Back to top

Analyst Blog

Zacks Equity Research

The Ensign Group's Unit Acquires River City Hospice Assets

HUM WCG MGLN ENSG

Trades from $3

The Ensign Group, Inc. (ENSG - Free Report) recently announced that its home health and hospice portfolio subsidiary, Cornerstone Healthcare, Inc., has completed the acquisition of certain assets of River City Hospice LLC.

With this acquisition, Cornerstone Healthcare will now have a total of 18 hospice operations, 17 home health operations, and three home care operations in nine western states.

River City Hospice is renowned in the Northern Idaho region for providing the medical, physical, psychological and spiritual support that is needed upon the diagnosis of a terminal illness. Hence, this strategic acquisition should boost the Ensign Group’s long-term growth. The scope to expand its presence in the Coeur d’Alene region with the support of River City Hospice should open up vast opportunities for the acquirer.

Cornerstone Healthcare will also benefit largely from the expertise of River City’s clinical and professional staff and community partners, who have already established a hospice team in Northern Idaho. Furthermore, this acquisition highlights the company’s intention to restructure its operating model with the main focus on meeting the unique needs of patients, employees and communities. The support from local clinical and operational leaders should ensure access to premium quality hospice care to patients in a relatively underserved area.

Management expects this new operating model to have significant impact on the company’s 2017 earnings.  It reaffirmed that Cornerstone Healthcare is actively seeking additional opportunities to acquire both well-performing and struggling home health, hospice, and home care operations across the United States.

The Ensign Group, the parent of Cornerstone Healthcare, has a strong inorganic growth story. Strategic acquisitions, mergers, alliances and divestures have been bolstering the company’s revenue base for quite some time. In Sep 2016, the company purchased the assets of Kinder Hearts Home Health and Hospice in Abilene, Texas. In July, the company bought the operations and real estate of Riverbend Post Acute Rehabilitation. Also, the company acquired both Kansas Skilled Nursing Facility and Hospice operations in Wright County in May. These apart, the company acquired three South Carolina nursing facilities in January.

Zacks Rank and Stocks to Consider

The company presently carries Zacks Rank #4 (Sell).

However, investors can look at some better-ranked stocks from the medical sector like WellCare Health Plans Inc. (WCG - Free Report) , Magellan Health Inc. (MGLN - Free Report) and Humana Inc. (HUM - Free Report) .

Magellan delivered positive surprise in three of the last four quarters with an average beat of  42.58%. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

WellCare delivered positive surprises in all of the last four quarters with an average beat of 40.01%. The company also has a Zacks Rank #1.

Humana delivered positive surprise in three of the last four quarters with an average beat of 1.94%. It carries a Zacks Rank #2 (Buy).

Zacks’ Best Private Investment Ideas

In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?

Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>


In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

HUMANA INC NEW (HUM) - free report >>

WELLCARE HEALTH (WCG) - free report >>

MAGELLAN HLTH (MGLN) - free report >>

ENSIGN GROUP (ENSG) - free report >>