Ensign Group(US:ENSG)2025-11-03 21:04Operations and Expansion - As of September 30, 2025, the company operates 361 skilled nursing and senior living facilities, with a total of 37,076 operational skilled nursing beds and 3,401 senior living units[166]. - During the nine months ended September 30, 2025, the company expanded operations by adding 28 stand-alone skilled nursing operations and five stand-alone senior living operations, contributing 3,384 operational skilled nursing beds and 313 operational senior living units[171]. - Subsequent to September 30, 2025, the company added eight stand-alone skilled nursing operations, increasing operational skilled nursing beds by 428[172]. - Standard Bearer Healthcare REIT, Inc. added $228.9 million of real estate associated with 15 stand-alone skilled nursing operations and one stand-alone senior living operation during the nine months ended September 30, 2025[175]. - The company expanded into Alabama, Alaska, and Oregon in the first quarter of 2025, enhancing its national presence in attractive markets[173]. - The company’s real estate portfolio includes 148 owned properties, with 112 facilities operated and managed by the company and 36 leased to third-party operators[166]. - The company reported a total of 37,076 operational beds at the end of Q3 2025, with available patient days increasing to 3,367,685 from 2,974,651 in Q3 2024[191]. - The company continues to acquire underperforming skilled nursing operations and integrate them with its operational principles[326]. - The company aims to reach full clinical and financial potential for each operation through diligent efforts with existing and recently acquired operations[326]. Financial Performance - Total service revenue for Q3 2025 reached $1,289.8 million, up from $1,076.1 million in Q3 2024, representing a year-over-year growth of approximately 19.8%[194]. - For the nine months ended September 30, 2025, total service revenue was $3,678.2 million, compared to $3,111.2 million for the same period in 2024, reflecting a growth of approximately 18.2%[196]. - Total revenue for the three months ended September 30, 2025, increased by $214.6 million, or 19.8%, compared to the same period in 2024[324]. - Diluted GAAP earnings per share grew by 6.0%, from $1.34 to $1.42, for the three months ended September 30, 2025, compared to the same period in 2024[324]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $435,086,000, up from $356,766,000 in the same period of 2024[329]. - Adjusted EBT for the three months ended September 30, 2025, was $128,721,000, compared to $108,352,000 in Q3 2024, reflecting a 18.5% increase[347]. - Net income for the three months ended September 30, 2025, was $83,911,000, an increase of 6.0% from $78,567,000 in 2024[349]. - The company reported a decrease in total expenses to 92.6% of total revenue for Q3 2025, compared to 91.7% in Q3 2024[328]. Revenue Sources - Medicaid revenue for Q3 2025 was $501.7 million, an increase from $416.2 million in Q3 2024, while Medicare revenue rose to $303.3 million from $263.6 million[194]. - Managed care revenue for Q3 2025 was $238.0 million, up from $202.5 million in Q3 2024, indicating a growth of approximately 17.5%[194]. - The skilled services segment accounted for 71.4% of total service revenue for the nine months ended September 30, 2025, slightly down from 72.9% in the same period of 2024[196]. - Skilled nursing average daily revenue rates for Medicare increased to $792.47 in 2025 from $750.49 in 2024, representing a growth of 5.3%[362]. - Total skilled nursing revenue rose to $420.16 million in 2025, up from $395.24 million in 2024, reflecting an increase of 6.3%[362]. - The average daily revenue for Medicaid increased to $304.16 in 2025 from $294.55 in 2024, showing a rise of 3.0%[362]. - Overall, the company demonstrated a positive trend in skilled nursing revenue across various payor sources, indicating strong operational performance[362]. Regulatory and Compliance - The company settled wage-related violations for $12,000 pending court approval during the three months ended September 30, 2025[179]. - The OBBB establishes a limit of $1.0 million for home equity that can be exempted from calculating an individual's eligibility for Medicaid in seeking long-term care starting January 1, 2028[208]. - States must conduct Medicaid eligibility redeterminations every six months starting in the first quarter of 2027, rather than annually[206]. - The Medicare Access and CHIP Reauthorization Act (MACRA) introduces two separate conversion factors for Medicare-participating providers, impacting reimbursement for therapeutic services[218]. - The Skilled Nursing Facility Quality Reporting Program (SNF QRP) imposes a 2.0% payment reduction for facilities that fail to submit required quality data[228]. - CMS has increased penalties for Special Focus Facilities (SFFs) that fail to improve performance, with heightened scrutiny and oversight lasting three years post-graduation from the program[296]. - CMS is intensifying survey and enforcement activities, focusing on facilities with substandard care or repeat violations of standards[298]. Market Trends and Future Outlook - The company continues to focus on expanding its skilled nursing and rehabilitation services, which are critical for maintaining revenue growth and profitability[192]. - For fiscal year 2026, CMS has finalized a 3.2% increase to SNF PPS payment rates, based on a final SNF market basket of 3.3% and adjustments[213]. - The company anticipates lower overall occupancy during years of growth due to historically lower rates at Recently Acquired Facilities[361]. - The company has made progress on initiatives related to increasing occupancy and the acuity of patients served in its facilities[326].