The Ensign Group (Nasdaq: ENSG) is turning to new construction in addition to continuing its strategic plan to acquire and turnaround properties across a number of states.
Most recently, two development projects in California were completed by the San Juan Capistrano, Calif.-based company, a 40-bed expansion at Vista Knoll Specialized Healthcare and a replacement facility for Grossmont Post Acute in La Mesa, which added 15 beds and upgraded to a modern, state-of-the-art building, according to Ensign Chief Investment Officer Chad Keetch; both construction projects will serve the SNF population.
“We recently beefed up our construction capabilities, bringing in some experts,” Ensign CEO Barry Port said of construction options. But the nursing home giant has learned some lessons with its recent construction project, especially when it comes to third parties that maybe aren’t aligned with how they would like to manage costs.
“Having that capability in-house would be really helpful,” added Port. “There’s really two categories. One is adding beds to existing operations, where there’s clearly demand for extra beds, but also the capability to build; that’s something we’re looking at doing.”
Building a new nursing home is time consuming and expensive, especially going through the Medicare certification process, Port said – replacement facilities cut some of these costs especially when you can move staff and patients to the new property on day one and get a quicker return on investment.
Balancing construction, costs and M&A
Ensign worked with Omega Healthcare REIT on the Vista construction project, taking advantage of several acres of vacant land on an Ensign leased property.
“The expansion added much needed capacity to our specialty care unit and significantly strengthened our ability to meet the community’s growing needs,” Keetch said of the Vista Knoll expansion. “Only a few months after opening, the new wing has already achieved 98.3% occupancy.”
As for the La Mesa project, Keetch said the original operation was housed in an aging building, and the landlord had already planned to replace that building with new medical office space. And so, Ensign was on the hunt for new space.
“Several years ago, we acquired land next door and endeavored to build a brand new replacement building across the street from the original location,” said Keetch. “After several years and lots of hard work, we successfully completed the construction and will be moving all the patients and staff to a brand new, state-of-the-art building that will replace the old building, while also adding 15 beds to the original license.”
Looking ahead, Ensign will continue to search for opportunities to add beds to successful operations and in appropriate circumstances invest in newer construction and markets, Keetch said.
Keetch added that Ensign is willing to pay premiums for high quality, newer assets as well, with strong clinical performance and ones that are a strategic fit. The Utah portfolio is a great example, he said, with facilities already outperforming expectations shortly after closing.
“When there are high quality assets with newer construction, and have higher occupancies and higher skilled mix, those sometimes deserve a premium,” added Port.
Acquisition opportunities continue to be abundant for the operator, with 82 new operations sourced, underwritten, closed and transitioned since 2024 across several markets.
In Q4 and beyond, Ensign added 17 new operations across Utah, Texas, Arizona, Colorado Alabama, Kansas and Wisconsin; that’s a total of 1,371 new skilled nursing beds across these states.
Ensign’s Standard Bearer REIT, meanwhile, added 12 assets during Q4, beginning the portfolio to 154 properties. The REIT generated $34.5 million in rental revenue, $20.4 million in funds from operations.
Local teams prepared transition plans for each building about three months in advance, Keetch said of the Ensign acquisitions, demonstrating the company’s ability to integrate smaller assets as well as larger portfolios.
“We’re very humbled by what we’re able to accomplish in 2025 and we are eager to continue to drive organic improvements and take advantage of the acquisition opportunities that we see on the horizon,” said Port.
Q4 stats, facility-specific wins
Ensign adjusted earnings per share beat analyst expectations by 5 cents, coming in at $1.82 per share for Q4, while analysts expected $1.77 per share. Q4 adjusted earnings per share increased 22.1% compared to Q4 2024.
Ensign reported its annual 2026 earnings guidance of $7.41 to $7.61 per diluted share, and annual revenue guidance of $5.77 billion to $5.84 billion; the change represents a 14.3% increase over its 2025 results and 36.5% higher than 2024 results.
Ensign reported occupancy in the mid-90% range, with even newly acquired campuses in states like California, Utah, Washington and Alaska having room to grow despite the states having higher occupancy levels overall compared to other states, Port said.
These new properties still have room to boost occupancy compared to Ensign’s mature campuses, he added.
At the facility level, Ensign COO Spencer Burton highlighted developments in specialized services, including bariatric care at one of its San Diego nursing homes, South Bay Post Acute. South Bay made investments in facility upgrades, specialized equipment, staff training and expanded behavioral health services, Burton said, which positioned the property as a solution for complex hospital discharges and in turn stronger relationships with health plans and new, high-reimbursement contracts.
The facility’s EBIT rose 127% year-over-year in Q4, Burton said, driven by improved payer and acuity mix.
Another Ensign property in Seattle became the only facility in the area taking total parenteral nutrition (TPN) patients, or those with severe gastrointestinal dysfunction – another specialized service for the community. Financial performance and improvements in staffing turnover followed, echoing South Bay’s success with added bariatric services.
Seattle’s Shoreline Health and Rehabilitation saw turnover 60% below the state average, and Q4 revenues up 11%, while EBIT was up nearly 33% for the same period.
On Friday, Ensign shares closed at $197.80, up 64 cents, or 0.32%.
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