Ensign Group Inc

Bull points

• During the quarter and since, we accelerated our growth by adding 22 new operations, including 21 real estate assets, bringing the number of operations acquired during 2025 and since to 71. These recent additions include 20 in Texas, one in Arizona, and one in Wisconsin. In total, we added 2,662 new skilled nursing beds, 100 senior living units, and 55 independent living units across three states. This growth brings the number of operations in our recently acquired group of operations to 17.4% of our entire portfolio. We were thrilled to complete these acquisitions and to expand our presence in some key markets in each of these states, particularly in Texas. Like in the recent Stonehenge acquisition we closed in Utah, the Texas portfolio has made up a very new, high-quality construction in populated and growing metro areas. As we've discussed in our recent past, in certain strategic situations, paying higher prices can be justified for performing assets that have newer physical plans. And while some of those deals may take a bit longer to generate the returns we expect, we've seen these deals pay off over time as our leaders implement the proper adjustments to key clinical and financial systems, along with establishing a culture of ownership and accountability. We continue to learn from and improve our transition process and believe that those lessons are showing through in the performance of our recently acquired acquisitions. In particular, as we continue to scale, we have leadership spread across many mature markets, enhancing ability to make larger deals smaller by breaking them into bite-sized pieces, transitioning in the traditional enzyme way, but with a local cluster-driven plan that gives each operation the time and attention they deserve. The performance of our newly acquired operations, particularly in the last few years, shows that our building-by-building approach to transitions works for single operations, small portfolios, and larger portfolios, particularly when the larger deals span several markets and geographies. While we will certainly continue to evaluate and consider any deal that's out there, we are also very comfortable growing the way we've grown over the last few quarters, with lots of transactions across many states, including small deals to larger portfolios and, where it makes sense, higher-priced strategic assets. As we look at the current pipeline, we continue to see opportunities that include everything from larger portfolios, landlords looking to replace current tenants, nonprofits looking to divest of their post-acute assets, and a steady flow of traditional onesie-twosies. We have several new additions lining up for Q2 and Q3 of 2026 as our local leadership teams and their partners at the Service Center work together to source, underwrite, and carefully select the right opportunities. We continue to have a lot of success in closing deals with sellers who are not just interested in receiving top dollar, but care deeply about the quality and reputation of the company they select to inherit their legacy, and they choose us because they believe in our mission to dignify close to key care. During the quarter, we were pleased to complete the construction of a replacement facility of one of our high-performing skilled nursing operations in San Diego County.
• During the quarter and since, we accelerated our growth by adding 22 new operations, including 21 real estate assets, bringing the number of operations acquired during 2025 and since to 71. These recent additions include 20 in Texas, one in Arizona, and one in Wisconsin. In total, we added 2,662 new skilled nursing beds, 100 senior living units, and 55 independent living units across three states. This growth brings the number of operations in our recently acquired group of operations to 17.4% of our entire portfolio. We were thrilled to complete these acquisitions and to expand our presence in some key markets in each of these states, particularly in Texas. Like in the recent Stonehenge acquisition we closed in Utah, the Texas portfolio has made up a very new, high-quality construction in populated and growing metro areas. As we've discussed in our recent past, in certain strategic situations, paying higher prices can be justified for performing assets that have newer physical plans. And while some of those deals may take a bit longer to generate the returns we expect, we've seen these deals pay off over time as our leaders implement the proper adjustments to key clinical and financial systems, along with establishing a culture of ownership and accountability. We continue to learn from and improve our transition process and believe that those lessons are showing through in the performance of our recently acquired acquisitions. In particular, as we continue to scale, we have leadership spread across many mature markets, enhancing ability to make larger deals smaller by breaking them into bite-sized pieces, transitioning in the traditional enzyme way, but with a local cluster-driven plan that gives each operation the time and attention they deserve. The performance of our newly acquired operations, particularly in the last few years, shows that our building-by-building approach to transitions works for single operations, small portfolios, and larger portfolios, particularly when the larger deals span several markets and geographies. While we will certainly continue to evaluate and consider any deal that's out there, we are also very comfortable growing the way we've grown over the last few quarters, with lots of transactions across many states, including small deals to larger portfolios and, where it makes sense, higher-priced strategic assets. As we look at the current pipeline, we continue to see opportunities that include everything from larger portfolios, landlords looking to replace current tenants, nonprofits looking to divest of their post-acute assets, and a steady flow of traditional onesie-twosies. We have several new additions lining up for Q2 and Q3 of 2026 as our local leadership teams and their partners at the Service Center work together to source, underwrite, and carefully select the right opportunities. We continue to have a lot of success in closing deals with sellers who are not just interested in receiving top dollar, but care deeply about the quality and reputation of the company they select to inherit their legacy, and they choose us because they believe in our mission to dignify close to key care. During the quarter, we were pleased to complete the construction of a replacement facility of one of our high-performing skilled nursing operations in San Diego County.
• As each operation solidifies its reputation in respective markets, they're not only seeing more patients, but they're also being entrusted to care for increasingly complex cases, including a larger share of Medicare, managed care, and other skilled patients.

Bear points

• when managed care plans kind of see facilities like SunWest see such massive increases in skilled mix and managed care mix, does that ever trigger higher clinical review? Any comments you have there?
• it's not necessarily conservatism. We try to reflect an accurate picture of where we think these will will contribute, but obviously we've had to update and revise as time has gone on when things have gone faster than we're scheduled to.