The Ensign Group Reports Record Revenues and Adjusted Earnings of $0.70 per Share; Issues 2014 Guidance

Conference Call and Webcast Scheduled for February 14, 2014 at 10:00 am PT

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| Source: The Ensign Group, Inc.

MISSION VIEJO, Calif., Feb. 13, 2014 (GLOBE NEWSWIRE) -- The Ensign Group, Inc. (Nasdaq:ENSG), the parent company of the Ensign™ group of skilled nursing, rehabilitative care services, assisted and independent living, home health, hospice care and urgent care companies, today reported operating results for the fourth quarter and full year 2013.

Quarter Highlights Include:

  • Adjusted earnings per share climbed 25% sequentially to $0.70 per share for the quarter, and grew 4.5% over the prior year quarter;
  • Same-store skilled mix days grew by 40 basis points to 28.0% of revenues in the quarter;
  • Same-store occupancy grew by 41 basis points over the prior year quarter, to 81.3%;
  • Adjusted consolidated EBITDAR was $40.5 million, an increase of 9.4% over the prior year quarter;
  • Consolidated revenues were up 12.6% over the prior year quarter to a record $237.0 million, and up 9.9% to a record $904.6 million in the year; and
  • Same-store revenues increased by $5.7 million or 3.4% over the prior year quarter.

Operating Results

Commenting on the operating results, Ensign's President and Chief Executive Officer Christopher Christensen said, "We are pleased to report another record quarter with revenues of $237.0 million on a GAAP basis, representing a 12.6% increase over the prior year quarter. This reversal was in spite of the many challenges we faced throughout the year."

Mr. Christensen added that Management is "likewise pleased to be issuing 2014 annual guidance, with projected revenues of $1.01 billion to $1.025 billion in revenues, with $2.74 to $2.81 in diluted adjusted earnings per share." He also indicated that Ensign anticipates updating its earnings per share guidance following the previously-announced spin-off transaction, but revenue guidance will not be materially affected. He also stated that, "As we have noted in the past, our business can be a bit lumpy from quarter to quarter, but we are pleased to have been able to project performance fairly accurately on an annual basis year after year."

Mr. Christensen also acknowledged that, for the first time in Ensign's history, annual results came in just under management's guidance for 2013, and added "Even though the improvements in the fourth quarter were significant, they were not quite large enough to make up for our second and third quarter results." He also affirmed that some of the challenges faced by Ensign in the second and third quarter continued into the fourth quarter, including distractions associated with structuring the spin-off transaction, significant costs surrounding the implementation of our corporate integrity agreement and the short-term earnings drag created by Ensign's significant growth earlier in the year. Noting a record quarter, he added, "Although many of these challenges remain, our improvement demonstrates that we can do much, much better, and we expect to take the momentum we generated in the fourth quarter into 2014 and beyond."

Suzanne Snapper, Ensign's Chief Financial Officer, observed that substantial organic upside remains within the company's existing portfolio. "We have started to see growth in occupancy in our 42 Transitioning and Newly-Acquired Facilities, with an increase of 58 basis points at our Transitioning and Newly-Acquired facilities to 71.1%, and an increase of 120 basis points at our Newly-Acquired Facilities to 65.7%, as compared to the third quarter," she said. She noted that these improvements, together with the 41 basis point climb in same-store occupancy to 81.3%, grew sequential consolidated occupancy to 78.0%.

Diluted GAAP earnings per share were $0.59 for the quarter, compared to $0.14 per share in the prior year quarter, and $1.16 for the year, compared to $1.91 in 2012. Adjusted non-GAAP earnings for the quarter were $0.70 per diluted share, compared to $0.56 in the third quarter of 2013. Ms. Snapper also noted that the company's adjusted earnings per share have grown at a rate of almost 15% a year since 2009.

During the quarter, the company's Board of Directors declared a quarterly cash dividend of $0.07 per share of Ensign common stock, an increase from the prior quarterly cash dividend of $0.065 per share. Ensign has been a dividend-paying company since 2002 and has consistently increased its dividend annually.

Ensign's growing portfolio consists of 119 facilities, nine home health and seven hospice companies, nine urgent care clinics, and an ancillary service provider, all in 11 states. Of the 119 post-acute and seniors housing facilities, 96 are Ensign-owned, and 75 of those are owned free of mortgage debt, with Ensign affiliates holding purchase options on two of Ensign's 23 leased facilities. Management reaffirmed that Ensign is actively seeking additional opportunities to acquire both well-performing and struggling long-term care, assisted living, seniors housing, home health and hospice operations across the United States. Management also reports that they are seeing an increased number of attractive acquisition opportunities at present, and that they expect to complete additional acquisitions before the end of the first quarter of 2014.

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.

2013 Guidance Issued

Management issued 2014 annual guidance, projecting revenues of $1.01 billion to $1.025 billion in revenues, with $2.74 to $2.81 per diluted share for the year. The guidance is based on diluted weighted average common shares outstanding of 22.7 million and assumes, among other things, acquisitions anticipated to be closed by the end of the second quarter, anticipated Medicaid reimbursement rate increases net of provider taxes, and that tax rates do not materially increase. It also excludes acquisition-related costs and amortization costs related to intangible assets acquired, start-up losses at newly-created operations and the impact of the spin-off healthcare and real estate businesses.

CareTrust Update

Management also reported that the planned separation of Ensign's real estate business from its healthcare operations, which was announced on November 7, 2013, continues to move forward. The spin-off of CareTrust REIT, Inc. will create a separate and independent publicly-traded real estate investment trust which will own, acquire and lease real estate serving the healthcare and seniors housing industries.

Mr. Christensen reiterated that Ensign continues working to ensure that the strategic separation results in two very healthy platforms for growth. Greg Stapley, Ensign's Executive Vice President and Secretary, who will become the Chief Executive Officer of CareTrust, noted that CareTrust filed its updated registration statement on Form 10 with the Securities and Exchange Commission today, which contains further details on the current format and status of the proposed transaction. Ensign anticipates that the spin-off will be completed early in the second quarter of 2014, but there can be no assurances regarding the final terms and structure of the spin-off or that it will be completed.

Conference Call

A live webcast will be held on Friday, February 14, 2014 at 10:00 a.m. Pacific Time (1:00 p.m. Eastern) to discuss Ensign's fourth quarter and fiscal 2013 financial results, and Management's 2014 guidance. To listen to the webcast, or to view any financial or statistical information required by SEC Regulation G, please visit the Investors section of the Ensign website at http://investor.ensigngroup.net. The webcast will be recorded, and will be available for replay via the website until 5:00 p.m. Pacific Time on Friday, March 7, 2014.

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, and other rehabilitative, healthcare and diagnostic services for both long-term residents and short-stay rehabilitation patients at 119 post-acute, assisted living and seniors housing facilities, nine home health companies, seven hospice companies, nine urgent care locations and a mobile diagnostic business, all spread across California, Arizona, Texas, Washington, Utah, Idaho, Colorado, Nevada, Iowa, Nebraska and Oregon. 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 verbiage, are not meant to imply that The Ensign Group, Inc. has direct operating assets, employees or revenue, or that any of the facilities, the home health and hospice businesses, the Service Center or the captive insurance subsidiary are operated by the same entity. More information about Ensign is available at http://www.ensigngroup.net.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

This press release contains, and the related conference call and webcast will include, forward-looking statements that are based on management's current expectations, assumptions and beliefs about its business, financial performance, operating results, the industry in which it operates and other future events. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. These forward-looking statements include, but are not limited to, statements regarding growth prospects, future operating and financial performance, and the entry into final settlement documents. They are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to materially and adversely differ from those expressed in any forward-looking statement.

These risks and uncertainties relate to the company's business, its industry and its common stock and include: reduced prices and reimbursement rates for its services; its ability to acquire, develop, manage or improve facilities, its ability to manage its increasing borrowing costs as it incurs additional indebtedness to fund the acquisition and development of facilities; its ability to access capital on a cost-effective basis to continue to successfully implement its growth strategy; its operating margins and profitability could suffer if it is unable to grow and manage effectively its increasing number of facilities; competition from other companies in the acquisition, development and operation of facilities; and the application of existing or proposed government regulations, or the adoption of new laws and regulations, that could limit its business operations, require it to incur significant expenditures or limit its ability to relocate its facilities if necessary. Readers should not place undue reliance on any forward-looking statements and are encouraged to review the company's periodic filings with the Securities and Exchange Commission, including its Form 10-K, which was filed today, for a more complete discussion of the risks and other factors that could affect Ensign's business, prospects and any forward-looking statements. Except as required by the federal securities laws, Ensign does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changing circumstances or any other reason after the date of this press release.

 
THE ENSIGN GROUP, INC.
GAAP and ADJUSTED CONSOLIDATED STATEMENTS OF INCOME
(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
U.S. Government inquiry settlement (4)  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 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 income (loss) 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      (0.09)      (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 for the first six months of 2013 incurred 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 during the first quarter of 2013. This facility began operating at full capacity during the third quarter and therefore, third quarter results were not included in the three or nine month 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.
GAAP and ADJUSTED CONSOLIDATED STATEMENTS OF INCOME
Including Adjustments for Discontinued Operations
(In thousands, except per share data)
                 
  Three Months Ended
December 31, 2012
Year Ended
December 31, 2012
  As Reported Non-GAAP Adj.   As Adjusted As Reported Non-GAAP Adj.   As Adjusted
Revenue  $ 210,505  (79) (9)  $ 210,426  $ 823,155  (79) (9)  $ 823,076
Expense:                 
Cost of services (exclusive of facility rent, general and administrative and depreciation and amortization expense shown separately below)  169,133 (3,077) (1)(2)(5)(9)  166,056  656,424 (6,641) (1)(2)(3)(5)(9)  649,783
Charges related to U.S. Government inquiries  15,000 (15,000) (4)  --   15,000 (15,000) (4)  
Facility rent—cost of services  3,247 (272) (6)(9)  2,975  13,281 (860) (6)(9)  12,421
General and administrative expense  7,886 (503) (7)  7,383  31,819 (1,945) (7)  29,874
Depreciation and amortization  7,287 (50) (8)(9)  7,237  28,358 (501) (8)(9)  27,857
Total expenses  202,553 (18,902)    183,651  744,882 (24,947)    719,935
Income from operations  7,952 18,823    26,775  78,273 24,868    103,141
Other income (expense):                 
Interest expense  (3,098)      (3,098)  (12,229)      (12,229)
Interest income  83      83  255      255
Other expense, net  (3,015)      (3,015)  (11,974)      (11,974)
Income before provision for income taxes  4,937 18,823    23,760  66,299 24,868    91,167
Tax impact of non-GAAP adjustments   7,134 (10)     9,425 (10)  
Adjustments to reflect 38.9% tax rate   (149) (11)          
Provision for income taxes  2,020 6,985    9,005  25,134 9,425    34,559
Income from continuing operations  2,917 11,838    14,755  41,165 15,443    56,608
Income (loss) from discontinued operations, net of income tax benefit  (1,252)      (1,252)  (1,357)      (1,357)
Net income  1,665 11,838    13,503  39,808 15,443    55,251
Less: net loss attributable to noncontrolling interests  (272) 226    (46)  (783) 354    (429)
Net income attributable to The Ensign Group, Inc.  $ 1,937 11,612    $ 13,549  $ 40,591 15,089    $ 55,680
Attributable to The Ensign Group, Inc.                
Net income attributable to The Ensign Group, Inc.  1,937 11,612    13,549  40,591 15,089    55,680
Loss from discontinued operations, net of income tax benefit  (1,252)      (1,252)  (1,357)      (1,357)
Income from continuing operations attributable to The Ensign Group, Inc.  $ 3,189 11,612    $ 14,801  $ 41,948 15,089    $ 57,037
Net income per share                
Basic:                
Net income attributable to The Ensign Group, Inc.  0.09      0.63  1.89      2.60
Loss from discontinued operations, net of income tax benefit  (0.06)      (0.06)  (0.07)      (0.06)
Income from continuing operations attributable to The Ensign Group, Inc.  $ 0.15      $ 0.69  $ 1.96      $ 2.66
Diluted:                
Net income attributable to The Ensign Group, Inc.  0.09      0.61  1.85      2.54
Loss from discontinued operations, net of income tax benefit  (0.05)      (0.06)  (0.06)      (0.06)
Income from continuing operations attributable to The Ensign Group, Inc.  $ 0.14      $ 0.67  $ 1.91      $ 2.60
Weighted average common shares outstanding:                 
Basic  21,605      21,605  21,429      21,429
Diluted  22,075      22,075  21,942      21,942
                 
(1) Represents acquisition-related costs of $20 and $250 for the three and twelve months ended December 31, 2012, respectively.
(2) Represents costs of $152 and $591 for the three and twelve months ended December 31, 2012, respectively, incurred to recognize income tax credits which contributed to
the decrease in the Company's effective tax rate
(3) Represents the settlement of a class action lawsuit regarding minimum staffing requirements in the state of California of $2,596 during the period ended June 30, 2012.
(4) Represents the Company's estimated liability related to its efforts to achieve a global, company-wide resolution of any claims connected to the U.S. Department of Justice
(DOJ) investigation
(5) Represents impairment charges of $2,225 recorded at our urgent care franchising operations, which we attribute to a decline in the estimated fair value of redeemable
noncontrolling interests.
(6) Represents straight-line rent amortization for a facility which the Company has begun construction activities, but had not commenced operations of a skilled nursing facility
as of December 31, 2012.
(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
Department of Justice (DOJ).
(8) Represents amortization costs related to patient base intangible assets acquired. Patient base intangible assets are amortized over a period of four to eight months, depending
on the classification of the patients and the level of occupancy in a new acquisition on the acquisition date
(9) Represents revenues and expenses incurred at newly opened urgent care centers
(10) Represents the tax impact of non-GAAP adjustments noted in (1) - (9) above in our effective tax rate of 37.9%.
(11) Represents an adjustment to the provision for income taxes to our effective tax rate of 37.9%.
 
 
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,
  2013 2012 2013 2012
Consolidated Statements of Income Data:        
Net income  $ 13,349  $ 1,665  $ 23,854  $ 39,808
Net (income) loss attributable to noncontrolling interests  7 272 186 783
Loss (income) from discontinued operations  (80)  1,804  1,357
Interest expense, net 3,203 3,015 12,281 11,974
Provision for income taxes  8,563 2,020  20,003 25,134
Depreciation and amortization 8,711 7,287 33,909 28,358
EBITDA  $ 33,833  $ 14,179  $ 92,037  $ 107,414
Facility rent—cost of services 3,557 3,248 13,613 13,281
EBITDAR  $ 37,390  $ 17,427  $ 105,650  $ 120,695
         
EBITDA  $ 33,833  $ 14,179  $ 92,037  $ 107,414
Adjustments to EBITDA:        
Charge related to the U.S. Government inquiry(a)  —   15,000  33,000  15,000
Expenses related to the Spin-Off(b)  2,192  —   4,050  — 
Legal costs(c)  (13)  503  1,098  1,945
Settlement of class action lawsuit(d)  —   —   1,524  2,596
Impairment of goodwill and other indefinite-lived intangibles  490  2,225  490  2,225
Urgent care center losses(e)  406  240  1,844  546
Losses at skilled nursing facility not at full operation(f)  —   —   1,256  — 
Acquisition related costs(g)  10  20  288  250
Costs incurred to recognize income tax credits(h)  42  153  145  591
Rent related to non-core business items above(i)  322  272  1,009  860
Adjusted EBITDA  $ 37,282  $ 32,592  $ 136,741  $ 131,427
Facility rent—cost of services  3,557  3,248  13,613  13,281
Less: rent related to non-core business items above(i)  (322)  (272)  (1,009)  (860)
Adjusted EBITDAR  $ 40,517  $ 35,568  $ 149,345  $ 143,848
         
(a) 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.
(b) 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).
(c) Legal costs incurred in connection with the DOJ settlement.
(d) Settlement of a class action lawsuit regarding minimum staffing requirements in the state of California.
(e) Losses incurred at newly opened urgent care centers, excluding rent, depreciation, interest and income taxes.
(f) Losses incurred through the second quarter at one newly constructed skilled nursing facility which began operations during the first quarter of 2013, excluding rent, depreciation, interest and income taxes. The facility began running at full capacity during the third quarter of 2013, and therefore, results for the third and fourth quarter were not included in the results above.
(g) Costs incurred to acquire operations which are not capitalizable.
(h) Costs incurred to recognize income tax credits which contributed to a decrease in effective tax rate.
(i) Rent related to newly opened urgent care centers and one newly constructed skilled nursing facility which began operations during the first quarter of 2013, not included in items (e) and (f) above.
   
   
THE ENSIGN GROUP, INC.  
CONSOLIDATED BALANCE SHEETS  
 (In thousands)  
  December 31 December 31,  
  2013 2012  
Assets      
Current assets:      
Cash and cash equivalents  $ 65,755  $ 40,685  
Accounts receivable — less allowance for doubtful accounts of $16,540 and $13,811 at September 30, 2013 and December 31, 2012, respectively  111,370  94,187  
Investments — current  5,511  5,195  
Prepaid income taxes  9,915  3,787  
Prepaid expenses and other current assets  9,213  8,606  
Deferred tax asset — current  9,232  14,871  
Assets held for sale — current  —   268  
Total current assets  210,996  167,599  
Property and equipment, net  479,770  447,855  
Insurance subsidiary deposits and investments  16,888  17,315  
Escrow deposits  1,000  4,635  
Deferred tax asset  4,464  2,234  
Restricted and other assets  9,804  8,640  
Intangible assets, net  5,718  6,115  
Long-term assets held for sale  —   11,324  
Goodwill  23,935  21,557  
Other indefinite-lived intangibles  7,740  3,588  
Total assets  $ 760,315  $ 690,862  
       
Liabilities and equity       
Current liabilities:      
Accounts payable  $ 23,793  $ 26,069  
Accrued charge related to U.S. Government inquiry  —   15,000  
Accrued wages and related liabilities  40,093  35,847  
Accrued self-insurance liabilities — current  15,461  16,034  
Liabilities held for sale — current  —   339  
Other accrued liabilities  25,698  20,871  
Current maturities of long-term debt  7,411  7,187  
Total current liabilities  112,456  121,347  
Long-term debt — less current maturities  251,895  200,505  
Accrued self-insurance liabilities — less current portion  33,642  34,849  
Fair value of interest rate swap  1,828  2,866  
Long-term liabilities held for sale  —   130  
Deferred rent and other long-term liabilities  3,237  3,281  
Total equity  357,257  327,884  
Total liabilities and equity  $ 760,315  $ 690,862  
       
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, 
  2013 2012  
Net cash provided by operating activities  $ 37,424  $ 82,050  
Net cash used in investing activities (65,235)  (84,496)  
Net cash provided by financing activities 52,881  13,547  
Net increase (decrease) in cash and cash equivalents 25,070  11,101  
Cash and cash equivalents beginning of period 40,685  29,584  
Cash and cash equivalents end of period  $ 65,755  $ 40,685  
 
 
THE ENSIGN GROUP, INC.
SELECT PERFORMANCE INDICATORS
(Quarterly Information Unaudited)
         
The following tables summarize our selected performance indicators, along with other statistics, for each of the dates or periods indicated:
         
  Three Months Ended
December 31,
   
  2013 2012    
  (Dollars in thousands) Change % Change
Total Facility Results:        
Revenue  $ 237,008  $ 210,505  $ 26,503  12.6%
Number of facilities at period end  119  108  11  10.2%
Actual patient days  947,138  872,634  74,504  8.5%
Occupancy percentage — Operational beds 78.0% 78.3%    (0.3)%
Skilled mix by nursing days 26.0% 25.9%    0.1%
Skilled mix by nursing revenue 49.1% 49.7%    (0.6)%
         
  Three Months Ended
December 31,
   
  2013 2012    
  (Dollars in thousands) Change % Change
Same Facility Results(1):        
Revenue  $ 174,913  $ 169,214  $ 5,699  3.4%
Number of facilities at period end  77  77  —%
Actual patient days  664,098  661,257  2,841  0.4%
Occupancy percentage — Operational beds 81.3% 80.9%    0.4%
Skilled mix by nursing days 28.0% 27.6%    0.4%
Skilled mix by nursing revenue 50.9% 52.1%    (1.2)%
         
  Three Months Ended
December 31,
   
  2013 2012    
  (Dollars in thousands) Change % Change
Transitioning Facility Results(2):        
Revenue  $ 36,377  $ 34,869  $ 1,508  4.3%
Number of facilities at period end  25  25  —   —%
Actual patient days  183,922  182,738  1,184  0.6%
Occupancy percentage — Operational beds 74.4% 73.9%    0.5%
Skilled mix by nursing days 19.5% 18.8%    0.7%
Skilled mix by nursing revenue 41.8% 38.8%    3.0%
         
  Three Months Ended
December 31,
   
  2013 2012    
  (Dollars in thousands) Change % Change
Recently Acquired Facility Results(3):        
Revenue  $ 25,718  $ 6,422  $ 19,296 NM
Number of facilities at period end  17  6  11 NM
Actual patient days  99,118  28,639  70,479 NM
Occupancy percentage — Operational beds 65.7% 56.8%   NM
Skilled mix by nursing days 19.1% 14.0%   NM
Skilled mix by nursing revenue 40.9% 23.5%   NM
_______________________        
         
(1)  Same Facility results represent all facilities purchased prior to January 1, 2010.
(2)  Transitioning Facility results represents all facilities purchased from January 1, 2010 to December 31, 2011.
(3)  Recently Acquired Facility (or "Acquisitions") results represent all facilities purchased on or subsequent to January 1, 2012.
 
 
THE ENSIGN GROUP, INC.
SELECT PERFORMANCE INDICATORS
(Quarterly Information Unaudited)
         
The following tables summarize our selected performance indicators, along with other statistics, for each of the dates or periods indicated:
         
  Twelve Months Ended
December 31,
   
  2013 2012    
  (Dollars in thousands) Change % Change
Total Facility Results:        
Revenue  $ 904,556  $ 823,155  $ 81,401  9.9%
Number of facilities at period end  119  108  11  10.2%
Actual patient days  3,648,651  3,452,598  196,053  5.7%
Occupancy percentage — Operational beds 77.5% 79.0%    (1.5)%
Skilled mix by nursing days 26.4% 25.9%    0.5%
Skilled mix by nursing revenue 50.0% 50.0%   —%
         
  Twelve Months Ended
December 31,
   
  2013 2012    
  (Dollars in thousands) Change % Change
Same Facility Results(1):        
Revenue  $ 679,610  $ 670,747  $ 8,863  1.3%
Number of facilities at period end  77  77  —% 
Actual patient days  2,618,541  2,638,029  (19,488)  (0.7)%
Occupancy percentage — Operational beds 80.8% 81.2%    (0.4)%
Skilled mix by nursing days 28.3% 27.5%    0.8%
Skilled mix by nursing revenue 52.1% 52.0%    0.1%
         
  Twelve Months Ended
December 31,
   
  2013 2012    
  (Dollars in thousands) Change % Change
Transitioning Facility Results(2):        
Revenue  $ 141,180  $ 135,639  $ 5,541  4.1%
Number of facilities at period end  25  25  —   —% 
Actual patient days  724,243  736,995  (12,752)  (1.7)%
Occupancy percentage — Operational beds 73.8% 74.9%    (1.1)%
Skilled mix by nursing days 20.2% 18.2%    2.0%
Skilled mix by nursing revenue 42.0% 39.2%    2.8%
         
  Twelve Months Ended
December 31,
   
  2013 2012    
  (Dollars in thousands) Change % Change
Recently Acquired Facility Results(3):        
Revenue  $ 83,766  $ 16,769  $ 66,997 NM
Number of facilities at period end  17  6  11 NM
Actual patient days  305,867  77,574  228,293 NM
Occupancy percentage — Operational beds 62.7% 55.5%   NM
Skilled mix by nursing days 18.0% 11.2%   NM
Skilled mix by nursing revenue 38.1% 20.9%   NM
_______________________        
         
(1)  Same Facility results represent all facilities purchased prior to January 1, 2010.
(2)  Transitioning Facility results represents all facilities purchased from January 1, 2010 to December 31, 2011.
(3)  Recently Acquired Facility (or "Acquisitions") results represent all facilities purchased on or subsequent to January 1, 2012.
 
 
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 %
  2013 2012 2013 2012 2013 2012 2013 2012 Change
Skilled Nursing Average Daily Revenue Rates:                  
Medicare $572.28 $565.15 $487.50 $474.63 $468.45 $424.77 $552.37 $547.86  0.8%
Managed care  404.54  399.71  397.83  389.83  461.24  264.91  408.26  399.25  2.3%
Other skilled  432.46  451.81  723.71  439.00  253.00  439.21  451.60  (2.7)%
Total skilled revenue  494.98  494.30  478.68  461.54  465.23  425.53  491.43  489.90  0.3%
Medicaid  184.47  170.42  159.06  169.56  159.31  235.97  179.18  172.38  3.9%
Private and other payors  190.34  185.72  165.11  167.11  155.97  170.02  179.57  179.55  0.0%
Total skilled nursing revenue $271.91 $261.30 $222.99 $223.84 $217.12 $254.16 $260.54 $255.72  1.9%
                   
                   
  Twelve Months Ended December 31,
  Same Facility Transitioning Acquisitions Total %
  2013 2012 2013 2012 2013 2012 2013 2012 Change
Skilled Nursing Average Daily Revenue Rates:                  
Medicare $564.45 $555.44 $474.16 $471.25 $461.98 $418.73 $544.51 $541.63  0.5%
Managed care  398.86  391.08  378.70  395.32  458.55  427.52  400.44  391.32  2.3%
Other skilled  455.88  457.58  708.32  529.85  253.00  460.76  458.67  0.5%
Total skilled revenue  492.13  490.63  462.86  460.25  460.78  418.88  487.53  486.98  0.1%
Medicaid  176.97  168.85  158.45  155.16  167.26  204.57  174.04  167.78  3.7%
Private and other payors  188.44  189.62  167.45  165.93  154.87  168.26  179.40  181.52  (1.2)%
Total skilled nursing revenue $267.38 $259.48 $222.39 $213.93 $218.10 $223.11 $257.67 $252.18  2.2%
                   
The following tables set forth our percentage of skilled nursing patient revenue and days by payor source for the three months ended December 31, 2013 and 2012:
                 
  Three Months Ended December 31,
  Same Facility Transitioning Acquisitions Total
  2013 2012 2013 2012 2013 2012 2013 2012
Percentage of Skilled Nursing Revenue:                
Medicare 30.5% 31.9% 34.4% 33.4% 25.6% 23.5% 30.6% 31.8%
Managed care  14.8  14.7  5.8  4.8  15.2  —   13.8  13.1
Other skilled  5.6  5.5  1.6  0.6  0.1  —   4.7  4.8
Skilled mix  50.9  52.1  41.8  38.8  40.9  23.5  49.1  49.7
Private and other payors  7.6  7.6  21.0  21.3  12.4  8.4  9.5  9.3
Quality mix  58.5  59.7  62.8  60.1  53.3  31.9  58.6  59.0
Medicaid  41.5  40.3  37.2  39.9  46.7  68.1  41.4  41.0
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
  2013 2012 2013 2012 2013 2012 2013 2012
Percentage of Skilled Nursing Days:                
Medicare  14.6%  14.8%  15.8%  15.7%  11.9%  14.0%  14.4%  14.8%
Managed care  9.9  9.6  3.2  2.8  7.2  —  8.8  8.4
Other skilled  3.5  3.2  0.5  0.3  —   —  2.8  2.7
Skilled mix  28.0  27.6  19.5  18.8  19.1  14.0  26.0  25.9
Private and other payors  10.8  10.6  28.4  28.5  17.2  12.7  13.8  13.3
Quality mix  38.8  38.2  47.9  47.3  36.3  26.7  39.8  39.2
Medicaid  61.2  61.8  52.1  52.7  63.7  73.3  60.2  60.8
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, 2013 and 2012:
                 
  Twelve Months Ended December 31,
  Same Facility Transitioning Acquisitions Total
  2013 2012 2013 2012 2013 2012 2013 2012
Percentage of Skilled Nursing Revenue:                
Medicare 31.3% 33.0% 35.1% 33.3% 26.6% 20.6% 31.4% 32.9%
Managed care  15.2  13.7  5.7  5.3  11.5  0.3  13.9  12.4
Other skilled  5.6  5.3  1.2  0.6  —   —   4.7  4.7
Skilled mix  52.1  52.0  42.0  39.2  38.1  20.9  50.0  50.0
Private and other payors  7.5  7.6  21.4  22.6  12.1  11.2  9.5  9.5
Quality mix  59.6  59.6  63.4  61.8  50.2  32.1  59.5  59.5
Medicaid  40.4  40.4  36.6  38.2  49.8  67.9  40.5  40.5
Total skilled nursing 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
                 
                 
  Twelve Months Ended December 31,
  Same Facility Transitioning Acquisitions Total
  2013 2012 2013 2012 2013 2012 2013 2012
Percentage of Skilled Nursing Days:                
Medicare  14.8%  15.4%  16.5%  15.1%  12.6%  11.0%  14.8%  15.3%
Managed care  10.2  9.1  3.3  2.8  5.4  0.2  8.9  8.0
Other skilled  3.3  3.0  0.4  0.3  —   —   2.7  2.6
Skilled mix  28.3  27.5  20.2  18.2  18.0  11.2  26.4  25.9
Private and other payors  10.7  10.4  28.4  29.2  17.0  14.7  13.7  13.2
Quality mix  39.0  37.9  48.6  47.4  35.0  25.9  40.1  39.1
Medicaid  61.0  62.1  51.4  52.6  65.0  74.1  59.9  60.9
Total skilled nursing  100.0%  100.0%  100.0%  100.0%  100.0%  100.0%  100.0%  100.0%
 
 
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,
Twelve Months Ended
December 31,
  2013 2012 2013 2012
  $ % $ % $ % $ %
Revenue: (Dollars in thousands)
Medicaid  $ 86,502 36.5%  $ 78,112 37.1%  $ 323,803 35.8%  $ 302,046 36.7%
Medicare 74,703 31.5% 68,863 32.7% 292,917 32.4% 278,578 33.8%
Medicaid—skilled 9,469 4.0% 8,690 4.1% 36,085 4.0% 33,031 4.0%
Total 170,674 72.0% 155,665 73.9% 652,805 72.2% 613,655 74.5%
Managed Care 30,722 13.0% 26,668 12.7% 118,168 13.1% 98,655 12.0%
Private and Other(1) 35,612 15.0% 28,172 13.4% 133,583 14.7% 110,845 13.5%
Total revenue $ 237,008 100.0% $ 210,505 100.0%  $ 904,556 100.0%  $ 823,155 100.0%
(1) Private and other payors includes revenue from urgent care centers and other ancillary businesses.

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 Report on Form 10-K filed today with the SEC. The Form 10-K is 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.

Investor/Media Relations, The Ensign Group, Inc.
(949) 487-9500,