Amid record occupancy, rising Medicare managed care, and growth through 22 acquisitions in the third quarter, Ensign Group (Nasdaq: ENSG) maintained strong clinical performance and added new service lines to care for more complex residents.

The demand for Ensign’s services will only grow given that the facilities are successfully able to care for higher acuity patients, reflecting Ensign’s rising reputation as the provider of choice, according to CEO Barry Port.

“These powerful tailwinds will only bolster the census momentum we’re seeing across our portfolio,” Port said during Ensign’s quarterly conference call, noting occupancy of 83% for same-store and 84.4% for transitioning facilities.

During the quarter, Ensign acquired 22 new operations across six states, including a 10-building portfolio in California and a 7-building portfolio in Utah. Managed care revenue grew 7.1% and 24.3% year over year. Ensign raised 2025 earnings guidance to $6.48-$6.54 per share and revenue to $5.0-$5.07 billion.

Ensign Group reported a record third quarter, with GAAP diluted earnings per share of $1.42, up 6%, and adjusted earnings per share of $1.64, up 18%. Revenue increased 19.8% to $1.3 billion. Meanwhile, same-store occupancy reached 83%, and skilled mix grew 5.1%.

On Tuesday, Ensign shares closed at $183.98, up 10 cents, or 0.054%.

Investment approach: ‘Pricing too rich’

Ensign’s unique investment approach was behind some of the success.

“We’re actually excited that [occupancy] is as low as it is. At 83% we have enough organic growth potential left in our organization to sustain our consistent earnings and revenue growth, even if we stopped acquiring during periods of irrational pricing,” Port said.

Port explained that reaching 85% occupancy would be like adding eight new 100-bed facilities, and 88% would equal 17, emphasizing that organic growth boosts census and margins more efficiently than acquisitions.

Ensign added 1,857 skilled nursing beds and 109 senior living units into its portfolio during the third quarter, bringing the total to 45 operations acquired in 2025 to date, with major deals including an 11-building portfolio in California and the seven-building portfolio in Utah. 

As a testament to Ensign’s commitment to the communities it serves, Chief Investment Officer Chad Keetch said the company has “never sold a skilled nursing operation” and views each facility as a long-term commitment.

He described the Utah acquisition as an “off-market transaction” made possible by “a very long-standing relationship between the sellers and our local leaders,” and said Ensign’s strategy to empower local facilities continues to benefit the company.

Looking ahead, Ensign has several transactions planned for early 2026, supported by a strong bench of local CEO trainees and a strong Administrators-in-Training (AIT) program, Keetch said, adding that this approach supports its decentralized transition model, he said. But, he said the pricing for facilities is high right now.

“As we look at the current pipeline, we continue to include everything from small to midsize, owner operated portfolios, landlords looking to replace current tenants, nonprofits looking to divest of their post acute assets and a steady flow of the traditional onesie twosies,” Keetch said. “However, we’ve also seen some trends in the last few months that show that pricing in certain areas has become too rich to support the fundamentals of the operations.

5-star ratings, new service lines, 7-day physician coverage

Spencer Burton, president and COO, highlighted two facilities that exemplify Ensign’s operational strength and growth through innovation and leadership. 

Beacon Harbor Healthcare and Rehabilitation in Rockwall, Texas, has combined workforce stability and clinical excellence to achieve steady gains, he said. The team, which has avoided nursing agency use entirely, maintained a five-star CMS rating while expanding new service lines in cardiology, pulmonology, and nephrology, strengthening hospital ties, and joining multiple ACOs. Occupancy rose to 77.7%, with Medicare and managed care days up 11% and 21%, driving a 45% EBIT increase year over year, he said.

Meanwhile, River Park Post Acute in Chandler, Arizona, transformed rapidly after its 2020 acquisition by introducing seven-day physician coverage and focusing on complex, skilled care. The facility advanced from a 3-star to 5-star rating, boosted occupancy to 97%, and grew managed care days 176%, with revenues up 54%, demonstrating the impact of empowered local leadership and new service offerings, Burton said.

“When clinical excellence comes first, results follow quickly,” Burton said.

Operational strength and uncertainties

Ensign’s 2025 guidance reflects executive confidence in achieving targets driven by strong performance, rising occupancy and skilled mix, and continued labor and operational improvements. The outlook assumes about 59 million diluted shares, a 25% tax rate, expected acquisitions through year-end, anticipated reimbursement rates, and excludes stock-based compensation, according to CFO Suzanne Snapper.

“We have evaluated multiple scenarios and based on the strength of our performance and the positive momentum we have seen in occupancy and skilled mix, as well as continued progress on labor agency management and other operational initiatives, we have confidence that we can achieve these results,” said Snapper.

Larger market forces can introduce some uncertainty, however, she said.

“[O]ther factors that could impact quarterly performance include variations in reimbursement delays and changes in state budgets, seasonality and occupancy and skilled mix, the influence on the general economy, census and staffing, the short term impact of our acquisition activities, variation in insurance accruals and other factors,” Snapper said.