ENSIGN

GROUP

Investor Presentation May 2017

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 Statements in this presentation concerning The Ensign Group’s (“Ensign” or the “Company”) future prospects are forward-looking statements based on management’s current expectations, assumptions and beliefs about our business, financial performance, operating results, the industry in which we operate and possible future events. These statements include, but are not limited to, statements regarding our growth prospects and future operating and financial performance. They are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to materially and adversely differ from those expressed in any forwardlooking statement. Readers should not place undue reliance on any forward-looking statements and are encouraged to review our periodic filings with the Securities and Exchange Commission, including our recently filed Forms 10-K and 10-Q, for a more complete discussion of the risks and other factors that could affect Ensign’s business, prospects and any forwardlooking statements. These documents are available on our website at www.ensigngroup.net. This information is provided as of today’s date only, and except as required by federal securities law, Ensign does not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changing circumstances or for any other reason after the date of this presentation. We supplement our GAAP reporting with EBITDA, EBITDAR, adjusted EBITDA, adjusted EBITDAR, adjusted net income and adjusted EPS metrics, which are supplemental non-GAAP financial measures. They reflect an additional way of looking at aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. They should not be relied upon to the exclusion of GAAP financial measures. A more ample discussion of these GAAP financial measures is available on the “Investor Relations” tab of our website and a reconciliation to GAAP is included as an appendix to this presentation. During this presentation we may reference operations in any or all of the 215 transitional, skilled and assisted living Operations and other businesses operated by our subsidiaries. Each such business is operated as a separate, wholly-owned independent operating subsidiary that has its own management, employees and assets. References in the presentation to the consolidated “Company” and “its” assets and activities, as well as the use of the terms “we,” “us,” “our,” and similar verbiage are not meant to imply that The Ensign Group, Inc. has direct operating assets, employees or revenue, or that any of the Operations, the Service Center or the captive insurance subsidiary are operated by the same entity.

Table of Contents Ensign Overview

4

Organic Growth

9

Strategic Growth

17

Financial Update

22

Industry Overview

26

New Ventures

33

Appendix

36

ENSIGN

OVERVIEW

Presence Across 14 States

Ensign Overview

Organic Growth

Strategic Growth

Financial Update

Industry Overview

New Ventures

5

Ensign Overview Healthcare Market Map

Segment Revenue – Q1 2017

Acute Care

Patient Service Intensity

Urgent Care Inpatient Rehab

Outpatient Rehab

7.3%

Transitional & 84.3% Skilled Services

LTAC

Assisted Living

Home Health & 7.3% Hospice 1.1%

Other

Skilled Nursing

Revenue Payor Mix – Q1 2017(1)

Assisted Living Hospice

Other(2) Home Health

Managed Care

Home Care HOME

14.7% 38.8%

17.1%

Medicaid

Denotes Ensign Business 29.4%

Patient Illness Intensity

Source: Company filings, management. Other: Mobile Diagnostics, Urgent Care and Medical Transport not shown. (1) Represents all business lines. (2) Includes revenue from all private payors and revenue generated in our other ancillary operations.

Ensign Overview

Organic Growth

Strategic Growth

Financial Update

Medicare

Industry Overview

New Ventures

6

The Ensign Formula: Empower Local Leadership Local Leadership

Superior Clinical Outcomes

Local Market Operation of Choice

Ensign Overview

Organic Growth

Strategic Growth

Financial Update

Industry Overview

New Ventures

7

Ensign Investment Thesis Superior Results Clinical Excellence Organic Growth Opportunities In-House Therapy

Strategic Growth Opportunities

Local Leadership & Accountability

Unique Company Culture

Ensign is Positioned to Deliver Superior Clinical Excellence that Will Generate Exceptional Financial and Operating Results Ensign Overview

Organic Growth

Strategic Growth

Financial Update

Industry Overview

New Ventures

8

ORGANIC

GROWTH

Clinical Success = Financial Success Ensign CMS Star Rating Trend

83%

Facility count by Star Rating

200

1-Star

2-Star

3-Star

4-Star

5-Star

150 100 50

Over a 2-Year Period(1)

0 14

21

2009

38

45

2011

60

77

2013

72

86

2015

94 Mar-17

Ensign Adjusted EBITDAR Trend

Ensign 1-Star Facility % Trend

$ in millions

41%

$262 $268

33%

$221 20%

14% 7%

2009

2010

2011

2012

2013

3% 2014

6%

2015

10%

$87

$107

$149 $159 $130 $144

6%

2016 Mar-17

2009 2010 2011 2012 2013 2014 2015 2016 TTM

Source: Company filings, management. (1) Star Rating Process encompasses a rolling 3-year look-back period.

Ensign Overview

Organic Growth

Strategic Growth

Financial Update

Industry Overview

New Ventures

10

Established Track Record of Organic Top and Bottom-line Growth Average Operational Improvement from 1st quarter to 5th quarter(1)

Occupancy

Skilled Mix Revenue

Quality Mix Revenue

EBITDAR Margin

406 bps

504 bps

327 bps

145 bps

23%

16% of Ensign’s skilled nursing operations are “recently acquired”

61%

Same Facility

16%

Transitioning

15. 1%

Recently acquired skilled nursing operations are primed for organic growth

13.4%

166 bps

Average 1st Q EBITDAR Margin % for Recently Acquired Skilled Nursing Operations(2)

Recently Acquired

Ensign’s Untapped Organic Growth is the Largest in History Source: Management. (1) Acquisition track record based on an average for all SNF acquisitions from 2001 to July 1, 2015 measuring 5 quarters of operating performance. (2) Recently acquired skilled nursing Operations were acquired on or after January 1, 2016.

Ensign Overview

Organic Growth

Strategic Growth

Financial Update

Industry Overview

New Ventures

11

Q1 2017 Summary Metrics Skilled Mix Revenue

Medicare Rates

Consolidated 57.0% 104 Operations

Consolidated $565

40 Operations

27 Operations

52.0%

57.0%

53.5%

Same Store

Transitioning

Recently Acquired

104 Operations

40 Operations

27 Operations

$596

$539

$502

Same Store

Transitioning

Recently Acquired

Occupancy

Skilled Mix Days Consolidated 32.0%

Consolidated 74.9% 104 Operations

40 Operations

78.5%

74.5%

Same Store

Transitioning

Medicaid $205

27 Operations

104 Operations

38.3%

30.9%

65.9% Recently Acquired

40 Operations

Same Store

Transitioning

27 Operations

29.2% Recently Acquired

Source: Company filings, management. At the end of Q1, there were 171 skilled nursing Operations in operation. Transitioning represents all skilled nursing Operations purchased from January 1, 2014 to December 31, 2015 totaling 40 Operations. Same Store represents all skilling nursing Operations purchased prior to January 1, 2014 totaling 104 Operations.

Ensign Overview

Organic Growth

Strategic Growth

Financial Update

Industry Overview

New Ventures

12

Case Study - Legend Oaks Healthcare and Rehabilitation An Example of a recently acquired operation • • • •

124 licensed-bed facility in West Houston, Texas Acquired by Ensign in May 2016 EBITDAR has grown 92% from the first month of operation to Q1 2017. Increased Medicare average daily census by 44% from the first month of operation to Q1 2017.

Post Acquisition Revenue Growth $ in thousands

Post Acquisition EBITDAR Growth $ in thousands

$2,534

$2,480

$603

$2,611 $478

$1,708

Q2 2016

Ensign Overview

$455

$315

Q3 2016

Organic Growth

Q4 2016

Q1 2017

Strategic Growth

Q2 2016

Financial Update

Q3 2016

Industry Overview

Q4 2016

New Ventures

Q1 2017

13

Case Study – Opus Post Acute Rehabilitation An Example of a Transitioning Operation • • •

• •

100 licensed-bed facility in West Columbia, South Carolina Acquired by Ensign in December 2015 Revenue growth: occupancy expansion from 68.5% in the first month of operations to 79.5% occupancy in March 2017 EBITDAR expansion: 57% growth since the first quarter of operations Skilled mix growth: skilled mix days growth from 35.0% in the first month of operations to 38.2% in March 2017

Post Acquisition Revenue Growth

Post Acquisition EBITDAR Growth

$ in thousands $252

$1,995 $1,690 $160

1st QTD

Ensign Overview

1st QTD

5th QTD

Organic Growth

Strategic Growth

Financial Update

5th QTD

Industry Overview

New Ventures

14

Case Study – Brookfield Rehabilitation An Example of a Same Store Operation •

143 licensed-bed facility in Downey, California

•

Acquired by Ensign in June 2003

•

CMS Star Rating:

•

EBITDAR has grown 86% from Q1 2016 to Q1 2017

•

Typical Cases: cardiac, orthopedic, pressure ulcer/wound, CJR, transplants, LVAD/HVAD

Post Acquisition Revenue Growth $ in thousands

$2,976

Post Acquisition EBITDAR Growth $ in thousands

$2,843

$723

$766

$2,351 $412

Q1 2016

Ensign Overview

Q4 2016

Organic Growth

Q1 2017

Strategic Growth

Q1 2016

Financial Update

Q4 2016

Industry Overview

Q1 2017

New Ventures

15

Multifaceted Growth Opportunity Skilled Mix

Disciplined Acquisitions

Occupancy

Organic

CREATING VALUE Strategic

Fundamentals

Distressed Assets

New Ventures Ensign Overview

Organic Growth

Strategic Growth

Financial Update

Industry Overview

New Ventures

16

STRATEGIC

GROWTH

Proven Track Record of Successful Acquisitions Adjusted EBITDAR(1) Growth Outpaces Revenue Growth $ in millions

$268 $221 $149

$130

$542

$411 '07

$1,342

$87

$60

'08

'09

$1,713

$905

$758 '10 '11 Revenue

'12

'13 '14 EBITDAR

'15

16

TTM

16% EBITDAR CAGR(1)

EBITDAR growth has outpaced revenue growth by nearly 200 basis points on average over the past 10 years.

15% Revenue CAGR Source: Company filings, management. (1) See appendix for calculation of Adjusted EBITDAR.

Ensign Overview

Organic Growth

Strategic Growth

Financial Update

Industry Overview

New Ventures

18

Proven Track Record of Successful Acquisitions Historical Unit Growth

61

63

77

82

'07

'08

'09

'10

102

108

119

136

'11

'12

'13

'14

Skilled Nursing & Assisted Living

21 20 4 2

186

210

215

'15

'16

'17

Other

Home Health / Home Care Hospice Agencies Mobile Diagnostic Operations Medical Transport Companies

Source: Company filings, management.

Ensign Overview

Organic Growth

Strategic Growth

Financial Update

Industry Overview

New Ventures

19

Well-Capitalized for Growth Capital Structure – March 31, 2017 Cash & Cash Equivalents Revolving Credit Facility Other Debt

Conservative Leverage Profile

$ 31.5 253.2

Ability to Add Incremental Debt

13.9

Total Debt

$ 267.1

Net Debt

$ 235.6

Net Debt to Adjusted EBITDAR (1)

Active Acquisition Pipeline

4.1x

Closed $450M Credit Facility in July 2016 Source: Company filings, management. (1) Includes all interest bearing debt, plus capitalized lease obligations at 8x, minus cash and cash equivalents.

Ensign Overview

Organic Growth

Strategic Growth

Financial Update

Industry Overview

New Ventures

20

Ownership Status as of May 11, 2017 % of Total Facilites 215 Facilites

Total Operational Skilled Nursing Beds: 18,204

77.0%

17.5% 5.5%

24.7% 70.7%

4.7%

Total Assisted and Independent Units: 4,523

35.8% Leased (without a Purchase Option) Owned Leased (with a Purchase Option)

Ensign Overview

Organic Growth

Strategic Growth

60.1%

Financial Update

Industry Overview

4.1%

New Ventures

21

FINANCIAL

UPDATE

Q1 Year-Over-Year Highlights Q1 2017

Q1 2016

$ in millions

Revenue

Same Facility Revenue(1)

Adjusted EBITDAR(2)

15.3%

$441.7

$383.2

2.2%

$240.1

$234.9

$68.7

$62.6

9.7%

Source: Company filings, management. (1) Represents 104 transitional and skilled Operations purchased prior to January 1, 2014 at the end of Q1 2017. (2) See appendix for calculation of Adjusted EBITDAR.

Ensign Overview

Organic Growth

Strategic Growth

Financial Update

Industry Overview

New Ventures

23

Sequential Highlights Q1 2017

Q4 2016

$ in millions, except for census

Same Store Managed Care Revenue(1)

11%

$42.1

$37.9

Transitioning Skilled Mix Revenue(2)

6.4%

$43.8

$41.2

406.3

366.5

Transitioning Medicare Census(2)

10.9%

Source: Company filings, management. (1) Represents 104 transitional and skilled Operations purchased prior to January 1, 2014 at the end of Q1 2017. (2) Represents 40 transitional and skilled Operations purchased from January 1, 2014 to December 31, 2015.

Ensign Overview

Organic Growth

Strategic Growth

Financial Update

Industry Overview

New Ventures

24

Revenue and EPS Guidance(1) 2017

Revenue (in billions)

$1.76 to $1.80

Diluted Adjusted EPS $1.46 to $1.53

(1)

See detailed statement on guidance in earnings release.

Ensign Overview

Organic Growth

Strategic Growth

Financial Update

Industry Overview

New Ventures

25

INDUSTRY

OVERVIEW

BPCI Shares Gain or Loss with Awardee Participants FFS Payments Continue under BPCI Model 3 Acute Care

Post-Acute Care

Re-admit

Acute Care

Medicare FFS Payments

Physical Therapy in SNF

Home Care

BPCI Payments reward Quality of Care, rather than Quantity

Model 3 Bundle (30/60/90 days Post Acute Care)

Total FFS Payments Retrospectively Reconciled to Target Price (Quarterly) Medicare Target Price for Bundle of Care

Set by CMS Based on Historical Averages

Total Medicare FFS Payments Made During 90-Day Episode

BPCI Gain/(Loss)

Ensign Overview

Organic Growth

Limited to 20% of Target Price

Strategic Growth

Ensign has effectively managed the costs to provide services within its elected bundles of care, resulting in a net gain of $1.6M for BPCI participation, to date.

Financial Update

Industry Overview

New Ventures

27

Verdict from Actual Value Based Payment Participation = Ensign Wins Increased Volume via CJR Model

More Medicare CJR Business Ensign CJR Revenue as % of Medicare Revenue

CJR Admissions

4.7% 3.7%

511 340

50.3% 1.0%

2015 YTD

2016 YTD

% Increase

Effective April 1, 2016 Awardee hospitals are financially accountable for CJR(1) episodes of care during a 90-day period. Ensign’s referral volume for CJR episodes has increased indicating we are a partner of choice as hospitals narrow networks.

2015 YTD

2016 YTD

Increase

Along with increased admissions, Ensign’s Medicare revenue for CJR care has increased as a percentage of total Medicare revenue.

CJR: Comprehensive Care for Joint Replacement. (1) CJR patients are Medicare beneficiaries discharged from a participant hospital for knee and hip replacements.

Ensign Overview

Organic Growth

Strategic Growth

Financial Update

Industry Overview

New Ventures

28

Largest Beneficiary of Medicare Post-Acute Dollars with Lowest Cost Post-Acute Destinations - % of Medicare Dollars 41%

37%

10%

Skilled Nursing

Home Health

9%

IRF

2%

1%

LTAC

Hospice

Other

Relative Costs of Treatment Across Post-Acute Destinations $ in thousands

LTAC

IRF

Skilled Nursing

$115

$26

$31 $34

$10

Tracheotomy with Vent

$45 $9

Hip Fracture

$75

$67 $18 $11

Joint Replacement

$17

$6

Respiratory with Vent

$26

$8

Stroke

Skilled Nursing is the Most Utilized and Lowest Cost Setting for Post-Acute Care Sources: Medpac and US HHS Department.

Ensign Overview

Organic Growth

Strategic Growth

Financial Update

Industry Overview

New Ventures

29

Growth in 65+ Population to Outpace Skilled Nursing Supply Number of Individuals 65+ Will Grow 5x Faster Than Total Population(1) Population over 65 years old % of Total Population

100

25%

75

20%

50

15%

25

10%

0

5%

'10 '15 '20 '25 '30 '35 '40 '45 '50 '55 '60

Between 2010 and 2030, the number of individuals aged 65+ is projected to nearly double from 39M to 73M, a growth rate nearly 5x faster than the 18% increase expected for the total population. As a result, the percentage of Americans 65+ is estimated to grow from 13% to 20% of the population by 2030.

Skilled Nursing Facility Supply May Not Keep up With 65+ Population(2) 16,800 16,600 16,400 16,200 16,000 15,800 15,600 15,400 15,200 15,000

(1) (2)

Amid the growing demand for Skilled Nursing Operations, the supply has steadily decreased due to consolidation and changing reimbursement environment. '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

US Bureau of Census (March 2015). AHCA/NCAL data (March 2015).

Ensign Overview

Organic Growth

Strategic Growth

Financial Update

Industry Overview

New Ventures

30

Growth Through Industry Headwinds $ in millions $2,000 2011 to 2014 Medicare 2% sequestration.

$1,800 2007 to 2010 Changes in RUG Classification Categories. Average price per bed hits new high.

$1,600 1999 to 2002 Reimbursement transitions to Prospective Payment System (“PPS”) leading several larger operators to file for bankruptcy

$1,400 $1,200 $1,000 $800 $600

2003 to 2006 Large operators spin off less desirable assets

Ensign is Born in 1999

Ensign acquires 54 Operations and expands home health

215 200

136

150 100

63

46

50

$200 $0

5 1999

2000

2001

2002

2003

2004

2005

2006

TSA Facilities

Ensign Overview

Organic Growth

350

250

102

$400

400

300

210

Ensign focuses on organic growth. Revenues grow 81% during this period

Ensign grows 70%

Ensign embraces new payment and delivery models

Strategic Growth

2007

2008

2009

2010

Revenue

Financial Update

2011

2012

2013

2014

2015

2016 May-17

0

Guidance

Industry Overview

New Ventures

31

Skilled Nursing Reimbursement Stable and Increasing Over Time Avg. SNF Medicaid Rate Per Day Avg. SNF Medicare Rate Per Day ENSG Same Facility Rate Per Day

(1)

$620

$508 $451

$287

$336 $349 $325 $312 $301

$363

$385

$408

$543

$580 $566 $579

$574 $505

$432

$454

$600

$484 $492 $469 $478

$196 $179 $183 $186 $177 $174 $172 $156 $164 $142 $145 $150 $129 $124 $109 $118

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

October 1, 2016: 2.4% net market basket increase for 2017 SNF payments Sources: Eljay LLC, Hansen, Hunter and Company for AHCA and composite of CMS, AHCA, AQNHC, OSCAR, Eljay LLC and Avalere Group Data; ENSG company filings. (1) Amounts represent the Medicare rates for all Operations acquired on or before 2013 in each year.

Ensign Overview

Organic Growth

Strategic Growth

Financial Update

Industry Overview

New Ventures

32

NEW

VENTURES

Entrepreneurial Growth New Geographic Markets

New Ventures

New Synergistic Enterprise

Ensign Overview

Organic Growth

Strategic Growth

Financial Update

Industry Overview

New Ventures

34

New Ventures: Other Post Acute Services Assisted and Independent Living Revenue Growth $ in thousands

$123,636

$125,811

2016

TTM

$88,129 $48,848

$40,931

2013

2014

2015

Home Health and Hospice Revenue Growth $ in thousands $121,280

$115,813 $90,356 $54,516 $39,762

2013 Ensign Overview

2014 Organic Growth

2015 Strategic Growth

2016 Financial Update

TTM Industry Overview

New Ventures

35

APPENDIX

Reconciliation of GAAP to Non-GAAP Financial Measures $ in thousands

Three Months Ended March 31 2017

2016

Net Income Less: net income (loss) attributable to noncontrolling interests Interest expense, net Provision for income taxes Depreciation and amortization EBITDA Facility rent – cost of services EBITDAR EBITDA Adjustments to EBITDA: Results related to closed operations and operations not at fall capacity, including continued obligations and closing expenses(a) Costs incurred for Operations currently being constructed & other start-up operations(b)

$2,956 116 3,155 1,441 10,514 $17,950 31,900 $49,850 17,950

$9,290 118 1,136 5,889 8,298 $24,495 26,991 $51,486 24,495

4,919

8,125

631

1,363

Urgent care center earnings(c) Legal costs and charges related to the settlement of the class action lawsuit(d) Share-based compensation expense(e) Acquisition related costs(f) Costs incurred related to new systems implementation and professional service fee(g) Rent related to items (a), (b), and (c) above Adjusted EBITDA Facility rent – cost of services Less: rent related to items (a), (b), and (c) above Adjusted EBITDAR

--11,000 2,224 88 --4,273 $41,085 31,900 (4,273) $68,712

(1,057) --1,885 145 678 1,940 $37,574 26,991 (1,940) $62,625

37

Reconciliation of GAAP to Non-GAAP Financial Measures Footnotes to Reconciliation of Net Income to EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR (a) Represent results at closed operations and operations not at full capacity during the three months ended March 31, 2017 and 2016, including the fair value of continued obligation under the lease agreement and related closing expenses of $4.0 million and $7.9 million, respectively. (b) Costs incurred for Operations currently being constructed and other start-up operations. This amount excludes rent, depreciation and interest expense. (c) Operating results at urgent care centers for the three months ended March 31, 2016. This amount excludes rent, depreciation, interest expense and the net loss attributable to the variable interest entity associated with our urgent care business. (d) Legal costs and charges incurred in connection with the settlement of the class action lawsuit. (e) Share-based compensation expense incurred during the three months ended March 31, 2017 and 2016. (f) Costs incurred to acquire an operation which are not capitalizable. (g) Costs incurred related to new systems implementation and income tax credits which contributed to a decrease in effective tax rate.

38

Reconciliation by Segment $ in thousands

Three Months ended March 31, Transitional and Skilled Services

Income from operations, excluding general & admin expense(a) Less: net income attributable to noncontrolling Depreciation and amortization EBITDA Rent – cost of services EBITDAR EBITDA Adjustments to EBITDA: Costs at Operations currently being constructed and other start-up operations(b) Results at closed Operations, including continued obligations and closing expenses(c) Share-based compensation expense(d) Rent related to item (b) and (c) above Adjusted EBITDA Rent – cost of services Less: rent related to items (b) and (c) above Adjusted EBITDAR (a) (b) (c) (d)

Assisted and Independent Independent Services

2017

2016

$ 31,790

$ 27,596

---

---

2017

2016

$ 4,439

Home Health & Hospice 2017

2016

$ 3,260

$ 4,294

$ 3,176

---

---

8

---

6,953 $38,743 25,946 $64,689 38,743

5,239 $32,835 18,983 $51,818 32,835

1,623 $6,062 5,308 $11,370 5,308

1,063 $4,323 7,004 $11,327 4,323

235 $4,521 551 $5,072 4,521

268 $3,444 378 $3,822 3,444

190

1,224

346

108

95

31

4,404

8,125

2

---

513

---

1,028 3,180 $47,545 25,946

1,026 1,001 $44,211 18,983

90 934 $7,434 5,308

95 368 $4,894 7,004

85 159 $5,373 551

66 9 $3,550 378

(3,180)

(1,001)

(934)

(368)

(159)

(9)

$70,311

$62,193

$11,808

$11,530

$5,765

$3,919

General and administrative expenses are not allocated to any segment for purposes of determining segment profit or loss. Costs incurred for Operations currently being constructed and other start-up operations. Represent results at closed operations and operations not at full capacity during the three months ended March 31, 2017 and 2016, including the fair value of continued obligation under the lease agreement and related closing expenses of $4.0 million and $7.9 million, respectively. 39 Share-based compensation expense incurred during the three months ended March 31, 2017 and 2016.