Chief Financial Officer Suzanne Snapper reported that GAAP net income of $0.09 per diluted share was significantly impacted by a $15 million reserve taken by the company in the fourth quarter against the anticipated disposition of the Department of Justice civil investigation that has been ongoing since 2006. Commenting on the reserve, Mr. Christensen added, "We view this reserve and the move toward a possible settlement as a positive for Ensign, and hope that the outstanding operating results posted by our field leaders in the face of enormous obstacles this year will not be lost in the noise that can sometimes surround such discussions."
Operating results for the year came in the midst of an unprecedented 11.1% reduction in Medicare rates to skilled nursing facilities, as well as a simultaneous change in therapy regulations that increased the cost of delivering physical and other types of therapy to skilled nursing patients, all of which went into effect in late 2011.
Adjusted net income was up 10.1% to $55.7 million for the year, and up 29.3% to $13.5 million for the quarter. Consolidated revenues for the year were up 8.8% to $824.7 million, and up 9.6% to $211.1 million for the quarter. Adjusted EBITDAR grew 18.0% to $35.0 million in the quarter, and up 9.3% to $141.8 million for the year.
Ms. Snapper also reported that Ensign's balance sheet remained strong, with its industry-low net-debt-to-EBITDAR ratio of 2.34x at year end. She further noted that the company continues to generate strong cash flow, with cash on hand on December 31 of $40.9 million, and net cash from operations of $82.1 million for the year.Diluted GAAP earnings per share were $0.09 for the quarter, compared to $0.48 per share in the prior year quarter, and $1.85 for the year, compared to $2.21 in 2011. Ms. Snapper noted that, in addition to the reserve for the DOJ investigation, the quarter included a non-cash adjustment of $2.2 million for the impairment of the fair valuation of Doctors Express, Ensign's urgent care franchise system. "The initial value of Doctor's Express was based in part on the "fair valuation" of a non-controlling interest, which is based on an accounting analysis and not based on cash paid for the transaction," she said.