Shares of The Ensign Group, Inc. (ENSG) surged 4.7% following its robust fourth-quarter 2023 results announced on February 1, 2024. The company experienced significant growth due to higher skilled service revenues, an increase in skilled mix, and improved occupancies. The positive investor sentiment was further fueled by an optimistic adjusted earnings per share (EPS) guidance for 2024. However, the surge was slightly dampened by an increase in overall expenses.
Q4 Financial Performance
ENSG reported an adjusted EPS of $1.28 for Q4 2023, marking a 16.4% year-over-year increase and surpassing the Zacks Consensus Estimate. Operating revenues of $980.4 million also showed a promising 21.1% year-over-year growth.
The Ensign Group, Inc. Price, Consensus, and EPS Surprise
Ensign Group’s adjusted net income for Q4 2023 increased by 17.5% year over year to $73.7 million. However, it fell short of analysts’ estimates. Same-store occupancy witnessed an improvement of 240 basis points year over year, while transitioning occupancy expanded by 150 basis points.
Segmental Performance
Ensign Group’s Skilled Services segment’s revenues soared 21% year over year to $940.8 million in the fourth quarter, surpassing both the Zacks Consensus Estimate and analyst predictions. The segment’s income of $116.8 million also exhibited a healthy 9.7% year-over-year growth.
The Standard Bearer segment reported rental revenues of $21.9 million, signifying a 12.7% year-over-year increase, with a segmental income of $7.5 million, up by 4.9% year over year. Additionally, the company witnessed a 9.4% year-over-year increase in Funds from Operations, totaling $14.2 million in Q4 2023.
Financial Update
As of December 31, 2023, Ensign Group’s cash and cash equivalents swelled by 61.1% from the previous year-end figure, totaling $509.6 million. The company also possessed a leftover capacity of $593.7 million under its line of credit at the end of the fourth quarter. Total assets grew by 21% to reach $4.2 billion, while long-term debt (excluding current maturities) decreased by 2.5% to reach $145.5 million. Total equity also climbed nearly 20% from the 2022 year-end figure. Ensign Group managed to generate net cash from operations of $376.7 million in 2023, marking a 38.2% increase from the previous year.
Future Plans
Looking ahead to 2024, Ensign Group projected revenues to range between $4.13 billion and $4.17 billion, implying an 11.3% improvement from the 2023 figures. The company also forecasted an adjusted EPS between $5.29 and $5.47, signifying a 13% growth from 2023. Management estimated the weighted average common shares outstanding to be approximately 58.5 million with a projected tax rate of 25% for 2024.
Industry Performance
Among medical sector peers, UnitedHealth Group Incorporated, HCA Healthcare, Inc., and The Cigna Group also reported positive fourth-quarter 2023 results, demonstrating a healthy trend in the industry.
UnitedHealth Group’s adjusted earnings per share surpassed expectations, climbing by 15.4% year over year. HCA Healthcare reported a 27.2% year-over-year improvement in EPS, and Cigna exhibited a 4.1% increase in adjusted EPS compared to the Zacks Consensus Estimate.
