GlobeNewswire Inc | Feb 3, 2021 04:11PM EST

February 03, 2021

Conference Call and Webcast scheduled for tomorrow, February 4, 2021 at 10:00 am PT

SAN JUAN CAPISTRANO, Calif., Feb. 03, 2021 (GLOBE NEWSWIRE) -- The Ensign Group, Inc. (Nasdaq: ENSG), the parent company of the Ensign(TM) group of companies, which invest in and provide skilled nursing services, senior living services, rehabilitative care services and other healthcare services, announced record operating results for the fourth quarter of 2020, reporting GAAP diluted earnings per share of $0.82 and $3.06 for the quarter and year ended December 31, 2020, respectively, and a record adjusted earnings per share(2) of $0.80 and $3.13 for the quarter and the year, respectively.

Highlights Include:

-- GAAP diluted earnings per share for the quarter was $0.82, representing an increase of 67.3% over the prior year quarter. Adjusted diluted earnings per share for the quarter was $0.80, an increase of 33.3%(1)(2) over the prior year quarter. -- GAAP diluted earnings per share for the year was $3.06, representing an increase of 86.6%(1) over the prior year, and adjusted diluted earnings per share for the year was $3.13 (2), an increase of 75.8% over the prior year. -- Consolidated GAAP and adjusted revenues for the year were $2.4billion, an increase of over 18.0% (1)(2) over the prior year. -- Total transitioning and skilled services revenue was $2.3billion for the year, an increase of 18.3% over the prior year, and transitioning and skilled services revenue was $603 million for the quarter, an increase of 13.8% over the prior year quarter and 5.7% sequentially over the third quarter. -- Same store skilled revenue improved by 14.7% with an increase in Medicare days of 22.1%, both over the prior year, and same store skilled revenue increased by 18.7% with an increase in Medicare days of 37.7%, both over the prior year quarter. -- Transitioning skilled revenue improved by 24.4% over the prior year with an increase in transitioning managed care revenue of 21.1% and Medicare revenue of 25.8% both over the prior year. -- Real estate segment income(3) was $31.3million for the year, an increase of 79.2% from prior year, and $8.7million for the quarter, an increase of 73.5% from the prior year quarter. FFO was $49.5million for the year, an increase of 51.6% from prior year, and $13.3million, an increase of 42.5% from the prior year quarter. -- GAAP net income was $170.5million for the year, an increase of 85.9%(1) over the prior year, and $46.3million for the quarter, an increase of 69.1% over the prior year quarter. -- Adjusted net income for the year was 174.6 million, an increase of 74.8%(1) over the prior year, and $44.9million for the quarter, an increase of 33.9% (2) over the prior year quarter.(1)Represents GAAP continued operations which excludes operating results for the October 1, 2019 spin-out of The Pennant Group, Inc. in accordance with discontinued operation guidance in GAAP.(2) See "Reconciliation of GAAP to Non-GAAP Financial Information". All Non-GAAP financial results exclude operating results for the spun-out The Pennant Group, Inc. in accordance with discontinued operation guidance.(3) Our Transitional and Skilled Services and Real Estate Segments are defined and outlined in Note 7 on Form 10-K.

Operating Results

In spite of the continued challenges brought on as the result of the ongoing global pandemic, we are very happy to report another record quarter as we achieved our highest adjusted earnings per share in our history, said Ensigns Chief Executive Officer Barry Port. Since the beginning of this unprecedented pandemic, our local teams have shown incredible strength and consistency while doing everything in their power to care for their patients, residents and the healthcare community they serve. Rather than hunkering down and waiting for the storm to pass, they have rolled up their sleeves and worked tirelessly to find ways to make clinical and operational adjustments that are tailored to meet the needs of their existing and potential patients in their local market. As they have done so, the medical community and the patients families have entrusted them to care for patients with increasingly complex clinical needs.

Port noted that as evidence of the medical communities confidence in their local operations clinical capabilities, the Company saw a marked improvement in patient volumes, especially with high acuity and skilled patients with a 7.2% and 10.8% increase in Medicare census and a 6.2% and 5.7% in managed care census, sequentially from second quarter to third quarter and third quarter to the fourth quarter for same store and transitioning portfolio, respectively. "This improvement in our admissions trends not only gives us great confidence that we can continue to perform well as the pandemic stubbornly persists in many of our largest markets, but it also gives us confidence that we are in an excellent position to see occupancies normalize to pre-pandemic levels even while the pandemic continues to impact us and our patients. Because we have been working arm in arm with our hospital and managed care partners during this pandemic to care for both COVID-19 positive and negative patients with complex medical needs, our operations have solidified the critical role they play in the post-acute care continuum as an essential and cost-effective setting for highly complex patients, he added.

Ensign also emphasized that the results for the quarter and the year do not include any benefit related to CARES Act Provider Relief Funds and reminded investors that the Company has returned all of the relief funds it received from the Government, which included approximately $109 million in provider grants in July, $33 million in the fourth quarter and $5 million in January. The Company also noted that the strong results in the quarter came from continued improvements in skilled mix across the portfolio, improved admissions trends, availability of more frequent and broader COVID testing, increased managed care revenues, cost saving initiatives, improved cash collections, sequestration suspension and improved Medicaid funding in certain states. Port added, During this latest and most significant surge in COVID-19 positivity rates weve seen to date, especially in Texas, Arizona and California, we saw an increase in skilled mix. However, unlike in prior quarters where COVID surges were accompanied by occupancy declines, during the fourth quarter we saw occupancies remain flat. While we have ground to make up to get back to pre-COVID occupancies, the increase in our skilled mix has more than made up for the temporary decline in occupancy.

Management also reaffirmed its guidance for 2021, with annual earnings per share guidance of $3.44 to $3.56 per diluted share and annual revenue guidance of $2.62 billion to $2.69 billion. The midpoint of this 2021 guidance represents an increase of approximately 14% over the midpoint of Ensigns 2020 guidance, which it increased twice during 2020. We remain confident that we can achieve this guidance as we begin to see the positive impact of the vaccination efforts and begin to realize the enormous upside in our newly acquired operations, coupled with the opportunistic acquisitions on the horizon. But more importantly, we believe, when this pandemic is behind us, that our operations are primed to rebuild occupancies and to continue to gain additional market share as a result of the deepened relationships with acute care providers and other healthcare partners, Port said.

Chief Financial Officer, Suzanne Snapper, reported that the companys liquidity remains strong with approximately $236.6million of cash on hand and $340million of available capacity under its line-of-credit facility, which also has a built-in expansion option, both as of December31, 2020. She also indicated that the company received approximately $105.0 million of Medicare advance payments from the Centers for Medicare and Medicaid Services (CMS) and approximately $147.0 million of the Provider Relief Funds, including the amount received in January. To date, all of the Provider Relief Funds have been returned to the government. She also noted that the company also has 94 owned assets, 74 of which are unlevered and add additional liquidity. Ms. Snapper also indicated that the Company retained $102.0 million under the Medicare Accelerated and Advance Payment Program and the Company has elected to return these funds by the second quarter.

Managements guidance is based on diluted weighted average common shares outstanding of approximately 57.8 million and a 25% tax rate. In addition, the guidance assumes, among other things, normalized health insurance costs, normal anticipated Medicare and Medicaid reimbursement rate increases, net of provider taxes, acquisitions closed in the first half of 2021 and recovery of the COVID-19 pandemic. It also excludes acquisition-related costs and amortization costs related to intangible assets acquired, share-based compensation and start-up losses.

A discussion of the company's use of non-GAAP financial measures is set forth below. A reconciliation of net income to EBITDA, adjusted EBITDAR, adjusted EBITDA, FFO for our real estate segment as well as a reconciliation of GAAP earnings per share, net income to adjusted net income and adjusted net earnings per share appear in the financial data portion of this release. More complete information is contained in the companys Annual Report on Form 10-K for the year ended December31, 2020 which is expected to be filed with the SEC today and can be viewed on the companys website at http://www.ensigngroup.net.

Growth and Real Estate Highlights

Chad Keetch, Ensigns Chief Investment Officer, said, We are pleased to announce that we are making progress in our effort to demonstrate, and ultimately unlock, the growing value in our owned real estate. As a first step, starting in the fourth quarter of 2020, we began reporting the results of our real estate portfolio as a new segment. This new real estate segment is comprised of properties owned by us and leased to affiliated skilled nursing and senior living operations and 31 senior living operations that are leased to The Pennant Group, Inc. He noted that each of these properties are subject to triple-net, long-term leases and generated rental revenue of $61.3 million, of which $46.1 million was derived from Ensign affiliated operations. Also, for 2020 Ensign reported $49.5 million in FFO, which represents an increase of 51.6% over the prior year of $32.7 million. Our goal in separating this real estate business from our operations is to demonstrate the enormous inherent value that these real estate assets have and will have over time. We hope that this extra disclosure will be helpful to our current and prospective investors as they evaluate this growing part of our business, Keetch added.

During the quarter, the company paid a quarterly cash dividend of $0.0525 per share of Ensign common stock. We are pleased to announce our eighteenth consecutive annual dividend increase, which reflects our strong balance sheet and continued commitment to return value to our shareholders, Keetch said. He noted that the companys liquidity remains strong and that there are no current plans to suspend future dividends.

Also during the quarter and since, Ensigns affiliates acquired the following skilled nursing operations:

-- The Medical LodgeofAmarillo, an 82-bed skilled nursing facility, located inAmarillo, TX; -- Hays NursingandRehabilitation Center, a 116-bed skilled nursing facility, located inSan Marcos, TX; -- Golden Hill Post Acute, a 99-bed skilled nursing facility located inSan Diego, CA; -- St. Catherine Healthcare, a 99-bed skilled nursing facility located inFullerton, CA; -- Camino Healthcare, a 99-bed skilled nursing facility located inHawthorne, CA; and -- San Pedro Manor, a 150-bed skilled nursing facility located in San Antonio, TX.

Our ability to continue to grow in the midst of a pandemic is a true testament to our local team of clinical and operational leadership and their experience, planning and preparation. We have full confidence in our teams ability to successfully transition these operations, Keetch said. We are very excited about each of these hand-picked opportunities. Given the uniqueness of transitioning during a pandemic and the extra time that weve had to prepare for each of these, we feel an extra measure of confidence that these operations are poised to contribute to our overall results very soon, he added. Keetch also noted that the pipeline for Ensigns typical turnaround opportunities, in addition to some exciting strategic opportunities, remains strong. We are still being very selective and are keeping plenty of dry powder on hand for what we believe will be an attractive buyers market on the horizon. We look forward to growing within our existing geographical footprint and will do so as we see significant advantages to adding strength in markets we know well, including some of our newer emerging markets as they continue to mature and prepare for growth, he added.

These additions bring Ensign's growing portfolio to 232 healthcare operations, 24 of which also include senior living operations, across thirteen states. Ensign now owns 94 real estate assets, 64 of which it operates. Keetch reaffirmed that Ensign continues to actively seek transactions to acquire real estate and to lease both well-performing and struggling skilled nursing, senior living and other healthcare related businesses in new and existing markets.

Conference Call

A live webcast will be held Thursday, February4, 2021 at 10:00 a.m. Pacific time (1:00 p.m. Eastern time) to discuss Ensigns fourth quarter financial results. To listen to the webcast, or to view any financial or statistical information required by SEC Regulation G, please visit the Investors Relations section of Ensigns website at http://investor.ensigngroup.net. The webcast will be recorded, and will be available for replay via the website until 5:00 p.m. Pacific time on Friday, March 5, 2021.

About Ensign

The Ensign Group, Inc.'s independent operating subsidiaries provide a broad spectrum of skilled nursing and assisted living services, physical, occupational and speech therapies and other rehabilitative and healthcare services at 232 healthcare facilities in Arizona, California, Colorado, Idaho, Iowa, Kansas, Nebraska, Nevada, South Carolina, Texas, Utah, Washington and Wisconsin. As part of its investment strategy, the Company also acquire, lease and own healthcare real estate to service the post-acute care continuum through acquisition and investment opportunities in healthcare properties. Ensigns new business venture operating subsidiaries also offer several other post-acute-related services, including mobile x-ray, lab, non-emergency transportation services and other consulting services also across several states. Each of these operations is operated by a separate, independent operating subsidiary that has its own management, employees and assets. References herein to the consolidated "company" and "its" assets and activities, as well as the use of the terms "we," "us," "its" and similar verbiage, are not meant to imply that The Ensign Group, Inc. has direct operating assets, employees or revenue, or that any of the facilities, the Service Center or the captive insurance subsidiary are operated by the same entity. More information about Ensign is available at http://www.ensigngroup.net.

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

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

These risks and uncertainties relate to the companys business, its industry and its common stock and include: reduced prices and reimbursement rates for its services; its ability to acquire, develop, manage or improve operations, its ability to manage its increasing borrowing costs as it incurs additional indebtedness to fund the acquisition and development of operations; its ability to access capital on a cost-effective basis to continue to successfully implement its growth strategy; its operating margins and profitability could suffer if it is unable to grow and manage effectively its increasing number of operations; competition from other companies in the acquisition, development and operation of facilities; its ability to defend claims and lawsuits, including professional liability claims alleging that our services resulted in personal injury, and other regulatory-related claims; and the application of existing or proposed government regulations, or the adoption of new laws and regulations, that could limit its business operations, require it to incur significant expenditures or limit its ability to relocate its operations if necessary. Additionally, many of these risks and uncertainties are currently amplified by and in the future may be amplified by, the COVID-19 outbreak. The developments with respect to the spread of COVID-19 and its impacts have been occurring so rapidly and because of the unprecedented nature of the pandemic, we are unable to predict the extent and duration of the adverse financial impact of COVID-19 on our business, financial condition and results of operations. While we are not able to estimate the full impact of the COVID-19 outbreak on our future results of operations, the pandemic could have an adverse effect on our reported results in the future. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. Readers should not place undue reliance on any forward-looking statements and are encouraged to review the companys periodic filings with the Securities and Exchange Commission, including its Form 10-K and Form 10-Q, for a more complete discussion of the risks and other factors that could affect Ensigns business, prospects and any forward-looking statements. Except as required by the federal securities laws, Ensign does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changing circumstances or any other reason after the date of this press release.

Contact Information

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

SOURCE: The Ensign Group, Inc.

THE ENSIGN GROUP, INC.CONSOLIDATED STATEMENT OF INCOME

Three Months Ended Year Ended December 31, December 31,(In thousands,except per 2020 2019 2020 2019share data) Revenue: Service $ 625,068 $ 556,475 $ 2,387,439 $ 2,031,266 revenueRental revenue 3,961 3,716 15,157 5,258 Total revenue $ 629,029 $ 560,191 $ 2,402,596 $ 2,036,524 Expense: Cost of 493,823 443,382 1,865,201 1,620,628 servicesRent?cost of 32,608 31,511 129,926 124,789 servicesGeneral andadministrative 33,250 32,251 129,743 110,873 expenseDepreciationand 13,489 13,354 54,571 51,054 amortizationTotal expenses 573,170 520,498 2,179,441 1,907,344 Income from 55,859 39,693 223,155 129,180 operationsOther income (expense):Interest (1,664 ) (4,149 ) (9,362 ) (15,662 )expenseInterest and 1,183 792 3,813 2,649 other incomeOther expense, (481 ) (3,357 ) (5,549 ) (13,013 )netIncome beforeprovision for 55,378 36,336 217,606 116,167 income taxesProvision for 9,216 9,010 46,242 23,954 income taxesNet incomefrom 46,162 27,326 171,364 92,213 continuingoperationsNet incomefromdiscontinued ? ? ? 19,473 operations,net of taxNet income 46,162 27,326 171,364 111,686 Less: Net income/(loss)attributableto (159 ) (68 ) 886 523 noncontrollinginterests incontinuingoperationsNet incomeattributabletononcontrolling ? ? ? 629 interests indiscontinuedoperationsNet income/(loss)attributable (159 ) (68 ) 886 1,152 tononcontrollinginterestsNet incomeattributable $ 46,321 $ 27,394 $ 170,478 $ 110,534 to The EnsignGroup, Inc. Amountsattributable to The EnsignGroup, Inc.:Income fromcontinuingoperations $ 46,321 $ 27,394 $ 170,478 $ 91,690 attributableto The EnsignGroup, Inc.Income fromdiscontinuedoperations, ? ? ? 18,844 net of incometaxNet incomeattributable $ 46,321 $ 27,394 $ 170,478 $ 110,534 to The EnsignGroup, Inc.Net income pershareattributable to The EnsignGroup, Inc.:Basic: Continuing $ 0.86 $ 0.51 $ 3.19 $ 1.72 operationsDiscontinued ? ? ? 0.35 operationsBasic incomeper shareattributable $ 0.86 $ 0.51 $ 3.19 $ 2.07 to The EnsignGroup, Inc.Diluted: Continuing $ 0.82 $ 0.49 $ 3.06 $ 1.64 operationsDiscontinued ? ? ? 0.33 operationsDiluted incomeper shareattributable $ 0.82 $ 0.49 $ 3.06 $ 1.97 to The EnsignGroup, Inc.Weightedaverage common sharesoutstanding:Basic 53,835 53,397 53,434 53,452 Diluted 56,307 55,760 55,787 55,981

THE ENSIGN GROUP, INC.CONSOLIDATED BALANCE SHEETS

December 31, December 31, 2020 2019 (In thousands)Assets Current assets: Cash and cash equivalents $ 236,562 $ 59,175 Accounts receivable?less allowance for doubtfulaccounts of $8,718 and $2,472 at December 31, 305,062 308,985 2020 and 2019, respectivelyInvestments?current 13,449 17,754 Prepaid income taxes 1,224 739 Prepaid expenses and other current assets 26,659 24,428 Total current assets 582,956 411,081 Property and equipment, net 778,244 767,565 Right-of-use assets 1,025,510 1,046,901 Insurance subsidiary deposits and investments 32,105 30,571 Escrow deposits 100 14,050 Deferred tax assets 32,424 4,615 Restricted and other assets 33,155 26,207 Intangible assets, net 2,899 3,382 Goodwill 54,469 54,469 Other indefinite-lived intangibles 3,716 3,068 Total assets $ 2,545,578 $ 2,361,909 Liabilities and equity Current liabilities: Accounts payable $ 50,901 $ 44,973 Accrued wages and related liabilities 236,614 151,009 Lease liabilities?current 48,187 44,964 Accrued self-insurance liabilities?current 34,396 29,252 Advance payment liabilities 102,023 ? Other accrued liabilities 87,318 70,273 Current maturities of long-term debt 2,960 2,702 Total current liabilities 562,399 343,173 Long-term debt?less current maturities 112,544 325,217 Long-term lease liabilities?less current portion 950,320 973,983 Accrued self-insurance liabilities?less current 62,402 58,114 portionOther long-term liabilities 39,686 5,278 Total equity 818,227 656,144 Total liabilities and equity $ 2,545,578 $ 2,361,909

THE ENSIGN GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS

The following table presents selected data from our consolidated statements of cash flows for the periods presented:

Year Ended December 31, 2020 2019 (In thousands)Net cash provided by/(used in): Continuing operating activities $ 373,351 $ 168,927 Continuing investing activities (58,666 ) (224,030 )Continuing financing activities (137,298 ) 83,278 Net decrease in cash and cash equivalents from ? (83 )discontinued operationsNet increase in cash and cash equivalents 177,387 28,092 Cash and cash equivalents beginning of period 59,175 31,083 Cash and cash equivalents at end of period $ 236,562 $ 59,175

THE ENSIGN GROUP, INC.UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION(In thousands, except per share data)

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME

The following table reconciles net income to Non-GAAP net income for the periods presented:

Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019Net income from $ 46,321 $ 27,394 $ 170,478 $ 91,690 continuing operationsNet income fromdiscontinued operations, ? ? ? 18,844 net of taxNet income attributable $ 46,321 $ 27,394 $ 170,478 $ 110,534 to The Ensign Group, Inc. Non-GAAP adjustments Stock-based compensation 3,588 3,107 14,524 11,322 expense(a)Results related tooperations not at full 647 1,311 1,499 3,505 capacity(b)Acquisition related costs ? 132 104 277 (c)Depreciation andamortization - patient 19 260 259 521 base(d)General andadministrative - Spin-Off ? 464 ? 464 transaction costs(e)COS - gain on sale offixed assets, net of ? 1,732 ? 329 impairment charges(f)COS - impairment ofgoodwill and intangibles ? 941 ? 941 (g)Interest expense - writeoff of deferred financing ? 329 ? 329 fees(h)Provision for incometaxes on Non-GAAP (5,693 ) (2,141 ) (12,256 ) (9,509 )adjustments(i)Non-GAAP income from $ 44,882 $ 33,529 $ 174,608 $ 99,869 continuing operationsNon-GAAP income fromdiscontinued operations ? ? ? 25,688 (j)Non-GAAP net income $ 44,882 $ 33,529 $ 174,608 $ 125,557 Average number of diluted 56,307 55,760 55,787 55,981 shares outstanding Diluted Earnings Per Share As ReportedContinuing operations $ 0.82 $ 0.49 $ 3.06 $ 1.64 Discontinued operations ? ? ? 0.33 Diluted income per shareattributable to The $ 0.82 $ 0.49 $ 3.06 $ 1.97 Ensign Group, Inc. Adjusted Diluted Earnings Per ShareContinuing operations $ 0.80 $ 0.60 $ 3.13 $ 1.78 Discontinued operations ? ? ? 0.46 Diluted income per shareattributable to The $ 0.80 $ 0.60 $ 3.13 $ 2.24 Ensign Group, Inc. Footnotes: (a) Represents stock-based compensation expense incurred. Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019Cost of services $ 2,277 $ 2,001 $ 9,686 $ 7,036 General and 1,311 1,106 4,838 4,286 administrativeTotal Non-GAAP adjustment $ 3,588 $ 3,107 $ 14,524 $ 11,322

(b) Represents results to operations not at full capacity Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019Revenue $ (1,020 ) $ (4,212 ) $ (3,161 ) $ (8,609 )Cost of services 1,583 4,708 4,344 10,289 Rent 28 443 100 921 Depreciation and 56 372 216 904 amortizationTotal Non-GAAP $ 647 $ 1,311 $ 1,499 $ 3,505 adjustment (c) Represents costs incurred to acquire an operation which are notcapitalizable.(d) Included in depreciation and amortization are expenses related to patientbase intangible assets at newly acquired skilled nursing and senior livingfacilities.(e) Included in general and administrative expense are costs incurred inconnection with the Completed Spin-Off of our home health and hospiceoperations and substantially all of our senior living operations to a newlyformed publicly traded company subsequent to the Spin-off date. Expensesincurred prior to Spin-Off date are included in discontinued operations as anadjustment.(f) Impairment charges to fixed assets includes impairment charges of $1.7million at one of our skilled nursing operations during the three months endedDecember 31, 2019. Additionally, included in the year ended December 31, 2019,impairment charges of $1.5 million at two of our senior living operations andat the skilled nursing operation mentioned, offset by the gain recognized forthe sale of real estate of $2.9 million.(g) Impairment charges to goodwill and intangible assets at our other ancillaryoperations and a skilled nursing operation.(h) Represents the write off of deferred financing fees associated with theamendment of the credit facility.(i) Represents an adjustment to the provision for income tax to our historicalyear to date effective tax rate of 25.0% for the three months and years endedDecember 31, 2020 and 2019.(j) Represents results of the home health, hospice and senior living operationswe transferred to the Pennant Group, Inc. as a result of the Spin-Off. Year Ended December 31, 2019Revenue $ 248,713 Cost of services (185,963 )General and administrative expenses (8,037 )Rent (17,283 )Depreciation and amortization (2,367 )Interest income, net 26 Provision for income taxes (8,772 )Non-controlling interest (629 )Non-GAAP net income from discontinued $ 25,688 operations

THE ENSIGN GROUP, INC.UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION(In thousands)

The table below reconciles net income to EBITDA, Adjusted EBITDA and Adjusted EBITDAR for the periods presented:

Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019Consolidated Statements of Income Data:Net income attributableto The Ensign Group, $ 46,162 $ 27,326 $ 171,364 $ 111,686 Inc.Less: net incomeattributable to (159 ) (68 ) 886 523 noncontrolling interestsin continuing operationsLess: net income from ? ? ? 19,473 discontinued operationsAdd: Interest expense, 481 3,357 5,549 13,013 netProvision for income 9,216 9,010 46,242 23,954 taxesDepreciation and 13,489 13,354 54,571 51,054 amortizationEBITDA from continuing 69,507 53,115 276,840 179,711 operationsEBITDA from discontinued ? ? ? 26,883 operations(e)EBITDA $ 69,507 $ 53,115 $ 276,840 $ 206,594 Adjustments to EBITDA: Stock-based compensation 3,588 3,107 14,524 11,322 expenseResults related tooperations not at full 563 496 1,183 1,680 capacity(a)Acquisition related ? 132 104 277 costs(b)Impairment of goodwill ? 941 ? 941 and intangible assetsSpin-Off transaction ? 464 ? 464 costs(c)Impairment charges tofixed assets, net of ? 1,732 ? 329 gain on sale(d)Rent related to items 28 443 100 921 aboveAdjusted EBITDA from 73,686 60,430 292,751 195,645 continuing operationsAdjusted EBITDA fromdiscontinued operations ? ? ? 36,801 (e)Adjusted EBITDA $ 73,686 $ 60,430 $ 292,751 $ 232,446 Rent?cost of services 32,608 31,511 129,926 124,789 Less: rent related to (28 ) (443 ) (100 ) (921 )items aboveAdjusted rent from 32,580 31,068 129,826 123,868 continuing operationsAdjusted rent includedin discontinued ? ? ? 17,283 operationsAdjusted EBITDAR from $ 106,266 $ 422,577 continuing operations

(a) Represents results at closed operations and operations not at full capacity.(b) Costs incurred to acquire operations which are not capitalizable.(c) Costs incurred in connection with the completed Spin-Off transaction of The Pennant Group, Inc. Transaction costs incurred prior to Spin-Off date are included in discontinued operations as an adjustment.(d) Impairment charges to fixed assets includes impairment charges of $1.7 million at one of our skilled nursing operations during the three months ended December 31, 2019. Additionally, included in the year ended December 31, 2019, impairment charges of $1.5 million at two of our senior living operations and at the skilled nursing operation mentioned, offset by the gain recognized for the sale of real estate of $2.9 million. (e) All adjustments included in the table below are presented within net income from discontinued operations, net of tax within the consolidated statements of income for the periods presented.

Year Ended December 31, 2019Consolidated Statements of Income Data: Net income from discontinued operations, net of tax $ 19,473 Less: net income attributable to noncontrolling interests in 629 discontinued operationsAdd: Interest and other income, net (26 )Provision for income taxes 5,663 Depreciation and amortization 2,402 EBITDA from discontinued operations $ 26,883 Results related to closed operations Losses related to operations in the start-up phase 377 Stock-based compensation expense 1,018 Spin-Off transaction costs 7,909 Acquisition related costs 603 Rent related to items above 11 Adjusted EBITDA from discontinued operations $ 36,801

THE ENSIGN GROUP, INC.UNAUDITED SELECT PERFORMANCE INDICATORS

The following tables summarize our selected performance indicators for our transitional and skilled services segment along with other statistics, for each of the dates or periods indicated:

Three Months Ended December 31, 2020 2019 Change % Change Total Facility Results: (Dollars in thousands) Transitional and skilled $ 602,919 $ 529,901 $ 73,018 13.8 %revenueNumber of facilities at period 195 190 5 2.6 %endNumber of campuses at period 24 23 1 4.3 %end*Actual patient days 1,502,237 1,591,163 (88,926 ) (5.6 ) %Occupancy percentage ? 70.7 % 79.1 % (8.4 ) %Operational bedsSkilled mix by nursing days 35.2 % 28.7 % 6.5 %Skilled mix by nursing revenue 56.8 % 49.2 % 7.6 %

Three Months Ended December 31, 2020 2019 Change % Change Same Facility Results(1): (Dollars in thousands) Transitional and skilled $ 467,823 $ 433,801 $ 34,022 7.8 %revenueNumber of facilities at 152 152 ? ? %period endNumber of campuses at 15 15 ? ? %period end*Actual patient days 1,141,809 1,274,588 (132,779 ) (10.4 ) %Occupancy percentage ? 71.5 % 79.9 % (8.4 ) %Operational bedsSkilled mix by nursing 37.2 % 30.3 % 6.9 %daysSkilled mix by nursing 59.0 % 51.4 % 7.6 %revenue

Three Months Ended December 31, 2020 2019 Change % Change Transitioning Facility Results (Dollars in thousands) (2):Transitional and skilled revenue $ 54,056 $ 49,740 $ 4,316 8.7 %Number of facilities at period 16 16 ? ? %endNumber of campuses at period 4 4 ? ? %end*Actual patient days 145,358 158,458 (13,100 ) (8.3 ) %Occupancy percentage ? 73.2 % 80.8 % (7.6 ) %Operational bedsSkilled mix by nursing days 29.2 % 23.3 % 5.9 %Skilled mix by nursing revenue 47.2 % 39.4 % 7.8 %

Three Months Ended December 31, 2020 2019 Change % Change Recently Acquired Facility (Dollars in thousands) Results(3):Transitional and skilled revenue $ 81,040 $ 45,484 $ 35,556 NMNumber of facilities at period 27 22 5 NMendNumber of campuses at period end* 5 4 1 NMActual patient days 215,070 155,315 59,755 NMOccupancy percentage ? 65.7 % 72.4 % NMOperational bedsSkilled mix by nursing days 28.7 % 20.7 % NMSkilled mix by nursing revenue 50.8 % 39.3 % NM

Three Months Ended December 31, 2020 2019 Change % Change Facility Closed Results(4): (Dollars in thousands)Skilled nursing revenue $ ? $ 876 $ (876 ) NMActual patient days ? 2,802 (2,802 ) NMOccupancy percentage ? Operational ? % 60.7 % NMbedsSkilled mix by nursing days ? % 13.7 % NMSkilled mix by nursing revenue ? % 27.8 % NM

* Campus represents a facility that offers both skilled nursing and senior living services. Revenue and expenses related to skilled nursing and senior living services have been allocated and recorded in the respective operating segment.(1) Same Facility results represent all facilities purchased prior to January1, 2017.(2) Transitioning Facility results represent all facilities purchased from January1, 2017 to December31, 2018.(3) Recently Acquired Facility (Acquisitions) results represent all facilities purchased on or subsequent to January1, 2019.(4) Facility Closed results represents closed operations during the three months ended December 31, 2019, which were excluded from Same Facilities results for the three months ended December 31, 2019 and 2020 for comparison purposes.



Year Ended December 31, 2020 2019 Change % Change Total Facility Results: (Dollars in thousands) Transitional and $ 2,288,182 $ 1,934,243 $ 353,939 18.3 %skilled revenueNumber of facilities at 195 190 5 2.6 %period endNumber of campuses at 24 23 1 4.3 %period end*Actual patient days 6,171,198 5,987,027 184,171 3.1 %Occupancy percentage ? 73.5 % 79.2 % (5.7 ) %Operational bedsSkilled mix by nursing 31.7 % 29.0 % 2.7 %daysSkilled mix by nursing 53.1 % 48.8 % 4.3 %revenue

Year Ended December 31, 2020 2019 Change % Change Same Facility Results (Dollars in thousands) (1):Transitional and $ 1,787,138 $ 1,650,515 $ 136,623 8.3 %skilled revenueNumber of facilities 152 152 ? ? %at period endNumber of campuses at 15 15 ? ? %period end*Actual patient days 4,711,983 5,036,697 (324,714 ) (6.4 ) %Occupancy percentage 74.1 % 79.7 % (5.6 ) %? Operational bedsSkilled mix by 33.6 % 30.4 % 3.2 %nursing daysSkilled mix by 55.4 % 50.7 % 4.7 %nursing revenue

Year Ended December 31, 2020 2019 Change % Change Transitioning Facility Results (Dollars in thousands) (2):Transitional and skilled $ 208,657 $ 185,895 $ 22,762 12.2 %revenueNumber of facilities at period 16 16 ? ? %endNumber of campuses at period 4 4 ? ? %end*Actual patient days 602,072 617,091 (15,019 ) (2.4 ) %Occupancy percentage ? 76.8 % 79.5 % (2.7 ) %Operational bedsSkilled mix by nursing days 25.9 % 22.2 % 3.7 %Skilled mix by nursing revenue 43.1 % 37.6 % 5.5 %

Year Ended December 31, 2020 2019 Change % Change Recently Acquired Facility (Dollars in thousands) Results(3):Transitional and skilled revenue $ 292,387 $ 88,818 $ 203,569 NMNumber of facilities at period 27 22 5 NMendNumber of campuses at period 5 4 1 NMend*Actual patient days 857,143 303,700 553,443 NMOccupancy percentage ? 68.5 % 72.0 % NMOperational bedsSkilled mix by nursing days 25.0 % 21.4 % NMSkilled mix by nursing revenue 46.3 % 39.3 % NM

Year Ended December 31, 2020 2019 Change % Change Facility Closed Results(4): (Dollars in thousands)Skilled nursing revenue $ ? $ 9,015 $ (9,015 ) NMActual patient days ? 29,539 (29,539 ) NMOccupancy percentage ? Operational ? % 65.2 % NMbedsSkilled mix by nursing days ? % 17.0 % NMSkilled mix by nursing revenue ? % 36.6 % NM

* Campus represents a facility that offers both skilled nursing and senior living services. Revenue and expenses related to skilled nursing and senior living services have been allocated and recorded in the respective operating segment. (1) Same Facility results represent all facilities purchased prior to January1, 2017. (2) Transitioning Facility results represent all facilities purchased from January1, 2017 to December31, 2018.(3) Recently Acquired Facility (Acquisitions) results represent all facilities purchased on or subsequent to January1, 2019. (4) Facility Closed results represents closed operations during the year ended December 31, 2019, which were excluded from Same Facilities results for the year ended December 31, 2019 and 2020 for comparison purposes.

THE ENSIGN GROUP, INC.UNAUDITED SKILLED NURSING AVERAGE DAILY REVENUE RATES ANDPERCENT OF SKILLED NURSING REVENUE AND DAYS BY PAYOR

The following table reflects the change in skilled nursing average daily revenue rates by payor source, excluding services that are not covered by the daily rate(1):

Three Months Ended December 31, Same Facility Transitioning Acquisitions Total 2020 2019 2020 2019 2020 2019 2020 2019Skilled Nursing Average DailyRevenue Rates:Medicare $ 673.77 $ 651.37 $ 601.49 $ 574.20 $ 664.79 $ 628.97 $ 666.72 $ 642.11 Managed care 514.34 476.47 485.38 434.64 499.86 438.81 510.11 470.83 Other skilled 532.73 510.21 496.68 473.14 357.39 329.13 522.60 501.46 Total skilled revenue 598.47 553.46 547.28 507.60 595.71 532.74 594.04 548.33 Medicaid 249.12 230.76 256.61 239.14 235.05 216.82 247.65 230.12 Private and other 230.99 217.07 231.68 225.61 220.54 204.02 229.51 216.97 payorsTotal skilled nursing $ 377.25 $ 327.02 $ 338.07 $ 299.64 $ 337.19 $ 280.74 $ 367.72 $ 319.72 revenue

(1) These rates exclude state relief revenue we recognized and include sequestration reversal of 2%.

Year Ended December 31, Same Facility Transitioning Acquisitions Total 2020 2019 2020 2019 2020 2019 2020 2019Skilled Nursing Average DailyRevenue Rates:Medicare $ 669.76 $ 612.60 $ 594.20 $ 543.30 $ 649.45 $ 631.27 $ 660.78 $ 607.24 Managed care 495.41 461.77 470.38 427.88 478.66 433.97 491.53 458.26 Other skilled 534.00 495.83 505.73 468.21 346.56 339.08 525.51 490.93 Total skilled revenue 584.60 528.36 536.37 489.17 578.94 523.86 580.14 525.41 Medicaid 240.05 225.57 248.99 234.52 224.75 222.20 238.62 226.43 Private and other 232.70 225.67 236.41 222.00 215.02 208.68 230.52 223.97 payorsTotal skilled nursing $ 355.20 $ 317.87 $ 321.53 $ 289.10 $ 312.08 $ 285.23 $ 345.92 $ 313.11 revenue

(1) These rates exclude state relief revenue we recognized and include sequestration reversal of 2%.

The following tables set forth our percentage of skilled nursing patient revenue and days by payor source for the three months and years ended December 31, 2020 and 2019(1):

Three Months Ended December 31, Same Facility Transitioning Acquisitions Total 2020 2019 2020 2019 2020 2019 2020 2019Percentage of SkilledNursing Revenue:Medicare 33.8 % 24.5 % 27.1 % 21.9 % 35.8 % 25.3 % 33.4 % 24.3 %Managed care 16.5 18.3 15.5 13.4 13.3 11.8 16.0 17.3 Other skilled 8.7 8.6 4.6 4.1 1.7 2.2 7.4 7.6 Skilled mix 59.0 51.4 47.2 39.4 50.8 39.3 56.8 49.2 Private and other 5.7 8.0 9.1 11.0 6.9 9.1 6.3 8.4 payorsMedicaid 35.3 40.6 43.7 49.6 42.3 51.6 36.9 42.4 Total skilled 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %nursing

(1) The revenue mix excludes state relief revenue we recognized.

Three Months Ended December 31, Same Facility Transitioning Acquisitions Total 2020 2019 2020 2019 2020 2019 2020 2019Percentage of SkilledNursing Days:Medicare 18.9 % 12.3 % 15.2 % 11.4 % 18.1 % 11.3 % 18.4 % 12.1 %Managed care 12.1 12.5 10.8 9.2 8.9 7.6 11.5 11.7 Other skilled 6.2 5.5 3.2 2.7 1.7 1.8 5.3 4.9 Skilled mix 37.2 30.3 29.2 23.3 28.7 20.7 35.2 28.7 Private and other 9.4 12.1 13.3 14.6 10.5 12.4 10.0 12.3 payorsMedicaid 53.4 57.6 57.5 62.1 60.8 66.9 54.8 59.0 Total skilled 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %nursing

Year Ended December 31, Same Facility Transitioning Acquisitions Total 2020 2019 2020 2019 2020 2019 2020 2019Percentage of SkilledNursing Revenue:Medicare 30.1 % 23.6 % 24.1 % 20.7 % 32.6 % 23.9 % 29.8 % 23.4 %Managed care 16.7 18.8 14.9 13.3 12.3 12.9 16.0 17.9 Other skilled 8.6 8.3 4.1 3.6 1.4 2.5 7.3 7.5 Skilled mix 55.4 50.7 43.1 37.6 46.3 39.3 53.1 48.8 Private and other 6.7 8.0 10.5 11.8 8.1 8.5 7.3 8.5 payorsMedicaid 37.9 41.3 46.4 50.6 45.6 52.2 39.6 42.7 Total skilled 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %nursing

(1) The revenue mix excludes state relief revenue we recognized.

Year Ended December 31, Same Facility Transitioning Acquisitions Total 2020 2019 2020 2019 2020 2019 2020 2019Percentage of SkilledNursing Days:Medicare 15.9 % 12.2 % 13.0 % 11.0 % 15.7 % 10.8 % 15.6 % 12.0 %Managed care 12.0 12.9 10.2 9.0 8.0 8.5 11.2 12.2 Other skilled 5.7 5.3 2.7 2.2 1.3 2.1 4.9 4.8 Skilled mix 33.6 30.4 25.9 22.2 25.0 21.4 31.7 29.0 Private and other 10.4 11.7 14.1 15.3 11.7 11.6 10.9 12.1 payorsMedicaid 56.0 57.9 60.0 62.5 63.3 67.0 57.4 58.9 Total skilled 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %nursing

THE ENSIGN GROUP, INC.UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION BY SEGMENT(In thousands)

In the fourth quarter of 2020, the Company began reporting the results of its real estate portfolio as a new segment. The Company now 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.

Transitional and Skilled Services

The table below reconciles net income to EBITDA and Adjusted EBITDA for the transitional and skilled services reportable segment for the periods presented:

Year Ended December 31, 2020 2019Statements of Income Data: Segment income(a) $ 327,812 $ 225,910 Depreciation and amortization 28,585 27,837 EBITDA 356,397 253,747 Adjustments to EBITDA: Stock-based compensation expense 9,239 6,419 Results related to operations not at full capacity ? 109 (b)Rent related to items above ? 809 Adjusted EBITDA $ 365,636 $ 261,084

(a) Segment income reflects profits or loss from operations before provision for income taxes, excluding gain or loss from sale of real estate and impairment charges from operations. General and administrative expenses are not allocated to any segment for purposes of determining segment profit or loss.(b) Represents results at closed operations and operations not at full capacity.

The tables below reconcile net income to EBITDA and Adjusted EBITDA for the transitional and skilled services reportable segment for the periods presented:

Three Months Ended 3/31/2020 6/30/2020 9/30/2020 12/31/2020Statements of Income Data:Segment income $ 80,591 $ 78,302 $ 84,747 $ 84,172 (a)Depreciationand 7,148 7,005 7,094 7,338 amortizationEBITDA 87,739 85,307 91,841 91,510 Adjustments to EBITDA:Stock-basedcompensation 2,000 2,215 2,829 2,195 expenseAdjusted EBITDA $ 89,739 $ 87,522 $ 94,670 $ 93,705

(a) Segment income reflects profits or loss from operations before provision for income taxes, excluding gain or loss from sale of real estate and impairment charges from operations. General and administrative expenses are not allocated to any segment for purposes of determining segment profit or loss.(b) Represents results at closed operations and operations not at full capacity.



Three Months Ended 3/31/2019 6/30/2019 9/30/2019 12/31/2019Statements of Income Data:Segment income(a) $ 54,413 $ 51,951 $ 51,459 $ 68,087 Depreciation and 6,593 6,882 6,995 7,367 amortizationEBITDA 61,006 58,833 58,454 75,454 Adjustments to EBITDA: Stock-based 1,385 1,573 1,566 1,895 compensation expenseResults related tooperations not at full 264 25 190 (370 )capacity(b)Rent related to items 76 77 245 411 aboveAdjusted EBITDA $ 62,731 $ 60,508 $ 60,455 $ 77,390

(a) Segment income reflects profits or loss from operations before provision for income taxes, excluding gain or loss from sale of real estate and impairment charges from operations. General and administrative expenses are not allocated to any segment for purposes of determining segment profit or loss.(b) Represents results at closed operations and operations not at full capacity.

Real Estate

The following table sets forth details of operating results for our revenue and earnings, and their respective components, by our real estate segment the periods indicated:

Year Ended December 31, 2020 2019 Rental revenue generated from third-party $ 15,157 $ 5,258 tenantsRental revenue generated from Ensign affiliated 46,118 44,610 operationsTotal rental revenue 61,275 49,868 Segment income(a) 31,323 17,479 Depreciation and amortization 18,218 15,196 FFO(b) $ 49,541 $ 32,675

(a) Segment income reflects profits or loss from operations before provision for income taxes, excluding gain or loss from sale of real estate and impairment charges from operations. General and administrative expenses are not allocated to any segment for purposes of determining segment profit or loss.(b) FFO, in accordance with the definition used by the National Association of Real Estate Investment Trusts, means net income attributable to common stockholders, computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of real estate and impairment of depreciable real estate assets and adding depreciation and amortization related to real estate to earnings.



Three Months Ended 3/31/2020 6/30/2020 9/30/2020 12/31/2020 Rentalrevenuegenerated $ 3,662 $ 3,620 $ 3,914 $ 3,961 fromthird-partytenantsRentalrevenuegenerated 11,282 11,389 11,622 11,825 from EnsignaffiliatedoperationsTotal rental 14,944 15,009 15,536 15,786 revenueSegment 6,325 7,794 8,474 8,730 income(a)Depreciationand 4,515 4,587 4,522 4,594 amortizationFFO(b) $ 10,840 $ 12,381 $ 12,996 $ 13,324

(a) Segment income reflects profits or loss from operations before provision for income taxes, excluding gain or loss from sale of real estate and impairment charges from operations. General and administrative expenses are not allocated to any segment for purposes of determining segment profit or loss.(b) FFO, in accordance with the definition used by the National Association of Real Estate Investment Trusts, means net income attributable to common stockholders, computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of real estate and impairment of depreciable real estate assets and adding depreciation and amortization related to real estate to earnings.



Three Months Ended (c) 3/31/2019 6/30/2019 9/30/2019 12/31/2019 Rental revenuegenerated from $ 576 $ 487 $ 479 $ 3,716 third-party tenants(c)Rental revenuegenerated from Ensign 10,587 11,407 12,345 10,271 affiliated operations(c)Total rental revenue 11,163 11,894 12,824 13,987 Segment income(a) 3,716 4,161 4,569 5,033 Depreciation and 3,422 3,545 3,912 4,317 amortizationFFO(b) $ 7,138 $ 7,706 $ 8,481 $ 9,350

(a) Segment income reflects profits or loss from operations before provision for income taxes, excluding gain or loss from sale of real estate and impairment charges from operations. General and administrative expenses are not allocated to any segment for purposes of determining segment profit or loss.(b) FFO, in accordance with the definition used by the National Association of Real Estate Investment Trusts, means net income attributable to common stockholders, computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of real estate and impairment of depreciable real estate assets and adding depreciation and amortization related to real estate to earnings.(c) For all periods presented prior to October 1, 2019, Pennant rental revenue has been included within Ensign affiliated operations. Effective upon the Spin-Off, Pennant rental revenue has been included within third-party tenant rental revenue.

THE ENSIGN GROUP, INC.UNAUDITED REVENUE BY PAYOR SOURCE

The following table sets forth our service revenue by payor source and as a percentage of total service revenue for the periods indicated:

Three Months Ended December 31, 2020 2019 Revenue % of Revenue % of Revenue RevenueMedicaid $ 227,744 36.4 % $ 216,729 38.9 %Medicare 207,509 33.2 144,213 25.9 Medicaid ? skilled 39,220 6.3 36,567 6.6 Total Medicaid and 474,473 75.9 397,509 71.4 MedicareManaged care 95,102 15.2 92,849 16.7 Private and other^(1) 55,493 8.9 66,117 11.9 Service revenue $ 625,068 100.0 % $ 556,475 100.0 %

(1) Private and other payors also includes revenue from all payors generated in our other ancillary operations for the three months ended December 31, 2020 and 2019.



Year Ended December 31, 2020 2019 Revenue % of Revenue % of Revenue RevenueMedicaid $ 900,249 37.7 % $ 802,952 39.5 %Medicare 727,374 30.5 499,353 24.6 Medicaid ? skilled 149,846 6.3 132,889 6.5 Total Medicaid and 1,777,469 74.5 1,435,194 70.6 MedicareManaged care 367,095 15.4 351,054 17.3 Private and other^(1) 242,875 10.1 245,018 12.1 Service revenue $ 2,387,439 100.0 % $ 2,031,266 100.0 %

(1) Private and other payors also includes revenue from all payors generated in our other ancillary operations for the years ended December 31, 2020 and 2019.

Discussion of Non-GAAP Financial Measures

EBITDA consists of net income before (a) interest expense, net, (b) provisions for income taxes and (c) depreciation and amortization. Adjusted EBITDA consists of net income before (a) interest expense, net, (b) provisions for income taxes, (c) depreciation and amortization, (d) share-based compensation expense; (e) results of operations not at full capacity, excluding depreciation, interest and income taxes; (f) acquisition related costs; (g) impairment of goodwill and intangible assets; (h) spin-off transaction costs and (i) gain on sale of fixed assets, net of impairment charges; Adjusted EBITDAR consists of net income before (a) interest expense, net, (b) provisions for income taxes, (c) depreciation and amortization, (d) rent-cost of services, (e) share-based compensation expense; (f) results of operations not at full capacity, excluding rent, depreciation, interest and income taxes (g) acquisition related costs; (h) impairment of goodwill and intangible assets; (i) spin-off transaction costs; and (j) gain on sale of fixed assets, net of impairment charges. Funds from Operations (FFO) for our real estate segment consists of segment income, excluding gains (or losses) from sales of real estate and impairment of depreciable real estate assets and adding depreciation and amortization related to real estate to earnings. The company believes that the presentation of EBITDA, adjusted EBITDA, FFO, adjusted net income and adjusted earnings per share provides important supplemental information to management and investors to evaluate the companys operating performance. Adjusted EBITDAR is a financial valuation measure that is not specified in GAAP. This measure is not displayed as a performance measure as it excludes rent expense, which is a normal and recurring operating expense. The company believes disclosure of adjusted net income, adjusted net income per share, FFO, EBITDA, adjusted EBITDA and adjusted EBITDAR has substance because the excluded revenues and expenses are infrequent in nature and are variable in nature, or do not represent current revenues or cash expenditures. A material limitation associated with the use of these measures as compared to the GAAP measures of net income and diluted earnings per share is that they may not be comparable with the calculation of net income and diluted earnings per share for other companies in the company's industry. These non-GAAP financial measures should not be relied upon to the exclusion of GAAP financial measures. For further information regarding why the company believes that this non-GAAP measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the company's periodic filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Report on Form 10-Q. The companys periodic filings are available on the SEC's website at www.sec.govor under the "Financial Information" link of the Investor Relations section on Ensigns website at http://www.ensigngroup.net.