Assisted, independent living 'critical part' of Ensign's success in fourth quarter, CEO says
The Ensign Group saw the highest adjusted earnings per share in its history in the fourth quarter of 2017, and assisted living and independent living had much to do with it, Ensign President, CEO and Director Christopher Christensen told analysts and others participating in a Friday earnings call.
Earnings per share, at $0.40, represented a 33.3% increase over the prior-year quarter.
“Bridgestone Healthcare, our assisted and independent living company, has been a critical part of our success in the quarter,” he said. “Over the past three years, Bridgestone has grown from 24 operations to 75 as of today.”
Ensign's assisted and independent living business, together with its home health and hospice business and other new healthcare ventures within its portfolio, “are quickly approaching the size Ensign was when it completed its initial public offering in 2017,” Christensen said. The company has added 145 operations and acquired 64 real estate assets since 2014, when all but one of its real estate assets were spun off to CareTrust REIT, he added.
Total assisted living and independent living services segment revenue increased 13.7% to $35.8 million, and segment income was up 66.3% to $4.3 million, both over the prior-year quarter, Christensen said. Bridgestone Living offers the services at 51 stand-alone communities and 21 campuses in 12 states.
Total home health and hospice services segment revenue increased 27.5% to $39.7 million, and segment income was up 27.7% to $5.8 million, both over the prior-year quarter. The services are offered through Ensign portfolio company Cornerstone Healthcare.
Total transitional and skilled services segment income was $39.9 million for the quarter, an increase of 40.2% over the prior-year quarter and an increase of 8.3% sequentially over the third quarter.
“We expect to see each of these segments grow by acquiring underperforming operations and driving organic growth,” Christensen said. The growth should come in smaller deals, he added.
Among the acquisitions made in and after the fourth quarter, according to Executive Vice President and Secretary Chad Keetch, was the Feb. 1 purchase of the real estate and operations of Cedar Hills Senior Living, a 37-unit assisted living community in Cedar Hill, TX, and Deer Creek Senior Living, a 37-unit assisted living community in DeSoto, TX.
The overall Ensign portfolio now stretches across 15 states and includes 181 skilled nursing operations, 21 of which also include assisted living operations; 51 assisted and independent living operations; 22 hospice agencies; 20 home health agencies; and four home care businesses, Keetch said.
Keetch said Ensign has added more disclosures related to its different business segments, “hoping to kind of shine more of a light on those businesses.”
Christensen said Ensign does not plan to sell off assets “if the market doesn't give us credit for what's happening there in a growing part of our portfolio.” “But creating a separate entity that functions alongside us but where people can see in detail what's happening with our home health and hospice, and assisted living — that are both functioning very, very well — that's something that we certainly have the obligation to look at and constantly consider,” he added.
Making such a move would not involve much change to the way the organization functions, Christensen said. Subsidiaries and the company's wholly owned insurance company share some legal and accounting services, “but other than that, they are very independent” although interdependent, and have their own management, employees and assets, he added.
Keetch said that Ensign has increased its dividend for the 15th consecutive year, “which we hope shows our continued confidence in our operating model and our ability to create long-term value for shareholders.” The latest bump was a 5.9% increase over the prior year, he said.