenue 47.9% 48.1%
Three Months Ended
September 30,
-------------
2010 2009
---- ----
(Dollars in
thousands)
Same Facility Results(1) :
Revenue $124,274 $115,748
Number of facilities at
period end 56 56
Actual patient days 498,610 495,532
Occupancy percentage -
Operational beds 83.3% 81.1%
Skilled mix by nursing days 28.1% 26.2%
Skilled mix by nursing
revenue 52.4% 50.4%
Three Months Ended
September 30,
-------------
2010 2009
---- ----
(Dollars in
thousands)
Transitioning Facility
Results(2) :
Revenue $9,129 $8,519
Number of facilities at
period end 6 6
Actual patient days 42,942 42,317
Occupancy percentage -
Operational beds 73.3% 72.2%
Skilled mix by nursing days 19.4% 17.3%
Skilled mix by nursing
revenue 41.6% 39.5%
Three Months Ended
September 30,
-------------
2010 2009
---- ----
(Dollars in
thousands)
Recently Acquired Facility
Results(3) :
Revenue $31,250 $8,657
Number of facilities at
period end 19 7
Actual patient days 147,065 43,192
Occupancy percentage -
Operational beds 72.7% 70.1%
Skilled mix by nursing days 13.8% 11.6%
Skilled mix by nursing
revenue 30.5% 25.8%
Change % Change
------ --------
Total Facility Results :
Revenue $31,729 23.9%
Number of facilities at
period end 11 15.7%
Actual patient days 107,576 18.5%
Occupancy percentage -
Operational beds 0.6%
Skilled mix by nursing days - %
Skilled mix by nursing
revenue (0.2)%
Change % Change
------ --------
Same Facility Results(1) :
Revenue $8,526 7.4%
Number of facilities at
period end - - %
Actual patient days 3,078 0.6%
Occupancy percentage -
Operational beds 2.2%
Skilled mix by nursing days 1.9%
Skilled mix by nursing
revenue 2.0%
Change % Change
------ --------
Transitioning Facility
Results(2) :
Revenue $610 7.2%
Number of facilities at
period end - - %
Actual patient days 625 1.5%
Occupancy percentage -
Operational beds 1.1%
Skilled mix by nursing days 2.1%
Skilled mix by nursing
revenue 2.1%
Change % Change
------ --------
Recently Acquired Facility
Results(3) :
Revenue $22,593 NM %
Number of facilities at
period end 12 NM %
Actual patient days 103,873 NM %
Occupancy percentage -
Operational beds 2.6%
Skilled mix by nursing days 2.2%
Skilled mix by nursing
revenue 4.7%
Same Facility results represent all facilities purchased prior
to January 1, 2007. Same Facility results for 2009 include the
results of operations through September 30, 2009 of our
assisted living facility in Arizona where we decided not to
exercise our renewal option on the lease which expired on
September 30, 2009. The non-renewal of this lease reduced the
number of actual patient days by 7,461 during the three months
(1) ended September 30, 2010.
Transitioning Facility results represents all facilities
(2) purchased from January 1, 2007 to December 31, 2008.
Recently Acquired Facility (or "Acquisitions") results represent
(3) all facilities purchased on or subsequent to January 1, 2009.
THE ENSIGN GROUP, INC.
SELECT PERFORMANCE INDICATORS
(Dollars in thousands)
The following table summarizes our selected performance indicators,
along with other statistics, for each of the dates or periods
indicated:
Nine Months Ended
September 30,
-------------
2010 2009
---- ----
(Dollars in thousands)
Total Facility Results :
Revenue $476,775 $395,387
Number of facilities at
period end 81 70
Actual patient days 2,005,559 1,724,398
Occupancy percentage -
Operational beds 79.6% 79.6%
Skilled mix by nursing days 25.1% 24.7%
Skilled mix by nursing
revenue 48.6% 48.2%
Change % Change
------ --------
Total Facility Results :
Revenue $81,388 20.6%
Number of facilities at
period end 11 15.7%
Actual patient days 281,161 16.3%
Occupancy percentage -
Operational beds - %
Skilled mix by nursing days 0.4%
Skilled mix by nursing
revenue 0.4%
Nine Months Ended
September 30,
-------------
2010 2009
---- ----
(Dollars in thousands)
Same Facility Results(1) :
Revenue $366,323 $348,348
Number of facilities at
period end 56 56
Actual patient days 1,472,619 1,488,370
Occupancy percentage -
Operational beds 82.9% 81.7%
Skilled mix by nursing days 28.7% 26.3%
Skilled mix by nursing
revenue 53.1% 50.3%
Change % Change
------ --------
Same Facility Results(1) :
Revenue $17,975 5.2%
Number of facilities at
period end - - %
Actual patient days (15,751) (1.1)%
Occupancy percentage -
Operational beds 1.2%
Skilled mix by nursing days 2.4%
Skilled mix by nursing
revenue 2.8%
Nine Months
Ended
September
30,
----------
2010 2009
---- ----
(Dollars in
thousands)
Transitioning Facility
Results(2) :
Revenue $26,046 $24,683
Number of facilities at
period end 6 6
Actual patient days 123,820 120,358
Occupancy percentage -
Operational beds 71.2% 69.2%
Skilled mix by nursing days 19.0% 18.2%
Skilled mix by nursing
revenue 40.5% 41.9%
Change % Change
------ --------
Transitioning Facility
Results(2) :
Revenue $1,363 5.5%
Number of facilities at
period end - - %
Actual patient days 3,462 2.9%
Occupancy percentage -
Operational beds 2.0%
Skilled mix by nursing days 0.8%
Skilled mix by nursing
revenue (1.4)%
Nine Months Ended
September 30,
-------------
2010 2009
---- ----
(Dollars in thousands)
Recently Acquired Facility
Results(3) :
Revenue $84,406 $22,356
Number of facilities at
period end 19 7
Actual patient days 409,120 115,670
Occupancy percentage -
Operational beds 72.1% 67.4%
Skilled mix by nursing days 14.1% 10.3%
Skilled mix by nursing
revenue 30.6% 22.8%
Change % Change
------ --------
Recently Acquired Facility
Results(3) :
Revenue $62,050 NM %
Number of facilities at
period end 12 NM %
Actual patient days 293,450 NM %
Occupancy percentage -
Operational beds 4.7%
Skilled mix by nursing days 3.8%
Skilled mix by nursing
revenue 7.8%
Same Facility results represent all facilities purchased prior
to January 1, 2007. Same Facility results for 2009 include
the results of operations through September 30, 2009 of our
assisted living facility in Arizona where we decided not to
exercise our renewal option on the lease which expired on
September 30, 2009. The non-renewal of this lease reduced
the number of actual patient days by 21,984 during the nine
(1) months ended September 30, 2010.
Transitioning Facility results represents all facilities
(2) purchased from January 1, 2007 to December 31, 2008.
Recently Acquired Facility (or "Acquisitions") results
represent all facilities purchased on or subsequent to
(3) January 1, 2009.
THE ENSIGN GROUP, INC.
SKILLED NURSING AVERAGE DAILY REVENUE RATES AND REVENUE BY PAYOR
The following table reflects the change in the skilled nursing
average daily revenue rates by payor source, excluding therapy and
other ancillary services that are not covered by the daily rate:
Three Months Ended
------------------
September 30,
-------------
Same Facility
-------------
%
2010 2009 Change
---- ---- -------
Skilled Nursing Average
Daily Revenue Rates:
Medicare $557.22 $545.11 2.2%
Managed care 347.68 338.97 2.6%
Other skilled 556.12 588.55 (5.5)%
Total skilled revenue 475.75 463.99 2.5%
Medicaid 166.12 159.67 4.0%
Private and other payors 189.16 179.75 5.2%
Total skilled nursing
revenue $255.49 $241.73 5.7%
Nine Months Ended
-----------------
September 30,
-------------
Same Facility
-------------
%
2010 2009 Change
---- ---- -------
Skilled Nursing Average
Daily Revenue Rates:
Medicare $554.61 $544.12 1.9%
Managed care 343.65 335.98 2.3%
Other skilled 550.11 612.91 (10.2)%
Total skilled revenue 471.73 463.61 1.8%
Medicaid 164.63 160.52 2.6%
Private and other payors 188.14 182.47 3.1%
Total skilled nursing
revenue $255.16 $242.67 5.1%
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 September 30,
--------------------------------
2010 2009
---- ----
$ % $ %
--- --- --- ---
Revenue:
Medicaid $66,993 40.7% $53,589 40.3%
Medicare 52,905 32.1 42,027 31.6
Medicaid-
skilled 4,420 2.7 3,640 2.7
----- --- ----- ---
Total 124,318 75.5 99,256 74.6
Managed Care 20,373 12.4 17,996 13.6
Private and
Other(1) 19,962 12.1 15,672 11.8
------ ---- ------ ----
Total
revenue $164,653 100.0% $132,924 100.0%
======== ===== ======== =====
Nine Months Ended September 30,
-------------------------------
2010 2009
---- ----
$ % $ %
--- --- --- ---
Revenue:
Medicaid $192,648 40.4% $159,428 40.3%
Medicare 154,616 32.4 128,389 32.5
Medicaid-
skilled 13,462 2.8 8,627 2.2
------ --- ----- ---
Total 360,726 75.6 296,444 75.0
Managed Care 61,164 12.9 52,675 13.3
Private and
Other(1) 54,885 11.5 46,268 11.7
------ ---- ------ ----
Total
revenue $476,775 100.0% $395,387 100.0%
======== ===== ======== =====
Discussion of Non-GAAP Financial Measures
EBITDA consists of net income before (a) interest expense, net, (b) provisions for income taxes, and (c) depreciation and amortization. EBITDAR consists of net income before (a) interest expense, net, (b) provisions for income taxes, (c) depreciation and amortization, and (d) facility rent-cost of services. The Company believes that the presentation of EBITDA and EBITDAR provides important supplemental information to management and investors to evaluate the Company's operating performance. The Company believes disclosure of adjusted non-GAAP net income and non-GAAP diluted earnings per share has economic substance because the excluded expenses are infrequent in nature and are variable in nature, or do not represent current cash expenditures. A material limitation associated with the use of these measures as compared to the GAAP measures of net income and diluted earnings per share is that they may not be comparable with the calculation of net income and diluted earnings per share for other companies in the Company's industry. These non-GAAP financial measures should not be relied upon to the exclusion of GAAP financial measures. For further information regarding why the Company believes that this non-GAAP measure provides useful information to investors, the specific manner in which management uses this measure, and some of the limitations associated with the use of this measure, please refer to the Company's Report on Form 10-Q filed today with the SEC. The Form 10-Q is available on the SEC's website at www.sec.gov or under the "Financial Information" link of the Investor Relations section on Ensign's website at http://www.ensigngroup.net.
SOURCE The Ensign Group, Inc.
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