U.S. Markets close in 5 hrs 41 mins
  • S&P 500

    3,462.47
    +19.35 (+0.56%)
     
  • Dow 30

    28,433.07
    +124.28 (+0.44%)
     
  • Nasdaq

    11,598.79
    +82.30 (+0.71%)
     
  • Russell 2000

    1,619.86
    +2.16 (+0.13%)
     
  • Crude Oil

    41.01
    -0.69 (-1.65%)
     
  • Gold

    1,929.20
    +13.80 (+0.72%)
     
  • Silver

    25.26
    +0.28 (+1.14%)
     
  • EUR/USD

    1.1872
    +0.0044 (+0.3680%)
     
  • 10-Yr Bond

    0.8160
    +0.0190 (+2.38%)
     
  • Vix

    28.64
    -0.71 (-2.42%)
     
  • GBP/USD

    1.3131
    +0.0184 (+1.4247%)
     
  • USD/JPY

    104.4850
    -0.9850 (-0.9339%)
     
  • BTC-USD

    12,445.37
    +1,388.36 (+12.56%)
     
  • CMC Crypto 200

    250.00
    +5.11 (+2.09%)
     
  • FTSE 100

    5,806.79
    -82.43 (-1.40%)
     
  • Nikkei 225

    23,639.46
    +72.42 (+0.31%)
     

Ensign Group (ENSG) Continues to Gain From Buyout Binge

Zacks Equity Research
·3 mins read

The Ensign Group, Inc. ENSG boasts a strong inorganic growth story with several acquisitions carried out by the company over the past decade.
During the first six months of 2020, the company purchased three stand-alone skilled nursing operations and one stand-alone independent living operation. Its portfolio now consists of 226 skilled nursing operations, 24 of which include senior living operations and other ancillary businesses across 14 states. The company also owns the real estate at 93 healthcare operations. 

Acquisition Story

Ensign Group has been on an acquisition spree with regard to 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 the last decade (2009-2019).

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

Rationale Behind the Moves

The company's acquisition strategy consists of applying its core operating expertise to improve the above operations, both clinically and financially. During the years when pricing has been high, the company focused on the integration and improvement of its existing operating subsidiaries while limiting its acquisitions to strategically- situated properties. This, in turn, contributed to revenue growth.

Ensign Group's growth plans and integrations drove its top line, which has been growing since 2012. In the first six months of 2020, the metric improved 22% year over year to $590 million.

Mergers and acquisitions in the healthcare space have remained strong over the past few years. Many companies believe that the key to success is merging and acquiring other companies, which in turn, will help them cope with their falling reimbursement rates and fight financial hardships.

As a new decade begins, healthcare systems are continuing to make buyouts to upgrade their quality of care by combining capabilities, reducing expenses, etc.

Other Initiatives

Along with the buyouts, the company is also disposing its non-core business. In late 2019, the company separated its home health and hospice business into a publicly-traded company. This spin-off is expected to be beneficial to the company’s shareholders as well as help it focus on its core business.  All these initiatives bode well for the long haul.

Zacks Rank and Price Performance

Shares of this currently Zacks Rank #1 (Strong Buy) company have gained 21.5% in a year’s time against its industry’s decline of 15.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.


 

Other companies in the same space, such as Genesis Healthcare, Inc. GEN, Brookdale Senior Living Inc. BKD and Universal Health Services, Inc. UHS have lost 30.5%, 65.4% and 22.7%, respectively, in the same time frame.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through Q2 2020, while the S&P 500 gained an impressive +44.0%, five of our strategies returned +50.9%, +93.8%, +122.2%, +153.0%, and even +156.8%.

This outperformance has not just been a recent phenomenon. From 2000 – Q2 2020, while the S&P averaged +5.5% per year, our top strategies averaged up to +51.7% per year.

See their latest picks free >>

 


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Universal Health Services, Inc. (UHS) : Free Stock Analysis Report
 
Brookdale Senior Living Inc. (BKD) : Free Stock Analysis Report
 
Genesis Healthcare, Inc. (GEN) : Free Stock Analysis Report
 
The Ensign Group, Inc. (ENSG) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research