Ensign Group notched another record quarter for earnings and an eighth consecutive quarter of overall occupancy growth, company leaders reported during a Friday earnings call covering 2022 year-end results.
Those gains came as the company picked up facilities in five states — including 20 buildings in a previously disclosed partnership with Sabra Health Care REIT — and focused on building census and attracting short-stay patients.
“Remarkably, we saw continued improvements in occupancy, skilled revenue and managed care revenues,” said CEO and Director Barry Port, giving much of the credit to Ensign’s local leaders model, which encourages acquisitions of turnaround projects in areas where the company already has a footprint.
Ensign’s same-store occupancy hit 77.8% as of the end of December, tracking ever-closer to an March 202 pre-COVID rate of 80.1%. Port said the growth in skilled mix, or patients with higher-level needs, contributed to his and other leaders’ confidence in Ensign’s ability to continue on a growth trajectory in 2023.
Last quarter, skilled mix grew by 9.1% in buildings that were also operated by Ensign that same time last year. Company officials said while some of that could be attributed to patients with COVID-19 or respiratory conditions, facilities also had improved their ability to serve patients with high needs, leading to “fundamental, continuous growth.”
“As those that have followed us know, growth in skilled mix only happens after our local teams demonstrate over and over that they can achieve successful outcomes for sicker patients that need more advanced care,” Port said. “In the wake of the pandemic, there’s been a lot of noise around potential shifts to home-based care or lack of support for in-patient post-acute services from hospitals and managed care providers. But when compared to pre-COVID levels, our skilled mix has remained elevated, showing just how important high-quality post-acute services are within the continuum of care.”
Ensign last week said it would be managing 17 of the former North American
facilities it picked up in an operations deal with Sabra; it has decided to sub-lease the other three facilities, all near Sacramento, to the Aspen Group. That operator has some 34 facilities in California and had already been in talks with Ensign to develop an ownership deal through the company’s Standard Bearer REIT.
Elsewhere, Ensign added 12 facilities with more than 1,500 beds last quarter, according to Chief Investment Officer and Executive Vice Presidents Chad A. Keetch. Those properties are split between Arizona, Texas, Colorado and South Carolina.
After noting that the South Carolina properties were the first new ones for Ensign since initially entering the state several years ago, Keetch noted that the company would like to build its footprint in the Mid-Atlantic.
The company expects closings to slow in the early months of the year. Despite expecting a wide range of portfolios to come to market as the public health emergency expires, Port said the company would stay with its disciplined approach to acquisitions and operational takeovers.
Meanwhile, slowing wage inflation, improved Medicaid and Managed Care rates and state promises of continued support will continue to boost the bottom line, several leaders said.
Even without expected impacts from its new pick up in the next year, Ensign issued 2023 guidance projecting earnings of $4.60 to $4.74 per diluted share and annual revenues of $3.55 billion to $3.62 billion. The midpoint of the earnings guidance would be an increase of 12.8% over the company’s 2022 results.
For more on the Ensign event and other skilled nursing and senior living earnings calls held Friday, see the McKnight’s Business Daily newsletter.
