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Ensign Group (ENSG) on Buyout Spree, Adds New Properties

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The Ensign Group, Inc. (ENSG - Free Report) recently acquired the operations of certain living facilities in California and Washington. The acquired bodies, namely are, Sea Cliff Assisted Living in Huntington Beach, CL, The Grove Assisted Living in Riverside, CL and Redmond Heights Senior Living in Redmond, WA. The buyouts were effective on Apr 1, 2022.

In this regard, it should be noted that the Ensign affiliate already owns the real estate of Sea Cliff Assisted Living. The buyouts of Grove Assisted Living and Redmond Heights Senior Living will be subject to a long-term, triple net lease.

These acquisitions are expected to result in better health outcomes for the communities.

The hospital company is known for its aggressive inorganic growth story. Time and again, it has resorted to acquisitions to enhance its expertise both clinically and financially. In fact, ENSG continues to actively seek transactions to acquire real estate and lease both well-performing and struggling skilled nursing, assisted living and other healthcare-related businesses in new and existing markets. In 2021, it successfully added 20 operations to its portfolio. Ensign Group’s acquisition spree continues in 2022 as well. To this effect, the company recently purchased the operations of two assisted living facilities in Arizona and the real estate and operations of a skilled nursing facility in Texas.

The buyout strategy of Ensign Group is focused on identifying opportunistic and strategic buyouts that lie within specific markets and deliver robust returns.

The strategy aids the leading industry player to establish its dominance further in the United States.

ENSG bought 278 facilities from January 2011 through December 2021.

Post the aforementioned acquisitions, ENSG now has a portfolio of 252 healthcare operations, 25 of which include senior living operations across 13 states. Ensign owns 103 real estate assets.

ENSG carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of ENSG have gained 7.6% in the year-to-date period, compared with the industry’s growth of 12.4%.

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Like ENSG, other medical stocks serious about their M&A strategy include Community Health Systems, Inc. (CYH - Free Report) , HCA Healthcare, Inc. (HCA - Free Report) and Tenet Healthcare Corporation (THC - Free Report) .

Community Health continues to acquire hospitals to expand the number of licensed beds. CYH has a pipeline of activities lined up for the near future. In 2021, CYH spent $3 million on buyouts.

HCA Healthcare is committed to undertaking acquisitions, which have so far added and expanded its facilities across several markets and increased patient volumes. HCA spends a substantial amount on acquiring hospitals and health care entities, which incurred expenses worth $1.1 billion in 2021. HCA recently purchased MD Now Urgent Care from an LA-based private equity investment firm, Brentwood Associates.

Tenet Healthcare resorted to numerous acquisitions, partnerships and strategic alliances to expand the scale of its business, operating capacity and geographical presence. THC has constantly partnered with industry biggies like Blue Cross Blue Shield of Texas, Cigna, Aetna, UnitedHealth, Humana and so on. It closed the buyout of an ASC in Washington and a new surgical hospital in ASC in Central Valley of California. In November 2021, THC, along with its unit United Surgical Partners International (“USPI”), entered into a definitive agreement to acquire SurgCenter Development (“SCD”) for $1.2 billion. Its inorganic growth strategies poise it well for long-term growth.

Shares of THC have inched up 1.2% in the year-to-date period, while that of CYH and HCA have lost 11.8% and 4.4%, respectively.