ENSIGN GROUP, INC 10-Q

Item 1. FINANCIAL STATEMENTS THE ENSIGN GROUP, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except par values) June 30, 2026 December 31, 2025 ASSETS Current assets: Cash and cash equivalents $ 262,300 $ 503,881 Accounts receivable—less allowance for doubtful accounts of $ 7,895 and $ 7,805 at June 30, 2026 and December 31, 2025, respectively 668,902 636,985 Investments—current 58,544 68,506 Prepaid expenses and other current assets 81,742 62,932 Total current assets $ 1,071,488 $ 1,272,304 Property and equipment, net 2,096,977 1,696,863 Right-of-use assets 2,143,787 2,097,862 Insurance subsidiary deposits and investments 210,077 166,841 Deferred tax assets 83,068 83,138 Restricted and other assets 39,755 41,600 Intangible assets, net 6,263 6,381 Goodwill 97,981 97,981 TOTAL ASSETS $ 5,749,396 $ 5,462,970 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 119,675 $ 97,327 Accrued wages and related liabilities 368,817 422,326 Lease liabilities—current 121,117 114,816 Accrued self-insurance liabilities—current 100,007 81,623 Other accrued liabilities 171,001 174,027 Current maturities of long-term debt 4,182 4,227 Total current liabilities $ 884,799 $ 894,346 Long-term lease liabilities—less current portion 1,989,485 1,949,213 Accrued self-insurance liabilities—less current portion 195,813 164,792 Other long-term liabilities 98,428 82,266 Long-term debt—less current maturities 135,562 137,529 TOTAL LIABILITIES $ 3,304,087 $ 3,228,146 Commitments and contingencies (Notes 13 and 18) EQUITY Ensign Group, Inc. stockholders' equity: Common stock: $ 0.001 par value; 150,000 shares authorized; 62,102 and 58,272 shares issued and shares outstanding at June 30, 2026, respectively, and 61,652 and 58,085 shares issued and shares outstanding at December 31, 2025, respectively 62 62 Additional paid-in capital 673,846 614,724 Retained earnings 1,947,958 1,756,137 Treasury stock, at cost, 3,830 and 3,567 shares at June 30, 2026 and December 31, 2025 ( 180,178 ) ( 139,198 ) Total Ensign Group, Inc. stockholders' equity $ 2,441,688 $ 2,231,725 Non-controlling interest 3,621 3,099 Total equity $ 2,445,309 $ 2,234,824 TOTAL LIABILITIES AND EQUITY $ 5,749,396 $ 5,462,970 See accompanying notes to the condensed consolidated financial statements. 1 Table of Contents THE ENSIGN GROUP, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (In thousands, except per share data) REVENUE Service revenue $ 1,432,497 $ 1,221,414 $ 2,814,800 $ 2,388,454 Rental revenue 7,984 6,355 14,877 12,356 TOTAL REVENUE $ 1,440,481 $ 1,227,769 $ 2,829,677 $ 2,400,810 Expense: Cost of services 1,134,237 971,780 2,230,063 1,899,629 Rent—cost of services 66,412 57,195 131,918 114,271 General and administrative expense 85,922 69,107 160,132 131,662 Depreciation and amortization 31,406 25,785 60,207 49,973 TOTAL EXPENSES $ 1,317,977 $ 1,123,867 $ 2,582,320 $ 2,195,535 Income from operations 122,504 103,902 247,357 205,275 Other income (expense): Interest expense ( 1,933 ) ( 2,025 ) ( 3,865 ) ( 4,062 ) Interest income 4,633 5,240 11,169 12,123 Other income 8,470 5,241 7,585 5,602 OTHER INCOME, NET $ 11,170 $ 8,456 $ 14,889 $ 13,663 Income before provision for income taxes 133,674 112,358 262,246 218,938 Provision for income taxes 33,840 27,892 62,656 54,119 NET INCOME $ 99,834 $ 84,466 $ 199,590 $ 164,819 Less: Net income attributable to noncontrolling interests 96 70 184 146 NET INCOME ATTRIBUTABLE TO THE ENSIGN GROUP, INC. $ 99,738 $ 84,396 $ 199,406 $ 164,673 NET INCOME PER SHARE ATTRIBUTABLE TO THE ENSIGN GROUP INC. Basic $ 1.72 $ 1.48 $ 3.45 $ 2.88 Diluted $ 1.68 $ 1.44 $ 3.35 $ 2.81 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Basic 57,958 57,157 57,865 57,128 Diluted 59,483 58,602 59,527 58,560 See accompanying notes to the condensed consolidated financial statements. 2 Table of Contents THE ENSIGN GROUP, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Non-Controlling Interest (In thousands) Shares Amount Shares Amount Total BALANCE - JANUARY 1, 2026 58,085 $ 62 $ 614,724 $ 1,756,137 3,567 $ ( 139,198 ) $ 3,099 $ 2,234,824 Issuance of common stock to employees and directors resulting from the exercise of stock options 188 — 11,490 — — — — 11,490 Issuance of restricted stock, net of forfeitures 150 — 13,555 — — — — 13,555 Shares of common stock used to satisfy tax withholding obligations — — — — — ( 23 ) — ( 23 ) Dividends declared ($ 0.0650 per share) — — — ( 3,797 ) — — — ( 3,797 ) Employee stock award compensation — — 13,693 — — — — 13,693 Net income attributable to noncontrolling interest — — — — — — 88 88 Noncontrolling interests attributable to subsidiary equity plan — — ( 61 ) — — — 260 199 Net income attributable to the Ensign Group, Inc. — — — 99,668 — — — 99,668 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 66 — 4,384 — — — — 4,384 Issuance of restricted stock, net of forfeitures 46 — — — — — — — Shares of common stock used to satisfy tax withholding obligations ( 6 ) — — — 6 ( 957 ) — ( 957 ) Dividends declared ($ 0.0650 per share) — — — ( 3,788 ) — — — ( 3,788 ) Employee stock award compensation — — 15,962 — — — — 15,962 Repurchase of common stock (Note 19) ( 257 ) — — — 257 ( 40,000 ) — ( 40,000 ) Net income attributable to noncontrolling interest — — — — — — 96 96 Noncontrolling interests attributable to subsidiary equity plan — — 99 — — — 78 177 Net income attributable to the Ensign Group, Inc. — — — 99,738 — — — 99,738 BALANCE - JUNE 30, 2026 58,272 $ 62 $ 673,846 $ 1,947,958 3,830 $ ( 180,178 ) $ 3,621 $ 2,445,309 3 Table of Contents Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Non-Controlling Interest (In thousands) Shares Amount Shares Amount Total BALANCE - JANUARY 1, 2025 57,438 $ 61 $ 528,052 $ 1,426,762 3,400 $ ( 117,764 ) $ 3,317 $ 1,840,428 Issuance of common stock to employees and directors resulting from the exercise of stock options 106 — 5,050 — — — — 5,050 Issuance of restricted stock, net of forfeitures 87 — 8,003 — — — — 8,003 Shares of common stock used to satisfy tax withholding obligations — — — — — ( 14 ) — ( 14 ) Dividends declared ($ 0.0625 per share) — — — ( 3,597 ) — — — ( 3,597 ) Employee stock award compensation — — 10,691 — — — — 10,691 Repurchase of common stock (Note 19) ( 84 ) — — — 84 ( 10,775 ) — ( 10,775 ) Net income attributable to noncontrolling interest — — — — — — 76 76 Noncontrolling interests attributable to subsidiary equity plan — — 71 — — — ( 53 ) 18 Net income attributable to the Ensign Group, Inc. — — — 80,277 — — — 80,277 BALANCE - MARCH 31, 2025 57,547 $ 61 $ 551,867 $ 1,503,442 3,484 $ ( 128,553 ) $ 3,340 $ 1,930,157 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 19) ( 73 ) — — — 73 ( 9,225 ) — ( 9,225 ) Net income attributable to noncontrolling interest — — — — — — 70 70 Noncontrolling interests attributable to subsidiary equity plan — — 53 — — — ( 86 ) ( 33 ) 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 See accompanying notes to the condensed consolidated financial statements. 4 Table of Contents THE ENSIGN GROUP, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended June 30, (In thousands) 2026 2025 Cash flows from operating activities: Net income $ 199,590 $ 164,819 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 60,207 49,973 Amortization of deferred financing fees 527 530 Stock-based compensation 30,061 22,386 Insurance proceeds and loss on long-lived assets 2,455 402 Other operating activities, net 1,744 1,279 Change in operating assets and liabilities Accounts receivable ( 29,618 ) ( 9,025 ) Prepaid income taxes ( 17,943 ) ( 10,453 ) Prepaid expenses and other assets 614 ( 469 ) Cash surrender value of life insurance policy premiums ( 16,485 ) ( 12,295 ) Deferred compensation liability 16,124 12,162 Operating lease obligations ( 200 ) ( 3,169 ) Accounts payable 20,578 4,952 Accrued wages and related liabilities ( 39,407 ) ( 17,523 ) Other accrued liabilities ( 4,100 ) 1,817 Accrued self-insurance liabilities 47,961 22,564 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 272,108 $ 227,950 Cash flows from investing activities: Purchase of property and equipment ( 88,301 ) ( 92,521 ) Cash payments for acquisitions ( 375,983 ) ( 213,611 ) Cash proceeds from insurance recoveries and sale of assets 1,692 2,990 Purchases of investments ( 61,511 ) ( 62,678 ) Maturities of investments 44,722 53,249 Other investing activities 488 647 NET CASH USED IN INVESTING ACTIVITIES $ ( 478,893 ) $ ( 311,924 ) Cash flows from financing activities: Payments on debt ( 2,094 ) ( 2,025 ) Issuance of common stock upon exercise of options 15,874 13,702 Repurchase of shares of common stock to satisfy tax withholding obligations ( 980 ) ( 1,071 ) Repurchase of shares of common stock (Note 19) ( 40,000 ) ( 20,000 ) Dividends paid ( 7,572 ) ( 7,186 ) Other financing activities ( 24 ) ( 75 ) NET CASH USED IN FINANCING ACTIVITIES $ ( 34,796 ) $ ( 16,655 ) Net decrease in cash and cash equivalents ( 241,581 ) ( 100,629 ) Cash and cash equivalents beginning of period 503,881 464,598 Cash and cash equivalents end of period $ 262,300 $ 363,969 5 Table of Contents Six Months Ended June 30, (In thousands) 2026 2025 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period for: Interest $ 3,327 $ 3,567 Income taxes 81,217 64,621 Lease liabilities 133,064 117,256 Non-cash financing and investing activity Accrued capital expenditures $ 10,870 $ 6,800 Accrued dividends declared 3,788 3,605 Right-of-use assets obtained in exchange for new and modified operating lease obligations 106,727 113,553 See accompanying notes to the condensed consolidated financial statements. 6 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars, shares and options in thousands, except per share data) 1. DESCRIPTION OF BUSINESS The Company — The Ensign Group, Inc. (collectively, Ensign or the Company), is a holding company with no direct operating assets, employees or revenue. The Company's independent subsidiaries provide health care services across the post-acute care continuum and engage in the ownership, acquisition, development and leasing of skilled nursing, senior living and other healthcare-related properties and ancillary businesses. As of June 30, 2026, the Company's independent subsidiaries operated 396 facilities and other ancillary operations located in 17 states. The Company's independent subsidiaries have a collective capacity of approximately 40,700 operational skilled nursing beds and 3,400 senior living units. As of June 30, 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 181 owned real estate properties, which includes 142 facilities operated and managed by the Company's independent subsidiaries, 39 operations leased to and operated by third-party operators and the Service Center (defined below) location. Of those 39 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. During the six months ended June 30, 2026, the Company expanded its presence with the addition of 21 stand-alone skilled nursing operations and two campus operations in four states . These new operations added a total of 2,724 operational skilled nursing beds and 135 operational senior living units to be operated by the Company's independent subsidiaries. Subsequent to June 30, 2026, the Company expanded its presence with the addition of two stand-alone skilled nursing operations in Texas, and these new operations will add 250 operational skilled nursing beds to be operated by the Company's independent subsidiaries. The Company's captive real estate investment trust (REIT), Standard Bearer Healthcare REIT, Inc. (Standard Bearer), owns and manages its real estate business. The REIT structure provides the Company with an efficient vehicle for future acquisitions of properties that could be operated by Ensign's independent subsidiaries or other third parties. Standard Bearer has elected to be taxed as a REIT for U.S. federal income tax purposes. Refer to Note 6, Standard Bearer for additional information on Standard Bearer. 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. 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. 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 June 30, 2026 and for the three and six months ended June 30, 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. Readers of the Interim Financial Statements should refer to the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2025, which are included in the Company’s Annual Report on Form 10-K, File No. 001-33757 (the Annual Report) filed with the Securities and Exchange Commission (SEC). Management believes that the Interim Financial Statements reflect all adjustments which are of a normal and recurring nature necessary to present fairly the Company’s financial position and results of operations in all material respects. The results of operations presented in the Interim Financial Statements are not necessarily representative of operations for the entire year. 7 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation — The accompanying Interim Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). The Company is the sole member or stockholder of various consolidated limited liability companies and corporations established to operate various acquired skilled nursing operations, senior living operations and related ancillary services. All intercompany transactions and balances have been eliminated in consolidation. The Company presents noncontrolling interests within the equity section of its condensed consolidated balance sheets and the amount of consolidated net income that is attributable to The Ensign Group, Inc. and the noncontrolling interests in its condensed consolidated statements of income. The Interim Financial Statements include the accounts of all independent subsidiaries controlled by the Company through its ownership of a majority voting interest. 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. The most significant estimates in the Company’s Interim Financial Statements relate to revenue, acquired property and equipment, goodwill, right-of-use assets, impairment of long-lived assets, lease liabilities, general and professional liabilities, workers' compensation and healthcare claims included in accrued self-insurance liabilities and income taxes. Actual results could differ from those estimates. 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 pronouncement 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 annual periods beginning with the Company's fiscal year 2027, and interim periods within the Company's fiscal year 2028, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its Notes to the Consolidated Financial Statements. In September 2025, the FASB issued ASU 2025-06 " Targeted Improvements to the Accounting for Internal-Use Software ," which amends the accounting for and disclosure of software costs under the existing standards. The amendments clarify the requirement for capitalizing software costs. ASU 2025-06 is effective beginning with the Company's fiscal year 2028 for both interim and annual periods, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its Consolidated Financial Statements. 3. REVENUE AND ACCOUNTS RECEIVABLE The Company's service revenue is derived primarily from providing healthcare services to its patients. Revenue is recognized when services are provided to patients at the amount that reflects the consideration that the Company expects to be entitled from patients and third-party payors, including Medicaid, Medicare and insurers (private and Medicare replacement plans), in exchange for providing patient care. Disaggregation of Revenue The Company disaggregates revenue from contracts with its patients by payors. The Company 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. 8 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Revenue by Payor The Company’s revenue is derived primarily from providing healthcare services to patients and is recognized on the date services are provided at amounts billable to individual patients, adjusted for estimates for variable consideration. 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 68.9 % and 69.0 % of the three and six months ended June 30, 2026, and 69.8 % and 69.6 % for the three and six months ended June 30, 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 six months ended June 30, 2026 and 2025. Service revenue for the three and six months ended June 30, 2026 and 2025 is summarized in the following tables: Three Months Ended June 30, 2026 2025 Revenue % of Revenue Revenue % of Revenue Medicaid (1) $ 566,819 39.6 % $ 485,848 39.8 % Medicare 339,650 23.7 291,117 23.8 Medicaid-skilled 80,664 5.6 75,207 6.2 Total Medicaid and Medicare $ 987,133 68.9 % $ 852,172 69.8 % Managed care 265,348 18.5 229,495 18.8 Private and other (2) 180,016 12.6 139,747 11.4 SERVICE REVENUE $ 1,432,497 100.0 % $ 1,221,414 100.0 % (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. Six Months Ended June 30, 2026 2025 Revenue % of Revenue Revenue % of Revenue Medicaid (1) $ 1,110,269 39.4 % $ 939,688 39.3 % Medicare 675,479 24.0 578,868 24.2 Medicaid-skilled 155,902 5.6 144,758 6.1 Total Medicaid and Medicare $ 1,941,650 69.0 % $ 1,663,314 69.6 % Managed care 526,199 18.7 456,712 19.1 Private and other (2) 346,951 12.3 268,428 11.3 SERVICE REVENUE $ 2,814,800 100.0 % $ 2,388,454 100.0 % (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. In addition to the service revenue above, the Company's rental revenue derived from triple-net lease arrangements with third parties is $ 7,984 and $ 14,877 for the three and six months ended June 30, 2026, respectively, and $ 6,355 and $ 12,356 , for the three and six months ended June 30, 2025, respectively. 9 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Balance Sheet Impact Included in the Company’s condensed consolidated balance sheets are contract balances, comprised of billed accounts receivable and unbilled receivables, which are the result of the timing of revenue recognition, billings and cash collections, as well as contract liabilities, which primarily represent payments the Company receives in advance of services provided. The Company had no material contract liabilities or contract assets as of June 30, 2026 and December 31, 2025, and no material contracts occurred during the three and six months ended June 30, 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 June 30, 2026 and December 31, 2025, is summarized in the following table: June 30, 2026 December 31, 2025 Medicaid $ 303,348 $ 296,649 Managed care 176,273 163,463 Medicare 109,306 102,693 Private and other payors 87,870 81,985 $ 676,797 $ 644,790 Less: allowance for doubtful accounts ( 7,895 ) ( 7,805 ) ACCOUNTS RECEIVABLE, NET $ 668,902 $ 636,985 4. COMPUTATION OF NET INCOME PER COMMON SHARE Basic net income per share is computed by dividing income from operations attributable to stockholders of The Ensign Group, Inc. by the weighted average number of outstanding common shares for the period. The computation of diluted net income per share is similar to the computation of basic net income per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. A reconciliation of the numerator and denominator used in the calculation of basic net income per common share follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 NUMERATOR: Net income $ 99,834 $ 84,466 $ 199,590 $ 164,819 Less: net income attributable to noncontrolling interests 96 70 184 146 Net income attributable to The Ensign Group, Inc. $ 99,738 $ 84,396 $ 199,406 $ 164,673 DENOMINATOR: Weighted average shares outstanding 57,958 57,157 57,865 57,128 Basic net income per common share: $ 1.72 $ 1.48 $ 3.45 $ 2.88 10 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) A reconciliation of the numerator and denominator used in the calculation of diluted net income per common share follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 NUMERATOR: Net income $ 99,834 $ 84,466 $ 199,590 $ 164,819 Less: net income attributable to noncontrolling interests 96 70 184 146 Net income attributable to The Ensign Group, Inc. $ 99,738 $ 84,396 $ 199,406 $ 164,673 DENOMINATOR: Weighted average common shares outstanding 57,958 57,157 57,865 57,128 Plus: incremental shares from assumed conversion (1) 1,525 1,445 1,662 1,432 Adjusted weighted average common shares outstanding 59,483 58,602 59,527 58,560 Diluted net income per common share: $ 1.68 $ 1.44 $ 3.35 $ 2.81 (1) Options and restricted stock awards outstanding that were anti-dilutive and therefore excluded from the calculation of weighted average common shares outstanding were 1,377 and 1,192 for the three and six months ended June 30, 2026, respectively, and 920 and 855 for the three and six months ended June 30, 2025, respectivel y. 5. FAIR VALUE MEASUREMENTS The Company's financial assets include held-to-maturity investments carried at amortized cost basis of $ 165,982 and $ 150,119 , of which $ 103,900 and $ 81,816 are designated to support insurance subsidiary liabilities, as of June 30, 2026 and December 31, 2025, respectively. As of June 30, 2026 and December 31, 2025, the amortized cost basis of these financial assets is considered to approximate fair value and is derived using Level 2 inputs. The Company believes its amortized cost basis investments that were in an unrealized loss position as of June 30, 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 Company's financial assets also include the contracts insuring the lives of certain employees who are eligible to participate in non-qualified deferred compensation plans that are held in a rabbi trust. The cash surrender value of these contracts is based on funds that shadow the investment allocations specified by participants in the deferred compensation plan and are held at fair value. As of June 30, 2026 and December 31, 2025, the fair value of the investment funds was $ 90,890 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. 6. STANDARD BEARER Standard Bearer's real estate portfolio consists of 175 of the Company's 181 owned real estate properties, of which 138 are operated and managed by the Company's independent subsidiaries and 38 are leased to and operated by third-party operators. Of those 38 operations, one senior living operation is located on the same real estate property as a skilled nursing operation that an independent subsidiary operates. During the six months ended June 30, 2026, Standard Bearer added $ 374,645 of real estate assets associated with 18 stand-alone skilled nursing operations, three stand-alone senior living operations and two campus operations. Of these additions, three stand-alone senior living operations are leased to a third-party operator and the remaining additions are operated by the Company's independent subsidiaries. Subsequent to June 30, 2026, Standard Bearer added approximately $ 36,000 real estate assets associated with two stand-alone skilled nursing operations to be operated by the Company's independent subsidiaries. 11 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) During the six months ended June 30, 2025, Standard Bearer added $ 195,045 of real estate assets associated with 11 stand-alone skilled nursing operations, one stand-alone senior living operation and two campus operations. Four of these additions were related to the exercise of purchase options under an existing lease arrangement from CareTrust REIT, Inc. (CareTrust). Of these additions, one stand-alone skilled nursing operation is leased to a third-party operator and the remaining additions are operated by the Company's independent subsidiaries. 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 . All intercompany transactions have been eliminated in consolidation. Refer to Note 7, Business Segments , for additional information related to these intercompany eliminations as well as Standard Bearer as a reportable segment. Intercompany master lease agreements Certain of the Company's independent subsidiaries and 138 Standard Bearer independent real estate subsidiaries have entered into 10 triple-net master lease agreements (collectively, the Standard Bearer Master Leases). The lease periods range from 15 to 19 years with three five-year renewal options beyond the initial term, on the same terms and conditions. The rent structure under the Standard Bearer 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 independent subsidiaries are required to pay the following: (1) all impositions and taxes levied on or with respect to the leased properties; (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. Intercompany rental revenue generated from Ensign affiliated operations was $ 37,785 and $ 68,617 for the three and six months ended June 30, 2026, respectively and $ 26,756 and $ 50,660 for the three and six months ended June 30, 2025, respectively. Intercompany management agreement Standard Bearer has no employees. The Service Center provides personnel and services to Standard Bearer pursuant to the management agreement between Standard Bearer and the Service Center. The management agreement provides for a base management fee that is equal to 5.0 % of total rental revenue and an incentive management fee that is equal to 5.0 % of funds from operations (FFO) and is capped at 1.0 % of total rental revenue, for a total of 6.0 %. Management fee generated between Standard Bearer and the Service Center for the three and six months ended June 30, 2026 were $ 2,646 and $ 4,809 , respectively. Management fees generated between Standard Bearer and the Service Center for the three and six months ended June 30, 2025 were $ 1,883 and $ 3,575 , respectively. Intercompany debt arrangements Standard Bearer obtains its funding through various sources including operating cash flows, access to debt arrangements and intercompany loans. The intercompany debt arrangements include mortgage loans and a credit facility to fund acquisitions and working capital needs. The interest rate under the credit facility is a base rate plus a margin ranging from 0.25 % to 1.25 % per annum or SOFR plus a margin ranging from 1.25 % to 2.25 % per annum. In addition, as the Department of Housing and Urban Development (HUD) mortgage loans and promissory note are entered into by real estate subsidiaries of Standard Bearer, the interest expense incurred from these debts are included in Standard Bearer's segment income. Refer to Note 13, Debt , for additional information related to these debts. Equity Instrument Denominated in the Shares of a Subsidiary As part of the formation of Standard Bearer in 2022, the Company established the Standard Bearer Healthcare REIT, Inc. 2022 Omnibus Incentive Plan (Standard Bearer Equity Plan). The Company may grant stock options and restricted stock awards under the Standard Bearer Equity Plan to employees and management of Ensign's independent subsidiaries. These awards generally vest over a period of five years or upon the occurrence of certain prescribed events. The value of the stock options and restricted stock awards is tied to the value of the common stock of Standard Bearer, which is determined based on an independent valuation of Standard Bearer. The Company can also call the awards, generally upon employee termination. During the six months ended June 30, 2026 and 2025, the Company did not grant any stock options or restricted shares under the Standard Bearer Equity Plan. During the six months ended June 30, 2026 and 2025, no restricted stock awards vested during either period. 12 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The grant-date fair value of the awards is recognized as compensation expense over the relevant vesting periods, with a corresponding adjustment to noncontrolling interests. The grant value was determined based on an independent valuation of the subsidiary shares. For the three and six months ended June 30, 2026 and 2025, share-based compensation expense under the Standard Bearer Equity Plan was not material. 7. BUSINESS SEGMENTS The Company has two reportable segments: (1) skilled services, which includes the operation of skilled nursing facilities and rehabilitation therapy services and (2) Standard Bearer, which is comprised of selected real estate properties owned by Standard Bearer and leased to skilled nursing and senior living operators. As of June 30, 2026, the skilled services segment includes 348 skilled nursing and 32 campus operations that provide both skilled nursing and rehabilitative care services and senior living services. The Company's Standard Bearer segment consists of 175 owned real estate properties. The Company also reports an “All Other” category that includes results from its senior living operations, which includes 16 stand-alone senior living operations and the senior living operations at 32 campus operations that provide both skilled nursing and rehabilitative care services and senior living services. In addition, the "All Other" category includes mobile diagnostics, medical transportation, other real estate, other ancillary operations and the Service Center. Services included in the “All Other” category are insignificant individually and therefore do not constitute a reportable segment. The Company’s reportable segments are significant operating segments that offer differentiated services. The segment structure reflects the Company's current operational and financial management and provides the best structure to maximize the quality of care and investment strategy provided, while maintaining financial discipline. Segment income is defined as income before provision for income taxes, excluding gain or loss from sale of real estate, real estate insurance recoveries and impairment of long-lived assets. The Company's chief operating decision maker or CODM, who is the Chief Executive Officer, reviews segment income for each operating segment to evaluate performance and allocate capital resources. The CODM uses segment income to analyze actual results as part of operational planning and to decide whether to reinvest profits into the segments or into other parts of the Company, such as through acquisitions, to pay dividends or to recommend a stock repurchase program. The Company's CODM does not review assets by segment in his resource allocation and therefore assets by segment are not disclosed below. Intercompany revenue is eliminated in consolidation, along with corresponding intercompany expenses. Included in segment income for Standard Bearer is expense for intercompany services provided by the Service Center as described in Note 6, Standard Bearer , as it is part of the CODM financial information. 13 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The following tables set forth financial information for the segments: Three Months Ended June 30, 2026 Skilled Services Standard Bearer Total Service revenue (1) $ 1,379,912 $ — $ 1,379,912 Rental revenue — 44,133 44,133 Segment revenue $ 1,379,912 $ 44,133 $ 1,424,045 Reconciliation of revenue: All other revenue (2) 64,268 Elimination of intercompany revenue (3) ( 47,832 ) TOTAL CONSOLIDATED REVENUE $ 1,440,481 Less: Other segment items (4) 1,184,846 3,621 Depreciation and amortization 15,445 12,676 Interest expense (5) — 15,766 Segment income $ 179,621 $ 12,070 $ 191,691 Reconciliation of profit or loss: All other not included in segment income ( 58,017 ) INCOME BEFORE PROVISION FOR INCOME TAXES $ 133,674 (1) Skilled services service revenue does not include intercompany service revenue generated by ancillary operations provided to the Company's independent subsidiaries or management service revenue generated by the Service Center for services provided to Standard Bearer. Intercompany service revenue is eliminated in "Elimination of intercompany revenue". (2) All other revenue includes $ 61,053 of service revenue and $ 3,215 of rental revenue for the three months ended June 30, 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 $ 39,364 and intercompany service revenue of $ 8,468 for the three months ended June 30, 2026. (4) Other segment items include cost of services of $ 1,089,109 and rent expense of $ 95,737 for the skilled services segment and cost of services of $ 500 , rent expense of $ 346 and general and administrative expenses of $ 2,775 for the Standard Bearer segment. Additionally, there are intercompany expenses of $ 47,832 during the three months ended June 30, 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 $ 14,149 during the three months ended June 30, 2026, which is eliminated in consolidation. 14 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Three Months Ended June 30, 2025 Skilled Services Standard Bearer Total Service revenue (1) $ 1,173,576 $ — $ 1,173,576 Rental revenue — 31,468 31,468 Segment revenue $ 1,173,576 $ 31,468 $ 1,205,044 Reconciliation of revenue: All other revenue (2) 57,332 Elimination of intercompany revenue (3) ( 34,607 ) TOTAL CONSOLIDATED REVENUE $ 1,227,769 Less: Other segment items (4) 1,009,822 2,766 Depreciation and amortization 13,750 9,265 Interest expense (5) — 10,311 Segment income $ 150,004 $ 9,126 $ 159,130 Reconciliation of profit or loss: All other not included in segment income ( 46,772 ) INCOME BEFORE PROVISION FOR INCOME TAXES $ 112,358 (1) Skilled services service revenue does not include intercompany service revenue generated by ancillary operations provided to the Company's independent subsidiaries or management service revenue generated by the Service Center for services provided to Standard Bearer. Intercompany service revenue is eliminated in "Elimination of intercompany revenue". (2) All Other revenue includes $ 54,174 of service revenue and $ 3,158 of rental revenue for the three months ended June 30, 2025, both of which include intercompany revenue that is eliminated in "Elimination of intercompany revenue". (3) Elimination of intercompany revenue includes the elimination of intercompany rental revenue of $ 28,271 and intercompany service revenue of $ 6,336 for the three months ended June 30, 2025. (4) Other segment items include cost of services of $ 932,823 and rent expense of $ 76,999 for the skilled services segment and cost of services of $ 472 , rent expense of $ 270 and general and administrative expenses of $ 2,024 for the Standard Bearer segment. Additionally, there are intercompany expenses of $ 34,607 during the three months ended June 30, 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 $ 9,023 during the three months ended June 30, 2025, which is eliminated in consolidation. 15 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Six Months Ended June 30, 2026 Skilled Services Standard Bearer Total Service revenue (1) $ 2,710,747 $ — $ 2,710,747 Rental revenue — 80,235 80,235 Segment revenue $ 2,710,747 $ 80,235 $ 2,790,982 Reconciliation of revenue: All other revenue (2) 126,524 Elimination of intercompany revenue (3) ( 87,829 ) TOTAL CONSOLIDATED REVENUE $ 2,829,677 Less: Other segment items (4) 2,326,354 6,743 Depreciation and amortization 30,755 23,459 Interest expense (5) — 27,154 Segment income $ 353,638 $ 22,879 $ 376,517 Reconciliation of profit or loss: All other not included in segment income ( 114,271 ) INCOME BEFORE PROVISION FOR INCOME TAXES $ 262,246 (1) Skilled services service revenue does not include intercompany service revenue generated by ancillary operations provided to the Company's independent subsidiaries or management service revenue generated by the Service Center for services provided to Standard Bearer. Intercompany service revenue is eliminated in "Elimination of intercompany revenue". (2) All other revenue includes $ 120,114 of service revenue and $ 6,410 of rental revenue for the six months ended June 30, 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 $ 71,768 and intercompany service revenue of $ 16,061 for the six months ended June 30, 2026. (4) Other segment items includes cost of services of $ 2,141,833 and rent expense of $ 184,521 for the skilled services segment and cost of services of $ 1,125 , rent expense of $ 611 and general and administrative expenses of $ 5,007 for the Standard Bearer segment. Additionally, there are intercompany expenses of $ 87,829 during the six months ended June 30, 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 $ 23,916 during the six months ended June 30, 2026, which is eliminated in consolidation. 16 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Six Months Ended June 30, 2025 Skilled Services Standard Bearer Total Service revenue (1) $ 2,297,130 $ — $ 2,297,130 Rental revenue — 59,869 59,869 Segment revenue $ 2,297,130 $ 59,869 $ 2,356,999 Reconciliation of revenue: All other revenue (2) 109,758 Elimination of intercompany revenue (3) ( 65,947 ) TOTAL CONSOLIDATED REVENUE $ 2,400,810 Less: Other segment items (4) 1,976,232 5,372 Depreciation and amortization 26,963 17,741 Interest expense (5) — 19,047 Segment income $ 293,935 $ 17,709 $ 311,644 Reconciliation of profit or loss: All other not included in segment income ( 92,706 ) INCOME BEFORE PROVISION FOR INCOME TAXES $ 218,938 (1) Skilled services service revenue does not include intercompany service revenue generated by ancillary operations provided to the Company's independent subsidiaries or management service revenue generated by the Service Center for services provided to Standard Bearer. Intercompany service revenue is eliminated in "Elimination of intercompany revenue". (2) All Other revenue includes $ 103,601 of service revenue and $ 6,157 of rental revenue for the six months ended June 30, 2025, both of which include intercompany revenue that is eliminated in "Elimination of intercompany revenue". (3) Elimination of intercompany revenue includes the elimination of intercompany rental revenue of $ 53,670 and intercompany service revenue of $ 12,277 for the six months ended June 30, 2025. (4) Other segment items include cost of services of $ 1,824,678 and rent expense of $ 151,554 for the skilled services segment and cost of services of $ 1,070 , rent expense of $ 527 and general and administrative expenses of $ 3,775 for the Standard Bearer segment. Additionally, there are intercompany expenses of $ 65,947 during the six months ended June 30, 2025, which are eliminated in consolidation. (5) Included in interest expense in Standard Bearer is interest from intercompany debt arrangements between Standard Bearer and The Ensign Group, Inc. of $ 16,063 during the six months ended June 30, 2025, which is eliminated in consolidation. Service revenue by major payor source were as follows: Three Months Ended June 30, 2026 Skilled Services All Other (3) Total Service Revenue Revenue % Medicaid (1) $ 552,588 $ 14,231 $ 566,819 39.6 % Medicare 339,650 — 339,650 23.7 Medicaid-skilled 80,664 — 80,664 5.6 Subtotal $ 972,902 $ 14,231 $ 987,133 68.9 % Managed care 265,348 — 265,348 18.5 Private and other (2) 141,662 38,354 180,016 12.6 TOTAL SERVICE REVENUE $ 1,379,912 $ 52,585 $ 1,432,497 100.0 % (1) Medicaid payor includes revenue generated from senior living operations. (2) Private and other includes revenue for skilled services (private, Veteran Affairs and hospice payors), senior living and ancillary operations. (3) All Other incorporates intercompany eliminations. 17 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Three Months Ended June 30, 2025 Skilled Services All Other (3) Total Service Revenue Revenue % Medicaid (1) $ 473,904 $ 11,944 $ 485,848 39.8 % Medicare 291,117 — 291,117 23.8 Medicaid-skilled 75,207 — 75,207 6.2 Subtotal $ 840,228 $ 11,944 $ 852,172 69.8 % Managed care 229,495 — 229,495 18.8 Private and other (2) 103,853 35,894 139,747 11.4 TOTAL SERVICE REVENUE $ 1,173,576 $ 47,838 $ 1,221,414 100.0 % (1) Medicaid payor includes revenue generated from senior living operations. (2) Private and other includes revenue for skilled services (private, Veteran Affairs and hospice payors), senior living and ancillary operations. (3) All Other incorporates intercompany eliminations. Six Months Ended June 30, 2026 Skilled Services All Other (3) Total Service Revenue Revenue % Medicaid (1) $ 1,081,921 $ 28,348 $ 1,110,269 39.4 % Medicare 675,479 — 675,479 24.0 Medicaid-skilled 155,902 — 155,902 5.6 Total Medicaid and Medicare $ 1,913,302 $ 28,348 $ 1,941,650 69.0 % Managed care 526,199 — 526,199 18.7 Private and other (2) 271,246 75,705 346,951 12.3 TOTAL SERVICE REVENUE $ 2,710,747 $ 104,053 $ 2,814,800 100.0 % ( 1) Medicaid payor includes revenue generated from senior living operations. (2) Private and other includes revenue for skilled services (private, Veteran Affairs and hospice payors), senior living and ancillary operations. (3) All Other incorporates intercompany eliminations. Six Months Ended June 30, 2025 Skilled Services All Other (3) Total Service Revenue Revenue % Medicaid (1) $ 917,315 $ 22,373 $ 939,688 39.3 % Medicare 578,868 — 578,868 24.2 Medicaid-skilled 144,758 — 144,758 6.1 Total Medicaid and Medicare $ 1,640,941 $ 22,373 $ 1,663,314 69.6 % Managed care 456,712 — 456,712 19.1 Private and other (2) 199,477 68,951 268,428 11.3 TOTAL SERVICE REVENUE $ 2,297,130 $ 91,324 $ 2,388,454 100.0 % (1) Medicaid payor includes revenue generated from senior living operations. (2) Private and other includes revenue for skilled services (private, Veteran Affairs and hospice payors), senior living and ancillary operations. (3) All Other incorporates intercompany eliminations. 18 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 8. PROPERTY AND EQUIPMENT - NET Property and equipment, net consists of the following: June 30, 2026 December 31, 2025 Land $ 257,995 $ 219,857 Buildings and improvements 1,602,352 1,231,704 Leasehold improvements 279,397 254,309 Equipment 532,026 478,729 Furniture and fixtures 5,161 4,588 Construction in progress 30,491 58,615 $ 2,707,422 $ 2,247,802 Less: accumulated depreciation ( 610,445 ) ( 550,939 ) PROPERTY AND EQUIPMENT, NET $ 2,096,977 $ 1,696,863 Real Estate Acquisitions A majority of the real estate properties were acquired by subsidiaries of Standard Bearer, as detailed in Note 6 . Standard Bearer . The aggregate purchase price for the real estate purchases during the six months ended June 30, 2026 was $ 375,263 , which primarily consists of building and improveme nts of $ 326,417 and land of $ 38,138 . The aggregate purchase price for the real estate purchases during the six months ended June 30, 2025 was $ 204,609 , which primarily consists of building and improvements of $ 162,806 and land of $ 37,493 . Subsequent to June 30, 2026, the Company, through Standard Bearer, added approximately $ 36,000 real estate assets associated with two stand-alone skilled nursing operations to be operated by the Company's independent subsidiaries. 9. INTANGIBLE ASSETS - NET June 30, 2026 December 31, 2025 Weighted Average Life (Years) Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Intangible Assets Net Net Facility trade name 30.0 733 ( 499 ) 234 733 ( 486 ) 247 Customer relationships 18.4 4,582 ( 3,219 ) 1,363 4,582 ( 3,114 ) 1,468 TOTAL $ 5,315 $ ( 3,718 ) $ 1,597 $ 5,315 $ ( 3,600 ) $ 1,715 Estimated amortization expense for each of the years ending December 31 is as follows: Year Amount 2026 (remainder) $ 120 2027 238 2028 238 2029 238 2030 238 2031 238 Thereafter 287 $ 1,597 Other indefinite-lived intangible assets consist of the following: June 30, 2026 December 31, 2025 Trade name $ 889 $ 889 Medicare and Medicaid licenses 3,777 3,777 TOTAL $ 4,666 $ 4,666 19 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 10. GOODWILL Goodwill is subject to annual testing for impairment during the fourth quarter of each year. In addition, goodwill is tested for impairment if events occur or circumstances indicate that its carrying value may not be recoverable. There were no indicators of goodwill impairment noted during the six months ended June 30, 2026. The Company anticipates that the majority of goodwill recognized will be fully deductible for tax purposes as of June 30, 2026. There were no activities in goodwill during the six months ended June 30, 2026. The following table represents goodwill value by the skilled services segment and "all other" category for June 30, 2026 and December 31, 2025: Skilled Services All Other Total Goodwill $ 88,626 $ 9,355 $ 97,981 11. OTHER ACCRUED LIABILITIES Other accrued liabilities consist of the following: June 30, 2026 December 31, 2025 Quality assurance fee $ 15,121 $ 17,398 Refunds, deferred revenue and advances 100,006 105,642 Cash held in trust for patients 8,592 8,653 Dividends payable 3,788 3,775 Property taxes 14,418 7,150 Income tax payable — 818 Accrued litigation (Note 18) 12,000 12,000 Other 17,076 18,591 OTHER ACCRUED LIABILITIES $ 171,001 $ 174,027 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 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. Maintaining a trust account for patients is a regulatory requirement and, while the trust assets offset the liabilities, the Company assumes a fiduciary responsibility for these funds. The cash balance related to this liability is included in other current assets in the condensed consolidated balance sheets. 12. INCOME TAXES The Company recorded income tax expense of $ 62,656 and $ 54,119 during the six months ended June 30, 2026 and 2025, respectively, or 23.9 % of earnings before income taxes for the six months ended June 30, 2026, compared to 24.7 % for the six months ended June 30, 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. The Company is not currently under examination by any major income tax jurisdiction. During 2026, the statutes of limitations will lapse on the Company's 2022 federal tax year and certain 2021 and 2022 state tax years. The Company does not believe the federal or state statute lapses or any other event will significantly impact the balance of unrecognized tax benefits in the next twelve months. The net balance of unrecognized tax benefits was not material to the Interim Financial Statements for the six months ended June 30, 2026 and 2025. 20 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 13. DEBT Debt consists of the following: June 30, 2026 December 31, 2025 Mortgage loans and promissory note $ 142,258 $ 144,352 Less: current maturities ( 4,182 ) ( 4,227 ) Less: debt issuance costs, net ( 2,514 ) ( 2,596 ) LONG-TERM DEBT LESS CURRENT MATURITIES $ 135,562 $ 137,529 Credit Facility with a Lending Consortium Arranged by Truist The Company maintains a revolving credit facility between the Company and its independent subsidiaries, including Standard Bearer as co-borrowers, and Truist Securities (Truist) (the Credit Facility) with a revolving line of credit of up to $ 600,000 in aggregate principal amount with a maturity date of April 8, 2027. Borrowings are supported by a lending consortium arranged by Truist. The interest rates applicable to loans under the Credit Facility are, at the Company's option, equal to either a base rate plus a margin ranging from 0.25 % to 1.25 % per annum or SOFR plus a margin ranging from 1.25 % to 2.25 % per annum, based on the Consolidated Total Net Debt to Consolidated EBITDA ratio (as defined in the Credit Facility). In addition, there is a commitment fee on the unused portion of the commitments that ranges from 0.20 % to 0.40 % per annum, depending on the Consolidated Total Net Debt to Consolidated EBITDA ratio. Borrowings made under the Credit Facility are guaranteed, jointly and severally, by certain of the Company’s wholly-owned subsidiaries, and are secured by a pledge of stock of the Company's material independent subsidiaries as well as a first lien on substantially all of such independent subsidiaries' personal property. The Credit Facility contains customary covenants that, among other things, restrict, subject to certain exceptions, the ability of the Company and its independent subsidiaries to grant liens on their assets, incur indebtedness, sell assets, make investments, engage in acquisitions, mergers or consolidations, amend certain material agreements and pay certain dividends and other restricted payments. Under the terms of the Credit Facility, the Company must comply with financial maintenance covenants to be tested quarterly, consisting of (i) a maximum consolidated total net debt to consolidated EBITDA ratio (which shall not be greater than 3.75 :1.00; provided that if the aggregate consideration for approved acquisitions in a six month period is greater than $ 50,000 , then the ratio can be increased at the election of the Company with notice to the administrative agent to 4.25 :1.00 for the first fiscal quarter and the immediately following three fiscal quarters), and (ii) a minimum interest/rent coverage ratio (which cannot be less than 1.50 :1.00). As of June 30, 2026, there was no outstanding debt under the Credit Facility. The Company was in compliance with all loan covenants as of June 30, 2026. Mortgage Loans and Promissory Note As of June 30, 2026, the Company has 23 subsidiaries that have mortgage loans insured with HUD in the aggregate amount of $ 141,686 , 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. In addition to the interest rate, the Company incurs other fees for HUD placement, including, but not limited to audit fees. Amounts borrowed under the mortgage loans may be prepaid, subject to prepayment fees based on the principal balance on the date of prepayment. For the majority of the loans, during the first three years, the prepayment fee is 10.0 % and is reduced by 3.0 % in the fourth year of the loan and reduced by 1.0 % per year for years five through ten of the loan. There is no prepayment penalty after year ten. The terms for all the mortgage loans are 25 to 35 years. In addition to the HUD mortgage loans above, the Company has a promissory note of $ 572 that bears a fixed interest rate of 5.3 % per annum and has a term of 12 years. The note, which was assumed as part of an acquisition, is secured by the real property comprising the facility and the rent, issues and profits thereof, as well as all personal property used in the operation of the facility. Off-Balance Sheet Arrangements As of June 30, 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 June 30, 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. 21 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 14. OPTIONS AND AWARDS Stock-based compensation expense consists of stock-based payment awards made to employees and directors, including employee stock options, restricted stock awards and performance stock units (PSUs) based on estimated fair values. As stock-based compensation expense recognized in the Company’s condensed consolidated statements of income for the three and six months ended June 30, 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 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 June 30, 2026, 2,425 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. Determining the appropriate fair-value model and calculating the fair value of stock option awards at the grant date requires judgment, including estimating stock price volatility, expected option life, and forfeiture rates. The fair-value of the restricted stock awards at the grant date is based on the market price on the grant date, adjusted for forfeiture rates. The Company develops estimates based on historical data and market information, which can change significantly over time. Stock Options The Company used the following assumptions for stock options granted during the three months ended June 30, 2026 and 2025: Grant Year Options Granted Weighted Average Risk-Free Rate Expected Life Weighted Average Volatility Weighted Average Dividend Yield 2026 197 4.2 % 6.2 years 37.9 % 0.1 % 2025 175 4.2 % 6.2 years 39.1 % 0.2 % The Company used the following assumptions for stock options granted during the six months ended June 30, 2026 and 2025: Grant Year Options Granted Weighted Average Risk-Free Rate Expected Life Weighted Average Volatility Weighted Average Dividend Yield 2026 509 3.9 % 6.2 years 38.2 % 0.1 % 2025 327 4.2 % 6.2 years 39.4 % 0.2 % For the six months ended June 30, 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 2026 509 $ 199.28 $ 87.28 2025 327 $ 137.42 $ 61.71 The weighted average exercise price equaled the weighted average fair value of common stock on the grant date for all options granted during the six months ended June 30, 2026 and 2025 and therefore, the intrinsic value was $ 0 at the date of grant. 22 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The following table represents the employee stock option activity during the six months ended June 30, 2026: Number of Options Outstanding Weighted Average Exercise Price Number of Options Vested Weighted Average Exercise Price of Options Vested January 1, 2026 4,071 $ 96.87 1,991 $ 67.10 Granted 509 199.28 Forfeited ( 43 ) 127.12 Exercised ( 254 ) 62.45 June 30, 2026 4,283 $ 110.77 2,042 $ 73.22 The aggregate intrinsic value of options outstanding, vested, expected to vest and exercised as of June 30, 2026 and December 31, 2025 is as follows: Options June 30, 2026 December 31, 2025 Outstanding $ 239,432 $ 317,984 Vested 177,815 213,189 Expected to vest 58,481 98,487 The intrinsic value is calculated as the difference between the market value of the underlying common stock and the exercise price of the options . The aggregate intrinsic value of options that vested during the six months ended June 30, 2026 and 2025 was $ 17,267 and $ 22,121 , respectively. The total intrinsic value of options exercised during the six months ended June 30, 2026 and 2025 was $ 33,869 and $ 24,957 , respectively. Restricted Stock Awards The Company granted 50 and 205 restricted stock awards during the three and six months ended June 30, 2026, respectively. The Company granted 42 and 134 restricted stock awards during the three and six months ended June 30, 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 six months ended June 30, 2026 and 2025 ranged from $ 178.00 to $ 212.65 and $ 126.34 to $ 147.04 , respectively. The fair value per share includes quarterly stock awards to non-employee directors. 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 six months ended June 30, 2026 and 2025, respectively. A summary of the status of the Company's non-vested restricted stock awards as of June 30, 2026 and changes during the six months ended June 30, 2026 is presented below: Non-Vested Restricted Awards Weighted Average Grant Date Fair Value Nonvested at January 1, 2026 436 $ 129.54 Granted 205 203.09 Vested ( 142 ) 156.12 Forfeited ( 9 ) 123.94 Nonvested at June 30, 2026 490 $ 152.85 During the three and six months ended June 30, 2026, the Company granted four and seven 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 award s ranged from $ 183.54 to $ 197.92 based on the market price on the grant date. Performance Stock Units PSU awards are granted to certain employees and vest based on the achievement of specified Company performance objectives over a designated performance period. During the three months ended June 30, 2026, the Company granted 54 PSU awards with a grant date fair values ranging from $ 169.70 to $ 257.70 per share. PSU awards are subject to a three-year cliff vesting schedule and the ultimate number of shares granted may range from 0 to 2.5 times the target number of awards based on the Company's achievement of earnings and shareholder returns. Compensation expense is recognized over the requisite service period based on the estimated number of awards expected to vest. 23 Table of Contents 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 six months ended June 30, 2026 and 2025 was as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Stock-based compensation expense related to stock options $ 9,456 $ 7,402 $ 18,108 $ 14,207 Stock-based compensation expense related to restricted stock awards 4,727 3,761 9,107 7,163 Stock-based compensation expense related to restricted stock awards to non-employee directors 713 465 1,374 949 Stock-based compensation expense related to performance stock units 1,066 — 1,066 — TOTAL $ 15,962 $ 11,628 $ 29,655 $ 22,319 In future periods, the Company expects to recognize approximately $ 126,656 , $ 65,928 and $ 10,450 in stock-based compensation expense for unvested options, restricted stock awards and performance stock units, respectively, that were outstanding as of June 30, 2026. Future stock-based compensation expense will be recognized over 3.8 , 3.9 and 2.1 weighted average years for unvested options, restricted stock awards and performance stock units, respectively. There were 2,241 unvested and outstanding options as of June 30, 2026, of which 2,068 options are expected to vest. The weighted average contractual life for options outstanding, vested and expected to vest as of June 30, 2026 was 6.7 years. 15. LEASES The Company leases real property associated with 103 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 approximately $ 19,755 and $ 39,386 for the three and six months ended June 30, 2026, respectively, and $ 16,904 and $ 34,030 for the three and six months ended June 30, 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 June 30, 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 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. Failure to comply with Medicare and Medicaid provider requirements is an event of default under several of the Company’s leases, master lease agreements and debt financing instruments. In addition, other potential defaults related to an individual facility may cause a default of an entire master lease portfolio and could trigger cross-default provisions in the Company’s outstanding debt arrangements and other leases. With an indivisible lease, it is difficult to restructure the composition of the portfolio or economic terms of the lease without the consent of the landlord. 24 Table of Contents 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 June 30, Six Months Ended June 30, 2026 2025 2026 2025 Rent - cost of services (1) $ 66,412 $ 57,195 $ 131,918 $ 114,271 Cost of services (2) 7,922 6,611 14,901 13,040 General and administrative expense 275 214 495 413 $ 74,609 $ 64,020 $ 147,314 $ 127,724 (1) Rent - cost of services includes deferred rent expense adju stments of $ 255 and $ 576 for the three and six months ended June 30, 2026, respectively, and $ 199 and $ 407 for the three and six months ended June 30, 2025, respectively. Additionally, rent - cost of services includes other variable lease costs such as consumer price index increases and short-term leases of $ 5,127 and $ 10,258 for the three and six months ended June 30, 2026, respectively, and $ 4,634 and $ 8,638 for the three and six months ended June 30, 2025, respectively. (2) Cost of services includes variable lease costs consisting of property taxes and insurance. Future minimum lease payments for all third-party leases as of June 30, 2026 are as follows: Year Amount 2026 (remainder) $ 122,703 2027 245,198 2028 244,213 2029 239,030 2030 233,671 2031 223,098 Thereafter 1,797,565 TOTAL LEASE PAYMENTS $ 3,105,478 Less: present value adjustment ( 994,876 ) PRESENT VALUE OF TOTAL LEASE LIABILITIES $ 2,110,602 Less: current lease liabilities ( 121,117 ) LONG-TERM OPERATING LEASE LIABILITIES $ 1,989,485 Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used its incremental borrowing rate based on the information available at the lease commencement date. As of June 30, 2026, the weighted average remaining lease term is 13.7 years and the weighted average discount rate used to determine the operating lease liabilities is 6.1 %. Lessor Activities The Company leases 39 owned real estate properties to third‑party operators, including 35 senior living operations operated by The Pennant Group, Inc. (Pennant). 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. During the three and six months ended June 30, 2026, the Company, through Standard Bearer, entered into three lease agreements with a third-party operator for three stand-alone senior living operations, each with initial lease terms of 15 years. Total rental income from all third-party sources for the three and six months ended June 30, 2026 and 2025 is as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Pennant (1) $ 4,427 $ 4,082 $ 8,640 $ 8,204 Other third-party (2)(3) 3,557 2,273 6,237 4,152 TOTAL $ 7,984 $ 6,355 $ 14,877 $ 12,356 (1) Pennant rental income includes variable rent such as property taxes of $ 321 and $ 633 during the three and six months ended June 30, 2026 and $ 270 and $ 580 for the three and six months ended June 30, 2025. (2) Other third-party includes rental revenue associated with the Company's subleases to third parties of $ 1,144 and $ 2,279 for the three and six months ended June 30, 2026, and $ 1,116 and $ 2,223 for the three and six months ended June 30, 2025, respectively. (3) For the three and six months ended June 30, 2026, other third-party revenue included $ 1,016 of rental income earned from acquired real estate properties during the period prior to their lease to the Company's independent operating subsidiaries. 25 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Future contractual minimum annual rental income for all third-party leases as of June 30, 2026 were as follows: Year Amount 2026 (remainder) $ 14,647 2027 28,719 2028 28,269 2029 28,148 2030 27,072 2031 27,052 Thereafter 115,327 TOTAL $ 269,234 16. DEFINED CONTRIBUTION PLANS The Company has a 401(k) defined contribution plan (the 401(k) Plan), whereby eligible employees may contribute up to 90 % of their annual basic earnings, subject to applicable annual Internal Revenue Code limits. 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 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. As of June 30, 2026 and December 31, 2025, the Company accrued $ 98,224 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 six months ended June 30, 2026, the Company recorded gains on its DCP of $ 7,640 and $ 5,946 , which is included in other income, net and recorded offsetting expense of $ 7,804 and $ 6,206 , respectively, which is allocated between cost of services and general and administrative expenses. For the three and six months ended June 30, 2025, the Company recorded gains on its DCP of $ 4,482 and $ 4,200 , which is included in other income, net and recorded offsetting expenses of $ 4,578 and $ 4,344 , respectively, which is allocated between cost of services and general and administrative expenses. 17. SELF INSURANCE LIABILITIES The Company is partially self-insured for general and professional liability claims up to a base amount per claim (the self-insured retention) with an aggregate, one-time deductible above this limit. Losses beyond these amounts are insured through third-party policies with coverage limits per claim, per location and on an aggregate basis for the Company. The combined self-insured retention for the Company's independent subsidiaries in California is $ 1,000 per claim ($ 750 if an enforceable arbitration agreement applies), subject to an additional one-time deductible of $ 3,950 . For the independent subsidiaries not in California, the self-insured claim is $ 750 per claim ($ 650 if an enforceable arbitration agreement applies), subject to an additional one-time, deductible of $ 5,100 . For all independent subsidiaries, except those located in Colorado, the third-party coverage above these limits is $ 1,000 per claim, $ 3,000 per operation, with a $ 10,000 blanket aggregate limit and an additional state-specific aggregate where required by state law. In Colorado, the third-party coverage above these limits is $ 1,000 per claim and $ 3,000 per operation, which is independent of the aforementioned blanket aggregate limits that apply outside of Colorado. The majority of the self-insured retention and deductible limits for general and professional liabilities and workers' compensation liabilities are self-insured through the captive insurance subsidiary, the related assets and liabilities of which are included in the accompanying condensed consolidated balance sheets. The captive insurance subsidiary is subject to certain statutory requirements as an insurance provider. 26 Table of Contents 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. The Company develops information about the size of the ultimate claims based on historical experience, current industry information and actuarial analysis, and evaluates the estimates for claim loss exposure on a quarterly basis. The Company uses actuarial valuations to estimate the liability based on historical experience and industry information. The Company’s independent subsidiaries are self-insured for workers’ compensation liabilities in California. To protect itself against loss exposure in California with this policy, the Company has purchased individual specific excess insurance coverage that insures individual claims that exceed $ 625 per occurrence. In Texas, the independent subsidiaries have elected non-subscriber status for workers’ compensation claims and the Company has purchased individual stop-loss coverage that insures individual claims that exceed $ 750 per occurrence. The Company’s independent subsidiaries in all other states, with the exception of Washington, are under a loss sensitive plan that insures individual claims that exceed $ 350 per occurrence. In the State of Washington, the Company is self-insured and has purchased individual specific excess insurance coverage that insures individual claims that exceed $ 500 per occurrence. For all of the self-insured plans and retention, the Company accrues amounts equal to the estimated costs to settle open claims, as well as an estimate of the cost of claims that have been incurred but not reported. The Company uses actuarial valuations to estimate the liability based on historical experience and industry information. The Company self-funds medical (including prescription drugs) and dental healthcare benefits for the majority of its employees. The Company is fully liable for all financial and legal aspects of these benefit plans. To protect itself against loss exposure with this policy, the Company has purchased individual stop-loss insurance coverage that insures individual claims that exceed $ 525 for each covered person for fiscal year 2026. The following table represents the Company's self-insurance liabilities, on an undiscounted basis, inclusive of anticipated insurance recoveries, as of June 30, 2026 and December 31, 2025: June 30, 2026 December 31, 2025 Accrued general liability and professional malpractice liabilities $ 222,192 $ 186,780 Accrued workers’ compensation liabilities 47,605 42,121 Accrued health benefits 26,023 17,514 TOTAL SELF-INSURANCE LIABILITIES $ 295,820 $ 246,415 Less: current self-insurance liabilities 100,007 81,623 LONG-TERM SELF-INSURANCE LIABILITIES $ 195,813 $ 164,792 The anticipated insurance recoveries included in the self-insurance liabilities are presented gross rather than net with the corresponding asset of $ 18,587 and $ 17,143 , as of June 30, 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. 18. COMMITMENTS AND CONTINGENCIES Indemnities — From time to time, the independent subsidiaries of the Company enter into certain types of contracts that contingently require the affiliates to indemnify parties against third-party claims. The terms of such obligations vary by contract and, in most instances, do not expressly state or include a specific or maximum dollar amount. Generally, amounts under these contracts cannot be reasonably estimated until a specific claim is asserted. 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. 27 Table of Contents 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" claims related to alleged violations of the False Claims Act (FCA) 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: U.S. Department of Health and Human Services (HHS), including the Centers for Disease Control and Prevention (CDC), Centers for Medicare and Medicaid Services (CMS), Office for Civil Rights (OCR) and Office of Inspector General (OIG); U.S. Department of Justice (DOJ); Occupational Safety and Health Administration (OSHA); U.S. Equal Employment Opportunity Commission (EEOC); National Labor Relations Board (NLRB); U.S. Department of Labor (DOL); U.S. Department of Housing and Urban Development (HUD); U.S. Department of Veterans Affairs (VA); and Environmental Protection Agency (EPA). In addition to these federal agencies, there are also a variety of state and local authorities with the ability to bring claims against our independent subsidiaries, such as the Office of Health Care Affordability (OHCA). 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, the Company's business, financial condition, results of operations and cash flows could be materially and adversely affected and its stock price could be adversely impacted. 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 resolve 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 three of the Company's independent subsidiaries in California. The Company provided OHCA with the 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 of the inquiry to that contemplated by the applicable regulation, 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 are 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. 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 both as of June 30, 2026 and 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. 28 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) On July 16, 2026, a purported stockholder filed a derivative complaint in the Superior Court of the State of California, County of Orange, captioned Thompson v. Keetch, et. al., Case No. 2026-01584212-CU-NP-CXC (the “Derivative Action”) against certain current and former directors and officers of the Company and against the Company as a nominal defendant. The complaint asserts claims for, among other things, breach of fiduciary duty and unjust enrichment arising from allegations relating to the Company's healthcare regulatory compliance, staffing, executive compensation, stock sales by certain of the individual defendants, and related-party transactions. The complaint seeks, on behalf of the Company, unspecified damages, disgorgement, corporate governance reforms, attorneys' fees and costs, and other relief. No responsive pleading has been filed. As the Company is unable to determine at this time whether any loss ultimately will occur or to reasonably estimate the possible loss or range of loss, no amount has been accrued in the financial statements at this time. 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. As a general matter, the Company's independent subsidiaries maintain policies and procedures to promote compliance with all applicable Medicare and Medicaid requirements, including but not limited to those relating to the presentation of claims for reimbursement for services provided . The Company is fully cooperating with the DOJ in response to the CID. However, the Company cannot predict the outcome of the investigation or its potential impact on the consolidated financial statements. 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 appealed the result, and the Arizona Court of Appeals issued its decision in the Company's favor on July 6, 2026. The Company vigorously defends against these specific claims, and in general these types of claims and cases, however, there can be no assurance that the outcomes of these matters will not have a material adverse effect on operational results and financial condition. Medicare Revenue Recoupments — The Company's independent subsidiaries are subject to regulatory reviews relating to the provision of Medicare and Medicaid services, to include reviews of billings and potential overpayments by 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 to larger, multi-claim batches; and from single rounds of review to reviews of multiple rounds with pass/fail criteria. If an operation has a significant error rate or fails a Review and/or subsequent Reviews, the operation could then be subject to extended review or an extrapolation of the identified error rate to other billings in the same time period. The Company anticipates that these Reviews could increase in frequency in the future. As of June 30, 2026, and through the filing date of this report, 18 of the Company's independent subsidiaries had multi-claim Reviews scheduled or in process. Concentrations Credit Risk — The Company has significant accounts receivable balances, the collectability of which is dependent on the availability of funds from certain governmental programs, primarily Medicare and Medicaid. These receivables represent the only significant concentration of credit risk for the Company. The Company does not believe there are significant credit risks associated with these governmental programs. 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 61.0 % and 61.9 % of its total accounts receivable as of June 30, 2026 and December 31, 2025, respectively. Revenue from reimbursement under the Medicare and Medicaid programs accounted for 68.9 % and 69.0 % of the Company's revenue for the three and six months ended June 30, 2026, respectively, and 69.8 % and 69.6 % for the three and six months ended June 30, 2025, respectively. 19. COMMON STOCK REPURCHASE PROGRAM On May 13, 2026, the Board of Directors approved a stock repurchase program pursuant to which the Company is authorized to repurchase up to $ 40,000 of its common stock under the program for a period of approximately 12 months from June 12, 2026. On June 12, 2026, the Board of Directors approved an amendment to the stock repurchase program pursuant to which the Company is authorized to repurchase an additional $ 60,000 of its common stock under the program. During the three months ended June 30, 2026, the Company repurchased 257 shares of its common stock for $ 40,000 . As of June 30, 2026, $ 60,000 authorized for repurchase remained available under the stock repurchase program. 29 Table of Contents THE ENSIGN GROUP, INC. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 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. The stock repurchase program expired on June 16, 2026 and is no longer in effect. The Company did not repurchase any shares pursuant to this stock repurchase program. On February 21, 2025, the Board of Directors approved a stock repurchase program pursuant to which the Company was authorized to repurchase up to $ 20,000 of its common stock under the program for a period of approximately 12 months from March 26, 2025. During the first quarter of 2025, the Company repurchased 84 shares of its common stock for $ 10,775 . During the second quarter of 2025, the Company repurchased an additional 73 shares of its common stock for $ 9,225 . This repurchase program expired upon the repurchase of the maximum authorized amount. Under each of the repurchase programs, the Company is authorized to repurchase its issued and outstanding common shares from time to time in open-market and privately negotiated transactions, tender offers, pursuant to contractual provisions, and block trades, or otherwise in accordance with federal securities laws. The share repurchase program does not obligate the Company to acquire any specific number of shares. Any such repurchases will depend on the Company's business strategy, prevailing market conditions, the Company's liquidity requirements, contractual restrictions or covenants, compliance with securities laws, and other factors. The amounts involved in any such transaction may be material.