Leaders with the Ensign Group (Nasdaq: ENSG) pushed back on concerns about slowing demand for skilled nursing amid a continued shift toward home and community-based services, and increased scrutiny from payers in the nursing home sector, stating that while patient volumes may fluctuate, overall demand is strong.
This is especially true for higher acuity cases, Ensign CEO Barry Port said during the company’s first quarter earnings call on Friday.
That said, Ensign is still being “super active” in its planning ahead of potential changes in state Medicaid budgets once changes from the federal budget reconciliation bill take effect, Ensign CFO Suzanne Snapper said.
“We are meeting with the state, meeting with folks who are in our associations, representing us and really taking an active role in where Medicaid could go for us, educating what we do for our residents, and obviously the folks that are in the state,” said Snapper.
The San Juan Capistrano, Calif.-based organization’s executive team feels good about relationships with state officials, who recognize the need for skilled nursing services across the country.
“Hospital and managed care volumes may ebb and flow as patients move through the system but that volatility tends to normalize for us, resulting in consistently strong occupancy and skilled mixed trends,” said Port. “Regarding commentary around increased clinical reviews and heightened scrutiny of post-acute utilization, this is not new. Our experience over many years is that this dynamic refines demand rather than reduces it.”
Ensign saw growth across all skilled payers between Q4 2025 and Q1 2026; same store transitioning managed care and Medicare census increased sequentially by 6.2% and 8.3%, Port said. These improvements were driven by expanding trust from communities served, and consistent, high-quality outcomes.
And admission trends remained consistently strong as patient acuity continues to rise. Port hasn’t seen a meaningful system-wide reduction in admissions or skilled mix as payers seek to move patients to lower cost settings.
“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,” noted Port.
It also helps that Ensign isn’t dependent on any single payer region or utilization trend for reimbursement. The operator’s large footprint allows for offset through other market share gains, stronger referral relationships and higher acuity admissions, and growth across other channels, in the event that one plan tightens in a given market, Port said.
‘Bite-Sized’ M&A
The team also reiterated its growth strategy, noting new operations across multiple states including significant expansion in Texas, Arizona and Wisconsin. Ensign’s Chief Investment Officer Chad Keetch said the company continues to see a robust deal pipeline.
Ensign added 22 operations during Q1 and since, bringing total acquisitions in 2025 to 71. That’s 2,662 skilled nursing beds across three states, Keetch said. Ensign’s portfolio consists of 395 health care operations across 17 states, 32 of which also include senior living operations.
“This Texas portfolio is made up of very new, high-quality construction in populated and growing metro areas,” said Keetch. “In certain strategic situations, paying higher prices can be justified for performing assets that have newer physical plants. 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.”
Growth at Ensign acquired facilities stems from integrating acquisitions gradually through local leadership, as a way to improve performance over time. Leaders placed by Ensign’s cluster model implement proper adjustments to clinical and financial systems in these cases, and establish a culture of ownership and accountability, he said.
“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 acquisition in particular,” added Keetch.
Leadership is placed in mature markets, he said, making larger deals smaller, breaking them into “bite-sized pieces” before transitioning them into the Ensign local cluster model.
“That gives each operation the time and attention they deserve,” said Keetch. “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 deal spans several markets and geographies.”
In addition to purchasing newer properties, Ensign completed some new construction too during the quarter, building a replacement facility for its high-performing skilled nursing property in San Diego County, Grossmont Post Acute Care.
“We successfully completed the construction and have moved all the patients and staff to a brand new state of the art building, while also adding 15 beds to the original license,” said Keetch. “We will continue to look for opportunities to add beds to successful operations, and where appropriate, to invest in newer construction and markets.”
Record-level occupancy, clinical strength
Ensign reported $1.33 billion in total skilled services revenue for the quarter, an increase of 18.4% compared to Q1 2025. Consolidated revenue for Q1 was $1.39 billion, an increase of 18.4% compared to Q1 2025.
Adjusted earnings per share was $1.85, beating analyst expectations by 5 cents and showing a 21.7% increase compared to Q1 2025. Adjusted net income was $110.2 million for Q1, a 23.9% increase compared to Q1 2025.
Occupancy reached record levels across Ensign properties, and revenue grew significantly year over year, Ensign reported. Quality ratings improved as well, with most facilities achieving high CMS scores, due in part to better staff retention and reduced reliance on temporary labor.
“Affiliated facilities outperform their peers in annual survey results by 22% at the state level and 31% at the county level. This is especially notable given that many of these facilities were one- or two-stars at acquisition,” said Port, referring to the Five-Star Rating System for nursing homes.
Snapper said factors that could impact future quarterly performance included a variation in reimbursement systems, delays and changes in state budgets, seasonality and occupancy, and skilled mix, as well as the influence of the general economy, census and staffing.
About 85% of all Ensign operations are four or five star facilities, he said.
“This clinical strength depends on attracting and retaining exceptional talent. We are encouraged by the depth of talent continuing to join our organization. On the retention side, we’re seeing improvements in turnover, stable wage growth and reduced reliance on agency staffing, even with increased occupancy,” said Port.
Port highlighted low turnover among directors of nursing (DONs) in particular, which has declined by 32% in the last two years. Leadership stability is a key driver of consistent, high-quality care, Port said.
On Friday, Ensign shares closed at $183.72, down $2.97, or 1.59%.
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