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Ensign Group (ENSG) Buys Facilities to Boost Real Estate Suite

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·4 min read
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  • ENSG
  • THC
  • HCA
  • EHC

The Ensign Group, Inc. ENSG recently purchased the real estate properties of five skilled nursing and assisted living facilities. The transactions related to the acquisition of these facilities, located either across Arizona, California or Kansas, have been effective since Nov 15, 2021.

The five health hubs named Horizon Post-Acute and Rehabilitation Center, Mission Care Center, California Mission Inn, The Healthcare Resort of Leawood and The Healthcare Resort of Topeka house 179, 58, 144, 94 and 105 beds, respectively. Each of these facilities is operated by an independent operating subsidiary of Ensign Group.

Holding strong organic growth potential, the newly acquired facilities have already substantiated credibility across their respective areas of operations. Following the recent move, these facilities are expected to provide a boost to the real estate portfolio of Ensign Group over the long term.

The real estate portfolio contains properties owned by ENSG, which is subsequently leased to skilled nursing and assisted living operations for delivering improved healthcare services throughout the United States. The latest addition brings the total count of Ensign Group’s owned real estate properties to 100.

Moves similar to the latest one strengthen Ensign Group’s objective of bolstering its real estate investment strategy. It seems to be a time opportune move as well, considering the fact that this Zacks Rank #3 (Hold) healthcare provider sanctioned the establishment of a captive REIT in October 2021. The captive REIT structure tends to offer additional acquisition opportunities and enhanced access of capital to ENSG. Hence, Ensign Group remains keen on entering new deals for purchasing assets, the operations of which are entrusted with either an Ensign Group affiliate or any third party.

Apart from leasing out properties, Ensign Group boasts of a strong healthcare portfolio through which it offers skilled nursing and senior living services, physical, occupational and speech therapies, other rehabilitative and healthcare services. The portfolio of ENSG currently includes 245 healthcare operations spanning across 13 U.S. States. Senior living operations totaling 22 are also part of its total healthcare operations suite.

Ensign Group has a decade-long history of successful acquisitions. Each buyout underscores ENSG’s proven expertise in acquiring real estate or leasing out strongly performing as well as struggling post-acute care operations and subsequently evolving them into market leaders. The buyout strategy of Ensign Group is focused on detecting opportunistic and strategic buyouts that lie within specific markets and deliver robust returns.

Over the period starting from Jan 1, 2010 until Dec 31, 2020, ENSG acquired 205 facilities. This year was no exception to the sustained trend as Ensign Group’s buyout spree continued. These initiatives have aided the healthcare provider to bolster its healthcare portfolio and reach out to several U.S. states, thereby boosting nationwide presence.

With the latest move, ENSG intends to strengthen its footprint in the three U.S. states of California, Arizona and Kansas. Prior to the latest one, Ensign Group acquired the operations of three skilled nursing facilities in Texas and Idaho.

Similar to Ensign Group, other medical stocks such as Encompass Health Corporation EHC, HCA Healthcare, Inc. HCA and Tenet Healthcare Corporation THC have resorted to a merger and acquisition (“M&A”) strategy for bolstering healthcare portfolios.

Encompass Health focuses on expansion plans to add inpatient rehabilitation hospitals to its existing network, the most recent one being in South Carolina (November 2021). The healthcare provider sincerely pursues a M&A strategy for catering to the growing demand for facility-based and home-based post-acute care services. EHC’s healthcare portfolio has been continually growing, with 145 hospitals, 249 home-health hubs and 95 hospice centers across 42 states and Puerto Rico.

HCA Healthcare is committed to undertaking acquisitions, which have led to addition and expansion of facilities across several markets and increase in patient volumes. HCA spends a substantial amount on acquiring hospitals and health care entities, which resulted in expenses of $488 million in the first nine months of 2021. HCA Healthcare currently operates 183 hospitals and roughly 2,000 ambulatory sites of care, across 20 states and the U.K.

Tenet Healthcare pursued numerous acquisitions, partnerships and strategic alliances with an aim to expand scale of business, operating capacity and geographical presence. THC operates an expansive care network of 60 hospitals and other healthcare facilities totaling around 460.

Shares of Ensign Group have gained 18.4% in a year compared with the industry’s rally of 25.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Zacks Investment Research

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While shares of HCA Healthcare and Tenet Healthcare have jumped 61.7% and 147.5%, respectively, in a year, Encompass Health's stock has lost 19.3% in the same time frame.


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