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 first quarter of 2024, reporting GAAP
diluted earnings per share of $1.19 and adjusted earnings per
share(1) of $1.30, both for the quarter ended March 31, 2024.
Highlights Include:
- GAAP diluted earnings per share for the quarter was $1.19, an
increase of 13.3% over the prior year quarter. Adjusted diluted
earnings per share(1) for the quarter was $1.30, an increase of
15.0% over the prior year quarter.
- GAAP net income was $68.8 million, an increase of 15.0% over
the prior year quarter. Adjusted net income(1) was $75.4 million
for the quarter, an increase of 16.6%, over the prior year
quarter.
- Same Facilities and Transitioning Facilities occupancy
increased by 2.7% and 3.1%, respectively, over the prior year
quarter. Same Facilities occupancy was 81.0% during the first
quarter of 2024.
- Same Facilities skilled revenue increased by 3.8% over the
prior year quarter and increased by 5.6% sequentially over the
fourth quarter.
- Same Facilities and Transitioning Facilities managed care
census increased by 4.8% and 27.8%, respectively, over the prior
year quarter.
- Consolidated GAAP and adjusted revenue for the quarter were
$1.01 billion, an increase of 13.9% over the prior year
quarter.
- Total skilled services(2) revenue was $969.6 million for the
quarter, an increase of 13.9% over the prior year quarter and 3.1%
sequentially over the fourth quarter. Total skilled services(2)
segment income was $126.8 million for the quarter, an increase of
11.9% over the prior year quarter and 8.6% sequentially over the
fourth quarter.
- Standard Bearer(2) revenue was $22.2 million for the quarter,
an increase of 12.6% over the prior year quarter. FFO was $14.1
million for the quarter, an increase of 6.8% over 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 very pleased with the continued and
consistent performance that our local teams achieved again. After
another record quarter, we are excited about the remarkable
momentum our teams have created across our entire portfolio and
look forward to seeing that continue throughout the year,” said
Barry Port, Ensign’s Chief Executive Officer. “We were also excited
to see same store occupancy for the quarter reach 81.0%, which grew
by 2.7% over the prior year quarter and surpassed pre-pandemic same
store occupancies for the first time since the first quarter of
2020. While we celebrate this milestone, our same store portfolio
still has an incredible amount of built-in upside as dozens of our
most mature same store operations operate in the 90+ percent
occupancy range. As our operators continue to build on a solid
foundation of strong clinical results, cultural excellence, and
sustainable real estate expenses, they will continue to realize the
occupancy and skilled mix growth inherent in our same store
portfolio, which will allow us to continue achieving the consistent
financial results that we have delivered over time without
depending solely on acquiring new operations,” Port added. In
addition, the Company noted that it saw an increase in skilled mix
during the quarter with an increase in same store skilled mix days
of 5.6% and an increase in same store skilled mix revenue of 1.9%
sequentially over the fourth quarter. “All of these achievements
are entirely due to the efforts and commitment of our local
leadership teams, caregivers, field resources and service center
partners. As strong as our performance has been, we continue to see
enormous opportunities inherent in our portfolio, both in existing
operations and the growing number of new acquisitions,” Port
said.
“We are eager to continue to drive improvements
in our existing portfolio and to take advantage of the many
acquisition opportunities we see on the horizon. We are affirming
our annual 2024 earnings guidance of $5.29 to $5.47 per diluted
share and annual revenue guidance of $4.13 billion to $4.17
billion. The midpoint of this 2024 earnings guidance represents an
increase of 13% over our 2023 results and is 30% higher than our
2022 results. When we consider the current health of our
organization, combined with our culture and proven local leadership
strategy, we are well-positioned to meet or exceed this guidance in
2024," Port added.
Speaking to the Company’s growth, Chad Keetch,
Ensign’s Chief Investment Officer and Executive Vice President
said, “As we expected, we continued to add to our growing portfolio
and are very excited about the thirteen new operations and six real
estate assets we added during the quarter and since, bringing the
number of operations acquired since January 2023 to 39. We continue
to see a very healthy pipeline of new acquisition opportunities and
are lining up some exciting new additions that we expect to close
in the second and third quarters. Our decentralized growth model is
driven by leadership in each market who have a built-in incentive
to attract talent, train them and then acquire operations that will
be accretive to their clusters, and ultimately the entire
organization. As co-owners of the organization, our teams’
bandwidth to acquire expands as they grow, and the model is not
dependent on a centralized team of ‘deal experts’. This scalable
approach to growth has allowed us to continue to acquire or lease
new operations at disciplined prices, which has led to a cost
structure that has allowed us to drive consistent organic growth
over time at healthy margins. However, we don’t grow just for the
sake of growth or acquire revenue or buy earnings. We have and will
continue to grow when we see deals that will be accretive to
shareholders in both the near-term and over time.”
Speaking to the Company’s financial health,
Suzanne Snapper, Ensign’s Executive Vice President and Chief
Financial Officer reported that the Company’s liquidity remains
strong with approximately $511.8 million of cash on hand and $593.7
million of available capacity under its line-of-credit. Ms. Snapper
also indicated that, “Management’s annual guidance is based on
diluted weighted average common shares outstanding of approximately
58.5 million and a 25.0% tax rate. In addition, the guidance
assumes, among other things, normalized health insurance costs and
management’s current expectations regarding reimbursement rates. It
also excludes certain one-time charges, including expenses related
to litigation matters arising outside of the ordinary course of
business, impairment of long-lived assets, 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 Standard Bearer, 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
Quarterly Report on Form 10-Q for the period ended March 31, 2024,
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 were very happy today
to announce several new acquisitions spanning 8 of our 14 states.
Each of these opportunities represent significant opportunity to
either strengthen our current footprint or to establish new
clusters in new markets. We continue to prioritize growth in our
established geographies as it allows our clusters to work together
with their acute care partners to provide a comprehensive solution
to their healthcare needs. However, we are also excited to build
clusters in new states or in markets where we have significant room
to add more density. In particular, we are very excited to grow in
Nevada and to add our second and third operations in Tennessee,
which along with the acquisition we completed earlier this year
creates our first Tennessee cluster. We are very optimistic about
our ability to continue growing in Nevada, Tennessee and the
surrounding regions. We were also excited to add a dynamic
healthcare campus in Northern Utah that includes a skilled nursing
operation and a long-term acute care hospital (LTACH). While the
LTACH beds will remain a very small part of what we do in Utah, we
look forward to adding another service offering for our acute
partners in Utah that rely on us for a wide variety of post-acute
services for some of their most complex patients.”
The recent acquisitions include the following
leased operations:
- Hearthstone Health and Rehabilitation, a 125-bed skilled
nursing facility located in Sparks, Nevada;
- Park Post Acute, a 135-bed skilled nursing facility located in
Parker, Colorado;
- Oakwood Care and Rehabilitation, a 170-bed skilled nursing
facility located in Lakewood, Colorado;
- TriState Health and Rehabilitation Center, a 116-bed skilled
nursing facility located in Harrogate, Tennessee;
- Creekview Health and Rehabilitation, a 78-bed skilled nursing
facility located in Knoxville, Tennessee;
- Foothills Transitional Care and Rehabilitation, a 135-bed
skilled nursing facility located in Maryville, Tennessee; and
- Midlothian Healthcare Center, a 120-bed skilled nursing
facility located in Midlothian, Texas.
Standard Bearer also announced the following
real estate acquisitions, all of which will be operated by an
Ensign-affiliated operator:
- Atchison Senior Village Rehabilitation and Nursing Center, a
45-bed skilled nursing facility located in Atchison, Kansas;
- River Park Post Acute and Elmwood Senior Living, a healthcare
campus with 66 skilled nursing beds, 45 assisted living units and
119 independent living units located in Chandler, Arizona;
- Hillside Village of De Soto Rehabilitation and Nursing Center,
a healthcare campus with 49 skilled nursing beds and 38 assisted
living units, located in De Soto, Kansas;
- Spencer Post Acute Rehabilitation Center, an 82-bed skilled
nursing facility located in Spencer, Iowa;
- South Davis Specialty Care a 95-bed skilled nursing operation,
located in Bountiful, Utah; and
- Western Peaks Specialty Hospital, a 43-bed long-term acute care
hospital (LTACH) located in Bountiful, Utah.
Ensign's growing portfolio consists of 310
healthcare operations, 29 of which also include senior living
operations, across fourteen states. Ensign now owns 119 real estate
assets, 89 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.
The Company continues to provide additional
disclosure on Standard Bearer, which is comprised of 114 owned
properties. Of these assets, 85 are leased to an Ensign-affiliated
operator and 30 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 $22.2 million for the
quarter, of which $18.0 million was derived from Ensign-affiliated
operations. For the quarter, Ensign reported $14.1 million in
FFO.
The Company paid a quarterly cash dividend of
$0.06 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 2023 the Company increased the annual
dividend for the 21st consecutive year.
Conference Call
A live webcast will be held Thursday, May 2,
2024, at 10:00 a.m. Pacific time (1:00 p.m. Eastern time) to
discuss Ensign’s first 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, May 31, 2024.
About Ensign™
The Ensign Group, Inc.'s independent
subsidiaries provide a broad spectrum of skilled nursing and senior
living services, physical, occupational and speech therapies and
other rehabilitative and healthcare services at 310 healthcare
facilities in Arizona, California, Colorado, Idaho, Iowa, Kansas,
Nebraska, Nevada, South Carolina, Tennessee, 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, emergency and
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 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
continue to be impacted by the unprecedented nature of the changes
in the regulations and environment, as such, 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 March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
|
(In thousands, except per share data) |
REVENUE |
|
|
|
Service revenue |
$ |
1,004,485 |
|
|
$ |
881,918 |
|
Rental revenue |
|
5,687 |
|
|
|
4,923 |
|
TOTAL REVENUE |
$ |
1,010,172 |
|
|
$ |
886,841 |
|
Expense: |
|
|
|
Cost of services |
|
799,263 |
|
|
|
696,326 |
|
Rent—cost of services |
|
51,876 |
|
|
|
46,637 |
|
General and administrative expense |
|
57,158 |
|
|
|
51,891 |
|
Depreciation and amortization |
|
19,657 |
|
|
|
17,112 |
|
TOTAL EXPENSES |
|
927,954 |
|
|
|
811,966 |
|
Income from operations |
|
82,218 |
|
|
|
74,875 |
|
Other income
(expense): |
|
|
|
Interest expense |
|
(1,964 |
) |
|
|
(2,036 |
) |
Other income |
|
9,344 |
|
|
|
5,543 |
|
Other income, net |
|
7,380 |
|
|
|
3,507 |
|
Income
before provision for income taxes |
|
89,598 |
|
|
|
78,382 |
|
Provision
for income taxes |
|
20,638 |
|
|
|
18,413 |
|
NET INCOME |
|
68,960 |
|
|
|
59,969 |
|
Less: net income attributable to noncontrolling interests |
|
125 |
|
|
|
117 |
|
Net income attributable to The Ensign Group,
Inc. |
$ |
68,835 |
|
|
$ |
59,852 |
|
|
|
|
|
NET
INCOME PER SHARE ATTRIBUTABLE TO THE ENSIGN GROUP
INC. |
|
|
|
Basic |
$ |
1.22 |
|
|
$ |
1.08 |
|
Diluted |
$ |
1.19 |
|
|
$ |
1.05 |
|
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING |
|
|
|
Basic |
|
56,337 |
|
|
|
55,300 |
|
Diluted |
|
57,921 |
|
|
|
57,098 |
|
THE ENSIGN
GROUP, INC.UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands) |
|
|
|
|
|
March 31,
2024 |
|
December 31,
2023 |
|
|
|
|
ASSETS |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
511,839 |
|
|
$ |
509,626 |
|
Accounts receivable—less allowance for doubtful accounts of $9,463
and $9,348 at March 31, 2024 and December 31, 2023,
respectively |
|
519,439 |
|
|
|
485,039 |
|
Investments—current |
|
14,459 |
|
|
|
17,229 |
|
Prepaid expenses and other current assets |
|
42,451 |
|
|
|
35,036 |
|
Total current assets |
|
1,088,188 |
|
|
|
1,046,930 |
|
Property and
equipment, net |
|
1,101,560 |
|
|
|
1,090,771 |
|
Right-of-use
assets |
|
1,821,024 |
|
|
|
1,756,430 |
|
Insurance
subsidiary deposits and investments |
|
107,666 |
|
|
|
92,687 |
|
Deferred tax
assets |
|
66,486 |
|
|
|
67,124 |
|
Restricted
and other assets |
|
39,686 |
|
|
|
40,205 |
|
Intangible
assets, net |
|
6,559 |
|
|
|
6,525 |
|
Goodwill |
|
77,241 |
|
|
|
76,869 |
|
TOTAL ASSETS |
$ |
4,308,410 |
|
|
$ |
4,177,541 |
|
LIABILITIES AND EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
82,635 |
|
|
$ |
92,811 |
|
Accrued wages and related liabilities |
|
294,208 |
|
|
|
332,568 |
|
Lease liabilities—current |
|
85,898 |
|
|
|
82,526 |
|
Accrued self-insurance liabilities—current |
|
62,589 |
|
|
|
54,664 |
|
Other accrued liabilities |
|
180,408 |
|
|
|
168,228 |
|
Current maturities of long-term debt |
|
3,983 |
|
|
|
3,950 |
|
Total current liabilities |
|
709,721 |
|
|
|
734,747 |
|
Long-term
debt—less current maturities |
|
144,533 |
|
|
|
145,497 |
|
Long-term
lease liabilities—less current portion |
|
1,701,652 |
|
|
|
1,639,326 |
|
Accrued
self-insurance liabilities—less current portion |
|
117,364 |
|
|
|
111,246 |
|
Other
long-term liabilities |
|
51,673 |
|
|
|
49,408 |
|
Total equity |
|
1,583,467 |
|
|
|
1,497,317 |
|
TOTAL LIABILITIES AND EQUITY |
$ |
4,308,410 |
|
|
$ |
4,177,541 |
|
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: |
|
|
Three Months
Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
NET CASH PROVIDED BY/(USED IN): |
(In thousands) |
Operating activities |
$ |
35,312 |
|
|
$ |
48,344 |
|
Investing activities |
|
(34,655 |
) |
|
|
(35,971 |
) |
Financing activities |
|
1,556 |
|
|
|
(1,674 |
) |
Net increase in cash and cash equivalents |
|
2,213 |
|
|
|
10,699 |
|
Cash and
cash equivalents beginning of period |
|
509,626 |
|
|
|
316,270 |
|
Cash and cash equivalents at end of period |
$ |
511,839 |
|
|
$ |
326,969 |
|
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 GAAP net income to Non-GAAP net
income for the periods presented: |
|
|
Three Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
Net income
attributable to The Ensign Group, Inc. |
$ |
68,835 |
|
|
$ |
59,852 |
|
Non-GAAP adjustments |
|
|
|
Stock-based compensation expense(a) |
|
8,238 |
|
|
|
6,573 |
|
Litigation(b) |
|
764 |
|
|
|
67 |
|
Cost of services - impairment of long-lived assets |
|
1,849 |
|
|
|
— |
|
Cost of services - acquisition related costs(c) |
|
114 |
|
|
|
460 |
|
General and administrative - costs incurred related to new systems
implementation |
|
76 |
|
|
|
815 |
|
Depreciation and amortization - patient base(d) |
|
39 |
|
|
|
47 |
|
Provision for income taxes on Non-GAAP adjustments(e) |
|
(4,531 |
) |
|
|
(3,173 |
) |
Non-GAAP Net Income |
$ |
75,384 |
|
|
$ |
64,641 |
|
|
|
|
|
Average
number of diluted shares outstanding |
|
57,921 |
|
|
|
57,098 |
|
|
|
|
|
Diluted Earnings Per Share |
|
|
|
Net Income |
$ |
1.19 |
|
|
$ |
1.05 |
|
|
|
|
|
Adjusted Diluted Earnings Per Share |
|
|
|
Net Income |
$ |
1.30 |
|
|
$ |
1.13 |
|
|
|
|
|
Footnotes: |
|
|
|
(a) Represents stock-based compensation expense incurred. |
|
Three Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
Cost of
services |
$ |
5,401 |
|
|
$ |
4,307 |
|
General and
administrative |
|
2,837 |
|
|
|
2,266 |
|
Total Non-GAAP adjustment |
$ |
8,238 |
|
|
$ |
6,573 |
|
(b) Litigation
relates to specific proceedings arising outside of the ordinary
course of business. |
|
Three Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
Cost of
services |
$ |
— |
|
|
$ |
67 |
|
General and
administrative |
|
764 |
|
|
|
— |
|
Total Non-GAAP adjustment |
$ |
764 |
|
|
$ |
67 |
|
(c) Represents
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. |
(e) 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 March 31, |
|
|
2024 |
|
|
|
2023 |
|
Consolidated Statements of Income Data: |
|
|
|
Net income |
$ |
68,960 |
|
|
$ |
59,969 |
|
Less: Net
income attributable to noncontrolling interests |
|
125 |
|
|
|
117 |
|
Other income, net |
|
7,380 |
|
|
|
3,507 |
|
Add:
Provision for income taxes |
|
20,638 |
|
|
|
18,413 |
|
Depreciation and amortization |
|
19,657 |
|
|
|
17,112 |
|
EBITDA |
$ |
101,750 |
|
|
$ |
91,870 |
|
Adjustments to EBITDA: |
|
|
|
Stock-based compensation expense |
|
8,238 |
|
|
|
6,573 |
|
Litigation(a) |
|
764 |
|
|
|
67 |
|
Impairment of long-lived assets |
|
1,849 |
|
|
|
— |
|
Acquisition related costs(b) |
|
114 |
|
|
|
460 |
|
Costs incurred related to new systems implementation |
|
76 |
|
|
|
815 |
|
ADJUSTED EBITDA |
$ |
112,791 |
|
|
$ |
99,785 |
|
Rent—cost of services |
|
51,876 |
|
|
|
46,637 |
|
ADJUSTED EBITDAR |
$ |
164,667 |
|
|
|
(a) Litigation relates to specific proceedings arising outside of
the ordinary course of business. |
(b) Costs incurred to acquire operations that are not
capitalizable. |
The table below reconciles income before provision
for income taxes to Adjusted EBT for the periods presented:
|
Three Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
Consolidated statements of income data: |
(In thousands) |
Income
before provision for income taxes |
$ |
89,598 |
|
|
$ |
78,382 |
|
Stock-based
compensation expense |
|
8,238 |
|
|
|
6,573 |
|
Litigation(a) |
|
764 |
|
|
|
67 |
|
Impairment
of long-lived assets |
|
1,849 |
|
|
|
— |
|
Acquisition
related costs(b) |
|
114 |
|
|
|
460 |
|
Costs
incurred related to new systems implementation |
|
76 |
|
|
|
815 |
|
Depreciation
and amortization - patient base(c) |
|
39 |
|
|
|
47 |
|
ADJUSTED EBT |
$ |
100,678 |
|
|
$ |
86,344 |
|
(a) Litigation relates to specific proceedings arising outside of
the ordinary course of business. |
(b) Costs incurred to acquire operations that are not
capitalizable. |
(c) 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 March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
Change |
|
% Change |
|
|
|
|
|
|
|
|
TOTAL FACILITY RESULTS: |
(Dollars in thousands) |
Skilled services revenue |
$ |
969,602 |
|
|
$ |
850,923 |
|
|
$ |
118,679 |
|
|
|
13.9 |
% |
Number of facilities at period end |
|
264 |
|
|
|
253 |
|
|
|
11 |
|
|
|
4.3 |
% |
Number of campuses at period end(1) |
|
27 |
|
|
|
26 |
|
|
|
1 |
|
|
|
3.8 |
% |
Actual patient days |
|
2,255,531 |
|
|
|
2,047,705 |
|
|
|
207,826 |
|
|
|
10.1 |
% |
Occupancy percentage — Operational beds |
|
80.1 |
% |
|
|
77.9 |
% |
|
|
|
|
2.2 |
% |
Skilled mix by nursing days |
|
31.0 |
% |
|
|
32.3 |
% |
|
|
|
|
(1.3 |
)% |
Skilled mix by nursing revenue |
|
49.9 |
% |
|
|
52.7 |
% |
|
|
|
|
(2.8 |
)% |
|
Three Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
Change |
|
% Change |
|
|
|
|
|
|
|
|
SAME FACILITY RESULTS:(2) |
(Dollars in thousands) |
Skilled services revenue |
$ |
743,253 |
|
|
$ |
695,806 |
|
|
$ |
47,447 |
|
|
|
6.8 |
% |
Number of facilities at period end |
|
194 |
|
|
|
194 |
|
|
|
— |
|
|
|
— |
% |
Number of campuses at period end(1) |
|
25 |
|
|
|
25 |
|
|
|
— |
|
|
|
— |
% |
Actual patient days |
|
1,710,340 |
|
|
|
1,649,905 |
|
|
|
60,435 |
|
|
|
3.7 |
% |
Occupancy percentage — Operational beds |
|
81.0 |
% |
|
|
78.9 |
% |
|
|
|
|
2.1 |
% |
Skilled mix by nursing days |
|
32.4 |
% |
|
|
33.6 |
% |
|
|
|
|
(1.2 |
)% |
Skilled mix by nursing revenue |
|
50.9 |
% |
|
|
53.6 |
% |
|
|
|
|
(2.7 |
)% |
|
Three Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
Change |
|
% Change |
|
|
|
|
|
|
|
|
TRANSITIONING FACILITY
RESULTS:(3) |
(Dollars in thousands) |
Skilled services revenue |
$ |
123,624 |
|
|
$ |
114,591 |
|
|
$ |
9,033 |
|
|
|
7.9 |
% |
Number of facilities at period end |
|
40 |
|
|
|
40 |
|
|
|
— |
|
|
|
— |
% |
Number of campuses at period end(1) |
|
1 |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
% |
Actual patient days |
|
328,471 |
|
|
|
315,952 |
|
|
|
12,519 |
|
|
|
4.0 |
% |
Occupancy percentage — Operational beds |
|
74.0 |
% |
|
|
71.8 |
% |
|
|
|
|
2.2 |
% |
Skilled mix by nursing days |
|
21.7 |
% |
|
|
23.0 |
% |
|
|
|
|
(1.3 |
)% |
Skilled mix by nursing revenue |
|
37.9 |
% |
|
|
42.0 |
% |
|
|
|
|
(4.1 |
)% |
|
Three Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
Change |
|
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
RECENTLY ACQUIRED FACILITY
RESULTS:(4) |
(Dollars in thousands) |
Skilled services revenue |
$ |
102,725 |
|
|
$ |
40,526 |
|
|
$ |
62,199 |
|
|
|
NM |
|
Number of facilities at period end |
|
30 |
|
|
|
19 |
|
|
|
11 |
|
|
|
NM |
|
Number of campuses at period end(1) |
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
NM |
|
Actual patient days |
|
216,720 |
|
|
|
81,848 |
|
|
|
134,872 |
|
|
|
NM |
|
Occupancy percentage — Operational beds |
|
83.8 |
% |
|
|
85.6 |
% |
|
|
|
|
NM |
|
Skilled mix by nursing days |
|
34.1 |
% |
|
|
43.0 |
% |
|
|
|
|
NM |
|
Skilled mix by nursing revenue |
|
56.1 |
% |
|
|
66.9 |
% |
|
|
|
|
NM |
|
(1) 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. |
(2) Same Facility results represent all facilities
purchased prior to January 1, 2021. |
(3) Transitioning Facility results represent all
facilities purchased from January 1, 2021 to December 31,
2022. |
(4)Recently Acquired Facility (Acquisitions)
results represent all facilities purchased on or subsequent to
January 1, 2023. |
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 March 31, |
|
Same Facility |
|
Transitioning |
|
Acquisitions |
|
Total |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
SKILLED NURSING AVERAGE DAILY REVENUE RATES |
Medicare |
$ |
745.00 |
|
|
$ |
711.24 |
|
|
$ |
692.63 |
|
|
$ |
665.71 |
|
|
$ |
857.22 |
|
|
$ |
849.75 |
|
|
$ |
757.86 |
|
|
$ |
715.64 |
|
Managed
care |
|
548.37 |
|
|
|
517.06 |
|
|
|
527.91 |
|
|
|
513.07 |
|
|
|
596.52 |
|
|
|
591.96 |
|
|
|
549.91 |
|
|
|
519.43 |
|
Other
skilled |
|
620.47 |
|
|
|
599.52 |
|
|
|
495.13 |
|
|
|
490.82 |
|
|
|
576.46 |
|
|
|
513.98 |
|
|
|
606.82 |
|
|
|
585.02 |
|
Total
skilled revenue |
|
631.79 |
|
|
|
608.13 |
|
|
|
592.32 |
|
|
|
589.70 |
|
|
|
754.79 |
|
|
|
740.70 |
|
|
|
640.78 |
|
|
|
613.16 |
|
Medicaid |
|
293.05 |
|
|
|
267.09 |
|
|
|
269.49 |
|
|
|
243.45 |
|
|
|
299.79 |
|
|
|
264.00 |
|
|
|
289.78 |
|
|
|
262.78 |
|
Private and
other payors |
|
283.96 |
|
|
|
263.19 |
|
|
|
259.61 |
|
|
|
235.74 |
|
|
|
344.88 |
|
|
|
349.95 |
|
|
|
285.16 |
|
|
|
261.40 |
|
Total skilled nursing revenue |
$ |
401.81 |
|
|
$ |
381.27 |
|
|
$ |
338.23 |
|
|
$ |
322.06 |
|
|
$ |
459.18 |
|
|
$ |
476.10 |
|
|
$ |
398.06 |
|
|
$ |
375.92 |
|
(1) The rates are
based on contractually agreed-upon amounts or rates, excluding the
estimates of variable consideration under the revenue recognition
standard, Financial Accounting Standards Board (FASB) Accounting
Standards Codification (ASC) Topic 606 and state relief
funding. |
The following tables set forth our percentage of
skilled nursing patient revenue and days by payor source for the
periods presented:
|
Three Months Ended March 31, |
|
Same Facility |
|
Transitioning |
|
Acquisitions |
|
Total |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
PERCENTAGE OF SKILLED NURSING REVENUE |
Medicare |
|
21.5 |
% |
|
|
25.2 |
% |
|
|
18.7 |
% |
|
|
24.8 |
% |
|
|
39.0 |
% |
|
|
46.7 |
% |
|
|
23.1 |
% |
|
|
26.2 |
% |
Managed
care |
|
20.4 |
|
|
|
20.1 |
|
|
|
14.5 |
|
|
|
12.1 |
|
|
|
13.7 |
|
|
|
15.3 |
|
|
|
18.9 |
|
|
|
18.8 |
|
Other
skilled |
|
9.0 |
|
|
|
8.3 |
|
|
|
4.7 |
|
|
|
5.1 |
|
|
|
3.4 |
|
|
|
4.9 |
|
|
|
7.9 |
|
|
|
7.7 |
|
Skilled mix |
|
50.9 |
|
|
|
53.6 |
|
|
|
37.9 |
|
|
|
42.0 |
|
|
|
56.1 |
|
|
|
66.9 |
|
|
|
49.9 |
|
|
|
52.7 |
|
Private and
other payors |
|
7.3 |
|
|
|
7.2 |
|
|
|
9.2 |
|
|
|
8.1 |
|
|
|
7.0 |
|
|
|
6.0 |
|
|
|
7.4 |
|
|
|
7.3 |
|
Medicaid |
|
41.8 |
|
|
|
39.2 |
|
|
|
52.9 |
|
|
|
49.9 |
|
|
|
36.9 |
|
|
|
27.1 |
|
|
|
42.7 |
|
|
|
40.0 |
|
TOTAL SKILLED NURSING |
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
Three Months Ended March 31, |
|
Same Facility |
|
Transitioning |
|
Acquisitions |
|
Total |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
PERCENTAGE OF SKILLED NURSING DAYS |
Medicare |
|
11.6 |
% |
|
|
13.5 |
% |
|
|
9.1 |
% |
|
|
12.0 |
% |
|
|
20.9 |
% |
|
|
26.2 |
% |
|
|
12.1 |
% |
|
|
13.8 |
% |
Managed
care |
|
15.0 |
|
|
|
14.8 |
|
|
|
9.3 |
|
|
|
7.6 |
|
|
|
10.6 |
|
|
|
12.3 |
|
|
|
13.7 |
|
|
|
13.6 |
|
Other
skilled |
|
5.8 |
|
|
|
5.3 |
|
|
|
3.3 |
|
|
|
3.4 |
|
|
|
2.6 |
|
|
|
4.5 |
|
|
|
5.2 |
|
|
|
4.9 |
|
Skilled mix |
|
32.4 |
|
|
|
33.6 |
|
|
|
21.7 |
|
|
|
23.0 |
|
|
|
34.1 |
|
|
|
43.0 |
|
|
|
31.0 |
|
|
|
32.3 |
|
Private and
other payors |
|
10.2 |
|
|
|
10.4 |
|
|
|
11.9 |
|
|
|
11.0 |
|
|
|
9.4 |
|
|
|
8.2 |
|
|
|
10.4 |
|
|
|
10.4 |
|
Medicaid |
|
57.4 |
|
|
|
56.0 |
|
|
|
66.4 |
|
|
|
66.0 |
|
|
|
56.5 |
|
|
|
48.8 |
|
|
|
58.6 |
|
|
|
57.3 |
|
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 March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
Revenue |
|
% of Revenue |
|
Revenue |
|
% of Revenue |
Medicaid(1) |
$ |
390,163 |
|
|
|
38.8 |
% |
|
$ |
340,264 |
|
|
|
38.6 |
% |
Medicare |
|
265,583 |
|
|
|
26.4 |
|
|
|
247,723 |
|
|
|
28.1 |
|
Medicaid — skilled |
|
63,309 |
|
|
|
6.4 |
|
|
|
57,927 |
|
|
|
6.6 |
|
Total Medicaid and Medicare |
|
719,055 |
|
|
|
71.6 |
|
|
|
645,914 |
|
|
|
73.3 |
|
Managed care |
|
188,104 |
|
|
|
18.7 |
|
|
|
156,663 |
|
|
|
17.8 |
|
Private and other(2) |
|
97,326 |
|
|
|
9.7 |
|
|
|
79,341 |
|
|
|
8.9 |
|
SERVICE REVENUE |
$ |
1,004,485 |
|
|
|
100.0 |
% |
|
$ |
881,918 |
|
|
|
100.0 |
% |
|
(1) Medicaid payor includes revenue for senior
living operations and revenue related to state relief funding. |
(2) Private and other also includes revenue from
senior living operations and all revenue 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 March 31, |
|
|
2024 |
|
|
|
2023 |
|
Statements of Income Data: |
|
|
|
Segment income(a) |
$ |
126,809 |
|
|
$ |
113,345 |
|
Depreciation and amortization |
|
10,536 |
|
|
|
9,064 |
|
EBITDA |
$ |
137,345 |
|
|
$ |
122,409 |
|
Adjustments to EBITDA: |
|
|
|
Stock-based compensation expense |
|
5,214 |
|
|
|
4,156 |
|
ADJUSTED EBITDA |
$ |
142,559 |
|
|
$ |
126,565 |
|
|
|
|
|
(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 March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
Rental
revenue generated from third-party tenants |
$ |
4,195 |
|
|
$ |
3,786 |
|
Rental revenue generated from Ensign's independent
subsidiaries |
|
18,006 |
|
|
|
15,931 |
|
TOTAL RENTAL REVENUE |
$ |
22,201 |
|
|
$ |
19,717 |
|
Segment income(a) |
|
7,258 |
|
|
|
7,219 |
|
Depreciation and amortization |
|
6,829 |
|
|
|
5,966 |
|
FFO(b) |
$ |
14,087 |
|
|
$ |
13,185 |
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|
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(a) Segment income reflects profit or loss from operations before
provision for income taxes, excluding gain or loss from sale of
real estate, insurance recoveries and impairment of long-lived
assets. Included in Standard Bearer expenses for the three months
ended March 31, 2024 and 2023 is the management fee of $1.3 million
and $1.2 million, respectively, and interest of $4.3 million and
$2.8 million, respectively, from intercompany agreements between
Standard Bearer and the Company and its independent subsidiaries,
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 long-lived 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, net, (b) provisions for income taxes and (c) depreciation
and amortization. Adjusted EBITDA consists of net income before (a)
other income, 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) litigation and (h) impairment of
long-lived assets. Adjusted EBITDAR consists of net income before
(a) other income, 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)
litigation and (i) impairment of long-lived 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)
litigation, (f) impairment of long-lived assets and (g)
depreciation and amortization of patient base intangible assets.
Funds from Operations (FFO) for our Standard Bearer segment
consists of segment income, excluding depreciation and amortization
related to real estate. 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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