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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 2021.
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from                      to                     .
Commission file number: 001-33757
_____________________________
ensg-20210930_g1.jpg
THE ENSIGN GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware33-0861263
(State or Other Jurisdiction of(I.R.S. Employer
Incorporation or Organization)Identification No.)
29222 Rancho Viejo Road, Suite 127
San Juan Capistrano, CA 92675
(Address of Principal Executive Offices and Zip Code)
(949487-9500
(Registrant’s Telephone Number, Including Area Code)
_____________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareENSGNASDAQ Global Select Market
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark:
whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.þYesNo
whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).þYesNo
whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act:
Large accelerated filerþAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
If an emerging growth company, indicate if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.YesNo
whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).YesþNo
As of October 22, 2021, 55,254,806 shares of the registrant’s common stock, $0.001 par value, were outstanding.


THE ENSIGN GROUP, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021
TABLE OF CONTENTS

Pg.






PART I.
Item 1.        FINANCIAL STATEMENTS

THE ENSIGN GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2021December 31, 2020
(In thousands, except par values)
Assets   
Current assets:   
Cash and cash equivalents$304,620 $236,562 
Accounts receivable—less allowance for doubtful accounts of $11,267 and $8,718 at September 30, 2021 and December 31, 2020, respectively
313,858 305,062 
Investments—current12,844 13,449 
Prepaid income taxes4,136 1,224 
Prepaid expenses and other current assets32,660 26,659 
Total current assets668,118 582,956 
Property and equipment, net791,247 778,244 
Right-of-use assets 1,175,685 1,025,510 
Insurance subsidiary deposits and investments35,180 32,105 
Escrow deposits 100 
Deferred tax assets31,966 32,424 
Restricted and other assets 44,382 33,155 
Intangible assets, net 2,711 2,899 
Goodwill 60,469 54,469 
Other indefinite-lived intangibles 3,621 3,716 
Total assets$2,813,379 $2,545,578 
Liabilities and equity  
Current liabilities:  
Accounts payable$57,206 $50,901 
Accrued wages and related liabilities (Note 3)
246,106 236,614 
Lease liabilities—current 52,050 48,187 
Accrued self-insurance liabilities—current38,730 34,396 
Advance payment liabilities (Note 3)
 102,023 
Other accrued liabilities 85,469 87,318 
Current maturities of long-term debt3,548 2,960 
Total current liabilities483,109 562,399 
Long-term debt—less current maturities140,680 112,544 
Long-term lease liabilities—less current portion 1,093,176 950,320 
Accrued self-insurance liabilities—less current portion68,299 62,402 
Other long-term liabilities (Note 3)
48,821 39,686 
Total liabilities$1,834,085 $1,727,351 
Commitments and contingencies (Notes 15, 17 and 18)
Equity  
Ensign Group, Inc. stockholders' equity:
Common stock: $0.001 par value; 100,000 shares authorized; 58,059 and 55,247 shares issued and outstanding at September 30, 2021, respectively, and 57,417 and 54,626 shares issued and outstanding at December 31, 2020, respectively
58 58 
Additional paid-in capital363,779 338,177 
Retained earnings688,287 551,055 
Common stock in treasury, at cost, 2,812 and 2,791 shares at September 30, 2021 and December 31, 2020, respectively (Note 19)
(72,924)(71,213)
Total Ensign Group, Inc. stockholders' equity979,200 818,077 
Non-controlling interest94 150 
Total equity
979,294 818,227 
Total liabilities and equity$2,813,379 $2,545,578 
See accompanying notes to condensed consolidated financial statements.
1

THE ENSIGN GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
(In thousands, except per share data)
Revenue:
Service revenue$664,597 $595,341 $1,922,482 $1,762,371 
Rental revenue3,933 3,914 11,837 11,196 
Total revenue $668,530 $599,255 $1,934,319 $1,773,567 
Expense:
Cost of services514,106 465,108 1,484,816 1,371,378 
Rent—cost of services 35,623 32,504 103,534 97,318 
General and administrative expense38,554 32,817 109,735 96,493 
Depreciation and amortization13,929 13,757 41,383 41,082 
Total expenses602,212 544,186 1,739,468 1,606,271 
Income from operations66,318 55,069 194,851 167,296 
Other income (expense):
Interest expense(1,709)(1,740)(4,984)(7,698)
Other income (expense), net248 850 2,117 2,630 
Other expense, net(1,461)(890)(2,867)(5,068)
Income before provision for income taxes64,857 54,179 191,984 162,228 
Provision for income taxes16,513 10,866 43,220 37,026 
Net income 48,344 43,313 148,764 125,202 
Less:
Net income attributable to noncontrolling interests1,063 253 2,852 1,045 
Net income attributable to The Ensign Group, Inc.$47,281 $43,060 $145,912 $124,157 
Net income per share attributable to The Ensign Group, Inc.:
Basic $0.87 $0.81 $2.68 $2.33 
Diluted$0.83 $0.77 $2.56 $2.23 
Weighted average common shares outstanding:
Basic54,627 53,328 54,430 53,299 
Diluted56,971 55,713 56,954 55,585 

See accompanying notes to condensed consolidated financial statements.
2

THE ENSIGN GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
 Common Stock Additional Paid-In Capital Retained Earnings Treasury StockNon-Controlling Interest
(In thousands)Shares Amount   Shares AmountTotal
Balance - January 1, 202154,626 $58 $338,177 $551,055 2,791 $(71,213)$150 $818,227 
Issuance of common stock to employees and directors resulting from the exercise of stock options246  3,880     3,880 
Issuance of restricted stock, net of forfeitures81  3,725     3,725 
Shares of common stock used to satisfy tax withholding obligations     (9) (9)
Dividends declared ($0.0525 per share)
   (2,886)   (2,886)
Employee stock award compensation  4,054     4,054 
Net income attributable to noncontrolling interest      631 631 
Distribution to noncontrolling interest holder      (1,248)(1,248)
Net income attributable to the Ensign Group, Inc.   49,206    49,206 
Balance - March 31, 202154,953 $58 $349,836 $597,375 2,791 $(71,222)$(467)$875,580 
Issuance of common stock to employees and directors resulting from the exercise of stock options148  2,982     2,982 
Issuance of restricted stock, net of forfeitures49        
Shares of common stock used to satisfy tax withholding obligations (20)   20 (1,600) (1,600)
Dividends declared ($0.0525 per share)
   (2,894)   (2,894)
Employee stock award compensation  4,633     4,633 
Net income attributable to noncontrolling interest      1,158 1,158 
Distribution to noncontrolling interest holder      (641)(641)
Net income attributable to the Ensign Group, Inc.   49,425    49,425 
Balance - June 30, 202155,130 $58 $357,451 $643,906 2,811 $(72,822)$50 $928,643 
Issuance of common stock to employees and directors resulting from the exercise of stock options69  1,246     1,246 
Issuance of restricted stock, net of forfeitures49        
Shares of common stock used to satisfy tax withholding obligations(1)   1 (102) (102)
Dividends declared ($0.0525 per share)
   (2,900)   (2,900)
Employee stock award compensation  5,082     5,082 
Net income attributable to noncontrolling interest      1,063 1,063 
Distribution to noncontrolling interest holder      (1,019)(1,019)
Net income attributable to the Ensign Group, Inc.   47,281    47,281 
Balance - September 30, 202155,247 $58 $363,779 $688,287 2,812 $(72,924)$94 $979,294 


3

 Common Stock Additional Paid-In Capital Retained Earnings Treasury StockNon-Controlling Interest
(In thousands)Shares Amount   Shares AmountTotal
Balance - January 1, 202053,487 $56 $307,914 $391,523 2,079 $(45,296)$1,947 $656,144 
Issuance of common stock to employees and directors resulting from the exercise of stock options148 — 1,552 — — — — 1,552 
Issuance of restricted stock, net of forfeitures723 1 3,085 — — — — 3,086 
Dividends declared ($0.0500 per share)
— — — (2,683)— — — (2,683)
Employee stock award compensation— — 3,235 — — — — 3,235 
Repurchase of common stock (Note 19)
(692)— — — 692 (25,000)— (25,000)
Net income attributable to noncontrolling interest— — — — — — 352 352 
Distribution to noncontrolling interest holder— — — — — — (720)(720)
Net income attributable to the Ensign Group, Inc.— — — 40,849 — — — 40,849 
Balance - March 31, 202053,666 $57 $315,786 $429,689 2,771 $(70,296)$1,579 $676,815 
Issuance of common stock to employees and directors resulting from the exercise of stock options31 — 456 — — — — 456 
Issuance of restricted stock, net of forfeitures75 — — — — — — — 
Shares of common stock used to satisfy tax withholding obligations (17)— — — 17 (753)— (753)
Dividends declared ($0.0500 per share)
— — — (2,718)— — — (2,718)
Employee stock award compensation— — 3,528 — — — — 3,528 
Net income attributable to noncontrolling interest— — — — — — 440 440 
Distribution to noncontrolling interest holder— — — — — — (240)(240)
Net income attributable to the Ensign Group, Inc.— — — 40,248 — — — 40,248 
Balance - June 30, 202053,755 $57 $319,770 $467,219 2,788 $(71,049)$1,779 $717,776 
Issuance of common stock to employees and directors resulting from the exercise of stock options340 — 4,404 — — — — 4,404 
Issuance of restricted stock, net of forfeitures43 — — — — — — — 
Shares of common stock used to satisfy tax withholding obligations(3)— — — 3 (154)— (154)
Dividends declared ($0.0500 per share)
— — — (2,725)— — — (2,725)
Employee stock award compensation— — 4,173 — — — — 4,173 
Net income attributable to noncontrolling interest— — — — — — 253 253 
Distribution to noncontrolling interest holder— — — — — — (1,243)(1,243)
Net income attributable to the Ensign Group, Inc.— — — 43,060 — — — 43,060 
Balance - September 30, 202054,135 $57 $328,347 $507,554 2,791 $(71,203)$789 $765,544 
See accompanying notes to condensed consolidated financial statements.

4

THE ENSIGN GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30,
(In thousands)20212020
Cash flows from operating activities:  
Net income $148,764 $125,202 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization41,383 41,082 
Impairment of long-lived assets 2,681 
Amortization of deferred financing fees637 630 
Non-cash leasing arrangement 346 337 
Deferred income taxes 458 1,179 
Provision for doubtful accounts 2,609 4,193 
Stock-based compensation13,769 10,936 
Loss on sale of asset disposals155 282 
Change in operating assets and liabilities 
Accounts receivable (16,606)11,441 
Prepaid income taxes(2,912)(12,811)
Prepaid expenses and other assets(6,061)(2,090)
Cash surrender value of life insurance policy premiums(9,505)(5,378)
Operating lease obligations(5,668)(542)
Deferred compensation liability9,607 5,412 
Accounts payable6,332 7,197 
Accrued wages and related liabilities14,112 31,551 
Income taxes payable357  
Other accrued liabilities(2,907)19,333 
Accrued self-insurance liabilities9,796 8,433 
Other long-term liabilities(177)33,093 
Net cash provided by operating activities204,489 282,161 
Cash flows from investing activities:  
Purchase of property and equipment(50,133)(37,824)
Cash payments for business acquisitions (Note 8)
(6,000) 
Cash payments for asset acquisitions (Note 8)
(5,183)(23,077)
Escrow deposits100 (35)
Escrow deposits used to fund acquisitions 14,050 
Cash from insurance proceeds6,705  
Cash proceeds from the sale of assets and ancillary business951 359 
Purchases of investments(26,387)(14,648)
Maturities of investments23,917 13,626 
Other restricted assets(1,839)(936)
Net cash used in investing activities(57,869)(48,485)
Cash flows from financing activities:  
Proceeds from debt (Note 15)
31,646 380,600 
Payments on debt (Note 15)
(2,146)(592,255)
Issuance of common stock upon exercise of options8,108 6,412 
Repurchase of shares of common stock to satisfy tax withholding obligations(1,711)(907)
Repurchase of shares of common stock (Note 19)
 (25,000)
Dividends paid(8,647)(8,106)
Non-controlling interest distribution(2,908)(2,203)
Payments of deferred financing costs(881) 
Proceeds from CARES Act Provider Relief Fund and Medicare Advance Payment Program (Note 3)
11,637 235,976 
Repayments of CARES Act Provider Relief Fund and Medicare Advance Payment Program (Note 3)
(113,660)(111,988)
Net cash used in financing activities(78,562)(117,471)
Net increase in cash and cash equivalents68,058 116,205 
Cash and cash equivalents beginning of period236,562 59,175 
Cash and cash equivalents end of period$304,620 $175,380 
See accompanying notes to condensed consolidated financial statements.
5

THE ENSIGN GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
Nine Months Ended September 30,
(In thousands)20212020
Supplemental disclosures of cash flow information:  
Cash paid during the period for:  
Interest$4,265 $8,467 
Income taxes$45,440 $48,620 
Lease liabilities$103,067 $97,533 
Non-cash financing and investing activity: 
Accrued capital expenditures$3,500 $2,900 
Accrued dividends declared$2,900 $