After picking up 11 new skilled nursing facilities and restoring occupancy at several others in its extensive holdings, the Ensign Group’s future is “brighter than ever,” CEO Barry Port said on a second-quarter earnings call Tuesday.
Port said the San Juan Capistrano, CA-based company, which has grown to 259 healthcare facilities in 13 states, has seen improvement in occupancies, skilled revenue and managed care revenue. Operators also have achieved sequential growth in overall occupancy for the sixth consecutive quarter.
“In addition, we saw improvements in occupancies with same-store and transitioning occupancy increasing by 1.8% and 6.4%, respectively, over the prior year quarter,” Port said.
Chief Investment Officer Chad Keetch said that the Ensign Group has added 11 new operations during the quarter ending June 30 “and since.” Those included six skilled nursing facilities in Texas, one skilled nursing facility in Nevada, a healthcare campus in Arizona, and three senior living communities in California and in Washington.
He said that Ensign is familiar with most of the regions involved, particularly in Texas, where it has grown its footprint substantially amid pandemic conditions and the state’s eight years without a Medicaid rate increase.
Las Vegas, however, is a new market for the company. Ensign also has an existing presence in Arizona, California, Colorado, Idaho, Iowa, Kansas, Nebraska, South Carolina, Utah, Washington and Wisconsin.
Captive REIT Standard Bearer added six new real estate operations, all of which will be leased to an Ensign affiliated tenant. Standard Bearer now includes 101 properties owned by the company and leased to 73 affiliated skilled nursing and senior living operations and 29 senior living operations that are leased to the Pennant Group.
“These acquisitions continue to showcase one of Standard Bearer’s primary strategies, which is to capture the upside created by Ensign operators and properties that have historically been subject to a long-term lease,” Keetch said.
Ever-growing appetite
Ensign affiliates entered into seven new long-term leases with third-party landlords.
“As this activity illustrates, the ratio between leased and owned will vary depending on the circumstances. We are first and foremost focused on the operational health of acquisitions,” Keetch said.
The pipeline for real estate transactions is growing. Keetch said the company is looking forward to a busy fall and winter, with even more growth ahead in 2023.
“In some cases, particularly larger deals, pricing is still out of whack, but as we demonstrated last quarter, there [are] still plenty of good opportunities to be had at right prices and the turnaround nature of most deals on the market,” the executive said.
According to Keetch, the Ensign Group has $593 million of available capacity under its line of credit, “which, when combined with the cash on our balance sheet, gives us nearly $900 million in dry powder for future investments.” The company owns 106 assets, of which 101 are held by Standard Bearer and 82 of which are owned completely free of debt.
Chief Financial Officer Suzanne Snapper said that as of June 30, the company had repurchased 271,000 shares of common stock for approximately $20 million, completing the February 2022 stock repurchase program.
“Given the stock’s recent performance, our liquidity and our confidence in near and long-term results, we have established an additional share buyback program of $20 million, and we believe this to be a very healthy use of our capital,” Snapper said. “As we said before, share buybacks are one of the many levers we have to deploy capital to benefit the shareholders.”
