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The Ensign Group Buys Units in Colorado, Grows Inorganically

Zacks

The Ensign Group, Inc. ENSG has acquired the real estate and operations of two continuing care retirement communities in Colorado.

Of these communities, one is The Villas at Sunny Acres, a post-acute care and retirement community with 134 skilled nursing beds, 35 assisted living units and 198 independent living units set on 64 acres in Thornton. The other is Medallion Post Acute Rehabilitation, a 60-bed skilled nursing operation, and Medallion Villas, a 44-unit assisted living and 64-unit independent living operation, both set on a single healthcare campus in Colorado Springs.

The acquisition was effective Jul 1, 2017.

With this acquisition, The Ensign Group will expand its portfolio to 226 facilities spread across 14 states. These include 60 owned facilities, 19 hospice agencies, 18 home health agencies and three home care businesses.


The Ensign Group is quite bent on achieving growth via inorganic means. Much of the company’s historical growth can be attributed to its expertise in acquiring real estate or leasing both under-performing and well-performing post-acute care operations. Subsequently, the company applies its core operating know-how to improve upon each acquired operation, both clinically and financially.

Its stock price also reflects inorganic growth efforts that have helped it to perform better then the sub industry. Though the company’s share price has declined 1.8% in the past one year, it is better off than the Zacks categorized Medical – Nursing Homes industry which has suffered a decline of 12.4%.



In the last few years, the company expedited its acquisition activity, having added 108 facilities between Jan 1, 2012 and Dec 31, 2016. It spent nearly $96 million, $120 million and $65 million on acquisitions in 2014, 2015 and 2016, respectively.

The skilled nursing industry, in which the company operates, is large and highly fragmented, characterized predominantly by numerous local and regional providers. This fragmentation creates significant acquisition and consolidation opportunities.

Recently, another player in the same space HCA Holdings, Inc. HCA announced that it will acquire two Texas hospitals from Community Health Systems Inc. CYH and three Houston hospitals from Tenet Healthcare Corporation THC.

Consolidation in the industry is being driven by rising expenses, declining admissions and a flurry of regulatory actions. These are compelling the players to gain in scale for survival.

The Ensign Group carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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