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The Biden administration’s proposed nursing home reform measures shouldn’t be a setback to the Ensign Group’s streak of record quarters, according to a new Seeking Alpha analysis.

The report argues that the company’s “impressive track record” will provide it the strength to overcome the proposed reform to the industry, while also acknowledging Ensign will still likely face headwinds in fiscal 2023. Ensign owns 251 healthcare facilities in Arizona, California, Colorado, Idaho, Iowa, Kansas, Nebraska, Nevada, South Carolina, Texas, Utah, Washington and Wisconsin.

President Biden’s proposed reform measures include a minimum staffing requirement for nursing homes and reduced resident room crowding. But Ensign staffs on a higher level than average, given that it focuses on patients with higher needs. It’s also strategically planned to expand and renovate its existing operations with $70 million budgeted for projects in 2022, the analysis noted.

“As the company’s short-term debt is just $4 million, and the renovation budget costs about one-fourth of the cash in hand, [we] believe the rising interest rate would have a limited impact on the company’s planning of refurbishment,” the report stated.

However, it also pointed out that Ensign did benefit from the suspension of the Medicare sequestration cuts; when those come back in place, the “positive effects [will] fade” and its growth is expected to slow down. 

Even with slowed growth, the company’s price/earnings ratio could still yield a large return for investors at 16.2%, the analysis noted. 

“Although the Biden Administration has not yet revealed more details about the reform, Ensign has a strong balance sheet and income stream to support the changes,” it concluded. “So, the impact of the reform would be limited to the company.”