Dana Hambly, CFA, is a Research Analyst covering health care services for Stephens Inc. Prior to joining Stephens Inc., he was a Research Associate at Jefferies & Company, Inc., from 2006 to 2011, covering various health care sectors including health care services, health care IT and distribution.
A macro view informs Mr. Hambly’s observations in his exclusive interview with the Wall Street Transcript: “…this year what has emerged starting at the hospital level has been a slowdown in volume growth. And it’s unclear what is driving that slowdown in volume growth. Is it an anomaly? Do we pick up next year? Or is it just a fundamental shift in the way health care services are being delivered? We’re not really sure. It’s unclear, and I think the uncertainty has really has put a lot of pressure, broadly speaking, on the health care services space.”
His wide view of the sector has several different foci, including health care related real estate investment trusts or REITs. “Broadly speaking on the REIT side, I think the health care REITs relative to other REIT classes have been an outperformer for a number of years; however, as we look at assisted living, that industry has actually been under quite a bit of pressure over the last couple of years, and it’s mainly been about the pace of new supply. There’s been a lot of construction going on in assisted living, and that has challenged operators, particularly with their occupancy. And so occupancy has been declining in the assisted living sector for a few years now, And we think that will probably persist at least through the middle of 2018…”
An example of his top picks is The Ensign Group (NASDAQ:ENSG). “We see Ensign as a very quality operator with a good balance sheet that will be able to prove quality and therefore take volume from its competitors. So we think they’re at the early stages of that dominance; they’re very acquisitive, and they tend to find underperforming facilities. They can buy them cheaply and then over a few years’ time grow them to where they’re very quality performers.”
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