The Ensign Group, Inc.

and placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again press star and the number one. I would now like to turn the call over to Chad Keech, Chief Investment Officer. Please go ahead.

Thank you, operator, and welcome, everyone. We filed our earnings press release yesterday, and it is available on the investor relations section of our website at EnzymeGroup.net. A replay of this call will also be available on our website until 5 p.m. Pacific on Friday, November 24th, 2023. We want to remind any listeners that may be listening to a replay of this call that all the statements made are as of today, October 26th, 2023, and these statements have not been nor 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 materially differ from those expressed or implied on today's call. Listeners should not place under reliance on forward-looking statements and are encouraged to review our SEC filings for more complete discussion of factors that could impact our results. Except as required by federal securities laws, Ensign and its affiliates do not undertake to publicly update or revise any forward-looking statements where changes arise as a result of new information, future events, changing circumstances, or for any other reason. In addition, the Ensign Group Inc. is a holding company with no direct operating assets, employees, or revenues. Certain of our wholly owned independent subsidiaries, collectively referred to as the service center, provide accounting, payroll, human resources, information technology, legal, risk management, and other services to other operating subsidiaries through contractual relationships with such subsidiaries. In addition, our wholly owned captive insurance subsidiary, which we refer to as the insurance captive, provides certain claims made coverage to our operating companies for general and professional liability as well as for workers' compensation insurance liabilities. Enzyme also owns Standard Bear Healthcare REIT, Inc., which is a captive real estate investment trust that invests in healthcare properties and enters into lease agreements with certain independent subsidiaries of Enzyme, as well as third-party tenants that are unaffiliated with the Enzyme Group. The words Enzyme, company, we, our, and us refer to the Enzyme Group, Inc., and its consolidated subsidiaries. All of our operating subsidiaries, the service center, standard bearer healthcare REIT, and the insurance captive are operated by separate, wholly owned, independent companies that have their own management, employees, and assets. References herein to the consolidated company and its assets and activities, as well as the use of words we, us, our, and similar terms we may use today are not meant to imply, nor should it be construed as meaning, that the Enzyme Group has direct operating assets, employees, or revenue. or that any of the subsidiaries are operated by the Enzyme Group. Also, we supplement our gap reporting with non-gap metrics. When viewed together with our 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 Form 10-Q. And with that, I'll turn the call over to Barry Port, our CEO. Barry?

Thanks, Chad, and thank you all for joining us today. We are proud to report another strong quarter and are pleased that we have been able to continue to improve our clinical and financial results across our portfolio. We are grateful for the efforts and commitment of our teams and caregivers and leaders who work endlessly to support and love one another, which allows for the high quality patient outcomes they consistently achieve. During the quarter, we saw continued improvement in occupancies and managed care revenues, which is particularly impressive given the persistent labor market pressures and the return of more typical seasonality. More specifically, we were pleased to see same-store occupancy of 79.5%, which grew by 290 basis points over the prior year quarter and by 97 basis points sequentially over the second quarter. Given the upward trend in same store occupancy through the quarter, we are confident that we are on a path to reach and eventually exceed our pre-COVID same store occupancy of 80.1% as we move into higher admission months of fall and winter. We also continue to build stronger relationships with our managed care partners due to better coordination of care, increased capabilities, and strong clinical outcomes. As a result, We saw increased volume in our same store in transitioning combined managed care census and managed care revenue, which increased during the quarter by 6.6% and 13.8%, respectively, over the prior year. As expected, we saw a seasonal decrease to skilled mix during the quarter. However, due to our local operators' strong clinical reputations, we are continuing to see elevated skilled mix when compared to pre-COVID levels. This continued growth and skilled mix demonstrates the increasing and sustainable demand for skilled post-acute services, including within the context of our managed care patients. We are very excited to see our local field and service center partners share and apply best practices as they respond to the persistent labor market challenges. As they instill our customer second culture into each operation, we have seen and will continue to see lower turnover. Likewise, we are also seeing less usage of third-party nursing agencies, which improved again for the ninth month in a row as of September, representing a reduction in agency usage of 55% since its peak in December of 2022. We are also encouraged to see wage inflation slow down and our ability to successfully recruit new talent grow. As of the end of the quarter, we saw our number of new hires increase by 69% since the end of March. Due to our solid results during the quarter, as well as continued strength from our recent acquisitions, we are increasing our annual 2023 earnings guidance to between $4.73 and $4.79 per diluted share, up from $4.70 to $4.78 per diluted share. This new midpoint of our 2023 earnings guidance represents an increase of 15% over our 2022 results, and is 30.8% higher than our 2021 results. We are also raising our annual revenue guidance to between 3.72 billion and 3.73 billion, up from our previous guidance of 3.69 billion to 3.73 billion. This increased guidance comes on top of the enormous growth we experienced in the last few years. To put this performance in perspective, Since we spun out the pennant group in 2019, we have seen adjusted EPS grow by 167% with a compound annual growth rate of 28%. This performance is not due to some large event or single transformative transaction, but instead is the result of consistent growth and performance quarter after quarter that comes from following proven and signed principles. We are excited about the upcoming year and are confident that our partners will continue to manage and innovate through all the lingering challenges on the labor front. In spite of our impressive results, we also recognize that there are many opportunities to improve on certain operational fundamentals, both in existing operations and the growing number of new acquisitions. As we evaluate our expanding portfolio, we see more organic growth potential within our existing portfolio than ever before. There are so many opportunities in front of us to improve labor and drive occupancy and skilled mix as we continue to successfully transition dozens of recently acquired operations. We also see enormous growth opportunities in skilled mix in a way that best serves each unique healthcare market. When combined with the number of very attractive acquisition opportunities that we see on the near and far horizon, we are poised to again showcase our ability to find, acquire, and transition performing and underperforming operations by applying proven in-time principles developed over two decades. As we relentlessly follow and protect the cultural fundamentals that got us here, we are confident that we will continue to consistently produce world-class clinical and financial performance. Next, I'll ask Chad to add some additional insights regarding our recent growth. Chad?