The Pennant Group, Inc.

good day and thank you for standing by welcome to the pennant group second quarter 2021 earnings call at this time our participants are in a listen-only mode after the speaker's presentation there will be a question and answer session to ask a question during the session you will need to press star one on your telephone please be advised that today's conference is being recorded if you require any further assistance please press star zero I would now like to hand the conference over to your speaker today, Derek Bunker. Please go ahead.

Thank you, Adrienne. Welcome, everyone, and thank you for joining us today. Here with me today I have Danny Walker, our CEO, Brent Garasoli, our president, and Jen Freeman, our CFO. Before we begin, I have a few housekeeping matters. We filed our earnings press release in 10-Q yesterday. This announcement is available on the investor relations section of our website at www.pennantgroup.com. A replay of this call will also be available on our website until 5 p.m. Mountain Time on Friday, September 9, 2021. We want to remind anyone that may be listening to a replay of this call that all statements are made as of today, August 10, 2021. Any statements have not been or will they 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, Pennant 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 Pennant Group, Inc. is a holding company with no direct operating assets, employees, or revenues. Certain of our independent subsidiaries, collectively referred to as a service center, provide accounting, payroll, human resources, information technology, legal, risk management, and other services to the other operating subsidiaries through contractual relationships with such subsidiaries. The words Pennant, Company, We, Our, and Us refer to the Pennant Group, Inc. and its consolidated subsidiaries. All of our operating subsidiaries and the service center 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 terms we, us, and our, and similar terms used today, are not meant to imply, nor should it be construed as meaning that the Pending Group Inc. has direct operating assets, employees, or revenue, or that any of the subsidiaries are operated by the Pending Group. Also, we supplement our gap reporting with non-gap 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. The GAAP to non-GAAP reconciliation is available in yesterday's press release and in our 10Q. With that, I'll turn the call over to Danny Walker, our CEO. Danny.

Thank you, Derek, and welcome everyone to our second quarter 2021 earnings call. Yesterday, we reported our financial results for the second quarter. We are pleased with the progress made financially, clinically, and culturally, while acting urgently to accelerate that progress in the second half of the year and position us well for 2022 and beyond. Before I get into more detailed remarks, I want to express gratitude to the many members of our team, employees, our shareholders, stakeholders, partners in the community as we continue to navigate the challenges that are presented by this global pandemic. We're making good progress and there's a lot more improvement to come. Our home health and hospice segment continues to produce record results driven by strong adherence to our operating principles. We're pleased to report strong top and bottom line financial growth with segment adjusted revenue increasing 27.4% and segment adjusted EBITDA from operations increasing 32.8% each over the prior year quarter. Excluding agencies acquired in the previous 12 months, our home health Medicare admissions grew 41.2%, while our total home health admissions grew 39.6%, both over the prior year quarter. Our hospice admissions and average daily census were up 4.8% and 16%, respectively, over the prior year quarter. Our clinical quality measures continued to improve. As a reminder, while CMS has stated that they are not updating their home health or hospice compare tools in 2021, third-party real-time analytics reveal positive trends in our home health star ratings with the number of agencies with four stars or higher improving to 93% on a real-time basis and hospice quality composite trends improving to 97% on a real-time basis or 8% over the industry average. We are confident that as we continue to produce quality care outcomes, we will better address the needs of our complex patient population and expand our growth opportunities at the local level. These clinical and financial achievements in our home health and hospice segment are particularly impressive as they came in the midst of a challenging labor environment and a record number of acquisitions in various stages of transition. Over the past 18 months, notwithstanding the spinoff-related distractions, system integrations, and global pandemic, our local operators have acquired or started 23 operations across the segment. While this record number of transactions contributed to some choppiness to our quarterly results, they also provide compelling long-term growth opportunities across virtually every market in which we operate. As we methodically continue to integrate these new tenant-affiliated agencies and build the cultural, clinical, and financial foundation for sustained success, we are well positioned to produce strong results in the second half of the year and into 2022. In our senior living segment, we achieved a step forward in many areas of the business, resulting in increased segment revenue of $0.7 million. and segment adjusted EBITDA of $1 million each over the first quarter of 2021, which represented the pandemic-driven low point in our results. Our quarterly occupancy of 72.7% was 60 basis points higher than our first quarter occupancy. We are making progress on our ongoing efforts to deepen the leadership in our senior living communities, strengthen our cluster-centered operating model across the segment, and build out marketing, get resident care and labor management systems and tools that will accelerate the ability of our local teams to drive further census growth and margin expansion. The process of becoming the senior living of choice in each local market will take time to fully actualize, yet we are confident it will build a solid foundation for which we can generate substantial value for our long-term stakeholders. While we knew the second quarter would have some lingering challenges from the sharp second wave of COVID-19 that impacted our first quarter results, both segments have tremendous inherent value that we know we can unlock. As we guided last quarter, while some of these pressures will persist in the second half of 2021, we expect the momentum we started to see in the second quarter to build and lay the foundation for an improved second half and even stronger 2022. As a reminder, we are not quite two years removed from our spinoff from the Ensign Group, during which time we have built teams and infrastructure to support our public company functions, transitioned nearly every major IT, accounting, HR, and payroll system, onto our own platform, successfully navigated the dynamics of PDGM, improved our home health and hospice clinical quality scores, and added roughly two dozen agencies, all in the face of an unprecedented global pandemic. We have been able to accomplish all of this through the adherence to our core values and best practices that underpin our historical success, and the success that we've watched our mentor and business partner Ensign achieve over many years. We're far ahead of where we were two years ago. Today, we have stronger leaders and clusters, a deeper leadership pipeline, better quality measures, more robust IT solutions, a stronger balance sheet, greater dry powder, and more favorable debt terms. And importantly, as we continue to integrate these recent acquisitions and acquire more operations, we're compounding the dozens of compelling upside opportunities inherent throughout the tenant group. With all that said, we're not satisfied with where we're at currently, and we are acting with urgency to continue to recover from the pandemic effects in our senior living business and deliver on a stronger second half of the year and position ourselves to achieve even stronger results in 2022 and beyond, without many of the distractions that have weighed on and occupied our time over the past two years. With that, I'll ask Derek to provide an update on our recent investment activity. Derek?