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Ensign Group Inc (ENSG) |
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WIKI ANALYSIS
Ensign Group (ENSG) operates more than 80 facilities that offer a range of skilled nursing, rehabilitation, and assisted living services. The company's facilities are located in the West and Midwestern US, with the heaviest concentration in California, Texas, and Arizona. Medicaid and Medicare are the two largest sources of revenue, respectively, accounting for more than 75% of total revenues; managed care and private care payers make up the remaining 25% of revenues.[1] Ensign Group is a relatively small player among skilled nursing facility operators, however it has grown quickly thanks to an aggressive acquisition strategy; the company has added 21 facilities since 2009.[2][3]
Business Growth
FY 2010 (Year Ended December 31, 2010)[4]
- Net Revenues increased 20% to $649.5 million.
- Net Income increased 25% to $40.5 million.
Revenue growth in 2010 was driven by the company's acquisition of five new facilities, which helped increase patient days by 15%. The company also received larger reimbursements from most of its payers (including Medicare and Medicaid) for the skilled nursing services it provides. This is due to a larger percentage of its residents requiring skilled nursing care and stable reimbursement rates.
Trends and Forces
Medicare and Medicaid are the Major Sources of Revenue and other Federal Legislation
As a provider of healthcare services for the elderly, the vast majority of Ensign's revenue comes from Medicare and Medicaid reimbursements. Although a steady source of income, Medicare rates are established by the federal government and Medicaid rates are established by the individual states. Ensign is reimbursed a set amount for each day a patient stays in their facility that depends on the patient's level of care required. The effect of the recent healthcare legislation overhaul remains to be seen, however the overall trend will force the government to limit Medicare/Medicaid spending, which may adversely affect the company.[5]
The company may also be affected by any immigration law reforms since the majority of its operations occur in states with very large legal and illegal immigrant populations - California, Texas, and Arizona. Changes to immigration laws could potentially create staffing problems for Ensign.[6]
Growing Elderly Population, Increased Demand, and Attractive Acquisition Opportunities
Ensign's growth strategy has been to aggressively acquire smaller, local companies in markets that Ensign wishes to enter.[7] From FY 2009-2011, Ensign added 21 facilities to its portfolio, nearly all of which were acquired from smaller companies. As America's Baby Boomers continue to age, the country is faced with a dire shortage of skilled nursing facilities to meet the impending boom in demand. In order to continue growing and meet the ever-increasing demand, Ensign will have to continue identifying attractive acquisition targets.[8]
Competition
- Kindred Healthcare (KND) is a large diversified healthcare facility company that operates hospitals, skilled nursing facilities, and long-term rehabilitation facilities. Their operations are located in 28 states.
- Skilled Healthcare Group Inc (SKH) operates 100 healthcare facilities that include skilled skilled nursing and rehabilitation facilities and hospice services. They operate in California, Texas and the Midwest.
- New Hope Corpn (ASX:NHC) operates 77 long-term healthcare facilities that include assisted living and skilled nursing. The company's locations are primarily in the Southeastern US.
- Sunrise Senior Living (SRZ) has interests or operates 319 senior living communities in the US, Canada, and the UK.
References
- ↑ ENSG 2010 10-K, p. 56
- ↑ ENSG 2010 10-K, p. 6
- ↑ Ensign Group: This Dividend Paying Growth Stock is Already Strong Pre-Boomer Retirement, Seekingalpha, 1/24/11
- ↑ ENSG 2010 10-K, p. 50
- ↑ ENSG 2010 10-K, p. 9
- ↑ Ensign Group: This Dividend Paying Growth Stock is Already Strong Pre-Boomer Retirement, Seekingalpha, 1/24/11
- ↑ The Ensign Group: Stable Medical Investment, Seekingalpha, 1/6/09
- ↑ Ensign Group: This Dividend Paying Growth Stock is Already Strong Pre-Boomer Retirement, Seekingalpha, 1/24/11
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