The Ensign Group’s near-term and long-term future is “brighter than ever,” CEO Barry Port said during Tuesday’s second-quarter earnings call.
The San Juan Capistrano, CA-based company, he added, has seen improvement in skilled revenue and managed care revenue, and operators 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 and afterward. The additions include two senior living communities in California, one senior living community in Washington, six skilled nursing facilities in Texas, one SNF in Nevada and one healthcare campus in Arizona. He said that Ensign is familiar with most of the regions involved, although Las Vegas is a new market for the company.
Ensign’s 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.
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, adding that the company is looking forward to a busy fall and winter, with even more growth ahead looking into 2023.
“In some cases, particularly larger deals, pricing is still out of whack, but as we demonstrated last quarter, there is 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 ; 82 of those 106 properties 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 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.”
