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Ensign Group's (ENSG) Q3 Earnings Miss Estimates, Rise Y/Y

Zacks Equity Research

The Ensign Group, Inc. ENSG delivered adjusted operating earnings of 55 cents per share in third-quarter 2019, missing the Zacks Consensus Estimate by 1.8% due to high expenses. However, the metric improved 19.6% year over year on higher revenues.

Also, adjusted net income in the quarter under review was $30.9 million, up 24% from the prior-year quarter.

Operational Update

Total revenues of $601 million increased 16.9% year over year in the reported quarter. This upside was driven by solid segmental performances at Transitional and skilled services, Senior living services plus Home health and hospice services. Moreover, the metric beat the Zacks Consensus Estimate by 0.2%.

Total Transitional and Skilled Services segment income was $56.8 million for the quarter under consideration, up 22.6% from the prior-year period.

Total Home Health and Hospice Services segment’s revenues rose 25.9% year over year to $55 million.

Total expenses escalated 15.8% year over year to $561 million due to higher cost of services, depreciation and amortization plus general and administrative expenses.

The Ensign Group, Inc. Price, Consensus and EPS Surprise

The Ensign Group, Inc. Price, Consensus and EPS Surprise

The Ensign Group, Inc. price-consensus-eps-surprise-chart | The Ensign Group, Inc. Quote

Quarterly Segment Update

Transitional and Skilled Services

Revenue generation of $485.9 million was up 15.2% year over year. Notably, the segment accounted for 80.9% of the total revenues in the reported quarter.

Senior Living Services

Operating revenues of $43.7 million were up 15.1% year over year with the segment contributing 7.3% to the company’s top line.

Home Health & Hospice Services

Total operating revenues in this segment were $55 million, up 25.9% year over year, representing 9.2% of the total revenues.

Other Services

Revenues of $15.5 million surged 45.4% from the prior-year quarter, reflecting 2.6% of the total revenue base.

Financial Update

The company exited the first nine months of 2019 with $44 million of cash and cash equivalents, up 42.8% from the level at 2018 end.

As of Sep 30, 2019, long-term debt less current maturities was $265.7 million, up 14% from the level at 2018 end.

For the first nine months of 2019, net cash by operating activities stands at $137.5 million, down 12.5% year over year.

Business Update

The company completed the spin-off of Pennant as previously announced.

Dividend Update

Ensign Group paid out a quarterly cash dividend of 4.75 cents per share during the third quarter. The company has been hiking its dividend for the 16 consecutive years.

2019 and 2020 Outlook

Following solid third-quarter earnings, management again raised its 2019 guidance. The company now expects earnings between $2.24 and $2.31. It also anticipates annual revenues between $2.35 billion and $2.40 billion.

Including the fourth-quarter impact of the Pennant spin-off, management’s 2019 raised earnings per share guidance is expected between $2.15 and $2.21 per share on revenues of $2.27-$2.30 billion band.

For 2020, management of the company expects earnings to be in between $2.22 and $2.30 per share and annual revenue to be in the $2.30-$2.35 band.

Zacks Rank

Ensign Group carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Players

Among other players from the medical sector, having already reported third-quarter earnings, the bottom-line results of UnitedHealth Group Incorporated UNH, Anthem Inc. ANTM and Centene Corporation CNC topped the respective Zacks Consensus Estimate.

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