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01/11 03:09
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The company demonstrated strong financial performance, with significant increases in revenue, earnings, and net income. The raised guidance for earnings and revenue further supports a positive outlook. Despite some uncertainties in managed care contracting, the company is expanding in new markets and seeing growth in skilled services. The Q&A revealed confidence in organic growth and acquisition strategy, contributing to a positive sentiment. The combination of these factors suggests a likely positive stock price movement.
Same-store and transitioning occupancy Increased to 83% and 84.4% during the quarter, both all-time highs. The growth is attributed to capturing more market share through clinical outcomes and earning trust in the communities served.
Skilled days Increased for same-store and transitioning operations by 5.1% and 10.9%, respectively, over the prior year quarter.
Medicare revenue Increased for same-store and transitioning operations by 10% and 8.8%, respectively, with same-store Medicare days increasing by 4.2% over the prior year quarter.
Managed care revenue Increased for same-store and transitioning operations by 7.1% and 24.3%, respectively.
GAAP diluted earnings per share $1.42, an increase of 6% year-over-year.
Adjusted diluted earnings per share $1.64, an increase of 18% year-over-year.
Consolidated GAAP revenue and adjusted revenues Both $1.3 billion, an increase of 19.8% year-over-year.
GAAP net income $83.8 million, an increase of 6.9% year-over-year.
Adjusted net income $96.5 million, an increase of 18.9% year-over-year.
Cash and cash equivalents $443.7 million as of September 30, 2025.
Cash flows from operations $381 million as of September 30, 2025.
Lease adjusted net debt-to-EBITDA ratio 1.86x after significant investments.
Rental revenue from Standard Bearer $32.6 million for the quarter, with $27.6 million derived from Ensign affiliated operations.
Standard Bearer FFO $19.3 million for the quarter.
New acquisitions: Acquired 22 new operations, including 10 real estate assets, adding 1,857 skilled nursing beds and 109 senior living units across 6 states. This includes an 11-building portfolio in California and a 7-building portfolio in Utah.
Operational improvements in new facilities: River Park Post Acute in Arizona achieved a turnaround with occupancy rising from 76.3% to 97.1%, skilled mix days increasing from 40.7% to 67.5%, and revenues up 54% year-over-year.
Market share growth: Same-store and transitioning occupancy increased to 83% and 84.4%, respectively, driven by clinical outcomes and reputation as the facility of choice.
Demographic trends: The U.S. population aged 80+ is projected to grow by 50% over the next decade, creating sustained demand for skilled nursing and rehabilitation services.
Labor improvements: Turnover rates improved, stable wage growth achieved, and staffing agency usage reduced despite increased occupancy.
Organic growth potential: Same-store occupancy at 83% leaves room for organic growth, with potential to add the equivalent of 8 to 17 new 100-bed operations by reaching 85%-88% occupancy.
Acquisition strategy: Focused on disciplined acquisitions, avoiding overpriced deals, and leveraging local leadership for transitions.
Standard Bearer Healthcare REIT: Added 11 new assets, including properties leased to third-party operators, diversifying tenant base and expanding real estate portfolio.
Regulatory and Reimbursement Risks: The company acknowledges the potential impact of changes in state and federal reimbursement rates, as well as delays and variations in state budgets, which could affect financial performance.
Acquisition and Integration Risks: The company faces challenges in acquiring and integrating new operations, particularly in a fluctuating deal market where pricing can become irrational. This could lead to overpaying for assets or difficulties in transitioning newly acquired facilities.
Labor Market Challenges: Despite improvements, the company continues to face challenges in maintaining stable wage growth, reducing turnover, and managing staffing agency usage, which are critical to operational success.
Economic and Market Conditions: Economic uncertainties and fluctuations in the deal market could impact the company's ability to grow through acquisitions and maintain financial stability.
Operational Execution Risks: The company’s growth strategy relies heavily on local leadership and decentralized operations, which could lead to inconsistencies in execution and performance across different facilities.
Supply Chain and Resource Allocation: The company must ensure adequate resources and investments in newly acquired facilities to achieve high clinical outcomes, which could strain existing resources.
Demographic Trends: The U.S. population aged 80 and older, the company's core population, is projected to grow by more than 50% over the next decade, from roughly 13 million today to over 20 million by 2035. This demographic shift is expected to create sustained and growing demand for skilled nursing and rehabilitation services.
Occupancy Growth: Same-store and transitioning occupancy increased to 83% and 84.4%, respectively, during the quarter, reaching all-time highs. The company anticipates further organic growth in occupancy, with potential to reach 85% or higher, which would significantly contribute to revenue and margin improvement.
Skilled Mix and Revenue Growth: Skilled days increased for same-store and transitioning operations by 5.1% and 10.9%, respectively, over the prior year quarter. Medicare revenue increased by 10% and 8.8% for same-store and transitioning operations, respectively. Managed care revenue also grew by 7.1% and 24.3%, respectively. These trends are expected to continue, driven by strong demand and operational improvements.
2025 Earnings and Revenue Guidance: The company raised its 2025 earnings guidance to $6.48 to $6.54 per diluted share, representing an 18.4% increase over 2024 results. Annual revenue guidance was also increased to $5.05 billion to $5.07 billion, up from the previous range of $4.99 billion to $5.02 billion.
Acquisition Strategy: The company added 22 new operations, including 10 real estate assets, during the quarter, bringing the total number of operations acquired in 2025 to 45. The company plans to continue its disciplined acquisition strategy, focusing on reasonably priced deals with long-term growth potential.
Labor and Staffing Improvements: The company reported improvements in turnover, stable wage growth, and lower staffing agency usage, even with increased occupancy. These trends are expected to support continued operational success and financial performance.
Standard Bearer Healthcare REIT: Standard Bearer added 11 new assets during the quarter, bringing its total to 149 owned properties. The REIT generated $32.6 million in rental revenue for the quarter and plans to continue expanding its portfolio through acquisitions.
Quarterly cash dividend: The company paid a quarterly cash dividend of $0.0625 per share for common stock.
Dividend history: The company has a long history of paying dividends and has increased the annual dividend for 22 consecutive years.
Stock repurchase plan: The company currently has a stock repurchase plan in place.
The company demonstrated strong financial performance, with significant increases in revenue, earnings, and net income. The raised guidance for earnings and revenue further supports a positive outlook. Despite some uncertainties in managed care contracting, the company is expanding in new markets and seeing growth in skilled services. The Q&A revealed confidence in organic growth and acquisition strategy, contributing to a positive sentiment. The combination of these factors suggests a likely positive stock price movement.
The earnings call summary indicates strong financial performance, with record occupancy rates, revenue growth, and increased earnings guidance. The Q&A section reveals a disciplined acquisition strategy and confidence in maintaining Medicaid funding. Despite some unclear responses, the overall sentiment is positive, driven by strong financial metrics and optimistic guidance, suggesting a likely positive stock price movement in the short term.
The earnings call reflects solid financial performance with strong revenue and earnings growth, increased revenue guidance, and a robust shareholder return plan through dividends and stock repurchases. Despite risks like regulatory changes and staffing challenges, management shows confidence in their strategic approach and market expansion plans. The Q&A session highlights proactive engagement in managing potential Medicaid cuts and a selective acquisition strategy. Overall, the financial health and optimistic outlook suggest a positive stock price movement in the short term.
The earnings call summary indicates strong financial performance, with record occupancy rates, increased earnings and revenue guidance, and disciplined acquisition strategies. The company also completed a stock repurchase program and has a history of increasing dividends. Despite some regulatory and staffing concerns, the overall sentiment is positive, supported by optimistic guidance and strategic growth initiatives. The Q&A section provided additional confidence in management's strategies, leading to an expected positive stock price movement of 2% to 8% over the next two weeks.
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