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Item 1. Financial Statements

2026-04-30 compared with 2025-11-03 · 223 added, 456 removed, 607 unchanged (53% of the section changed)

3 unchanged sentences

(In thousands, except par values)

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

Current assets:

Cash and cash equivalents $ 539,498 $ 503,881

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

Accounts receivable—less allowance for doubtful accounts of $ 7,583 and $ 7,805 at March 31, 2026 and December 31, 2025, respectively

663,247 636,985

19 unchanged sentences

Total current liabilities $ 848,046 $ 894,346

Long-term debt—less current maturities 138,557 141,585

Long-term lease liabilities—less current portion 1,987,386 1,949,213

1 unchanged sentence

Other long-term liabilities 86,281 82,266

Long-term debt—less current maturities 136,491 137,529

TOTAL LIABILITIES $ 3,242,064 $ 3,228,146

5 unchanged sentences

150,000 shares authorized;

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

61,990 and 58,423 shares issued and shares outstanding at March 31, 2026, respectively, and 61,652 and 58,085 shares issued and shares outstanding at December 31, 2025, respectively

Additional paid-in capital 653,401 614,724

Retained earnings 1,852,008 1,756,137

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

Treasury stock, at cost, 3,567 shares at March 31, 2026 and December 31, 2025

( 139,221 ) ( 139,198 )

4 unchanged sentences

TOTAL LIABILITIES AND EQUITY $ 5,611,761 $ 5,462,970

See accompanying notes to condensed consolidated financial statements.

See accompanying notes to the condensed consolidated financial statements.

THE ENSIGN GROUP, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

2025 2024 2025 2024

Three Months Ended March 31,

(In thousands, except per share data)

11 unchanged sentences

Interest income 6,536 6,883

6,185 3,753 11,787 7,686

Other (expense) income ( 885 ) 361

OTHER INCOME, NET

12 unchanged sentences

Diluted 59,567 58,500

See accompanying notes to condensed consolidated financial statements.

See accompanying notes to the condensed consolidated financial statements.

THE ENSIGN GROUP, INC.

9 unchanged sentences

Employee stock award compensation — — 13,693 — — — — 13,693

Repurchase of common stock (Note 20)

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

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

Net income attributable to noncontrolling interest — — — — — — 88 88

3 unchanged sentences

BALANCE - MARCH 31, 2026 58,423 $ 62 $ 653,401 $ 1,852,008 3,567 $ ( 139,221 ) $ 3,447 $ 2,369,697

Issuance of common stock to employees and directors resulting from the exercise of stock options 168 — 8,652 — — — — 8,652

Issuance of restricted stock, net of forfeitures 41 — — — — — — —

Shares of common stock used to satisfy tax withholding obligations ( 7 ) — — — 7 ( 1,057 ) — ( 1,057 )

Dividends declared ($ 0.0625 per share)

— — — ( 3,605 ) — — — ( 3,605 )

Employee stock award compensation — — 11,628 — — — — 11,628

Repurchase of common stock (Note 20)

( 73 ) — — — 73 ( 9,225 ) — ( 9,225 )

Acquisition of noncontrolling interest shares — — ( 64 ) — — — — ( 64 )

Net income attributable to noncontrolling interest — — — — — — 70 70

Noncontrolling interests attributable to subsidiary equity plan — — 117 — — — ( 86 ) 31

Net income attributable to the Ensign Group, Inc.

— — — 84,396 — — — 84,396

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

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

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

Dividends declared ($ 0.0625 per share)

— — — ( 3,619 ) — — — ( 3,619 )

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

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

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

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

Net income attributable to the Ensign Group, Inc.

— — — 83,844 — — — 83,844

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

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

7 unchanged sentences

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

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

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

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

Net income attributable to the Ensign Group, Inc.

— — — 68,835 — — — 68,835

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

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

Issuance of restricted stock, net of forfeitures 38 — — — — — — —

Shares of common stock used to satisfy tax withholding obligations ( 10 ) — — — 10 ( 1,195 ) — ( 1,195 )

Dividends declared ($ 0.0600 per share)

— — — ( 3,424 ) — — — ( 3,424 )

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

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

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

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

Net income attributable to the Ensign Group, Inc.

— — — 71,007 — — — 71,007

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

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

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

Dividends declared ($ 0.0600 per share)

Repurchase of common stock (Note 19)

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

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

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

3 unchanged sentences

— — — 80,277 — — — 80,277

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

See accompanying notes to condensed consolidated financial statements.

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

See accompanying notes to the condensed consolidated financial statements.

THE ENSIGN GROUP, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands) 2026 2025

4 unchanged sentences

Amortization of deferred financing fees 264 266

Non-cash leasing arrangement 632 590

Impairment of long-lived assets 1,073 1,849

Deferred income taxes 10,156 1,931

Provision for doubtful accounts 1,509 1,419

Stock-based compensation 13,895 10,724

Cash received from insurance proceeds 3,877 199

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

( 5,953 ) 849

Insurance proceeds and (gain) loss on long-lived assets, net 1,915 420

Other operating activities, net 613 646

Change in operating assets and liabilities

14 unchanged sentences

Cash payments for acquisitions ( 28,737 ) ( 194,241 )

( 240,300 ) ( 83,384 )

Escrow deposits — ( 3,846 )

Cash from insurance proceeds 3,567 1,562

Cash proceeds from the sale of assets 124 2,808

Cash proceeds from insurance recoveries and sale of assets 83 1,494

Purchases of investments ( 36,866 ) ( 25,984 )

Maturities of investments 29,717 17,862

Other restricted assets 599 ( 817 )

Other investing activities, net 89 ( 9 )

NET CASH USED IN INVESTING ACTIVITIES

1 unchanged sentence

Cash flows from financing activities:

Proceeds from debt (Note 14)

Payments on debt ( 1,042 ) ( 1,009 )

3 unchanged sentences

Dividends paid ( 3,775 ) ( 3,589 )

Non-controlling interest distribution — ( 278 )

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

NET CASH USED IN FINANCING ACTIVITIES

Other financing activities — ( 11 )

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

$ 6,650 $ ( 10,348 )

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

Net increase (decrease) in cash and cash equivalents 35,617 ( 181,932 )

Cash and cash equivalents beginning of period 503,881 464,598

Cash and cash equivalents end of period $ 539,498 $ 282,666

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands) 2026 2025

8 unchanged sentences

Right-of-use assets obtained in exchange for new and modified operating lease obligations 68,296 57,961

See accompanying notes to condensed consolidated financial statements.

See accompanying notes to the condensed consolidated financial statements.

THE ENSIGN GROUP, INC.

5 unchanged sentences

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

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

As of March 31, 2026, the Company's independent subsidiaries operated 378 facilities and other ancillary operations located in 17 states.

The Company's independent subsidiaries have a collective capacity of approximately 38,500 operational skilled nursing beds and 3,400 senior living units.

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

As of March 31, 2026, the Company's independent subsidiaries operated 254 facilities under long-term lease arrangements and had options to purchase eight of those 254 facilities.

The Company's real estate portfolio consists of 160 owned real estate properties, which includes 124 facilities operated and managed by the Company's independent subsidiaries, 36 operations leased to and operated by third-party operators and the Service Center (defined below) location.

Of those 36 third-party operations, one senior living operation is located on the same real estate property as a skilled nursing operation that an independent subsidiary operates.

Certain of the Company’s wholly-owned independent subsidiaries, collectively referred to as the Service Center, provide specific accounting, payroll, human resources, information technology, legal, risk management and other centralized services to the other independent subsidiaries.

The Company also has a wholly-owned captive insurance subsidiary that provides some claims-made coverage to the Company’s independent subsidiaries for general and professional liabilities, as well as coverage for certain workers’ compensation insurance liabilities.

During the three months ended March 31, 2026, the Company expanded its presence with the addition of five stand-alone skilled nursing operations in three states .

These new operations added a total of 582 operational skilled nursing beds to be operated by the Company's independent subsidiaries.

Additionally, the Company entered into definitive agreements to acquire 15 stand-alone skilled nursing operations and two campus operations in Texas subsequent to March 31, 2026, subject to customary closing conditions.

These new operations will add 2,080 operational skilled nursing beds and 155 senior living units 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.

Each of the Company's independent subsidiaries are operated by wholly-owned subsidiaries that have their own management, employees and assets.

To support its growth efforts 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 wholly-owned independent subsidiaries.

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.

Each of the Company's wholly-owned independent subsidiaries has its own management, employees and assets.

References herein to the consolidated “Company” and “its” assets and activities in this Quarterly Report are not meant to imply, nor should it be construed as meaning that The Ensign Group, Inc.

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

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

Other Information — The accompanying condensed consolidated financial statements as of March 31, 2026 and for the three months ended March 31, 2026 and 2025 (collectively, the Interim Financial Statements) are unaudited.

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

3 unchanged sentences

The results of operations presented in the Interim Financial Statements are not necessarily representative of operations for the entire year.

THE ENSIGN GROUP, INC.

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

5 unchanged sentences

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

THE ENSIGN GROUP, INC.

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

The preparation of the Interim Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Interim Financial Statements and the reported amounts of revenue and expenses during the reporting periods.

1 unchanged sentence

Actual results could differ from those estimates.

Recently Issued Accounting Pronouncements — In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09 " Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, " which requires the Company to disclose disaggregated jurisdictional and categorical information for the tax rate reconciliation, income taxes paid and other income tax related amounts.

This guidance is effective for annual periods beginning after December 15, 2024, which will be the Company's fiscal year 2025, with early adoption permitted.

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

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

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

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

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

These reclassifications had no effect on previously reported net income.

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.

For any new pronouncements announced, the Company considers whether the new pronouncements could alter previous generally accepted accounting principles and determines whether any new or modified principles will have a material impact on the Company's reported financial position or operations in the near term.

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

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.

9 unchanged sentences

The Company has determined that disaggregating revenue into these categories achieves the disclosure objectives to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

THE ENSIGN GROUP, INC.

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

Revenue by Payor

1 unchanged sentence

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

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

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

Revenue from the Medicare and Medicaid programs accounted for 69.1 % and 69.5 % of all service revenue for the three months ended March 31, 2026 and 2025, respectively.

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

These settlements are estimated based on the terms of the payment agreement with the payor, correspondence from the payor and the Company’s historical settlement activity.

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

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

THE ENSIGN GROUP, INC.

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

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

Three Months Ended September 30,

Revenue % of Revenue Revenue % of Revenue

$ 515,157 39.9 % $ 425,642 39.6 %

Medicare 303,281 23.5 263,594 24.5

Medicaid — skilled 78,450 6.1 65,907 6.1

Total Medicaid and Medicare $ 896,888 69.5 % $ 755,143 70.2 %

Managed care 237,978 18.5 202,528 18.8

Private and other (2)

154,913 12.0 118,421 11.0

SERVICE REVENUE $ 1,289,779 100.0 % $ 1,076,092 100.0 %

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

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

Nine Months Ended September 30,

The Company recorded adjustments to revenue which were not material to the Company's revenue for the three months ended March 31, 2026 and 2025.

Service revenue for the three months ended March 31, 2026 and 2025 is summarized in the following tables:

Three Months Ended March 31,

Revenue % of Revenue Revenue % of Revenue

9 unchanged sentences

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

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

In addition to the service revenue above, the Company's rental revenue derived from triple-net lease arrangements with third parties was $ 6,893 and $ 6,001 , respectively, for the three months ended March 31, 2026 and 2025.

Balance Sheet Impact

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

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

The Company had no material contract liabilities or contract assets as of March 31, 2026 and December 31, 2025, or activity during the three months ended March 31, 2026 and 2025.

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

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

September 30, 2025 December 31, 2024

Accounts receivable as of March 31, 2026 and December 31, 2025, is summarized in the following table:

March 31, 2026 December 31, 2025

Medicaid $ 291,960 $ 296,649

12 unchanged sentences

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

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

2025 2024 2025 2024

Three Months Ended March 31,

Net income $ 99,756 $ 80,353

2 unchanged sentences

$ 99,668 $ 80,277

Weighted average shares outstanding for basic net income per share 57,382 56,776 57,214 56,553

Weighted average shares outstanding

57,771 57,099

Basic net income per common share:

1 unchanged sentence

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

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

2025 2024 2025 2024

Three Months Ended March 31,

Net income $ 99,756 $ 80,353

4 unchanged sentences

incremental shares from assumed conversion (1)

1,574 1,668 1,499 1,572

Adjusted weighted average common shares outstanding 59,567 58,500

1 unchanged sentence

$ 1.67 $ 1.37

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

(1) Options and restricted stock awards outstanding that were anti-dilutive and therefore excluded from the calculation of the weighted average common shares outstanding were 733 and 1,171 for the three months ended March 31, 2026 and 2025, respectivel y.

FAIR VALUE MEASUREMENTS

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

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

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

The Company's financial assets include held-to-maturity investments carried at amortized cost basis of $ 156,945 and $ 150,119 , of which $ 100,578 and $ 81,816 are designated to support insurance subsidiary liabilities, as of March 31, 2026 and December 31, 2025, respectively.

As of March 31, 2026 and December 31, 2025, the amortized cost basis of these financial assets are considered to approximate fair value and are derived using Level 2 inputs.

The Company believes its amortized cost basis investments that were in an unrealized loss position as of March 31, 2026 and 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.

THE ENSIGN GROUP, INC.

2 unchanged sentences

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

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

As of March 31, 2026 and December 31, 2025, the fair value of the investment funds was $ 81,895 and $ 74,405 , respectively, which are derived using Level 2 inputs.

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.

2 unchanged sentences

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

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

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

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

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

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

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

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

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

During the three months ended March 31, 2026, Standard Bearer added $ 17,468 of real estate assets associated with two stand-alone skilled nursing operations, both of which are operated by the Company's independent subsidiaries .

Additionally , during the three months ended March 31, 2026, the operating responsibility for two stand-alone skilled nursing operations previously acquired by Standard Bearer was transitioned from third-party operators to the Company's independent subsidiaries.

R efer to Note 8, Property and Equipment - Net, for additional information on real estate acquisitions subsequent to March 31, 2026.

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

Four of these additions were related to the exercise of purchase options under an existing lease arrangement from CareTrust REIT, Inc.

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

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 .

11 unchanged sentences

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

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

THE ENSIGN GROUP, INC.

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

Intercompany rental revenue generated from Ensign-affiliated operations for the three months ended March 31, 2026 and 2025 was $ 30,832 and $ 23,904 , respectively, which has been eliminated in consolidation.

Intercompany management agreement

2 unchanged sentences

The management agreement provides for a base management fee that is equal to 5.0 % of total rental revenue and an incentive management fee that is equal to 5.0 % of funds from operations (FFO) and is capped at 1.0 % of total rental revenue, for a total of 6.0 %.

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

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

Management fee generated between Standard Bearer and the Service Center for the three months ended March 31, 2026 and 2025 was $ 2,163 and $ 1,692 , respectively, which has been eliminated in consolidation.

THE ENSIGN GROUP, INC.

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

Intercompany debt arrangements

11 unchanged sentences

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

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

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

During the three months ended March 31, 2026 and 2025, the Company did not grant any stock options or restricted shares under the Standard Bearer Equity Plan.

During the three months ended March 31, 2026 and 2025, there were no restricted stock awards vested for the periods.

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

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

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

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

OPERATION EXPANSIONS

The focus of the Company's independent subsidiaries is to expand its operations through leases or acquisitions of real estate that are complementary to the current operations, accretive to the business, or otherwise advance the Company's strategy.

The results of all independent subsidiaries are included in the Interim Financial Statements subsequent to the date of acquisition.

Acquisitions are accounted for using the acquisition method of accounting.

In connection with the new operations obtained through long-term leases, the Company did not acquire any material assets or assume any liabilities other than the tenant's post-assumption rights and obligations under the long-term lease.

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

The Company's independent subsidiaries also enter into long-term leases that may include options to purchase the facilities.

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

2025 Expansions

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

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

THE ENSIGN GROUP, INC.

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

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

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

2024 Expansions

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

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

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

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

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

For the three months ended March 31, 2026 and 2025, share-based compensation expense under the Standard Bearer Equity Plan was not material.

BUSINESS SEGMENTS

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

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

As of March 31, 2026, the skilled services segment includes 331 skilled nursing and 31 campus operations that provide both skilled nursing and rehabilitative care services and senior living services.

The Company's Standard Bearer segment consists of 154 owned real estate properties.

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The following tables set forth financial information for the segments:

Three Months Ended September 30, 2025

Skilled Services Standard Bearer Total

Service revenue (1)

$ 1,239,096 $ — $ 1,239,096

Rental revenue — 32,610 32,610

Segment revenue $ 1,239,096 $ 32,610 $ 1,271,706

Reconciliation of revenue:

All other revenue (2)

Elimination of intercompany revenue (3)

TOTAL CONSOLIDATED REVENUE

Other segment items (4)

1,071,815 2,959

Depreciation and amortization 14,155 9,709

Interest expense (5)

Segment income

$ 153,126 $ 9,622 $ 162,748

Reconciliation of profit or loss:

All other not included in segment income

INCOME BEFORE PROVISION FOR INCOME TAXES $ 106,600

(1) Skilled services service revenue does not include intercompany service revenue generated by ancillary operations provided to the Company's independent subsidiaries and management service revenue generated by the Service Center with Standard Bearer.

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

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

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

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

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

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

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

THE ENSIGN GROUP, INC.

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

Three Months Ended September 30, 2024

Three Months Ended March 31, 2026

Skilled Services Standard Bearer Total

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

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

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

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

(2) All other revenue includes $ 59,061 of service revenue and $ 3,195 of rental revenue for the three months ended March 31, 2026, both of which include intercompany revenue that is eliminated in "Elimination of intercompany revenue".

(3) Elimination of intercompany revenue includes the elimination of intercompany rental revenue of $ 32,404 and intercompany service revenue of $ 7,593 for the three months ended March 31, 2026.

(4) Other segment items include cost of services of $ 1,052,724 and rent expense of $ 88,784 for the skilled services segment, and cost of services of $ 625 , rent expense of $ 265 and general and administrative expenses of $ 2,232 for the Standard Bearer segment.

Additionally, there are intercompany expenses of $ 39,997 during the three months ended March 31, 2026, which are eliminated in consolidation.

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

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

of $ 9,767 during the three months ended March 31, 2026, which is eliminated in consolidation.

THE ENSIGN GROUP, INC.

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

Nine Months Ended September 30, 2025

Three Months Ended March 31, 2025

Skilled Services Standard Bearer Total

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Rental revenue — 28,401 28,401

— 92,479 92,479

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

$ 3,536,226 $ 92,479 $ 3,628,705

Reconciliation of revenue:

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

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

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

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

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

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

THE ENSIGN GROUP, INC.

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

Nine Months Ended September 30, 2024

Skilled Services Standard Bearer Total

Service revenue (1)

$ 2,994,000 $ — $ 2,994,000

Rental revenue

— 69,984 69,984

Segment revenue

$ 2,994,000 $ 69,984 $ 3,063,984

Reconciliation of revenue:

All other revenue (2)

Elimination of intercompany revenue (3)

TOTAL CONSOLIDATED REVENUE

Other segment items (4)

2,583,529 6,686

Depreciation and amortization 32,988 21,479

Interest expense (5)

Segment income $ 377,483 $ 21,892 $ 399,375

Reconciliation of profit or loss:

All other not included in segment income

INCOME BEFORE PROVISION FOR INCOME TAXES

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

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

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

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

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

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

(4) Other segment items include cost of services of $ 891,855 and rent expense of $ 74,555 for the skilled services segment, and cost of services of $ 598 , rent expense of $ 257 and general and administrative expenses of $ 1,751 for the Standard Bearer segment.

Additionally, there are intercompany expenses of $ 31,340 during the three months ended March 31, 2025, which is eliminated in consolidation.

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

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

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

Service revenue by major payor source were as follows:

Three Months Ended September 30, 2025

Three Months Ended March 31, 2026

Skilled Services All Other (3)

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TOTAL SERVICE REVENUE $ 1,330,835 $ 51,468 $ 1,382,303 100.0 %

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

(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.

THE ENSIGN GROUP, INC.

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

Three Months Ended September 30, 2024

Skilled Services All Other (3)

Total Service Revenue Revenue %

$ 416,190 $ 9,452 $ 425,642 39.6 %

Medicare 263,594 — 263,594 24.5

Medicaid-skilled 65,907 — 65,907 6.1

Subtotal $ 745,691 $ 9,452 $ 755,143 70.2 %

Managed care 202,528 — 202,528 18.8

Private and other (2)

84,894 33,527 118,421 11.0

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

Nine Months Ended September 30, 2025

Skilled Services All Other (3)

Total Service Revenue Revenue %

$ 1,419,037 $ 35,808 $ 1,454,845 39.6 %

Medicare 882,149 — 882,149 24.0

Medicaid-skilled 223,208 — 223,208 6.0

Subtotal $ 2,524,394 $ 35,808 $ 2,560,202 69.6 %

Managed care 694,690 — 694,690 18.9

Private and other (2)

317,142 106,199 423,341 11.5

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

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Skilled Services All Other (3)

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TOTAL SERVICE REVENUE $ 1,123,554 $ 43,486 $ 1,167,040 100.0 %

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

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

(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.

THE ENSIGN GROUP, INC.

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

PROPERTY AND EQUIPMENT - NET

Property and equipment, net consists of the following:

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

Land $ 221,208 $ 219,857

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Standard Bearer .

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

Nine Months Ended September 30,

Land $ 42,122 $ 17,909

Building and improvements 192,550 62,428

Equipment, furniture, and fixtures 5,274 1,898

Assembled occupancy 354 515

Goodwill — 372

Other indefinite-lived intangible assets — 262

TOTAL ACQUISITIONS $ 240,300 $ 83,384

The aggregate purchase price for the real estate purchases during the three months ended March 31, 2026 was $ 18,086 , which primarily consists of building and improveme nts of $ 16,117 and land of $ 1,351 , respectively.

The aggregate purchase price for the real estate purchases during the three months ended March 31, 2025 was $ 159,172 , which primarily consists of building and improvements of $ 135,654 and land of $ 20,453 , respectively.

The Company finalized the purchase price allocation for certain acquisitions during the three months ended March 31, 2025 resulting in no activities in goodwill during that period.

During the three months ended March 31, 2026, the Company, including Standard Bearer, entered into definitive agreements to acquire real estate assets associated with 19 operations subsequent to March 31, 2026, subject to customary closing conditions, for an aggregate purchase price of approximately $ 342,350 .

The real estate assets are associated with 15 stand-alone skilled nursing operations and two campus operations to be operated by the Company's independent subsidiaries and two stand-alone senior living operations to be leased to a third-party operator beginning on May 1, 2026, in each case, assuming the closing of the acquisitions.

INTANGIBLE ASSETS - NET

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

Weighted Average Life (Years)

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Intangible Assets Net Net

Assembled occupancy 0.4 $ 2,345 $ ( 2,345 ) $ — $ 1,991 $ ( 1,316 ) $ 675

Facility trade name 30.0 733 ( 493 ) 240 733 ( 486 ) 247

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TOTAL $ 5,315 $ ( 3,659 ) $ 1,656 $ 5,315 $ ( 3,600 ) $ 1,715

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

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

THE ENSIGN GROUP, INC.

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

During the three months ended March 31, 2026 and 2025, amortization expense was $ 333 and $ 811 , respectively, of which $ 274 and $ 142 was related to the amortization of right-of-use assets, respectively.

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

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Other indefinite-lived intangible assets consist of the following:

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

Trade name $ 889 $ 889

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

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

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

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

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

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

There were no indicators of goodwill impairment noted during the three months ended March 31, 2026.

The Company anticipates that the majority of goodwill recognized will be fully deductible for tax purposes as of March 31, 2026.

There were no activities in goodwill during the three months ended March 31, 2026.

The following table represents goodwill value by the skilled services segment and "all other" category for March 31, 2026 and December 31, 2025:

Skilled Services All Other Total

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Other accrued liabilities consist of the following:

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

Quality assurance fee $ 15,869 $ 17,398

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Property taxes 11,590 7,150

Income tax payable

Accrued litigation (Note 18)

12,000 12,000

Other 19,549 18,591

1 unchanged sentence

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

Refunds, deferred revenue and advances consists of liabilities related to duplicate payments and credit balances from various payor sources, as well as payments received from residents in advance of services provided.

Refunds, deferred revenue and advances consist 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.

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

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

The Company recorded income tax expense of $ 28,816 and $ 26,227 during the three months ended March 31, 2026 and 2025, respectively, or 22.4 % of earnings before income taxes for the three months ended March 31, 2026, compared to 24.6 % for the three months ended March 31, 2025.

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

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

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

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

The OBBB includes provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act and changes to certain U.S.

corporate tax provisions.

These changes include 100% bonus depreciation for capital expenditures incurred after January 19, 2025, and full expensing of domestic research and experimental expenditures.

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

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

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

The net balance of unrecognized tax benefits was not material to the Interim Financial Statements for the three months ended March 31, 2026 and 2025.

Debt consists of the following:

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

Mortgage loans and promissory note $ 143,310 $ 144,352

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

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

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

THE ENSIGN GROUP, INC.

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

As of March 31, 2026, there was no outstanding debt under the Credit Facility.

The Company was in compliance with all loan covenants as of March 31, 2026.

Mortgage Loans and Promissory Note

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

As of March 31, 2026, the Company has 23 subsidiaries that have mortgage loans insured with HUD in the aggregate amount of $ 142,571 , which subjects these subsidiaries to HUD oversight and periodic inspections.

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

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

THE ENSIGN GROUP, INC.

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

In addition to the HUD mortgage loans above, the Company has a promissory note of $ 739 that bears a fixed interest rate of 5.3 % per annum and has a term of 12 years.

1 unchanged sentence

Off-Balance Sheet Arrangements

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

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

As of March 31, 2026 and December 31, 2025, the Company had approximately $ 8,402 of borrowing capacity under the Credit Facility pledged as collateral to secure outstanding letters of credit.

The Company believes that its outstanding letters of credit as of March 31, 2026 do not require an allowance for expected credit losses, nor has any event occurred through the filing date of this report that would indicate differently.

OPTIONS AND AWARDS

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

As stock-based compensation expense recognized in the Company’s condensed consolidated statements of income for the three and nine months ended September 30, 2025 and 2024 was based on awards expected to vest, it has been reduced for estimated forfeitures.

As stock-based compensation expense recognized in the Company’s condensed consolidated statements of income for the three months ended March 31, 2026 and 2025 was based on awards expected to vest, it has been reduced for estimated forfeitures.

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

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

During the second quarter of 2025, the Company’s stockholders approved the Amended and Restated Plan, which increased the total number of shares authorized for issuance under the 2022 Omnibus Incentive Plan (the Predecessor Plan).

Including the shares rolled over from the Predecessor Plan, the Amended and Restated Plan provides for the issuance of 4,231 shares of common stock.

The number of shares available to be issued under the Amended and Restated Plan will be reduced by (i) one share for each share that relates to an option or stock appreciation right award and (ii) two shares for each share which relates to an award other than a stock option or stock appreciation right award (a full-value award).

Non-employee director options, to the extent granted, will vest and become exercisable in three equal annual installments, or the length of the term if less than three years , on the completion of each year of service measured from the grant date.

All other options generally vest over five years at 20 % per year on the anniversary of the grant date.

Options expire ten years from the date of grant.

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

The Company grants equity awards under the Amended and Restated 2022 Omnibus Incentive Plan (the Amended and Restated Plan), the amendment and restatement of which was approved by the Company’s stockholders during the second quarter of 2025.

There are 4,231 shares of common stock available for issuance under the Amended and Restated Plan, and the number of shares available for issuance is reduced by one share for each share subject to an option or stock appreciation right award and by two shares for each share subject to an award other than an option or stock appreciation right.

At March 31, 2026, 2,804 shares remained available for future issuance under the Amended and Restated Plan.

Non-employee director stock options, to the extent granted, vest and become exercisable in three equal annual installments, or over the term of the award if less than three years , subject to continued service from the grant date through the date of vesting.

All other stock options generally vest over five years at a rate of 20 % per year on each anniversary of the grant date.

Stock options expire ten years from the grant date.

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

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Stock Options

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

THE ENSIGN GROUP, INC.

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

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

2025 190 4.0 % 6.2 years 39.1 % 0.2 %

2024 112 3.8 % 6.2 years 40.3 % 0.2 %

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

The Company used the following assumptions for stock options granted during the three months ended March 31, 2026 and 2025:

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

1 unchanged sentence

2025 152 4.3 % 6.2 years 39.8 % 0.2 %

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

For the three months ended March 31, 2026 and 2025, the following represents the exercise price and fair value displayed at grant date for stock option grants:

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

1 unchanged sentence

2025 152 $ 126.34 $ 57.17

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

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

The weighted average exercise price equaled the weighted average fair value of common stock on the grant date for all options granted during the three months ended March 31, 2026 and 2025 and therefore, the intrinsic value was $ 0 at the date of grant.

THE ENSIGN GROUP, INC.

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

The following table represents the employee stock option activity during the three months ended March 31, 2026:

Number of Options Outstanding Weighted Average

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Exercised ( 188 ) 61.08

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

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

Options September 30, 2025 December 31, 2024

March 31, 2026 4,173 $ 107.01 1,955 $ 70.45

The aggregate intrinsic value of options outstanding, vested, expected to vest and exercised as of March 31, 2026 and December 31, 2025 is as follows:

Options March 31, 2026 December 31, 2025

Outstanding $ 397,796 $ 317,984

2 unchanged sentences

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

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

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

The aggregate intrinsic value of options that vested during the three months ended March 31, 2026 and 2025 was $ 12,451 and $ 6,045 , respectively.

The total intrinsic value of options exercised during the three months ended March 31, 2026 and 2025 was $ 26,483 and $ 9,470 , respectively.

Restricted Stock Awards

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

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

The Company granted 155 and 92 restricted stock awards during the three months ended March 31, 2026 and 2025 , respectively.

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

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

The fair value per share of restricted awards granted during the three months ended March 31, 2026 and 2025 ranged from $ 183.54 to $ 212.65 and $ 126.34 to $ 134.58 , respectively.

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

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

THE ENSIGN GROUP, INC.

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

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

Included in the restricted stock award grants are $ 13,555 and $ 8,003 of annual bonuses that were settled in vested restricted stock awards during the three months ended March 31, 2026 and 2025, respectively.

A summary of the status of the Company's non-vested restricted stock awards as of March 31, 2026 and changes during the three months ended March 31, 2026 is presented below:

Non-Vested Restricted Awards Weighted Average Grant Date Fair Value

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Forfeited ( 5 ) 116.28

Nonvested at September 30, 2025

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

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

Nonvested at March 31, 2026

During the three months ended March 31, 2026, the Company granted three automatic quarterly stock awards to non-employee directors for their service on the Company's board of directors.

The fair value per share of these stock awards was $ 183.54 based on the market price on the grant date.

THE ENSIGN GROUP, INC.

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

Stock-based compensation expense

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

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

2025 2024 2025 2024

Stock-based compensation expense recognized for the Company's equity incentive plans and long-term incentive plan for the three months ended March 31, 2026 and 2025 was as follows:

Three Months Ended March 31,

Stock-based compensation expense related to stock options $ 8,652 $ 6,805

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

508 595 1,457 1,635

TOTAL $ 13,693 $ 10,691

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

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

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

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

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

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

The extension of the term of any of the Master Leases is subject to the following conditions:

(1) no event of default under any of the Master Leases having occurred and continuing;

and (2) the tenants providing timely notice of their intent to renew.

The term of the Master Leases is subject to termination prior to the expiration of the current term upon default by the tenants in their obligations, if not cured within any applicable cure periods set forth in the Master Leases.

If the Company elects to renew the term of a Master Lease, the renewal will be effective to all, but not less than all, of the leased property then subject to the Master Lease.

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

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

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

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

THE ENSIGN GROUP, INC.

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

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

In addition to rent, the Company is required to pay the following:

(1) all impositions and taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor);

(2) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties;

(3) all insurance required in connection with the leased properties and the business conducted on the leased properties;

(4) all facility maintenance and repair costs;

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

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

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

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

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

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

In future periods, the Company expects to recognize approximately $ 121,924 and $ 62,954 in stock-based compensation expense for unvested options and unvested restricted stock awards, respectively, that were outstanding as of March 31, 2026.

Future stock-based compensation expense will be recognized over 3.9 and 4.0 weighted average years for unvested options and restricted stock awards, respectively.

There were 2,218 unvested and outstanding options as of March 31, 2026, of which 2,049 options are expected to vest.

The weighted average contractual life for options outstanding, vested and expected to vest as of March 31, 2026 was 6.8 years.

The Company leases real property associated with 104 independent skilled nursing and senior living facilities under eight triple‑net master lease agreements with CareTrust REIT, Inc.

(collectively, the Master Leases).

The Master Leases have initial terms ranging from 13 to 20 years and include two or three five‑year renewal options at the Company’s election, subject to customary conditions.

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 such Master Lease.

The Master Leases are non‑cancelable prior to expiration without the consent of CareTrust.

Rent consists of a fixed base amount subject to annual escalation equal to the lesser of 2.5 % or the percentage change in the Consumer Price Index (not less than zero ).

As triple‑net leases, the Company is responsible for substantially all property‑level operating costs, including taxes, insurance, utilities, and maintenance.

Total rent expense under the Master Leases was $ 19,631 and $ 17,126 for the three months ended March 31, 2026 and 2025, respectively.

The Master Leases require the Company to comply with certain financial covenants, including portfolio coverage and minimum rent coverage ratios, as well as customary reporting and other requirements.

The Company was in compliance with all such requirements as of March 31, 2026.

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.

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

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

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

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

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

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

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

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.

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

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With an indivisible lease, it is difficult to restructure the composition of the portfolio or economic terms of the lease without the consent of the landlord.

THE ENSIGN GROUP, INC.

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

The components of operating lease expense are as follows:

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

2025 2024 2025 2024

Three Months Ended March 31,

Rent - cost of services (1)

1 unchanged sentence

Cost of services (2)

6,787 6,344 19,827 17,763

General and administrative expense 220 199

Depreciation and amortization (3)

$ 72,705 $ 63,704

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

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

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

(1) Rent - cost of services includes deferred rent expense adju stments of $ 321 and $ 208 for the three months ended March 31, 2026 and 2025, respectively.

Additionally, rent - cost of services includes other variable lease costs such as consumer price index increases and short-term leases of $ 5,131 and $ 4,004 for the three months ended March 31, 2026 and 2025, respectively.

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

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

THE ENSIGN GROUP, INC.

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

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

Future minimum lease payments for all third-party leases as of March 31, 2026 are as follows:

2026 (remainder) $ 182,707

7 unchanged sentences

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

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

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

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

As of March 31, 2026, the weighted average remaining lease term is 13.9 years and the weighted average discount rate used to determine the operating lease liabilities is 6.2 %.

Lessor Activities

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

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

(1) all impositions and taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor);

(2) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties;

(3) all insurance required in connection with the leased properties and the business conducted on the leased properties;

(4) all facility maintenance and repair costs;

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

The Company leases 36 owned real estate properties to third‑party operators, including 32 senior living operations operated by The Pennant Group, Inc.

All of the leases are triple‑net arrangements, under which the tenants are responsible for substantially all property‑level operating costs, including taxes, insurance, utilities, and maintenance.

The initial terms range from 14 to 16 years.

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

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

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

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

2025 2024 2025 2024

During the three months ended March 31, 2026, the Company, through Standard Bearer, entered into a definitive agreement to acquire real estate assets associated with two stand-alone senior living operations on May 1, 2026 subject to customary closing conditions.

Assuming the closing of the acquisitions, these operations will be leased to a third-party operator beginning on May 1, 2026.

Total rental income from all third-party sources for the three months ended March 31, 2026 and 2025 is as follows:

Three Months Ended March 31,

$ 4,213 $ 4,122

Other third-party (2)

2,542 1,863 6,694 5,617

TOTAL $ 6,893 $ 6,001

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

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

(1) Pennant rental income includes variable rent such as property taxes of $ 312 and $ 310 during the three months ended March 31, 2026 and 2025, respectively.

(2) Other third-party includes rental revenue associated with the Company's subleases to third parties of $ 1,135 and $ 1,107 for the three months ended March 31, 2026 and 2025.

THE ENSIGN GROUP, INC.

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

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

Year Amount (1)

Future contractual minimum annual rental income for all third-party leases as of March 31, 2026 were as follows:

2026 (remainder) $ 20,641

1 unchanged sentence

TOTAL $ 249,822

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

DEFINED CONTRIBUTION PLANS

1 unchanged sentence

Additionally, the 401(k) Plan provides for discretionary matching contributions (as defined in the 401(k) Plan) by the Company.

The Company has a non-qualified deferred compensation plan (DCP), whereby certain highly compensated employees who are otherwise ineligible to participate in the Company's 401(k) plan, may defer the receipt of a portion of their base compensation and, for certain employees, up to 100 % of their eligible bonuses.

The Company has a non-qualified deferred compensation plan (DCP), whereby highly compensated employees may defer the receipt of a portion of their base compensation and, for certain employees, up to 100 % of their eligible bonuses.

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

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

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

As of March 31, 2026 and December 31, 2025, the Company accrued $ 86,070 and $ 81,553 , respectively, as long term deferred compensation in other long term liabilities on the condensed consolidated balance sheets.

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

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

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

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

For the three months ended March 31, 2026 and 2025, the Company recorded a loss on its DCP of $ 1,694 and $ 282 , respectively, which is included in other income, net.

During the same periods, the Company recorded an offsetting reduction in expenses of $ 1,598 and $ 234 , respectively, which is allocated between cost of services and general and administrative expenses.

SELF INSURANCE LIABILITIES

7 unchanged sentences

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

THE ENSIGN GROUP, INC.

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

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

1 unchanged sentence

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

THE ENSIGN GROUP, INC.

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

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

8 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 for fiscal year 2026.

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

September 30, 2025 December 31, 2024

The following table represents the Company's self-insurance insurance liabilities, on an undiscounted basis, inclusive of anticipated insurance recoveries, as of March 31, 2026 and December 31, 2025:

March 31, 2026 December 31, 2025

Accrued general liability and professional malpractice liabilities $ 214,460 $ 186,780

7 unchanged sentences

$ 183,860 $ 164,792

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

The anticipated insurance recoveries included in the self-insurance liabilities are presented gross rather than net with the corresponding asset of $ 19,007 and $ 17,143 , as of March 31, 2026 and December 31, 2025, respectively, included in Restricted and other assets on the consolidated balance sheets.

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

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

THE ENSIGN GROUP, INC.

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

Litigation and Regulatory Matters — The Company and its independent subsidiaries are party to various legal actions and administrative proceedings and are subject to various claims arising in the ordinary course of business.

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

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.

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

7 unchanged sentences

Department of Veterans Affairs (VA);

and Environmental Protection Agency (EPA).

Environmental Protection Agency (EPA);

and Office of Health Care Affordability (OHCA).

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

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

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

If any such inquiry, investigation or related litigation were to proceed, and the Company and its independent subsidiaries are subjected to, alleged to be liable for, or agree to a settlement of, claims or obligations under federal Medicare statutes, the FCA, or similar state and federal statutes and related regulations, or if the Company or its independent subsidiaries are alleged or found to be liable on theories of general or professional negligence or wage and hour violations, the Company's business, financial condition and results of operations and cash flows could be materially and adversely affected and its stock price could be adversely impacted.

THE ENSIGN GROUP, INC.

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

The Company and its independent subsidiaries are also subject to requests for information and investigations by other state and federal governmental entities.

For example, representatives of the State Attorney General's Office or the State OIG Office may and do request medical records, operational information, and other such documents and materials from the Company's independent subsidiaries.

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

If any such request, 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 related claims or obligations under federal Medicare statutes, the FCA, or similar state and federal statutes and regulations.

In addition, if the Company and/or its independent subsidiaries are alleged or found to be liable on theories of general or professional negligence or conduct alleged to be related to its 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.

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

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

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

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

The Company provided OHCA with requested information regarding specific components of the proposed transaction as part of the CMIR.

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.

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.

It also has requested that OHCA be ordered to withdraw the subpoena and close the inquiry, so the underlying transaction can be completed.

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

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

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

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.

Accordingly, the Company has recorded an accrual of $ 12,000 within Other accrued liabilities on the condensed consolidated balance sheet as of December 31, 2025.

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

In 2024, the Company, on behalf of its independent subsidiaries, received a Civil Investigative Demand (CID) from the U.S.

Department of Justice (DOJ) indicating that the DOJ is investigating the Company to determine whether claims have been submitted to Medicare and Texas Medicaid for services which were unnecessary or otherwise not consistent with existing reimbursement requirements.

From time to time, the Company has received Civil Investigative Demands (CID) from the U.S.

Department of Justice (DOJ).

Certain of these matters resulted in settlements that were material to the Company’s financial statements in prior periods.

In 2024, the Company, on behalf of its independent subsidiaries, received a CID indicating that the DOJ is investigating the Company to determine whether claims have been submitted to Medicare and Texas Medicaid for services which were unnecessary or otherwise not consistent with existing reimbursement requirements.

The CID covers the period from January 1, 2016, to the present.

2 unchanged sentences

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

In 2023, in a four-week medical negligence trial in the State of Arizona, the jury returned a verdict against one of the Company’s independent subsidiaries.

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.

4 unchanged sentences

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

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

In 2020, the Company was advised that the DOJ declined to intervene in any subsequent action filed in connection with the subject matter of this investigation.

Despite the decision of the DOJ to decline to participate in litigation based on the subject matter of its previously issued CID, the involved qui tam relator moved forward with the complaint in 2020.

In 2024, the Company mediated with the involved parties and agreed to settle the civil case for $ 48,000 and recorded the accrual as of December 31, 2023.

Following the finalization of the settlement documents and payment of the settlement funds during the fourth quarter of 2024, the qui tam complaint was dismissed and the matter was resolved.

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

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;

2 unchanged sentences

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

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

As of March 31, 2026, and through the filing date of this report, 22 of the Company's independent subsidiaries had multi-claim Reviews scheduled or in process.

Concentrations

3 unchanged sentences

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

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

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

The Company’s receivables from Medicare and Medicaid payor programs accounted for 60.7 % and 61.9 % of its total accounts receivable as of March 31, 2026 and December 31, 2025, respectively.

Revenue from reimbursement under the Medicare and Medicaid programs accounted for 69.1 % and 69.5 % of the Company's revenue for the three months ended March 31, 2026 and 2025, respectively.

COMMON STOCK REPURCHASE PROGRAM

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

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

During the three months ended March 31, 2026, the Company did not repurchase any shares pursuant to this stock repurchase program.

As of March 31, 2026, the full $ 20,000 authorized for repurchase remained available under the stock repurchase program.

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

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

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

On May 16, 2024, the Board of Directors approved a stock repurchase program pursuant to which the Company was authorized to repurchase up to $ 20,000 of its common stock under the program for a period of approximately 12 months from September 1, 2024.

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

On August 29, 2023, the Board of Directors approved a stock repurchase program pursuant to which the Company was authorized to repurchase up to $ 20,000 of its common stock under the program for a period of approximately 12 months from September 1, 2023, which terminated by its terms on August 31, 2024.

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

THE ENSIGN GROUP, INC.

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

During the first quarter of 2025, the Company repurchased 84 shares of its common stock for $ 10,775 .

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

This repurchase program expired upon the repurchase of the fully authorized amount under the plan.

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.

3 unchanged sentences

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What changed 10-Q

Item 1. Financial Statements