“After another record quarter, we are excited about the remarkable momentum our teams have created across our entire portfolio and look forward to seeing that continue throughout the year,” Ensign Group CEO Barry Port told analysts and investors Thursday during a first-quarter earnings call.
“As strong as our performance has been, we continue to see enormous opportunities inherent in our portfolio, both in existing operations and the growing number of new acquisitions,” he added.
According to Port, the San Juan Capistrano, CA-based company has seen an increase in skilled mix during the quarter, with an increase in same-store skilled mix revenue of 1.9% sequentially over the fourth quarter.
“This continued strength in our skilled mix demonstrates the ongoing trend of increasing demand for skilled post-acute services,” Port said.
Same-store occupancy for the quarter reached 81%, which was 2.7% over the same quarter in 2023.
“While we celebrate this milestone,” Port said, “our same-store portfolio still has an incredible amount of built-in upside as dozens of our most mature same-store operations operate in the 90-plus % occupancy range. As our operators continue to build on a solid foundation of strong clinical results, cultural excellence and sustainable real estate costs, they will continue to realize the occupancy and skilled net growth potential inherent in our same-store portfolio.”
Recent acquisitions
The Ensign Group on Wednesday announced a sweeping package of deals that it said will kickstart growth in one market, expand its footprint in five others and make the company a player in a new post-acute segment.
The acquisition news regarding eight facilities was reported Wednesday in advance of the earnings call.
“As we’ve shown over two decades, we expect our teams to unlock significant upside in each of these new operations as they mature,” Port said Thursday.
Chad Keetch, Ensign’s chief investment officer and executive vice president, noted that Ensign had added 13 new operations and six real estate properties during the first quarter and since. He said that action brings the number of operations acquired by Ensign since January 2023 to 39.
“In particular, we are very excited to grow in Nevada and to add our second and third operations in Tennessee, which along with the acquisition we completed earlier this year creates our first Tennessee cluster,” Keetch said in a press release issued in conjunction with the call. We are very optimistic about our ability to continue growing in Nevada, Tennessee and the surrounding regions.”
Additionally, he said, the company added a healthcare campus in Northern Utah that includes a skilled nursing operation and a long-term acute care hospital.
“While the LTACH beds will remain a very small part of what we do in Utah, we look forward to adding another service offering for our acute partners in Utah that rely on us for a wide variety of post-acute services for some of their most complex patients,” he said.
In a separate announcement Wednesday, CareTrust REIT announced that it had funded a $26.7 million mortgage loan in connection with Ensign’s Tennessee purchase of two skilled nursing facilities.
CareTrust Chief Investment Officer James Callister called it a “unique investment opportunity.”
“When you consider the purchase option, this loan has all the hallmarks of our strategy to lend with a purpose: strong local market dynamics; the expansion of our relationship with a best-in-class operator in The Ensign Group; and the direct opportunity to acquire real estate in the future,” Callister said.
Key financials
Ensign’s liquidity remains strong, according to Ensign’s Executive Vice President and Chief Financial Officer Suzanne Snapper. The company has approximately $511.8 million of cash on hand and $593.7 million of available capacity under its line-of-credit, she said. Combined with cash on hand on the company’s balance sheet, the firm has $1 billion dollars in dry powder for future investment.
Snapper said that the company continues to de-lever its portfolio, achieving a least adjusted net debt to EBITDA (earnings before interest, taxes, depreciation, and amortization) ratio of 1.98 times.
“This de-leverage in a period of growth is particularly noteworthy and demonstrates our commitment for disciplined growth, as well as our belief that we can continue to achieve
sustainable growth in the long run,” she said.
The Ensign Group is reaffirming its annual earnings guidance of $5.29 to $5.47 per diluted share and annual revenue guidance of $4.13 billion to $4.17 billion, Snapper said.
“We’ve evaluated multiple scenarios, and based upon the strength in our performance and positive momentum we’ve seen in occupancy and skilled mix, as well as continued progress on agency management and other operational initiatives, we have confidence that we can achieve these results, ” she said.
