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Ensign Group (ENSG) Q3 Earnings Beat on Occupancy, Stock Up 2.4%
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Shares of The Ensign Group, Inc. (ENSG - Free Report) gained 2.4% since it reported third-quarter 2023 results on Oct 25, 2023. The quarterly results benefited on the back of higher managed care revenues and improved occupancies. A hiked adjusted earnings per share (EPS) for this year may have boosted investors’ sentiment about the stock. However, the upside was partly offset by an elevated expense level.
ENSG reported a third-quarter 2023 adjusted EPS of $1.20, which surpassed the Zacks Consensus Estimate by 1.7%. The bottom line improved 15.4% year over year.
Operating revenues climbed 22.2% year over year to $940.8 million in the quarter under review. The top line beat the consensus mark by a whisker.
The Ensign Group, Inc. Price, Consensus and EPS Surprise
ENSG’s adjusted net income of $69 million advanced 16.6% year over year in the third quarter and came higher than our estimate of $67.8 million.
Same-store occupancy improved 290 basis points (bps) year over year while transitioning occupancy expanded 270 bps year over year.
Total expenses rose 23.8% year over year to $861 million, higher than our estimate of $854.9 million. The year-over-year increase was due to higher cost of services, rent-cost of services and general and administrative expenses.
Segmental Update
Skilled Services: The segment recorded revenues of $903 million, which grew 22.1% year over year in the third quarter. The figure matched the Zacks Consensus Estimate but surpassed our estimate of $902.3 million. Segment income improved 15.8% year over year to $117.8 million.
Skilled nursing and campus operations of the segment totaled 258 and 26, respectively, at the third-quarter end.
Standard Bearer: Rental revenues advanced 12% year over year to $21 million in the quarter under review but fell short of our estimate of $22.2 million. Segmental income of $7.2 million grew 3.2% year over year.
Funds from Operations totaled $13.6 million in the third quarter, which rose 8.7% year over year.
Financial Update (as of Sep 30, 2023)
Ensign Group exited the third quarter with cash and cash equivalents of $467.9 million, which climbed 47.9% from the level at 2022 end. It had a leftover capacity of $593.3 million under its line of credit at the third-quarter end.
Total assets of $4,082 million increased 18.2% from the 2022-end figure.
Long-term debt-less current maturities were $146.5 million, down 1.9% from the figure as of Dec 31, 2022. Current maturities of long-term debt amounted to $3.9 million.
Total equity of $1,465.4 million advanced 17.3% from the figure at 2022 end.
ENSG generated net cash from operations of $291.4 million in the first nine months of 2023, which rose 31.1% from the prior-year comparable period.
Capital-Deployment Update
Ensign Group did not buy back shares in the third quarter. It paid out a quarterly dividend of 5.75 cents per share.
2023 Outlook Updated
Revenues are projected to lie within $3.72-$3.73 billion compared with the prior guidance of $3.69-$3.73 billion. The midpoint of the updated outlook implies a 23.1% rise from the 2022 figure.
Adjusted EPS is estimated to be between $4.73-$4.79 for 2023, up from the earlier view of $4.70-$4.78. The midpoint of the revised guidance indicates an improvement of 15% from the 2022 figure.
The weighted average common shares outstanding is estimated to be around 57.7 million and the tax rate is assumed at 25% for this year.
Of the Medical sector players that have reported third-quarter 2023 results so far, the bottom-line results of Encompass Health Corporation (EHC - Free Report) , Merit Medical Systems, Inc. (MMSI - Free Report) and DexCom, Inc. (DXCM - Free Report) beat the respective Zacks Consensus Estimate.
Encompass Health reported third-quarter 2023 adjusted EPS of 86 cents, which surpassed the Zacks Consensus Estimate by 11.7%. The bottom line advanced 28.4% year over year. Net operating revenues of EHC rose 10.8% year over year to $1,206.9 million in the quarter under review. The top line beat the consensus mark by a whisker. Net patient revenue per discharge of Encompass Health improved 3.3% year over year in the third quarter. Total discharges increased 7.3% year over year. Adjusted EBITDA was $237.5 million, which rose 21.6% year over year in the third quarter. It added 26 beds to its existing hospitals in the quarter under review.
Merit Medical’s third-quarter 2023 adjusted EPS of 75 cents rose 17.2% year over year. The figure also surpassed the Zacks Consensus Estimate by 15.4%. MMSI registered revenues of $315.2 million in the third quarter, up 9.8% year over year. The figure surpassed the consensus estimate by 2.9%. The Cardiovascular unit reported third-quarter revenues of $306.1 million, up 9.7% both on a reported basis and at constant exchange rate (CER) year over year. Endoscopy devices’ revenues totaled $9.1 million, up 11.2% year over year both on a reported basis and at CER. Adjusted operating profit totaled $35.7 million, reflecting an 82.4% jump from the prior-year quarter. The adjusted operating margin in the third quarter expanded 451 bps to 11.3%.
DexCom reported third-quarter 2023 adjusted EPS of 50 cents, which beat the Zacks Consensus Estimate of earnings of 22 cents per share by 47.1%. The company reported earnings of 28 cents per share in the prior-year quarter. Total revenues of DXCM grew 27% (26% on an organic basis) to $975 million on a year-over-year basis and beat the Zacks Consensus Estimate by 4%. Sensor and other revenues (90% of total revenues) increased 31% on a year-over-year basis to $873.8 million. Hardware revenues (10%) decreased 2% year over year to $101.2 million. Operating margin (as a percentage of revenues) was 21.1%, up 190 bps year over year.
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Ensign Group (ENSG) Q3 Earnings Beat on Occupancy, Stock Up 2.4%
Shares of The Ensign Group, Inc. (ENSG - Free Report) gained 2.4% since it reported third-quarter 2023 results on Oct 25, 2023. The quarterly results benefited on the back of higher managed care revenues and improved occupancies. A hiked adjusted earnings per share (EPS) for this year may have boosted investors’ sentiment about the stock. However, the upside was partly offset by an elevated expense level.
ENSG reported a third-quarter 2023 adjusted EPS of $1.20, which surpassed the Zacks Consensus Estimate by 1.7%. The bottom line improved 15.4% year over year.
Operating revenues climbed 22.2% year over year to $940.8 million in the quarter under review. The top line beat the consensus mark by a whisker.
The Ensign Group, Inc. Price, Consensus and EPS Surprise
The Ensign Group, Inc. price-consensus-eps-surprise-chart | The Ensign Group, Inc. Quote
Q3 Update
ENSG’s adjusted net income of $69 million advanced 16.6% year over year in the third quarter and came higher than our estimate of $67.8 million.
Same-store occupancy improved 290 basis points (bps) year over year while transitioning occupancy expanded 270 bps year over year.
Total expenses rose 23.8% year over year to $861 million, higher than our estimate of $854.9 million. The year-over-year increase was due to higher cost of services, rent-cost of services and general and administrative expenses.
Segmental Update
Skilled Services: The segment recorded revenues of $903 million, which grew 22.1% year over year in the third quarter. The figure matched the Zacks Consensus Estimate but surpassed our estimate of $902.3 million. Segment income improved 15.8% year over year to $117.8 million.
Skilled nursing and campus operations of the segment totaled 258 and 26, respectively, at the third-quarter end.
Standard Bearer: Rental revenues advanced 12% year over year to $21 million in the quarter under review but fell short of our estimate of $22.2 million. Segmental income of $7.2 million grew 3.2% year over year.
Funds from Operations totaled $13.6 million in the third quarter, which rose 8.7% year over year.
Financial Update (as of Sep 30, 2023)
Ensign Group exited the third quarter with cash and cash equivalents of $467.9 million, which climbed 47.9% from the level at 2022 end. It had a leftover capacity of $593.3 million under its line of credit at the third-quarter end.
Total assets of $4,082 million increased 18.2% from the 2022-end figure.
Long-term debt-less current maturities were $146.5 million, down 1.9% from the figure as of Dec 31, 2022. Current maturities of long-term debt amounted to $3.9 million.
Total equity of $1,465.4 million advanced 17.3% from the figure at 2022 end.
ENSG generated net cash from operations of $291.4 million in the first nine months of 2023, which rose 31.1% from the prior-year comparable period.
Capital-Deployment Update
Ensign Group did not buy back shares in the third quarter. It paid out a quarterly dividend of 5.75 cents per share.
2023 Outlook Updated
Revenues are projected to lie within $3.72-$3.73 billion compared with the prior guidance of $3.69-$3.73 billion. The midpoint of the updated outlook implies a 23.1% rise from the 2022 figure.
Adjusted EPS is estimated to be between $4.73-$4.79 for 2023, up from the earlier view of $4.70-$4.78. The midpoint of the revised guidance indicates an improvement of 15% from the 2022 figure.
The weighted average common shares outstanding is estimated to be around 57.7 million and the tax rate is assumed at 25% for this year.
Zacks Rank
Ensign Group currently carries a Zacks Rank #2 (Buy). 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 third-quarter 2023 results so far, the bottom-line results of Encompass Health Corporation (EHC - Free Report) , Merit Medical Systems, Inc. (MMSI - Free Report) and DexCom, Inc. (DXCM - Free Report) beat the respective Zacks Consensus Estimate.
Encompass Health reported third-quarter 2023 adjusted EPS of 86 cents, which surpassed the Zacks Consensus Estimate by 11.7%. The bottom line advanced 28.4% year over year. Net operating revenues of EHC rose 10.8% year over year to $1,206.9 million in the quarter under review. The top line beat the consensus mark by a whisker. Net patient revenue per discharge of Encompass Health improved 3.3% year over year in the third quarter. Total discharges increased 7.3% year over year. Adjusted EBITDA was $237.5 million, which rose 21.6% year over year in the third quarter. It added 26 beds to its existing hospitals in the quarter under review.
Merit Medical’s third-quarter 2023 adjusted EPS of 75 cents rose 17.2% year over year. The figure also surpassed the Zacks Consensus Estimate by 15.4%. MMSI registered revenues of $315.2 million in the third quarter, up 9.8% year over year. The figure surpassed the consensus estimate by 2.9%. The Cardiovascular unit reported third-quarter revenues of $306.1 million, up 9.7% both on a reported basis and at constant exchange rate (CER) year over year. Endoscopy devices’ revenues totaled $9.1 million, up 11.2% year over year both on a reported basis and at CER. Adjusted operating profit totaled $35.7 million, reflecting an 82.4% jump from the prior-year quarter. The adjusted operating margin in the third quarter expanded 451 bps to 11.3%.
DexCom reported third-quarter 2023 adjusted EPS of 50 cents, which beat the Zacks Consensus Estimate of earnings of 22 cents per share by 47.1%. The company reported earnings of 28 cents per share in the prior-year quarter. Total revenues of DXCM grew 27% (26% on an organic basis) to $975 million on a year-over-year basis and beat the Zacks Consensus Estimate by 4%. Sensor and other revenues (90% of total revenues) increased 31% on a year-over-year basis to $873.8 million. Hardware revenues (10%) decreased 2% year over year to $101.2 million. Operating margin (as a percentage of revenues) was 21.1%, up 190 bps year over year.