The Ensign Group, Inc.

ladies and gentlemen thank you for joining us and welcome to the enzyme group q3 earnings call after today's prepared remarks we will host a question and answer session if you would like to ask a question please raise your hand if you have dialed into today's call please press star 9 to raise your hand and star 6 to unmute at this time i would like to turn the call over to mr keach 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 November 30th, 2025. We want to remind anyone that may be listening to a replay of this call that all statements made are as of today, November 4th, 2025, and these statements have not been or 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 a 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 Ensign 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. 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 Bearer Healthcare Reef, 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 our independent subsidiaries, the Service Center, Standard Bearer, 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 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 these 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. 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 CBO. Barry?

Thanks, Chad, and thank you all for joining us today. We're pleased to report another record quarter in several key areas. Before we jump into some of the financial highlights... I do want to provide some more detail about the primary driver of our success, which is the extraordinary outcomes achieved by the dedicated and talented clinical teams. While we're always trying to highlight our clinically driven culture, sometimes the financial outcomes take the forefront on calls like this. We do feel, however, it's important to point out again that our clinical performance continues to be the key differentiator for us. Simply put, our consistent financial results would not be possible without a relentless patient-focused culture that strives to deliver the highest quality clinical outcomes. According to the most recently published CMS data, same-store Ensign-affiliated facilities outperformed their peers in their annual survey results by an impressive 24% at the state level and 33% at the county level. This exceptional performance is not just a snapshot, it reflects the sustained clinical excellence of our local leadership teams and caregivers. In that same CMS data set, InSign affiliated operations also maintained a 10% advantage in overall four and five star rated buildings when compared to their peers. What makes this especially notable is that the majority of these communities were one and two star facilities at the time of acquisition. Together, these results demonstrate our consistent ability to elevate quality of care, strengthen operational execution, and create long-term value across our portfolio. We can't emphasize enough how hard our teams are working every day to give our patients and their families the best service possible while developing and sharing best practices with their peers in their own clusters and markets and beyond. These efforts are bearing fruit and showing through in several ways. On the census front, our same store and transitioning occupancy increased to 83% and 84.4% during the quarter, which were both all-time highs. The primary reason for this growth in occupancy is due to the fact that our teams are capturing more market share by earning the trust of the communities they serve through the clinical outcomes described earlier. As each operation earns and solidifies their reputation as a facility of choice in their respective markets, They're not only seeing more patients, but they're also being entrusted to care for more and more medically complex patients, which includes a larger share of Medicare, managed care, and other skilled patients. In addition, we believe we're just now starting to see the increased demand for our services related to the strong demographic trends. As we look ahead, these demographic trends are undeniable. The US population, aged 80 and older, our core population, is projected to grow by more than 50% over the next decade, from roughly 13 million today to over 20 million by 2035. At the same time, the ratio of seniors to middle-aged family members is expected to decline by nearly 40%, creating sustained and growing demand for the kind of skilled nursing and rehabilitation services offered in our facilities every day. These powerful tailwinds will only bolster the census momentum we're seeing across our portfolio, giving us confidence in a long-term growth and opportunity ahead. On the skilled mix front, we saw skilled days increase for both our same-store and transitioning operations by 5.1% and 10.9%, respectively, over the prior year quarter. We also saw Medicare revenue increase for both our same-store and transitioning operations by 10% and 8.8% respectively, and an increase in our same-store Medicare days by 4.2% over the prior year quarter. In addition, we saw managed care revenue increase for both our same-store and transitioning operations by 7.1% and 24.3% respectively. These improvements in skilled NICs, in our same store operations and the even larger improvements in our transitioning operations highlight our ability to capture a portion of the enormous upside inherent in our existing portfolio. The combination of strong demand for our services and our efforts to be best in class in our markets creates a pathway to continue to produce long-term sustainable growth. At the same time, we continue to acquire new operations with massive long-term upsides. Since 2024, we have successfully sourced, underwritten, closed, and transitioned 73 new operations across several markets, many of which were already performing at or above our expectations. Our opportunity to continue adding new operations to our portfolio remains solid. However, as Chad will discuss in a minute, the deal market does fluctuate. In our 26-year history, we've seen periods of time when capital seems to flood into the industry, which can temporarily raise prices to irrational levels. A close look at our history will show, in an environment like that, we have remained disciplined and taken a slower pace to growth, avoiding the addition of what we believe to be overpriced deals. Instead, our local leaders spend fewer hours on transitioning newly acquired assets and shift their focus towards enhancing our capabilities within our same store and transitioning portfolio. Over time we have experienced very consistent growth in revenue and earnings even though the deal market has been and will continue to be choppy. While we're thrilled with our current record same store occupancy, we're actually excited that it's as low as it is. At 83% we have enough organic growth potential left in our organization to sustain our consistent earnings and revenue growth even if we stopped acquiring during periods of irrational pricing. To illustrate this opportunity, Reaching a minimum of 85% occupancy in same store would be like adding eight new 100-bed operations, and at a minimum of 88%, it would be the equivalent of adding 17. This kind of organic growth is even more powerful than acquisitions because it expands census without adding new fixed overhead, driving stronger and more efficient margin improvement. As we point out during each of our earnings calls each quarter with specific facility examples, It is not uncommon to see some of our most mature operations consistently achieve and maintain occupancies in mid to high 90s. As we grow, our local leaders are always on the lookout to attract and develop new partners into post-acute care, including administrators and training, nursing and therapy leaders, and other key contributors. We are encouraged by the deep bench of incredible talent that continues to flow into our organization and we look forward to working with them to continue to achieve our mission to dignify post-acute care. On the labor front, we do continue to experience improvements in turnover, stable wage growth, and lower staffing agency usage, even in the face of increased occupancy. As we've said before, our people are at the heart of our efforts, and seeing these metrics consistently improve is critical to maintaining our path of success and to achieve industry-leading results. After another stronger than expected quarter, we are again raising our 2025 earnings guidance to between $6.48 to $6.54 per diluted share, up from our previously raised guidance of $6.34 to $6.46 per diluted share. The new midpoint of this increased 2025 earnings guidance represents an increase of 18.4% over our 2024 results, and is 36.5% higher than our 2023 results. We are also increasing our annual revenue guidance to 5.05 billion to 5.07 billion, up from 4.99 billion to 5.02 billion to account for our current quarter performance and acquisitions we anticipate closing through the end of the year. We're excited about the trajectory we are on for the year and look forward to continuing our consistent march towards great clinical and financial results. This increased guidance is due to the continued execution of our growth model, with organic growth stemming from continued strength in occupancy and skilled mix as we head into the fourth quarter, which is typically one of our strongest quarters. In addition, many of our new acquisitions are performing well ahead of schedule, which highlights our continued commitment to our locally driven transition strategy, and also points towards solid underwriting and investment decisions. We are excited about our performance so far this year and are confident that our partners will continue to execute and innovate while balancing the addition of newly acquired operations. We are eager to continue to drive organic improvements and take advantage of the acquisition opportunities we see on the horizon. The combination of improvements in occupancy and skilled mix in our more mature operations and the long-term upside in our newly acquired operations highlights the enormous organic potential we see in our existing portfolio. Next, I'll ask Chad to add some additional insights regarding our recent growth. Chad?