The Ensign Group second-quarter total revenue up 19.5%

The Ensign Group, Inc. (Nasdaq: ENSG), the parent company of the Ensign™ group of skilled nursing, rehabilitative care services, home health, hospice care and assisted living companies, today reported record results for the second quarter of 2010.

Financial Highlights Include:

• Adjusted earnings were a record $0.46 per diluted share, up 15.0% over the second quarter of 2009;
• Total revenue was a record $157.9 million, up 19.5% on a consolidated basis;
• Same-store skilled mix increased by 284 basis points to 52.9%;
• Same-store skilled revenue increased by 10.4%;
• Consolidated EBITDAR climbed 19.9% to $25.7 million, with consolidated EBITDAR margins of 16.3%; and
• Net income rose 17.5% to $9.6 million for the quarter.

Operating Results

Ensign's President and Chief Executive Officer Christopher Christensen praised Ensign's operational leaders and their teams for the outstanding quality standards maintained during the quarter, noting that financial performance follows clinical excellence. "We understand that our patients, our staff and our business all benefit from one essential thing: high quality care," he said.

He also remarked on progress in the 19 facility acquisitions completed by the Company in 2009 and 2010 to date, noting that all but one are already profitable, and nearly all are running at or ahead of proforma since acquisition. He also reported that Horizon Home Health and Hospice, Ensign's Idaho home health and hospice business which was acquired on May 1, is seeing a surge in census and is also running ahead of proforma.  

Mr. Christensen also referenced Ensign's balance sheet and its industry-low adjusted net-debt-to-EBITDAR ratio of approximately 2.1x. He further noted that the company continues to generate strong cash flow, with net cash from operations of $14.9 million through June 30, 2010. "Our balance sheet, together with our accumulated operating and turnaround expertise, position us well to continue our pattern of disciplined growth," he added.

Fully diluted GAAP earnings per share were $0.46 for the quarter, compared to $0.39 per share in the prior year. Excluding $0.1 million in acquisition expenses and amortization of recently-acquired patient bases, adjusted net income was $9.7 million or $0.46 per diluted share for the quarter.  

A discussion of the company's use of non-GAAP financial measures is set forth below. A reconciliation of net income to EBITDAR and EBITDA, as well as a reconciliation of GAAP earnings per share and net income to adjusted net earnings per share and adjusted net income, appear in the financial data portion of this release.

More complete information is contained in the Company's 10-Q, which was filed with the SEC today and can be viewed on the Company's website at http://www.ensigngroup.net.

2010 Guidance Increased

Management increased its 2010 annual guidance, projecting revenues of $628 million to $638 million, and net income of $1.79 to $1.83 per diluted share for the year. The guidance is based on diluted weighted average common shares outstanding of 21.4 million and assumes, among other things, no additional acquisitions or dispositions beyond those made to date, and an aggregate 1.0% projected decline in overall reimbursement rates. It also assumes that tax rates do not materially increase, and no negative impact associated with the implementation of RUGs IV and MDS 3.0.

Quarter Highlights

During the quarter, the company's Board of Directors declared a quarterly cash dividend of $0.05 per share of Ensign common stock. Ensign has been a dividend-paying company since 2002.

The company also announced the acquisition of two long-term care facilities and a home health and hospice business in two separate transactions during the quarter. The real estate and operations were purchased with cash, and include:

• In Texas, Heritage Gardens Healthcare Center, a 140-bed skilled nursing facility in Carrollton, Texas, and Silver Springs Healthcare Center, a 144-bed skilled nursing facility in Houston, Texas, on May 1, 2010.
• And in Idaho, Horizon Home Health and Hospice, a well-regarded home health and hospice agency based in Meridian, Idaho, also on May 1, 2010.

The two facility acquisitions brought Ensign's growing portfolio to 81 facilities, 51 of which are Ensign-owned, with Ensign affiliates holding purchase options on eight of Ensign's 30 leased facilities. Ensign also owns one home health and two hospice businesses. Management reaffirmed that Ensign is actively seeking additional opportunities to acquire both well-performing and struggling long-term care operations across the Western United States.