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Ensign Group (ENSG) on Buyout Binge to Boost Capabilities

Zacks Equity Research

The Ensign Group, Inc. ENSG has acquired four skilled nursing facilities in Dallas, TX. Effective Dec 1, 2019, the purchases will be subject to long-term, triple net leases with purchase options following year five of the lease.

The acquisitions include Crestwood Health and Rehabilitation Center; Beacon Harbor Healthcare and Rehabilitation; Rowlett Health and Rehabilitation Center plus Pleasant Manor Healthcare and Rehabilitation. These new deals will fortify its current presence in Dallas, thereby strengthening its overall portfolio. The company looks to enrich customer experience and provide better medical care for improved health outcomes by means of these initiatives.

On the same day, Ensign Group also purchased the real estate and operations of Mission Hills Post Acute in Mesa, AZ, which will further bolster its portfolio. This tactical move will help the company cater to the unique needs of the community.

With these takeovers, Ensign Group now has a portfolio of 213 skilled nursing operations, 24 of which are assisted living operations across 13 states. Additionally, the company owns the real estate of 89 healthcare operations. Management announced that it will continue to seek transactions to acquire real estate and lease both well-performing and struggling skilled nursing operations plus assisted living and other healthcare related businesses throughout the United States.

In September, the company bought the real estate and operations of Temple View Transitional Care Center in Rexburg, ID. With an array of consolidations made in the past decade, Ensign Group now boasts a strong inorganic growth story. It has been successful in integrating businesses  by  acquiring real estate or leasing post-acute care operations and transforming the same into market leaders. With each integration, the company whetted its efficiency, both clinically and financially. Therefore, we expect all these buyouts to bode well in the long term.

Shares of this Zacks Rank #4 (Sell) stock have lost 5.2% in a year’s time, narrower than its industry’s decline of 12.9%.

Stocks to Consider

Investors interested in the medical sector might consider some better-ranked stocks like Select Medical Holdings Corporation SEM, WellCare Health Plans, Inc. WCG and Genesis Healthcare, Inc. GEN. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Select Medical Holdings operates critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics and occupational health centers. In the trailing four quarters, the company’s average beat was 11.1%. The stock sports a Zacks Rank #1.

WellCare Health offers managed care services to government-sponsored health care programs. The company pulled off average positive surprise of 17.3% in the preceding four quarters. It carries a Zacks Rank #2 (Buy).

Genesis Healthcare operates skilled nursing facilities and assisted/senior living centers. In the last four quarters, the company delivered average beat of 80.9%. It has a Zacks Rank of 1.

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