Ensign : First Quarter 2024 GAAP to Non-GAAP Net Income Reconciliation

THE ENSIGN GROUP, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION

(In thousands, except per share data)

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
The following table reconciles GAAP net income to Non-GAAP net income for the periods presented:
	Three Months Ended March 31,
	2024			2023
Net income attributable to The Ensign Group, Inc.	$	68,835	$	59,852
Non-GAAP adjustments
Stock-based compensation expense(a)		8,238		6,573
Litigation(b)		764		67
Cost of services - impairment of long-lived assets		1,849		-
Cost of services - acquisition related costs(c)		114		460
General and administrative - costs incurred related to new systems implementation		76		815
Depreciation and amortization - patient base(d)		39		47
Provision for income taxes on Non-GAAP adjustments(e)		(4,531)		(3,173)
Non-GAAP Net Income	$	75,384	$	64,641
Average number of diluted shares outstanding		57,921		57,098
Diluted Earnings Per Share
Net Income	$	1.19	$	1.05
Adjusted Diluted Earnings Per Share
Net Income	$	1.30	$	1.13
Footnotes:
(a) Represents stock-based compensation expense incurred.
	Three Months Ended March 31,
	2024			2023
Cost of services	$	5,401	$	4,307
General and administrative		2,837		2,266
Total Non-GAAP adjustment	$	8,238	$	6,573

(b) Litigation relates to specific proceedings arising outside of the ordinary course of business.

	Three Months Ended March 31,
	2024		2023
Cost of services	$	-	$	67
General and administrative		764		-
Total Non-GAAP adjustment	$	764	$	67

1. Represents costs incurred to acquire operations that are not capitalizable.
2. Included in depreciation and amortization are amortization expenses related to patient base intangible assets at newly acquired skilled nursing and senior living facilities.
3. Represents an adjustment to the provision for income tax to our historical year to date effective tax rate of 25.0%.