2 unchanged sentences
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
−Removed: June 30, 2022 December 31, 2021
+Added: September 30, 2022 December 31, 2021
(In thousands, except par values)
1 unchanged sentence
Cash and cash equivalents $ 308,864 $ 262,201
−Removed: Accounts receivable—less allowance for doubtful accounts of $ 7,827 and $ 11,213 at June 30, 2022 and December 31, 2021, respectively
+Added: Accounts receivable—less allowance for doubtful accounts of $ 7,865 and $ 11,213 at September 30, 2022 and December 31, 2021, respectively
353,956 328,731
34 unchanged sentences
100,000 shares authorized;
−Removed: 58,646 and 55,278 shares issued and outstanding at June 30, 2022, respectively, and 58,134 and 55,190 shares issued and outstanding at December 31, 2021, respectively
+Added: 58,833 and 55,465 shares issued and outstanding at September 30, 2022, respectively, and 58,134 and 55,190 shares issued and outstanding at December 31, 2021, respectively
Additional paid-in capital 405,555 369,760
Retained earnings 889,069 733,992
−Removed: Common stock in treasury, at cost, 3,368 and 2,944 shares at June 30, 2022 and December 31, 2021, respectively (Note 20)
+Added: Common stock in treasury, at cost, 3,368 and 2,944 shares at September 30, 2022 and December 31, 2021, respectively (Note 20)
( 114,626 ) ( 83,042 )
7 unchanged sentences
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
11 unchanged sentences
Interest expense ( 2,108 ) ( 1,709 ) ( 6,864 ) ( 4,984 )
−Removed: Other (expense) income ( 2,587 ) 1,121 ( 3,403 ) 1,869
+Added: Other income (expense) 276 248 ( 3,127 ) 2,117
Other expense, net ( 1,832 ) ( 1,461 ) ( 9,991 ) ( 2,867 )
39 unchanged sentences
Net income attributable to noncontrolling interest — — — — — — 112 112
−Removed: Distribution to noncontrolling interest holder — — — — — — ( 8 ) ( 8 )
+Added: Distribution to noncontrolling interest holder and other changes — — — — — — ( 8 ) ( 8 )
Net income attributable to the Ensign Group, Inc.
1 unchanged sentence
BALANCE - JUNE 30, 2022 55,278 $ 58 $ 398,793 $ 835,941 3,368 $ ( 114,626 ) $ 527 $ 1,120,693
+Added: Issuance of common stock to employees and directors resulting from the exercise of stock options 151 — 2,635 — — — — 2,635
+Added: Issuance of restricted stock, net of forfeitures 36 — — — — — — —
+Added: Dividends declared ($ 0.0550 per share)
+Added: — — — ( 3,051 ) — — — ( 3,051 )
+Added: Employee stock award compensation — — 5,898 — — — — 5,898
+Added: Acquisition of noncontrolling interest shares — — ( 1,774 ) — — — 1,105 ( 669 )
+Added: Net income attributable to noncontrolling interest — — — — — — 63 63
+Added: Distribution to noncontrolling interest holder and other changes — — 3 — — — ( 3 ) —
+Added: Net income attributable to the Ensign Group, Inc.
+Added: — — — 56,179 — — — 56,179
+Added: BALANCE - SEPTEMBER 30, 2022 55,465 $ 58 $ 405,555 $ 889,069 3,368 $ ( 114,626 ) $ 1,692 $ 1,181,748
Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Non-Controlling Interest
23 unchanged sentences
BALANCE - JUNE 30, 2021 55,130 $ 58 $ 357,451 $ 643,906 2,811 $ ( 72,822 ) $ 50 $ 928,643
+Added: Issuance of common stock to employees and directors resulting from the exercise of stock options 69 — 1,246 — — — — 1,246
+Added: Issuance of restricted stock, net of forfeitures 49 — — — — — — —
+Added: Shares of common stock used to satisfy tax withholding obligations ( 1 ) — — — 1 ( 102 ) — ( 102 )
+Added: Dividends declared ($ 0.0525 per share)
+Added: — — — ( 2,900 ) — — — ( 2,900 )
+Added: Employee stock award compensation — — 5,082 — — — — 5,082
+Added: Net income attributable to noncontrolling interest — — — — — — 1,063 1,063
+Added: Distribution to noncontrolling interest holder — — — — — — ( 1,019 ) ( 1,019 )
+Added: Net income attributable to the Ensign Group, Inc.
+Added: — — — 47,281 — — — 47,281
+Added: BALANCE - SEPTEMBER 30, 2021 55,247 $ 58 $ 363,779 $ 688,287 2,812 $ ( 72,924 ) $ 94 $ 979,294
See accompanying notes to condensed consolidated financial statements
1 unchanged sentence
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
(In thousands) 2022 2021
57 unchanged sentences
( 31,903 ) ( 78,562 )
−Removed: Net increase (decrease) in cash and cash equivalents 23,379 ( 38,151 )
+Added: Net increase in cash and cash equivalents 46,663 68,058
Cash and cash equivalents beginning of period 262,201 236,562
Cash and cash equivalents end of period $ 308,864 $ 304,620
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
(In thousands) 2022 2021
16 unchanged sentences
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.
−Removed: As of June 30, 2022, the Company operated 251 facilities and other ancillary operations located in Arizona, California, Colorado, Idaho, Iowa, Kansas, Nebraska, Nevada, South Carolina, Texas, Utah, Washington and Wisconsin.
+Added: As of September 30, 2022, the Company operated 259 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 have a collective capacity of approximately 26,600 operational skilled nursing beds and 3,000 senior living units.
−Removed: As of June 30, 2022, the Company operated 180 facilities under long-term lease arrangements, and had options to purchase 11 of those 180 facilities.
+Added: As of September 30, 2022, the Company operated 182 facilities under long-term lease arrangements, and had options to purchase 11 of those 182 facilities.
The Company's real estate portfolio includes 106 owned real estate properties, which included 77 facilities operated and managed by the Company, 29 senior living operations leased to and operated by The Pennant Group, Inc.
10 unchanged sentences
has direct operating assets, employees or revenue, or that any of the subsidiaries, are operated by The Ensign Group, Inc.
−Removed: Other Information — The accompanying condensed consolidated financial statements as of June 30, 2022 and for the three and six months ended June 30, 2022 and 2021 (collectively, the Interim Financial Statements) are unaudited.
+Added: Other Information — The accompanying condensed consolidated financial statements as of September 30, 2022 and for the three and nine months ended September 30, 2022 and 2021 (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.
11 unchanged sentences
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: The condensed consolidated financial statements include the accounts of all entities controlled by the Company through its ownership of a majority voting interest.
+Added: The Interim 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.
1 unchanged sentence
On October 1, 2021, the Company deconsolidated its VIE, which was not material, as this entity no longer met the requirements for consolidation.
−Removed: As of June 30, 2022 and December 31, 2021, the Company had no VIEs.
+Added: As of September 30, 2022 and December 31, 2021, the Company had no VIEs.
Reclassifications — Prior period results reflect reclassifications, for comparative purposes, related to the change in the Company's segment structure as a result of the formation of Standard Bearer.
23 unchanged sentences
For leases commencing subsequent to the ASC 842 adoption date, the Company performs an evaluation to determine whether the lease should be classified as an operating or finance lease at the inception of the lease.
−Removed: As of June 30, 2022, the Company does not have any leases that are classified as finance leases.
+Added: As of September 30, 2022, 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 sheets.
21 unchanged sentences
The Company estimates the fair value of assets based on the estimated future discounted cash flows of the asset.
−Removed: Management has evaluated its long-lived assets and determined there was no impairment during the three and six months ended June 30, 2022 and 2021.
+Added: Management has evaluated its long-lived assets and determined there was no impairment during the three and nine months ended September 30, 2022 and 2021.
Intangible Assets and Goodwill — Definite-lived intangible assets consist primarily of patient base, facility trade names and customer relationships.
7 unchanged sentences
The Company performs its annual test for impairment during the fourth quarter of each year.
−Removed: The Company did no t identify any goodwill or intangible asset impairment during the three and six months ended June 30, 2022 and 2021.
+Added: The Company did no t identify any goodwill or intangible asset impairment during the three and nine months ended September 30, 2022 and 2021.
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.
10 unchanged sentences
The Company uses actuarial valuations to estimate the liability based on historical experience and industry information.
−Removed: Accrued general liability and professional malpractice liabilities on an undiscounted basis, net of anticipated insurance recoveries, were $ 76,145 and $ 66,158 as of June 30, 2022 and December 31, 2021, respectively.
+Added: Accrued general liability and professional malpractice liabilities on an undiscounted basis, net of anticipated insurance recoveries, were $ 73,056 and $ 66,158 as of September 30, 2022 and December 31, 2021, respectively.
The Company’s operating subsidiaries are self-insured for workers’ compensation liabilities in California.
5 unchanged sentences
The Company uses actuarial valuations to estimate the liability based on historical experience and industry information.
−Removed: Accrued workers’ compensation liabilities are recorded on an undiscounted basis in the accompanying condensed consolidated balance sheets and were $ 28,365 and $ 27,335 as of June 30, 2022 and December 31, 2021, respectively.
−Removed: In addition, the Company has recorded an asset and equal liability of $ 8,440 and $ 6,755 as of June 30, 2022 and December 31, 2021, respectively, in order to present the ultimate costs of malpractice and workers' compensation claims and the anticipated insurance recoveries on a gross basis.
+Added: Accrued workers’ compensation liabilities are recorded on an undiscounted basis in the accompanying condensed consolidated balance sheets and were $ 28,290 and $ 27,335 as of September 30, 2022 and December 31, 2021, respectively.
+Added: In addition, the Company has recorded an asset and equal liability of $ 9,406 and $ 6,755 as of September 30, 2022 and December 31, 2021, 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 13, Restricted and Other Assets.
2 unchanged sentences
To protect itself against loss exposure with this policy, the Company has purchased individual stop-loss insurance coverage that insures individual claims that exceed $ 525 for each covered person for fiscal year 2022.
−Removed: The Company’s accrued liability under these plans recorded on an undiscounted basis in the accompanying condensed consolidated balance sheets was $ 13,571 and $ 9,891 as of June 30, 2022 and December 31, 2021, respectively.
+Added: The Company’s accrued liability under these plans recorded on an undiscounted basis in the accompanying condensed consolidated balance sheets was $ 14,005 and $ 9,891 as of September 30, 2022 and December 31, 2021, 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.
27 unchanged sentences
ASC 832 requires business entities to disclose information about certain government assistance they receive.
−Removed: The Company adopted this standard on January 1, 2022 and determined there was no material impact on the Company's condensed consolidated financial statements.
+Added: The Company adopted this standard on January 1, 2022 and determined there was no material impact on the Company's Interim 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 London Interbank Offered Rate (LIBOR) reference rates.
2 unchanged sentences
An entity may elect to apply the amendments prospectively through December 31, 2022.
−Removed: During the quarter ended June 30, 2022, the Company and its subsidiaries including Standard Bearer, entered into the Second Amendment to Third Amended and Restated Credit Agreement (such agreement, the Amended Credit Agreement, and the revolving credit facility thereunder, the Revolving Credit Facility), which increased the Revolving Credit Facility by $ 250,000 to an aggregate principal amount of up to $ 600,000 .
−Removed: Pursuant to the Amended Credit Agreement, the Company transitioned from LIBOR to the Secured Overnight Financing Rate (SOFR) as the applicable reference rate for borrowings under the Revolving Credit Facility and determined there was no resulting material impact on the Company's condensed consolidated financial statements.
+Added: During the nine months ended September 30, 2022, the Company and its subsidiaries including Standard Bearer, entered into the Second Amendment to Third Amended and Restated Credit Agreement (such agreement, the Amended Credit Agreement, and the revolving credit facility thereunder, the Revolving Credit Facility), which increased the Revolving Credit Facility by $ 250,000 to an aggregate principal amount of up to $ 600,000 .
+Added: Pursuant to the Amended Credit Agreement, the Company transitioned from LIBOR to the Secured Overnight Financing Rate (SOFR) as the applicable reference rate for borrowings under the Revolving Credit Facility and determined there was no resulting material impact on the Company's Interim Financial Statements.
COVID-19 UPDATE
2 unchanged sentences
Department of Health and Human Services (HHS) to be used to protect residents of nursing homes and long-term care (LTC) facilities from the impact of COVID-19 .
−Removed: During the three and six months ended June 30, 2022, the Company did not receive Provider Relief Funds.
−Removed: During the three and six months ended June 30, 2021, the Company received and returned $ 2,399 and $ 11,538 , respectively, in Provider Relief Funds.
+Added: During the three and nine months ended September 30, 2022, the Company did not receive Provider Relief Funds.
+Added: During the three and nine months ended September 30, 2021, the Company received and returned $ 99 and $ 11,637 , respectively, in Provider Relief Funds.
The Company may continue to receive additional funding in future periods.
1 unchanged sentence
The purpose of the program is to assist in providing needed liquidity to care delivery providers.
−Removed: The Company repaid $ 3,232 of the funds in 2020.
−Removed: In March 2021, the Company repaid the remaining funds of $ 102,023 .
+Added: The Company repaid $ 3,232 of the funds in 2020 and the remaining funds of $ 102,023 in March 2021.
THE ENSIGN GROUP, INC.
6 unchanged sentences
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.
−Removed: As of June 30, 2022 and December 31, 2021, the Company had $ 4,356 and $ 1,781 in unapplied state relief funds, respectively.
−Removed: During the three and six months ended June 30, 2022, the Company received an additional $ 27,345 and $ 44,662 in state relief funding and recognized $ 24,489 and $ 42,088 , respectively, as revenue.
−Removed: During the three and six months ended June 30, 2021, the Company received an additional $ 16,776 and $ 32,421 in state relief funding and recognized $ 16,692 and $ 33,157 , respectively, as revenue.
+Added: As of September 30, 2022 and December 31, 2021, the Company had $ 3,248 and $ 1,781 in unapplied state relief funds, respectively.
+Added: During the three and nine months ended September 30, 2022, the Company received an additional $ 20,293 and $ 64,955 in state relief funding and recognized $ 21,400 and $ 63,488 , respectively, as revenue.
+Added: During the three and nine months ended September 30, 2021, the Company received an additional $ 17,829 and $ 50,250 in state relief funding and recognized $ 19,229 and $ 52,386 , respectively, as revenue.
The CARES Act also provides for deferred payment of the employer portion of social security taxes through the end of 2020, with 50% of the deferred amount due by December 31, 2021 and the remaining 50% due by December 31, 2022.
The Company recorded $ 48,309 of deferred payments of social security taxes as a liability during 2020.
−Removed: The Company paid $ 24,154 during the year ended December 31, 2021 and the remaining short-term balance of $ 24,155 is included in accrued wages and related liabilities within the condensed consolidated balance sheets as of June 30, 2022.
+Added: The Company paid $ 24,154 during the year ended December 31, 2021 and the remaining short-term balance of $ 24,155 is included in accrued wages and related liabilities within the condensed consolidated balance sheets as of September 30, 2022.
REVENUE AND ACCOUNTS RECEIVABLE
11 unchanged sentences
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.
−Removed: Revenue from the Medicare and Medicaid programs accounted for 73.4 % of all service revenue for both the three and six months ended June 30, 2022 and 73.1 % and 73.6 % for the three and six months ended June 30, 2021, respectively.
+Added: Revenue from the Medicare and Medicaid programs accounted for 73.7 % and 73.5 % of all service revenue for the three and nine months ended September 30, 2022, respectively and 73.6 % for both the three and nine months ended September 30, 2021, 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.
1 unchanged sentence
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.
−Removed: The Company recorded adjustments to revenue which were not material to the Company's revenue for the three and six months ended June 30, 2022 and 2021.
+Added: The Company recorded adjustments to revenue which were not material to the Company's revenue for the three and nine months ended September 30, 2022 and 2021.
THE ENSIGN GROUP, INC.
13 unchanged sentences
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 rates, adjusted for estimates for variable consideration, on a per patient, daily basis or as services are performed.
−Removed: Service revenue for the three and six months ended June 30, 2022 and 2021 is summarized in the following tables:
−Removed: Three Months Ended June 30,
+Added: Service revenue for the three and nine months ended September 30, 2022 and 2021 is summarized in the following tables:
+Added: Three Months Ended September 30,
Revenue % of Revenue Revenue % of Revenue
7 unchanged sentences
SERVICE REVENUE $ 765,883 100.0 % $ 664,597 100.0 %
−Removed: (1) Medicaid payor includes revenue for senior living operations and revenue related to FMAP.
+Added: (1) Medicaid payor includes revenue for senior living operations and revenue related to FMAP and other COVID-19 related state funding.
(2) Private and other payors also includes revenue from senior living operations and all payors generated in other ancillary services.
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
Revenue % of Revenue Revenue % of Revenue
7 unchanged sentences
SERVICE REVENUE $ 2,203,386 100.0 % $ 1,922,482 100.0 %
−Removed: (1) Medicaid payor includes revenue for senior living operations and revenue related to FMAP.
+Added: (1) Medicaid payor includes revenue for senior living operations and revenue related to FMAP and other COVID-19 related state funding.
(2) Private and other payors also includes revenue from senior living operations and all payors generated in other ancillary services.
1 unchanged sentence
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: In addition to the service revenue above, the Company's rental revenue derived from triple-net lease arrangements with third parties was $ 4,139 and $ 8,428 , respectively, for the three and six months ended June 30, 2022 and $ 3,927 and $ 7,904 , respectively, for the three and six months ended June 30, 2021.
+Added: In addition to the service revenue above, the Company's rental revenue derived from triple-net lease arrangements with third parties was $ 4,122 and $ 12,550 , respectively, for the three and nine months ended September 30, 2022 and $ 3,933 and $ 11,837 , respectively, for the three and nine months ended September 30, 2021.
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.
−Removed: The Company had no material contract liabilities and contract assets as of June 30, 2022 and December 31, 2021, or activity during the three and six months ended June 30, 2022 and 2021.
−Removed: Accounts receivable as of June 30, 2022 and December 31, 2021, is summarized in the following table:
−Removed: June 30, 2022 December 31, 2021
+Added: The Company had no material contract liabilities and contract assets as of September 30, 2022 and December 31, 2021, or activity during the three and nine months ended September 30, 2022 and 2021.
+Added: Accounts receivable as of September 30, 2022 and December 31, 2021, is summarized in the following table:
+Added: September 30, 2022 December 31, 2021
Medicaid $ 125,440 $ 123,647
14 unchanged sentences
A reconciliation of the numerator and denominator used in the calculation of basic net income per common share follows:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Net income $ 56,242 $ 48,344 $ 164,133 $ 148,764
−Removed: net (loss) income attributable to noncontrolling interests 112 1,158 ( 140 ) 1,789
+Added: net income (loss) attributable to noncontrolling interests 63 1,063 ( 77 ) 2,852
Net income attributable to The Ensign Group, Inc.
6 unchanged sentences
A reconciliation of the numerator and denominator used in the calculation of diluted net income per common share follows:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Net income $ 56,242 $ 48,344 $ 164,133 $ 148,764
−Removed: net (loss) income attributable to noncontrolling interests 112 1,158 ( 140 ) 1,789
+Added: net income (loss) attributable to noncontrolling interests 63 1,063 ( 77 ) 2,852
Net income attributable to The Ensign Group, Inc.
6 unchanged sentences
$ 0.99 $ 0.83 $ 2.89 $ 2.56
−Removed: (1) Options outstanding which are anti-dilutive and therefore not factored into the weighted average common shares amount above were 789 and 697 for the three and six months ended June 30, 2022, respectively, and 167 and 80 for the three and six months ended June 30, 2021, respectively.
+Added: (1) Options outstanding which are anti-dilutive and therefore not factored into the weighted average common shares amount above were 918 and 734 for the three and nine months ended September 30, 2022, respectively, and 365 and 139 for the three and nine months ended September 30, 2021, respectively.
FAIR VALUE MEASUREMENTS
4 unchanged sentences
and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.
−Removed: The fair value of cash and cash equivalents of $ 285,580 and $ 262,201 as of June 30, 2022 and December 31, 2021, respectively, is derived using Level 1 inputs.
+Added: The fair value of cash and cash equivalents of $ 308,864 and $ 262,201 as of September 30, 2022 and December 31, 2021, 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 funds that shadow the investment allocations specified by participants in the deferred compensation plan.
−Removed: As of June 30, 2022, and December 31, 2021, the fair value of the investment funds of $ 23,151 and $ 17,530 , respectively, is derived using Level 2 inputs.
+Added: As of September 30, 2022, and December 31, 2021, the fair value of the investment funds of $ 22,908 and $ 17,530 , respectively, is derived using Level 2 inputs.
The investment funds are included in restricted and other assets in the condensed consolidated balance sheets.
4 unchanged sentences
Debt Security Investments - Held to Maturity
−Removed: As of June 30, 2022 and December 31, 2021, the Company had approximately $ 49,068 and $ 50,330 , respectively, in debt security investments which were classified as held to maturity and carried at amortized cost.
−Removed: The carrying value of the debt securities approximates fair value based on Level 1 inputs.
+Added: As of September 30, 2022 and December 31, 2021, the Company had approximately $ 53,922 and $ 50,330 , respectively, in debt security investments which were classified as held to maturity and carried at amortized cost.
+Added: The carrying value of the majority of debt securities approximates fair value based on Level 1 inputs.
The Company has the intent and ability to hold these debt securities to maturity.
−Removed: Further, as of June 30, 2022, the debt security investments were held in AA, A and BBB r ated de bt securities.
−Removed: The Company believes its debt security investments and investment funds that were in an unrealized loss position as of June 30, 2022 were not other-than-temporarily impaired, nor has any event occurred subsequent to that date that would indicate any other-than-temporary impairment.
+Added: Further, as of September 30, 2022, the debt security investments were primarily held in AA, A and BBB r ated de bt securities.
+Added: The Company believes its debt security investments and investment funds that were in an unrealized loss position as of September 30, 2022 were not other-than-temporarily impaired, nor has any event occurred subsequent to that date that would indicate any other-than-temporary impairment.
THE ENSIGN GROUP, INC.
5 unchanged sentences
federal income tax purposes, commencing with its taxable year ending December 31, 2022.
−Removed: During the six months ended June 30, 2022, Standard Bearer acquired the real estate of two skilled nursing facilities for a purchase price of $ 17,412 , both of which are operated and managed by Ensign's affiliated operations.
+Added: During the nine months ended September 30, 2022, Standard Bearer acquired the real estate of eight skilled nursing facilities for a purchase price of $ 65,619 , three of which were previously operated and managed by Ensign's affiliated operations.
Refer to Note 9, Operation Expansions for additional information.
−Removed: Subsequent to June 30, 2022, Standard Bearer expanded its real estate portfolio with the addition of five skilled nursing properties and one campus property for a total purchase price of $ 47,900 .
+Added: Subsequent to September 30, 2022, Standard Bearer expanded its real estate portfolio with the addition of one skilled nursing property for a total purchase price of $ 8,000 .
As part of the formation of Standard Bearer, certain of the Company's operating subsidiaries, Standard Bearer and Standard Bearer's subsidiaries entered into several agreements that include leasing, management services and debt arrangements between the operations.
−Removed: As these intercompany arrangements were entered into when Standard Bearer was formed in January 2022, the transactions related to these agreements are reflected in Standard Bearer's segment income during three and six months ended June 30, 2022.
+Added: As these intercompany arrangements were entered into when Standard Bearer was formed in January 2022, the transactions related to these agreements are reflected in Standard Bearer's segment income during three and nine months ended September 30, 2022.
All intercompany transactions have been eliminated in consolidation.
10 unchanged sentences
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.
−Removed: The two real estate properties acquired during six months ended June 30, 2022 were added to the Standard Bearer Master Leases.
−Removed: Rental revenue generated from Ensign affiliated operations was $ 13,894 and $ 27,319 , respectively, for the three and six months ended June 30, 2022 and $ 10,784 and $ 21,375 , respectively, for the three and six months ended June 30, 2021.
+Added: The eight real estate properties acquired during nine months ended September 30, 2022 were added to the Standard Bearer Master Leases.
+Added: Rental revenue generated from Ensign affiliated operations was $ 15,024 and $ 42,343 , respectively, for the three and nine months ended September 30, 2022 and $ 11,010 and $ 32,385 , respectively, for the three and nine months ended September 30, 2021.
Intercompany management agreement
2 unchanged sentences
The management agreement provides for a base management fee that is equal to 5 % of total rental revenue and an incentive management fee that is equal to 5 % of funds from operations (FFO) and is capped at 1 % of total rental revenue.
−Removed: Management fee generated between Standard Bearer and the Service Center for the three and six months ended June 30, 2022 was $ 1,056 and $ 2,078 , respectively, both of which represent 6 % of total Standard Bearer rental revenue.
+Added: Management fee generated between Standard Bearer and the Service Center for the three and nine months ended September 30, 2022 was $ 1,124 and $ 3,202 , respectively, both of which represent 6 % of total Standard Bearer rental revenue.
No management fees were recorded in 2021, which was prior to the formation of Standard Bearer.
13 unchanged sentences
The value of the stock options and restricted stock awards is tied to the value of the common stock of Standard Bearer, which is determined based on an independent valuation of Standard Bearer.
−Removed: The awards can be put to the Company at various prescribed dates, which in no event is earlier than six months after vesting of the restricted awards or exercise of the stock options.
+Added: The awards can be put to Standard Bearer at various prescribed dates, which in no event is earlier than six months after vesting of the restricted awards or exercise of the stock options.
The Company can also call the awards, generally upon employee termination.
−Removed: During the three months ended June 30, 2022, Standard Bearer sold fully vested common shares from the Standard Bearer Equity Plan to shareholders for cash of $ 6,544 .
−Removed: During the three and six months ended June 30, 2022, the Company did not grant any stock options nor restricted shares under the Standard Bearer Equity Plan.
−Removed: During the three months ended June 30, 2022, Standard Bearer established shareholders of its preferred shares through contributions of cash of $ 149 .
+Added: During the nine months ended September 30, 2022, Standard Bearer sold fully vested common shares from the Standard Bearer Equity Plan to shareholders for cash of $ 6,544 .
+Added: During the three and nine months ended September 30, 2022, the Company did not grant any stock options nor restricted shares under the Standard Bearer Equity Plan.
+Added: During the nine months ended September 30, 2022, Standard Bearer established shareholders of its preferred shares through contributions of cash of $ 149 .
These preferred shares were fully vested at the time of the contributions by the shareholders.
BUSINESS SEGMENTS
−Removed: In conjunction with the formation Standard Bearer in January 2022, the Company's Chief Executive Officer, who is its chief operating decision maker, or CODM, began reviewing the results of Standard Bearer instead of all real estate properties.
+Added: In conjunction with the formation of Standard Bearer in January 2022, the Company's Chief Executive Officer, who is its chief operating decision maker, or CODM, began reviewing the results of Standard Bearer instead of all real estate properties.
Accordingly, the Company revised its former real estate segment to include only real estate properties that are part of Standard Bearer.
3 unchanged sentences
Segment information for prior periods has been recast to reflect the change of the Company’s segment structure.
−Removed: As of June 30, 2022, the skilled services segment includes 215 skilled nursing operations and 25 campus operations that provide both skilled nursing and rehabilitative care services and senior living services.
+Added: As of September 30, 2022, the skilled services segment includes 222 skilled nursing operations and 26 campus operations that provide both skilled nursing and rehabilitative care services and senior living services.
The Company's Standard Bearer segment consists of 101 owned real estate properties.
10 unchanged sentences
Intercompany revenue is eliminated in consolidation, along with corresponding intercompany expenses.
−Removed: Segment income and loss is defined as 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.
+Added: Segment income and loss is defined as profit or loss from operations before provision for income taxes, excluding gain or loss from sale of real estate, real estate insurance recoveries and losses and impairment charges from operations.
Included in segment income for Standard Bearer is expense for intercompany services provided by the Service Center as described in Note 7, Standard Bearer , as it is part of the CODM financial information.
2 unchanged sentences
The following tables set forth financial information for the segments:
−Removed: Three Months Ended June 30, 2022
+Added: Three Months Ended September 30, 2022
Skilled Services Standard Bearer All Other (1)
6 unchanged sentences
Segment income (loss) 101,750 6,941 ( 37,036 ) — 71,655
−Removed: Gain on sale of assets 2,467
+Added: Gain on sale of assets, net 800
Income before provision for income taxes $ 72,455
9 unchanged sentences
The intercompany interest expense is eliminated in the "Intercompany Elimination" column.
−Removed: Three Months Ended June 30, 2021
+Added: Three Months Ended September 30, 2021
Skilled Services Standard Bearer All Other (1)
14 unchanged sentences
Intercompany rental revenue is eliminated in consolidation along with corresponding intercompany rent expense.
−Removed: Six Months Ended June 30, 2022
+Added: Nine Months Ended September 30, 2022
Skilled Services Standard Bearer All Other (1)
6 unchanged sentences
Segment income (loss) 302,272 20,679 ( 114,580 ) — 208,371
−Removed: Gain on sale of assets 2,467
+Added: Gain on sale of assets, net 3,267
Income before provision for income taxes $ 211,638
11 unchanged sentences
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: Six Months Ended June 30, 2021
+Added: Nine Months Ended September 30, 2021
Skilled Services Standard Bearer All Other (1)
16 unchanged sentences
Service revenue by major payor source were as follows:
−Removed: Three Months Ended June 30, 2022
−Removed: Skilled Services All Other Total Service Revenue Revenue %
+Added: Three Months Ended September 30, 2022
+Added: Skilled Services All Other (3)
+Added: Total Service Revenue Revenue %
$ 295,927 $ 6,688 $ 302,615 39.5 %
6 unchanged sentences
TOTAL SERVICE REVENUE $ 739,318 $ 26,565 $ 765,883 100.0 %
−Removed: (1) Medicaid payor includes revenue generated from senior living operations and revenue related to FMAP.
+Added: (1) Medicaid payor includes revenue generated from senior living operations and revenue related to FMAP and other COVID-19 related state funding.
(2) Private and other payors also includes revenue from senior living operations and all payors generated in other ancillary services.
−Removed: Three Months Ended June 30, 2021
−Removed: Skilled Services All Other Total Service Revenue Revenue %
+Added: (3) All other incorporates intercompany eliminations.
+Added: Three Months Ended September 30, 2021
+Added: Skilled Services All Other (3)
+Added: Total Service Revenue Revenue %
$ 263,072 $ 3,936 $ 267,008 40.2 %
6 unchanged sentences
TOTAL SERVICE REVENUE $ 642,075 $ 22,522 $ 664,597 100.0 %
−Removed: (1) Medicaid payor includes revenue generated from senior living operations and revenue related to FMAP.
+Added: (1) Medicaid payor includes revenue generated from senior living operations and revenue related to FMAP and other COVID-19 related state funding.
(2) Private and other payors also includes revenue from senior living operations and all payors generated in other ancillary services.
+Added: (3) All other incorporates intercompany eliminations.
THE ENSIGN GROUP, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: Six Months Ended June 30, 2022
+Added: Nine Months Ended September 30, 2022
Skilled Services Other Service Revenue Total Service Revenue Revenue %
7 unchanged sentences
TOTAL SERVICE REVENUE $ 2,128,567 $ 74,819 $ 2,203,386 100.0 %
−Removed: (1) Medicaid payor includes revenue generated from senior living operations and revenue related to FMAP.
+Added: (1) Medicaid payor includes revenue generated from senior living operations and revenue related to FMAP and other COVID-19 related state funding.
(2) Private and other payors also includes revenue from senior living operations and all payors generated in other ancillary services.
−Removed: Six Months Ended June 30, 2021
+Added: Nine Months Ended September 30, 2021
Skilled Services Other Service Revenue Total Service Revenue Revenue %
7 unchanged sentences
TOTAL SERVICE REVENUE $ 1,855,993 $ 66,489 $ 1,922,482 100.0 %
−Removed: (1) Medicaid payor includes revenue generated from senior living operations and revenue related to FMAP.
+Added: (1) Medicaid payor includes revenue generated from senior living operations and revenue related to FMAP and other COVID-19 related state funding.
(2) Private and other payors also includes revenue from senior living operations and all payors generated in other ancillary services.
−Removed: In addition to the service revenue above, the Company's rental revenue derived from triple-net lease arrangements with third parties is $ 4,139 and $ 8,428 , respectively, for the three and six months ended June 30, 2022 and $ 3,927 and $ 7,904 , respectively, for the three and six months ended June 30, 2021.
+Added: In addition to the service revenue above, the Company's rental revenue derived from triple-net lease arrangements with third parties is $ 4,122 and $ 12,550 , respectively, for the three and nine months ended September 30, 2022 and $ 3,933 and $ 11,837 , respectively, for the three and nine months ended September 30, 2021.
This revenue is included in both Standard Bearer and the all other category.
12 unchanged sentences
2022 Expansions
−Removed: During the six months ended June 30, 2022, the Company expanded its operations through a combination of long-term leases and real estate purchases, with the addition of four stand-alone skilled nursing operations.
−Removed: Of these additions, Standard Bearer acquired the real estate of two of the stand-alone skilled nursing operations, which were leased back to Ensign affiliated entities.
+Added: During the nine months ended September 30, 2022, the Company expanded its operations through a combination of long-term leases and real estate purchases, with the addition of 11 stand-alone skilled nursing operations and one campus operation.
+Added: Of these additions, Standard Bearer acquired the real estate of five of the stand-alone skilled nursing operations, which were leased back to Ensign affiliated entities.
+Added: In addition, the Company purchased the real estate at three skilled nursing properties that the Company was already operating, further expanding the Company's real estate portfolio.
Refer to Note 7, Standard Bearer, for additional information on the purchase of real estate properties.
2 unchanged sentences
The Company also invested in new ancillary services that are complementary to its existing businesses.
−Removed: The aggregate purchase price for these expansions during the six months ended June 30, 2022 was $ 33,892 .
+Added: The aggregate purchase price for these expansions during the nine months ended September 30, 2022 was $ 82,099 .
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.
−Removed: The aggregate purchase price for the transactions that were classified as asset acquisitions during the six months ended June 30, 2022 was $ 17,492 , consisting of real estate properties and indefinite-lived intangible assets.
−Removed: The remaining aggregate purchase price for transactions during the six months ended June 30, 2022 is concentrated in goodwill of $ 16,400 and accordingly, the transactions were classified as business combinations.
−Removed: Subsequent to June 30, 2022, the Company expanded its operations through a combination of long-term leases and real estate purchases, with the addition of seven stand-alone skilled nursing operations and one campus operation.
−Removed: Of these additions, Standard Bearer acquired the real estate of three of these operations, which were leased back to Ensign affiliated entities.
−Removed: These new operations added 1,100 operational skilled nursing beds and 61 operational senior living units to be operated by the Company's affiliated operating subsidiaries.
−Removed: In addition, the Company purchased the real estate at three skilled nursing properties that the Company was already operating, further expanding the Company's real estate portfolio.
+Added: The aggregate purchase price for the transactions that were classified as asset acquisitions during the nine months ended September 30, 2022 was $ 65,699 , consisting of real estate properties and indefinite-lived intangible assets.
+Added: The remaining aggregate purchase price for transactions during the nine months ended September 30, 2022 was concentrated in goodwill of $ 16,400 and accordingly, the transactions were classified as business combinations.
+Added: Subsequent to September 30, 2022, the Company expanded its operations through a combination of long-term leases and real estate purchases, with the addition of nine stand-alone skilled nursing operations.
+Added: Of these additions, Standard Bearer acquired the real estate of one of these operations, which was leased back to an Ensign affiliated entity.
+Added: These new operations added 1,115 operational skilled nursing beds.
The aggregate purchase price for these expansions was $ 8,000 .
2021 Expansions
−Removed: During the six months ended June 30, 2021, the Company expanded its operations through a combination of long-term leases and a real estate purchase, with the addition of twelve stand-alone skilled nursing operations.
+Added: During the nine months ended September 30, 2021, the Company expanded its operations through a combination of long-term leases and a real estate purchase, with the addition of 14 stand-alone skilled nursing operations.
Of these additions, one is related to the purchase of real estate property, further expanding the Company's real estate portfolio.
These new operations added a total of 1,504 operational skilled nursing beds operated by the Company's affiliated operating subsidiaries.
−Removed: The aggregate purchase price for these acquisitions during the six months ended June 30, 2021 was $ 11,183 .
+Added: The aggregate purchase price for these acquisitions during the nine months ended September 30, 2021 was $ 11,183 .
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.
−Removed: The fair value of assets for nine of the acquisitions was concentrated in property and equipment and as such, these transactions were classified as asset acquisitions.
−Removed: The aggregate purchase price for the asset acquisitions during the six months ended June 30, 2021 was $ 5,183 .
+Added: The fair value of assets for ten of the acquisitions was concentrated in property and equipment and as such, these transactions were classified as asset acquisitions.
+Added: The aggregate purchase price for the asset acquisitions during the nine months ended September 30, 2021 was $ 5,183 .
The fair value of assets for the remaining four additions was concentrated in goodwill of $ 6,000 and as such, the transaction was classified as a business combination.
3 unchanged sentences
Consequently, the Company believes that prior operating results are not a meaningful representation of the Company’s current operating results or indicative of the integration potential of its newly acquired operating subsidiaries.
−Removed: The assets added during the six months ended June 30, 2022 were not material operations to the Company individually or in the aggregate.
+Added: The assets added during the nine months ended September 30, 2022 were not material operations to the Company individually or in the aggregate.
Accordingly, pro forma financial information is not presented.
−Removed: These additions have been included in the June 30, 2022 condensed consolidated balance sheets of the Company, and the operating results have been included in the condensed consolidated statements of operations of the Company since the date the Company gained effective control.
+Added: These additions have been included in the September 30, 2022 condensed consolidated balance sheets of the Company, and the operating results have been included in the condensed consolidated statements of operations of the Company since the date the Company gained effective control.
THE ENSIGN GROUP, INC.
2 unchanged sentences
Property and equipment, net consists of the following:
−Removed: June 30, 2022 December 31, 2021
+Added: September 30, 2022 December 31, 2021
Land $ 132,757 $ 121,164
7 unchanged sentences
PROPERTY AND EQUIPMENT, NET $ 963,465 $ 888,434
−Removed: The Company completed the sale of assets for a sale price of $ 7,707 and recorded a gain of $ 2,567 within the Company's condensed consolidated statement of income as cost of services during the three months ended June 30, 2022.
−Removed: See also Note 7, Standard Bearer and Note 9, Operation Expansions for information on acquisitions during the six months ended June 30, 2022.
+Added: The Company completed the sale of assets for a sale price of $ 8,607 and recorded a gain of $ 3,467 within the Company's condensed consolidated statement of income as cost of services during the nine months ended September 30, 2022.
+Added: See also Note 7, Standard Bearer and Note 9, Operation Expansions for information on acquisitions during the nine months ended September 30, 2022.
INTANGIBLE ASSETS - NET
−Removed: June 30, 2022 December 31, 2021
+Added: September 30, 2022 December 31, 2021
Weighted Average Life (Years)
5 unchanged sentences
TOTAL $ 5,650 $ ( 3,119 ) $ 2,531 $ 5,383 $ ( 2,731 ) $ 2,652
−Removed: During the three and six months ended June 30, 2022, amortization expense was $ 418 and $ 822 , respectively, of which $ 288 and $ 577 was related to the amortization of right-of-use assets, respectively.
−Removed: Amortization expense was $ 363 and $ 724 , respectively, of which $ 290 and $ 580 was related to the amortization of right-of-use assets for the three and six months ended June 30, 2021, respectively.
+Added: During the three and nine months ended September 30, 2022, amortization expense was $ 432 and $ 1,254 , respectively, of which $ 289 and $ 866 was related to the amortization of right-of-use assets, respectively.
+Added: Amortization expense was $ 363 and $ 1,087 , respectively, of which $ 289 and $ 869 was related to the amortization of right-of-use assets for the three and nine months ended September 30, 2021, respectively.
Estimated amortization expense for each of the years ending December 31 is as follows:
12 unchanged sentences
An impairment loss is measured by the difference between the carrying value of the reporting unit and its fair value.
−Removed: The Company anticipates that the majority of total goodwill recognized will be fully deductible for tax purposes as of June 30, 2022.
+Added: The Company anticipates that the majority of total goodwill recognized will be fully deductible for tax purposes as of September 30, 2022.
Provided that goodwill corresponds to the acquisition of a business and not merely the acquisition of real estate property, the Company's Standard Bearer segment appropriately does not carry a goodwill balance.
−Removed: The following table represents activity in goodwill by skilled service segment and "all other" category as of and for the six months ended June 30, 2022:
+Added: The following table represents activity in goodwill by skilled service segment and "all other" category as of and for the nine months ended September 30, 2022:
Skilled Services All Other Total
1 unchanged sentence
Additions 16,400 — 16,400
−Removed: June 30, 2022 $ 67,886 $ 8,983 $ 76,869
+Added: September 30, 2022 $ 67,886 $ 8,983 $ 76,869
Other indefinite-lived intangible assets consist of the following:
−Removed: June 30, 2022 December 31, 2021
+Added: September 30, 2022 December 31, 2021
Trade name $ 889 $ 889
3 unchanged sentences
Restricted and other assets consist of the following:
−Removed: June 30, 2022 December 31, 2021
+Added: September 30, 2022 December 31, 2021
Debt issuance costs, net $ 3,974 $ 1,953
Long-term insurance losses recoverable asset 9,406 6,755
−Removed: Deposits with landlords 14,725 13,705
Capital improvement reserves with landlords and lenders 6,633 7,103
Deferred compensation plan investments 22,908 17,530
+Added: Deposits with landlords 2,524 2,606
+Added: Other 13,024 11,099
RESTRICTED AND OTHER ASSETS $ 58,469 $ 47,046
−Removed: Included in restricted and other assets as of June 30, 2022 and December 31, 2021 are anticipated insurance recoveries related to the Company's workers' compensation liabilities and general and professional liability reserves that are recorded on a gross rather than net basis in accordance with GAAP.
+Added: Included in restricted and other assets as of September 30, 2022 and December 31, 2021 are anticipated insurance recoveries related to the Company's workers' compensation liabilities and general and professional liability reserves that are recorded on a gross rather than net basis in accordance with GAAP.
THE ENSIGN GROUP, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: The Company implemented a non-qualified deferred compensation plan (the DCP) that was effective in 2019 for certain employees and was expanded to other employees in 2020.
+Added: The Company implemented a non-qualified deferred compensation plan (DCP) that was effective in 2019.
The DCP allows for the employee deferrals to be deposited into a rabbi trust and these funds are generally invested in individual variable life insurance contracts owned by the Company that are specifically designed to fund the deferrals.
−Removed: The cash surrender value of the insurance contracts is based on funds that shadow the investment allocations specified by participants in the deferred compensation plan.
−Removed: For the three and six months ended June 30, 2022, the Company recorded a loss on these investments of $ 3,313 and $ 4,515 , respectively, which is included in other (expense) income, net.
+Added: The cash surrender value of the insurance contracts is based on funds that shadow the investment allocations specified by participants in the DCP.
+Added: For the three and nine months ended September 30, 2022, the Company recorded a loss on these investments of $ 1,135 and $ 5,650 , respectively, which is included in other income (expense), net.
During the same periods, the Company recorded an offsetting reduction in expense of $ 1,055 and $ 5,566 , respectively, allocated between cost of services and general and administrative expenses.
−Removed: For the three and six months ended June 30, 2021, the Company recorded a gain on the deferral investment of $ 751 and $ 1,057 , respectively, which is included in other (expense) income, net.
−Removed: During the same periods, the Company recorded an offsetting expense of $ 780 and $ 1,131 , respectively, allocated between cost of services and general and administrative expenses.
+Added: For the three months ended September 30, 2021, the Company recorded loss on the investment acquired in connection with our DCP that was not material.
+Added: For the nine months ended September 30, 2021, the Company recorded income on the investment acquired in connection with our DCP of $ 940 , which is included in other income (expense), net, and an offsetting expense of $ 1,046 between cost of services and general and administrative expenses.
OTHER ACCRUED LIABILITIES
Other accrued liabilities consists of the following:
−Removed: June 30, 2022 December 31, 2021
+Added: September 30, 2022 December 31, 2021
Quality assurance fee $ 7,071 $ 6,474
11 unchanged sentences
Resident advances occur when the Company receives payments in advance of services provided.
−Removed: Resident deposits include refundable deposits to patients.
Cash held in trust for patients reflects monies received from or on behalf of patients.
1 unchanged sentence
The cash balance related to this liability is included in other current assets in the condensed consolidated balance sheets.
−Removed: The Company recorded income tax expense of $ 31,292 and $ 26,707 during the six months ended June 30, 2022 and 2021, respectively, or 22.5 % of earnings before income taxes for the six months ended June 30, 2022, compared to 21.0 % for the six months ended June 30, 2021.
+Added: The Company recorded income tax expense of $ 47,505 and $ 43,220 during the nine months ended September 30, 2022 and 2021, respectively, or 22.4 % of earnings before income taxes for the nine months ended September 30, 2022, compared to 22.5 % for the nine months ended September 30, 2021.
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.
−Removed: Th e Company is not currently under examination by any major income tax jurisdiction.
+Added: The Company is not currently under examination by any major income tax jurisdiction.
During 2022, the statutes of limitations will lapse on the Company's 2018 Federal tax year and certain 2017 and 2018 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.
−Removed: The net balance of unrecognized tax benefits was not material to the Interim Financial Statements for the six months ended June 30, 2022 and 2021.
+Added: The net balance of unrecognized tax benefits was not material to the Interim Financial Statements for the nine months ended September 30, 2022 and 2021.
THE ENSIGN GROUP, INC.
1 unchanged sentence
Debt consists of the following:
−Removed: June 30, 2022 December 31, 2021
+Added: September 30, 2022 December 31, 2021
Mortgage loans and promissory notes $ 157,269 $ 159,967
10 unchanged sentences
Except as set forth in the Amended Credit Facility, all other terms and conditions of the Credit Facility remained in full force and effect as described below.
−Removed: As part of the entry into the Amended Credit Agreement, deferred financing costs of $ 566 were written off and additional deferred financing costs of $ 3,197 were capitalized during the three months ended June 30, 2022.
+Added: As part of the entry into the Amended Credit Agreement, deferred financing costs of $ 566 were written off and additional deferred financing costs of $ 3,197 were capitalized during the nine months ended September 30, 2022.
Borrowings made under the Revolving Credit Facility are guaranteed, jointly and severally, by certain of the Company’s wholly-owned subsidiaries, and are secured by a pledge of stock of the Company's material operating subsidiaries as well as a first lien on substantially all of their personal property.
2 unchanged sentences
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).
−Removed: As of June 30, 2022, and July 27, 2022, there was no outstanding debt under the Revolving Credit Facility.
−Removed: The Company was in compliance with all loan covenants as of June 30, 2022.
+Added: As of September 30, 2022, and October 24, 2022, there was no outstanding debt under the Revolving Credit Facility.
+Added: The Company was in compliance with all loan covenants as of September 30, 2022.
Mortgage Loans and Promissory Notes
−Removed: As of June 30, 2022, the Company's operating subsidiaries had $ 158,258 outstanding under the mortgage loans and notes, of which $ 3,944 is classified as short-term and the remaining $ 154,314 is classified as long-term.
−Removed: The Company was in compliance with all loan covenants as of June 30, 2022.
−Removed: As of June 30, 2022, 23 of the Company's subsidiaries have mortgage loans insured with HUD in the aggregate amount of $ 155,074 , which subjects these subsidiaries to HUD oversight and periodic inspections.
+Added: As of September 30, 2022, the Company's operating subsidiaries had $ 157,269 outstanding under the mortgage loans and notes, of which $ 3,914 is classified as short-term and the remaining $ 153,355 is classified as long-term.
+Added: The Company was in compliance with all loan covenants as of September 30, 2022.
+Added: As of September 30, 2022, 23 of the Company's subsidiaries have mortgage loans insured with HUD in the aggregate amount of $ 154,284 , which subjects these subsidiaries to HUD oversight and periodic inspections.
The mortgage loans bear effective interest rates in a range of 3.1 % to 4.2 %, including fixed interest rates in a range of 2.4 % to 3.3 % per annum.
11 unchanged sentences
Off-Balance Sheet Arrangements
−Removed: As of June 30, 2022, the Company had approximately $ 6,710 of borrowing capacity under the Revolving Credit Facility pledged as collateral to secure outstanding letters of credit.
+Added: As of September 30, 2022, the Company had approximately $ 6,710 of borrowing capacity under the Revolving Credit Facility pledged as collateral to secure outstanding letters of credit.
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.
−Removed: As stock-based compensation expense recognized in the Company’s condensed consolidated statements of income for the three and six months ended June 30, 2022 and 2021 was based on awards ultimately expected to vest, it has been reduced for estimated forfeitures.
+Added: As stock-based compensation expense recognized in the Company’s condensed consolidated statements of income for the three and nine months ended September 30, 2022 and 2021 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.
The Company has an option plan, the 2022 Omnibus Incentive Plan (the 2022 Plan), which was approved by the Company's stockholders on May 26, 2022, and replaced the Company's prior option plan, the 2017 Omnibus Incentive Plan (the 2017 Plan).
−Removed: The total number of shares available for issuance under the 2022 Plan was 3,268 as of June 30, 2022.
+Added: The total number of shares available for issuance under the 2022 Plan was 3,047 as of September 30, 2022.
2022 Omnibus Incentive Plan - During the second quarter of 2022, the Company's shareholders approved the 2022 Plan.
4 unchanged sentences
Options expire ten years from the date of grant.
−Removed: As of June 30, 2022, there were approximately 3,268 unissued shares of common stock available for issuance under this plan.
−Removed: The Company retired the 2017 Plan as a result of the approval of the 2022 Plan.
The Company uses the Black-Scholes option-pricing model to recognize the value of stock-based compensation expense for stock option awards.
3 unchanged sentences
Stock Options
−Removed: The Company granted 154 and 318 stock options from the available plans during the three and six months ended June 30, 2022, respectively.
−Removed: The Company used the following assumptions for stock options granted during the three months ended June 30, 2022 and 2021:
+Added: The Company granted 145 and 463 stock options from the available plans during the three and nine months ended September 30, 2022, respectively.
+Added: The Company used the following assumptions for stock options granted during the three months ended September 30, 2022 and 2021:
Grant Year Options Granted Weighted Average Risk-Free Rate Expected Life Weighted Average Volatility Weighted Average Dividend Yield
3 unchanged sentences
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: The Company used the following assumptions for stock options granted during the six months ended June 30, 2022 and 2021:
+Added: The Company used the following assumptions for stock options granted during the nine months ended September 30, 2022 and 2021:
Grant Year Options Granted Weighted Average Risk-Free Rate Expected Life Weighted Average Volatility Weighted Average Dividend Yield
1 unchanged sentence
2021 496 0.9 % 6.2 years 42.3 % 0.3 %
−Removed: For the six months ended June 30, 2022 and 2021, the following represents the exercise price and fair value displayed at grant date for stock option grants:
+Added: For the nine months ended September 30, 2022 and 2021, 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
1 unchanged sentence
2021 496 $ 81.89 $ 33.45
−Removed: 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 June 30, 2022 and 2021 and therefore, the intrinsic value was $ 0 at the date of grant.
−Removed: The following table represents the employee stock option activity during the six months ended June 30, 2022:
+Added: 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 September 30, 2022 and 2021 and therefore, the intrinsic value was $ 0 at the date of grant.
+Added: The following table represents the employee stock option activity during the nine months ended September 30, 2022:
Number of Options Outstanding Weighted Average
5 unchanged sentences
Exercised ( 521 ) 16.71 — —
−Removed: June 30, 2022 3,918 $ 41.69 2,151 $ 25.53
−Removed: The following summary information reflects stock options outstanding, vested and related details as of June 30, 2022:
+Added: September 30, 2022 3,897 $ 44.37 2,127 $ 27.59
+Added: The following summary information reflects stock options outstanding, vested and related details as of September 30, 2022:
Stock Options Outstanding Stock Options Vested
15 unchanged sentences
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: The aggregate intrinsic value of options outstanding, vested and expected to vest as of June 30, 2022 and December 31, 2021 is as follows:
−Removed: Options June 30, 2022 December 31, 2021
+Added: The aggregate intrinsic value of options outstanding, vested and expected to vest as of September 30, 2022 and December 31, 2021 is as follows:
+Added: Options September 30, 2022 December 31, 2021
Outstanding $ 139,784 $ 191,242
2 unchanged sentences
The intrinsic value is calculated as the difference between the market value of the underlying common stock and the exercise price of the options .
−Removed: The aggregate intrinsic value of options that vested during the six months ended June 30, 2022 and 2021 was $ 10,409 and $ 17,618 , respectively.
−Removed: The total intrinsic value of options exercised during the six months ended June 30, 2022 and 2021 was $ 25,642 and $ 26,715 , respectively.
+Added: The aggregate intrinsic value of options that vested during the nine months ended September 30, 2022 and 2021 was $ 15,810 and $ 18,500 , respectively.
+Added: The total intrinsic value of options exercised during the nine months ended September 30, 2022 and 2021 was $ 36,151 and $ 31,167 , respectively.
Restricted Stock Awards
−Removed: The Company granted 46 and 158 restricted stock awards from the available plans during the three and six months ended June 30, 2022, respectively.
−Removed: The Company granted 54 and 144 restricted stock awards during the three and six months ended June 30, 2021, respectively.
+Added: The Company granted 41 and 199 restricted stock awards from the available plans during the three and nine months ended September 30, 2022, respectively.
+Added: The Company granted 51 and 195 restricted stock awards during the three and nine months ended September 30, 2021, respectively.
All awards were granted at an issue price of $ 0 and generally vest over five years .
−Removed: The fair value per share of restricted awards granted during the six months ended June 30, 2022 and 2021 ranged from $ 73.17 to $ 83.93 and $ 82.20 to $ 93.31 , respectively.
+Added: The fair value per share of restricted awards granted during the nine months ended September 30, 2022 and 2021 ranged from $ 73.17 to $ 90.50 and $ 82.20 to $ 93.31 , respectively.
The fair value per share includes quarterly stock awards to non-employee directors.
−Removed: A summary of the status of the Company's non-vested restricted stock awards as of June 30, 2022 and changes during the six months ended June 30, 2022 is presented below:
+Added: A summary of the status of the Company's non-vested restricted stock awards as of September 30, 2022 and changes during the nine months ended September 30, 2022 is presented below:
Non-Vested Restricted Awards Weighted Average Grant Date Fair Value
3 unchanged sentences
Forfeited ( 21 ) 55.45
−Removed: Non-vested at June 30, 2022 492 $ 59.01
−Removed: During the three and six months ended June 30, 2022, respectively, the Company granted 5 and 9 automatic quarterly stock awards to non-employee directors for their service on the Company's board of directors from the 2017 Plan.
+Added: Non-vested at September 30, 2022 486 $ 62.07
+Added: During the three and nine months ended September 30, 2022, respectively, the Company granted 4 and 13 automatic quarterly stock awards to non-employee directors for their service on the Company's board of directors from the 2017 and 2022 Plan.
The fair value per share of these stock awards ranged from $ 75.33 to $ 83.93 based on the market price on the grant date.
5 unchanged sentences
If a recipient is terminated or voluntarily leaves the Company, all shares subject to restriction or not yet vested shall be entirely forfeited.
−Removed: The total stock-based compensation related to the 2019 LTI Plan was approximately $ 195 and $ 390 for the three and six months ended June 30, 2022, respectively, compared to $ 202 and $ 403 for the three and six months ended June 30, 2021, respectively.
+Added: The total stock-based compensation related to the 2019 LTI Plan was approximately $ 248 and $ 638 for the three and nine months ended September 30, 2022, respectively, compared to $ 248 and $ 651 for the three and nine months ended September 30, 2021, respectively.
THE ENSIGN GROUP, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: Stock-based compensation expense recognized for the Company's equity incentive plans and long-term incentive plan for the three and six months ended June 30, 2022 and 2021 was as follows:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Stock-based compensation expense recognized for the Company's equity incentive plans and long-term incentive plan for the three and nine months ended September 30, 2022 and 2021 was as follows:
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
3 unchanged sentences
TOTAL $ 5,898 $ 5,082 $ 16,681 $ 13,769
−Removed: In future periods, the Company expects to recognize approximately $ 39,110 and $ 28,748 in stock-based compensation expense for unvested options and unvested restricted stock awards, respectively, that were outstanding as of June 30, 2022.
+Added: In future periods, the Company expects to recognize approximately $ 41,668 and $ 29,166 in stock-based compensation expense for unvested options and unvested restricted stock awards, respectively, that were outstanding as of September 30, 2022.
Future stock-based compensation expense will be recognized over 3.7 and 3.4 weighted average years for unvested options and restricted stock awards, respectively.
−Removed: There were 1,767 unvested and outstanding options as of June 30, 2022, of which 1,669 shares are expected to vest.
−Removed: The weighted average contractual life for options outstanding, vested and expected to vest as of June 30, 2022 was 6.0 years.
+Added: There were 1,770 unvested and outstanding options as of September 30, 2022, of which 1,671 shares are expected to vest.
+Added: The weighted average contractual life for options outstanding, vested and expected to vest as of September 30, 2022 was 6.0 years.
The Company leases from CareTrust REIT, Inc.
17 unchanged sentences
The terms and conditions of the one stand-alone lease are substantially the same as those for the master leases described above.
−Removed: Total rent expense under the Master Leases was approximately $ 16,007 and $ 31,652 for the three and six months ended June 30, 2022, respectively, and $ 14,419 and $ 28,499 for the three and six months ended June 30, 2021, respectively.
+Added: Total rent expense under the Master Leases was approximately $ 16,259 and $ 47,911 for the three and nine months ended September 30, 2022, respectively, and $ 15,445 and $ 43,944 for the three and nine months ended September 30, 2021, 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.
−Removed: The Company is in compliance with requirements of the Master Leases as of June 30, 2022.
−Removed: In connection with the Spin-Off, the Company guaranteed certain leases of Pennant based on the underlying terms of the leases.
−Removed: 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.
+Added: The Company is in compliance with requirements of the Master Leases as of September 30, 2022.
THE ENSIGN GROUP, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: The Company also leases certain affiliated operations and certain administrative offices under non-cancelable operating leases, most of which have initial lease terms ranging from five to 20 years.
+Added: In connection with the Spin-Off, the Company guaranteed certain leases of Pennant based on the underlying terms of the leases.
+Added: 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 has entered into multiple lease agreements with various landlords to operate newly constructed state-of-the-art, full-service healthcare resorts.
The term of each lease is 15 years with two five-year renewal options and is subject to annual escalation equal to the percentage change in the Consumer Price Index with a stated cap percentage.
+Added: The Company also leases certain affiliated operations and certain administrative offices under non-cancelable operating leases, most of which have initial lease terms ranging from five to 20 years.
In addition, the Company leases certain of its equipment under non-cancelable operating leases with initial terms ranging from three to five years .
Most of these leases contain renewal options, certain of which involve rent increases.
−Removed: Total rent expense for continuing operations inclusive of straight-line rent adjustments and rent associated with the Master Leases noted above, was $ 37,251 and $ 73,036 for the three and six months ended June 30, 2022, respectively, and $ 34,476 and $ 67,952 for the three and six months ended June 30, 2021, respectively.
−Removed: Forty-four of the Company’s affiliated facilities, excluding the facilities that are operated under the Master Leases with CareTrust, are operated under eight separate master lease arrangements.
−Removed: In the first quarter of 2022, the Company added an operation and extended the term for one of the master leases to 14 remaining years.
+Added: Total rent expense for continuing operations inclusive of straight-line rent adjustments and rent associated with the Master Leases noted above, was $ 38,940 and $ 111,976 for the three and nine months ended September 30, 2022, respectively, and $ 35,646 and $ 103,598 for the three and nine months ended September 30, 2021, respectively.
+Added: Forty-eight of the Company’s affiliated facilities, excluding the facilities that are operated under the Master Leases with CareTrust, are operated under eight separate master lease arrangements.
+Added: In the first quarter of 2022, the Company added an operation and extended the term for one of the separate master leases to 14 remaining years.
As a result, the lease liabilities and right-of-use assets increased by $ 120,349 to reflect the new lease obligations.
+Added: In the third quarter of 2022, the Company added four new operations to one of the separate master leases.
+Added: As a result, the lease liabilities and right-of-use assets increased by $ 32,853 to reflect the new lease obligations.
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.
2 unchanged sentences
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.
+Added: During the three months ended September 30, 2022, Standard Bearer acquired the real estate of three skilled nursing operations, which were previously under separate long-term lease arrangements.
+Added: The aggregate reduction in the carrying value of the Company's lease liabilities and right-of-use assets related to this acquisition is $ 10,080 .
The components of operating lease expense are as follows:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
7 unchanged sentences
$ 43,350 $ 39,517 $ 126,098 $ 115,186
−Removed: (1) Rent- cost of services includes deferred rent expense adju stments of $ 116 and $ 240 for the three and six months ended June 30, 2022, respectively and $ 109 and $ 221 for the three and six months ended June 30, 2021, respectively.
−Removed: Additionally, rent- cost of services includes other variable lease costs such as CPI increases and short-term leases of $ 1,302 and $ 2,239 for the three and six months ended June 30, 2022, respectively, and $ 832 and $ 1,416 for the three and six months ended June 30, 2021, respectively.
+Added: (1) Rent- cost of services includes deferred rent expense adju stments of $ 111 and $ 351 for the three and nine months ended September 30, 2022, respectively and $ 125 and $ 346 for the three and nine months ended September 30, 2021, respectively.
+Added: Additionally, rent- cost of services includes other variable lease costs such as CPI increases and short-term leases of $ 1,758 and $ 3,997 for the three and nine months ended September 30, 2022, respectively, and $ 1,127 and $ 2,543 for the three and nine months ended September 30, 2021, 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.
−Removed: Future minimum lease payments for all leases as of June 30, 2022 are as follows:
+Added: THE ENSIGN GROUP, INC.
+Added: NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: Future minimum lease payments for all leases as of September 30, 2022 are as follows:
2022 (remainder) $ 37,045
7 unchanged sentences
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.
−Removed: As of June 30, 2022, the weighted average remaining lease term is 15.1 years and the weighted average discount rate used to determine the operating lease liabilities is 6.8 %.
−Removed: THE ENSIGN GROUP, INC.
−Removed: NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: Subsequent to June 30, 2022, the Company expanded its operations through long-term lease arrangements with the addition of five stand-alone skilled nursing operations, four of which are part of an amended separate master lease agreement, adding a total of 779 operational skilled nursing beds operated by the Company's affiliated operating subsidiaries.
−Removed: The term of the amended separate master lease agreement was extended to 20 remaining years.
−Removed: The aggregate impact to the fair value of lease liabilities and right-of-use assets related to both the new long-term lease arrangement and the amended separate master lease agreement is estimated to be approximately $ 70,614 .
−Removed: Additionally, Standard Bearer acquired the real estate of three skilled nursing operations, which were previously under long-term lease arrangements.
−Removed: The aggregate reduction in the fair value of lease liabilities and right-of-use assets related to this acquisition is estimated to be approximately $ 10,080 .
+Added: As of September 30, 2022, the weighted average remaining lease term is 15.1 years and the weighted average discount rate used to determine the operating lease liabilities is 6.8 %.
+Added: Subsequent to September 30, 2022, the Company expanded its operations through long-term lease arrangements with the addition of eight stand-alone skilled nursing operations, adding a total of 1,051 operational skilled nursing beds operated by the Company's affiliated operating subsidiaries.
+Added: Of the eight , six are part of two new separate master lease agreements and the remaining are part of a separate existing amended master lease agreement.
+Added: The aggregate impact to the fair value of lease liabilities and right-of-use assets related to both the new long-term lease arrangement and the separate amended master lease agreement is estimated to be approximately $ 78,505 .
Lessor Activities
In connection with the Spin-Off, Ensign affiliates retained ownership of the real estate at 29 senior living operations that were contributed to Pennant.
−Removed: Between October 2019 and June 30, 2022, the Company transferred three additional senior living operations to Pennant.
−Removed: During the three months ended June 30, 2022, the Company completed the sale of real estate associated with two of the senior living operations operated by Pennant and also transferred one senior living operation operated by Pennant back to Ensign affiliates.
−Removed: As of June 30, 2022, Ensign affiliates retained ownership of the real estate for these 29 senior living communities.
+Added: Between October 2019 and September 30, 2022, the Company transferred three additional senior living operations to Pennant.
+Added: In the second quarter of 2022, the Company completed the sale of real estate associated with two of the senior living operations operated by Pennant and also transferred one senior living operation operated by Pennant back to Ensign affiliates.
+Added: As of September 30, 2022, Ensign affiliates retained ownership of the real estate for these 29 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:
5 unchanged sentences
The initial terms range between 14 to 16 years.
−Removed: Total rental income from all third-party sources for the three and six months ended June 30, 2022 and 2021 is as follows:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Total rental income from all third-party sources for the three and nine months ended September 30, 2022 and 2021 is as follows:
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
2 unchanged sentences
$ 4,122 $ 3,933 $ 12,550 $ 11,837
−Removed: (1) Pennant rental income includes variable rent such as property taxes of $ 327 and $ 657 during the three and six months ended June 30, 2022 and $ 266 and $ 580 for the three and six months ended June 30, 2021.
−Removed: Future annual rental income for all leases as of June 30, 2022 were as follows:
+Added: (1) Pennant rental income includes variable rent such as property taxes of $ 331 and $ 988 during the three and nine months ended September 30, 2022 and $ 301 and $ 881 for the three and nine months ended September 30, 2021.
+Added: THE ENSIGN GROUP, INC.
+Added: NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: Future annual rental income for all leases as of September 30, 2022 were as follows:
Year Amount (1)
2 unchanged sentences
TOTAL $ 161,011
−Removed: (1) Annual rental income includes base rents and variable rental income pursuant to existing leases as of June 30, 2022 .
−Removed: THE ENSIGN GROUP, INC.
−Removed: NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: (1) Annual rental income includes base rents and variable rental income pursuant to existing leases as of September 30, 2022 .
COMMITMENTS AND CONTINGENCIES
10 unchanged sentences
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.
+Added: THE ENSIGN GROUP, INC.
+Added: NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Department of Justice Civil Investigative Demand — On May 31, 2018, the Company received a Civil Investigative Demand (CID) from the U.S.
12 unchanged sentences
In July 2022, the Company received a follow up request for additional documents and information.
−Removed: The Company is cooperating in responding to this inquiry.
−Removed: 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, which could have a material adverse effect on our reputation, business, financial condition, and results of operations.
−Removed: THE ENSIGN GROUP, INC.
−Removed: NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: The Company responded to this request, and continues to cooperate with the House Select Subcommittee in connection with its investigation.
+Added: 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 process, which 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.
12 unchanged sentences
As such, the Company and its independent operating subsidiaries 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.
+Added: THE ENSIGN GROUP, INC.
+Added: NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
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.
10 unchanged sentences
Other claims and suits, including class actions, continue to be filed against the Company and other companies in its industry.
−Removed: 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 of action.
+Added: 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 authorize meal and rest breaks, and related causes of 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.
−Removed: THE ENSIGN GROUP, INC.
−Removed: NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The Company and its independent operating subsidiaries have been, and continue to be, subject to claims, findings and legal actions that arise in the ordinary course of the various businesses, including healthcare and non-healthcare services.
13 unchanged sentences
The Company anticipates that these Reviews could increase in frequency in the future.
−Removed: As of June 30, 2022 and since, 22 of the Company's independent operating subsidiaries had Reviews scheduled, on appeal, or in a dispute resolution process.
+Added: As of September 30, 2022 and since, 27 of the Company's independent operating subsidiaries had Reviews scheduled, on appeal, or in a dispute resolution process.
+Added: THE ENSIGN GROUP, INC.
+Added: NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Concentrations
3 unchanged sentences
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.
−Removed: The Company’s receivables from Medicare and Medicaid payor programs accounted for 52.9 % and 54.0 % of its total accounts receivable as of June 30, 2022 and December 31, 2021, respectively.
−Removed: Revenue from reimbursement under the Medicare and Medicaid programs accounted for 73.4 % of the Company's revenue for both the three and six months ended June 30, 2022, and 73.1 % and 73.6 % for the three and six months ended June 30, 2021, respectively.
+Added: The Company’s receivables from Medicare and Medicaid payor programs accounted for 53.5 % and 54.0 % of its total accounts receivable as of September 30, 2022 and December 31, 2021, respectively.
+Added: Revenue from reimbursement under the Medicare and Medicaid programs accounted for 73.7 % and 73.5 % of the Company's revenue for the three and nine months ended September 30, 2022, respectively, and 73.6 % for both the three and nine months ended September 30, 2021.
Cash in Excess of FDIC Limits — The Company currently has bank deposits with financial institutions in the U.S.
2 unchanged sentences
In addition, the Company has uninsured bank deposits with a financial institution outside the U.S.
−Removed: As of July 27, 2022, the Company had approximately $ 567 in uninsured cash deposits.
+Added: As of October 24, 2022, the Company had approximately $ 701 in uninsured cash deposits.
All uninsured bank deposits are held at high quality credit institutions.
COMMON STOCK REPURCHASE PROGRAM
+Added: On July 28, 2022, the Board of Directors approved the Company to enter 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 from August 2, 2022.
+Added: 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.
+Added: The Company did not purchase any shares pursuant to this stock repurchase program.
On February 9, 2022, the Board of Directors approved the Company to enter into a stock repurchase program pursuant to which the Company could repurchase up to $ 20,000 of its common stock under the program for a period of approximately 12 months from February 10, 2022.
2 unchanged sentences
This repurchase program expired upon the repurchase of the fully authorized amount under the plan.
−Removed: THE ENSIGN GROUP, INC.
−Removed: NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
As approved by the Board of Directors on October 21, 2021, the Company entered into a stock repurchase program pursuant to which the Company could repurchase up to $ 20,000 of its common stock under the program for a period of approximately 12 months that started on October 29, 2021.
3 unchanged sentences
This repurchase program expired upon the repurchase of the fully authorized amount under the plan.
−Removed: On July 28, 2022, the Board of Directors approved the Company to enter 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 from August 2, 2022.
−Removed: 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.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.