What changed in this filing

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Item 1. Financial Statements

2025-11-03 compared with 2025-07-24 · 219 added, 173 removed, 844 unchanged (32% of the section changed)

3 unchanged sentences

(In thousands, except par values)

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Current assets:

Cash and cash equivalents $ 443,668 $ 464,598

Accounts receivable—less allowance for doubtful accounts of $ 8,320 and $ 8,435 at June 30, 2025 and December 31, 2024, respectively

Accounts receivable—less allowance for doubtful accounts of $ 7,948 and $ 8,435 at September 30, 2025 and December 31, 2024, respectively

612,744 569,897

30 unchanged sentences

150,000 shares authorized;

61,240 and 57,676 shares issued and shares outstanding at June 30, 2025, respectively, and 60,838 and 57,438 shares issued and shares outstanding at December 31, 2024, respectively

61,461 and 57,897 shares issued and shares outstanding at September 30, 2025, respectively, and 60,838 and 57,438 shares issued and shares outstanding at December 31, 2024, respectively

Additional paid-in capital 593,781 528,052

Retained earnings 1,664,458 1,426,762

Common stock in treasury, at cost, 3,564 and 3,400 shares at June 30, 2025 and December 31, 2024, respectively

Common stock in treasury, at cost, 3,564 and 3,400 shares at September 30, 2025 and December 31, 2024, respectively

( 138,835 ) ( 117,764 )

7 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended June 30, Six Months Ended June 30,

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

2025 2024 2025 2024

61 unchanged sentences

BALANCE - JUNE 30, 2025 57,676 $ 61 $ 572,200 $ 1,584,233 3,564 $ ( 138,835 ) $ 3,324 $ 2,020,983

Issuance of common stock to employees and directors resulting from the exercise of stock options 181 — 9,024 — — — — 9,024

Issuance of restricted stock, net of forfeitures (Note 16) 40 — — — — — — —

Dividends declared ($ 0.0625 per share)

— — — ( 3,619 ) — — — ( 3,619 )

Employee stock award compensation — — 12,868 — — — — 12,868

Acquisition of noncontrolling interest shares — — ( 382 ) — — — — ( 382 )

Net income attributable to noncontrolling interest — — — — — — 67 67

Noncontrolling interests attributable to subsidiary equity plan — — 71 — — — 46 117

Net income attributable to the Ensign Group, Inc.

— — — 83,844 — — — 83,844

BALANCE - SEPTEMBER 30, 2025 57,897 $ 61 $ 593,781 $ 1,664,458 3,564 $ ( 138,835 ) $ 3,437 $ 2,122,902

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

19 unchanged sentences

Employee stock award compensation — — 8,978 — — — — 8,978

Repurchase of common stock (Note 20)

— — — — — — — —

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

4 unchanged sentences

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

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

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

Dividends declared ($ 0.0600 per share)

— — — ( 3,437 ) — — — ( 3,437 )

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

Acquisition of noncontrolling interest shares — — ( 2,387 ) — — — ( 2,024 ) ( 4,411 )

Net income attributable to noncontrolling interest — — — — — — 123 123

Noncontrolling interests attributable to subsidiary equity plan — — 158 — — — ( 155 ) 3

Net income attributable to the Ensign Group, Inc.

— — — 78,444 — — — 78,444

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

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands) 2025 2024

10 unchanged sentences

Cash received from insurance proceeds 3,877 199

(Gain) loss on insurance claims and asset disposals ( 598 ) 254

(Gain) loss on insurance claims, other investments and asset disposals

( 5,953 ) 849

Change in operating assets and liabilities

16 unchanged sentences

Escrow deposits — ( 3,846 )

Cash from insurance proceeds and the sale of assets 2,990 2,949

Cash from insurance proceeds 3,567 1,562

Cash proceeds from the sale of assets 124 2,808

Purchases of investments ( 91,791 ) ( 52,262 )

4 unchanged sentences

Cash flows from financing activities:

Proceeds from debt (Note 14)

Payments on debt ( 3,050 ) ( 3,350 )

5 unchanged sentences

Purchase of non-controlling interest ( 457 ) ( 4,450 )

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

NET CASH USED IN FINANCING ACTIVITIES

$ ( 12,643 ) $ ( 825 )

Net decrease in cash and cash equivalents ( 100,629 ) ( 32,290 )

Net (decrease)/increase in cash and cash equivalents ( 20,930 ) 22,440

Cash and cash equivalents beginning of period 464,598 509,626

Cash and cash equivalents end of period $ 443,668 $ 532,066

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands) 2025 2024

16 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 June 30, 2025, the Company's independent subsidiaries operated 347 facilities and other ancillary operations located in 17 states.

As of September 30, 2025, the Company's independent subsidiaries operated 361 facilities and other ancillary operations located in 17 states.

The Company's independent subsidiaries have a collective capacity of approximately 37,100 operational skilled nursing beds and 3,400 senior living units.

As of June 30, 2025, the Company's independent subsidiaries operated 238 facilities under long-term lease arrangements and had options to purchase eight of those 238 facilities.

As of September 30, 2025, the Company's independent subsidiaries operated 249 facilities under long-term lease arrangements and had options to purchase eight of those 249 facilities.

The Company's real estate portfolio consists of 148 owned real estate properties, which includes 112 facilities operated and managed by the Company's independent subsidiaries, 36 operations leased to and operated by third-party operators and the Service Center (defined below) location.

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 June 30, 2025, and for the three and six months ended June 30, 2025 and 2024 (collectively, the Interim Financial Statements) are unaudited.

Other Information — The accompanying condensed consolidated financial statements as of September 30, 2025, and for the three and nine months ended September 30, 2025 and 2024 (collectively, the Interim Financial Statements) are unaudited.

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

19 unchanged sentences

The adoption is expected to enhance the Company's Notes to the Consolidated Financial Statements.

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

The Company is currently evaluating the impact of the ASU on its Consolidated Financial Statements.

In November 2024, the FASB issued ASU 2024-03 " Disaggregation of Income Statement Expenses, " which requires the Company to disaggregate key expense categories such as employee compensation, depreciation and intangible asset amortization within its financial statements.

ASU 2024-03 is effective for annuals periods beginning with the Company's fiscal year 2027, and interim periods within the Company's fiscal year 2028, with early adoption permitted.

ASU 2024-03 is effective for annual periods beginning with the Company's fiscal year 2027, and interim periods within the Company's fiscal year 2028, with early adoption permitted.

The Company is currently evaluating the impact of this ASU on its Notes to the Consolidated Financial Statements.

In September 2025, the FASB issued ASU 2025-06 " Targeted Improvements to the Accounting for Internal-Use Software ," which amends the accounting for and disclosure of software costs under the existing standards.

The amendments clarify the requirement for capitalizing software costs.

ASU 2025-06 is effective beginning with the Company's fiscal year 2028 for both interim and annual periods, with early adoption permitted.

The Company is currently evaluating the impact of this ASU on its Consolidated Financial Statements.

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.

Revenue from the Medicare and Medicaid programs accounted for 69.8 % and 69.6 % of all service revenue for the three and six months ended June 30, 2025, respectively, and 71.2 % and 71.4 % of all service revenue for the three and six months ended June 30, 2024, respectively.

Revenue from the Medicare and Medicaid programs accounted for 69.5 % and 69.6 % of all service revenue for the three and nine months ended September 30, 2025, respectively, and 70.2 % and 71.0 % of all service revenue for the three and nine months ended September 30, 2024, respectively.

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

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 six months ended June 30, 2025 and 2024.

The Company recorded adjustments to revenue which were not material to the Company's revenue for the three and nine months ended September 30, 2025 and 2024.

THE ENSIGN GROUP, INC.

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

Service revenue for the three and six months ended June 30, 2025 and 2024 is summarized in the following tables:

Three Months Ended June 30,

Service revenue for the three and nine months ended September 30, 2025 and 2024 is summarized in the following tables:

Three Months Ended September 30,

Revenue % of Revenue Revenue % of Revenue

8 unchanged sentences

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

(2) Private and other in skilled services includes private, Veteran Affairs and hospice payors.

In addition, private and other in the "all other" category includes revenue from senior living and ancillary operations.

Six Months Ended June 30,

(2) Private and other includes revenue for skilled services (private, Veteran Affairs and hospice payors), senior living and ancillary operations.

Nine Months Ended September 30,

Revenue % of Revenue Revenue % of Revenue

8 unchanged sentences

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

(2) Private and other in skilled services includes private, Veteran Affairs and hospice payors.

In addition, private and other in the "all other" category includes revenue from senior living and ancillary operations.

In addition to the service revenue above, the Company's rental revenue derived from triple-net lease arrangements with third parties was $ 6,355 and $ 12,356 , respectively, for the three and six months ended June 30, 2025 and $ 5,711 and $ 11,398 , respectively, for the three and six months ended June 30, 2024.

(2) Private and other includes revenue for skilled services (private, Veteran Affairs and hospice payors), senior living and ancillary operations.

In addition to the service revenue above, the Company's rental revenue derived from triple-net lease arrangements with third parties was $ 6,626 and $ 18,982 , respectively, for the three and nine months ended September 30, 2025 and $ 5,684 and $ 17,082 , respectively, for the three and nine months ended September 30, 2024.

Balance Sheet Impact

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

The Company had no material contract liabilities or contract assets as of June 30, 2025 and December 31, 2024, or activity during the three and six months ended June 30, 2025 and 2024.

The Company had no material contract liabilities or contract assets as of September 30, 2025 and December 31, 2024, or activity during the three and nine months ended September 30, 2025 and 2024.

Accounts receivable consist primarily of amounts due from Medicare and Medicaid programs, other government programs, managed care health plans and private payor sources, net of estimates for variable consideration and doubtful accounts.

Accounts receivable as of June 30, 2025 and December 31, 2024, is summarized in the following table:

June 30, 2025 December 31, 2024

Accounts receivable as of September 30, 2025 and December 31, 2024, is summarized in the following table:

September 30, 2025 December 31, 2024

Medicaid $ 266,048 $ 228,872

12 unchanged sentences

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

Three Months Ended June 30, Six Months Ended June 30,

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

2025 2024 2025 2024

7 unchanged sentences

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

Three Months Ended June 30, Six Months Ended June 30,

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

2025 2024 2025 2024

9 unchanged sentences

$ 1.42 $ 1.34 $ 4.23 $ 3.76

(1) Options outstanding which are anti-dilutive and therefore not factored into the weighted average common shares amount above were 920 and 855 for the three and six months ended June 30, 2025, respectively, and 1,368 and 1,252 for the three and six months ended June 30, 2024, respectivel y.

(1) Options outstanding which are anti-dilutive and therefore not factored into the weighted average common shares amount above were 1,072 and 914 for the three and nine months ended September 30, 2025, respectively, and 400 and 858 for the three and nine months ended September 30, 2024, respectivel y.

FAIR VALUE MEASUREMENTS

The Company's financial assets include held-to-maturity investments carried at amortized cost basis of $ 146,725 and $ 138,600 , of which $ 73,839 and $ 65,831 are designated to support long-term insurance subsidiary liabilities, as of June 30, 2025 and December 31, 2024, respectively.

As of June 30, 2025 and December 31, 2024, the amortized cost basis of these financial assets are considered to approximate fair value and are derived using Level 2 inputs.

The Company believes its amortized cost basis investments that were in an unrealized loss position as of June 30, 2025 and December 31, 2024 do not require an allowance for expected credit losses, nor has any event occurred through the filing date of this report that would indicate differently.

The Company's financial assets include held-to-maturity investments carried at amortized cost basis of $ 148,735 and $ 138,600 , of which $ 80,706 and $ 65,831 are designated to support long-term insurance subsidiary liabilities, as of September 30, 2025 and December 31, 2024, respectively.

As of September 30, 2025 and December 31, 2024, the amortized cost basis of these financial assets are considered to approximate fair value and are derived using Level 2 inputs.

The Company believes its amortized cost basis investments that were in an unrealized loss position as of September 30, 2025 and December 31, 2024 do not require an allowance for expected credit losses, nor has any event occurred through the filing date of this report that would indicate differently.

THE ENSIGN GROUP, INC.

2 unchanged sentences

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 June 30, 2025 and December 31, 2024, the fair value of the investment funds was $ 68,344 and $ 56,049 , respectively, which are derived using Level 2 inputs.

As of September 30, 2025 and December 31, 2024, the fair value of the investment funds was $ 72,381 and $ 56,049 , respectively, which are derived using Level 2 inputs.

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

2 unchanged sentences

Of those 35 operations, one senior living operation is located on the same real estate property as a skilled nursing operation that an independent subsidiary operates.

During the six months ended June 30, 2025, Standard Bearer added $ 195,045 of real estate assets associated with 11 stand-alone skilled nursing operations, one stand-alone senior living operation and two campus operations .

During the nine months ended September 30, 2025, Standard Bearer added $ 228,874 of real estate assets associated with 15 stand-alone skilled nursing operations, one stand-alone senior living operation and two campus operations .

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

Of these additions, one stand-alone skilled nursing operation is leased to a third-party operator and the remaining additions are operated by the Company's independent subsidiaries.

Of these additions, two s tand-alone skilled nursing operations are leased to third-party operators and the remaining additions are operated by the Company's independent subsidiaries.

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

Subsequent to June 30, 2025, Standard Bearer added approximately $ 20,820 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.

Subsequent to September 30, 2025, Standard Bearer added approximately $ 65,000 of real estate assets associated with seven stand-alone skilled nursing operations, of which all were leased back to the Company's independent subsidiaries.

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

During the six months ended June 30, 2024, Standard Bearer added $ 63,412 of real estate assets associated with five stand-alone skilled nursing operations and two campus operations, all of which are operated by the Company's independent subsidiaries.

During the nine months ended September 30, 2024, Standard Bearer added $ 81,274 of real estate assets associated with seven stand-alone skilled nursing operations and two campus operations, all of which are operated by the Company's independent subsidiaries.

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

12 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.

Intercompany rental revenue generated from Ensign affiliated operations was $ 26,756 and $ 50,660 , respectively, for the three and six months ended June 30, 2025 and $ 19,156 and $ 37,162 , respectively, for the three and six months ended June 30, 2024.

Intercompany rental revenue generated from Ensign affiliated operations was $ 27,634 and $ 78,294 , respectively, for the three and nine months ended September 30, 2025 and $ 20,234 and $ 57,396 , respectively, for the three and nine months ended September 30, 2024.

THE ENSIGN GROUP, INC.

4 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 six months ended June 30, 2025 was $ 1,883 and $ 3,575 , respectively.

Management fees generated between Standard Bearer and the Service Center for the three and six months ended June 30, 2024 was $ 1,401 and $ 2,733 , respectively.

Management fee generated between Standard Bearer and the Service Center for the three and nine months ended September 30, 2025 was $ 1,955 and $ 5,530 , respectively.

Management fees generated between Standard Bearer and the Service Center for the three and nine months ended September 30, 2024 was $ 1,466 and $ 4,199 , respectively.

Intercompany debt arrangements

11 unchanged sentences

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

During the six months ended June 30, 2025 and 2024, the Company did not grant any stock options or restricted shares under the Standard Bearer Equity Plan.

During the six months ended June 30, 2025 and 2024, there were no restricted stock awards vested for the periods.

During the nine months ended September 30, 2025 and 2024, the Company did not grant any stock options or restricted shares under the Standard Bearer Equity Plan.

During the nine months ended September 30, 2025 and 2024, there were no restricted stock awards vested for the periods.

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

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

For the three and six months ended June 30, 2025, the Standard Bearer Equity Plan's share-based compensation expense was not material.

There was no expense during the three and six months ended June 30, 2024.

For the three and nine months ended September 30, 2025, the Standard Bearer Equity Plan's share-based compensation expense was not material.

There was no expense during the three and nine months ended September 30, 2024.

OPERATION EXPANSIONS

7 unchanged sentences

2025 Expansions

During the six months ended June 30, 2025, the Company expanded its operations with the addition of 17 stand-alone skilled nursing operations, two stand-alone senior living operations and one campus operation.

These new operations added a total of 1,955 operational skilled nursing beds and 204 operational senior living units be operated by the Company's independent subsidiaries.

During the nine months ended September 30, 2025, the Company expanded its operations with the addition of 28 stand-alone skilled nursing operations, five stand-alone senior living operations and one campus operation.

These new operations added a total of 3,384 operational skilled nursing beds and 313 operational senior living units to be operated by the Company's independent subsidiaries.

THE ENSIGN GROUP, INC.

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

Subsequent to June 30, 2025, the Company expanded its operations with the addition of one stand-alone skilled nursing operation.

This new operation added 120 operational skilled nursing beds to be operated by one of the Company's independent subsidiary.

Subsequent to September 30, 2025, the Company expanded its operations with the addition of eight stand-alone skilled nursing operations.

These new operations added 428 operational skilled nursing beds to be operated by the Company's independent subsidiaries.

2024 Expansions

During the six months ended June 30, 2024, the Company expanded its operations with the addition of 13 stand-alone skilled nursing operations and two campus operations.

During the nine months ended September 30, 2024, the Company expanded its operations with the addition of 24 stand-alone skilled nursing operations and two campus operations.

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

These new operations added a total of 2,565 operational skilled nursing beds and 202 operational senior living units operated by the Company's independent subsidiaries.

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

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

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

2 unchanged sentences

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

As of June 30, 2025, the skilled services segment includes 303 skilled nursing and 31 campus operations that provide both skilled nursing and rehabilitative care services and senior living services.

As of September 30, 2025, the skilled services segment includes 314 skilled nursing and 31 campus operations that provide both skilled nursing and rehabilitative care services and senior living services.

The Company's Standard Bearer segment consists of 142 owned real estate properties.

13 unchanged sentences

The following tables set forth financial information for the segments:

Three Months Ended June 30, 2025

Three Months Ended September 30, 2025

Skilled Services Standard Bearer Total

18 unchanged sentences

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

(2) All other revenue includes $ 54,174 of service revenue and $ 3,158 of rental revenue for the three months ended June 30, 2025, both of which include intercompany revenue that is eliminated in "Elimination of intercompany revenue".

(3) Elimination of intercompany revenue includes the elimination of intercompany rental revenue of $ 28,271 and intercompany service revenue of $ 6,336 for the three months ended June 30, 2025.

(2) All other revenue includes $ 57,377 of service revenue and $ 3,201 of rental revenue for the three months ended September 30, 2025, both of which include intercompany revenue that is eliminated in "Elimination of intercompany revenue".

(3) Elimination of intercompany revenue includes the elimination of intercompany rental revenue of $ 29,185 and intercompany service revenue of $ 6,694 for the three months ended September 30, 2025.

(4) Other segment items include cost of services and rent expense for the skilled services segment and cost of services, rent expense and general and administrative expenses for the Standard Bearer segment.

Additionally, there are intercompany expenses of $ 34,607 during the three months ended June 30, 2025, which are eliminated in consolidation.

Additionally, there are intercompany expenses of $ 35,879 during the three months ended September 30, 2025, which are eliminated in consolidation.

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

of $ 9,023 during the three months ended June 30, 2025, which is eliminated in consolidation.

of $ 9,090 during the three months ended September 30, 2025, which is eliminated in consolidation.

THE ENSIGN GROUP, INC.

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

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Skilled Services Standard Bearer Total

18 unchanged sentences

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

(2) All Other revenue includes $ 44,340 of service revenue and $ 2,999 of rental revenue for the three months ended June 30, 2024, both of which include intercompany revenue that is eliminated in "Elimination of intercompany revenue".

(3) Elimination of intercompany revenue includes the elimination intercompany rental revenue of $ 20,642 and intercompany service revenue of $ 5,051 for the three months ended June 30, 2024.

(2) All Other revenue includes $ 48,209 of service revenue and $ 2,935 of rental revenue for the three months ended September 30, 2024, both of which include intercompany revenue that is eliminated in "Elimination of intercompany revenue".

(3) Elimination of intercompany revenue includes the elimination intercompany rental revenue of $ 21,680 and intercompany service revenue of $ 5,230 for the three months ended September 30, 2024.

Additionally, there are intercompany expenses of $ 25,693 during the three months ended June 30, 2024, which is eliminated in consolidation.

Additionally, there are intercompany expenses of $ 26,910 during the three months ended September 30, 2024, which is eliminated in consolidation.

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

of $ 4,998 during the three months ended June 30, 2024, which is eliminated in consolidation.

of $ 5,535 during the three months ended September 30, 2024, which is eliminated in consolidation.

THE ENSIGN GROUP, INC.

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

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

Skilled Services Standard Bearer Total

20 unchanged sentences

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

(2) All other revenue includes $ 103,601 of service revenue and $ 6,157 of rental revenue for the six months ended June 30, 2025, both of which include intercompany revenue that is eliminated in "Elimination of intercompany revenue".

(3) Elimination of intercompany revenue includes the elimination of intercompany rental revenue of $ 53,670 and intercompany service revenue of $ 12,277 for the six months ended June 30, 2025.

(2) All other revenue includes $ 160,978 of service revenue and $ 9,358 of rental revenue for the nine months ended September 30, 2025, both of which include intercompany revenue that is eliminated in "Elimination of intercompany revenue".

(3) Elimination of intercompany revenue includes the elimination of intercompany rental revenue of $ 82,855 and intercompany service revenue of $ 18,971 for the nine months ended September 30, 2025.

Additionally, there are intercompany expenses of $ 65,947 during the six months ended June 30, 2025, which are eliminated in consolidation.

Additionally, there are intercompany expenses of $ 101,826 during the nine months ended September 30, 2025, which are eliminated in consolidation.

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

of $ 16,063 during the six months ended June 30, 2025, which is eliminated in consolidation.

of $ 25,153 during the nine months ended September 30, 2025, which is eliminated in consolidation.

THE ENSIGN GROUP, INC.

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

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Skilled Services Standard Bearer Total

19 unchanged sentences

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

(2) All Other revenue includes $ 83,966 of service revenue and $ 5,945 of rental revenue for the six months ended June 30, 2024, both of which include intercompany revenue that is eliminated in "Elimination of intercompany revenue".

(3) Elimination of intercompany revenue includes the elimination intercompany rental revenue of $ 40,102 and intercompany service revenue of $ 9,794 for the six months ended June 30, 2024.

(2) All Other revenue includes $ 132,175 of service revenue and $ 8,880 of rental revenue for the nine months ended September 30, 2024, both of which include intercompany revenue that is eliminated in "Elimination of intercompany revenue".

(3) Elimination of intercompany revenue includes the elimination intercompany rental revenue of $ 61,782 and intercompany service revenue of $ 15,024 for the nine months ended September 30, 2024.

Additionally, there are intercompany expenses of $ 49,896 during the six months ended June 30, 2024, which is eliminated in consolidation.

Additionally, there are intercompany expenses of $ 76,806 during the nine months ended September 30, 2024, which is eliminated in consolidation.

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

of $ 9,283 during the six months ended June 30, 2024, which is eliminated in consolidation.

of $ 14,818 during the nine months ended September 30, 2024, which is eliminated in consolidation.

Service revenue by major payor source were as follows:

Three Months Ended June 30, 2025

Three Months Ended September 30, 2025

Skilled Services All Other (3)

10 unchanged sentences

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

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Skilled Services All Other (3)

8 unchanged sentences

TOTAL SERVICE REVENUE $ 1,033,113 $ 42,979 $ 1,076,092 100.0 %

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

Skilled Services All Other (3)

8 unchanged sentences

TOTAL SERVICE REVENUE $ 3,536,226 $ 142,007 $ 3,678,233 100.0 %

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Skilled Services All Other (3)

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

(2) Private and other in skilled services includes private, Veteran Affairs and hospice payors.

In addition, private and other in the "all other" category includes revenue from senior living and ancillary operations.

(2) Private and other includes revenue for skilled services (private, Veteran Affairs and hospice payors), senior living and ancillary operations.

(3) All Other incorporates intercompany eliminations.

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Property and equipment, net consists of the following:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Land $ 204,995 $ 162,873

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PROPERTY AND EQUIPMENT, NET $ 1,598,401 $ 1,291,354

Management evaluated its long-lived assets and determined there was no impairment during the six months ended June 30, 2025.

During the six months ended June 30, 2024, the Company recorded an impairment charge of $ 1,849 within the Company's consolidated statement of income as cost of services .

Real Estate Acquisitions

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Standard Bearer.

The table below presents the allocation of the purchase price for real estate purchases during the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

The table below presents the allocation of the purchase price for real estate purchases during the nine months ended September 30, 2025 and 2024:

Nine Months Ended September 30,

Land $ 42,122 $ 17,909

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INTANGIBLE ASSETS - NET

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Weighted Average Life (Years)

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TOTAL $ 7,660 $ ( 5,884 ) $ 1,776 $ 7,306 $ ( 4,680 ) $ 2,626

During the three and six months ended June 30, 2025, amortization expense was $ 740 and $ 1,551 , respectively, of which $ 272 and $ 414 was related to the amortization of right-of-use assets, respectively.

Amortization expense was $ 536 and $ 937 , respectively, of which $ 303 and $ 606 was related to the amortization of right-of-use assets for the three and six months ended June 30, 2024, respectively.

During the three and nine months ended September 30, 2025, amortization expense was $ 340 and $ 1,891 , respectively, of which $ 273 and $ 687 was related to the amortization of right-of-use assets, respectively.

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

THE ENSIGN GROUP, INC.

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Other indefinite-lived intangible assets consist of the following:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Trade name $ 889 $ 889

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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 six months ended June 30, 2025.

The Company anticipates that the majority of goodwill recognized will be fully deductible for tax purposes as of June 30, 2025.

There were no indicators of goodwill impairment noted during the three and nine months ended September 30, 2025.

The Company anticipates that the majority of goodwill recognized will be fully deductible for tax purposes as of September 30, 2025.

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

There were no activities in goodwill during the six months ended June 30, 2025.

The following table represents goodwill value by the skilled services segment and "all other" category as of June 30, 2025 and December 31, 2024:

There were no activities in goodwill during the nine months ended September 30, 2025.

The following table represents goodwill value by the skilled services segment and "all other" category as of September 30, 2025 and December 31, 2024:

Skilled Services All Other Total

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Other accrued liabilities consist of the following:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Quality assurance fee $ 16,548 $ 12,667

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Property taxes 17,133 15,400

Accrued litigation (Note 19)

Other 17,491 18,458

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

The Company recorded income tax expense of $ 54,119 and $ 41,521 during the six months ended June 30, 2025 and 2024, respectively, or 24.7 % of earnings before income taxes for the six months ended June 30, 2025, compared to 22.9 % for the six months ended June 30, 2024.

The Company recorded income tax expense of $ 76,808 and $ 61,628 during the nine months ended September 30, 2025 and 2024, respectively, or 23.6 % of earnings before income taxes for the nine months ended September 30, 2025, compared to 22.0 % for the nine months ended September 30, 2024.

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

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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 six months ended June 30, 2025 and 2024.

The net balance of unrecognized tax benefits was not material to the Interim Financial Statements for the nine months ended September 30, 2025 and 2024.

On July 4, 2025, the One Big Beautiful Bill (OBBB) was enacted in the U.S.

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FASB ASC Topic 740, Income Taxes, requires the effects of tax law changes to be recognized in the period of enactment.

As the legislation was signed into law after the close of the Company's second quarter, the impacts are not included in the Company's operating results for the six months ended June 30, 2025.

The Company is currently assessing the impact but does not expect that the provisions will have a material impact on its consolidated financial statements.

The Company has reflected the impact of the enacted provisions, primarily affecting deferred tax liability and income tax receivable balances, in its condensed consolidated balance sheets.

The Company does not anticipate that these provisions will affect its current period income tax expense or its effective tax rate for 2025.

Debt consists of the following:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Mortgage loans and promissory note $ 145,388 $ 148,438

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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 June 30, 2025, there was no outstanding debt under the Credit Facility.

The Company was in compliance with all loan covenants as of June 30, 2025.

As of September 30, 2025, there was no outstanding debt under the Credit Facility.

The Company was in compliance with all loan covenants as of September 30, 2025.

THE ENSIGN GROUP, INC.

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Mortgage Loans and Promissory Note

As of June 30, 2025, the Company has 23 subsidiaries that have mortgage loans insured with HUD in the aggregate amount of $ 145,187 , which subjects these subsidiaries to HUD oversight and periodic inspections.

As of September 30, 2025, the Company has 23 subsidiaries that have mortgage loans insured with HUD in the aggregate amount of $ 144,322 , which subjects these subsidiaries to HUD oversight and periodic inspections.

The mortgage loans bear effective interest rates in a range of 3.1 % to 4.2 %, including fixed interest rates in a range of 2.4 % to 3.3 % per annum.

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Off-Balance Sheet Arrangements

As of June 30, 2025, the Company had approximately $ 7,402 of borrowing capacity under the Credit Facility pledged as collateral to secure outstanding letters of credit, a decrease of $ 20,491 from December 31, 2024.

The Company believes that its outstanding letters of credit as of June 30, 2025 do not require an allowance for expected credit losses, nor has any event occurred through the filing date of this report that would indicate differently.

As of September 30, 2025 and December 31, 2024, the Company had approximately $ 7,402 and $ 27,893 , respectively, of borrowing capacity under the Credit Facility pledged as collateral to secure outstanding letters of credit.

The Company believes that its outstanding letters of credit as of September 30, 2025 do not require an allowance for expected credit losses, nor has any event occurred through the filing date of this report that would indicate differently.

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 six months ended June 30, 2025 and 2024 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 and nine months ended September 30, 2025 and 2024 was based on awards expected to vest, it has been reduced for estimated forfeitures.

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

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Options expire ten years from the date of grant.

At June 30, 2025, the total number of shares available for issuance under the Amended and Restated Plan was 3,982 .

At September 30, 2025, the total number of shares available for issuance under the Amended and Restated Plan was 3,724 .

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

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The Company develops estimates based on historical data and market information, which can change significantly over time.

Stock Options

The Company used the following assumptions for stock options granted during the three months ended September 30, 2025 and 2024:

THE ENSIGN GROUP, INC.

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

Stock Options

The Company used the following assumptions for stock options granted during the three months ended June 30, 2025 and 2024:

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

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2024 112 3.8 % 6.2 years 40.3 % 0.2 %

The Company used the following assumptions for stock options granted during the six months ended June 30, 2025 and 2024:

The Company used the following assumptions for stock options granted during the nine months ended September 30, 2025 and 2024:

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

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2024 466 4.2 % 6.1 years 40.7 % 0.2 %

For the six months ended June 30, 2025 and 2024, the following represents the exercise price and fair value displayed at grant date for stock option grants:

For the nine months ended September 30, 2025 and 2024, the following represents the exercise price and fair value displayed at grant date for stock option grants:

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

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2024 466 $ 127.07 $ 57.81

The weighted average exercise price equaled the weighted average fair value of common stock on the grant date for all options granted during the six months ended June 30, 2025 and 2024 and therefore, the intrinsic value was $ 0 at the date of grant.

The following table represents the employee stock option activity during the six months ended June 30, 2025:

The weighted average exercise price equaled the weighted average fair value of common stock on the grant date for all options granted during the nine months ended September 30, 2025 and 2024 and therefore, the intrinsic value was $ 0 at the date of grant.

The following table represents the employee stock option activity during the nine months ended September 30, 2025:

Number of Options Outstanding Weighted Average

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Exercised ( 455 ) 49.93

June 30, 2025 4,009 $ 85.40 1,943 $ 58.64

The aggregate intrinsic value of options outstanding, vested, expected to vest and exercised as of June 30, 2025 and December 31, 2024 is as follows:

Options June 30, 2025 December 31, 2024

September 30, 2025 4,003 $ 90.87 1,928 $ 62.74

The aggregate intrinsic value of options outstanding, vested, expected to vest and exercised as of September 30, 2025 and December 31, 2024 is as follows:

Options September 30, 2025 December 31, 2024

Outstanding $ 327,883 $ 219,309

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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 six months ended June 30, 2025 and 2024 was $ 22,121 and $ 18,073 , respectively.

The total intrinsic value of options exercised during the six months ended June 30, 2025 and 2024 was $ 24,957 and $ 29,894 , respectively.

THE ENSIGN GROUP, INC.

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

The aggregate intrinsic value of options that vested during the nine months ended September 30, 2025 and 2024 was $ 40,633 and $ 34,971 , respectively.

The total intrinsic value of options exercised during the nine months ended September 30, 2025 and 2024 was $ 44,962 and $ 50,840 , respectively.

Restricted Stock Awards

The Company granted 42 and 134 restricted stock awards during the three and six months ended June 30, 2025, respectively.

The Company granted 42 and 137 restricted stock awards during the three and six months ended June 30, 2024, respectively.

The Company granted 43 and 177 restricted stock awards during the three and nine months ended September 30, 2025, respectively.

The Company granted 29 and 116 restricted stock awards during the three and nine months ended September 30, 2024, respectively.

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

The fair value per share of restricted awards granted during the six months ended June 30, 2025 and 2024 ranged from $ 126.34 to $ 147.04 and $ 116.65 to $ 122.69 , respectively.

The fair value per share of restricted awards granted during the nine months ended September 30, 2025 and 2024 ranged from $ 126.34 to $ 169.24 and $ 116.65 to $ 146.37 , respectively.

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

Included in the restricted stock award grants are $ 8,003 and $ 6,165 of annual bonuses that were settled in vested restricted stock awards in the first quarter of 2025 and 2024, respectively .

A summary of the status of the Company's non-vested restricted stock awards as of June 30, 2025 and changes during the six months ended June 30, 2025 is presented below:

THE ENSIGN GROUP, INC.

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

A summary of the status of the Company's non-vested restricted stock awards as of September 30, 2025 and changes during the nine months ended September 30, 2025 is presented below:

Non-Vested Restricted Awards Weighted Average Grant Date Fair Value

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Forfeited ( 9 ) 107.92

Nonvested at June 30, 2025

During the three and six months ended June 30, 2025, the Company granted 3 and 7 automatic quarterly stock awards, respectively, to non-employee directors for their service on the Company's board of directors.

Nonvested at September 30, 2025

During the three and nine months ended September 30, 2025, the Company granted 4 and 11 automatic quarterly stock awards, respectively, to non-employee directors for their service on the Company's board of directors.

The fair value per share of these stock awards ranged from $ 129.09 to $ 141.18 based on the market price on the grant date.

Stock-based compensation expense

Stock-based compensation expense recognized for the Company's equity incentive plans and long-term incentive plan for the three and six months ended June 30, 2025 and 2024 was as follows:

Three Months Ended June 30, Six Months Ended June 30,

Stock-based compensation expense recognized for the Company's equity incentive plans and long-term incentive plan for the three and nine months ended September 30, 2025 and 2024 was as follows:

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

2025 2024 2025 2024

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TOTAL $ 12,868 $ 9,177 $ 35,187 $ 26,386

In future periods, the Company expects to recognize approximately $ 89,480 and $ 39,906 in stock-based compensation expense for unvested options and unvested restricted stock awards, respectively, that were outstanding as of June 30, 2025.

In future periods, the Company expects to recognize approximately $ 94,617 and $ 42,557 in stock-based compensation expense for unvested options and unvested restricted stock awards, respectively, that were outstanding as of September 30, 2025.

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

There were 2,066 unvested and outstanding options as of June 30, 2025, of which 1,900 options are expected to vest.

The weighted average contractual life for options outstanding, vested and expected to vest as of June 30, 2025 was 6.7 years.

There were 2,075 unvested and outstanding options as of September 30, 2025, of which 1,916 options are expected to vest.

The weighted average contractual life for options outstanding, vested and expected to vest as of September 30, 2025 was 6.7 years.

The Company leases from CareTrust real property associated with 104 independent skilled nursing and senior living facilities used in the Company’s operations under eight “triple-net” master lease agreements (collectively, the Master Leases), which range in terms from 13 to 20 years.

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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.

THE ENSIGN GROUP, INC.

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

In the third quarter of 2025, the Company added eight operations to an existing Master Lease and amended the initial term to 15 years.

As a result, the total lease liabilities and right-of-use assets increased by $ 124,761 to reflect the new lease obligations.

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

If a Master Lease is terminated prior to its expiration other than with CareTrust’s consent, the Company may be liable for damages and incur charges such as continued payment of rent through the end of the lease term as well as maintenance and repair costs for the leased property.

THE ENSIGN GROUP, INC.

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

The rent structure under the Master Leases includes a fixed component, subject to annual escalation equal to the lesser of (1) the percentage change in the Consumer Price Index (but not less than zero ) or (2) 2.5 %.

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and (5) all fees in connection with any licenses or authorizations necessary or appropriate for the leased properties and the business conducted on the leased properties.

Total rent expense under the Master Leases was approximately $ 16,904 and $ 34,030 for the three and six months ended June 30, 2025, respectively, and $ 17,272 and $ 34,072 for the three and six months ended June 30, 2024, respectively.

Total rent expense under the Master Leases was approximately $ 18,800 and $ 52,830 for the three and nine months ended September 30, 2025, respectively, and $ 17,635 and $ 51,707 for the three and nine months ended September 30, 2024, respectively.

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

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

The Company is in compliance with requirements of the Master Leases as of June 30, 2025.

The Company is in compliance with requirements of the Master Leases as of September 30, 2025.

The Company leases facilities where its independent subsidiaries operate and certain administrative offices under non-cancelable operating leases, most of which have initial lease terms ranging from 15 to 20 years.

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 100 independent subsidiaries, excluding the subsidiaries that are operated under the Master Leases with CareTrust, are operated under 17 separate master lease arrangements.

In the first quarter of 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.

In the second quarter of 2025, the Company entered into two new master lease arrangements to add four stand-alone skilled nursing facilities operated by the Company's independent subsidiaries with an initial term of 15 years.

The new master lease arrangements increased the lease liabilities and right-of-use assets by $ 52,753 to reflect the new lease obligations.

The Company's 102 independent subsidiaries, excluding the subsidiaries that are operated under the Master Leases with CareTrust, are operated under 18 separate Master Leases.

In the first quarter of 2025, the Company entered into one new Master Lease to add six stand-alone skilled nursing facilities operated by the Company's independent subsidiaries with an initial term of 15 years.

The new Master Lease increased the lease liabilities and right-of-use assets by $ 57,961 to reflect the new lease obligations.

In the second quarter of 2025, the Company entered into two new Master Lease to add four stand-alone skilled nursing facilities operated by the Company's independent subsidiaries with an initial term of 15 years.

The new Master Lease increased the lease liabilities and right-of-use assets by $ 52,753 to reflect the new lease obligations.

In the third quarter of 2025, the Company entered into one new Master Lease to add two stand-alone skilled nursing facilities operated by the Company's independent subsidiaries with an initial term of 14 years.

The new Master Lease increased the lease liabilities and right-of-use assets by $ 6,833 to reflect the new lease obligations.

Under the Master Leases, a default at a single facility could subject one or more of the other facilities covered by the same Master lease to the same default risk.

Failure to comply with Medicare and Medicaid provider requirements is a default under several of the Company’s leases, master lease agreements and debt financing instruments.

Failure to comply with Medicare and Medicaid provider requirements is an event of default under several of the Company’s leases, master lease agreements and debt financing instruments.

In addition, other potential defaults related to an individual facility may cause a default of an entire master lease portfolio and could trigger cross-default provisions in the Company’s outstanding debt arrangements and other leases.

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The components of operating lease expense are as follows:

Three Months Ended June 30, Six Months Ended June 30,

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

2025 2024 2025 2024

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$ 68,783 $ 61,618 $ 196,921 $ 179,125

(1) Rent - cost of services includes deferred rent expense adju stments of $ 199 and $ 407 for the three and six months ended June 30, 2025, respectively, and $ 190 and $ 385 for the three and six months ended June 30, 2024, respectively.

Additionally, rent - cost of services includes other variable lease costs such as CPI increases and short-term leases of $ 4,634 and $ 8,638 for the three and six months ended June 30, 2025, respectively, and $ 3,300 and $ 6,357 for the three and six months ended June 30, 2024, respectively.

(1) Rent - cost of services includes deferred rent expense adju stments of $ 225 and $ 632 for the three and nine months ended September 30, 2025, respectively, and $ 205 and $ 590 for the three and nine months ended September 30, 2024, respectively.

Additionally, rent - cost of services includes other variable lease costs such as CPI increases and short-term leases of $ 4,922 and $ 13,560 for the three and nine months ended September 30, 2025, respectively, and $ 3,668 and $ 10,025 for the three and nine months ended September 30, 2024, respectively.

(2) Cost of services includes variable lease costs consisting of property taxes and insurance.

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

Future minimum lease payments for all third-party leases as of June 30, 2025 are as follows:

Future minimum lease payments for all third-party leases as of September 30, 2025 are as follows:

2025 (remainder) $ 58,013

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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 June 30, 2025, the weighted average remaining lease term is 14.2 years and the weighted average discount rate used to determine the operating lease liabilities is 6.3 %.

As of September 30, 2025, the weighted average remaining lease term is 14.0 years and the weighted average discount rate used to determine the operating lease liabilities is 6.3 %.

Subsequent to September 30, 2025, the Company expanded its operations through a long-term lease with the addition of one stand-alone skilled nursing operation.

The aggregate impact to the carrying value of lease liabilities and right-of-use assets related to the long-term lease is estimated to be $ 10,896 .

Lessor Activities

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

The Company leases 36 of its owned real estate properties to third-party operators, of which 32 senior living operations are operated by The Pennant Group, Inc.

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

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The initial terms range from 14 to 16 years.

During the three and six months ended June 30, 2025, the Company entered into two lease agreements with a third-party operator for one skilled nursing and one senior living operation, both with initial lease terms of 15 years.

Total rental income from all third-party sources for the three and six months ended June 30, 2025 and 2024 is as follows:

Three Months Ended June 30, Six Months Ended June 30,

In the second quarter of 2025, the Company entered into two lease agreements with a separate third-party operator for one skilled nursing and one senior living operation, both with initial lease terms of 15 years.

In the third quarter of 2025, the Company entered into one lease agreement with a separate third-party operator for one skilled nursing operation with an initial lease term of 8 years.

Total rental income from all third-party sources for the three and nine months ended September 30, 2025 and 2024 is as follows:

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

2025 2024 2025 2024

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TOTAL $ 6,626 $ 5,684 $ 18,982 $ 17,082

(1) Pennant rental income includes variable rent such as property taxes of $ 270 and $ 580 during the three and six months ended June 30, 2025 and $ 314 and $ 632 for the three and six months ended June 30, 2024.

(2) Other third-party includes rental revenue associated with the Company's subleases to third parties of $ 1,116 and $ 2,223 for the three and six months ended June 30, 2025, respectively, and $ 1,089 and $ 2,169 for the three and six months ended June 30, 2024, respectively.

(1) Pennant rental income includes variable rent such as property taxes of $ 274 and $ 854 during the three and nine months ended September 30, 2025 and $ 308 and $ 940 for the three and nine months ended September 30, 2024.

(2) Other third-party includes rental revenue associated with the Company's subleases to third parties of $ 1,116 and $ 3,339 for the three and nine months ended September 30, 2025, respectively, and $ 1,089 and $ 3,258 for the three and nine months ended September 30, 2024, respectively.

THE ENSIGN GROUP, INC.

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

Future annual rental income for all third-party leases as of June 30, 2025 were as follows:

Future annual rental income for all third-party leases as of September 30, 2025 were as follows:

Year Amount (1)

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TOTAL $ 259,299

(1) Annual rental income includes base rents and variable rental income pursuant to existing leases as of June 30, 2025.

Subsequent to June 30, 2025, the Company entered into one lease agreement with a third-party operator for one stand-alone skilled nursing operation .

(1) Annual rental income includes base rents and variable rental income pursuant to existing leases as of September 30, 2025.

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 six months ended June 30, 2025 and 2024.

As of June 30, 2025 and December 31, 2024, the Company accrued $ 62,816 and $ 63,051 , respectively, as long term deferred compensation in other long term liabilities on the condensed consolidated balance sheets.

The Company paid for related administrative costs, which were not significant during the three and nine months ended September 30, 2025 and 2024.

As of September 30, 2025 and December 31, 2024, the Company accrued $ 75,933 and $ 63,051 , respectively, as long term deferred compensation in other long term liabilities on the condensed consolidated balance sheets.

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

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

For the three and six months ended June 30, 2025, the Company recorded gains related to its DCP of $ 4,482 and $ 4,200 , respectively, which is included in other income (expense), and recorded offsetting expenses of $ 4,578 and $ 4,344 , respectively, which is allocated between cost of services and general and administrative expenses.

For the three and six months ended June 30, 2024, the Company recorded gains related to its DCP of $ 527 and $ 2,921 , respectively, which is included in other income (expense), and recorded offsetting expenses of $ 628 and $ 3,116 , respectively, which is allocated between cost of services and general and administrative expenses.

For the three and nine months ended September 30, 2025, the Company recorded gains related to its DCP of $ 3,048 and $ 7,248 , respectively, which is included in other income, net, and recorded offsetting expenses of $ 3,184 and $ 7,528 , respectively, which is allocated between cost of services and general and administrative expenses.

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

SELF INSURANCE LIABILITIES

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In Colorado, the third-party coverage above these limits is $ 1,000 per claim and $ 3,000 per operation, which is independent of the aforementioned blanket aggregate limits that apply outside of Colorado.

THE ENSIGN GROUP, INC.

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

The majority of the self-insured retention and deductible limits for general and professional liabilities and workers' compensation liabilities are self-insured through the captive insurance subsidiary, the related assets and liabilities of which are included in the accompanying condensed consolidated balance sheets.

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

THE ENSIGN GROUP, INC.

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

The Company’s policy is to accrue amounts equal to the actuarial estimated costs to settle open claims of insureds, as well as an estimate of the cost of insured claims that have been incurred but not reported.

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

The following table represents the Company's self-insurance insurance liabilities, on an undiscounted basis, inclusive of anticipated insurance recoveries, as of June 30, 2025 and December 31, 2024:

June 30, 2025 December 31, 2024

The following table represents the Company's self-insurance insurance liabilities, on an undiscounted basis, inclusive of anticipated insurance recoveries, as of September 30, 2025 and December 31, 2024:

September 30, 2025 December 31, 2024

Accrued general liability and professional malpractice liabilities $ 177,814 $ 160,149

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$ 160,646 $ 144,421

The anticipated insurance recoveries included in the self-insurance liabilities are presented gross rather than net with the corresponding asset of $ 17,958 and $ 17,741 , as of June 30, 2025 and December 31, 2024, respectively, included in Restricted and other assets on the consolidated balance sheets.

The anticipated insurance recoveries included in the self-insurance liabilities are presented gross rather than net with the corresponding asset of $ 17,572 and $ 17,741 , as of September 30, 2025 and December 31, 2024, respectively, included in Restricted and other assets on the consolidated balance sheets.

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

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Such claims may be related to, but are not limited to, the Health Insurance Portability and Accountability Act of 1996, alleged Medicare or Medicaid false claims, qui tam or "whistleblower" provisions of the False Claims Act and/or the Anti-Kickback Statute, alleged violations of state and federal wage and hour laws, environmental matters, investigations, examinations, audits and surveys or other claims in connection with the delivery of healthcare and non-healthcare services.

These claims may come from a variety of governmental agencies, including but not limited to, the following federal agencies:

Department of Health and Human Services (HHS), including the Centers for Disease Control and Prevention (CDC), Centers for Medicare and Medicaid Services (CMS), Office for Civil Rights (OCR) and Office of Inspector General (OIG);

Department of Justice (DOJ);

Occupational Safety and Health Administration (OHSA), U.S.

Equal Employment Opportunity Commission (EEOC);

National Labor Relations Board (NLRB);

Department of Labor (DOL);

Department of Housing and Urban Development (HUD);

Department of Veterans Affairs (VA);

and Environmental Protection Agency (EPA).

In addition to these federal agencies, there are also a variety of state and local authorities with the ability to bring claims against our independent subsidiaries.

The Company and its independent subsidiaries are also subject to requests for information and investigations by other state and federal governmental entities (e.g., Offices of the Attorney General and Offices of the Inspector General).

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Among other things, any settlement or litigation could involve the payment of substantial sums to settle any alleged violations and may also include the assumption of specific procedural and financial obligations by the Company or its independent subsidiaries under a Corporate Integrity Agreement and/or other such arrangement.

From time to time, various state or Federal agencies may issue requests for information, including but not limited to a subpoena.

As an example, California's Office of Health Care Affordability is currently conducting a Cost and Market Impact Review (CMIR) with respect to specific components of a proposed transaction involving several of our California operations.

We have been and will continue to communicate with the Office of Health Care Affordability regarding all correspondence and informational requests related to the CMIR.

Other claims and suits, including class actions, continue to be filed against the Company and other companies in its industry.

The Company and its independent subsidiaries have been subjected to, and are currently involved in, class action litigation alleging violations (alone or in combination) of state and federal wage and hour laws as related to the alleged failure to pay wages, to timely provide and compensate for meal and rest breaks, and related causes of action.

During the three months ended September 30, 2025, the Company agreed to settle substantially all alleged wage, hour or labor code-related violations asserted on a class or representative basis against its independent subsidiaries in California for purported violations occurring during the six year period ending December 2025, for $ 12,000 , pending court approval.

The Company does not believe that the ultimate resolution of these actions will have an ongoing material adverse effect on the Company’s business, cash flows, financial condition or results of operations.

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Although the Company intends to vigorously defend against these specific claims and in general these types of claims and cases, there can be no assurance that the outcomes of these matters will not have a material adverse effect on operational results and financial condition.

The Company has recorded an estimated liability for this matter.

THE ENSIGN GROUP, INC.

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

In 2018, the Company, on behalf of its independent subsidiaries, received a CID from the DOJ stating that it was investigating to determine whether there had been a violation of the False Claims Act (FCA) and/or the Anti-Kickback Statute (AKS) with respect to the relationships between certain of the Company’s independent subsidiaries and persons who serve or have served as medical directors.

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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.

THE ENSIGN GROUP, INC.

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

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

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

As of June 30, 2025 and through the filing date of this report, 10 of the Company's independent subsidiaries had multi-claim Reviews scheduled or in process.

As of September 30, 2025 and through the filing date of this report, 14 of the Company's independent subsidiaries had multi-claim Reviews scheduled or in process.

Concentrations

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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 56.3 % and 52.9 % of its total accounts receivable as of June 30, 2025 and December 31, 2024, respectively.

Revenue from reimbursement under the Medicare and Medicaid programs accounted for 69.8 % and 69.6 % of the Company's service revenue for the three and six months ended June 30, 2025, respectively, and 71.2 % and 71.4 % for the three and six months ended June 30, 2024, respectively.

The Company’s receivables from Medicare and Medicaid payor programs accounted for 58.6 % and 52.9 % of its total accounts receivable as of September 30, 2025 and December 31, 2024, respectively.

Revenue from reimbursement under the Medicare and Medicaid programs accounted for 69.5 % and 69.6 % of the Company's service revenue for the three and nine months ended September 30, 2025, respectively, and 70.2 % and 71.0 % for the three and nine months ended September 30, 2024, respectively.

COMMON STOCK REPURCHASE PROGRAM

On May 15, 2025, the Board of Directors approved a stock repurchase program pursuant to which the Company is authorized to repurchase up to $ 20,000 of its common stock under the program for a period of approximately 12 months from June 16, 2025.

During the three months ended June 30, 2025, the Company did not repurchase any shares pursuant to this stock repurchase program.

During the three months ended September 30, 2025, the Company did not repurchase any shares pursuant to this stock repurchase program.

On February 21, 2025, the Board of Directors approved a stock repurchase program pursuant to which the Company was authorized to repurchase up to $ 20,000 of its common stock under the program for a period of approximately 12 months from March 26, 2025.

During the three and six months ended June 30, 2025, the Company purchased 73 and 157 , respectively, of its common stock for $ 9,225 and $ 20,000 , respectively.

During the first and second quarter of 2025, the Company purchased 84 and 73 , respectively, of its common stock for $ 10,775 and $ 9,225 , respectively.

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

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

THE ENSIGN GROUP, INC.

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

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

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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