With already 11 acquisitions announced this year, California-based provider The Ensign Group, Inc. (Nasdaq: ENSG) isn’t slowing down on its purchase spree, announcing plans Monday to buy nearly the entire portfolio of one San Diego provider’s operations.
The company—also the parent entity of the Ensign group of skilled nursing, assisted living, rehabilitative care, home health care, hospice and urgent care companies—said today it has agreed to purchase the operations behind nine skilled nursing and assisted living facilities, a home health agency and private home care business from Shea Family Care, a San Diego-based provider of post-acute healthcare services.
The transaction includes all but one property within Shea Family’s operating portfolio—the exception being an assisted living community in Escondido dubbed Felicita.
In total, the agreement spans 711 beds/units in the San Diego market, as well as the addition of Medicare- and Medicaid-certified Shea Family Home Health agency and Shea Family at Home in El Cajon, Cali.
The Ensign Group did not disclose the purchase prices of the acquisitions.
“Shea Family has a long history of serving the San Diego community and we are honored to be continuing and advancing the exceptional work that they have been doing for generations,” said Ensign’s CEO Christopher Christensen in a written statement. “We welcome Shea Family to Ensign and look forward to combining our teams of top-performing healthcare professionals as we seek to take our service to a whole new level.”
The largest of the acquisitions involves a 120-bed skilled nursing facility in El Cajon, Shea Family Care Victoria, while the smallest, not including the home health purchases, is Shea Family Care Parkside, a 52-bed skilled nursing facility also in El Cajon.
“We saw that skilled nursing over the long-term was going to have consolidation because of regulatory requirements and other factors,” Shea Family CEO Ken Lund tells SHN. “We saw that coming and at a point in time, the management team at Shea Family decided this was the time to pursue an exit strategy.”
But at first, the company wasn’t entirely convinced with a potential exit, Lund added.
“We were a little unsure whether or not we wanted to pursue the [exit] strategy, but after working with Ensign we were impressed with who they were and that helped move us down the path,” he said. “We found similarities in value systems and business methods. Frankly, it was just a great relationship.”
Other facilities in El Cajon that Ensign plans to acquire under Monday’s agreement include Shea Family Care Somerset, a 65-bed SNF and sub-acute care facility; Shea Family Care Magnolia, a 99-bed SNF and Shea Family Living LoHar, a 68-unit assisted living community.
Additional assets included in the announcement include Shea Family Care Grossmont, an 86-bed SNF in La Mesa; Shea Family Care La Jolla, a 59-bed SNF in La Jolla; Shea Family Care Mission Hills, a 68-bed SNF in San Diego and Shea Family Care South Bay, a 94-bed SNF in Chula Vista.
“We were impressed by Ensign’s focus on quality of life for its team of healthcare providers, quality of care for residents and quality outcomes across all levels of care, making this relationship a win for the greater San Diego region for generations to come,” added Lund.
Although skilled nursing consumes a majority of Shea Family’s portfolio, the provider has expanded its services to other segments of senior housing.
Most recently, in June the company diversified its offerings by extending “portable” home care services to two Holiday Retirement communities in California.
Thus far in 2014, The Ensign Group has tallied approximately 1,292 units/beds in announced acquisitions since the start of the year, not including several home health, home care and hospice acquisitions in Denver, Los Angeles and Boise, Ida.
The company this year also completed the creation of CareTrust REIT, Inc., a new health care real estate investment trust established as a result of Ensign splitting its healthcare and real estate businesses into two separate and independent publicly-traded companies.
Under the agreement, Ensign will purchase and retain the real estate in two of the nine operations it announced and will assume long-term leases on the remaining facilities, two of which will include an option to purchase the real estate.
The facilities, which the company said will be purchased with cash, will be operated by Ensign’s California-based subsidiaries.
The closing of the Shea Family transaction will bring Ensign’s growing portfolio to 136 healthcare facilities—nine of which will be owned—nine hospice companies, 12 home health agencies, two home care businesses and 14 urgent care clinics across 12 states.
“This strategic acquisition significantly strengthens our presence in the San Diego healthcare community and adds to our ability to partner with hospital systems and managed care providers to serve customers with post-acute solutions across the continuum of care,” said Ensign COO Barry Port in a written statement. “Shea’s Family locations, spectrum of services, strong core values, reputation for quality and market position are an ideal fit.”
Ensign continues to actively seek additional opportunities to acquire real estate, or to lease, both “well-performing and struggling” skilled nursing, assisted living and other healthcare-related businesses across the U.S., Christensen said.
The company expects Monday’s announced acquisition will be effective in the fourth quarter and remains subject to the completion of certain regulatory approvals and other closing conditions. Ensign expects the operations to be operationally accretive to earnings in 2015.
The Ensign Group did not respond to a request for comment as of press time.
Written by Jason Oliva