FULLTEXT DEL 1 AV 3
10-Q – 2025-11-03 – ensg-20250930.htm
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ensg:SuzanneD.SnapperMember 2025-09-30 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________ FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended September 30, 2025 . OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from to . Commission file number: 001-33757 _____________________________ THE ENSIGN GROUP, INC . (Exact Name of Registrant as Specified in Its Charter) Delaware 33-0861263 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 29222 Rancho Viejo Road, Suite 127 San Juan Capistrano , CA 92675 (Address of Principal Executive Offices and Zip Code) ( 949 ) 487-9500 (Registrant’s Telephone Number, Including Area Code) _____________________________ Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.001 per share ENSG NASDAQ Global Select Market Indicate by check mark: whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes ☐ No whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). þ Yes ☐ No whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act: Large accelerated filer þ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Yes ☐ No whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes þ No As of October 29, 2025, 57,924,783 shares of the registrant’s common stock, $0.001 par value, were outstanding. Table of Contents THE ENSIGN GROUP, INC. QUARTERLY REPORT ON FORM 10-Q FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 TABLE OF CONTENTS PART I. Financial Information Pg. Item 1. Financial Statements (unaudited): Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 1 Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2025 and 2024 2 Condensed Consolidated Statements of Stockholders' Equity for the three and nine months ended September 30, 2025 and 2024 3 Condensed Consolidated Statements of Cash Flows for the n ine months ended Septe mber 30, 2025 and 2024 5 Notes to the Condensed Consolidated Financial Statements 7 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 31 Item 3. Quantitative and Qualitative Disclosures About Market Risk 72 Item 4. Controls and Procedures 73 P ART II. Other Information Item 1. Legal Proceedings 73 Item 1A. Risk Factors 76 Item 5. Other Information 108 Item 6. Exhibits 109 Signatures Table of Contents PART I. Item 1. FINANCIAL STATEMENTS THE ENSIGN GROUP, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except par values) September 30, 2025 December 31, 2024 ASSETS Current assets: Cash and cash equivalents $ 443,668 $ 464,598 Accounts receivable—less allowance for doubtful accounts of $ 7,948 and $ 8,435 at September 30, 2025 and December 31, 2024, respectively 612,744 569,897 Investments—current 62,641 62,255 Prepaid expenses and other current assets 87,525 60,882 Total current assets $ 1,206,578 $ 1,157,632 Property and equipment, net 1,598,401 1,291,354 Right-of-use assets 2,047,979 1,861,071 Insurance subsidiary deposits and investments 169,142 141,246 Deferred tax assets 56,125 66,281 Restricted and other assets 43,789 46,499 Intangible assets, net 6,442 7,292 Goodwill 97,981 97,981 TOTAL ASSETS $ 5,226,437 $ 4,669,356 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 105,796 $ 98,947 Accrued wages and related liabilities 370,530 347,532 Lease liabilities—current 110,817 93,475 Accrued self-insurance liabilities—current 73,854 67,331 Other accrued liabilities 160,042 132,057 Current maturities of long-term debt 4,191 4,086 Total current liabilities $ 825,230 $ 743,428 Long-term debt—less current maturities 138,557 141,585 Long-term lease liabilities—less current portion 1,902,946 1,735,325 Accrued self-insurance liabilities—less current portion 160,646 144,421 Other long-term liabilities 76,156 64,169 TOTAL LIABILITIES $ 3,103,535 $ 2,828,928 Commitments and contingencies (Notes 14 and 19) EQUITY Ensign Group, Inc. stockholders' equity: Common stock: $ 0.001 par value; 150,000 shares authorized; 61,461 and 57,897 shares issued and shares outstanding at September 30, 2025, respectively, and 60,838 and 57,438 shares issued and shares outstanding at December 31, 2024, respectively 61 61 Additional paid-in capital 593,781 528,052 Retained earnings 1,664,458 1,426,762 Common stock in treasury, at cost, 3,564 and 3,400 shares at September 30, 2025 and December 31, 2024, respectively ( 138,835 ) ( 117,764 ) Total Ensign Group, Inc. stockholders' equity $ 2,119,465 $ 1,837,111 Non-controlling interest 3,437 3,317 Total equity $ 2,122,902 $ 1,840,428 TOTAL LIABILITIES AND EQUITY $ 5,226,437 $ 4,669,356 See accompanying notes to condensed consolidated financial statements. 1 Table of Contents THE ENSIGN GROUP, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (In thousands, except per share data) REVENUE Service revenue $ 1,289,779 $ 1,076,092 $ 3,678,233 $ 3,111,151 Rental revenue 6,626 5,684 18,982 17,082 TOTAL REVENUE $ 1,296,405 $ 1,081,776 $ 3,697,215 $ 3,128,233 Expense: Cost of services 1,044,659 859,992 2,944,288 2,479,615 Rent—cost of services 61,528 54,792 175,799 159,940 General and administrative expense 67,367 56,180 199,029 169,532 Depreciation and amortization 26,633 21,474 76,606 61,619 TOTAL EXPENSES $ 1,200,187 $ 992,438 $ 3,395,722 $ 2,870,706 Income from operations 96,218 89,338 301,493 257,527 Other income (expense): Interest expense ( 1,971 ) ( 2,024 ) ( 6,033 ) ( 6,028 ) Interest income 6,168 7,607 18,291 21,151 Other income 6,185 3,753 11,787 7,686 OTHER INCOME, NET $ 10,382 $ 9,336 $ 24,045 $ 22,809 Income before provision for income taxes 106,600 98,674 325,538 280,336 Provision for income taxes 22,689 20,107 76,808 61,628 NET INCOME $ 83,911 $ 78,567 $ 248,730 $ 218,708 Less: Net income attributable to noncontrolling interests 67 123 213 422 NET INCOME ATTRIBUTABLE TO THE ENSIGN GROUP, INC. $ 83,844 $ 78,444 $ 248,517 $ 218,286 NET INCOME PER SHARE ATTRIBUTABLE TO THE ENSIGN GROUP INC. Basic $ 1.46 $ 1.38 $ 4.34 $ 3.86 Diluted $ 1.42 $ 1.34 $ 4.23 $ 3.76 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Basic 57,382 56,776 57,214 56,553 Diluted 58,956 58,444 58,713 58,125 See accompanying notes to condensed consolidated financial statements. 2 Table of Contents THE ENSIGN GROUP, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Non-Controlling Interest (In thousands) Shares Amount Shares Amount Total BALANCE - JANUARY 1, 2025 57,438 $ 61 $ 528,052 $ 1,426,762 3,400 $ ( 117,764 ) $ 3,317 $ 1,840,428 Issuance of common stock to employees and directors resulting from the exercise of stock options 106 — 5,050 — — — — 5,050 Issuance of restricted stock, net of forfeitures 87 — 8,003 — — — — 8,003 Shares of common stock used to satisfy tax withholding obligations — — — — — ( 14 ) — ( 14 ) Dividends declared ($ 0.0625 per share) — — — ( 3,597 ) — — — ( 3,597 ) Employee stock award compensation — — 10,691 — — — — 10,691 Repurchase of common stock (Note 20) ( 84 ) — — — 84 ( 10,775 ) — ( 10,775 ) Acquisition of noncontrolling interest shares — — ( 11 ) — — — — ( 11 ) Net income attributable to noncontrolling interest — — — — — — 76 76 Noncontrolling interests attributable to subsidiary equity plan — — 82 — — — ( 53 ) 29 Net income attributable to the Ensign Group, Inc. — — — 80,277 — — — 80,277 BALANCE - MARCH 31, 2025 57,547 $ 61 $ 551,867 $ 1,503,442 3,484 $ ( 128,553 ) $ 3,340 $ 1,930,157 Issuance of common stock to employees and directors resulting from the exercise of stock options 168 — 8,652 — — — — 8,652 Issuance of restricted stock, net of forfeitures 41 — — — — — — — Shares of common stock used to satisfy tax withholding obligations ( 7 ) — — — 7 ( 1,057 ) — ( 1,057 ) Dividends declared ($ 0.0625 per share) — — — ( 3,605 ) — — — ( 3,605 ) Employee stock award compensation — — 11,628 — — — — 11,628 Repurchase of common stock (Note 20) ( 73 ) — — — 73 ( 9,225 ) — ( 9,225 ) Acquisition of noncontrolling interest shares — — ( 64 ) — — — — ( 64 ) Net income attributable to noncontrolling interest — — — — — — 70 70 Noncontrolling interests attributable to subsidiary equity plan — — 117 — — — ( 86 ) 31 Net income attributable to the Ensign Group, Inc. — — — 84,396 — — — 84,396 BALANCE - JUNE 30, 2025 57,676 $ 61 $ 572,200 $ 1,584,233 3,564 $ ( 138,835 ) $ 3,324 $ 2,020,983 Issuance of common stock to employees and directors resulting from the exercise of stock options 181 — 9,024 — — — — 9,024 Issuance of restricted stock, net of forfeitures (Note 16) 40 — — — — — — — Dividends declared ($ 0.0625 per share) — — — ( 3,619 ) — — — ( 3,619 ) Employee stock award compensation — — 12,868 — — — — 12,868 Acquisition of noncontrolling interest shares — — ( 382 ) — — — — ( 382 ) Net income attributable to noncontrolling interest — — — — — — 67 67 Noncontrolling interests attributable to subsidiary equity plan — — 71 — — — 46 117 Net income attributable to the Ensign Group, Inc. — — — 83,844 — — — 83,844 BALANCE - SEPTEMBER 30, 2025 57,897 $ 61 $ 593,781 $ 1,664,458 3,564 $ ( 138,835 ) $ 3,437 $ 2,122,902 3 Table of Contents Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Non-Controlling Interest (In thousands) Shares Amount Shares Amount Total BALANCE - JANUARY 1, 2024 56,597 $ 60 $ 465,707 $ 1,142,653 3,390 $ ( 116,555 ) $ 5,452 $ 1,497,317 Issuance of common stock to employees and directors resulting from the exercise of stock options 219 — 6,229 — — — — 6,229 Issuance of restricted stock, net of forfeitures 88 — 6,165 — — — — 6,165 Shares of common stock used to satisfy tax withholding obligations — — — — — ( 14 ) — ( 14 ) Dividends declared ($ 0.0600 per share) — — — ( 3,414 ) — — — ( 3,414 ) Employee stock award compensation — — 8,231 — — — — 8,231 Acquisition of noncontrolling interest shares — — ( 10 ) — — — — ( 10 ) Net income attributable to noncontrolling interest — — — — — — 125 125 Noncontrolling interests attributable to subsidiary equity plan — — 14 — — — ( 11 ) 3 Net income attributable to the Ensign Group, Inc. — — — 68,835 — — — 68,835 BALANCE - MARCH 31, 2024 56,904 $ 60 $ 486,336 $ 1,208,074 3,390 $ ( 116,569 ) $ 5,566 $ 1,583,467 Issuance of common stock to employees and directors resulting from the exercise of stock options 117 1 4,089 — — — — 4,090 Issuance of restricted stock, net of forfeitures 38 — — — — — — — Shares of common stock used to satisfy tax withholding obligations ( 10 ) — — — 10 ( 1,195 ) — ( 1,195 ) Dividends declared ($ 0.0600 per share) — — — ( 3,424 ) — — — ( 3,424 ) Employee stock award compensation — — 8,978 — — — — 8,978 Acquisition of noncontrolling interest shares — — ( 29 ) — — — — ( 29 ) Net income attributable to noncontrolling interest — — — — — — 174 174 Noncontrolling interests attributable to subsidiary equity plan — — 37 — — — ( 34 ) 3 Net income attributable to the Ensign Group, Inc. — — — 71,007 — — — 71,007 BALANCE - JUNE 30, 2024 57,049 $ 61 $ 499,411 $ 1,275,657 3,400 $ ( 117,764 ) $ 5,706 $ 1,663,071 Issuance of common stock to employees and directors resulting from the exercise of stock options 205 — 7,977 — — — — 7,977 Issuance of restricted stock, net of forfeitures (Note 16) 27 — — — — — — — Dividends declared ($ 0.0600 per share) — — — ( 3,437 ) — — — ( 3,437 ) Employee stock award compensation — — 9,177 — — — — 9,177 Acquisition of noncontrolling interest shares — — ( 2,387 ) — — — ( 2,024 ) ( 4,411 ) Net income attributable to noncontrolling interest — — — — — — 123 123 Noncontrolling interests attributable to subsidiary equity plan — — 158 — — — ( 155 ) 3 Net income attributable to the Ensign Group, Inc. — — — 78,444 — — — 78,444 BALANCE - SEPTEMBER 30, 2024 57,281 $ 61 $ 514,336 $ 1,350,664 3,400 $ ( 117,764 ) $ 3,650 $ 1,750,947 See accompanying notes to condensed consolidated financial statements. 4 Table of Contents THE ENSIGN GROUP, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended September 30, (In thousands) 2025 2024 Cash flows from operating activities: Net income $ 248,730 $ 218,708 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 76,606 61,619 Amortization of deferred financing fees 793 796 Non-cash leasing arrangement 632 590 Impairment of long-lived assets 1,073 1,849 Deferred income taxes 10,156 1,931 Provision for doubtful accounts 1,509 1,419 Stock-based compensation 35,375 26,406 Cash received from insurance proceeds 3,877 199 (Gain) loss on insurance claims, other investments and asset disposals ( 5,953 ) 849 Change in operating assets and liabilities Accounts receivable ( 44,356 ) ( 69,025 ) Prepaid income taxes ( 19,507 ) ( 22,130 ) Prepaid expenses and other assets ( 7,716 ) ( 16,668 ) Cash surrender value of life insurance policy premiums ( 16,332 ) ( 14,840 ) Deferred compensation liability 16,332 14,941 Operating lease obligations ( 3,265 ) 331 Accounts payable 5,449 ( 5,237 ) Accrued wages and related liabilities 27,549 25,303 Other accrued liabilities 27,081 2,308 Accrued self-insurance liabilities 22,917 17,381 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 380,950 $ 246,730 Cash flows from investing activities: Purchase of property and equipment ( 143,714 ) ( 110,079 ) Cash payments for acquisitions ( 240,300 ) ( 83,384 ) Escrow deposits — ( 3,846 ) Cash from insurance proceeds 3,567 1,562 Cash proceeds from the sale of assets 124 2,808 Purchases of investments ( 91,791 ) ( 52,262 ) Maturities of investments 82,278 22,553 Other restricted assets 599 ( 817 ) NET CASH USED IN INVESTING ACTIVITIES $ ( 389,237 ) $ ( 223,465 ) Cash flows from financing activities: Proceeds from debt (Note 14) — 400 Payments on debt ( 3,050 ) ( 3,350 ) Issuance of common stock upon exercise of options 22,726 18,296 Repurchase of shares of common stock to satisfy tax withholding obligations ( 1,071 ) ( 1,209 ) Repurchase of shares of common stock (Note 20) ( 20,000 ) — Dividends paid ( 10,791 ) ( 10,234 ) Non-controlling interest distribution — ( 278 ) Purchase of non-controlling interest ( 457 ) ( 4,450 ) NET CASH USED IN FINANCING ACTIVITIES $ ( 12,643 ) $ ( 825 ) Net (decrease)/increase in cash and cash equivalents ( 20,930 ) 22,440 Cash and cash equivalents beginning of period 464,598 509,626 Cash and cash equivalents end of period $ 443,668 $ 532,066 5 Table of Contents Nine Months Ended September 30, (In thousands) 2025 2024 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period for: Interest $ 5,220 $ 5,276 Income taxes 86,181 81,962 Lease liabilities 178,699 159,487 Non-cash financing and investing activity Accrued capital expenditures $ 9,300 $ 7,300 Accrued dividends declared 3,619 3,437 Right-of-use assets obtained in exchange for new and modified operating lease obligations 258,486 220,815 See accompanying notes to condensed consolidated financial statements. 6 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars, shares and options in thousands, except per share data) 1. DESCRIPTION OF BUSINESS The Company — The Ensign Group, Inc. (collectively, Ensign or the Company), is a holding company with no direct operating assets, employees or revenue. The Company's independent subsidiaries provide health care services across the post-acute care continuum and engage in the ownership, acquisition, development and leasing of skilled nursing, senior living and other healthcare-related properties and ancillary businesses. As of September 30, 2025, the Company's independent subsidiaries operated 361 facilities and other ancillary operations located in 17 states. The Company's independent subsidiaries have a collective capacity of approximately 37,100 operational skilled nursing beds and 3,400 senior living units. As of September 30, 2025, the Company's independent subsidiaries operated 249 facilities under long-term lease arrangements and had options to purchase eight of those 249 facilities. The Company's real estate portfolio consists of 148 owned real estate properties, which includes 112 facilities operated and managed by the Company's independent subsidiaries, 36 operations leased to and operated by third-party operators and the Service Center (defined below) location. Of those 36 third-party operations, one senior living operation is located on the same real estate property as a skilled nursing operation that an independent subsidiary operates. Certain of the Company’s wholly-owned independent subsidiaries, collectively referred to as the Service Center, provide specific accounting, payroll, human resources, information technology, legal, risk management and other centralized services to the other independent subsidiaries. The Company also has a wholly-owned captive insurance subsidiary that provides some claims-made coverage to the Company’s independent subsidiaries for general and professional liabilities, as well as coverage for certain workers’ compensation insurance liabilities. The Company's captive real estate investment trust (REIT), Standard Bearer Healthcare REIT, Inc. (Standard Bearer), owns and manages its real estate business. The REIT structure provides the Company with an efficient vehicle for future acquisitions of properties that could be operated by Ensign's independent subsidiaries or other third parties. Standard Bearer has elected to be taxed as a REIT for U.S. federal income tax purposes. Refer to Note 6, Standard Bearer for additional information on Standard Bearer. Each of the Company's independent subsidiaries are operated by wholly-owned subsidiaries that have their own management, employees and assets. References herein to the consolidated “Company” and “its” assets and activities in this Quarterly Report are not meant to imply, nor should it be construed as meaning that The Ensign Group, Inc. has direct operating assets, employees or revenue, or that any of the subsidiaries are operated by The Ensign Group, Inc. Other Information — The accompanying condensed consolidated financial statements as of September 30, 2025, and for the three and nine months ended September 30, 2025 and 2024 (collectively, the Interim Financial Statements) are unaudited. Certain information and note disclosures normally included in the annual consolidated financial statements have been condensed or omitted, as permitted under applicable rules and regulations. Readers of the Interim Financial Statements should refer to the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2024 which are included in the Company’s Annual Report on Form 10-K, File No. 001-33757 (the Annual Report) filed with the Securities and Exchange Commission (SEC). Management believes that the Interim Financial Statements reflect all adjustments which are of a normal and recurring nature necessary to present fairly the Company’s financial position and results of operations in all material respects. The results of operations presented in the Interim Financial Statements are not necessarily representative of operations for the entire year. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation — The accompanying Interim Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). The Company is the sole member or stockholder of various consolidated limited liability companies and corporations established to operate various acquired skilled nursing operations, senior living operations and related ancillary services. All intercompany transactions and balances have been eliminated in consolidation. The Company presents noncontrolling interests within the equity section of its condensed consolidated balance sheets and the amount of consolidated net income that is attributable to The Ensign Group, Inc. and the noncontrolling interests in its condensed consolidated statements of income. The Interim Financial Statements include the accounts of all independent subsidiaries controlled by the Company through its ownership of a majority voting interest. 7 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The preparation of the Interim Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Interim Financial Statements and the reported amounts of revenue and expenses during the reporting periods. The most significant estimates in the Company’s Interim Financial Statements relate to revenue, acquired property and equipment, goodwill, right-of-use assets, impairment of long-lived assets, lease liabilities, general and professional liabilities, workers' compensation and healthcare claims included in accrued self-insurance liabilities and income taxes. Actual results could differ from those estimates. Recently Issued Accounting Pronouncements — In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09 " Income Taxes (Topic 740): Improvements to Income Tax Disclosures, " which requires the Company to disclose disaggregated jurisdictional and categorical information for the tax rate reconciliation, income taxes paid and other income tax related amounts. This guidance is effective for annual periods beginning after December 15, 2024, which will be the Company's fiscal year 2025, with early adoption permitted. The adoption is expected to enhance the Company's Notes to the Consolidated Financial Statements. The Company is currently evaluating the impact of the ASU on its Consolidated Financial Statements. In November 2024, the FASB issued ASU 2024-03 " Disaggregation of Income Statement Expenses, " which requires the Company to disaggregate key expense categories such as employee compensation, depreciation and intangible asset amortization within its financial statements. ASU 2024-03 is effective for annual periods beginning with the Company's fiscal year 2027, and interim periods within the Company's fiscal year 2028, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its Notes to the Consolidated Financial Statements. In September 2025, the FASB issued ASU 2025-06 " Targeted Improvements to the Accounting for Internal-Use Software ," which amends the accounting for and disclosure of software costs under the existing standards. The amendments clarify the requirement for capitalizing software costs. ASU 2025-06 is effective beginning with the Company's fiscal year 2028 for both interim and annual periods, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its Consolidated Financial Statements. 3. REVENUE AND ACCOUNTS RECEIVABLE The Company's service revenue is derived primarily from providing healthcare services to its patients. Revenue is recognized when services are provided to patients at the amount that reflects the consideration that the Company expects to be entitled from patients and third-party payors, including Medicaid, Medicare and insurers (private and Medicare replacement plans), in exchange for providing patient care. Disaggregation of Revenue The Company disaggregates revenue from contracts with its patients by payors. The Company has determined that disaggregating revenue into these categories achieves the disclosure objectives to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Revenue by Payor The Company’s revenue is derived primarily from providing healthcare services to patients and is recognized on the date services are provided at amounts billable to individual patients, adjusted for estimates for variable consideration. For patients under reimbursement arrangements with third-party payors, including Medicaid, Medicare and private insurers, revenue is recorded based on contractually agreed-upon amounts or rates, adjusted for estimates for variable consideration, on a per patient, daily basis or as services are performed. Revenue from the Medicare and Medicaid programs accounted for 69.5 % and 69.6 % of all service revenue for the three and nine months ended September 30, 2025, respectively, and 70.2 % and 71.0 % of all service revenue for the three and nine months ended September 30, 2024, respectively. Settlements with Medicare and Medicaid payors for retroactive adjustments due to audits and reviews are considered variable consideration and are included in the determination of the estimated transaction price. These settlements are estimated based on the terms of the payment agreement with the payor, correspondence from the payor and the Company’s historical settlement activity. Consistent with healthcare industry practices, any changes to these revenue estimates are recorded in the period the change or adjustment becomes known based on the final settlement. The Company recorded adjustments to revenue which were not material to the Company's revenue for the three and nine months ended September 30, 2025 and 2024. 8 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Service revenue for the three and nine months ended September 30, 2025 and 2024 is summarized in the following tables: Three Months Ended September 30, 2025 2024 Revenue % of Revenue Revenue % of Revenue Medicaid (1) $ 515,157 39.9 % $ 425,642 39.6 % Medicare 303,281 23.5 263,594 24.5 Medicaid — skilled 78,450 6.1 65,907 6.1 Total Medicaid and Medicare $ 896,888 69.5 % $ 755,143 70.2 % Managed care 237,978 18.5 202,528 18.8 Private and other (2) 154,913 12.0 118,421 11.0 SERVICE REVENUE $ 1,289,779 100.0 % $ 1,076,092 100.0 % (1) Medicaid payor includes revenue for senior living operations. (2) Private and other includes revenue for skilled services (private, Veteran Affairs and hospice payors), senior living and ancillary operations. Nine Months Ended September 30, 2025 2024 Revenue % of Revenue Revenue % of Revenue Medicaid (1) $ 1,454,845 39.6 % $ 1,227,565 39.5 % Medicare 882,149 24.0 788,046 25.3 Medicaid — skilled 223,208 6.0 192,185 6.2 Total Medicaid and Medicare $ 2,560,202 69.6 % $ 2,207,796 71.0 % Managed care 694,690 18.9 581,654 18.7 Private and other (2) 423,341 11.5 321,701 10.3 SERVICE REVENUE $ 3,678,233 100.0 % $ 3,111,151 100.0 % (1) Medicaid payor includes revenue for senior living operations. (2) Private and other includes revenue for skilled services (private, Veteran Affairs and hospice payors), senior living and ancillary operations. In addition to the service revenue above, the Company's rental revenue derived from triple-net lease arrangements with third parties was $ 6,626 and $ 18,982 , respectively, for the three and nine months ended September 30, 2025 and $ 5,684 and $ 17,082 , respectively, for the three and nine months ended September 30, 2024. Balance Sheet Impact Included in the Company’s condensed consolidated balance sheets are contract balances, comprised of billed accounts receivable and unbilled receivables, which are the result of the timing of revenue recognition, billings and cash collections, as well as contract liabilities, which primarily represent payments the Company receives in advance of services provided. The Company had no material contract liabilities or contract assets as of September 30, 2025 and December 31, 2024, or activity during the three and nine months ended September 30, 2025 and 2024. Accounts receivable consist primarily of amounts due from Medicare and Medicaid programs, other government programs, managed care health plans and private payor sources, net of estimates for variable consideration and doubtful accounts. Accounts receivable as of September 30, 2025 and December 31, 2024, is summarized in the following table: September 30, 2025 December 31, 2024 Medicaid $ 266,048 $ 228,872 Managed care 162,905 139,711 Medicare 97,949 77,056 Private and other payors 93,790 132,693 $ 620,692 $ 578,332 Less: allowance for doubtful accounts ( 7,948 ) ( 8,435 ) ACCOUNTS RECEIVABLE, NET $ 612,744 $ 569,897 9 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 4. COMPUTATION OF NET INCOME PER COMMON SHARE Basic net income per share is computed by dividing income from operations attributable to stockholders of The Ensign Group, Inc. by the weighted average number of outstanding common shares for the period. The computation of diluted net income per share is similar to the computation of basic net income per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. A reconciliation of the numerator and denominator used in the calculation of basic net income per common share follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 NUMERATOR: Net income $ 83,911 $ 78,567 $ 248,730 $ 218,708 Less: net income attributable to noncontrolling interests 67 123 213 422 Net income attributable to The Ensign Group, Inc. $ 83,844 $ 78,444 $ 248,517 $ 218,286 DENOMINATOR: Weighted average shares outstanding for basic net income per share 57,382 56,776 57,214 56,553 Basic net income per common share: $ 1.46 $ 1.38 $ 4.34 $ 3.86 A reconciliation of the numerator and denominator used in the calculation of diluted net income per common share follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 NUMERATOR: Net income $ 83,911 $ 78,567 $ 248,730 $ 218,708 Less: net income attributable to noncontrolling interests 67 123 213 422 Net income attributable to The Ensign Group, Inc. $ 83,844 $ 78,444 $ 248,517 $ 218,286 DENOMINATOR: Weighted average common shares outstanding 57,382 56,776 57,214 56,553 Plus: incremental shares from assumed conversion (1) 1,574 1,668 1,499 1,572 Adjusted weighted average common shares outstanding 58,956 58,444 58,713 58,125 Diluted net income per common share: $ 1.42 $ 1.34 $ 4.23 $ 3.76 (1) Options outstanding which are anti-dilutive and therefore not factored into the weighted average common shares amount above were 1,072 and 914 for the three and nine months ended September 30, 2025, respectively, and 400 and 858 for the three and nine months ended September 30, 2024, respectivel y. 5. FAIR VALUE MEASUREMENTS The Company's financial assets include held-to-maturity investments carried at amortized cost basis of $ 148,735 and $ 138,600 , of which $ 80,706 and $ 65,831 are designated to support long-term insurance subsidiary liabilities, as of September 30, 2025 and December 31, 2024, respectively. As of September 30, 2025 and December 31, 2024, the amortized cost basis of these financial assets are considered to approximate fair value and are derived using Level 2 inputs. The Company believes its amortized cost basis investments that were in an unrealized loss position as of September 30, 2025 and December 31, 2024 do not require an allowance for expected credit losses, nor has any event occurred through the filing date of this report that would indicate differently. 10 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The Company's financial assets also include the contracts insuring the lives of certain employees who are eligible to participate in non-qualified deferred compensation plans that are held in a rabbi trust. The cash surrender value of these contracts is based on funds that shadow the investment allocations specified by participants in the deferred compensation plan and are held at fair value. As of September 30, 2025 and December 31, 2024, the fair value of the investment funds was $ 72,381 and $ 56,049 , respectively, which are derived using Level 2 inputs. Additionally, the Company has other investments held at historical cost basis, which are not material, for which the fair value is derived using Level 3 inputs. 6. STANDARD BEARER Standard Bearer's real estate portfolio consists of 142 of the Company's 148 owned real estate properties, of which 108 are operated and managed by the Company's independent subsidiaries and 35 are leased to and operated by third-party operators. Of those 35 operations, one senior living operation is located on the same real estate property as a skilled nursing operation that an independent subsidiary operates. During the nine months ended September 30, 2025, Standard Bearer added $ 228,874 of real estate assets associated with 15 stand-alone skilled nursing operations, one stand-alone senior living operation and two campus operations . Four of the acquisitions were related to exercising purchase options under an existing lease arrangement from CareTrust REIT, Inc. (CareTrust). Of these additions, two s tand-alone skilled nursing operations are leased to third-party operators and the remaining additions are operated by the Company's independent subsidiaries. Refer to Note 7, Operation Expansions , for additional information. Subsequent to September 30, 2025, Standard Bearer added approximately $ 65,000 of real estate assets associated with seven stand-alone skilled nursing operations, of which all were leased back to the Company's independent subsidiaries. Refer to Note 7, Operation Expansions , for additional information. During the nine months ended September 30, 2024, Standard Bearer added $ 81,274 of real estate assets associated with seven stand-alone skilled nursing operations and two campus operations, all of which are operated by the Company's independent subsidiaries. Refer to Note 7, Operation Expansions , for additional information. As part of the formation of Standard Bearer, certain of the Company's independent subsidiaries , Standard Bearer and Standard Bearer's independent real estate subsidiaries entered into several agreements that include leasing, management services and debt arrangements between the operations . All intercompany transactions have been eliminated in consolidation. Refer to Note 8, Business Segments , for additional information related to these intercompany eliminations as well as Standard Bearer as a reportable segment. Intercompany master lease agreements Certain of the Company's independent subsidiaries and 108 Standard Bearer independent real estate subsidiaries have entered into seven triple-net master lease agreements (collectively, the Standard Bearer Master Leases). The lease periods range from 15 to 19 years with three five-year renewal options beyond the initial term, on the same terms and conditions. The rent structure under the Standard Bearer Master Leases includes a fixed component, subject to annual escalation equal to the lesser of (1) the percentage change in the Consumer Price Index (but not less than zero ) or (2) 2.5 %. In addition to rent, the independent subsidiaries are required to pay the following: (1) all impositions and taxes levied on or with respect to the leased properties; (2) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties; (3) all insurance required in connection with the leased properties and the business conducted on the leased properties; (4) all facility maintenance and repair costs; and (5) all fees in connection with any licenses or authorizations necessary or appropriate for the leased properties and the business conducted on the leased properties. Intercompany rental revenue generated from Ensign affiliated operations was $ 27,634 and $ 78,294 , respectively, for the three and nine months ended September 30, 2025 and $ 20,234 and $ 57,396 , respectively, for the three and nine months ended September 30, 2024. 11 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Intercompany management agreement Standard Bearer has no employees. The Service Center provides personnel and services to Standard Bearer pursuant to the management agreement between Standard Bearer and the Service Center. The management agreement provides for a base management fee that is equal to 5.0 % of total rental revenue and an incentive management fee that is equal to 5.0 % of funds from operations (FFO) and is capped at 1.0 % of total rental revenue, for a total of 6.0 %. Management fee generated between Standard Bearer and the Service Center for the three and nine months ended September 30, 2025 was $ 1,955 and $ 5,530 , respectively. Management fees generated between Standard Bearer and the Service Center for the three and nine months ended September 30, 2024 was $ 1,466 and $ 4,199 , respectively. Intercompany debt arrangements Standard Bearer obtains its funding through various sources including operating cash flows, access to debt arrangements and intercompany loans. The intercompany debt arrangements include mortgage loans and a credit facility to fund acquisitions and working capital needs. The interest rate under the credit facility is a base rate plus a margin ranging from 0.25 % to 1.25 % per annum or SOFR plus a margin ranging from 1.25 % to 2.25 % per annum. In addition, as the Department of Housing and Urban Development (HUD) mortgage loans and promissory note are entered into by real estate subsidiaries of Standard Bearer, the interest expense incurred from these debts are included in Standard Bearer's segment income. Refer to Note 14, Debt , for additional information related to these debts. Equity Instrument Denominated in the Shares of a Subsidiary As part of the formation of Standard Bearer in 2022, the Company established the Standard Bearer Healthcare REIT, Inc. 2022 Omnibus Incentive Plan (Standard Bearer Equity Plan). The Company may grant stock options and restricted stock awards under the Standard Bearer Equity Plan to employees and management of Ensign's independent subsidiaries. These awards generally vest over a period of five years or upon the occurrence of certain prescribed events. The value of the stock options and restricted stock awards is tied to the value of the common stock of Standard Bearer, which is determined based on an independent valuation of Standard Bearer. The Company can also call the awards, generally upon employee termination. During the nine months ended September 30, 2025 and 2024, the Company did not grant any stock options or restricted shares under the Standard Bearer Equity Plan. During the nine months ended September 30, 2025 and 2024, there were no restricted stock awards vested for the periods. The grant-date fair value of the awards is recognized as compensation expense over the relevant vesting periods, with a corresponding adjustment to noncontrolling interests. The grant value was determined based on an independent valuation of the subsidiary shares. For the three and nine months ended September 30, 2025, the Standard Bearer Equity Plan's share-based compensation expense was not material. There was no expense during the three and nine months ended September 30, 2024. 7. OPERATION EXPANSIONS The focus of the Company's independent subsidiaries is to expand its operations through leases or acquisitions of real estate that are complementary to the current operations, accretive to the business, or otherwise advance the Company's strategy. The results of all independent subsidiaries are included in the Interim Financial Statements subsequent to the date of acquisition. Acquisitions are accounted for using the acquisition method of accounting. In connection with the new operations obtained through long-term leases, the Company did not acquire any material assets or assume any liabilities other than the tenant's post-assumption rights and obligations under the long-term lease. The Company also entered into a separate operations transfer agreement with each prior operator as part of each transaction. The Company's independent subsidiaries also enter into long-term leases that may include options to purchase the facilities. As a result, from time to time, an independent real estate subsidiary may acquire the property of facilities that have previously been operated under third-party leases. 2025 Expansions During the nine months ended September 30, 2025, the Company expanded its operations with the addition of 28 stand-alone skilled nursing operations, five stand-alone senior living operations and one campus operation. These new operations added a total of 3,384 operational skilled nursing beds and 313 operational senior living units to be operated by the Company's independent subsidiaries. 12 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Subsequent to September 30, 2025, the Company expanded its operations with the addition of eight stand-alone skilled nursing operations. These new operations added 428 operational skilled nursing beds to be operated by the Company's independent subsidiaries. 2024 Expansions During the nine months ended September 30, 2024, the Company expanded its operations with the addition of 24 stand-alone skilled nursing operations and two campus operations. One of the stand-alone skilled nursing operations includes a long-term acute care hospital. These new operations added a total of 2,565 operational skilled nursing beds and 202 operational senior living units operated by the Company's independent subsidiaries. Included within the operational skilled nursing beds are 43 long-term acute care beds. The Company also invested in new ancillary services that are complementary to its existing businesses. 8. BUSINESS SEGMENTS The Company has two reportable segments: (1) skilled services, which includes the operation of skilled nursing facilities and rehabilitation therapy services and (2) Standard Bearer, which is comprised of selected real estate properties owned by Standard Bearer and leased to skilled nursing and senior living operators. As of September 30, 2025, the skilled services segment includes 314 skilled nursing and 31 campus operations that provide both skilled nursing and rehabilitative care services and senior living services. The Company's Standard Bearer segment consists of 142 owned real estate properties. The Company also reports an “All Other” category that includes results from its senior living operations, which includes 16 stand-alone senior living operations and the senior living operations at 31 campus operations that provide both skilled nursing and rehabilitative care services and senior living services. In addition, the "All Other" category includes mobile diagnostics, medical transportation, other real estate, other ancillary operations and the Service Center. Services included in the “All Other” category are insignificant individually and therefore do not constitute a reportable segment. The Company’s reportable segments are significant operating segments that offer differentiated services. The segment structure reflects the Company's current operational and financial management and provides the best structure to maximize the quality of care and investment strategy provided, while maintaining financial discipline. Segment income is defined as income before provision for income taxes, excluding gain or loss from sale of real estate, real estate insurance recoveries and impairment of long-lived assets. The Company's chief operating decision maker or CODM, who is the Chief Executive Officer, reviews segment income for each operating segment to evaluate performance and allocate capital resources. The CODM uses segment income to analyze actual results as part of operational planning and to decide whether to reinvest profits into the segments or into other parts of the Company, such as through acquisitions, to pay dividends or to recommend a stock repurchase program. The Company's CODM does not review assets by segment in his resource allocation and therefore assets by segment are not disclosed below. Intercompany revenue is eliminated in consolidation, along with corresponding intercompany expenses. Included in segment income for Standard Bearer is expense for intercompany services provided by the Service Center as described in Note 6, Standard Bearer , as it is part of the CODM financial information. 13 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The following tables set forth financial information for the segments: Three Months Ended September 30, 2025 Skilled Services Standard Bearer Total Service revenue (1) $ 1,239,096 $ — $ 1,239,096 Rental revenue — 32,610 32,610 Segment revenue $ 1,239,096 $ 32,610 $ 1,271,706 Reconciliation of revenue: All other revenue (2) 60,578 Elimination of intercompany revenue (3) ( 35,879 ) TOTAL CONSOLIDATED REVENUE $ 1,296,405 Less: Other segment items (4) 1,071,815 2,959 Depreciation and amortization 14,155 9,709 Interest expense (5) — 10,320 Segment income $ 153,126 $ 9,622 $ 162,748 Reconciliation of profit or loss: All other not included in segment income ( 56,148 ) INCOME BEFORE PROVISION FOR INCOME TAXES $ 106,600 (1) Skilled services service revenue does not include intercompany service revenue generated by ancillary operations provided to the Company's independent subsidiaries and management service revenue generated by the Service Center with Standard Bearer. Intercompany service revenue is eliminated in "Elimination of intercompany revenue". (2) All other revenue includes $ 57,377 of service revenue and $ 3,201 of rental revenue for the three months ended September 30, 2025, both of which include intercompany revenue that is eliminated in "Elimination of intercompany revenue". (3) Elimination of intercompany revenue includes the elimination of intercompany rental revenue of $ 29,185 and intercompany service revenue of $ 6,694 for the three months ended September 30, 2025. (4) Other segment items include cost of services and rent expense for the skilled services segment and cost of services, rent expense and general and administrative expenses for the Standard Bearer segment. Additionally, there are intercompany expenses of $ 35,879 during the three months ended September 30, 2025, which are eliminated in consolidation. (5) Included in interest expense in Standard Bearer is interest from intercompany debt arrangements between Standard Bearer and The Ensign Group, Inc. of $ 9,090 during the three months ended September 30, 2025, which is eliminated in consolidation. 14 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Three Months Ended September 30, 2024 Skilled Services Standard Bearer Total Service revenue (1) $ 1,033,113 $ — $ 1,033,113 Rental revenue — 24,429 24,429 Segment revenue $ 1,033,113 $ 24,429 $ 1,057,542 Reconciliation of revenue: All other revenue (2) 51,144 Elimination of intercompany revenue (3) ( 26,910 ) TOTAL CONSOLIDATED REVENUE $ 1,081,776 Less: Other segment items (4) 893,083 2,420 Depreciation and amortization 11,541 7,484 Interest expense (5) — 7,251 Segment income $ 128,489 $ 7,274 $ 135,763 Reconciliation of profit or loss: All other not included in segment income ( 37,089 ) INCOME BEFORE PROVISION FOR INCOME TAXES $ 98,674 (1) Skilled services service revenue does not include intercompany service revenue generated by ancillary operations provided to the Company's independent subsidiaries and management service revenue generated by the Service Center with Standard Bearer. Intercompany service revenue is eliminated in "Elimination of intercompany revenue". (2) All Other revenue includes $ 48,209 of service revenue and $ 2,935 of rental revenue for the three months ended September 30, 2024, both of which include intercompany revenue that is eliminated in "Elimination of intercompany revenue". (3) Elimination of intercompany revenue includes the elimination intercompany rental revenue of $ 21,680 and intercompany service revenue of $ 5,230 for the three months ended September 30, 2024. (4) Other segment items include cost of services and rent expense for the skilled services segment and cost of services, rent expense and general and administrative expenses for the Standard Bearer segment. Additionally, there are intercompany expenses of $ 26,910 during the three months ended September 30, 2024, which is eliminated in consolidation. (5) Included in interest expense in Standard Bearer is interest from intercompany debt arrangements between Standard Bearer and The Ensign Group, Inc. of $ 5,535 during the three months ended September 30, 2024, which is eliminated in consolidation. 15 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Nine Months Ended September 30, 2025 Skilled Services Standard Bearer Total Service revenue (1) $ 3,536,226 $ — $ 3,536,226 Rental revenue — 92,479 92,479 Segment revenue $ 3,536,226 $ 92,479 $ 3,628,705 Reconciliation of revenue: All other revenue (2) 170,336 Elimination of intercompany revenue (3) ( 101,826 ) TOTAL CONSOLIDATED REVENUE $ 3,697,215 Less: Other segment items (4) 3,048,047 8,331 Depreciation and amortization 41,118 27,450 Interest expense (5) — 29,367 Segment income $ 447,061 $ 27,331 $ 474,392 Reconciliation of profit or loss: All other not included in segment income ( 148,854 ) INCOME BEFORE PROVISION FOR INCOME TAXES $ 325,538 (1) Skilled services service revenue does not include intercompany service revenue generated by ancillary operations provided to the Company's independent subsidiaries and management service revenue generated by the Service Center with Standard Bearer. Intercompany service revenue is eliminated in "Elimination of intercompany revenue". (2) All other revenue includes $ 160,978 of service revenue and $ 9,358 of rental revenue for the nine months ended September 30, 2025, both of which include intercompany revenue that is eliminated in "Elimination of intercompany revenue". (3) Elimination of intercompany revenue includes the elimination of intercompany rental revenue of $ 82,855 and intercompany service revenue of $ 18,971 for the nine months ended September 30, 2025. (4) Other segment items include cost of services and rent expense for the skilled services segment and cost of services, rent expense and general and administrative expenses for the Standard Bearer segment. Additionally, there are intercompany expenses of $ 101,826 during the nine months ended September 30, 2025, which are eliminated in consolidation. (5) Included in interest expense in Standard Bearer is interest from intercompany debt arrangements between Standard Bearer and The Ensign Group, Inc. of $ 25,153 during the nine months ended September 30, 2025, which is eliminated in consolidation. 16 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Nine Months Ended September 30, 2024 Skilled Services Standard Bearer Total Service revenue (1) $ 2,994,000 $ — $ 2,994,000 Rental revenue — 69,984 69,984 Segment revenue $ 2,994,000 $ 69,984 $ 3,063,984 Reconciliation of revenue: All other revenue (2) 141,055 Elimination of intercompany revenue (3) ( 76,806 ) TOTAL CONSOLIDATED REVENUE $ 3,128,233 Less: Other segment items (4) 2,583,529 6,686 Depreciation and amortization 32,988 21,479 Interest expense (5) — 19,927 Segment income $ 377,483 $ 21,892 $ 399,375 Reconciliation of profit or loss: All other not included in segment income ( 119,039 ) INCOME BEFORE PROVISION FOR INCOME TAXES $ 280,336 (1) Skilled services service revenue does not include intercompany service revenue generated by ancillary operations provided to the Company's independent subsidiaries and management service revenue generated by the Service Center with Standard Bearer. Intercompany service revenue is eliminated in "Elimination of intercompany revenue". (2) All Other revenue includes $ 132,175 of service revenue and $ 8,880 of rental revenue for the nine months ended September 30, 2024, both of which include intercompany revenue that is eliminated in "Elimination of intercompany revenue". (3) Elimination of intercompany revenue includes the elimination intercompany rental revenue of $ 61,782 and intercompany service revenue of $ 15,024 for the nine months ended September 30, 2024. (4) Other segment items include cost of services and rent expense for the skilled services segment and cost of services, rent expense and general and administrative expenses for the Standard Bearer segment. Additionally, there are intercompany expenses of $ 76,806 during the nine months ended September 30, 2024, which is eliminated in consolidation. (5) Included in interest expense in Standard Bearer is interest from intercompany debt arrangements between Standard Bearer and The Ensign Group, Inc. of $ 14,818 during the nine months ended September 30, 2024, which is eliminated in consolidation. Service revenue by major payor source were as follows: Three Months Ended September 30, 2025 Skilled Services All Other (3) Total Service Revenue Revenue % Medicaid (1) $ 501,722 $ 13,435 $ 515,157 39.9 % Medicare 303,281 — 303,281 23.5 Medicaid-skilled 78,450 — 78,450 6.1 Subtotal $ 883,453 $ 13,435 $ 896,888 69.5 % Managed care 237,978 — 237,978 18.5 Private and other (2) 117,665 37,248 154,913 12.0 TOTAL SERVICE REVENUE $ 1,239,096 $ 50,683 $ 1,289,779 100.0 % 17 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Three Months Ended September 30, 2024 Skilled Services All Other (3) Total Service Revenue Revenue % Medicaid (1) $ 416,190 $ 9,452 $ 425,642 39.6 % Medicare 263,594 — 263,594 24.5 Medicaid-skilled 65,907 — 65,907 6.1 Subtotal $ 745,691 $ 9,452 $ 755,143 70.2 % Managed care 202,528 — 202,528 18.8 Private and other (2) 84,894 33,527 118,421 11.0 TOTAL SERVICE REVENUE $ 1,033,113 $ 42,979 $ 1,076,092 100.0 % Nine Months Ended September 30, 2025 Skilled Services All Other (3) Total Service Revenue Revenue % Medicaid (1) $ 1,419,037 $ 35,808 $ 1,454,845 39.6 % Medicare 882,149 — 882,149 24.0 Medicaid-skilled 223,208 — 223,208 6.0 Subtotal $ 2,524,394 $ 35,808 $ 2,560,202 69.6 % Managed care 694,690 — 694,690 18.9 Private and other (2) 317,142 106,199 423,341 11.5 TOTAL SERVICE REVENUE $ 3,536,226 $ 142,007 $ 3,678,233 100.0 % Nine Months Ended September 30, 2024 Skilled Services All Other (3) Total Service Revenue Revenue % Medicaid (1) $ 1,201,435 $ 26,130 $ 1,227,565 39.5 % Medicare 788,046 — 788,046 25.3 Medicaid-skilled 192,185 — 192,185 6.2 Subtotal $ 2,181,666 $ 26,130 $ 2,207,796 71.0 % Managed care 581,654 — 581,654 18.7 Private and other (2) 230,680 91,021 321,701 10.3 TOTAL SERVICE REVENUE $ 2,994,000 $ 117,151 $ 3,111,151 100.0 % (1) Medicaid payor includes revenue generated from senior living operations. (2) Private and other includes revenue for skilled services (private, Veteran Affairs and hospice payors), senior living and ancillary operations. (3) All Other incorporates intercompany eliminations. 18 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 9. PROPERTY AND EQUIPMENT - NET Property and equipment, net consists of the following: September 30, 2025 December 31, 2024 Land $ 204,995 $ 162,873 Buildings and improvements 1,151,819 933,790 Leasehold improvements 244,666 212,603 Equipment 463,770 396,018 Furniture and fixtures 4,719 4,349 Construction in progress 62,326 41,209 $ 2,132,295 $ 1,750,842 Less: accumulated depreciation ( 533,894 ) ( 459,488 ) PROPERTY AND EQUIPMENT, NET $ 1,598,401 $ 1,291,354 Real Estate Acquisitions A majority of the real estate properties were acquired by subsidiaries of Standard Bearer, as detailed in Note 6. Standard Bearer. The table below presents the allocation of the purchase price for real estate purchases during the nine months ended September 30, 2025 and 2024: Nine Months Ended September 30, 2025 2024 Land $ 42,122 $ 17,909 Building and improvements 192,550 62,428 Equipment, furniture, and fixtures 5,274 1,898 Assembled occupancy 354 515 Goodwill — 372 Other indefinite-lived intangible assets — 262 TOTAL ACQUISITIONS $ 240,300 $ 83,384 10. INTANGIBLE ASSETS - NET September 30, 2025 December 31, 2024 Weighted Average Life (Years) Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Intangible Assets Net Net Assembled occupancy 0.4 $ 2,345 $ ( 2,345 ) $ — $ 1,991 $ ( 1,316 ) $ 675 Facility trade name 30.0 733 ( 480 ) 253 733 ( 462 ) 271 Customer relationships 18.4 4,582 ( 3,059 ) 1,523 4,582 ( 2,902 ) 1,680 TOTAL $ 7,660 $ ( 5,884 ) $ 1,776 $ 7,306 $ ( 4,680 ) $ 2,626 During the three and nine months ended September 30, 2025, amortization expense was $ 340 and $ 1,891 , respectively, of which $ 273 and $ 687 was related to the amortization of right-of-use assets, respectively. Amortization expense was $ 598 and $ 1,535 , respectively, of which $ 303 and $ 909 was related to the amortization of right-of-use assets for the three and nine months ended September 30, 2024, respectively. 19 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Estimated amortization expense for each of the years ending December 31 is as follows: Year Amount 2025 (remainder) $ 61 2026 234 2027 234 2028 234 2029 234 2030 234 Thereafter 545 $ 1,776 Other indefinite-lived intangible assets consist of the following: September 30, 2025 December 31, 2024 Trade name $ 889 $ 889 Medicare and Medicaid licenses 3,777 3,777 TOTAL $ 4,666 $ 4,666 11. GOODWILL Goodwill is subject to annual testing for impairment during the fourth quarter of each year. In addition, goodwill is tested for impairment if events occur or circumstances indicate that its carrying value may not be recoverable. There were no indicators of goodwill impairment noted during the three and nine months ended September 30, 2025. The Company anticipates that the majority of goodwill recognized will be fully deductible for tax purposes as of September 30, 2025. Provided that goodwill corresponds to the acquisition of a business and not merely the acquisition of real estate property, the Company's Standard Bearer segment appropriately does not carry a goodwill balance. There were no activities in goodwill during the nine months ended September 30, 2025. The following table represents goodwill value by the skilled services segment and "all other" category as of September 30, 2025 and December 31, 2024: Skilled Services All Other Total Goodwill $ 88,626 $ 9,355 $ 97,981 12. OTHER ACCRUED LIABILITIES Other accrued liabilities consist of the following: September 30, 2025 December 31, 2024 Quality assurance fee $ 16,548 $ 12,667 Refunds, deferred revenue and advances 85,490 75,573 Cash held in trust for patients 7,761 6,370 Dividends payable 3,619 3,589 Property taxes 17,133 15,400 Accrued litigation (Note 19) 12,000 — Other 17,491 18,458 OTHER ACCRUED LIABILITIES $ 160,042 $ 132,057 Quality assurance fee represents the aggregate of amounts payable to various states that have a mandated fee based on patient days or licensed beds. Refunds, deferred revenue and advances consists of liabilities related to duplicate payments and credit balances from various payor sources, as well as payments received from residents in advance of services provided. Cash held in trust for patients reflects monies received from or on behalf of patients. Maintaining a trust account for patients is a regulatory requirement and, while the trust assets offset the liabilities, the Company assumes a fiduciary responsibility for these funds. The cash balance related to this liability is included in other current assets in the condensed consolidated balance sheets. 20 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 13. INCOME TAXES The Company recorded income tax expense of $ 76,808 and $ 61,628 during the nine months ended September 30, 2025 and 2024, respectively, or 23.6 % of earnings before income taxes for the nine months ended September 30, 2025, compared to 22.0 % for the nine months ended September 30, 2024. The effective tax rate for both periods is driven by the impact of excess tax benefits from stock-based compensation, offset by non-deductible expenses including non-deductible compensation. The Company is not currently under examination by any major income tax jurisdiction. During 2025, the statutes of limitations will lapse on the Company's 2021 federal tax year and certain 2020 and 2021 state tax years. The Company does not believe the federal or state statute lapses or any other event will significantly impact the balance of unrecognized tax benefits in the next twelve months. The net balance of unrecognized tax benefits was not material to the Interim Financial Statements for the nine months ended September 30, 2025 and 2024. On July 4, 2025, the One Big Beautiful Bill (OBBB) was enacted in the U.S. The OBBB includes provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act and changes to certain U.S. corporate tax provisions. These changes include 100% bonus depreciation for capital expenditures incurred after January 19, 2025, and full expensing of domestic research and experimental expenditures. FASB ASC Topic 740, Income Taxes, requires the effects of tax law changes to be recognized in the period of enactment. The Company has reflected the impact of the enacted provisions, primarily affecting deferred tax liability and income tax receivable balances, in its condensed consolidated balance sheets. The Company does not anticipate that these provisions will affect its current period income tax expense or its effective tax rate for 2025. 14. DEBT Debt consists of the following: September 30, 2025 December 31, 2024 Mortgage loans and promissory note $ 145,388 $ 148,438 Less: current maturities ( 4,191 ) ( 4,086 ) Less: debt issuance costs, net ( 2,640 ) ( 2,767 ) LONG-TERM DEBT LESS CURRENT MATURITIES $ 138,557 $ 141,585 Credit Facility with a Lending Consortium Arranged by Truist The Company maintains a revolving credit facility between the Company and its independent subsidiaries, including Standard Bearer as co-borrowers, and Truist Securities (Truist) (the Credit Facility) with a revolving line of credit of up to $ 600,000 in aggregate principal amount with a maturity date of April 8, 2027. Borrowings are supported by a lending consortium arranged by Truist. The interest rates applicable to loans under the Credit Facility are, at the Company's option, equal to either a base rate plus a margin ranging from 0.25 % to 1.25 % per annum or SOFR plus a margin ranging from 1.25 % to 2.25 % per annum, based on the Consolidated Total Net Debt to Consolidated EBITDA ratio (as defined in the Credit Facility). In addition, there is a commitment fee on the unused portion of the commitments that ranges from 0.20 % to 0.40 % per annum, depending on the Consolidated Total Net Debt to Consolidated EBITDA ratio. Borrowings made under the Credit Facility are guaranteed, jointly and severally, by certain of the Company’s wholly-owned subsidiaries, and are secured by a pledge of stock of the Company's material independent subsidiaries as well as a first lien on substantially all of such independent subsidiaries' personal property. The Credit Facility contains customary covenants that, among other things, restrict, subject to certain exceptions, the ability of the Company and its independent subsidiaries to grant liens on their assets, incur indebtedness, sell assets, make investments, engage in acquisitions, mergers or consolidations, amend certain material agreements and pay certain dividends and other restricted payments. Under the terms of the Credit Facility, the Company must comply with financial maintenance covenants to be tested quarterly, consisting of (i) a maximum consolidated total net debt to consolidated EBITDA ratio (which shall not be greater than 3.75 :1.00; provided that if the aggregate consideration for approved acquisitions in a six month period is greater than $ 50,000 , then the ratio can be increased at the election of the Company with notice to the administrative agent to 4.25 :1.00 for the first fiscal quarter and the immediately following three fiscal quarters), and (ii) a minimum interest/rent coverage ratio (which cannot be less than 1.50 :1.00). As of September 30, 2025, there was no outstanding debt under the Credit Facility. The Company was in compliance with all loan covenants as of September 30, 2025. 21 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Mortgage Loans and Promissory Note As of September 30, 2025, the Company has 23 subsidiaries that have mortgage loans insured with HUD in the aggregate amount of $ 144,322 , which subjects these subsidiaries to HUD oversight and periodic inspections. The mortgage loans bear effective interest rates in a range of 3.1 % to 4.2 %, including fixed interest rates in a range of 2.4 % to 3.3 % per annum. In addition to the interest rate, the Company incurs other fees for HUD placement, including, but not limited to audit fees. Amounts borrowed under the mortgage loans may be prepaid, subject to prepayment fees based on the principal balance on the date of prepayment. For the majority of the loans, during the first three years, the prepayment fee is 10.0 % and is reduced by 3.0 % in the fourth year of the loan and reduced by 1.0 % per year for years five through ten of the loan. There is no prepayment penalty after year ten. The terms for all the mortgage loans are 25 to 35 years. In addition to the HUD mortgage loans above, the Company has a promissory note of $ 1,066 that bears a fixed interest rate of 5.3 % per annum and has a term of 12 years. The note, which was assumed as part of an acquisition, is secured by the real property comprising the facility and the rent, issues and profits thereof, as well as all personal property used in the operation of the facility. Off-Balance Sheet Arrangements As of September 30, 2025 and December 31, 2024, the Company had approximately $ 7,402 and $ 27,893 , respectively, of borrowing capacity under the Credit Facility pledged as collateral to secure outstanding letters of credit. The Company believes that its outstanding letters of credit as of September 30, 2025 do not require an allowance for expected credit losses, nor has any event occurred through the filing date of this report that would indicate differently. 15. OPTIONS AND AWARDS Stock-based compensation expense consists of stock-based payment awards made to employees and directors, including employee stock options and restricted stock awards, based on estimated fair values. As stock-based compensation expense recognized in the Company’s condensed consolidated statements of income for the three and nine months ended September 30, 2025 and 2024 was based on awards expected to vest, it has been reduced for estimated forfeitures. The Company estimates forfeitures at the time of grant and, if necessary, revises the estimate in subsequent periods if actual forfeitures differ. The Company has one stock incentive plan, the Amended and Restated 2022 Omnibus Incentive Plan (the Amended and Restated Plan), pursuant to which grants of the Company's securities may currently be made. During the second quarter of 2025, the Company’s stockholders approved the Amended and Restated Plan, which increased the total number of shares authorized for issuance under the 2022 Omnibus Incentive Plan (the Predecessor Plan). Including the shares rolled over from the Predecessor Plan, the Amended and Restated Plan provides for the issuance of 4,231 shares of common stock. The number of shares available to be issued under the Amended and Restated Plan will be reduced by (i) one share for each share that relates to an option or stock appreciation right award and (ii) two shares for each share which relates to an award other than a stock option or stock appreciation right award (a full-value award). Non-employee director options, to the extent granted, will vest and become exercisable in three equal annual installments, or the length of the term if less than three years , on the completion of each year of service measured from the grant date. All other options generally vest over five years at 20 % per year on the anniversary of the grant date. Options expire ten years from the date of grant. At September 30, 2025, the total number of shares available for issuance under the Amended and Restated Plan was 3,724 . The Company uses the Black-Scholes option-pricing model to recognize the value of stock-based compensation expense for stock option awards. Determining the appropriate fair-value model and calculating the fair value of stock option awards at the grant date requires judgment, including estimating stock price volatility, expected option life, and forfeiture rates. The fair-value of the restricted stock awards at the grant date is based on the market price on the grant date, adjusted for forfeiture rates. The Company develops estimates based on historical data and market information, which can change significantly over time. Stock Options The Company used the following assumptions for stock options granted during the three months ended September 30, 2025 and 2024: 22 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Grant Year Options Granted Weighted Average Risk-Free Rate Expected Life Weighted Average Volatility Weighted Average Dividend Yield 2025 190 4.0 % 6.2 years 39.1 % 0.2 % 2024 112 3.8 % 6.2 years 40.3 % 0.2 % The Company used the following assumptions for stock options granted during the nine months ended September 30, 2025 and 2024: Grant Year Options Granted Weighted Average Risk-Free Rate Expected Life Weighted Average Volatility Weighted Average Dividend Yield 2025 517 4.1 % 6.2 years 39.3 % 0.2 % 2024 466 4.2 % 6.1 years 40.7 % 0.2 % For the nine months ended September 30, 2025 and 2024, the following represents the exercise price and fair value displayed at grant date for stock option grants: Grant Year Granted Weighted Average Exercise Price Weighted Average Fair Value of Options 2025 517 $ 149.08 $ 66.56 2024 466 $ 127.07 $ 57.81 The weighted average exercise price equaled the weighted average fair value of common stock on the grant date for all options granted during the nine months ended September 30, 2025 and 2024 and therefore, the intrinsic value was $ 0 at the date of grant. The following table represents the employee stock option activity during the nine months ended September 30, 2025: Number of Options Outstanding Weighted Average Exercise Price Number of Options Vested Weighted Average Exercise Price of Options Vested January 1, 2025 3,987 $ 78.84 1,895 $ 52.64 Granted 517 149.08 Forfeited ( 46 ) 107.63 Exercised ( 455 ) 49.93 September 30, 2025 4,003 $ 90.87 1,928 $ 62.74 The aggregate intrinsic value of options outstanding, vested, expected to vest and exercised as of September 30, 2025 and December 31, 2024 is as follows: Options September 30, 2025 December 31, 2024 Outstanding $ 327,883 $ 219,309 Vested 212,109 152,011 Expected to vest 108,579 63,243 The intrinsic value is calculated as the difference between the market value of the underlying common stock and the exercise price of the options . The aggregate intrinsic value of options that vested during the nine months ended September 30, 2025 and 2024 was $ 40,633 and $ 34,971 , respectively. The total intrinsic value of options exercised during the nine months ended September 30, 2025 and 2024 was $ 44,962 and $ 50,840 , respectively. Restricted Stock Awards The Company granted 43 and 177 restricted stock awards during the three and nine months ended September 30, 2025, respectively. The Company granted 29 and 116 restricted stock awards during the three and nine months ended September 30, 2024, respectively. All awards were granted at an issue price of $ 0 and generally vest over five years . The fair value per share of restricted awards granted during the nine months ended September 30, 2025 and 2024 ranged from $ 126.34 to $ 169.24 and $ 116.65 to $ 146.37 , respectively. The fair value per share includes quarterly stock awards to non-employee directors. Included in the restricted stock award grants are $ 8,003 and $ 6,165 of annual bonuses that were settled in vested restricted stock awards in the first quarter of 2025 and 2024, respectively . 23 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) A summary of the status of the Company's non-vested restricted stock awards as of September 30, 2025 and changes during the nine months ended September 30, 2025 is presented below: Non-Vested Restricted Awards Weighted Average Grant Date Fair Value Nonvested at January 1, 2025 435 $ 102.71 Granted 177 141.85 Vested ( 195 ) 104.05 Forfeited ( 9 ) 107.92 Nonvested at September 30, 2025 408 $ 119.62 During the three and nine months ended September 30, 2025, the Company granted 4 and 11 automatic quarterly stock awards, respectively, to non-employee directors for their service on the Company's board of directors. The fair value per share of these stock awards ranged from $ 129.09 to $ 141.18 based on the market price on the grant date. Stock-based compensation expense Stock-based compensation expense recognized for the Company's equity incentive plans and long-term incentive plan for the three and nine months ended September 30, 2025 and 2024 was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Stock-based compensation expense related to stock options $ 8,361 $ 5,699 $ 22,568 $ 16,205 Stock-based compensation expense related to restricted stock awards 3,999 2,883 11,162 8,546 Stock-based compensation expense related to restricted stock awards to non-employee directors 508 595 1,457 1,635 TOTAL $ 12,868 $ 9,177 $ 35,187 $ 26,386 In future periods, the Company expects to recognize approximately $ 94,617 and $ 42,557 in stock-based compensation expense for unvested options and unvested restricted stock awards, respectively, that were outstanding as of September 30, 2025. Future stock-based compensation expense will be recognized over 3.7 weighted average years for both unvested options and restricted stock awards. There were 2,075 unvested and outstanding options as of September 30, 2025, of which 1,916 options are expected to vest. The weighted average contractual life for options outstanding, vested and expected to vest as of September 30, 2025 was 6.7 years. 16. LEASES The Company leases from CareTrust real property associated with 104 independent skilled nursing and senior living facilities used in the Company’s operations under eight “triple-net” master lease agreements (collectively, the Master Leases), which range in terms from 13 to 20 years. At the Company’s option, the Master Leases may be extended for two or three five-year renewal terms beyond the initial term, on the same terms and conditions. The extension of the term of any of the Master Leases is subject to the following conditions: (1) no event of default under any of the Master Leases having occurred and continuing; and (2) the tenants providing timely notice of their intent to renew. The term of the Master Leases is subject to termination prior to the expiration of the current term upon default by the tenants in their obligations, if not cured within any applicable cure periods set forth in the Master Leases. If the Company elects to renew the term of a Master Lease, the renewal will be effective to all, but not less than all, of the leased property then subject to the Master Lease. In the third quarter of 2025, the Company added eight operations to an existing Master Lease and amended the initial term to 15 years. As a result, the total lease liabilities and right-of-use assets increased by $ 124,761 to reflect the new lease obligations. The Company does not have the ability to terminate the obligations under a Master Lease prior to its expiration without CareTrust’s consent. If a Master Lease is terminated prior to its expiration other than with CareTrust’s consent, the Company may be liable for damages and incur charges such as continued payment of rent through the end of the lease term as well as maintenance and repair costs for the leased property. 24 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The rent structure under the Master Leases includes a fixed component, subject to annual escalation equal to the lesser of (1) the percentage change in the Consumer Price Index (but not less than zero ) or (2) 2.5 %. In addition to rent, the Company is required to pay the following: (1) all impositions and taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor); (2) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties; (3) all insurance required in connection with the leased properties and the business conducted on the leased properties; (4) all facility maintenance and repair costs; and (5) all fees in connection with any licenses or authorizations necessary or appropriate for the leased properties and the business conducted on the leased properties. Total rent expense under the Master Leases was approximately $ 18,800 and $ 52,830 for the three and nine months ended September 30, 2025, respectively, and $ 17,635 and $ 51,707 for the three and nine months ended September 30, 2024, respectively. Among other things, under the Master Leases, the Company must maintain compliance with specified financial covenants measured on a quarterly basis, including a portfolio coverage ratio and a minimum rent coverage ratio. The Master Leases also include certain reporting, legal and authorization requirements. The Company is in compliance with requirements of the Master Leases as of September 30, 2025. The Company leases facilities where its independent subsidiaries operate and certain administrative offices under non-cancelable operating leases, most of which have initial lease terms ranging from 15 to 20 years. Most of these leases contain renewal options, certain of which involve rent increases. The Company's 102 independent subsidiaries, excluding the subsidiaries that are operated under the Master Leases with CareTrust, are operated under 18 separate Master Leases. In the first quarter of 2025, the Company entered into one new Master Lease to add six stand-alone skilled nursing facilities operated by the Company's independent subsidiaries with an initial term of 15 years. The new Master Lease increased the lease liabilities and right-of-use assets by $ 57,961 to reflect the new lease obligations. In the second quarter of 2025, the Company entered into two new Master Lease to add four stand-alone skilled nursing facilities operated by the Company's independent subsidiaries with an initial term of 15 years. The new Master Lease increased the lease liabilities and right-of-use assets by $ 52,753 to reflect the new lease obligations. In the third quarter of 2025, the Company entered into one new Master Lease to add two stand-alone skilled nursing facilities operated by the Company's independent subsidiaries with an initial term of 14 years. The new Master Lease increased the lease liabilities and right-of-use assets by $ 6,833 to reflect the new lease obligations. Under the Master Leases, a default at a single facility could subject one or more of the other facilities covered by the same Master lease to the same default risk. Failure to comply with Medicare and Medicaid provider requirements is an event of default under several of the Company’s leases, master lease agreements and debt financing instruments. In addition, other potential defaults related to an individual facility may cause a default of an entire master lease portfolio and could trigger cross-default provisions in the Company’s outstanding debt arrangements and other leases. With an indivisible lease, it is difficult to restructure the composition of the portfolio or economic terms of the lease without the consent of the landlord. The components of operating lease expense are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Rent - cost of services (1) $ 61,528 $ 54,792 $ 175,799 $ 159,940 Cost of services (2) 6,787 6,344 19,827 17,763 General and administrative expense 195 179 608 513 Depreciation and amortization (3) 273 303 687 909 $ 68,783 $ 61,618 $ 196,921 $ 179,125 (1) Rent - cost of services includes deferred rent expense adju stments of $ 225 and $ 632 for the three and nine months ended September 30, 2025, respectively, and $ 205 and $ 590 for the three and nine months ended September 30, 2024, respectively. Additionally, rent - cost of services includes other variable lease costs such as CPI increases and short-term leases of $ 4,922 and $ 13,560 for the three and nine months ended September 30, 2025, respectively, and $ 3,668 and $ 10,025 for the three and nine months ended September 30, 2024, respectively. (2) Cost of services includes variable lease costs consisting of property taxes and insurance. (3) Depreciation and amortization is related to the amortization of favorable and direct lease costs. 25 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Future minimum lease payments for all third-party leases as of September 30, 2025 are as follows: Year Amount 2025 (remainder) $ 58,013 2026 232,010 2027 231,598 2028 230,640 2029 225,219 2030 220,897 Thereafter 1,818,251 TOTAL LEASE PAYMENTS $ 3,016,628 Less: present value adjustment ( 1,002,865 ) PRESENT VALUE OF TOTAL LEASE LIABILITIES $ 2,013,763 Less: current lease liabilities ( 110,817 ) LONG-TERM OPERATING LEASE LIABILITIES $ 1,902,946 Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used its incremental borrowing rate based on the information available at the lease commencement date. As of September 30, 2025, the weighted average remaining lease term is 14.0 years and the weighted average discount rate used to determine the operating lease liabilities is 6.3 %. Subsequent to September 30, 2025, the Company expanded its operations through a long-term lease with the addition of one stand-alone skilled nursing operation. The aggregate impact to the carrying value of lease liabilities and right-of-use assets related to the long-term lease is estimated to be $ 10,896 . Lessor Activities The Company leases 36 of its owned real estate properties to third-party operators, of which 32 senior living operations are operated by The Pennant Group, Inc. (Pennant). All of these properties are triple-net leases, whereby the respective tenants are responsible for all costs at the properties including: (1) all impositions and taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor); (2) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties; (3) all insurance required in connection with the leased properties and the business conducted on the leased properties; (4) all facility maintenance and repair costs; and (5) all fees in connection with any licenses or authorizations necessary or appropriate for the leased properties and the business conducted on the leased properties. The initial terms range from 14 to 16 years. In the second quarter of 2025, the Company entered into two lease agreements with a separate third-party operator for one skilled nursing and one senior living operation, both with initial lease terms of 15 years. In the third quarter of 2025, the Company entered into one lease agreement with a separate third-party operator for one skilled nursing operation with an initial lease term of 8 years. Total rental income from all third-party sources for the three and nine months ended September 30, 2025 and 2024 is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Pennant (1) $ 4,084 $ 3,821 $ 12,288 $ 11,465 Other third-party (2) 2,542 1,863 6,694 5,617 TOTAL $ 6,626 $ 5,684 $ 18,982 $ 17,082 (1) Pennant rental income includes variable rent such as property taxes of $ 274 and $ 854 during the three and nine months ended September 30, 2025 and $ 308 and $ 940 for the three and nine months ended September 30, 2024. (2) Other third-party includes rental revenue associated with the Company's subleases to third parties of $ 1,116 and $ 3,339 for the three and nine months ended September 30, 2025, respectively, and $ 1,089 and $ 3,258 for the three and nine months ended September 30, 2024, respectively. 26 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Future annual rental income for all third-party leases as of September 30, 2025 were as follows: Year Amount (1) 2025 (remainder) $ 6,871 2026 26,977 2027 26,399 2028 26,071 2029 25,960 2030 24,907 Thereafter 122,114 TOTAL $ 259,299 (1) Annual rental income includes base rents and variable rental income pursuant to existing leases as of September 30, 2025. 17. DEFINED CONTRIBUTION PLANS The Company has a 401(k) defined contribution plan (the 401(k) Plan), whereby eligible employees may contribute up to 90 % of their annual basic earnings, subject to applicable annual Internal Revenue Code limits. Additionally, the 401(k) Plan provides for discretionary matching contributions (as defined in the 401(k) Plan) by the Company. The Company has a non-qualified deferred compensation plan (DCP), whereby certain highly compensated employees who are otherwise ineligible to participate in the Company's 401(k) plan, may defer the receipt of a portion of their base compensation and, for certain employees, up to 100 % of their eligible bonuses. Additionally, the DCP allows for the employee deferrals to be deposited into a rabbi trust and the funds are generally invested in individual variable life insurance contracts owned by the Company that are specifically designed to fund savings plans of this nature. The Company paid for related administrative costs, which were not significant during the three and nine months ended September 30, 2025 and 2024. As of September 30, 2025 and December 31, 2024, the Company accrued $ 75,933 and $ 63,051 , respectively, as long term deferred compensation in other long term liabilities on the condensed consolidated balance sheets. Cash surrender value of the contracts is based on investment funds that shadow the investment allocations specified by participants in the deferred compensation plan. Refer to Note 5, Fair Value Measurements for more information on the funds. For the three and nine months ended September 30, 2025, the Company recorded gains related to its DCP of $ 3,048 and $ 7,248 , respectively, which is included in other income, net, and recorded offsetting expenses of $ 3,184 and $ 7,528 , respectively, which is allocated between cost of services and general and administrative expenses. For the three and nine months ended September 30, 2024, the Company recorded gains related to its DCP of $ 3,175 and $ 6,096 , respectively, which is included in other income, net, and recorded offsetting expenses of $ 3,294 and $ 6,410 , respectively, which is allocated between cost of services and general and administrative expenses. 18. SELF INSURANCE LIABILITIES The Company is partially self-insured for general and professional liability claims up to a base amount per claim (the self-insured retention) with an aggregate, one-time deductible above this limit. Losses beyond these amounts are insured through third-party policies with coverage limits per claim, per location and on an aggregate basis for the Company. The combined self-insured retention for the Company's independent subsidiaries in California is $ 1,000 per claim ($ 750 if an enforceable arbitration agreement applies), subject to an additional one-time deductible of $ 3,139 . For the independent subsidiaries not in California, the self-insured claim is $ 750 per claim ($ 650 if an enforceable arbitration agreement applies), subject to an additional one-time, deductible of $ 4,600 . For all independent subsidiaries, except those located in Colorado, the third-party coverage above these limits is $ 1,000 per claim, $ 3,000 per operation, with a $ 10,000 blanket aggregate limit and an additional state-specific aggregate where required by state law. In Colorado, the third-party coverage above these limits is $ 1,000 per claim and $ 3,000 per operation, which is independent of the aforementioned blanket aggregate limits that apply outside of Colorado. The majority of the self-insured retention and deductible limits for general and professional liabilities and workers' compensation liabilities are self-insured through the captive insurance subsidiary, the related assets and liabilities of which are included in the accompanying condensed consolidated balance sheets. The captive insurance subsidiary is subject to certain statutory requirements as an insurance provider. 27 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The Company’s policy is to accrue amounts equal to the actuarial estimated costs to settle open claims of insureds, as well as an estimate of the cost of insured claims that have been incurred but not reported. The Company develops information about the size of the ultimate claims based on historical experience, current industry information and actuarial analysis, and evaluates the estimates for claim loss exposure on a quarterly basis. The Company uses actuarial valuations to estimate the liability based on historical experience and industry information. The Company’s independent subsidiaries are self-insured for workers’ compensation liabilities in California. To protect itself against loss exposure in California with this policy, the Company has purchased individual specific excess insurance coverage that insures individual claims that exceed $ 625 per occurrence. In Texas, the independent subsidiaries have elected non-subscriber status for workers’ compensation claims and the Company has purchased individual stop-loss coverage that insures individual claims that exceed $ 750 per occurrence. The Company’s independent subsidiaries in all other states, with the exception of Washington, are under a loss sensitive plan that insures individual claims that exceed $ 350 per occurrence. In the state of Washington, the Company is self-insured and has purchased individual specific excess insurance coverage that insures individual claims that exceed $ 500 per occurrence. For all of the self-insured plans and retention, the Company accrues amounts equal to the estimated costs to settle open claims, as well as an estimate of the cost of claims that have been incurred but not reported. The Company uses actuarial valuations to estimate the liability based on historical experience and industry information. The Company self-funds medical (including prescription drugs) and dental healthcare benefits for the majority of its employees. The Company is fully liable for all financial and legal aspects of these benefit plans. To protect itself against loss exposure with this policy, the Company has purchased individual stop-loss insurance coverage that insures individual claims that exceed $ 525 for each covered person for fiscal year 2025. The following table represents the Company's self-insurance insurance liabilities, on an undiscounted basis, inclusive of anticipated insurance recoveries, as of September 30, 2025 and December 31, 2024: September 30, 2025 December 31, 2024 Accrued general liability and professional malpractice liabilities $ 177,814 $ 160,149 Accrued workers’ compensation liabilities 40,044 37,291 Accrued health benefits 16,642 14,312 TOTAL SELF-INSURANCE LIABILITIES $ 234,500 $ 211,752 Less: current self-insurance liabilities 73,854 67,331 LONG-TERM SELF-INSURANCE LIABILITIES $ 160,646 $ 144,421 The anticipated insurance recoveries included in the self-insurance liabilities are presented gross rather than net with the corresponding asset of $ 17,572 and $ 17,741 , as of September 30, 2025 and December 31, 2024, respectively, included in Restricted and other assets on the consolidated balance sheets. The Company believes that adequate provision has been made in the Interim Financial Statements for liabilities that may arise out of patient care, workers’ compensation, healthcare benefits and related services provided to date. 19. COMMITMENTS AND CONTINGENCIES Indemnities — From time to time, the Company enters into certain types of contracts that contingently require the Company to indemnify parties against third-party claims. The terms of such obligations vary by contract and, in most instances, do not expressly state or include a specific or maximum dollar amount. Generally, amounts under these contracts cannot be reasonably estimated until a specific claim is asserted. Consequently, because no claims have been asserted, no liabilities have been recorded for these obligations on the Company’s condensed consolidated balance sheets for any of the periods presented. 28 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Litigation and Regulatory Matters — The Company and its independent subsidiaries are party to various legal actions and administrative proceedings and are subject to various claims arising in the ordinary course of business. Such claims may be related to, but are not limited to, the Health Insurance Portability and Accountability Act of 1996, alleged Medicare or Medicaid false claims, qui tam or "whistleblower" provisions of the False Claims Act and/or the Anti-Kickback Statute, alleged violations of state and federal wage and hour laws, environmental matters, investigations, examinations, audits and surveys or other claims in connection with the delivery of healthcare and non-healthcare services. These claims may come from a variety of governmental agencies, including but not limited to, the following federal agencies: U.S. Department of Health and Human Services (HHS), including the Centers for Disease Control and Prevention (CDC), Centers for Medicare and Medicaid Services (CMS), Office for Civil Rights (OCR) and Office of Inspector General (OIG); U.S. Department of Justice (DOJ); Occupational Safety and Health Administration (OHSA), U.S. Equal Employment Opportunity Commission (EEOC); National Labor Relations Board (NLRB); U.S. Department of Labor (DOL); U.S. Department of Housing and Urban Development (HUD); U.S. Department of Veterans Affairs (VA); and Environmental Protection Agency (EPA). In addition to these federal agencies, there are also a variety of state and local authorities with the ability to bring claims against our independent subsidiaries. The Company and its independent subsidiaries are also subject to requests for information and investigations by other state and federal governmental entities (e.g., Offices of the Attorney General and Offices of the Inspector General). The Company cannot predict or provide any assurance as to the possible outcome of any inquiry, investigation or related litigation. If any such inquiry, investigation or related litigation were to proceed, and the Company and its independent subsidiaries are subjected to, alleged to be liable for, or agree to a settlement of, claims or obligations under federal Medicare statutes, the FCA, or similar state and federal statutes and related regulations, or if the Company or its independent subsidiaries are alleged or found to be liable on theories of general or professional negligence or wage and hour violations, the Company's business, financial condition and results of operations and cash flows could be materially and adversely affected and its stock price could be adversely impacted. Among other things, any settlement or litigation could involve the payment of substantial sums to settle any alleged violations and may also include the assumption of specific procedural and financial obligations by the Company or its independent subsidiaries under a Corporate Integrity Agreement and/or other such arrangement. From time to time, various state or Federal agencies may issue requests for information, including but not limited to a subpoena. As an example, California's Office of Health Care Affordability is currently conducting a Cost and Market Impact Review (CMIR) with respect to specific components of a proposed transaction involving several of our California operations. We have been and will continue to communicate with the Office of Health Care Affordability regarding all correspondence and informational requests related to the CMIR. Other claims and suits, including class actions, continue to be filed against the Company and other companies in its industry. The Company and its independent subsidiaries have been subjected to, and are currently involved in, class action litigation alleging violations (alone or in combination) of state and federal wage and hour laws as related to the alleged failure to pay wages, to timely provide and compensate for meal and rest breaks, and related causes of action. During the three months ended September 30, 2025, the Company agreed to settle substantially all alleged wage, hour or labor code-related violations asserted on a class or representative basis against its independent subsidiaries in California for purported violations occurring during the six year period ending December 2025, for $ 12,000 , pending court approval. The Company does not believe that the ultimate resolution of these actions will have an ongoing material adverse effect on the Company’s business, cash flows, financial condition or results of operations. In 2024, the Company, on behalf of its independent subsidiaries, received a Civil Investigative Demand (CID) from the U.S. Department of Justice (DOJ) indicating that the DOJ is investigating the Company to determine whether claims have been submitted to Medicare and Texas Medicaid for services which were unnecessary or otherwise not consistent with existing reimbursement requirements. The CID covers the period from January 1, 2016, to the present. As a general matter, the Company's independent subsidiaries maintain policies and procedures to promote compliance with all applicable Medicare and Medicaid requirements, including but not limited to those relating to the presentation of claims for reimbursement for services provided . The Company is fully cooperating with the DOJ in response to the CID. However, the Company cannot predict the outcome of the investigation or its potential impact on the consolidated financial statements. In 2023, in a four-week medical negligence trial in the State of Arizona, the jury returned a verdict against one of the Company’s independent subsidiaries. The Company is in the process of appealing the jury verdict. The Company has in the past appealed similar decisions and has, in some circumstances, received decisions in its favor. Although the Company intends to vigorously defend against these specific claims and in general these types of claims and cases, there can be no assurance that the outcomes of these matters will not have a material adverse effect on operational results and financial condition. The Company has recorded an estimated liability for this matter. 29 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) In 2018, the Company, on behalf of its independent subsidiaries, received a CID from the DOJ stating that it was investigating to determine whether there had been a violation of the False Claims Act (FCA) and/or the Anti-Kickback Statute (AKS) with respect to the relationships between certain of the Company’s independent subsidiaries and persons who serve or have served as medical directors. In 2020, the Company was advised that the DOJ declined to intervene in any subsequent action filed in connection with the subject matter of this investigation. Despite the decision of the DOJ to decline to participate in litigation based on the subject matter of its previously issued CID, the involved qui tam relator moved forward with the complaint in 2020. In 2024, the Company mediated with the involved parties and agreed to settle the civil case for $ 48,000 and recorded the accrual as of December 31, 2023. Following the finalization of the settlement documents and payment of the settlement funds during the fourth quarter of 2024, the qui tam complaint was dismissed and the matter was resolved. Medicare Revenue Recoupments — The Company's independent subsidiaries are subject to regulatory reviews relating to the provision of Medicare and Medicaid services, billings and potential overpayments as a result of Recovery Audit Contractors (RAC), various Program Safeguard Contractors and Medicaid Integrity Contractors (collectively referred to as Reviews). Reviews vary in claim selection size and processes, ranging from a single episode/claim month to larger, multi-claim batches; and from single rounds of review to reviews of multiple rounds with pass/fail criteria. If an operation has a significant error rate or fails a Review and/or subsequent Reviews, the operation could then be subject to extended review or an extrapolation of the identified error rate to billings in the same time period. The Company anticipates that these Reviews could increase in frequency in the future. As of September 30, 2025 and through the filing date of this report, 14 of the Company's independent subsidiaries had multi-claim Reviews scheduled or in process. Concentrations Credit Risk — The Company has significant accounts receivable balances, the collectability of which is dependent on the availability of funds from certain governmental programs, primarily Medicare and Medicaid. These receivables represent the only significant concentration of credit risk for the Company. The Company does not believe there are significant credit risks associated with these governmental programs. The Company believes that an appropriate allowance has been recorded for the possibility of these receivables proving uncollectible and continually monitors and adjusts these allowances as necessary. The Company’s receivables from Medicare and Medicaid payor programs accounted for 58.6 % and 52.9 % of its total accounts receivable as of September 30, 2025 and December 31, 2024, respectively. Revenue from reimbursement under the Medicare and Medicaid programs accounted for 69.5 % and 69.6 % of the Company's service revenue for the three and nine months ended September 30, 2025, respectively, and 70.2 % and 71.0 % for the three and nine months ended September 30, 2024, respectively. 20. COMMON STOCK REPURCHASE PROGRAM On May 15, 2025, the Board of Directors approved a stock repurchase program pursuant to which the Company is authorized to repurchase up to $ 20,000 of its common stock under the program for a period of approximately 12 months from June 16, 2025. During the three months ended September 30, 2025, the Company did not repurchase any shares pursuant to this stock repurchase program. On February 21, 2025, the Board of Directors approved a stock repurchase program pursuant to which the Company was authorized to repurchase up to $ 20,000 of its common stock under the program for a period of approximately 12 months from March 26, 2025. During the first and second quarter of 2025, the Company purchased 84 and 73 , respectively, of its common stock for $ 10,775 and $ 9,225 , respectively. This repurchase program expired upon the repurchase of the fully authorized amount under the plan and is no longer in effect. On May 16, 2024, the Board of Directors approved a stock repurchase program pursuant to which the Company was authorized to repurchase up to $ 20,000 of its common stock under the program for a period of approximately 12 months from September 1, 2024. The Company did not purchase any shares pursuant to this stock repurchase program before the repurchase program was cancelled on February 21, 2025. On August 29, 2023, the Board of Directors approved a stock repurchase program pursuant to which the Company was authorized to repurchase up to $ 20,000 of its common stock under the program for a period of approximately 12 months from September 1, 2023, which terminated by its terms on August 31, 2024. The Company did not purchase any shares pursuant to this stock repurchase program. 30 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Under the repurchase program, the Company is authorized to repurchase its issued and outstanding common shares from time to time in open-market and privately negotiated transactions, tender offers, pursuant to contractual provisions, and block trades, or otherwise in accordance with federal securities laws. The share repurchase program does not obligate the Company to acquire any specific number of shares. Any such repurchases will depend on the Company's business strategy, prevailing market conditions, the Company's liquidity requirements, contractual restrictions or covenants, compliance with securities laws, and other factors. The amounts involved in any such transaction may be material. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the condensed consolidated financial statements and accompanying notes, which appear elsewhere in this Quarterly Report on Form 10-Q. We urge you to carefully review and consider the various disclosures made by us in this Quarterly Report and in our other reports filed with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2024 (Annual Report), which discusses our business and related risks in greater detail, as well as subsequent reports we may file from time to time on Form 10-Q and Form 8-K, for additional information. The section entitled “Risk Factors” contained in Part II, Item 1A of this Quarterly Report on Form 10-Q, and similar discussions in our other SEC filings, also describe some of the important risk factors that may affect our business, financial condition, results of operations and/or liquidity. You should carefully consider those risks, in addition to the other information in this Quarterly Report on Form 10-Q and in our other filings with the SEC, before deciding to purchase, hold or sell our common stock. This Quarterly Report on Form 10-Q contains "forward-looking statements," within the meaning of the Private Securities Litigation Reform Act of 1995, which include, but are not limited to our expected future financial position, results of operations, cash flows, financing plans, business strategy, budgets, capital expenditures, competitive positions, growth opportunities, and plans and objectives of management. Forward-looking statements can often be identified by words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing,” similar expressions, and variations or negatives of these words. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Our actual results could differ materially from those expressed in any forward-looking statements as a result of various factors, some of which are listed under the section “Risk Factors” contained in Part II, Item 1A of this Quarterly Report on Form 10-Q. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q, and are based on our current expectations, estimates and projections about our industry and business, management’s beliefs, and certain assumptions made by us, all of which are subject to change. We undertake no obligation to revise or update publicly any forward-looking statement for any reason, except as otherwise required by law. As used in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, the words, "Ensign," "Company," “we,” “our” and “us” refer to The Ensign Group, Inc. and its consolidated subsidiaries. All of our affiliated operations, the Service Center, our wholly-owned captive insurance subsidiary and our captive real estate investment trust (REIT) called Standard Bearer Healthcare REIT, Inc. (Standard Bearer) are operated by separate, wholly-owned, independent subsidiaries that have their own management, employees and assets. The use of "Ensign," "Company," “we,” “us,” “our” and similar verbiage in this Quarterly Report on Form 10-Q is not meant to imply that any of our affiliated operations, the Service Center, the captive insurance subsidiary or Standard Bearer are operated by the same entity. This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements and related notes included the Quarterly Report. Overview We are a provider of health care services across the post-acute care continuum. We engage in the operation, ownership, acquisition, development and leasing of skilled nursing, senior living and other healthcare related properties and ancillary businesses located in 17 states. Our independent subsidiaries, each of which strive to be the operation of choice in the communities they serve, provide a broad spectrum of services. As of September 30, 2025, we offered skilled nursing, long term acute care, senior living and rehabilitative care services through 361 skilled nursing and senior living facilities. Our real estate portfolio includes 148 owned real estate properties, which includes 112 facilities operated and managed by us, 36 operations leased to and operated by third-party operators and the Service Center location. Of the 36 third-party operations, one senior living operation is located on the same real estate property as a skilled nursing operation that we own and operate. 31 Table of Contents The following table summarizes our independent subsidiaries and operational skilled nursing beds and senior living units by ownership status as of September 30, 2025: Owned and Operated Leased (with a Purchase Option) Leased (without a Purchase Option) Total for Facilities Operated Number of facilities 112 8 241 361 Percentage of total 31.0 % 2.2 % 66.8 % 100.0 % Operational skilled nursing beds 11,226 687 25,163 37,076 Percentage of total 30.3 % 1.9 % 67.8 % 100.0 % Senior living units 1,938 142 1,321 3,401 Percentage of total 57.0 % 4.2 % 38.8 % 100.0 % The Ensign Group, Inc. is a holding company with no direct operating assets, employees or revenues. Our subsidiaries are operated by separate, independent entities, each of which has its own management, employees and assets. In addition, certain of our wholly-owned subsidiaries including Ensign Services, Inc. and Cornet Limited, Inc., referred to collectively as the Service Center, provide centralized accounting, payroll, human resources, information technology, legal, risk management and other centralized services to the other independent subsidiaries. We also have a wholly-owned captive insurance subsidiary that provides some claims-made coverage to our independent subsidiaries for general and professional liability, as well as coverage for certain workers’ compensation insurance liabilities and our captive real estate trust owns and operates our real estate portfolio. Our captive real estate investment trust, Standard Bearer, owns and manages our real estate business. References herein to the consolidated “Company” and “its” assets and activities, as well as the use of the terms “we,” “us,” “our” and similar terms in this Quarterly Report, are not meant to imply, nor should they be construed as meaning that The Ensign Group, Inc. has direct operating assets, employees or revenue, or that any of the subsidiaries are operated by The Ensign Group, Inc. Our acquisition strategy has been focused on identifying both opportunistic and strategic acquisitions within our target markets that offer strong opportunities for return. The operations added by us are frequently underperforming financially and can have regulatory and clinical challenges to overcome. Financial information, especially with underperforming operations, is often inadequate, inaccurate or unavailable. Consequently, we believe that prior operating results are not a meaningful representation of our current operating results or indicative of the integration potential of our newly acquired independent subsidiaries. Recent Activities We believe we exist to dignify and transform post-acute care. We set out a strategy to achieve our goal of ensuring our patients are receiving the best possible care through our ability to acquire, integrate and improve our operations. Our results serve as a strong indicator that our strategy is working and our transformation is underway. Our dedication to our cultural and operational fundamentals continues to deliver strong results. Refer to Results of Operations for further discussion. Operational Expansions — During the nine months ended September 30, 2025, we expanded our operations with the addition of 28 stand-alone skilled nursing operations, five stand-alone senior living and one campus operation. These new operations added a total of 3,384 operational skilled nursing beds and 313 operational senior living units operated by our independent subsidiaries. Subsequent to September 30, 2025, we expanded our operations with the addition of eight stand-alone skilled nursing operations which added 428 operational skilled nursing beds operated by our Company's independent subsidiaries. Seven of the eight expansions are part of a real estate portfolio that allows us to continue growing our footprint in the state of Utah. For further discussion of expansions, see Note 6, and Operation Expansions in the Notes to the Interim Financial Statements. Expansion into New States — In the first quarter of 2025, we expanded our operations into the states of Alabama, Alaska and Oregon. These expansions are part of our strategic vision to further strengthen our growing national presence in both existing and new attractive markets. Standard Bearer Update — Standard Bearer Healthcare REIT, Inc. (Standard Bearer), our captive REIT, is a holding company with subsidiaries that own a majority of our real estate portfolio. We expect the REIT structure to allow us to better demonstrate the growing value of our owned real estate and provide us with an efficient vehicle for future acquisitions of properties that could be operated by our independent subsidiaries or other third parties. 32 Table of Contents During the nine months ended September 30, 2025, Standard Bearer added $228.9 million of real estate associated with 15 stand-alone skilled nursing operations, one stand-alone senior living operation and two campus operations. Four of the acquisitions were related to exercising purchase options from CareTrust REIT, Inc. (CareTrust) lease arrangements where our independent subsidiaries have been operating and managing these locations. Of these additions, two stand-alone skilled nursing operations are leased to third-party operators and the remaining additions are operated by our independent subsidiaries. Our existing relationships with third-party operators within our industry have allowed us to expand our growing REIT structure to operators outside of our organization. Subsequent to September 30, 2025, Standard Bearer added approximately $65.0 million of real estate associated with seven stand-alone skilled nursing operations, as discussed above, where all of the stand-alone skilled nursing facilities were leased back to our independent subsidiaries. Common Stock Repurchase Program — On February 21, 2025, the Board of Directors approved a stock repurchase program pursuant to which we were authorized to repurchase up to $20.0 million of our common stock under the program for a period of approximately 12 months from March 26, 2025. During the first quarter of 2025, we purchased 84 shares of our common stock for $10.8 million. During the second quarter of 2025, we purchased 73 shares of our common stock for $9.2 million. This repurchase program expired upon the repurchase of the fully authorized amount under the plan and is no longer in effect. On May 15, 2025, the Board of Directors approved a stock repurchase program pursuant to which we are authorized to repurchase up to $20.0 million of our common stock under the program for a period of approximately 12 months from June 16, 2025. During the third quarter of 2025, we did not repurchase any shares pursuant to this stock repurchase program. Litigation — During the three months ended September 30, 2025, we agreed to settle all alleged wage, hour or labor code-related violations asserted on a class or representative basis against our independent subsidiaries in California for purported violations occurring during the six year period ending December 2025, for $12,000, pending court approval. Facility Information The following table sets forth the location of our facilities and the number of operational beds and units located at our skilled nursing, senior living and campus facilities as of September 30, 2025: Facility Counts Bed / Unit Counts Skilled Operations Senior Living Communities Campus Operations (1) Total Skilled Operational Beds Senior Living Units Total Beds / Units Texas 79 1 5 85 10,242 604 10,846 California 78 4 3 85 8,162 378 8,540 Arizona 33 1 6 40 5,026 891 5,917 Colorado 31 5 1 37 3,369 633 4,002 Utah 19 2 1 22 2,071 163 2,234 Washington 17 1 — 18 1,608 98 1,706 Idaho 14 — 1 15 1,301 21 1,322 Tennessee 11 — — 11 1,120 — 1,120 Kansas 3 — 8 11 833 251 1,084 South Carolina 9 — — 9 1,126 — 1,126 Iowa 7 — 2 9 602 31 633 Nebraska 4 1 3 8 496 199 695 Wisconsin 4 — — 4 302 — 302 Nevada 3 — — 3 483 — 483 Alaska 1 1 — 2 146 82 228 Alabama 1 — — 1 91 — 91 Oregon — — 1 1 98 50 148 314 16 31 361 37,076 3,401 40,477 (1) Campuses represent facilities that offer both skilled nursing and senior living services. 33 Table of Contents The following table provides summary information regarding the location of our owned and operated real estate properties as of September 30, 2025: Facility Counts Bed / Unit Counts Skilled Operations Senior Living Communities Campus Operations (1) Total Skilled Operational Beds Senior Living Units Total Beds / Units Texas 22 1 4 27 3,077 574 3,651 Arizona 12 — 5 17 2,052 494 2,546 California 11 — 1 12 1,290 42 1,332 Colorado 6 3 — 9 592 369 961 Utah 8 — — 8 764 — 764 Washington 6 — — 6 621 — 621 Kansas 1 — 5 6 445 167 612 Idaho 6 — — 6 590 — 590 South Carolina 5 — — 5 544 — 544 Wisconsin 4 — — 4 302 — 302 Nebraska 1 1 1 3 171 160 331 Tennessee 3 — — 3 300 — 300 Alaska 1 1 — 2 146 82 228 Iowa 3 — — 3 234 — 234 Oregon — — 1 1 98 50 148 89 6 17 112 11,226 1,938 13,164 (1) Campuses represent facilities that offer both skilled nursing and senior living services. The following table provides summary information regarding the location of our owned real estate properties as of September 30, 2025: Owned and Operated by Ensign (1) Owned and Leased to Third-Party Operators (1) Service Center Total Properties (1) Texas (1) 27 7 — 33 Wisconsin 4 22 — 26 Arizona 17 1 — 18 California 12 2 1 15 Colorado 9 — — 9 Washington 6 3 — 9 Utah 8 — — 8 Idaho 6 — — 6 Kansas 6 — — 6 South Carolina 5 — — 5 Iowa 3 — — 3 Nebraska 3 — — 3 Tennessee 3 — — 3 Alaska 2 — — 2 Oregon 1 — — 1 Nevada — 1 — 1 112 36 1 148 (1) One senior living operation in Texas, which is owned by an independent subsidiary of Ensign and leased to a third-party operator, is located on the same real estate property as a skilled nursing facility that we own and operate. In this situation, the senior living operation is included in the total under "Owned and Leased to Third Party Operators" and the skilled nursing operation is included in the total under "Owned and Operated by Ensign", however, the amount reflected under "Total Properties" only recognizes the operation as a single property. 34 Table of Contents Key Performance Indicators We manage the fiscal aspects of our business by monitoring key performance indicators that affect our financial performance. Revenue associated with these metrics is generated based on contractually agreed-upon amounts or rate, excluding the estimates of variable consideration under the revenue recognition standard, Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 606. These indicators and their definitions include the following: Skilled Services • Routine revenue — Routine revenue is generated by the contracted daily rate charged for all contractually inclusive skilled nursing services. The inclusion of therapy and other ancillary treatments varies by payor source and by contract. Services provided outside of the routine contractual agreement are recorded separately as ancillary revenue, including Medicare Part B therapy services, and are not included in the routine revenue definition. • Skilled revenue — The amount of routine revenue generated from patients in the skilled nursing facilities who are receiving higher levels of care under Medicare, managed care, Medicaid, or other skilled reimbursement programs. The other skilled patients who are included in this population represent very high acuity patients who are receiving high levels of nursing and ancillary services which are reimbursed by payors other than Medicare or managed care. Skilled revenue excludes any revenue generated from our senior living services. • Skilled mix — The amount of our skilled revenue as a percentage of our total skilled nursing routine revenue. Skilled mix (in days) represents the number of days our Medicare, managed care, or other skilled patients are receiving skilled nursing services at the skilled nursing facilities divided by the total number of days patients from all payor sources are receiving skilled nursing services at the skilled nursing facilities for any given period. • Average daily rates — The routine revenue by payor source for a period at the skilled nursing facilities divided by actual patient days for that revenue source for that given period. • Occupancy percentage (operational beds) — The total number of patients occupying a bed in a skilled nursing facility as a percentage of the beds in a facility which are available for occupancy during the measurement period. • Number of facilities and operational beds — The total number of skilled nursing facilities that we own or operate, and the total number of operational beds associated with these facilities. Skilled Mix — Like most skilled nursing providers, we measure both patient days and revenue by payor. Medicare, managed care and other skilled patients, whom we refer to as high acuity patients, typically require a higher level of skilled nursing and rehabilitative care. Accordingly, Medicare and managed care reimbursement rates are typically higher than from other payors. In most states, Medicaid reimbursement rates are generally the lowest of all payor types. Changes in the payor mix can significantly affect our revenue and profitability. The following table summarizes our overall skilled mix from our skilled nursing services for the periods indicated as a percentage of our total skilled nursing routine revenue and as a percentage of total skilled nursing patient days: Three Months Ended September 30, Nine Months Ended September 30, Skilled Mix: 2025 2024 2025 2024 Days 30.3 % 29.7 % 30.8 % 30.2 % Revenue 48.9 % 48.5 % 49.4 % 48.8 % Occupancy — We define occupancy derived from our skilled services as the ratio of actual patient days (one patient day equals one patient occupying one bed for one day) during any measurement period to the number of beds in facilities which are available for occupancy during the measurement period. The number of beds in a skilled nursing facility that are actually operational and available for occupancy may be less than the total official licensed bed capacity. This sometimes occurs due to the permanent dedication of bed space to alternative purposes, such as enhanced therapy treatment space or other desirable uses calculated to improve service offerings and/or operational efficiencies in a facility. In some cases, three- and four-bed wards have been reduced to two-bed rooms for resident comfort, and larger wards have been reduced to conform to changes in Medicare requirements. These beds are seldom expected to be placed back into service. We believe that reporting occupancy based on operational beds is consistent with industry practices and provides a more useful measure of actual occupancy performance from period to period. 35 Table of Contents The following table summarizes our overall occupancy statistics for skilled nursing operations for the periods indicated: Three Months Ended September 30, Nine Months Ended September 30, Occupancy for skilled services: 2025 2024 2025 2024 Operational beds at end of period 37,076 33,039 37,076 33,039 Available patient days 3,367,685 2,974,651 9,683,807 8,658,993 Actual patient days 2,772,062 2,407,709 7,925,688 6,962,308 Occupancy percentage (based on operational beds) 82.3 % 80.9 % 81.8 % 80.4 % Segments We have two reportable segments: (1) skilled services, which includes the operation of skilled nursing facilities and rehabilitation therapy services and (2) Standard Bearer, which is comprised of select properties owned by us through our captive REIT and leased to skilled nursing and senior living operations, including our own independent subsidiaries and third-party operators. We also reported an “all other” category that includes operating results from our senior living operations, mobile diagnostics, transportation, other real estate and other ancillary operations. These businesses are neither significant individually, nor in aggregate and therefore do not constitute a reportable segment. Our Chief Executive Officer and Chairman of the Board, who is our chief operating decision maker, or CODM, reviews financial information at the operating segment level. Revenue Sources The following tables set forth our total service revenue by payor source generated by our skilled services segment and our "All Other" category and as a percentage of total revenue for the periods indicated (dollars in thousands): Three Months Ended September 30, Skilled Services All Other (3) Total Service Revenue 2025 2024 2025 2024 2025 2024 Medicaid (1) $ 501,722 $ 416,190 $ 13,435 $ 9,452 $ 515,157 $ 425,642 Medicare 303,281 263,594 — — 303,281 263,594 Medicaid-skilled 78,450 65,907 — — 78,450 65,907 Subtotal $ 883,453 $ 745,691 $ 13,435 $ 9,452 $ 896,888 $ 755,143 Managed care 237,978 202,528 — — 237,978 202,528 Private and other (2) 117,665 84,894 37,248 33,527 154,913 118,421 TOTAL SERVICE REVENUE $ 1,239,096 $ 1,033,113 $ 50,683 $ 42,979 $ 1,289,779 $ 1,076,092 Three Months Ended September 30, Skilled Services All Other (3) Total Service Revenue 2025 2024 2025 2024 2025 2024 Medicaid (1) 40.5 % 40.3 % 26.5 % 22.0 % 39.9 % 39.6 % Medicare 24.5 25.5 — — 23.5 24.5 Medicaid-skilled 6.3 6.4 — — 6.1 6.1 Subtotal 71.3 % 72.2 % 26.5 % 22.0 % 69.5 % 70.2 % Managed care 19.2 19.6 — — 18.5 18.8 Private and other (2) 9.5 8.2 73.5 78.0 12.0 11.0 TOTAL SERVICE REVENUE 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % (1) Medicaid payor includes revenue for senior living operations. (2) Private and other in skilled services includes private, Veteran Affairs and hospice payors. In addition, private and other in the "all other" category includes revenue from senior living and ancillary operations. (3) All Other incorporates intercompany eliminations. 36 Table of Contents Nine Months Ended September 30, Skilled Services All Other (3) Total Service Revenue 2025 2024 2025 2024 2025 2024 Medicaid (1) $ 1,419,037 $ 1,201,435 $ 35,808 $ 26,130 $ 1,454,845 $ 1,227,565 Medicare 882,149 788,046 — — 882,149 788,046 Medicaid-skilled 223,208 192,185 — — 223,208 192,185 Subtotal $ 2,524,394 $ 2,181,666 $ 35,808 $ 26,130 $ 2,560,202 $ 2,207,796 Managed care 694,690 581,654 — — 694,690 581,654 Private and other (2) 317,142 230,680 106,199 91,021 423,341 321,701 TOTAL SERVICE REVENUE $ 3,536,226 $ 2,994,000 $ 142,007 $ 117,151 $ 3,678,233 $ 3,111,151 Nine Months Ended September 30, Skilled Services All Other (3) Total Service Revenue 2025 2024 2025 2024 2025 2024 Medicaid (1) 40.1 % 40.1 % 25.2 % 22.3 % 39.6 % 39.5 % Medicare 24.9 26.3 — — 24.0 25.3 Medicaid-skilled 6.4 6.5 — — 6.0 6.2 Subtotal 71.4 % 72.9 % 25.2 % 22.3 % 69.6 % 71.0 % Managed care 19.6 19.4 — — 18.9 18.7 Private and other (2) 9.0 7.7 74.8 77.7 11.5 10.3 TOTAL SERVICE REVENUE 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % (1) Medicaid payor includes revenue for senior living operations. (2) Private and other in skilled services includes private, Veteran Affairs and hospice payors. In addition, private and other in our "all other" category includes revenue from senior living and ancillary operations. (3) All Other incorporates intercompany eliminations. GOVERNMENT REGULATION General Healthcare is an area of extensive and frequent regulatory change. Changes in the law or new interpretations of existing laws may have a significant impact on our revenue, costs and business operations. Our independent subsidiaries that provide healthcare services are subject to federal, state and local laws relating to, among other things, licensure, quality and adequacy of care, physical plant requirements, life safety, personnel and operating policies. In addition, these same subsidiaries are subject to federal and state laws that govern billing and reimbursement, relationships with vendors, business relationships with physicians and workplace protection for healthcare staff. Such laws include (but are not limited to) the Anti-Kickback Statute (AKS), the federal False Claims Act (FCA), the Stark Law and state corporate practice of medicine statutes. Governmental and other authorities periodically inspect our independent subsidiaries to verify continued compliance with applicable regulations and standards. The operations must pass these inspections to remain licensed under state laws and to comply with Medicare and Medicaid provider agreements and applicable Conditions of Participation. The operations can only participate in these third-party payment programs if unannounced inspections by regulatory authorities reveal that the operations are in substantial compliance with applicable state and federal requirements. In the ordinary course of business, federal or state regulatory authorities may issue notices to the operations alleging deficiencies in certain regulatory practices, which may require corrective action to regain and maintain compliance. In some cases, federal or state regulators may impose other remedies including imposition of directed in-service training, state monitoring, civil monetary penalties, temporary admission and/or payment bans, loss of certification as a provider in the Medicare or Medicaid programs, or revocation of a state operating license. 37 Table of Contents