The Ensign Group (NASDAQ:ENSG), Inc. ENSG recently purchased operations of Estrella Health and Rehabilitation Center, a 161-bed skilled nursing facility in Avondale, AZ. Subject to a long-term triple net lease, the buyout was effective Jan 1, 2022.
This latest move will help it solidify its presence in the Arizona region. Holding a strong growth potential, the newly-acquired facility will add credibility to ENSG’s operations.
With this latest addition, Ensign Group’s portfolio now stands at 246 healthcare operations, of which 22 include senior living operations across 13 states. Management reassured that the nursing home company is looking for opportunities to acquire real estate and lease well-performing and struggling skilled nursing, senior living and other healthcare-related businesses throughout the United States. This highlights its intention to sustain the momentum.
Acquisition Story
Ensign Group is aggressive about acquiring real estate or leasing strongly performing as well as struggling post-acute care operations and subsequently, evolving those into market leaders.
In November 2021, this major player in skilled nursing facility purchased the real-estate properties of five skilled nursing and assisted living facilities across Arizona, California or Kansas. Last year, ENSG bought Sedona Trace Health and Wellness Center in Austin TX, and Cedar Pointe Health and Wellness Center in Cedar TX besides four skilled nursing facilities and their operations in Washington.
The buyout strategy of Ensign Group is focused on identifying opportunistic and strategic buyouts that lie within specific markets and deliver robust returns. ENSG leaves no stone unturned when it comes to boosting its portfolio through inorganic growth.
Over the period starting Jan 1, 2010 until Dec 31, 2020, ENSG acquired 205 facilities. This buyout binge helps the leading industry player establish its dominance further in the United States.
Like ENSG, other medical stocks serious about their M&A strategy include Encompass Health (NYSE:EHC) Corporation EHC, HCA Healthcare (NYSE:HCA), Inc. HCA and Tenet Healthcare Corporation (NYSE:THC) THC.
Encompass Health focuses on expansion plans to add inpatient rehabilitation hospitals to its existing network and build scale in hospice. In June 2021, EHC purchased the home health and hospice assets of Frontier Home Health and Hospice across Alaska, Colorado, Montana, Washington and Wyoming.
HCA Healthcare is committed to undertaking acquisitions, which have so far added and expanded facilities across several markets as well as increased patient volumes. HCA spends a substantial amount on acquiring hospitals and health care entities, which induced expenses of $488 million in the first nine months of 2021. HCA recently purchased MD Now Urgent Care from an LA-based private equity investment firm, Brentwood Associates.
Tenet Healthcare pursued numerous acquisitions, partnerships and strategic alliances to expand the scale of business, operating capacity and geographical presence. In November 2021, THC along with its unit United Surgical Partners International (USPI) entered into a definitive agreement to acquire SurgCenter Development (SCD) for $1.2 billion. Its inorganic growth strategies poise it well for long-term growth.
Zacks Rank & Price Performance
Shares of this presently Zacks Rank #3 (Hold) healthcare provider have lost 6.3% in the past six months, narrower than the industry’s decline of 14.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
However, its inorganic growth measures, strong underwriting results and efficient capital deployment should help the stock bounce back going forward.
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Tenet Healthcare Corporation (THC): Free Stock Analysis Report
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