Back to top

Image: Bigstock

Ensign Group (ENSG) Bolsters Presence in Texas With Buyout

Read MoreHide Full Article

The Ensign Group, Inc. (ENSG - Free Report) recently completed the buyout of operations of a San Marcos, TX-based skilled nursing facility, which contains 116 beds. Prior to this acquisition, the operations of the facility named Hays Nursing and Rehabilitation Center were managed by a nonprofit organization.

Subject to a long-term, triple net lease, the transaction has already been effective since Dec 1, 2020. As a matter of fact, the newly-acquired facility had an occupancy rate of 49% at the time of buyout.

The inclusion of Hays Nursing and Rehabilitation Center brings the total count of healthcare operations in the company’s portfolio to 228, which is spread across 13 states. Assisted living operations of 24 are also included in its portfolio of total healthcare operations. Further, Ensign Group owns the real estate at 95 healthcare operations.

It is important to note that this is not the first time that the company is making an effort to strengthen its foothold in the state of Texas. With the company having numerous existing operations in Texas Hill Country, its latest purchase further reinforces its efforts to bolster its presence in the state.

Significantly, last month, it bought the real estate and operations of a Texas-based skilled nursing facility named The Medical Lodge of Amarillo. The healing home comprised 82 beds. This January, the company acquired the real estate and operations of another Texas-based healthcare campus named The Healthcare Center at Patriot Heights.

It is worth mentioning that Ensign Group has always been inclined toward acquiring distressed healthcare operations that require a massive clinical, financial and cultural turnaround. Management too reiterated the same, stating that the company is not only keen on exploring opportunities to purchase real estate and lease skilled nursing, assisted living and other healthcare-related businesses performing well but it also intends to provide the necessary assistance to struggling healthcare businesses across the United States.

Moreover, Ensign Group remains optimistic about its latest strategic move as the newly-acquired skilled nursing facility is not only expected to boost its healthcare and other services offered but is also likely to be accretive to its next-year earnings.

Shares of this currently Zacks Rank #3 (Hold) company have surged 62.7% in a year compared with the industry’s rally of 16.3%.

Ensign Group Riding on a Buyout Spree

Ensign Group has been banking on a buyout binge with skilled nursing facilities. The company has a track record of closing 208 acquisitions over the past decade (2009-2019). Each buyout added strength to the company’s expertise in acquiring real estate or leasing out post-acute care operations and evolving those into market leaders.

The previous year was no exception to the company’s buyout trend when it expanded its operations with the addition of 22 stand-alone skilled nursing operations, one stand-alone senior living facility and four campus operations. It also invested in new ancillary services that are complementary to its existing businesses.

Year to date, Ensign Group has purchased six operations including the latest addition. This, in turn, continued to boost its revenues and the momentum is here to stay. Notably, the Zacks Consensus Estimate for 2020 revenues is pegged at $2.4 billion, indicating 5.5% growth from the year-ago reported figure.

Stocks to Consider

Some better-ranked stocks in the medical space are Quidel Corporation (QDEL - Free Report) , Molina Healthcare, Inc. (MOH - Free Report) and Acadia Healthcare Company, Inc. (ACHC - Free Report) . While Quidel sports a Zacks Rank #1 (Strong Buy), Molina Healthcare and Acadia Healthcare carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Quidel, Molina Healthcare and Acadia Healthcare have a trailing four-quarter earnings surprise of 30.74%, 14.80% and 20.84%, on average, respectively.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>