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Estate Planning Failures of the Rich and Famous V
 

The Ensign Group Reports Quarterly Earnings Up 27%; Adjusted Earnings of $0.61 per Share; Issues 2013 Guidance

MISSION VIEJO, Calif., Feb. 13, 2013-- The Ensign Group, Inc., the parent company of the Ensign™ group of skilled nursing, rehabilitative care services, assisted and independent living, home health, hospice care and urgent care companies, today reported operating results for the fourth quarter and full year 2012.. Adjusted earnings per share climbed 27.1% to $0.61 per...

GlobeNewswire

MISSION VIEJO, Calif., Feb. 13, 2013 (GLOBE NEWSWIRE) -- The Ensign Group, Inc. (Nasdaq:ENSG), the parent company of the Ensign™ group of skilled nursing, rehabilitative care services, assisted and independent living, home health, hospice care and urgent care companies, today reported operating results for the fourth quarter and full year 2012.

Financial Highlights Include:

  • Adjusted earnings per share climbed 27.1% to $0.61 per share for the quarter, and grew 8.5% to $2.54 per share for the year, despite the October 2011Medicare cuts, and well within the increased annual guidance published by Management in August 2012;
     
  • Same-store skilled revenue mix grew by 117 basis points to 53.9% of revenues in the quarter;
     
  • Same-store occupancy grew by 20 basis points over the prior year quarter, and by 53 basis points over the prior year, to 82.7%;
     
  • Adjusted consolidated EBITDAR was $35.0 million, an increase of 18.0% over the prior year quarter; and
     
  • Consolidated revenues were up 8.8% to a record $824.7 million in the year, and up 9.6% to a record $211.1 million in the quarter.

Operating Results

"We are pleased to report that operating results exceeded annual earnings guidance, which was increased in August 2012, with adjusted earnings per share of $2.54 for the year," said Ensign's President and Chief Executive Officer Christopher Christensen. He noted further that the adjusted earnings results were within the higher end of the range of Management's increased guidance, and a penny ahead of analyst consensus for the year.

Mr. Christensen added that Management is "likewise pleased to be issuing 2013 annual guidance, with projected revenues of $915 million to $931 million, and adjusted earnings of $2.79 to $2.88 per diluted share." He also stated that, "As we have noted in the past, our business can be a bit lumpy from quarter to quarter, but we are pleased to have been able to project performance fairly accurately on an annual basis to date."

Chief Financial Officer Suzanne Snapper reported that GAAP net income of $0.09 per diluted share was significantly impacted by a $15 million reserve taken by the company in the fourth quarter against the anticipated disposition of the Department of Justice civil investigation that has been ongoing since 2006. Commenting on the reserve, Mr. Christensen added, "We view this reserve and the move toward a possible settlement as a positive for Ensign, and hope that the outstanding operating results posted by our field leaders in the face of enormous obstacles this year will not be lost in the noise that can sometimes surround such discussions."

Operating results for the year came in the midst of an unprecedented 11.1% reduction in Medicare rates to skilled nursing facilities, as well as a simultaneous change in therapy regulations that increased the cost of delivering physical and other types of therapy to skilled nursing patients, all of which went into effect in late 2011.

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Adjusted net income was up 10.1% to $55.7 million for the year, and up 29.3% to $13.5 million for the quarter. Consolidated revenues for the year were up 8.8% to $824.7 million, and up 9.6% to $211.1 million for the quarter. Adjusted EBITDAR grew 18.0% to $35.0 million in the quarter, and up 9.3% to $141.8 million for the year.

Ms. Snapper also reported that Ensign's balance sheet remained strong, with its industry-low net-debt-to-EBITDAR ratio of 2.34x at year end. She further noted that the company continues to generate strong cash flow, with cash on hand on December 31 of $40.9 million, and net cash from operations of $82.1 million for the year.

Diluted GAAP earnings per share were $0.09 for the quarter, compared to $0.48 per share in the prior year quarter, and $1.85 for the year, compared to $2.21 in 2011. Ms. Snapper noted that, in addition to the reserve for the DOJ investigation, the quarter included a non-cash adjustment of $2.2 million for the impairment of the fair valuation of Doctors Express, Ensign's urgent care franchise system. "The initial value of Doctor's Express was based in part on the "fair valuation" of a non-controlling interest, which is based on an accounting analysis and not based on cash paid for the transaction," she said.

Adjusted non-GAAP earnings for the quarter were $0.61 per diluted share, compared to $0.48 in the fourth quarter of 2011, an increase of 27.1%. Adjusted non-GAAP earnings for the year were $2.54 per diluted share, compared to $2.34 in 2011, an increase of 8.5%.

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-K, which was filed with the SEC today and can be viewed on the Company's website at http://www.ensigngroup.net.

2013 Guidance Issued

Management issued 2013 annual guidance, projecting revenues of $915 million to $931 million, and adjusted net income of $2.79 to $2.88 per diluted share for the year. The guidance is based on diluted weighted average common shares outstanding of 22.5 million and assumes, among other things, no additional acquisitions or dispositions beyond those made to date, the anticipated effects of sequestration followed by an anticipated Medicare rate increase in October 1, 2013, an approximately 1.0% increase in Medicaid reimbursement rates net of expected provider tax increases, and that tax rates do not materially increase. It excludes acquisition-related costs and amortization costs related to intangible assets acquired. It also excludes expenses related to the DOJ investigation, which can vary widely from quarter to quarter depending on the DOJ's activities and the required response by the Company, and any costs associated with an eventual settlement or litigation thereof if the matter is not otherwise resolved.

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DOJ Investigation Progress

Explaining the $15 million reserve taken in the quarter, General Counsel Beverly Wittekind said, "Over the past months and years, as we have previously indicated, management and the special committee have been interacting with government representatives to advance the matter toward resolution. While the interactions continue, progress to date has allowed the conversation between our representatives and the government to move toward active settlement discussions." She further noted that the taking of the reserve is neither final nor a guarantee of a settlement, but rather represents an estimated liability related to the Company's efforts to achieve a global, company-wide resolution of any claims, if a settlement can be achieved. She also added that the ultimate settlement amount, if any, could differ materially from what has been recorded, and that it is impossible to predict the outcome of the investigation, further settlement discussions, or any litigation that might yet follow, and she directed investors to the more complete discussions of the matter contained in the company's 2012 10-K, for additional disclosures.

Quarter Highlights

During the quarter, the company's Board of Directors declared a quarterly cash dividend of $0.065 per share of Ensign common stock, an increase from the prior quarterly cash dividend of $0.06 per share. Ensign has been a dividend-paying company since 2002.

Also during the quarter and since, the company acquired one long-term care facility, one home health business, two hospice businesses and a majority interest in an ancillary service provider, in five separate transactions. The operations were all purchased with cash, and include:

  • In Texas, Richland Hills Care & Rehabilitation Center, a 92-bed skilled nursing facility located in Fort Worth;
     
  • In Arizona, Emblem Healthcare, a well-regarded hospice agency located in the greater Phoenix market's burgeoning East Valley area;
     
  • In California, Vesper Healthcare, a small but respected hospice agency located in the Pasadena market;
     
  • In Washington, Symbol Healthcare, a home health agency located in the Tacoma market; and
     
  • In a multi-state transaction, the company also acquired a majority interest in a small but well-regarded mobile ancillary services provider.

The acquisitions brought Ensign's growing portfolio to 108 facilities, seven home health and six hospice companies, and an ancillary service provider, all in 11 states. Of the 108 facilities, 86 are Ensign-owned, and 65 of those are owned free of mortgage debt, with Ensign affiliates holding purchase options on two of Ensign's 22 leased facilities. Management reaffirmed that Ensign is actively seeking additional opportunities to acquire both well-performing and struggling long-term care, seniors housing, home health and hospice operations across the United States.

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Conference Call

A live webcast will be held on Thursday, February 14, 2013 at 10:30 a.m. Pacific Time (1:30 p.m. Eastern) to discuss Ensign's fourth quarter and fiscal 2012 financial results, and Management's 2013 guidance. 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, March 8, 2013.

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, healthcare and diagnostic services for both long-term residents and short-stay rehabilitation patients at 108 facilities, seven home health companies, six hospice companies, three urgent care locations and a mobile diagnostic business, all spread across California, Arizona, Texas, Washington, Utah, Idaho, Colorado, Nevada, Iowa, Nebraska and Oregon. 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 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 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. 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-K, 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 CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
 
                 
 Three Months Ended
December 31, 2012
Year Ended
December 31, 2012
 As ReportedNon-GAAP Adj.  As AdjustedAs ReportedNon-GAAP Adj.  As Adjusted
Revenue  $ 211,101  (79)(8)  $ 211,022  $ 824,719  (79)(8)  $ 824,640
Expense:                
Cost of services (exclusive of facility rent, general and administrative and depreciation and amortization expense shown separately below)  171,765 (3,077)(1)(2)(8)  168,688  660,070  (6,641)(1)(2)(3)(8)  653,429
Charge related to U.S. Government inquiry  15,000 (15,000)(4)  --   15,000  (15,000)(4)  -- 
Facility rent—cost of services  3,256 (272)(5)(8)  2,984  13,319  (860)(5)(8)  12,459
General and administrative expense  7,886 (503)(6)  7,383  31,819  (1,945)(6)  29,874
Depreciation and amortization  7,319 (50)(7)(8)  7,269  28,464  (501)(7)(8)  27,963
Total expenses  205,226 (18,902)    186,324  748,672  (24,947)    723,725
Income from operations  5,875 18,823    24,698  76,047  24,868    100,915
Other income (expense):                
Interest expense  (3,098)      (3,098)  (12,229)      (12,229)
Interest income  83      83  255      255
Other expense, net  (3,015)      (3,015)  (11,974)      (11,974)
Income before provision for income taxes  2,860 18,823    21,683  64,073  24,868    88,941
Tax Effect on Non-GAAP Adjustments   7,134(9)      9,425(9)  
Tax True-up for Effective Tax Rate   (110)(10)          
Provision for income taxes  1,195 7,024    8,219  24,265  9,425    33,690
Net income  $ 1,665 11,799    $ 13,464  $ 39,808  15,443    $ 55,251
Less: net loss attributable to noncontrolling interests  (272) 226    (46)  (783)  354    (429)
Net income attributable to The Ensign Group, Inc.  $ 1,937 11,573    $ 13,510  $ 40,591  15,089    $ 55,680
Net income per share attributable to The Ensign Group, Inc.:                
Basic  $ 0.09      $ 0.63  $ 1.89      $ 2.60
Diluted  $ 0.09      $ 0.61  $ 1.85      $ 2.54
Weighted average common shares outstanding:                
Basic  21,605      21,605  21,429      21,429
Diluted  22,075      22,075  21,942      21,942
 
(1) Represents acquisition-related costs of $20 and $250 for the three and twelve months ended December 31, 2012, respectively.
(2) Represents costs of $152 and $591 for the three and twelve months ended December 31, 2012, respectively, incurred to recognize income tax credits which contributed to decrease in effective tax rate.
(3) Represents the settlement of a class action lawsuit regarding minimum staffing requirements in the state of California of $2,596 during the period ended June 30, 2012.
(4) Represents the Company's estimated liability related to our efforts to achieve a global, company-wide, resolution of any claims connected to the U.S. Department of Justice (DOJ) investigation.
(5) Represents straight-line rent amortization for a facility which the Company has begun construction activities, but has not commenced operations of a skilled nursing facility as of December 31, 2012.
(6) Represents legal costs incurred in connection with the ongoing investigation into the billing and reimbursement processes of some of our subsidiaries being conducted by the Department of Justice (DOJ).
(7) Represents amortization costs related to patient base intangible assets acquired. Patient base intangible assets are amortized over a period of four to eight months, depending on the classification of the patients and the level of occupancy in a new acquisition on the acquisition date.
(8) Represents revenues and expenses incurred at newly opened urgent care centers.
(9) Represents the tax impact of non-GAAP adjustments noted in (1) – (8) at our current year effective tax rate of 37.9%.
(10) Represents an adjustment to the provision for income taxes to our current year effective tax rate of 37.9%
 
 
THE ENSIGN GROUP, INC.
GAAP and ADJUSTED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
 
                 
 Three Months Ended
December 31, 2011
Year Ended
December 31, 2011
 
As Reported

Non-GAAP Adj.
 
As Adjusted

As Reported

Non-GAAP Adj.
 
As Adjusted
Revenue  $ 192,662      $ 192,662  $ 758,277      $ 758,277
Expense:                
Cost of services (exclusive of facility rent, general and administrative and depreciation and amortization expense shown separately below)  156,287 (91)(1)  156,196  600,804  (452)(1)  600,352
Facility rent—cost of services  3,345      3,345  13,725      13,725
General and administrative expense  7,578 (780)(2)  6,798  29,766  (1,544)(2)  28,222
Depreciation and amortization  6,502 (213)(3)  6,289  23,286  (1,021)(3)  22,265
Total expenses  173,712 (1,084)    172,628  667,581  (3,017)    664,564
Income from operations  18,950 1,084    20,034  90,696  3,017    93,713
Other income (expense):                
Interest expense  (2,989)      (2,989)  (13,778)  2,542(4)  (11,236)
Interest income  51      51  249      249
Other expense, net  (2,938)      (2,938)  (13,529)  2,542    (10,987)
Income before provision for income taxes  16,012 1,084    17,096  77,167  5,559    82,726
Tax impact of non-GAAP adjustments   422        2,162    
Adjustments to reflect 38.9% tax rate   571        526    
Provision for income taxes  5,657 993(5)  6,650  29,492  2,688(5)  32,180
Net income  $ 10,355 91    $ 10,446  $ 47,675  2,871    $ 50,546
Net income per share:                
Basic  $ 0.49      $ 0.49  $ 2.27      $ 2.41
Diluted  $ 0.48      $ 0.48  $ 2.21      $ 2.34
Weighted average common shares outstanding:                
Basic  21,109      21,109  20,967      20,967
Diluted  21,621      21,621  21,583      21,583
 
(1) Represents acquisition-related costs expenses.
(2) Represents legal costs incurred in connection with the ongoing investigation into the billing and reimbursement processes of some of our subsidiaries being conducted by the Department of Justice (DOJ).
(3) Represents amortization costs related to patient base intangible assets acquired. Patient base intangible assets are amortized over a period of four to eight months, depending on the classification of the patients and the level of occupancy in a new acquisition on the acquisition date.
(4) Represents the loss on extinguishment and amortization of remaining deferred financing costs in connection with the Senior Credit Facility entered into by the Company on July 15, 2011.
(5) Represents the tax impact of acquisition costs, patient base and loss on extinguishment of debt non-GAAP adjustments represented in entries (1) - (4).
   
   
THE ENSIGN GROUP, INC.
RECONCILIATION OF NET INCOME TO EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR
(in thousands)
(Unaudited)
 
The table below reconciles net income to EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR for the periods presented:  
           
 Three Months Ended
December 31,
Year Ended
December 31,
 2012201120122011  
Consolidated Statements of Income Data:          
Net income  $ 1,665  $ 10,355  $ 39,808  $ 47,675  
Net loss attributable to noncontrolling interests 272 783  
Interest expense, net 3,015 2,938 11,974 13,529  
Provision for income taxes 1,195 5,657 24,265 29,492  
Depreciation and amortization 7,319 6,502 28,464 23,286  
EBITDA  $ 13,466  $ 25,452  $ 105,294  $ 113,982  
Facility rent—cost of services 3,256 3,345 13,319 13,725  
EBITDAR  $ 16,722  $ 28,797  $ 118,613  $ 127,707  
     
EBITDA  $ 13,466  $ 25,452  $ 105,294  $ 113,982  
Adjustments to EBITDA:          
Charge related to the U.S. Government inquiry(a)  15,000  --   15,000  --   
Legal costs(b)  503  780  1,945  1,544  
Settlement of class action lawsuit(c)  --   --   2,596  --   
Impairment of goodwill and other indefinite-lived intangibles(d)  2,225  --   2,225  --   
Urgent care center losses(e)  374  --   546  --   
Acquisition related costs(f)  20  91  250  452  
Costs incurred to recognize income tax credits(g)  153  --   591  --   
Rent related to non-core business items above(h)  272  --   860  --   
Adjusted EBITDA  $ 32,013  $ 26,323  $ 129,307  $ 115,978  
Facility rent—cost of services  3,256  3,345  13,319  13,725  
Less: rent related to non-core business items above(h)  (272)  --   (860)  --   
Adjusted EBITDAR  $ 34,997  $ 29,668  $ 141,766  $ 129,703  
           
(a) Estimated liability related to our efforts to achieve a global, company-wide, resolution of any claims connected to the U.S. Department of Justice (DOJ) investigation.  
(b) Legal costs incurred in connection with the ongoing investigation into the billing and reimbursement processes of some our our subsidiaries being conducted by the DOJ.  
(c) Settlement of a class action lawsuit regarding minimum staffing requirements in the state of California during the three months ended June 30, 2012.  
(d) Impairment charges recorded at DRX, which we attribute to a decline in the estimated fair value of redeemable noncontrolling interest.  
(e) Operating losses incurred at newly opened urgent care centers, which are not already excluded through the net loss attributable to noncontrolling interests.  
(f) Costs incurred to acquire an operation which are not capitalizable.  
(g) Costs incurred to recognize income tax credits which contributed to a decrease in effective tax rate.  
(h) Rent related to urgent care operations, not included in item € above and straight-line rent amortization at one facility, for which the Company has begun construction activities, but has not commenced operations of a skilled nursing facility.  
   
   
THE ENSIGN GROUP, INC.
CONSOLIDATED BALANCE SHEETS
 (In thousands)
 
 December 31,  
 20122011  
Assets      
Current assets:      
Cash and cash equivalents  $ 40,923  $ 29,584  
Accounts receivable — less allowance for doubtful accounts of $13,811 and $12,782 at December 31, 2012 and 2011, respectively 94,187 86,311  
Investments — current 5,195  
Prepaid income taxes 3,787 5,882  
Prepaid expenses and other current assets 8,636 7,667  
Deferred tax asset — current 14,871 11,195  
Total current assets 167,599 140,639  
Property and equipment, net 447,877 403,862  
Insurance subsidiary deposits and investments 17,315 16,752  
Escrow deposits  4,635 175  
Deferred tax asset 2,234 3,514  
Restricted and other assets 8,643 10,418  
Intangible assets, net 9,015 2,321  
Goodwill 22,656 17,177  
Other indefinite-lived intangibles 10,888 1,481  
Total assets  $ 690,862  $ 596,339  
       
Liabilities and equity      
Current liabilities:      
Accounts payable  $ 26,069  $ 21,169  
Accrued charge related to U.S. Government inquiry  15,000  
Accrued wages and related liabilities 35,847 41,958  
Accrued self-insurance liabilities — current 16,034 12,369  
Other accrued liabilities 21,210 18,577  
Current maturities of long-term debt 7,187 6,314  
Total current liabilities 121,347 100,387  
Long-term debt — less current maturities 200,505 181,556  
Accrued self-insurance liabilities — less current portion 34,849 31,904  
Fair value of interest rate swap 2,866 2,143  
Deferred rent and other long-term liabilities 3,411 2,864  
Total equity 327,884 277,485  
Total liabilities and equity  $ 690,862  $ 596,339  
       
 
THE ENSIGN GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
The following table presents selected data from our consolidated statements of cash flows for the periods presented:
       
 Year Ended
December 31, 
 201220112010
Net cash provided by operating activities  $ 82,050  $ 72,687  $ 60,501
Net cash used in investing activities (84,258)  (156,052)  (57,186)
Net cash provided by financing activities 13,547  40,861  29,918
Net increase (decrease) in cash and cash equivalents 11,339  (42,504)  33,233
Cash and cash equivalents beginning of period 29,584  72,088  38,855
Cash and cash equivalents end of period  $ 40,923  $ 29,584  $ 72,088
 
 
THE ENSIGN GROUP, INC.
SELECT PERFORMANCE INDICATORS
(Quarterly Information Unaudited)
         
The following tables summarize our selected performance indicators, along with other statistics, for each of the dates or periods indicated:
         
 Three Months Ended
December 31,
   
 20122011    
 (Dollars in thousands)Change% Change
Total Facility Results:        
Revenue  $ 211,101  $ 192,662  $ 18,439  9.6%
Number of facilities at period end  108  102  6  5.9%
Actual patient days  872,634  833,617  39,017  4.7%
Occupancy percentage — Operational beds 78.3% 78.5%    (0.2)%
Skilled mix by nursing days 25.9% 24.7%    1.2%
Skilled mix by nursing revenue 49.7% 48.6%    1.1%
 Three Months Ended
December 31,
   
 20122011    
 (Dollars in thousands)Change% Change
Same Facility Results(1):        
Revenue  $ 141,726  $ 137,466  $ 4,260  3.1%
Number of facilities at period end  62  62  —%
Actual patient days  537,457  536,591  866  0.2%
Occupancy percentage — Operational beds 82.0% 81.8%    0.2%
Skilled mix by nursing days 29.3% 28.5%    0.8%
Skilled mix by nursing revenue 53.9% 52.7%    1.2%
 Three Months Ended
December 31,
   
 20122011    
 (Dollars in thousands)Change% Change
Transitioning Facility Results(2):        
Revenue  $ 38,492  $ 34,079  $ 4,413  12.9%
Number of facilities at period end  20  20  —   —%
Actual patient days  169,032  159,119  9,913  6.2%
Occupancy percentage — Operational beds 76.1% 71.6%    4.5%
Skilled mix by nursing days 19.9% 16.9%    3.0%
Skilled mix by nursing revenue 40.8% 36.3%    4.5%
 Three Months Ended
December 31,
   
 20122011    
 (Dollars in thousands)Change% Change
Recently Acquired Facility Results(3):        
Revenue  $ 30,883  $ 21,117  $ 9,766 NM
Number of facilities at period end  26  20  6 NM
Actual patient days  166,145  137,907  28,238 NM
Occupancy percentage — Operational beds 69.8% 74.6%   NM
Skilled mix by nursing days 17.8% 15.4%   NM
Skilled mix by nursing revenue 37.1% 35.3%   NM
 Year Ended
December 31,
   
 20122011    
 (Dollars in thousands)Change% Change
Total Facility Results:        
Revenue  $ 824,719  $ 758,277  $ 66,442  8.8%
Number of facilities at period end  108  102  6  5.9%
Actual patient days  3,452,598  3,124,724  327,874  10.5%
Occupancy percentage — Operational beds 79.0% 79.2%    (0.2)%
Skilled mix by nursing days 25.9% 25.5%    0.4%
Skilled mix by nursing revenue 50.0% 51.3%    (1.3)%
 Year Ended
December 31,
   
 20122011    
 (Dollars in thousands)Change% Change
Same Facility Results(1):        
Revenue  $ 563,719  $ 568,087  $ (4,368)  (0.8)%
Number of facilities at period end  62  62  —%
Actual patient days  2,152,011  2,137,951  14,060  0.7%
Occupancy percentage — Operational beds 82.7% 82.2%    0.5%
Skilled mix by nursing days 29.5% 29.0%    0.5%
Skilled mix by nursing revenue 54.2% 55.4%    (1.2)%
 Year Ended
December 31,
   
 20122011    
 (Dollars in thousands)Change% Change
Transitioning Facility Results(2):        
Revenue  $ 147,104  $ 138,521  $ 8,583  6.2%
Number of facilities at period end  20  20  —   —%
Actual patient days  662,290  640,396  21,894  3.4%
Occupancy percentage — Operational beds 75.0% 72.7%    2.3%
Skilled mix by nursing days 18.3% 16.3%    2.0%
Skilled mix by nursing revenue 39.0% 37.3%    1.7%
 Year Ended
December 31,
   
 20122011    
 (Dollars in thousands)Change% Change
Recently Acquired Facility Results(3):        
Revenue  $ 113,896  $ 51,669  $ 62,227 NM
Number of facilities at period end  26  20  6 NM
Actual patient days  638,297  346,377  291,920 NM
Occupancy percentage — Operational beds 72.1% 74.9%   NM
Skilled mix by nursing days 17.5% 14.2%   NM
Skilled mix by nursing revenue 38.2% 34.0%   NM
                                                               
         
(1)  Same Facility results represent all facilities purchased prior to January 1, 2009.
(2)  Transitioning Facility results represents all facilities purchased from January 1, 2009 to December 31, 2010.
(3)  Recently Acquired Facility (or "Acquisitions") results represent all facilities purchased on or subsequent to January 1, 2011.
 
 
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 the 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 FacilityTransitioningAcquisitionsTotal%
 20122011201220112012201120122011Change
Skilled Nursing Average Daily Revenue Rates:                  
Medicare  $ 576.38  $ 551.16  $ 486.70  $ 482.82  $ 472.44  $ 460.48  $ 547.86  $ 532.66  2.9%
Managed care  380.85  365.18  412.58  392.99  381.03  346.85  384.89  367.46  4.7%
Other skilled  554.79  571.56  574.08  622.42  610.62  558.50  656.84  (15.0)%
Total skilled revenue  496.80  486.43  470.74    462.95  444.50  489.90  485.03  1.0%
Medicaid  172.72  170.75  171.56  164.47  171.89  137.96  172.38  166.10  3.8%
Private and other payors  195.43  191.16  157.27  172.45  167.15  160.91  179.55  178.72  0.5%
Total skilled nursing revenue  $ 269.80  $ 262.56  $ 229.00  $ 216.32  $ 222.40  $ 193.32  $ 255.72  $ 246.44  3.8%
                   
 Year Ended December 31,
 Same FacilityTransitioningAcquisitionsTotal%
 20122011201220112012201120122011Change
Skilled Nursing Average Daily Revenue Rates:                  
Medicare$ 564.94$ 618.22$ 485.07$ 522.28$ 471.49$ 464.57$ 541.63$ 595.30  (9.0)%
Managed care 377.94 367.74 408.23  415.82 400.94 408.28  382.13 372.41  2.6%
Other skilled 521.11 542.93 571.97  554.10 610.62  528.00 564.60  (6.5)%
Total skilled revenue 492.71 519.82 470.08  497.87 461.19 458.06  486.98 515.90  (5.6)%
Medicaid 170.76 168.36 164.91  161.43 154.04 138.48  167.78 165.11  1.6%
Private and other payors 196.64 188.21 167.34  173.40 165.64 158.35  181.52 179.42  1.2%
Total skilled nursing revenue$ 268.24$ 272.35$ 221.20$ 218.01$ 211.56$ 191.02$ 252.18$ 256.34  (1.6)%
 
 
The following tables set forth our percentage of skilled nursing patient revenue and days by payor source for the three months ended December 31, 2012 and 2011:
                 
 Three Months Ended December 31,
 Same FacilityTransitioningAcquisitionsTotal
 20122011201220112012201120122011
Percentage of Skilled Nursing Revenue:                
Medicare 33.1% 33.9% 25.6% 25.9% 33.7% 31.4% 31.9% 32.4%
Managed care  16.5  14.1  11.1  8.1  3.3  3.9  14.0  12.3
Other skilled  4.3  4.7  4.1  2.3  0.1  —   3.8  3.9
Skilled mix  53.9  52.7  40.8  36.3  37.1  35.3  49.7  48.6
Private and other payors  7.2  7.1  9.4  10.4  22.2  30.0  9.3  9.5
Quality mix  61.1  59.8  50.2  46.7  59.3  65.3  59.0  58.1
Medicaid  38.9  40.2  49.8  53.3  40.7  34.7  41.0  41.9
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 FacilityTransitioningAcquisitionsTotal
 20122011201220112012201120122011
Percentage of Skilled Nursing Days:                
Medicare  15.5%  16.2%  12.0%  11.6%  15.8%  13.2%  14.9%  15.0%
Managed care  11.7  10.1  6.2  4.4  1.9  2.2  9.3  8.2
Other skilled  2.1  2.2  1.7  0.9  0.1  —   1.7  1.5
Skilled mix  29.3  28.5  19.9  16.9  17.8  15.4  25.9  24.7
Private and other payors  9.9  9.7  13.6  13.0  29.6  36.0  13.3  13.2
Quality mix  39.2  38.2  33.5  29.9  47.4  51.4  39.2  37.9
Medicaid  60.8  61.8  66.5  70.1  52.6  48.6  60.8  62.1
Total skilled nursing  100.0%  100.0%  100.0%  100.0%  100.0%  100.0%  100.0%  100.0%
                 
The following tables set forth our percentage of skilled nursing patient revenue and days by payor source for the years ended December 31, 2012 and 2011:                
                 
 Year Ended December 31,
 Same FacilityTransitioningAcquisitionsTotal
 20122011201220112012201120122011
Percentage of Skilled Nursing Revenue:                
Medicare 34.4% 37.1% 26.3% 28.3% 33.3% 30.5% 32.9% 35.3%
Managed care  15.6  14.7  9.4  7.5  4.9  3.5  13.4  12.9
Other skilled  4.2  3.6  3.3  1.5  —   —   3.7  3.1
Skilled mix  54.2  55.4  39.0  37.3  38.2  34.0  50.0  51.3
Private and other payors  7.1  7.1  10.3  10.6  24.9  30.3  9.5  8.8
Quality mix  61.3  62.5  49.3  47.9  63.1  64.3  59.5  60.1
Medicaid  38.7  37.5  50.7  52.1  36.9  35.7  40.5  39.9
Total skilled nursing 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
                 
                 
 Year Ended December 31,
 Same FacilityTransitioningAcquisitionsTotal
 20122011201220112012201120122011
Percentage of Skilled Nursing Days:                
Medicare  16.3%  16.3%  12.0%  11.8%  14.9%  12.5%  15.3%  15.2%
Managed care  11.2  10.9  5.1  3.9  2.6  1.7  9.0  8.9
Other skilled  2.0  1.8  1.2  0.6  —   —   1.6  1.4
Skilled mix  29.5  29.0  18.3  16.3  17.5  14.2  25.9  25.5
Private and other payors  9.7  10.3  13.6  13.4  31.9  36.6  13.2  12.6
Quality mix  39.2  39.3  31.9  29.7  49.4  50.8  39.1  38.1
Medicaid  60.8  60.7  68.1  70.3  50.6  49.2  60.9  61.9
Total skilled nursing  100.0%  100.0%  100.0%  100.0%  100.0%  100.0%  100.0%  100.0%
 
 
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,
 201220112010201220112010
 $%$%$%$%$%$%
Revenue:(Dollars in thousands)    
Medicaid  $ 78,113 37.0%  $ 73,463 38.1%  $ 66,878 38.7%  $ 302,046 36.6%  $ 277,736 36.6%  $ 259,711 40.0%
Medicare 68,863 32.6% 64,386 33.4% 61,194 35.4%  278,578 33.8% 272,283 35.9%  219,217 33.7%
Medicaid—skilled 6,828 3.3% 6,560 3.4% 4,111 2.4%  25,418 3.1% 20,290 2.7%  17,573 2.7%
Total 153,804 72.9% 144,409 74.9% 132,183 76.5%  606,042 73.5% 570,309 75.2%  496,501 76.4%
Managed Care 28,530 13.5% 22,328 11.6% 22,265 12.9%  106,268 12.9% 94,266 12.4%  84,364 13.0%
Private and Other(1) 28,767 13.6% 25,925 13.5% 18,309 10.6%  112,409 13.6% 93,702 12.4%  68,667 10.6%
Total revenue  $ 211,101 100.0%  $ 192,662 100.0%  $ 172,757 100.0%  $ 824,719 100.0%  $ 758,277 100.0%  $ 649,532 100.0%
 
(1) Private and other payors includes revenue from urgent care centers and franchising businesses.

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, EBITDAR, adjusted EBITDA, adjusted EBITDAR and adjusted net income, 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 Report on Form 10-K filed today with the SEC. The Form 10-K 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.

CONTACT: Robert EastWestwicke Partners LLC
         (443) 213-0500
         bob.east@westwickepartners.com

         or

         Gregory Stapley
         Investor/Media Relations
         The Ensign Group, Inc.
         (949) 487-9500
         ir@ensigngroup.net

The Ensign Group, Inc. Logo

Source: The Ensign Group, Inc.
Copyright: 2013 GlobeNewswire, Inc.
Wordcount: 6091



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