What changed in this filing

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Item 1. Financial Statements

2025-04-29 compared with 2024-10-24 · 279 added, 491 removed, 605 unchanged (56% of the section changed)

3 unchanged sentences

(In thousands, except par values)

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Current assets:

Cash and cash equivalents $ 282,666 $ 464,598

Accounts receivable—less allowance for doubtful accounts of $ 9,822 and $ 9,348 at September 30, 2024 and December 31, 2023, respectively

Accounts receivable—less allowance for doubtful accounts of $ 8,400 and $ 8,435 at March 31, 2025 and December 31, 2024, respectively

584,048 569,897

Investments—current 61,805 62,255

Prepaid income taxes 25,960 3,830

Prepaid expenses and other current assets 57,872 60,882

28 unchanged sentences

150,000 shares authorized;

60,681 and 57,281 shares issued and shares outstanding at September 30, 2024, respectively, and 59,987 and 56,597 shares issued and shares outstanding at December 31, 2023, respectively

61,031 and 57,547 shares issued and shares outstanding at March 31, 2025, respectively, and 60,838 and 57,438 shares issued and shares outstanding at December 31, 2024, respectively

Additional paid-in capital 551,867 528,052

Retained earnings 1,503,442 1,426,762

Common stock in treasury, at cost, 3,400 and 3,390 shares at September 30, 2024 and December 31, 2023, respectively

Common stock in treasury, at cost, 3,484 and 3,400 shares at March 31, 2025 and December 31, 2024, respectively

( 128,553 ) ( 117,764 )

7 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

(In thousands, except per share data)

11 unchanged sentences

Interest income 6,883 6,460

Other income (expense)

3,753 ( 982 ) 7,686 2,237

OTHER INCOME, NET

4 unchanged sentences

Net income attributable to noncontrolling interests 76 125

123 105 422 319

NET INCOME ATTRIBUTABLE TO THE ENSIGN GROUP, INC.

13 unchanged sentences

Issuance of common stock to employees and directors resulting from the exercise of stock options 106 — 5,050 — — — — 5,050

Issuance of restricted stock, net of forfeitures (Note 16)

88 — 6,165 — — — — 6,165

Shares of common stock used to satisfy tax withholding obligations — — — — — ( 14 ) — ( 14 )

Dividends declared ($ 0.0600 per share)

— — — ( 3,414 ) — — — ( 3,414 )

Employee stock award compensation — — 8,231 — — — — 8,231

Acquisition of noncontrolling interest shares — — ( 10 ) — — — — ( 10 )

Net income attributable to noncontrolling interest — — — — — — 125 125

Noncontrolling interests attributable to subsidiary equity plan — — 14 — — — ( 11 ) 3

Net income attributable to the Ensign Group, Inc.

— — — 68,835 — — — 68,835

BALANCE - MARCH 31, 2024 56,904 $ 60 $ 486,336 $ 1,208,074 3,390 $ ( 116,569 ) $ 5,566 $ 1,583,467

Issuance of common stock to employees and directors resulting from the exercise of stock options 117 1 4,089 — — — — 4,090

Issuance of restricted stock, net of forfeitures (Note 16)

38 — — — — — — —

Issuance of restricted stock, net of forfeitures 87 — 8,003 — — — — 8,003

Shares of common stock used to satisfy tax withholding obligations — — — — — ( 14 ) — ( 14 )

2 unchanged sentences

Employee stock award compensation — — 10,691 — — — — 10,691

Acquisition of noncontrolling interest shares — — ( 29 ) — — — — ( 29 )

Net income attributable to noncontrolling interest — — — — — — 174 174

Noncontrolling interests attributable to subsidiary equity plan — — 37 — — — ( 34 ) 3

Net income attributable to the Ensign Group, Inc.

— — — 71,007 — — — 71,007

BALANCE - JUNE 30, 2024 57,049 $ 61 $ 499,411 $ 1,275,657 3,400 $ ( 117,764 ) $ 5,706 $ 1,663,071

Issuance of common stock to employees and directors resulting from the exercise of stock options 205 — 7,977 — — — — 7,977

Issuance of restricted stock, net of forfeitures (Note 16) 27 — — — — — — —

Dividends declared ($ 0.0600 per share)

Repurchase of common stock (Note 20)

( 84 ) — — — 84 ( 10,775 ) — ( 10,775 )

Employee stock award compensation — — 9,177 — — — — 9,177

Acquisition of noncontrolling interest shares — — ( 11 ) — — — — ( 11 )

3 unchanged sentences

— — — 80,277 — — — 80,277

BALANCE - SEPTEMBER 30, 2024 57,281 $ 61 $ 514,336 $ 1,350,664 3,400 $ ( 117,764 ) $ 3,650 $ 1,750,947

BALANCE - MARCH 31, 2025 57,547 $ 61 $ 551,867 $ 1,503,442 3,484 $ ( 128,553 ) $ 3,340 $ 1,930,157

Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Non-Controlling Interest

13 unchanged sentences

BALANCE - MARCH 31, 2024 56,904 $ 60 $ 486,336 $ 1,208,074 3,390 $ ( 116,569 ) $ 5,566 $ 1,583,467

Issuance of common stock to employees and directors resulting from the exercise of stock options 253 — 5,905 — — — — 5,905

Issuance of restricted stock, net of forfeitures 54 — — — — — — —

Shares of common stock used to satisfy tax withholding obligations ( 21 ) — — — 21 ( 1,909 ) — ( 1,909 )

Dividends declared ($ 0.0575 per share)

— — — ( 3,231 ) — — — ( 3,231 )

Employee stock award compensation — — 8,881 — — — — 8,881

Acquisition of noncontrolling interest shares — — ( 100 ) — — — — ( 100 )

Net income attributable to noncontrolling interest — — — — — — 97 97

Noncontrolling interests attributable to subsidiary equity plan — — ( 3,937 ) — — — 3,940 3

Net income attributable to the Ensign Group, Inc.

— — — 63,993 — — — 63,993

BALANCE - JUNE 30, 2023 56,193 $ 60 $ 440,532 $ 1,063,738 3,390 $ ( 116,555 ) $ 5,618 $ 1,393,393

Issuance of common stock to employees and directors resulting from the exercise of stock options 180 — 4,148 — — — — 4,148

Issuance of restricted stock, net of forfeitures 40 — — — — — — —

Dividends declared ($ 0.0575 per share)

— — — ( 3,243 ) — — — ( 3,243 )

Employee stock award compensation — — 7,230 — — — — 7,230

Acquisition of noncontrolling interest shares — — ( 57 ) — — — — ( 57 )

Net income attributable to noncontrolling interest — — — — — — 105 105

Noncontrolling interests attributable to subsidiary equity plan — — 30 — — — ( 27 ) 3

Net income attributable to the Ensign Group, Inc.

— — — 63,863 — — — 63,863

BALANCE - SEPTEMBER 30, 2023 56,413 $ 60 $ 451,883 $ 1,124,358 3,390 $ ( 116,555 ) $ 5,696 $ 1,465,442

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands) 2025 2024

10 unchanged sentences

Cash received from insurance proceeds — 199

Loss (gain) on sale of assets and insurance claims

Litigation adjustment

( 4,289 ) ( 818 )

Loss (gain) on insurance claims and asset disposals

Change in operating assets and liabilities

10 unchanged sentences

Accrued self-insurance liabilities 8,710 14,055

Other long-term liabilities 600 ( 37 )

NET CASH PROVIDED BY OPERATING ACTIVITIES

2 unchanged sentences

Purchase of property and equipment ( 42,926 ) ( 29,437 )

Cash payments for business acquisitions

Cash payments for asset acquisitions

Cash payments for acquisitions

( 159,172 ) ( 2,437 )

Escrow deposits ( 35,069 ) ( 486 )

Cash from insurance proceeds 1,562 1,129

Cash proceeds from the sale of assets

Cash from insurance proceeds and the sale of assets 1,494 536

Purchases of investments ( 25,984 ) ( 12,815 )

4 unchanged sentences

Cash flows from financing activities:

Proceeds from debt (Note 15)

Payments on debt ( 1,009 ) ( 975 )

( 3,350 ) ( 2,917 )

Issuance of common stock upon exercise of options 5,050 6,229

Repurchase of shares of common stock to satisfy tax withholding obligations ( 14 ) ( 14 )

Repurchase of shares of common stock (Note 20)

Dividends paid ( 3,589 ) ( 3,396 )

1 unchanged sentence

Purchase of non-controlling interest ( 11 ) ( 10 )

Payments of deferred financing costs — ( 19 )

NET CASH USED IN FINANCING ACTIVITIES

NET CASH (USED IN)/PROVIDED BY IN FINANCING ACTIVITIES

$ ( 10,348 ) $ 1,556

Net increase in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

( 181,932 ) 2,213

1 unchanged sentence

Cash and cash equivalents end of period $ 282,666 $ 511,839

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands) 2025 2024

2 unchanged sentences

Interest $ 1,769 $ 1,729

Income taxes 81,962 8,480

Lease liabilities 59,165 51,207

11 unchanged sentences

The Company's independent subsidiaries provide health care services across the post-acute care continuum and engage in the ownership, acquisition, development and leasing of skilled nursing, senior living and other healthcare-related properties and ancillary businesses.

As of September 30, 2024, the Company's independent subsidiaries operated 322 facilities and other ancillary operations located in Arizona, California, Colorado, Idaho, Iowa, Kansas, Nebraska, Nevada, South Carolina, Tennessee, Texas, Utah, Washington and Wisconsin.

As of March 31, 2025, the Company's independent subsidiaries operated 340 facilities and other ancillary operations located in Alabama, Alaska, Arizona, California, Colorado, Idaho, Iowa, Kansas, Nebraska, Nevada, Oregon, South Carolina, Tennessee, Texas, Utah, Washington and Wisconsin.

The Company's independent subsidiaries have a collective capacity of approximately 34,900 operational skilled nursing beds and 3,200 senior living units.

As of September 30, 2024, the Company's independent subsidiaries operated 231 facilities under long-term lease arrangements and had options to purchase 12 of those 231 facilities.

As of March 31, 2025, the Company's independent subsidiaries operated 233 facilities under long-term lease arrangements and had options to purchase eight of those 233 facilities.

The Company's real estate portfolio consists of 140 owned real estate properties, which includes 107 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.

11 unchanged sentences

has direct operating assets, employees or revenue, or that any of the subsidiaries are operated by The Ensign Group, Inc.

Other Information — The accompanying condensed consolidated financial statements as of September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023 (collectively, the Interim Financial Statements) are unaudited.

Other Information — The accompanying condensed consolidated financial statements as of March 31, 2025 and for the three months ended March 31, 2025 and 2024 (collectively, the Interim Financial Statements) are unaudited.

Certain information and note disclosures normally included in the annual consolidated financial statements have been condensed or omitted, as permitted under applicable rules and regulations.

15 unchanged sentences

Actual results could differ from those estimates.

Certain amounts in the prior period condensed balance sheet and statement of income 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 or total assets.

Recently Issued Accounting Pronouncements — In October 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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 Interim 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, and in interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

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

In December 2023, the FASB issued ASU 2023-09 " Income Taxes (Topic 740):

Certain amounts in the prior period condensed statement of income 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.

Recently Issued Accounting Pronouncements — 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.

2 unchanged sentences

The Company is currently evaluating the impact of the ASU on its Annual Report.

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.

REVENUE AND ACCOUNTS RECEIVABLE

7 unchanged sentences

For patients under reimbursement arrangements with third-party payors, including Medicaid, Medicare and private insurers, revenue is recorded based on contractually agreed-upon amounts or rates, adjusted for estimates for variable consideration, on a per patient, daily basis or as services are performed.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Revenue from the Medicare and Medicaid programs accounted for 70.2 % and 71.0 % of all service revenue for the three and nine months ended September 30, 2024, respectively, and 72.1 % and 72.8 % of all service revenue for the three and nine months ended September 30, 2023, respectively.

Revenue from the Medicare and Medicaid programs accounted for 69.5 % and 71.6 % of all service revenue for the three months ended March 31, 2025 and 2024, respectively.

Settlements with Medicare and Medicaid payors for retroactive adjustments due to audits and reviews are considered variable consideration and are included in the determination of the estimated transaction price.

1 unchanged sentence

Consistent with healthcare industry practices, any changes to these revenue estimates are recorded in the period the change or adjustment becomes known based on the final settlement.

The Company recorded adjustments to revenue which were not material to the Company's revenue for the three and nine months ended September 30, 2024 and 2023.

Service revenue for the three and nine months ended September 30, 2024 and 2023 is summarized in the following tables:

Three Months Ended September 30,

Revenue % of Revenue Revenue % of Revenue

Medicaid (1)(2)

$ 425,642 39.6 % $ 374,838 40.1 %

Medicare 263,594 24.5 237,531 25.4

Medicaid — skilled 65,907 6.1 62,452 6.6

Total Medicaid and Medicare $ 755,143 70.2 % $ 674,821 72.1 %

Managed care 202,528 18.8 170,747 18.3

Private and other (3)

118,421 11.0 89,756 9.6

SERVICE REVENUE $ 1,076,092 100.0 % $ 935,324 100.0 %

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

(2) Medicaid payor includes revenue related to state relief funding during the three months ended September 30, 2023.

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

Nine Months Ended September 30,

The Company recorded adjustments to revenue which were not material to the Company's revenue for the three months ended March 31, 2025 and 2024.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Service revenue for the three months ended March 31, 2025 and 2024 is summarized in the following tables:

Three Months Ended March 31,

Revenue % of Revenue Revenue % of Revenue

Medicaid (1)(2)

$ 453,840 38.9 % $ 390,163 38.8 %

7 unchanged sentences

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

(2) Medicaid payor includes revenue related to state relief funding during the nine months ended September 30, 2023.

(2) 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 were $ 5,684 and $ 17,082 , respectively, for the three and nine months ended September 30, 2024 and $ 5,467 and $ 15,634 , respectively, for the three and nine months ended September 30, 2023.

State relief funding

In 2023, the Company received state relief funding through Medicaid programs from various states, including healthcare relief funding under the American Rescue Plan Act (ARPA), increases in the Federal Medical Assistance Percentage (FMAP) under the Families First Coronavirus Response Act (FFCRA) and other state specific relief programs.

The funding generally incorporates specific use requirements primarily for direct patient care including labor related expenses that are attributable to the COVID-19 pandemic or are associated with providing patient care.

Due to the expiration of the COVID-19 Public Health Emergency in May 2023, the Company did not receive additional funding during the three and nine months ended September 30, 2024.

During the three and nine months ended September 30, 2023, the Company received $ 9,900 and $ 54,744 in state relief funding and recognized $ 10,298 and $ 55,109 , respectively, as revenue.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

In addition to the service revenue above, the Company's rental revenue derived from triple-net lease arrangements with third parties was $ 6,001 and $ 5,687 , respectively, for the three months ended March 31, 2025 and 2024.

Balance Sheet Impact

Included in the Company’s condensed consolidated balance sheets are contract balances, comprised of billed accounts receivable and unbilled receivables, which are the result of the timing of revenue recognition, billings and cash collections, as well as contract liabilities, which primarily represent payments the Company receives in advance of services provided.

The Company had no material contract liabilities and contract assets as of September 30, 2024 and December 31, 2023, or activity during the three and nine months ended September 30, 2024 and 2023.

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.

Accounts receivable as of September 30, 2024 and December 31, 2023, is summarized in the following table:

September 30, 2024 December 31, 2023

The Company had no material contract liabilities and contract assets as of March 31, 2025 and December 31, 2024, or activity during the three months ended March 31, 2025 and 2024.

Accounts receivable as of March 31, 2025 and December 31, 2024, is summarized in the following table:

March 31, 2025 December 31, 2024

Medicaid $ 217,845 $ 228,872

9 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.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Net income $ 80,353 $ 68,960

net income attributable to noncontrolling interests 76 125

123 105 422 319

Net income attributable to The Ensign Group, Inc.

3 unchanged sentences

$ 1.41 $ 1.22

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Net income $ 80,353 $ 68,960

net income attributable to noncontrolling interests 76 125

123 105 422 319

Net income attributable to The Ensign Group, Inc.

2 unchanged sentences

incremental shares from assumed conversion (1)

1,668 1,508 1,572 1,663

Adjusted weighted average common shares outstanding 58,500 57,921

1 unchanged sentence

$ 1.37 $ 1.19

(1) Options outstanding which are anti-dilutive and therefore not factored into the weighted average common shares amount above were 400 and 858 for the three and nine months ended September 30, 2024, respectively, and 1,475 and 1,389 for the three and nine months ended September 30, 2023, respectivel y.

(1) Options outstanding which are anti-dilutive and therefore not factored into the weighted average common shares amount above were 1,171 and 1,143 for the three months ended March 31, 2025 and 2024, respectivel y.

FAIR VALUE MEASUREMENTS

The Company's financial assets include investments, some of which are designated to support long-term insurance subsidiary liabilities, are carried at amortized cost basis of $ 90,422 and $ 59,530 , as of September 30, 2024 and December 31, 2023, respectively.

As of September 30, 2024 and December 31, 2023, the amortized cost basis of these financial assets are considered to approximate fair value and are derived using Level 2 inputs.

The Company's financial assets include held-to-maturity investments carried at amortized cost basis of $ 146,635 and $ 138,600 , of which $ 75,707 and $ 65,831 are designated to support long-term insurance subsidiary liabilities, as of March 31, 2025 and December 31, 2024, respectively.

As of March 31, 2025 and December 31, 2024, the amortized cost basis of these financial assets are considered to approximate fair value and are derived using Level 2 inputs.

The Company believes its amortized cost basis investments that were in an unrealized loss position as of March 31, 2025 and December 31, 2024 do not require an allowance for expected credit losses, nor has any event occurred through the filing date of this report that would indicate differently.

The Company's financial assets also include the contracts insuring the lives of certain employees who are eligible to participate in non-qualified deferred compensation plans that are held in a rabbi trust.

The cash surrender value of these contracts is based on funds that shadow the investment allocations specified by participants in the deferred compensation plan and are held at fair value.

As of September 30, 2024, and December 31, 2023, the fair value of the investment funds was $ 56,056 and $ 41,216 , respectively, which are derived using Level 2 inputs.

As of March 31, 2025 and December 31, 2024, the fair value of the investment funds was $ 63,538 and $ 56,049 , respectively, which are derived using Level 2 inputs.

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

The Company believes its amortized cost basis investments that were in an unrealized loss position as of September 30, 2024 and December 31, 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 ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

STANDARD BEARER

1 unchanged sentence

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 nine months ended September 30, 2024, Standard Bearer acquired the real estate of seven stand-alone skilled nursing operations and two campus operations for an aggregate purchase price of $ 81,274 .

These new additions are operated by nine of the Company's independent subsidiaries .

During the three months ended March 31, 2025, Standard Bearer added $ 147,796 of real estate assets associated with eight stand-alone skilled nursing operations, one stand-alone senior living operation and two campus operations .

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

All these additions are operated by the Company's independent subsidiaries .

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

Subsequent to September 30, 2024, Standard Bearer acquired the real estate of one campus operation for an aggregate purchase price of $ 3,140 , which is operated by one of the Company's independent subsidiaries .

Subsequent to March 31, 2025, Standard Bearer added $ 24,781 of real estate assets associated with two stand-alone skilled nursing operations, of which one was leased back to the Company's independent subsidiaries and one leased to a third-party operator.

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

As of the date of this filing, the preliminary allocation of the purchase price for the acquisitions in the first quarter and subsequently has not been finalized, as necessary valuation information was not yet available.

During the three months ended March 31, 2024, Standard Bearer added $ 1,604 of real estate assets associated with one skilled nursing facility, which is operated by the Company's independent subsidiary.

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

As part of the formation of Standard Bearer, certain of the Company's independent subsidiaries , Standard Bearer and Standard Bearer's independent real estate subsidiaries entered into several agreements that include leasing, management services and debt arrangements between the operations .

1 unchanged sentence

Refer to Note 8, Business Segments , for additional information related to these intercompany eliminations as well as Standard Bearer as a reportable segment.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Intercompany master lease agreements

Certain of the Company's independent subsidiaries and 87 Standard Bearer independent real estate subsidiaries have entered into six triple-net master lease agreements (collectively, the Standard Bearer Master Leases).

Certain of the Company's independent subsidiaries and 103 Standard Bearer independent real estate subsidiaries have entered into seven triple-net master lease agreements (collectively, the Standard Bearer Master Leases).

The lease periods range from 15 to 19 years with three five-year renewal options beyond the initial term, on the same terms and conditions.

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 Ensign affiliated operations was $ 20,234 and $ 57,396 , respectively, for the three and nine months ended September 30, 2024 and $ 16,976 and $ 49,035 , respectively, for the three and nine months ended September 30, 2023.

Intercompany rental revenue generated from Ensign affiliated operations for the three months ended March 31, 2025 and 2024 was $ 23,904 and $ 18,006 , respectively.

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 three and nine months ended September 30, 2024 were $ 1,466 and $ 4,199 , respectively.

Management fees generated between Standard Bearer and the Service Center for the three and nine months ended September 30, 2023 were $ 1,259 and $ 3,636 , respectively.

Management fee generated between Standard Bearer and the Service Center for the three months ended March 31, 2025 and 2024 was $ 1,692 and $ 1,332 , respectively, both representing 6 % of total Standard Bearer rental revenue.

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 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.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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.

6 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.

During the nine months ended September 30, 2024 and 2023, the Company did not grant any stock options or restricted shares under the Standard Bearer Equity Plan.

During the three months ended March 31, 2025 and 2024, the Company did not grant any stock options or restricted shares under the Standard Bearer Equity Plan.

During the three months ended March 31, 2025 and 2024, there were no restricted stock awards vested for the periods.

The grant-date fair value of the awards is recognized as compensation expense over the relevant vesting periods, with a corresponding adjustment to noncontrolling interests.

The grant value was determined based on an independent valuation of the subsidiary shares.

For the three months ended March 31, 2025, the Standard Bearer Equity Plan's share-based compensation expense was not material.

There was no expense during the three months ended March 31, 2024.

OPERATION EXPANSIONS

2 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.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

As a result, from time to time, an independent real estate subsidiary may acquire the property of facilities that have previously been operated under third-party leases.

2025 Expansions

During the nine months ended September 30, 2024, the Company expanded its operations and real estate portfolio through a combination of long-term leases and real estate purchases , with the addition of 24 stand-alone skilled nursing operations and two campus operations.

One of the stand-alone skilled nursing operations includes a long-term acute care hospital.

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

During the three months ended March 31, 2025, the Company expanded its operations and real estate portfolio through a combination of long-term leases and real estate purchases , with the addition of 11 stand-alone skilled nursing operations, one stand-alone senior living operation and one campus operation.

Of these additions, Standard Bearer acquired the real estate of seven 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 1,365 operational skilled nursing beds and 132 operational senior living units to be operated by the Company's independent subsidiaries.

Included within the operational skilled nursing beds are 43 long-term acute care beds.

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

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

Subsequent to September 30, 2024, the Company expanded its operations and real estate portfolio with the addition of one campus operation.

Standard Bearer acquired the real estate of this operation, which was leased back to the Company's independent subsidiary.

The new operation added 83 operational skilled nursing beds and 20 operational senior living units to be operated by the Company's independent subsidiary.

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

Subsequent to March 31, 2025, the Company expanded its operations through a combination of long-term leases and real estate purchases , with the addition of two stand-alone skilled nursing operations and one stand-alone senior living operation.

Of these additions, Standard Bearer acquired the real estate of one stand-alone skilled nursing operation, 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 241 operational skilled nursing beds and 68 operational senior living units to be operated by the Company's independent subsidiaries.

Additionally, the Company added one stand-alone senior living facility to its real estate portfolio, which is leased to a third-party operator.

2024 Expansions

During the nine months ended September 30, 2023, the Company expanded its operations through long-term leases , with the addition of 24 stand-alone skilled nursing operations.

Of these additions, Standard Bearer acquired the real estate of three of the stand-alone skilled nursing operations, which were leased back to Ensign affiliated entities.

These new operations added a total of 2,340 operational skilled nursing beds operated by the Company's independent subsidiaries.

During the three months ended March 31, 2024, the Company expanded its operations and real estate portfolio through a combination of long-term leases and a real estate purchase , with the addition of five stand-alone skilled nursing operations.

Of these additions, Standard Bearer acquired the real estate of one of the stand-alone skilled nursing operation, which was leased back to the Company's independent subsidiary.

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

These new operations added a total of 591 operational skilled nursing beds 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.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

As of the date of this filing, the preliminary allocation of the purchase price for the acquisitions in the first quarter of 2025 was not finalized as necessary valuation information was not yet available.

The table below presents the allocation of the purchase price for the operations acquired during the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

Land $ 20,136 $ 241

Building and improvements 127,660 1,503

Equipment, furniture, and fixtures 2,723 189

Assembled occupancy 324 —

Goodwill 8,329 372

Other indefinite-lived intangible assets — 132

TOTAL ACQUISITIONS $ 159,172 $ 2,437

The Company’s acquisition strategy has been focused on identifying both opportunistic and strategic acquisitions within its target markets that offer strong opportunities for return.

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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 nine months ended September 30, 2024 were not material operations to the Company individually or in the aggregate.

The operations added during the three months ended March 31, 2025 were not material to the Company individually or in the aggregate.

Accordingly, pro forma financial information is not presented.

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(1) skilled services, which includes the operation of skilled nursing facilities and rehabilitation therapy services and (2) Standard Bearer, which is comprised of selected real estate properties owned by Standard Bearer and leased to skilled nursing and senior living operators.

As of September 30, 2024, the skilled services segment includes 282 skilled nursing and 29 campus operations that provide both skilled nursing and rehabilitative care services and senior living services.

As of March 31, 2025, the skilled services segment includes 297 skilled nursing and 31 campus operations that provide both skilled nursing and rehabilitative care services and senior living services.

The Company's Standard Bearer segment consists of 135 owned real estate properties.

The Company also reports an “All Other” category that includes results from its senior living operations, which includes 12 stand-alone senior living operations and the senior living operations at 31 campus operations that provide both skilled nursing and rehabilitative care services and senior living services.

In addition, the "All Other" category includes mobile diagnostics, medical transportation, other real estate 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 ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 chief operating decision maker or 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.

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 impairment of long-lived assets.

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.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following tables set forth financial information for the segments:

Three Months Ended September 30, 2024

Skilled Services Standard Bearer All Other (1)

Intercompany Elimination Total

Three Months Ended March 31, 2025

Skilled Services Standard Bearer Total

Service revenue (1)

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Rental revenue — 28,401 28,401

Segment revenue $ 1,123,554 $ 28,401 $ 1,151,955

Reconciliation of revenue:

All other revenue (2)

Elimination of intercompany revenue (3)

TOTAL CONSOLIDATED REVENUE

Other segment items (4)

966,410 2,606

TOTAL REVENUE $ 1,033,113 $ 24,429 $ 51,144 $ ( 26,910 ) $ 1,081,776

Segment income (loss) 128,489 7,274 ( 36,603 ) — 99,160

Loss on long-lived assets

Income before provision for income taxes $ 98,674

Depreciation and amortization 13,213 8,476

Interest expense (5)

$ — $ 7,251 $ 308 $ ( 5,535 ) $ 2,024

(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 $ 1,089 for the three months ended September 30, 2024.

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.

Three Months Ended September 30, 2023

Skilled Services Standard Bearer All Other (1)

Intercompany Elimination Total

Service revenue (2)

$ 902,967 $ — $ 36,254 $ ( 3,897 ) $ 935,324

Rental revenue (3)

Segment income

$ 143,931 $ 8,583 $ 152,514

TOTAL REVENUE $ 902,967 $ 20,980 $ 39,124 $ ( 22,280 ) $ 940,791

Segment income (loss) 117,816 7,165 ( 42,936 ) — 82,045

Reconciliation of profit or loss:

All other not included in segment income

INCOME BEFORE PROVISION FOR INCOME TAXES $ 106,580

Depreciation and amortization 9,936 6,429 2,081 — 18,446

Interest expense (4)

$ — $ 5,139 $ 312 $ ( 3,427 ) $ 2,024

(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 affiliated wholly owned healthcare facilities 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 $ 1,063 for the three months ended September 30, 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.

(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 $ 49,427 of service revenue and $ 2,999 of rental revenue for the three months ended March 31, 2025, both of which include intercompany revenue that is eliminated in "Elimination of intercompany revenue".

(3) Elimination of intercompany revenue includes the elimination of intercompany rental revenue of $ 25,399 and intercompany service revenue of $ 5,941 for the three months ended March 31, 2025.

(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 $ 31,340 during the three months ended March 31, 2025, which are eliminated in consolidation.

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

of $ 7,040 during the three months ended March 31, 2025, which is eliminated in consolidation.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Nine Months Ended September 30, 2024

Skilled Services Standard Bearer All Other (1)

Intercompany Elimination Total

Three Months Ended March 31, 2024

Skilled Services Standard Bearer Total

Service revenue (1)

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Rental revenue — 22,201 22,201

Segment revenue $ 969,602 $ 22,201 $ 991,803

Reconciliation of revenue:

All other revenue (2)

Elimination of intercompany revenue (3)

TOTAL CONSOLIDATED REVENUE

Other segment items (4)

832,257 2,137

TOTAL REVENUE $ 2,994,000 $ 69,984 $ 141,055 $ ( 76,806 ) $ 3,128,233

Segment income (loss) 377,483 21,892 ( 116,704 ) — 282,671

Loss on long-lived assets

Income before provision for income taxes $ 280,336

Depreciation and amortization 10,536 6,829

Interest expense (5)

$ — $ 19,927 $ 919 $ ( 14,818 ) $ 6,028

(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) All Other rental revenue includes rental revenue associated with the Company's subleases to third parties of $ 3,258 for the nine months ended September 30, 2024.

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.

Nine Months Ended September 30, 2023

Skilled Services Standard Bearer All Other (1)

Intercompany Elimination Total

Service revenue (2)

$ 2,638,090 $ — $ 106,322 $ ( 11,069 ) $ 2,733,343

Rental revenue (3)

Segment income

$ 126,809 $ 7,258 $ 134,067

TOTAL REVENUE $ 2,638,090 $ 60,611 $ 114,574 $ ( 64,298 ) $ 2,748,977

Segment income (loss) 348,169 21,517 ( 128,106 ) — 241,580

Loss on insurance recoveries from real estate ( 100 )

Reconciliation of profit or loss:

All other not included in segment income

INCOME BEFORE PROVISION FOR INCOME TAXES $ 89,598

Depreciation and amortization 28,417 18,528 6,209 — 53,154

Interest expense (4)

$ — $ 14,283 $ 927 $ ( 9,127 ) $ 6,083

(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) All Other rental revenue includes rental revenue associated with the Company's subleases to third parties of $ 2,834 for the nine months ended September 30, 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.

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

(2) All Other revenue includes $ 39,626 of service revenue and $ 2,946 of rental revenue for the three months ended March 31, 2024, both of which include intercompany revenue that is eliminated in "Elimination of intercompany revenue".

(3) Elimination of intercompany revenue includes the elimination intercompany rental revenue of $ 19,460 and intercompany service revenue of $ 4,743 for the three months ended March 31, 2024.

Additionally, there are intercompany expenses of $ 24,203 during the three months ended March 31, 2024, which is eliminated in consolidation.

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

of $ 4,285 during the three months ended March 31, 2024, which is eliminated in consolidation.

Service revenue by major payor source were as follows:

Three Months Ended September 30, 2024

Three Months Ended March 31, 2025

Skilled Services All Other (3)

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

(2) Private and other also includes revenue from senior living operations and all revenue 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.

1 unchanged sentence

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Three Months Ended September 30, 2023

Skilled Services All Other (3)

Total Service Revenue Revenue %

$ 367,079 $ 7,759 $ 374,838 40.1 %

Medicare 237,531 — 237,531 25.4

Medicaid-skilled 62,452 — 62,452 6.6

Subtotal $ 667,062 $ 7,759 $ 674,821 72.1 %

Managed care 170,747 — 170,747 18.3

Private and other (2)

65,158 24,598 89,756 9.6

TOTAL SERVICE REVENUE $ 902,967 $ 32,357 $ 935,324 100.0 %

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

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

(3) All Other incorporates intercompany eliminations.

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2024

Skilled Services All Other (3)

11 unchanged sentences

(3) All Other incorporates intercompany eliminations.

Nine Months Ended September 30, 2023

Skilled Services All Other (3)

Total Service Revenue Revenue %

$ 1,052,904 $ 21,979 $ 1,074,883 39.3 %

Medicare 733,335 — 733,335 26.8

Medicaid-skilled 182,394 — 182,394 6.7

Subtotal $ 1,968,633 $ 21,979 $ 1,990,612 72.8 %

Managed care 488,511 — 488,511 17.9

Private and other (2)

180,946 73,274 254,220 9.3

TOTAL SERVICE REVENUE $ 2,638,090 $ 95,253 $ 2,733,343 100.0 %

(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 revenue generated in other ancillary services.

(3) All Other incorporates intercompany eliminations.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

PROPERTY AND EQUIPMENT - NET

Property and equipment, net consists of the following:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Land $ 183,009 $ 162,873

7 unchanged sentences

PROPERTY AND EQUIPMENT, NET $ 1,459,378 $ 1,291,354

Management evaluated its long-lived assets and recorded an impairment charge of $ 1,849 during the nine months ended September 30, 2024.

The Company determined there was no impairment during the three months ended September 30, 2024 and during the three and nine months ended September 30, 2023.

See also Note 6, Standard Bearer and Note 7, Operation Expansions for information on acquisitions during the nine months ended September 30, 2024.

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 three months ended March 31, 2024.

The Company determined there was no impairment during the three months ended March 31, 2025.

INTANGIBLE ASSETS - NET

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Weighted Average Life (Years)

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TOTAL $ 7,630 $ ( 5,349 ) $ 2,281 $ 7,306 $ ( 4,680 ) $ 2,626

During the three and nine months ended September 30, 2024, amortization expense was $ 598 and $ 1,535 , respectively, of which $ 303 and $ 909 was related to the amortization of right-of-use assets, respectively.

Amortization expense for the three and nine months ended September 30, 2023 was $ 495 and $ 1,256 , respectively, of which $ 303 and $ 899 was related to the amortization of right-of-use assets, respectively.

During the three months ended March 31, 2025 and 2024, amortization expense was $ 811 and $ 401 , respectively, of which $ 142 and $ 303 was related to the amortization of right-of-use assets, respectively.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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

2 unchanged sentences

Other indefinite-lived intangible assets consist of the following:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Trade name $ 889 $ 889

1 unchanged sentence

TOTAL $ 4,666 $ 4,666

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Goodwill is subject to annual testing for impairment during the fourth quarter of each year.

In addition, goodwill is tested for impairment if events occur or circumstances indicate that its carrying value may not be recoverable.

There were no indicators of goodwill impairment noted during the three and nine months ended September 30, 2024.

The Company anticipates that the majority of goodwill recognized will be fully deductible for tax purposes as of September 30, 2024.

There were no indicators of goodwill impairment noted during the three months ended March 31, 2025.

The Company anticipates that the majority of goodwill recognized will be fully deductible for tax purposes as of March 31, 2025.

Provided that goodwill corresponds to the acquisition of a business and not merely the acquisition of real estate property, the Company's Standard Bearer segment appropriately does not carry a goodwill balance.

The following table represents activity in goodwill by the skilled services segment and "all other" category as of and for the nine months ended September 30, 2024:

The following table represents activity in goodwill by the skilled services segment and "all other" category as of and for the three months ended March 31, 2025:

Skilled Services All Other Total

1 unchanged sentence

Additions 8,329 — 8,329

September 30, 2024 $ 67,886 $ 9,355 $ 77,241

RESTRICTED AND OTHER ASSETS

Restricted and other assets consist of the following:

September 30, 2024 December 31, 2023

Debt issuance costs, net $ 2,217 $ 2,883

Long-term insurance losses recoverable asset 16,648 15,913

Capital improvement reserves with landlords and lenders 5,618 4,870

Deposits with landlords 2,680 2,661

Escrow deposits 3,846 1,216

Other 14,744 12,662

RESTRICTED AND OTHER ASSETS $ 45,753 $ 40,205

Included in restricted and other assets as of September 30, 2024 and December 31, 2023 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.

March 31, 2025 $ 96,955 $ 9,355 $ 106,310

OTHER ACCRUED LIABILITIES

Other accrued liabilities consist of the following:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Quality assurance fee $ 13,423 $ 12,667

4 unchanged sentences

Property taxes 8,782 15,400

Accrued litigation (Note 20)

47,445 51,734

Income tax payable 13,219 —

Other 19,623 18,458

OTHER ACCRUED LIABILITIES $ 153,857 $ 132,057

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.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Quality assurance fee represents the aggregate of amounts payable to various states that have a mandated fee based on patient days or licensed beds.

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

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

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company recorded income tax expense of $ 61,628 and $ 53,453 during the nine months ended September 30, 2024 and 2023, respectively, or 22.0 % of earnings before income taxes for the nine months ended September 30, 2024, compared to 22.1 % for the nine months ended September 30, 2023.

The Company recorded income tax expense of $ 26,227 and $ 20,638 during the three months ended March 31, 2025 and 2024, respectively, or 24.6 % of earnings before income taxes for the three months ended March 31, 2025, compared to 23.0 % for the three months ended March 31, 2024.

The effective tax rate for both periods is driven by the impact of excess tax benefits from stock-based compensation, offset by non-deductible expenses including non-deductible compensation.

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The Company does not believe the federal or state statute lapses or any other event will significantly impact the balance of unrecognized tax benefits in the next twelve months.

The net balance of unrecognized tax benefits was not material to the Interim Financial Statements for the nine months ended September 30, 2024 and 2023.

The net balance of unrecognized tax benefits was not material to the Interim Financial Statements for the three months ended March 31, 2025 and 2024.

Debt consists of the following:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Mortgage loans and promissory note $ 147,429 $ 148,438

11 unchanged sentences

provided that if the aggregate consideration for approved acquisitions in a six month period is greater than $ 50,000 , then the ratio can be increased at the election of the Company with notice to the administrative agent to 4.25 :1.00 for the first fiscal quarter and the immediately following three fiscal quarters), and (ii) a minimum interest/rent coverage ratio (which cannot be less than 1.50 :1.00).

As of September 30, 2024, there was no outstanding debt under the Credit Facility.

The Company was in compliance with all loan covenants as of September 30, 2024.

As of March 31, 2025, there was no outstanding debt under the Credit Facility.

The Company was in compliance with all loan covenants as of March 31, 2025.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Mortgage Loans and Promissory Note

As of September 30, 2024, the Company has 23 subsidiaries that have mortgage loans insured with HUD in the aggregate amount of $ 147,744 , which subjects these subsidiaries to HUD oversight and periodic inspections.

As of March 31, 2025, the Company has 23 subsidiaries that have mortgage loans insured with HUD in the aggregate amount of $ 146,045 , 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.

4 unchanged sentences

The terms for all the mortgage loans are 25 to 35 years.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

In addition to the HUD mortgage loans above, the Company has a promissory note of $ 1,384 that bears a fixed interest rate of 5.3 % per annum and has a term of 12 years.

The note, which was assumed as part of an acquisition, is secured by the real property comprising the facility and the rent, issues and profits thereof, as well as all personal property used in the operation of the facility.

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.

Off-Balance Sheet Arrangements

As of September 30, 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 September 30, 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.

As of March 31, 2025, the Company had approximately $ 27,893 of borrowing capacity under the Credit Facility pledged as collateral to secure outstanding letters of credit.

The Company believes that its outstanding letters of credit as of March 31, 2025 do not require an allowance for expected credit losses, nor has any event occurred through the filing date of this report that would indicate differently.

OPTIONS AND AWARDS

Stock-based compensation expense consists of stock-based payment awards made to employees and directors, including employee stock options and restricted stock awards, based on estimated fair values.

As stock-based compensation expense recognized in the Company’s condensed consolidated statements of income for the three and nine months ended September 30, 2024 and 2023 was based on awards expected to vest, it has been reduced for estimated forfeitures.

As stock-based compensation expense recognized in the Company’s condensed consolidated statements of income for the three months ended March 31, 2025 and 2024 was based on awards expected to vest, it has been reduced for estimated forfeitures.

The Company estimates forfeitures at the time of grant and, if necessary, revises the estimate in subsequent periods if actual forfeitures differ.

5 unchanged sentences

Options expire ten years from the date of grant.

At September 30, 2024, the total number of shares available for issuance under the 2022 Plan was 708 .

At March 31, 2025, the total number of shares available for issuance under the 2022 Plan was 28 .

The Company uses the Black-Scholes option-pricing model to recognize the value of stock-based compensation expense for stock option awards.

3 unchanged sentences

Stock Options

The Company used the following assumptions for stock options granted during the three months ended September 30, 2024 and 2023:

The Company used the following assumptions for stock options granted during the three months ended March 31, 2025 and 2024:

Grant Year Options Granted Weighted Average Risk-Free Rate Expected Life Weighted Average Volatility Weighted Average Dividend Yield

3 unchanged sentences

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company used the following assumptions for stock options granted during the nine months ended September 30, 2024 and 2023:

Grant Year Options Granted Weighted Average Risk-Free Rate Expected Life Weighted Average Volatility Weighted Average Dividend Yield

2024 466 4.2 % 6.1 years 40.7 % 0.2 %

2023 606 4.0 % 6.2 years 41.4 % 0.3 %

For the nine months ended September 30, 2024 and 2023, the following represents the exercise price and fair value displayed at grant date for stock option grants:

For the three months ended March 31, 2025 and 2024, the following represents the exercise price and fair value displayed at grant date for stock option grants:

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

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2024 181 $ 122.69 $ 56.23

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 September 30, 2024 and 2023 and therefore, the intrinsic value was $ 0 at the date of grant.

The following table represents the employee stock option activity during the nine months ended September 30, 2024:

The weighted average exercise price equaled the weighted average fair value of common stock on the grant date for all options granted during the three months ended March 31, 2025 and 2024 and therefore, the intrinsic value was $ 0 at the date of grant.

The following table represents the employee stock option activity during the three months ended March 31, 2025:

Number of Options Outstanding Weighted Average

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Exercised ( 106 ) 47.47

September 30, 2024 3,853 $ 74.11 1,825 $ 49.48

The aggregate intrinsic value of options outstanding, vested, expected to vest and exercised as of September 30, 2024 and December 31, 2023 is as follows:

Options September 30, 2024 December 31, 2023

March 31, 2025 4,019 $ 81.35 1,941 $ 55.85

The aggregate intrinsic value of options outstanding, vested, expected to vest and exercised as of March 31, 2025 and December 31, 2024 is as follows:

Options March 31, 2025 December 31, 2024

Outstanding $ 198,136 $ 219,309

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The intrinsic value is calculated as the difference between the market value of the underlying common stock and the exercise price of the options .

The aggregate intrinsic value of options that vested during the nine months ended September 30, 2024 and 2023 was $ 34,971 and $ 16,856 , respectively.

The total intrinsic value of options exercised during the nine months ended September 30, 2024 and 2023 was $ 50,840 and $ 43,299 , respectively.

The aggregate intrinsic value of options that vested during the three months ended March 31, 2025 and 2024 was $ 6,045 and $ 7,382 , respectively.

The total intrinsic value of options exercised during the three months ended March 31, 2025 and 2024 was $ 9,470 and $ 19,959 , respectively.

Restricted Stock Awards

The Company granted 29 and 166 restricted stock awards during the three and nine months ended September 30, 2024, respectively.

The Company granted 49 and 215 restricted stock awards during the three and nine months ended September 30, 2023, respectively.

The Company granted 92 and 95 restricted stock awards during the three months ended March 31, 2025 and 2024 , respectively.

All awards were granted at an issue price of $ 0 and generally vest over five years .

The fair value per share of restricted awards granted during the nine months ended September 30, 2024 and 2023 ranged from $ 116.65 to $ 146.37 and $ 89.83 to $ 98.31 , respectively.

The fair value per share of restricted awards granted during the three months ended March 31, 2025 and 2024 ranged from $ 126.34 to $ 134.58 and $ 116.65 to $ 122.69 , respectively.

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 d uring the nine months ended September 30, 2024 and 2023, respectively.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

A summary of the status of the Company's non-vested restricted stock awards as of September 30, 2024 and changes during the nine months ended September 30, 2024 is presented below:

Included in the restricted stock award grants are $ 8,003 and $ 6,165 of annual bonuses that were settled in vested restricted stock awards during the three months ended March 31, 2025 and 2024, respectively.

A summary of the status of the Company's non-vested restricted stock awards as of March 31, 2025 and changes during the three months ended March 31, 2025, is presented below:

Non-Vested Restricted Awards Weighted Average Grant Date Fair Value

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Forfeited ( 5 ) 114.00

Nonvested at September 30, 2024

During the three and nine months ended September 30, 2024, the Company granted 4 and 13 , respectively, automatic 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 $ 135.18 based on the market price on the grant date.

Long-Term Incentive Plan

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 The Pennant Group, Inc.

(Pennant) from the Company in 2019 (spin-off) 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 $ 132 and $ 546 for the three and nine months ended September 30, 2024, respectively, compared to $ 218 and $ 620 for the three and nine months ended September 30, 2023, respectively.

Nonvested at March 31, 2025

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

During the three months ended March 31, 2025, the Company granted 3.6 automatic 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 was $ 134.58 based on the market price on the grant date.

Stock-based compensation expense

Stock-based compensation expense recognized for the Company's equity incentive plans and long-term incentive plan for the three and nine months ended September 30, 2024 and 2023 was as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Stock-based compensation expense recognized for the Company's equity incentive plans and long-term incentive plan for the three months ended March 31, 2025 and 2024 was as follows:

Three Months Ended March 31,

Stock-based compensation expense related to stock options $ 6,805 $ 4,988

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

595 405 1,635 1,262

TOTAL $ 10,691 $ 8,231

In future periods, the Company expects to recognize approximately $ 76,142 and $ 32,427 in stock-based compensation expense for unvested options and unvested restricted stock awards, respectively, that were outstanding as of September 30, 2024.

Future stock-based compensation expense will be recognized over 3.8 and 3.6 weighted average years for unvested options and restricted stock awards, respectively.

There were 2,028 unvested and outstanding options as of September 30, 2024, of which 1,873 shares are expected to vest.

The weighted average contractual life for options outstanding, vested and expected to vest as of September 30, 2024 was 6.8 years.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company leases from CareTrust REIT, Inc.

(CareTrust) real property associated with 100 independent skilled nursing and senior living facilities used in the Company’s operations, 99 of which are under nine “triple-net” master lease agreements (collectively, the Master Leases), which range in terms from 13 to 20 years.

In future periods, the Company expects to recognize approximately $ 86,128 and $ 37,841 in stock-based compensation expense for unvested options and unvested restricted stock awards, respectively, that were outstanding as of March 31, 2025.

Future stock-based compensation expense will be recognized over 3.7 weighted average years for both unvested options and restricted stock awards.

There were 2,078 unvested and outstanding options as of March 31, 2025, of which 1,913 options are expected to vest.

The weighted average contractual life for options outstanding, vested and expected to vest as of March 31, 2025 was 6.7 years.

The Company leases from CareTrust real property associated with 96 independent skilled nursing and senior living facilities used in the Company’s operations under eight “triple-net” master lease agreements (collectively, the Master Leases), which range in terms from 13 to 20 years.

At the Company’s option, the Master Leases may be extended for two or three five-year renewal terms beyond the initial term, on the same terms and conditions.

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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.

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

In the first quarter of 2024, the Company added two operations and extended the term for one of the Master Leases to 20 years.

As a result, the total lease liabilities and right-of-use assets increased by $ 48,112 to reflect the new lease obligations.

In the third quarter of 2024, the Company added one operation and extended the term for one of the Master Leases to 15 years.

As a result, the total lease liabilities and right-of-use assets increased by $ 24,391 to reflect the new lease obligations.

During the three months ended March 31, 2025, the Company exercised purchase options under an existing lease arrangement to acquire the real estate of four facilities from CareTrust for $ 44,627 .

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

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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 under the Master Leases was approximately $ 17,635 and $ 51,707 for the three and nine months ended September 30, 2024, respectively, and $ 16,741 and $ 49,698 for the three and nine months ended September 30, 2023, respectively.

Total rent expense under the Master Leases was approximately $ 17,126 and $ 16,800 for the three months ended March 31, 2025 and 2024, respectively.

Among other things, under the Master Leases, the Company must maintain compliance with specified financial covenants measured on a quarterly basis, including a portfolio coverage ratio and a minimum rent coverage ratio.

The Master Leases also include certain reporting, legal and authorization requirements.

The Company is in compliance with requirements of the Master Leases as of September 30, 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 performance under these guarantees to be probable and the likelihood of Pennant defaulting is remote, and therefore no liabilities have been accrued.

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 .

Most of these leases contain renewal options, certain of which involve rent increases.

The Company is in compliance with requirements of the Master Leases as of March 31, 2025.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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.

In the first quarter of 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.

The amended master lease increased the lease liabilities and right-of-use assets by $ 30,980 to reflect the new lease obligations and extended the term to 20 years.

In the third quarter of 2024, the Company entered into one new master lease arrangement to add six stand-alone skilled nursing operations operated by the Company's independent subsidiaries.

The new master lease increased the lease liabilities and right-of-use assets by $ 40,636 to reflect the new lease obligations for a term of 15 years.

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

Most of these leases contain renewal options, certain of which involve rent increases.

The Company's 96 independent subsidiaries, excluding the subsidiaries that are operated under the Master Leases with CareTrust, are operated under 15 separate master lease arrangements.

During the three months ended March 31, 2025, the Company entered into one new master lease arrangement to add six stand-alone skilled nursing facilities operated by the Company's independent subsidiaries with an initial term of 15 years.

The new master lease arrangement increased the lease liabilities and right-of-use assets by $ 57,961 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.

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The components of operating lease expense are as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Rent - cost of services (1)

$ 57,076 $ 51,876

Cost of services (2)

General and administrative expense 199 153

1 unchanged sentence

$ 63,846 $ 58,102

Variable lease costs (3)

6,344 5,376 17,763 15,362

$ 61,618 $ 56,159 $ 179,125 $ 163,387

(1) Rent - cost of services includes deferred rent expense adju stments of $ 205 and $ 590 for the three and nine months ended September 30, 2024, respectively, and $ 211 and $ 692 for the three and nine months ended September 30, 2023, respectively.

Additionally, rent - cost of services includes other variable lease costs such as CPI increases and short-term leases of $ 3,668 and $ 10,025 for the three and nine months ended September 30, 2024, respectively, and $ 2,859 and $ 7,317 for the three and nine months ended September 30, 2023, respectively.

(1) Rent- cost of services includes deferred rent expense adju stments of $ 208 and $ 195 for the three months ended March 31, 2025 and 2024, respectively.

Additionally, rent- cost of services includes other variable lease costs such as CPI increases and short-term leases of $ 4,004 and $ 3,057 for the three months ended March 31, 2025 and 2024, 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 condensed consolidated statements of income.

Future minimum lease payments for all third-party leases as of September 30, 2024 are as follows:

Future minimum lease payments for all third-party leases as of March 31, 2025 are as follows:

2025 (remainder) $ 158,154

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In determining the present value of lease payments, the Company used its incremental borrowing rate based on the information available at the lease commencement date.

As of September 30, 2024, the weighted average remaining lease term is 14.7 years and the weighted average discount rate used to determine the operating lease liabilities is 6.3 %.

As of March 31, 2025, the weighted average remaining lease term is 14.4 years and the weighted average discount rate used to determine the operating lease liabilities is 6.3 %.

Subsequent to March 31, 2025, the Company expanded its operations through a new master lease with the addition of one stand-alone skilled nursing operation and one stand-alone senior living operation.

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 $ 34,000 .

THE ENSIGN GROUP, INC.

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Lessor Activities

The Company leases its owned real estate properties to third-party operators, of which 29 senior living operations are operated by Pennant.

The Company leases its owned real estate properties to third-party operators, of which 32 senior living operations are operated by The Pennant Group, Inc.

All of these properties are triple-net leases, whereby the respective tenants are responsible for all costs at the properties including:

5 unchanged sentences

The initial terms range from 14 to 16 years.

During the first quarter of 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 three months ended September 30, 2023, the Company entered into a lease agreement with a third-party operator for one campus operation with an initial lease term of 15 years.

Total rental income from all third-party sources for the three and nine months ended September 30, 2024 and 2023 is as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Total rental income from all third-party sources for the three months ended March 31, 2025 and 2024 is as follows:

Three Months Ended March 31,

$ 4,122 $ 3,820

Other third-party (2)

1,863 1,727 5,617 4,410

TOTAL $ 6,001 $ 5,687

(1) Pennant rental income includes variable rent such as property taxes of $ 308 and $ 940 during the three and nine months ended September 30, 2024 and $ 324 and $ 974 for the three and nine months ended September 30, 2023, respectively.

(2) Other third-party includes rental revenue associated with the Company's subleases to third parties of $ 1,089 and $ 3,258 for the three and nine months ended September 30, 2024, and $ 1,063 and $ 2,834 for the three and nine months ended September 30, 2023, respectively.

Future annual rental income for all third-party leases as of September 30, 2024 were as follows:

(1) Pennant rental income includes variable rent such as property taxes of $ 310 and $ 318 during the three months ended March 31, 2025 and 2024.

(2) Other third-party includes rental revenue associated with the Company's subleases to third parties of $ 1,107 and $ 1,080 for the three months ended March 31, 2025 and 2024.

Future annual rental income for all third-party leases as of March 31, 2025 were as follows:

Year Amount (1)

2 unchanged sentences

TOTAL $ 233,337

(1) Annual rental income includes base rents and variable rental income pursuant to existing leases as of September 30, 2024.

(1) Annual rental income includes base rents and variable rental income pursuant to existing leases as of March 31, 2025.

Subsequent to March 31, 2025, the Company entered into two lease agreements with a third-party operator for one stand-alone skilled nursing operation and one stand-alone senior living operation with an initial lease term of 15 years, respectively.

DEFINED CONTRIBUTION PLANS

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Additionally, the DCP allows for the employee deferrals to be deposited into a rabbi trust and the funds are generally invested in individual variable life insurance contracts owned by the Company that are specifically designed to fund savings plans of this nature.

The Company paid for related administrative costs, which were not significant during the three and nine months ended September 30, 2024 and 2023.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

As of September 30, 2024 and December 31, 2023, the Company accrued $ 62,285 and $ 49,201 , respectively, as long term deferred compensation in other long term liabilities on the consolidated balance sheet.

The Company paid for related administrative costs, which were not significant during the three months ended March 31, 2025 and 2024.

As of March 31, 2025 and December 31, 2024, the Company accrued $ 65,232 and $ 63,051 , respectively, as long term deferred compensation in other long term liabilities on the condensed consolidated balance sheets.

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

Refer to Note 5, Fair Value Measurements for more information on the funds.

For the three and nine months ended September 30, 2024, the Company recorded gains related to its DCP of $ 3,175 and $ 6,096 , respectively, which are included in other income (expense), and recorded offsetting expenses of $ 3,294 and $ 6,410 , which are allocated between cost of services and general and administrative expenses.

For the three months ended September 30, 2023, the Company recorded a loss related to its DCP of $ 1,424 , which is included in other income (expense), and recorded an offsetting reduction in expense of $ 1,352 , which is allocated between cost of services and general administrative expense.

For the nine months ended September 30, 2023, the Company recorded a gain related to its DCP of $ 1,065 , which is included in other income (expense), and recorded an offsetting expense of $ 1,261 , which is allocated between cost of services and general administrative expenses.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

For the three months ended March 31, 2025, the Company recorded a loss related to its DCP of $ 282 , which is included in other income (expense), and recorded an offsetting reduction in expense of $ 234 , which is allocated between cost of services and general and administrative expenses.

For the three months ended March 31, 2024, the Company recorded a gain related to its DCP of $ 2,394 , which is included in other income (expense), and recorded an offsetting expense of $ 2,488 , which is allocated between cost of services and general and administrative expenses.

SELF INSURANCE LIABILITIES

1 unchanged sentence

Losses beyond these amounts are insured through third-party policies with coverage limits per claim, per location and on an aggregate basis for the Company.

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

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 .

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

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 .

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.

5 unchanged sentences

The Company uses actuarial valuations to estimate the liability based on historical experience and industry information.

Accrued general liability and professional malpractice liabilities on an undiscounted basis, net of anticipated insurance recoveries, were $ 120,905 and $ 105,729 as of September 30, 2024 and December 31, 2023, respectively.

The Company’s independent subsidiaries are self-insured for workers’ compensation liabilities in California.

5 unchanged sentences

The Company uses actuarial valuations to estimate the liability based on historical experience and industry information.

Accrued workers’ compensation liabilities are recorded on an undiscounted basis in the accompanying condensed consolidated balance sheets and were $ 32,355 and $ 29,454 as of September 30, 2024 and December 31, 2023, respectively.

In addition, the Company has recorded an asset and corresponding liability of $ 16,648 and $ 15,913 as of September 30, 2024 and December 31, 2023, respectively, in order to present the ultimate costs of malpractice and workers' compensation claims and the anticipated insurance recoveries on a gross basis.

See Note 12, Restricted and Other Assets.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company self-funds medical (including prescription drugs) and dental healthcare benefits for the majority of its employees.

1 unchanged sentence

To protect itself against loss exposure with this policy, the Company has purchased individual stop-loss insurance coverage that insures individual claims that exceed $ 525 for each covered person for fiscal year 2025.

As of September 30, 2024 and December 31, 2023, the Company’s accrued liability under these plans recorded on an undiscounted basis in the accompanying condensed consolidated balance sheets was $ 14,118 and $ 14,814 , respectively.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table represents the Company's self-insurance insurance liabilities, on an undiscounted basis, inclusive of anticipated insurance recoveries, as of March 31, 2025 and December 31, 2024:

March 31, 2025 December 31, 2024

Accrued general liability and professional malpractice liabilities $ 166,680 $ 160,149

Accrued workers’ compensation liabilities 38,375 37,291

Accrued health benefits

15,565 14,312

TOTAL SELF-INSURANCE LIABILITIES $ 220,620 $ 211,752

current self-insurance liabilities

69,959 67,331

LONG-TERM SELF-INSURANCE LIABILITIES

$ 150,661 $ 144,421

The anticipated insurance recoveries included in the self-insurance liabilities are presented gross rather than net with the corresponding asset of $ 17,899 and $ 17,741 , as of March 31, 2025 and December 31, 2024, respectively, included in Restricted and other assets on the consolidated balance sheets.

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

1 unchanged sentence

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 condensed consolidated balance sheets for any of the periods presented.

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 enforces 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.

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 is in the process of appealing the jury verdict.

The Company has in the past appealed similar decisions and has, in some circumstances, received decisions in its favor.

Although the Company intends to vigorously defend against these 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.

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.

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.

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.

Refer to Part I.

Legal Proceedings for additional information on litigation and regulatory matters.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 intervention 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 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/or reimbursement;

authorities could also seek the suspension or exclusion of the provider or individual from participation in state and federal healthcare 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 alleged 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 investigations can be a distraction to the business of the Company's independent subsidiaries.

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.

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.

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However, the Company cannot predict the outcome of the investigation or its potential impact on the consolidated financial statements.

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 any recovery obtained for the Federal government.

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 related to the mandatory exchange of information between the parties in the fourth quarter of 2023.

In early January 2024, the Company entered into mediation with the involved parties and on January 19, 2024, the parties agreed to settle the civil case for approximately $ 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 consistently complied with and continues to comply with all applicable State and Federal statutes (including but not limited to the FCA and the AKS).

The settlement documents are in the process of being finalized and, following payment of the settlement funds, the qui tam complaint will be dismissed and the matter will be resolved.

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.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Under the Fraud Enforcement and Recovery Act of 2009 (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.

Additionally, in July of 2024, the Company and two of its independent subsidiaries received a subpoena to produce documents regarding related to alleged environmental matters from the United States’ Attorney’s office for the Western District of Washington.

The Company and its subsidiaries are fully cooperating with the United States' Attorney’s office in response to the subpoena.

The Company cannot predict or provide any assurance as to the possible outcome of any inquiry, investigation or litigation.

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), various Program Safeguard Contractors, and Medicaid Integrity Contractor programs (collectively referred to as Reviews).

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 fourth quarter of 2024, the qui tam complaint was dismissed and the matter was resolved.

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

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The Company anticipates that these Reviews could increase in frequency in the future.

As of September 30, 2024 and through the filing date of this report, 18 of the Company's independent subsidiaries had multi-claim 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.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

As of March 31, 2025 and through the filing date of this report, 18 of the Company's independent subsidiaries had multi-claim Reviews scheduled or in process.

Concentrations

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The Company believes that an appropriate allowance has been recorded for the possibility of these receivables proving uncollectible and continually monitors and adjusts these allowances as necessary.

The Company’s receivables from Medicare and Medicaid payor programs accounted for 53.5 % and 53.4 % of its total accounts receivable as of September 30, 2024 and December 31, 2023, respectively.

Revenue from reimbursement under the Medicare and Medicaid programs accounted for 70.2 % and 71.0 % of the Company's revenue for the three and nine months ended September 30, 2024, respectively, and 72.1 % and 72.8 % for the three and nine months ended September 30, 2023, respectively.

The Company’s receivables from Medicare and Medicaid payor programs accounted for 51.2 % and 52.9 % of its total accounts receivable as of March 31, 2025 and December 31, 2024, respectively.

Revenue from reimbursement under the Medicare and Medicaid programs accounted for 69.5 % and 71.6 % of the Company's revenue for the three months ended March 31, 2025 and 2024, respectively.

COMMON STOCK REPURCHASE PROGRAM

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 nine months ended September 30, 2024.

On August 29, 2023, the Board of Directors previously 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, which the program terminated by its terms on August 31, 2024 and is no longer in effect.

On February 21, 2025, 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 March 26, 2025.

During the three months ended March 31, 2025, the Company purchased 84 shares of its common stock for $ 10,775 .

Subsequent to March 31, 2025, the Company repurchased 73 shares of its common stock for $ 9,225 .

This repurchase program expired upon the repurchase of the fully authorized amount under the plan and is no longer in effect.

On May 16, 2024, the Board of Directors previously 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, 2024.

The Company did not purchase any shares pursuant to this stock repurchase program before the repurchase program was cancelled on February 21, 2025.

THE ENSIGN GROUP, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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

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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-Q

Item 1. Financial Statements