MISSION VIEJO, Calif., Aug. 6 /PRNewswire-FirstCall/ -- The Ensign Group, Inc. , the parent company of the Ensign(TM) group of skilled nursing, rehabilitative care services, home health, hospice care and assisted living companies, today reported record results for the second quarter of 2010.
(Logo: http://photos.prnewswire.com/prnh/20071213/LATH168LOGO) (Logo: http://www.newscom.com/cgi-bin/prnh/20071213/LATH168LOGO) Financial Highlights Include: -- Adjusted earnings were a record $0.46 per diluted share, up 15.0% over the second quarter of 2009; -- Total revenue was a record $157.9 million, up 19.5% on a consolidated basis; -- Same-store skilled mix increased by 284 basis points to 52.9%; -- Same-store skilled revenue increased by 10.4%; -- Consolidated EBITDAR climbed 19.9% to $25.7 million, with consolidated EBITDAR margins of 16.3%; and -- Net income rose 17.5% to $9.6 million for the quarter. Operating Results
Ensign's President and Chief Executive Officer Christopher Christensen praised Ensign's operational leaders and their teams for the outstanding quality standards maintained during the quarter, noting that financial performance follows clinical excellence. "We understand that our patients, our staff and our business all benefit from one essential thing: high quality care," he said.
He also remarked on progress in the 19 facility acquisitions completed by the Company in 2009 and 2010 to date, noting that all but one are already profitable, and nearly all are running at or ahead of proforma since acquisition. He also reported that Horizon Home Health and Hospice, Ensign's Idaho home health and hospice business which was acquired on May 1, is seeing a surge in census and is also running ahead of proforma.
Mr. Christensen also referenced Ensign's balance sheet and its industry-low adjusted net-debt-to-EBITDAR ratio of approximately 2.1x. He further noted that the company continues to generate strong cash flow, with net cash from operations of $14.9 million through June 30, 2010. "Our balance sheet, together with our accumulated operating and turnaround expertise, position us well to continue our pattern of disciplined growth," he added.
Fully diluted GAAP earnings per share were $0.46 for the quarter, compared to $0.39 per share in the prior year. Excluding $0.1 million in acquisition expenses and amortization of recently-acquired patient bases, adjusted net income was $9.7 million or $0.46 per diluted share for the quarter.
A discussion of the company's use of non-GAAP financial measures is set forth below. A reconciliation of net income to EBITDAR and EBITDA, as well as a reconciliation of GAAP earnings per share and net income to adjusted net earnings per share and adjusted net income, appear in the financial data portion of this release.
More complete information is contained in the Company's 10-Q, which was filed with the SEC today and can be viewed on the Company's website at http://www.ensigngroup.net/.
2010 Guidance Increased
Management increased its 2010 annual guidance, projecting revenues of $628 million to $638 million, and net income of $1.79 to $1.83 per diluted share for the year. The guidance is based on diluted weighted average common shares outstanding of 21.4 million and assumes, among other things, no additional acquisitions or dispositions beyond those made to date, and an aggregate 1.0% projected decline in overall reimbursement rates. It also assumes that tax rates do not materially increase, and no negative impact associated with the implementation of RUGs IV and MDS 3.0.
Quarter Highlights
During the quarter, the company's Board of Directors declared a quarterly cash dividend of $0.05 per share of Ensign common stock. Ensign has been a dividend-paying company since 2002.
The company also announced the acquisition of two long-term care facilities and a home health and hospice business in two separate transactions during the quarter. The real estate and operations were purchased with cash, and include:
-- In Texas, Heritage Gardens Healthcare Center, a 140-bed skilled nursing facility in Carrollton, Texas, and Silver Springs Healthcare Center, a 144-bed skilled nursing facility in Houston, Texas, on May 1, 2010. -- And in Idaho, Horizon Home Health and Hospice, a well-regarded home health and hospice agency based in Meridian, Idaho, also on May 1, 2010.
The two facility acquisitions brought Ensign's growing portfolio to 81 facilities, 51 of which are Ensign-owned, with Ensign affiliates holding purchase options on eight of Ensign's 30 leased facilities. Ensign also owns one home health and two hospice businesses. Management reaffirmed that Ensign is actively seeking additional opportunities to acquire both well-performing and struggling long-term care operations across the Western United States.
Conference Call
A live webcast will be held on Tuesday, August 10, 2010, at 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time) to discuss Ensign's second quarter results. To listen to the webcast, or to view any financial or statistical information required by SEC Regulation G, please visit the Investors section of the Ensign website at http://investor.ensigngroup.net/. The webcast will be recorded, and will be available for replay via the website until 5:00 p.m. Pacific Time on Tuesday, August 17, 2010.
About Ensign(TM)
The Ensign Group, Inc.'s independent operating subsidiaries provide a broad spectrum of skilled nursing and assisted living services, physical, occupational and speech therapies, home health and hospice services, and other rehabilitative and healthcare services for both long-term residents and short-stay rehabilitation patients at 81 facilities, two hospice companies and a home health business in California, Arizona, Texas, Washington, Utah, Idaho and Colorado. Each of these facilities is operated by a separate, wholly-owned independent operating subsidiary that has its own management, employees and assets. References herein to the consolidated "Company" and "its" assets and activities, as well as the use of the terms "we," "us," "its" and similar verbiage are not meant to imply that The Ensign Group, Inc. has direct operating assets, employees or revenue, or that any of the facilities, the hospice business, the Service Center or the captive insurance subsidiary are operated by the same entity. More information about Ensign is available at http://www.ensigngroup.net/.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
This press release contains, and the related conference call and webcast will include, forward-looking statements that are based on management's current expectations, assumptions and beliefs about its business, financial performance, operating results, the industry in which it operates and other future events. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. These forward-looking statements include, but are not limited to, statements regarding growth prospects, future operating and financial performance. They are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to materially and adversely differ from those expressed in any forward-looking statement.
These risks and uncertainties relate to the company's business, its industry and its common stock and include: reduced prices and reimbursement rates for its services; its ability to acquire, develop, manage or improve facilities, its ability to manage its increasing borrowing costs as it incurs additional indebtedness to fund the acquisition and development of facilities; its ability to access capital on a cost-effective basis to continue to successfully implement its growth strategy; its operating margins and profitability could suffer if it is unable to grow and manage effectively its increasing number of facilities; competition from other companies in the acquisition, development and operation of facilities; and the application of existing or proposed government regulations, or the adoption of new laws and regulations, that could limit its business operations, require it to incur significant expenditures or limit its ability to relocate its facilities if necessary. Readers should not place undue reliance on any forward-looking statements and are encouraged to review the company's periodic filings with the Securities and Exchange Commission, including its Form 10-Q, which was filed today, for a more complete discussion of the risks and other factors that could affect Ensign's business, prospects and any forward-looking statements. Except as required by the federal securities laws, Ensign does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changing circumstances or any other reason after the date of this press release.
THE ENSIGN GROUP, INC. GAAP AND ADJUSTED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) Three Months Ended June 30, 2010 ------------- As As Non- Adjusted Reported GAAP --------- -------- Adj. ---- Revenue $157,948 $157,948 Expense: Cost of services (exclusive of facility rent and depreciation and amortization shown separately below) 125,808 (37)(1) 125,771 Facility rent--cost of services 3,616 3,616 General and administrative expense 6,407 6,407 Depreciation and amortization 4,023 (114)(2) 3,909 ----- ------------ ----- Total expenses 139,854 (151) 139,703 Income from operations 18,094 151 18,245 Other income (expense): Interest expense (2,308) (2,308) Interest income 63 63 --- --- Other expense, net (2,245) (2,245) Income before provision for income taxes 15,849 151 16,000 Provision for income taxes 6,230 60(3) 6,290 ----- ----- ----- Net income $9,619 91 $9,710 ====== === ====== Net income per share: Basic $0.46 $0.47 ===== ===== Diluted $0.46 $0.46 ===== ===== Weighted average common shares outstanding: Basic 20,741 20,741 ====== ====== Diluted 21,126 21,126 ====== ====== Six Months Ended June 30, 2010 ------------- As As Non- Adjusted Reported GAAP --------- -------- Adj. ---- Revenue $312,122 $312,122 Expense: Cost of services (exclusive of facility rent and depreciation and amortization shown separately below) 248,991 (89)(1) 248,902 Facility rent--cost of services 7,191 7,191 General and administrative expense 12,181 12,181 Depreciation and amortization 7,978 (369)(2) 7,609 ----- ---------- ----- Total expenses 276,341 (458) 275,883 Income from operations 35,781 458 36,239 Other income (expense): Interest expense (4,588) (4,588) Interest income 130 130 --- --- Other expense, net (4,458) (4,458) Income before provision for income taxes 31,323 458 31,781 Provision for income 181 taxes 12,356 (3) 12,537 ------ ------ ------ Net income $18,967 277 $19,244 ======= === ======= Net income per share: Basic $0.92 $0.93 ===== ===== Diluted $0.90 $0.91 ===== ===== Weighted average common shares outstanding: Basic 20,713 20,713 ====== ====== Diluted 21,103 21,103 ====== ====== (1) Represents acquisition-related costs expenses. (2) Represents amortization costs related to patient base intangible assets acquired. Patient base intangible assets are amortized over a period of four to eight months, depending on the classification of the patients and the level of occupancy in a new acquisition on the acquisition date. (3) Represents the tax impact of acquisition costs and patient base non-GAAP adjustments represented in entries (1) and (2). THE ENSIGN GROUP, INC. RECONCILIATION OF NET INCOME TO EBITDA AND EBITDAR (in thousands) The table below reconciles net income to EBITDA and EBITDAR for the periods presented: Three Months Ended June 30, ------------------ 2010 2009 ---- ---- Consolidated Statement of Income Data: Net income $9,619 $8,184 Interest expense, net 2,245 1,072 Provision for income taxes 6,230 5,282 Depreciation and amortization 4,023 3,209 ----- ----- EBITDA $22,117 $17,747 ======= ======= Facility rent--cost of services 3,616 3,724 ----- ----- EBITDAR $25,733 $21,471 ======= ======= Six Months Ended June 30, ---------------- 2010 2009 ---- ---- Consolidated Statement of Income Data: Net income $18,967 $16,107 Interest expense, net 4,458 2,330 Provision for income taxes 12,356 10,560 Depreciation and amortization 7,978 6,174 ----- ----- EBITDA(1) $43,759 $35,171 ======= ======= Facility rent--cost of services 7,191 7,425 ----- ----- EBITDAR(1) $50,950 $42,596 ======= ======= THE ENSIGN GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF CASH FLOWS (In thousands) December June 30, 31, 2010 2009 ---- ---- Assets Current assets: Cash and cash equivalents $26,353 $38,855 Accounts receivable 72,678 62,606 Prepaid income taxes 1,245 1,242 Prepaid expenses and other current assets 6,695 6,498 Deferred tax asset-current 8,868 8,126 ----- ----- Total current assets 115,839 117,327 Property and equipment, net 251,320 230,774 Insurance subsidiary deposits and investments 15,397 13,810 Escrow deposits - 7,595 Deferred tax asset 6,659 4,262 Restricted and other assets 6,036 5,650 Intangible assets, net 4,288 4,498 Goodwill 10,524 7,432 Other indefinite-lived intangibles 672 - --- --- Total assets $410,735 $391,348 ======== ======== Liabilities and stockholders' equity Current liabilities: Accounts payable $16,267 $15,498 Accrued wages and related liabilities 27,538 28,756 Accrued self-insurance liabilities-current 10,500 10,074 Other accrued liabilities 13,442 15,375 Current maturities of long-term debt 2,125 2,065 ----- ----- Total current liabilities 69,872 71,768 Long-term debt-less current maturities 106,363 107,401 Accrued self-insurance liabilities-less current portion 25,059 22,096 Deferred rent and other long-term liabilities 2,897 2,524 Stockholders' equity 206,544 187,559 ------- ------- Total liabilities and stockholders' equity $410,735 $391,348 ======== ======== The following table presents selected data from our condensed consolidated statement of cash flows for the periods presented: Six Months Ended June 30, -------- 2010 2009 ---- ---- (In thousands) Net cash provided by operating activities $14,903 $18,700 Net cash used in investing activities (25,153) (24,072) Net cash used in financing activities (2,252) (2,267) ------ ------ Net decrease in cash and cash equivalents (12,502) (7,639) Cash and cash equivalents at beginning of period 38,855 41,326 ------ ------ Cash and cash equivalents at end of period $26,353 $33,687 ======= ======= THE ENSIGN GROUP, INC. SELECT PERFORMANCE INDICATORS (Dollars in thousands) The following table summarizes our selected performance indicators, along with other statistics, for each of the dates or periods indicated: Three Months Ended June 30, -------- 2010 2009 Change % Change ---- ---- ------ -------- (Dollars in thousands) Total Facility Results: Revenue $157,948 $132,178 $25,770 19.5% Number of facilities at period end 81 70 11 15.7% Actual patient days 667,858 576,738 91,120 15.8% Occupancy percentage - Operational beds 79.3% 79.4% (0.1)% Skilled mix by nursing days 24.8% 24.3% 0.5% Skilled mix by nursing revenue 48.2% 48.0% 0.2% Three Months Ended June 30, -------- 2010 2009 Change % Change ---- ---- ------ -------- (Dollars in thousands) Same Facility Results(1): Revenue $120,899 $116,296 $4,603 4.0% Number of facilities at period end 56 56 - - % Actual patient days 488,508 495,981 (7,473) (1.5)% Occupancy percentage - Operational beds 82.5% 81.6% 0.9% Skilled mix by nursing days 28.6% 25.9% 2.7% Skilled mix by nursing revenue 52.9% 50.1% 2.8% Three Months Ended June 30, -------- 2010 2009 Change % Change ---- ---- ------ -------- (Dollars in thousands) Transitioning Facility Results(2): Revenue $8,753 $7,924 $829 10.5% Number of facilities at period end 6 6 - - % Actual patient days 40,901 39,249 1,652 4.2% Occupancy percentage - Operational beds 70.6% 67.7% 2.9% Skilled mix by nursing days 18.5% 18.2% 0.3% Skilled mix by nursing revenue 39.7% 41.7% (2.0)% Three Months Ended June 30, -------- 2010 2009 Change % Change ---- ---- ------ -------- (Dollars in thousands) Recently Acquired Facility Results(3): Revenue $28,296 $7,958 $20,338 NM % Number of facilities at period end 19 7 12 NM % Actual patient days 138,449 41,508 96,941 NM % Occupancy percentage - Operational beds 72.2% 68.1% 4.1% Skilled mix by nursing days 13.5% 10.8% 2.7% Skilled mix by nursing revenue 29.5% 23.3% 6.2% Same Facility results represent all facilities purchased prior to January 1, 2007. Same Facility results for 2009 include the results of operations through June 30, 2009 of our assisted living facility in Arizona. We decided not to exercise our renewal option on the lease which expired on September 30, 2009. The reduction in the number of actual and available patient (1) days primarily relates to the non-renewal of this lease. Transitioning Facility results represents all facilities (2) purchased from January 1, 2007 to December 31, 2008. Recently Acquired Facility (or "Acquisitions") results represent (3) all facilities purchased on or subsequent to January 1, 2009. THE ENSIGN GROUP, INC. SELECT PERFORMANCE INDICATORS (Dollars in thousands) The following table summarizes our selected performance indicators, along with other statistics, for each of the dates or periods indicated: Six Months Ended June 30, -------- 2010 2009 Change % Change ---- ---- ------ -------- (Dollars in thousands) Total Facility Results: Revenue $312,122 $262,463 $49,659 18.9% Number of facilities at period end 81 70 9 12.9% Actual patient days 1,316,942 1,143,357 173,585 15.2% Occupancy percentage - Operational beds 79.4% 79.6% (0.2)% Skilled mix by nursing days 25.4% 24.8% 0.6% Skilled mix by nursing revenue 49.0% 48.3% 0.7% Six Months Ended June 30, -------- 2010 2009 Change % Change ---- ---- ------ -------- (Dollars in thousands) Same Facility Results(1): Revenue $242,049 $232,600 $9,449 4.1% Number of facilities at period end 56 56 - - % Actual patient days 974,009 992,838 (18,829) (1.9)% Occupancy percentage - Operational beds 82.6% 82.0% 0.6% Skilled mix by nursing days 29.0% 26.3% 2.7% Skilled mix by nursing revenue 53.5% 50.2% 3.3% Six Months Ended June 30, -------- 2010 2009 Change % Change ---- ---- ------ -------- (Dollars in thousands) Transitioning Facility Results(2): Revenue $16,917 $16,164 $753 4.7% Number of facilities at period end 6 6 - - % Actual patient days 80,878 78,041 2,837 3.6% Occupancy percentage - Operational beds 70.2% 67.7% 2.5% Skilled mix by nursing days 18.7% 18.7% - % Skilled mix by nursing revenue 40.0% 43.2% (3.2)% Six Months Ended June 30, -------- 2010 2009 Change % Change ---- ---- ------ -------- (Dollars in thousands) Recently Acquired Facility Results(3): Revenue $53,156 $13,699 $39,457 NM % Number of facilities at period end 19 7 12 NM % Actual patient days 262,055 72,478 189,577 NM % Occupancy percentage - Operational beds 71.8% 65.9% 5.9% Skilled mix by nursing days 14.2% 9.6% 4.6% Skilled mix by nursing revenue 30.6% 20.8% 9.8% Same Facility results represent all facilities purchased prior to January 1, 2007. Same Facility results for 2009 include the results of operations through June 30, 2009 of our assisted living facility in Arizona. We decided not to exercise our renewal option on the lease which expired on September 30, 2009. The reduction in the number of actual and available patient days primarily relates to the non-renewal of this (1) lease. Transitioning Facility results represents all facilities (2) purchased from January 1, 2007 to December 31, 2008. Recently Acquired Facility (or "Acquisitions") results represent (3) all facilities purchased on or subsequent to January 1, 2009. THE ENSIGN GROUP, INC. SKILLED NURSING AVERAGE DAILY REVENUE RATES AND REVENUE BY PAYOR The following table reflects the change in the skilled nursing average daily revenue rates by payor source, excluding therapy and other ancillary services that are not covered by the daily rate: Three Months Ended June 30, -------- Same Facility ------------- % 2010 2009 Change Skilled Nursing Average Daily Revenue Rates: Medicare $551.53 $552.06 -- % Managed care 343.52 340.15 1.0% Other skilled 543.60 620.88 (12.4)% Total skilled revenue 469.43 470.83 (0.3)% Medicaid 163.44 160.44 1.9% Private and other payors 189.80 185.21 2.5% Total skilled nursing revenue $253.53 $243.42 4.2% Six Months Ended June 30, -------- Same Facility ------------- % 2010 2009 Change Skilled Nursing Average Daily Revenue Rates: Medicare $553.30 $543.66 1.8% Managed care 341.68 334.46 2.2% Other skilled 547.19 632.38 (13.5)% Total skilled revenue 469.74 463.42 1.4% Medicaid 163.86 160.95 1.8% Private and other payors 187.63 183.81 2.1% Total skilled nursing revenue $254.99 $243.14 4.9% The following table sets forth our total revenue by payor source and as a percentage of total revenue for the periods indicated: Three Months Ended June 30, -------- 2010 2009 ---- ---- $ % $ % --- --- --- --- Revenue: Medicaid $64,002 40.5% $53,603 40.6% Medicare 50,589 32.1 43,156 32.7 Medicaid- skilled 4,624 2.9 2,705 2.0 ----- --- ----- --- Total 119,215 75.5 99,464 75.3 Managed Care 20,222 12.8 17,182 13.0 Private and Other 18,511 11.7 15,532 11.7 ------ ---- ------ ---- Total revenue $157,948 100.0% $132,178 100.0% ======== ===== ======== ===== Six Months Ended June 30, -------- 2010 2009 ---- ---- $ % $ % --- --- --- --- Revenue: Medicaid $125,656 40.3 % $105,839 40.3% Medicare 101,711 32.6 86,362 32.9 Medicaid- skilled 9,041 2.9 4,988 1.9 ----- --- ----- --- Total 236,408 75.8 197,189 75.1 Managed Care 40,791 13.0 34,679 13.2 Private and Other 34,923 11.2 30,595 11.7 ------ ---- ------ ---- Total revenue $312,122 100.0 % $262,463 100.0% ======== ===== ======== ===== Discussion of Non-GAAP Financial Measures
EBITDA consists of net income before (a) interest expense, net, (b) provisions for income taxes, and (c) depreciation and amortization. EBITDAR consists of net income before (a) interest expense, net, (b) provisions for income taxes, (c) depreciation and amortization, and (d) facility rent-cost of services. The Company believes that the presentation of EBITDA and EBITDAR provides important supplemental information to management and investors to evaluate the Company's operating performance. The Company believes disclosure of adjusted non-GAAP net income and non-GAAP diluted earnings per share has economic substance because the excluded expenses are infrequent in nature and are variable in nature, or do not represent current cash expenditures. A material limitation associated with the use of these measures as compared to the GAAP measures of net income and diluted earnings per share is that they may not be comparable with the calculation of net income and diluted earnings per share for other companies in the Company's industry. These non-GAAP financial measures should not be relied upon to the exclusion of GAAP financial measures. For further information regarding why the Company believes that this non-GAAP measure provides useful information to investors, the specific manner in which management uses this measure, and some of the limitations associated with the use of this measure, please refer to the Company's Report on Form 10-Q filed today with the SEC. The Form 10-Q is available on the SEC's website at http://www.sec.gov/ or under the "Financial Information" link of the Investor Relations section on Ensign's website at http://www.ensigngroup.net/.
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The Ensign Group, Inc.
CONTACT: Robert East of Westwicke Partners LLC, +1-443-213-0500,
bob.east@westwickepartners.com; or Suzanne Snapper, Investor/Media Relations
of The Ensign Group, Inc., +1-949-487-9500, ir@ensigngroup.net
Web Site: http://www.ensigngroup.net/
