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ENSIGN GROUP, INC (ENSG)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 was a strong beat-and-raise quarter: adjusted EPS of $1.59 rose 20.5% YoY and exceeded consensus of $1.55*, while revenue of $1.23B rose 18.5% YoY and modestly topped consensus of $1.22B* .
  • Management raised FY25 EPS guidance to $6.34–$6.46 (from $6.22–$6.38) and revenue guidance to $4.99–$5.02B (from $4.89–$4.94B), citing sustained occupancy, skilled mix strength, and better-than-expected acquisition performance .
  • KPIs broadly improved: total occupancy 81.3% (+120 bps YoY), same-facility occupancy 82.1% (+160 bps), transitioning occupancy 84.0% (+370 bps); skilled services revenue +18.4% YoY to $1.17B .
  • Liquidity remains robust ($364M cash; $593M available on revolver), enabling continued acquisitions and Standard Bearer real estate expansion; quarterly dividend of $0.0625 maintained .
  • Stock reaction catalyst: the guidance raise and accelerating operating momentum in both mature and newly acquired facilities, plus visible acquisition pipeline, support estimate revisions and sustained growth narrative .

What Went Well and What Went Wrong

What Went Well

  • Same-store and transitioning occupancy set second-quarter records (82.1% and 84.0%), with skilled daily census +7.4% and +13.5% YoY, underscoring demand and execution. CEO: “our same store and transitioning occupancy increase to 82.1% and 84.0%… new second quarter records” .
  • Strong skilled services performance and payor mix: skilled services revenue +18.4% YoY to $1.17B; managed care revenue improved in both same and transitioning facilities (+11.8% and +27.8% YoY) .
  • Balance sheet firepower and disciplined growth: $364M cash, $592.6M revolver capacity; Standard Bearer rental revenue $31.5M and FFO $18.4M. CFO highlighted >$1B “dry powder” post-Q2 investments .

What Went Wrong

  • GAAP-to-non-GAAP adjustments remain meaningful (stock-based comp $11.7M in Q2; system implementation costs; acquisition-related costs), diluting GAAP comparability and requiring investor focus on adjusted metrics .
  • Medicare mix moderation at the total level vs historic peaks; while skilled mix improved, payor mix still shows heavy Medicaid exposure (69.8% Medicare+Medicaid combined) which can pressure rates if state budgets tighten .
  • Ongoing regulatory and reimbursement uncertainty necessitates continued state-level advocacy; management flagged broader macro and regulatory risks despite recent carve-outs (e.g., provider tax) .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Total Revenue ($USD Billions)$1.036 $1.173 $1.228
GAAP Diluted EPS ($)$1.22 $1.37 $1.44
Adjusted Diluted EPS ($)$1.32 $1.52 $1.59
GAAP Net Income ($USD Millions)$71.0 $80.3 $84.4
Adjusted Net Income ($USD Millions)$76.4 $89.0 $93.3
EBITDA ($USD Millions)$107.3 $125.8 $134.9
Net Income Margin (%)6.9% (71.0/1036.3) 6.8% (80.3/1173.0) 6.9% (84.4/1227.8)
EBITDA Margin (%)10.4% (107.3/1036.3) 10.7% (125.8/1173.0) 11.0% (134.9/1227.8)
Segment Breakdown ($USD Millions)Q2 2024Q1 2025Q2 2025
Skilled Services – Segment Income$122.2 $143.9 $150.0
Skilled Services – EBITDA$133.1 $157.1 $163.8
Skilled Services – Adjusted EBITDA$140.9 $164.0 $170.3
Standard Bearer – Rental Revenue$23.4 $28.4 $31.5
Standard Bearer – FFO$14.5 $17.1 $18.4
KPIs (Skilled Services)Q2 2024Q1 2025Q2 2025
Total Actual Patient Days2,299,068 2,538,135 2,615,490
Total Occupancy % (Operational beds)80.1% 81.9% 81.3%
Skilled Mix by Nursing Days (Total)29.9% 31.4% 30.8%
Skilled Mix by Nursing Revenue (Total)48.2% 50.2% 49.2%
Same-Facility Occupancy %80.5% 82.6% 82.1%
Transitioning Occupancy %80.3% 83.5% 84.0%
Revenue by PayorQ2 2024Q1 2025Q2 2025
Medicaid ($MM, % of service revenue)$411.8, 40.0% $453.8, 38.9% $485.8, 39.8%
Medicare ($MM, % of service revenue)$258.9, 25.1% $287.8, 24.7% $291.1, 23.8%
Managed Care ($MM, % of service revenue)$191.0, 18.5% $227.2, 19.5% $229.5, 18.8%
Private & Other ($MM, % of service revenue)$106.0, 10.3% $128.7, 11.0% $139.7, 11.4%
Results vs Estimates (S&P Global)Consensus EstimateActual
Q2 2025 Revenue ($USD)$1,219,816,160*$1,227,769,000
Q2 2025 Primary EPS ($)$1.5496*$1.59

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Diluted EPSFY 2025$6.22–$6.38 $6.34–$6.46 Raised
RevenueFY 2025$4.89–$4.94B $4.99–$5.02B Raised
Tax Rate AssumptionFY 202525.0% 25.0% Maintained
Diluted Shares AssumptionFY 2025~59.5M ~59.0M Lowered
Quarterly DividendQ2 2025$0.0625 (Q1 paid) $0.0625 declared (payable by Jul 31) Maintained

Additionally, initial FY25 guidance issued with Q4 2024 results was $6.16–$6.34 EPS and $4.83–$4.91B revenue, subsequently raised in Q1 and again in Q2 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Occupancy & Skilled MixQ4: same-store occupancy 81.7%, transitioning 77.5%; skilled days growth across cohorts . Q1: same 82.6%, transitioning 83.5%; skilled mix stronger .Set Q2 records: same 82.1%, transitioning 84.0%; skilled census +7.4% and +13.5% YoY .Improving
Labor & Agency UsageQ4/Q1: focus on reducing registry and turnover .Continued reduction in agency/overtime even at higher occupancy .Improving
M&A & Portfolio IntegrationQ4/Q1: active pipeline; density in new and mature markets; Standard Bearer expansion .CIO details scalable approach to larger multi-state portfolios; ongoing pipeline; additional third-party tenants .Expanding
Standard Bearer REITQ4: Rental revenue $25.1M; FFO $15.3M . Q1: Rental revenue $28.4M; FFO $17.1M .Rental revenue $31.5M; FFO $18.4M; 140 owned properties; 106 leased to Ensign affiliates .Growing
Regulatory/Medicaid FundingQ4: macro/regulatory risks highlighted . Q1: ongoing advocacy .CEO notes provider tax carve-out; confident on state-level funding priorities; watch indirect impacts .Constructive but vigilant
Managed Care & Value-BasedQ1: ongoing value-based discussions with MCOs .CFO confirms active value-based engagements; scale varies by market .Active, incremental

Management Commentary

  • CEO Barry Port: “our same store and transitioning occupancy increase to 82.1% and 84.0%… new second quarter records… we are raising our annual 2025 earnings guidance to between $6.34 to $6.46… [and] revenue guidance to $4.99 billion to $5.02 billion” .
  • CIO Chad Keetch: “We continued our steady pace of growth by adding eight new operations… bringing the number of operations acquired during 2024 and since to 52… we remain committed to… acquisitions that will be accretive to shareholders over the long term” .
  • CFO Suzanne Snapper: “liquidity remains strong with approximately $364.0 million of cash on hand and $592.6 million of available capacity… guidance is based on… ~59.0 million diluted shares and a 25.0% tax rate” .
  • COO Spencer Burton: highlighted facility-level transformations (Sedona Trace; Valley of the Moon) demonstrating reduced registry, improved CMS ratings, and EBIT growth .

Q&A Highlights

  • Larger portfolio integration strategy: No strategic shift, but refined local, cluster-based transitions for scalability; lessons from prior Texas portfolio guide current playbook .
  • Third-party tenant strategy & rent coverage: Leasing selective assets to unaffiliated operators with target ~1.5x coverage over time; disciplined pricing to ensure sustainable economics .
  • Regulatory landscape (Medicaid, “one big beautiful bill”): Direct impacts carved out for SNF; focus remains on advocacy and protecting senior funding; state-level discussions anticipated over next few years .
  • Valuation/pipeline: Moderate pricing increases post-COVID; deal evaluations anchored in local DAR economics; pipeline strong but discipline maintained .
  • California WQIP: CFO expects funding through 2025–2026 by recognition methodology; ongoing work to preserve base-rate integrity as programs evolve .

Estimates Context

  • Q2 2025 beat vs consensus: Adjusted EPS of $1.59 vs $1.55*; revenue $1.228B vs $1.220B* .
  • Forward look: Q3 2025 consensus EPS ~$1.606* and revenue ~$1.279B*, with actuals later to confirm; ongoing guidance raise implies upward pressure on models [GetEstimates].
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Beat-and-raise quarter supports upward estimate revisions; adjusted EPS and revenue topped consensus, and FY25 guidance increased for both EPS and revenue [GetEstimates].
  • Operating momentum is broad-based: occupancy, skilled mix, patient days, and segment EBITDA all strengthened, including sharp gains in transitioning and newly acquired facilities .
  • Balance sheet capacity and Standard Bearer growth provide multiple levers for accretive portfolio expansion, including selective third-party leases to optimize rent coverage .
  • Non-GAAP adjustments are consistent (stock-based comp, system implementations); investors should focus on adjusted EPS/EBITDA while monitoring GAAP trends .
  • Regulatory backdrop constructive near-term (provider tax carve-out), but state budgets require continued advocacy; mix remains Medicaid-heavy, reinforcing the importance of rate negotiations .
  • Near-term trading: Guidance raise and KPI strength are positive catalysts; watch upcoming acquisition closures and any state rate updates.
  • Medium-term thesis: Ensign’s decentralized, cluster-led integration model appears scalable across larger portfolios, supporting sustained growth in earnings and cash flows .