The Ensign Group met Wall Street’s revenue expectations in the first quarter, with management highlighting strong organic growth and substantial increases in occupancy and skilled mix across both mature and newly acquired facilities. CEO Barry Port attributed these gains to effective local leadership, improved staff retention, and the company’s ability to integrate 47 new operations since January 2024. Port noted that operational improvements, particularly in managed care census and skilled nursing, were possible due to focused clinical outcomes and reduced reliance on agency staffing.
Is now the time to buy ENSG? Find out in our full research report (it’s free).
The Ensign Group (ENSG) Q1 CY2025 Highlights:
- Revenue: $1.17 billion vs analyst estimates of $1.17 billion (16.1% year-on-year growth, in line)
- Adjusted EPS: $1.52 vs analyst estimates of $1.49 (1.9% beat)
- Adjusted EBITDA: $137.4 million vs analyst estimates of $133.7 million (11.7% margin, 2.8% beat)
- Operating Margin: 8.6%, in line with the same quarter last year
- Sales Volumes rose 12.5% year on year (10.1% in the same quarter last year)
- Market Capitalization: $8.76 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions The Ensign Group’s Q1 Earnings Call
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Ben Hendrix (RBC Capital Markets) asked about the impact of value-based managed care contracts on guidance. CFO Suzanne Snapper responded that deep local relationships with MCOs and clinical focus drive both clinical and financial success.
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Ben Hendrix (RBC Capital Markets) also inquired about policy risks, specifically around supplemental Medicaid. CEO Barry Port explained that management is actively engaging with lawmakers and monitoring developments, but feels current trends are not a near-term threat.
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Tao Qiu (Macquarie Capital) questioned the sustainability of the recent record investment pace and the mix of real estate vs. lease deals. Director Chad Keetch said deal flow remains robust, with future deals likely more lease-focused, and stressed that leadership talent is the main growth limiter.
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Tao Qiu (Macquarie Capital) asked about ongoing staffing constraints and the relationship between occupancy and operating leverage. CEO Barry Port stated that Ensign is near pre-pandemic staffing levels, with turnover and agency usage down, and sees room for further leverage as stability continues.
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A.J. Rice (UBS) probed competition for deals and entry into new Southeast markets with lower Medicaid rates. Keetch noted competition is steady, and local expertise ensures the company can achieve desired economics regardless of market.
Catalysts in Upcoming Quarters
In future quarters, our team will focus on (1) the pace and success of new acquisition integrations, especially in recently entered states; (2) sustained improvements in staff retention and reductions in agency labor; and (3) ongoing development of managed care partnerships and payer mix. Progress on regulatory and Medicaid funding issues will remain a critical area to watch.
The Ensign Group currently trades at $152.87, up from $128.39 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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