What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-05 compared with 2024-02-01 · 323 added, 356 removed, 966 unchanged (41% of the section changed)

89 unchanged sentences

$ 0.001 par value;

150,000 , 59,987 and 56,597 shares authorized, shares issued and shares outstanding at December 31, 2023, respectively, and 100,000 , 59,029 and 55,661 shares authorized, shares issued and shares outstanding at December 31, 2022, respectively

150,000 shares authorized;

60,838 and 57,438 shares issued and shares outstanding at December 31, 2024, respectively, and 59,987 and 56,597 shares issued and shares outstanding at December 31, 2023, respectively

Additional paid-in capital 528,052 465,707

24 unchanged sentences

Interest expense ( 8,286 ) ( 8,087 ) ( 8,931 )

Interest income 28,749 19,216 5,035

Other income (expense)

7,327 6,266 ( 3,840 )

OTHER INCOME (EXPENSE), NET

$ 27,790 $ 17,395 $ ( 7,736 )

Income before provision for income taxes 386,094 272,762 289,089

16 unchanged sentences

BALANCE - JANUARY 1, 2022 55,190 $ 58 $ 369,760 $ 733,992 2,944 $ ( 83,042 ) $ 946 $ 1,021,714

Issuance of common stock to employees and directors resulting from the exercise of stock options and grant of stock awards 516 — 9,180 — — — — 9,180

Issuance of common stock to employees and directors resulting from the exercise of stock options 688 1 12,676 — — — — 12,677

Issuance of restricted stock, net of forfeitures 207 — 5,241 — — — — 5,241

5 unchanged sentences

( 404 ) — — — 404 ( 29,882 ) — ( 29,882 )

Deconsolidation of an ancillary business — — — — — — ( 1,369 ) ( 1,369 )

Capital contribution from noncontrolling interest holder — — — — — — 2,000 2,000

Net income attributable to noncontrolling interest — — — — — — 3,073 3,073

Acquisition of noncontrolling interest shares — — ( 1,539 ) — — — 835 ( 704 )

Issuance of noncontrolling interests through subsidiary equity plan — — 6,693 — — — — 6,693

Net loss attributable to noncontrolling interest

— — — — — — ( 29 ) ( 29 )

Noncontrolling interest attributable to subsidiary equity plan — — 9 — — — ( 284 ) ( 275 )

8 unchanged sentences

Employee stock award compensation — — 30,754 — — — — 30,754

Repurchase of common stock (Note 21)

( 404 ) — — — 404 ( 29,882 ) — ( 29,882 )

Acquisition of noncontrolling interest shares — — ( 256 ) — — — — ( 256 )

Issuance of noncontrolling interests through subsidiary equity plan — — 6,693 — — — — 6,693

Net loss attributable to noncontrolling interest — — — — — — ( 29 ) ( 29 )

Net income attributable to noncontrolling interest

— — — — — — 451 451

Noncontrolling interest attributable to subsidiary equity plan — — ( 3,787 ) — — — 3,533 ( 254 )

25 unchanged sentences

Non-cash leasing arrangement 808 870 493

Impairment of long-lived assets 1,849 — —

Write-off of deferred financing fees 200 — 566

3 unchanged sentences

Cash received from insurance proceeds 199 1,396 1,282

Gain on sale of assets ( 123 ) ( 3,467 ) ( 1,371 )

(Gain)/loss on insurance claims, legal matters and asset disposals

Loss (gain) on sale of assets

486 ( 123 ) ( 3,467 )

Loss (gain) on insurance claims and asset disposals

833 ( 550 ) ( 627 )

( 4,289 ) 47,182 4,553

Change in operating assets and liabilities

16 unchanged sentences

Purchase of property and equipment ( 158,240 ) ( 106,180 ) ( 87,545 )

Cash payments for business acquisitions (Note 7)

— ( 16,400 ) ( 6,000 )

Cash payments for asset acquisitions (Note 7)

Cash payments for acquisitions

( 156,547 ) ( 69,014 ) ( 101,136 )

Escrow deposits ( 1,216 ) — 100

Cash from insurance proceeds 3,334 2,029 1,339

Cash proceeds from the sale of assets 2,818 248 8,630

Deconsolidation of an ancillary business — — ( 1,984 )

Cash payments for Medicare and Medicaid licenses — — ( 106 )

Purchases of investments ( 105,149 ) ( 29,603 ) ( 21,975 )

5 unchanged sentences

Proceeds from debt (Note 14)

150 411 45,218

Payments on debt (Note 15)

( 4,033 ) ( 4,106 ) ( 3,056 )

Payments on debt ( 4,350 ) ( 4,033 ) ( 4,106 )

Issuance of common stock upon exercise of options 22,286 18,369 12,677

6 unchanged sentences

Purchase of non-controlling interest ( 4,450 ) ( 256 ) ( 704 )

Payment of contingent consideration

Payments of deferred financing costs — ( 19 ) ( 3,197 )

Proceeds from CARES Act Provider Relief Fund and Medicare Advance Payment Program (Note 3) — — 11,637

Repayments of CARES Act Provider Relief Fund and Medicare Advance Payment Program (Note 3) — — ( 113,660 )

NET CASH USED IN FINANCING ACTIVITIES

$ ( 2,162 ) $ ( 612 ) $ ( 32,262 )

Net increase in cash and cash equivalents 193,356 54,069 25,639

Net (decrease) increase in cash and cash equivalents

( 45,028 ) 193,356 54,069

Cash and cash equivalents beginning of period 509,626 316,270 262,201

18 unchanged sentences

(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 other ancillary businesses.

As of December 31, 2023, the Company's independent subsidiaries operated 297 facilities and other ancillary operations located in Arizona, California, Colorado, Idaho, Iowa, Kansas, Nebraska, Nevada, South Carolina, Texas, Utah, Washington and Wisconsin.

Subsequent to December 31, 2023, one of the Company's independent subsidiaries expanded its operations into Tennessee.

As of December 31, 2024, the Company's independent subsidiaries operated 327 facilities and other ancillary operations located in Arizona, California, Colorado, Idaho, Iowa, Kansas, Nebraska, Nevada, South Carolina, Tennessee, Texas, Utah, Washington and Wisconsin.

The Company's independent subsidiaries have a collective capacity of approximately 33,500 operational skilled nursing beds and 3,100 senior living units.

As of December 31, 2024, the Company's independent subsidiaries operated 231 facilities under long-term lease arrangements and had options to purchase 12 of those 231 facilities.

The Company's real estate portfolio includes 113 owned real estate properties, which includes 83 facilities operated and managed by the Company's independent subsidiaries, 30 operations leased to and operated by third-party operators, and the Service Center (defined below) location.

Of those 30 operations, one senior living facility is located on the same real estate property as a skilled nursing facility that an independent subsidiary owns and 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 through contractual relationships with such subsidiaries.

The Company's real estate portfolio consists of 129 owned real estate properties, which includes 96 facilities operated and managed by the Company's independent subsidiaries, 33 operations leased to and operated by third-party operators and the Service Center (defined below) location.

Of those 33 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.

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.

In 2022, the Company formed a captive real estate investment trust (REIT), which owns and manages its real estate business, called Standard Bearer Healthcare REIT, Inc.

(Standard Bearer).

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.

9 unchanged sentences

The Financial Statements include the accounts of all independent subsidiaries controlled by the Company through its ownership of a majority voting interest.

Reclassifications — Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements.

Reclassifications — Certain amounts in the prior period statements of income and statements of cash flows have been reclassified to conform to the presentation of the current period financial statements.

These reclassifications had no effect on the previously reported net income.

Estimates and Assumptions — The preparation of the 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 Financial Statements and the reported amounts of revenue and expenses during the reporting periods.

The most significant estimates in the Company’s Financial Statements relate to revenue, acquired property and equipment, intangible assets and 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.

The most significant estimates in the Company’s Financial Statements relate to revenue, acquired property and equipment, intangible assets and goodwill, right-of-use assets and lease liabilities, impairment of long-lived assets, as well as general and professional liabilities, workers' compensation and healthcare claims included in accrued self-insurance liabilities.

Actual results could differ from those estimates .

20 unchanged sentences

Revenue recognized from healthcare services are adjusted for estimates of variable consideration to arrive at the transaction price.

The Company determines the transaction price based on contractually agreed-upon amounts or rate on a per day basis, adjusted for estimates of variable consideration.

The Company determines the transaction price based on contractually agreed-upon amounts or rates on a per day basis, adjusted for estimates of variable consideration.

The Company uses the expected value method in determining the variable component that should be used to arrive at the transaction price, using contractual agreements and historical reimbursement experience within each payor type.

16 unchanged sentences

The Company places its cash and short-term investments with high credit quality financial institutions.

Insurance Subsidiary Deposits and Investments — The Company's captive insurance subsidiary cash and cash equivalents, deposits and investments are designated to support long-term insurance subsidiary liabilities and have been classified as short-term and long-term assets based on the timing of expected future payments of the Company's captive insurance liabilities.

Insurance Subsidiary Deposits and Other Investments — The Company's captive insurance subsidiary cash and cash equivalents, deposits and investments are designated to support long-term insurance subsidiary liabilities and have been classified as short-term and long-term assets based on the timing of expected future payments of the Company's captive insurance liabilities.

The majority of these deposits and investments are currently held in AA, A and BBB rated debt security investments and the remainder is held in a bank account with a high credit quality financial institution.

The Company's non-qualified deferred compensation plan (the DCP)'s contracts insuring the lives of certain employees who are eligible to participate in the DCP are held in a rabbi trust.

Investments classified as held-to-maturity are financial instruments that the Company has the intent and ability to hold to maturity and are reported net of any related amortization and are not remeasured to fair value on a recurring basis.

The Company's non-qualified deferred compensation plan's (the DCP) contracts insuring the lives of certain employees who are eligible to participate in the DCP are held in a rabbi trust.

Cash surrender value of the contracts is based on funds that shadow the investment allocations specified by participants in the deferred compensation plan.

6 unchanged sentences

The Company determines if an arrangement is a lease and performs an evaluation to determine whether the lease should be classified as an operating or finance lease at the inception of the lease.

As of December 31, 2023, the Company has one financing lease that is not material to the consolidated balance sheet.

Rights and obligations of these leases are included as right-of-use assets and current and long-term lease liabilities on the Company's consolidated balance sheets.

As of December 31, 2024, the Company has three financing lease that are not material to the consolidated balance sheet.

Rights and obligations of the operating leases are included as right-of-use assets and current and long-term lease liabilities on the Company's consolidated balance sheets.

As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at lease commencement date in determining the present value of future lease payments.

The Company utilizes a third-party valuation specialist to assist in estimating the incremental borrowing rate.

The Company utilizes a third-party credit specialist to assist in estimating the incremental borrowing rate.

The Company records rent expense for operating leases on a straight-line basis over the term of the lease.

19 unchanged sentences

The Company estimates the fair value of assets based on the estimated future discounted cash flows of the asset.

Management has evaluated its long-lived assets and determined there was no impairment during the years ended December 31, 2023, 2022, and 2021.

Intangible Assets and Goodwill — Definite-lived intangible assets consist primarily of patient base, facility trade names and customer relationships.

12 unchanged sentences

An impairment loss is measured by the difference between the carrying value of the reporting unit and its fair value.

Management has evaluated its goodwill and intangible assets and determined there was no impairment during the years ended December 31, 2023, 2022, and 2021.

The Company has recognized cumulative goodwill impairment losses of $ 7,410 , since inception in 1999.

The Company anticipates that the majority of goodwill recognized will be fully deductible for tax purposes as of December 31, 2024.

Self-Insurance — 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 is $ 500 per claim, subject to an additional one-time deductible of $ 1,250 for the Company's independent subsidiaries in California and a separate, one-time, deductible of $ 1,250 for the Company's independent subsidiaries not in California.

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 $ 5,000 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.

Subsequent to December 31, 2023, the self-insured retention is $ 750 per claim, subject to an additional one-time deductible of $ 1,500 for the Company's independent subsidiaries in California.

For the independent subsidiaries not in California, the self-insured retention is $ 650 per claim, subject to an additional one-time deductible of $ 1,350 .

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.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The combined self-insured retention is $ 750 per claim, subject to an additional one-time deductible of $ 1,500 for the Company's independent subsidiaries in California.

For the independent subsidiaries not in California, the self-insured claim is $ 650 per claim, subject to an additional one-time, deductible of $ 1,400 .

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 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 aggregate limits that apply outside of Colorado.

Subsequent to December 31, 2024, the combined self-insured retention is $ 1,000 per claim ($ 750 if an enforceable arbitration agreement applies), subject to an additional one-time deductible of $ 2,950 for the Company's independent subsidiaries in California.

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 $ 4,500 .

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 consolidated balance sheets.

The captive insurance subsidiary is subject to certain statutory requirements as an insurance provider.

THE ENSIGN GROUP, INC.

NOTES TO THE 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.

10 unchanged sentences

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 years 2023 and 2022, respectively, and $ 500 for each covered person for fiscal year 2021.

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.

The Company believes that adequate provision has been made in the Financial Statements for liabilities that may arise out of patient care, workers’ compensation, healthcare benefits and related services provided to date.

12 unchanged sentences

Due to certain risks associated with the Company’s estimates and assumptions, actual results could differ.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Standard Bearer elected to be taxed as a REIT, for U.S.

federal income tax purposes, commencing with its taxable year ended December 31, 2022.

Standard Bearer was organized, has operated and intends to continue to operate in a manner to qualify for taxation as a REIT.

2 unchanged sentences

If Standard Bearer fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost unless the Internal Revenue Service grants the Company relief under certain statutory provisions.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Noncontrolling Interest — The noncontrolling interest in a subsidiary is initially recognized at estimated fair value on the acquisition date and is presented within total equity in the Company's consolidated balance sheets.

3 unchanged sentences

The carrying amount of the noncontrolling interest is adjusted based on an allocation of subsidiary earnings based on ownership interest.

Stock-Based Compensation — The Company measures and recognizes compensation expense for all stock-based payment awards made to employees and directors including employee stock options based on estimated fair values, ratably over the requisite service period of the award.

Stock-Based Compensation — The Company measures and recognizes compensation expense for all stock-based payment awards made to employees and directors including employee stock options and restricted stock awards based on estimated fair values, ratably over the requisite service period of the award.

Net income has been reduced as a result of the recognition of the fair value of all stock options and restricted stock awards issued, the amount of which is based upon the number of grants and other variables.

As stock-based compensation expense recognized in the Company’s consolidated statements of income 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.

Comprehensive Income — The Company does not have any components of other comprehensive income recorded within its Financial Statements and, therefore, does not separately present a statement of comprehensive income in its Financial Statements.

2 unchanged sentences

The applicability of any standard is subject to the formal review of the Company's financial management and certain standards are under consideration.

Recent Accounting Standards Issued But Not Yet Adopted by the Company — In October 2023, the FASB issued ASU 2023-06 "Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative", which amends U.S.

Recent Accounting Standards Adopted by the Company — In November 2023, the FASB issued Accounting Standards Update (ASU) 2023-07 " Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, " which requires the Company to expand the breadth and frequency of segment disclosures to include additional information about significant segment expenses, the chief operating decision maker (CODM) and other items, and also require the annual disclosures on an interim basis.

This guidance was effective for annual periods beginning with the Company's fiscal year 2024, and in interim periods within the Company's fiscal year 2025.

The Company adopted the requirements of this ASU in Note 8, Business Segments of this Annual Report.

Recently Issued Accounting Pronouncements Not Yet Adopted — In October 2023, the FASB issued ASU 2023-06 "Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative," which amends U.S.

GAAP to include 14 disclosure requirements that are currently required under SEC Regulation S-X or Regulation S-K.

Each amendment will be effective on the date on which the SEC removes the related disclosure requirement from SEC Regulation S-X or Regulation S-K.

The adoption is not expected to have a material impact on the Company's Notes to the Consolidated Financial Statements as these requirements were previously incorporated under the SEC Regulations.

In November 2023, the FASB issued ASU 2023-07 " Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures ", which requires the Company to expand the breadth and frequency of segment disclosures to include additional information about significant segment expenses, the chief operating decision maker (CODM) and other items, and also require the annual disclosures on an interim basis.

This guidance is effective for annual periods beginning after December 15, 2023, which will be the Company's fiscal year 2024, with early adoption permitted.

The Company is currently evaluating the impact of the ASU on its Quarterly and Annual Reports.

The adoption is not expected to have a material impact on the Company's Financial Statements as these requirements were previously incorporated under the SEC Regulations.

In December 2023, the FASB issued 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 Annual Report.

ASU 2023-09 is effective for annual periods beginning with the Company's fiscal year 2025, with early adoption permitted.

The Company is currently evaluating the impact of this ASU on its Notes to the 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 annuals 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.

THE ENSIGN GROUP, INC.

1 unchanged sentence

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 determines 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.

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

10 unchanged sentences

Revenue % of Revenue Revenue % of Revenue Revenue % of Revenue

Medicaid (1)(2)

$ 1,682,344 39.7 % $ 1,459,449 39.4 % $ 1,183,156 39.3 %

6 unchanged sentences

SERVICE REVENUE $ 4,237,525 100.0 % $ 3,708,071 100.0 % $ 3,008,711 100.0 %

(1) Medicaid payor includes revenue for senior living operations and revenue related to state relief funding .

(2) Private and other payors also includes revenue from senior living operations and all payors generated in other an cillary services.

(1) Medicaid payor includes revenue for senior living operations.

(2) Medicaid payor includes revenue related to state relief funding during the year ended December 31, 2023 and 2022.

(3) Private and other also includes revenue from senior living operations and all revenue generated in other an cillary services.

In addition to the service revenue above, the Company's rental revenue derived from triple-net lease arrangements with third parties is $ 22,960 , $ 21,284 and $ 16,757 for the years ended December 31, 2024, 2023 and 2022.

4 unchanged sentences

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Due to the expiration of the COVID-19 Public Health Emergency in May 2023, the Company did not receive additional funding during the year ended December 31, 2024.

Revenues from these additional payments are recognized in accordance with ASC 606, subject to variable consideration constraints.

4 unchanged sentences

Federal relief funding

In prior years, as part of the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the CARES Act), the Company received cash distributions of relief fund payments (Provider Relief Funds) and funds authorized by U.S.

Department of Health and Human Services (HHS) to be used to protect residents of nursing homes and long-term care (LTC) facilities from the impact of COVID-19.

During the years ended December 31, 2023 and 2022, the Company did not receive Provider Relief Funds.

During the year ended December 31, 2021, the Company received and returned $ 11,637 in Provider Relief Funds.

In fiscal year 2020, the Company applied for and received $ 105,255 through the Medicare Accelerated and Advance Payment Program under the CARES Act.

The purpose of the program is to assist in providing needed liquidity to care delivery providers.

The Company repaid $ 3,232 of the funds in 2020 and the remaining funds of $ 102,023 in March 2021.

The CARES Act also provides for deferred payment of the employer portion of social security taxes through the end of 2020, with approximately 50% of the deferred amount due by December 31, 2021 and the remaining 50% due by December 31, 2022.

The Company recorded $ 48,309 of deferred payments of social security taxes as a liability during 2020, and paid the first and second half of the payments in the fourth quarters of 2021 and 2022, respectively.

As part of the Coronavirus Aid, Relief, and Economic Security Act of 2020 (CARES Act), the Company deferred payment of the employer portion of social security taxes related to 2020.

For the year ended December 31, 2022, the Company paid $ 24,155 , which was the second and final payment associated with the deferred amount from 2020.

Balance Sheet Impact

1 unchanged sentence

The Company had no material contract liabilities and contract assets as of December 31, 2024 and 2023, or activity during the years ended December 31, 2024, 2023 and 2022.

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 December 31, 2024 and 2023, is summarized in the following table:

10 unchanged sentences

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:

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

A reconciliation of the numerator and denominator used in the calculation of basic net income per common share follows:

Year Ended December 31,

22 unchanged sentences

FAIR VALUE MEASUREMENTS

The Company's financial assets include the captive insurance subsidiary's deposits and investments designated to support long-term insurance subsidiary liabilities and are carried at amortized cost basis of $ 59,530 and $ 53,924 as of December 31, 2023 and 2022, respectively.

As of December 31, 2023 and 2022, the amortized cost basis of the Company's financial assets included in the captive insurance subsidiary's investments are considered to approximate the fair value of these financial assets and are derived using Level 2 inputs.

Also included are 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 Company's financial assets include held-to-maturity investments carried at amortized cost basis of $ 138,600 and $ 59,530 , of which $ 65,831 and $ 59,530 are designated to support long-term insurance subsidiary liabilities, both as of December 31, 2024 and 2023, respectively.

As of December 31, 2024 and 2023, 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 December 31, 2024 and 2023 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.

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 December 31, 2024 and 2023, the fair value of the investment funds was $ 56,049 and $ 41,216 , respectively, which are derived using Level 2 inputs.

Additionally, the Company has other investments held at historical cost basis, which are not material, where the fair value is derived using Level 3 inputs.

The Company believes its amortized cost basis investments that were in an unrealized loss position as of December 31, 2023 and 2022 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.

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.

THE ENSIGN GROUP, INC.

2 unchanged sentences

Standard Bearer's real estate portfolio consists of 124 of the Company's 129 owned real estate properties, of which 92 are operated and managed by the Company's independent subsidiaries and 33 are leased to and operated by third-party operators.

Of those 30 operations, one senior living facility is located on the same real estate property as a skilled nursing facility that an independent subsidiary owns and operates.

Standard Bearer elected to be taxed as a REIT, for U.S.

federal income tax purposes, commencing with its taxable year ended December 31, 2022.

During the year ended December 31, 2023, Standard Bearer acquired the real estate of three stand-alone skilled nursing facilities and two campus operations for an aggregate purchase price of $ 65,899 .

Of those 33 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 year ended December 31, 2024, Standard Bearer added $ 131,927 of real estate assets associated with 11 stand-alone skilled nursing operations, three stand-alone senior living operations and three campus operations .

These new additions for the stand-alone skilled nursing and campus operations are operated by 14 of the Company's independent subsidiaries and the three stand-alone senior living operations are leased to a third-party operator.

Refer to Note 7, Operation Expansions , for additional information.

Subsequent to December 31, 2024, Standard Bearer added $ 50,853 of real estate assets associated with four stand-alone skilled nursing operations and one campus operation.

Four of the acquisitions were related to exercising purchase options under an existing lease arrangement from CareTrust REIT, Inc.

These locations are currently operated by the Company's independent subsidiaries.

The remaining one real estate acquisition was leased back to the Company's independent subsidiaries.

Refer to Note 7, Operation Expansions , for additional information.

During the year ended December 31, 2023, Standard Bearer added $ 65,899 of real estate assets associated with three stand-alone skilled nursing facilities and two campus operations.

Of these additions, the three skilled nursing facilities and one campus operation acquired are operated by the Company's independent subsidiaries and the other campus operation is leased to a third-party operator.

During the year ended December 31, 2022, Standard Bearer acquired the real estate of ten skilled nursing facilities for an aggregate purchase price of $ 84,656 , three of which were previously operated and managed by the Company's independent subsidiaries.

During the year ended December 31, 2022, Standard Bearer added $ 84,656 of real estate assets associated with ten skilled nursing facilities, three of which were previously operated and managed by the Company's independent subsidiaries.

Refer to Note 7, Operation Expansions , for additional information.

3 unchanged sentences

Intercompany master lease agreements

Certain of the Company's independent subsidiaries and 79 Standard Bearer independent real estate subsidiaries have entered into five triple-net master lease agreements (collectively, the Standard Bearer Master Leases).

Certain of the Company's independent subsidiaries and 92 Standard Bearer independent real estate subsidiaries have entered into six 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.

6 unchanged sentences

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.

Rental revenue generated from the Company's independent subsidiaries was $ 66,712 , $ 57,967 , and $ 44,165 for the years ended December 31, 2023, 2022, and 2021, respectively.

Intercompany rental revenue generated from Ensign affiliated operations was $ 78,110 , $ 66,712 , and $ 57,967 for the years ended December 31, 2024, 2023 and 2022, respectively, which has been eliminated in consolidation.

Intercompany management agreement

2 unchanged sentences

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 year ended December 31, 2023 and 2022 was $ 4,948 and $ 4,367 , respectively.

No management fees were recorded in 2021, which was prior to the formation of Standard Bearer.

Management fee generated between Standard Bearer and the Service Center for the years ended December 31, 2024, 2023 and 2022 was $ 5,707 , $ 4,948 and $ 4,367 , respectively, which has been eliminated in consolidation.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 the 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 range from 1.25 % to 2.25 % per annum.

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.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Equity Instrument Denominated in the Shares of a Subsidiary

As part of the formation of Standard Bearer in January of 2022, the Company established the Standard Bearer Healthcare REIT, Inc.

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).

2 unchanged sentences

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 awards can be put to Standard Bearer at various prescribed dates, which in no event is earlier than six months after vesting of the restricted awards or exercise of the stock options.

The Company can also call the awards, generally upon employee termination.

The Company granted 39 restricted stock awards during the year ended December 31, 2024.

During the years ended December 31, 2023 and 2022, the Company did not grant any stock options or restricted shares under the Standard Bearer Equity Plan.

During the years ended December 31, 2024, 2023 and 2022, 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 year ended December 31, 2024, the Standard Bearer Equity Plan's share-based compensation expense was not material.

There was no expense during the years ended December 31, 2023 and 2022.

During the year ended December 31, 2022, Standard Bearer sold fully vested common shares from the Standard Bearer Equity Plan to shareholders for cash of $ 6,544 .

During the year ended December 31, 2023 and 2022, the Company did not grant any stock options nor restricted shares under the Standard Bearer Equity Plan.

Also, during the year ended December 31, 2022, Standard Bearer established shareholders of its preferred shares through contributions of cash of $ 149 .

5 unchanged sentences

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 will acquire the property of facilities that have previously been operated under third-party leases.

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.

2024 Expansions

During the year ended December 31, 2023, the Company expanded its operations and real estate portfolio through a combination of long-term leases and real estate purchases , with the addition of 25 stand-alone skilled nursing operations and one campus operation.

During the year ended December 31, 2024, the Company expanded its operations through a combination of long-term leases and real estate purchases , with the addition of 28 stand-alone skilled nursing operations, including a long-term acute care hospital and three campus operations.

Of these additions, Standard Bearer acquired the real estate of 14 of these operations, all of which were leased back to the Company's independent subsidiaries.

Refer to Note 6, Standard Bearer, for additional information on the purchase of real estate properties.

These new operations added a total of 3,030 operational skilled nursing beds, including 43 long-term acute care beds and 218 operational senior living units to be operated by the Company's independent subsidiaries.

The Company also invested in new ancillary services that are complementary to its existing businesses.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Subsequent to December 31, 2024, the Company expanded its operations with the addition of seven stand-alone skilled nursing operations.

Of these additions, Standard Bearer acquired the real estate of one of these operations, which was leased back to the Company's independent subsidiary.

Refer to Note 6, Standard Bearer, for additional information on the purchase of the real estate property.

The new operations added 682 operational skilled nursing beds to be operated by the Company's independent subsidiaries.

2023 Expansions

During the year ended December 31, 2023, the Company expanded its operations through a combination of long-term leases and real estate purchases , with the addition of 25 stand-alone skilled nursing operations and one campus operation.

Of these additions, Standard Bearer acquired the real estate of three of the stand-alone skilled nursing operations and one campus operation, which were leased back to the Company's independent subsidiaries.

1 unchanged sentence

These new operations added a total of 2,483 operational skilled nursing beds and 94 operational senior living units to be operated by the Company's independent subsidiaries.

The Company also invested in new ancillary services that are complementary to its existing businesses.

The Company entered into a separate operations transfer agreement with each prior operator as part of each transaction.

Subsequent to December 31, 2023, the Company expanded its operations through a long-term lease, with the addition of two stand-alone skilled nursing operations, totaling 241 operational skilled nursing beds operated by the Company's independent subsidiaries, including one in a new state, Tennessee.

2022 Expansions

6 unchanged sentences

The Company also invested in new ancillary services that are complementary to its existing businesses.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Of the new operations acquired during the year ended December 31, 2022, $ 16,400 was concentrated in goodwill and accordingly, the transactions were classified as business combinations.

The Company entered into a separate operations transfer agreement with each prior operator as part of each transaction.

2021 Acquisitions

During the year ended December 31, 2021, the Company expanded its operations through a combination of long-term leases and a real estate purchase, with the addition of 17 stand-alone skilled nursing operations and five real estate purchases, four of which the Company previously operated and continues to operate.

The remaining real estate purchase is operated by Pennant.

These new operations added a total of 1,832 operational skilled nursing beds operated by the Company's independent subsidiaries.

Of the new operations acquired during the year ended December 31, 2021, $ 6,000 was concentrated in goodwill and accordingly, the transactions were classified as business combinations.

In connection with the new operations made 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 entered into a separate operations transfer agreement with the prior operator as part of each transaction.

The table below presents the allocation of the purchase price for the operations acquired during the years ended December 31, 2024, 2023 and 2022:

13 unchanged sentences

Consequently, the Company believes that prior operating results are not a meaningful representation of the Company’s current operating results or indicative of the integration potential of its newly acquired independent subsidiaries .

The assets added during the year ended December 31, 2023 were not material operations to the Company individually or in the aggregate.

The operations added during the year ended December 31, 2024 were not material to the Company individually or in the aggregate.

Accordingly, pro forma financial information is not presented.

3 unchanged sentences

(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 December 31, 2023, the skilled services segment includes 259 skilled nursing operations and 27 campus operations that provide both skilled nursing and rehabilitative care services and senior living services.

The Company's Standard Bearer segment consists of 108 owned real estate properties.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

As of December 31, 2024, the skilled services segment includes 286 skilled nursing and 30 campus operations that provide both skilled nursing and rehabilitative care services and senior living services.

The Company's Standard Bearer segment consists of 124 owned real estate properties.

The Company also reports an “All Other” category that includes results from its senior living operations, which includes 11 stand-alone senior living operations and the senior living operations at 30 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 and other ancillary operations.

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 Company's CODM reviews financial information for each operating segment to evaluate performance and allocate capital resources.

This structure reflects its current operational and financial management and provides the best structure to maximize the quality of care and investment strategy provided, while maintaining financial discipline.

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 (loss) is defined as income or loss 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 CODM, who is the Chief Executive Officer, reviews segment income or loss for each operating segment to evaluate performance and allocate capital resources.

The CODM uses segment income or loss 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.

The accounting policies of the reportable segments are the same as those described in Note 2, Summary of Significant Accounting Policies .

Intercompany revenue is eliminated in consolidation, along with corresponding intercompany expenses.

Segment income and loss is defined as profit or loss from operations before provision for income taxes, excluding gain or loss from sale of real estate, real estate insurance recoveries and losses and impairment charges from operations.

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.

1 unchanged sentence

Year Ended December 31, 2024

Skilled Services Standard Bearer All Other (1)

Intercompany Elimination Total

Skilled Services Standard Bearer Total

Service revenue (1)

2 unchanged sentences

— 95,086 95,086

TOTAL REVENUE $ 3,578,855 $ 82,486 $ 155,804 $ ( 87,790 ) $ 3,729,355

Segment income (loss) 464,925 29,065 ( 221,251 ) — 272,739

Gain on sale of assets and insurance recoveries from real estate, net

Income before provision for income taxes $ 272,762

Segment revenue

$ 4,076,825 $ 95,086 $ 4,171,911

Reconciliation of revenue:

All other revenue (2)

Elimination of intercompany revenue (3)

TOTAL CONSOLIDATED REVENUE

Other segment items (4)

3,513,167 9,152

Depreciation and amortization 45,195 29,297

Interest expense (5)

Segment income

$ 518,463 $ 29,335 $ 547,798

(1) All Other primarily includes all ancillary operations, stand-alone senior living operations and the Service Center.

(2) Intercompany service revenue represents 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 consolidation along with corresponding intercompany cost of service.

(3) All Other rental revenue includes rental revenue associated with the Company's subleases to third parties of $ 3,897 for the year ended December 31, 2023.

Intercompany rental revenue represents rental income generated by both Standard Bearer and other real estate properties with the Company's independent subsidiaries.

Intercompany rental revenue is eliminated in consolidation along with corresponding intercompany rent expense.

(4) Included in interest expense in Standard Bearer is interest expense incurred from intercompany debt arrangements between Standard Bearer and The Ensign Group, Inc.

Intercompany interest expense is eliminated in the "Intercompany Elimination" column.

Reconciliation of profit or loss:

All other loss

INCOME BEFORE PROVISION FOR INCOME TAXES

(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 $ 181,066 of service revenue and $ 11,815 of rental revenue for the year ended December 31, 2024, 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 $ 83,941 and intercompany service revenue of $ 20,366 for the year ended December 31, 2024.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(4) Other segment items includes 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 $ 104,307 during the year ended December 31, 2024, 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 $ 20,285 during the year ended December 31, 2024, which is eliminated in consolidation.

Year Ended December 31, 2023

Skilled Services Standard Bearer All Other (1)

Intercompany Elimination Total

Skilled Services Standard Bearer Total

Service revenue (1)

2 unchanged sentences

— 82,486 82,486

TOTAL REVENUE $ 2,906,215 $ 72,937 $ 122,610 $ ( 76,294 ) $ 3,025,468

Segment income (loss) 408,732 27,871 ( 150,781 ) — 285,822

Gain on sale of assets and insurance recoveries from real estate, net

Income before provision for income taxes $ 289,089

Segment revenue

$ 3,578,855 $ 82,486 $ 3,661,341

Reconciliation of revenue:

All other revenue (2)

Elimination of intercompany revenue (3)

TOTAL CONSOLIDATED REVENUE

Other segment items (4)

3,075,164 8,455

Depreciation and amortization 38,766 25,205

Interest expense (5)

$ — $ 15,707 $ 1,870 $ ( 8,646 ) $ 8,931

(1) All Other primarily includes all ancillary operations, stand-alone senior living operations and the Service Center.

Intercompany service revenue is eliminated in consolidation along with corresponding intercompany cost of service.

(3) Intercompany rental revenue represents rental income generated by both Standard Bearer and other real estate properties with the Company's independent subsidiaries.

Intercompany rental revenue is eliminated in consolidation along with corresponding intercompany rent expense.

(4) Included in interest expense in Standard Bearer is interest expense incurred from intercompany debt arrangements between Standard Bearer and The Ensign Group, Inc.

Intercompany interest expense is eliminated in the "Intercompany Elimination" column.

Segment income $ 464,925 $ 29,065 $ 493,990

Reconciliation of profit or loss:

All other loss

INCOME BEFORE PROVISION FOR INCOME TAXES

Intercompany service revenue is eliminated in "Elimination of intercompany revenue".

(2) All Other revenue includes $ 144,667 of service revenue and $ 11,137 of rental revenue for the year ended December 31, 2023, 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 $ 72,339 and intercompany service revenue of $ 15,451 for the year ended December 31, 2023.

Additionally, there are intercompany expenses of $ 87,790 during the year ended December 31, 2023, 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 $ 12,902 during the year ended December 31, 2023, which is eliminated in consolidation.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Year Ended December 31, 2022

Skilled Services Standard Bearer All Other (1)

Intercompany Elimination Total

Skilled Services Standard Bearer Total

Service revenue (1)

2 unchanged sentences

— 72,937 72,937

TOTAL REVENUE $ 2,523,234 $ 58,127 $ 102,685 $ ( 56,585 ) $ 2,627,461

Segment income (loss) 373,603 31,876 ( 147,915 ) — 257,564

Gain on real estate insurance recoveries 440

Income before provision for income taxes $ 258,004

Segment revenue

$ 2,906,215 $ 72,937 $ 2,979,152

Reconciliation of revenue:

All other revenue (2)

Elimination of intercompany revenue (3)

TOTAL CONSOLIDATED REVENUE

Other segment items (4)

2,464,259 7,746

Depreciation and amortization 33,224 21,613

Interest expense (5)

(1) All Other primarily includes all ancillary operations, stand-alone senior living operations and the Service Center.

Intercompany service revenue is eliminated in consolidation along with corresponding intercompany cost of service.

(3) Intercompany rental revenue represents rental income generated by both Standard Bearer and other real estate properties with the Company's independent subsidiaries.

Intercompany rental revenue is eliminated in consolidation along with corresponding intercompany rent expense.

Segment income $ 408,732 $ 27,871 $ 436,603

Reconciliation of profit or loss:

All other loss

INCOME BEFORE PROVISION FOR INCOME TAXES

Intercompany service revenue is eliminated in "Elimination of intercompany revenue".

(2) All Other revenue includes $ 115,214 of service revenue and $ 7,396 of rental revenue for the year ended December 31, 2022, 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 $ 63,576 and intercompany service revenue of $ 12,718 for the year ended December 31, 2022.

Additionally, there are intercompany expenses of $ 76,294 during the year ended December 31, 2022, 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 $ 8,646 during the year ended December 31, 2022, which is eliminated in consolidation.

Service revenue by major payor source were as follows:

10 unchanged sentences

TOTAL SERVICE REVENUE $ 4,076,825 $ 160,700 $ 4,237,525 100.0 %

(1) Medicaid payor includes revenue generated from senior living operations and revenue related to state relief funding.

(2) Private and other payors also includes revenue from senior living operations and all payors generated in other ancillary services.

(1) Medicaid payor includes revenue generated from senior living operations.

(2) Private and other payors also includes revenue from senior living operations and all revenue generated in other ancillary services.

(3) All Other incorporates intercompany eliminations.

13 unchanged sentences

(1) Medicaid payor includes revenue generated from senior living operations and revenue related to state relief funding.

(2) Private and other payors also includes revenue from senior living operations and all payors generated in other ancillary services.

(2) Private and other payors also includes revenue from senior living operations and all revenue generated in other ancillary services.

(3) All Other incorporates intercompany eliminations.

25 unchanged sentences

The Company completed the sale of assets for a sale price of $ 8,607 and recorded a gain of $ 3,467 within the Company's consolidated statement of income as cost of services during the year ended December 31, 2022.

In addition, the Company evaluated its long-lived assets and did not record an impairment charge for the fiscal years ended 2023, 2022, and 2021.

See also Note 6, Standard Bearer and Note 7, Operation Expansions for information on acquisitions during the year ended December 31, 2023.

The Company recorded gain and losses related to sale of assets, which were not material during the years ended December 31, 2024 and 2023.

Management evaluated its long-lived assets and recorded an impairment charge of $ 1,849 within the Company's consolidated statement of income as cost of services during the year ended December 31, 2024.

The Company determined there was no impairment during the year ended December 31, 2023 and 2022.

THE ENSIGN GROUP, INC.

9 unchanged sentences

During the years ended December 31, 2024, 2023 and 2022, amortization expense was $ 2,019 , $ 1,790 and $ 1,714 , respectively, of which $ 1,212 , $ 1,202 , and $ 1,160 was related to the amortization of right-of-use assets, respectively.

The Company did no t record any impairment charge to intangible assets during the years ended December 31, 2023, 2022, and 2021.

The Company did not record any impairment charge to intangible assets during the years ended December 31, 2024, 2023 and 2022.

Estimated amortization expense for each of the years ending December 31 is as follows:

5 unchanged sentences

During the year ended December 31, 2024, the Company acquired $ 364 in Medicare and Medicaid licenses compared to $ 330 and $ 245 in the fiscal years 2023 and 2022, respectively.

The Company anticipates that the majority of goodwill recognized will be fully deductible for tax purposes as of December 31, 2023.

All of the Company's acquisitions during the year ended December 31, 2023 were classified as asset acquisitions and accordingly, no goodwill was recognized for these acquisitions.

There were no other activities in goodwill during the year ended December 31, 2023.

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.

The following table represents activity in goodwill by skilled service segment and "all other" category as of December 31, 2024, 2023 and 2022:

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Skilled Services All Other Total

2 unchanged sentences

December 31, 2022 $ 67,886 $ 8,983 $ 76,869

Additions 16,400 — 16,400

December 31, 2023 $ 67,886 $ 8,983 $ 76,869

Additions 20,740 372 21,112

December 31, 2024 $ 88,626 $ 9,355 $ 97,981

RESTRICTED AND OTHER ASSETS

Restricted and other assets consist of the following:

Debt issuance costs, net $ 2,883 $ 3,753

Long-term insurance losses recoverable asset 15,913 10,512

Capital improvement reserves with landlords and lenders 4,870 6,446

Deposits with landlords 2,661 2,527

Escrow deposits 1,216 —

Other 12,662 14,053

RESTRICTED AND OTHER ASSETS $ 40,205 $ 37,291

Included in restricted and other assets as of December 31, 2023 and 2022 are anticipated insurance recoveries related to the Company's workers' compensation and general and professional liability claims that are recorded on a gross, rather than net, basis.

Management has evaluated its goodwill and intangible assets and determined there was no impairment during the years ended December 31, 2024, 2023 and 2022.

The Company has recognized cumulative goodwill impairment losses of $ 7,410 , since inception in 1999.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

OTHER ACCRUED LIABILITIES

3 unchanged sentences

Resident advances 18,818 10,834

Unapplied state relief funds 486 1,001

Cash held in trust for patients 6,370 6,215

4 unchanged sentences

OTHER ACCRUED LIABILITIES $ 132,057 $ 168,228

Quality assurance fee represents the aggregate of amounts payable to Arizona, California, Colorado, Idaho, Iowa, Kansas, Nebraska, Nevada, Utah, Washington and Wisconsin as a result of a mandated fee based on patient days or licensed beds.

Quality assurance fee represents the aggregate of amounts payable to Arizona, California, Colorado, Idaho, Iowa, Kansas, Nebraska, Nevada, Tennessee, Utah, Washington and Wisconsin as a result of a mandated fee based on patient days or licensed beds.

Refunds payable includes payables related to overpayments, duplicate payments and credit balances from various payor sources.

3 unchanged sentences

The cash balance related to this liability is included in other current assets in the consolidated balance sheets.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The provision for income taxes on continuing operations for the years ended December 31, 2023, 2022 and 2021 is summarized as follows:

The provision for income taxes for the years ended December 31, 2024, 2023 and 2022 is summarized as follows:

Year Ended December 31,

7 unchanged sentences

TOTAL $ 87,636 $ 62,912 $ 64,437

A reconciliation of the federal statutory rate to the effective tax rate for income from continuing operations for the years ended December 31, 2023, 2022 and 2021, respectively, is comprised as follows:

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

A reconciliation of the federal statutory rate to the effective tax rate for net income for the years ended December 31, 2024, 2023 and 2022, respectively, is comprised as follows:

2024 2023 2022

6 unchanged sentences

The Company's effective tax rate was 22.7 % for the year ended December 31, 2024, compared to 23.1 % for the same period in 2023 and 22.3 % in 2022.

The higher effective tax rate is due to higher non-deductible expenses compared to tax benefits from stock compensation.

The lower effective tax rate is due to lower non-deductible expenses included but not limited to tax benefits from stock based compensation.

The Company's deferred tax assets and liabilities as of December 31, 2024 and 2023 are summarized below.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Deferred tax assets (liabilities):

4 unchanged sentences

Lease liability 470,313 444,590

State taxes — 28

$ 599,169 $ 567,862

5 unchanged sentences

Right-of-use asset

( 468,955 ) ( 443,222 )

TOTAL DEFERRED TAX LIABILITIES $ ( 532,795 ) $ ( 499,949 )

4 unchanged sentences

The remainder of these carryforwards relate to credits against the Texas margin tax and is expected to carryforward until 2027.

As of December 31, 2023 and 2022, the valuation allowance of $ 789 , for both years, was primarily recorded against the Enterprise Zone credits as the Company believes it is more likely than not that some of the benefit of the credits will not be realized.

The Company's operating loss carry forwards for states were not material during the year ended December 31, 2023 and 2022.

As of December 31, 2024 and 2023, the valuation allowance of $ 93 and $ 789 , respectively, was primarily recorded against the Enterprise Zone credits as the Company believes it is more likely than not that some of the benefit of the credits will not be realized.

The Company's operating loss carry forwards for states were not material during the years ended December 31, 2024 and 2023.

As of December 31, 2024, 2023 and 2022, the Company did not have any unrecognized tax benefits, net of its state benefits that would affect the Company's effective tax rate.

4 unchanged sentences

The lapses during the years ended December 31, 2024 and 2023 had no impact on the Company's unrecognized tax benefits.

During the year ended December 31, 2021, the state of Wisconsin initiated and completed an examination of the Company's 2019, 2018, and 2017 state tax years with no adjustments.

The Company is not under examination by any major income tax jurisdiction.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Debt consists of the following:

3 unchanged sentences

LONG-TERM DEBT LESS CURRENT MATURITIES $ 141,585 $ 145,497

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Credit Facility with a Lending Consortium Arranged by Truist

1 unchanged sentence

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 range 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).

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.

When the Company amended the Credit Facility in 2022 with the terms and conditions described above, it wrote off deferred financing costs of $ 566 and additional deferred financing costs of $ 3,197 were capitalized during the year ended December 31, 2022.

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.

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 3.00 :1.00;

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).

2 unchanged sentences

Mortgage Loans and Promissory Note

The Company has 23 subsidiaries that have mortgage loans insured with HUD in the aggregate amount of $ 150,244 , which subjects these subsidiaries to HUD oversight and periodic inspections.

As of December 31, 2024, the Company has 23 subsidiaries that have mortgage loans insured with HUD in the aggregate amount of $ 146,898 , 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.

6 unchanged sentences

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.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Future principal payments due under the long-term debt arrangements discussed above are as follows:

2 unchanged sentences

Based on Level 2 inputs, the carrying value of the Company's long-term debt is considered to approximate the fair value of such debt for all periods presented based upon the interest rates that the Company believes it can currently obtain for similar debt.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Off-Balance Sheet Arrangements

As of December 31, 2023, the Company had approximately $ 6,255 of borrowing capacity under the Credit Facility pledged as collateral to secure outstanding letters of credit, which decreased by $ 455 from prior year.

As of December 31, 2024, the Company had approximately $ 27,893 of borrowing capacity under the Credit Facility pledged as collateral to secure outstanding letters of credit, which increased by $ 21,638 from December 31, 2023.

The Company believes that its outstanding letters of credit as of 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.

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 consolidated statements of income for the years ended December 31, 2023, 2022, and 2021 was based on awards ultimately 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.

2022 Omnibus Incentive Plan (2022 Plan) — The Company has one active stock incentive plan, the 2022 Omnibus Incentive Plan (the 2022 Plan).

2022 Omnibus Incentive Plan (2022 Plan) — The Company has one stock incentive plan, the 2022 Omnibus Incentive Plan (the 2022 Plan), pursuant to which grants of the Company's securities may currently be made.

Including the shares rolled over from the 2017 Omnibus Incentive Plan, the 2022 Plan provides for the issuance of 3,452 shares of common stock.

16 unchanged sentences

• Estimated forfeiture rate of approximately 4.86 % per year is based on the Company's historical forfeiture activity of unvested stock options.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Stock Options

6 unchanged sentences

For the years ended December 31, 2024, 2023 and 2022, the following represents the exercise price and fair value displayed at grant date for stock option grants:

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Grant Year Granted Weighted Average Exercise Price Weighted Average Fair Value of Options

3 unchanged sentences

The weighted average exercise price equaled the weighted average fair value of common stock on the grant date for all options granted during the periods ended December 31, 2024, 2023 and 2022 and therefore, the intrinsic value was $ 0 at the date of grant.

The following table represents the employee stock option activity during the year ended December 31, 2023:

The following table represents the employee stock option activity during the years ended December 31, 2024, 2023 and 2022:

Number of Options Outstanding Weighted Average

9 unchanged sentences

Exercised ( 759 ) 24.21

December 31, 2022 3,833 $ 46.72 2,069 $ 28.87

2023 3,991 $ 62.65 1,887 $ 39.58

Granted 704 132.46

2 unchanged sentences

December 31, 2024 3,987 $ 78.84 1,895 $ 52.64

The following summary information reflects stock options outstanding, vested and related details as of December 31, 2023:

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table represents the employee stock option activity during the year ended December 31, 2024:

Stock Options Outstanding Stock Options Vested

13 unchanged sentences

The aggregate intrinsic value of options outstanding, vested and expected to vest as of December 31, 2024, 2023 and 2022 is as follows:

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Options 2024 2023 2022

10 unchanged sentences

The fair value per share includes quarterly stock awards to non-employee directors.

Included in the restricted stock award grants are $ 6,165 and $ 5,068 of annual bonuses that were settled in vested restricted stock awards during the years ended December 31, 2024 and 2023, respectively.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

A summary of the status of the Company's non-vested restricted stock awards as of December 31, 2024 and changes during the years ended December 31, 2024, 2023 and 2022 is presented below:

13 unchanged sentences

Nonvested at December 31, 2024

During the year ended December 31, 2023, the Company granted 18 quarterly stock awards to non-employee directors for their service on the Company's board of directors from the 2022 Plan.

During the year ended December 31, 2024, the Company granted 16 quarterly stock awards 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 $ 116.65 to $ 149.12 based on the market price on the grant date.

1 unchanged sentence

On August 27, 2019, the Board approved the Long-Term Incentive Plan (the 2019 LTI Plan).

The 2019 LTI Plan provides that certain employees of the Company who assisted in the consummation of the spin-off of Pennant from the Company in 2019 (spin-off transaction) were granted shares of restricted stock upon successful completion of the spin-off.

The 2019 LTI Plan provides that certain employees of the Company who assisted in the consummation of the spin-off of Pennant from the Company in 2019 were granted shares of restricted stock upon successful completion of the spin-off.

The 2019 LTI Plan provides for the issuance of 500 shares of Pennant restricted stock.

The shares are vested over five years at 20 % per year on the anniversary of the grant date.

If a recipient is terminated or voluntarily leaves the Company, all shares subject to restriction or not yet vested are entirely forfeited.

The total stock-based compensation related to the 2019 LTI Plan was approximately $ 827 , $ 836 , and $ 854 for the years ended December 31, 2023, 2022 and 2021, respectively.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

As of December 31, 2024, the 2019 LTI Plan was fully vested.

The total stock-based compensation related to the 2019 LTI Plan was $ 546 , $ 827 , and $ 836 for the years ended December 31, 2024, 2023 and 2022, respectively.

Stock-based compensation expense

4 unchanged sentences

Stock-based compensation expense related to restricted stock awards 11,662 11,845 9,920

Stock-based compensation expense related to stock options and restricted stock awards to non-employee directors 1,688 1,439 1,834

Stock-based compensation expense related to restricted stock awards to non-employee directors

2,082 1,688 1,439

TOTAL $ 36,183 $ 30,754 $ 22,720

3 unchanged sentences

The weighted average contractual life for options outstanding, vested and expected to vest as of December 31, 2024 was 6.7 years.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company leases from CareTrust REIT, Inc.

2 unchanged sentences

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 been continuing;

(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.

1 unchanged sentence

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.

During the year ended December 31, 2024, the Company amended two of the Master Leases by adding three operations and extending the terms to 15 and 20 years, respectively.

These amendments increased the lease liabilities and right-of-use assets by $ 72,503 to reflect the new lease obligations.

Additionally, four of the 100 facilities leased from CareTrust include an option to purchase that the Company can exercise starting on December 1, 2024.

Subsequent to December 31, 2024, the Company purchased the real estate of the four facilities from CareTrust for $ 44,575 .

The Company does not have the ability to terminate the obligations under a Master Lease prior to its expiration without CareTrust’s consent.

8 unchanged sentences

The terms and conditions of the one stand-alone lease are substantially the same as those for the master leases described above.

Total rent expense for continuing operations under the Master Leases was approximately $ 66,439 , $ 64,178 and $ 59,571 for the years ended December 31, 2023, 2022 and 2021, respectively.

Total rent expense under the Master Leases was approximately $ 69,399 , $ 66,439 and $ 64,178 for the years ended December 31, 2024, 2023 and 2022, 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.

1 unchanged sentence

The Company is in compliance with requirements of the Master Leases as of December 31, 2024.

In connection with the spin-off that occurred in 2019, the Company guaranteed certain leases of Pennant based on the underlying terms of the leases.

The Company does not consider these guarantees to be probable and the likelihood of Pennant defaulting is remote, and therefore no liabilities have been accrued.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 five to 20 years.

In addition, the Company leases certain of its equipment under non-cancelable operating leases with initial terms ranging from three to five years .

1 unchanged sentence

Total rent expense for continuing operations inclusive of straight-line rent adjustments and rent associated with the Master Leases noted above, was $ 216,716 , $ 197,856 and $ 153,174 for the years ended December 31, 2024, 2023 and 2022, respectively.

Eighty of the Company’s independent subsidiaries, excluding the subsidiaries that are operated under the Master Leases with CareTrust, are operated under 13 separate master lease arrangements.

During 2023, the Company expanded its operations through three separate master lease arrangements for 22 stand-alone skilled nursing operations, of which 19 are operated by the Company's independent subsidiaries and the remaining three are subleased to a third-party operator.

These three master leases increased the lease liabilities and right-of-use assets by $ 346,789 to reflect the new lease obligations and have initial lease terms of 18 , 20 and 20 years, respectively.

Under these 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.

Ninety of the Company’s independent subsidiaries, excluding the subsidiaries that are operated under the Master Leases with CareTrust, are operated under 14 separate master lease arrangements.

During the year ended December 31, 2024, the Company amended one of the separate master lease arrangements to add two stand-alone skilled nursing operations operated by the Company's independent subsidiaries and extended the term to 20 years.

In addition, the Company entered into one new master lease arrangement to add six stand-alone skilled nursing operations operated by the Company's independent subsidiaries with an initial term of 15 years.

The amended and new master lease arrangements increased the lease liabilities and right-of-use assets by $ 71,616 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 a default under several of the Company’s leases, master lease agreements and debt financing instruments.

2 unchanged sentences

The components of operating lease expense are as follows:

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Year Ended December 31,

2 unchanged sentences

$ 216,016 $ 197,358 $ 153,049

Cost of services (2)

24,297 20,454 16,938

General and administrative expense 700 498 125

1 unchanged sentence

1,212 1,202 1,160

Variable lease costs (3)

$ 242,225 $ 219,512 $ 171,272

$ 219,512 $ 171,272 $ 154,693

(1) Rent- cost of services includes deferred rent expense adju stments of $ 870 , $ 493 and $ 485 for the years ended December 31, 2023, 2022 and 2021, respectively.

(1) Rent- cost of services includes accrued rent expense adju stments of $ 808 , $ 870 and $ 493 for the years ended December 31, 2024, 2023 and 2022, respectively.

Additionally, rent- cost of services includes other variable lease costs such as consumer price index increases and short-term leases of $ 14,013 , $ 10,259 , $ 5,878 for the years ended December 31, 2024, 2023, and 2022 respectively.

(2) Cost of services includes variable lease costs, which consists of property taxes and insurance.

(3) Depreciation and amortization is related to the amortization of favorable and direct lease costs.

(3) Variable lease costs, including property taxes and insurance, are classified in cost of services in the Company's consolidated statements of income.

Future minimum lease payments for all third-party leases as of December 31, 2024 are as follows:

8 unchanged sentences

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 December 31, 2023 and 2022, the weighted average remaining lease term is 14.9 years and 15.0 years and the weighted average discount rate used to determine the operating lease liabilities is 6.5 % and 6.7 %.

Subsequent to December 31, 2023, the Company amended an existing separate master lease arrangement to add two stand-alone skilled nursing facilities and extend the initial term to 20 years.

This added a total of 241 operational skilled nursing beds operated by the Company's independent subsidiaries and the aggregate impact to the carrying value of lease liabilities and right-of-use assets related to the separate master lease agreement is estimated to be approximately $ 30,980 .

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

As of December 31, 2024 and 2023, the weighted average remaining lease term is 14.5 years and 14.9 years, respectively, and the weighted average discount rate used to determine the operating lease liabilities is 6.3 % and 6.5 %, respectively.

Subsequent to December 31, 2024, the Company expanded its operations through a new master lease with the addition of six standalone skilled nursing operations.

The aggregate impact to the carrying value of lease liabilities and right-of-use assets related to the long-term leases is estimated to be approximately $ 67,572 .

Lessor Activities

7 unchanged sentences

The initial terms range from 14 to 16 years.

During 2024, the Company expanded its operations through a separate master lease arrangement for three stand-alone senior living operations with a third-party operator for an initial lease term of 15 years.

During 2023, the Company entered into a sublease agreement for three stand-alone skilled nursing operations with a third-party operator with an initial lease term of 18 years.

Additionally, during the year, the Company entered into a lease agreement with a third-party operator for one campus operation with an initial lease term of 15 years.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Total rental income from all third-party sources for the years ended December 31, 2024, 2023 and 2022 is as follows:

6 unchanged sentences

(1) Pennant rental income includes variable rent such as property taxes of $ 1,235 , $ 1,296 , and $ 1,318 during the year ended December 31, 2024, 2023, and 2022.

In addition, the number of senior living operations leased to and operated by Pennant was 29 during the year ended December 31, 2023 and decreased from 32 to 29 during the year ended December 31, 2022.

(2) Other third-party includes rental revenue associated with the Company's subleases to third parties of $ 3,897 for the year ended December 31, 2023.

There was no sublease rental revenue for the years ended December 31, 2022 and 2021.

(2) Other third-party includes rental revenue associated with the Company's subleases to third parties of $ 4,347 and $ 3,897 for the years ended December 31, 2024 and 2023.

There was no sublease rental revenue for the year ended December 31, 2022.

Future annual rental income for all third-party leases as of December 31, 2024 were as follows:

10 unchanged sentences

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 fiscal years 2023, 2022 and 2021.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

As of the years ended December 31, 2023 and 2022, the Company accrued $ 49,201 and $ 33,017 , respectively, as long term deferred compensation in other long term liabilities on the consolidated balance sheet.

As of December 31, 2024 and 2023, the Company accrued $ 63,051 and $ 49,201 , respectively, as long term deferred compensation in other long term liabilities on the 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 years ended December 31, 2023 and 2021, the Company recorded gains related to its DCP of $ 4,634 and $ 1,612 , respectively, which are included in other income (expense), net, and recorded offsetting expenses of $ 4,887 and $ 1,758 , respectively, which are allocated between cost of services and general and administrative expenses.

For the year ended December 31, 2022, the Company recorded a loss related to its DCP of $ 4,188 , which is included in other income (expense), net, and recorded an offsetting reduction in expense of $ 4,051 , which is allocated between cost of services and general and administrative expenses.

For the years ended December 31, 2024 and 2023, the Company recorded gains related to its DCP of $ 5,157 and $ 4,634 , respectively, which are included in other income (expense), and recorded offsetting expenses of $ 5,559 and $ 4,887 , which are allocated between cost of services and general and administrative expenses.

For the year ended December 31, 2022, the Company recorded a loss related to its DCP of $ 4,188 , which is included in other income (expense), and recorded an offsetting reduction in expense of $ 4,051 , which is allocated between cost of services and general and administrative expenses.

SELF INSURANCE LIABILITIES

The following table represents activity in our insurance liabilities as of and for the years ended December 31, 2023 and 2022:

The following table represents the Company's self-insurance insurance liabilities, on an undiscounted basis, inclusive of anticipated insurance recoveries, as of December 31, 2024 and 2023:

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Accrued general liability and professional malpractice liabilities $ 160,149 $ 117,744

Accrued workers’ compensation liabilities 37,291 33,352

Accrued health benefits

14,312 14,814

TOTAL SELF-INSURANCE LIABILITIES $ 211,752 $ 165,910

current self-insurance liabilities

67,331 54,664

LONG-TERM SELF-INSURANCE LIABILITIES

$ 144,421 $ 111,246

The following table represents activity in the Company's self-insurance liabilities as of and for the years ended December 31, 2024 and 2023:

Balance January 1, 2023

7 unchanged sentences

Balance December 31, 2024

Included in the table above are accrued general liability and professional malpractice liabilities on an undiscounted basis, net of anticipated insurance recoveries, of $ 117,744 and $ 87,000 as of December 31, 2023 and 2022, respectively.

Included in long-term insurance losses recoverable as of December 31, 2023 and 2022 are anticipated insurance recoveries related to the Company's general and professional liability claims that are recorded on a gross rather than net basis in accordance with GAAP.

The anticipated insurance recoveries included in the self-insurance liabilities are presented gross rather than net with the corresponding asset of $ 17,741 and $ 15,913 as of December 31, 2024 and 2023, respectively, included in Restricted and other assets on the consolidated balance sheets.

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.

These contracts primarily include (i) certain real estate leases, under which the Company may be required to indemnify property owners or prior facility operators for post-transfer environmental obligations or other liabilities and other claims arising from the Company’s use of the applicable premises, (ii) operations transfer agreements, in which the Company agrees to indemnify past operators of facilities the Company acquires against certain liabilities arising from the transfer of the operation and/or the operation thereof after the transfer to the Company's independent subsidiary, (iii) certain lending agreements, under which the Company may be required to indemnify the lender against various claims and liabilities, and (iv) certain agreements with the Company’s officers, directors and others, under which the Company may be required to indemnify such persons for liabilities based on the nature of their relationship to the Company.

The terms of such obligations vary by contract and, in most instances, do not expressly state or include a specific or maximum dollar amount.

1 unchanged sentence

Consequently, because no claims have been asserted, no liabilities have been recorded for these obligations on the Company’s consolidated balance sheets for any of the periods presented.

In connection with the spin-off in 2019, certain landlords required, in exchange for their consent to the transaction, that the Company's lease guarantees remain in place for a certain period of time following the transaction.

These guarantees could result in significant additional liabilities and obligations for the Company if Pennant were to default on their obligations under their leases with respect to these properties.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Litigation and Regulatory Matters — Laws and regulations governing Medicare and Medicaid programs are complex and subject to review and interpretation.

Compliance with such laws and regulations is evaluated regularly, the results of which can be subject to future governmental review and interpretation, and can include significant regulatory action including fines, penalties, and exclusion from certain governmental programs.

Included in these laws and regulations is monitoring performed by the Office of Civil Rights which covers the Health Insurance Portability and Accountability Act of 1996, the terms of which require healthcare providers (among other things) to safeguard the privacy and security of certain patient protected health information.

Both government and private pay sources have instituted cost-containment measures designed to limit payments made to providers of healthcare services, and there can be no assurance that future measures designed to limit payments made to providers will not adversely affect us.

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, including claims that services provided to patients by the Company’s independent subsidiaries have resulted in injury or death, and claims related to employment and commercial matters.

For example, 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 in late November 2023.

The Company intends to appeal the verdict.

The Company has in the past appealed and have in some circumstances received returned decisions in its favor.

Although the Company intends to vigorously defend against these 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.

Additionally, in certain states in which the Company has or has had independent subsidiaries, insurance coverage for the risk of punitive damages arising from general and professional liability litigation may not be available due to state law and/or public policy prohibitions.

There can be no assurance that the Company or its independent subsidiaries will not be liable for punitive damages awarded in litigation arising in states for which punitive damage insurance coverage is not available.

The skilled nursing and post-acute care industry is heavily regulated.

As such, the Company and its independent subsidiaries are continuously subject to state and federal regulatory scrutiny, supervision and control in the ordinary course of business.

Such regulatory scrutiny often includes inquiries, investigations, examinations, audits, site visits and surveys, some of which are non-routine.

In addition to being subject to direct regulatory oversight from state and federal agencies, the skilled nursing and post-acute care industry is also subject to regulatory requirements which, if noncompliance is identified, could result in civil, administrative or criminal fines, penalties or restitutionary relief, and reimbursement;

authorities could also seek the suspension or exclusion of the provider or individual from participation in their programs.

The Company believes that there has been, and will continue to be, an increase in governmental investigations of post-acute providers, particularly in the area of Medicare/Medicaid false claims, as well as an increase in enforcement actions resulting from these investigations.

Adverse determinations in civil legal proceedings or governmental investigations, whether currently asserted or arising in the future, could have a material adverse effect on the Company’s financial position, results of operations, and cash flows.

Additionally, such proceedings and/or investigation can be a distraction to the business.

For example, in 2020, the U.S.

House of Representatives Select Subcommittee on the Coronavirus Crisis launched a nation-wide investigation into the COVID-19 pandemic, which included the impact of the coronavirus on residents and employees in nursing homes.

In June 2020, the Company and its independent subsidiaries received a document and information request from the House Select Subcommittee.

The Company and its independent subsidiaries cooperated in responding to this inquiry.

In July 2022 and thereafter, the Company and its independent subsidiaries received follow up requests for additional documents and information.

The Company and its independent subsidiaries responded to these requests and cooperated with the House Select Subcommittee in connection with its investigation.

On December 9, 2022, the House Select Subcommittee issued its final report summarizing its investigation and related recommendations designed "to strengthen the nation's ability to prevent and respond to public health and economic emergencies." According to the information provided by the House Select Subcommittee, the issuance of this report was the House Select Subcommittee's final official act in connection with their assigned responsibilities.

Also , the Company, on behalf of its independent subsidiaries, received a Civil Investigative Demand (CID) from the U.S.

Department of Justice (DOJ) in January of 2024 indicating that the DOJ is investigating the Company to determine whether it has caused the submission of claims to Medicare and Texas Medicaid for services which were unnecessary or otherwise not consistent with existing reimbursement requirements.

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, site visits and surveys or other claims in connection with the delivery of healthcare and non-healthcare services.

Refer to Part I.

Legal Proceedings for additional information on litigation and regulatory matters.

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 intends to fully cooperate with the DOJ in response to the CID.

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.

1 unchanged sentence

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

In addition to the potential lawsuits and claims described above, the Company and its independent subsidiaries are also subject to potential lawsuits under the FCA and comparable state laws alleging submission of fraudulent claims for services to any healthcare program (such as Medicare or Medicaid) or other payor.

A violation may provide the basis for exclusion from federally funded healthcare programs.

Such exclusions could have a correlative negative impact on the Company’s financial performance.

In addition, and pursuant to the qui tam or "whistleblower" provisions of the FCA, a private individual with knowledge of fraud or potential fraud may bring a claim on behalf of the federal government and receive a percentage of the federal government's recovery.

Due to these whistleblower incentives, qui tam lawsuits have become more frequent.

For example, on May 31, 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.

The Company fully cooperated with the DOJ and promptly responded to its requests for information.

In April 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 December 2020.

From that time until December 2023, and notwithstanding the Company's success in early pre-trial motions, the Company continued to incur legal defense costs and fees, including significant amounts as part of discovery in the fourth quarter of 2023.

In early January 2024, the Company entered into mediation and on January 19, 2024, the parties agreed to settle the civil case for $ 48,000 , subject to the review of the DOJ and other relevant government entities.

The settlement does not include admissions on the part of the Company or its independent subsidiaries and the Company maintains that it has and continues to comply with all applicable State and Federal statutes (including but not limited to the FCA and the AKS).

In addition to the FCA, some states, including California, Arizona and Texas, have enacted similar whistleblower and false claims laws and regulations.

Further, the Deficit Reduction Act of 2005 created incentives for states to enact anti-fraud legislation modeled on the FCA.

As such, the Company and its independent subsidiaries could face increased scrutiny, potential liability and legal expenses and costs based on claims under state false claims acts in markets in which its independent subsidiaries do business.

In May 2009, Congress passed the FERA which made significant changes to the FCA and expanded the types of activities subject to prosecution and whistleblower liability.

Following changes by FERA, health care providers face significant penalties for the knowing retention of government overpayments, even if no false claim was involved.

Health care providers can now be liable for knowingly and improperly avoiding or decreasing an obligation to pay money or property to the government.

This includes the retention of any government overpayment.

The government can argue, therefore, that an FCA violation can occur without any affirmative fraudulent action or statement, as long as the action or statement is knowingly improper.

In addition, FERA extended protections against retaliation for whistleblowers, including protections not only for employees, but also contractors and agents.

Thus, an employment relationship is generally not required in order to qualify for protection against retaliation for whistleblowing.

Healthcare litigation (including class action litigation) is common and is filed based upon a wide variety of claims and theories, and the Company's independent subsidiaries are routinely subjected to varying types of claims, including class action "staffing" suits where the allegation is understaffing at the facility level.

These class-action “staffing” suits have the potential to result in large jury verdicts and settlements and may result in significant legal costs.

The Company expects the plaintiffs' bar to continue to be aggressive in their pursuit of these staffing and similar claims.

While the Company has been able to settle these claims without an ongoing material adverse effect on its business, future claims could be brought that may materially affect its business, financial condition and results of operations.

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 authorize meal and rest breaks, and related causes of action.

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.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 litigation.

If any such inquiry, investigation or 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.

Cost-Containment Measures — Both government and private pay sources have instituted cost-containment measures designed to limit payments made to providers of healthcare services, and there can be no assurance that future measures designed to limit payments made to providers will not adversely affect the Company.

Medicare Revenue Recoupments — The Company's independent subsidiaries are subject to regulatory reviews relating to the provision of Medicare services, billings and potential overpayments as a result of Recovery Audit Contractors (RAC), Program Safeguard Contractors, and Medicaid Integrity Contractors programs (collectively referred to as Reviews).

For several months during the COVID-19 pandemic, the Centers for Medicare and Medicaid Services (CMS) suspended its Targeted Probe and Educate (TPE) Program.

Beginning in August 2020, CMS resumed TPE Program activity.

If an operation 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.

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.

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.

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 year ended December 31, 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 services, billings and potential overpayments as a result of Recovery Audit Contractors (RAC), various Program Safeguard Contractors, and Medicaid Integrity Contractor programs (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 December 31, 2023 and through the filing date of this report, 40 of the Company's independent subsidiaries had Reviews scheduled or in process.

In June 2023, CMS announced a new nationwide audit, the “SNF 5-Claim Probe & Educate Review”, in which the Medicare Administrative Contractors (MACs) will review five claims from each SNF to check for compliance.

In implementing this SNF 5-Claim Probe & Educate Review, CMS acknowledged that the increase in observed improper payments from 2021 to 2022 may have arisen from a "misunderstanding" by SNFs about how to appropriately bill for claims of service after October 1, 2019.

All facilities that are not undergoing TPE reviews, or have not recently passed a TPE review, will be subject to the nationwide audit.

MACs will complete only one round of probe-and-educate for each SNF, rather than three rounds that typically occur in the TPE.

Additionally, CMS's education for each SNF will be individualized and based on observed claim review errors, with rationales for denial explained to the SNF on a claim-by-claim basis.

This program applies only to claims submitted after October 1, 2019, and will exclude claims containing a COVID-19 diagnosis.

As of December 31, 2024 and through the filing date of this report, 18 of the Company's independent subsidiaries had multi-claim Reviews scheduled or in process.

Concentrations

5 unchanged sentences

Revenue from reimbursement under the Medicare and Medicaid programs accounted for 70.9 %, 72.6 % and 73.7 % of the Company's revenue for the years ended December 31, 2024, 2023 and 2022, respectively.

Cash in Excess of FDIC Limits — The Company currently has bank deposits with financial institutions in the U.S.

that exceed FDIC insurance limits.

FDIC insurance provides protection for bank deposits up to $250.

In addition, the Company has uninsured bank deposits with a financial institution outside the U.S.

As of December 31, 2023, the Company's uninsured cash deposits are not material.

All uninsured bank deposits are held at high quality credit institutions.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

COMMON STOCK REPURCHASE PROGRAM

On August 29, 2023, the Board of Directors approved a stock repurchase program pursuant to which the Company could repurchase up to $ 20,000 of its common stock under the program for a period of approximately 12 months from September 1, 2023.

Under this program, the Company is authorized to repurchase its issued and outstanding common shares from time to time in open-market and privately negotiated transactions and block trades in accordance with federal securities laws.

The share repurchase program does not obligate us to acquire any specific number of shares.

On May 16, 2024, the Board of Directors approved a stock repurchase program pursuant to which the Company may 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 during the year ended December 31, 2024.

The stock repurchase program expired on August 31, 2024 and is no longer in effect.

The Company did not purchase any shares pursuant to this stock repurchase program.

On July 28, 2022, the Board of Directors approved a stock repurchase program pursuant to which the Company could repurchase up to $ 20,000 of its common stock under the program for a period of approximately 12 months from August 2, 2022.

Under this program, the Company was authorized to repurchase its issued and outstanding common shares from time to time in open-market and privately negotiated transactions and block trades in accordance with federal securities laws.

The share repurchase program did not obligate the Company to acquire any specific number of shares.

The stock repurchase program expired on August 2, 2023 and is no longer in effect.

The Company did not purchase any shares pursuant to this stock repurchase program.

In addition, the Company repurchased 404 shares of its common stock for $ 29,882 during the year ended December 31, 2022, and 132 shares of its common stock for $ 10,118 during the year ended December 31, 2021, related to two separate stock repurchase programs that are no longer in effect.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

In addition, the Company repurchased 404 shares of its common stock for $ 29,882 during the year ended December 31, 2022, related to two separate stock repurchase programs that are no longer in effect.

THE ENSIGN GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Under these repurchase programs, 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.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data