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The Ensign Group (ENSG) Q2 Earnings Miss Estimates, Up Y/Y

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The Ensign Group, Inc (ENSG - Free Report) reported second-quarter 2017 adjusted operating earnings of 31 cents per share that missed the Zacks Consensus Estimate by 3.1%. Earnings, however, inched up 3.3% year over year.

Adjusted EBITDA (earnings before interest, taxes, depreciation & amortization) increased 169 basis points (bps) to $38.1 million from the prior-year quarter.

Operational Update

Total revenue of $448.3 million increased nearly 9% year over year and also surpassed the Zacks Consensus Estimate by 2.5%.

Same store managed care revenues for transitional and skilled services increased 10.8%, with growth of 5.5% in managed care days from the prior-year quarter.

Same store skilled mix revenues for transitional and skilled services as a percentage of revenues for all segments increased 56 bps to 51.6% from the prior-year quarter.

Transitioning revenues for transitional and skilled services increased 8.2% to $77.8 million with occupancy growth of 268 bps to 73.9% from the prior-year quarter.

Transitioning Medicare and Medicaid skilled revenues for transitional and skilled services increased 8.2% and 16.9%, respectively, from the prior-year quarter.

Transitioning Medicare and Medicaid skilled days increased 2.9% and 27.0%, respectively, from the prior-year quarter.

Total expenses at the end of the second quarter rose 9% year over year to $426.2 million due to higher cost of services, and depreciation & amortization costs.

Quarterly Segment Update

The Transitional, Skilled & Assisted Living Services Segment:

The segment reported revenues of $408 million, up 10% year over year. Solid growth in skilled nursing and facilities drove the upside. Notably, the segment accounted for 91.1% of the total revenue in the second quarter.

Ensign Group's assisted and independent living subsidiary, Bridgestone Living LLC grew its segment income by 12.1% to $3.7 million from the prior-year quarter.

Home Health & Hospice Services

For this segment, total operating revenues were $34.6 billion, up 25% year over year. Strong growth in home health services resulted in the improvement. This segment contributed 7.7% to the total revenue.

Ensign Group's home health and hospice subsidiary, Cornerstone Healthcare, Inc.’s  segment income grew 13.2% to $4.9 million and revenues jumped $6.1 million or 21.5% to $34.6 million from the prior-year quarter.

Other Services

This segment reported revenues of $5.4 million, down 50.4% from the prior-year quarter. This segment accounted for 1.2% of the total revenue.

The Ensign Group, Inc. Price, Consensus and EPS Surprise

Financial Update

Total cash and cash equivalents decreased 43% to $33 million as of Jun 30, 2017 from $57.7 million as of Dec 31, 2016.

As of Jun 30, 2017, long-term debt was $284.5 million, up 3.3% from $275.5 million at the end of 2016. 

Cash from operations was $25 million, down 32.4% year over year.

Dividend Update

Ensign Group paid 4.25 cents per share of its common stock to shareholders through dividends during the quarter.

Guidance for 2017

Management expects annual revenues in the range of $1.76–$1.80 billion. It had earlier projected revenues in the range of $1.818–$1.842 billion.

Annual earnings are now expected in the range of $1.46–$1.53 per diluted share compared with $1.62–$1.70 guided previously.

Management’s guidance is based on diluted weighted average common shares outstanding of 53.7 million and a 35.5% tax rate.

Zacks Rank & Performance of Other Insurers

Ensign Group currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among the other firms in the medical sector that have reported second-quarter earnings so far, the bottom lines of Anthem Inc. , Humana Inc. (HUM - Free Report) and UnitedHealth Group Inc. (UNH - Free Report) beat their respective Zacks Consensus Estimate.

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