The Ensign Group Restructures

The Ensign Group, Inc. (Ensign), the parent company of the Ensign™ group of skilled nursing, rehabilitative care services, home health care, hospice care and senior living companies, recently announced a plan to separate its home health and hospice agencies and substantially all of its senior living businesses into a separate publicly-traded company. Upon consummation of the spin-off, the two companies will include:

• The Ensign Group, Inc., which will include transitional and skilled services, rehabilitative care services, healthcare campuses, post-acute-related new business ventures and real estate investments.
• The Pennant Group, Inc., which will include Ensign’s home health and hospice operations, substantially all of Ensign’s senior living operations, and Ensign’s mobile diagnostic and clinical laboratory operations.

The Ensign Group, Inc.’s independent operating subsidiaries provide a broad spectrum of skilled nursing and senior living services, physical, occupational and speech therapies, home health and hospice services and other rehabilitative and healthcare services at 253 healthcare facilities, including 198 SNFs and 56 with assisted and independent living, 27 with hospice care, 26 with home health agencies and nine home care businesses in California, Arizona, Texas, Washington, Utah, Idaho, Colorado, Nevada, Iowa, Nebraska, Oregon, Wisconsin, Kansas, South Carolina, Oklahoma, and Wyoming.

At the time of the spin-off, it is anticipated that Pennant, which is currently a wholly-owned subsidiary of Ensign, will consist of 60 home health and hospice agencies, 51 senior living operations, and mobile diagnostics and lab operations located across 13 states. In addition, Pennant will operate 28 senior living communities pursuant to a new, long-term triple-net leases with Ensign subsidiaries.

Ensign’s current management team will continue in place. Mr. Daniel H Walker, President of Ensign’s home health and hospice holding company, Cornerstone Healthcare, Inc., will become the Chairman, Chief Executive Officer and President of Pennant.

Company executives also emphasized that Ensign will continue to be the leading consolidator in its highly fragmented core skilled nursing business, noting that Ensign will retain all existing owned real estate assets and will continue to pursue the purchase of additional real estate assets.

Ensign and Pennant created a preferred provider network, called the Ensign-Pennant Care Continuum. As preferred providers within the care continuum, each Ensign and Pennant operation that elects to opt into the network will work together to appropriately share data and create care pathways that will help the company continue to drive care models focused on achieving the highest possible outcomes in transitions between care settings.

Ensign also plans to assume operations of the skilled-care unit of Sonoma Valley Hospital on July 1, 2019. The hospital has struggled to make the business profitable and has decided to outsource it to Ensign.

The hospital will receive funds from Ensign as part of a revenue-sharing agreement while providing certain higher-acuity services to nursing unit patients.

During 2019, Ensign has acquired the following, strengthening its position in several states:

• Cedar Health and Rehabilitation, a 120-bed skilled nursing operation located in Cedar City, Utah
• Downey Care Center, a 99-bed skilled nursing beds located in Downey, California
• Phoenix Mountain Post Acute, a 130-bed skilled nursing operation located in Phoenix, Arizona
• Rockbrook Memory Care, a 52-unit memory care community in Lewisville, Texas
• The Hills Post Acute, a 172-bed skilled nursing operation located in Santa Ana, California
• St. Elizabeth Healthcare and Rehabilitation, a 59-bed skilled nursing operation located in Fullerton, California
• Villa Maria Post Acute, a 78-bed skilled nursing operation located in Santa Maria, California
• Mainplace Post Acute, a 163-bed skilled nursing operation located in Orange, California
• Vista Post Acute and Rehabilitation & Olive Ridge Senior Living, a 150-bed skilled nursing operation and a 67-unit senior living facility, both in Peoria, Arizona
• Alta Mesa Health and Rehabilitation & The Groves Assisted Living and Independent Senior Living Community, a 58-bed skilled nursing operation and a senior living center with 18 assisted living and 88 independent living units, both in Mesa, Arizona
• Golden Palms Rehabilitation and Retirement, a 60-bed skilled nursing operation and a senior living center with 38 assisted living beds and 92 independent living units in Harlingen, TX