The Ensign Group, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Ensign Group, Inc. First Quarter Fiscal Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference to your speaker today, Mr. Keetch. Please go ahead, sir.

Thank you, Operator. Welcome, everyone, and thank you for joining us today. As always, before we begin, I have just a few housekeeping matters. We filed our earnings press release in 10Q yesterday. This announcement is available on the Investors Relations section of our website at www.ensigngroup.net. A REPLAY OF THIS CALL Thank you for joining us. Thank you for joining us. Payroll, Human Resources, Information Technology, Legal, Risk Management, and other services to the other operating subsidiaries through contractual relationships with such subsidiaries. In addition, our wholly owned captive insurance subsidiary, which we refer to as the captive, provides certain claims made coverage to our operating subsidiaries for general and professional liability as well as for workers' compensation insurance liabilities. All of our operating subsidiaries, including the service center and the captive, are operated by separate, wholly owned, independent companies that have their own management, employees, and assets. References herein to Ensign or the consolidated company and its assets and activities, as well as the use of terms we, us, our, and similar terms used today, are not meant to imply, nor should it be construed as meaning, that the Ensign Group, Inc. has direct operating assets, employees, or revenue, or that any of the subsidiaries are operated by the Ensign Group. Also, we supplement our gap reporting with non-gap metrics. When viewed together with gap results, we believe that these measures can provide a more complete understanding of our business, but they should not be relied upon to the exclusion of gap reports. A gap to non-gap reconciliation is available in yesterday's press release and is available in our 10-Q. And with that, I'll turn the call over to Barry Port, our CEO. Barry? Good morning, everyone.

Before I outline some of our operational metrics, on behalf of all of our shareholders, patients, and their families, I want to publicly thank our frontline teams for their heroism and dedication over the last several weeks. As an organization, the past two months have proven to be some of the most challenging times we've faced, both clinically and operationally. During this unprecedented period, our ability to learn, collaborate, and adapt has been put to the test Thank you for joining us. Thank you for joining us. Thank you. Thank you. Thank you. and are honored to be associated with each of you. Now, we want to provide you some details on the first quarter performance before we provide an update on the impact of COVID-19. As we stated in our release yesterday, the tremendous operational momentum we generated in 2019 continued into the first quarter of 2020. For the second quarter in a row, we achieved our highest earnings per share in our history of 77 cents, an increase Thank you for joining us. Thank you for joining us. We also want to make it clear that our results in the first quarter were not boosted by any stimulus funds or other positives on the reimbursement front. I'm sure you all agree that our quarterly results are something to celebrate. Given these unique circumstances, our focus this quarter will be to provide an update on the impact of COVID-19. Thank you for joining us. Let us remind you that Ensign was born in times much like these, and our model is not only designed to survive, but to thrive and grow in the face of uncertainty. Our current health, combined with our culture, proven local leadership strategy, healthy balance sheet, and the enormous potential in our newly acquired transitioning and same store operations, gives us confidence that we are well positioned and managed through these unusual times, and to rebound to our pre-COVID health. Each of our local leaders have been actively adapting to the rapidly evolving COVID-19 environment as they continue to provide the highest level of care to their patients. As you might expect, similar to what the whole country is experiencing, the impact is varied by market and building by building. Overall, our portfolio is not being overwhelmed by COVID-19. As we mentioned in our release yesterday, as of May 8, 2020, the company's 225 affiliated operations across 13 states has 355 confirmed COVID-19 patients in-house. Also, as of May 8, seven operations had over 20 COVID-19 positive cases, 25 operations had less than 20 cases, and 193 operations had no confirmed cases of COVID-19. As testing continues to become more available, we expect the number of known cases to continue to rise during the second quarter, but we believe we are prepared to operate in the COVID environment for the foreseeable future. We started to see occupancies decline in the latter half of March due to governmental stay-at-home orders, a pause on vital procedures and overall lower hospital occupancies, all of which directly impact patient referrals coming into the post-acute setting. More specifically, between mid-March and mid-April, combined same-store and transitioning occupancy was down 5.2%, and skilled mix was down by 11.8%. Between mid-April and early May, combined same-store and transitioning occupancy was down by an additional 1.7%, and Skilled Mix actually improved by 13.6% respectively. As these numbers demonstrate, the rate of decline in occupancy slowed by approximately 40% over the last several weeks. Also, a recent boost in Skilled Mix was partially due to CMS's waiver of the three-day qualifying stay and special arrangements with our managed care partners. This recovery and skilled mix over the last few weeks, together with the flattening of the occupancy declines, demonstrates continued partnership with the healthcare community. And as those that have been following us through our history know, when we experience an increase in skilled mix, it is invariably followed by an increase in overall occupancy. The organization has taken numerous actions over the course of the past several weeks to provide the safest possible environment for its employees, affiliated physicians, and patients, and have been preparing for the potential, and in a few cases, an actual surge of COVID patients. With the assistance of the service center, they have also been successful in acquiring PPE, acquiring testing solutions, and other supplies and equipment. They have implemented staff retention initiatives tailored to the unique environment of the various markets, and the Service Center and Field Resources are providing training and helping to establish clinical protocols and safety measures in an ever-changing regulatory environment. To mitigate the impact of volume reductions in our operations, we have also taken steps to enhance our operational and financial flexibility and redirect resources to critical operations. Simultaneously, we took actions to increase liquidity, and defer capital spend and other costs that could be delayed without impacting our delivery of care. The organization has implemented certain cost reduction initiatives, which included the voluntary reduction in base salaries by the board of directors, the executive team, and other key organizational leaders. The company's response plan has multiple facets and continues to evolve as the pandemic unfolds. As we've said today, we've seen and expect to continue to see a significant impact from the pandemic on the second quarter and carrying into the third quarter. But we are seeing signs of stabilization and occupancy in many of our markets, and we are optimistic that occupancies will continue to recover in the second half of the year as hospitals reopen and vital elective procedures that have been delayed begin to take place. We are maintaining our 2020 annual earnings guidance of $2.50 to $2.58 per diluted share, and annual revenue guidance of $2.42 billion to $2.45 billion. We are confident that we can provide this guidance for several reasons, including our better-than-expected results for the first quarter, which under normal circumstances would have led to an increase in guidance. The implementation of certain cost-reduction initiatives and the positive news on both reimbursement stimulus funding are also other factors. While the pathway to achieving these results will differ significantly from what we originally planned and the quarterly cadence has changed, we are confident that we are well positioned to regain much of our pre-COVID momentum as the flow of patients continues to normalize over time. As the year progresses, We will continue to evaluate the impact of COVID-19 across the portfolio, and we will readjust as necessary. And with that, I'll ask Chad to give us an update on our recent investment activity. Chad?