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The Ensign Group (ENSG) Q4 Earnings Miss Estimates, Fall Y/Y

The Ensign GroupENSG reported fourth-quarter 2016 adjusted operating earnings of 30 cents per share that missed the Zacks Consensus Estimate of 34 cents by 11.8%. Earnings also declined 14.3% year over year.

For 2016, adjusted earnings came in at $1.29 per share, down 9.4% year over year.

Operational Update

Total revenue of $433 million increased nearly 16% year over year in the fourth quarter but missed the Zacks Consensus Estimate by 0.7%. For 2016, the top line displayed 23% year-over-year growth to $1.65 billion.

Total expenses at the end of the fourth quarter rose 14% year over year to $397.4 million due to higher cost of services, loss incurred from divestures and depreciation and amortization costs. For 2016, costs totaled $1.6 billion, up 33% year over year.

Quarterly Segment Update

The Transitional, Skilled & Assisted Living (TSA) Services Segment:

The segment reported revenues of $393.4 million, up 17% year over year. Solid growth in skilled nursing and facilities drove the upside. Notably, the segment accounted for 90.8% of the total revenue in the fourth quarter.

Home Health & Hospice Services

For this segment, total operating revenue was $31.1 billion, up 16% year over year. Strong growth in home health services resulted in the improvement. This segment contributed 7.2% of the total revenue.

Other Services

This segment reported revenues of $8.5 million, down 9.6% from the prior-year quarter. This segment accounted for 2% of the total revenue.

The Ensign Group, Inc. Price, Consensus and EPS Surprise

The Ensign Group, Inc. Price, Consensus and EPS Surprise | The Ensign Group, Inc. Quote

Financial Update

Total cash and cash equivalents increased 39% to $57.7 million as of Dec 31, 2016 from $41.6 million as of Dec 31, 2015.

Cash from operations at the end of 2016 soared 118% year over year to $73.9 million.

As of Dec 31, 2016, long-term debt was $275.5 million compared with only $99 million at the end of 2015.

Share Repurchase and Dividend Update

The Ensign Group's board authorized a new stock repurchase program that allows the company to buy back up to $30 million of its common stock over the next 12 months. Under this plan, the company is authorized to repurchase its issued and outstanding common shares from time to time in open-market and privately negotiated transactions and block trades in accordance with federal securities laws.

The year 2016 was the 14th consecutive year of dividend increases by the company. The Ensign Group raised its dividends by 6.3% in the fourth quarter and paid $0.0425 per share of its common stock to shareholders through dividends.

Guidance Updated for 2017

Management expects annual revenues in the range of $1.76 billion to $1.80 billion. It had earlier projected revenues in the range of $1.818 billion to $1.842 billion.

Annual earnings are now expected in the range $1.46-$1.53 per diluted share compared with $1.62-1.70 per diluted share guided previously.

Zacks Rank and Performance of Other Insurers

The Ensign Group currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Among the other firms in the medical sector that have reported their fourth-quarter earnings so far, the bottom line at Aetna Inc. (AET), HCA Holdings Inc. (HCA) and UnitedHealth Group Inc. (UNH) beat their respective Zacks Consensus Estimate.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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