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ENSIGN GROUP, INC (ENSG)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered record operational KPIs and a revenue beat, with total revenue of $1.173B, slightly above consensus, while GAAP diluted EPS of $1.37 missed consensus; adjusted diluted EPS was $1.52 . Consensus: EPS $1.49*, Revenue $1.172B*.
  • Management raised FY 2025 guidance: EPS to $6.22–$6.38 (from $6.16–$6.34) and revenue to $4.89–$4.94B (from $4.83–$4.91B), citing faster-than-expected contribution from new operations and strong occupancy/mix trends vs prior guidance .
  • Same-store and transitioning occupancy hit new highs at 82.6% and 83.5%, respectively; skilled mix and managed care days improved across cohorts, supporting margin trajectory and multi-quarter momentum .
  • Liquidity remains robust: $282.7M cash and $572.1M undrawn revolver; Q1 operating cash flow was $72.2M as the company deployed >$190M into real estate/operations and completed a $20M buyback; dividend $0.0625 was paid, continuing a 22-year increase streak .
  • Near-term stock reaction catalysts: raised FY guidance, revenue beat, accelerating occupancy/mix, plus policy commentary (Medicaid and staffing rules) that management views as manageable given advocacy and portfolio mix .

What Went Well and What Went Wrong

What Went Well

  • Record quarter across KPIs: “operators set several all-time highs,” with same-store and transitioning occupancy reaching 82.6% and 83.5%; skilled daily census up 7.6% and 9.9% YoY; managed care census up 8.9% and 15.6% YoY .
  • Raised FY 2025 guidance (EPS to $6.22–$6.38; revenue to $4.89–$4.94B) on faster-than-expected contributions from newly acquired operations and strong operational momentum .
  • Standard Bearer growth: rental revenue $28.4M (+27.9% YoY), FFO $17.1M (+21.1% YoY); added 13 owned properties in/around the quarter, reinforcing diversified earnings and real estate accretion .

Quotes:

  • “We are thrilled to announce another record setting quarter… our results this quarter demonstrate that we’ve never been stronger” — CEO Barry Port .
  • “We are raising our annual 2025 earnings guidance… [and] increasing our annual revenue guidance” — CEO Barry Port .
  • “We continued our steady pace of growth by adding 19 new operations… across 8 states” — CIO Chad Keetch ; call detail: 1,906 SNF beds and 200 senior living units added .

What Went Wrong

  • EPS miss: GAAP diluted EPS of $1.37 fell short of consensus EPS $1.49*, though adjusted diluted EPS was $1.52; revenue slightly beat .
  • Non-operating headwind: other income net declined YoY to $5.2M from $7.4M, partially offsetting operating gains; rent expense increased given portfolio growth .
  • Policy overhang persists: investor concern around potential Medicaid-related changes and federal staffing minimums; management engaged in advocacy but flagged reconciliation timelines extending through July .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Total Revenue ($USD Billions)$1.082 $1.132 $1.173
GAAP Diluted EPS ($)$1.34 $1.36 $1.37
Adjusted Diluted EPS ($)$1.39 $1.49 $1.52
Net Income ($USD Millions)$78.6 $79.8 $80.4
Income from Operations ($USD Millions)$89.3 $100.8 $101.4
SegmentQ1 2025
Skilled Services Revenue ($USD Millions)$1,123.6
Skilled Services Segment Income ($USD Millions)$143.9
Skilled Services EBITDA ($USD Millions)$157.1
Skilled Services Adjusted EBITDA ($USD Millions)$164.0
Standard Bearer Total Rental Revenue ($USD Millions)$28.4
Standard Bearer Segment Income ($USD Millions)$8.6
Standard Bearer FFO ($USD Millions)$17.1
KPIs (Total Facility unless noted)Q1 2024Q1 2025
Actual Patient Days2,255,531 2,538,135
Occupancy % (Operational Beds)80.1% 81.9%
Skilled Mix by Nursing Revenue49.9% 50.2%
Skilled Mix by Nursing Days31.0% 31.4%
Same-Store Occupancy %80.3% 82.6%
Transitioning Occupancy %79.5% 83.5%
Revenue by Payor ($USD Millions)Q1 2024Q1 2025
Medicaid$390.2 $453.8
Medicare$265.6 $287.8
Managed Care$188.1 $227.2
Private & Other$97.3 $128.7
Service Revenue Total$1,004.5 $1,167.0

Vs Estimates (Q1 2025)

MetricConsensusActual
EPS ($)$1.49*$1.37
Revenue ($USD Billions)$1.1723*$1.1730

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
EPS (Diluted)FY 2025$6.16–$6.34 $6.22–$6.38 Raised
Revenue ($USD Billions)FY 2025$4.83–$4.91 $4.89–$4.94 Raised
AssumptionsFY 2025Shares ~59.5M; Tax rate 25%; normalized insurance; reimbursement expectations Shares ~59.5M; Tax rate 25%; normalized insurance; reimbursement expectations Maintained
DividendQuarterly$0.0625 declared/paid $0.0625 declared Mar 20, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 & Q4 2024)Current Period (Q1 2025)Trend
Occupancy & Skilled MixSame-store occupancy hit 81.7% in Q3; continued improvement in Q4 across cohorts New highs: 82.6% (same-store), 83.5% (transitioning); skilled census up 7.6%/9.9% YoY Improving
Managed Care/ACO PartnershipsManaged care revenue/days growth across cohorts; network narrowing visible Deeper local partnerships; value/outcome-based contracting; back-office data supports collaboration Strengthening
Labor/StaffingWage inflation moderating; agency usage declining; labor stability emerging Near pre-pandemic agency levels; turnover improving; staffing not limiting admissions Stabilizing
Acquisitions & Real EstateAdded 27 operations in Q3; 12 in Q4; focus on disciplined growth, clusters Added 19 operations (8 states), 1,906 SNF beds/200 units; Standard Bearer added 13 assets Robust pipeline
Regulatory/Medicaid PolicyOngoing industry/regulatory “noise”; advocacy ongoing Active engagement with Congress; focus on expansion population; reconciliation through July Watchful, proactive

Management Commentary

  • Strategic focus: “Sound fundamentals coupled with incredible passion can forge consistency… improvements in occupancy and skilled mix… highlight the enormous upside inherent in our portfolio” — Barry Port .
  • Guidance rationale: “After such a strong first quarter… faster-than-expected contribution from newly acquired operations, we are raising our annual 2025 earnings [and] revenue guidance” — Barry Port .
  • Growth discipline: “Remain committed to proven deal criteria… focus is to carefully choose acquisitions that will be accretive… near- and long-term” — Chad Keetch .
  • Liquidity and leverage: “Lease-adjusted net debt-to-EBITDA of 2.13x… ~$570M revolver capacity and >$1B dry powder” — Suzanne Snapper .

Q&A Highlights

  • Managed care/value-based contracting: Local leadership + data transparency drive outcomes and volume; partnerships align clinical performance with financial returns .
  • Policy outlook: Advocacy with House/Senate; emphasis that potential per-capita cap ideas focus on expansion population; timeline points to reconciliation into July .
  • Acquisition pace/mix: Ample deal flow; real estate-heavy quarter in Q1; remainder of year likely more lease-focused; talent pipeline is the growth limiter, not capital .
  • Staffing leverage: Agency usage near pre-pandemic; stable wage environment; ability to continue admissions without staffing constraints .
  • Medicaid rate updates: States cautious amid D.C. uncertainty; visibility for 2025 rate cycles remains good; ongoing state-level engagement .

Estimates Context

  • Q1 2025: EPS consensus $1.49* vs GAAP diluted EPS $1.37 (miss); Revenue consensus $1.172B* vs $1.173B actual (beat) . Values retrieved from S&P Global.
  • Implications: Expect modest upward revenue estimate revisions; EPS may see limited adjustments given raised FY EPS guidance $6.22–$6.38 and strong operational momentum .

Key Takeaways for Investors

  • Operational momentum is broad-based with record occupancy/mix and managed care growth driving revenue and adjusted EPS resilience despite a GAAP EPS miss versus consensus .
  • Raised FY 2025 guidance signals confidence in organic improvements and contributions from acquisitions; guidance midpoint implies ~14.5% YoY EPS growth .
  • Liquidity and balance sheet flexibility (> $1B dry powder) support continued disciplined M&A and real estate accretion via Standard Bearer .
  • Policy risk remains an overhang, but management’s advocacy and portfolio mix (limited expansion-population exposure) mitigate near-term impact; monitor reconciliation headlines into summer .
  • Segment mix continues to diversify earnings: Skilled Services adjusted EBITDA $164.0M; Standard Bearer FFO $17.1M in Q1, supporting recurring cash flows .
  • Near-term trading lens: narrative anchored by guidance raise and revenue beat; watch subsequent quarters for EPS cadence, labor stability, and acquisition integration KPIs .
  • Medium-term thesis: Local-cluster operating model, payor partnerships, and real estate platform create durable compounding through occupancy/mix improvements and disciplined external growth .

Citations: . Values marked with * retrieved from S&P Global.