The Ensign Group (Nasdaq: ENSG) is adding five senior living communities to its portfolio.
The skilled nursing heavyweight has entered into a definitive agreement with The Pennant Group (Nasdaq: PNTG) to transfer the operations of the five communities to Ensign affiliates. The communities, which are located in Washington, Arizona and California, are near skilled nursing facilities operated by Ensign’s affiliates.
Ensign launched Pennant in October 2019 as a spin off of all of its non-skilled nursing business lines – including its former home health, hospice and senior living companies.
The transaction is expected to happen across separate closings in the first half of the year.
Barry Port, Ensign’s CEO, said the deal was a “win-win” for both Ensign and Pennant.
“This is a win-win for Ensign and Pennant, but most importantly, our patients, residents and caregivers will all benefit from the operational efficiencies that can be better achieved when the skilled nursing and senior living resources can be combined to provide a multi-faceted range of services in the same location,” Port said in a news release.
Ensign’s independent operating subsidiaries provide skilled nursing and senior living services, physical, occupational and speech therapies and other rehabilitative and health care services at 246 facilities in 13 states.
This appears to be “another value-add opportunity” for Ensign, according to Stifel analysts.
“We also think the transaction is indicative of the broader investment pipeline the company now sees, including senior living assets operated by Pennant and other third-party operators,” the analysts wrote in a Jan. 27 note.
Since the spin off in 2019, the two have collaborated across the care continuum “and their relationship remains strong,” analysts said.
Ensign remains active on the acquisition front following its announcement that it would launch an in-house real estate investment trust (REIT).
Stifel analyst Tao Qiu recently told Skilled Nursing News that he thinks “it’s going to be a good year for Ensign, at least on the external growth side.”
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