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

Investopedia: Healthcare Services Group - Great Business ... Great Stock?

If you can reliably reduce costs for healthcare facilities, you're going to be quite popular. To that end, Healthcare Services Group (Nasdaq:HCSG) has indeed built a very appealing and scalable business in providing housekeeping, linen/laundry and dining services to healthcare facilities. While this company has a pretty compelling dividend story, the valuation is a bit confounding.

Cost Challenges Bite into First Quarter Results
Although Healthcare Services did well on the top line, cost control proved to be a more challenging situation. Revenue rose 25%, as the company continues to see solid performance in its core housekeeping/laundry services, but also impressive growth from dietary services, as more clients add these services.

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http://stocks.investopedia.com/stock-analysis/2012/Healthcare-Services-Group---Great-Business--Great-Stock-HCSG-ECL-CTAS-HCA0412.aspx

Seeking Alpha: Can The Government Afford To Let Skilled Healthcare Prosper?

In some respects it may seem like a good thing to have the government as a major customer for your healthcare services. After all, hospitals like HCA (NYSE: HCA) and Health Management Associates (NYSE: HMA) have to wrangle with the fact that they must treat all comers irrespective of ability to pay and bad debt expense is a major issue here. Unfortunately, Medicare and Medicaid are looming as major problem areas in the U.S. federal budget and reimbursement cutbacks threaten to limit Skilled Healthcare's (NYSE: SKH) ability to grow and prosper.

A Deceptively Good Third Quarter
Skilled Healthcare's third quarter results hint at what the company can do. Revenue was up a little less than 4% on flat occupancy. The company's core business, long term care, was down very slightly this quarter, while therapy services and hospice revenue were both up better than 20%. While Skilled Healthcare has stood out a bit from rivals like Kindred (NYSE: KND) and Sun Healthcare (Nasdaq: SUNH) on the basis of a higher mix of skilled services, the skilled mix was a little disappointing this quarter at less than 23%.


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http://seekingalpha.com/article/304388-can-the-government-afford-to-let-skilled-healthcare-prosper