Five Star Senior Living Inc.

Good afternoon and welcome to the Five Star Senior Living Second Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please to know a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Ms. Olivia Snyder, Manager of Investor Relations. Ma'am, please go ahead.

Thank you. Welcome to Five Star Senior Living's second quarter of 2021 earnings call. The agenda for today's call includes a presentation by President and CEO Katie Potter, Executive Vice President and COO Margaret Wigglesworth, and Executive Vice President, CFO, and Treasurer Jeff Lear. followed by a question and answer session with research analysts. I would like to note that the transcription, recording, or retransmission of today's conference call is strictly prohibited without the prior written consent of the company. Today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. These forward-looking statements are based on Five Star's present beliefs and expectations as of today, Thursday, August 5th, 2021. The company undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made in today's conference call, other than through filings with the Securities and Exchange Commission, or SEC, regarding this reporting period. Actual results may differ materially from those projected in any forward-looking statements. Additional information concerning factors that could cause those differences is contained in our filings with the SEC. Investors are cautioned not to place undue reliance upon any forward-looking statements. In addition, this call may contain non-GAAP numbers, including EBITDA, adjusted EBITDA, adjusted net income, and adjusted earnings per share. Reconciliations of net income to these non-GAAP figures and the components to calculate them are available in our quarterly results news release or investor presentation, available on our website at 5starseniorliving.com. I will now turn the call over to Katie.

Thanks, Olivia, and thanks everyone for joining us on our earnings call for the second quarter of 2021. Last quarter, we announced our three-pronged strategy, Reposition, Evolve, and Diversify, beginning with the repositioning of our Senior Living Management Services offering and the continued growth of our Agility Outpatient Rehabilitation Services. During the second quarter, Five Star made strong progress on the first phase of this plan, which is intended to optimize our senior living portfolio and drive greater profitability as industry conditions stabilize. As a reminder, this repositioning aligns our business with areas of operational strength and with favorable market opportunities. By transitioning 108 of our smaller managed senior living communities to new operators, closing the healthcare units in the CCRCs we will continue to manage and completing our exit from the skilled nursing business. We are pleased with the swift execution of our plan to date, completing the planned closure of all healthcare units and CCRCs, as well as 27 agility inpatient clinics, a pace which exceeded our initial estimates. The anticipated revenue loss is reflected in our financial results for the quarter. However, we believe the strategic exit from skilled nursing will best position us for long-term growth and success. We have maintained our focus on growing our agility outpatient rehabilitation services and successfully opened three net new clinics in the second quarter and increased same-store revenues by 7.3% year-over-year. We expect to continue to expand our agility footprint and have experienced additional growth from our agility fitness offering. While still comprising only a small portion of our overall business, fitness revenues have increased by more than 50% over the past year. Turning to community transitions, Diversified Healthcare Trust has entered into agreements to transition 76 of the 108 communities to new operators, and we have completed the transition of 41 communities to date. We anticipate the remainder of community transitions will be completed by year end. Of the 44 agility outpatient clinics located in transitioning communities, to date, 33 are confirmed to remain in operation. We continue to believe our agility rehabilitation services are a significant benefit to the resident experience in senior living communities, and expect the remaining 11 outpatient clinics in transitioning communities to continue operation. The 120 communities that we will continue to manage for DHC outperform the total managed portfolio in the second quarter, with 340 basis points higher average occupancy, 270 basis points higher operating margin, and 300 basis points higher EBITDA margin. We are encouraged by the continued momentum of sales, leads, and tours, which are key components of reclaiming lost occupancy in our continuing communities. We anticipate that both our infection control protocols and the vaccination requirement for five-star team members will help to insulate our communities against possible surges in cases of COVID-19 variants that we see on the rise across the country. We continue to focus on expanding our rehabilitation and wellness services segment and driving the evolution of our business to serve the changing needs and preferences of the growing older adult population. Above all, we are proud of our team's response in the face of this unpredictable virus. And our commitment to safety, well-being, and delivering an enriching customer experience across the company is unchanged. As part of our strategic plan, we are implementing changes to our corporate infrastructure to increase efficiency and support improved operations, which will ultimately drive cost savings for Five Star. As we focus on our core senior living management services, we expect to make progress towards realizing our G&A and other expense targets throughout the remainder of 2021 and into 2022 as we fully transition the 108 communities and right-size our workforce. As we move through the phases of our strategic plan, we will continue to prioritize the evolution of our differentiated resident experience to meet market demand and opportunity, as well as the diversification of our services offering and customer base to drive future revenue growth. I'll now turn the call over to Margaret to discuss operational results.