The Ensign Group, Inc. (NASDAQ:ENSG) recently announced that Cornerstone Healthcare, its home health and hospice portfolio subsidiary, has acquired Abilene, TX-based Kinder Hearts Home Health and Hospice. Financial terms of the deal have been kept under wraps. However, the company expects the operations to be accretive to earnings in 2016.
Coming to share price movement, Ensign Group gained 0.7% to close at $19.54 following the news.
Management is highly optimistic about this deal. The buyout of Kinder Hearts is expected to fortify Cornerstone’s footprint in Texas and also expand its overall operations. Post-closing, this buyout is expected to add value to Ensign Group’s healthcare platform, courtesy of Kinder Hearts’ 15-year legacy of first-class home health and hospice care and service.
While, at present, the market has taken the buyout news positively, a further analysis of the trends reveal dull sentiments as Ensign Group represents a negative one-year return of 18.1%, comparing unfavorably with the positive S&P 500’s return of 10.1% over the same time frame. Nevertheless, we believe that the recent development will help the company overcome the adversities to some extent.
Notably, Cornerstone’s subsidiaries currently have 17 home-health operations, 17 hospice facilities and three homecare operations across nine states within the U.S. On that note, management added that Cornerstone is aggressively taking over high performing as well as struggling home health, hospice, and home care facilities across the nation.
Zacks Rank & Key Picks
Ensign Group currently has a Zacks Rank #5 (Strong Sell).
Better-ranked stocks in the broader medical sector include CryoLife Inc. (NYSE:CRY) , Masimo Corporation (NASDAQ:MASI) and IDEXX Laboratories Inc. (NASDAQ:IDXX) . Notably, all the three stocks sport a Zacks Rank #1 (Strong Buy).
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ENSIGN GROUP (ENSG): Free Stock Analysis Report
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