Image of male nurse pushing senior woman in a wheelchair in nursing facility

Skilled nursing facility operating giant Ensign Group provided more insights Tuesday into why it’s spinning off most of its non-SNF assets into a new and separate company.

The Mission Viejo, CA, operator announced late Monday that it was creating the new Pennant Group, which will include hospice, home health, and most of its senior living operations. The separation will open up the possibility for more provider partnerships by eliminating potential conflicts of interest, executives said. Plus, by separating home health and hospice from its skilled nursing business line, it can attract investors who might be wary of entering the skilled care space.

“There are people that don’t really like our profession, that don’t like our industry,” said CEO Christopher Christensen, referring to the skilled nursing side of the business. “This gives them a chance to invest in Ensign,” he added later.  

“Part of the opportunity that exists is to continue to work with other providers in the whole post-acute continuum that, in some cases, are hesitant to do business because of the channel-conflict issues that exist,” Daniel Walker, president of Ensign’s home health and hospice holding company, Cornerstone Healthcare, told investors Tuesday.

Ensign officials emphasized that the spinoff does not signal any disinterest or slowdown in its skilled nursing facility business. The company saw income of $58.8 million from its transitional and skilled services segment for the first quarter of this year, a 27.2% increase compared to the prior year quarter. Same-store skilled services occupancy was at 80.1%, an increase of 163 basis points.

Officials said they’ll continue to aggressively acquire more SNF assets, continuing the company’s recent buying binge. Following several acquisitions so far in 2019, the company now owns 197 skilled nursing facilities, 26 of which also include senior living, 56 stand-alone senior living institutions, 26 hospice agencies, 25 home health operators and nine home care businesses across 16 states.