Ensign Announces Flurry Of New Senior Housing Acquisitions Following Strong Q3

The Ensign Group (NYSE: ENSG) has bulked up its senior housing portfolio in recent weeks.

The Mission Viejo, California-based senior care operator on Thursday announced the acquisition of Rock Creek of Ottawa, a post-acute care retirement campus with 93 skilled nursing beds, 71 assisted living units and 24 independent living units located in Ottawa, Kansas. The acquisition is effective as of Nov. 1.

Ensign, through its Bridgestone Living assisted living and independent living subsidiary, also acquired the operations of four assisted living and memory care communities locked in long-term leases. The communities, located in Temple, Texas; Granbury, Texas; Rockwall Texas; and Weatherford, Texas, total 150 memory care units, 53 assisted living units and 36 independent living units. This deal was also announced on Thursday and was effective as of Nov. 1.

These transactions cap a month of increased senior housing acquisition activity that began with Bridgestone Living’s acquisition of Villa Court Assisted Living and Memory Care, a facility in Las Vegas with 53 assisted living units and 20 memory care units.

Ensign’s overall portfolio includes a mix of senior housing, skilled nursing and home health/hospice. Skilled nursing accounts for 82.5% of revenue, home health and hospice makes up 8.3% and assisted living is 7.4%.

The latest acquisitions were announced hours before Ensign held a conference call to review its Q3 earnings report. According to the report, Ensign’s total assisted living services revenue increased 7.3% over the second quarter, to $38.1 million, while assisted living services segment income rose 9% over Q2, to $4.7 million.

Overall, Ensign Group’s GAAP earnings per share for the quarter was up 40.7% over the prior year quarter to $0.38 per diluted share, and adjusted earnings per share was up 27.8% over the prior year quarter to a record $0.46 per diluted share.

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The Ensign Group has been steadily acquiring underperforming assets and experiencing growth spurts as the properties begin their turnarounds, President and CEO Christopher Christensen said during a Nov. 1 earnings call. Ensign now owns to assets outright; 10 were added in the past five months.

“We sifted through dozens of acquisition opportunities over the last 18 months,” Christensen said.

Ensign Group employs a disciplined, value-add acquisition strategy. The properties the company acquires are not stabilized, but are not in need of complete turnarounds. The buildings’ physical plants are in good condition and operations only need minor tweaks in order to improve revenues.

If there is an obstacle to acquiring more properties, it is a lack of availability to locally driven clinical and operational leadership, Ensign Group EVP and Secretary Chad Keetch said during the earnings call. In preparation for future growth, Ensign is recruiting and retraining longterm leaders, building a leadership pipeline that will allow it to capitalize on more deals in Q4 and 2019.

“We will only do a deal if we can see a pathway to continued and sustained health, over the long run,” Keetch said.

The Ensign Group’s stock ended trading Thursday up nearly 12.5%, at $41.65 per share.

Written by Chuck Sudo

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