MISSION VIEJO, Calif., Aug. 03, 2017 (GLOBE NEWSWIRE) -- The Ensign Group, Inc. (Nasdaq:ENSG), the parent company of the Ensign™ group of skilled nursing, rehabilitative care services, home health, home care, hospice care and assisted living companies, today announced its operating results for the second quarter of 2017, reporting GAAP diluted earnings per share for the quarter of $0.23 and fully diluted adjusted earnings per share for the quarter of $0.31 ⁽¹⁾.

Quarter Highlights Include:

• Consolidated EBITDA increased 10.4% to $32.6M and adjusted EBITDA increased 169 basis points to $38.1M over the prior year quarter;
• Same store managed care revenue for transitional and skilled services grew by 10.8%, with growth of 5.5% in managed care days, over the prior year quarter;
• Same store skilled mix revenue for transitional and skilled services as a percentage of revenue for all segments increased 56 basis points to 51.6% over the prior year quarter;
• Transitioning revenue for transitional and skilled services increased 8.2% to $77.8M, with occupancy growth of 268 basis points to 73.9%, over the prior year quarter;
• Transitioning Medicare and Medicaid skilled revenue for transitional and skilled services increased 8.2% and 16.9%, respectively, over the prior year quarter;
• Transitioning Medicare and Medicaid skilled days increased 2.9% and 27.0%, respectively, over the prior year quarter;
• Bridgestone Living LLC, Ensign's assisted and independent living subsidiary, grew its segment income by 12.1% to $3.7 million over the prior year quarter; and
• Cornerstone Healthcare, Inc., Ensign's home health and hospice subsidiary, grew its segment income by 13.2% to $4.9 million and revenue by $6.1 million or 21.5% to $34.6 million all over the prior year quarter.          

 ^{(1) See "Reconciliation of GAAP to Non-GAAP Financial Information".}

Operating Results

“We continue to make progress in both occupancy and skilled revenue in both same-store and transitioning operations,” said Ensign’s President and Chief Executive Officer Christopher Christensen.  He continued, “We were particularly pleased to see increases in skilled revenue and skilled Medicare and Medicaid days in transitioning operations of 8.2% and 16.9%, respectively, and an improvement in skilled occupancy of 268 basis points all over the prior year quarter.” 

Mr. Christensen also reported that results are on track with Management’s expectations and that Management is confident that the company can achieve its previously-announced 2017 annual guidance.  Ensign reaffirmed projected revenues of $1.76 billion to $1.80 billion and annual earnings per share guidance of $1.46 to $1.53 per diluted share. He continued, “We are not satisfied with the results achieved during the quarter, but we are very encouraged with the improvements our local leaders have made and we expect to see continued growth in the third and fourth quarter and beyond,” he added.

Pointing to the large number of newly acquired and transitioning operations within the portfolio, he commented, “We are encouraged to see the tremendous organic growth potential that exists within our portfolio continuing to take shape, even during one of our historically slower quarters.”  Noting that Ensign’s adjusted earnings per share was $0.31 for the quarter, Mr. Christensen indicated that a few slower-than-expected transitions and a substantial spike in health insurance claims have created a short-term drag on performance, but that the progress in most of the portfolio sets the stage for strong third and fourth quarter results.  He continued, “We believe that as the quality of our service offerings, our superior clinical outcomes and our local connections to our individual markets continue to strengthen, we will increasingly draw market share across the portfolio.”

Mr. Christensen also highlighted the continued success of the company’s new business ventures, including assisted living, home health, hospice care, and other post-acute care businesses.  He pointed to their income growth as further evidence of the organization’s agility and ability to apply its operating principles in other healthcare service businesses. “We are grateful to our local leaders in each of these businesses as they strive to make their organizations the “go-to” providers in the markets they serve, and thereby extending Ensign’s growing influence in the healthcare world. It is through them that we continue to realize our mission of bringing a new level of quality and dignity to the post-acute care industry, doing it one operation at a time,” he said.

Commenting on the variability of short-term results, Chief Financial Officer Suzanne Snapper observed that, “As we have noted in the past, our business can be a bit lumpy from quarter to quarter, which is why we only provide annual earnings guidance.”  She added that “Operating results in the quarter were impacted by a number of non-operational factors, including a spike in healthcare costs, the drag created by several new acquisitions during the quarter, and seasonal softness in same-store occupancy and skilled mix, all of which are already significantly improving in July.”

Ms. Snapper added that, “We believe that Ensign still has the cleanest balance sheet in the industry,” noting that even after the company’s significant acquisition activity, Ensign’s lease-adjusted net-debt-to-EBITDAR ratio was 4.17x as of the end of the quarter.  She noted that even though this debt ratio is higher than Ensign’s historical averages, the ratio has improved over the last few quarters and that she expects the ratio to return to historical levels as the new acquisitions add EBITDAR to consolidated operating results.  She cited the company’s acquisition history and business model to explain that the debt ratio rises during periods with higher acquisition activity, emphasizing the fact that the Company has acquired approximately $190 million in new assets in just the last 9 months.  She also indicated that the company’s credit relationships remain strong, with approximately $162 million in borrowing capacity available on its existing credit line and 58 unlevered real estate assets that add additional liquidity.

GAAP diluted earnings per share were $0.23 and fully diluted adjusted earnings per share were $0.31 for the quarter.  GAAP net income was $12.2 million and adjusted net income was $16.1 million. A discussion of the company's use of non-GAAP financial measures is set forth below. A reconciliation of net income to adjusted EBITDAR and adjusted 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.

Quarter Highlights

During the quarter, the Company paid a quarterly cash dividend of $0.0425 per share of Ensign common stock. Ensign has been a dividend-paying company since 2002 and has increased its dividend every year for 14 years.

Also during the quarter and since, the company announced the following acquisitions:

• On April 1, 2017, Rehabilitation Center of Des Moines, a 74-bed skilled nursing operation in Des Moines, Iowa;
• On May 1, 2017, Meadow View Nursing and Rehabilitation, a 112-bed skilled nursing facility in Nampa, Idaho;
• Also on May 1, 2017, Voto Home Health, a Medicare-certified home health agency servicing King County, Washington;
• On June 1, 2017, Heritage Park Healthcare and Rehabilitation, a 115-bed skilled nursing facility in Roy, Utah and Wide Horizons Intermediate Care Facility, an 83-bed intermediate care facility for individuals with intellectual disability in Ogden, Utah;
• On June 16, 2017, Meadowcreek Senior Living, a 37-unit assisted living facility in Lancaster, Texas; Paris Chalet Senior Living, a 37-unit assisted living facility in Paris, Texas; Maple Meadows Assisted Living, a 19-unit assisted living facility in Fond du Lac, Wisconsin; North Point Senior Living, a 19-unit assisted living facility in Kenosha, Wisconsin; and Lake Pointe Villa Assisted Living, a 19-unit assisted living facility in Oshkosh, Wisconsin;
• On July 1, 2017, The Villas at Sunny Acres, a post-acute care and retirement community with 134 skilled nursing beds, 35 assisted living units and 198 independent living units set on 64 acres in Thornton, Colorado; and Medallion Post Acute Rehabilitation, a 60-bed skilled nursing operation, and Medallion Villas, a 44-unit assisted living and 64-unit independent living operation, both set on a single healthcare campus in Colorado Springs, Colorado; and
• On August 1, 2017, Parkside Senior Living, a 20-unit assisted living facility in Neenah, Wisconsin.

During the quarter, the Company also completed the sale and simultaneous lease of two skilled nursing facilities and one assisted living community to Mainstreet Health Investments Inc. (TSX:HLP.U) ("MHI").   The triple-net master lease includes an initial 20-year term and CPI-based annual escalators. The properties are located within high-density neighborhoods of the Los Angeles and Phoenix metro markets and have been owned and operated by Ensign for many years. Simultaneously, MHI released Ensign from its lease obligations on three transitional care facilities in Kansas and Texas.

"This transaction not only demonstrates the significant value inherent in our owned real estate, but it also shows that we have several levers we can pull to strengthen our already healthy balance sheet." said Christopher Christensen, Ensign's President and Chief Executive Officer. "We were pleased to capture some of the value we've created in these real estate assets while simultaneously ensuring that we will continue serving each of these communities for decades to come," he said, noting that the EBITDAR to lease ratios exceeded two times as of the commencement date.   

Ensign affiliates own the real estate of 61 of the 227 healthcare facilities within the portfolio, with twenty hospice agencies, eighteen home health agencies and three home care businesses in 14 states.  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.

2017 Guidance

Management reaffirmed its 2017 annual revenue guidance of $1.76 billion to $1.80 billion and annual earnings per share guidance of $1.46 to $1.53 per diluted share.  Management’s guidance is based on diluted weighted average common shares outstanding of 53.7 million and a 35.5% tax rate, both of which reflect the impact of ASU 2016-09.  In addition, the guidance assumes, among other things, normalized health insurance costs, anticipated Medicare and Medicaid reimbursement rate increases net of provider taxes and acquisitions closed to date. It also excludes acquisition-related costs and amortization costs related to intangible assets acquired, share-based compensation, costs incurred from closed operations, costs incurred to recognize income tax credits and costs incurred for facilities currently being constructed and other start-up operations.

Conference Call

A live webcast will be held Friday, August 4, 2017 at 10:00 a.m. Pacific time (1:00 p.m. Eastern time) to discuss Ensign’s second quarter financial results. To listen to the webcast, or to view any financial or statistical information required by SEC Regulation G, please visit the Investors Relations section of Ensign’s 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, September 1, 2017.

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 227 healthcare facilities, twenty hospice agencies, eighteen home health agencies and three home care businesses in California, Arizona, Texas, Washington, Utah, Idaho, Colorado, Nevada, Iowa, Nebraska, Oregon, Wisconsin, Kansas and South Carolina. 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 Ensign Group, Inc. has direct operating assets, employees or revenue, or that any of the operations, the home health and hospice businesses, 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, 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 Securities and Exchange Commission, including its Form 10-Q, 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.

SOURCE: The Ensign Group, Inc.