Ensign Group (ENSG) Q4 Earnings Beat, Stock Up 5%
Shares of The Ensign Group, Inc. ENSG rose 4.7% since it reported fourth-quarter 2023 results on Feb 1, 2024. The quarterly results benefited on the back of higher skilled service revenues, an increase in skilled mix and improved occupancies. An impressive adjusted earnings per share (EPS) guidance for 2024 may have boosted investors’ sentiment about the stock. However, the upside was partly offset by a significant rise in overall expenses.
ENSG reported a fourth-quarter 2023 adjusted EPS of $1.28, which beat the Zacks Consensus Estimate by a whisker. The bottom line advanced 16.4% year over year.
Operating revenues of $980.4 million improved 21.1% year over year in the quarter under review. The top line outpaced the consensus mark by a whisker.
The Ensign Group, Inc. Price, Consensus and EPS Surprise
The Ensign Group, Inc. price-consensus-eps-surprise-chart | The Ensign Group, Inc. Quote
Q4 Update
Ensign Group’s adjusted net income grew 17.5% year over year to $73.7 million in the fourth quarter but fell short of our estimate of $74.6 million.
Same-store occupancy improved 240 basis points (bps) year over year while transitioning occupancy expanded 150 bps year over year.
Total expenses of $957.6 million escalated 30.4% year over year in the quarter under review and also came higher than our estimate of $883.1 million. The year-over-year increase was due to higher cost of services, and general and administrative expenses.
Segmental Update
Skilled Services: The segment’s revenues rose 21% year over year to $940.8 million in the fourth quarter. The metric surpassed the Zacks Consensus Estimate of $936 million and our estimate of $931 million. Segment income of $116.8 million improved 9.7% year over year.
Skilled nursing and campus operations of the segment totaled 259 and 27, respectively, at the fourth-quarter end.
Standard Bearer: Rental revenues amounted to $21.9 million, which grew 12.7% year over year and outpaced our estimate of $21.3 million. Segmental income of $7.5 million advanced 4.9% year over year.
Funds from Operations were $14.2 million in the fourth quarter, which improved 9.4% year over year.
Financial Update (as of Dec 31, 2023)
Ensign Group exited the fourth quarter with cash and cash equivalents of $509.6 million, which surged 61.1% from the 2022-end figure. It had a leftover capacity of $593.7 million under its line of credit at the fourth-quarter end.
Total assets of $4.2 billion rose 21% from the 2022-end level.
Long-term debt-less current maturities were $145.5 million, which declined 2.5% from the figure as of Dec 31, 2022. Current maturities of long-term debt amounted to $4 million.
Total equity of $1.5 billion climbed nearly 20% from the figure at 2022 end.
ENSG generated net cash from operations of $376.7 million in 2023, which climbed 38.2% from the 2022-end figure.
Capital-Deployment Update
Ensign Group did not buy back shares in the fourth quarter. During the quarter, management approved a 4.3% increase in the quarterly cash dividend and the increased dividend was 6 cents per share.
2024 Outlook Unveiled
Revenues are anticipated to lie within $4.13-$4.17 billion, the mid-point of which indicates an improvement of 11.3% from the 2023 figure of $3.73 billion.
Adjusted EPS is forecasted to be between $5.29 and $5.47 for 2024, the midpoint of which suggests 13% growth from the 2023 figure of $4.77.
The weighted average common shares outstanding is estimated to be around 58.5 million and the tax rate is assumed to be 25% for 2024.
Zacks Rank
Ensign Group currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Medical Sector Releases
Of the Medical sector players that have reported fourth-quarter 2023 results so far, the bottom-line results of UnitedHealth Group Incorporated UNH, HCA Healthcare, Inc. HCA and The Cigna Group CI beat the respective Zacks Consensus Estimate.
UnitedHealth Group reported fourth-quarter 2023 adjusted earnings of $6.16 per share, which beat the Zacks Consensus Estimate by 3%. The bottom line rose 15.4% year over year. Revenues amounted to $94.4 billion, which advanced 14.1% year over year in the quarter under review. The top line outpaced the consensus mark by 2.6%.
The medical care ratio of UNH deteriorated 220 bps year over year to 85% in the fourth quarter. Operating earnings improved 11.6% year over year to $7.7 billion. The net margin of 5.8% remained flat year over year in the quarter under review. The UnitedHealthcare segment generated revenues of $70.8 billion in the fourth quarter, which rose 12.3% year over year. The UnitedHealthcare business served 52.8 million people as of Dec 31, 2023, which increased 2% year over year.
HCA Healthcare’s fourth-quarter 2023 adjusted EPS of $5.90, which beat the Zacks Consensus Estimate by 16.8%. The bottom line improved 27.2% year over year. Revenues amounted to $17.3 billion, which improved 11.6% year over year in the quarter under review. The top line outpaced the consensus mark by 4.5%.
Same-facility equivalent admissions of HCA advanced 3.9% year over year in the fourth quarter, while same-facility admissions grew 3.1% year over year. Same-facility revenue per equivalent admission rose 6.9% year over year in the quarter under review. Same-facility inpatient surgeries grew 1% year over year. Same-facility outpatient surgeries inched up 0.7% year over year. Adjusted EBITDA improved 13.8% year over year to $3.6 billion in the quarter under review.
Cigna reported fourth-quarter 2023 adjusted EPS of $6.79, which beat the Zacks Consensus Estimate by 4.1%. The bottom line improved 36.9% year over year. Adjusted revenues of $51.2 billion advanced 4.8% year over year in the quarter under review. The top line outpaced the consensus mark by 4.8%. CI’s medical customer base was 19.8 million as of Dec 31, 2023, which witnessed a 9.9% year-over-year increase.
The Evernorth Health Services segment generated adjusted revenues of $40.5 billion, which advanced 12% year over year. Adjusted operating income of the segment on a pretax basis rose 10% year over year to $1.9 billion in the fourth quarter. Meanwhile, the Cigna Healthcare unit’s adjusted revenues climbed 17% year over year to $13 billion. The segment’s MCR improved 160 bps year over year to 82.2% at the fourth-quarter end.
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