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Ensign Group (ENSG) Down 5.1% Despite Q1 Earnings Beat
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The Ensign Group, Inc.’s (ENSG - Free Report) shares have declined 5.1% despite reporting strong first-quarter 2022 earnings on Apr 28. Investor sentiments may have been hurt by escalating expenses of the healthcare provider, which primarily stemmed from a 15.2% year-over-year rise in the cost of services.
Expenses of ENSG witnessed an 8.6% year-over-year escalation in 2021 as well, thereby signaling the persistent uptrend observed in the case of overall expenses.
Nevertheless, the downside in the first quarter was mitigated by strong revenues, improved same store and transitioning occupancy, and growing skilled revenues and managed care revenues.
The Ensign Group, Inc. Price, Consensus and EPS Surprise
Ensign Group reported first-quarter 2022 adjusted operating earnings of 99 cents per share, which outpaced the Zacks Consensus Estimate by 3.1%. The bottom line rose 13.8% year over year.
Operating revenues of ENSG amounted to $713.4 million, which improved 13.5% year over year in the first quarter on the back of higher service revenues and rental revenues. The top line surpassed theZacks Consensus Estimate by 1.8%.
Adjusted net income of $56.4 million climbed 13.7% year over year.
While same store occupancy increased 2.9% year over year, transitioning occupancy advanced 6.2% year over year in the quarter under review. Meanwhile, same store and transitioning managed care revenues climbed 10.2% and 22.8%, respectively, on a year-over-year basis.
Total expenses of Ensign Group increased 14.3% year over year to $644.3 million due to higher cost of services, rent-cost of services, general and administrative expenses and higher depreciation and amortization.
Segmental Update
Till the fourth quarter of 2021, Ensign Group reported results under two segments — Skilled Services and Real Estate. It established a captive real estate investment (REIT) trust, Standard Bearer, in January 2022, which highlights ENSG’s endeavor to bolster its real estate investment strategy. Consequently, the organizational structure underwent a change and the Real Estate segment was amended to include only those real estate properties that are owned by Standard Bearer. Thereby, from the first quarter of 2022, ENSG comprises two segments, namely Skilled Services and Standard Bearer.
Skilled Services: Revenues of the segment rose 14.3% year over year to $686.8 million in the first quarter. Segment income of $98.3 million improved 10.5% year over year.
Skilled nursing operations and campus operations of the segment totaled 217 and 23, respectively, as of Mar 31, 2022.
Standard Bearer: Segmental revenues of $17.2 million grew 22.2% year over year in the quarter under review. However, segment income decreased 10.5% year over year to $6.9 million.
Funds from Operations (FFO) of the segment totaled $11.9 million, up 0.4% year over year.
Financial Update (as of Mar 31, 2022)
Cash and cash equivalents of Ensign Group amounted to $248.5 million, which declined 5.2% from the 2021-end level. Total assets of $3 billion increased 6.8% from the figure at the 2021 end.
Long-term debt less current maturities were $152 million, which dipped 0.6% from the 2021-end figure.
Net cash provided by operating activities surged 33.8% year over year to $45.9 million.
Capital Deployment Update
Ensign Group bought back shares worth $10 million during the first quarter. ENSG paid out a quarterly cash dividend of 5.5 cents per share in the quarter.
2022 Guidance Reiterated
Ensign Group reaffirmed its 2022 outlook with respect to revenues and diluted earnings per share.
Diluted earnings per share continue to be projected within $4.01-4.13. The mid-point of the guidance suggests 12% growth from the 2021-reported figure.
Revenues are anticipated to lie between $2.93 billion and $2.98 billion for this year. The mid-point of the guidance indicates a rise of 13.7% from the 2021 figure.
Of the Medical sector players that have reported first-quarter results so far, the bottom lines of Centene Corporation (CNC - Free Report) , Humana Inc. (HUM - Free Report) and Molina Healthcare, Inc. (MOH - Free Report) beat the Zacks Consensus Estimate.
Centene reported first-quarter 2022 adjusted earnings per share of $1.83, which surpassed the Zacks Consensus Estimate by 8.9%. The bottom line improved 12.3% year over year. Total revenues of Centene rose 24% year over year to $37.2 billion in the first quarter. The top line beat the consensus mark by 7.2%. Managed care membership of CNC grew 8% year over year to 26.2 million as of Mar 31, 2022.
Humana reported first-quarter 2022 adjusted earnings per share of $8.04, which surpassed the Zacks Consensus Estimate of $6.83. The bottom line improved from the year-ago figure of $7.67 per share. Humana’s revenues of $23,970 million were up from $20,668 million in the prior-year quarter. The top line beat the Zacks Consensus Estimate of $23,550 million. While revenues from premiums and services increased 12.8% and 171.2% year over year, respectively, investment income declined 96.2% for HUM.
Molina Healthcare reported first-quarter 2022 adjusted earnings of $4.90 per share, beating the Zacks Consensus Estimate of $4.74. The bottom line increased from the year-ago earnings of $4.44 per share. Molina Healthcare's total revenues of $7,770 million beat the consensus mark of $7,538 million. The top line surged from the year-ago level of $6,522 million. Premium revenues for MOH increased to $7,531 million from $6,306 million a year ago.
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Ensign Group (ENSG) Down 5.1% Despite Q1 Earnings Beat
The Ensign Group, Inc.’s (ENSG - Free Report) shares have declined 5.1% despite reporting strong first-quarter 2022 earnings on Apr 28. Investor sentiments may have been hurt by escalating expenses of the healthcare provider, which primarily stemmed from a 15.2% year-over-year rise in the cost of services.
Expenses of ENSG witnessed an 8.6% year-over-year escalation in 2021 as well, thereby signaling the persistent uptrend observed in the case of overall expenses.
Nevertheless, the downside in the first quarter was mitigated by strong revenues, improved same store and transitioning occupancy, and growing skilled revenues and managed care revenues.
The Ensign Group, Inc. Price, Consensus and EPS Surprise
The Ensign Group, Inc. price-consensus-eps-surprise-chart | The Ensign Group, Inc. Quote
Q1 Update
Ensign Group reported first-quarter 2022 adjusted operating earnings of 99 cents per share, which outpaced the Zacks Consensus Estimate by 3.1%. The bottom line rose 13.8% year over year.
Operating revenues of ENSG amounted to $713.4 million, which improved 13.5% year over year in the first quarter on the back of higher service revenues and rental revenues. The top line surpassed theZacks Consensus Estimate by 1.8%.
Adjusted net income of $56.4 million climbed 13.7% year over year.
While same store occupancy increased 2.9% year over year, transitioning occupancy advanced 6.2% year over year in the quarter under review. Meanwhile, same store and transitioning managed care revenues climbed 10.2% and 22.8%, respectively, on a year-over-year basis.
Total expenses of Ensign Group increased 14.3% year over year to $644.3 million due to higher cost of services, rent-cost of services, general and administrative expenses and higher depreciation and amortization.
Segmental Update
Till the fourth quarter of 2021, Ensign Group reported results under two segments — Skilled Services and Real Estate. It established a captive real estate investment (REIT) trust, Standard Bearer, in January 2022, which highlights ENSG’s endeavor to bolster its real estate investment strategy. Consequently, the organizational structure underwent a change and the Real Estate segment was amended to include only those real estate properties that are owned by Standard Bearer. Thereby, from the first quarter of 2022, ENSG comprises two segments, namely Skilled Services and Standard Bearer.
Skilled Services: Revenues of the segment rose 14.3% year over year to $686.8 million in the first quarter. Segment income of $98.3 million improved 10.5% year over year.
Skilled nursing operations and campus operations of the segment totaled 217 and 23, respectively, as of Mar 31, 2022.
Standard Bearer: Segmental revenues of $17.2 million grew 22.2% year over year in the quarter under review. However, segment income decreased 10.5% year over year to $6.9 million.
Funds from Operations (FFO) of the segment totaled $11.9 million, up 0.4% year over year.
Financial Update (as of Mar 31, 2022)
Cash and cash equivalents of Ensign Group amounted to $248.5 million, which declined 5.2% from the 2021-end level. Total assets of $3 billion increased 6.8% from the figure at the 2021 end.
Long-term debt less current maturities were $152 million, which dipped 0.6% from the 2021-end figure.
Net cash provided by operating activities surged 33.8% year over year to $45.9 million.
Capital Deployment Update
Ensign Group bought back shares worth $10 million during the first quarter. ENSG paid out a quarterly cash dividend of 5.5 cents per share in the quarter.
2022 Guidance Reiterated
Ensign Group reaffirmed its 2022 outlook with respect to revenues and diluted earnings per share.
Diluted earnings per share continue to be projected within $4.01-4.13. The mid-point of the guidance suggests 12% growth from the 2021-reported figure.
Revenues are anticipated to lie between $2.93 billion and $2.98 billion for this year. The mid-point of the guidance indicates a rise of 13.7% from the 2021 figure.
Zacks Rank
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.
Other Medical Sector Releases
Of the Medical sector players that have reported first-quarter results so far, the bottom lines of Centene Corporation (CNC - Free Report) , Humana Inc. (HUM - Free Report) and Molina Healthcare, Inc. (MOH - Free Report) beat the Zacks Consensus Estimate.
Centene reported first-quarter 2022 adjusted earnings per share of $1.83, which surpassed the Zacks Consensus Estimate by 8.9%. The bottom line improved 12.3% year over year. Total revenues of Centene rose 24% year over year to $37.2 billion in the first quarter. The top line beat the consensus mark by 7.2%. Managed care membership of CNC grew 8% year over year to 26.2 million as of Mar 31, 2022.
Humana reported first-quarter 2022 adjusted earnings per share of $8.04, which surpassed the Zacks Consensus Estimate of $6.83. The bottom line improved from the year-ago figure of $7.67 per share. Humana’s revenues of $23,970 million were up from $20,668 million in the prior-year quarter. The top line beat the Zacks Consensus Estimate of $23,550 million. While revenues from premiums and services increased 12.8% and 171.2% year over year, respectively, investment income declined 96.2% for HUM.
Molina Healthcare reported first-quarter 2022 adjusted earnings of $4.90 per share, beating the Zacks Consensus Estimate of $4.74. The bottom line increased from the year-ago earnings of $4.44 per share. Molina Healthcare's total revenues of $7,770 million beat the consensus mark of $7,538 million. The top line surged from the year-ago level of $6,522 million. Premium revenues for MOH increased to $7,531 million from $6,306 million a year ago.