ENSIGN GROUP, INC Q1 FY2025 earnings call

• Record-setting quarter with strong clinical outcomes and growth across all buckets and markets.
• Added 47 new operations since January 2024, including 19 in the quarter, with 1,906 new skilled nursing beds and 200 senior living units across 8 states.
• Examples of Lomita Post-Acute Care Center showing 17.7% revenue increase, 86.4% EBIT improvement, and 5-star CMS ratings.
• Copperfield Healthcare and Rehabilitation with 90.7% occupancy, 43% growth in skilled Medicare days, and 14.8% managed care census improvement.
• Focus on local leadership, caregiver retention, and operational efficiencies.

GAAP diluted earnings per share was $1.37, an increase of 15.1%; adjusted diluted earnings per share was $1.52, an increase of 16.9%. Consolidated GAAP revenue and adjusted revenues were both $1.2 billion, an increase of 16.1%. GAAP net income was $80.3 million, an increase of 16.6%; adjusted net income was $89 million, an increase of 18%. Same-store and transitioning occupancy reached all-time highs at 82.6% and 83.5% respectively. Skilled census increased for same-store operations by 7.6% and transitioning operations by 9.9% over the prior year quarter. Managed care census grew by 8.9% (same-store) and 15.6% (transitioning) over the prior year quarter. Standard Bearer Healthcare REIT generated rental revenue of $28.4 million for the quarter, with $23.9 million from Ensign affiliated operations, and reported $17.1 million in FFO with an EBITDAR to rent coverage ratio of 2.6 times.

• Raised annual 2025 earnings guidance to between $6.22 and $6.38 per diluted share, up from $6.16 to $6.34.
• Increased annual revenue guidance to $4.89 billion to $4.94 billion, up from $4.83 billion to $4.91 billion, accounting for current quarter growth and anticipated acquisitions.

• Forward-looking statements subject to risks and uncertainties that could cause actual results to materially differ from those expressed or implied.
• Regulatory changes, market uncertainties, and potential impacts of federal securities laws on forward-looking statements.

Q: Ben Hendrix asked about managed care contracting and value-based contracts.

A: Suzanne Snapper and Barry Port discussed local partnerships with MCOs, clinical focus driving financial returns.

Q: Tao Qiu asked about deal volume, marketing dynamics, and mix of real estate vs lease deals.

A: Chad Keetch talked about disciplined approach, cash position, and focus on leadership pipeline.

Q: Tao Qiu asked about staffing constraints and occupancy leverage.

A: Barry Port and Suzanne Snapper discussed staffing recovery, agency staffing decrease, and stability leading to leverage.

Q: A.J. Rice asked about deal competition and Medicaid rates.

A: Chad Keetch and Barry Port discussed competition dynamics, local expertise in new markets, and state rate discussions.