Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2021 | Apr. 26, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-33757 | |
Entity Registrant Name | ENSIGN GROUP, INC | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 33-0861263 | |
Entity Address, Address Line One | 29222 Rancho Viejo Road, Suite 127 | |
Entity Address, City or Town | San Juan Capistrano | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92675 | |
City Area Code | 949 | |
Local Phone Number | 487-9500 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | ENSG | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 54,977,473 | |
Entity Central Index Key | 0001125376 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 155,527 | $ 236,562 |
Accounts receivable—less allowance for doubtful accounts of $11,090 and $8,718 at March 31, 2021 and December 31, 2020, respectively | 312,578 | 305,062 |
Investments—current | 14,623 | 13,449 |
Prepaid income taxes | 0 | 1,224 |
Prepaid expenses and other current assets | 30,588 | 26,659 |
Total current assets | 513,316 | 582,956 |
Property and equipment, net | 779,269 | 778,244 |
Right-of-use assets | 1,050,506 | 1,025,510 |
Insurance subsidiary deposits and investments | 34,370 | 32,105 |
Escrow deposits | 350 | 100 |
Deferred tax assets | 32,424 | 32,424 |
Restricted and other assets | 41,422 | 33,155 |
Intangible assets, net | 2,828 | 2,899 |
Goodwill | 54,469 | 54,469 |
Other indefinite-lived intangibles | 3,546 | 3,716 |
Total assets | 2,512,500 | 2,545,578 |
Current liabilities: | ||
Accounts payable | 53,942 | 50,901 |
Accrued wages and related liabilities (Note 3) | 203,420 | 236,614 |
Lease liabilities—current | 50,056 | 48,187 |
Accrued self-insurance liabilities—current | 35,135 | 34,396 |
Advance payment liabilities (Note 3) | 0 | 102,023 |
Other accrued liabilities | 97,639 | 87,318 |
Current maturities of long-term debt | 2,828 | 2,960 |
Total current liabilities | 443,020 | 562,399 |
Long-term debt—less current maturities | 111,859 | 112,544 |
Long-term lease liabilities—less current portion | 973,679 | 950,320 |
Accrued self-insurance liabilities—less current portion | 66,742 | 62,402 |
Other long-term liabilities | 41,620 | 39,686 |
Total liabilities | 1,636,920 | 1,727,351 |
Commitments and contingencies (Notes 15, 17 and 18) | ||
Ensign Group, Inc. stockholders' equity: | ||
Common stock: $0.001 par value; 100,000 shares authorized; 57,744 and 54,953 shares issued and outstanding at March 31, 2021, respectively, and 57,417 and 54,626 shares issued and outstanding at December 31, 2020, respectively | 58 | 58 |
Additional paid-in capital | 349,836 | 338,177 |
Retained earnings | 597,375 | 551,055 |
Common stock in treasury, at cost, 2,791 shares at both periods ended March 31, 2021 and December 31, 2020 (Note 19) | (71,222) | (71,213) |
Total Ensign Group, Inc. stockholders' equity | 876,047 | 818,077 |
Non-controlling interest | (467) | 150 |
Total equity | 875,580 | 818,227 |
Total liabilities and equity | $ 2,512,500 | $ 2,545,578 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 11,090 | $ 8,718 |
Common stock, par value (usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 57,744,000 | 57,417,000 |
Common stock, shares outstanding (in shares) | 54,953,000 | 54,626,000 |
Common stock in treasury, at cost (in shares) | 2,791,000 | 2,791,000 |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Total revenue | $ 627,253 | $ 589,613 |
Expense: | ||
Cost of services | 482,186 | 454,521 |
Rent—cost of services | 33,456 | 32,330 |
General and administrative expense | 34,273 | 32,249 |
Depreciation and amortization | 13,659 | 13,720 |
Total expenses | 563,574 | 532,820 |
Income from operations | 63,679 | 56,793 |
Other income (expense): | ||
Interest expense | (1,641) | (3,665) |
Interest and other income | 748 | 698 |
Other expense, net | (893) | (2,967) |
Income before provision for income taxes | 62,786 | 53,826 |
Provision for income taxes | 12,949 | 12,625 |
Net income | 49,837 | 41,201 |
Less: | ||
Net income attributable to noncontrolling interests | 631 | 352 |
Net income attributable to The Ensign Group, Inc. | $ 49,206 | $ 40,849 |
Net income per share attributable to The Ensign Group, Inc.: | ||
Basic income per share attributable to The Ensign Group, Inc. (in dollars per share) | $ 0.91 | $ 0.76 |
Diluted income per share attributable to The Ensign Group, Inc.(in dollars per share) | $ 0.86 | $ 0.73 |
Weighted average common shares outstanding: | ||
Basic (in shares) | 54,192 | 53,475 |
Diluted (in shares) | 56,891 | 55,796 |
Service revenue | ||
Total revenue | $ 623,276 | $ 585,951 |
Rental revenue | ||
Total revenue | $ 3,977 | $ 3,662 |
UNAUDITED CONDENSED CONSOLIDA_4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Non-Controlling Interest |
Balance at beginning of period (in shares) at Dec. 31, 2019 | 53,487 | 2,079 | ||||
Balance at beginning of period at Dec. 31, 2019 | $ 656,144 | $ 56 | $ 307,914 | $ 391,523 | $ (45,296) | $ 1,947 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock to employees and directors resulting from the exercise of stock options and grant of stock awards (in shares) | 148 | |||||
Issuance of common stock to employees and directors resulting from the exercise of stock options | 1,552 | 1,552 | ||||
Issuance of restricted stock (in shares) | 723 | |||||
Issuance of restricted stock, net of forfeitures | 3,086 | $ 1 | 3,085 | |||
Dividends declared | (2,683) | (2,683) | ||||
Employee stock award compensation | 3,235 | 3,235 | ||||
Repurchase of common stock (in shares) | (692) | 692 | ||||
Repurchase of common stock | (25,000) | $ (25,000) | ||||
Net income attributable to noncontrolling interests | 352 | 352 | ||||
Distribution to noncontrolling interest holder | (720) | (720) | ||||
Net income attributable to the Ensign Group, Inc. | 40,849 | 40,849 | ||||
Balance at end of period (in shares) at Mar. 31, 2020 | 53,666 | 2,771 | ||||
Balance at end of period at Mar. 31, 2020 | 676,815 | $ 57 | 315,786 | 429,689 | $ (70,296) | 1,579 |
Balance at beginning of period (in shares) at Dec. 31, 2020 | 54,626 | 2,791 | ||||
Balance at beginning of period at Dec. 31, 2020 | 818,227 | $ 58 | 338,177 | 551,055 | $ (71,213) | 150 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock to employees and directors resulting from the exercise of stock options and grant of stock awards (in shares) | 246 | |||||
Issuance of common stock to employees and directors resulting from the exercise of stock options | 3,880 | 3,880 | ||||
Issuance of restricted stock (in shares) | 81 | |||||
Issuance of restricted stock, net of forfeitures | 3,725 | $ 0 | 3,725 | |||
Shares of common stock used to satisfy tax withholding obligations | (9) | $ (9) | ||||
Dividends declared | (2,886) | (2,886) | ||||
Employee stock award compensation | 4,054 | 4,054 | ||||
Net income attributable to noncontrolling interests | 631 | 631 | ||||
Distribution to noncontrolling interest holder | (1,248) | (1,248) | ||||
Net income attributable to the Ensign Group, Inc. | 49,206 | 49,206 | ||||
Balance at end of period (in shares) at Mar. 31, 2021 | 54,953 | 2,791 | ||||
Balance at end of period at Mar. 31, 2021 | $ 875,580 | $ 58 | $ 349,836 | $ 597,375 | $ (71,222) | $ (467) |
UNAUDITED CONDENSED CONSOLIDA_5
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Stockholders' Equity [Abstract] | ||
Dividends per share (in dollars per share) | $ 0.0525 | $ 0.0500 |
UNAUDITED CONDENSED CONSOLIDA_6
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities: | ||
Net income | $ 49,837 | $ 41,201 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 13,659 | 13,720 |
Amortization of deferred financing fees | 210 | 210 |
Non-cash leasing arrangement | 112 | 125 |
Deferred income taxes | 0 | 1,003 |
Provision for doubtful accounts | 2,560 | 1,312 |
Stock-based compensation | 4,054 | 3,235 |
(Gain)/loss on sale of asset disposals | (236) | 101 |
Change in operating assets and liabilities | ||
Accounts receivable | (15,449) | (21,845) |
Prepaid income taxes | 1,224 | 739 |
Prepaid expenses and other assets | (4,271) | (1,589) |
Cash surrender value of life insurance policy premiums | (7,440) | (3,712) |
Operating lease obligations | (133) | (181) |
Deferred compensation liability | 7,459 | 3,660 |
Accounts payable | 2,768 | (3,257) |
Accrued wages and related liabilities | (34,562) | (16,381) |
Income taxes payable | 11,791 | 10,882 |
Other accrued liabilities | (1,737) | (4,040) |
Accrued self-insurance liabilities | 4,615 | 1,985 |
Other long-term liabilities | (167) | (45) |
Net cash provided by operating activities | 34,294 | 27,123 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (15,334) | (15,810) |
Cash payments for asset acquisitions (Note 8) | 0 | (14,054) |
Escrow deposits | (250) | 0 |
Escrow deposits used to fund acquisitions | 0 | 14,050 |
Cash proceeds from insurance proceeds | 6,250 | 0 |
Cash proceeds from the sale of assets and ancillary business | 840 | 121 |
Purchases of investments | (6,869) | (1,008) |
Maturities of investments | 3,430 | 1,396 |
Other restricted assets | (279) | (237) |
Net cash used in investing activities | (12,212) | (15,542) |
Cash flows from financing activities: | ||
Proceeds from revolving credit facility and other debt (Note 15) | 0 | 260,000 |
Payments on revolving credit facility and other debt (Note 15) | (849) | (240,666) |
Issuance of common stock upon exercise of options | 3,880 | 1,552 |
Repurchase of shares of common stock to satisfy tax withholding obligations | (9) | 0 |
Repurchase of shares of common stock (Note 19) | 0 | (25,000) |
Dividends paid | (2,868) | (2,705) |
Non-controlling interest distribution | (1,248) | (720) |
Proceeds from CARES Act Provider Relief Fund (Note 3) | 9,139 | 0 |
Repayments of CARES Act Provider Relief Fund and Medicare Advance Payment Program(Note 3) | (111,162) | 0 |
Net cash used in financing activities | (103,117) | (7,539) |
Net (decrease)/increase in cash and cash equivalents | (81,035) | 4,042 |
Cash and cash equivalents beginning of period | 236,562 | 59,175 |
Cash and cash equivalents end of period | 155,527 | 63,217 |
Cash paid during the period for: | ||
Interest | 1,427 | 4,835 |
Lease liabilities | 33,339 | 32,481 |
Non-cash financing and investing activity: | ||
Accrued capital expenditures | 3,800 | 3,300 |
Accrued dividends declared | 2,886 | 2,683 |
Right-of-use assets obtained in exchange for new operating lease obligations | $ 37,471 | $ 8,370 |
Description of Business
Description of Business | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | DESCRIPTION OF BUSINESS The Company — The Ensign Group, Inc. (collectively, Ensign or the Company), is a holding company with no direct operating assets, employees or revenue. The Company, through its operating subsidiaries, is a provider of health care services across the post-acute care continuum, engaged in the ownership, acquisition, development and leasing of skilled nursing, senior living and other healthcare-related properties, and other ancillary businesses. As of March 31, 2021, the Company operated 232 facilities and other ancillary operations located in Arizona, California, Colorado, Idaho, Iowa, Kansas, Nebraska, Nevada, South Carolina, Texas, Utah, Washington and Wisconsin. The Company's operating subsidiaries, each of which strives to be the operation of choice in the community it serves, provide a broad spectrum of skilled nursing, senior living and other ancillary services. The Company's operating subsidiaries have a collective capacity of approximately 23,600 operational skilled nursing beds and 2,200 senior living units. As of March 31, 2021, the Company operated 168 facilities under long-term lease arrangements, and had options to purchase 11 of those 168 facilities. The Company's real estate portfolio includes 94 owned real estate properties, which included 64 facilities operated and managed by the Company, 31 senior living operations leased to and operated by The Pennant Group, Inc., or Pennant, as part of the spin-off transaction that occurred in October 2019, and the Service Center location. Of those 31 senior living operations, two are located on the same real estate properties as skilled nursing facilities that the Company owns and operates. Certain of the Company’s wholly-owned independent subsidiaries, collectively referred to as the Service Center, provide specific accounting, payroll, human resources, information technology, legal, risk management and other centralized services to the other operating subsidiaries through contractual relationships with such subsidiaries. The Company also has a wholly-owned captive insurance subsidiary (the Captive) that provides some claims-made coverage to the Company’s operating subsidiaries for general and professional liabilities, as well as coverage for certain workers’ compensation insurance liabilities. Each of the Company's affiliated operations are operated by separate, wholly-owned, independent subsidiaries that have their own management, employees and assets. References herein to the consolidated “Company” and “its” assets and activities in this Quarterly Report is not meant to imply, nor should it be construed as meaning that The Ensign Group, Inc. has direct operating assets, employees or revenue, or that any of the subsidiaries, are operated by The Ensign Group, Inc. Segment Updates — In the fourth quarter of 2020, the Company began reporting the results of its real estate portfolio as a new segment. The Company has two reportable segments: (1) transitional and skilled services and (2) real estate. Refer to Note 7, Business Segments , for additional information. Corresponding items of segment information for prior periods have been recast to reflect the change of the Company’s segment structure. This structure reflects its current operational and financial management, and provides the best structure for the Company to focus on growth and investing opportunities while maintaining financial discipline. Other Information — The accompanying condensed consolidated financial statements as of March 31, 2021 and for the three months ended March 31, 2021 and 2020 (collectively, the Interim Financial Statements) are unaudited. Certain information and note disclosures normally included in annual consolidated financial statements have been condensed or omitted, as permitted under applicable rules and regulations. Readers of the Interim Financial Statements should refer to the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2020 which are included in the Company’s Annual Report on Form 10-K, File No. 001-33757 (the Annual Report) filed with the Securities and Exchange Commission (SEC). Management believes that the Interim Financial Statements reflect all adjustments which are of a normal and recurring nature necessary to present fairly the Company’s financial position and results of operations in all material respects. The results of operations presented in the Interim Financial Statements are not necessarily representative of operations for the entire year. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation — The accompanying Interim Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). The Company is the sole member or stockholder of various consolidated limited liability companies and corporations established to operate various acquired skilled nursing operations, senior living operations and related ancillary services. All intercompany transactions and balances have been eliminated in consolidation. The Company presents noncontrolling interests within the equity section of its condensed consolidated balance sheets and the amount of consolidated net income that is attributable to The Ensign Group, Inc. and the noncontrolling interest in its condensed consolidated statements of income. The condensed consolidated financial statements include the accounts of all entities controlled by the Company through its ownership of a majority voting interest. Additionally, the accounts of any variable interest entities (VIEs) where the Company is subject to a majority of the risk of loss from the VIE's activities are entitled to receive a majority of the entity's residual returns, or both. The Company assesses the requirements related to the consolidation of VIEs, including a qualitative assessment of power and economics that considers which entity has the power to direct the activities that "most significantly impact" the VIE's economic performance and has the obligation to absorb losses of, or the right to receive benefits that could be potentially significant to, the VIE. The Company's relationship with variable interest entities was not material during the three months ended March 31, 2021 and 2020. Reclassifications — Certain prior period results have been reclassified to be consistent with the current period presentation. Prior period results also reflect reclassifications, for comparative purposes, related to the change in the Company's segment structure. Refer to Note 7, Business Segments , for additional information related to segments. Prior to the fourth quarter of 2020, the Company only presented total revenue for all revenue services. As a result of the change in segments, the presentation of the Company's service revenue and rental revenue are presented separately on the Company's Condensed Consolidated Statements of Income. The reclassifications had no effect on the reported condensed consolidated results of operations. Estimates and Assumptions — The preparation of Interim Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Interim Financial Statements and the reported amounts of revenue and expenses during the reporting periods. The most significant estimates in the Company’s Interim Financial Statements relate to revenue, acquired property and equipment, intangible assets and goodwill, right-of-use-assets, impairment of long-lived assets, lease liabilities, general and professional liabilities, workers' compensation and healthcare claims included in accrued self-insurance liabilities, and income taxes. Actual results could differ from those estimates. Fair Value of Financial Instruments — The Company’s financial instruments consist principally of cash and cash equivalents, debt security investments, accounts receivable, insurance subsidiary deposits, accounts payable and borrowings. The Company believes all of the financial instruments’ recorded values approximate fair values because of their nature or respective short durations. Contracts insuring the lives of certain employees who are eligible to participate in non-qualified deferred compensation plans are held in a rabbi trust. Cash surrender value of the contracts is based on performance measurement funds that shadow the deferral investment allocations made by participants in the deferred compensation plan. The fair value of the pooled investment funds is derived using Level 2 inputs. Service Revenue Recognition — The Company recognizes revenue in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606). S ee Note 4, Revenue and Accounts Receivable. Rental Revenue Recognition — The Company recognizes rental revenue for operating leases on a straight-line basis over the lease term when collectability of all minimum lease payments is probable (ASC 842). See Note 4, Revenue and Accounts Receivable. Accounts Receivable and Allowance for Doubtful Accounts — Accounts receivable consist primarily of amounts due from Medicare and Medicaid programs, other government programs, managed care health plans and private payor sources, net of estimates for variable consideration. The allowance for doubtful accounts reflects the Company’s best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on known troubled accounts and other currently available evidence. Property and Equipment — Property and equipment are initially recorded at their historical cost. Repairs and maintenance are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the depreciable assets (ranging from three Leases and Leasehold Improvements — The Company leases skilled nursing facilities, senior living facilities and commercial office space. On January 1, 2019, the Company adopted Accounting Standards Codification Topic 842, Leases (ASC 842), electing the transition method that allows it to apply the standard as of the adoption date and record a cumulative adjustment in retained earnings. The Company determines if an arrangement is a lease at the inception of each lease. At the inception of each lease, the Company performs an evaluation to determine whether the lease should be classified as an operating or finance lease. As of March 31, 2021, the Company does not have any leases that are classified as finance leases. Rights and obligations of operating leases are included as right-of-use assets, current lease liabilities and long-term lease liabilities on the Company's condensed consolidated balance sheet. As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at lease commencement date in determining the present value of future lease payments. The Company utilized a third-party valuation specialist to assist in estimating the incremental borrowing rate. The Company records rent expense for operating leases on a straight-line basis over the term of the lease. The lease term used for straight-line rent expense is calculated from the date the Company is given control of the leased premises through the end of the lease term. Renewals are not assumed in the determination of the lease term unless they are deemed to be reasonably assured at the inception of the lease. The lease term used for this evaluation also provides the basis for establishing depreciable lives for buildings subject to lease and leasehold improvements. The Company recognizes lease expense for leases with an initial term of 12 months or less on a straight-line basis over the lease term. These leases are not recorded on the condensed consolidated balance sheet. Certain of the Company's lease agreements include rental payments that are adjusted periodically for inflation. The lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company does not have material subleases. Impairment of Long-Lived Assets — The Company reviews the carrying value of long-lived assets that are held and used in the Company’s operating subsidiaries for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of these assets is determined based upon expected undiscounted future net cash flows from the operating subsidiaries to which the assets relate, utilizing management’s best estimate, appropriate assumptions, and projections at the time. If the carrying value is determined to be unrecoverable from future operating cash flows, the asset is deemed impaired and an impairment loss would be recognized to the extent the carrying value exceeded the estimated fair value of the asset. The Company estimates the fair value of assets based on the estimated future discounted cash flows of the asset. Management has evaluated its long-lived assets and determined there was no impairment during the three months ended March 31, 2021 and 2020. Intangible Assets and Goodwill — Definite-lived intangible assets consist primarily of patient base, facility trade names and customer relationships. Patient base is amortized over a period of four The Company's indefinite-lived intangible assets consist of trade names, and Medicare and Medicaid licenses. The Company tests indefinite-lived intangible assets for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable. Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations. Goodwill is subject to annual testing for impairment. In addition, goodwill is tested for impairment if events occur or circumstances indicate that its carrying value may not be recoverable. The Company performs its annual test for impairment during the fourth quarter of each year. The Company did not identify any goodwill or intangible asset impairment during the three months ended March 31, 2021 and 2020. Self-Insurance — The Company is partially self-insured for general and professional liability claims up to a base amount per claim (the self-insured retention) with an aggregate, one-time deductible above this limit. Losses beyond these amounts are insured through third-party policies with coverage limits per claim, per location and on an aggregate basis for the Company. The combined self-insured retention is $500 per claim, subject to an additional one-time deductible of $750 for California affiliated operations and a separate, one-time, deductible of $1,000 for non-California operations. For all affiliated operations, except those located in Colorado, the third-party coverage above these limits is $1,000 per claim, $3,000 per operation, with a $5,000 blanket aggregate limit and an additional state-specific aggregate where required by state law. In Colorado, the third-party coverage above these limits is $1,000 per claim and $3,000 per operation, which is independent of the aforementioned blanket aggregate limits that apply outside of Colorado. The self-insured retention and deductible limits for general and professional liabilities and workers' compensation liabilities for all states (except Texas and Washington for workers' compensation) are self-insured through the Captive, the related assets and liabilities of which are included in the accompanying condensed consolidated balance sheets. The Captive is subject to certain statutory requirements as an insurance provider. The Company’s policy is to accrue amounts equal to the actuarial estimated costs to settle open claims of insureds, as well as an estimate of the cost of insured claims that have been incurred but not reported. The Company develops information about the size of the ultimate claims based on historical experience, current industry information and actuarial analysis, and evaluates the estimates for claim loss exposure on a quarterly basis. The Company uses actuarial valuations to estimate the liability based on historical experience and industry information. Accrued general liability and professional malpractice liabilities on an undiscounted basis, net of anticipated insurance recoveries, were $60,761 and $57,628 as of March 31, 2021 and December 31, 2020, respectively. The Company’s operating subsidiaries are self-insured for workers’ compensation liabilities in California. To protect itself against loss exposure in California with this policy, the Company has purchased individual specific excess insurance coverage that insures individual claims that exceed $625 per occurrence. In Texas, the operating subsidiaries have elected non-subscriber status for workers’ compensation claims and the Company has purchased individual stop-loss coverage that insures individual claims that exceed $750 per occurrence. The Company’s operating subsidiaries in all other states, with the exception of Washington, are under a loss sensitive plan that insures individual claims that exceed $350 per occurrence. In Washington, the operating subsidiaries' coverage is financed through premiums paid by the employers and employees. The claims and benefit payments are managed through a state insurance pool. Outside of California, Texas and Washington, the Company has purchased insurance coverage that insures individual claims that exceed $350 per occurrence. In all states except Washington, the Company accrues amounts equal to the estimated costs to settle open claims, as well as an estimate of the cost of claims that have been incurred but not reported. The Company uses actuarial valuations to estimate the liability based on historical experience and industry information. Accrued workers’ compensation liabilities are recorded on an undiscounted basis in the accompanying condensed consolidated balance sheets and were $25,078 and $24,499 as of March 31, 2021 and December 31, 2020, respectively. Effective April 1, 2021, the Company's operating subsidiaries in Washington are covered under the Company's self-insured program and the Company purchased individual specific excess insurance coverage that insures individual claims that exceed $500 per occurrence. In addition, the Company has recorded an asset and equal liability of $7,602 and $7,138 as of March 31, 2021 and December 31, 2020, respectively, in order to present the ultimate costs of malpractice and workers' compensation claims and the anticipated insurance recoveries on a gross basis. See Note 12 Restricted and Other Assets. The Company self-funds medical (including prescription drugs) and dental healthcare benefits to the majority of its employees. The Company is fully liable for all financial and legal aspects of these benefit plans. To protect itself against loss exposure with this policy, the Company has purchased individual stop-loss insurance coverage that insures individual claims that exceed $500 for each covered person for fiscal year 2021. The Company’s accrued liability under these plans recorded on an undiscounted basis in the accompanying condensed consolidated balance sheets was $8,436 and $7,533 as of March 31, 2021 and December 31, 2020, respectively. The Company believes that adequate provision has been made in the Interim Financial Statements for liabilities that may arise out of patient care, workers’ compensation, healthcare benefits and related services provided to date. The amount of the Company’s reserves was determined based on an estimation process that uses information obtained from both company-specific and industry data. This estimation process requires the Company to continuously monitor and evaluate the life cycle of the claims. Using data obtained from this monitoring and the Company’s assumptions about emerging trends, the Company, with the assistance of an independent actuary, develops information about the size of ultimate claims based on the Company’s historical experience and other available industry information. The most significant assumptions used in the estimation process include determining the trend in costs, the expected cost of claims incurred but not reported and the expected costs to settle or pay damage awards with respect to unpaid claims. The self-insured liabilities are based upon estimates, and while management believes that the estimates of loss are reasonable, the ultimate liability may be in excess of or less than the recorded amounts. Due to the inherent volatility of actuarially determined loss estimates, it is reasonably possible that the Company could experience changes in estimated losses that could be material to net income. If the Company’s actual liabilities exceed its estimates of losses, its future earnings, cash flows and financial condition would be adversely affected. Income Taxes — Deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities at tax rates in effect when such temporary differences are expected to reverse. The Company generally expects to fully utilize its deferred tax assets; however, when necessary, the Company records a valuation allowance to reduce its net deferred tax assets to the amount that is more likely than not to be realized. In determining the need for a valuation allowance or the need for and magnitude of liabilities for uncertain tax positions, the Company makes certain estimates and assumptions. These estimates and assumptions are based on, among other things, knowledge of operations, markets, historical trends and likely future changes and, when appropriate, the opinions of advisors with knowledge and expertise in certain fields. Due to certain risks associated with the Company’s estimates and assumptions, actual results could differ. Noncontrolling Interest — The noncontrolling interest in a subsidiary is initially recognized at estimated fair value on the acquisition date and is presented within total equity in the Company's condensed consolidated balance sheets. The Company presents the noncontrolling interest and the amount of consolidated net income attributable to The Ensign Group, Inc. in its condensed consolidated statements of income. Net income per share is calculated based on net income attributable to The Ensign Group, Inc.'s stockholders. The carrying amount of the noncontrolling interest is adjusted based on an allocation of subsidiary earnings based on ownership interest. Stock-Based Compensation — The Company measures and recognizes compensation expense for all stock-based payment awards made to employees and directors including employee stock options based on estimated fair values, ratably over the requisite service period of the award. Net income has been reduced as a result of the recognition of the fair value of all stock options and restricted stock awards issued, the amount of which is contingent upon the number of future grants and other variables. Recent Accounting Pronouncements — Except for rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws and a limited number of grandfathered standards, the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. For any new pronouncements announced, the Company considers whether the new pronouncements could alter previous generally accepted accounting principles and determines whether any new or modified principles will have a material impact on the Company's reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company's financial management and certain standards are under consideration. Recent Accounting Standards Adopted by the Company In December 2019, the FASB issued Accounting Standards Update (ASU) 2019-12 "Simplifying the Accounting for Income Taxes (Topic 740)" as part of its simplification initiative to reduce the cost and complexity in accounting for income taxes. ASU 2019-12 removes certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also amends other aspects of the guidance to help simplify and promote consistent application of GAAP. The Company adopted this standard on January 1, 2021 and determined there was no material impact on the Company's financial position, results of operations and liquidity. In May 2020, the SEC issued Final Rule Release No. 33-10786 “ Amendments to Financial Disclosures about Acquired and Disposed Businesses ” (“SEC Rule 33-10786”), which amends the disclosure requirements applicable to acquisitions and dispositions of businesses. Amendments within SEC Rule 33-10786 primarily impact (1) the tests and thresholds used to determine the significance of acquisitions and dispositions; (2) the form and content of pro forma information required to be disclosed in connection with significant acquisitions and dispositions; (3) acquiree financial statement requirements; and (4) thresholds used to determine the significance of acquisitions and dispositions of real estate operations, and related financial statement requirements, among others. The Company adopted this standard on January 1, 2021 and determined there was no material impact on the Company's condensed consolidated financial statements. Accounting Standards Recently Issued but Not Yet Adopted by the Company In February 2020, the FASB issued ASU 2020-04 "Reference Rate Reform (Topic 848)," which provides temporary, optional practical expedients and exceptions to enable a smoother transition to reference rates which are expected to replace LIBOR reference rates. Adoption of the provisions of ASU 2020-04 is optional. The amendments are effective for all entities from the beginning of the interim period that includes the issuance date of the ASU. An entity may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the impact of ASU 2020-04 on its financial position, results of operations and liquidity. In November 2020, the SEC issued final rules 33-10890 and 34-90459 “ Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information ,” which modernizes and simplifies certain disclosure requirements of Regulation S-K. Certain key rule amendments eliminate the requirement to disclose Selected Financial Data; Selected Quarterly Financial Data, with certain exceptions; the impact of inflation and changing prices, provided the impact is not material; off-balance sheet arrangements in tabular form; and the aggregate amount of contractual obligations in tabular form. The final rules also amended various aspects of Item 303, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ,” among others. The final rules are effective for all registration statements, annual reports and quarterly reports filed on or after August 9, 2021, with early adoption permitted. The Company is currently evaluating the impact of the disclosure changes in its annual and quarterly report. |
COVID-19 UPDATE
COVID-19 UPDATE | 3 Months Ended |
Mar. 31, 2021 | |
Unusual or Infrequent Items, or Both [Abstract] | |
COVID-19 UPDATE | COVID-19 UPDATE The Company's affiliated operations continued to be impacted by the worldwide outbreak of the 2019 coronavirus disease (COVID-19). The Company received cash distribution of relief fund payments (Provider Relief Funds) from the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the CARES Act) and funds authorized by U.S. Department of Health and Human Services (HHS) to be used to protect residents of nursing homes and long-term care facilities from the impact of COVID-19 throughout 2020 and continued into 2021. During the first quarter of 2021, the Company received $9,139 in Provider Relief Funds and as of March 31, 2021 had returned all of the funds. The Company may continue to receive additional funding in future periods. Subsequent to March 31, 2021, the Company received and returned another $2,083 in Provider Relief Funds. Additionally, the Company applied for and received $105,255 through the Medicare Accelerated and Advance Payment Program under the CARES Act during fiscal year 2020. The purpose of the program is to assist in providing needed liquidity to care delivery providers. The Company repaid $3,232 of the funds in July 2020. In March 2021, the Company repaid the remaining funds of $102,023. The Family First Coronavirus Response Act was signed into law in 2020 to provide a temporary 6.2% increase to the Federal Medical Assistance Percentage (FMAP) effective January 1, 2020. The law permits states to retroactively change their state's Medicaid program rates effective as of January 1, 2020. The law provides discretion to each state and specifies the funds are to be used to reimburse the recipient for healthcare related expenses that are attributable to COVID-19 and associated with providing patient care. In addition, increases in Medicaid rates can come from other areas of the state's budget outside of FMAP funding. Revenues from these additional payments are recognized in accordance with ASC 606, subject to variable consideration constraints. In certain operations where the Company received additional payments that exceeded expenses incurred related to COVID-19, the Company characterized such payments as variable revenue that required additional consideration and accordingly, the amount of state relief revenue recognized is limited to the actual COVID-19 related expenses incurred. As of December 31, 2020, the Company had $6,520 in unapplied state relief funds. During the three months ended March 31, 2021, the Company received an additional $15,645 in state relief funding and recognized $16,465 as revenue. For the three months ended March 31, 2020, the Company received and recognized $730 in state relief funding. |
Revenue and Accounts Receivable
Revenue and Accounts Receivable | 3 Months Ended |
Mar. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE AND ACCOUNTS RECEIVABLE | REVENUE AND ACCOUNTS RECEIVABLE Service Revenue The Company's service revenue is derived primarily from providing healthcare services to its patients. Revenue is recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled from patients and third-party payors, including Medicaid, Medicare and insurers (private and Medicare replacement plans), in exchange for providing patient care. The healthcare services in transitional and skilled patient contracts include routine services in exchange for a contractual agreed-upon amount or rate. Routine services are treated as a single performance obligation satisfied over time as services are rendered. As such, patient care services represent a bundle of services that are not capable of being distinct. Additionally, there may be ancillary services which are not included in the daily rates for routine services, but instead are treated as separate performance obligations satisfied at a point in time, if and when those services are rendered. Revenue recognized from healthcare services are adjusted for estimates of variable consideration to arrive at the transaction price. The Company determines the transaction price based on contractually agreed-upon amounts or rate on a per day basis, adjusted for estimates of variable consideration. The Company uses the expected value method in determining the variable component that should be used to arrive at the transaction price, using contractual agreements and historical reimbursement experience within each payor type. The amount of variable consideration which is included in the transaction price may be constrained, and is included in net revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If actual amounts of consideration ultimately received differ from the Company’s estimates, the Company adjusts these estimates, which would affect net revenue in the period such variances become known. Revenue from the Medicare and Medicaid programs accounted for 74.1% and 71.0% of all service revenue for the three months ended March 31, 2021 and 2020, respectively. Settlements with Medicare and Medicaid payors for retroactive adjustments due to audits and reviews are considered variable consideration and are included in the determination of the estimated transaction price. These settlements are estimated based on the terms of the payment agreement with the payor, correspondence from the payor and the Company’s historical settlement activity. Consistent with healthcare industry practices, any changes to these revenue estimates are recorded in the period the change or adjustment becomes known based on the final settlement. The Company recorded adjustments to revenue which were not material to the Company's consolidated revenue for the three months ended March 31, 2021 and 2020. Rental Revenue The Company's rental revenues are primarily generated by leasing healthcare-related properties through triple-net lease arrangements, under which the tenant is solely responsible for the costs related to the property. Revenue is recognized on a straight-line basis over the lease term if it has been deemed probable of collection. The Company has elected the single component practical expedient, which allows a lessor, by class of underlying asset, not to allocate the total consideration to the lease and non-lease components based on their relative stand-alone selling prices where certain criteria are met. This single component practical expedient requires the Company to account for the lease component and non-lease component(s) associated with that lease as a single component if (1) the timing and pattern of transfer of the lease component and the non-lease component(s) associated with it are the same and (2) the lease component would be classified as an operating lease if it were accounted for separately. If the Company determines that the lease component is the predominant component, it accounts for the single component as an operating lease in accordance with the new lease standards. Conversely, the Company is required to account for the combined component under the revenue recognition standard if it determines that the non-lease component is the predominant component. As a result of this assessment, rental revenues from the lease of real estate assets that qualify for this expedient are accounted for as a single component under the new lease standards. The components of the Company's operating leases qualify for the single component presentation. Tenant reimbursements related to property taxes and insurance are neither considered lease nor non-lease components under the new lease standards. Lessee payments for taxes and insurance paid directly to a third party, on behalf of the Company, are excluded from variable lease payments and rental revenue in the Company’s condensed consolidated statements of income. Otherwise, tenant reimbursements for taxes and insurance that are paid by the Company directly to a third party are classified as additional rental revenue and expense and recognized by the Company on a gross basis. Disaggregation of Revenue The Company disaggregates revenue from contracts with its patients by payors. The Company determines that disaggregating revenue into these categories achieves the disclosure objectives to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Revenue by Payor The Company’s revenue is derived primarily from providing healthcare services to patients and is recognized on the date services are provided at amounts billable to individual patients, adjusted for estimates for variable consideration. For patients under reimbursement arrangements with third-party payors, including Medicaid, Medicare and private insurers, revenue is recorded based on contractually agreed-upon amounts or rate, adjusted for estimates for variable consideration, on a per patient, daily basis or as services are performed. Service revenue for the three months ended March 31, 2021 and 2020 is summarized in the following tables: Three Months Ended March 31, 2021 2020 Revenue % of Revenue Revenue % of Revenue Medicaid (1) $ 231,358 37.1 % $ 224,195 38.3 % Medicare 190,303 30.5 155,584 26.6 Medicaid — skilled 39,993 6.5 36,009 6.1 Total Medicaid and Medicare 461,654 74.1 415,788 71.0 Managed care 108,345 17.4 102,029 17.4 Private and other (2) 53,277 8.5 68,134 11.6 Service revenue $ 623,276 100.0 % $ 585,951 100.0 % (1) Medicaid payor includes revenue for senior living operations and revenue related to FMAP for the three months ended March 31, 2021 and 2020. (2) Private and other payors also includes revenue from all payors generated in other an cillary services for the three months ended March 31, 2021 and 2020 . In addition to the service revenue above, the Company's rental revenue derived from triple-net lease arrangements with third parties is $3,977 and $3,662, respectively for the three months ended March 31, 2021 and 2020. Balance Sheet Impact Included in the Company’s condensed consolidated balance sheets are contract balances, comprised of billed accounts receivable and unbilled receivables, which are the result of the timing of revenue recognition, billings and cash collections, as well as, contract liabilities, which primarily represent payments the Company receives in advance of services provided. The Company had no material contract liabilities and contract assets as of March 31, 2021 and December 31, 2020, or activity during the three months ended March 31, 2021 and 2020. Accounts receivable as of March 31, 2021 and 2020, is summarized in the following table: March 31, 2021 December 31, 2020 Medicaid $ 121,942 $ 102,077 Managed care 71,830 61,743 Medicare 63,095 80,904 Private and other payors 66,801 69,056 323,668 313,780 Less: allowance for doubtful accounts (11,090) (8,718) Accounts receivable, net $ 312,578 $ 305,062 Practical Expedients and Exemptions As the Company’s contracts with its patients have an original duration of one year or less, the Company uses the practical expedient applicable to its contracts and does not consider the time value of money. Further, because of the short duration of these contracts, the Company has not disclosed the transaction price for the remaining performance obligations as of the end of each reporting period or when the Company expects to recognize this revenue. In addition, the Company has applied the practical expedient provided by ASC 340, Other Assets and Deferred Costs |
Computation of Net Income Per C
Computation of Net Income Per Common Share | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
COMPUTATION OF NET INCOME PER COMMON SHARE | COMPUTATION OF NET INCOME PER COMMON SHARE Basic net income per share is computed by dividing income from operations attributable to stockholders of The Ensign Group, Inc. by the weighted average number of outstanding common shares for the period. The computation of diluted net income per share is similar to the computation of basic net income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. A reconciliation of the numerator and denominator used in the calculation of basic net income per common share follows: Three Months Ended March 31, 2021 2020 Numerator: Net income $ 49,837 $ 41,201 Less: net income attributable to noncontrolling interests 631 352 Net income attributable to The Ensign Group, Inc. $ 49,206 $ 40,849 Denominator: Weighted average shares outstanding for basic net income per share 54,192 53,475 Basic net income per common share: $ 0.91 $ 0.76 A reconciliation of the numerator and denominator used in the calculation of diluted net income per common share follows: Three Months Ended March 31, 2021 2020 Numerator: Net income $ 49,837 $ 41,201 Less: net income attributable to noncontrolling interests 631 352 Net income attributable to The Ensign Group, Inc. $ 49,206 $ 40,849 Denominator: Weighted average common shares outstanding 54,192 53,475 Plus: incremental shares from assumed conversion (1) 2,699 2,321 Adjusted weighted average common shares outstanding 56,891 55,796 Diluted net income per common share: $ 0.86 $ 0.73 (1) Options outstanding which are anti-dilutive and therefore not factored into the weighted average common shares amount above were 28 and 787 for the three months ended March 31, 2021 and 2020, respectivel |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. These tiers include: Level 1, defined as observable inputs such as quoted market prices in active markets; Level 2, defined as inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions. The fair value of cash and cash equivalents of $155,527 and $236,562 as of March 31, 2021 and December 31, 2020, respectively, is derived using Level 1 inputs. The Company's other financial assets include contracts insuring the lives of certain employees who are eligible to participate in non-qualified deferred compensation plans which are held in a rabbi trust. The cash surrender value of these contracts is based on performance measurement funds that shadow the deferral investment allocations made by participants in the deferred compensation plan. As of March 31, 2021, and December 31, 2020, the fair value of the pooled investment funds of $14,017 and $6,577, respectively, is derived using Level 2 inputs. The pooled investment funds are included in restricted and other assets in the Condensed Consolidated Balance Sheets. See Note 12 Restricted and Other Assets. The Company's non-financial assets, which includes goodwill, intangible assets, property and equipment and right-of-use assets, are not required to be measured at fair value on a recurring basis. However, on a periodic basis, or whenever events or changes in circumstances indicate that their carrying value may not be recoverable, the Company assesses its long-lived assets for impairment. When impairment has occurred, such long-lived assets are written down to fair value. Debt Security Investments - Held to Maturity As of March 31, 2021 and December 31, 2020, the Company had approximately $48,993 and $45,554, respectively, in debt security investments which were classified as held to maturity and carried at amortized cost. The carrying value of the debt securities approximates fair value based on Level 1 inputs. The Company has the intent and ability to hold these debt securities to maturity. Further, as of March 31, 2021, the debt security investments were held in AA, A and BBB r ated de bt securities. The Company believes its debt security investments that were in an unrealized loss position as of March 31, 2021 were not other-than-temporarily impaired, nor has any event occurred subsequent to that date that would indicate any other-than-temporary impairment. |
Business Segments
Business Segments | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
BUSINESS SEGMENTS | BUSINESS SEGMENTS In the fourth quarter of 2020, the Company's Chief Executive Officer, who is its chief operating decision maker, or CODM, began reviewing the results of the Company's real estate portfolio. Accordingly, the Company began reporting a new segment as it continues to expand its real estate investment strategy. The Company has two reportable segments: (1) transitional and skilled services, which includes the operation of skilled nursing facilities and rehabilitation therapy services and (2) real estate, which is comprised of properties owned by the Company and leased to skilled nursing and assisted living operations where the properties are subject to triple-net long-term leases, including operations that are owned and operated by the Company. Prior to this new segment structure, the Company had one reportable segment, transitional and skilled services. Corresponding items of segment information for prior periods have been recast to reflect the change of the Company’s segment structure. As of March 31, 2021, the transitional and skilled services segment includes 200 skilled nursing operations and 23 campus operations that provide both skilled nursing and rehabilitative care services and senior living services. The Company's real estate segment includes 94 owned real estate properties. These properties include 64 operations the Company operated and managed, real estate properties of 31 senior living operations that are leased to and operated by Pennant and the Service Center location, which continues to lease office space to various third parties. Of the 31 real estate operations leased to Pennant, two senior living operations are located on the same real estate properties as skilled nursing facilities that the Company owns and operates. The Company also reports an “All Other” category that includes results from its senior living operations, which includes nine stand-alone senior living operations and 23 campus operations that provide both skilled nursing and rehabilitative care services and senior living services, mobile diagnostics, medical transportation and other ancillary operations. Services included in the “All Other” category are insignificant individually, and therefore do not constitute a reportable segment. The Company’s reportable segments are significant operating segments that offer differentiated services. The Company's CODM reviews financial information for each operating segment to evaluate performance and allocate capital resources. This structure reflects its current operational and financial management and provides the best structure to maximize the quality of care and investment strategy provided, while maintaining financial discipline. The Company's CODM does not review assets by segment in his resource allocation and therefore assets by segment are not disclosed below. Beginning in the fourth quarter of 2020, segment income and loss was changed from profit or loss from operations before interest and provision for income taxes to profit or loss from operations before provision for income taxes, excluding gain or loss from sale of real estate, insurance recoveries and impairment charges from operations. Prior period presentation has been revised to reflect the new measurement. With the exception of intercompany rental revenue, the accounting policies of the reportable segments are the same as those described in Note 2, Summary of Significant Accounting Policies . Rental revenue from Ensign-affiliated operations are based on mutually agreed-upon base rent that are subject to change from time to time. Intercompany revenue is eliminated in consolidation, along with corresponding intercompany rent expenses of the related healthcare facilities. Included in the real estate segment income is interest expense related to the borrowings to fund real estate acquisitions. Interest revenue is related to the investment accounts that the Service Center manages on behalf of the Company and is included in the "All Other" category. The following tables set forth financial information for the segments: Three Months Ended March 31, 2021 Transitional and Skilled Services Real Estate All Other (1) Intercompany Elimination (2) Total Service revenue $ 601,036 $ — $ 22,240 $ — $ 623,276 Rental revenue — 15,879 — (11,902) 3,977 Total revenue $ 601,036 $ 15,879 $ 22,240 $ (11,902) $ 627,253 Segment income (loss) 88,931 8,821 (35,406) — 62,346 Gain on sale of real estate 440 Income before provision for income taxes $ 62,786 Depreciation and amortization 7,475 4,693 1,491 — 13,659 Other expense (income), net (3) $ — $ 1,641 $ (748) $ — $ 893 (1) General and administrative expense are included in the "all other" category. (2) Intercompany elimination represents rental income at the real estate segment generated from triple-net lease arrangements with the Company's affiliated wholly-owned healthcare facilities. Intercompany rental revenue is eliminated in consolidation, along with corresponding intercompany rent expenses of related healthcare facilities. (3) Other expense (income), net includes interest expense and interest revenue. Three Months Ended March 31, 2020 Transitional and Skilled Services Real Estate All Other (1) Intercompany Elimination (2) Total Service revenue $ 558,304 $ — $ 27,647 $ — $ 585,951 Rental revenue — 14,944 — (11,282) 3,662 Total revenue $ 558,304 $ 14,944 $ 27,647 $ (11,282) $ 589,613 Segment income (loss) 80,591 6,325 (33,090) — 53,826 Income before provision for income taxes $ 53,826 Depreciation and amortization 7,148 4,515 2,057 — 13,720 Other expense (income), net (3) $ — $ 3,665 $ (698) $ — $ 2,967 (1) General and administrative expense is included in the "all other" category (2) Intercompany elimination represents rental income at the real estate segment generated from triple-net lease arrangements with the Company's affiliated wholly-owned healthcare facilities. Intercompany rental revenue is eliminated in consolidation, along with corresponding intercompany rent expenses of related healthcare facilities. (3) Other expense (income), net includes interest expense and interest revenue. Service revenue by major payor source were as follows: Three Months Ended March 31, 2021 Transitional and Skilled Services All Other Total Service Revenue Revenue % Medicaid $ 227,741 $ 3,617 (1) $ 231,358 37.1 % Medicare 190,303 — 190,303 30.5 Medicaid-skilled 39,993 — 39,993 6.5 Subtotal 458,037 3,617 461,654 74.1 Managed care 108,345 — 108,345 17.4 Private and other 34,654 18,623 (2) 53,277 8.5 Total service revenue $ 601,036 $ 22,240 $ 623,276 100.0 % (1) Medicaid payor includes revenue for senior living operations and revenue related to FMAP for the three months ended March 31, 2021. (2) Private and other payors also includes revenue from senior living operations and all payors generated in other ancillary services for the three months ended March 31, 2021. Three Months Ended March 31, 2020 Transitional and Skilled Services All Other Total Service Revenue Revenue % Medicaid $ 220,969 $ 3,226 (1) $ 224,195 38.3 % Medicare 155,584 — 155,584 26.6 Medicaid-skilled 36,009 — 36,009 6.1 Subtotal 412,562 3,226 415,788 71.0 Managed care 102,029 — 102,029 17.4 Private and other 43,713 24,421 (2) 68,134 11.6 Total service revenue $ 558,304 $ 27,647 $ 585,951 100.0 % (1) Medicaid payor includes revenue for senior living operations and revenue related to FMAP for the three months ended March 31, 2020. (2) Private and other payors also includes revenue from senior living operations and all payors generated in other ancillary services for the three months ended March 31, 2020. In addition to the service revenue above, the Company's rental revenue derived from triple-net lease arrangements with third parties is $3,977 and $3,662 for the three months ended March 31, 2021 and 2020, respectively. This revenue is included in our real estate segment. |
Operation Expansions
Operation Expansions | 3 Months Ended |
Mar. 31, 2021 | |
Business Combinations [Abstract] | |
Operation Expansions | OPERATION EXPANSIONS The Company's subsidiaries expansion focus is to purchase or lease operations that are complementary to the current affiliated operations, accretive to the business, or otherwise advance the Company's strategy. The results of all operating subsidiaries are included in the accompanying Interim Financial Statements subsequent to the date of acquisition. Acquisitions are accounted for using the acquisition method of accounting. The Company's affiliated operations also enter into long-term leases that may include options to purchase the facilities. As a result, from time to time, a real estate affiliated subsidiary will acquire the property of facilities that have previously been operated under third-party leases. 2021 Expansions During the three months ended March 31, 2021, the Company expanded its operations through long-term leases, with the addition of four stand-alone skilled nursing operations. These new operations added a total of 447 operational skilled nursing beds operated by the Company's affiliated operating subsidiaries. The Company did not acquire any material assets or assume any liabilities other than the tenant's post-assumption rights and obligations under the long-term lease. The Company entered into a separate operations transfer agreement with the prior operator as part of each transaction. Subsequent to March 31, 2021, the Company expanded its operations through long-term leases with the addition of three stand-alone skilled nursing operations. These new operations added 322 operational skilled nursing beds to be operated by the Company's affiliated operating subsidiaries. 2020 Expansions During the three months ended March 31, 2020, the Company expanded its operations through a combination of a long-term lease and real estate purchases, with the addition of three stand-alone skilled nursing operations and one stand-alone senior living operation. Of these additions, two are related to purchases of owned properties, further expanding our real estate portfolio. These new operations added a total of 247 operational skilled nursing beds and 162 operational senior living units to be operated by the Company's affiliated operating subsidiaries. The aggregate purchase price for these acquisitions during the three months ended March 31, 2020 was $14,054. In connection with the new operations made through long-term leases, the Company did not acquire any material assets or assume any liabilities other than the tenant's post-assumption rights and obligations under the long-term lease. The Company entered into a separate operations transfer agreement with the prior operator as part of each transaction. The fair value of assets for our purchases of these properties was concentrated in property and equipment and as such, these transactions were classified as asset acquisitions. The purchase price for the asset acquisitions consists of building and improvements of $9,669; land of $4,080; equipment, furniture and fixtures of $236; and assembled occupancy of $69. During the first quarter of 2020, the Company entered into a long-term lease agreement to transfer two senior living operations to Pennant. Ensign affiliates retained ownership of the real estate for these two senior living communities. |
Property and Equipment _ Net
Property and Equipment — Net | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT— Net | PROPERTY AND EQUIPMENT - NET Property and equipment, net consists of the following: March 31, 2021 December 31, 2020 Land $ 101,236 $ 101,236 Buildings and improvements 557,616 555,416 Leasehold improvements 131,911 129,727 Equipment 239,867 233,453 Furniture and fixtures 4,498 4,409 Construction in progress 5,657 3,008 1,040,785 1,027,249 Less: accumulated depreciation (261,516) (249,005) Property and equipment, net $ 779,269 $ 778,244 See also Note 8, Operation Expansions for information on acquisitions during the three months ended March 31, 2021 and 2020. |
Intangible Assets _ Net
Intangible Assets — Net | 3 Months Ended |
Mar. 31, 2021 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
INTANGIBLE ASSETS — NET | INTANGIBLE ASSETS - NET March 31, 2021 December 31, 2020 Weighted Average Life (Years) Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Intangible Assets Net Net Assembled occupancy 0.4 $ 39 $ (39) $ — $ 39 $ (26) $ 13 Facility trade name 30.0 733 (372) 361 733 (366) 367 Customer relationships 18.4 4,582 (2,115) 2,467 4,640 (2,121) 2,519 Total $ 5,354 $ (2,526) $ 2,828 $ 5,412 $ (2,513) $ 2,899 During the three months ended March 31, 2021 and 2020, amortization expense was $361 and $674, respectively, of which $290 and $354 was related to the amortization of right-of-use assets, respectively. Additionally, the Company identified intangible assets which became fully amortized during the prior year and removed these fully amortized balances from the gross asset and accumulated amortization amounts. Estimated amortization expense for each of the years ending December 31 is as follows: Year Amount 2021 (remainder) $ 176 2022 234 2023 234 2024 234 2025 234 2026 234 Thereafter 1,482 $ 2,828 |
Goodwill and Other Indefinite-L
Goodwill and Other Indefinite-Lived Intangible Assets | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS | GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS The Company tests goodwill during the fourth quarter of each year or more often if events or circumstances indicate there may be impairment. The Company performs its analysis for each reporting unit that constitutes a business for which discrete financial information is produced and reviewed by operating segment management and provides services that are distinct from the other components of the operating segment, in accordance with the provisions of Accounting Standards Codification topic 350, Intangibles—Goodwill and Other (ASC 350). This guidance provides the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value, a "Step 0" analysis. If, based on a review of qualitative factors, it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company performs a goodwill impairment test by comparing the carrying value of each reporting unit to its respective fair value. The Company determines the estimated fair value of each reporting unit using a discounted cash flow analysis. The fair value of the reporting unit is the implied fair value of goodwill. In the event a reporting unit's carrying value exceeds its fair value, an impairment loss will be recognized. An impairment loss is measured by the difference between the carrying value of the reporting unit and its fair value. The Company anticipates that the majority of total goodwill recognized will be fully deductible for tax purposes as of March 31, 2021. The Company's expansions during the three months ended March 31, 2021 were all through long-term leases and accordingly, no goodwill was recognized for these acquisitions. There were no activities in goodwill during the three months ended March 31, 2021. Provided that goodwill corresponds to the acquisition of a business and not merely the acquisition of real estate property, the Company's real estate segment appropriately does not carry a goodwill balance. The following table represents the goodwill value by transitional and skilled service segment and "all other" category, which includes other ancillary services, as of March 31, 2021 and December 31, 2020: Transitional and Skilled Services All Other Total Goodwill $ 45,486 $ 8,983 $ 54,469 Other indefinite-lived intangible assets consist of the following: March 31, 2021 December 31, 2020 Trade name $ 889 $ 889 Medicare and Medicaid licenses 2,657 2,827 $ 3,546 $ 3,716 |
Restricted and Other Assets
Restricted and Other Assets | 3 Months Ended |
Mar. 31, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
RESTRICTED AND OTHER ASSETS | RESTRICTED AND OTHER ASSETS Restricted and other assets consist of the following: March 31, 2021 December 31, 2020 Debt issuance costs, net $ 2,486 $ 2,664 Long-term insurance losses recoverable asset 7,602 7,138 Deposits with landlords 12,637 12,400 Capital improvement reserves with landlords and lenders 4,680 4,376 Cash surrender value of life insurance related to deferred compensation plan 14,017 6,577 Restricted and other assets $ 41,422 $ 33,155 Included in restricted and other assets as of March 31, 2021 and December 31, 2020 are anticipated insurance recoveries related to the Company's workers' compensation liabilities and general and professional liability claims that are recorded on a gross rather than net basis in accordance with ASU issued by the FASB. |
Other Accrued Liabilities
Other Accrued Liabilities | 3 Months Ended |
Mar. 31, 2021 | |
Payables and Accruals [Abstract] | |
OTHER ACCRUED LIABILITIES | OTHER ACCRUED LIABILITIES Other accrued liabilities consists of the following: March 31, 2021 December 31, 2020 Quality assurance fee $ 7,103 $ 6,631 Refunds payable 39,590 36,323 Resident advances 6,049 8,558 Unapplied state relief funds 5,700 6,520 Cash held in trust for patients 5,611 6,052 Dividends payable 2,886 2,868 Property taxes 7,656 9,222 Income tax payable 11,927 136 Other 11,117 11,008 Other accrued liabilities $ 97,639 $ 87,318 Quality assurance fee represents the aggregate of amounts payable to Arizona, California, Colorado, Idaho, Iowa, Kansas, Nebraska, Nevada, Utah, Washington and Wisconsin as a result of a mandated fee based on patient days or licensed beds. Refunds payable includes payables related to overpayments, duplicate payments and credit balances from various payor sources. Resident advances occur when the Company receives payments in advance of services provided. Resident deposits include refundable deposits to patients. Cash held in trust for patients reflects monies received from or on behalf of patients. Maintaining a trust account for patients is a regulatory requirement and, while the trust assets offset the liabilities, the Company assumes a fiduciary responsibility for these funds. The cash balance related to this liability is included in other current assets in the accompanying condensed consolidated balance sheets. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company recorded income tax expense of $12,949 and $12,625 during the three months ended March 31, 2021 and 2020, respectively, or 20.6% of earnings before income taxes for the three months ended March 31, 2021, compared to 23.5% for the three months ended March 31, 2020. The effective tax rate for both periods is driven by the impact of excess tax benefits from stock-based compensation, offset by non-deductible expenses including non-deductible compensation. Th e Company is not currently under examination by any major income tax jurisdiction. During 2021, the statutes of limitations will lapse on the Company's 2017 Federal tax year and certain 2016 and 2017 state tax years. The Company does not believe the Federal or state statute lapses or any other event will significantly impact the balance of unrecognized tax benefits in the next twelve months. The net balance of unrecognized tax benefits was not material to the Interim Financial Statements for the three months ended March 31, 2021 and 2020. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Debt consists of the following: March 31, 2021 December 31, 2020 Mortgage loans and promissory notes $ 116,957 $ 117,806 Less: current maturities (2,828) (2,960) Less: debt issuance costs, net (2,270) (2,302) Long term debt less current maturities $ 111,859 $ 112,544 Mortgage Loans and Promissory Notes As of March 31, 2021, the Company's operating subsidiaries had $116,957 outstanding under the mortgage loans and notes, of which $2,828 is classified as short-term and the remaining $114,129 is classified as long-term. The Company was in compliance with all loan covenants as of March 31, 2021. As of March 31, 2021, 19 of the Company's subsidiaries have mortgage loans insured with the Department of Housing and Urban Development (HUD) in the aggregate amount of $113,304, which subjects these subsidiaries to HUD oversight and periodic inspections. The mortgage loans bear fixed interest rates ranging from 2.6% to 3.5% per annum. Amounts borrowed under the mortgage loans may be prepaid, subject to prepayment fees based on the principal balance on the date of prepayment. For the majority of the loans, during the first three years, the prepayment fee is 10% and is reduced by 3% in the fourth year of the loan, and reduced by 1.0% per year for years five ten ten In addition to the HUD mortgage loans above, the Company has a promissory note in connection with an acquisition. The note bears a fixed interest rate of 5.3% per annum and the term of the note is 12 years. The note which was used for an acquisition is secured by the real property comprising the facility and the rent, issues and profits thereof, as well as all personal property used in the operation of the facility. Based on Level 2, the carrying value of the Company's long-term debt is considered to approximate the fair value of such debt for all periods presented based upon the interest rates that the Company believes it can currently obtain for similar debt. Credit Facility with a Lending Consortium Arranged by Truist The Company maintains a revolving credit facility under the Third Amended and Restated Credit Agreements, dated as of October 1, 2019, between the Company and Truist Financial Corporation (Truist) (formerly known as SunTrust Bank, Inc.) (the Credit Facility). The Credit Facility includes a revolving line of credit of up to $350,000 in aggregate principal amount. The maturity date of the Credit Facility is October 1, 2024. Borrowings are supported by a lending consortium arranged by Truist. The interest rates applicable to loans under the Credit Facility are, at the Company's option, equal to either a base rate plus a margin ranging from 0.50% to 1.50% per annum or LIBOR plus a margin range from 1.50% to 2.50% per annum, based on the Consolidated Total Net Debt to Consolidated EBITDA ratio (as defined in the agreement). In addition, the Company pays a commitment fee on the unused portion of the commitments that ranges from 0.25% to 0.45% per annum, depending on the Consolidated Total Net Debt to Consolidated EBITDA ratio. The Credit Facility is guaranteed, jointly and severally, by certain of the Company’s wholly owned subsidiaries, and is secured by a pledge of stock of the Company's material operating subsidiaries as well as a first lien on substantially all of its personal property. The Credit Facility contains customary covenants that, among other things, restrict, subject to certain exceptions, the ability of the Company and its operating subsidiaries to grant liens on their assets, incur indebtedness, sell assets, make investments, engage in acquisitions, mergers or consolidations, amend certain material agreements and pay certain dividends and other restricted payments. Under the Credit Facility, the Company must comply with financial maintenance covenants to be tested quarterly, consisting of (i) a maximum consolidated total net debt to consolidated EBITDA ratio (which shall not be greater than 3.00:1.00; provided that if the aggregate consideration for approved acquisitions in a six month period is greater than $50,000, then the ratio can be increased at the election of the Company with notice to the administrative agent to 3.50:1.00 for the first fiscal quarter and the immediately following three fiscal quarters), and (ii) a minimum interest/rent coverage ratio (which cannot be less than 1.50:1.00). As of March 31, 2021, and April 26, 2021, there was no outstanding debt under the Credit Facility. The Company was in compliance with all loan covenants as of March 31, 2021. Off-Balance Sheet Arrangements As of March 31, 2021, the Company had approximately $7,580 o |
Options and Awards
Options and Awards | 3 Months Ended |
Mar. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
OPTIONS AND AWARDS | OPTIONS AND AWARDS Stock-based compensation expense consists of stock-based payment awards made to employees and directors, including employee stock options and restricted stock awards, based on estimated fair values. As stock-based compensation expense recognized in the Company’s condensed consolidated statements of income for the three months ended March 31, 2021 and 2020 was based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. The Company estimates forfeitures at the time of grant and, if necessary, revises the estimate in subsequent periods if actual forfeitures differ. 2017 Omnibus Incentive Plan - The Company has one active stock incentive plan, the 2017 Omnibus Incentive Plan (the 2017 Plan). The 2017 Plan provided for the issuance of 6,881 shares of common stock which are to be proportionally adjusted in the event of any Equity Restructuring. The number of shares available to be issued under the 2017 Plan were adjusted to 8,118 shares of common stock in order to reflect the proportional adjustments as part of the spin-off transaction that occurred in October 2019. The number of shares available to be issued under the 2017 Plan will be reduced by (i) one share for each share that relates to an option or stock appreciation right award and (ii) 2.5 shares for each share which relates to an award other than a stock option or stock appreciation right award (a full-value award). Granted non-employee director options vest and become exercisable in three equal annual installments, or the length of the term if less than three years, on the completion of each year of service measured from the grant date. All other options generally vest over 5 years at 20% per year on the anniversary of the grant date. Options expire 10 years from the date of grant. As of March 31, 2021, there were approximately 2,839 unissued shares of common stock available for issuance under this plan. The Company uses the Black-Scholes option-pricing model to recognize the value of stock-based compensation expense for stock option awards. Determining the appropriate fair-value model and calculating the fair value of stock option awards at the grant date requires judgment, including estimating stock price volatility, expected option life, and forfeiture rates. The fair-value of the restricted stock awards at the grant date is based on the market price on the grant date, adjusted for forfeiture rates. The Company develops estimates based on historical data and market information, which can change significantly over time. Stock Options The Company granted 136 stock options during the three months ended March 31, 2021. The Company used the following assumptions for stock options granted during the three months ended March 31, 2021 and 2020: Grant Year Options Granted Weighted Average Risk-Free Rate Expected Life Weighted Average Volatility Weighted Average Dividend Yield 2021 136 0.8% 6.3 years 42.2% 0.2% 2020 145 1.3% 6.2 years 32.1% 0.4% For the three months ended March 31, 2021 and 2020, the following represents the exercise price and fair value displayed at grant date for stock option grants: Grant Year Granted Weighted Average Exercise Price Weighted Average Fair Value of Options 2021 136 $ 83.64 $ 33.99 2020 145 $ 51.20 $ 16.60 The weighted average exercise price equaled the weighted average fair value of common stock on the grant date for all options granted during the periods ended March 31, 2021 and 2020 and therefore, the intrinsic value was $0 at the date of grant. The following table represents the employee stock option activity during the three months ended March 31, 2021: Number of Options Outstanding Weighted Average Number of Weighted Average Exercise Price of Options Vested January 1, 2021 4,038 $ 27.71 2,148 $ 16.66 Granted 136 83.64 Forfeited (33) 41.27 Exercised (246) 15.78 March 31, 2021 3,895 $ 30.30 2,034 $ 17.73 The following summary information reflects stock options outstanding, vested and related details as of March 31, 2021: Stock Options Outstanding Stock Options Vested Number Outstanding Black-Scholes Fair Value Remaining Contractual Life (Years) Vested and Exercisable Year of Grant Exercise Price 2011 $5.00 - $6.77 14 $ 38 0 14 2012 5.56 - 6.75 88 267 1 88 2013 6.76 - 9.74 165 712 2 165 2014 8.94 - 16.05 676 3,231 3 676 2015 18.20 - 21.39 303 2,362 4 303 2016 15.93 - 16.86 275 1,618 5 219 2017 15.80 - 19.41 336 1,977 6 184 2018 22.49 - 32.71 566 5,855 7 214 2019 41.07 - 45.76 698 10,955 8 147 2020 44.84 - 59.49 638 12,511 9 24 2021 $83.64 136 4,625 10 — Total 3,895 $ 44,151 2,034 The aggregate intrinsic value of options outstanding, vested and expected to vest as of March 31, 2021 and December 31, 2020 is as follows: Options March 31, 2021 December 31, 2020 Outstanding $ 247,457 $ 182,552 Vested 154,841 120,867 Expected to vest 80,008 53,366 The intrinsic value is calculated as the difference between the market value of the underlying common stock and the exercise price of the options . The aggregate intrinsic value of options that vested during the three months ended March 31, 2021 and 2020 was $8,545 and $2,084, respectively. The total intrinsic value of options exercised during the three months ended March 31, 2021 and 2020 was $17,241 and $5,621, respectively. Restricted Stock Awards The Company granted 90 and 113 restricted stock awards during the three months ended March 31, 2021 and 2020 , respectively. All awards were granted at an issue price of $0 and generally vest over five years. The fair value per share of restricted awards granted during the three months ended March 31, 2021 and 2020 ranged from $83.64 to $84.70 and $42.02 to $51.20, respectively. The fair value per share includes quarterly stock awards to non-employee directors. A summary of the status of the Company's non-vested restricted stock awards as of March 31, 2021 and changes during the three months ended March 31, 2021 is presented below: Non-Vested Restricted Awards Weighted Average Grant Date Fair Value Nonvested at January 1, 2021 591 $ 38.90 Granted 90 83.71 Vested (80) 64.35 Forfeited (9) 45.18 Nonvested at March 31, 2021 592 $ 42.16 During the three months ended March 31, 2021, the Company granted 6 automatic quarterly stock awards to non-employee directors for their service on the Company's board of directors. The fair value per share of these stock awards was $84.70 based on the market price on the grant date. Long-Term Incentive Plan On August 27, 2019, the Board approved the Long-Term Incentive Plan (the 2019 LTI Plan). The 2019 LTI Plan provides that certain employees of the Company who assisted in the consummation of the spin-off transaction that occurred in October 2019 are granted shares of restricted stock upon the successful completion of the spin-off. The 2019 LTI Plan provides for the issuance of 500 shares of Pennant restricted stock. The shares are vested over five years at 20% per year on the anniversary of the grant date. If a recipient is terminated or voluntarily leaves the Company, all shares subject to restriction or not yet vested shall be entirely forfeited. The total stock-based compensation related to the 2019 LTI Plan was approximately $201 and $194 for the three months ended March 31, 2021 and 2020, respectively. Stock-based compensation expense recognized for the Company's equity incentive plans and long-term incentive plan for the three months ended March 31, 2021 and 2020 was as follows: Three Months Ended March 31, 2021 2020 Stock-based compensation expense related to stock options $ 1,733 $ 1,419 Stock-based compensation expense related to restricted stock awards 1,838 1,598 Stock-based compensation expense related to stock options and restricted stock awards to non-employee directors 483 218 Total $ 4,054 $ 3,235 In future periods, the Company expects to recognize approximately $27,178 and $26,072 in stock-based compensation expense for unvested options and unvested restricted stock awards, respectively, that were outstanding as of March 31, 2021. Future stock-based compensation expense will be recognized over 3.8 and 3.5 weighted average years for unvested options and restricted stock awards, respectively. There were 1,861 unvested and outstanding options as of March 31, 2021, of which 1,726 shares are expected to vest. The weighted average contractual life for options outstanding, vested and expected to vest as of March 31, 2021 was 6.1 years. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
LEASES | LEASES The Company leases from CareTrust REIT, Inc. (CareTrust) real property associated with 89 affiliated skilled nursing and senior living facilities used in the Company’s operations, 88 of which are under nine “triple-net” master lease agreements (collectively, the Master Leases), which range in terms from 12 to 20 years. At the Company’s option, the Master Leases may be extended for two or three five-year renewal terms beyond the initial term, on the same terms and conditions. The extension of the term of any of the Master Leases is subject to the following conditions: (1) no event of default under any of the Master Leases having occurred and being continuing; and (2) the tenants providing timely notice of their intent to renew. The term of the Master Leases is subject to termination prior to the expiration of the then current term upon default by the tenants in their obligations, if not cured within any applicable cure periods set forth in the Master Leases. If the Company elects to renew the term of a Master Lease, the renewal will be effective to all, but not less than all, of the leased property then subject to the Master Lease. Additionally, four of the 89 facilities leased from CareTrust include an option to purchase that the Company can exercise starting on December 1, 2024. The Company does not have the ability to terminate the obligations under a Master Lease prior to its expiration without CareTrust’s consent. If a Master Lease is terminated prior to its expiration other than with CareTrust’s consent, the Company may be liable for damages and incur charges such as continued payment of rent through the end of the lease term as well as maintenance and repair costs for the leased property. The rent structure under the Master Leases includes a fixed component, subject to annual escalation equal to the lesser of (1) the percentage change in the Consumer Price Index (but not less than zero) or (2) 2.5%. In addition to rent, the Company is required to pay the following: (1) all impositions and taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor); (2) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties; (3) all insurance required in connection with the leased properties and the business conducted on the leased properties; (4) all facility maintenance and repair costs; and (5) all fees in connection with any licenses or authorizations necessary or appropriate for the leased properties and the business conducted on the leased properties. The terms and conditions of the one stand-alone lease are substantially the same as those for the master leases described above. Total rent expense under the Master Leases was approximately $14,080 and $13,125 for the three months ended March 31, 2021 and 2020, respectively. Among other things, under the Master Leases, the Company must maintain compliance with specified financial covenants measured on a quarterly basis, including a portfolio coverage ratio and a minimum rent coverage ratio. The Master Leases also include certain reporting, legal and authorization requirements. The Company is in compliance with requirements of the Master Leases as of March 31, 2021. In connection with the spin-off transaction that occurred in October 2019, the Company guaranteed certain leases of Pennant based on the underlying terms of the leases. The Company does not consider these guarantees to be probable and the likelihood of Pennant defaulting is remote, and therefore no liabilities have been accrued. The Company also leases certain affiliated operations and its administrative offices under non-cancelable operating leases, most of which have initial lease terms ranging from five three Forty of the Company’s affiliated facilities, excluding the facilities that are operated under the Master Leases with CareTrust, are operated under seven separate master lease arrangements. Under these master leases, a breach at a single facility could subject one or more of the other facilities covered by the same master lease to the same default risk. Failure to comply with Medicare and Medicaid provider requirements is a default under several of the Company’s leases, master lease agreements and debt financing instruments. In addition, other potential defaults related to an individual facility may cause a default of an entire master lease portfolio and could trigger cross-default provisions in the Company’s outstanding debt arrangements and other leases. With an indivisible lease, it is difficult to restructure the composition of the portfolio or economic terms of the lease without the consent of the landlord. The components of operating lease expense are as follows: Three Months Ended March 31, 2021 2020 Rent - cost of services (1) $ 33,456 $ 32,330 General and administrative expense 20 17 Depreciation and amortization (2) 290 354 Variable lease costs (3) 3,443 3,211 $ 37,209 $ 35,912 (1) Rent- cost of services includes deferred rent expense adju stments of $112 and $125 for the three months ended March 31, 2021 and 2020, respectively. Additionally, rent- cost of services includes other variable lease costs such as CPI increases and short-term leases of $584 and $594 for the three months ended March 31, 2021 and 2020, respectively. (2) Depreciation and amortization is related to the amortization of favorable and direct lease costs. (3) Variable lease costs, including property taxes and insurance, are classified in cost of services in the Company's condensed consolidated statements of income. Future minimum lease payments for all leases as of March 31, 2021 are as follows: Year Amount 2021 (remainder) $ 98,448 2022 131,211 2023 129,521 2024 128,600 2025 128,506 2026 128,383 Thereafter 957,340 Total lease payments 1,702,009 Less: present value adjustment (678,274) Present value of total lease liabilities 1,023,735 Less: current lease liabilities (50,056) Long-term operating lease liabilities $ 973,679 Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used its incremental borrowing rate based on the information available at the lease commencement date. As of March 31, 2021, the weighted average remaining lease term is 13.7 years and the weighted average discount rate used to determine the operating lease liabilities is 8.2%. Subsequent to March 31, 2021, the Company expanded its operations through long-term lease arrangements with the addition of three stand-alone skilled nursing facilities under a new triple-net master lease, adding a total of 322 operational skilled nursing beds operated by the Company’s affiliated operating subsidiaries. The aggregate impact to the fair value of lease liabilities and right-of-use assets related to new master lease is estimated to be approximately $20,005. Lessor Activities In connection with the spin-off transaction that occurred in October 2019, Ensign affiliates retained ownership of the real estate at 29 senior living operations that were contributed to Pennant. During the first quarter of 2020, the Company transferred the operations of an additional two senior living operations to Pennant. Ensign affiliates retained ownership of the real estate for these 31 senior living communities. All of these properties are leased to Pennant on a triple-net basis, whereas the respective Pennant affiliates are responsible for all costs at the properties including: (1) all impositions and taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor); (2) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties; (3) all insurance required in connection with the leased properties and the business conducted on the leased properties; (4) all facility maintenance and repair costs; and (5) all fees in connection with any licenses or authorizations necessary or appropriate for the leased properties and the business conducted on the leased properties. The initial terms range between 14 to 16 years. Total rental income from all third-party sources for the three months ended March 31, 2021 and 2020 is as follows: Three Months Ended March 31, 2021 2020 Pennant (1) $ 3,488 $ 3,101 Other third-party 489 561 $ 3,977 $ 3,662 (1) Pennant rental income includes variable rent such as property taxes of $314 and $466 during the three months ended March 31, 2021 and 2020. Future annual rental income for all leases as of March 31, 2021 were as follows: Year Amount (1) 2021 (remainder) $ 11,671 2022 15,053 2023 14,790 2024 14,170 2025 13,952 2026 13,772 Thereafter 85,281 Total $ 168,689 |
LEASES | LEASES The Company leases from CareTrust REIT, Inc. (CareTrust) real property associated with 89 affiliated skilled nursing and senior living facilities used in the Company’s operations, 88 of which are under nine “triple-net” master lease agreements (collectively, the Master Leases), which range in terms from 12 to 20 years. At the Company’s option, the Master Leases may be extended for two or three five-year renewal terms beyond the initial term, on the same terms and conditions. The extension of the term of any of the Master Leases is subject to the following conditions: (1) no event of default under any of the Master Leases having occurred and being continuing; and (2) the tenants providing timely notice of their intent to renew. The term of the Master Leases is subject to termination prior to the expiration of the then current term upon default by the tenants in their obligations, if not cured within any applicable cure periods set forth in the Master Leases. If the Company elects to renew the term of a Master Lease, the renewal will be effective to all, but not less than all, of the leased property then subject to the Master Lease. Additionally, four of the 89 facilities leased from CareTrust include an option to purchase that the Company can exercise starting on December 1, 2024. The Company does not have the ability to terminate the obligations under a Master Lease prior to its expiration without CareTrust’s consent. If a Master Lease is terminated prior to its expiration other than with CareTrust’s consent, the Company may be liable for damages and incur charges such as continued payment of rent through the end of the lease term as well as maintenance and repair costs for the leased property. The rent structure under the Master Leases includes a fixed component, subject to annual escalation equal to the lesser of (1) the percentage change in the Consumer Price Index (but not less than zero) or (2) 2.5%. In addition to rent, the Company is required to pay the following: (1) all impositions and taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor); (2) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties; (3) all insurance required in connection with the leased properties and the business conducted on the leased properties; (4) all facility maintenance and repair costs; and (5) all fees in connection with any licenses or authorizations necessary or appropriate for the leased properties and the business conducted on the leased properties. The terms and conditions of the one stand-alone lease are substantially the same as those for the master leases described above. Total rent expense under the Master Leases was approximately $14,080 and $13,125 for the three months ended March 31, 2021 and 2020, respectively. Among other things, under the Master Leases, the Company must maintain compliance with specified financial covenants measured on a quarterly basis, including a portfolio coverage ratio and a minimum rent coverage ratio. The Master Leases also include certain reporting, legal and authorization requirements. The Company is in compliance with requirements of the Master Leases as of March 31, 2021. In connection with the spin-off transaction that occurred in October 2019, the Company guaranteed certain leases of Pennant based on the underlying terms of the leases. The Company does not consider these guarantees to be probable and the likelihood of Pennant defaulting is remote, and therefore no liabilities have been accrued. The Company also leases certain affiliated operations and its administrative offices under non-cancelable operating leases, most of which have initial lease terms ranging from five three Forty of the Company’s affiliated facilities, excluding the facilities that are operated under the Master Leases with CareTrust, are operated under seven separate master lease arrangements. Under these master leases, a breach at a single facility could subject one or more of the other facilities covered by the same master lease to the same default risk. Failure to comply with Medicare and Medicaid provider requirements is a default under several of the Company’s leases, master lease agreements and debt financing instruments. In addition, other potential defaults related to an individual facility may cause a default of an entire master lease portfolio and could trigger cross-default provisions in the Company’s outstanding debt arrangements and other leases. With an indivisible lease, it is difficult to restructure the composition of the portfolio or economic terms of the lease without the consent of the landlord. The components of operating lease expense are as follows: Three Months Ended March 31, 2021 2020 Rent - cost of services (1) $ 33,456 $ 32,330 General and administrative expense 20 17 Depreciation and amortization (2) 290 354 Variable lease costs (3) 3,443 3,211 $ 37,209 $ 35,912 (1) Rent- cost of services includes deferred rent expense adju stments of $112 and $125 for the three months ended March 31, 2021 and 2020, respectively. Additionally, rent- cost of services includes other variable lease costs such as CPI increases and short-term leases of $584 and $594 for the three months ended March 31, 2021 and 2020, respectively. (2) Depreciation and amortization is related to the amortization of favorable and direct lease costs. (3) Variable lease costs, including property taxes and insurance, are classified in cost of services in the Company's condensed consolidated statements of income. Future minimum lease payments for all leases as of March 31, 2021 are as follows: Year Amount 2021 (remainder) $ 98,448 2022 131,211 2023 129,521 2024 128,600 2025 128,506 2026 128,383 Thereafter 957,340 Total lease payments 1,702,009 Less: present value adjustment (678,274) Present value of total lease liabilities 1,023,735 Less: current lease liabilities (50,056) Long-term operating lease liabilities $ 973,679 Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used its incremental borrowing rate based on the information available at the lease commencement date. As of March 31, 2021, the weighted average remaining lease term is 13.7 years and the weighted average discount rate used to determine the operating lease liabilities is 8.2%. Subsequent to March 31, 2021, the Company expanded its operations through long-term lease arrangements with the addition of three stand-alone skilled nursing facilities under a new triple-net master lease, adding a total of 322 operational skilled nursing beds operated by the Company’s affiliated operating subsidiaries. The aggregate impact to the fair value of lease liabilities and right-of-use assets related to new master lease is estimated to be approximately $20,005. Lessor Activities In connection with the spin-off transaction that occurred in October 2019, Ensign affiliates retained ownership of the real estate at 29 senior living operations that were contributed to Pennant. During the first quarter of 2020, the Company transferred the operations of an additional two senior living operations to Pennant. Ensign affiliates retained ownership of the real estate for these 31 senior living communities. All of these properties are leased to Pennant on a triple-net basis, whereas the respective Pennant affiliates are responsible for all costs at the properties including: (1) all impositions and taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor); (2) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties; (3) all insurance required in connection with the leased properties and the business conducted on the leased properties; (4) all facility maintenance and repair costs; and (5) all fees in connection with any licenses or authorizations necessary or appropriate for the leased properties and the business conducted on the leased properties. The initial terms range between 14 to 16 years. Total rental income from all third-party sources for the three months ended March 31, 2021 and 2020 is as follows: Three Months Ended March 31, 2021 2020 Pennant (1) $ 3,488 $ 3,101 Other third-party 489 561 $ 3,977 $ 3,662 (1) Pennant rental income includes variable rent such as property taxes of $314 and $466 during the three months ended March 31, 2021 and 2020. Future annual rental income for all leases as of March 31, 2021 were as follows: Year Amount (1) 2021 (remainder) $ 11,671 2022 15,053 2023 14,790 2024 14,170 2025 13,952 2026 13,772 Thereafter 85,281 Total $ 168,689 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Regulatory Matters — Laws and regulations governing Medicare and Medicaid programs are complex and subject to review and interpretation. Compliance with such laws and regulations can likewise be subject to future governmental review and interpretation, as well as significant regulatory action including fines, penalties, and exclusion from certain governmental programs. Included in these laws and regulations is the Health Insurance Portability and Accountability Act of 1996, which requires healthcare providers (among other things) to safeguard the privacy and security of certain health information. Cost-Containment Measures — Both government and private pay sources have instituted cost-containment measures designed to limit payments made to providers of healthcare services, and there can be no assurance that future measures designed to limit payments made to providers will not adversely affect the Company. Indemnities — From time to time, the Company enters into certain types of contracts that contingently require the Company to indemnify parties against third-party claims. These contracts primarily include (i) certain real estate leases, under which the Company may be required to indemnify property owners or prior facility operators for post-transfer environmental or other liabilities and other claims arising from the Company’s use of the applicable premises, (ii) operations transfer agreements, in which the Company agrees to indemnify past operators of facilities the Company acquires against certain liabilities arising from the transfer of the operation and/or the operation thereof after the transfer to the Company's independent operating subsidiary, (iii) certain lending agreements, under which the Company may be required to indemnify the lender against various claims and liabilities, and (iv) certain agreements with the Company’s officers, directors and employees, under which the Company may be required to indemnify such persons for liabilities arising out of their employment or other relationship to the Company. The terms of such obligations vary by contract and, in most instances, do not expressly state or include a specific or maximum dollar amount. Generally, amounts under these contracts cannot be reasonably estimated until a specific claim is asserted. Consequently, because no claims have been asserted, no liabilities have been recorded for these obligations on the Company’s condensed consolidated balance sheets for any of the periods presented. In connection with the spin-off transaction that occurred in October 2019, certain landlords required, in exchange for their consent to the transaction, that the Company's lease guarantees remain in place for a certain period of time following the spin-off. These guarantees could result in significant additional liabilities and obligations for the Company if Pennant were to default on their obligations under their leases with respect to these properties. U.S. Department of Justice Civil Investigative Demand — On May 31, 2018, the Company received a Civil Investigative Demand (CID) from the U.S. Department of Justice stating that it was investigating whether there had been a violation of the False Claims Act and/or the Anti-Kickback Statute with respect to relationships between certain of the Company’s independently operated skilled nursing facilities and persons who serve or have served as medical directors, advisory board participants or other potential referral sources. The CID covered the period from October 3, 2013 through 2018, and was limited in scope to ten of the Company’s Southern California independent operating entities. In October 2018, the Department of Justice made an additional request for information covering the period of January 1, 2011 through 2018, relating to the same topic. As a general matter, the Company’s independent operating entities have established and maintain policies and procedures to promote compliance with the False Claims Act, the Anti-Kickback Statute, and other applicable regulatory requirements. The Company has fully cooperated with the U.S. Department of Justice and promptly responded to the requests for information, and has been advised that the U.S. Department of Justice declined to intervene in any subsequent action filed by a relator in connection with the subject matter of this investigation. U.S. House of Representatives Select Subcommittee Request — The U.S. House of Representatives Select Subcommittee on the Coronavirus Crisis has launched a nation-wide investigation into the COVID-19 pandemic, which includes the impact of the coronavirus on residents and employees in nursing homes. In June 2020, the Company received a document and information request from the House Select Subcommittee. The Company is cooperating in responding to this inquiry. However, it is not possible to predict the ultimate outcome of any such investigation or whether and what other investigations or regulatory responses may result from the investigation and could have a material adverse effect on our reputation, business, financial condition, and results of operations. Litigation — The skilled nursing business involves a significant risk of liability given the age and health of the patients and residents served by the Company's independent operating subsidiaries. The Company, its independent operating subsidiaries, and others in the industry are subject to an increasing number of claims and lawsuits, including professional liability claims, alleging that services provided have resulted in personal injury, elder abuse, wrongful death or other related claims. In addition, the Company, its independent operating subsidiaries, and others in the industry are subject to claims and lawsuits in connection with COVID-19 and a facility's preparation for and/or response to COVID-19. The defense of these lawsuits may result in significant legal costs, regardless of the outcome, and can result in large settlement amounts or damage awards. In addition to the potential lawsuits and claims described above, the Company is also subject to potential lawsuits under the Federal False Claims Act and comparable state laws alleging submission of fraudulent claims for services to any healthcare program (such as Medicare) or payor. A violation may provide the basis for exclusion from Federally-funded healthcare programs. Such exclusions could have a correlative negative impact on the Company’s financial performance. Under the qui tam or "whistleblower" provisions of the False Claims Act, a private individual with knowledge of fraud may bring a claim on behalf of the Federal Government and receive a percentage of the Federal Government's recovery. Due to these whistleblower incentives, qui tam lawsuits have become more frequent. For example, and despite the decision of the U.S. Department of Justice to decline to participate in litigation based on the subject matter of its previously issued Civil Investigative Demand, the qui tam relator has continued on with the lawsuit and is pursuing claims that the Company has allegedly violated the False Claims Act and/or the Anti-Kickback Statute. In addition to the Federal False Claims Act, some states, including California, Arizona and Texas, have enacted similar whistleblower and false claims laws and regulations. Further, the Deficit Reduction Act of 2005 created incentives for states to enact anti-fraud legislation modeled on the Federal False Claims Act. As such, the Company could face increased scrutiny, potential liability and legal expenses and costs based on claims under state false claims acts in markets in which its independent operating subsidiaries do business. In May 2009, Congress passed the Fraud Enforcement and Recovery Act (FERA) which made significant changes to the Federal False Claims Act and expanded the types of activities subject to prosecution and whistleblower liability. Following changes by FERA, health care providers face significant penalties for the knowing retention of government overpayments, even if no false claim was involved. Health care providers can now be liable for knowingly and improperly avoiding or decreasing an obligation to pay money or property to the government. This includes the retention of any government overpayment. The government can argue, therefore, that a Federal False Claims Act violation can occur without any affirmative fraudulent action or statement, as long as the action or statement is knowingly improper. In addition, FERA extended protections against retaliation for whistleblowers, including protections not only for employees, but also contractors and agents. Thus, an employment relationship is generally not required in order to qualify for protection against retaliation for whistleblowing. Healthcare litigation (including class action litigation) is common and is filed based upon a wide variety of claims and theories, and the Company's independent operating subsidiaries are routinely subjected to varying types of claims, including class action "staffing" suits. These class-action “staffing” suits have the potential to result in large jury verdicts and settlements, and may result in significant legal costs. The Company expects the plaintiffs' bar to continue to be aggressive in their pursuit of these staffing and similar claims. While the Company has been able to settle these claims without an ongoing material adverse effect on its business, future claims could be brought that may materially affect its business, financial condition and results of operations. Other claims and suits, including class actions, continue to be filed against the Company and other companies in its industry. The Company and its independent operating subsidiaries have been subjected to, and are currently involved in, class action litigation alleging violations (alone or in combination) of state and federal wage and hour laws as related to the alleged failure to pay wages, to timely provide and au thorize meal and rest breaks, and related causes action. The Company does not believe that the ultimate resolution of these actions will have an ongoing material adverse effect on the Company’s business, cash flows, financial condition or results of operations. The Company and its independent operating subsidiaries have been, and continue to be, subject to claims and legal actions that arise in the ordinary course of business, including potential claims filed by residents and responsible parties related to patient care and treatment (professional negligence claims), as well as employment related claims filed by current or former employees. A significant increase in the number of these claims, or an increase in the amounts owing should plaintiffs be successful in their prosecution of these claims, could materially adversely affect the Company’s business, financial condition, results of operations and cash flows. The Company cannot predict or provide any assurance as to the possible outcome of any inquiry, investigation or litigation. If any such inquiry, investigation or litigation were to proceed, and the Company and its independent operating subsidiaries are subjected to, alleged to be liable for, or agree to a settlement of, claims or obligations under Federal Medicare statutes, the Federal False Claims Act, or similar state and federal statutes and related regulations, or if the Company or its independent operating subsidiaries are alleged or found to be liable on theories of general or professional negligence or wage and hour violations, the Company's business, financial condition and results of operations and cash flows could be materially and adversely affected and its stock price could be adversely impacted. Among other things, any settlement or litigation could involve the payment of substantial sums to settle any alleged violations, and may also include the assumption of specific procedural and financial obligations by the Company or its operating subsidiaries going forward under a corporate integrity agreement and/or other such arrangement. Medicare Revenue Recoupments — The Company's independent operating entities are subject to regulatory reviews relating to the provision of Medicare services, billings and potential overpayments as a result of Recovery Audit Contractors (RAC), Program Safeguard Contractors, and Medicaid Integrity Contractors programs (collectively referred to as Reviews). For several months during the COVID-19 pandemic, the Centers for Medicare and Medicaid Services (CMS) suspended its Targeted Probe and Educate Program. Beginning in August 2020, CMS resumed Targeted Probe and Educate Program activity. As of March 31, 2021, two of the Company's independent operating subsidiaries had Reviews scheduled, on appeal, or in a dispute resolution process. Subsequently, during April, one facility review was resolved and closed. The Company anticipates that these Reviews could increase in frequency in the future. If an operation fails a Review and/or subsequent Reviews, the operation could then be subject to extended review or an extrapolation of the identified error rate to billings in the same time period. As of March 31, 2021, the Company's independent operating subsidiaries have responded to the requests with respect to the claims currently under review, on appeal or in a dispute resolution process. Concentrations Credit Risk — The Company has significant accounts receivable balances, the collectability of which is dependent on the availability of funds from certain governmental programs, primarily Medicare and Medicaid. These receivables represent the only significant concentration of credit risk for the Company. The Company does not believe there are significant credit risks associated with these governmental programs. The Company believes that an appropriate allowance has been recorded for the possibility of these receivables proving uncollectible, and continually monitors and adjusts these allowances as necessary. The Company’s receivables from Medicare and Medicaid payor programs accounted for 57.2% and 58.3% of its total accounts receivable as of March 31, 2021 and December 31, 2020, respectively. Revenue from reimbursement under the Medicare and Medicaid programs accounted for 74.1% and 71.0% of the Company's service revenue for the three months ended March 31, 2021 and 2020, respectively. Cash in Excess of FDIC Limits — The Company currently has bank deposits with financial institutions in the U.S. that exceed FDIC insurance limits. FDIC insurance provides protection for bank deposits up to $250. In addition, the Company has uninsured bank deposits with a financial institution outside the U.S. As of April 26, 2021, the Company had approximately $424 in uninsured cash deposits. All uninsured bank deposits are held at high quality credit institutions. |
Common Stock Repurchase Program
Common Stock Repurchase Program | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
COMMON STOCK REPURCHASE PROGRAM | COMMON STOCK REPURCHASE PROGRAMAs approved by the Board of Directors on March 4, 2020 and March 13, 2020, the Company entered into two stock repurchase programs pursuant to which the Company was authorized to repurchase up to $20,000 and $5,000, respectively, of its common stock under the programs for a period of approximately 12 months. Under these programs, the Company was authorized to repurchase its issued and outstanding common shares from time to time in open-market and privately negotiated transactions and block trades in accordance with federal securities laws. During the first quarter of 2020, the Company repurchased 503 and 189 shares of its common stock for $20,000 and $5,000, respectively. These repurchase programs expired upon the repurchase of the full authorized amount under the two plans.As approved by the Board of Directors on August 26, 2019, the Company entered into a stock repurchase program pursuant to which the Company may repurchase up to $20,000 of its common stock under the program for a period of approximately 12 months. Under this program, the Company is authorized to repurchase its issued and outstanding common shares from time to time in open-market and privately negotiated transactions and block trades in accordance with federal securities laws. The Company repurchased 138 shares of its common stock for a total of $6,406 in fiscal year 2019 before the repurchase program was cancelled in the first quarter of 2020. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation — The accompanying Interim Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). The Company is the sole member or stockholder of various consolidated limited liability companies and corporations established to operate various acquired skilled nursing operations, senior living operations and related ancillary services. All intercompany transactions and balances have been eliminated in consolidation. The Company presents noncontrolling interests within the equity section of its condensed consolidated balance sheets and the amount of consolidated net income that is attributable to The Ensign Group, Inc. and the noncontrolling interest in its condensed consolidated statements of income. The condensed consolidated financial statements include the accounts of all entities controlled by the Company through its ownership of a majority voting interest. Additionally, the accounts of any variable interest entities (VIEs) where the Company is subject to a majority of the risk of loss from the VIE's activities are entitled to receive a majority of the entity's residual returns, or both. The Company assesses the requirements related to the consolidation of VIEs, including a qualitative assessment of power and economics that considers which entity has the power to direct the activities that "most significantly impact" the VIE's economic performance and has the obligation to absorb losses of, or the right to receive benefits that could be potentially significant to, the VIE. The Company's relationship with variable interest entities was not material during the three months ended March 31, 2021 and 2020. |
Reclassifications | Reclassifications — Certain prior period results have been reclassified to be consistent with the current period presentation. Prior period results also reflect reclassifications, for comparative purposes, related to the change in the Company's segment structure. Refer to Note 7, Business Segments |
Estimates and Assumptions | Estimates and Assumptions — The preparation of Interim Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Interim Financial Statements and the reported amounts of revenue and expenses during the reporting periods. The most significant estimates in the Company’s Interim Financial Statements relate to revenue, acquired property and equipment, intangible assets and goodwill, right-of-use-assets, impairment of long-lived assets, lease liabilities, general and professional liabilities, workers' compensation and healthcare claims included in accrued self-insurance liabilities, and income taxes. Actual results could differ from those estimates. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments — The Company’s financial instruments consist principally of cash and cash equivalents, debt security investments, accounts receivable, insurance subsidiary deposits, accounts payable and borrowings. The Company believes all of the financial instruments’ recorded values approximate fair values because of their nature or respective short durations. Contracts insuring the lives of certain employees who are eligible to participate in non-qualified deferred compensation plans are held in a rabbi trust. Cash surrender value of the contracts is based on performance measurement funds that shadow the deferral investment allocations made by participants in the deferred compensation plan. The fair value of the pooled investment funds is derived using Level 2 inputs. |
Revenue Recognition | Service Revenue Recognition — The Company recognizes revenue in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers Rental Revenue Recognition — |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts — |
Property and Equipment | Property and Equipment — three |
Leases and Leasehold Improvements | Leases and Leasehold Improvements — The Company leases skilled nursing facilities, senior living facilities and commercial office space. On January 1, 2019, the Company adopted Accounting Standards Codification Topic 842, Leases (ASC 842), electing the transition method that allows it to apply the standard as of the adoption date and record a cumulative adjustment in retained earnings. The Company determines if an arrangement is a lease at the inception of each lease. At the inception of each lease, the Company performs an evaluation to determine whether the lease should be classified as an operating or finance lease. As of March 31, 2021, the Company does not have any leases that are classified as finance leases. Rights and obligations of operating leases are included as right-of-use assets, current lease liabilities and long-term lease liabilities on the Company's condensed consolidated balance sheet. As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at lease commencement date in determining the present value of future lease payments. The Company utilized a third-party valuation specialist to assist in estimating the incremental borrowing rate. The Company records rent expense for operating leases on a straight-line basis over the term of the lease. The lease term used for straight-line rent expense is calculated from the date the Company is given control of the leased premises through the end of the lease term. Renewals are not assumed in the determination of the lease term unless they are deemed to be reasonably assured at the inception of the lease. The lease term used for this evaluation also provides the basis for establishing depreciable lives for buildings subject to lease and leasehold improvements. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets — |
Intangible Assets and Goodwill | Intangible Assets and Goodwill — Definite-lived intangible assets consist primarily of patient base, facility trade names and customer relationships. Patient base is amortized over a period of four The Company's indefinite-lived intangible assets consist of trade names, and Medicare and Medicaid licenses. The Company tests indefinite-lived intangible assets for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable. |
Self-Insurance | Self-Insurance — The Company is partially self-insured for general and professional liability claims up to a base amount per claim (the self-insured retention) with an aggregate, one-time deductible above this limit. Losses beyond these amounts are insured through third-party policies with coverage limits per claim, per location and on an aggregate basis for the Company. The combined self-insured retention is $500 per claim, subject to an additional one-time deductible of $750 for California affiliated operations and a separate, one-time, deductible of $1,000 for non-California operations. For all affiliated operations, except those located in Colorado, the third-party coverage above these limits is $1,000 per claim, $3,000 per operation, with a $5,000 blanket aggregate limit and an additional state-specific aggregate where required by state law. In Colorado, the third-party coverage above these limits is $1,000 per claim and $3,000 per operation, which is independent of the aforementioned blanket aggregate limits that apply outside of Colorado. The self-insured retention and deductible limits for general and professional liabilities and workers' compensation liabilities for all states (except Texas and Washington for workers' compensation) are self-insured through the Captive, the related assets and liabilities of which are included in the accompanying condensed consolidated balance sheets. The Captive is subject to certain statutory requirements as an insurance provider. The Company’s policy is to accrue amounts equal to the actuarial estimated costs to settle open claims of insureds, as well as an estimate of the cost of insured claims that have been incurred but not reported. The Company develops information about the size of the ultimate claims based on historical experience, current industry information and actuarial analysis, and evaluates the estimates for claim loss exposure on a quarterly basis. The Company uses actuarial valuations to estimate the liability based on historical experience and industry information. Accrued general liability and professional malpractice liabilities on an undiscounted basis, net of anticipated insurance recoveries, were $60,761 and $57,628 as of March 31, 2021 and December 31, 2020, respectively. The Company’s operating subsidiaries are self-insured for workers’ compensation liabilities in California. To protect itself against loss exposure in California with this policy, the Company has purchased individual specific excess insurance coverage that insures individual claims that exceed $625 per occurrence. In Texas, the operating subsidiaries have elected non-subscriber status for workers’ compensation claims and the Company has purchased individual stop-loss coverage that insures individual claims that exceed $750 per occurrence. The Company’s operating subsidiaries in all other states, with the exception of Washington, are under a loss sensitive plan that insures individual claims that exceed $350 per occurrence. In Washington, the operating subsidiaries' coverage is financed through premiums paid by the employers and employees. The claims and benefit payments are managed through a state insurance pool. Outside of California, Texas and Washington, the Company has purchased insurance coverage that insures individual claims that exceed $350 per occurrence. In all states except Washington, the Company accrues amounts equal to the estimated costs to settle open claims, as well as an estimate of the cost of claims that have been incurred but not reported. The Company uses actuarial valuations to estimate the liability based on historical experience and industry information. Accrued workers’ compensation liabilities are recorded on an undiscounted basis in the accompanying condensed consolidated balance sheets and were $25,078 and $24,499 as of March 31, 2021 and December 31, 2020, respectively. Effective April 1, 2021, the Company's operating subsidiaries in Washington are covered under the Company's self-insured program and the Company purchased individual specific excess insurance coverage that insures individual claims that exceed $500 per occurrence. In addition, the Company has recorded an asset and equal liability of $7,602 and $7,138 as of March 31, 2021 and December 31, 2020, respectively, in order to present the ultimate costs of malpractice and workers' compensation claims and the anticipated insurance recoveries on a gross basis. See Note 12 Restricted and Other Assets. The Company self-funds medical (including prescription drugs) and dental healthcare benefits to the majority of its employees. The Company is fully liable for all financial and legal aspects of these benefit plans. To protect itself against loss exposure with this policy, the Company has purchased individual stop-loss insurance coverage that insures individual claims that exceed $500 for each covered person for fiscal year 2021. The Company’s accrued liability under these plans recorded on an undiscounted basis in the accompanying condensed consolidated balance sheets was $8,436 and $7,533 as of March 31, 2021 and December 31, 2020, respectively. The Company believes that adequate provision has been made in the Interim Financial Statements for liabilities that may arise out of patient care, workers’ compensation, healthcare benefits and related services provided to date. The amount of the Company’s reserves was determined based on an estimation process that uses information obtained from both company-specific and industry data. This estimation process requires the Company to continuously monitor and evaluate the life cycle of the claims. Using data obtained from this monitoring and the Company’s assumptions about emerging trends, the Company, with the assistance of an independent actuary, develops information about the size of ultimate claims based on the Company’s historical experience and other available industry information. The most significant assumptions used in the estimation process include determining the trend in costs, the expected cost of claims incurred but not reported and the expected costs to settle or pay damage awards with respect to unpaid claims. The self-insured liabilities are based upon estimates, and while management believes that the estimates of loss are reasonable, the ultimate liability may be in excess of or less than the recorded amounts. Due to the inherent volatility of actuarially determined loss estimates, it is reasonably possible that the Company could experience changes in estimated losses that could be material to net income. If the Company’s actual liabilities exceed its estimates of losses, its future earnings, cash flows and financial condition would be adversely affected. |
Income Taxes | Income Taxes — Deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities at tax rates in effect when such temporary differences are expected to reverse. The Company generally expects to fully utilize its deferred tax assets; however, when necessary, the Company records a valuation allowance to reduce its net deferred tax assets to the amount that is more likely than not to be realized. In determining the need for a valuation allowance or the need for and magnitude of liabilities for uncertain tax positions, the Company makes certain estimates and assumptions. These estimates and assumptions are based on, among other things, knowledge of operations, markets, historical trends and likely future changes and, when appropriate, the opinions of advisors with knowledge and expertise in certain fields. Due to certain risks associated with the Company’s estimates and assumptions, actual results could differ. |
Noncontrolling Interest | Noncontrolling Interest — |
Stock-Based Compensation | Stock-Based Compensation — The Company measures and recognizes compensation expense for all stock-based payment awards made to employees and directors including employee stock options based on estimated fair values, ratably over the requisite service period of the award. Net income has been reduced as a result of the recognition of the fair value of all stock options and restricted stock awards issued, the amount of which is contingent upon the number of future grants and other variables. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements — Except for rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws and a limited number of grandfathered standards, the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. For any new pronouncements announced, the Company considers whether the new pronouncements could alter previous generally accepted accounting principles and determines whether any new or modified principles will have a material impact on the Company's reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company's financial management and certain standards are under consideration. Recent Accounting Standards Adopted by the Company In December 2019, the FASB issued Accounting Standards Update (ASU) 2019-12 "Simplifying the Accounting for Income Taxes (Topic 740)" as part of its simplification initiative to reduce the cost and complexity in accounting for income taxes. ASU 2019-12 removes certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also amends other aspects of the guidance to help simplify and promote consistent application of GAAP. The Company adopted this standard on January 1, 2021 and determined there was no material impact on the Company's financial position, results of operations and liquidity. In May 2020, the SEC issued Final Rule Release No. 33-10786 “ Amendments to Financial Disclosures about Acquired and Disposed Businesses ” (“SEC Rule 33-10786”), which amends the disclosure requirements applicable to acquisitions and dispositions of businesses. Amendments within SEC Rule 33-10786 primarily impact (1) the tests and thresholds used to determine the significance of acquisitions and dispositions; (2) the form and content of pro forma information required to be disclosed in connection with significant acquisitions and dispositions; (3) acquiree financial statement requirements; and (4) thresholds used to determine the significance of acquisitions and dispositions of real estate operations, and related financial statement requirements, among others. The Company adopted this standard on January 1, 2021 and determined there was no material impact on the Company's condensed consolidated financial statements. Accounting Standards Recently Issued but Not Yet Adopted by the Company In February 2020, the FASB issued ASU 2020-04 "Reference Rate Reform (Topic 848)," which provides temporary, optional practical expedients and exceptions to enable a smoother transition to reference rates which are expected to replace LIBOR reference rates. Adoption of the provisions of ASU 2020-04 is optional. The amendments are effective for all entities from the beginning of the interim period that includes the issuance date of the ASU. An entity may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the impact of ASU 2020-04 on its financial position, results of operations and liquidity. In November 2020, the SEC issued final rules 33-10890 and 34-90459 “ Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information ,” which modernizes and simplifies certain disclosure requirements of Regulation S-K. Certain key rule amendments eliminate the requirement to disclose Selected Financial Data; Selected Quarterly Financial Data, with certain exceptions; the impact of inflation and changing prices, provided the impact is not material; off-balance sheet arrangements in tabular form; and the aggregate amount of contractual obligations in tabular form. The final rules also amended various aspects of Item 303, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ,” among others. The final rules are effective for all registration statements, annual reports and quarterly reports filed on or after August 9, 2021, with early adoption permitted. The Company is currently evaluating the impact of the disclosure changes in its annual and quarterly report. |
Revenue and Accounts Receivab_2
Revenue and Accounts Receivable (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Service revenue for the three months ended March 31, 2021 and 2020 is summarized in the following tables: Three Months Ended March 31, 2021 2020 Revenue % of Revenue Revenue % of Revenue Medicaid (1) $ 231,358 37.1 % $ 224,195 38.3 % Medicare 190,303 30.5 155,584 26.6 Medicaid — skilled 39,993 6.5 36,009 6.1 Total Medicaid and Medicare 461,654 74.1 415,788 71.0 Managed care 108,345 17.4 102,029 17.4 Private and other (2) 53,277 8.5 68,134 11.6 Service revenue $ 623,276 100.0 % $ 585,951 100.0 % (1) Medicaid payor includes revenue for senior living operations and revenue related to FMAP for the three months ended March 31, 2021 and 2020. (2) Private and other payors also includes revenue from all payors generated in other an cillary services for the three months ended March 31, 2021 and 2020 . |
Schedule of Accounts, Notes, Loans and Financing Receivable | Accounts receivable as of March 31, 2021 and 2020, is summarized in the following table: March 31, 2021 December 31, 2020 Medicaid $ 121,942 $ 102,077 Managed care 71,830 61,743 Medicare 63,095 80,904 Private and other payors 66,801 69,056 323,668 313,780 Less: allowance for doubtful accounts (11,090) (8,718) Accounts receivable, net $ 312,578 $ 305,062 |
Computation of Net Income Per_2
Computation of Net Income Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic, by Common Class, Including Two Class Method | A reconciliation of the numerator and denominator used in the calculation of basic net income per common share follows: Three Months Ended March 31, 2021 2020 Numerator: Net income $ 49,837 $ 41,201 Less: net income attributable to noncontrolling interests 631 352 Net income attributable to The Ensign Group, Inc. $ 49,206 $ 40,849 Denominator: Weighted average shares outstanding for basic net income per share 54,192 53,475 Basic net income per common share: $ 0.91 $ 0.76 |
Schedule of Earnings Per Share, Diluted, by Common Class, Including Two Class Method | A reconciliation of the numerator and denominator used in the calculation of diluted net income per common share follows: Three Months Ended March 31, 2021 2020 Numerator: Net income $ 49,837 $ 41,201 Less: net income attributable to noncontrolling interests 631 352 Net income attributable to The Ensign Group, Inc. $ 49,206 $ 40,849 Denominator: Weighted average common shares outstanding 54,192 53,475 Plus: incremental shares from assumed conversion (1) 2,699 2,321 Adjusted weighted average common shares outstanding 56,891 55,796 Diluted net income per common share: $ 0.86 $ 0.73 (1) Options outstanding which are anti-dilutive and therefore not factored into the weighted average common shares amount above were 28 and 787 for the three months ended March 31, 2021 and 2020, respectivel |
Business Segments (Tables)
Business Segments (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The following tables set forth financial information for the segments: Three Months Ended March 31, 2021 Transitional and Skilled Services Real Estate All Other (1) Intercompany Elimination (2) Total Service revenue $ 601,036 $ — $ 22,240 $ — $ 623,276 Rental revenue — 15,879 — (11,902) 3,977 Total revenue $ 601,036 $ 15,879 $ 22,240 $ (11,902) $ 627,253 Segment income (loss) 88,931 8,821 (35,406) — 62,346 Gain on sale of real estate 440 Income before provision for income taxes $ 62,786 Depreciation and amortization 7,475 4,693 1,491 — 13,659 Other expense (income), net (3) $ — $ 1,641 $ (748) $ — $ 893 (1) General and administrative expense are included in the "all other" category. (2) Intercompany elimination represents rental income at the real estate segment generated from triple-net lease arrangements with the Company's affiliated wholly-owned healthcare facilities. Intercompany rental revenue is eliminated in consolidation, along with corresponding intercompany rent expenses of related healthcare facilities. (3) Other expense (income), net includes interest expense and interest revenue. Three Months Ended March 31, 2020 Transitional and Skilled Services Real Estate All Other (1) Intercompany Elimination (2) Total Service revenue $ 558,304 $ — $ 27,647 $ — $ 585,951 Rental revenue — 14,944 — (11,282) 3,662 Total revenue $ 558,304 $ 14,944 $ 27,647 $ (11,282) $ 589,613 Segment income (loss) 80,591 6,325 (33,090) — 53,826 Income before provision for income taxes $ 53,826 Depreciation and amortization 7,148 4,515 2,057 — 13,720 Other expense (income), net (3) $ — $ 3,665 $ (698) $ — $ 2,967 (1) General and administrative expense is included in the "all other" category (2) Intercompany elimination represents rental income at the real estate segment generated from triple-net lease arrangements with the Company's affiliated wholly-owned healthcare facilities. Intercompany rental revenue is eliminated in consolidation, along with corresponding intercompany rent expenses of related healthcare facilities. |
Reconciliation of Revenue from Segments to Consolidated | Service revenue by major payor source were as follows: Three Months Ended March 31, 2021 Transitional and Skilled Services All Other Total Service Revenue Revenue % Medicaid $ 227,741 $ 3,617 (1) $ 231,358 37.1 % Medicare 190,303 — 190,303 30.5 Medicaid-skilled 39,993 — 39,993 6.5 Subtotal 458,037 3,617 461,654 74.1 Managed care 108,345 — 108,345 17.4 Private and other 34,654 18,623 (2) 53,277 8.5 Total service revenue $ 601,036 $ 22,240 $ 623,276 100.0 % (1) Medicaid payor includes revenue for senior living operations and revenue related to FMAP for the three months ended March 31, 2021. (2) Private and other payors also includes revenue from senior living operations and all payors generated in other ancillary services for the three months ended March 31, 2021. Three Months Ended March 31, 2020 Transitional and Skilled Services All Other Total Service Revenue Revenue % Medicaid $ 220,969 $ 3,226 (1) $ 224,195 38.3 % Medicare 155,584 — 155,584 26.6 Medicaid-skilled 36,009 — 36,009 6.1 Subtotal 412,562 3,226 415,788 71.0 Managed care 102,029 — 102,029 17.4 Private and other 43,713 24,421 (2) 68,134 11.6 Total service revenue $ 558,304 $ 27,647 $ 585,951 100.0 % (1) Medicaid payor includes revenue for senior living operations and revenue related to FMAP for the three months ended March 31, 2020. |
Property and Equipment _ Net (T
Property and Equipment — Net (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment, net consists of the following: March 31, 2021 December 31, 2020 Land $ 101,236 $ 101,236 Buildings and improvements 557,616 555,416 Leasehold improvements 131,911 129,727 Equipment 239,867 233,453 Furniture and fixtures 4,498 4,409 Construction in progress 5,657 3,008 1,040,785 1,027,249 Less: accumulated depreciation (261,516) (249,005) Property and equipment, net $ 779,269 $ 778,244 |
Intangible Assets _ Net (Tables
Intangible Assets — Net (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Schedule of Finite-Lived Intangible Assets | March 31, 2021 December 31, 2020 Weighted Average Life (Years) Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Intangible Assets Net Net Assembled occupancy 0.4 $ 39 $ (39) $ — $ 39 $ (26) $ 13 Facility trade name 30.0 733 (372) 361 733 (366) 367 Customer relationships 18.4 4,582 (2,115) 2,467 4,640 (2,121) 2,519 Total $ 5,354 $ (2,526) $ 2,828 $ 5,412 $ (2,513) $ 2,899 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Estimated amortization expense for each of the years ending December 31 is as follows: Year Amount 2021 (remainder) $ 176 2022 234 2023 234 2024 234 2025 234 2026 234 Thereafter 1,482 $ 2,828 |
Goodwill and Other Indefinite_2
Goodwill and Other Indefinite-Lived Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The following table represents the goodwill value by transitional and skilled service segment and "all other" category, which includes other ancillary services, as of March 31, 2021 and December 31, 2020: Transitional and Skilled Services All Other Total Goodwill $ 45,486 $ 8,983 $ 54,469 |
Schedule of Other Indefinite-lived Intangible Assets by Major Class | Other indefinite-lived intangible assets consist of the following: March 31, 2021 December 31, 2020 Trade name $ 889 $ 889 Medicare and Medicaid licenses 2,657 2,827 $ 3,546 $ 3,716 |
Restricted and Other Assets (Ta
Restricted and Other Assets (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Restricted and Other Assets | Restricted and other assets consist of the following: March 31, 2021 December 31, 2020 Debt issuance costs, net $ 2,486 $ 2,664 Long-term insurance losses recoverable asset 7,602 7,138 Deposits with landlords 12,637 12,400 Capital improvement reserves with landlords and lenders 4,680 4,376 Cash surrender value of life insurance related to deferred compensation plan 14,017 6,577 Restricted and other assets $ 41,422 $ 33,155 |
Other Accrued Liabilities (Tabl
Other Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Payables and Accruals [Abstract] | |
Schedule of Other Accrued Liabilities | Other accrued liabilities consists of the following: March 31, 2021 December 31, 2020 Quality assurance fee $ 7,103 $ 6,631 Refunds payable 39,590 36,323 Resident advances 6,049 8,558 Unapplied state relief funds 5,700 6,520 Cash held in trust for patients 5,611 6,052 Dividends payable 2,886 2,868 Property taxes 7,656 9,222 Income tax payable 11,927 136 Other 11,117 11,008 Other accrued liabilities $ 97,639 $ 87,318 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | Debt consists of the following: March 31, 2021 December 31, 2020 Mortgage loans and promissory notes $ 116,957 $ 117,806 Less: current maturities (2,828) (2,960) Less: debt issuance costs, net (2,270) (2,302) Long term debt less current maturities $ 111,859 $ 112,544 |
Options and Awards (Tables)
Options and Awards (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The Company used the following assumptions for stock options granted during the three months ended March 31, 2021 and 2020: Grant Year Options Granted Weighted Average Risk-Free Rate Expected Life Weighted Average Volatility Weighted Average Dividend Yield 2021 136 0.8% 6.3 years 42.2% 0.2% 2020 145 1.3% 6.2 years 32.1% 0.4% |
Schedule of Weighted Average Grant Date Fair Value and Exercise Price of Options | For the three months ended March 31, 2021 and 2020, the following represents the exercise price and fair value displayed at grant date for stock option grants: Grant Year Granted Weighted Average Exercise Price Weighted Average Fair Value of Options 2021 136 $ 83.64 $ 33.99 2020 145 $ 51.20 $ 16.60 |
Schedule of Common Stock Outstanding Roll Forward | The following table represents the employee stock option activity during the three months ended March 31, 2021: Number of Options Outstanding Weighted Average Number of Weighted Average Exercise Price of Options Vested January 1, 2021 4,038 $ 27.71 2,148 $ 16.66 Granted 136 83.64 Forfeited (33) 41.27 Exercised (246) 15.78 March 31, 2021 3,895 $ 30.30 2,034 $ 17.73 |
Share-based Payment Arrangement, Option, Exercise Price Range | The following summary information reflects stock options outstanding, vested and related details as of March 31, 2021: Stock Options Outstanding Stock Options Vested Number Outstanding Black-Scholes Fair Value Remaining Contractual Life (Years) Vested and Exercisable Year of Grant Exercise Price 2011 $5.00 - $6.77 14 $ 38 0 14 2012 5.56 - 6.75 88 267 1 88 2013 6.76 - 9.74 165 712 2 165 2014 8.94 - 16.05 676 3,231 3 676 2015 18.20 - 21.39 303 2,362 4 303 2016 15.93 - 16.86 275 1,618 5 219 2017 15.80 - 19.41 336 1,977 6 184 2018 22.49 - 32.71 566 5,855 7 214 2019 41.07 - 45.76 698 10,955 8 147 2020 44.84 - 59.49 638 12,511 9 24 2021 $83.64 136 4,625 10 — Total 3,895 $ 44,151 2,034 |
Schedule of Aggregate Intrinsic Value of Options | The aggregate intrinsic value of options outstanding, vested and expected to vest as of March 31, 2021 and December 31, 2020 is as follows: Options March 31, 2021 December 31, 2020 Outstanding $ 247,457 $ 182,552 Vested 154,841 120,867 Expected to vest 80,008 53,366 |
Schedule of Nonvested Restricted Stock Units Activity | A summary of the status of the Company's non-vested restricted stock awards as of March 31, 2021 and changes during the three months ended March 31, 2021 is presented below: Non-Vested Restricted Awards Weighted Average Grant Date Fair Value Nonvested at January 1, 2021 591 $ 38.90 Granted 90 83.71 Vested (80) 64.35 Forfeited (9) 45.18 Nonvested at March 31, 2021 592 $ 42.16 |
Schedule of Stock-Based Compensation Expense | Stock-based compensation expense recognized for the Company's equity incentive plans and long-term incentive plan for the three months ended March 31, 2021 and 2020 was as follows: Three Months Ended March 31, 2021 2020 Stock-based compensation expense related to stock options $ 1,733 $ 1,419 Stock-based compensation expense related to restricted stock awards 1,838 1,598 Stock-based compensation expense related to stock options and restricted stock awards to non-employee directors 483 218 Total $ 4,054 $ 3,235 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
Lease, Cost | The components of operating lease expense are as follows: Three Months Ended March 31, 2021 2020 Rent - cost of services (1) $ 33,456 $ 32,330 General and administrative expense 20 17 Depreciation and amortization (2) 290 354 Variable lease costs (3) 3,443 3,211 $ 37,209 $ 35,912 (1) Rent- cost of services includes deferred rent expense adju stments of $112 and $125 for the three months ended March 31, 2021 and 2020, respectively. Additionally, rent- cost of services includes other variable lease costs such as CPI increases and short-term leases of $584 and $594 for the three months ended March 31, 2021 and 2020, respectively. (2) Depreciation and amortization is related to the amortization of favorable and direct lease costs. (3) Variable lease costs, including property taxes and insurance, are classified in cost of services in the Company's condensed consolidated statements of income. |
Lessee, Operating Lease, Liability, Maturity | Future minimum lease payments for all leases as of March 31, 2021 are as follows: Year Amount 2021 (remainder) $ 98,448 2022 131,211 2023 129,521 2024 128,600 2025 128,506 2026 128,383 Thereafter 957,340 Total lease payments 1,702,009 Less: present value adjustment (678,274) Present value of total lease liabilities 1,023,735 Less: current lease liabilities (50,056) Long-term operating lease liabilities $ 973,679 |
Operating Lease, Lease Income | Total rental income from all third-party sources for the three months ended March 31, 2021 and 2020 is as follows: Three Months Ended March 31, 2021 2020 Pennant (1) $ 3,488 $ 3,101 Other third-party 489 561 $ 3,977 $ 3,662 |
Lessor, Operating Lease, Payments to be Received, Maturity | Future annual rental income for all leases as of March 31, 2021 were as follows: Year Amount (1) 2021 (remainder) $ 11,671 2022 15,053 2023 14,790 2024 14,170 2025 13,952 2026 13,772 Thereafter 85,281 Total $ 168,689 |
Description of Business (Detail
Description of Business (Details) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021bedfacilitysegment | Sep. 30, 2020segment | Mar. 31, 2020bedfacility | Oct. 01, 2019facility | |
Restructuring Cost and Reserve [Line Items] | ||||
Health care facilities | 232 | |||
Operational skilled nursing beds | bed | 23,600 | |||
Operational senior living units | bed | 2,200 | |||
Number of real estate properties leased | 168 | |||
Number of real estate properties leased with an option to purchase | 11 | |||
Number of real estate properties | 94 | |||
Number of reportable segments | segment | 2 | 1 | ||
Wholly Owned Properties | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Number of real estate properties | 64 | |||
Senior Living Facilities | The Pennant Group, Inc. | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Number of real estate properties | 2 | |||
Spinoff | Senior Living Facilities | The Pennant Group, Inc. | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Number of real estate properties | 31 | 29 | ||
Skilled Nursing Operations | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Operational skilled nursing beds | bed | 447 | 247 | ||
Remaining Company | Skilled Nursing Operations | Spinoff | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Number of real estate properties | 2 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Property and Equipment (Details) | 3 Months Ended |
Mar. 31, 2021 | |
Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 3 years |
Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 59 years |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Impairment of Long-Lived Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Accounting Policies [Abstract] | ||
Impairment of long-lived assets | $ 0 | $ 0 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Intangible Assets and Goodwill (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill and intangible asset impairment | $ 0 | $ 0 |
Facility trade name | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible asset, useful life | 30 years | |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible asset, useful life | 20 years | |
Minimum | Assembled occupancy | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible asset, useful life | 4 months | |
Maximum | Assembled occupancy | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible asset, useful life | 8 months |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Self-Insurance General and Professional (Details) - USD ($) $ in Thousands | Apr. 01, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Long-term insurance losses recoverable asset | $ 7,602 | $ 7,138 | |
General and Professional Liability | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Malpractice loss contingency, accrual, undiscounted | 60,761 | 57,628 | |
Health | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Self insurance reserve | 8,436 | $ 7,533 | |
Self-Insurance Retention Per Claim | General Liability | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Self insurance reserve | $ 500 | ||
Self-Insurance Retention Per Claim | Parent Company | General Liability | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Self insurance reserve | 500 | ||
Aggregate Deductible | Parent Company | California | General Liability | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Self insurance reserve | 750 | ||
Aggregate Deductible | Parent Company | Non-California | General Liability | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Self insurance reserve | 1,000 | ||
Blanket Aggregate | Third-Party Payor | All States Except Colorado | General Liability | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Self insurance reserve | 5,000 | ||
Per Occurence | Third-Party Payor | All States Except Colorado | General Liability | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Self insurance reserve | 1,000 | ||
Per Occurence | Third-Party Payor | Colorado | General Liability | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Self insurance reserve | 1,000 | ||
Per Facility | Third-Party Payor | All States Except Colorado | General Liability | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Self insurance reserve | 3,000 | ||
Per Facility | Third-Party Payor | Colorado | General Liability | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Self insurance reserve | $ 3,000 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Self-Insurance Workers' Compensation (Details) - USD ($) $ in Thousands | Apr. 01, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
Workers' Compensation | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Self insurance reserve | $ 25,078 | $ 24,499 | |
Workers' Compensation | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Self insurance reserve | 625 | ||
Workers' Compensation | TEXAS | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Self insurance reserve | 750 | ||
Workers' Compensation | Loss-Sensitive Limit Per Claim | Other States, Except California, Texas and Washington | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Self insurance reserve | 350 | ||
General Liability | Self-Insurance Retention Per Claim | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Self insurance reserve | $ 500 | ||
General Liability | Self-Insurance Retention Per Claim | Parent Company | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Self insurance reserve | $ 500 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Self Insurance Recoveries (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Accounting Policies [Abstract] | ||
Long-term insurance losses recoverable asset | $ 7,602 | $ 7,138 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Self-Insurance Health Insurance (Details) $ in Thousands | Mar. 31, 2021USD ($) |
Health Liability Insurance | Stop-Loss Insurance Limit Per Claim | |
Liability for Claims and Claims Adjustment Expense [Line Items] | |
Self insurance reserve | $ 500 |
COVID-19 UPDATE (Details)
COVID-19 UPDATE (Details) - USD ($) $ in Thousands | Apr. 01, 2021 | Mar. 31, 2021 | Jul. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 |
Subsequent Event [Line Items] | ||||||
Coronavirus Aid, Relief, and Economic Security (“CARES”) Funds Received | $ 9,139 | |||||
Medicare Accelerated and Advance Payment | 105,255 | |||||
Repayment of Medicare Accelerated and Advance Payment Program | $ 102,023 | $ 3,232 | ||||
Unapplied state relief funds | 5,700 | 5,700 | $ 6,520 | |||
FMAP payments received | 15,645 | $ 730 | ||||
Revenue, FMAP payments received | 16,465 | |||||
Total deferred payment of social security taxes | 48,309 | 48,309 | ||||
Deferred payment of social security taxes, current | 24,155 | 24,155 | ||||
Deferred payment of social security taxes, noncurrent | $ 24,154 | $ 24,154 | ||||
Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Coronavirus Aid, Relief, and Economic Security (“CARES”) Funds Received | $ 2,083 |
Revenue and Accounts Receivab_3
Revenue and Accounts Receivable - Revenue from Medicare and Medicaid Programs (Details) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Customer Concentration Risk | Revenue Benchmark | Total Medicare and Medicaid | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk | 74.10% | 71.00% |
Revenue and Accounts Receivab_4
Revenue and Accounts Receivable - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 627,253 | $ 589,613 |
Rental revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 3,977 | 3,662 |
Service revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 623,276 | $ 585,951 |
Customer Concentration Risk | Revenue Benchmark | Service revenue | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk | 100.00% | 100.00% |
Medicaid | Service revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 231,358 | $ 224,195 |
Medicaid | Customer Concentration Risk | Revenue Benchmark | Service revenue | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk | 37.10% | 38.30% |
Medicare | Service revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 190,303 | $ 155,584 |
Medicare | Customer Concentration Risk | Revenue Benchmark | Service revenue | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk | 30.50% | 26.60% |
Medicaid — skilled | Service revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 39,993 | $ 36,009 |
Medicaid — skilled | Customer Concentration Risk | Revenue Benchmark | Service revenue | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk | 6.50% | 6.10% |
Total Medicaid and Medicare | Service revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 461,654 | $ 415,788 |
Total Medicaid and Medicare | Customer Concentration Risk | Revenue Benchmark | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk | 74.10% | 71.00% |
Total Medicaid and Medicare | Customer Concentration Risk | Revenue Benchmark | Service revenue | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk | 74.10% | 71.00% |
Managed care | Service revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 108,345 | $ 102,029 |
Managed care | Customer Concentration Risk | Revenue Benchmark | Service revenue | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk | 17.40% | 17.40% |
Private and other | Service revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 53,277 | $ 68,134 |
Private and other | Customer Concentration Risk | Revenue Benchmark | Service revenue | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk | 8.50% | 11.60% |
Revenue and Accounts Receivab_5
Revenue and Accounts Receivable - Accounts Receivable (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | $ 323,668 | $ 313,780 |
Less: allowance for doubtful accounts | (11,090) | (8,718) |
Accounts receivable, net | 312,578 | 305,062 |
Medicaid | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | 121,942 | 102,077 |
Managed care | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | 71,830 | 61,743 |
Medicare | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | 63,095 | 80,904 |
Private and other payors | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | $ 66,801 | $ 69,056 |
Computation of Net Income Per_3
Computation of Net Income Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Numerator: | ||
Net income from continuing operations | $ 49,837 | $ 41,201 |
Less: net income attributable to noncontrolling interests | 631 | 352 |
Net income attributable to The Ensign Group, Inc. | $ 49,206 | $ 40,849 |
Denominator: | ||
Weighted average shares outstanding for basic net income per share (in shares) | 54,192 | 53,475 |
Plus: incremental shares from assumed conversion (in shares) | 2,699 | 2,321 |
Adjusted weighted average common shares outstanding (in shares) | 56,891 | 55,796 |
Basic net income from continuing operations (in dollars per share) | $ 0.91 | $ 0.76 |
Diluted net income from continuing operations (in dollars per share) | $ 0.86 | $ 0.73 |
Antidilutive securities excluded from computation of earnings per share, amount (in shares) | 28 | 787 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Fair Value, of Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Fair Value, Inputs, Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents, fair value disclosure | $ 155,527 | $ 236,562 |
Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash surrender value of life insurance related to deferred compensation plan | $ 14,017 | $ 6,577 |
Fair Value Measurements - Inves
Fair Value Measurements - Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Debt Security, Corporate, US | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Debt securities, held-to-maturity | $ 48,993 | $ 45,554 |
Business Segments - Narrative (
Business Segments - Narrative (Details) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021facilitysegment | Sep. 30, 2020segment | Mar. 31, 2020facility | Oct. 01, 2019facility | |
Segment Reporting Information [Line Items] | ||||
Number of reportable segments | segment | 2 | 1 | ||
Transitional and skilled service facilities | 200 | |||
Transitional and skilled services and senior living campuses | 23 | |||
Number of real estate properties | 94 | |||
Senior living facilities | 9 | |||
Spinoff | Remaining Company | Skilled Nursing Operations | ||||
Segment Reporting Information [Line Items] | ||||
Number of real estate properties | 2 | |||
The Pennant Group, Inc. | Senior Living Facilities | ||||
Segment Reporting Information [Line Items] | ||||
Number of real estate properties | 2 | |||
The Pennant Group, Inc. | Senior Living Facilities | Spinoff | ||||
Segment Reporting Information [Line Items] | ||||
Number of real estate properties | 31 | 29 | ||
Wholly Owned Properties | ||||
Segment Reporting Information [Line Items] | ||||
Number of real estate properties | 64 |
Business Segments - Schedule of
Business Segments - Schedule of Segment Reporting Information, by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Segment Reporting Information [Line Items] | ||
Total revenue | $ 627,253 | $ 589,613 |
Segment income (loss) | 62,346 | 53,826 |
Gain on sale of real estate | 440 | |
Income before provision for income taxes | 62,786 | 53,826 |
Depreciation and amortization | 13,659 | 13,720 |
Other income (expense), net | 893 | 2,967 |
Service revenue | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 623,276 | 585,951 |
Rental revenue | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 3,977 | 3,662 |
Operating Segments | Transitional and Skilled Services | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 601,036 | 558,304 |
Segment income (loss) | 88,931 | 80,591 |
Depreciation and amortization | 7,475 | 7,148 |
Other income (expense), net | 0 | 0 |
Operating Segments | Transitional and Skilled Services | Service revenue | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 601,036 | 558,304 |
Operating Segments | Transitional and Skilled Services | Rental revenue | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 0 | 0 |
Operating Segments | Real Estate | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 15,879 | 14,944 |
Segment income (loss) | 8,821 | 6,325 |
Depreciation and amortization | 4,693 | 4,515 |
Other income (expense), net | 1,641 | 3,665 |
Operating Segments | Real Estate | Service revenue | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 0 | 0 |
Operating Segments | Real Estate | Rental revenue | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 15,879 | 14,944 |
All Other | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 22,240 | 27,647 |
Segment income (loss) | (35,406) | (33,090) |
Depreciation and amortization | 1,491 | 2,057 |
Other income (expense), net | (748) | (698) |
All Other | Service revenue | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 22,240 | 27,647 |
All Other | Rental revenue | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 0 | 0 |
Intercompany Eliminations | ||
Segment Reporting Information [Line Items] | ||
Total revenue | (11,902) | (11,282) |
Segment income (loss) | 0 | 0 |
Depreciation and amortization | 0 | 0 |
Other income (expense), net | 0 | 0 |
Intercompany Eliminations | Service revenue | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 0 | 0 |
Intercompany Eliminations | Rental revenue | ||
Segment Reporting Information [Line Items] | ||
Total revenue | $ (11,902) | $ (11,282) |
Business Segments - Revenue by
Business Segments - Revenue by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenue | $ 627,253 | $ 589,613 |
Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenue | $ 623,276 | $ 585,951 |
Revenue Benchmark | Customer Concentration Risk | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Concentration risk | 100.00% | 100.00% |
Medicaid | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenue | $ 231,358 | $ 224,195 |
Medicaid | Revenue Benchmark | Customer Concentration Risk | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Concentration risk | 37.10% | 38.30% |
Medicare | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenue | $ 190,303 | $ 155,584 |
Medicare | Revenue Benchmark | Customer Concentration Risk | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Concentration risk | 30.50% | 26.60% |
Medicaid — skilled | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenue | $ 39,993 | $ 36,009 |
Medicaid — skilled | Revenue Benchmark | Customer Concentration Risk | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Concentration risk | 6.50% | 6.10% |
Total Medicaid and Medicare | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenue | $ 461,654 | $ 415,788 |
Total Medicaid and Medicare | Revenue Benchmark | Customer Concentration Risk | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Concentration risk | 74.10% | 71.00% |
Total Medicaid and Medicare | Revenue Benchmark | Customer Concentration Risk | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Concentration risk | 74.10% | 71.00% |
Managed care | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenue | $ 108,345 | $ 102,029 |
Managed care | Revenue Benchmark | Customer Concentration Risk | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Concentration risk | 17.40% | 17.40% |
Private and other | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenue | $ 53,277 | $ 68,134 |
Private and other | Revenue Benchmark | Customer Concentration Risk | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Concentration risk | 8.50% | 11.60% |
Operating Segments | Transitional and Skilled Services | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenue | $ 601,036 | $ 558,304 |
Operating Segments | Transitional and Skilled Services | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenue | 601,036 | 558,304 |
Operating Segments | Medicaid | Transitional and Skilled Services | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenue | 227,741 | 220,969 |
Operating Segments | Medicare | Transitional and Skilled Services | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenue | 190,303 | 155,584 |
Operating Segments | Medicaid — skilled | Transitional and Skilled Services | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenue | 39,993 | 36,009 |
Operating Segments | Total Medicaid and Medicare | Transitional and Skilled Services | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenue | 458,037 | 412,562 |
Operating Segments | Managed care | Transitional and Skilled Services | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenue | 108,345 | 102,029 |
Operating Segments | Private and other | Transitional and Skilled Services | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenue | 34,654 | 43,713 |
All Other | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenue | 22,240 | 27,647 |
All Other | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenue | 22,240 | 27,647 |
All Other | Medicaid | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenue | 3,617 | 3,226 |
All Other | Medicare | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenue | 0 | 0 |
All Other | Medicaid — skilled | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenue | 0 | 0 |
All Other | Total Medicaid and Medicare | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenue | 3,617 | 3,226 |
All Other | Managed care | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenue | 0 | 0 |
All Other | Private and other | Service revenue | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Total revenue | $ 18,623 | $ 24,421 |
Operation Expansions - Narrativ
Operation Expansions - Narrative (Details) $ in Thousands | Apr. 01, 2021operationbed | Mar. 31, 2021bedfacilityoperation | Mar. 31, 2020USD ($)operationfacilitybed |
Business Acquisition [Line Items] | |||
Operational skilled nursing beds | bed | 23,600 | ||
Operational senior living units | bed | 2,200 | ||
Payments to acquire business and asset acquisitions | $ 14,054 | ||
Number of real estate properties | facility | 94 | ||
8051 Services, Skilled Nursing Care Facilities | Subsequent Event | |||
Business Acquisition [Line Items] | |||
Number of businesses acquired | operation | 3 | ||
Operational skilled nursing beds | bed | 322 | ||
Asset Acquisition | Buildings and improvements | |||
Business Acquisition [Line Items] | |||
Property, plant and equipment | 9,669 | ||
Asset Acquisition | Land | |||
Business Acquisition [Line Items] | |||
Property, plant and equipment | 4,080 | ||
Asset Acquisition | Furniture and fixtures | |||
Business Acquisition [Line Items] | |||
Property, plant and equipment | 236 | ||
Asset Acquisition | Assembled occupancy | |||
Business Acquisition [Line Items] | |||
Property, plant and equipment | $ 69 | ||
The Pennant Group, Inc. | Senior Living Facilities | |||
Business Acquisition [Line Items] | |||
Number of real estate properties | facility | 2 | ||
Skilled Nursing Operations | |||
Business Acquisition [Line Items] | |||
Number of businesses acquired | operation | 4 | 3 | |
Operational skilled nursing beds | bed | 447 | 247 | |
Owned Properties | |||
Business Acquisition [Line Items] | |||
Number of businesses acquired | facility | 2 | ||
Senior Living Facilities | |||
Business Acquisition [Line Items] | |||
Number of businesses acquired | operation | 1 | ||
Operational senior living units | facility | 162 |
Property and Equipment _ Net (D
Property and Equipment — Net (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 1,040,785 | $ 1,027,249 |
Less: accumulated depreciation | (261,516) | (249,005) |
Property and equipment, net | 779,269 | 778,244 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 101,236 | 101,236 |
Buildings and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 557,616 | 555,416 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 131,911 | 129,727 |
Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 239,867 | 233,453 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 4,498 | 4,409 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 5,657 | $ 3,008 |
Intangible Assets _ Net - Sched
Intangible Assets — Net - Schedule of Finite Lived Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 5,354 | $ 5,412 |
Accumulated Amortization | (2,526) | (2,513) |
Net | $ 2,828 | 2,899 |
Assembled occupancy | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Life (Years) | 4 months 24 days | |
Gross Carrying Amount | $ 39 | 39 |
Accumulated Amortization | (39) | (26) |
Net | $ 0 | 13 |
Facility trade name | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Life (Years) | 30 years | |
Gross Carrying Amount | $ 733 | 733 |
Accumulated Amortization | (372) | (366) |
Net | $ 361 | 367 |
Customer relationships | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Life (Years) | 18 years 4 months 24 days | |
Gross Carrying Amount | $ 4,582 | 4,640 |
Accumulated Amortization | (2,115) | (2,121) |
Net | $ 2,467 | $ 2,519 |
Intangible Assets _ Net - Narra
Intangible Assets — Net - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of intangible assets | $ 361 | $ 674 |
Operating lease expense | 37,209 | 35,912 |
Depreciation and amortization | ||
Finite-Lived Intangible Assets [Line Items] | ||
Operating lease expense | $ 290 | $ 354 |
Intangible Assets _ Net - Futur
Intangible Assets — Net - Future Amortization (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Year | ||
2021 (remainder) | $ 176 | |
2022 | 234 | |
2023 | 234 | |
2024 | 234 | |
2025 | 234 | |
2026 | 234 | |
Thereafter | 1,482 | |
Net | $ 2,828 | $ 2,899 |
Goodwill and Other Indefinite_3
Goodwill and Other Indefinite-Lived Intangible Assets - Goodwill Rollforward (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Goodwill [Line Items] | ||
Goodwill | $ 54,469 | $ 54,469 |
Operating Segments | Transitional and Skilled Services | ||
Goodwill [Line Items] | ||
Goodwill | 45,486 | 45,486 |
All Other | ||
Goodwill [Line Items] | ||
Goodwill | $ 8,983 | $ 8,983 |
Goodwill and Other Indefinite_4
Goodwill and Other Indefinite-Lived Intangible Assets - Indefinite-Lived Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Indefinite-lived Intangible Assets [Line Items] | ||
Medicare and Medicaid licenses | $ 3,546 | $ 3,716 |
Trade name | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Medicare and Medicaid licenses | 889 | 889 |
Medicare and Medicaid licenses | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Medicare and Medicaid licenses | $ 2,657 | $ 2,827 |
Restricted and Other Assets - S
Restricted and Other Assets - Schedule of Restricted and Other Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Debt issuance costs, net | $ 2,486 | $ 2,664 |
Long-term insurance losses recoverable asset | 7,602 | 7,138 |
Deposits with landlords | 12,637 | 12,400 |
Capital improvement reserves with landlords and lenders | 4,680 | 4,376 |
Cash surrender value of life insurance related to deferred compensation plan | 14,017 | 6,577 |
Restricted and other assets | $ 41,422 | $ 33,155 |
Restricted and Other Assets - N
Restricted and Other Assets - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Gain on deferral investment | $ 306 | |
Deferral investment expense | $ 351 | $ 87 |
Other Accrued Liabilities (Deta
Other Accrued Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 |
Payables and Accruals [Abstract] | |||
Quality assurance fee | $ 7,103 | $ 6,631 | |
Refunds payable | 39,590 | 36,323 | |
Resident advances | 6,049 | 8,558 | |
Unapplied state relief funds | 5,700 | 6,520 | |
Cash held in trust for patients | 5,611 | 6,052 | |
Dividends payable | 2,886 | 2,868 | $ 2,683 |
Property taxes | 7,656 | 9,222 | |
Income tax payable | 11,927 | 136 | |
Other | 11,117 | 11,008 | |
Other accrued liabilities | $ 97,639 | $ 87,318 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Provision for income taxes | $ 12,949 | $ 12,625 |
Total income tax provision | 20.60% | 23.50% |
Debt - Schedule of Long term de
Debt - Schedule of Long term debt (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||
Less: current maturities | $ (2,828) | $ (2,960) |
Less: debt issuance costs, net | (2,270) | (2,302) |
Long-term debt—less current maturities | 111,859 | 112,544 |
Mortgage loans and promissory notes | Mortgage loans and promissory notes | ||
Debt Instrument [Line Items] | ||
Mortgage loans and promissory notes | 116,957 | $ 117,806 |
Less: current maturities | $ (2,828) |
Debt - Mortgage Loans and Promi
Debt - Mortgage Loans and Promissory Notes and Off-Balance Sheet Arrangements (Details) $ in Thousands | May 01, 2015 | Mar. 31, 2021USD ($)facility | Dec. 31, 2020USD ($) |
Debt Instrument [Line Items] | |||
Amount outstanding, current | $ 2,828 | $ 2,960 | |
Letters of credit outstanding, pledged amount | 7,580 | ||
Mortgage loans and promissory notes | Notes Payable Other Payables | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | 116,957 | $ 117,806 | |
Amount outstanding, current | 2,828 | ||
Long-term debt—less current maturities | $ 114,129 | ||
Mortgage loans and promissory notes | Mortgages | |||
Debt Instrument [Line Items] | |||
Number of operating subsidiaries | facility | 19 | ||
Notes payable | $ 113,304 | ||
Prepayment penalty reduced rate during first three years | 10.00% | ||
Prepayment penalty reduced rate during the fourth year | 3.00% | ||
Prepayment penalty reduced rate for the fifth through tenth years | 1.00% | ||
Mortgage loans and promissory notes | Mortgages | Minimum | |||
Debt Instrument [Line Items] | |||
Debt Instrument, pre-payment fee reduction, term | 5 years | ||
Debt instrument, term | 25 years | ||
Mortgage loans and promissory notes | Mortgages | Maximum | |||
Debt Instrument [Line Items] | |||
Debt Instrument, pre-payment fee reduction, term | 10 years | ||
Debt instrument, term | 35 years | ||
Mortgage loans and promissory notes | Notes Payable to Banks | Minimum | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate, stated percentage | 2.60% | ||
Mortgage loans and promissory notes | Notes Payable to Banks | Maximum | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate, stated percentage | 3.50% | ||
Mortgage loans and promissory notes | Promissory Note, 5.3% | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate, stated percentage | 5.30% | ||
Mortgage loans and promissory notes | Promissory Note, 5.3% | Minimum | |||
Debt Instrument [Line Items] | |||
Debt instrument, term | 12 years |
Debt - Credit Facility with a L
Debt - Credit Facility with a Lending Consortium Arranged by SunTrust (Details) - Truist - Revolving credit facility with Truist | Oct. 01, 2019USD ($) | Mar. 31, 2021USD ($) |
Debt Instrument [Line Items] | ||
Total net debt ratio, maximum | 3 | |
Long-term debt, threshold for EBITDA ratio increase election | $ 50,000,000 | |
Total net debt ratio, maximum after increase election | 3.50 | |
Total net debt ratio, minimum | 1.50 | |
Minimum | ||
Debt Instrument [Line Items] | ||
Line of credit facility, unused capacity, commitment fee percentage | 0.25% | |
Maximum | ||
Debt Instrument [Line Items] | ||
Line of credit facility, unused capacity, commitment fee percentage | 0.45% | |
Third Amended Credit Facility | ||
Debt Instrument [Line Items] | ||
Line of credit facility, maximum borrowing capacity | $ 350,000,000 | |
Long-term debt, gross | $ 0 | |
Base Rate | Minimum | ||
Debt Instrument [Line Items] | ||
Interest rate margin | 0.50% | |
Base Rate | Maximum | ||
Debt Instrument [Line Items] | ||
Interest rate margin | 1.50% | |
LIBOR | Minimum | ||
Debt Instrument [Line Items] | ||
Interest rate margin | 1.50% | |
LIBOR | Maximum | ||
Debt Instrument [Line Items] | ||
Interest rate margin | 2.50% |
Options and Awards - Stock Opti
Options and Awards - Stock Options Narrative (Details) shares in Thousands | May 25, 2017installmentshares | Mar. 31, 2021plan$ / sharesshares | Mar. 31, 2020$ / shares | Oct. 01, 2019shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of option plans | plan | 1 | |||
Award vesting period | 5 years | |||
Grant date intrinsic value (in dollars per share) | $ / shares | $ 0 | $ 0 | ||
2017 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares authorized (in shares) | 6,881 | |||
Conversion to reduce shares availability | 1 | |||
Other than options, conversion to reduce shares availability | 2.5 | |||
Award vesting period | 5 years | |||
Award vesting rights, percentage | 20.00% | |||
Expiration period | 10 years | |||
Number of shares available for grant (in shares) | 2,839 | |||
2017 Plan | Non-employee directors | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of installments | installment | 3 | |||
Award requisite service period | 3 years | |||
Spinoff | 2017 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares authorized (in shares) | 8,118 |
Options and Awards - Valuation
Options and Awards - Valuation Assumptions (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | ||
Options Granted (in shares) | 136 | 145 |
Weighted Average Risk-Free Rate | 0.80% | 1.30% |
Expected Life | 6 years 3 months 18 days | 6 years 2 months 12 days |
Weighted Average Volatility | 42.20% | 32.10% |
Weighted Average Dividend Yield | 0.20% | 0.40% |
Options and Awards - Exercise P
Options and Awards - Exercise Price and Fair Value (Details) - $ / shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | ||
Granted (in shares) | 136 | 145 |
Weighted Average Exercise Price (in dollars per share) | $ 83.64 | $ 51.20 |
Weighted Average Fair Value of Options (in dollars per share) | $ 33.99 | $ 16.60 |
Options and Awards - Options Ou
Options and Awards - Options Outstanding Rollforward (Details) - $ / shares shares in Thousands | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Number of Options Outstanding | |||
Balance at beginning of period, (in shares) | 4,038 | ||
Granted (in shares) | 136 | 145 | |
Forfeited (in shares) | (33) | ||
Exercised (in shares) | (246) | ||
Balance at end of period, (in shares) | 3,895 | ||
Weighted Average Exercise Price | |||
Balance at beginning of period, (in dollars per share) | $ 27.71 | ||
Granted (in dollars per share) | 83.64 | $ 51.20 | |
Forfeited (in dollars per share) | 41.27 | ||
Exercised (in dollars per share) | 15.78 | ||
Balance at end of period, (in dollars per share) | $ 30.30 | ||
Number of options vested (in shares) | 2,034 | 2,148 | |
Weighted average exercise price of options vested (in dollars per share) | $ 17.73 | $ 16.66 |
Options and Awards - Options _2
Options and Awards - Options Outstanding by Exercise Price (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended |
Mar. 31, 2021USD ($)$ / sharesshares | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Number outstanding (in shares) | 3,895 |
Black-Scholes Fair Value | $ | $ 44,151 |
Stock options vested and exercisable (in shares) | 2,034 |
2011 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price, lower range limit (in dollars per share) | $ / shares | $ 5 |
Exercise price, upper range limit (in dollars per share) | $ / shares | $ 6.77 |
Number outstanding (in shares) | 14 |
Black-Scholes Fair Value | $ | $ 38 |
Remaining Contractual Life (Years) | 0 years |
Stock options vested and exercisable (in shares) | 14 |
2012 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price, lower range limit (in dollars per share) | $ / shares | $ 5.56 |
Exercise price, upper range limit (in dollars per share) | $ / shares | $ 6.75 |
Number outstanding (in shares) | 88 |
Black-Scholes Fair Value | $ | $ 267 |
Remaining Contractual Life (Years) | 1 year |
Stock options vested and exercisable (in shares) | 88 |
2013 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price, lower range limit (in dollars per share) | $ / shares | $ 6.76 |
Exercise price, upper range limit (in dollars per share) | $ / shares | $ 9.74 |
Number outstanding (in shares) | 165 |
Black-Scholes Fair Value | $ | $ 712 |
Remaining Contractual Life (Years) | 2 years |
Stock options vested and exercisable (in shares) | 165 |
2014 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price, lower range limit (in dollars per share) | $ / shares | $ 8.94 |
Exercise price, upper range limit (in dollars per share) | $ / shares | $ 16.05 |
Number outstanding (in shares) | 676 |
Black-Scholes Fair Value | $ | $ 3,231 |
Remaining Contractual Life (Years) | 3 years |
Stock options vested and exercisable (in shares) | 676 |
2015 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price, lower range limit (in dollars per share) | $ / shares | $ 18.20 |
Exercise price, upper range limit (in dollars per share) | $ / shares | $ 21.39 |
Number outstanding (in shares) | 303 |
Black-Scholes Fair Value | $ | $ 2,362 |
Remaining Contractual Life (Years) | 4 years |
Stock options vested and exercisable (in shares) | 303 |
2016 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price, lower range limit (in dollars per share) | $ / shares | $ 15.93 |
Exercise price, upper range limit (in dollars per share) | $ / shares | $ 16.86 |
Number outstanding (in shares) | 275 |
Black-Scholes Fair Value | $ | $ 1,618 |
Remaining Contractual Life (Years) | 5 years |
Stock options vested and exercisable (in shares) | 219 |
2017 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price, lower range limit (in dollars per share) | $ / shares | $ 15.80 |
Exercise price, upper range limit (in dollars per share) | $ / shares | $ 19.41 |
Number outstanding (in shares) | 336 |
Black-Scholes Fair Value | $ | $ 1,977 |
Remaining Contractual Life (Years) | 6 years |
Stock options vested and exercisable (in shares) | 184 |
2018 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price, lower range limit (in dollars per share) | $ / shares | $ 22.49 |
Exercise price, upper range limit (in dollars per share) | $ / shares | $ 32.71 |
Number outstanding (in shares) | 566 |
Black-Scholes Fair Value | $ | $ 5,855 |
Remaining Contractual Life (Years) | 7 years |
Stock options vested and exercisable (in shares) | 214 |
2019 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price, lower range limit (in dollars per share) | $ / shares | $ 41.07 |
Exercise price, upper range limit (in dollars per share) | $ / shares | $ 45.76 |
Number outstanding (in shares) | 698 |
Black-Scholes Fair Value | $ | $ 10,955 |
Remaining Contractual Life (Years) | 8 years |
Stock options vested and exercisable (in shares) | 147 |
2020 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price, lower range limit (in dollars per share) | $ / shares | $ 44.84 |
Exercise price, upper range limit (in dollars per share) | $ / shares | $ 59.49 |
Number outstanding (in shares) | 638 |
Black-Scholes Fair Value | $ | $ 12,511 |
Remaining Contractual Life (Years) | 9 years |
Stock options vested and exercisable (in shares) | 24 |
2021 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price, lower range limit (in dollars per share) | $ / shares | $ 83.64 |
Number outstanding (in shares) | 136 |
Black-Scholes Fair Value | $ | $ 4,625 |
Remaining Contractual Life (Years) | 10 years |
Stock options vested and exercisable (in shares) | 0 |
Options and Awards - Intrinsic
Options and Awards - Intrinsic Values (Details) - Stock Options - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Outstanding | $ 247,457 | $ 182,552 | |
Vested | 154,841 | 120,867 | |
Expected to vest | 80,008 | $ 53,366 | |
Aggregate intrinsic value of options that vested in period | 8,545 | $ 2,084 | |
Intrinsic value of options exercised in period | $ 17,241 | $ 5,621 |
Options and Awards - Restricted
Options and Awards - Restricted Stock Awards Narrative (Details) - $ / shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Nonvested restricted awards, granted (in shares) | 90 | 113 |
Share-based compensation, restricted awards, exercise price (in dollars per share) | $ 0 | |
Award vesting period | 5 years | |
Granted (in dollars per share) | $ 83.71 | |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted (in dollars per share) | 83.64 | $ 42.02 |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted (in dollars per share) | $ 84.70 | $ 51.20 |
Non-employee directors | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options granted to non-employee directors (in shares) | 6 | |
Non-employee directors | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted (in dollars per share) | $ 84.70 |
Options and Awards - Restrict_2
Options and Awards - Restricted Award Rollforward (Details) - $ / shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Non-Vested Restricted Awards | ||
Nonvested at beginning of period (in shares) | 591 | |
Granted (in shares) | 90 | 113 |
Vested (in shares) | (80) | |
Forfeited (in shares) | (9) | |
Nonvested at end of period (in shares) | 592 | |
Weighted Average Grant Date Fair Value | ||
Nonvested at beginning of period (in dollars per share) | $ 38.90 | |
Granted (in dollars per share) | 83.71 | |
Vested (in dollars per share) | 64.35 | |
Forfeited (in dollars per share) | 45.18 | |
Nonvested at end of period (in dollars per share) | $ 42.16 |
Options and Awards - Long-Term
Options and Awards - Long-Term Incentive Plan (Details) - USD ($) $ in Thousands | Aug. 27, 2019 | Mar. 31, 2021 | Mar. 31, 2020 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 5 years | ||
Share-based compensation expense | $ 4,054 | $ 3,235 | |
Spinoff | 2019 LTI Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares authorized (in shares) | 500,000 | ||
Award vesting period | 5 years | ||
Award vesting rights, percentage | 20.00% | ||
Share-based compensation expense | $ 201 | $ 194 |
Options and Awards - Compensati
Options and Awards - Compensation Expense (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | $ 4,054 | $ 3,235 |
Share-based compensation arrangement by share-based payment award, options, outstanding, weighted average remaining contractual term | 6 years 1 month 6 days | |
Stock-based compensation expense related to stock options | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | $ 1,733 | 1,419 |
Employee service share-based compensation, nonvested awards, total compensation cost not yet recognized | $ 27,178 | |
Employee service share-based compensation, nonvested awards, total compensation cost not yet recognized, period for recognition | 3 years 9 months 18 days | |
Employee service share-based compensation, nonvested awards (in shares) | 1,861 | |
Share-based compensation arrangement by share-based payment award, options, expected to vest, number (in shares) | 1,726 | |
Stock-based compensation expense related to restricted stock awards | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | $ 1,838 | 1,598 |
Employee service share-based compensation, nonvested awards, total compensation cost not yet recognized | $ 26,072 | |
Employee service share-based compensation, nonvested awards, total compensation cost not yet recognized, period for recognition | 3 years 6 months | |
Stock-based compensation expense related to stock options and restricted stock awards to non-employee directors | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | $ 483 | $ 218 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Thousands | Apr. 01, 2021USD ($)operationbed | Mar. 31, 2021USD ($)bedrenewalagreementfacility | Mar. 31, 2020USD ($) |
Lessee, Lease, Description [Line Items] | |||
Master lease agreements | agreement | 7 | ||
Facilities under master lease arrangement | facility | 40 | ||
Operating lease, weighted average remaining lease term | 13 years 8 months 12 days | ||
Operating lease, weighted average discount rate, percent | 8.20% | ||
Operational skilled nursing beds | bed | 23,600 | ||
Right-of-use assets obtained in exchange for new operating lease obligations | $ | $ 37,471 | $ 8,370 | |
Subsequent Event | |||
Lessee, Lease, Description [Line Items] | |||
Right-of-use assets obtained in exchange for new operating lease obligations | $ | $ 20,005 | ||
Subsequent Event | 8051 Services, Skilled Nursing Care Facilities | |||
Lessee, Lease, Description [Line Items] | |||
Number of businesses acquired | operation | 3 | ||
Operational skilled nursing beds | bed | 322 | ||
Cost of Sales and General and Administrative Expense | |||
Lessee, Lease, Description [Line Items] | |||
Rent expense | $ | $ 33,476 | 32,347 | |
CareTrust REIT | |||
Lessee, Lease, Description [Line Items] | |||
Skilled nursing, assisted living and independent living facilities | facility | 89 | ||
Master lease agreements | agreement | 9 | ||
Lessee, operating lease, renewal term | 5 years | ||
Operating leases of lessee, contingent rentals, basis spread on variable rate | 2.50% | ||
Rent expense | $ | $ 14,080 | $ 13,125 | |
CareTrust REIT | Third Party Tenants Under Triple Net Lease Arrangements | |||
Lessee, Lease, Description [Line Items] | |||
Skilled nursing, assisted living and independent living facilities | facility | 88 | ||
CareTrust REIT | Purchase Option | |||
Lessee, Lease, Description [Line Items] | |||
Skilled nursing, assisted living and independent living facilities | facility | 4 | ||
CareTrust REIT | Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Lessee, operating lease, term of contract | 12 years | ||
Lessee leasing arrangements, operating leases, number of renewal terms | renewal | 2 | ||
CareTrust REIT | Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Lessee, operating lease, term of contract | 20 years | ||
Lessee leasing arrangements, operating leases, number of renewal terms | renewal | 3 | ||
Various Landlords | |||
Lessee, Lease, Description [Line Items] | |||
Lessee, operating lease, term of contract | 15 years | ||
Lessee leasing arrangements, operating leases, number of renewal terms | renewal | 2 | ||
Lessee, operating lease, renewal term | 5 years | ||
Various Landlords | Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Lessee, operating lease, term of contract | 5 years | ||
Various Landlords | Minimum | Equipment | |||
Lessee, Lease, Description [Line Items] | |||
Lessee, operating lease, term of contract | 3 years | ||
Various Landlords | Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Lessee, operating lease, term of contract | 20 years | ||
Various Landlords | Maximum | Equipment | |||
Lessee, Lease, Description [Line Items] | |||
Lessee, operating lease, term of contract | 5 years |
Leases - Lease Cost (Details)
Leases - Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Lessee, Lease, Description [Line Items] | ||
Operating lease expense | $ 37,209 | $ 35,912 |
Amortization of deferred rent | 112 | 125 |
Rent - cost of services | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease expense | 33,456 | 32,330 |
Variable lease, cost | 584 | 594 |
General and administrative expense | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease expense | 20 | 17 |
Depreciation and amortization | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease expense | 290 | 354 |
Variable lease costs | ||
Lessee, Lease, Description [Line Items] | ||
Variable lease, cost | $ 3,443 | $ 3,211 |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Year | ||
2021 (remainder) | $ 98,448 | |
2022 | 131,211 | |
2023 | 129,521 | |
2024 | 128,600 | |
2025 | 128,506 | |
2026 | 128,383 | |
Thereafter | 957,340 | |
Total lease payments | 1,702,009 | |
Less: present value adjustment | (678,274) | |
Present value of total lease liabilities | 1,023,735 | |
Less: current lease liabilities | (50,056) | $ (48,187) |
Long-term operating lease liabilities | $ 973,679 | $ 950,320 |
Lessor - Narrative (Details)
Lessor - Narrative (Details) - facility | Mar. 31, 2021 | Mar. 31, 2020 | Oct. 01, 2019 |
Lessor, Lease, Description [Line Items] | |||
Number of real estate properties | 94 | ||
Spinoff | Minimum | |||
Lessor, Lease, Description [Line Items] | |||
Lessee, operating lease, term of contract | 14 years | ||
Spinoff | Maximum | |||
Lessor, Lease, Description [Line Items] | |||
Lessee, operating lease, term of contract | 16 years | ||
The Pennant Group, Inc. | Senior Living Facilities | |||
Lessor, Lease, Description [Line Items] | |||
Number of real estate properties | 2 | ||
The Pennant Group, Inc. | Spinoff | Senior Living Facilities | |||
Lessor, Lease, Description [Line Items] | |||
Number of real estate properties | 31 | 29 |
Lessor - Rental Income (Details
Lessor - Rental Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Lessor, Lease, Description [Line Items] | ||
Operating lease, lease income | $ 3,977 | $ 3,662 |
The Pennant Group, Inc. | ||
Lessor, Lease, Description [Line Items] | ||
Operating lease, variable lease income | 314 | 466 |
The Pennant Group, Inc. | ||
Lessor, Lease, Description [Line Items] | ||
Operating lease, lease income | 3,488 | 3,101 |
Other third-party | ||
Lessor, Lease, Description [Line Items] | ||
Operating lease, lease income | $ 489 | $ 561 |
Lessor - Future Minimum Lease P
Lessor - Future Minimum Lease Payments Receivable (Details) $ in Thousands | Mar. 31, 2021USD ($) |
Leases [Abstract] | |
2021 (remainder) | $ 11,671 |
2022 | 15,053 |
2023 | 14,790 |
2024 | 14,170 |
2025 | 13,952 |
2026 | 13,772 |
Thereafter | 85,281 |
Total | $ 168,689 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2021facility | Mar. 31, 2020 | Dec. 31, 2020 | Apr. 26, 2021USD ($) | Apr. 01, 2021facility | |
Concentration Risk [Line Items] | |||||
Facilities under Medicare probe reviews | 2 | ||||
Subsequent Event | |||||
Concentration Risk [Line Items] | |||||
Number of facilities resolved in period | 1 | ||||
Cash, uninsured amount | $ | $ 424 | ||||
Customer Concentration Risk | Total Medicaid and Medicare | Accounts Receivable | |||||
Concentration Risk [Line Items] | |||||
Concentration risk | 57.20% | 58.30% | |||
Customer Concentration Risk | Total Medicaid and Medicare | Revenue Benchmark | |||||
Concentration Risk [Line Items] | |||||
Concentration risk | 74.10% | 71.00% |
Common Stock Repurchase Progr_2
Common Stock Repurchase Program (Details) shares in Thousands | Mar. 13, 2020USD ($)numberOfRepurchasePrograms | Mar. 04, 2020USD ($) | Aug. 26, 2019USD ($) | Mar. 31, 2020USD ($)shares | Dec. 31, 2019USD ($)shares |
Equity, Class of Treasury Stock [Line Items] | |||||
Number of stock repurchase programs | numberOfRepurchasePrograms | 2 | ||||
Repurchase of common stock | $ 25,000,000 | ||||
March 4, 2020 Repurchase Program | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Stock repurchase program, authorized amount | $ 20,000,000 | ||||
Stock repurchase program, period in force | 12 months | ||||
Repurchase of common stock (in shares) | shares | 503 | ||||
Repurchase of common stock | $ 20,000,000 | ||||
March 13, 2020 Repurchase Program | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Stock repurchase program, authorized amount | $ 5,000,000 | ||||
Stock repurchase program, period in force | 12 months | ||||
Repurchase of common stock (in shares) | shares | 189 | ||||
Repurchase of common stock | $ 5,000,000 | ||||
August 26, 2019 Repurchase Program | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Stock repurchase program, authorized amount | $ 20,000,000 | ||||
Stock repurchase program, period in force | 12 months | ||||
Repurchase of common stock (in shares) | shares | 138 | ||||
Repurchase of common stock | $ 6,406,000 |