Shares of The Ensign Group, Inc. ENSG have gained 2.1% since it reported strong third-quarter 2022 results on Oct 26. Consistent improvement in occupancies, Medicare and managed care revenues contributed to the quarterly results. A raised 2022 earnings per share (EPS) guidance might have buoyed investors’ optimism on the stock.
Nevertheless, the upside was partly offset by a rising expense level resulting mainly from an elevated cost of services level.
The Ensign Group, Inc. Price, Consensus and EPS Surprise
The Ensign Group, Inc. price-consensus-eps-surprise-chart | The Ensign Group, Inc. Quote
Ensign Group reported third-quarter 2022 adjusted operating earnings of $1.04 per share, which missed the Zacks Consensus Estimate by a whisker. The bottom line climbed 14.3% year over year.
Operating revenues of $770 million grew 15.2% year over year on the back of improved skilled services and rental revenues. The top line beat the consensus mark by 2.7%.
Adjusted net income of $59.2 million rose 14.3% year over year in the quarter under review.
Same-store occupancy improved 2.4% year over year, while transitioning occupancy advanced 5.3% year over year. Same-store and transitioning managed care revenues climbed 9.7% and 25.9%, respectively, on a year-over-year basis.
Total expenses of $695.7 million escalated 15.5% year over year due to increased cost of services, rent-cost of services, general and administrative expenses, and depreciation and amortization.
Skilled Services: Revenues logged $739.3 million, up 15.1% year over year in the third quarter but fell short of the Zacks Consensus Estimate of $752 million. Segmental income rose 7.8% year over year to $101.8 million.
Skilled nursing and campus operations of the segment totaled 222 and 26, respectively, at the third-quarter end.
Standard Bearer: Revenues climbed 29.8% year over year to $18.7 million. Segmental income of $6.9 million tumbled 12.6% year over year.
Funds from Operations (FFO) increased 1.4% year over year to $12.5 million in the third quarter.
Financial Update (as of Sep 30, 2022)
Ensign Group exited the third quarter with cash and cash equivalents of $308.9 million, which advanced 17.8% from the 2021-end level. ENSG had an available capacity of $593.3 million under its credit facility at the end of the quarter.
Total assets of $3,265.3 million increased 14.5% from the figure at 2021 end.
Long-term debt less current maturities dipped 1.8% from the figure as of Dec 31, 2021 to $150.2 million.
During the first nine months ended Sep 30, 2022, net cash provided by operating activities grew 8.7% from the prior-year comparable period’s level to $222.3 million.
Ensign Group did not buy back shares in the third quarter as part of the share repurchase program authorized by management in July 2022.
ENSG paid out a quarterly cash dividend of 5.5 cents per share in the quarter under review.
On the basis of continued improvements in occupancies, skilled mix and reimbursement, management raised the full-year outlook for revenues and EPS.
Revenues are anticipated between $3.01 billion and $3.03 billion this year, up from the prior view of $2.96-$3 billion. The midpoint of the revised guidance suggests a rise of 16.2% from the reported figure of 2021.
EPS is currently predicted within $4.10-$4.18, higher than the previous guidance of $4.05-$4.15. The midpoint of the revised guidance indicates 14% growth from the 2021 reported figure.
Ensign Group currently carries a Zacks Rank #2 (Buy). 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 third-quarter results so far, the bottom-line results of Universal Health Services, Inc. UHS, Centene Corporation CNC and HCA Healthcare, Inc. HCA beat the respective Zacks Consensus Estimate.
Universal Health reported third-quarter 2022 adjusted earnings of $2.54 per share, beating the Zacks Consensus Estimate by 5.8%. However, the bottom line fell 4.9% year over year. Net revenues of $3.3 billion improved 5.7% year over year in the third quarter. The top line outpaced the consensus mark by a whisker. Adjusted admissions (adjusted for outpatient activity) rose 1.9% year over year on a same-facility basis at UHS’ acute care hospitals, while adjusted patient days declined 5% year over year.
Centene’s third-quarter 2022 adjusted earnings per share of $1.30 outpaced the Zacks Consensus Estimate by 6.6%. The bottom line grew 3.2% year over year. CNC’s revenues of $35.9 billion advanced 11% year over year in the quarter under review and also beat the consensus mark by 1.1%. Premiums of $31.8 billion rose 10.3% year over year in the quarter under review, while service revenues climbed 14.7% year over year to $1.9 billion.
HCA Healthcare reported third-quarter 2022 adjusted earnings of $3.93 per share, beating the Zacks Consensus Estimate by 1%. However, the bottom line dropped 14% year over year. Revenues of HCA dipped 2% year over year to $15 billion in the third quarter and missed the consensus mark by a whisker. Same-facility equivalent admissions inched up 2.3% year over year in the third quarter, while same-facility admissions slipped 1.5% year over year.
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
HCA Healthcare, Inc. (HCA) : Free Stock Analysis Report
Centene Corporation (CNC) : 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