The board of directors for The Ensign Group (Nasdaq: ENSG) this week approved a plan to separate its skilled nursing operations from the remainder of its senior housing and care business lines.
The San Juan Capistrano, Calif.-based nursing home giant will see its home health, hospice, and senior living business lines move into a new separate entity, The Pennant Group, which will trade on the Nasdaq exchange under the ticker symbol PNTG.
Ensign first announced the separation plan back in May, with officials at the provider blaming investor skittishness over the SNF industry for potentially deflating the value of its other offerings.
“More education about and visibility into these uniquely situated operations will create a better understanding of the value we believe remains somewhat hidden and overshadowed by the market’s perception of the skilled nursing industry at large, despite Ensign’s successful history of outperforming industry peers in many key metrics,” Daniel Walker, who will take the reins as Pennant’s CEO and president, wrote in a letter to shareholders at the time.
Walker currently serves as president and CEO of Cornerstone Healthcare, Ensign’s home health and hospice arm.
Christopher Christensen, the former Ensign CEO who left his post in a planned transition earlier this year, specifically called out investors who “don’t like our industry” but were still interested in the company’s local-focused model of care delivery.
“This gives them a chance to invest in Ensign and what we believe in and how we operate and the fundamentals and the way we acquire — the contrarian acquisition model we tend to follow,” Christensen said on a call explaining the deal to investors and analysts. “It gives them a chance to do that without necessarily coming into an industry that they’re uncomfortable with.”
Ensign will begin distributing Pennant stock to shareholders — one Pennant share for every two Ensign shares held — on September 20, with an effective date of October 1.
In a statement announcing the board’s approval, Ensign CEO Barry Port noted that the company “will continue to acquire properties consistent with its existing business model.”
The operator recently pushed past the 200-SNF mark with the acquisition of Surprise Health and Rehabilitation in the Phoenix suburb of Surprise, Ariz., the 201st building in its portfolio.