The Ensign Group, Inc.

Hello and welcome to the Ensign Group Inc. Q2 2024 earnings call. At this time, I would like to turn the call over to Mr. Keech. 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 ensigngroup.net. A replay of this call will also be available on our website until 5 p.m. Pacific on Friday, August 30, 2024. We want to remind anyone that may be listening to a replay of this call that all statements made are as of today, July 26, 2024, 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 undue 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 independent subsidiaries 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 Enzyme Group, Inc. is a holding company with no direct operating assets, employees, or revenues. Certain of our independent subsidiaries, collectively referred to as the service center, provide accounting, payroll, human resources, information technology, legal, risk management, and other services to the other independent subsidiaries through contractual relationships with such subsidiaries. In addition, our 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 independent subsidiaries, the Service Center, Standard Bear Healthcare REIT, and the Insurance Captive are operated by separate, 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 the words we, us, our, and similar terms 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 GAAP reporting with non-GAAP metrics. When viewed together with our GAAP 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 GAAP reports. A GAAP to non-GAAP 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're thrilled to report another record quarter and are excited about the continued momentum our teams have created across our entire portfolio. We're in awe of our local leaders and how they continue to consistently drive outstanding clinical and financial performance as they work together with their cluster partners to practice proven operational principles. We're very pleased to see our growth over the prior year quarter in occupancy and skilled mix days in our same store and transitioning operations, particularly in our managed care population. Our same store occupancy, which reached 80.8% for the quarter, an increase of 2.8% over the prior year quarter. In addition, we saw an increase in the same store and transitioning skilled service revenue during the quarter of 6.8% and 6.0%, respectively. With that pace of growth, we are as excited as ever about the incredible amount of built-in upside that exists in our portfolio as so many of our operations continue to march towards occupancy levels that dozens of our most mature same-store operations regularly achieve, which are in the 90-plus percent range. I also want to emphasize that for 25 years we have acquired lower occupancy operations at very attractive prices, which has resulted in an enormous long-term ramp in value creation. So with consolidated occupancies where they are, we get very excited about the significant organic growth potential that is inherent in our existing portfolio. As our operators continue to build on a solid foundation of strong clinical results, cultural excellence, and sustainable real estate expenses, we are confident that our partners will continue to capitalize on the occupancy and skilled next growth inherent in our portfolio, which will allow us to consistently achieve the results that we have delivered over time. Also, as you saw in our press release yesterday, we've been busy acquiring new operations And our transitioning and recently acquired buckets now represent 27% of our total operational beds. Again, we want to emphasize that this represents massive organic growth potential within those existing growth buckets. To give some perspective, our occupancy and skilled mixed days for the skilled nursing operations in the transitioning bucket were 75.7% and 21.7% respectively. while our same store occupancy and skilled mix days were 80.8% and 31.5% respectively. As we've shown over two decades, we expect our teams to continue to unlock the significant upside in each of these new operations as they mature. Our focus on customer second continues to ensure that our caregivers and their teams are recognized for their amazing daily achievements. which has now resulted in lower turnover for the 11th quarter in a row and also a decrease in the use of staffing agencies for the sixth quarter in a row. And all of this has occurred while our teams have simultaneously been assisting the newly acquired operations integrate into their local clusters and begin the process of improving clinically and financially. Due to our solid results, including our stable skilled mix and growing occupancy, As well as continued strength from our recent acquisitions, we are increasing and narrowing our annual 2024 earnings guidance to between $5.38 to $5.50 per diluted share, up from $5.29 to $5.47 per diluted share. This new midpoint of our 2024 earnings guidance represents an increase of more than 14% over our 2023 results, and is 31% higher than our 2022 results. We are also raising our annual revenue guidance to between $4.20 billion to $4.22 billion, up from our previous guidance of $4.13 billion to $4.17 billion. We are also excited about the upcoming year and are confident that our partners will continue to manage and innovate while balancing the addition of newly acquired operations. This performance is not due to some large event or even a singular transformative transaction, but instead is the result of consistent growth and performance quarter after quarter. All these achievements are entirely due to the efforts and commitment of our local leadership teams, caregivers, field resources, and service center partners. There are so many opportunities in front of us to improve in expense management and drive occupancy and skilled mix as we continue to successfully unlock value in all of our operations. We remain poised to again showcase our ability to find, acquire, and transition performing and underperforming operations by applying proven and signed principles developed over 25 years. Next, I'll ask Chad to add some additional insights regarding our recent growth. Chad?