Executive Summary

Q3 2025 delivered record revenue and occupancy; consolidated revenue rose 19.8% to $1.296B and adjusted EPS increased 18% to $1.64, with guidance raised for FY25 EPS ($6.48–$6.54) and revenue ($$5.05–$5.07B) .
Same-store and transitioning occupancy reached all-time highs of 83.0% and 84.4%, respectively, with skilled mix and Medicare/managed care growth underpinning strength .
Strategic expansion accelerated: 22 operations added (11 CA, 7 UT portfolios), 1,857 beds, and Standard Bearer rental revenue up 33.5% YoY to $32.6M; FFO $19.3M; EBITDA-to-rent coverage 2.5x .
Catalysts: guidance raise, record occupancy/skilled intensity, disciplined M&A with visible pipeline, labor normalization, and 3.2% Medicare market basket increase effective Oct 1 .

What Went Well and What Went Wrong

What Went Well

Record occupancy and strong skilled mix trends: same-store occupancy 83.0%, transitioning 84.4%; skilled days up 5.1% (same) and 10.9% (transitioning) YoY; Medicare revenue up 10.0% (same) and 8.8% (transitioning); managed care revenue up 7.1% (same) and 24.3% (transitioning) .
Acquisition execution and organic runway: 22 operations added in Q3, with CEO highlighting organic potential (e.g., moving same-store occupancy from 83% to 85% equates to eight 100‑bed operations; 88% equates to 17) .
Strategic real estate growth: Standard Bearer rental revenue $32.6M, FFO $19.3M, and EBITDA-to-rent coverage 2.5x; diversification via third-party tenants .

Quote: “We are pleased to report another record quarter… these efforts are bearing fruit… same store and transitioning occupancy increased to 83.0% and 84.4%” .

What Went Wrong

Valuation pressure in select markets (e.g., Texas) leading to disciplined restraint on acquisitions; management notes pockets with pricing “too rich” for fundamentals .
Continued (albeit minimal) contract labor usage, more prevalent in newly acquired operations; wage inflation normalized to low/mid-single digits, but labor remains a watch item .
Non-GAAP adjustments included $12.0M litigation charge and elevated stock-based compensation ($13.0M) in Q3, impacting GAAP figures versus adjusted metrics .

Financial Results

Metric	Q3 2024	Q2 2025	Q3 2025	Consensus Q3 2025
Revenue ($USD Billions)	$1.082	$1.228	$1.296	$1.279*
GAAP Diluted EPS ($)	$1.34	$1.44	$1.42	$1.606*
Adjusted Diluted EPS ($)	$1.39	$1.59	$1.64	$1.606*
GAAP Net Income ($USD Millions)	$78.567	$84.466	$83.911	N/A
Adjusted Net Income ($USD Millions)	$81.141	$93.320	$96.474	N/A

Notes:

Revenue and Adjusted EPS beat consensus in Q3 2025 (actual $1.296B vs $1.279B; actual $1.64 vs $1.606). Values with * retrieved from S&P Global.

Segment breakdown:

Segment Metric	Q3 2024	Q2 2025	Q3 2025
Skilled Services Revenue ($USD Billions)	$1.033	$1.174	$1.239
Standard Bearer Rental Revenue ($USD Millions)	$24.429	$31.468	$32.610
Standard Bearer FFO ($USD Millions)	$14.758	$18.391	$19.331

Key KPIs:

KPI	Q3 2024	Q2 2025	Q3 2025
Same-Store Occupancy (%)	81.3	82.1	83.0
Transitioning Occupancy (%)	81.5	84.0	84.4
Same-Store Skilled Mix (Days, %)	31.0	32.4	31.7
Transitioning Skilled Mix (Days, %)	27.5	29.5	29.4
Service Revenue Payor Mix – Medicaid (%)	39.6	39.8	39.9
Service Revenue Payor Mix – Medicare (%)	24.5	23.8	23.5
Service Revenue Payor Mix – Managed Care (%)	18.8	18.8	18.5
Service Revenue Payor Mix – Private/Other (%)	11.0	11.4	12.0

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Diluted EPS (FY)	FY 2025	$6.34–$6.46 (midpoint $6.40)	$6.48–$6.54 (midpoint $6.51)	Raised
Revenue (FY)	FY 2025	$4.99–$5.02B	$5.05–$5.07B	Raised
Assumptions	FY 2025	Shares ~59.0M; Tax rate 25%	Shares ~59.0M; Tax rate 25%	Maintained
Dividend (Quarterly)	Current	$0.0625/share	$0.0625/share	Maintained

Earnings Call Themes & Trends

Topic	Q1 2025 (Prior-2)	Q2 2025 (Prior-1)	Q3 2025 (Current)	Trend
Occupancy & Skilled Mix	Record highs; same-store 82.6%; skilled daily census up 7.6% YoY	Same-store 82.1%; transitioning 84.0%; skilled census +7.4%/13.5% YoY	All-time highs 83.0%/84.4%; skilled days +5.1%/+10.9% YoY	Improving
Guidance	EPS raised to $6.22–$6.38; revenue to $4.89–$4.94B	EPS raised to $6.34–$6.46; revenue to $4.99–$5.02B	EPS raised to $6.48–$6.54; revenue to $5.05–$5.07B	Upward revisions
M&A & Pipeline	19 operations added; multi-state cluster build-out	8 operations added; steady pace; disciplined criteria	22 operations added; disciplined approach amid pockets of rich pricing; several deals lining up for Q1’26	Accelerating breadth, disciplined
Labor	Focus on culture; staffing improvement narrative emerging	Continued improvement; seasonality managed	Contract labor minimal; wage inflation low/mid-single digits; turnover declining 4th year	Normalizing
Payor/Rate Environment	Strong managed care growth	Managed care revenue +11.8% (same) / +27.8% (transitioning) YoY	Medicare market basket +3.2% effective Oct 1; continued managed care gains	Supportive tailwinds
Behavioral Health	Not highlighted	Not highlighted	Expanding behavioral units (AZ, CA) with managed care partners	Expanding capacity

Management Commentary

Clinically driven culture as differentiator: “Our consistent financial results would not be possible without a relentless patient-focused culture…”; CMS outperformance (surveys +24% state, +33% county; 10% advantage in 4/5‑star buildings vs peers) .
Organic runway: At 83% same-store occupancy, moving to 85% equals adding 8×100-bed operations; at 88% equals 17; organic growth expands census without new fixed overhead, improving margins .
Acquisition discipline: Pricing pockets “too rich” in some markets (e.g., Texas); remain selective with multi-state, off-market opportunities built via local relationships .
Capital & liquidity: Cash $443.7M; ~$593M revolver capacity; >$1B dry powder; lease-adjusted net debt/EBITDA 1.86x .
Standard Bearer: Rental revenue $32.6M; FFO $19.3M; EBITDA-to-rent coverage 2.5x; broader tenant diversification .

Q&A Highlights

Skilled mix runway: Same-store skilled days only 31.7%, leaving “very large” opportunity to grow skilled across portfolio; operators adding capabilities to meet acute provider and managed care needs .
Managed care contracting in new markets: Process takes time; leverages cross-state relationships (e.g., TN); clinical capabilities must ramp alongside contracts .
Deal environment: No special conditions driving Q3 closes; pockets of pricing too rich (Texas); discipline maintained; pipeline includes Q4 2025 and Q1 2026 deals .
Behavioral health capacity: Adding units in AZ and CA with county programs and managed care partners; expanding as demand persists .
Labor normalization: Contract labor now minimal (esp. same-store); wage inflation back to low/mid-single digits; turnover declining for fourth year .

Estimates Context

Metric	Consensus (Q3 2025)	Actual (Q3 2025)	# of Estimates
Primary EPS ($)	1.60557*	1.64*	5*
Revenue ($USD)	1,279,449,510*	1,296,405,000	5*

Both revenue and EPS exceeded consensus in Q3 2025. Values with * retrieved from S&P Global.

Key Takeaways for Investors

Guidance momentum and beats: Revenue and adjusted EPS beat consensus, and FY25 guidance was raised again—an ongoing positive estimate-revision narrative .
Organic growth lever: Same-store occupancy at 83% leaves meaningful runway; each 200–500bps of occupancy adds material “embedded capacity” to drive margins without incremental overhead .
Portfolio quality and disciplined M&A: Large CA/UT portfolios transitioned well; management explicitly avoiding overpriced deals, mitigating long-term risk .
Labor tailwinds: Contract labor minimal; wage inflation normalizing; turnover declining—supportive for sustained margin expansion .
Rate environment support: 3.2% Medicare market basket increase (effective Oct 1) augments payor-rate tailwinds heading into Q4, typically a seasonally strong quarter .
Real estate platform strength: Standard Bearer’s growing rental revenue/FFO and 2.5x coverage add stability and optionality to capital deployment .
Watch items: Rich-priced markets (e.g., TX), payor mix reliance on Medicaid (~40%), and non-GAAP adjustments (e.g., $12M litigation in Q3) warrant monitoring for earnings quality and cash conversion .

S&P Global disclaimer: Consensus estimate values marked with * were retrieved from S&P Global.

ENSIGN GROUP, INC (ENSG)·Q3 2025 Earnings Summary