The Financial Performance of “Nursing Home” Corporations during the COVID Pandemic, Part I: The Ensign Group


Dave Kingsley


The long-term care industry is paid by federal and state governments to care for medically fragile patients. That is an awesome responsibility. Historically, the industry has failed to provide the level of quality expected in a wealthy, humane, democratic society.  But the irresponsibility and negligence of so-called “nursing home” corporations in the face of a deadly pandemic has resulted in a human tragedy of incomprehensible proportions. Let’s call what happened what it is: gross negligence.

The public needs to know about the providers who have failed the patients in their care.  Hence, with this post, I will commence a series of highlights of companies in the business.  These posts are designed to illustrate the variety of corporations structured as publicly listed corporations, family trusts, private equity firms, family offices, sole proprietorships, and real estate investment trusts (REITs). One purpose of this series is to demonstrate the wide variety of ownership structures.

Throughout the COVID pandemic, I have been interviewed by various journalists about facilities with egregious amounts of COVID infections and deaths.  One task that I assisted members of the press with was tracking down ownership, which is often opaque and somewhat difficult to determine.  Initially, I’m highlighting two of those facilities and their owners: (1) Riverbend in Kansas City, Kansas, owned by The Ensign Group (ENSG) and Avocado Acute Care in San Diego, California, owned by the Jacob Graff Family Trust. This first post pertains solely to The Ensign Group.

The Ensign Group & the Riverbend Post-Acute & Rehabilitation Center

Riverbend Post-Acute & Rehabilitation Center came to the attention of the Kansas City media early in the sweep of the COVID pandemic through long-term care facilities.  According to the Kansas City Star, thirty patients had died from COVID in the facility as early as April.  I was contacted by Fox4 television reporters working on a story about a notorious loss of life in the facility early in the pandemic.

I was interviewed on air about the industry in general, but at the time I was not that knowledgeable about Riverbend ownership.  However, it did not take long to pin down The Ensign Group (ENSG) as the ultimate owner, which is a “holding company” and one of a handful of publicly listed owners in the business.

With over 200 facilities, The ENSG is one of the major players in the long-term care industry.  Given that it wasn’t formed until 1999, it is a rather young company.  Nevertheless, its revenue recently surpassed $2 billion.  Furthermore, a review of its annual 10-K and quarterly 10-Q reports filed with the SEC suggests that it has had robust earnings per share, has accumulated several hundred million dollars in cash and equivalents, and has very little debt (debt to equity ratio is at .15 versus 1.45 for the industry) – a very good position to be in these days.

How is it doing in this pandemic?  According to its third quarter 2020 10-Q filing, revenue was $599,255,000 compared to same quarter of 2019, which was $512,109,000.  It is doing stunningly well.  The ENSG reported 3rd quarter long-term debt of $113,322,000 compared to $325,217,000 as of December 31, 2019.

…earnings per share for the quarter was $0.77, representing an increase of 97.4% over the prior year quarter and adjusted diluted earnings per share for the quarter was $0.78, an increase of 95.0% over the prior year quarter.

At last check today I noticed that ENSG stock today was listed at $74.37 per share – near an all-time high. Here is what the Forex website had to say about the stock:

We wrote about the Ensign Group (ENSG) back in September and stated that gains may be only starting. The premise for our bullishness was the fact that earnings were increasing significantly and the technicals were following suit. Well, this momentum continued in the third quarter as the company reported adjusted net income of $44 million on sales of just under $600 million. In fact, record earnings over the past few quarters have resulted in management increasing its 2020 guidance significantly. Updated guidance for this year comes in at $3.12 per share on sales of approximately $2.435 billion. The maintaining of the top-line numbers illustrates that margins continue to increase. Management expects to do $3.50 in earnings per share in 2021 which would be a 12% increase over this year if met.

The annual 10-K reports and 10-Q filings are hundreds of pages of financial and other information. Suffice it to say that the ENSG has been an excellent investment. It is difficult to understand the lack of preparation by management for a pandemic they knew was coming. The 2020 proxy report indicates the CEO’s 2019 compensation was $6 million. Lobbyists for the industry will claim that providers are operating on a low margin, which is a lie and needs to be debunked by advocates. I suggest that advocates never buy the excuse that low quality and grossly neglectful care is caused by a provider’s financial hardship.

 I will conclude with this:  providers have received an immense injection of federal funds through the CARES act and other supplemental payments from the Center for Medicare & Medicaid Services.  No doubt the ENSG has taken advantage of the lending facility provided by the Federal Reserve and Treasury Department and has probably received some outright grants worth $millions.  It is not feasible at this time to sort out just how these programs have enhanced cash flow, but I will be working on this issue in the months ahead.

One thought on “The Financial Performance of “Nursing Home” Corporations during the COVID Pandemic, Part I: The Ensign Group

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