‘Significant Bandwidth’: Ensign Reports Jump in Census, Managed Care Revenue, Expects Localized Growth  

Acquisitions and localized growth, along with the looming federal minimum staffing proposal and legal settlements were top of mind for executives of the Ensign Group (Nasdaq: ENSG) as the California-based organization closed out the year.

Managed care revenue and census increased during the quarter by 12.3% and 3.5% respectively, compared to the prior year’s quarter, Barry Port, Ensign CEO, shared during the company’s fourth quarter earnings call on Friday. This was a result of strengthened relationships between Ensign and its managed care partners, he said.

Ensign issued an increased earning guidance for 2024 from $5.29 to $5.47 per diluted share, and annual revenue guidance from $4.13 billion to $4.17 billion.


“The midpoint of this 2024 earnings guidance represents an increase of 13% over our 2023 results and is 30% higher than our 2022 results. The annual guidance comes on top of the extraordinary growth we experienced in the last few years,” said Port.

The inclusion of acquisitions due to close in the first half of 2024, and management’s expectations for Medicare and Medicaid reimbursement also fold into annual guidance, CFO Suzanne Snapper said. But, other factors at play include variations in reimbursement systems, delays and changes to state budgets, seasonality and occupancy.

Since Ensign spun off the Pennant Group in 2019, the company saw adjusted earnings per share grow by 168% with a compound annual growth rate of 28%.


Consolidated GAAP and adjusted revenues for the year were $3.73 billion, an increase of 23.3% over the prior year, and $980.4 million for the quarter.

Ensign’s real estate investment trust, Standard Bearer REIT, generated rental revenue of $21.9 million for the quarter, of which $17.7 million was derived from Ensign-affiliated operations. Standard Bearer comprises 108 properties owned by the company and leased to 79 affiliated skilled nursing and senior living operations, and 30 operations leased to third party operators.

New in Tennessee, ‘significant bandwidth’ to grow

In Q4, Ensign added three new skilled nursing operations and one real estate asset with both skilled nursing and assisted living, bringing the number of operations acquired since 2022 to 54, said Ensign Chief Investment Officer Chad Keetch. Ensign has 299 operations in 14 states with “significant bandwidth” to grow, he noted.

Acquisitions include Ensign’s first campus in Tennessee, along with facilities in Nevada, Kansas and Texas, totalling an additional 528 operational beds, he said. This marks Ensign’s first dip into a new state in several years.

“We take entering into a new state very seriously,” said Keetch. “Eventually, this will grow into multiple clusters, which will eventually comprise a sizable market.”

Over the next several months, Keetch anticipates the company will acquire additional operations to build a cluster of facilities over the next few quarters, similar to what Ensign worked toward in South Carolina.

As assets grow, Ensign continues to recruit “future CEOs of Ensign-affiliated operations,” said Keetch. It’s a stark contrast to other operators in the industry that are struggling, he said. To that point, Keetch expects the difficult operating environment will translate to many near- and long-term opportunities to lease or acquire post-acute care assets.

This bleeds into Ensign’s acquisition strategy, which is geared towards only growing when the right leaders are in place and the pricing is right, he said.

Occupancy and staffing agency use

Ensign officials reiterated that they don’t expect the federal minimum staffing proposal to impact them this year. That’s despite the federal agency’s intention to finalize the proposed rule in 2024.

In terms of staffing agency use, Port said Ensign reduced contracting with such staff for the fourth quarter in a row. This represented a reduction in agency usage of 58% since its peak in December 2022.

Turnover also decreased for the third year in a row, the result of local leaders and Ensign’s “customer second” philosophy. Net new hires increased by approximately 6,000 employees throughout the year, he said. It’s no small feat given the 9% reduction in employment for the skilled nursing sector since the start of the pandemic.

Port mentioned that positive clinical and financial results build momentum toward other opportunities to “capture the enormous potential inherent in our portfolio.”

Port was particularly encouraged by the strength of Ensign’s skilled mix, which he said demonstrates the continuously increasing demand for skilled post-acute care services.

Occupancy and skilled mix days for skilled nursing operations in the “recently acquired bucket” were 77.6% and 27.5% respectively, said Keetch. It’s promising data considering same store occupancy reached 79.9% in Q4, growing by 240 basis points over the prior year quarter, Port said.

“There is enormous upside in each of these new operations as they continue to transform into same store caliber operations,” said Keetch.

Litigation put to rest in 4Q

During the fourth financial quarter, California-based Ensign also settled litigation from a case initially opened in 2018. Snapper said during the call that the team is “pleased to put this matter behind us and look forward to focusing solely on our mission.”

Meanwhile, Port said the case started out as a Department of Justice (DOJ) inquiry, but when the agency declined to intervene, it turned into a civil case stretching over many years.

“We brought in a mediator earlier this year to find a suitable resolution. This saves us from additional defense costs … there’s a large breadth to the scope of it,” said Port. “We just felt like the cost and the timing and distraction made it important for us to just get that one behind us.”

Analysts and Port discussed another DOJ inquiry that is unrelated, involving Texas Medicaid issues; Port considers this other inquiry to be fairly general.

“Whenever you’re dealing with government payers, there’s always the chance that they’re going to ask questions and do audits. We don’t know what’s driving it, necessarily. We don’t have a whole lot of details on it,” said Port. “We’ve retained good outside counsel to help represent us on it and get to the bottom of what they’re asking for. It is totally unrelated to the prior settlement.”

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