Ensign Group Inc (ENSG) 2013 Q1 法說會逐字稿

Good day, ladies and gentlemen, and thank you for your patience. You have joined the Ensign Group first quarter of fiscal-year 2013 earnings conference call. (Operator Instructions). As a reminder, this conference may be recorded. I would now like to turn the call over to your host, Executive Vice President Greg Stapley. Sir, you may begin.

Thanks, Matif, and thanks, everyone, for being on the call today.

We filed our 10-Q and accompanying press release yesterday. Both are available on the investor relations section of our website at www.EnsignGroup.net. A replay of this call will also be available there until 5 p.m. Pacific on Friday, May 4 -- or Friday, May 24, 2013.

Before we get to what's been really a very busy start to the year, we always open with a few housekeeping items. First, any forward-looking statements made today are based on management's current expectations, assumptions, and beliefs about our business and the environment in which we operate. These statements are subject to risks and uncertainties that could cause our actual results to materially differ from those expressed or implied on the call.

Listeners should not place undue reliance on forward-looking statements and are encouraged to review our SEC filings for a more complete discussion of factors that could impact our results. Except as required by federal securities laws, Ensign does not undertake to publicly update or revise any forward-looking statements where changes arise as a result of new information, future events, change in circumstances, or for any other reason.

In addition, any Ensign business we may mention today is operated by a separate independent operating subsidiary that has its own management, employees, and assets. References to the consolidated company and its assets and activities, as well as the use of terms like we, us, our, and similar verbiage, are not meant to imply that The Ensign Group, Inc., has direct operating assets, employees, or revenue or that any of the various operations, the service center, or our captive insurance subsidiaries are operated by the same entity.

Also, we supplement our GAAP reporting with non-GAAP metrics. When viewed together with our GAAP results, we believe these measures can provide a more complete understanding of our business and they should not be relied upon to the exclusion of the GAAP results. A GAAP to non-GAAP reconciliation is available in yesterday's press release and in the Q.

Finally, we were pleased to report last week that the end is in sight on the DOJ and civil investigation that has been underway since 2006. In addition to the $15 million reserve we recorded in Q4, last week we announced an agreement in principle has been reached and we agreed -- and we increased that reserve by $33 million to cover the final settlement amount of $48 million negotiated with the government. We expect to remit the alleged -- the settlement amount to the government in the second quarter or the third quarter of 2013.

We have also tentatively agreed to enter into a corporate integrity agreement, or CIA, in conjunction with this settlement, and that document is being negotiated and drafted now.

We have agreed to the settlement without any admission of wrongdoing in order to resolve the matter and avoid the uncertainty and expense of litigation. We do not expect the settlement to have a material adverse effect on the Company's long-term financial position, business plan, or prospects. However, as we disclosed last week, the resolution will have an impact on the Company's GAAP results of operations and cash flows for fiscal 2013.

Apart from the settlement payment itself, this is largely due to the fact that we've been making and continue to make significant investments in our resource infrastructure to enhance our internal compliance program. We will also incur other ongoing costs associated with the CIA, such as monitoring expenses and other expenses, as well as interest expense on a portion of the settlement amount totaling approximately $2.5 million per year.

We accordingly revised our 2013 earnings guidance to a range of $2.72 to $2.81 per share to account for these costs, and we confirm that the change is attributable solely to the settlement and we're not projecting any decline in operating performance for the year. If the ongoing settlement discussions are successfully concluded, we expect that the tentative settlement will fully and finally resolve the DOJ investigations previously described in the Company's periodic filings with the US Securities and Exchange Commission. The tentative settlement is subject to completion and execution of all required documentation and the final approval with the Department of Justice, the Office of the Inspector General HHS, and the court.

Until the tentative settlement becomes final, there can be no guarantee that these matters will be resolved by the agreement in principle, and we would direct you to the more complete discussions of this matter contained in our 10-Q for additional disclosures and details.

But as Christopher noted in last week's press release, we view this tentative settlement as tremendously positive and look forward to operating without the specter of government litigation hanging over our heads for the first time in over six years.

With that, I will turn the call over to Christopher Christensen, our President and CEO. Christopher?

Thanks, Greg. Good morning, everyone.

The performance for the first quarter was modestly up across the board, both sequentially and quarter over quarter, as we began our ramp-up for 2013. You'll recall that we have always advised that our business can be fairly lumpy from quarter to quarter, and while we are pleased to be reporting significantly improved performance in the first quarter, to outsiders this will probably look like one of those quarters.

We continue to have many levers we can pull to achieve our operating goals for the year. We are maintaining the annual guidance we recently announced, which projected revenues of $915 million to $931 million and adjusted earnings of $2.72 to $2.81 per diluted share, which Suzanne will discuss more in just a moment.

For the quarter, we are pleased to report an increase in revenues of 8% and growth in adjusted net income of 10.1% and adjusted earnings growth of 6.6% over the prior-year quarter. In addition, same-store skilled mix was up 124 basis points. Same-store skilled revenue dollars were up 450 basis points and same-store managed-care revenue was up 11.2% as well, all of which are exciting key indicators in today's evolving operating environment. I'll discuss that last one more in just a moment.

The quarter would have been even better had it not been for a few large but unusual items that hit all at once. For example, we reported in the second quarter of last year that two of our top-performing operations in south Texas had suffered major storm damage and would be partially out of commission for some time. While we are pleased to report that those facilities are now coming fully back online, the business interruption insurance proceeds that we expected to receive to cover their higher-than-normal operating expenses for the past few quarters have not yet been paid, and we've yet to book the revenue that will match those costs.

Also in the first quarter, the state of California finally announced the Medi-Cal rates and quality assurance fees for the full-year 2013. Rates net of increased QA fees declined, and we took a retroactive charge for the last five months of 2012, plus had the effects of the change for the first three months of 2013, effectively resulting in eight months' worth of impact in one quarter.

In addition, we had some very substantial renovations underway in the first quarter, which in some cases resulted in the temporary closure of entire wings of those facilities. While we always have several facilities undergoing some type of upgrade, these were unusual in their scope and effect on operations, and some of these will continue into the second quarter.

All of these unusual items combined to impact earnings in the quarter by about $0.05 per share. We don't anticipate a repeat of these items, other than the normal effects of the Medi-Cal rate change going forward and two very unusual renovations versus the five that we had in the first quarter. Fortunately, we have proven that we can perform despite reimbursement cuts, having done so very well against the draconian 11% Medicare cuts and therapy changes that followed us throughout last year and into this quarter.

That said, we are confident that our operators and their teams will take both the effects of sequestration and any other state or federal changes in reimbursement in stride and continue to ramp their performance through the year, as they almost always do.

In addition, we actively prepared for and began to absorb a number of new operations in the first quarter. With the groundwork done in this quarter, we believe that we have laid a solid foundation to ramp our growth in every key operating and quality metric through the remainder of 2013.

So despite some uncertainty still on the horizon, all of which is just another iteration of the uncertainty with which we constantly contend in our sector, we are enthusiastic about our future and our prospects for continued growth and performance. With that, I'd like to have Greg discuss our recent growth. Greg?

Thanks.

In Q1, we added one very nice skilled nursing facility in Texas to our growing portfolio. We also opened our first ground-up development, Sloan's Lake Rehab Center, in Denver, Colorado, and it is on track to date as it works its way toward fill-up and stabilization. Since quarter-end, we've added three additional skilled nursing facilities in Texas, and just yesterday we announced the successful acquisition of three more facilities, one skilled nursing and one assisted living in the greater Seattle area and a skilled nursing facility in the metropolitan Omaha market.

This growth has brought our total senior housing and inpatient care portfolio to 116 facilities in 11 states with 11,108 skilled beds and 1,889 assisted and independent living units in operation. Of the 116 properties we operate, 93 are Ensign owned and 72 of those are owned free of mortgage debt.

Cornerstone, our home health and hospice business, has added three new home health and three new hospice agencies in the quarter and since. It may now take a well-deserved step back on acquisitions in order to digest its recent acquisitions, but we see numerous opportunities in that space and expect to continue growing those businesses as their existing base matures. To date, we have acquired or developed nine home health and seven hospice agencies.

In addition, we sold our Doctors Express franchise business on favorable terms just following the quarter, but remain committed to our non-franchise urgent care business, Immediate Clinic. Immediate Clinic opened up two more locations in the quarter, bringing its total footprint to five open and operating clinics, all of which are in the greater Seattle market, with more locations in the pipeline. As we announced previously, some expected startup losses in these new businesses will negatively impact the first half of the year, but we still anticipate that these pilot locations will start becoming accretive in the second half.

We continue to see compelling opportunities to spread the Ensign operating philosophy across the country, and we have additional acquisition growth and diversification prospects in the pipeline. We continue to generate strong free cash flow that can be used to fund growth. In addition, the majority of our $150 million revolving credit line remains available, and we have tremendous untapped equity in our real estate portfolio, as well as a very strong balance sheet, all of which can be used to access additional growth capital, should we need it.

And with that, I'll hand it back to Christopher.

Thanks, Greg.

With a growing portfolio that extends across 11 different states, numerous different markets, and several different business lines, Ensign is becoming increasingly diverse in its asset base and operations.

While this breadth of diversity might challenge a traditional top-down organization, our unique, locally-focused business model lends itself well to performing across multiple, very different markets. This is because our individual facility and market leaders have the vision, the motivation, the ability, and the authority to tailor their individual business plans for the markets and communities they serve. Each will face very different problems, and each will innovate and come up with unique solutions. I just want to mention three quick examples.

At Victoria Care Center in Ventura, California, CEO John Gardner and Director of Nursing and Chief Operating Officer Julie Lopez have reached deep into their market by establishing what's called PARC, the Post Acute Rehab Center inside their operation, PARC. With innovative inpatient and outpatient therapy programs, outstanding clinical outcomes, and specialized attention to the individualized needs and objectives of doctors and their patients, PARC has caught the attention of the medical community and their local managed care organizations in an unprecedented way. As a result, Victoria's managed care days have jumped nearly 25%, driving overall occupancy up by 475 basis points and producing an increase in EBIT of 42% over last year's quarter.

At Royal Vista Nursing Center in San Diego, California, Director of Nursing and Chief Operating Officer [Josie Ledesma] and Marian, her Executive Director, have done a remarkable job of turning what was once a sleepy long forgotten convalescent home that was built in 1928 into a modern, busy, and well-regarded skilled nursing and rehab center. By focusing squarely on clinical outcomes and building relationships with the medical community and managed care organizations in their area, Josie and Marian and their team have nearly doubled their managed care days and still grown their EBIT by 28%. As a CMS five-star facility, they have achieved a 93% occupancy level and pushed their skilled mix days up by more than 13 percentage points over last year.

In addition, they were recently awarded the coveted Ensign flag, Ensign's highest award for clinical excellence, cultural alignment, corporate compliance, and financial strength.

Finally, at Bella Vita Health and Rehab Center in Glendale, Arizona, CEO Doug Haney and Director of Nursing and COO [Renna Castro] have proven once again that even our most mature facilities can still improve significantly each year. Doug and Renna have led an older operation in a decidedly rough part of town to the pinnacle of clinical excellence and reputation, expanding their market radius and winning the hearts of the local medical community and managed care organizations.

Seeing a substantial need for enhanced behavioral services in their market, Doug and Renna established a program that is unlike any other in the greater Phoenix area. They revamped their 24-bed secure behavioral unit and branded it Sereno, which means tranquil in Italian, then built an entire inpatient behavioral services program off that platform. With overall occupancy at 90% and occupancy in Sereno at 100% with a waiting list, they are now expanding the secure unit and their service offerings.

Community response has been overwhelming, allowing them to grow their EBITDAR margins by 660 basis points and post an increase in EBIT over last year of more than 91%.

Each of these individual stories demonstrates our operations' strong commitment to their residents, patients, doctors, hospitals, managed care organizations, and other present and future decision-makers and referral sources in the markets they serve. Each of our markets, whether large or small, rural or suburban, upscale or blue collar, is vitally important to us because we know they are vitally important to the people who live and work there.

Clinically, we're better than we have ever been with now half of our same-store facilities boasting four- and five-star ratings from CMS, which is particularly significant considering the condition of most of these operations when we acquired them.

And on the compliance front, we are pleased to have the cost and distraction of the six-year DOJ investigation behind us and look forward to having our new compliance team help our operations become the standard for compliance in the industry.

I cannot stress how important all this is in the current and coming operating environment. With the advent of accountable care organizations and other systems that may fundamentally change the marketplace, post-acute providers who partner well with local doctors, hospitals, and managed care organizations to deliver high-quality outcomes for their patients will be rewarded.

We believe that we are extremely well positioned to earn market share and thrive in such an environment, whatever form it may take in a given market, and that our facility leaders will be nimble and able to adapt quickly to changes in the referral landscape, individual market by individual market.

With that, I'll hand it to Suzanne to provide more detail on the Company's financial performance, and then we'll open it up for questions. Suzanne?

Thank you, Christopher, and good morning, everyone.

Before we discuss our operational results, I'd like to just highlight for everyone a couple of unusual items that showed up in the financials this quarter and impacted GAAP EPS. First, as Greg already mentioned, after years of cooperating with the government, we are finally at a point where we can finalize our reserve for the settlement of the DOJ civil investigation.

The additional $33 million charge we recorded is not expected to change, but negotiation of the settlement documents and the Corporate Integrity Agreement are ongoing, and a settlement is tentative until finalized and approved. While the amount certainly hurts, we do not expect the settlement payment to have a materially adverse effect on the Company's long-term financial position, business plan, or prospects.

However, the resolution will obviously have an impact on the Company's GAAP operating results and cash flow for 2013. However, overall we view the resolution of this investigation as a tremendously positive development for our operators and shareholders.

In addition, the Company is incurring ongoing costs associated with enhanced compliance activities. We have always had a compliance program. But we have been building our compliance team significantly since late last year. Some of those additional costs started to show up in our G&A expense this quarter, and we expect some fairly heavy startup costs in Q2 and Q3 before they level off.

We also expect to have some monitoring costs and other costs under the Corporate Integrity Agreement, as well as some additional interest expense on a portion of the settlement amount when it is paid. We have estimated that these combined costs at approximately $2 million for the year -- excuse me, $2.5 million for the year.

Finally, the quarter included a non-cash charge of $2.8 million to write off the balance of the excess fair value of Doctors Express, Ensign's former urgent care franchise system which we sold in April. The initial value of Doctors Express was based in part on the fair valuation of a noncontrolling interest, which is an accounting analysis, and not based on cash paid for the acquisition.

We are pleased to report that the operating results have improved, although modestly relative to our typical performance, where we actively prepared for and began to observe a number of new operations. On an adjusted basis, operations improved with EBITDAR up 7.6% and EBITDA up 8.6% over the last year. Adjusted non-GAAP first-quarter earnings were $0.65, exceeding Q1 2012 by 6.6%.

As always, we have provided the reconciliation of GAAP to non-GAAP results in yesterday's release. In reviewing the strength of our financial position for the three months ended March 31, cash and cash equivalents at quarter-end were $42.5 million, and the Company generated net cash from operations of $21.7 million. Free cash flow for the trailing 12 months ended March 31 was $61.4 million, with free cash flow for the three months ended March 31 of $16.5 million.

Now as we look at the rest of 2013, we believe our single most significant opportunity lies in improving occupancy. Occupancy was a bit soft in the quarter. Same-store occupancy was up just two basis points sequentially as the number of our skilled nursing facilities temporarily experienced stop admission holds while new patients -- for new patients during the winter's worse-than-usual flu season.

In addition, first-quarter occupancy was also impacted by extensive renovation activities and five mature facilities that temporarily closed beds, and some of the renovation impacts on occupancy will continue in the second quarter.

In spite of these temporary challenges, we believe that occupancy can go much higher as we intensify our focus on building relationships within our markets and continue to improve our clinical outcomes.

Finally, as Christopher mentioned, we have reaffirmed our annual guidance for 2013 of $915 million to $931 million in revenues, with $2.72 and $2.81 in adjusted diluted earnings per share. This represents an average annual growth rate in earnings per share of almost 15% a year since 2009. We are confident in the projections -- projecting this ramp will continue.

These projections are based on diluted weighted average common shares outstanding of approximately 22.5 million; no additional acquisitions or disposals beyond those made to date; the exclusion of acquisition-related costs and amortization costs related to intangible assets acquired; the exclusion of expenses and accruals related to the DOJ matter; tax rate at the historical average of approximately 38.5%; the effect of sequestration followed by an offsetting Medicare market basket increase in October 1, 2013; and approximately 1% increase in Medicaid reimbursement rates, net of the provider tax.

In getting these numbers, I would like to remind you again that our business can be a bit lumpy from quarter to quarter. This was largely attributable to variations in reimbursement systems, delays and changes in state budgets, seasonality in occupancy and skilled mix, the influence of the general economy on our census and staffing, the short-term impact of our acquisition activity, and other factors. Full financials were included in our Q and the press release.

And we'd be happy to answer any specific questions you might have later in the call. I will now turn it back over to Christopher to wrap up. Christopher?

Thanks, Suzanne, and thanks to everyone who's been on the call. We hope this discussion is helpful and we plan to continue it at our upcoming investor conferences. We'll be at Bank of America Merrill Lynch conference in May and at the Jefferies conference in June, and hope to see many of you there.

As always, I want to conclude by thanking our outstanding partners in the field, at the service center, and across the organization for their continued efforts to make Ensign the best company in the healthcare industry. We'd also like to thank our shareholders again for your support and confidence. Matif, do you mind instructing us on the Q&A procedure?

(Operator Instructions). Kevin Campbell, Avondale Partners.

I wanted to just start with the Medicare rate proposal that came out last night and get your thoughts on that, sort of how it stands relative to the expectations you have built in your guidance. And then, any commentary on the rebasing of the market basket or the calendar days for therapy utilization?

Yes, I guess I'll start. This is Christopher. I think it was fairly similar to what we assumed it would be. There weren't a lot of surprises.

I suppose it was -- if it were one way or the other, it might've been slightly less than we had assumed. But again, only slightly. And (multiple speakers)

Yes, and on the therapy part, that's consistent with how we've been counting and looking at therapy and how we are rolling stuff into the NDS already. So we do not expect that secondary portion with regards to the therapy clarification in there to really impact us.

Okay, great. And looking at the occupancy, can you give us some sense as to what impact the renovations had, occupancy wise? And also, just maybe a little bit more clarity on the stopping of intake for flu. Just who actually drives that process? Why were they stopped? I'm assuming to prevent sort of further spread of the flu, but maybe just some additional color on that.

Yes, your last comment is correct. It's the right thing to do when there is any meaningful outbreak of flu is to not take any admissions until we are sure that it's cleared up so that we don't spread it.

And it spread to about -- well, it didn't spread from one facility to another, but it impacted over the first quarter about 16 of our operations, a pretty large number. And you know, that's only for a few weeks at a time, but still, 16 facilities over an average 2.5-, three-week period is meaningful.

I don't know -- it would take me a second to come up with the impact of that. I can answer the first part a little bit better than that. The wings that were shut down in those five operations impacted us to the tune of about 110 to 120 basis points, and as we said in the script, it was buried in there somewhere, probably, but three of those are back online and the other two should be finished sometime during the second quarter.

And just to clarify, those were all in the same-store bucket, so that's really when you look at that same-store bucket occupancy and you look at the analysis.

Okay. That's helpful. And the one-time items, I just want to make sure I caught them all. So you mentioned the storm damage in Texas and the business interruption insurance, the California Medicaid rates, and the renovations. Was there anything else that were in that bucket of one-time items for $0.05?

No. Not that -- I mean, those were all significant items. You know, the other things were -- wouldn't be significant.

Okay. And you know, as we look at those three, you know, was one of them any more important than the other? Or were they kind of about -- of the $0.05, about a third, a third, and a third to each?

Well, the third one is a little more dizzy -- I mean, the first two are easy to calculate. The third one is a little more difficult to calculate because you assume that they would all be full or not. But I would say that the -- I'm trying to remember the order that I shared them in -- the insurance was the first one, right?

Yes.

Yes, I would say that was probably the most impactful. I don't want to -- if you exclude what we already assumed would occur in California without the retroactive five months hitting in one quarter, that was -- that probably is about 40% to 50% of the amount.

Just remember that on the buildings that had the damage, it's a double impact. It's the business interruption, plus what they would've done had they not had the damage in the first place. So that's a double impact.

Okay. And then, Christopher, I think in the press release you guys sort of -- you talked about the solid foundation for ramping growth in 2013. So, at what point should we start to expect some leverage on the G&A and the cost of services line from that ramping? It sounds like G&A, you'll be building out your compliance for a quarter or two. So, maybe you won't see any leverage there until the back -- last quarter of the year, but what about the cost of services?

You know, I don't think -- because of our growth, I think on a percentage basis, I don't think you'll see a meaningful change there. From an overall dollar standpoint, you will, but not in terms of percentage of revenues. Does that make sense?

Yes. And that's what I'm driving at.

Yes, I mean, as was stated, I think that we'll -- as you said, third and fourth quarter, we'll see a little bit of an uptick because of some of the things that might accompany that CIA, but I don't think you'll see anything increase, again, as a percentage of expenses or a percentage of revenues.

And I would just encourage you to use the adjusted cost of service number when you figure out that percentage versus the GAAP number because the GAAP number does have some of those unusual items in there.

Okay. All right, thank you very much.

Rob Mains, Stifel.

The most recent -- the couple of recent announcements, the Nebraska acquisition, how many beds was that facility? It wasn't in the press release.

That was 70 beds.

70 beds. And am I correct in assuming that what we should read into six facilities done in fairly short order is that's just how the timing works out, that there is nothing that's making the pipeline either particularly robust or deals easier to close right now than it might have been a month or two ago?

I wish we could tell you, Rob -- this is Greg. I wish we could tell you exactly what's going on out there because we do see the pipeline becoming more robust.

I don't know if it has anything to do with the fact that some of the big REITs in our space have announced that they're taking a step back from the skilled nursing side of the industry. That may have something to do with it because I think in the past couple of years, they were the ones driving up pricing.

But for performing assets, we still see pricing up in areas where we don't really like it. But the stuff that we chase, as we've said in the past, that pricing stays fairly constant, and we are seeing a fair number of deals that we think we like or could like coming down the pike. So it could be a big year for us. We never know and we can't make any predictions. But this is -- it's what they call a target-rich environment.

And can I surmise from your comments that there's not a lot of competition for those targets?

Well, there's still competition for them. But funding for some of that competition is going to be more difficult if the REITs take a step back and truly do that, as they said they're going to.

Okay. And then, M&A for home health hospice, how active is that?

Super active. We probably see an opportunity a day down here.

And same question as price and competition?

Pricing -- you know, I can't comment on competition for them, but the pricing is generally pretty attractive.

Remember that on the home health and hospice agencies, our strategy is an organic growth strategy. We acquire small agencies, small licenses. In fact, if you look at the one we mentioned, I think, in the press release yesterday, Custom, that agency really was essentially nonfunctional. We bought the license and then bolted that thing onto an existing hospice company that we had in the Dallas market. So they will grow organically in those two businesses, and so the pricing is -- it's not inconsequential, but it's pretty darn low when you're acquiring that way.

Got it. Okay, that's all I had. Thank you very much.

Dana Hambly, Stephens.

On the business interruption insurance, had you anticipated getting that in the first quarter?

Yes, we did. We did. We were a little surprised that it didn't come through in the first quarter, but we feel comfortable that it will happen very soon.

So could be any day now. Okay. And then, just, Christopher, you mentioned, I think -- I saw an article recently about the REITs stepping away as well, and they talked about presumably from reimbursement risk. You know, a year ago at this time, I think you commented that it was maybe one of the worst environments you've ever seen in the skilled nursing sector. A year later, how are you feeling about the sector and generally how do you feel about reimbursement in general?

I don't remember my comment, but it is -- we -- what I meant to say is the pricing was a bit perplexing back then, and I think that we are seeing adjustments and pricing as people step away, and I think that that's why you're seeing us begin to close on some transactions again.

We really do try to be -- I'm sure we've made mistakes. But we try to be disciplined in the way that we buy these things, and when price rises, we do -- it's not that there's been a shortage of deals at all during any of that period of time. It's just the way the pricing has moved, and pricing does seem to be -- hopefully, it continues -- but it does seem to be more favorable now than it was a year ago.

Okay. I think in the past, you had mentioned seeing maybe more financial buyers in the last couple of quarters. Do those other guys that seem to be drying up right now?

No. This is Greg. I think, as I said a minute ago, the performing assets are the ones the financial buyers typically chase, and pricing for those still seems to be where it's been, for the most part. Those are financeable deals.

It's the underperforming, the nonperforming, the stuff, the pro forma performing stuff that you really are going to have a hard time financing if you're not a cash buyer, like we are, and those are the ones that we are -- pricing isn't necessarily changing a lot and it doesn't change a lot, but the number -- or the supply of deals has moved up a bit.

There are select markets that have been key to us in the past where we have seen these financial buyers come in surprisingly on underperforming assets and pay, you know, multiple -- well, there is no multiple, but paid amounts we just wouldn't pay. And those -- that pace does seem to be slowing. But as Greg said, it isn't across our entire platform. It really is just in select markets.

Okay. And then, last one from me, you just opened the Sloan. That was a new development. Any plans on any future development or would we expect that to be kind of few and far between?

I think it will be slow. Until we see pricing, you know, different than it is now or pricing gets very expensive, I think you'll see us -- but I do think, Dana, that we do want that skill set, and so you will see us do one here and one there over a lengthy period of time.

Okay, thanks very much.

Thank you. At this time, I'd like to turn the call over to CEO Christopher Christensen for any closing remarks.

I appreciate your help, Matif, and I again want to thank everyone for giving us your time this Thursday morning and appreciate your support and belief in us. That's it.

Thank you, sir, and thank you, ladies and gentlemen, for your participation. That does conclude The Ensign Group's first-quarter fiscal-year 2013 earnings conference call. You may disconnect your lines at this time. Have a great day.