Q2 2026 Ensign Group, Inc Earnings Call Transcript
Key Points
- Ensign Group Inc (ENSG) reported record Q2 results with GAAP diluted EPS of $1.68, up 16.7% year-over-year, and adjusted diluted EPS of $1.92, up 20.8%.
- The company raised its full-year 2026 earnings guidance to $7.75-$7.85 per diluted share, up from $7.48-$7.62, reflecting strong operational momentum.
- Same-store and transitioning occupancy reached 84.1% and 84.7%, respectively, with skilled mix days up 6.2% and managed care revenue up 16.2% year-over-year.
- Clinical outcomes are industry-leading, with over 80% of skilled nursing operations earning a CMS quality measure rating of 4 or 5 stars and zero CMS Special Focus facilities.
- The company has a strong balance sheet with $262.3 million in cash, $592 million available under its line of credit, and a lease-adjusted net debt-to-EBITDA ratio of 2.0 times.
- Leadership stability is a key differentiator, with administrator turnover 46% lower than the CMS state average and RN retention 8% better than the 17-state footprint average.
- Ensign added 20 new operations in Q2, including 19 in Texas, expanding its portfolio to 398 affiliates with significant long-term turnaround potential.
- The Reserve case study highlights a successful turnaround: from a Special Focus facility to a 5-star CMS rating, 92% occupancy, and 97% EBIT growth year-over-year.
- Newly acquired Texas operations are currently below average occupancy and present significant clinical and operational hurdles, with no immediate accretion expected.
- The company faces ongoing labor cost pressures, though contract labor usage has stabilized at low levels and turnover is improving faster than the industry average.
- Medicaid rate increases remain modest, with only stability expected rather than major uplifts, which could limit revenue growth from this payer source.
- CMS changes to the five-star quality measure rating methodology could impact some facilities, though preliminary analysis shows a smaller-than-expected effect.
- The company's growth strategy relies heavily on finding and retaining local leadership talent, which remains a challenge and a common reason for passing on acquisition opportunities.
- Seasonality in occupancy and skilled mix, along with potential delays in state budgets, could create quarterly volatility in financial performance.
- The large bolus of recently acquired facilities (71 operations since 2025) may take time to transition to same-store status and generate expected returns.
Hello, everyone. Thank you for joining us, and welcome to the Ensign Group Q2 earnings call.
(Operator Instructions)
I will now hand the conference over to Mr. Keetch. Please go ahead.
Thank you, operator, and welcome, everyone. We filed our earnings press release on Monday, and it is available on the Investor Relations section of our website at ensigngroup.net. A replay of this call will also be available on our website until 5:00 PM Pacific on August 28, 2026. We want to remind anyone that may be listening to a replay of this call that all statements made are as of today, July 29, 2026, and these statements have not been or will be updated subsequent to today's call.
Also, any forward-looking statements made today are based on management's current expectations, assumptions and beliefs about our business and the environment in which we operate. These statements are subject to risks and uncertainties that could cause our actual results to
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