Seeking Alpha: Ensign Group's Model Still Works

Ensign Group (ENSG) continues to stand out as a solid operator in a difficult, highly fragmented market. The company is still looking at a long runway of acquire-and-improve prospects in the core skilled nursing facility (or SNF) business, not to mention opportunities to expand into related/complementary businesses like home health, hospice, and all-skill facilities. While reimbursement is not likely to ever be an easy or supportive part of the story, the opportunity to make money still seems valid for the company. The impending CareTrust spinoff seems to be adding a meaningful amount of support to the valuation, though, so I'm still not all that attracted to the value proposition here.

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Ensign Group's Model Still Works

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?

Seeking Alpha: Lincare's Short-Term Pain Can Become Long-Term Gain?

Some investors love to parrot the thesis that the aging of America will be a boon to health care companies of all stripes. What these investors aren't always able to explain, though, is who is going to pay for all of that growth. That's a key issue with home oxygen therapy provider Lincare (LNCR). While efforts to diversify the business are pressuring margins and cash flow in the near-term, long-term investors should support these as moves towards better long-term sustainability.

First Quarter Results Not Bad On Balance
Revenue growth of 16% looks pretty flashy, but organic growth was a more modest 6%. Lincare saw a 1% negative impact from Medicare rate changes, with about 11% growth coming from various acquisitions. Interestingly, patient growth was the slowest it has been in some time (up about 2%), while revenue per patient rose by double-digits.

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Lincare's Short-Term Pain Can Become Long-Term Gain