MISSION VIEJO, Calif., Feb. 16, 2011 /PRNewswire/ -- The Ensign Group, Inc. , the parent company of the Ensign(TM) group of skilled nursing, rehabilitative care services, home health, hospice care and assisted and independent living companies, today reported record results for the fourth quarter and full year 2010.
(Logo: http://photos.prnewswire.com/prnh/20071213/LATH168LOGO) Financial Highlights Include: -- Same-store occupancy grew by 137 basis points to a record 83.1% for the year, and by 194 basis points to 83.7% for the quarter; -- Consolidated EBITDAR climbed 22.8% to $106.8 million for the year, with consolidated EBITDAR margins improving by 40 basis points to 16.4% and same-store EBITDAR margins increasing by 92 basis points to 17.6% for the year and by 192 basis points to 18.9% for the quarter; -- Same-store skilled mix by revenue increased 292 basis points to 53.5% for 2010, and by 319 basis points to 54.6% for the quarter; -- Total revenue was a record $649.5 million for the year and $172.8 million for the quarter, up 19.8% and 17.8% over the comparable periods in 2009; -- Consolidated net income for the year climbed 24.7% to $40.5 million, or $1.92 per diluted share; and -- The company's net debt-to-EBITDAR ratio at December 31 was 1.76x. Operating Results
Ensign's President and Chief Executive Officer Christopher Christensen cited the company's concerted focus on census growth in producing record results while overall occupancy fell elsewhere in the industry. "Making each Ensign facility the facility of choice in the community it serves is not only the key to consistent financial performance, but the antidote for almost any economic challenge facing the industries in which we operate," he said.
Mr. Christensen lauded the company's facility leaders and care teams, stating that, "We could never have achieved this occupancy growth or these financial results without first and consistently delivering outstanding clinical outcomes for our residents and their families," noting that based on state survey results, 2010 had seen a marked uptick in quality-of-care metrics across the organization. "Quality care begets financial performance," he added, "and the clinical excellence that produced these results is the work product of many, many dedicated leaders and caregivers across the Ensign organization who selflessly give their all to their residents, their communities and each other every day."
He noted that the company achieved these results while actively acquiring additional assets, with eight new facilities and one home health business flying the Ensign banner since January 1, 2010, some of which were initially dilutive to earnings, as expected.
Executive Vice President Greg Stapley discussed Ensign's 2010 growth, saying, "The kinds of acquisitions we've made this past year have tended more toward the strategic, as opposed to the opportunistic, which is what we usually do as market forces start to favor sellers. But we continue to see and seek both kinds of opportunities, and expect to continue acquiring both strategically and opportunistically, and always in a disciplined fashion."
Mr. Stapley noted that the company has already acquired two strategic "potential flagship" continuing care retirement campuses in the first quarter of 2011. He also observed that opportunities for organic growth and improvement across the company's expanding portfolio appear more compelling than ever, as local leaders continue to focus on business fundamentals, occupancy continues to climb, and recent acquisitions start to mature.
Mr. Christensen also referenced Ensign's balance sheet and its industry-low debt ratio, reporting that the company's net-debt-to-EBITDAR ratio was 1.76x at year end. He further noted that the company continues to generate strong cash flow, with cash on hand on December 31 of $72.1 million, and net cash from operations of $60.5 million for the year.
In other results, consolidated EBITDA for the year grew by 27.8% or $20.1 million, to $92.3 million. Overall EBITDAR margins increased 40 basis points to 16.4% for the year, and by 92 basis points to 17.0% in the quarter. Consolidated net income margins climbed by 25 basis points to 6.24% for the year, and by 83 basis points to 6.76% for the quarter, notwithstanding recent acquisitions, which typically carry little or no positive margin at all upon acquisition.
Net income was $11.7 million for the quarter and $40.5 million for the year. Fully diluted GAAP earnings per share were $0.55 for the quarter, compared to $0.41 per share in the prior year, and $1.92 for the year, compared to $1.55 in 2009.
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-K, which was filed with the SEC today and can be viewed on the Company's website at http://www.ensigngroup.net/.
2011 Guidance Issued
Management issued 2011 annual guidance, projecting revenues of $740 million to $756 million, and net income of $2.15 to $2.25 per diluted share for the year. The guidance is based on diluted weighted average common shares outstanding of 21.7 million and assumes, among other things, no additional acquisitions or dispositions beyond those made to date, an aggregate 1.0% projected decline in overall Medicaid reimbursement rates including expected provider tax increases, and taking into account the impact of wide variations in actual facility (versus aggregate state) rate changes in states like California which have facility-specific rates and Texas which has a patient-specific rate, and that tax rates do not materially increase.
Quarter Highlights
During the quarter, the company's Board of Directors declared a quarterly cash dividend of $0.055 per share of Ensign common stock, an increase from the prior quarterly cash dividend of $0.05 per share. Ensign has been a dividend-paying company since 2002.
Also during the quarter, the company announced that it procured a $35 million, seven-year secured term loan from RBS Asset Finance, Inc., an affiliate of the Royal Bank of Scotland, which was mainly used to replenish the company's acquisition fund. The loan, which funded on December 31, is secured by mortgages on four of the company's previously-unencumbered properties. Of the company's 55 owned properties, 30 remain unencumbered and may be leveraged to fund further expansion in the future.
The company also announced the acquisition of eight long-term care facilities and a home health business in six separate transactions since January 1, 2010. The facilities and business were purchased with cash, and include:
-- In Idaho, Emmett Care & Rehabilitation Center, a 72-bed skilled nursing facility in Emmett, Idaho, and Parke View Rehabilitation & Care Center, an 86-bed skilled nursing facility in Burley, Idaho. -- In Texas, Heritage Gardens Healthcare Center, a 140-bed skilled nursing facility in Carrollton, Texas, and Silver Springs Healthcare Center, a 137-bed skilled nursing facility in Houston, Texas. -- Also in Idaho, Horizon Home Health and Hospice, a well-regarded four-office home health and hospice agency based in the greater Boise, Idaho market. -- In Colorado, Canterbury Gardens Independent & Assisted Living Community, a 215-bed assisted and independent living facility in Aurora, Colorado. -- Also in Texas, Wisteria Place, a full-service senior care campus in Abilene, with 123 skilled nursing beds, 77 assisted living units and 20 independent living cottages, and Wisteria Independent Living, a separate residential retirement community also located in Abilene, with 72 independent living units. -- And in Utah, St. Joseph Villa, a full-service senior care campus with 221 skilled nursing beds, 48 assisted living units and 60 independent living apartments. St. Joseph Villa also includes the Marian Center, the Salt Lake Valley's premier long-term inpatient acute psychiatric program, with its 12 psychiatric beds.
The acquisitions brought Ensign's growing portfolio to 85 facilities, 55 of which are Ensign-owned, with Ensign affiliates holding purchase options on eight of Ensign's 30 leased facilities. 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 Thursday, February 17, 2011 at 10:00 a.m. Pacific Time (1:00 p.m. Eastern Time) to discuss Ensign's fourth quarter and fiscal 2010 financial results, and Management's 2011 guidance. To listen to the webcast, or to view any financial or statistical information required by SEC Regulation G, please visit the Investors section of the Ensign website at http://investor.ensigngroup.net/. The webcast will be recorded, and will be available for replay via the website until 5:00 p.m. Pacific Time on Thursday, February 24, 2011.
About Ensign(TM)
The Ensign Group, Inc.'s operating subsidiaries provide a broad spectrum of skilled nursing, assisted living and independent living services, home health and hospice services, physical, occupational and speech therapies, and other rehabilitative and healthcare services for both long-term residents and short-stay rehabilitation patients at 85 care facilities 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 home health and hospice businesses, the Service Center or the captive insurance subsidiary are operated by the same entity. More information about Ensign is available at http://www.ensigngroup.net/.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
This press release contains, and the related conference call and webcast will include, forward-looking statements that are based on management's current expectations, assumptions and beliefs about its business, financial performance, operating results, the industry in which it operates and other future events. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. These forward-looking statements include, but are not limited to, statements regarding growth prospects, future operating and financial performance. They are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to materially and adversely differ from those expressed in any forward-looking statement.
These risks and uncertainties relate to the company's business, its industry and its common stock and include: reduced prices and reimbursement rates for its services; its ability to acquire, develop, manage or improve facilities, its ability to manage its increasing borrowing costs as it incurs additional indebtedness to fund the acquisition and development of facilities; its ability to access capital on a cost-effective basis to continue to successfully implement its growth strategy; its operating margins and profitability could suffer if it is unable to grow and manage effectively its increasing number of facilities; competition from other companies in the acquisition, development and operation of facilities; and the application of existing or proposed government regulations, or the adoption of new laws and regulations, that could limit its business operations, require it to incur significant expenditures or limit its ability to relocate its facilities if necessary. Readers should not place undue reliance on any forward-looking statements and are encouraged to review the company's periodic filings with the Securities and Exchange Commission, including its Form 10-K, which was filed today, for a more complete discussion of the risks and other factors that could affect Ensign's business, prospects and any forward-looking statements. Except as required by the federal securities laws, Ensign does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changing circumstances or any other reason after the date of this press release.
THE ENSIGN GROUP, INC. GAAP AND ADJUSTED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) Three Months Ended ------------------ December 31, 2010 ----------------- As As Reported Non- Adjusted --------- ---- --------- GAAP Adj. ----- Revenue $172,757 $172,757 Expense: Cost of services (exclusive of facility rent and depreciation and amortization shown (1) separately below) 136,217 (54) 136,163 Facility rent-cost of services 3,656 3,656 General and administrative expense 7,205 7,205 Depreciation and (27) amortization 4,395 (2) 4,368 ----- ------- ----- Total expenses 151,473 (81) 151,392 Income from operations 21,284 81 21,365 Other income (expense): Interest expense (2,252) (2,252) Interest income 60 60 --- --- Other expense, net (2,192) (2,192) Income before provision for income taxes 19,092 81 19,173 Provision for income 32 taxes 7,420 (3) 7,452 ----- ----- ----- Net income $11,672 49 $11,721 ======= === ======= Net income per share: Basic $0.56 $0.56 ===== ===== Diluted $0.55 $0.55 ===== ===== Weighted average common shares outstanding: Basic 20,791 20,791 ====== ====== Diluted 21,275 21,275 ====== ====== Year Ended ---------- December 31, 2010 ----------------- As As Reported Non- Adjusted --------- ---- --------- GAAP Adj. ----- Revenue $649,532 $649,532 Expense: Cost of services (exclusive of facility rent and depreciation and amortization shown (1) separately below) 516,668 (150) 516,518 Facility rent-cost of services 14,478 14,478 General and administrative expense 26,099 26,099 Depreciation and (481) amortization 16,633 (2) 16,152 ------ ------- ------ Total expenses 573,878 (631) 573,247 Income from operations 75,654 631 76,285 Other income (expense): Interest expense (9,123) (9,123) Interest income 248 248 --- --- Other expense, net (8,875) (8,875) Income before provision for income taxes 66,779 631 67,410 Provision for income 248 taxes 26,253 (3) 26,501 ------ ------ ------ Net income $40,526 383 $40,909 ======= === ======= Net income per share: Basic $1.95 $1.97 ===== ===== Diluted $1.92 $1.93 ===== ===== Weighted average common shares outstanding: Basic 20,744 20,744 ====== ====== Diluted 21,159 21,159 ====== ====== (1) Represents acquisition-related costs. 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 (2) the acquisition date. Represents the tax impact of acquisition costs and patient base non- (3) 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 Year Ended December 31, December 31, ------------ ------------ 2010 2009 2010 2009 ---- ---- ---- ---- Consolidated Statement of Income Data: Net income $11,672 $8,693 $40,526 $32,486 Interest expense, net 2,192 1,914 8,875 5,412 Provision for income taxes 7,420 5,503 26,253 21,040 Depreciation and amortization 4,395 3,863 16,633 13,276 ----- ----- ------ ------ EBITDA(1) $25,679 $19,973 $92,287 $72,214 ======= ======= ======= ======= Facility rent-cost of services 3,656 3,571 14,478 14,703 ----- ----- ------ ------ EBITDAR(1) $29,335 $23,544 $106,765 $86,917 ======= ======= ======== ======= THE ENSIGN GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF CASH FLOWS (In thousands) December 31, ------------ 2010 2009 ---- ---- Assets Current assets: Cash and cash equivalents $72,088 $38,855 Accounts receivable-less allowance for doubtful accounts of $9,793 and $7,575 at December 31, 2010 and 2009, respectively 69,437 62,606 Prepaid income taxes 1,333 1,242 Prepaid expenses and other current assets 7,175 6,498 Deferred tax asset-current 9,975 8,126 ----- ----- Total current assets 160,008 117,327 Property and equipment, net 262,527 230,774 Insurance subsidiary deposits and investments 16,358 13,810 Escrow deposits 14,422 7,595 Deferred tax asset 4,987 4,262 Restricted and other assets 6,509 5,650 Intangible assets, net 4,070 4,498 Goodwill 10,339 7,432 Other indefinite-lived intangibles 672 - --- --- Total assets $479,892 $391,348 ======== ======== Liabilities and stockholders' equity Current liabilities: Accounts payable $17,897 $15,498 Accrued wages and related liabilities 37,377 28,756 Accrued self-insurance liabilities-current 11,480 10,074 Other accrued liabilities 13,557 15,375 Current maturities of long-term debt 3,055 2,065 ----- ----- Total current liabilities 83,366 71,768 Long-term debt-less current maturities 139,451 107,401 Accrued self-insurance liabilities-less current portion 25,920 22,096 Deferred rent and other long-term liabilities 2,952 2,524 Stockholders' equity 228,203 187,559 Total liabilities and stockholders' equity $479,892 $391,348 ======== ======== The following table presents selected data from our condensed consolidated statement of cash flows for the periods presented: Year Ended December 31, ------------ 2010 2009 ---- ---- (In thousands) Net cash provided by operating activities $60,501 $46,271 Net cash used in investing activities (57,186) (80,469) Net cash provided by (used in) financing activities 29,918 31,727 ------ ------ Net increase (decrease) in cash and cash equivalents 33,233 (2,471) Cash and cash equivalents at beginning of period 38,855 41,326 ------ ------ Cash and cash equivalents at end of period $72,088 $38,855 ======= ======= 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 December 31, ------------ 2010 2009 ---- ---- (Dollars in thousands) Total Facility Results : Revenue $172,757 $146,615 Number of facilities at period end 82 77 Actual patient days 700,984 628,699 Occupancy percentage - Operational beds 80.5% 78.7% Skilled mix by nursing days 24.5% 24.4% Skilled mix by nursing revenue 50.5% 47.9% Three Months Ended December 31, ------------ 2010 2009 ---- ---- (Dollars in thousands) Same Facility Results(1) : Revenue $130,950 $119,683 Number of facilities at period end 56 56 Actual patient days 499,241 491,648 Occupancy percentage - Operational beds 83.7% 81.7% Skilled mix by nursing days 28.2% 27.3% Skilled mix by nursing revenue 54.6% 51.4% Three Months Ended December 31, ------------ 2010 2009 ---- ---- (Dollars in thousands) Transitioning Facility Results(2) : Revenue $9,785 $8,623 Number of facilities at period end 6 6 Actual patient days 43,425 41,892 Occupancy percentage - Operational beds 74.1% 71.5% Skilled mix by nursing days 19.4% 17.8% Skilled mix by nursing revenue 44.1% 39.3% Three Months Ended December 31, ------------ 2010 2009 ---- ---- (Dollars in thousands) Recently Acquired Facility Results(3) : Revenue $32,022 $18,309 Number of facilities at period end 20 15 Actual patient days 158,318 95,159 Occupancy percentage - Operational beds 73.5% 68.9% Skilled mix by nursing days 13.8% 12.2% Skilled mix by nursing revenue 34.1% 28.3% Change % Change ------ -------- Total Facility Results : Revenue $26,142 17.8% Number of facilities at period end 5 6.5% Actual patient days 72,285 11.5% Occupancy percentage - Operational beds 1.8% Skilled mix by nursing days 0.1% Skilled mix by nursing revenue 2.6% Change % Change ------ -------- Same Facility Results(1) : Revenue $11,267 9.4% Number of facilities at period end - - % Actual patient days 7,593 1.5% Occupancy percentage - Operational beds 2.0% Skilled mix by nursing days 0.9% Skilled mix by nursing revenue 3.2% Change % Change ------ -------- Transitioning Facility Results(2) : Revenue $1,162 13.5% Number of facilities at period end - - % Actual patient days 1,533 3.7% Occupancy percentage - Operational beds 2.6% Skilled mix by nursing days 1.6% Skilled mix by nursing revenue 4.8% Change % Change ------ -------- Recently Acquired Facility Results(3) : Revenue $13,713 NM % Number of facilities at period end 5 NM % Actual patient days 63,159 NM % Occupancy percentage - Operational beds 4.6% Skilled mix by nursing days 1.6% Skilled mix by nursing revenue 5.8% Same Facility results represent all facilities purchased (1) prior to January 1, 2007. Transitioning Facility results represents all facilities (2) purchased from January 1, 2007 to December 31, 2008. Recently Acquired Facility (or "Acquisitions") results represent all acquisition made on or subsequent to (3) 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: Year Ended December 31, ------------ 2010 2009 Change % Change ---- ---- ------ -------- (Dollars in thousands) Total Facility Results : Revenue $649,532 $542,002 $107,530 19.8% Number of facilities at period end 82 77 5 6.5% Actual patient days 2,706,543 2,353,087 353,456 15.0% Occupancy percentage - Operational beds 79.9% 79.4% 0.5% Skilled mix by nursing days 25.0% 24.6% 0.4% Skilled mix by nursing revenue 49.1% 48.2% 0.9% Year Ended December 31, ------------ 2010 2009 Change % Change ---- ---- ------ -------- (Dollars in thousands) Same Facility Results(1) : Revenue $497,274 $468,032 $29,242 6.2% Number of facilities at period end 56 56 - - % Actual patient days 1,971,860 1,980,008 (8,148) (0.4)% Occupancy percentage - Operational beds 83.1% 81.7% 1.4% Skilled mix by nursing days 28.6% 26.6% 2.0% Skilled mix by nursing revenue 53.5% 50.6% 2.9% Year Ended December 31, ------------ 2010 2009 Change % Change ---- ---- ------ -------- (Dollars in thousands) Transitioning Facility Results(2) : Revenue $35,830 $33,305 $2,525 7.6% Number of facilities at period end 6 6 - - % Actual patient days 167,245 162,250 4,995 3.1% Occupancy percentage - Operational beds 71.9% 69.8% 2.1% Skilled mix by nursing days 19.1% 18.1% 1.0% Skilled mix by nursing revenue 41.5% 41.2% 0.3% Year Ended December 31, 2010 2009 Change % Change (Dollars in thousands) Recently Acquired Facility Results(3) : Revenue $116,428 $40,665 $75,763 NM % Number of facilities at period end 20 15 5 NM % Actual patient days 567,438 210,829 356,609 NM % Occupancy percentage - Operational beds 72.5% 68.1% 4.4% Skilled mix by nursing days 13.8% 11.2% 2.6% Skilled mix by nursing revenue 31.5% 25.2% 6.3% Same Facility results represent all facilities purchased prior to January 1, 2007. Same Facility results for 2009 include the results of operations through September 30, 2009 of our assisted living facility in Arizona where we decided not to exercise our renewal option on the lease which expired on September 30, 2009. The non- renewal of this lease reduced the number of actual patient days by (1) 21,984 during the year ended December 31, 2010. Transitioning Facility results represents all facilities purchased (2) from January 1, 2007 to December 31, 2008. Recently Acquired Facility (or "Acquisitions") results represent all (3) 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 December 31, ------------ Same Facility ------------- % 2010 2009 Change ---- ---- ------- Skilled Nursing Average Daily Revenue Rates: Medicare $647.13 $555.81 16.4% Managed care 350.48 343.66 2.0% Other skilled 534.53 551.05 (3.0)% Total skilled revenue 523.75 469.47 11.6% Medicaid 166.47 163.90 1.6% Private and other payors 194.46 183.34 6.1% Total skilled nursing revenue $269.94 $249.51 8.2% Twelve Months Ended December 31, ------------ Same Facility ------------- % 2010 2009 Change ---- ---- ------- Skilled Nursing Average Daily Revenue Rates: Medicare $577.63 $547.06 5.6% Managed care 345.36 337.99 2.2% Other skilled 546.35 592.57 (7.8)% Total skilled revenue 484.67 465.12 4.2% Medicaid 165.10 161.36 2.3% Private and other payors 189.78 182.69 3.9% Total skilled nursing revenue $258.89 $244.39 5.9% 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 ------------------ December 31, ------------ 2010 $ % --- --- Revenue: Medicaid $66,878 38.7% Medicare 61,194 35.4 Medicaid- skilled 4,111 2.4 ----- --- Total 132,183 76.5 Managed Care 22,265 12.9 Private and Other 18,309 10.6 ------ ---- Total revenue $172,757 100.0% ======== ===== Three Months Ended ------------------ December 31, ------------ 2009 $ % --- --- Revenue: Medicaid $59,760 40.8% Medicare 46,895 32.0 Medicaid- skilled 3,823 2.6 ----- --- Total 110,478 75.4 Managed Care 19,868 13.5 Private and Other 16,269 11.1 ------ ---- Total revenue $146,615 100.0% ======== ===== Year Ended ---------- December 31, ------------ 2010 $ % --- --- Revenue: Medicaid $259,711 40.0% Medicare 219,217 33.7 Medicaid- skilled 17,573 2.7 ------ --- Total 496,501 76.4 Managed Care 84,364 13.0 Private and Other 68,667 10.6 ------ ---- Total revenue $649,532 100.0% ======== ===== Year Ended ---------- December 31, ------------ 2009 $ % --- --- Revenue: Medicaid $219,188 40.4% Medicare 174,769 32.3 Medicaid- skilled 12,449 2.3 ------ --- Total 406,406 75.0 Managed Care 72,544 13.4 Private and Other 63,052 11.6 ------ ---- Total revenue $542,002 100.0% ======== ===== 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-K filed today with the SEC. The Form 10-K 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.
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Web Site: http://www.ensigngroup.net/
