Seeking Alpha: Can Core Ops Take Ensign Group Much Higher?

Skilled nursing facility operator Ensign Group (ENSG) is a good example of a good property in what can be a rough neighborhood. Almost any healthcare service provider that has to rely upon Medicare and/or Medicaid will find itself faced with significant challenges from time to time, as the government tries to contain healthcare spending while healthcare costs continue to rise. Through acquisitions and a differentiated decentralized management approach, though, Ensign has been able to show better growth and profitability relative to many other skilled nursing service providers.

Now the question would seem to be whether management can keep up the momentum. The announced separation of Ensign into two new companies (one focused on the skilled nursing/assisted living operations, the other a REIT that will own the facilities) could unlock some value, but it's a one-time opportunity and Ensign will still be dealing with the challenges of rising costs and stingy reimbursement in an environment where demand ought to be growing in the coming years. With that, the shares don't look like the greatest bargain anymore.

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Can Core Ops Take Ensign Group Much Higher?