Investment Case Study - The Ensign Group

Investment Case Study – The Ensign Group

Find out why we decided to add The Ensign Group into the Global Smaller Companies Trust portfolio.

Leading providers of nursing & assisted living


The Ensign Group is a leading provider of skilled nursing, assisted living and other rehabilitation related services across thirteen US states. The group has excellent relationships with managed care insurers which in the US context play a key role in determining where patients are treated. This enables the creation of strong partnerships across multiple states, delivering superior health outcomes for patients.

Following a local leadership strategy has allowed Ensign to expand beyond the skilled nursing industry to provide a broader range of senior care services. The group, under a strong and experienced senior management team, has also demonstrated an ability to acquire underperforming competitors and make rapid improvements to both occupancy and patients’ outcomes by deploying a disciplined and repeatable operating model across their operations. Their long-term success has been built on a culture of local leadership and accountability, with a passion for growth and delivering the best possible care embedded across the organisation. Ensign have taken a prudent and disciplined approach to their geographic growth, focusing on those states with attractive financial terms and market structures in the sector.

Increasing scope of services


Ageing demographics continue to put strain on healthcare systems and the US is no exception, with the number of over-65s expected to double by 2060. In-patient acute care services remain the most expensive setting. Insurers and government customers continue to make efforts to reduce the length of stay in these settings, preferring patients move into lower cost settings for the rehabilitation phase of care. Ensign have consistently increased their scope of services over several years, taking on more complex rehabilitation services, as well as providing innovative services like mobile dialysis and x-rays. Ongoing budget pressures should continue to drive attractive growth for more cost-effective healthcare models delivering high quality care.

Acquisition activity often comes with a real estate component and Ensign has created additional value by actively managing its real estate footprint. The group currently owns more than 100 properties but actively seeks to maximise value through sale and leaseback, spin-offs and outright sales to optimise shareholder returns.

We initially invested in Ensign back in 2015. To date the investment has delivered more than a fourfold return, taking into account the spin-off of The Pennant Group in 2019. We have been impressed by how well the Company managed through the COVID pandemic, a period when the sector suffered from falling occupancy, reflecting the risk of becoming infected in a healthcare facility. Ensign have also demonstrated a skill in managing labour in recent years at a time when the availability of skilled nursing staff has been a major issue. This underlines the quality of the overall business within the sector.

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