The Ensign Group, Inc. (NASDAQ:ENSG) saw its net income drop 11.3% to $10.4 million, or $0.48 per diluted share, compared to the previous year’s $11.7 million for the quarter ended Dec. 31, 2011. The decrease was attributed to the 11.1% reduction in Medicare rates to skilled nursing facilities that went into effect on Oct. 1, 2011.
However, for the full year, net income climbed 17.6% to $47.7 million, and the company reported increased consolidated revenues of $758.3 million for the total year. Revenue rose 16.7% from the previous year, with $192.7 million coming in the fourth quarter.
“The fourth quarter marked the most daunting challenge to Ensign’s facility-centric leadership structure and operating model to date, and perhaps the best test of our flexibility, responsiveness and resilience that we will ever experience,” said Ensign’s President and CEO, Christopher Christensen, in a statement.
Medicare daily revenue rates dropped 14.4% in the quarter, although they increased 7.5% in 2011. For the full year, 35.3% of Ensign’s skilled nursing revenue came from Medicare, an increase from 2010’s 33%. The company’s private pay census paid just 8.8% of its yearly revenue.
The Medicare rate cuts were more heavily weighted toward the highest-acuity patients, said Ensign, but the company’s facilities were able to make it up through increasing residents’ time receiving skilled nursing.
“As a result of a thousand little things [Ensign’s facility leadership] collectively did, even with the rate cuts our overall skilled revenue was only off 4.4% on a same-store basis, and net income only declined 11.3% in the quarter,” Christensen said.
In 2011, Ensign announced the acquisition of six long-term care facilities and two home health business in eight separate transactions, all purchased with cash and located in California, Idaho, Nevada, Arizona, Utah, Colorado, and Oregon.
These acquisitions brought the company’s portfolio to 103 facilities, 78 of which are owned by Ensign, with Ensign affiliates holding purchase options on five of the company’s 25 leased facilities; three hospice companies; and five home health business, spread over 11 states.
The company also announced the formation of Immediate Clinic, a joint venture to develop and operate urgent care facilities and related business.
Looking ahead, Ensign’s 2012 guidance projects revenues of $830 million to $846 million, an net income of $2.36 to $2.42 per diluted share for the year.
View The Ensign Group’s fourth quarter and year-end earnings report here.
Written by Alyssa Gerace