Critical Review: Genesis Healthcare (GEN) and Diversicare Healthcare Services (DVCR)

Genesis Healthcare (NYSE:GEN) and Diversicare Healthcare Services (NASDAQ:DVCR) are both small-cap medical companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, earnings, institutional ownership, risk, profitability, valuation and analyst recommendations.

Analyst Ratings

This is a breakdown of current recommendations for Genesis Healthcare and Diversicare Healthcare Services, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Genesis Healthcare 0 3 1 0 2.25
Diversicare Healthcare Services 0 0 0 0 N/A

Genesis Healthcare currently has a consensus price target of $3.19, suggesting a potential upside of 126.06%. Given Genesis Healthcare’s higher possible upside, research analysts clearly believe Genesis Healthcare is more favorable than Diversicare Healthcare Services.

Earnings and Valuation

This table compares Genesis Healthcare and Diversicare Healthcare Services’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Genesis Healthcare $5.37 billion 0.04 -$578.98 million ($2.11) -0.67
Diversicare Healthcare Services $574.79 million 0.04 -$4.82 million N/A N/A

Diversicare Healthcare Services has lower revenue, but higher earnings than Genesis Healthcare.

Insider & Institutional Ownership

20.4% of Genesis Healthcare shares are held by institutional investors. Comparatively, 19.8% of Diversicare Healthcare Services shares are held by institutional investors. 58.1% of Genesis Healthcare shares are held by company insiders. Comparatively, 38.7% of Diversicare Healthcare Services shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Diversicare Healthcare Services pays an annual dividend of $0.22 per share and has a dividend yield of 5.7%. Genesis Healthcare does not pay a dividend.

Profitability

This table compares Genesis Healthcare and Diversicare Healthcare Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Genesis Healthcare -4.99% N/A -2.66%
Diversicare Healthcare Services -2.42% -165.82% -4.28%

Risk and Volatility

Genesis Healthcare has a beta of 0.5, meaning that its share price is 50% less volatile than the S&P 500. Comparatively, Diversicare Healthcare Services has a beta of 0.58, meaning that its share price is 42% less volatile than the S&P 500.

Summary

Genesis Healthcare beats Diversicare Healthcare Services on 7 of the 12 factors compared between the two stocks.

About Genesis Healthcare

Genesis Healthcare, Inc., together with its subsidiaries, owns and operates skilled nursing facilities and assisted/senior living facilities in the United States. The company operates through three segments: Inpatient Services, Rehabilitation Therapy Services, and All Other Services. It also provides a range of rehabilitation therapy services, including speech-language pathology, physical therapy, occupational therapy, and respiratory therapy. In addition, the company offers other specialty medical services, such as physician, staffing, and other healthcare related services. As of December 31, 2017, it provided inpatient services through a network of 470 skilled nursing and assisted/senior living facilities, including 444 skilled nursing facilities and 26 stand-alone assisted/senior living facilities across 30 states. Genesis HealthCare, Inc. also supplied rehabilitation and respiratory therapy to approximately 1,600 healthcare locations in 46 states and the District of Columbia. The company was formerly known as FC-GEN Operations Investment, LLC and changed its name to Genesis HealthCare, Inc. in February 2015. Genesis HealthCare, Inc. was founded in 2003 and is headquartered in Kennett Square, Pennsylvania.

About Diversicare Healthcare Services

Diversicare Healthcare Services, Inc. provides post-acute care services to skilled nursing center, patients, and residents primarily in the Southeast, Midwest, and Southwest United States. The company offers skilled nursing health care services, including nutrition, recreational therapy, social, housekeeping, and laundry services; the delivery of ancillary medical services at the nursing centers; rehabilitation therapy services, such as audiology, speech, occupational, and physical therapies; and medical supplies, nutritional support, infusion therapies, and related clinical services. As of March 1, 2018, it operated 76 nursing centers with 8,945 licensed nursing beds. The company was formerly known as Advocat Inc. and changed its name to Diversicare Healthcare Services, Inc. in March 2013. Diversicare Healthcare Services, Inc. was founded in 1994 and is based in Brentwood, Tennessee.

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