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The Ensign Group Reports Adjusted Annual Earnings of $2.18 per Share; Reaffirms 2015 Guidance

MISSION VIEJO, Calif., Feb. 9, 2015 (GLOBE NEWSWIRE) -- The Ensign Group, Inc. (Nasdaq:ENSG), the parent company of the Ensign™ group of skilled nursing, rehabilitative care services, home health, home care, hospice care, assisted living and urgent care companies, today reported operating results for the fourth quarter and full year 2014.

Quarter and Fiscal Year Highlights Include:

  • Adjusted annual earnings per share was $2.18, at the midpoint of Management's annual guidance of between $2.16 and $2.21 per share;
  • Consolidated revenues were up 16.8% over the prior year quarter to a record $276.9 million in the quarter;
  • Adjusted consolidated EBITDAR was $44.0 million, an increase of 8.5% over the prior year quarter;
  • Transitioning skilled mix days grew by 118 basis points over the prior year quarter to 19.8% for the quarter and transitioning occupancy was 71.8%, an increase of 121 basis points over the prior year quarter;
  • Same-store skilled mix days grew by 179 basis points over the prior year quarter to 29.3% for the quarter and same-store occupancy was 82.3%, an increase of 137 basis points over the prior year quarter; and
  • Cornerstone Healthcare, Inc., our home health and hospice subsidiary, grew its Adjusted EBITDA by 97.8% over the prior year to $10.2 million.

Operating Results

"We are proud to report that we saw improvements across our same store, transitioning and newly acquired buckets, all during a historic year in which we completed a significant spin-off of CareTrust REIT, Inc. and experienced one of our most active acquisition years ever," said Ensign's President and Chief Executive Officer Christopher Christensen. He lauded the local operational leadership teams and all of their field-based and Service Center partners for continuing their relentless focus on clinical and financial performance while also supporting the transition of the newly acquired operations in several markets. "This year has been another true test of our flexibility, responsiveness and resilience and even though there were some pockets that need improvement, overall the strength inherent in Ensign's business model shone through, demonstrating the scalability of Ensign's unique approach to growth," he added.

"We are also pleased to report that operating results met annual earnings guidance, with adjusted earnings per share of $2.18 for the year," Mr. Christensen added. He noted further that the adjusted earnings results were at the midpoint of Management's guidance.

In the fourth quarter of 2014, Ensign realigned its operating segments to include a transitional, skilled and assisted living segment, a home health, home care and hospice segment, and an "all other" segment. Mr. Christensen indicated that "we are anxious to share more detail on the performance of these expanding operations and believe that this additional disclosure will demonstrate the expanding influence these service offerings will have on our entire organization."

Chief Financial Officer Suzanne Snapper reported that, "our balance sheet remained strong, with approximately $50 million currently available of our $150 million revolving line of credit." She also reported that consolidated adjusted EBITDAR for the year grew by 6.7% to $159.4 million, with EBITDAR margins for the quarter of 16.1%. Fully diluted GAAP earnings per share were $0.49 for the quarter and adjusted net income was $12.8 million or $0.55 per diluted share for the quarter. Fully diluted GAAP earnings per share were $1.56 for the year and adjusted net income was $50.2 million or $2.18 per diluted share for the year.

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 Annual Report on Form 10-K for the year ended December 31, 2014, which is expected to be filed with the SEC today and can be viewed on the company's website at http://www.ensigngroup.net.

2015 Guidance Reaffirmed

Management also reaffirmed its 2015 annual guidance, projecting revenues of $1.20 billion to $1.25 billion and net income of $58.1 million to $60.2 million and $2.44 to $2.53 per diluted share for 2015. The 2015 guidance is based on diluted weighted average common shares outstanding of 23.8 million as of December 31, 2014 and assumes, among other things, anticipated Medicare and Medicaid reimbursement rate increases net of provider taxes, tax rates of 38.5% and acquisitions anticipated to be closed by the end of the first quarter in 2015. It also excludes acquisition-related costs and amortization costs related to intangible assets acquired, stock based compensation and start-up losses at newly-created operations.

Quarter Highlights

During the quarter, the company's Board of Directors declared a quarterly cash dividend of $0.075 per share of Ensign common stock, an increase from the prior quarterly cash dividend of $0.07 per share. Ensign has been a dividend-paying company since 2002 and has increased its dividend every year for 13 years.

Also during the quarter and since, the company announced the acquisition of thirteen skilled nursing operations, four assisted living operations, two independent living operations, two home health agencies, two hospice agencies, one private home care business and two urgent care businesses, including:

  • In San Diego, California, nine skilled nursing and assisted living operations, a home health agency and a private home care business from Shea Family Care, the largest provider of a complete continuum of post-acute healthcare services in the San Diego market.
  • Also in San Diego, California, Guardian Angel Hospice, a Medicare and Medi-Cal certified hospice agency.
  • In Scottsdale, Arizona, Alarys Home Health, a Medicare and Medicaid certified home health agency.
  • In Pueblo, Colorado, Riverwalk Post-Acute and Rehabilitation, a 60-bed skilled nursing operation, Rock Canyon Respiratory and Rehabilitation Center, an 81-bed skilled nursing operation with a subacute unit, and the Villas at Rock Canyon, a 17-bed independent living and assisted living operation.
  • In Lubbock, Texas, Mildred and Shirley L. Garrison Geriatric Education and Care Center, a 103-bed skilled nursing operation.
  • Also in Lubbock, Texas, Hospice of the South Plains, a hospice agency serving patients throughout the South Plains area of Northwest Texas.
  • In Colorado Springs, Colorado, Integrity Urgent Care, consisting of two urgent care clinics and our first acquisition of an urgent care clinic in the state of Colorado.
  • In Abilene, Texas, Mesa Springs Healthcare, a 44-acre post-acute care campus comprised of a 75-bed skilled nursing operation and 60 independent living homes.
  • In Omaha, Nebraska, Skyline Nursing and Rehabilitation, a 100-bed skilled nursing operation, and Skyline Assisted and Independent Living, an independent living, assisted living, and seniors apartment operation with 209 units.

These acquisitions brought Ensign's growing portfolio to 143 facilities, eighteen of which are owned, eleven hospice agencies, thirteen home health agencies, two home care businesses and sixteen urgent care clinics spread over twelve states. Management reaffirmed that Ensign is actively seeking additional opportunities to acquire real estate or to lease both well-performing and struggling skilled nursing, assisted living and other healthcare related businesses across the United States.

Conference Call

A live webcast will be held today, Monday, February 9, 2015 at 10:00 a.m. Eastern Time to discuss Ensign's fourth quarter and fiscal year 2014 financial results, and management's 2015 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 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, March 27, 2015.

About Ensign

The Ensign Group, Inc.'s independent operating subsidiaries provide a broad spectrum of skilled nursing and assisted living services, physical, occupational and speech therapies, home health and home care services, hospice services, urgent care services and other rehabilitative and healthcare services at 143 facilities, eleven hospice agencies, thirteen home health agencies, two home care businesses, sixteen urgent care clinics and a mobile x-ray and diagnostic company, located in California, Arizona, Texas, Washington, Utah, Idaho, Colorado, Nevada, Iowa, Nebraska, Oregon and Wisconsin. Each of these operations is operated by a separate, independent operating subsidiary that has its own management, employees and assets. References herein to the consolidated "company" and "its" assets and activities, as well as the use of the terms "we," "us," "its" and similar terms, 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, 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 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, 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, 2014
Year Ended
December 31, 2014
As Reported Non-GAAP Adj. As Adjusted As Reported Non-GAAP Adj. As Adjusted
Revenue $ 276,869 $ (4,409) (4)(5) $ 272,460 $ 1,027,406 $ (14,505) (4)(5) $ 1,012,901
Expense:
Cost of services (exclusive of facility rent, general and administrative and depreciation and amortization expense shown separately below) 221,137 (5,060) (1)(4)(5) 216,077 822,669 (16,966) (1)(4)(5) 805,703
Facility rent—cost of services 18,480 (402) (6) 18,078 48,488 (1,941) (6) 46,547
General and administrative expense 12,525 (200) (2)(3)(4) 12,325 56,895 (9,234) (2)(3)(4) 47,661
Depreciation and amortization 5,087 (371) (7) 4,716 26,430 (1,265) (7) 25,165
Total expenses 257,229 (6,033) 251,196 954,482 (29,406) 925,076
Income from operations 19,640 1,624 21,264 72,924 14,901 87,825
Other income (expense):
Interest expense (486) 46 (440) (12,976) 6,517 (6,459)
Interest income 159 159 594 594
Other expense, net (327) 46 (281) (12,382) 6,517 (5,865)
Income before provision for income taxes 19,313 1,670 20,983 60,542 21,418 81,960
Tax Effect on Non-GAAP Adjustments 643 (8) 8,246 (8)
Tax True-up for Effective Tax Rate (1,082) (9) (3,492) (9)
Provision for income taxes 8,517 (439) 8,078 26,801 4,754 31,555
Net income 10,796 2,109 12,905 33,741 16,664 50,405
Less: net (loss) income attributable to noncontrolling interests (715) 807 92 (2,209) 2,370 161
Net income attributable to The Ensign Group, Inc. $ 11,511 1,302 $ 12,813 $ 35,950 14,294 $ 50,244
Attributable to The Ensign Group, Inc.
Net income attributable to The Ensign Group, Inc. 11,511 1,302 12,813 35,950 14,294 50,244
Loss from discontinued operations, net of income tax benefit
Income from continuing operations attributable to The Ensign Group, Inc. $ 11,511 $ 1,302 $ 12,813 $ 35,950 $ 14,294 $ 50,244
Net income per share:
Basic:
Net income attributable to The Ensign Group, Inc. $ 0.51 $ 0.57 $ 1.61 $ 2.25
Loss from discontinued operations, net of income tax benefit
Income from continuing operations attributable to The Ensign Group, Inc. $ 0.51 $ 0.57 $ 1.61 $ 2.25
Diluted:
Net income attributable to The Ensign Group, Inc. $ 0.49 $ 0.55 $ 1.56 $ 2.18
Loss from discontinued operations, net of income tax benefit
Income from continuing operations attributable to The Ensign Group, Inc. $ 0.49 $ 0.55 $ 1.56 $ 2.18
Weighted average common shares outstanding:
Basic 22,519 22,519 22,341 22,341
Diluted 23,378 23,378 23,095 23,095
(1) Represents acquisition-related costs of $453 and $672 for the three months and year ended December 31, 2014, respectively.
(2) Represents costs of $45 and $138 for the three months and year ended December 31, 2014, respectively, incurred to recognize income tax credits.
(3) Represents costs of $9,026 and $155 for the three months and year ended December 31, 2014, incurred related to the Company's spin-off of real estate assets to CareTrust REIT (CTRE) (the Spin-Off).
(4) Represents revenues and expenses incurred at the three independent living operations transferred to CTRE on June 1, 2014 in connection with the Spin-Off, excluding rent expense recognized in note (6) below.
(5) Represents revenues and expenses incurred at newly opened urgent care centers, excluding rent expense recognized in note (6) below and depreciation expense recognized in note (7) below.
(6) Represents straight-line rent amortization for newly opened urgent care centers and the three independent living operations transferred to CTRE included in Note (4).
(7) Represents depreciation expense at newly opened urgent care centers and amortization costs related to patient base intangible assets at skilled nursing and assisted living facilities.
(8) Represents the tax impact of non-GAAP adjustments noted in (1) – (7) at the Company's year to date effective tax rate of 38.5% for the three months and year ended December 31, 2014.
(9) Represents an adjustment to the provision for income taxes to our current year to date effective rate to 38.5% for the three months and year ended December 31, 2014.
THE ENSIGN GROUP, INC.
GAAP and ADJUSTED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Including Adjustments for Discontinued Operations
(In thousands, except per share data)
Three Months Ended
December 31, 2013
Year Ended
December 31, 2013
As Reported Non-GAAP Adj. As Adjusted As Reported Non-GAAP Adj. As Adjusted
Revenue $ 237,008 (1,524) (9)(10) $ 235,484 $ 904,556 (5,688) (9)(10) $ 898,868
Expense:
Cost of services (exclusive of facility rent, general and administrative and depreciation and amortization expense shown separately below) 187,843 (2,478) (1)(2)(9)(10) 185,365 725,989 (11,235) (1)(2)(9)(10) 714,754
Charges related to U.S. Government inquiries 33,000 (33,000) (4)
Facility rent—cost of services 3,557 (321) (5)(6) 3,236 13,613 (1,009) (5)(6) 12,604
General and administrative expense 11,782 (2,180) (3)(7)(8) 9,602 40,103 (5,148) (3)(7)(8) 34,955
Depreciation and amortization 8,711 (210) (11)(12) 8,501 33,909 (1,386) (11)(12) 32,523
Total expenses 211,893 (5,189) 206,704 846,614 (51,778) 794,836
Income from operations 25,115 3,665 28,780 57,942 46,090 104,032
Other income (expense):
Interest expense (3,346) (3,346) (12,787) (12,787)
Interest income 143 143 506 506
Other expense, net (3,203) (3,203) (12,281) (12,281)
Income before provision for income taxes 21,912 3,665 25,577 45,661 46,090 91,751
Tax Effect on Non-GAAP Adjustments 1,411 (13) 17,745 (13)
Tax True-up for Effective Tax Rate (127) (14) (2,422) (14)
Provision for income taxes 8,563 1,284 9,847 20,003 15,323 35,326
Income from continuing operations 13,349 2,381 15,730 25,658 30,767 56,425
Loss from discontinued operations, net of income tax benefit (1,804) (1,804)
Net income (loss) 13,349 2,381 15,730 23,854 30,767 54,621
Less: net income (loss) attributable to noncontrolling interests (7) (7) (186) (186)
Net income attributable to The Ensign Group, Inc. $ 13,356 2,381 $ 15,737 $ 24,040 30,767 $ 54,807
Attributable to The Ensign Group, Inc.
Net income attributable to The Ensign Group, Inc. 13,356 2,381 15,737 24,040 30,767 54,807
Loss from discontinued operations, net of income tax benefit (1,804) (1,804)
Income from continuing operations attributable to The Ensign Group, Inc. $ 13,356 2,381 $ 15,737 $ 25,844 30,767 $ 56,611
Net (loss) income per share
Basic:
Net income attributable to The Ensign Group, Inc. 0.61 0.71 1.10 2.50
Loss from discontinued operations, net of income tax benefit (0.08) (0.08)
Income from continuing operations attributable to The Ensign Group, Inc. $ 0.61 $ 0.71 $ 1.18 $ 2.58
Diluted:
Net income attributable to The Ensign Group, Inc. 0.59 0.70 1.07 2.45
Loss from discontinued operations, net of income tax benefit (0.08) (0.08)
Income from continuing operations attributable to The Ensign Group, Inc. $ 0.59 $ 0.70 $ 1.16 $ 2.53
Weighted average common shares outstanding:
Basic 22,028 22,028 21,900 21,900
Diluted 22,507 22,507 22,364 22,364
(1) Represents acquisition-related costs of $10 and $288 for the three and year ended December 31, 2013.
(2) Represents costs of $42 and $145 for the three and year ended December 31, 2013, incurred to recognize income tax credits.
(3) Represents additional costs incurred related to a class action lawsuit settlement of $0 and $1,524 for the three and year ended December 31, 2013.
(4) Charges related to our efforts to achieve a global, company-wide, resolution of any claims connected to the U.S. Department of Justice (DOJ) investigation.
(5) Represents straight-line rent amortization for the first six months of 2013 for one newly constructed facility which began operations during the first quarter of 2013. This facility began operating at full capacity during the third quarter and therefore, third and fourth quarter results were not included in the three or year ended periods above.
(6) Represents straight-line rent amortization for newly opened urgent care centers.
(7) Represents legal costs incurred in connection with the ongoing investigation into the billing and reimbursement processes of some of our subsidiaries being conducted by the DOJ.
(8) Represents expenses incurred in connection with the Company's proposed spin-off of its real estate assets to a newly formed publicly traded real estate investment trust (REIT).
(9) Represents revenues and expenses incurred at newly opened urgent care centers, less rent expense recognized in note (6) above and depreciation expense recognized in note (11) below.
(10) Represents revenues and expenses incurred for the first six months of 2013 at one newly constructed facility which began operations during the first quarter of 2013, less rent expense recognized in note (5) above and depreciation expense recognized in Note (12) below. This facility began operating at full capacity during the third quarter and therefore, third and fourth quarter results were not included in the three or year ended periods above.
(11) Represents depreciation expense at newly opened urgent care centers and amortization costs related to patient base intangible assets at skilled nursing and assisted living facilities 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.
(12) Represents depreciation expense for the first six months of 2013 at one newly constructed facility which began operations in the first quarter of 2013. This facility began operating at full capacity during the third quarter and therefore, third and fourth quarter results were not included in the three or year end periods above.
(13) Represents the tax impact of non-GAAP adjustments noted in (1) – (12) at the Company's year to date effective tax rate of 38.5% for the three and year ended December 31, 2013.
(14) Represents an adjustment to the provision for income taxes to our current year to date effective rate to 40.9% and 37.9% for the three and year ended December 31, 2013.
THE ENSIGN GROUP, INC.
RECONCILIATION OF NET INCOME TO EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR
(in thousands)
(Unaudited)
The table below reconciles net income to EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR for the periods presented:
Three Months Ended
December 31,
Year Ended
December 31,
2014 2013 2014 2013
Consolidated Statements of Income Data:
Net income $ 10,796 $ 13,349 $ 33,741 $ 23,854
Less: net loss attributable to noncontrolling interests (715) (7) (2,209) (186)
Loss from discontinued operations 1,804
Interest expense, net 327 3,203 12,382 12,281
Provision for income taxes 8,517 8,563 26,801 20,003
Depreciation and amortization 5,087 8,711 26,430 33,909
EBITDA $ 25,442 $ 33,833 $ 101,563 $ 92,037
Facility rent—cost of services 18,480 3,557 48,488 13,613
EBITDAR $ 43,922 $ 37,390 $ 150,051 $ 105,650
EBITDA $ 25,442 $ 33,833 $ 101,563 $ 92,037
Adjustments to EBITDA:
Charge related to the U.S. Government inquiry(a) 33,000
Expenses related to the Spin-Off(b) 155 2,192 9,026 4,050
Legal costs(c) (13) 1,098
Settlement of class action lawsuit(d) 1,524
Impairment of goodwill and other indefinite-lived intangibles(e) 490 490
Urgent care center (earnings) losses(f) (609) 406 (389) 1,844
Earnings at three operations transferred to REIT(g) (122)
Loss at skilled nursing facility not at full operation(h) 1,256
Acquisition related costs(i) 453 10 672 288
Costs incurred to recognize income tax credits(j) 45 42 138 145
Rent related to items (f), (g) and (h) above (k) 402 322 1,941 1,009
Adjusted EBITDA $ 25,888 $ 37,282 $ 112,829 $ 136,741
Facility rent—cost of services 18,480 3,557 48,488 13,613
Less: related to items (f), (g) and (h) above (k) (402) (322) (1,941) (1,009)
Adjusted EBITDAR $ 43,966 $ 40,517 $ 159,376 $ 149,345
(a) Charges related to our resolution of any claims connected to the DOJ settlement.
(b) Expenses incurred in connection with the Spin-Off.
(c) Legal costs incurred in connection with the settlement of the investigation into the billing and reimbursement processes of some of our subsidiaries conducted by the DOJ.
(d) Settlement of a class action lawsuit regarding minimum staffing requirements in the State of California.
(e) Impairment charges to goodwill for a skilled nursing facility in Utah during the year ended December 31, 2013.
(f) Operating results at newly opened urgent care centers. This amount excluded rent, depreciation, interest and income taxes. The results also excluded the net loss attributable to the variable interest entity associated with our urgent care business of approximately $2.2 million.
(g) Results at three independent living facilities which were transferred to CareTrust as part of the Spin-Off, excluding rent, depreciation, interest and income taxes.
(h) Losses incurred through the second quarter of 2013 at one newly constructed skilled nursing facility which began operations during the first quarter of 2013, excluding rent, depreciation, interest and income taxes.
(i) Costs incurred to acquire an operation which are not capitalizable.
(j) Costs incurred to recognize income tax credits which contributed to a decrease in effective tax rate.
(k) Rent related to newly opened urgent care centers, one newly constructed skilled nursing facility which began operations during the first quarter of 2013, and the three independent living facilities which were transferred to CareTrust as part of the Spin-Off, not included in items (f), (g) and (h) above.
THE ENSIGN GROUP, INC.
RECONCILIATION OF NET INCOME TO EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR
(in thousands)
(Unaudited)
The table below reconciles net income to EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR for each reportable segment for the periods presented:
Year Ended
December 31,
Year Ended
December 31,
2014 2013 2014 2013
TSA Services Home Health and Hospice
Statements of Income Data:
Income from operations $ 126,011 $ 97,777 $ 9,701 $ 4,776
Depreciation and amortization 21,669 30,595 539 400
EBITDA $ 147,680 $ 128,372 $ 10,240 $ 5,176
Facility rent—cost of services 45,955 11,931 779 777
EBITDAR $ 193,635 $ 140,303 $ 11,019 $ 5,953
EBITDA $ 147,680 $ 128,372 $ 10,240 $ 5,176
Adjustments to EBITDA:
Charge related to the U.S. Government inquiry(a) 33,000
Impairment of goodwill and other indefinite-lived intangibles(b) 490
Settlement of class action lawsuit(c) 1,524
Earnings at three operations transferred to REIT(d) (122)
Loss at skilled nursing facility not at full operation(e) 1,256
Acquisition related costs(f) 672 288
Rent related to items (d) and (e) above (g) 406 158
Adjusted EBITDA $ 148,636 $ 165,088 $ 10,240 $ 5,176
Facility rent—cost of services 45,955 11,931 779 777
Less: related related to items (d) and (e) above (g) (406) (158)
Adjusted EBITDAR $ 194,185 $ 176,861 $ 11,019 $ 5,953
(a) Charges related to our resolution of any claims connected to the DOJ settlement.
(b) Impairment charges to goodwill for a skilled nursing facility in Utah during the year ended December 31, 2013.
(c) Settlement of a class action lawsuit regarding minimum staffing requirements in the State of California.
(d) Results at three independent living facilities which were transferred to CareTrust as part of the Spin-Off, excluding rent, depreciation, interest and income taxes.
(e) Losses incurred through the second quarter of 2013 at one newly constructed skilled nursing facility which began operations during the first quarter of 2013, excluding rent, depreciation, interest and income taxes.
(f) Costs incurred to acquire an operation which are not capitalizable.
(g) Rent related to the three independent living facilities which were transferred to CareTrust as part of the Spin-Off and one newly constructed skilled nursing facility which began operations during the first quarter of 2013, not included in items (d) above.
THE ENSIGN GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Year Ended December 31,
2014 2013
Assets
Current assets:
Cash and cash equivalents $ 50,408 $ 65,755
Restricted cash — current 5,082
Accounts receivable — less allowance for doubtful accounts of $20,438 and $16,540 at December 31, 2014 and 2013, respectively 130,051 111,370
Investments — current 6,060 5,511
Prepaid income taxes 2,992 9,915
Prepaid expenses and other current assets 8,434 9,213
Deferred tax asset — current 10,615 9,232
Total current assets 213,642 210,996
Property and equipment, net 149,708 479,770
Insurance subsidiary deposits and investments 17,873 16,888
Escrow deposits 16,153 1,000
Deferred tax asset 11,509 4,464
Restricted and other assets 6,833 9,804
Intangible assets, net 35,568 5,718
Goodwill 30,269 23,935
Other indefinite-lived intangibles 12,361 7,740
Total assets $ 493,916 $ 760,315
Liabilities and equity
Current liabilities:
Accounts payable 33,186 23,793
Accrued wages and related liabilities 56,712 40,093
Accrued self-insurance liabilities — current 15,794 15,461
Other accrued liabilities 24,630 25,698
Current maturities of long-term debt 111 7,411
Total current liabilities 130,433 112,456
Long-term debt — less current maturities 68,279 251,895
Accrued self-insurance liabilities — less current portion 34,166 33,642
Fair value of interest rate swap 1,828
Deferred rent and other long-term liabilities 3,235 3,237
Total equity 257,803 357,257
Total liabilities and equity $ 493,916 $ 760,315
THE ENSIGN GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
The following table presents selected data from our consolidated statements of cash flows for the periods presented:
Year Ended December 31
2014 2013
Net cash provided by operating activities $ 84,880 $ 37,424
Net cash used in investing activities (172,851) (65,235)
Net cash provided by financing activities 72,624 52,881
Net (decrease) increase in cash and cash equivalents (15,347) 25,070
Cash and cash equivalents at beginning of period 65,755 40,685
Cash and cash equivalents at end of period $ 50,408 $ 65,755
THE ENSIGN GROUP, INC.
REVENUE BY SEGMENTS
The following table sets forth our total revenue by segments and as a percentage of total revenue for the periods indicated:
Three Months Ended December 31,
2014 2013
Revenue
Dollars
Revenue
Percentage
Revenue
Dollars
Revenue
Percentage
Transitional, skilled and assisted living services:
Skilled nursing facilities $ 240,654 86.9% $ 211,359 89.8%
Assisted and independent living facilities 13,134 4.8 11,352 4.5
Total transitional, skilled and assisted living services $ 253,788 92.5 $ 222,711 94.3
Home health and hospice services:
Home health $ 8,639 2.9 $ 6,328 2.4
Hospice 7,442 2.4 4,697 2.0
Total home health and hospice services $ 16,081 5.3 $ 11,025 4.4
All other (1) 7,000 2.2 3,272 1.3
Total revenue $ 276,869 100.0% $ 237,008 100.0%
(1) Includes revenue from services provided at our urgent care clinics and a mobile x-ray and diagnostic company.
Years Ended December 31,
2014 2013
Revenue
Dollars
Revenue
Percentage
Revenue
Dollars
Revenue
Percentage
Transitional, skilled and assisted living services:
Skilled nursing facilities $ 901,470 87.7% $ 812,348 89.8%
Assisted and independent living facilities 48,848 4.8 40,931 4.5
Total transitional, skilled and assisted living services $ 950,318 92.5 $ 853,279 94.3
Home health and hospice services:
Home health $ 29,577 2.9 $ 21,978 2.4
Hospice 24,939 2.4 17,784 2.0
Total home health and hospice services $ 54,516 5.3 $ 39,762 4.4
All other (1) 22,572 2.2 11,515 1.3
Total revenue $ 1,027,406 100.0% $ 904,556 100.0%
(1) Includes revenue from services provided at our urgent care clinics and a mobile x-ray and diagnostic company.
THE ENSIGN GROUP, INC.
SELECT PERFORMANCE INDICATORS
(Unaudited)
The following tables summarize our selected performance indicators for our TSA services segment along with other statistics, for each of the dates or periods indicated:
Three Months Ended
December 31,
2014 2013
(Dollars in thousands) Change % Change
Total Facility Results:
Skilled nursing revenue $ 240,654 $ 211,359 $ 29,295 13.9%
Assisted and independent living revenue 13,134 11,352 1,782 15.7%
Total transitional, skilled and assisted living revenue $ 253,788 $ 222,711 $ 31,077 14.0%
Number of facilities at period end 136 119 17 14.3%
Actual patient days 1,026,493 947,138 79,355 8.4%
Occupancy percentage — Operational beds 78.2% 78.0% 0.2%
Skilled mix by nursing days 27.8% 26.0% 1.8%
Skilled mix by nursing revenue 50.4% 49.1% 1.3%
Three Months Ended
December 31,
2014 2013
(Dollars in thousands) Change % Change
Same Facility Results(1):
Skilled nursing revenue $ 186,686 $ 176,987 $ 9,699 5.5%
Assisted and independent living revenue 4,386 4,305 81 1.9%
Total transitional, skilled and assisted living revenue $ 191,072 $ 181,292 $ 9,780 5.4%
Number of facilities at period end 82 82 —%
Actual patient days 717,403 706,457 10,946 1.5%
Occupancy percentage — Operational beds 82.3% 80.9% 1.4%
Skilled mix by nursing days 29.3% 27.5% 1.8%
Skilled mix by nursing revenue 51.9% 50.4% 1.5%
Three Months Ended
December 31,
2014 2013
(Dollars in thousands) Change % Change
Transitioning Facility Results(2):
Skilled nursing revenue $ 25,497 $ 23,976 $ 1,521 6.3%
Assisted and independent living revenue 4,625 4,405 220 5.0%
Total transitional, skilled and assisted living revenue $ 30,122 $ 28,381 $ 1,741 6.1%
Number of facilities at period end 25 25 —%
Actual patient days 160,931 158,212 2,719 1.7%
Occupancy percentage — Operational beds 71.8% 70.5% 1.2%
Skilled mix by nursing days 19.8% 18.6% 1.2%
Skilled mix by nursing revenue 41.6% 40.5% 1.1%
Three Months Ended
December 31,
2014 2013
(Dollars in thousands) Change % Change
Recently Acquired Facility Results(3):
Skilled nursing revenue $ 28,471 $ 10,396 $ 18,075 173.9%
Assisted and independent living revenue 4,123 1,815 2,308 127.2%
Total transitional, skilled and assisted living revenue $ 32,594 $ 12,211 $ 20,383 166.9%
Number of facilities at period end 29 11 18 NM
Actual patient days 148,159 64,651 83,508 NM
Occupancy percentage — Operational beds 68.3% 69.2% NM
Skilled mix by nursing days 26.6% 21.6% NM
Skilled mix by nursing revenue 48.5% 47.1% NM
Three Months Ended
December 31,
2014 2013
(Dollars in thousands) Change % Change
Transferred to CareTrust(4):
Skilled nursing revenue $ — $ — $ — NM
Assisted and independent living revenue 827 (827) NM
Total transitional, skilled and assisted living revenue $ -- $ 827 $ (827) NM
Actual patient days 17,818 NM
Occupancy percentage — Operational beds 73.4% NM
_______________________
(1) Same Facility results represent all facilities purchased prior to January 1, 2011.
(2) Transitioning Facility results represents all facilities purchased from January 1, 2011 to December 31, 2012.
(3) Recently Acquired Facility (or "Acquisitions") results represent all facilities purchased on or subsequent to January 1, 2013.
(4) Transferred to CareTrust results represent the results at three independent living facilities which were transferred to CareTrust as part of the Spin-Off on June 1, 2014. These results were excluded from Same Facility and Transitioning Facility for the three months ended December 31, 2014 and 2013 for comparison purposes.
Year Ended
December 31,
2014 2013
(Dollars in thousands) Change % Change
Total Facility Results:
Skilled nursing revenue $ 901,470 $ 812,348 $ 89,122 11.0%
Assisted and independent living revenue 48,848 40,931 7,917 19.3%
Total transitional, skilled and assisted living revenue $ 950,318 $ 853,279 $ 97,039 11.4%
Number of facilities at period end 136 119 17 14.3%
Actual patient days 3,921,758 3,648,651 273,107 7.5%
Occupancy percentage — Operational beds 78.0% 77.5% 0.5%
Skilled mix by nursing days 27.6% 26.4% 1.2%
Skilled mix by nursing revenue 50.8% 50.0% 0.8%
Year Ended
December 31,
2014 2013
(Dollars in thousands) Change % Change
Same Facility Results(1):
Skilled nursing revenue $ 724,422 $ 688,184 $ 36,238 5.3%
Assisted and independent living revenue 17,456 16,493 963 5.8%
Total transitional, skilled and assisted living revenue $ 741,878 $ 704,677 $ 37,201 5.3%
Number of facilities at period end 82 82 —%
Actual patient days 2,832,584 2,784,664 47,920 1.7%
Occupancy percentage — Operational beds 81.9% 80.4% 1.5%
Skilled mix by nursing days 29.3% 27.9% 1.4%
Skilled mix by nursing revenue 52.4% 51.4% 1.0%
Year Ended
December 31,
2014 2013
(Dollars in thousands) Change % Change
Transitioning Facility Results(2):
Skilled nursing revenue $ 99,326 $ 96,454 $ 2,872 3.0%
Assisted and independent living revenue 18,171 16,467 1,704 10.3%
Total transitional, skilled and assisted living revenue $ 117,497 $ 112,921 $ 4,576 4.1%
Number of facilities at period end 25 25 —%
Actual patient days 634,772 619,161 15,611 2.5%
Occupancy percentage — Operational beds 71.3% 69.6% 1.7%
Skilled mix by nursing days 19.8% 19.5% 0.3%
Skilled mix by nursing revenue 41.5% 40.7% 0.8%
Year Ended
December 31,
2014 2013
(Dollars in thousands) Change % Change
Recently Acquired Facility Results(3):
Skilled nursing revenue $ 77,722 $ 27,710 $ 50,012 180.5%
Assisted and independent living revenue 11,974 4,512 7,462 165.4%
Total transitional, skilled and assisted living revenue $ 89,696 $ 32,222 $ 57,474 178.4%
Number of facilities at period end 29 11 18 NM
Actual patient days 426,386 171,861 254,525 NM
Occupancy percentage — Operational beds 66.5% 66.2% NM
Skilled mix by nursing days 24.4% 20.5% NM
Skilled mix by nursing revenue 47.0% 46.6% NM
Year Ended
December 31,
2014 2013
(Dollars in thousands) Change % Change
Transferred to CareTrust(4):
Skilled nursing revenue $ — $ — $ — NM
Assisted and independent living revenue 1,247 3,459 (2,212) NM
Total transitional, skilled and assisted living revenue $ 1,247 $ 3,459 $ (2,212) NM
Actual patient days 28,016 72,965 NM
Occupancy percentage — Operational beds 70.3% 75.7% NM
_______________________
(1) Same Facility results represent all facilities purchased prior to January 1, 2011.
(2) Transitioning Facility results represents all facilities purchased from January 1, 2011 to December 31, 2012.
(3) Recently Acquired Facility (or "Acquisitions") results represent all facilities purchased on or subsequent to January 1, 2013.
(4) Transferred to CareTrust results represent the results at three independent living facilities which were transferred to CareTrust as part of the Spin-Off on June 1, 2014. These results were excluded from Same Facility and Transitioning Facility for the year ended December 31, 2014 and 2013 for comparison purposes.
THE ENSIGN GROUP, INC.
SKILLED NURSING AVERAGE DAILY REVENUE RATES AND
PERCENT OF SKILLED NURSING REVENUE AND DAYS BY PAYOR
The following table reflects the change in the skilled nursing average daily revenue rates by payor source, excluding services that are not covered by the daily rate:
Three Months Ended December 31, 2014
Same Facility Transitioning Acquisitions Total
2014 2013 2014 2013 2014 2013 2014 2013
Skilled Nursing Average Daily Revenue Rates:
Medicare $570.73 $568.56 $494.99 $480.56 $531.97 $488.00 $556.58 $552.37
Managed care 414.69 404.09 410.24 407.70 446.51 466.26 419.19 408.26
Other skilled 443.97 432.54 835.03 720.73 335.63 253.00 436.62 439.21
Total skilled revenue 492.59 493.75 485.66 477.34 465.54 477.47 488.76 491.43
Medicaid 188.51 184.34 168.51 157.96 176.67 146.17 184.92 179.18
Private and other payors 195.75 188.72 169.23 165.96 189.73 153.29 187.98 179.57
Total skilled nursing revenue $278.44 $270.03 $231.58 $219.83 $255.35 $219.15 $269.91 $260.54
Year Ended December 31,
Same Facility Transitioning Acquisitions Total
2014 2013 2014 2013 2014 2013 2014 2013
Skilled Nursing Average Daily Revenue Rates:
Medicare $563.94 $560.04 $480.80 $470.74 $514.38 $489.75 $549.12 $544.51
Managed care 412.21 398.02 411.33 394.51 456.29 465.95 416.74 400.44
Other skilled 440.54 456.19 812.83 697.96 321.63 253.00 437.08 460.76
Total skilled revenue 491.20 490.35 475.57 464.84 464.31 480.12 487.55 487.53
Medicaid 183.36 177.35 163.22 161.95 165.44 139.92 179.45 174.04
Private and other payors 193.22 187.38 170.50 167.20 182.06 149.74 185.79 179.40
Total skilled nursing revenue $274.48 $265.65 $227.25 $222.42 $240.86 $211.74 $265.41 $257.67
The following tables set forth our percentage of skilled nursing patient revenue and days by payor source for the three months ended December 31, 2014 and 2013:
Three Months Ended December 31,
Same Facility Transitioning Acquisitions Total
2014 2013 2014 2013 2014 2013 2014 2013
Percentage of Skilled Nursing Revenue:
Medicare 28.2% 30.4% 32.9% 34.1% 22.4% 26.3% 28.0% 30.6%
Managed care 16.3 14.6 7.0 4.7 21.2 20.8 15.9 13.8
Other skilled 7.4 5.4 1.7 1.7 4.9 6.5 4.7
Skilled mix 51.9 50.4 41.6 40.5 48.5 47.1 50.4 49.1
Private and other payors 7.2 7.6 20.6 22.2 10.5 13.4 9.0 9.5
Quality mix 59.1 58.0 62.2 62.5 59.0 60.5 59.4 58.6
Medicaid 40.9 42.0 37.8 37.5 41.0 39.5 40.6 41.4
Total skilled nursing 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Three Months Ended December 31,
Same Facility Transitioning Acquisitions Total
2014 2013 2014 2013 2014 2013 2014 2013
Percentage of Skilled Nursing Days:
Medicare 13.8% 14.4% 15.4% 15.6% 10.8% 11.8% 13.6% 14.4%
Managed care 10.9 9.7 4.0 2.5 12.1 9.8 10.2 8.8
Other skilled 4.6 3.4 0.4 0.5 3.7 4.0 2.8
Skilled mix 29.3 27.5 19.8 18.6 26.6 21.6 27.8 26.0
Private and other payors 10.4 10.9 28.2 29.2 14.1 19.2 13.0 13.8
Quality mix 39.7 38.4 48.0 47.8 40.7 40.8 40.8 39.8
Medicaid 60.3 61.6 52.0 52.2 59.3 59.2 59.2 60.2
Total skilled nursing 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
The following tables set forth our percentage of skilled nursing patient revenue and days by payor source for the year ended December 31, 2014 and 2013:
Year Ended December 31,
Same Facility Transitioning Acquisitions Total
2014 2013 2014 2013 2014 2013 2014 2013
Percentage of Skilled Nursing Revenue:
Medicare 29.7% 31.1% 32.8% 34.8% 22.7% 28.8% 29.4% 31.4%
Managed care 15.9 14.9 6.9 4.7 20.1 17.8 15.3 13.9
Other skilled 6.8 5.4 1.8 1.2 4.2 6.1 4.7
Skilled mix 52.4 51.4 41.5 40.7 47.0 46.6 50.8 50.0
Private and other payors 7.2 7.7 21.5 21.9 11.3 13.8 9.1 9.5
Quality mix 59.6 59.1 63.0 62.6 58.3 60.4 59.9 59.5
Medicaid 40.4 40.9 37.0 37.4 41.7 39.6 40.1 40.5
Total skilled nursing 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Year Ended December 31,
Same Facility Transitioning Acquisitions Total
2014 2013 2014 2013 2014 2013 2014 2013
Percentage of Skilled Nursing Days:
Medicare 14.4% 14.7% 15.5% 16.4% 10.6% 12.4% 14.2% 14.8%
Managed care 10.7 10.0 3.8 2.7 10.7 8.1 9.7 8.9
Other skilled 4.2 3.2 0.5 0.4 3.1 3.7 2.7
Skilled mix 29.3 27.9 19.8 19.5 24.4 20.5 27.6 26.4
Private and other payors 10.3 10.8 28.7 29.1 15.0 19.6 13.1 13.7
Quality mix 39.6 38.7 48.5 48.6 39.4 40.1 40.7 40.1
Medicaid 60.4 61.3 51.5 51.4 60.6 59.9 59.3 59.9
Total skilled nursing 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
THE ENSIGN GROUP, INC.
SELECT PERFORMANCE INDICATORS
(Unaudited)
The following tables summarize our selected performance indicators for our home health and hospice segment along with other statistics, for each of the dates or periods indicated:
Three Months Ended December 31,
2014 2013 Change % Change
Results:
Home health and hospice revenue
Home health services: $ 8,639 $ 6,328 $ 2,311 36.5%
Hospice services: 7,442 4,697 2,745 58.4%
Total home health and hospice revenue $ 16,081 $ 11,025 $ 5,056 45.9%
Home health services:
Medicare Episodic Admissions 1,768 1,487 281 18.9%
Average Medicare Revenue per Completed Episode 2,945 2,905 39.48 1.4%
Hospice services:
Average Daily Census 493 312 181 58.0%
Year Ended December 31,
2014 2013 Change % Change
Results:
Home health and hospice revenue
Home health services: $ 29,577 $ 21,978 $ 7,599 34.6%
Hospice services: 24,939 17,784 7,155 40.2%
Total home health and hospice revenue $ 54,516 $ 39,762 $ 14,754 37.1%
Home health services:
Medicare Episodic Admissions 5,221 4,090 1,131 27.7%
Average Medicare Revenue per Completed Episode 2,840 2,746 94 3.4%
Hospice services:
Average Daily Census 420 302 118 39.1%
THE ENSIGN GROUP, INC.
REVENUE BY PAYOR SOURCE
The following table sets forth our total revenue by payor source and as a percentage of total revenue for the periods indicated:
Three Months Ended
December 31,
Year Ended
December 31,
2014 2013 2014 2013
$ % $ % $ % $ %
Revenue: (Dollars in thousands) (Dollars in thousands)
Medicaid $ 97,133 35.1% $ 86,502 36.5% $ 358,119 34.9% $ 323,803 35.8%
Medicare 81,182 29.3% 74,703 31.5% 313,144 30.5% 292,917 32.4%
Medicaid—skilled 14,583 5.3% 9,469 4.0% 51,157 5.0% 36,085 4.0%
Total 192,898 69.7% 170,674 72.0% 722,420 70.4% 652,805 72.2%
Managed care 40,480 14.6% 30,722 13.0% 145,796 14.2% 118,168 13.1%
Private and other(1) 43,491 15.7% 35,612 14.9% 159,190 15.5% 133,583 14.8%
Total revenue $ 276,869 100.0% $ 237,008 100.0% $ 1,027,406 100.0% $ 904,556 100.0%
(1) Private and other payors includes revenue from urgent care centers and other ancillary services.

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. Adjusted EBITDA consists of net income before (a) interest expense, net, (b) provisions for income taxes, (c) depreciation and amortization, and, (d) discontinued operations, (e) development and operational losses associated with newly-developed operations which have not achieved stabilization, (f) impairment charges, (g) charges related to the DOJ settlement, (h) expenses incurred in connection with the company's proposed spin-off of real estate assets, (i) settlement of a class action lawsuit and (j) normalized tax rate. Adjusted 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, (e) , discontinued operations, (f) development and operational losses associated with newly-developed operations which have not achieved stabilization, (g) impairment charges, (h) charges related to the DOJ settlement, (i) expenses incurred in connection with the company's proposed spin-off of real estate assets, (j) settlement of a class action lawsuit and (k) normalized tax rate. The company believes that the presentation of EBITDA, EBITDAR, adjusted EBITDA, adjusted EBITDAR, adjusted net income and adjusted earnings per share provides important supplemental information to management and investors to evaluate the company's operating performance. The company believes disclosure of adjusted net income per share, EBITDA, EBITDAR, adjusted EBITDA and adjusted EBITDAR has economic substance because the excluded revenues and expenses are infrequent in nature and are variable in nature, or do not represent current revenues or cash expenditures. A material limitation associated with the use of these measures as compared to the GAAP measures of net income and diluted earnings per share is that they may not be comparable with the calculation of net income and diluted earnings per share for other companies in the company's industry. These non-GAAP financial measures should not be relied upon to the exclusion of GAAP financial measures. For further information regarding why the company believes that this non-GAAP measure provides useful information to investors, the specific manner in which management uses this measure, and some of the limitations associated with the use of this measure, please refer to the company's periodic filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K. The company's periodic filings are available on the SEC's website at www.sec.gov or under the "Financial Information" link of the Investor Relations section on Ensign's website at http://www.ensigngroup.net.

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

Source:The Ensign Group, Inc.