The Ensign Group came out with its third quarter earnings, and contrary to many in the industry, the company reported rising revenues, net income and skilled mix. That news, plus the announcement that the company returned another $23 million of relief funds (on top of the previous $109 million announced last quarter), sent shares up by 6.3% to $60.19 per share, which is close to a near-term high of $61.98 per share achieved on October 14. By returning those provider relief funds, and reporting strong operating results, Ensign saw its market cap increase by over $130 million, so it seems like the move may have paid off.
Combined same store and transitioning occupancy did decline by 2.4% from the second quarter, while the skilled mix rose by 2.9%. However, from mid-July to mid-September, census remained flat and the skilled mix days fell slightly, while from mid-September to mid-October there was a 1.0% increase in occupancy and 4.0% increase in skilled days. That seems promising. Ensign reported that elective care procedures picked up in that time, and COVID-19 cases in its communities stabilized. The current spike in cases around the country may put a damper on that growth in a number of markets, but Ensign won’t be alone there. Unfortunately, there were eight Ensign operations with over 20 COVID-19 positive cases and 48 operations with less than 20 cases, but the majority (161 operations) had no cases in-house.
Consolidated GAAP revenues, which exclude operating results for the October 1, 2019 spin-off of The Pennant Group, were $599.3 million, an increase of 17.0% over the prior-year quarter. Same-store skilled revenue saw an 18.5% increase over the prior-year quarter and 7.8% sequentially on the back of an increase in Medicare days of 34.3% and 10.2%, respectively. The company did receive approximately $104 million of Medicare advance payments from CMS, and average daily Medicare rates for its same-store portfolio increased from $600.96 in Q3:2019 to $664.61 in Q3:2020. That certainly helps when your percentage of Medicare days increase from 11.5% in Q3:2019 to 17.2% in Q3:2020 for the same group of facilities too.
Similar to the second quarter, The Ensign Group raised its 2020 annual earnings guidance from $3.00-$3.10 per share to $3.04-$3.12 per share. We’ll see how the rest of fall goes.
