The Ensign Group, Inc. (ENSG) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights robust financial performance with significant EPS and revenue growth, optimistic guidance, and strategic acquisitions. The company has a disciplined M&A approach and is effectively addressing labor challenges. The Q&A reveals confidence in Medicare program adaptation and occupancy growth. A dividend increase and strong cash flow further bolster sentiment. Overall, the positive financial metrics, strategic initiatives, and market positioning suggest a strong positive outlook for the stock.
Key Financial Performance
GAAP diluted earnings per share (EPS) $5.84, an increase of 14.1% year-over-year. The increase is attributed to strong operational performance and disciplined growth.
Adjusted diluted earnings per share (EPS) $6.57, an increase of 19.5% year-over-year. This reflects improved operational efficiencies and higher revenue growth.
Consolidated revenue $5.1 billion, an increase of 18.7% year-over-year. The growth is driven by increased occupancy, skilled mix improvements, and acquisitions.
GAAP net income $344 million, an increase of 15.4% year-over-year. This is due to higher revenue and operational improvements.
Adjusted net income $386.6 million, an increase of 20.6% year-over-year. This reflects the company's focus on operational efficiencies and strategic growth.
Cash and cash equivalents $504 million as of December 31, 2025. This reflects strong cash flow from operations and disciplined financial management.
Cash flow from operations $564 million for the year. This is attributed to strong operational performance and effective cost management.
Lease adjusted net debt-to-EBITDA ratio 1.77x, a record low. This demonstrates the company's disciplined growth and strong financial position.
Dividend Quarterly cash dividend of $0.065 per common share, marking the 23rd consecutive year of dividend increases. This reflects the company's strong liquidity and commitment to returning value to shareholders.
Standard Bearer rental revenue $34.5 million for the quarter, of which $29.3 million was derived from Ensign affiliated operations. This reflects growth in the real estate investment trust segment.
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Operating Highlights
New construction projects: Completed a 40-bed addition at Vista Knoll Specialized Healthcare in Vista, California, and a replacement facility for Grossmont Post Acute in La Mesa, California, adding 15 beds to the original license.
Specialized care development: South Bay Post Acute developed specialized capabilities for bariatric patients, leading to improved patient outcomes and financial growth.
Acquisitions: Added 17 new operations, including 12 real estate assets, across 7 states, totaling 1,371 new skilled nursing beds. Acquisitions include a 7-building portfolio in Utah and others in Texas, Arizona, Colorado, Alabama, Kansas, and Wisconsin.
Expansion of Standard Bearer Healthcare REIT: Added 12 new assets, now comprising 154 owned properties, with 120 leased to Ensign affiliates and 35 to third-party operators.
Occupancy rates: Same-store and transitioning occupancy reached all-time highs of 83.8% and 84.9%, respectively.
Skilled mix improvement: Skilled days increased by 8.5% and 10% for same-store and transitioning operations, respectively. Medicare revenue grew by 15.7% and 11.3% for same-store and transitioning operations.
Staff retention: Director of Nursing turnover declined by 33%, with stable wage growth and reduced staffing agency usage.
Guidance for 2026: Issued annual earnings guidance of $7.41 to $7.61 per diluted share and revenue guidance of $5.77 billion to $5.84 billion, reflecting a 14.3% increase in earnings over 2025.
Long-term growth strategy: Focused on organic growth and acquisitions, with a 5-year adjusted revenue increase of $2.7 billion (111%) and adjusted net income growth of 121%.
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Risk or Challenges
Regulatory Risks: The company acknowledges that forward-looking statements are subject to risks and uncertainties, including changes in reimbursement systems, delays, and changes in state budgets, which could impact financial performance.
Operational Risks: The company faces challenges in maintaining low turnover rates, stable wage growth, and reducing staffing agency usage, which are critical for operational stability and quality care delivery.
Acquisition Risks: The company has been acquiring new operations, including multi-facility portfolios, which may take longer to generate expected returns and could pose integration challenges.
Economic Risks: The company mentions the influence of the general economy on census and staffing, which could impact occupancy rates and financial performance.
Market Risks: The company faces competitive pressures in maintaining and growing its market share, particularly in states with higher occupancy levels.
Strategic Execution Risks: The company’s growth strategy involves significant investments in acquisitions and new construction projects, which require careful execution to achieve expected returns.
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Guidance & Outlook
2026 Earnings Guidance: The company is issuing annual 2026 earnings guidance of $7.41 to $7.61 per diluted share, representing a 14.3% increase over 2025 results and a 36.5% increase over 2024 results.
2026 Revenue Guidance: Annual revenue guidance is set between $5.77 billion and $5.84 billion.
Growth Projections: The company expects continued growth driven by organic improvements, acquisitions, and demographic trends. Same-store occupancy is at 83%, leaving room for organic growth. Mature operations have achieved occupancy levels in the high to mid-90s.
Acquisition Strategy: The company plans to continue acquiring new operations with long-term upside potential. Since 2024, 82 new operations have been acquired, with many performing above expectations. Several new acquisitions are lined up for Q1 2026.
Capital Investments: The company has over $1 billion in liquidity for future investments, including $590 million available on its line of credit and $504 million in cash. Investments will focus on acquisitions, new construction, and adding beds to successful operations.
Standard Bearer Healthcare REIT: Standard Bearer added 12 new assets during the quarter, bringing its portfolio to 154 owned properties. It plans to continue acquiring portfolios with both Ensign-operated and third-party-operated facilities.
Labor and Operational Improvements: The company expects continued progress in labor management, agency usage reduction, and operational initiatives to support growth.
Market Trends: The company anticipates increased demand for services due to strong demographic trends, which will bolster census momentum and long-term growth opportunities.
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Shareholder Return Plan
Quarterly cash dividend: The company increased its dividend for the 23rd consecutive year and paid a quarterly cash dividend of $0.065 per common share.
Dividend history: The company has a long history of paying dividends and plans to continue this practice into the future.
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Key Q&A
Q:What is the current state of the M&A pipeline and how is the company approaching opportunities?
A:The company is seeing a healthy and seller-friendly M&A pipeline with rising valuations. They are encountering both traditional smaller deals and larger opportunities. The company remains disciplined in its growth approach, focusing on high-quality assets with newer construction, higher occupancies, and skilled mix, as seen in their recent Utah acquisition. They are also considering the long-term costs of acquisitions, such as CapEx for older assets.
Q:What initiatives are being taken to address the labor environment and reduce agency labor?
A:The company is focusing on leadership stability, particularly reducing Director of Nursing turnover, which fosters better relationships and retention among caregivers. They are optimistic about continued progress in labor stability and have seen improvements in both agency labor and overtime metrics.
Q:How is the company positioned regarding the new Medicare value-based purchasing program metrics?
A:The company is well-positioned due to its focus on quality metrics and leadership. They have dashboards and tools to measure and improve outcomes, and they have been preparing for these changes for years. Their clinical and data teams are adept at adapting to new requirements, ensuring high-quality care and compliance.
Q:Is there a risk that new Medicare programs could steepen the ramp for turnaround acquisitions?
A:The company believes the bigger challenge lies in changes in patient acuity rather than Medicare program nuances. Their focus is on improving clinical capabilities and aligning leadership and tools to ensure smooth transitions and effective operations in new acquisitions.
Q:What are the expectations for same-store occupancy and seasonality in 2026?
A:The company expects 2026 to mirror 2025 in terms of occupancy improvement, with seasonality being a factor. They anticipate overall occupancy to continue improving, despite the usual mid-year skilled mix decline.
Q:What are the company's plans regarding AI and construction projects?
A:The company is leveraging AI through existing enterprise partnerships and off-the-shelf solutions to improve financial and clinical operations. They are also exploring data-driven clinical decision-making. For construction, they are focusing on adding beds to existing facilities and replacement facilities to meet demand. They have enhanced their in-house construction capabilities to manage costs and efficiency.
Q:What is the company's strategy for managed care patients in behavioral health?
A:The company is addressing the growing need for behavioral health facilities in specific markets like California, Arizona, and Texas. They are developing specialty programs in partnership with managed care organizations to meet these needs, as seen in their new unit at Vista Knoll.
Q:Review of Unclear Management Responses
A:No questions were identified where management avoided giving a direct answer or provided unclear responses.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
CEO COO
Ensign affiliate
Executive VP
Grossmont Hospital
Health
La Mesa
North Seattle
San Diego
Sharp Grossmont
Shoreline
South Bay
Standard Bearer
TPN
Utah
Vista
Washington
acuity
brand
capability
care construction
decade
discharge
facility quality
focus
group
land
occupancy level
peer
project
replacement
solution
staff training
support
ENSG Transcript
The Ensign Group, Inc. (ENSG) Q4 2025 Earnings Call Transcript
Positive2-5
The earnings call highlights robust financial performance with significant EPS and revenue growth, optimistic guidance, and strategic acquisitions. The company has a disciplined M&A approach and is effectively addressing labor challenges. The Q&A reveals confidence in Medicare program adaptation and occupancy growth. A dividend increase and strong cash flow further bolster sentiment. Overall, the positive financial metrics, strategic initiatives, and market positioning suggest a strong positive outlook for the stock.
The Ensign Group, Inc. (ENSG) Q3 2025 Earnings Call Transcript
Positive11-4
The company demonstrated strong financial performance, with significant increases in revenue, earnings, and net income. The raised guidance for earnings and revenue further supports a positive outlook. Despite some uncertainties in managed care contracting, the company is expanding in new markets and seeing growth in skilled services. The Q&A revealed confidence in organic growth and acquisition strategy, contributing to a positive sentiment. The combination of these factors suggests a likely positive stock price movement.
Ensign Group (ENSG) Q2 2025 Earnings Call Transcript
Positive7-25
The earnings call summary indicates strong financial performance, with record occupancy rates, revenue growth, and increased earnings guidance. The Q&A section reveals a disciplined acquisition strategy and confidence in maintaining Medicaid funding. Despite some unclear responses, the overall sentiment is positive, driven by strong financial metrics and optimistic guidance, suggesting a likely positive stock price movement in the short term.
Earnings call transcript: Ensign Group Q1 2025 beats EPS forecast
Positive4-30
The earnings call reflects solid financial performance with strong revenue and earnings growth, increased revenue guidance, and a robust shareholder return plan through dividends and stock repurchases. Despite risks like regulatory changes and staffing challenges, management shows confidence in their strategic approach and market expansion plans. The Q&A session highlights proactive engagement in managing potential Medicaid cuts and a selective acquisition strategy. Overall, the financial health and optimistic outlook suggest a positive stock price movement in the short term.
ENSG Slides
ENSG Report
Frequently Asked Questions
Where does this earnings call transcript come from?
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Why do some answers appear as “Unclear” or “Inaudible”?
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Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
