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Ensign Group (ENSG) Q3 Earnings Miss Estimates, Rise Y/Y

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The Ensign Group, Inc (ENSG - Free Report) reported third-quarter 2017 adjusted operating earnings of 36 cents per share that missed the Zacks Consensus Estimate by 5.3%. Earnings, however, increased 12.5% year over year owing to higher revenues.

Adjusted net income was $18.8 million, up 13.8% year over year.

Operational Update

Total revenues of $471.6 million increased nearly 10% year over year in the third quarter and also surpassed the Zacks Consensus Estimate by 5.7%.

Same store skilled nursing revenues grew 4.5% year over year to $238 million. Same store managed care revenues jumped 9.7% to $40 million, year over year.

Total Transitional and Skilled Services segment income was $36.9 million for the quarter, up 26.2% from the prior-year quarter.

Total Assisted and Independent Living Services segment revenues and income were up 13.5% to $35.5 million and 67.5% to $4.3 million, respectively, year over year.

Total expenses at the end of the third quarter rose 9.3% year over year to $446 million, primarily due to higher cost of services.

Quarterly Segment Update

Transitional, Skilled & Assisted Living Services:

The segment reported revenues of $429.6 million, up 10.3% year over year. Solid growth in skilled nursing and facilities drove the upside. Notably, the segment accounted for 91.1% of the total revenues in the third quarter.

Home Health & Hospice Services

For this segment, total operating revenues were $36 billion, up 22% year over year. Strong growth in home health services drove the improvement. This segment contributed 7.6% to the total revenues.

Other Services

This segment reported revenues of $6 million, down 40% from the prior-year quarter. This segment accounted for 1.3% of the total revenues.

The Ensign Group, Inc. Price, Consensus and EPS Surprise

Financial Update

Total cash and cash equivalents decreased 31% to $40 million as of Sep 30, 2017 from $57.7 million as of Dec 31, 2016.

As of Sep 30, 2017, long-term debt was $287.5 million, up 4.3% from $275.5 million at the end of 2016. 

Cash from operations at the end of first nine months of 2017 was $63.2 million, down 11.3% year over year.

Dividend Update

Ensign Group paid 4.25 cents per share of its common stock to shareholders through dividends during the quarter.

2017 Earnings Guidance Lowered

Annual earnings are now expected in the range of $1.39 to $1.42 per share, lowered from $1.46-$1.53 per share guided previously.

Management reaffirmed its guidance for annual revenues in the range of $1.76-$1.80 billion.

The guidance is based on diluted weighted average common shares outstanding of 53 million and a 35.5% tax rate.

2018 Guidance

Management expects earnings to be in the range of$1.58 to $1.66 per share for 2018.

Revenues are expected to remain within the band of $2-$2.06 billion.

The guidance is based on diluted weighted average common shares outstanding of 54.3 million and a 35.5% tax rate.

Zacks Rank & Performance of Other Insurers

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.

Among the other firms in the medical sector that have reported third-quarter earnings so far, the bottom lines of Anthem Inc. , Humana Inc. (HUM - Free Report) and UnitedHealth Group Inc. (UNH - Free Report) beat their respective Zacks Consensus Estimate.

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