The Ensign Group, Inc. (Nasdaq: ENSG), the parent company of the
Ensign(TM) group of companies, which provide post-acute healthcare
services and invest in the long-term healthcare industry, primarily
in skilled nursing and senior living facilities, announced
operating results for the third quarter of 2023, reporting GAAP
diluted earnings per share of $1.11 and adjusted earnings per
share(1) of $1.20 for the quarter ended September 30, 2023.
Highlights Include:
- GAAP diluted earnings per share for
the quarter was $1.11 and adjusted diluted earnings per share(1)
was $1.20, an increase of 12.1% and 15.4%, respectively, over the
prior year quarter.
- GAAP net income was $63.9 million
and adjusted net income(1) was $69.0 million for the quarter, an
increase of 13.7% and 16.6%, respectively, over the prior year
quarter.
- Consolidated GAAP and adjusted
revenues for the quarter were $940.8 million, an increase of 22.2%
over the prior year quarter.
- Total skilled services(2) revenue
for the quarter was $903.0 million, an increase of 22.1% over the
prior year quarter, and total skilled services(2) segment income
was $117.8 million, an increase of 15.8% over the prior year
quarter.
- Same store and transitioning
occupancy increased by 290 and 270 basis points, respectively, over
the prior year quarter.
- Same store and transitioning
combined managed care revenue increased by 13.8% and managed care
census increased by 6.6%, over the prior year quarter.
- Standard Bearer(2) revenue was
$21.0 million for the quarter, an increase of 12.0% from prior year
quarter and FFO was $13.6 million for the quarter, an increase of
8.7% from the prior year quarter.(1) See "Reconciliation of GAAP to
Non-GAAP Financial Information".(2) Our Skilled Services and
Standard Bearer Segments are defined and outlined in Note 8 on Form
10-Q.
Operating Results
“We are proud to report another strong quarter
and are pleased that we have been able to continue to improve our
clinical and financial results across our portfolio,” said Barry
Port, Ensign’s Chief Executive Officer. “During the quarter we saw
continued improvement in occupancies and managed care revenues,
which is particularly impressive given persistent labor market
pressures and the return of more typical seasonality. More
specifically, we were pleased to see same store occupancy of 79.5%,
which grew by 290 basis points over the prior year quarter and by
97 basis points sequentially over the second quarter. All of these
results are all made possible by the relentless efforts of our
caregivers and their continued endurance and strength, all while
many of our same store leaders and clinicians were transitioning 51
recently acquired operations. We look forward to even more clinical
and financial success during the remainder of the year as our focus
is following and protecting the operational principles that got us
here,” Port added.
Port continued, “We also continue to build
stronger relationships with our managed care partners due to better
coordination of care, increased capabilities and strong clinical
outcomes. As a result, we saw increased volume in our same store
and transitioning combined managed care census and managed care
revenue, which increased during the quarter by 6.6% and 13.8%,
respectively, over the prior year. As expected, we saw a seasonal
decrease to skilled mix during the quarter, however due to our
local operators’ strong clinical reputations, we are continuing to
see elevated skilled mix when compared to pre-covid levels. This
continued growth in skilled mix demonstrates the increasing and
sustainable demand for skilled post-acute services, including
within the context of our managed care patients.”
Mr. Port, added, “Due to our solid results
during the quarter, as well as continued strength from our recent
acquisitions, we are increasing our annual 2023 earnings guidance
to between $4.73 to $4.79 per diluted share, up from $4.70 to $4.78
per diluted share. This new midpoint of our 2023 earnings guidance
represents an increase of 15.0% over our 2022 results and is 30.8%
higher than our 2021 results. We are also raising our annual
revenue guidance to between $3.72 billion and $3.73 billion, up
from our previous guidance of $3.69 billion to $3.73 billion. We
are excited about the upcoming year and are confident that our
partners will continue to manage and innovate through all the
lingering challenges on the labor front."
Chad Keetch, Ensign’s Chief Investment Officer
and Executive Vice President noted the progress the Company is
making with its newly acquired operations. He said, “As we
expected, we continued to add to our growing portfolio and are very
excited about the six new operations and four real estate assets we
added during the quarter and since, bringing the number of
operations in our newly acquired bucket to 51. We have been patient
and look forward to seeing our discipline paying off as these new
operations continue to improve. As a result of skilled services
expansions in 2023, occupancy and skilled mix days for the skilled
nursing operations in the recently acquired bucket was 77.4% and
26.1%, respectively, for the quarter. When compared to our same
store occupancy and skilled mix days of 79.5% and 30.7%,
respectively, there is enormous upside in each of these new
operations as they continue to transform into “same store” caliber
operations. We are very optimistic about the organic growth
potential within our existing portfolio as our new acquisitions are
already contributing to our results, in many cases ahead of
schedule.”
Speaking to the Company’s financial health, Ms.
Snapper, Ensign’s Executive Vice President and Chief Financial
Officer reported that the Company’s liquidity remains strong with
approximately $467.9 million of cash on hand and $593.3 million of
available capacity under its line-of-credit. Ms. Snapper also
indicated that, “Management’s guidance is based on diluted weighted
average common shares outstanding of approximately 57.7 million and
a 25.0% tax rate. In addition, the guidance assumes, among other
things, normalized health insurance costs, management’s current
expectations regarding reimbursement rates and recovery of the
COVID-19 pandemic. It also excludes one-time charges,
acquisition-related costs and amortization costs related to
intangible assets acquired and share-based compensation.”
A discussion of the Company's use of non-GAAP
financial measures is set forth below. A reconciliation of net
income to adjusted EBT, EBITDA, adjusted EBITDAR, adjusted EBITDA
and FFO for our real estate segment, as well as, a reconciliation
of GAAP earnings per share, net income to adjusted net income and
adjusted net earnings per share appear in the financial data
portion of this release. More complete information is contained in
the company’s Interim Report on Form 10-Q for the period ended
September 30, 2023 which is expected to be filed with the SEC today
and can be viewed on the Company’s website at
http://www.ensigngroup.net.
Growth and Real Estate
Highlights
Mr. Keetch added additional commentary on the
Company’s continued acquisition activity. “We continue to see a
steady pipeline of new opportunities and are beginning to see the
effects of higher interest rates on pricing, with more real estate
opportunities coming to market at reasonable prices due to tighter
financial markets. We also continue to see evidence that many
operators are struggling and, as a result, we still expect there
will be lots of opportunities that will arise. However, as we
always remind you, we do not set arbitrary growth goals and will
remain true to our disciplined acquisition strategy, only growing
when we have the right leaders in place and the pricing is right.”
Keetch said.
The recent acquisitions include the following
operations:
- Ashley River Healthcare, a 125-bed
skilled nursing facility located in Charleston, South
Carolina;
- The Reserve Healthcare and
Rehabilitation, a 135-bed skilled nursing facility located in
Hanahan, South Carolina and
- Providence Place, a 45-bed skilled
nursing facility located in Kansas City, Kansas.
Standard Bearer also announced the following
real estate acquisitions:
- Rehabilitation and Nursing Center
of the Rockies, a 96-bed skilled nursing facility located in Fort
Collins, Colorado, which will be operated by an independent
operating subsidiary of Ensign;
- Belmont Terrace, a 95-bed skilled
nursing facility located in Bremerton, Washington, which will be
operated by an independent operating subsidiary of Ensign;
- Puget Sound Transitional Care, a
125-bed skilled nursing facility located in Des Moines, Washington
which will be operated by an independent operating subsidiary of
Ensign; and
- Avamere Rehabilitation at Ridgemont
and The Villas at Ridgemont, consisting of 96 licensed skilled
nursing beds and 46 independent living units, located in Port
Orchard, Washington, which will be operated by a third-party
operator.
Ensign's growing portfolio consists of 296
healthcare operations, 26 of which also include senior living
operations, across thirteen states. Ensign now owns 112 real estate
assets, 82 of which it operates. Keetch noted that Ensign’s overall
strategy will continue to include both leasing and acquiring the
real estate and that the Company is actively looking for performing
and underperforming operations in several states.
“Looking forward, we are poised to grow with
over a billion dollars in dry powder for future investments. But
more importantly, our local leaders are constantly recruiting
future CEOs of our operations and we have a deep bench of
CEO’s-in-training that are eagerly preparing for their opportunity
to lead. We look forward to actively seeking opportunities to
acquire real estate and to lease both well-performing and
struggling skilled nursing, senior living and other healthcare
related businesses in our current footprint and in a few new
states,” Keetch added.
The Company continues to provide additional
disclosure on Standard Bearer, which is comprised of 107 properties
owned by the Company and leased to 78 affiliated skilled nursing
and senior living operations and 30 operations that are leased to
third party operators. Keetch noted that each of these properties
are subject to triple-net, long-term leases and generated rental
revenue of $21.0 million for the quarter, of which $17.0 million
was derived from Ensign affiliated operations. Also, for the
quarter, Ensign reported $13.6 million in FFO.
The Company paid a quarterly cash dividend of
$0.0575 per share of Ensign common stock. Ms. Snapper noted that
the Company’s liquidity remains strong and that the Company plans
to continue its long history of paying dividends into the future,
noting that in December of 2022 that the Company increased the
annual dividend for the 21th consecutive year.
Conference Call
A live webcast will be held Thursday, October
26, 2023 at 10:00 a.m. Pacific time (1:00 p.m. Eastern time) to
discuss Ensign’s third quarter of 2023 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, November 24,
2023.
About Ensign™
The Ensign Group, Inc.'s independent operating
subsidiaries provide a broad spectrum of skilled nursing and senior
living services, physical, occupational and speech therapies and
other rehabilitative and healthcare services at 296 healthcare
facilities in Arizona, California, Colorado, Idaho, Iowa, Kansas,
Nebraska, Nevada, South Carolina, Texas, Utah, Washington and
Wisconsin. As part of its investment strategy, the Company will
also acquire, lease and own healthcare real estate to service the
post-acute care continuum through acquisition and investment
opportunities in healthcare properties. Ensign’s new business
venture operating subsidiaries also offer several other
post-acute-related services, including mobile x-ray, non-emergency
transportation services, long-term care pharmacy and other
consulting services also across several states. 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 Service Center, Standard Bearer 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. Additionally, our business and operations
in 2023 continue to be impacted by the unprecedented nature of the
changes in the regulations and environment, we are unable to
predict the full extent and duration of the financial impact of
these changes on our business, financial condition and results of
operations. Therefore, our actual results could differ materially
and adversely from those expressed in any forward-looking
statements as a result of various factors. 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 and 10-K, 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.
Contact Information
Investor/Media Relations, The Ensign Group, Inc., (949) 487-9500,
ir@ensigngroup.net.
SOURCE: The Ensign Group, Inc.
THE ENSIGN GROUP, INC. UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
(In thousands, except per share data) |
REVENUE |
|
|
|
|
|
|
|
Service revenue |
$ |
935,324 |
|
|
$ |
765,883 |
|
|
$ |
2,733,343 |
|
|
$ |
2,203,386 |
|
Rental revenue |
|
5,467 |
|
|
|
4,122 |
|
|
|
15,634 |
|
|
|
12,550 |
|
TOTAL REVENUE |
$ |
940,791 |
|
|
$ |
770,005 |
|
|
$ |
2,748,977 |
|
|
$ |
2,215,936 |
|
Expense: |
|
|
|
|
|
|
|
Cost of services |
|
741,069 |
|
|
|
601,623 |
|
|
|
2,160,080 |
|
|
|
1,720,905 |
|
Rent—cost of services |
|
50,357 |
|
|
|
38,907 |
|
|
|
146,754 |
|
|
|
111,897 |
|
General and administrative expense |
|
51,127 |
|
|
|
39,247 |
|
|
|
156,448 |
|
|
|
116,030 |
|
Depreciation and amortization |
|
18,446 |
|
|
|
15,941 |
|
|
|
53,154 |
|
|
|
45,475 |
|
TOTAL EXPENSES |
$ |
860,999 |
|
|
$ |
695,718 |
|
|
$ |
2,516,436 |
|
|
$ |
1,994,307 |
|
Income from operations |
|
79,792 |
|
|
|
74,287 |
|
|
|
232,541 |
|
|
|
221,629 |
|
Other income (expense): |
|
|
|
|
|
|
|
Interest expense |
|
(2,024 |
) |
|
|
(2,108 |
) |
|
|
(6,083 |
) |
|
|
(6,864 |
) |
Other income (expense) |
|
4,277 |
|
|
|
276 |
|
|
|
15,022 |
|
|
|
(3,127 |
) |
Other income (expense), net |
$ |
2,253 |
|
|
$ |
(1,832 |
) |
|
$ |
8,939 |
|
|
$ |
(9,991 |
) |
Income before provision for income taxes |
|
82,045 |
|
|
|
72,455 |
|
|
|
241,480 |
|
|
|
211,638 |
|
Provision for income taxes |
|
18,077 |
|
|
|
16,213 |
|
|
|
53,453 |
|
|
|
47,505 |
|
NET INCOME |
$ |
63,968 |
|
|
$ |
56,242 |
|
|
$ |
188,027 |
|
|
$ |
164,133 |
|
Less: net income (loss) attributable to noncontrolling
interests |
|
105 |
|
|
|
63 |
|
|
|
319 |
|
|
|
(77 |
) |
Net income attributable to The Ensign Group,
Inc. |
$ |
63,863 |
|
|
$ |
56,179 |
|
|
$ |
187,708 |
|
|
$ |
164,210 |
|
|
|
|
|
|
|
|
|
NET INCOME PER SHARE ATTRIBUTABLE TO THE ENSIGN GROUP
INC. |
|
|
|
|
|
|
|
Basic |
$ |
1.14 |
|
|
$ |
1.02 |
|
|
$ |
3.38 |
|
|
$ |
3.00 |
|
Diluted |
$ |
1.11 |
|
|
$ |
0.99 |
|
|
$ |
3.28 |
|
|
$ |
2.89 |
|
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING |
|
|
|
|
|
|
|
Basic |
|
55,829 |
|
|
|
54,882 |
|
|
|
55,582 |
|
|
|
54,819 |
|
Diluted |
|
57,337 |
|
|
|
56,761 |
|
|
|
57,245 |
|
|
|
56,829 |
|
THE ENSIGN GROUP, INC. UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
September 30, 2023 |
|
December 31, 2022 |
|
|
|
|
|
(In thousands) |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
467,870 |
|
|
$ |
316,270 |
|
Accounts receivable—less allowance for doubtful accounts of $9,422
and $7,802 at September 30, 2023 and December 31, 2022,
respectively |
|
472,123 |
|
|
|
408,432 |
|
Investments—current |
|
16,433 |
|
|
|
15,441 |
|
Prepaid expenses and other current assets |
|
37,921 |
|
|
|
40,982 |
|
Total current assets |
|
994,347 |
|
|
|
781,125 |
|
Property and equipment, net |
|
1,067,902 |
|
|
|
992,010 |
|
Right-of-use assets |
|
1,773,751 |
|
|
|
1,450,995 |
|
Insurance subsidiary deposits and investments |
|
86,818 |
|
|
|
67,652 |
|
Deferred tax assets |
|
39,968 |
|
|
|
39,643 |
|
Restricted and other assets |
|
35,979 |
|
|
|
37,291 |
|
Intangible assets, net |
|
6,347 |
|
|
|
6,437 |
|
Goodwill |
|
76,869 |
|
|
|
76,869 |
|
TOTAL ASSETS |
$ |
4,081,981 |
|
|
$ |
3,452,022 |
|
LIABILITIES AND EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
77,091 |
|
|
$ |
77,087 |
|
Accrued wages and related liabilities |
|
311,509 |
|
|
|
289,810 |
|
Lease liabilities—current |
|
80,956 |
|
|
|
65,796 |
|
Accrued self-insurance liabilities—current |
|
50,197 |
|
|
|
48,187 |
|
Other accrued liabilities |
|
148,128 |
|
|
|
97,309 |
|
Current maturities of long-term debt |
|
3,916 |
|
|
|
3,883 |
|
Total current liabilities |
|
671,797 |
|
|
|
582,072 |
|
Long-term debt—less current maturities |
|
146,453 |
|
|
|
149,269 |
|
Long-term lease liabilities—less current portion |
|
1,657,955 |
|
|
|
1,355,113 |
|
Accrued self-insurance liabilities—less current portion |
|
97,502 |
|
|
|
83,495 |
|
Other long-term liabilities |
|
42,832 |
|
|
|
33,273 |
|
Total equity |
|
1,465,442 |
|
|
|
1,248,800 |
|
TOTAL LIABILITIES AND EQUITY |
$ |
4,081,981 |
|
|
$ |
3,452,022 |
|
THE ENSIGN GROUP, INC. UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
The following table presents selected data from
our condensed consolidated statements of cash flows for the periods
presented:
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
NET CASH PROVIDED BY/(USED IN): |
(In thousands) |
Operating activities |
$ |
291,397 |
|
|
$ |
222,337 |
|
Investing activities |
|
(137,754 |
) |
|
|
(143,771 |
) |
Financing activities |
|
(2,043 |
) |
|
|
(31,903 |
) |
Net increase in cash and cash equivalents |
|
151,600 |
|
|
|
46,663 |
|
Cash and cash equivalents beginning of period |
|
316,270 |
|
|
|
262,201 |
|
Cash and cash equivalents at end of period |
$ |
467,870 |
|
|
$ |
308,864 |
|
THE ENSIGN GROUP, INC. UNAUDITED
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(In thousands, except per share data)
RECONCILIATION OF GAAP TO NON-GAAP NET
INCOME
The following table reconciles net income to
Non-GAAP net income for the periods presented:
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income attributable to The Ensign Group, Inc. |
$ |
63,863 |
|
|
$ |
56,179 |
|
|
$ |
187,708 |
|
|
$ |
164,210 |
|
Non-GAAP adjustments |
|
|
|
|
|
|
|
Stock-based compensation expense(a) |
|
7,237 |
|
|
|
5,898 |
|
|
|
22,691 |
|
|
|
16,681 |
|
Cost of services – gain on business interruption recoveries
and sale of assets |
|
(259 |
) |
|
|
(900 |
) |
|
|
(1,009 |
) |
|
|
(3,467 |
) |
Cost of services – legal adjustments(b) |
|
— |
|
|
|
859 |
|
|
|
(818 |
) |
|
|
4,212 |
|
Cost of services – acquisition related costs(c) |
|
150 |
|
|
|
245 |
|
|
|
722 |
|
|
|
416 |
|
Interest expense – write-off of deferred financing
fees(d) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
566 |
|
Depreciation and amortization – patient base(e) |
|
135 |
|
|
|
86 |
|
|
|
182 |
|
|
|
213 |
|
General and administrative – legal costs(f) |
|
2,783 |
|
|
|
— |
|
|
|
2,783 |
|
|
|
— |
|
General and administrative – costs incurred related to new
systems implementation |
|
— |
|
|
|
321 |
|
|
|
875 |
|
|
|
390 |
|
Provision for income taxes on Non-GAAP adjustments(g) |
|
(4,946 |
) |
|
|
(3,528 |
) |
|
|
(13,274 |
) |
|
|
(10,225 |
) |
Non-GAAP Income |
$ |
68,963 |
|
|
$ |
59,160 |
|
|
$ |
199,860 |
|
|
$ |
172,996 |
|
|
|
|
|
|
|
|
|
Average number of diluted shares outstanding |
|
57,337 |
|
|
|
56,761 |
|
|
|
57,245 |
|
|
|
56,829 |
|
|
|
|
|
|
|
|
|
Diluted Earnings Per Share |
|
|
|
|
|
|
|
Net Income |
$ |
1.11 |
|
|
$ |
0.99 |
|
|
$ |
3.28 |
|
|
$ |
2.89 |
|
|
|
|
|
|
|
|
|
Adjusted Diluted Earnings Per Share |
|
|
|
|
|
|
|
Net Income |
$ |
1.20 |
|
|
$ |
1.04 |
|
|
$ |
3.49 |
|
|
$ |
3.04 |
|
|
|
|
|
|
|
|
|
Footnotes: |
|
|
|
|
|
|
|
(a) Represents stock-based compensation expense incurred. |
|
|
|
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Cost of services |
$ |
5,053 |
|
|
$ |
3,893 |
|
|
$ |
15,271 |
|
|
$ |
10,938 |
|
General and administrative |
|
2,184 |
|
|
|
2,005 |
|
|
|
7,420 |
|
|
|
5,743 |
|
Total Non-GAAP adjustment |
$ |
7,237 |
|
|
$ |
5,898 |
|
|
$ |
22,691 |
|
|
$ |
16,681 |
|
|
|
|
|
|
|
|
|
(b) Legal adjustments relate to findings attributable to our
ancillary services subsidiary, which includes the portion
attributable to non-controlling interest. |
(c) Represents costs incurred to acquire operations that are not
capitalizable. |
(d) Represents the write-off of deferred financing fees associated
with the amendment of the credit facility. |
(e) Included in depreciation and amortization are amortization
expenses related to patient base intangible assets at newly
acquired skilled nursing and senior living facilities. |
(f) Legal costs incurred in connection with the medical directors
related matter. |
(g) Represents an adjustment to the provision for income tax to our
historical year to date effective tax rate of 25.0%. |
THE ENSIGN GROUP, INC. UNAUDITED
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(In thousands)
The table below reconciles net income to EBITDA,
Adjusted EBITDA and Adjusted EBITDAR for the periods presented:
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Consolidated Statements of Income Data: |
|
|
|
|
|
|
|
Net income |
$ |
63,968 |
|
|
$ |
56,242 |
|
|
$ |
188,027 |
|
|
$ |
164,133 |
|
Less: net income (loss) attributable to noncontrolling
interests |
|
105 |
|
|
|
63 |
|
|
|
319 |
|
|
|
(77 |
) |
Add: Other (income) expense, net |
|
(2,253 |
) |
|
|
1,832 |
|
|
|
(8,939 |
) |
|
|
9,991 |
|
Provision for income taxes |
|
18,077 |
|
|
|
16,213 |
|
|
|
53,453 |
|
|
|
47,505 |
|
Depreciation and amortization |
|
18,446 |
|
|
|
15,941 |
|
|
|
53,154 |
|
|
|
45,475 |
|
EBITDA |
$ |
98,133 |
|
|
$ |
90,165 |
|
|
$ |
285,376 |
|
|
$ |
267,181 |
|
Adjustments to EBITDA: |
|
|
|
|
|
|
|
Stock-based compensation expense |
|
7,237 |
|
|
|
5,898 |
|
|
|
22,691 |
|
|
|
16,681 |
|
Legal costs and adjustments(a) |
|
2,783 |
|
|
|
859 |
|
|
|
1,965 |
|
|
|
4,212 |
|
Gain on business interruption recoveries and sale of assets |
|
(259 |
) |
|
|
(900 |
) |
|
|
(1,009 |
) |
|
|
(3,467 |
) |
Acquisition related costs(b) |
|
150 |
|
|
|
245 |
|
|
|
722 |
|
|
|
416 |
|
Costs incurred related to new systems implementation |
|
— |
|
|
|
321 |
|
|
|
875 |
|
|
|
390 |
|
ADJUSTED EBITDA |
$ |
108,044 |
|
|
$ |
96,588 |
|
|
$ |
310,620 |
|
|
$ |
285,413 |
|
Rent—cost of services |
|
50,357 |
|
|
|
38,907 |
|
|
|
146,754 |
|
|
|
111,897 |
|
ADJUSTED EBITDAR |
$ |
158,401 |
|
|
|
|
$ |
457,374 |
|
|
|
|
(a) Legal costs incurred in connection with the medical directors
related matter. Legal adjustments relate to findings attributable
to our ancillary services subsidiary, which excludes the portion
attributable to non-controlling
interests. |
(b) Costs incurred to acquire operations that are not
capitalizable. |
THE ENSIGN GROUP, INC. UNAUDITED
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(In thousands, except per share data)
The table below reconciles income before
provision for income taxes to Adjusted EBT for the periods
presented:
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
ConsolidatedStatements of Income
Data: |
(In thousands) |
Income before provision for income taxes |
$ |
82,045 |
|
|
$ |
72,455 |
|
|
$ |
241,480 |
|
|
$ |
211,638 |
|
Stock-based compensation expense |
|
7,237 |
|
|
|
5,898 |
|
|
|
22,691 |
|
|
|
16,681 |
|
Legal costs and adjustments(a) |
|
2,783 |
|
|
|
859 |
|
|
|
1,965 |
|
|
|
4,485 |
|
Gain on business interruption recoveries and sale of assets |
|
(259 |
) |
|
|
(900 |
) |
|
|
(1,009 |
) |
|
|
(3,467 |
) |
Write-off of deferred financing fees(b) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
566 |
|
Acquisition related costs(c) |
|
150 |
|
|
|
245 |
|
|
|
722 |
|
|
|
416 |
|
Costs incurred related to new systems implementation |
|
— |
|
|
|
321 |
|
|
|
875 |
|
|
|
390 |
|
Depreciation and amortization – patient base(d) |
|
135 |
|
|
|
86 |
|
|
|
182 |
|
|
|
213 |
|
ADJUSTED EBT |
$ |
92,091 |
|
|
$ |
78,964 |
|
|
$ |
266,906 |
|
|
$ |
230,922 |
|
|
(a) Legal costs incurred in connection with the medical directors
related matter. Legal adjustments relate to findings attributable
to our ancillary services subsidiary, which includes the portion
attributable to non-controlling interests. |
(b) Represents the write-off of deferred financing fees associated
with the amendment of the credit facility. |
(c) Costs incurred to acquire operations that are not
capitalizable. |
(d) Included in depreciation and amortization are amortization
expenses related to patient base intangible assets at newly
acquired skilled nursing and senior living facilities. |
THE ENSIGN GROUP, INC. UNAUDITED
SELECT PERFORMANCE INDICATORS
The following tables summarize our selected
performance indicators for our skilled services segment along with
other statistics, for each of the dates or periods presented:
|
Three Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
Change |
|
% Change |
|
|
|
|
|
|
|
|
TOTAL FACILITY RESULTS: |
(Dollars in thousands) |
Skilled services revenue |
$ |
902,967 |
|
|
$ |
739,318 |
|
|
$ |
163,649 |
|
|
22.1 |
% |
Number of facilities at period end |
|
258 |
|
|
|
222 |
|
|
|
36 |
|
|
16.2 |
% |
Number of campuses at period end* |
|
26 |
|
|
|
26 |
|
|
|
— |
|
|
— |
% |
Actual patient days |
|
2,190,540 |
|
|
|
1,846,699 |
|
|
|
343,841 |
|
|
18.6 |
% |
Occupancy percentage — Operational beds |
|
78.9 |
% |
|
|
75.7 |
% |
|
|
|
3.2 |
% |
Skilled mix by nursing days |
|
29.1 |
% |
|
|
31.6 |
% |
|
|
|
(2.5 |
)% |
Skilled mix by nursing revenue |
|
48.4 |
% |
|
|
51.6 |
% |
|
|
|
(3.2 |
)% |
|
Three Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
Change |
|
% Change |
|
|
|
|
|
|
|
|
SAME FACILITY RESULTS:(1) |
(Dollars in thousands) |
Skilled services revenue |
$ |
692,257 |
|
|
$ |
649,690 |
|
|
$ |
42,567 |
|
|
6.6 |
% |
Number of facilities at period end |
|
189 |
|
|
|
189 |
|
|
|
— |
|
|
— |
% |
Number of campuses at period end* |
|
24 |
|
|
|
24 |
|
|
|
— |
|
|
— |
% |
Actual patient days |
|
1,660,683 |
|
|
|
1,596,942 |
|
|
|
63,741 |
|
|
4.0 |
% |
Occupancy percentage — Operational beds |
|
79.5 |
% |
|
|
76.6 |
% |
|
|
|
2.9 |
% |
Skilled mix by nursing days |
|
30.7 |
% |
|
|
33.0 |
% |
|
|
|
(2.3 |
)% |
Skilled mix by nursing revenue |
|
49.8 |
% |
|
|
53.1 |
% |
|
|
|
(3.3 |
)% |
|
Three Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
Change |
|
% Change |
|
|
|
|
|
|
|
|
TRANSITIONING FACILITY
RESULTS:(2) |
(Dollars in thousands) |
Skilled services revenue |
$ |
62,979 |
|
|
$ |
59,773 |
|
|
$ |
3,206 |
|
|
5.4 |
% |
Number of facilities at period end |
|
22 |
|
|
|
22 |
|
|
|
— |
|
|
— |
% |
Number of campuses at period end* |
|
1 |
|
|
|
1 |
|
|
|
— |
|
|
— |
% |
Actual patient days |
|
165,645 |
|
|
|
158,856 |
|
|
|
6,789 |
|
|
4.3 |
% |
Occupancy percentage — Operational beds |
|
76.2 |
% |
|
|
73.5 |
% |
|
|
|
2.7 |
% |
Skilled mix by nursing days |
|
20.0 |
% |
|
|
23.1 |
% |
|
|
|
(3.1 |
)% |
Skilled mix by nursing revenue |
|
36.1 |
% |
|
|
40.5 |
% |
|
|
|
(4.4 |
)% |
|
Three Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
Change |
|
% Change |
|
|
|
|
|
|
|
|
RECENTLY ACQUIRED FACILITY
RESULTS:(3) |
(Dollars in thousands) |
Skilled services revenue |
$ |
147,731 |
|
|
$ |
29,855 |
|
|
$ |
117,876 |
|
|
NM |
Number of facilities at period end |
|
47 |
|
|
|
11 |
|
|
|
36 |
|
|
NM |
Number of campuses at period end* |
|
1 |
|
|
|
1 |
|
|
|
— |
|
|
NM |
Actual patient days |
|
364,212 |
|
|
|
90,901 |
|
|
|
273,311 |
|
|
NM |
Occupancy percentage — Operational beds |
|
77.4 |
% |
|
|
65.6 |
% |
|
|
|
NM |
Skilled mix by nursing days |
|
26.1 |
% |
|
|
22.6 |
% |
|
|
|
NM |
Skilled mix by nursing revenue |
|
46.9 |
% |
|
|
39.3 |
% |
|
|
|
NM |
|
* Campus represents a facility that offers both skilled nursing and
senior living services. Revenue and expenses related to skilled
nursing and senior living services have been allocated and recorded
in the respective operating segment. |
(1) Same Facility results represent all facilities purchased prior
to January 1, 2020. |
(2) Transitioning Facility results represent all facilities
purchased from January 1, 2020 to December 31, 2021. |
(3) Recently Acquired Facility (Acquisitions) results represent all
facilities purchased on or subsequent to January 1, 2022. |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
Change |
|
% Change |
|
|
|
|
|
|
|
|
TOTAL FACILITY RESULTS: |
(Dollars in thousands) |
Skilled services revenue |
$ |
2,638,090 |
|
|
$ |
2,128,567 |
|
|
$ |
509,523 |
|
|
23.9 |
% |
Number of facilities at period end |
|
258 |
|
|
|
222 |
|
|
|
36 |
|
|
16.2 |
% |
Number of campuses at period end* |
|
26 |
|
|
|
26 |
|
|
|
— |
|
|
— |
% |
Actual patient days |
|
6,363,107 |
|
|
|
5,287,690 |
|
|
|
1,075,417 |
|
|
20.3 |
% |
Occupancy percentage — Operational beds |
|
78.3 |
% |
|
|
75.0 |
% |
|
|
|
3.3 |
% |
Skilled mix by nursing days |
|
30.7 |
% |
|
|
32.1 |
% |
|
|
|
(1.4 |
)% |
Skilled mix by nursing revenue |
|
50.6 |
% |
|
|
52.3 |
% |
|
|
|
(1.7 |
)% |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
Change |
|
% Change |
|
|
|
|
|
|
|
|
SAME FACILITY RESULTS:(1) |
(Dollars in thousands) |
Skilled services revenue |
$ |
2,058,291 |
|
|
$ |
1,909,387 |
|
|
$ |
148,904 |
|
|
7.8 |
% |
Number of facilities at period end |
|
189 |
|
|
|
189 |
|
|
|
— |
|
|
— |
% |
Number of campuses at period end* |
|
24 |
|
|
|
24 |
|
|
|
— |
|
|
— |
% |
Actual patient days |
|
4,895,304 |
|
|
|
4,680,168 |
|
|
|
215,136 |
|
|
4.6 |
% |
Occupancy percentage — Operational beds |
|
78.9 |
% |
|
|
75.5 |
% |
|
|
|
3.4 |
% |
Skilled mix by nursing days |
|
32.2 |
% |
|
|
33.1 |
% |
|
|
|
(0.9 |
)% |
Skilled mix by nursing revenue |
|
51.8 |
% |
|
|
53.4 |
% |
|
|
|
(1.6 |
)% |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
Change |
|
% Change |
|
|
|
|
|
|
|
|
TRANSITIONING FACILITY
RESULTS:(2) |
(Dollars in thousands) |
Skilled services revenue |
$ |
186,948 |
|
|
$ |
171,428 |
|
|
$ |
15,520 |
|
9.1 |
% |
Number of facilities at period end |
|
22 |
|
|
|
22 |
|
|
|
— |
|
— |
% |
Number of campuses at period end* |
|
1 |
|
|
|
1 |
|
|
|
— |
|
— |
% |
Actual patient days |
|
489,310 |
|
|
|
462,848 |
|
|
|
26,462 |
|
5.7 |
% |
Occupancy percentage — Operational beds |
|
76.0 |
% |
|
|
72.1 |
% |
|
|
|
3.9 |
% |
Skilled mix by nursing days |
|
21.8 |
% |
|
|
23.4 |
% |
|
|
|
(1.6) % |
Skilled mix by nursing revenue |
|
38.9 |
% |
|
|
41.8 |
% |
|
|
|
(2.9) % |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
Change |
|
% Change |
|
|
|
|
|
|
|
|
RECENTLY ACQUIRED FACILITY
RESULTS:(3) |
(Dollars in thousands) |
Skilled services revenue |
$ |
392,851 |
|
|
$ |
47,752 |
|
|
$ |
345,099 |
|
NM |
Number of facilities at period end |
|
47 |
|
|
|
11 |
|
|
|
36 |
|
NM |
Number of campuses at period end* |
|
1 |
|
|
|
1 |
|
|
|
— |
|
NM |
Actual patient days |
|
978,493 |
|
|
|
144,674 |
|
|
|
833,819 |
|
NM |
Occupancy percentage — Operational beds |
|
76.4 |
% |
|
|
69.1 |
% |
|
|
|
NM |
Skilled mix by nursing days |
|
27.5 |
% |
|
|
28.0 |
% |
|
|
|
NM |
Skilled mix by nursing revenue |
|
49.7 |
% |
|
|
45.8 |
% |
|
|
|
NM |
|
*
Campus represents a facility that offers both skilled nursing and
senior living services. Revenue and expenses related to skilled
nursing and senior living services have been allocated and recorded
in the respective operating segment |
1. Same Facility results represent all facilities purchased prior
to January 1, 2020. |
2. Transitioning Facility results represent all facilities
purchased from January 1, 2020 to December 31, 2021. |
3. Recently Acquired Facility (Acquisitions) results represent all
facilities purchased on or subsequent to January 1, 2022. |
THE ENSIGN GROUP, INC. SKILLED
NURSING AVERAGE DAILY REVENUE RATES AND PERCENT OF SKILLED NURSING
REVENUE AND DAYS BY PAYOR (Unaudited)
The following table reflects the change in skilled
nursing average daily revenue rates by payor source, excluding
services that are not covered by the daily rate(1):
|
Three Months Ended September 30, |
|
Same Facility |
|
Transitioning |
|
Acquisitions |
|
Total |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SKILLED NURSING AVERAGE DAILY REVENUE RATES |
Medicare |
$ |
721.35 |
|
$ |
684.58 |
|
$ |
699.44 |
|
$ |
669.29 |
|
$ |
800.93 |
|
$ |
652.66 |
|
$ |
735.66 |
|
$ |
682.41 |
Managed care |
|
544.85 |
|
|
511.35 |
|
|
539.53 |
|
|
487.16 |
|
|
560.44 |
|
|
422.21 |
|
|
546.36 |
|
|
508.13 |
Other skilled |
|
584.77 |
|
|
566.00 |
|
|
518.59 |
|
|
514.55 |
|
|
433.72 |
|
|
425.91 |
|
|
562.61 |
|
|
552.31 |
Total skilled revenue |
|
615.02 |
|
|
593.71 |
|
|
612.82 |
|
|
587.23 |
|
|
663.54 |
|
|
510.11 |
|
|
622.12 |
|
|
590.36 |
Medicaid |
|
277.82 |
|
|
258.54 |
|
|
274.44 |
|
|
262.17 |
|
|
263.95 |
|
|
236.02 |
|
|
275.09 |
|
|
257.57 |
Private and other payors |
|
263.19 |
|
|
251.48 |
|
|
251.08 |
|
|
244.55 |
|
|
267.56 |
|
|
180.79 |
|
|
262.97 |
|
|
248.01 |
Total skilled nursing revenue |
$ |
379.79 |
|
$ |
368.27 |
|
$ |
339.42 |
|
$ |
335.24 |
|
$ |
368.46 |
|
$ |
293.23 |
|
$ |
374.85 |
|
$ |
361.74 |
|
(1) These rates
exclude state relief funding. |
|
Nine Months Ended September 30, |
|
Same Facility |
|
Transitioning |
|
Acquisitions |
|
Total |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SKILLED NURSING AVERAGE DAILY REVENUE RATES |
Medicare |
$ |
715.73 |
|
$ |
690.28 |
|
$ |
688.45 |
|
$ |
666.01 |
|
$ |
776.42 |
|
$ |
673.95 |
|
$ |
724.85 |
|
$ |
688.09 |
Managed care |
|
530.73 |
|
|
509.18 |
|
|
527.77 |
|
|
492.19 |
|
|
548.39 |
|
|
439.40 |
|
|
532.41 |
|
|
507.32 |
Other skilled |
|
594.85 |
|
|
570.37 |
|
|
522.06 |
|
|
533.80 |
|
|
468.14 |
|
|
428.56 |
|
|
576.60 |
|
|
558.30 |
Total skilled revenue |
|
612.20 |
|
|
595.47 |
|
|
608.25 |
|
|
589.74 |
|
|
659.01 |
|
|
498.57 |
|
|
618.43 |
|
|
592.79 |
Medicaid |
|
273.04 |
|
|
258.77 |
|
|
268.26 |
|
|
250.64 |
|
|
251.06 |
|
|
234.47 |
|
|
269.05 |
|
|
257.20 |
Private and other payors |
|
263.13 |
|
|
249.86 |
|
|
253.81 |
|
|
249.37 |
|
|
260.58 |
|
|
181.23 |
|
|
261.99 |
|
|
248.66 |
Total skilled nursing revenue |
$ |
381.33 |
|
$ |
369.26 |
|
$ |
340.74 |
|
$ |
329.84 |
|
$ |
364.26 |
|
$ |
305.09 |
|
$ |
375.58 |
|
$ |
364.06 |
|
(1) These rates exclude state relief funding and include
sequestration reversal of 1% for the second quarter in 2022 and 2%
for the first quarter of 2022. |
The following tables set forth our percentage of
skilled nursing patient revenue and days by payor source for the
periods presented:
|
Three Months Ended September 30, |
|
Same Facility |
|
Transitioning |
|
Acquisitions |
|
Total |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PERCENTAGE OF SKILLED NURSING REVENUE |
Medicare |
20.8 |
% |
|
26.1 |
% |
|
19.6 |
% |
|
24.6 |
% |
|
28.9 |
% |
|
18.9 |
% |
|
22.0 |
% |
|
25.7 |
% |
Managed
care |
20.2 |
|
|
19.0 |
|
|
12.7 |
|
|
11.9 |
|
|
13.2 |
|
|
7.9 |
|
|
18.6 |
|
|
18.0 |
|
Other skilled |
8.8 |
|
|
8.0 |
|
|
3.8 |
|
|
4.0 |
|
|
4.8 |
|
|
12.5 |
|
|
7.8 |
|
|
7.9 |
|
Skilled mix |
49.8 |
|
|
53.1 |
|
|
36.1 |
|
|
40.5 |
|
|
46.9 |
|
|
39.3 |
|
|
48.4 |
|
|
51.6 |
|
Private and other payors |
7.9 |
|
|
7.2 |
|
|
8.7 |
|
|
8.4 |
|
|
8.2 |
|
|
5.2 |
|
|
8.0 |
|
|
7.2 |
|
Medicaid |
42.3 |
|
|
39.7 |
|
|
55.2 |
|
|
51.1 |
|
|
44.9 |
|
|
55.5 |
|
|
43.6 |
|
|
41.2 |
|
TOTAL SKILLED NURSING |
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
Three Months Ended September 30, |
|
Same Facility |
|
Transitioning |
|
Acquisitions |
|
Total |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PERCENTAGE OF SKILLED NURSING DAYS |
Medicare |
10.9 |
% |
|
14.0 |
% |
|
9.5 |
% |
|
12.3 |
% |
|
13.3 |
% |
|
8.5 |
% |
|
11.2 |
% |
|
13.6 |
% |
Managed
care |
14.1 |
|
|
13.7 |
|
|
8.0 |
|
|
8.2 |
|
|
8.7 |
|
|
5.5 |
|
|
12.7 |
|
|
12.8 |
|
Other skilled |
5.7 |
|
|
5.3 |
|
|
2.5 |
|
|
2.6 |
|
|
4.1 |
|
|
8.6 |
|
|
5.2 |
|
|
5.2 |
|
Skilled mix |
30.7 |
|
|
33.0 |
|
|
20.0 |
|
|
23.1 |
|
|
26.1 |
|
|
22.6 |
|
|
29.1 |
|
|
31.6 |
|
Private and other payors |
11.5 |
|
|
10.5 |
|
|
11.8 |
|
|
11.6 |
|
|
11.2 |
|
|
8.5 |
|
|
11.5 |
|
|
10.5 |
|
Medicaid |
57.8 |
|
|
56.5 |
|
|
68.2 |
|
|
65.3 |
|
|
62.7 |
|
|
68.9 |
|
|
59.4 |
|
|
57.9 |
|
TOTAL SKILLED NURSING |
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
Nine Months Ended September 30, |
|
Same Facility |
|
Transitioning |
|
Acquisitions |
|
Total |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PERCENTAGE OF SKILLED NURSING REVENUE |
Medicare |
23.0 |
% |
|
26.2 |
% |
|
22.3 |
% |
|
25.3 |
% |
|
31.4 |
% |
|
17.0 |
% |
|
24.2 |
% |
|
25.9 |
% |
Managed
care |
20.1 |
|
|
19.2 |
|
|
12.7 |
|
|
12.4 |
|
|
13.1 |
|
|
9.3 |
|
|
18.5 |
|
|
18.4 |
|
Other skilled |
8.7 |
|
|
8.0 |
|
|
3.9 |
|
|
4.1 |
|
|
5.2 |
|
|
19.5 |
|
|
7.9 |
|
|
8.0 |
|
Skilled mix |
51.8 |
|
|
53.4 |
|
|
38.9 |
|
|
41.8 |
|
|
49.7 |
|
|
45.8 |
|
|
50.6 |
|
|
52.3 |
|
Private and other payors |
7.5 |
|
|
7.0 |
|
|
8.5 |
|
|
8.2 |
|
|
7.9 |
|
|
3.8 |
|
|
7.6 |
|
|
7.0 |
|
Medicaid |
40.7 |
|
|
39.6 |
|
|
52.6 |
|
|
50.0 |
|
|
42.4 |
|
|
50.4 |
|
|
41.8 |
|
|
40.7 |
|
TOTAL SKILLED NURSING |
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
Nine Months Ended September 30, |
|
Same Facility |
|
Transitioning |
|
Acquisitions |
|
Total |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PERCENTAGE OF SKILLED NURSING DAYS |
Medicare |
12.3 |
% |
|
14.0 |
% |
|
11.0 |
% |
|
12.5 |
% |
|
14.8 |
% |
|
7.7 |
% |
|
12.6 |
% |
|
13.7 |
% |
Managed
care |
14.4 |
|
|
13.9 |
|
|
8.2 |
|
|
8.3 |
|
|
8.7 |
|
|
6.5 |
|
|
13.1 |
|
|
13.2 |
|
Other skilled |
5.5 |
|
|
5.2 |
|
|
2.6 |
|
|
2.6 |
|
|
4.0 |
|
|
13.8 |
|
|
5.0 |
|
|
5.2 |
|
Skilled mix |
32.2 |
|
|
33.1 |
|
|
21.8 |
|
|
23.4 |
|
|
27.5 |
|
|
28.0 |
|
|
30.7 |
|
|
32.1 |
|
Private and other payors |
10.9 |
|
|
10.4 |
|
|
11.4 |
|
|
10.8 |
|
|
11.0 |
|
|
6.4 |
|
|
10.9 |
|
|
10.3 |
|
Medicaid |
56.9 |
|
|
56.5 |
|
|
66.8 |
|
|
65.8 |
|
|
61.5 |
|
|
65.6 |
|
|
58.4 |
|
|
57.6 |
|
TOTAL SKILLED NURSING |
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
THE ENSIGN GROUP, INC. UNAUDITED
REVENUE BY PAYOR SOURCE
The following table sets forth our service
revenue by payor source and as a percentage of total service
revenue for the periods presented:
|
Three Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
Revenue |
|
% of Revenue |
|
Revenue |
|
% of Revenue |
Medicaid(1) |
$ |
374,838 |
|
40.1 |
% |
|
$ |
302,615 |
|
39.5 |
% |
Medicare |
|
237,531 |
|
25.4 |
|
|
|
211,104 |
|
27.6 |
|
Medicaid — skilled |
|
62,452 |
|
6.6 |
|
|
|
50,643 |
|
6.6 |
|
Total Medicaid and Medicare |
|
674,821 |
|
72.1 |
|
|
|
564,362 |
|
73.7 |
|
Managed care |
|
170,747 |
|
18.3 |
|
|
|
132,663 |
|
17.3 |
|
Private and other(2) |
|
89,756 |
|
9.6 |
|
|
|
68,858 |
|
9.0 |
|
SERVICE REVENUE |
$ |
935,324 |
|
100.0 |
% |
|
$ |
765,883 |
|
100.0 |
% |
|
(1) Medicaid payor includes revenue for senior living operations
and revenue related to state relief funding. |
(2) Private and other payors also includes revenue from senior
living operations and all payors generated in other ancillary
services. |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
Revenue |
|
% of Revenue |
|
Revenue |
|
% of Revenue |
Medicaid(1) |
$ |
1,074,883 |
|
39.3 |
% |
|
$ |
863,091 |
|
39.2 |
% |
Medicare |
|
733,335 |
|
26.8 |
|
|
|
610,009 |
|
27.7 |
|
Medicaid — skilled |
|
182,394 |
|
6.7 |
|
|
|
146,355 |
|
6.6 |
|
Total Medicaid and Medicare |
|
1,990,612 |
|
72.8 |
|
|
|
1,619,455 |
|
73.5 |
|
Managed care |
|
488,511 |
|
17.9 |
|
|
|
389,036 |
|
17.7 |
|
Private and other(2) |
|
254,220 |
|
9.3 |
|
|
|
194,895 |
|
8.8 |
|
SERVICE REVENUE |
$ |
2,733,343 |
|
100.0 |
% |
|
$ |
2,203,386 |
|
100.0 |
% |
|
(1) Medicaid payor includes revenue for senior living operations
and revenue related to state relief funding. |
(2) Private and other payors also includes revenue from senior
living operations and all payors generated in other ancillary
services. |
THE ENSIGN GROUP, INC. UNAUDITED
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION BY SEGMENT
(In thousands)
Skilled Services
The table below reconciles net income to EBITDA
and Adjusted EBITDA for the skilled services reportable segment for
the periods presented:
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
|
|
2022 |
Statements of Income Data: |
|
|
|
|
|
|
|
Segment income(a) |
$ |
117,816 |
|
|
$ |
101,750 |
|
$ |
348,169 |
|
|
$ |
302,272 |
Depreciation and amortization |
|
9,936 |
|
|
|
8,397 |
|
|
28,417 |
|
|
|
24,411 |
EBITDA |
$ |
127,752 |
|
|
$ |
110,147 |
|
$ |
376,586 |
|
|
$ |
326,683 |
Adjustments to EBITDA: |
|
|
|
|
|
|
|
Business interruption recoveries |
|
(259 |
) |
|
|
— |
|
|
(1,009 |
) |
|
|
— |
Stock-based compensation expense |
|
4,879 |
|
|
|
3,758 |
|
|
14,740 |
|
|
|
10,571 |
ADJUSTED EBITDA |
$ |
132,372 |
|
|
$ |
113,905 |
|
$ |
390,317 |
|
|
$ |
337,254 |
|
(a) Segment income reflects profit or loss from operations before
provision for income taxes and impairment charges from operations.
General and administrative expenses are not allocated to the
skilled services segment for purposes of determining segment profit
or loss. |
Standard Bearer
The following table sets forth details of
operating results for our revenue and earnings, and their
respective components, by Standard Bearer for the periods
presented:
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
Rental
revenue generated from third-party tenants |
$ |
4,004 |
|
$ |
3,708 |
|
$ |
11,576 |
|
$ |
11,180 |
Rental revenue generated from Ensign affiliated operations |
|
16,976 |
|
|
15,024 |
|
|
49,035 |
|
|
42,343 |
TOTAL RENTAL REVENUE |
$ |
20,980 |
|
$ |
18,732 |
|
$ |
60,611 |
|
$ |
53,523 |
Segment income(a) |
|
7,165 |
|
|
6,941 |
|
|
21,517 |
|
|
20,679 |
Depreciation and amortization |
|
6,429 |
|
|
5,561 |
|
|
18,528 |
|
|
15,798 |
FFO(b) |
$ |
13,594 |
|
$ |
12,502 |
|
$ |
40,045 |
|
$ |
36,477 |
|
(a) Segment income
reflects profit or loss from operations before provision for income
taxes, excluding gain or loss from sale of real estate and
insurance recoveries and charges from real estate. Included in
Standard Bearer expenses for the three and nine months ended
September 30, 2023 is the management fee of $1.3 million and $3.7
million, respectively, and interest of $3.4 million and $9.1
million, respectively, from intercompany agreements between
Standard Bearer and The Ensign Group, Inc. and other affiliated
entities, including the Service Center. Included in Standard Bearer
expenses for the three and nine months ended September 30, 2022 is
the management fee of $1.1 million and $3.2 million, respectively,
and interest of $2.3 million and $6.1 million, respectively, from
intercompany agreements between Standard Bearer and The Ensign
Group, Inc. and other affiliated entities, including the Service
Center. |
|
(b) FFO, in
accordance with the definition used by the National Association of
Real Estate Investment Trusts, means net income attributable to
common stockholders, computed in accordance with U.S. GAAP,
excluding gains (or losses) from sales of real estate and
impairment of depreciable real estate assets, while including
depreciation and amortization related to real estate to
earnings. |
Discussion of Non-GAAP Financial
Measures
EBITDA consists of net income before (a) other
(income) expense, net, (b) provisions for income taxes and (c)
depreciation and amortization. Adjusted EBITDA consists of net
income before (a) other (income) expense, net, (b) provisions for
income taxes, (c) depreciation and amortization, (d) stock-based
compensation expense, (e) acquisition related costs, (f) costs
incurred related to new systems implementation, (g) legal costs and
adjustments and (h) gain on business interruption recoveries and
sale of assets. Adjusted EBITDAR consists of net income before (a)
other (income) expense, net, (b) provisions for income taxes, (c)
depreciation and amortization, (d) rent-cost of services, (e)
stock-based compensation expense, (f) acquisition related costs,
(g) costs incurred related to new systems implementation, (h) legal
costs and adjustments and (i) gain on business interruption
recoveries and sale of assets. Adjusted EBT consists of (a) income
before provision for income taxes, (b) stock-based compensation
expense, (c) acquisition related costs, (d) costs incurred related
to new systems implementation, (e) legal costs and adjustments, (f)
gain on business interruption recoveries and sale of assets, (g)
write-off of deferred financing fees and (h) depreciation and
amortization of patient base intangible assets. Funds from
Operations (FFO) for our real estate segment consists of segment
income, excluding depreciation and amortization related to real
estate, gains or losses from sales of real estate, insurance
recoveries related to real estate and impairment of depreciable
real estate assets. The Company believes that the presentation of
adjusted net income, adjusted earnings per share, EBITDA, adjusted
EBITDA, adjusted EBT and FFO provides important supplemental
information to management and investors to evaluate the Company’s
operating performance. Adjusted EBITDAR is a financial valuation
measure that is not specified in GAAP. This measure is not
displayed as a performance measure as it excludes rent expense,
which is a normal and recurring operating expense. The Company
believes disclosure of adjusted net income, adjusted net income per
share, EBITDA, adjusted EBITDA, adjusted EBITDAR, adjusted EBT and
FFO has 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
measures provide useful information to investors, the specific
manner in which management uses these measures, and some of the
limitations associated with the use of these measures, please refer
to the Company's periodic filings with the Securities and Exchange
Commission, including its Annual Report on Form 10-K and Quarterly
Report on Form 10-Q. The Company’s periodic filings are available
on the SEC's website at www.sec.gov or under the "Financials" link
of the Investor Relations section on Ensign’s website at
http://www.ensigngroup.net.
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