Ensign Group (ENSG) Buys Facilities to Expand in California
The Ensign Group, Inc. ENSG bought the operations of Arrowhead Springs Healthcare, San Bernardino, CA and Desert Mountain Care Center, Indio, CA. These buyouts were effective Feb 1, 2022. The purchase of Arrowhead Springs Healthcare includes its real estate and operations and that of Desert Mountain Care Center will be subject to a long-term, triple net lease.
With these transactions, ENSG will further establish its dominance in California. Ensign Group is also able to expand its growing real-estate portfolio. This major player in skilled nursing space leaves no stone unturned when it comes to acquiring real estate or leasing strongly performing as well as struggling post-acute care operations and subsequently, evolving those into market leaders. With this latest addition, Ensign Group’s portfolio now stands at 248 healthcare operations, of which 22 include senior living operations across 13 states. Moreover, the nursing home player owns 101 real-estate assets.
Management reassured that the nursing home company is looking for opportunities to acquire real estate, and lease well-performing and struggling skilled nursing, senior living and other healthcare-related businesses throughout the United States. This highlights its intention to sustain the momentum.
Booming Acquisition Story
ENSG has always been aggressive in acquiring companies to solidify its portfolio. In January, the same purchased operations of Estrella Health and Rehabilitation Center, a 161-bed skilled nursing facility in Avondale, AZ.
In November 2021, this major player in skilled nursing facility purchased the real-estate properties of five skilled nursing and assisted living facilities across Arizona, California and Kansas. ENSG bought Sedona Trace Health and Wellness Center in Austin, TX, and Cedar Pointe Health and Wellness Center in Cedar, TX, besides four skilled nursing facilities and their operations in Washington.
The buyout spree strategy of Ensign Group is focused on identifying opportunistic and strategic buyouts that lie within specific markets and deliver robust returns.
This buyout binge helps the leading industry player establish its dominance further in the United States.
Like ENSG, other medical stocks serious about their M&A strategy include Encompass Health Corporation EHC, HCA Healthcare, Inc. HCA and Tenet Healthcare Corporation THC.
Encompass Health focuses on expansion plans to add inpatient rehabilitation hospitals to its existing network and build scale in hospice. In June 2021, EHC purchased the home health and hospice assets of Frontier Home Health and Hospice across Alaska, Colorado, Montana, Washington and Wyoming.
HCA Healthcare is committed to undertaking acquisitions, which have so far added and expanded its facilities across several markets as well as increased patient volumes. HCA spends a substantial amount on acquiring hospitals and health care entities, which incurred expenses worth $1.1 billion in 2021. HCA recently purchased MD Now Urgent Care from an LA-based private equity investment firm, Brentwood Associates.
Tenet Healthcare pursued numerous acquisitions, partnerships and strategic alliances to expand the scale of its business, operating capacity and geographical presence. In November 2021, THC along with its unit United Surgical Partners International (USPI) entered into a definitive agreement to acquire SurgCenter Development (SCD) for $1.2 billion. Its inorganic growth strategies poise it well for long-term growth.
Zacks Rank & Price Performance
Shares of this presently Zacks Rank #3 (Hold) healthcare provider have lost 14.1% in the past year, wider than the industry’s decline of 6.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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However, its inorganic growth measures, strong underwriting results and efficient capital deployment should help the stock bounce back going forward.
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