Oops, they did it again. Late last week, The Ensign Group reported its fourth quarter and full-year earnings for 2022, and the company continues to outshine its competitors. While we realize the entire senior care business is on the rebound from the depths of the pandemic, some like Ensign seem to be beating the odds.
The company achieved record operating results for the fourth quarter and for the full year, and it has had eight consecutive quarters of occupancy increases. Same-facility occupancy was at 77.8% in the fourth quarter, not far behind its pre-COVID level of 80.1%. To their credit, they do take over a lot of nursing homes with underperforming operations and relatively low census, and it always seems to be an uphill battle. But it is a battle they keep winning.
Same-facility skilled mix revenues were up 9.1% year over year in the fourth quarter, which is pretty darn good. What is even better is that the company’s EBITDAR margin was 17.2% in the fourth quarter. While down 80 basis points from the year-ago quarter, both actual EBITDAR and EBITDA were up substantially, 11.9% and 9.9%, respectively. And remember, it is actual cash flow, not margin, that matters the most.
An important factor that should be noted is that the difference between the fee-for-service skilled Medicare rate was $700.23 per day, compared with $511.90 for the managed care daily rate. It used to be about a $50 differential 15 years ago, which at the time we thought was huge and caused investors to value the two different Medicare sources of payment differently. The spread is now nearly $200 per day. The key, however, is to lower the Medicaid census, at $259 per day for Ensign, and increase either Medicare payors. Not an easy task, but we believe Ensign is up
for it.
They will now have the operations of 17 nursing facilities in California to work on effective February 1, and we are sure landlord Sabra Health Care REIT is more than happy to expand their relationship with Ensign.
