Ensign Group(ENSG) - 2024 Q4 - Annual Results

Financial & Operational Highlights The Ensign Group achieved record Q4 and full-year 2024 financial results, demonstrating significant growth in net income, EPS, and revenues, with improved operational metrics Q4 and Full-Year 2024 Performance Summary The Ensign Group achieved record financial results for Q4 and full-year 2024, demonstrating substantial growth in net income and EPS, complemented by improved occupancy and skilled revenue across its facilities Q4 & Full-Year 2024 Key Financial Results | Metric | Full Year 2024 | YoY Change | Q4 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | | GAAP Diluted EPS | $5.12 | +40.3% | $1.36 | +257.9% | | Adjusted Diluted EPS | $5.50 | +15.3% | $1.49 | +16.4% | | GAAP Net Income | $298.0 Million | +42.3% | $79.7 Million | +267.4% | | Adjusted Net Income | $320.5 Million | +17.2% | $87.6 Million | +18.9% | | Consolidated Revenues | $4.26 Billion | +14.2% | $1.13 Billion | +15.5% | - Operational improvements were noted across facility types for the full year 2024 compared to 2023: - Same Facilities Occupancy: Increased by 2.7% - Transitioning Facilities Occupancy: Increased by 4.1% - Same Facilities Skilled Revenue: Increased by 8.6% - Transitioning Facilities Skilled Revenue: Increased by 9.8%[2] - The company experienced strong growth in managed care, with full-year managed care days improving by 6.5% for Same Facilities and 27.8% for Transitioning Facilities compared to the prior year[2] Management Commentary and Outlook Management attributes strong performance to operational execution, provides optimistic 2025 guidance, and highlights a robust acquisition strategy supported by strong liquidity Operating Results Review CEO Barry Port attributed record results to local leadership and caregiver efforts, driven by increased occupancy, skilled days, and managed care census, particularly in transitioning operations - In Q4 2024, same store and transitioning occupancy increased to 81.7% and 77.5%, respectively[3] - Compared to the prior year quarter, Q4 skilled days grew by 3.8% for same store operations and 10.9% for transitioning operations[3] - Managed care census in Q4 saw substantial growth over the prior year quarter, rising 6.6% for same store and 27.7% for transitioning operations[3] 2025 Financial Guidance The company issued its 2025 annual guidance, projecting continued strong growth in revenue and earnings, with the midpoint of EPS guidance representing a 13.8% increase over 2024 2025 Annual Guidance | Metric | Guidance Range | | :--- | :--- | | Annual Revenue | $4.83 billion to $4.91 billion | | Diluted EPS | $6.16 to $6.34 | - The midpoint of the 2025 earnings guidance is 13.8% higher than 2024 results and 31.0% higher than 2023 results[4] - Guidance is based on approximately 59.5 million diluted weighted average common shares and a 25.0% tax rate[5] Growth, Acquisitions, and Liquidity Management emphasized a strong acquisition pipeline, adding 38 operations since 2024, supported by robust liquidity with significant cash and available credit for sustainable growth - The company acquired 38 new operations during 2024 and since, including 12 during Q4 and post-quarter-end[5] - Ensign's acquisition strategy focuses on adding density in known markets and carefully choosing accretive opportunities[5] - The company reports strong liquidity with approximately $464.6 million of cash on hand and $572.1 million of available capacity under its line-of-credit[5] Growth and Real Estate Portfolio The company expanded its portfolio through strategic acquisitions across multiple states, increasing healthcare operations and real estate assets, while its Standard Bearer segment continued to generate significant rental revenue Recent Acquisitions The company expanded its portfolio through several Q4 and post-quarter acquisitions, adding skilled nursing and senior living facilities, and real estate assets across five states to increase market density - Acquisitions were completed across five states: Alabama, Tennessee, Nebraska, Wisconsin, and Texas[6] - New leased operations include facilities in Huntsville, AL; Pulaski, TN; Knoxville, TN; and Lubbock, TX, among others[6][10] - The company, through its Standard Bearer subsidiary, acquired the real estate for four operations in Texas and three senior living assets in Wisconsin operated by a third party[7][10] Portfolio and Standard Bearer Overview Ensign's portfolio includes 334 healthcare operations across 15 states, with 134 owned real estate assets, while its Standard Bearer segment generated $25.1 million in Q4 rental revenue, and the company increased its dividend for the 22nd consecutive year - The total portfolio consists of 334 healthcare operations, with the company owning 134 real estate assets[7] - The Standard Bearer segment comprises 129 owned properties. In Q4, it generated $25.1 million in rental revenue and $15.3 million in Funds from Operations (FFO)[8] - The company paid a quarterly cash dividend of $0.0625 per share and increased its dividend for the 22nd consecutive year in December 2024[9] Consolidated Financial Statements (GAAP) The company's GAAP financial statements show significant revenue and net income growth for fiscal year 2024, with a strengthened balance sheet and effective cash flow management Consolidated Statements of Income For fiscal year 2024, The Ensign Group achieved total revenues of $4.26 billion, a 14.2% increase, with net income attributable to the company growing significantly to $298.0 million, resulting in a diluted EPS of $5.12 Full-Year Income Statement Highlights (in thousands) | Metric | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $4,260,485 | $3,729,355 | +14.2% | | Income from Operations | $358,304 | $255,367 | +40.3% | | Net Income Attributable to ENSG | $297,973 | $209,399 | +42.3% | | Diluted EPS | $5.12 | $3.65 | +40.3% | Consolidated Balance Sheets As of December 31, 2024, the company's balance sheet strengthened, with total assets growing to $4.67 billion from $4.18 billion in 2023, supported by an increase in total equity to $1.84 billion Balance Sheet Highlights (in thousands) | Metric | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $464,598 | $509,626 | | Total Current Assets | $1,157,632 | $1,046,930 | | Total Assets | $4,669,356 | $4,177,541 | | Total Liabilities | $2,828,928 | $2,680,224 | | Total Equity | $1,840,428 | $1,497,317 | Consolidated Statements of Cash Flows For the year ended December 31, 2024, net cash provided by operating activities was $347.2 million, while $390.1 million was used in investing activities, with cash and cash equivalents ending at $464.6 million Full-Year Cash Flow Summary (in thousands) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $347,186 | $376,666 | | Net cash used in investing activities | ($390,052) | ($182,698) | | Net cash used in financing activities | ($2,162) | ($612) | | Net (decrease) increase in cash | ($45,028) | $193,356 | | Cash at end of period | $464,598 | $509,626 | Non-GAAP Financial Measures and Reconciliations The company provides non-GAAP financial measures like adjusted net income, EPS, EBITDA, and Adjusted EBITDA, offering a clearer view of core operating performance by excluding specific items Reconciliation of GAAP to Non-GAAP Net Income The company presents non-GAAP net income and EPS, excluding specific items, with fiscal year 2024 adjusted net income at $320.5 million and adjusted diluted EPS at $5.50, compared to GAAP figures of $298.0 million and $5.12, respectively FY 2024 GAAP vs. Non-GAAP Results | Metric | GAAP | Non-GAAP (Adjusted) | | :--- | :--- | :--- | | Net Income | $298.0 Million | $320.5 Million | | Diluted EPS | $5.12 | $5.50 | Q4 2024 GAAP vs. Non-GAAP Results | Metric | GAAP | Non-GAAP (Adjusted) | | :--- | :--- | :--- | | Net Income | $79.7 Million | $87.6 Million | | Diluted EPS | $1.36 | $1.49 | Reconciliation to EBITDA and Adjusted EBITDA The company reconciles net income to EBITDA and Adjusted EBITDA for operational insight, with fiscal year 2024 Adjusted EBITDA reaching $490.4 million, an increase from $425.8 million in 2023, and Q4 2024 Adjusted EBITDA at $133.6 million EBITDA and Adjusted EBITDA (in thousands) | Metric | Full Year 2024 | Full Year 2023 | Q4 2024 | Q4 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $79,750 | $21,823 | $298,458 | $209,850 | | EBITDA | $122,874 | $45,956 | $449,284 | $333,569 | | Adjusted EBITDA | $133,626 | $112,905 | $490,392 | $425,762 | Key Performance Indicators Key performance indicators show overall portfolio growth, improved occupancy rates across facility types, and detailed insights into skilled nursing revenue rates and payor mix Facility Performance Statistics In 2024, the company's total facility portfolio grew to 286 facilities, with overall occupancy rising to 80.5%, and both Same and Transitioning Facilities showing improved occupancy rates Full-Year 2024 vs 2023 Facility Metrics | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Total Facilities at period end | 286 | 259 | | Total Occupancy Percentage | 80.5% | 78.5% | | Same Facility Occupancy % | 81.3% | 79.2% | | Transitioning Facility Occupancy % | 76.0% | 73.0% | Q4 2024 vs 2023 Facility Metrics | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Total Occupancy Percentage | 80.9% | 79.2% | | Same Facility Occupancy % | 81.7% | 79.9% | | Transitioning Facility Occupancy % | 77.5% | 74.0% | Skilled Nursing Revenue Rates and Payor Mix For full-year 2024, the total average skilled nursing daily revenue rate increased to $398.66, with skilled mix at 48.6% of revenue, and Medicare and Medicaid collectively comprising 65.8% of total skilled nursing revenue Full-Year 2024 Average Daily Revenue Rates (Total Facilities) | Payor | 2024 Rate | 2023 Rate | | :--- | :--- | :--- | | Medicare | $767.72 | $733.47 | | Managed Care | $555.37 | $539.25 | | Medicaid | $294.78 | $272.14 | | Total Skilled Nursing | $398.66 | $378.02 | Full-Year 2024 Revenue by Payor (Total Facilities) | Payor | % of Revenue | | :--- | :--- | | Medicare | 21.9% | | Managed Care | 18.6% | | Other Skilled | 8.1% | | Medicaid | 43.9% | | Private & Other | 7.5% | Revenue by Payor Source For fiscal year 2024, total service revenue was $4.24 billion, with government payors (Medicaid & Medicare) accounting for 70.9%, managed care for 18.6%, and private/other sources for 10.5% Full-Year 2024 Service Revenue by Payor Source | Payor Source | Revenue (in thousands) | % of Revenue | | :--- | :--- | :--- | | Medicaid & Medicare | $3,004,308 | 70.9% | | Managed Care | $789,643 | 18.6% | | Private and other | $443,574 | 10.5% | | Total Service Revenue | $4,237,525 | 100.0% | Segment Reporting Segment reporting highlights strong financial performance in both Skilled Services and Standard Bearer real estate segments, with significant growth in income, Adjusted EBITDA, and rental revenue Skilled Services Segment The Skilled Services segment reported income of $518.5 million for fiscal year 2024, up from $464.9 million in 2023, with Adjusted EBITDA growing to $588.8 million, demonstrating strong operational performance Skilled Services Segment Performance (in thousands) | Metric | Full Year 2024 | Full Year 2023 | Q4 2024 | Q4 2023 | | :--- | :--- | :--- | :--- | :--- | | Segment Income | $518,463 | $464,925 | $140,980 | $116,756 | | Adjusted EBITDA | $588,750 | $527,186 | $159,489 | $136,869 | Standard Bearer Segment The Standard Bearer real estate segment generated $95.1 million in total rental revenue for fiscal year 2024, a 15.3% increase, with Funds from Operations (FFO) growing 8.0% to $58.6 million Standard Bearer Segment Performance (in thousands) | Metric | Full Year 2024 | Full Year 2023 | Q4 2024 | Q4 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Rental Revenue | $95,086 | $82,486 | $25,102 | $21,875 | | FFO | $58,632 | $54,270 | $15,261 | $14,225 | Appendix The appendix provides essential company information, including operational scope and details on the definitions and purpose of non-GAAP financial measures used in reporting Company Information The Ensign Group, Inc. operates 334 healthcare facilities across 15 states through its subsidiaries, providing post-acute services and investing in real estate, with a conference call scheduled for February 6, 2025 - The company's subsidiaries provide skilled nursing, senior living, and therapy services at 334 healthcare facilities in 15 states[12] - A conference call and webcast to discuss Q4 and FY 2024 results was scheduled for February 6, 2025[11] Discussion of Non-GAAP Financial Measures The company utilizes non-GAAP measures like EBITDA, Adjusted EBITDA, and FFO to supplement GAAP results, believing they offer valuable insights into operating performance by excluding specific infrequent or non-cash expenses, though they are not substitutes for GAAP - EBITDA is defined as net income before interest income, taxes, depreciation, and amortization, and interest expense[56] - Adjusted EBITDA further excludes items such as stock-based compensation, acquisition costs, certain litigation, and system implementation costs[56] - FFO for the Standard Bearer segment is calculated per the National Association of Real Estate Investment Trusts definition, excluding gains/losses from real estate sales and adding back depreciation[56]