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The Ensign Group Meets Earnings Guidance of $1.27 Per Share for 2015; Reaffirms 2016 Projections

MISSION VIEJO, Calif., Feb. 10, 2016 (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 2015.

Quarter and Fiscal Year Highlights Include:

  • Adjusted earnings per share were $1.27 for the year, an increase of 16.4% over the prior year, and $0.35 for the quarter, an increase of 29.6% over the prior year quarter;
  • Consolidated adjusted net income climbed 31.6% over the prior year to $66.1 million, and 44.7% over the prior year quarter to $18.5 million;
  • Consolidated adjusted EBITDAR was $221.3 million for the year, an increase of 38.8%, and $63.1 million for the quarter, an increase of 43.5%;
  • Same-store revenue for all segments grew by 6.9% over the prior year, and by 7.9% over the prior year quarter, and same-store TSA revenue grew by 6.4% over the prior year, and by 7.5% over the prior year quarter;
  • Same store skilled revenue mix increased by 115 basis points over the prior year to 52.9%;
  • Cornerstone Healthcare, Inc., our home health and hospice subsidiary, grew its revenue by $35.8 million to $90.4 million for the year, an increase of 65.7% over the prior year; and
  • Consolidated revenues for the year were up $314.4 million or 30.6% over the prior year to $1.34 billion, and consolidated revenues for the quarter were up $96.3 million or 34.8% over the prior year quarter to $373.2 million.

Operating Results

“We are pleased to report that operating results met consensus and our annual earnings guidance, which was increased three times during 2015, with adjusted earnings per share of $1.27 for the year,” said Ensign’s President and Chief Executive Officer Christopher Christensen. He stated that “Although there were some temporary challenges in some operations, the overall strength inherent in Ensign’s local approach to healthcare continues to drive steady improvements in each distinct healthcare market.” He credited the 2015 results to the local leaders and their teams, highlighting their ability to innovate in the midst of an ever-changing healthcare environment.

Mr. Christensen reiterated that as of December 31, 2015, the company had 68 operations in the recently acquired bucket, which is the highest number of operations in that category in the organization’s history. “While we are pleased with the contribution of a few of our newly acquired facilities to our 2015 results, most of our newly acquired operations have not yet contributed to our results in any meaningful way,” he said. He also noted that “our recent growth puts us in an unprecedented position for continued organic improvement in 2016 and beyond as these recently acquired operations begin to meet their potential, most of which we expect to occur towards the end of 2016.”

“We are also pleased to be reaffirming our annual guidance for 2016, projecting annual revenue of between $1.53 billion and $1.58 billion and annual earnings per share guidance between $1.43 and $1.50 per diluted share,” Christensen continued. He also emphasized that, given the number of new operations acquired last year, management expects much of the increase in performance in 2016 to occur in the later part of the year, adding that it often takes several quarters for newly acquired facilities to perform. He also noted that, “As we often remind you, our results are not symmetrical from quarter to quarter, especially in periods of significant growth, but we have been able to project performance fairly accurately on an annual basis.”

Chief Financial Officer Suzanne Snapper reported that Ensign’s balance sheet remains strong in spite of our record acquisition activity, with its conservative adjusted net-debt-to-EBITDAR ratio of 3.37x at year end. Ms. Snapper added that “as a result of our ever improving discipline, we recently increased our revolving line of credit to $250 million, an increase of $100 million.” She further noted that as of December 31, 2015 the company had $41.6 million in cash on hand.

Ms. Snapper also reported that consolidated revenues in for the year were up 30.6% over the prior year to a record $1.34 billion and consolidated adjusted EBITDAR for the year grew by 38.8% to $221.3 million. Fully diluted adjusted earnings per share were $0.35 for the quarter and adjusted net income was $18.5 million. Fully diluted GAAP earnings per share were $1.06 for the year and $0.26 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 adjusted EBITDAR and adjusted 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.

Quarter Highlights

During the quarter, Ensign paid a quarterly cash dividend of $0.04 per share of its common stock, an increase of 6.7% over the prior year. This is the thirteenth consecutive year Ensign has increased its dividend, signaling the board’s and management’s continued confidence in Ensign's operating model and its ability to return long-term value to shareholders. Ensign has been a dividend-paying company since 2002.

In addition, the Company completed a 2 for 1 split of its outstanding stock, increasing the number of basic outstanding shares to approximately 51.4 million as of December 31, 2015. Mr. Christensen noted that the stock split made Ensign stock more affordable for a wider range of investors, increasing the liquidity and trading volumes.

On February 5, 2016, Ensign also increased its revolving credit facility by $100 million to an aggregate of $250 million, $111.8 million of which was drawn as of February 5, 2016. The amendment reduced the LIBOR-based interest rate by 50 basis points and extended the termination date for the revolving commitment to February 5, 2021, among other things.

Also during the quarter and since, affiliates of Ensign acquired 7 skilled nursing facilities and opened 3 healthcare resorts, including:

  • In Kansas, The Healthcare Resort of Kansas City, featuring a 70-bed licensed transitional care operation and 30 private assisted living suites under a long-term lease;
  • In Chandler and Scottsdale, Arizona, Chandler Post Acute and Rehabilitation, a 120-bed skilled nursing operation, and Shea Post Acute Rehabilitation Center, a 105-bed skilled nursing operation under a long-term lease;
  • In West Columbia, South Carolina, the operations and real estate of Millennium Post Acute Rehabilitation, a 125-bed skilled nursing operation;
  • In Kansas, The Healthcare Resort of Shawnee Mission, featuring a 101-bed licensed transitional care operation and 24 private assisted living suites under a long-term lease;
  • In El Cajon, California, the underlying real estate of Somerset Subacute and Rehabilitation, a 46-bed skilled nursing operation that has been operated under a lease arrangement since December 2014;
  • In South Carolina, the operations and real estate of Compass Post Acute Rehabilitation, a 95-bed skilled nursing operation in Conway, Las Colinas Post Acute Rehabilitation, a 99-bed skilled nursing operation in Rock Hill, and Opus Post Acute Rehabilitation, a 100-bed skilled nursing operation in West Columbia; and
  • In Kansas, The Healthcare Resort of Olathe, featuring a 70-bed licensed transitional care operation and 30 private assisted living suites under a long-term lease;

These additions bring Ensign's growing portfolio to 187 healthcare operations, thirty-two of which are owned, fourteen hospice agencies, fifteen home health agencies, three home care businesses and seventeen urgent care clinics across 14 states. Mr. Christensen reaffirmed that Ensign continues to actively seek transactions to acquire real estate and to lease both well-performing and struggling skilled nursing, assisted living and other healthcare related businesses in new and existing markets.

2016 Guidance Reaffirmed

Management also reaffirmed its 2016 guidance, projecting annual revenue of between $1.53 billion and $1.58 billion and earnings per share guidance to between $1.43 and $1.50 per diluted share for 2016. Management’s guidance is based on diluted weighted average common shares outstanding of 53.3 million, which includes the impact of the 2 for 1 stock split completed in the fourth quarter of 2015. In addition, the guidance assumes, among other things, anticipated Medicare and Medicaid reimbursement rate increases net of provider taxes, tax rates of 38.5% and acquisitions closed. It also excludes acquisition-related costs and amortization costs related to intangible assets acquired, stock based compensation, implementation costs for system improvements, costs incurred to recognize income tax credits and costs incurred for facilities currently being constructed and other start-up operations.

Conference Call

A live webcast will be held Thursday, February 11, 2016 at 10:00 a.m. Pacific time (1:00 p.m. Eastern time) to discuss Ensign’s fourth quarter and fiscal year 2015 financial results. To listen to the webcast, or to view any financial or statistical information required by SEC Regulation G, please visit the Investors Relations section of Ensign’s website at http://investor.ensigngroup.net. The webcast will be recorded, and will be available for replay via the website until 5:00 p.m. Pacific Time on Friday, March 25, 2016.

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 hospice services, urgent care services and other rehabilitative and healthcare services at 187 facilities, fourteen hospice agencies, fifteen home health agencies, three home care businesses and seventeen urgent care clinics in California, Arizona, Texas, Washington, Utah, Idaho, Colorado, Nevada, Iowa, Nebraska, Oregon, Wisconsin, Kansas and South Carolina. More information about Ensign is available at http://www.ensigngroup.net. 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 operations, 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 operations, its ability to manage its increasing borrowing costs as it incurs additional indebtedness to fund the acquisition and development of operations; its ability to access capital on a cost-effective basis to continue to successfully implement its growth strategy; its operating margins and profitability could suffer if it is unable to grow and manage effectively its increasing number of operations; competition from other companies in the acquisition, development and operation of facilities; its ability to defend claims and lawsuits, including professional liability claims alleging that our services resulted in personal injury, and other regulatory-related claims; and the application of existing or proposed government regulations, or the adoption of new laws and regulations, that could limit its business operations, require it to incur significant expenditures or limit its ability to relocate its operations if necessary. 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 CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three Months Ended
December 31, 2015
Year Ended
December 31, 2015
As Reported Non-GAAP Adj. As Adjusted As
Reported
Non-GAAP Adj. As
Adjusted
Revenue$373,155 $ (8,059) (5)$365,096 1,341,826 $(28,066) (5)$1,313,760
Expense:
Cost of services (exclusive of rent, general and administrative and depreciation and amortization expense shown separately below) 297,401 (11,322)(1)(3)
(5)(8)
286,079 1,067,694 (35,321)(1)(3)(5) (8) 1,032,373
Rent—cost of services 26,245 (1,190) (6)(8) 25,055 88,776 (2,746) (6)(8) 86,030
General and administrative expense 17,246 (1,360)(1)(2)(3)(4)(9) 15,886 64,163 (4,249)(1)(2)(3) (4)(9) 59,914
Depreciation and amortization 7,926 (585) (7) 7,341 28,111 (2,279) (7) 25,832
Total expenses 348,818 (14,457) 334,361 1,248,744 (44,595) 1,204,149
Income from operations 24,337 6,398 30,735 93,082 16,529 109,611
Other income (expense):
Interest expense (793) 46 (747) (2,828) 184 (2,644)
Interest income 242 - 242 845 - 845
Other expense, net (551) 46 (505) (1,983) 184 (1,799)
Income before provision for income taxes 23,786 6,444 30,230 91,099 16,713 107,812
Tax Effect on Non-GAAP Adjustments 2,481 6,434
Tax True-up for Effective Tax Rate (191) (109)
Provision for income taxes 9,349 2,290 (10
)
11,639 35,182 6,325 (10 ) 41,507
Net income 14,437 4,154 18,591 55,917 10,388 66,305
Less: net (loss) income attributable to noncontrolling interests 836 (784) 52 485 (290) 195
Net income attributable to The Ensign Group, Inc.$ 13,601 4,938 $ 18,539 $ 55,432 10,678 $ 66,110
Net income per share:
Basic:$ 0.27 $ 0.36 $ 1.10 $ 1.31
Diluted$ 0.26 $ 0.35 $ 1.06 $ 1.27
Weighted average common shares outstanding:
Basic 51,308 51,308 50,316 50,316
Diluted 53,193 53,193 52,210 52,210
________________________
(1) Represents acquisition-related costs of $604 and $1,397 for the three months and year ended December 31, 2015, respectively.
(2) Represents costs of $131 and $267 for the three months and year ended December 31, 2015, respectively, incurred to recognize income tax credits and effect the stock-split in Q4 2015.
(3) Represents stock-based compensation expense of $1,729 and $6,677 for the three months and year ended December 31, 2015, respectively.
(4) Represents costs of $567 and $2,550 for the three months and year ended December 31, 2015, respectively, incurred related to new systems implementation.
(5) Represents revenues and expenses incurred at 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 urgent care centers included in Note (5) and Note (8).
(7) Represents depreciation expense at urgent care centers, facilities currently being constructed and start-up operations and amortization costs related to patient base intangible assets at skilled nursing and assisted living facilities.
(8) Represents costs incurred for facilities currently being constructed and start-up operations during the three months and year ended December 31, 2015.
(9) Represents breakup fee, net of costs, received in connection with a public auction in which we were the priority bidder.
(10) Represents the adjustment to provision for income tax to our historical year to date effective tax rate of 38.5% for the three months ended and year ended December 31, 2015.


THE ENSIGN GROUP, INC.
GAAP and ADJUSTED 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 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
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 8,246
Tax True-up for Effective Tax Rate (1,082) (3,492)
Provision for income taxes 8,517 (439) (8) 8,078 26,801 4,754 (8) 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
Net income per share
Basic:$ 0.26 $ 0.28 $ 0.80 $ 1.12
Diluted:$ 0.25 $ 0.27 $ 0.78 $ 1.09
Weighted average common shares outstanding:
Basic 45,038 45,038 44,682 44,682
Diluted 46,756 46,756 46,190 46,190
_____________________
(1) Represents acquisition-related costs of $453 and $672 for the three months and year ended 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 $155 and $9,026 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 adjustment to provision for income tax to our historical year to date effective tax rate of 38.6% for the three months ended and year ended December 31, 2014.

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,
2015 2014 2015 2014
Consolidated Statements of Income Data:
Net income 14,437 10,796 55,917 33,741
Less: net income (loss) attributable to noncontrolling interests 836 (715) 485 (2,209)
Interest expense, net 551 327 1,983 12,382
Provision for income taxes 9,349 8,517 35,182 26,801
Depreciation and amortization 7,926 5,087 28,111 26,430
EBITDA 31,427 25,442 120,708 101,563
Facility rent—cost of services 26,245 18,480 88,776 48,488
EBITDAR 57,672 43,922 209,484 150,051
EBITDA$ 31,427 $ 25,442 $ 120,708 $ 101,563
Adjustments to EBITDA:
Spin-Off charges including results at three independent living facilities transferred to CareTrust(a) - 155 - 8,904
Urgent care center losses (earnings)(b) 850 (609) (1,132) (389)
Breakup fee, net of costs, received in connection with a public auction(c) - - (1,019) -
Acquisition related costs(d) 604 453 1,397 672
Stock-based compensation expense(e) 1,729 - 6,677 -
Costs incurred for facilities currently being constructed and other start-up operations(f) 1,528 - 3,054 -
Costs incurred related to new systems implementation(g) 567 - 2,550 -
Professional service fees(h) 131 45 267 138
Rent related to items(a), (b), and (f) above 1,190 402 2,746 1,941
Adjusted EBITDA$ 38,026 $ 25,888 $ 135,248 $ 112,829
Facility rent—cost of services 26,245 18,480 88,776 48,488
Less: rent related to items(a), (b) and (f) above (1,190) (402) (2,746) (1,941)
Adjusted EBITDAR$ 63,081 $ 43,966 $ 221,278 $ 159,376
(a) Spin-Off charges including results at three independent living facilities transferred to CareTrust in connection with the Spin-Off transaction.
(b) 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.
(c) Breakup fee, net of costs, received in connection with a public auction.
(d) Costs incurred to acquire an operation which are not capitalizable.
(e) Stock-based compensation expense incurred during the three months and year ended December 31, 2015. Adjusted EBITDA and EBITDAR for the three months and year ended December 31, 2014 did not include non-GAAP adjustment related to stock-based compensation expense of $1.4 million and $5.2 million, respectively. If adjusted for stock-based compensation expense, Adjusted EBITDA for the three months and year ended December 31, 2014 would have been $27.3 million and $118.0 million, respectively, and Adjusted EBITDAR for the three months and year ended December 31, 2014 would have been $45.3 million and $164.6 million, respectively. EBITDA for the year ended December 31, 2014 reflects four month increase in rent expense as a result of the Spin-Off compared to twelve months increase in rent expense for the year ended December 31, 2015.
(f) Costs incurred for facilities currently being constructed and other start-up operations.
(g) Costs incurred related to new systems implementation.
(h) Professional service fees include costs incurred to recognize income tax credits which contributed to a decrease in effective tax rate and expenses incurred in connection with the stock-split effected in December 2015.

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:
Three Months Ended December 31, Year Ended December 31,
2015 2014 2015 2014 2015 2014 2015 2014
TSA
Services
Home Health
and Hospice
TSA
Services
Home Health
and Hospice
Statements of Income Data:
Income from operations, excluding general and administrative expense(a) $ 39,615 $ 30,445 $ 3,846 $ 2,909 $ 148,207 $ 126,011 $ 13,584 $ 9,701
Depreciation and amortization 5,978 3,749 277 168 21,346 21,669 980 539
EBITDA $ 45,593 $ 34,194 $ 4,123 $ 3,077 $ 169,553 $ 147,680 $ 14,564 $ 10,240
Rent—cost of services 25,266 17,811 369 211 85,216 45,955 1,235 779
EBITDAR $ 70,859 $ 52,005 $ 4,492 $ 3,288 $ 254,769 $ 193,635 $ 15,799 $ 11,019
EBITDA $ 45,593 $ 34,194 $ 4,123 $ 3,077 $ 169,553 $ 147,680 $ 14,564 $ 10,240
Adjustments to EBITDA:
Stock-based compensation expense(b) 1,043 - 60 - 3,933 - 241 -
Costs at facilities currently being constructed and other start-up operations(c) 1,060 - 11 - 3,043 - 11 -
Earnings at three operations transferred to REIT (d) - - - - - (122) - -
Acquisition related costs(e) 604 453 - - 1,397 672 - -
Rent related to item(d) above(f) 644 - 5 - 644 406 5 -
Adjusted EBITDA $ 48,944 $ 34,647 $ 4,199 $ 3,077 $ 178,570 $ 148,636 $ 14,821 $ 10,240
Rent—cost of services 25,266 17,811 369 211 85,216 45,955 1,235 779
Less: rent related to items(d) above(f) (644) (5) (644) (406) (5) -
Adjusted EBITDAR $ 73,566 $ 52,458 $ 4,563 $ 3,288 $ 263,142 $ 194,185 $ 16,051 $ 11,019
_________________________
(a) General and administrative expenses are not allocated to any segment for purposes of determining segment profit or loss.
(b) Stock-based compensation expense incurred during the three months ended and year ended December 31, 2015.
(c) Costs incurred for facilities currently being constructed and other start-up operations during the three months ended and year ended December 31, 2015.
(d) Results at three independent living facilities which were transferred to CareTrust REIT as part of the Spin-Off transaction, excluding rent, depreciation, interest and income taxes.
(e) Costs incurred to acquire operations which are not capitalizable.

THE ENSIGN GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
Year Ended December 31,
2015 2014
Assets
Current assets:
Cash and cash equivalents$ 41,569 $ 50,408
Restricted cash — current 5,082
Accounts receivable — less allowance for doubtful accounts of $30,308 and $20,438 at December 31, 2015 and 2014, respectively 209,026 130,051
Investments — current 2,004 6,060
Prepaid income taxes 8,141 2,992
Prepaid expenses and other current assets 18,827 8,434
Deferred tax asset — current 15,403 10,615
Total current assets 294,970 213,642
Property and equipment, net 299,633 149,708
Insurance subsidiary deposits and investments 32,713 17,873
Escrow deposits 400 16,153
Deferred tax asset 5,449 11,509
Restricted and other assets 9,631 6,833
Intangible assets, net 45,431 35,568
Goodwill 40,886 30,269
Other indefinite-lived intangibles 18,646 12,361
Total assets$ 747,759 $ 493,916
Liabilities and equity
Current liabilities:
Accounts payable 36,029 33,186
Accrued wages and related liabilities 78,890 56,712
Accrued self-insurance liabilities — current 18,122 15,794
Other accrued liabilities 46,205 24,630
Current maturities of long-term debt 620 111
Total current liabilities 179,866 130,433
Long-term debt — less current maturities 99,051 68,279
Accrued self-insurance liabilities — less current portion 37,881 34,166
Deferred rent and other long-term liabilities 3,976 3,235
Total equity 426,985 257,803
Total liabilities and equity$ 747,759 $ 493,916
THE ENSIGN GROUP, INC.
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,
2015 2014
Net cash provided by operating activities$ 33,369 $ 84,880
Net cash used in investing activities (168,538) (172,851)
Net cash provided by financing activities 126,330 72,624
Net decrease in cash and cash equivalents (8,839) (15,347)
Cash and cash equivalents at beginning of period 50,408 65,755
Cash and cash equivalents at end of period$ 41,569 $ 50,408


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, Year Ended Ended December 31,
2015 2014 2015 2014
Revenue
Dollars
Revenue
Percentage
Revenue
Dollars
Revenue
Percentage
Revenue
Dollars
Revenue
Percentage
Revenue
Dollars
Revenue
Percentage
(Dollars in thousands)
TSA Services:
Skilled nursing facilities $ 306,733 82.2% $ 240,654 86.9% $ 1,126,388 83.9% $ 901,470 87.7%
Assisted and independent living facilities 30,213 8.1 13,134 4.8 88,129 6.6 48,848 4.8
Total TSA services 336,946 90.3 253,788 91.7 1,214,517 90.5 950,318 92.5
Home health and hospice services:
Home health 13,503 3.6 8,639 3.1 47,955 3.6 29,577 2.9
Hospice 13,344 3.6 7,442 2.7 42,401 3.2 24,939 2.4
Total home health and hospice services 26,847 7.2 16,081 5.8 90,356 6.8 54,516 5.3
All other (1) 9,362 2.5 7,000 2.5 36,953 2.7 22,572 2.2
Total revenue $ 373,155 100.0% $ 276,869 100.0% $ 1,341,826 100.0% $ 1,027,406 100.0%
(1) Includes revenue from services provided at our urgent care clinics and mobile ancillary operations.

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,
2015 2014
(Dollars in thousands) Change % Change
Total Facility Results:
Skilled nursing revenue$ 306,733 $ 240,654 $ 66,079 27.5%
Assisted and independent living revenue 30,213 13,134 17,079 130.0%
Total TSA services revenue$ 336,946 $ 253,788 $ 83,158 32.8%
Number of facilities at period end 186 136 50 36.8%
Actual patient days 1,357,023 1,026,493 330,530 32.2%
Occupancy percentage — Operational beds 77.2% 78.2% (1.0)%
Skilled mix by nursing days 30.9% 27.8% 3.1%
Skilled mix by nursing revenue 51.8% 50.4% 1.4%
Three Months Ended
December 31,
2015 2014
(Dollars in thousands) Change % Change
Same Facility Results(1):
Skilled nursing revenue$ 222,592 $ 206,596 $ 15,996 7.7%
Assisted and independent living revenue 7,957 7,885 72 0.9%
Total TSA services revenue$ 230,549 $ 214,481 $ 16,068 7.5%
Number of facilities at period end 101 101 %
Actual patient days 836,313 840,922 (4,609) (0.5)%
Occupancy percentage — Operational beds 80.5% 81.0% (0.5)%
Skilled mix by nursing days 30.3% 28.4% 1.9%
Skilled mix by nursing revenue 51.1% 51.2% (0.1)%
Three Months Ended
December 31,
2015 2014
(Dollars in thousands) Change % Change
Transitioning Facility Results(2):
Skilled nursing revenue$ 17,387 $ 16,157 $ 1,230 7.6%
Assisted and independent living revenue 3,227 3,126 101 3.2%
Total TSA services revenue$ 20,614 $ 19,283 $ 1,331 6.9%
Number of facilities at period end 17 17 %
Actual patient days 102,317 102,723 (406) (0.4)%
Occupancy percentage — Operational beds 68.7% 68.1% 0.6%
Skilled mix by nursing days 21.2% 20.0% 1.2%
Skilled mix by nursing revenue 42.5% 39.9% 2.6%
Three Months Ended
December 31,
2015 2014
(Dollars in thousands) Change % Change
Recently Acquired Facility Results(3):
Skilled nursing revenue$ 66,754 $ 17,901 $ 48,853 NM
Assisted and independent living revenue 19,029 2,123 16,906 NM
Total TSA services revenue$ 85,783 $ 20,024 $ 65,759 NM
Number of facilities at period end 68 18 50 NM
Actual patient days 418,393 82,848 335,545 NM
Occupancy percentage — Operational beds 73.3% 67.0% NM
Skilled mix by nursing days 35.6% 30.6% NM
Skilled mix by nursing revenue 56.0% 51.3% NM
_______________________
(1) Same Facility results represent all facilities purchased prior to January 1, 2012.
(2) Transitioning Facility results represents all facilities purchased from January 1, 2012 to December 31, 2013.
(3) Recently Acquired Facility (or “Acquisitions”) results represent all facilities purchased on or subsequent to January 1, 2014.
Year Ended
December 31,
2015 2014
(Dollars in thousands) Change % Change
Total Facility Results:
Skilled nursing revenue$ 1,126,388 $ 901,470 $ 224,918 25.0%
Assisted and independent living revenue 88,129 48,848 39,281 80.4%
Total TSA services revenue$ 1,214,517 $ 950,318 $ 264,199 27.8%
Number of facilities at period end 186 136 50 36.8%
Actual patient days 4,872,742 3,921,758 950,984 24.2%
Occupancy percentage — Operational beds 77.9% 78.0% (0.1)%
Skilled mix by nursing days 30.4% 27.6% 2.8%
Skilled mix by nursing revenue 52.6% 50.8% 1.8%
Year Ended
December 31,
2015 2014
(Dollars in thousands) Change % Change
Same Facility Results(1):
Skilled nursing revenue$ 856,276 $ 803,173 $ 53,103 6.6%
Assisted and independent living revenue 31,783 31,495 288 0.9%
Total TSA services revenue$ 888,059 $ 834,668 $ 53,391 6.4%
Number of facilities at period end 101 101 %
Actual patient days 3,316,461 3,324,948 (8,487) (0.3)%
Occupancy percentage — Operational beds 80.9% 80.7% 0.2%
Skilled mix by nursing days 30.3% 28.4% 1.9%
Skilled mix by nursing revenue 52.9% 51.7% 1.2%
Year Ended
December 31,
2015 2014
(Dollars in thousands) Change % Change
Transitioning Facility Results(2):
Skilled nursing revenue$ 66,823 $ 61,955 $ 4,868 7.9%
Assisted and independent living revenue 12,795 11,759 1,036 8.8%
Total TSA services revenue$ 79,618 $ 73,714 $ 5,904 8.0%
Number of facilities at period end 17 17 %
Actual patient days 406,476 397,461 9,015 2.3%
Occupancy percentage — Operational beds 68.8% 66.4% 2.4%
Skilled mix by nursing days 20.9% 19.1% 1.8%
Skilled mix by nursing revenue 42.5% 40.2% 2.3%
Year Ended
December 31,
2015 2014
(Dollars in thousands) Change % Change
Recently Acquired Facility Results(3):
Skilled nursing revenue$ 203,289 $ 36,342 $ 166,947 NM
Assisted and independent living revenue 43,551 4,347 39,204 NM
Total TSA services revenue$ 246,840 $ 40,689 $ 206,151 NM
Number of facilities at period end 68 18 50 NM
Actual patient days 1,149,805 171,333 978,472 NM
Occupancy percentage — Operational beds 73.6% 63.3% NM
Skilled mix by nursing days 34.2% 28.7% NM
Skilled mix by nursing revenue 54.9% 48.5% NM
Year Ended
December 31,
2015 2014
(Dollars in thousands) Change % Change
Transferred to CareTrust(4):
Skilled nursing revenue$ - $ - $ - NM
Assisted and independent living revenue - 1,247 (1,247) NM
Total TSA services revenue$ - $ 1,247 $ (1,247) NM
Actual patient days - 28,016 NM
Occupancy percentage — Operational beds - 70.3% NM
_______________________
(1) Same Facility results represent all facilities purchased prior to January 1, 2012.
(2) Transitioning Facility results represents all facilities purchased from January 1, 2012 to December 31, 2013.
(3) Recently Acquired Facility (or “Acquisitions”) results represent all facilities purchased on or subsequent to January 1, 2014.
(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 for the nine months ended September 30, 2014 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,
Same Facility Transitioning Acquisitions Total
2015 2014 2015 2014 2015 2014 2015 2014
Skilled Nursing Average Daily Revenue Rates:
Medicare$574.76 $564.79 $487.80 $461.91 $517.23 $561.52 $556.02 $556.58
Managed care 423.69 414.37 472.40 420.03 438.12 458.20 429.72 419.19
Other skilled 434.17 449.96 355.05 - 357.56 335.63 414.07 436.62
Total skilled revenue 494.90 493.66 481.99 447.91 456.37 465.21 484.53 488.76
Medicaid 209.78 185.42 183.69 174.56 195.45 191.46 204.84 184.92
Private and other payors 194.63 191.44 143.84 141.26 215.35 214.46 193.66 187.98
Total skilled nursing revenue$295.27 $273.56 $240.73 $223.79 $290.21 $278.00 $290.52 $269.91
Year Ended December 31,
Same Facility Transitioning Acquisitions Total
2015 2014 2015 2014 2015 2014 2015 2014
Skilled Nursing Average Daily Revenue Rates:
Medicare$568.08 $556.11 $485.63 $462.51 $524.90 $542.66 $555.50 $549.12
Managed care 419.39 412.26 462.72 456.88 443.60 448.43 427.16 416.74
Other skilled 456.62 447.26 331.93 253.00 361.20 321.73 436.41 437.08
Total skilled revenue 497.93 491.22 476.58 460.42 463.92 446.07 490.07 487.55
Medicaid 194.26 180.40 176.59 166.35 195.14 187.52 193.04 179.45
Private and other payors 193.90 189.28 145.30 149.56 209.51 209.85 192.04 185.79
Total skilled nursing revenue$286.65 $269.72 $234.36 $219.98 $288.53 $264.21 $283.31 $265.41

The following tables set forth our percentage of skilled nursing patient revenue and days by payor source for the three months and year ended December 31, 2015 and 2014:
Three Months Ended December 31,
Same Facility Transitioning Acquisitions Total
2015 2014 2015 2014 2015 2014 2015 2014
Percentage of Skilled Nursing Revenue:
Medicare27.4% 28.8% 28.7% 27.4% 25.5% 19.5% 27.1% 28.0%
Managed care 16.1 15.5 13.6 12.5 23.2 24.0 17.5 15.9
Other skilled 7.6 6.9 0.2 - 7.3 7.8 7.2 6.5
Skilled mix 51.1 51.2 42.5 39.9 56.0 51.3 51.8 50.4
Private and other payors 8.0 8.9 9.4 10.2 6.8 9.0 7.7 9.0
Quality mix 59.1 60.1 51.9 50.1 62.8 60.3 59.5 59.4
Medicaid 40.9 39.9 48.1 49.9 37.2 39.7 40.5 40.6
Total skilled nursing100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Three Months Ended December 31,
Same Facility Transitioning Acquisitions Total
2015 2014 2015 2014 2015 2014 2015 2014
Percentage of Skilled Nursing Days:
Medicare 13.9% 14.0% 14.2% 13.3% 14.3% 9.7% 14.0% 13.6%
Managed care 11.2 10.2 6.9 6.7 15.4 14.5 11.8 10.2
Other skilled 5.2 4.2 0.1 - 5.9 6.4 5.1 4.0
Skilled mix 30.3 28.4 21.2 20.0 35.6 30.6 30.9 27.8
Private and other payors 12.2 12.7 15.7 16.1 9.2 11.8 11.7 13.0
Quality mix 42.5 41.1 36.9 36.1 44.8 42.4 42.6 40.8
Medicaid 57.5 58.9 63.1 63.9 55.2 57.6 57.4 59.2
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
2015 2014 2015 2014 2015 2014 2015 2014
Percentage of Skilled Nursing Revenue:
Medicare29.6% 30.2% 27.5% 25.8% 25.1% 18.7% 28.6% 29.4%
Managed care 15.9 15.1 14.8 14.4 23.3 20.9 17.2 15.3
Other skilled 7.4 6.4 0.2 - 6.5 8.9 6.8 6.1
Skilled mix 52.9 51.7 42.5 40.2 54.9 48.5 52.6 50.8
Private and other payors 8.1 9.0 9.7 11.4 8.0 8.6 8.2 9.1
Quality mix 61.0 60.7 52.2 51.6 62.9 57.1 60.8 59.9
Medicaid 39.0 39.3 47.8 48.4 37.1 42.9 39.2 40.1
Total skilled nursing100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Year Ended December 31,
Same Facility Transitioning Acquisitions Total
2015 2014 2015 2014 2015 2014 2015 2014
Percentage of Skilled Nursing Days:
Medicare 14.9% 14.6% 13.3% 12.2% 13.8% 9.1% 14.6% 14.2%
Managed care 10.8 9.9 7.5 6.9 15.2 12.3 11.4 9.7
Other skilled 4.6 3.9 0.1 - 5.2 7.3 4.4 3.7
Skilled mix 30.3 28.4 20.9 19.1 34.2 28.7 30.4 27.6
Private and other payors 12.1 12.8 15.6 16.8 11.0 10.9 12.1 13.1
Quality mix 42.4 41.2 36.5 35.9 45.2 39.6 42.5 40.7
Medicaid 57.6 58.8 63.5 64.1 54.8 60.4 57.5 59.3
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,
2015 2014 Change % Change
(Dollars in thousands)
Results:
Home health and hospice revenue
Home health services:$ 13,503 $ 8,639 $ 4,864 56.3%
Hospice services: 13,344 7,442 5,902 79.3
Total home health and hospice revenue$ 26,847 $ 16,081 $ 10,766 66.9%
Home health services:
Medicare Episodic Admissions 2,191 1,768 423 23.9 %
Average Medicare Revenue per Completed Episode$ 2,856 $ 2,945 $ (89) (3.0)%
Hospice services:
Average Daily Census 842 493 349 70.8%
Year Ended December 31,
2015 2014 Change % Change
(Dollars in thousands)
Results:
Home health and hospice revenue
Home health services:$ 47,955 $ 29,577 $ 18,378 62.1%
Hospice services: 42,401 24,939 17,462 70.0
Total home health and hospice revenue$ 90,356 $ 54,516 $ 35,840 65.7%
Home health services:
Medicare Episodic Admissions 7,534 5,221 2,313 44.3%
Average Medicare Revenue per Completed Episode $ 2,929 $ 2,840 $ 89 3.1%
Hospice services:
Average Daily Census 679 420 259 61.7%

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,
2015 2014 2015 2014
$ % $ % $ % $ %
Revenue:(Dollars in thousands) (Dollars in thousands)
Medicaid$ 123,388 33.1% $ 97,133 35.1% $ 439,996 32.8% $ 358,119 34.9%
Medicare 104,542 28.0 81,182 29.3 395,503 29.5 313,144 30.5
Medicaid—skilled 20,698 5.5 14,583 5.3 71,905 5.4 51,157 5.0
Total 248,628 66.6 192,898 69.7 907,404 67.7 722,420 70.4
Managed care 58,395 15.6 40,480 14.6 206,770 15.4 145,796 14.2
Private and other(1) 66,132 17.8 43,491 15.7 227,652 16.9 159,190 15.4
Total revenue$ 373,155 100.0% $ 276,869 100.0% $ 1,341,826 100.0% $ 1,027,406 100.0%
(1) Private and other payors also includes revenue from urgent care centers and mobile ancillary operations.

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) rent-cost of services. Adjusted EBITDA consists of net income before (a) interest expense, net, (b) provisions for income taxes, (c) depreciation and amortization, (d) costs incurred for operations currently being constructed and other start-up operations, excluding rent, depreciation, interest and income taxes, (e) Spin-Off charges including results at three independent living facilities transferred to CareTrust in connection with the Spin-Off transaction, excluding rent, depreciation, interest and income taxes, (f) stock-based compensation expense, (g) costs incurred related to new systems implementation, (h) breakup fee, net of costs, received in connection with a public auction in which we were the priority bidder, (i) professional service fees include costs incurred to recognize income tax credits which contributed to a decrease in effective tax rate and expenses incurred in connection with the stock-split effected in December 2015, (j) costs incurred to acquire operations which are not capitalized, and (k) operating results at urgent care centers, excluding depreciation, interest and income taxes. Adjusted EBITDAR consists of net income before (a) interest expense, net, (b)provisions for income taxes, (c) depreciation and amortization, (d) rent-cost of services, (e) costs incurred for facilities currently being constructed and other start-up operations, excluding rent, depreciation, interest and income taxes, (f) Spin-Off charges including results at three independent living facilities transferred to CareTrust in connection with the Spin-Off transaction, excluding rent, depreciation, interest and income taxes, (g) stock-based compensation expense, (h) costs incurred related to new systems implementation, (i) breakup fee, net of costs, received in connection with a public auction in which we were the priority bidder , (j) professional service fees include costs incurred to recognize income tax credits which contributed to a decrease in effective tax rate and expenses incurred in connection with the stock-split effected in December 2015, (k) costs incurred to acquire operations which are not capitalized and (l) operating results at urgent care centers, excluding rent, depreciation, interest and income taxes. 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 and Quarterly Report on Form 10-Q. The company’s periodic filings are available on the SEC's website at www.sec.gov or under the "Financial Information" link of the Investor Relations section on Ensign’s website at http://www.ensigngroup.net.

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

Source:The Ensign Group, Inc.