The Ensign Group (Nasdaq: ENSG) is looking to expand into Mid-Atlantic states and cautiously eyeing other opportunities while remaining focused on successfully transitioning recently acquired properties, company leaders said Tuesday.
The company recently took over operations of 17 skilled nursing communities (SNFs) in California, as part of a previously announced deal with Sabra Health Care REIT (Nasdaq: SBRA), and also added two more SNFs in Colorado at the beginning of March.
“We’re only in 13 states and so there’s a lot of white space out there for us to grow in,” Ensign COO Chad Keetch said at an investment presentation at Oppenheimer & Co.’s Annual Healthcare Conference.
While “there probably will be some new states on our horizon,” the company’s leadership remains cautious about entering new states, and particularly more than one at a time, Keetch said. Most likely, the approach will be to begin with two to four buildings and then pursue further expansion.
Keetch said a consideration for future acquisitions will be the company’s existing presence within a state as well as lessons learned from previous experience in states like Texas, where the company acquired assets from Legend Healthcare in 2016.
With a new state, the challenges can range from introducing the company’s brand to an unfamiliar health care community, a different regulatory environment, new managed care providers and unique hospital systems, Keetch said.
Ensign plans to scout opportunities in Tennessee, Alabama and Georgia, he said.
The California-based company is still in the process of working through its recent acquisition from Sabra of assets formerly run by North American Health Care, and executives said that the transition is going smoothly.
“The integration so far, it’s going really well,” Keetch said, adding that announcing the deal with Sabra many months in advance of the takeover contributed to the success of the transition.
“And so we were able to be in the buildings quite a bit leading up to the transition date on February 1,” he said. “And, we got to know a lot of the leaders, particularly the clinical leaders, were very, very impressed with the quality of the clinical team that we inherited there, and also some of the administrators,” Keetch said.
Labor ‘normalizing’
Ensign leaders also spoke about the labor trends as headed in the right direction. The company saw a decreased use of agency workers, less turnover and reduced wage pressure.
However, with the public health emergency (PHE) ending and assistance by the federal government extended to states also drying up, the industry is entering a “tricky” period, CEO Barry Port said during the call.
“It’ll be interesting to see how we’re able to navigate through that and continue the trends of decreased agency usage and more normalized labor dynamics. But in spite of all that, I think we still feel very positive about the overarching trends and the direction that we’re headed in our business,” Port said.
Companies featured in this article:
Ensign Group, Legend Healthcare, North American Health Care, Sabra Health Care REIT
