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The Ensign Group (ENSG)
NASDAQ:ENSG
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The Ensign Group
(NASDAQ:ENSG)
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Rating:74Outperform
Price Target:
$221.00
▲(3.69% Upside)
Action:ReiteratedDate:02/06/26
The score is driven primarily by solid underlying financial performance (multi-year growth and a strong 2025 cash flow rebound) and a very positive earnings-call outlook with upbeat 2026 guidance. Technicals are supportive with price above major moving averages, though elevated RSI suggests the stock may be stretched short-term. Valuation is the main constraint given the higher P/E and minimal dividend yield.
Positive Factors
Sustained Revenue & Earnings Growth
Multi-year top-line and profit expansion demonstrates scalable core operations and durable demand for post-acute services. Consistent revenue and EPS growth indicates improving payer mix, referral traction and operational leverage that can sustain earnings over the next 2–6 months and beyond.
Robust Cash Generation & Liquidity
Strong 2025 cash flow and >$1B total liquidity give the company durable financial flexibility to fund acquisitions, CapEx, dividends and working capital. Healthy cash conversion in 2025 reduces refinancing risk and supports strategic growth even if near-term earnings face headwinds.
High Clinical Quality and Execution
Superior clinical scores and above-market occupancy support durable referral flows, higher acuity and better payer mixes. Proven ability to integrate and improve operations (82 additions since 2024) signals repeatable execution that underpins sustainable margin and revenue expansion.
Negative Factors
Elevated Leverage
Material absolute debt and moderate leverage leave less cushion against reimbursement shocks or cyclical occupancy declines. Higher interest or refinancing needs could constrain capital allocation, making the balance sheet more sensitive to operational setbacks over the medium term.
Rising M&A Valuations & CapEx Needs
Acquisition-driven growth depends on disciplined pricing and successful integrations. Elevated purchase prices and sizable remediation or replacement capex for older facilities lengthen payback periods and can compress long-term returns if realized synergies or occupancy ramps are slower than modeled.
Regulatory & Labor Pressure on Margins
Dependence on Medicare/Medicaid reimbursement and labor-intensive care exposes margins to policy shifts and wage pressure. Structural reimbursement reform or adverse state budget actions, combined with elevated labor costs, can persistently pressure operating margins and cash conversion.
The Ensign Group (ENSG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$12.39B
Dividend Yield0.14%
Average Volume (3M)417.40K
Price to Earnings (P/E)36.5
Beta (1Y)0.23
Revenue Growth18.61%
EPS Growth35.76%
CountryUS
Employees39,300
SectorHealthcare
Sector Strength45
IndustryMedical - Care Facilities
Share Statistics
EPS (TTM)1.82
Shares Outstanding58,112,780
10 Day Avg. Volume379,050
30 Day Avg. Volume417,397
Financial Highlights & Ratios
PEG Ratio2.06
Price to Book (P/B)4.47
Price to Sales (P/S)1.97
P/FCF Ratio26.93
Enterprise Value/Market Cap1.29
Enterprise Value/Revenue3.17
Enterprise Value/Gross Profit23.05
Enterprise Value/Ebitda28.21
Forecast
1Y Price Target
$219.25Price Target Upside2.87% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
EPS Forecast (FY)7.48
Revenue Forecast (FY)$5.79B
The Ensign Group Business Overview & Revenue Model
Company DescriptionThe Ensign Group, Inc. provides health care services in the post-acute care continuum and other ancillary businesses. The company operates in two segments, Skilled Services and Real Estate. The company offers skilled services, which include short and long-term nursing care services for patients with chronic conditions, prolonged illness, and the elderly; and physical, occupational, and speech therapies and other rehabilitative and healthcare services. It also provides standard services, such as room and board, special nutritional programs, social, recreational, entertainment, and other services. In addition, the company offers senior living, as well as mobile diagnostics services; leases real estate properties; and provides other ancillary services consisting of digital x-ray, ultrasound, electrocardiogram, laboratory, sub-acute, and patient transportation services to people in their homes or at long-term care facilities. As of April 4, 2022, it operated 252 healthcare facilities in Arizona, California, Colorado, Idaho, Iowa, Kansas, Nebraska, Nevada, South Carolina, Texas, Utah, Washington, and Wisconsin. The company was incorporated in 1999 and is based in San Juan Capistrano, California.
How the Company Makes MoneyThe Ensign Group generates revenue primarily through the provision of skilled nursing and assisted living services, billing government programs such as Medicare and Medicaid, as well as private pay sources. A significant portion of its revenue comes from reimbursements for healthcare services provided to patients in its facilities. Additionally, Ensign has expanded its revenue streams by acquiring and managing skilled nursing facilities, which allows it to benefit from economies of scale and operational efficiencies. Partnerships with healthcare networks and insurance providers also contribute to its earnings, enabling Ensign to secure contracts that ensure a steady flow of patients and revenue. The company's focus on quality care and operational excellence helps maintain high occupancy rates, further supporting its financial performance.
The Ensign Group Earnings Call Summary
Earnings Call Date:Feb 04, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 23, 2026
Earnings Call Sentiment Positive
The call communicates a strongly positive performance profile: record quarterly and annual financial results, multi-year high growth rates, improving occupancy and skilled mix, robust liquidity and disciplined but active M&A and real estate expansion. Management acknowledges manageable headwinds — higher acquisition valuations, construction and CapEx needs, regulatory/reimbursement variability and remaining pockets of lower occupancy — but presents concrete operational progress (quality metrics, turnover reduction, specialty program wins) and ample capital to pursue opportunities. Overall, the positives — driven by double-digit revenue and earnings growth, strong cash flow, low leverage and demonstrated acquisition and transition capability — substantially outweigh the noted challenges.Q4-2025 Updates
Positive Updates
Record Financial Performance (FY2025 and Q4)
FY2025 consolidated revenue $5.1B (+18.7% YoY); GAAP diluted EPS $5.84 (+14.1% YoY); adjusted diluted EPS $6.57 (+19.5% YoY); GAAP net income $344M (+15.4% YoY); adjusted net income $386.6M (+20.6% YoY). Q4 consolidated revenue $1.4B (+20.2% YoY); Q4 GAAP diluted EPS $1.61 (+18.4% YoY); Q4 adjusted diluted EPS $1.82 (+22.1% YoY); Q4 GAAP net income $95.5M (+19.8% YoY); Q4 adjusted net income $107.8M (+23.2% YoY).
Strong Multi-Year Growth Trajectory
Five-year performance: total adjusted revenue increased $2.7B (111%), representing a 16% CAGR; diluted adjusted EPS grew $3.44 (16% CAGR); adjusted net income grew 121% (17% CAGR).
Confident 2026 Guidance
2026 guidance: EPS $7.41–$7.61 (midpoint implies +14.3% vs 2025 and +36.5% vs 2024); revenue guidance $5.77B–$5.84B — management cites momentum in occupancy, skilled mix and labor improvements as drivers.
Clinical Quality Outperformance
Same-store Ensign operations outperformed peers by 24% at the state level and 33% at the county level in most recent CMS survey; 19% advantage in overall 4- and 5-star buildings vs peers; same-store results 22% better on national 5-star quality measures and 17% above the state level — underpinning referral and acuity gains.
Meaningful Operational Improvements — Occupancy and Payer Mix
All-time highs: same-store occupancy 83.8% and transitioning occupancy 84.9% in the quarter. Skilled days increased same-store +8.5% and transitioning +10% YoY. Same-store Medicare revenue +15.7% and Medicare days +11% YoY. Managed care revenue increased same-store +8.9% and transitioning +15% YoY.
Successful Acquisitions and Capacity Expansion
Since 2024, 82 new operations sourced/underwritten/closed/transitioned. This quarter added 17 operations (including 12 real estate assets) and 1,371 skilled nursing beds across 7 states. Recently completed strategic deals (e.g., Utah portfolio) performing ahead of schedule.
High-Performing Local Operations Driving Growth
South Bay Post Acute: EBIT before tax +127% YoY; occupancy 96%→97%; skilled revenue mix +25%; Medicare days +86%; managed care +22%. Shoreline Health: Q4 revenue +11% YoY; EBIT +~33% YoY; Medicare days +24%; managed care +103%; skilled revenue mix 70%.
Strong Balance Sheet and Liquidity
Cash & equivalents $504M; operating cash flow $564M; >$590M available on credit line — combined >$1B in available capital. Lease-adjusted net debt-to-EBITDA at a record low 1.77x after substantial 2025 investments. Own 160 assets (136 debt-free).
Real Estate / REIT Performance
Standard Bearer generated quarterly rental revenue $34.5M ($29.3M from Ensign affiliates) and reported FFO $20.4M with EBITDAR to rent coverage of 2.6x; Standard Bearer now owns 154 properties (120 leased to Ensign affiliates, 35 to third parties).
Dividend Track Record
Increased dividend for the 23rd consecutive year; paid a quarterly cash dividend of $0.065 per common share, signaling continued capital return discipline.
Negative Updates
Rising M&A Valuations and Increased Acquisition Cost
Management noted a seller-friendly market with rising valuations. Higher-priced, newer assets may command premiums and certain deals require longer ramps; older assets can require heavy CapEx to modernize, increasing total acquisition cost and potentially extending payback periods.
Concentration of Opportunity — Occupancy Still Below Peak in Many Assets
While same-store occupancy hit record highs (~83.8%), management emphasized this level still leaves significant organic upside. Some acquired/recently transitioning operations remain far below mature-campus occupancies; one cited operation (Shoreline) still has overall occupancy below 74% despite improvement.
Construction and Replacement Projects Are Costly and Time-Consuming
New construction and replacement facilities require significant capital, time and licensing; management noted the complexity and expense of building projects (though replacement projects can shorten returns).
Regulatory / Reimbursement Uncertainties
Risks called out include changes in reimbursement systems (e.g., Medicare value-based purchasing, infection metrics), delays/changes in state budgets and seasonality in occupancy and skilled mix that could affect quarterly performance and reimbursement trends.
Labor Market and Operational Risks Persist
Although turnover and agency usage improved and DON turnover declined 33%, the company acknowledged macro labor environment dynamics and seasonality could influence overtime and agency usage; continued focus required to sustain gains.
Execution Risk on Specialty / Higher-Acuity Programs
Expanding into higher-acuity services (behavioral health, bariatric, TPN-capable care) creates opportunity but also execution risk — these programs require specialized training, equipment and partnerships and can steepen the operational ramp for some acquisitions.
Company Guidance
Ensign guided 2026 diluted EPS of $7.41–$7.61 and revenue of $5.77B–$5.84B (midpoint +14.3% vs 2025 and +36.5% vs 2024), based on ~60 million diluted weighted shares, a 25% tax rate, and the inclusion of acquisitions closed/expected in Q1 while excluding stock‑based compensation and system implementation amortization; management noted this guidance reflects ongoing gains in occupancy, skilled mix and labor trends but remains subject to reimbursement, state budget, seasonality and acquisition timing risks. For context, 2025 results included GAAP EPS $5.84 (+14.1%), adjusted EPS $6.57 (+19.5%), consolidated revenue $5.1B (+18.7%), GAAP net income $344M (+15.4%) and adjusted net income $386.6M (+20.6%); Q4 results were GAAP EPS $1.61, adjusted EPS $1.82, Q4 revenue $1.4B and adjusted net income $107.8M. Balance‑sheet metrics cited to support the outlook included cash $504M, cash flow from operations $564M, >$590M available on the line of credit (over $1B total liquidity), lease‑adjusted net debt/EBITDA of 1.77x and >$500M invested in 2025.The Ensign Group Financial Statement Overview
Summary
Income statement shows strong multi-year revenue and net income growth (2020–2025), but profitability appears somewhat mixed with signs of cost pressure below gross margin. Balance sheet is supported by meaningful equity growth, yet leverage remains elevated with debt around $2.07B and historically ~1.1–1.4x debt-to-equity. Cash flow improved materially in 2025 (operating cash flow ~$564M; free cash flow ~$371M), though cash conversion has been uneven in prior years (notably weaker in 2024).Income Statement
Revenue has grown consistently from 2020 to 2025, with especially strong growth in 2023–2024, and profits have also expanded in dollars (net income rising from $170M in 2020 to $344M in 2025). However, profitability looks mixed: margins in 2024 were solid (about 7% net margin), but the limited 2025 detail suggests gross margin may have stepped up while operating profitability did not expand proportionally, pointing to some cost pressure below the gross line.78
Positive
Balance Sheet
The company has built equity meaningfully over time (about $818M in 2020 to ~$2.23B in 2025) alongside asset growth, which supports balance-sheet resilience. The main offset is leverage: debt remains high at ~$2.07B in 2025 and debt has generally risen with expansion; historical debt-to-equity has hovered around ~1.1–1.4x (2024 ~1.07x), which is manageable but leaves less room if operating conditions weaken.66
Positive
Cash Flow
Cash generation is generally healthy, highlighted by strong 2025 operating cash flow (~$564M) and free cash flow (~$371M), with a sharp rebound in free cash flow growth in 2025 after a weak 2024. That said, cash conversion has been somewhat uneven: in prior years, operating cash flow covered less than all of earnings (e.g., 2024 roughly half), and free cash flow versus net income also dipped in 2024 versus 2023, indicating periodic working-capital or reinvestment swings.72
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 5.06B | 4.26B | 3.73B | 3.03B | 2.63B |
| Gross Profit | 695.13M | 667.59M | 590.76M | 517.99M | 468.21M |
| EBITDA | 567.94M | 478.52M | 353.24M | 360.38M | 320.84M |
| Net Income | 343.97M | 297.97M | 209.40M | 224.68M | 194.65M |
Balance Sheet | |||||
| Total Assets | 5.46B | 4.67B | 4.18B | 3.45B | 2.85B |
| Cash, Cash Equivalents and Short-Term Investments | 572.39M | 526.85M | 526.86M | 331.71M | 275.96M |
| Total Debt | 4.15B | 1.97B | 1.87B | 1.57B | 1.27B |
| Total Liabilities | 3.23B | 2.83B | 2.68B | 2.20B | 1.83B |
| Stockholders Equity | 2.23B | 1.84B | 1.49B | 1.25B | 1.02B |
Cash Flow | |||||
| Free Cash Flow | 370.71M | 188.95M | 270.49M | 184.97M | 206.13M |
| Operating Cash Flow | 564.27M | 347.19M | 376.67M | 272.51M | 275.68M |
| Investing Cash Flow | -513.18M | -390.05M | -182.70M | -186.18M | -173.91M |
| Financing Cash Flow | -11.81M | -2.16M | -612.00K | -32.26M | -76.14M |
The Ensign Group Technical Analysis
Positive
213.13
Price Trends
187.50
Positive
184.00
Positive
170.50
Positive
Market Momentum
8.71
Negative
70.46
Negative
76.78
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ENSG, the sentiment is Positive. The current price of 213.13 is above the 20-day moving average (MA) of 203.90, above the 50-day MA of 187.50, and above the 200-day MA of 170.50, indicating a bullish trend. The MACD of 8.71 indicates Negative momentum. The RSI at 70.46 is Negative, neither overbought nor oversold. The STOCH value of 76.78 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ENSG.
The Ensign Group Risk Analysis
The Ensign Group disclosed 53 risk factors in its most recent earnings report. The Ensign Group reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
The Ensign Group Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $2.65B | 22.23 | 9.94% | 1.80% | 23.74% | -18.99% | |
74 Outperform | $12.39B | 36.48 | 16.91% | 0.14% | 18.61% | 35.76% | |
74 Outperform | $12.51B | 8.87 | 21.36% | 0.35% | 10.21% | 39.58% | |
73 Outperform | $10.74B | 19.50 | 25.11% | 0.65% | 11.13% | 27.53% | |
69 Neutral | $21.12B | 15.68 | 33.54% | ― | -0.56% | -53.50% | |
56 Neutral | $1.80B | -22.70 | -9.45% | ― | 10.14% | -182.12% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% |
* Healthcare Sector Average
ENSG
The Ensign Group
213.13
83.77
64.76%
EHC
Encompass Health
108.01
10.18
10.41%
NHC
National Healthcare
170.51
79.43
87.21%
THC
Tenet Healthcare
242.88
120.21
97.99%
UHS
Universal Health
204.85
32.23
18.67%
SGRY
Surgery Partners
13.92
-9.88
-41.51%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.