The Ensign Group Inc. has emerged well from the pandemic that hammered the nursing home industry.
The San Juan Capistrano-based operator of post-acute care services, including assisted living, skilled nursing, and rehabilitative care facilities (Nasdaq: ENSG), on Feb. 1 reported 2023 revenue jumped 23% to $3.73 billion, topping the company’s 9.5% growth in 2021 and 15% in 2022.
It reported adjusted 2023 earnings of $4.77 per share, up 15% from a year ago. Analysts expected $4.76 a share on sales of $3.72 billion.
“We are very humbled by what we were able to accomplish in 2023, but we are eager to continue to drive improvements in our existing portfolio and to take advantage of the acquisition opportunities that we see on the horizon,” Ensign Chief Executive Barry Port said in a statement.
Ensign forecasts 2024 earnings of $5.29 to $5.47 a share, on sales of $4.13 billion to $4.17 billion, implying an 11% annual growth rate; analysts were expecting $5.23 a share on sales of $4.07 billion.
The shares climbed 4.7% in trading on Feb. 2 to $120.78 and a $6.7 billion market cap.
The company went public in 2007, opening at a split-adjusted $3.32 a share.
Strategy
Roy Christensen and his son Christopher Christensen in 1999 co-founded Ensign with a goal of establishing “a new level of quality care” within nursing homes.
Roy Christensen, who died in 2021, had about 50 years in the long-term care industry, dating back to when he was also a member of President Richard Nixon’s Healthcare Advisory Task Force on Medicare and Medicaid.
The company’s modus operandi has been to acquire struggling facilities and transform them into successful stand-alone entities by giving local management the authority to make their facilities the best in their communities.
In 2014, Ensign spun off its real estate assets into San Clemente-based CareTrust REIT Inc., which has a $2.5 billion market cap. In 2019, it also spun off The Pennant Group (Nasdaq: PNTG), a provider of hospices and mobile diagnostic and clinical laboratory operations. Pennant has a $461 million market cap.
Port was Ensign’s chief operating officer for five years before taking the CEO reins in 2019 from Christopher Christensen, who is the executive chairman and the largest individual shareholder with about 2.4% of the shares worth an estimated $155 million.
The Pandemic
In 2020, the nursing industry faced a devastating crisis caused by the pandemic. In a one-month period, Ensign’s shares fell in half to below $30 each. Still, Ensign reported it was able to weather the pandemic.
“This pandemic arrived at our doorsteps at a time when our organization had never been stronger clinically and financially,” Port said in a statement in August 2020.
Part of its growth has been through an acquisition strategy, including 54 buys since 2022.
Chief Investment Officer Chad Keetch on Feb. 1 said the strategy will continue to include both leasing and acquiring real estate and that the company is actively looking for performing and underperforming operations in several states.
The company has $509.6 million of cash on hand and $593.7 million of available capacity under its line of credit.
Ensign’s growing portfolio consists of 299 healthcare operations across 14 states. Ensign now owns 113 real estate assets, 83 of which it operates.
“When we consider the current health of our organization, combined with our culture and proven local leadership strategy, we are well positioned to have another outstanding year in 2024,” Port said.
