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Ensign Group (ENSG) Stock Up 6% Since Q2 Earnings Release

Shares of The Ensign Group, Inc. ENSG have gained 6% since reporting strong second-quarter 2022 earnings on Aug 1. Quarterly results benefited from a consistent improvement in same-store and transitioning occupancy, skilled revenues and managed care revenues. A hiked 2022 earnings per share (EPS) guidance might have buoyed investors’ optimism on the stock.

Nevertheless, the upside was partly offset by an elevated expense level induced mainly by the rising cost of services.

The Ensign Group, Inc. Price, Consensus and EPS Surprise

The Ensign Group, Inc. price-consensus-eps-surprise-chart | The Ensign Group, Inc. Quote

Q2 Update

Ensign Group reported second-quarter 2022 adjusted operating earnings of $1.01 per share, which matched the Zacks Consensus Estimate. The bottom line improved 13.5% year over year.

Operating revenues of ENSG rose 14.7% year over year to $732.5 million. Growth can be attributed to better service and rental revenues. The top line outpaced the consensus mark by a whisker.

Adjusted net income advanced 12.9% year over year to $57.4 million.

Same-store occupancy grew 1.8% year over year, while transitioning occupancy increased 6.4% year over year in the quarter under review. Same-store and transitioning managed care revenues improved 6% and 29.1%, respectively, on a year-over-year basis.

Total expenses of $654.3 million escalated 14% year over year due to increased cost of services, rent-cost of services, general and administrative expenses, and depreciation and amortization.

Segmental Update

Skilled Services: Revenues of $702.5 million climbed 14.6% year over year in the second quarter. Segment income of $102.3 million rose 13.6% year over year.

As of Jun 30, 2022, skilled nursing operations and campus operations of the segment totaled 215 and 25, respectively.

Standard Bearer: Revenues amounted to $17.6 million, which advanced 23.8% year over year in the quarter under review. Segment income dropped 13.5% year over year to $6.8 million.

Funds from Operations (FFO) came in at $12.1 million, which dipped 0.8% year over year.

Financial Update (as of Jun 30, 2022)

Ensign Group exited the second quarter with cash and cash equivalents of $285.6 million, which increased 8.9% from the figure at 2021 end. ENSG had an available capacity of $593.3 million under its credit facility at the end of the quarter.

Total assets of $3.1 billion climbed 9.6% from the 2021-end level.

Long-term debt-less current maturities came in at $151.1 million, down 1.2% from the figure as of Dec 31, 2021.

During the six months ended Jun 30, 2022, net cash provided by operating activities of $129.8 million improved 19.8% from the prior-year comparable period’s level.

Capital-Deployment Update

Ensign Group bought back shares worth around $20 million during the second quarter, completing the $20-million share buyback program authorized in Feb 2022.

ENSG paid out a quarterly cash dividend of 5.5 cents per share in the quarter under review.

2022 Guidance

Ensign Group hiked the full-year outlook for revenues and EPS.

EPS is currently anticipated within $4.05-$4.15, up from the prior guidance of $4.01-4.13. The midpoint of the revised guidance indicates 13% growth from the 2021 reported figure.

Revenues are forecast between $2.96 billion and $3 billion in 2022, higher than the previous outlook of $2.93-$2.98 billion. The midpoint of the updated guidance suggests a rise of 14.6% from the reported figure of 2021.

Zacks Rank

Ensign Group currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Medical Sector Releases

Of the Medical sector players that have reported second-quarter results so far, the bottom-line results of UnitedHealth Group Incorporated UNH, Elevance Health Inc. ELV and Tenet Healthcare Corporation THC beat the respective Zacks Consensus Estimate.

UnitedHealth Group reported second-quarter 2022 adjusted earnings of $5.57 per share, which beat the Zacks Consensus Estimate by 6.3%. The bottom line improved 19% year over year. Revenues of UNH were $80.3 billion, which climbed 13% year over year in the second quarter. The top line outpaced the consensus mark by 0.9%. The medical care ratio of UNH improved 130 basis points (bps) year over year to 81.5% during the quarter under review.

Elevance Health’s second-quarter 2022 earnings of $8.04 per share outpaced the Zacks Consensus Estimate of $7.72. The bottom line improved 14.4% year over year. Operating revenues of ELV in the second quarter totaled $38,482 million, which rose 15.6% year over year. The top line beat the consensus mark of $38,120 million. As of Jun 30, 2022, medical enrollment of ELV amounted to 47.1 million, which grew 6.1% year over year.

Tenet Healthcare reported second-quarter 2022 adjusted earnings of $1.50 per share, which beat the Zacks Consensus Estimate by 108.3%. However, the bottom line declined 6% year over year. THC’s net operating revenues of $4.7 billion fell 6.4% year over year in the second quarter. The top line missed the consensus mark by 4.1%. THC’s operating expenses of $4.2 billion decreased 4.7% year over year.

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