2 unchanged sentences
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: AND FINANCIAL STATEMENT SCHEDULE
Report of Independent Registered Public Accounting Firm
6 unchanged sentences
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
−Removed: To the Stockholders and the Board of Directors of
−Removed: The Ensign Group, Inc.
−Removed: San Juan Capistrano, California
+Added: To the Stockholders and the Board of Directors of The Ensign Group, Inc.
Opinion on the Financial Statements
19 unchanged sentences
Critical Audit Matter Description
−Removed: The Company's self-insurance liabilities for general and professional liability claims totaled $160.1 million at December 31, 2024.
−Removed: The Company develops information about the size of the ultimate claims based on historical experience, current industry information, and actuarial analysis.
−Removed: The determination of reserves for general and professional liability claims is highly subjective.
−Removed: Given the significant judgments in estimating the general and professional liability claims, we have determined this to be a critical audit matter.
−Removed: This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management estimates of reserves for open claims as well as for claims that are incurred but not reported (IBNR).
+Added: The Company is self-insured for general and professional liability claims while maintaining stop-loss coverage with third-party insurers to limit its total liability exposure.
+Added: Self-insurance reserves consist of the projected settlement value of reported and unreported claims.
+Added: The projected settlement values are estimated based on the Company's historical experience, supplemented with industry experience as necessary, and are established using actuarial methods followed in the insurance industry.
+Added: We identified the evaluation of the Company's self-insurance reserves for general and professional liability claims as a critical audit matter because estimating the projected settlement value for reported and unreported claims involves significant estimation by management.
+Added: This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our actuarial specialists, when performing audit procedures to evaluate whether the general and professional liability self-insurance reserves were appropriately recorded as of December 31, 2025.
How the Critical Audit Matter Was Addressed in the Audit
−Removed: Our audit procedures related to management’s judgment regarding the estimation of the reserve for general and professional liability claims included the following, among others:
−Removed: • We tested the effectiveness of controls over the reserve for general and professional liabilities, including those related to both the determination of reserves for open claims and estimation of the IBNR claims.
−Removed: • We obtained an understanding of the factors considered and assumptions made by management and its external actuarial specialists in developing the estimate of the general and professional liability reserves, including the sources of data relevant to these factors and assumptions.
−Removed: We tested underlying claims data, including testing the completeness and accuracy of open cases.
−Removed: • We involved our actuarial specialists to assist in our evaluation of the methodologies applied by management's specialist and to develop an independent range of expected reserves.
−Removed: We compared the recorded reserves to the estimated independent range.
−Removed: • We performed a retrospective review in which we compared the prior-year recorded amounts for ultimate losses and current liabilities to the subsequent claim emergence.
+Added: Our audit procedures related to the self-insurance reserves for general and professional liability included the following, among others:
+Added: • We tested the effectiveness of controls over the reserve for general and professional liabilities, including management's controls over the review of the historical claim data and the projection of the settlement value of the reported and unreported claims.
+Added: • We tested the underlying data that served as a basis for the actuarial analysis, including historical claims, to test that the inputs to the actuarial estimate were complete and accurate.
+Added: • We read the Company's insurance policies and compared the coverage and terms to the assumptions used by management.
+Added: • With the assistance of our actuarial specialists, we evaluated the methods and assumptions used by management to estimate the self-insurance reserves for general and professional liability claims by:
+Added: • Performing a retrospective review by comparing management's change in ultimate loss to the differential between expected development and actuals incurred during the current year to identify potential bias in the determination of the general and professional liability reserves.
+Added: • Developing an independent range of estimated losses for the general and professional liability reserve and comparing management's estimate to our estimated independent range .
/s/ DELOITTE & TOUCHE LLP
5 unchanged sentences
(In thousands, except par values)
+Added: (in thousands, except par values)
Current assets:
22 unchanged sentences
Total current liabilities $ 894,346 $ 743,428
−Removed: Long-term debt—less current maturities 141,585 145,497
Long-term lease liabilities—less current portion 1,949,213 1,735,325
1 unchanged sentence
Other long-term liabilities 82,266 64,169
+Added: Long-term debt—less current maturities 137,529 141,585
TOTAL LIABILITIES $ 3,228,146 $ 2,828,928
33 unchanged sentences
Interest income 24,512 28,749 19,216
−Removed: Other income (expense)
13,792 7,327 6,266
−Removed: OTHER INCOME (EXPENSE), NET
+Added: OTHER INCOME, NET
$ 30,316 $ 27,790 $ 17,395
2 unchanged sentences
NET INCOME $ 344,264 $ 298,458 $ 209,850
−Removed: Net income (loss) attributable to noncontrolling interests 485 451 ( 29 )
+Added: Net income attributable to noncontrolling interests 293 485 451
NET INCOME ATTRIBUTABLE TO THE ENSIGN GROUP, INC.
18 unchanged sentences
Employee stock award compensation — — 30,754 — — — — 30,754
−Removed: Repurchase of common stock (Note 20)
−Removed: ( 404 ) — — — 404 ( 29,882 ) — ( 29,882 )
−Removed: Acquisition of noncontrolling interest shares — — ( 1,539 ) — — — 835 ( 704 )
−Removed: Issuance of noncontrolling interests through subsidiary equity plan — — 6,693 — — — — 6,693
−Removed: Net loss attributable to noncontrolling interest
−Removed: — — — — — — ( 29 ) ( 29 )
+Added: Purchase of noncontrolling interest shares — — ( 256 ) — — — — ( 256 )
+Added: Net income attributable to noncontrolling interest — — — — — — 451 451
Noncontrolling interest attributable to subsidiary equity plan — — ( 3,787 ) — — — 3,533 ( 254 )
8 unchanged sentences
Employee stock award compensation — — 36,183 — — — — 36,183
−Removed: Acquisition of noncontrolling interest shares — — ( 256 ) — — — — ( 256 )
+Added: Purchase of noncontrolling interest shares — — ( 2,426 ) — — — ( 2,024 ) ( 4,450 )
Net income attributable to noncontrolling interest — — — — — — 485 485
−Removed: — — — — — — 451 451
Noncontrolling interest attributable to subsidiary equity plan — — 138 — — — ( 596 ) ( 458 )
8 unchanged sentences
Employee stock award compensation — — 47,895 — — — — 47,895
−Removed: Acquisition of noncontrolling interest shares — — ( 2,426 ) — — — ( 2,024 ) ( 4,450 )
+Added: Repurchase of common stock (Note 19)
+Added: ( 157 ) — — — 157 ( 20,000 ) — ( 20,000 )
+Added: Purchase of noncontrolling interest shares — — ( 594 ) — — — — ( 594 )
Net income attributable to noncontrolling interest — — — — — — 293 293
13 unchanged sentences
Amortization of deferred financing fees 1,057 1,061 1,067
−Removed: Non-cash leasing arrangement 808 870 493
−Removed: Impairment of long-lived assets 1,849 — —
−Removed: Write-off of deferred financing fees 200 — 566
Deferred income taxes ( 16,857 ) 635 ( 27,481 )
−Removed: Provision for doubtful accounts 1,739 3,408 2,390
Stock-based compensation 48,299 36,226 30,767
−Removed: Cash received from insurance proceeds 199 1,396 1,282
−Removed: Loss (gain) on sale of assets
−Removed: 486 ( 123 ) ( 3,467 )
−Removed: Loss (gain) on insurance claims and asset disposals
−Removed: 833 ( 550 ) ( 627 )
−Removed: ( 4,289 ) 47,182 4,553
+Added: Insurance proceeds and (gain) loss on long-lived assets, net 885 3,367 723
+Added: Other operating activities, net 4,371 2,747 4,278
Change in operating assets and liabilities
2 unchanged sentences
Prepaid expenses and other assets ( 16,441 ) ( 19,055 ) 6,993
−Removed: Deferred employer portion of social security taxes (Note 3)
−Removed: — — ( 24,155 )
Cash surrender value of life insurance policy premiums ( 18,356 ) ( 14,833 ) ( 16,072 )
5 unchanged sentences
Accrued self-insurance liabilities 35,261 44,014 28,827
−Removed: Other long-term liabilities 911 ( 50 ) ( 46 )
NET CASH PROVIDED BY OPERATING ACTIVITIES
3 unchanged sentences
Cash payments for acquisitions ( 323,258 ) ( 156,547 ) ( 69,014 )
−Removed: ( 156,547 ) ( 69,014 ) ( 101,136 )
−Removed: Cash from insurance proceeds 3,334 2,029 1,339
−Removed: Cash proceeds from the sale of assets 2,818 248 8,630
+Added: Cash proceeds from insurance recoveries and sale of assets 14,226 6,152 2,277
Purchases of investments ( 110,723 ) ( 105,149 ) ( 29,603 )
Maturities of investments 99,670 26,397 18,852
−Removed: Other restricted assets ( 2,665 ) 970 149
+Added: Other investing activities, net 465 ( 2,665 ) 970
NET CASH USED IN INVESTING ACTIVITIES
8 unchanged sentences
Dividends paid ( 14,410 ) ( 13,671 ) ( 12,890 )
−Removed: Proceeds from sale of subsidiary shares (Note 6)
−Removed: Non-controlling interest distribution ( 543 ) ( 4 ) ( 284 )
−Removed: Purchase of non-controlling interest ( 4,450 ) ( 256 ) ( 704 )
−Removed: Payment of contingent consideration
−Removed: Payments of deferred financing costs — ( 19 ) ( 3,197 )
+Added: Other financing activities ( 924 ) ( 5,618 ) ( 279 )
NET CASH USED IN FINANCING ACTIVITIES
$ ( 11,810 ) $ ( 2,162 ) $ ( 612 )
−Removed: Net (decrease) increase in cash and cash equivalents
−Removed: ( 45,028 ) 193,356 54,069
+Added: Net increase (decrease) in cash and cash equivalents 39,283 ( 45,028 ) 193,356
Cash and cash equivalents beginning of period 464,598 509,626 316,270
19 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.
−Removed: As of December 31, 2024, the Company's independent subsidiaries operated 327 facilities and other ancillary operations located in Arizona, California, Colorado, Idaho, Iowa, Kansas, Nebraska, Nevada, South Carolina, Tennessee, Texas, Utah, Washington and Wisconsin.
+Added: As of December 31, 2025, the Company's independent subsidiaries operated 373 facilities and other ancillary operations located in 17 states.
The Company's independent subsidiaries have a collective capacity of approximately 37,900 operational skilled nursing beds and 3,400 senior living units.
−Removed: As of December 31, 2024, the Company's independent subsidiaries operated 231 facilities under long-term lease arrangements and had options to purchase 12 of those 231 facilities.
+Added: As of December 31, 2025, the Company's independent subsidiaries operated 253 facilities under long-term lease arrangements and had options to purchase eight of those 253 facilities.
The Company's real estate portfolio consists of 158 owned real estate properties, which includes 120 facilities operated and managed by the Company's independent subsidiaries, 38 operations leased to and operated by third-party operators and the Service Center (defined below) location.
Of those 38 third-party operations, one senior living operation is located on the same real estate property as a skilled nursing operation that an independent subsidiary operates.
−Removed: Certain of the Company’s wholly-owned independent subsidiaries, collectively referred to as the Service Center, provide specific accounting, payroll, human resources, information technology, legal, risk management and other centralized services to the other independent subsidiaries.
−Removed: The Company also has a wholly-owned captive insurance subsidiary that provides some claims-made coverage to the Company’s independent subsidiaries for general and professional liabilities, as well as coverage for certain workers’ compensation insurance liabilities.
+Added: Building on this foundation, the Company continued its growth strategy in 2025 through significant expansion of its operational footprint.
+Added: During the year ended December 31, 2025, the Company expanded its presence with the addition of 40 stand-alone skilled nursing operations, five stand-alone senior living operations and one campus operation in 14 states, including entering into three new states.
+Added: These new operations added a total of 4,175 operational skilled nursing beds and 313 operational senior living units to be operated by the Company's independent subsidiaries.
+Added: Subsequent to December 31, 2025, the Company expanded its operations with the addition of five stand-alone skilled nursing operations.
+Added: These new operations added 582 operational skilled nursing beds to be operated by the Company's independent subsidiaries.
The Company's captive real estate investment trust (REIT), Standard Bearer Healthcare REIT, Inc.
4 unchanged sentences
Refer to Note 6, Standard Bearer for additional information on Standard Bearer.
−Removed: Each of the Company's independent subsidiaries are operated by wholly-owned subsidiaries that have their own management, employees and assets.
+Added: To support the growth effort and operational needs, the Company maintains a centralized support structure through its Service Center and captive insurance subsidiary, which provide essential services and risk management to its independent subsidiaries.
+Added: Certain of the Company’s wholly-owned independent subsidiaries, collectively referred to as the Service Center, provide specific accounting, payroll, human resources, compliance, information technology, legal, risk management and other centralized services to the other independent subsidiaries.
+Added: The Company also has a wholly-owned captive insurance subsidiary that provides some claims-made coverage to the Company’s independent subsidiaries for general and professional liabilities, as well as coverage for certain workers’ compensation insurance liabilities.
+Added: Each of the Company's wholly-owned independent subsidiaries have their own management, employees and assets.
References herein to the consolidated “Company” and “its” assets and activities in this Annual Report are not meant to imply, nor should it be construed as meaning that The Ensign Group, Inc.
7 unchanged sentences
The Financial Statements include the accounts of all independent subsidiaries controlled by the Company through its ownership of a majority voting interest.
−Removed: Reclassifications — Certain amounts in the prior period statements of income and statements of cash flows have been reclassified to conform to the presentation of the current period financial statements.
−Removed: These reclassifications had no effect on the previously reported net income.
−Removed: Estimates and Assumptions — The preparation of the Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Financial Statements and the reported amounts of revenue and expenses during the reporting periods.
−Removed: The most significant estimates in the Company’s Financial Statements relate to revenue, acquired property and equipment, intangible assets and goodwill, right-of-use assets and lease liabilities, impairment of long-lived assets, as well as general and professional liabilities, workers' compensation and healthcare claims included in accrued self-insurance liabilities.
−Removed: Actual results could differ from those estimates .
THE ENSIGN GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: Fair Value Considerations — The Company’s financial instruments consist principally of cash and cash equivalents, debt security investments, accounts receivable, insurance subsidiary deposits, deferred compensation investment funds, equity investments, accounts payable and borrowings.
+Added: Reclassifications — Certain amounts in the prior period statements of cash flows have been reclassified to conform to the presentation of the current period financial statements.
+Added: These reclassifications had no effect on previously reported net income.
+Added: Estimates and Assumptions — The preparation of the Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Financial Statements and the reported amounts of revenue and expenses during the reporting periods.
+Added: The most significant estimates in the Company’s Financial Statements relate to revenue, acquired property and equipment, right-of-use assets, impairment of long-lived assets, lease liabilities, general and professional liabilities, workers' compensation and healthcare claims included in accrued self-insurance liabilities and income taxes.
+Added: Actual results could differ from those estimates.
+Added: Fair Value Considerations — The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable and accounts payable.
The Company believes all of the financial instruments’ recorded values approximate fair values because of their nature or respective short durations.
6 unchanged sentences
The Company's non-financial assets, which includes goodwill, intangible assets, property and equipment and right-of-use assets, are not required to be measured at fair value on a recurring basis.
−Removed: However, on a periodic basis, or whenever events or changes in circumstances indicate that their carrying value may not be recoverable, the Company assesses its long-lived assets for impairment.
−Removed: When impairment has occurred, such long-lived assets are written down to fair value.
+Added: However, on a periodic basis, or whenever events or changes in circumstances indicate that their carrying value may not be recoverable.
Service Revenue Recognition — The Company recognizes revenue in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606).
13 unchanged sentences
In addition, the Company has applied the practical expedient provided by FASB ASC Topic 340, Other Assets and Deferred Costs , and all incremental customer contract acquisition costs are expensed as they are incurred because the amortization period would have been one year or less.
+Added: THE ENSIGN GROUP, INC.
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Rental Revenue Recognition — The Company's rental revenues are primarily generated by leasing healthcare-related properties through triple-net lease arrangements, under which the tenant is solely responsible for the costs related to the property.
4 unchanged sentences
Otherwise, tenant reimbursements for taxes and insurance that are paid by the Company directly to a third party are classified as additional rental revenue and expense and recognized by the Company on a gross basis.
−Removed: THE ENSIGN GROUP, INC.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Accounts Receivable — 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.
3 unchanged sentences
Insurance Subsidiary Deposits and Other Investments — The Company's captive insurance subsidiary cash and cash equivalents, deposits and investments are designated to support long-term insurance subsidiary liabilities and have been classified as short-term and long-term assets based on the timing of expected future payments of the Company's captive insurance liabilities.
−Removed: The majority of these deposits and investments are currently held in AA, A and BBB rated debt security investments and the remainder is held in a bank account with a high credit quality financial institution.
+Added: The majority of these deposits and investments are held in instruments that are rated A or better.
+Added: The deposits are held in a bank account with a high credit quality financial institution.
Investments classified as held-to-maturity are financial instruments that the Company has the intent and ability to hold to maturity and are reported net of any related amortization and are not remeasured to fair value on a recurring basis.
6 unchanged sentences
Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the remaining lease term.
+Added: Acquisition Accounting — The Company’s acquisition stra tegy has been focused on identifying real estate asset acquisitions within its target markets that offer strong opportunities for return.
+Added: The Company accounts for acquisitions using the acquisition method of accounting in accordance with FASB ASC Topic 805, Business Combinations (ASC 805).
+Added: The Company applies a screen test to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets to determine whether a transaction is accounted for as an asset acquisition or in rare cases, as a business combination.
+Added: Acquisitions are included in the consolidated financial statements from their respective acquisition dates which is the date when the Company gained effective control.
+Added: Assets acquired and liabilities assumed, if any, are measured at fair value on the acquisition date.
+Added: In determining the fair value of identifiable assets, the Company uses various valuation techniques.
+Added: These valuation methods require management to make estimates and assumptions surrounding projected revenues and costs, future growth, and discount rates.
+Added: THE ENSIGN GROUP, INC.
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Leases — The Company leases skilled nursing facilities, senior living facilities and commercial office space.
The Company determines if an arrangement is a lease and performs an evaluation to determine whether the lease should be classified as an operating or finance lease at the inception of the lease.
−Removed: As of December 31, 2024, the Company has three financing lease that are not material to the consolidated balance sheet.
Rights and obligations of the operating leases are included as right-of-use assets and current and long-term lease liabilities on the Company's consolidated balance sheets.
As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at lease commencement date in determining the present value of future lease payments.
−Removed: The Company utilizes a third-party credit specialist to assist in estimating the incremental borrowing rate.
+Added: The Company utilizes a third-party specialist to assist in estimating the incremental borrowing rate.
The Company records rent expense for operating leases on a straight-line basis over the term of the lease.
2 unchanged sentences
The lease term used for this evaluation also provides the basis for establishing depreciable lives for buildings subject to lease and leasehold improvements.
+Added: 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.
+Added: The Company also entered into a separate operations transfer agreement with each prior operator as part of each transaction.
+Added: The Company's independent subsidiaries also enter into long-term leases that may include options to purchase the facilities.
+Added: 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.
The Company's real estate leases generally have initial lease terms of ten years or more and typically include one or more options to renew, with renewal terms that generally extend the lease term for an additional ten to 15 years.
7 unchanged sentences
The lease agreements do not contain any material residual value guarantees or material restrictive covenants.
−Removed: THE ENSIGN GROUP, INC.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The Company subleases skilled nursing facilities to third-party operators and considers the subleases to be separate contracts as the Company is not relieved of its primary obligation under its operating lease.
9 unchanged sentences
The Company tests indefinite-lived intangible assets for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable.
+Added: THE ENSIGN GROUP, INC.
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations.
10 unchanged sentences
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.
−Removed: The combined self-insured retention is $ 750 per claim, subject to an additional one-time deductible of $ 1,500 for the Company's independent subsidiaries in California.
−Removed: 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 .
−Removed: For all independent subsidiaries, except those located in Colorado, the third-party coverage above these limits is $ 1,000 per claim, $ 3,000 per operation, with a $ 10,000 aggregate limit and an additional state-specific aggregate where required by state law.
−Removed: In Colorado, the third-party coverage above these limits is $ 1,000 per claim and $ 3,000 per operation, which is independent of the aforementioned aggregate limits that apply outside of Colorado.
−Removed: Subsequent to December 31, 2024, the combined self-insured retention is $ 1,000 per claim ($ 750 if an enforceable arbitration agreement applies), subject to an additional one-time deductible of $ 2,950 for the Company's independent subsidiaries in California.
+Added: The combined self-insured retention for the Company's independent subsidiaries in California is $ 1,000 per claim ($ 750 if an enforceable arbitration agreement applies), subject to an additional one-time deductible of $ 3,139 .
For the independent subsidiaries not in California, the self-insured claim is $ 750 per claim ($ 650 if an enforceable arbitration agreement applies), subject to an additional one-time, deductible of $ 4,600 .
+Added: 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.
+Added: In Colorado, the third-party coverage above these limits is $ 1,000 per claim and $ 3,000 per operation, which is independent of the aforementioned blanket aggregate limits that apply outside of Colorado.
The majority of the self-insured retention and deductible limits for general and professional liabilities and workers' compensation liabilities are self-insured through the captive insurance subsidiary, the related assets and liabilities of which are included in the accompanying consolidated balance sheets.
The captive insurance subsidiary is subject to certain statutory requirements as an insurance provider.
−Removed: THE ENSIGN GROUP, INC.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The Company’s policy is to accrue amounts equal to the actuarial estimated costs to settle open claims of insureds, as well as an estimate of the cost of insured claims that have been incurred but not reported.
11 unchanged sentences
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.
+Added: THE ENSIGN GROUP, INC.
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The Company believes that adequate provision has been made in the Financial Statements for liabilities that may arise out of patient care, workers’ compensation, healthcare benefits and related services provided to date.
16 unchanged sentences
If Standard Bearer fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost unless the Internal Revenue Service grants the Company relief under certain statutory provisions.
−Removed: THE ENSIGN GROUP, INC.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Noncontrolling Interest — The noncontrolling interest in a subsidiary is initially recognized at estimated fair value on the acquisition date and is presented within total equity in the Company's consolidated balance sheets.
7 unchanged sentences
The Company estimates forfeitures at the time of grant and, if necessary, revises the estimate in subsequent periods if actual forfeitures differ.
−Removed: Comprehensive Income — The Company does not have any components of other comprehensive income recorded within its Financial Statements and, therefore, does not separately present a statement of comprehensive income in its Financial Statements.
Recent Accounting Pronouncements — Except for rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws and a limited number of grandfathered standards, the FASB ASC is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company.
1 unchanged sentence
The applicability of any standard is subject to the formal review of the Company's financial management and certain standards are under consideration.
−Removed: Recent Accounting Standards Adopted by the Company — In November 2023, the FASB issued Accounting Standards Update (ASU) 2023-07 " Segment Reporting (Topic 280):
−Removed: 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.
−Removed: This guidance was effective for annual periods beginning with the Company's fiscal year 2024, and in interim periods within the Company's fiscal year 2025.
−Removed: The Company adopted the requirements of this ASU in Note 8, Business Segments of this Annual Report.
−Removed: Recently Issued Accounting Pronouncements Not Yet Adopted — In October 2023, the FASB issued ASU 2023-06 "Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative," which amends U.S.
−Removed: GAAP to include 14 disclosure requirements that are currently required under SEC Regulation S-X or Regulation S-K.
−Removed: 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.
−Removed: The adoption is not expected to have a material impact on the Company's Financial Statements as these requirements were previously incorporated under the SEC Regulations.
−Removed: In December 2023, the FASB issued ASU 2023-09 " Income Taxes (Topic 740):
+Added: THE ENSIGN GROUP, INC.
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: Recent Accounting Standards Adopted by the Company — In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09 "Income Taxes (Topic 740):
Improvements to Income Tax Disclosures," which requires the Company to disclose disaggregated jurisdictional and categorical information for the tax rate reconciliation, income taxes paid and other income tax related amounts.
−Removed: ASU 2023-09 is effective for annual periods beginning with the Company's fiscal year 2025, with early adoption permitted.
−Removed: The Company is currently evaluating the impact of this ASU on its Notes to the Consolidated Financial Statements.
−Removed: 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.
+Added: This guidance is effective for annual periods beginning after December 15, 2024.
+Added: The Company adopted the requirements of this ASU retrospectively in Note 12, Income Taxes of this Annual Report.
+Added: The adoption of this ASU does not have an impact on the Company's Consolidated Financial Statements.
+Added: Recently Issued Accounting Pronouncements Not Yet Adopted — 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.
−Removed: THE ENSIGN GROUP, INC.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: 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.
+Added: The amendments clarify the requirement for capitalizing software costs.
+Added: ASU 2025-06 is effective beginning with the Company's fiscal year 2028 for both interim and annual periods, with early adoption permitted.
+Added: The Company is currently evaluating the impact of this ASU on its Consolidated Financial Statements.
REVENUE AND ACCOUNTS RECEIVABLE
12 unchanged sentences
The Company recorded adjustments to revenue which were not material to the Company's revenue for the years ended December 31, 2025, 2024 and 2023.
+Added: THE ENSIGN GROUP, INC.
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Service revenue for the years ended December 31, 2025, 2024 and 2023 is summarized in the following tables:
6 unchanged sentences
Medicaid-skilled
+Added: 301,122 6.0 266,738 6.3 245,663 6.6
Total Medicaid and Medicare
+Added: $ 3,497,683 69.5 % $ 3,004,308 70.9 % $ 2,690,861 72.6 %
Managed care 944,316 18.8 789,643 18.6 666,129 18.0
3 unchanged sentences
(1) Medicaid payor includes revenue for senior living operations.
−Removed: (2) Medicaid payor includes revenue related to state relief funding during the year ended December 31, 2023 and 2022.
−Removed: (3) Private and other also includes revenue from senior living operations and all revenue generated in other an cillary services.
+Added: (2) Medicaid payor includes revenue related to state relief funding during the year ended December 31, 2023.
+Added: (3) 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 is $ 25,723 , $ 22,960 and $ 21,284 for the years ended December 31, 2025, 2024 and 2023.
State relief funding
−Removed: 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.
+Added: During the year ended December 31, 2023, the Company received $ 64,238 in state relief funding and recognized $ 64,753 as revenue.
+Added: The state relief funding were provided 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.
−Removed: THE ENSIGN GROUP, INC.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: Due to the expiration of the COVID-19 Public Health Emergency in May 2023, the Company did not receive additional funding during the year ended December 31, 2024.
+Added: Due to the expiration of the COVID-19 Public Health Emergency in May 2023, the Company did not receive additional funding during the years ended December 31, 2025 and 2024.
Revenues from these additional payments are recognized in accordance with ASC 606, subject to variable consideration constraints.
1 unchanged sentence
Accordingly, the amount of state relief revenue recognized is limited to the actual related expenses incurred.
−Removed: As of years ended December 31, 2023 and 2022, the Company had $ 486 and $ 1,001 in unapplied state relief funds, respectively.
−Removed: During the years ended December 31, 2023 and 2022, the Company received an additional $ 64,238 , and $ 81,057 in state relief funding and recognized $ 64,753 , and $ 81,837 , respectively, as revenue.
−Removed: Federal relief funding
−Removed: As part of the Coronavirus Aid, Relief, and Economic Security Act of 2020 (CARES Act), the Company deferred payment of the employer portion of social security taxes related to 2020.
−Removed: For the year ended December 31, 2022, the Company paid $ 24,155 , which was the second and final payment associated with the deferred amount from 2020.
Balance Sheet Impact
Included in the Company’s 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.
−Removed: The Company had no material contract liabilities and contract assets as of December 31, 2024 and 2023, or activity during the years ended December 31, 2024, 2023 and 2022.
+Added: The Company had no material contract liabilities or contract assets as of December 31, 2025 and 2024, or activity during the years ended December 31, 2025, 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 and doubtful accounts.
Accounts receivable as of December 31, 2025 and 2024, is summarized in the following table:
+Added: THE ENSIGN GROUP, INC.
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Medicaid $ 296,649 $ 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.
−Removed: THE ENSIGN GROUP, INC.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
A reconciliation of the numerator and denominator used in the calculation of basic net income per common share follows:
2 unchanged sentences
Net income $ 344,264 $ 298,458 $ 209,850
−Removed: net income (loss) attributable to noncontrolling interests 485 451 ( 29 )
+Added: net income attributable to noncontrolling interests 293 485 451
Net income attributable to The Ensign Group, Inc.
$ 343,971 $ 297,973 $ 209,399
−Removed: Weighted average shares outstanding for basic net income per share 56,655 55,708 54,887
+Added: Weighted average shares outstanding
+Added: 57,306 56,655 55,708
Basic net income per common share:
4 unchanged sentences
Net income $ 344,264 $ 298,458 $ 209,850
−Removed: net income (loss) attributable to noncontrolling interests 485 451 ( 29 )
+Added: net income attributable to noncontrolling interests 293 485 451
Net income attributable to The Ensign Group, Inc.
7 unchanged sentences
(1) Options outstanding which are anti-dilutive and therefore not factored into the weighted average common shares amount above were 1,006 , 914 and 1,429 for the years ended December 31, 2025, 2024 and 2023, respectively.
+Added: THE ENSIGN GROUP, INC.
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
FAIR VALUE MEASUREMENTS
−Removed: The Company's financial assets include held-to-maturity investments carried at amortized cost basis of $ 138,600 and $ 59,530 , of which $ 65,831 and $ 59,530 are designated to support long-term insurance subsidiary liabilities, both as of December 31, 2024 and 2023, respectively.
+Added: The Company's financial assets include held-to-maturity investments carried at amortized cost basis of $ 150,119 and $ 138,600 , of which $ 81,816 and $ 65,831 are designated to support insurance subsidiary liabilities, as of December 31, 2025 and 2024, respectively.
As of December 31, 2025 and 2024, the amortized cost basis of these financial assets are considered to approximate fair value and are derived using Level 2 inputs.
3 unchanged sentences
As of December 31, 2025 and 2024, the fair value of the investment funds was $ 74,405 and $ 56,049 , respectively, which are derived using Level 2 inputs.
+Added: Refer to Note 16, Defined Contribution Plans for more information.
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.
−Removed: THE ENSIGN GROUP, INC.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
STANDARD BEARER
1 unchanged sentence
Of those 37 operations, one senior living operation is located on the same real estate property as a skilled nursing operation that an independent subsidiary operates.
−Removed: During the year ended December 31, 2024, Standard Bearer added $ 131,927 of real estate assets associated with 11 stand-alone skilled nursing operations, three stand-alone senior living operations and three campus operations .
−Removed: These new additions for the stand-alone skilled nursing and campus operations are operated by 14 of the Company's independent subsidiaries and the three stand-alone senior living operations are leased to a third-party operator.
−Removed: Refer to Note 7, Operation Expansions , for additional information.
−Removed: Subsequent to December 31, 2024, Standard Bearer added $ 50,853 of real estate assets associated with four stand-alone skilled nursing operations and one campus operation.
+Added: During the year ended December 31, 2025, Standard Bearer added $ 314,189 of real estate assets associated with 25 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.
−Removed: These locations are currently operated by the Company's independent subsidiaries.
−Removed: The remaining one real estate acquisition was leased back to the Company's independent subsidiaries.
−Removed: Refer to Note 7, Operation Expansions , for additional information.
−Removed: During the year ended December 31, 2023, Standard Bearer added $ 65,899 of real estate assets associated with three stand-alone skilled nursing facilities and two campus operations.
−Removed: Of these additions, the three skilled nursing facilities and one campus operation acquired are operated by the Company's independent subsidiaries and the other campus operation is leased to a third-party operator.
−Removed: During the year ended December 31, 2022, Standard Bearer added $ 84,656 of real estate assets associated with ten skilled nursing facilities, three of which were previously operated and managed by the Company's independent subsidiaries.
−Removed: Refer to Note 7, Operation Expansions , for additional information.
+Added: Of these additions, four s tand-alone skilled nursing operations are leased to third-party operators and the remaining additions are operated by the Company's independent subsidiaries .
+Added: Subsequent to December 31, 2025, Standard Bearer added approximately $ 18,053 of real estate assets associated with two stand-alone skilled nursing operations, of which all were leased back to the Company's independent subsidiaries.
+Added: In addition, Standard Bearer had previously purchased the real estate for two stand-alone skilled nursing operations, which were subsequently transferred from third-party operators to the Company’s independent subsidiaries.
+Added: Refer to Note 1, Description of Business , for additional information on operational expansions.
+Added: During the year ended December 31, 2024, Standard Bearer added $ 131,927 of real estate assets associated with 11 stand-alone skilled nursing operations, three stand-alone senior living operations and three campus operations.
+Added: Of these additions, three stand-alone senior living operations are leased to a third-party operator and the remaining additions are operated by the Company's independent subsidiaries.
+Added: During the year ended December 31, 2023, Standard Bearer added $ 65,899 of real estate assets associated with three stand-alone skilled nursing operations and two campus operations.
+Added: Of these additions, three skilled nursing operations and one campus operation acquired are operated by the Company's independent subsidiaries and the other campus operation is leased to a third-party operator.
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 7, Business Segments , for additional information related to these intercompany eliminations as well as Standard Bearer as a reportable segment.
+Added: THE ENSIGN GROUP, INC.
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Intercompany master lease agreements
−Removed: Certain of the Company's independent subsidiaries and 92 Standard Bearer independent real estate subsidiaries have entered into six triple-net master lease agreements (collectively, the Standard Bearer Master Leases).
+Added: Certain of the Company's independent subsidiaries and 116 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.
12 unchanged sentences
Management fee generated between Standard Bearer and the Service Center for the years ended December 31, 2025, 2024 and 2023 was $ 7,589 , $ 5,707 and $ 4,948 , respectively, which has been eliminated in consolidation.
−Removed: THE ENSIGN GROUP, INC.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Intercompany debt arrangements
12 unchanged sentences
The Company granted 39 restricted stock awards during the year ended December 31, 2024.
−Removed: During the years ended December 31, 2023 and 2022, the Company did not grant any stock options or restricted shares under the Standard Bearer Equity Plan.
−Removed: During the years ended December 31, 2024, 2023 and 2022, there were no restricted stock awards vested for the periods.
+Added: No stock options or restricted shares were granted under the Standard Bearer Equity Plan during the years ended December 31, 2025 and 2023.
+Added: A total of 8 restricted stock awards vested during the year ended December 31, 2025.
+Added: There were no vestings of restricted stock awards during the years ended December 31, 2024 and 2023.
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.
−Removed: For the year ended December 31, 2024, the Standard Bearer Equity Plan's share-based compensation expense was not material.
−Removed: There was no expense during the years ended December 31, 2023 and 2022.
−Removed: During the year ended December 31, 2022, Standard Bearer sold fully vested common shares from the Standard Bearer Equity Plan to shareholders for cash of $ 6,544 .
−Removed: Also, during the year ended December 31, 2022, Standard Bearer established shareholders of its preferred shares through contributions of cash of $ 149 .
−Removed: These preferred shares were fully vested at the time of the contributions by the shareholders.
−Removed: The value of Standard Bearer common and preferred shares held by the Company are eliminated in consolidation and the value held by other shareholders are classified as noncontrolling interests on the Company's consolidated balance sheets.
−Removed: OPERATION EXPANSIONS
−Removed: The expansion focus of the Company's independent subsidiaries is to purchase or lease operations that are complementary to the current operations, accretive to the business, or otherwise advance the Company's strategy.
−Removed: The results of all independent subsidiaries are included in the Financial Statements subsequent to the date of acquisition.
−Removed: Acquisitions are accounted for using the acquisition method of accounting.
−Removed: 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.
−Removed: The Company also entered into a separate operations transfer agreement with each prior operator as part of each transaction.
−Removed: The Company's independent subsidiaries also enter into long-term leases that may include options to purchase the facilities.
−Removed: 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.
−Removed: 2024 Expansions
−Removed: During the year ended December 31, 2024, the Company expanded its operations through a combination of long-term leases and real estate purchases , with the addition of 28 stand-alone skilled nursing operations, including a long-term acute care hospital and three campus operations.
−Removed: Of these additions, Standard Bearer acquired the real estate of 14 of these operations, all of which were leased back to the Company's independent subsidiaries.
−Removed: Refer to Note 6, Standard Bearer, for additional information on the purchase of real estate properties.
−Removed: These new operations added a total of 3,030 operational skilled nursing beds, including 43 long-term acute care beds and 218 operational senior living units to be operated by the Company's independent subsidiaries.
−Removed: The Company also invested in new ancillary services that are complementary to its existing businesses.
−Removed: THE ENSIGN GROUP, INC.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: Subsequent to December 31, 2024, the Company expanded its operations with the addition of seven stand-alone skilled nursing operations.
−Removed: Of these additions, Standard Bearer acquired the real estate of one of these operations, which was leased back to the Company's independent subsidiary.
−Removed: Refer to Note 6, Standard Bearer, for additional information on the purchase of the real estate property.
−Removed: The new operations added 682 operational skilled nursing beds to be operated by the Company's independent subsidiaries.
−Removed: 2023 Expansions
−Removed: During the year ended December 31, 2023, the Company expanded its operations through a combination of long-term leases and real estate purchases , with the addition of 25 stand-alone skilled nursing operations and one campus operation.
−Removed: Of these additions, Standard Bearer acquired the real estate of three of the stand-alone skilled nursing operations and one campus operation, which were leased back to the Company's independent subsidiaries.
−Removed: Refer to Note 6, Standard Bearer, for additional information on the purchase of real estate properties.
−Removed: These new operations added a total of 2,483 operational skilled nursing beds and 94 operational senior living units to be operated by the Company's independent subsidiaries.
−Removed: 2022 Expansions
−Removed: During the year ended December 31, 2022, the Company expanded its operations and real estate portfolio through a combination of long-term leases and real estate purchases , with the addition of 23 stand-alone skilled nursing operations and one campus operation.
−Removed: Of these additions, Standard Bearer acquired the real estate of seven of the stand-alone skilled nursing operations, which were leased back to Ensign's independent subsidiaries.
−Removed: Refer to Note 6, Standard Bearer , for additional information on the purchases of real estate properties.
−Removed: In addition, the Company added five senior living operations that were transferred from The Pennant Group, Inc.
−Removed: (Pennant), three of which are part of campuses operated by the Company's independent subsidiaries.
−Removed: These new operations added a total of 3,058 operational skilled nursing beds and 674 operational senior living units to be operated by the Company's independent subsidiaries.
−Removed: The Company also invested in new ancillary services that are complementary to its existing businesses.
−Removed: The table below presents the allocation of the purchase price for the operations acquired during the years ended December 31, 2024, 2023 and 2022:
−Removed: Year Ended December 31,
−Removed: 2024 2023 2022
−Removed: Land $ 20,547 $ 7,794 $ 15,527
−Removed: Building and improvements 108,709 57,488 65,070
−Removed: Equipment, furniture, and fixtures 2,937 1,840 1,618
−Removed: Assembled occupancy 1,210 346 367
−Removed: Goodwill 21,112 — 16,400
−Removed: Leased asset — — 1,909
−Removed: Other indefinite-lived intangible assets 364 330 245
−Removed: TOTAL ACQUISITIONS $ 154,879 $ 67,798 $ 101,136
−Removed: 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.
−Removed: The operations added by the Company are frequently underperforming financially and can have regulatory and clinical challenges to overcome.
−Removed: Financial information, especially with underperforming operations, is often inadequate, inaccurate or unavailable.
−Removed: 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 .
−Removed: The operations added during the year ended December 31, 2024 were not material to the Company individually or in the aggregate.
−Removed: Accordingly, pro forma financial information is not presented.
−Removed: These additions have been included in the consolidated balance sheets of the Company, and the operating results have been included in the consolidated statements of income of the Company since the date the Company gained effective control.
+Added: For the years ended December 31, 2025 and 2024, share-based compensation expense under the Standard Bearer Equity Plan was not material.
+Added: There was no share-based compensation expense during the year ended December 31, 2023.
BUSINESS SEGMENTS
10 unchanged sentences
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.
−Removed: 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.
−Removed: The Company's CODM, who is the Chief Executive Officer, reviews segment income or loss for each operating segment to evaluate performance and allocate capital resources.
−Removed: 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.
+Added: Segment income is defined as income before provision for income taxes, excluding gain or loss from sale of real estate, real estate insurance recoveries and impairment of long-lived assets.
+Added: The Company's chief operating decision maker or CODM, who is the Chief Executive Officer, reviews segment income for each operating segment to evaluate performance and allocate capital resources.
+Added: The CODM uses segment income to analyze actual results as part of operational planning and to decide whether to reinvest profits into the segments or into other parts of the Company, such as through acquisitions, to pay dividends or to recommend a stock repurchase program.
The Company's CODM does not review assets by segment in his resource allocation and therefore assets by segment are not disclosed below.
21 unchanged sentences
Reconciliation of profit or loss:
−Removed: All other loss
+Added: All other not included in segment income
INCOME BEFORE PROVISION FOR INCOME TAXES
3 unchanged sentences
(3) Elimination of intercompany revenue includes the elimination of intercompany rental revenue of $ 113,689 and intercompany service revenue of $ 26,055 for the year ended December 31, 2025.
−Removed: THE ENSIGN GROUP, INC.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: (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.
+Added: (4) Other segment items include cost of services of $ 3,846,828 and rent expense of $ 318,763 for the skilled services segment, and cost of services of $ 2,133 , rent expense of $ 1,057 and general and administrative expenses of $ 8,020 for the Standard Bearer segment.
Additionally, there are intercompany expenses of $ 139,744 during the year ended December 31, 2025, which are eliminated in consolidation.
1 unchanged sentence
of $ 35,058 during the year ended December 31, 2025, which is eliminated in consolidation.
+Added: THE ENSIGN GROUP, INC.
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Year Ended December 31, 2024
16 unchanged sentences
Reconciliation of profit or loss:
−Removed: All other loss
+Added: All other not included in segment income
INCOME BEFORE PROVISION FOR INCOME TAXES
3 unchanged sentences
(3) Elimination of intercompany revenue includes the elimination intercompany rental revenue of $ 83,941 and intercompany service revenue of $ 20,366 for the year ended December 31, 2024.
−Removed: (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.
−Removed: Additionally, there are intercompany expenses of $ 87,790 during the year ended December 31, 2023, which is eliminated in consolidation.
+Added: (4) Other segment items include cost of services of $ 3,242,737 and rent expense of $ 270,430 for the skilled services segment, and cost of services of $ 2,265 , rent expense of $ 983 and general and administrative expenses of $ 5,904 for the Standard Bearer segment.
+Added: Additionally, there are intercompany expenses of $ 104,307 during the year ended December 31, 2024, which are eliminated in consolidation.
(5) Included in interest expense in Standard Bearer is interest from intercompany debt arrangements between Standard Bearer and The Ensign Group, Inc.
20 unchanged sentences
Reconciliation of profit or loss:
−Removed: All other loss
+Added: All other not included in segment income
INCOME BEFORE PROVISION FOR INCOME TAXES
3 unchanged sentences
(3) Elimination of intercompany revenue includes the elimination of intercompany rental revenue of $ 72,339 and intercompany service revenue of $ 15,451 for the year ended December 31, 2023.
−Removed: (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.
−Removed: Additionally, there are intercompany expenses of $ 76,294 during the year ended December 31, 2022, which is eliminated in consolidation.
+Added: (4) Other segment items includes cost of services of $ 2,832,012 and rent expense of $ 243,152 for the skilled services segment, and cost of services of $ 2,104 , rent expense of $ 954 and general and administrative expenses of $ 5,397 for the Standard Bearer segment.
+Added: Additionally, there are intercompany expenses of $ 87,790 during the year ended December 31, 2023, 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.
7 unchanged sentences
Medicaid-skilled
−Removed: Subtotal $ 2,968,386 $ 35,922 $ 3,004,308 70.9 %
+Added: 301,122 — 301,122 6.0
+Added: Total Medicaid and Medicare
+Added: $ 3,447,818 $ 49,865 $ 3,497,683 69.5 %
Managed care 944,316 — 944,316 18.8
3 unchanged sentences
(1) Medicaid payor includes revenue generated from senior living operations.
−Removed: (2) Private and other payors also includes revenue from senior living operations and all revenue generated in other ancillary services.
+Added: (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.
7 unchanged sentences
Medicaid-skilled
−Removed: Subtotal $ 2,660,885 $ 29,976 $ 2,690,861 72.6 %
+Added: 266,738 — 266,738 6.3
+Added: Total Medicaid and Medicare
+Added: $ 2,968,386 $ 35,922 $ 3,004,308 70.9 %
Managed care 789,643 — 789,643 18.6
2 unchanged sentences
TOTAL SERVICE REVENUE $ 4,076,825 $ 160,700 $ 4,237,525 100.0 %
−Removed: (1) Medicaid payor includes revenue generated from senior living operations and revenue related to state relief funding.
−Removed: (2) Private and other payors also includes revenue from senior living operations and all revenue generated in other ancillary services.
+Added: (1) Medicaid payor includes revenue generated from senior living operations.
+Added: (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.
5 unchanged sentences
Medicaid-skilled
−Removed: Subtotal 2,191,347 24,847 2,216,194 73.7
+Added: 245,663 — 245,663 6.6
+Added: Total Medicaid and Medicare
+Added: 2,660,885 29,976 2,690,861 72.6
Managed care 666,129 — 666,129 18.0
2 unchanged sentences
TOTAL SERVICE REVENUE $ 3,578,855 $ 129,216 $ 3,708,071 100.0 %
−Removed: (1) Medicaid payor includes revenue generated from senior living operations and revenue related to state relief funding.
−Removed: (2) Private and other payors also includes revenue from senior living operations and all payors generated in other ancillary services.
+Added: (1) Medicaid payor includes revenue generated from senior living operations.
+Added: (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.
10 unchanged sentences
PROPERTY AND EQUIPMENT, NET $ 1,696,863 $ 1,291,354
−Removed: The Company completed the sale of assets for a sale price of $ 8,607 and recorded a gain of $ 3,467 within the Company's consolidated statement of income as cost of services during the year ended December 31, 2022.
−Removed: The Company recorded gain and losses related to sale of assets, which were not material during the years ended December 31, 2024 and 2023.
−Removed: Management evaluated its long-lived assets and recorded an impairment charge of $ 1,849 within the Company's consolidated statement of income as cost of services during the year ended December 31, 2024.
−Removed: The Company determined there was no impairment during the year ended December 31, 2023 and 2022.
+Added: Real Estate Acquisitions
+Added: A majority of the real estate properties were acquired by subsidiaries of Standard Bearer, as detailed in Note 6 .
+Added: Standard Bearer .
+Added: The aggregate purchase price for the real estate purchases during the year ended December 31, 2025 was $ 326,667 , which primarily consists of building and improvements of $ 262,305 and land of $ 56,984 .
+Added: The aggregate purchase price for the real estate purchases during the year ended December 31, 2024 was $ 154,879 , which primarily consists of building and improvements of $ 108,709 and land of $ 20,547 , with the remaining primarily related to goodwill.
THE ENSIGN GROUP, INC.
9 unchanged sentences
During the years ended December 31, 2025, 2024 and 2023, amortization expense was $ 2,225 , $ 2,019 and $ 1,790 , respectively, of which $ 960 , $ 1,212 , and $ 1,202 was related to the amortization of right-of-use assets, respectively.
−Removed: The Company did not record any impairment charge to intangible assets during the years ended December 31, 2024, 2023 and 2022.
+Added: The Company did no t record any impairment charge to intangible assets during the years ended December 31, 2025, 2024 and 2023.
Estimated amortization expense for each of the years ending December 31 is as follows:
4 unchanged sentences
TOTAL $ 4,666 $ 4,666
−Removed: During the year ended December 31, 2024, the Company acquired $ 364 in Medicare and Medicaid licenses compared to $ 330 and $ 245 in the fiscal years 2023 and 2022, respectively.
−Removed: 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.
−Removed: The following table represents activity in goodwill by skilled service segment and "all other" category as of December 31, 2024, 2023 and 2022:
+Added: Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations.
+Added: The Company's acquisitions are primarily asset acquisitions and 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.
+Added: The following table represents goodwill value by the skilled services segment and "all other" category for the years ended December 31, 2025, 2024 and 2023:
Skilled Services All Other Total
−Removed: January 1, 2022 $ 51,486 $ 8,983 $ 60,469
−Removed: Additions 16,400 — 16,400
December 31, 2023 $ 67,886 $ 8,983 $ 76,869
−Removed: December 31, 2023 $ 67,886 $ 8,983 $ 76,869
Additions 20,740 372 21,112
December 31, 2024 $ 88,626 $ 9,355 $ 97,981
+Added: December 31, 2025 $ 88,626 $ 9,355 $ 97,981
Management has evaluated its goodwill and intangible assets and determined there was no impairment during the years ended December 31, 2025, 2024 and 2023.
5 unchanged sentences
Quality assurance fee $ 17,398 $ 12,667
−Removed: Refunds payable 56,755 51,248
−Removed: Resident advances 18,818 10,834
+Added: Refunds, deferred revenue and advances
+Added: 105,642 75,573
Cash held in trust for patients 8,653 6,370
1 unchanged sentence
Property taxes 7,150 15,400
+Added: Income tax payable
Accrued litigation (Note 18)
1 unchanged sentence
OTHER ACCRUED LIABILITIES $ 174,027 $ 132,057
−Removed: 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.
−Removed: Refunds payable includes payables related to overpayments, duplicate payments and credit balances from various payor sources.
−Removed: Resident advances occur when the Company receives payments in advance of services provided.
+Added: Quality assurance fee represents the aggregate of amounts payable to various states that have a mandated fee based on patient days or licensed beds.
+Added: Refunds, deferred revenue and advances consists of liabilities related to duplicate payments and credit balances from various payor sources, as well as payments received from residents in advance of services provided.
Cash held in trust for patients reflects monies received from or on behalf of patients.
11 unchanged sentences
TOTAL $ 111,358 $ 87,636 $ 62,912
−Removed: THE ENSIGN GROUP, INC.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: A reconciliation of the federal statutory rate to the effective tax rate for net income for the years ended December 31, 2024, 2023 and 2022, respectively, is comprised as follows:
+Added: A reconciliation of the federal statutory rate to the effective tax rate for income for the years ended December 31, 2025, 2024 and 2023, respectively, is comprised as follows:
+Added: Year Ended December 31,
2025 2024 2023
Income tax expense at statutory rate $ 95,681 21.0 % $ 81,080 21.0 % $ 57,280 21.0 %
−Removed: State income taxes - net of federal benefit 3.5 3.5 3.5
+Added: State income taxes - net of federal benefit (a)
+Added: 16,752 3.7 13,353 3.5 9,536 3.5
Non-deductible expenses 12,341 2.7 6,848 1.8 9,321 3.4
2 unchanged sentences
TOTAL INCOME TAX PROVISION $ 111,358 24.4 % $ 87,636 22.7 % $ 62,912 23.1 %
+Added: (a) State taxes in California made up the majority (greater than 50 percent) of the tax effect in this category.
+Added: THE ENSIGN GROUP, INC.
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The Company's effective tax rate was 24.4 % for the year ended December 31, 2025, compared to 22.7 % for the same period in 2024 and 23.1 % in 2023.
−Removed: The lower effective tax rate is due to lower non-deductible expenses included but not limited to tax benefits from stock based compensation.
The Company's deferred tax assets and liabilities as of December 31, 2025 and 2024 are summarized below.
5 unchanged sentences
Lease liability 532,035 470,313
+Added: State taxes 792 —
$ 690,717 $ 599,169
8 unchanged sentences
NET DEFERRED TAX ASSETS $ 83,138 $ 66,281
−Removed: The Company had state credit carryforwards as of December 31, 2024 and 2023 of $ 597 and $ 1,192 , respectively.
−Removed: These carryforwards almost entirely relate to state limitations on the application of Enterprise Zone employment-related tax credits.
−Removed: Unless the Company uses the Enterprise Zone credits beforehand, the carryforward began to expire in 2023.
−Removed: The remainder of these carryforwards relate to credits against the Texas margin tax and is expected to carryforward until 2027.
−Removed: As of December 31, 2024 and 2023, the valuation allowance of $ 93 and $ 789 , respectively, was primarily recorded against the Enterprise Zone credits as the Company believes it is more likely than not that some of the benefit of the credits will not be realized.
−Removed: The Company's operating loss carry forwards for states were not material during the years ended December 31, 2024 and 2023.
As of December 31, 2025, 2024 and 2023, the Company did not have any unrecognized tax benefits, net of its state benefits that would affect the Company's effective tax rate.
3 unchanged sentences
During the fourth quarter of each year, various state statutes of limitations also lapsed.
−Removed: The lapses during the years ended December 31, 2024 and 2023 had no impact on the Company's unrecognized tax benefits.
−Removed: THE ENSIGN GROUP, INC.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: The Company paid federal income taxes of $ 94,000 , $ 78,250 , and $ 72,500 for the years ended December 31, 2025, 2024 and 2023, respectively.
+Added: Additionally, the Company paid state income taxes of $ 22,202 , $ 18,087 , and $ 17,230 for the years ended December 31, 2025, 2024 and 2023, respectively.
+Added: Taxes paid in California accounted to greater than 5% of the total cash paid for taxes for 2025, 2024, and 2023.
+Added: California cash taxes paid for these years were $ 11,675 , $ 9,175 , and $ 8,350 , respectively.
Debt consists of the following:
3 unchanged sentences
LONG-TERM DEBT LESS CURRENT MATURITIES $ 137,529 $ 141,585
+Added: THE ENSIGN GROUP, INC.
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Credit Facility with a Lending Consortium Arranged by Truist
7 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).
−Removed: As of December 31, 2024, there was no outstanding debt under the Credit Facility.
−Removed: The Company was in compliance with all loan covenants as of December 31, 2024.
+Added: As of December 31, 2025 and 2024, there was no outstanding debt under the Credit Facility.
+Added: The Company was in compliance with all loan covenants as of December 31, 2025 and 2024.
Mortgage Loans and Promissory Note
8 unchanged sentences
The note, which was assumed as part of an acquisition, is secured by the real property comprising the facility and the rent, issues and profits thereof, as well as all personal property used in the operation of the facility.
−Removed: THE ENSIGN GROUP, INC.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Future principal payments due under the long-term debt arrangements discussed above are as follows:
1 unchanged sentence
Thereafter 124,536
−Removed: 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
−Removed: As of December 31, 2024, the Company had approximately $ 27,893 of borrowing capacity under the Credit Facility pledged as collateral to secure outstanding letters of credit, which increased by $ 21,638 from December 31, 2023.
+Added: As of December 31, 2025 and 2024, the Company had approximately $ 8,402 and $ 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 December 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.
+Added: THE ENSIGN GROUP, INC.
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
OPTIONS AND AWARDS
−Removed: 2022 Omnibus Incentive Plan (2022 Plan) — The Company has one stock incentive plan, the 2022 Omnibus Incentive Plan (the 2022 Plan), pursuant to which grants of the Company's securities may currently be made.
−Removed: Including the shares rolled over from the 2017 Omnibus Incentive Plan, the 2022 Plan provides for the issuance of 3,452 shares of common stock.
−Removed: The number of shares available to be issued under the 2022 Plan will be reduced by (i) one share for each share that relates to an option or stock appreciation right award and (ii) two shares for each share which relates to an award other than a stock option or stock appreciation right award (a full-value award).
+Added: The Company has one stock incentive plan, the Amended and Restated 2022 Omnibus Incentive Plan (the Amended and Restated Plan), pursuant to which grants of the Company's securities may currently be made.
+Added: During the second quarter of 2025, the Company’s stockholders approved the Amended and Restated Plan, which increased the total number of shares authorized for issuance under the 2022 Omnibus Incentive Plan (the Predecessor Plan).
+Added: Including the shares rolled over from the Predecessor Plan, the Amended and Restated Plan provides for the issuance of 4,231 shares of common stock.
+Added: The number of shares available to be issued under the Amended and Restated Plan will be reduced by (i) one share for each share that relates to an option or stock appreciation right award and (ii) two shares for each share which relates to an award other than a stock option or stock appreciation right award (a full-value award).
Non-employee director options, to the extent granted, will vest and become exercisable in three equal annual installments, or the length of the term if less than three years , on the completion of each year of service measured from the grant date.
1 unchanged sentence
Options expire ten years from the date of grant.
−Removed: At December 31, 2024, the total number of shares available for issuance under the 2022 Plan was 346 .
+Added: At December 31, 2025, the total number of shares available for issuance under the Amended and Restated Plan was 3,397 .
The Company uses the Black-Scholes option-pricing model to recognize the value of stock-based compensation expense for stock option awards.
2 unchanged sentences
The Company develops estimates based on historical data and market information, which can change significantly over time.
−Removed: The Black-Scholes model required the Company to make several key judgments including:
• The expected option term is calculated by the average of the contractual term of the options and the weighted average vesting period for all options.
5 unchanged sentences
• Estimated forfeiture rate of approximately 4.62 % per year is based on the Company's historical forfeiture activity of unvested stock options.
−Removed: THE ENSIGN GROUP, INC.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Stock Options
11 unchanged sentences
The weighted average exercise price equaled the weighted average fair value of common stock on the grant date for all options granted during the periods ended December 31, 2025, 2024 and 2023 and therefore, the intrinsic value was $ 0 at the date of grant.
+Added: THE ENSIGN GROUP, INC.
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The following table represents the employee stock option activity during the years ended December 31, 2025, 2024 and 2023:
10 unchanged sentences
Exercised ( 632 ) 35.28
−Removed: 2023 3,991 $ 62.65 1,887 $ 39.58
+Added: December 31, 2024 3,987 $ 78.84 1,895 $ 52.64
Granted 721 160.61
2 unchanged sentences
December 31, 2025 4,071 $ 96.87 1,991 $ 67.10
−Removed: THE ENSIGN GROUP, INC.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The following table represents the employee stock option activity during the year ended December 31, 2025:
21 unchanged sentences
The total intrinsic value of options exercised during the years ended December 31, 2025, 2024 and 2023 was $ 60,636 , $ 60,358 , and $ 56,186 , respectively.
+Added: THE ENSIGN GROUP, INC.
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Restricted Stock Awards
4 unchanged sentences
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 years ended December 31, 2025 and 2024, respectively.
−Removed: THE ENSIGN GROUP, INC.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
A summary of the status of the Company's non-vested restricted stock awards as of December 31, 2025 and changes during the years ended December 31, 2025, 2024 and 2023 is presented below:
13 unchanged sentences
Nonvested at December 31, 2025
−Removed: During the year ended December 31, 2024, the Company granted 16 quarterly stock awards to non-employee directors for their service on the Company's board of directors.
+Added: During the year ended December 31, 2025 , the Company granted 14 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 $ 129.09 to $ 177.94 based on the market price on the grant date.
−Removed: Long-Term Incentive Plan
−Removed: On August 27, 2019, the Board approved the Long-Term Incentive Plan (the 2019 LTI Plan).
−Removed: The 2019 LTI Plan provides that certain employees of the Company who assisted in the consummation of the spin-off of Pennant from the Company in 2019 were granted shares of restricted stock upon successful completion of the spin-off.
−Removed: The 2019 LTI Plan provides for the issuance of 500 shares of Pennant restricted stock.
−Removed: As of December 31, 2024, the 2019 LTI Plan was fully vested.
−Removed: The total stock-based compensation related to the 2019 LTI Plan was $ 546 , $ 827 , and $ 836 for the years ended December 31, 2024, 2023 and 2022, respectively.
Stock-based compensation expense
9 unchanged sentences
Future stock-based compensation expense will be recognized over 3.7 and 3.8 weighted average years for unvested options and restricted stock awards, respectively.
−Removed: There were 2,092 unvested and outstanding options as of December 31, 2024, of which 1,925 shares are expected to vest.
+Added: There were 2,080 unvested and outstanding options as of December 31, 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 December 31, 2025 was 6.7 years.
1 unchanged sentence
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: The Company leases from CareTrust REIT, Inc.
−Removed: (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.
+Added: The Company leases from CareTrust real property associated with 104 independent skilled nursing and senior living facilities used in the Company’s operations under eight “triple-net” master lease agreements (collectively, the Master Leases), which range in terms from 13 to 20 years.
At the Company’s option, the Master Leases may be extended for two or three five-year renewal terms beyond the initial term, on the same terms and conditions.
4 unchanged sentences
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.
−Removed: During the year ended December 31, 2024, the Company amended two of the Master Leases by adding three operations and extending the terms to 15 and 20 years, respectively.
−Removed: These amendments increased the lease liabilities and right-of-use assets by $ 72,503 to reflect the new lease obligations.
−Removed: Additionally, four of the 100 facilities leased from CareTrust include an option to purchase that the Company can exercise starting on December 1, 2024.
−Removed: Subsequent to December 31, 2024, the Company purchased the real estate of the four facilities from CareTrust for $ 44,575 .
+Added: During the year ended December 31, 2025, the Company added eight operations to an existing Master Lease and amended the initial term to 15 years.
+Added: 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.
7 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.
−Removed: The terms and conditions of the one stand-alone lease are substantially the same as those for the master leases described above.
−Removed: Total rent expense under the Master Leases was approximately $ 69,399 , $ 66,439 and $ 64,178 for the years ended December 31, 2024, 2023 and 2022, respectively.
+Added: Total rent expense for continuing operations under the Master Leases was approximately $ 72,460 , $ 69,399 and $ 66,439 for the years ended December 31, 2025, 2024 and 2023, respectively.
Among other things, under the Master Leases, the Company must maintain compliance with specified financial covenants measured on a quarterly basis, including a portfolio coverage ratio and a minimum rent coverage ratio.
1 unchanged sentence
The Company is in compliance with requirements of the Master Leases as of December 31, 2025.
−Removed: 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.
−Removed: In addition, the Company leases certain of its equipment under non-cancelable operating leases with initial terms ranging from three to five years .
+Added: The Company leases facilities where its independent subsidiaries operate under non-cancelable operating leases, most of which have initial lease terms ranging from 15 to 20 years.
Most of these leases contain renewal options, certain of which involve rent increases.
−Removed: Total rent expense for continuing operations inclusive of straight-line rent adjustments and rent associated with the Master Leases noted above, was $ 216,716 , $ 197,856 and $ 153,174 for the years ended December 31, 2024, 2023 and 2022, respectively.
−Removed: 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.
−Removed: During the year ended December 31, 2024, the Company amended one of the separate master lease arrangements to add two stand-alone skilled nursing operations operated by the Company's independent subsidiaries and extended the term to 20 years.
−Removed: In addition, the Company entered into one new master lease arrangement to add six stand-alone skilled nursing operations operated by the Company's independent subsidiaries with an initial term of 15 years.
−Removed: The amended and new master lease arrangements increased the lease liabilities and right-of-use assets by $ 71,616 to reflect the new lease obligations.
+Added: The Company's 104 independent subsidiaries, excluding the subsidiaries that are operated under the Master Leases with CareTrust, are operated under 19 separate master lease arrangements.
+Added: During the year ended December 31, 2025, the Company entered into five new master leases to add 14 stand-alone skilled nursing facilities operated by the Company's independent subsidiaries with initial terms between 14 and 15 years.
+Added: The new master leases increased the lease liabilities and right-of-use assets by $ 134,893 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.
−Removed: 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.
+Added: Failure to comply with Medicare and Medicaid provider requirements is an event of default under several of the Company’s leases, master lease agreements and debt financing instruments.
In addition, other potential defaults related to an individual facility may cause a default of an entire master lease portfolio and could trigger cross-default provisions in the Company’s outstanding debt arrangements and other leases.
With an indivisible lease, it is difficult to restructure the composition of the portfolio or economic terms of the lease without the consent of the landlord.
−Removed: The components of operating lease expense are as follows:
THE ENSIGN GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: The components of operating lease expense are as follows:
Year Ended December 31,
8 unchanged sentences
$ 267,893 $ 242,225 $ 219,512
−Removed: (1) Rent- cost of services includes accrued rent expense adju stments of $ 808 , $ 870 and $ 493 for the years ended December 31, 2024, 2023 and 2022, respectively.
−Removed: Additionally, rent- cost of services includes other variable lease costs such as consumer price index increases and short-term leases of $ 14,013 , $ 10,259 , $ 5,878 for the years ended December 31, 2024, 2023, and 2022 respectively.
−Removed: (2) Cost of services includes variable lease costs, which consists of property taxes and insurance.
+Added: (1) Rent- cost of services includes deferred rent expense adju stments of $ 868 , $ 808 and $ 870 for the years ended December 31, 2025, 2024 and 2023, respectively.
+Added: Additionally, rent- cost of services includes other variable lease costs such as consumer price index increases and short-term leases of $ 18,540 , $ 14,013 , and $ 10,259 for the years ended December 31, 2025, 2024, and 2023 respectively.
+Added: (2) Cost of services includes variable lease costs consisting of property taxes and insurance.
(3) Depreciation and amortization is related to the amortization of favorable and direct lease costs.
10 unchanged sentences
As of December 31, 2025 and 2024, the weighted average remaining lease term is 13.9 years and 14.5 years, respectively and the weighted average discount rate used to determine the operating lease liabilities is 6.2 % and 6.3 %, respectively.
−Removed: Subsequent to December 31, 2024, the Company expanded its operations through a new master lease with the addition of six standalone skilled nursing operations.
−Removed: The aggregate impact to the carrying value of lease liabilities and right-of-use assets related to the long-term leases is estimated to be approximately $ 67,572 .
+Added: Subsequent to December 31, 2025, the Company expanded its operations through a long-term lease with the addition of one stand-alone skilled nursing operation.
+Added: 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 $ 26,837 .
Lessor Activities
−Removed: The Company leases its owned real estate properties to third-party operators, of which 32 senior living operations are operated by Pennant.
+Added: The Company leases 38 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:
5 unchanged sentences
The initial terms range from 14 to 16 years.
+Added: During 2025, the Company entered into five lease agreements with separate third-party operators of four skilled nursing operations and one senior living operation, with initial lease terms between two months and 15 years.
+Added: Subsequent to December 31, 2025, two of these skilled nursing operations were transferred to the Company's independent subsidiaries to operate.
During 2024, the Company expanded its operations through a separate master lease arrangement for three stand-alone senior living operations with a third-party operator for an initial lease term of 15 years.
−Removed: During 2023, the Company entered into a sublease agreement for three stand-alone skilled nursing operations with a third-party operator with an initial lease term of 18 years.
−Removed: Additionally, during the year, the Company entered into a lease agreement with a third-party operator for one campus operation with an initial lease term of 15 years.
THE ENSIGN GROUP, INC.
9 unchanged sentences
(2) Other third-party includes rental revenue associated with the Company's subleases to third parties of $ 4,455 , $ 4,347 and $ 3,897 for the years ended December 31, 2025, 2024 and 2023.
−Removed: There was no sublease rental revenue for the year ended December 31, 2022.
−Removed: Future annual rental income for all third-party leases as of December 31, 2024 were as follows:
−Removed: Year Amount (1)
+Added: Future contractual minimum annual rental income for all third-party leases as of December 31, 2025 were as follows:
2026 $ 27,573
1 unchanged sentence
TOTAL $ 255,041
−Removed: (1) Annual rental income includes base rents and variable rental income pursuant to existing leases as of December 31, 2024.
DEFINED CONTRIBUTION PLANS
7 unchanged sentences
Refer to Note 5, Fair Value Measurements for more information on the funds.
−Removed: For the years ended December 31, 2024 and 2023, the Company recorded gains related to its DCP of $ 5,157 and $ 4,634 , respectively, which are included in other income (expense), and recorded offsetting expenses of $ 5,559 and $ 4,887 , which are allocated between cost of services and general and administrative expenses.
−Removed: For the year ended December 31, 2022, the Company recorded a loss related to its DCP of $ 4,188 , which is included in other income (expense), and recorded an offsetting reduction in expense of $ 4,051 , which is allocated between cost of services and general and administrative expenses.
−Removed: SELF INSURANCE LIABILITIES
−Removed: The following table represents the Company's self-insurance insurance liabilities, on an undiscounted basis, inclusive of anticipated insurance recoveries, as of December 31, 2024 and 2023:
+Added: For the years ended December 31, 2025, 2024 and 2023, the Company recorded gains related to its DCP of $ 8,354 , $ 5,157 and $ 4,634 , respectively, which are included in other income, net, and recorded offsetting expenses of 8,782 , $ 5,559 , and $ 4,887 , respectively, which are allocated between cost of services and general administrative expenses.
THE ENSIGN GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: SELF INSURANCE LIABILITIES
+Added: The following table represents the Company's self-insurance insurance liabilities, on an undiscounted basis, inclusive of anticipated insurance recoveries, as of December 31, 2025 and 2024:
Accrued general liability and professional malpractice liabilities $ 186,780 $ 160,149
7 unchanged sentences
$ 164,792 $ 144,421
−Removed: The following table represents activity in the Company's self-insurance liabilities as of and for the years ended December 31, 2024 and 2023:
+Added: The following table represents activity in our self-insurance liabilities as of and for the years ended December 31, 2025 and 2024:
Balance January 1, 2024
14 unchanged sentences
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.
−Removed: 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.
−Removed: Refer to Part I.
−Removed: Legal Proceedings for additional information on litigation and regulatory matters.
+Added: 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" claims related to alleged violations 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 and general business operations.
+Added: These claims may come from a variety of governmental agencies, including but not limited to, the following federal agencies:
+Added: 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);
+Added: Department of Justice (DOJ);
+Added: Occupational Safety and Health Administration (OHSA), U.S.
+Added: Equal Employment Opportunity Commission (EEOC);
+Added: National Labor Relations Board (NLRB);
+Added: Department of Labor (DOL);
+Added: Department of Housing and Urban Development (HUD);
+Added: Department of Veterans Affairs (VA);
+Added: and Environmental Protection Agency (EPA).
+Added: 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.
+Added: THE ENSIGN GROUP, INC.
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: 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).
+Added: The Company cannot predict or provide any assurance as to the possible outcome of any inquiry, investigation or related litigation.
+Added: If any such inquiry, investigation or related litigation were to proceed, and the Company and/or 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 and/or its independent subsidiaries are alleged or found to be liable on theories of general or professional negligence or under the law of employment practices (including 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.
+Added: 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.
+Added: From time to time, various state or Federal agencies may issue requests for information, including but not limited to a subpoena.
+Added: 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 three of our California operations.
+Added: The Company provided OHCA with requested information regarding specific components of the proposed transaction as part of the CMIR.
+Added: The Company has been unable to effect resolution including attempts to narrow the scope, and limit the requests to its independent subsidiaries operating in California.
+Added: The Company has filed a Petition in the Superior Court of the State of California, County of Orange, seeking a declaration that the CMIR regulations violate the United States Constitution and/or the California Constitution, and is void and unenforceable as applied to the Company.
+Added: It also has requested that OHCA be ordered to withdraw the subpoena and close the inquiry, so the underlying transaction can be completed.
+Added: Other claims and suits, including class actions, continue to be filed against the Company and other companies in its industry.
+Added: 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.
+Added: In 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, pending court approval.
+Added: Accordingly, the Company has recorded an accrual of $ 12,000 within Other accrued liabilities on the consolidated balance sheet as of December 31, 2025.
+Added: The Company does not believe that the ultimate resolution of these actions will have an ongoing material adverse effect on the Company’s business, cash flows, financial condition or results of operations.
In 2024, the Company, on behalf of its independent subsidiaries, received a Civil Investigative Demand (CID) from the U.S.
4 unchanged sentences
However, the Company cannot predict the outcome of the investigation or its potential impact on the consolidated financial statements.
−Removed: THE ENSIGN GROUP, INC.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: 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.
+Added: In 2023, following 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.
−Removed: 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.
+Added: 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.
+Added: The Company has recorded an estimated liability for this matter.
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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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.
−Removed: Following the finalization of the settlement documents and payment of the settlement funds during the year ended December 31, 2024, the qui tam complaint was dismissed and the matter was resolved.
−Removed: 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).
+Added: 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.
+Added: THE ENSIGN GROUP, INC.
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: 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), and various Program Safeguard Contractors and Medicaid Integrity Contractors (collectively referred to as Reviews).
Reviews vary in claim selection size and processes, ranging from a single episode/claim month to larger, multi-claim batches;
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COMMON STOCK REPURCHASE PROGRAM
−Removed: 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.
−Removed: The Company did not purchase any shares pursuant to this stock repurchase program during the year ended December 31, 2024.
−Removed: On August 29, 2023, the Board of Directors approved a stock repurchase program pursuant to which the Company could repurchase up to $ 20,000 of its common stock under the program for a period of approximately 12 months from September 1, 2023.
−Removed: The stock repurchase program expired on August 31, 2024 and is no longer in effect.
−Removed: The Company did not purchase any shares pursuant to this stock repurchase program.
−Removed: On July 28, 2022, the Board of Directors approved a stock repurchase program pursuant to which the Company could repurchase up to $ 20,000 of its common stock under the program for a period of approximately 12 months from August 2, 2022.
−Removed: The stock repurchase program expired on August 2, 2023 and is no longer in effect.
+Added: 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.
+Added: During the year ended December 31, 2025, the Company did not repurchase any shares pursuant to this stock repurchase program.
+Added: 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.
+Added: During the year ended December 31, 2025, the Company purchased 157 shares of its common stock for $ 20,000 .
+Added: This repurchase program expired upon the repurchase of the fully authorized amount under the plan and is no longer in effect.
+Added: On May 16, 2024, the Board of Directors approved a stock repurchase program pursuant to which the Company was authorized to repurchase up to $ 20,000 of its common stock under the program for a period of approximately 12 months from September 1, 2024.
+Added: The Company did not purchase any shares pursuant to this stock repurchase program before the repurchase program was cancelled on February 21, 2025.
+Added: On August 29, 2023, the Board of Directors approved a stock repurchase program pursuant to which the Company was authorized to repurchase up to $ 20,000 of its common stock under the program for a period of approximately 12 months from September 1, 2023, which terminated by its terms on August 31, 2024.
The Company did not purchase any shares pursuant to this stock repurchase program.
−Removed: In addition, the Company repurchased 404 shares of its common stock for $ 29,882 during the year ended December 31, 2022, related to two separate stock repurchase programs that are no longer in effect.
−Removed: THE ENSIGN GROUP, INC.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: Under these repurchase programs, the Company is authorized to repurchase its issued and outstanding common shares from time to time in open-market and privately negotiated transactions, tender offers, pursuant to contractual provisions, and block trades, or otherwise in accordance with federal securities laws.
+Added: Under the repurchase program, the Company is authorized to repurchase its issued and outstanding common shares from time to time in open-market and privately negotiated transactions, tender offers, pursuant to contractual provisions, and block trades, or otherwise in accordance with federal securities laws.
The share repurchase program does not obligate the Company to acquire any specific number of shares.
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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.