Back to top

Image: Bigstock

Ensign Group Expands Colorado Presence With Twin Buyouts

Read MoreHide Full Article

The Ensign Group, Inc. ENSG recently completed the buyouts of the operations of two skilled nursing facilities located in Commerce City, CO. Subject to long-term, triple net leases, the transactions were effective Mar 1, 2020.

The addition of Ridgeview Post Acute, a skilled nursing facility with 105 skilled nursing beds, and Irondale Post Acute, a skilled nursing facility with 83 skilled nursing beds, adds 216 skilled nursing operations to the company’s portfolio. It also owns the real estate at 91 healthcare operations. This strategic move is in line with its commitment to serve the greater Denver healthcare market.

Management confirmed that the company is still looking to purchase real estate and lease both well-performing and struggling skilled nursing, assisted living and other healthcare-related businesses throughout the United States.

Acquisition Story

Ensign Group has been on an acquisition spree for skilled nursing facilities. It has a tradition of acquiring distressed healthcare operations that require significant clinical, financial and cultural turnaround. The company has a track record of closing 208 acquisitions in all over the period of 10 years (2009-2019).

The company is also adding value to its real estate portfolio by improving the operating results in its owned operations and acquiring additional real-estate assets.

Last year, the company successfully expanded its operation with the addition of 22 stand-alone skilled nursing operations, one stand-alone senior living operation and four campus operations. It also invested in new ancillary services that are complementary to its existing businesses.

Other Strategic Initiatives

Apart from buyouts, the company separated its home health and hospice business into a publicly-traded company. This spin-off is expected to meet not only patients' requirements but also be beneficial to its shareholders. The company hopes to add capabilities to its home health, senior living and hospice business line through this spin-off. We expect the divestiture to enable Ensign Group to focus on its core operations.

Price Performance

Shares of this Zacks Rank #1 (Strong Buy) company have lost 16.2% in a year’s time, wider than its industry’s decline of 12.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The stock price performance looks subdued when compared with the returns of other companies in the same space, such as Genesis Healthcare, Inc. and UnitedHealth Group Incorporated UNH, which have gained 34.4% and 8.3%, respectively, and Brookdale Senior Living Inc. BKD, which has decreased 7.1% in the past year.

However, we expect the company to fare better going forward on the back of its solid fundamentals like inorganic growth and the improving top line.



Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.

This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.

See their latest picks free >>