The Pennant Group, Inc.

Thank you for standing by, and welcome to the tenant group fourth quarter 2021 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentations, there'll be a question and answer session. To ask a question at that time, please press star then one on your touchtone telephone. As a reminder, today's conference call is being recorded. I will now turn the conference over to your host, Mr. Derek Bunker, Chief Investment Officer. Please go ahead.

Thank you, Valerie. Welcome, everyone, and thank you for joining us today. Here with me today, I have Danny Walker, our CEO, Brent Garasoli, our president, Jen Freeman, our CFO, and John Gochner, our COO. Before we begin, I have a few housekeeping matters. We filed our earnings press release and 10-K 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. March 25th, 2022. We want to remind anyone that may be listening to a replay of this call that all statements made are as of today, March 1st, 2022, and these 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 the 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, our, and similar terms used today are not meant to imply, nor should it be construed as meaning that the tenant group has direct operating assets, employees, or revenue, or that any of the subsidiaries are operated by the tenant 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 that 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 in our 10-K. With that, I'll turn the call over to Danny Walker, our CEO. Danny.

Thank you, Derek, and welcome, everyone, to our full year and fourth quarter 2021 earnings call. At the outset here, I'd like to first thank our clinical and operational teams for the work that they have done through this most recent Omicron surge. The individual and collective efforts have been both harrowing and heroic, and we are deeply grateful. In 2021, we produced record full-year results in our home health and hospice segment, achieving double-digit top- and bottom-line growth. and strong quality outcomes while adding 11 agencies to our portfolio despite a difficult operating environment. Our senior living segment weathered three waves of COVID-19 surges and a record winter storm in Texas and is now poised to recover in 2022 with one, more robust leadership throughout the segment, two, stronger clusters and markets, three, better data and systems, and four, signs of an improving operating environment. Ultimately, our 2021 results fell short of our high expectations we established for ourselves. In general, the demands of completing the spinoff successfully, including completely overhauling our IT system infrastructure, the high volume of home health and hospice acquisitions, the leadership overhaul of our senior living segment, and the investment of time and resources in early-stage new business ventures combined with the unique pressures of the COVID-19 pandemic and the administrative requirements associated with full Sarbanes-Oxley 404 compliance, have temporarily limited our ability to achieve the exceptional operating results we have been accustomed to. However, as we look to 2022, we are encouraged by what we see. As described last quarter, we took action to, one, ensure that each local team is executing at a high level without distractions, two, retrench around our core opportunities across both segments, and three, reinforce the core principles of our operating model that have led to our historical successes. In the fourth quarter and since, we executed on these key initiatives, and we will continue to do so throughout 2022 to ensure we return to the healthy growth patterns and performance in both segments that we have achieved throughout our history. After a careful review of our core opportunities and how we could immediately limit distractions, we took several significant steps to this end. First, we recently announced that we entered into a transaction with our partners at Ensign to transfer to them five senior living communities, all of which share a campus setting with Ensign-affiliated skilled nursing operations. In a COVID-impacted operating environment where sharing a kitchen, laundry facilities, and staff became increasingly costly and complex, we believe that combining these operations in these campus settings will allow for care, staffing, and other strategic refinements that will better address the needs of the residents and families involved. This transaction underscores the value of our ongoing partnership with Ensign through the Ensign Pennant Care Continuum where we continue to explore mutually beneficial collaborations, and these changes will allow our senior living leadership to focus on fewer operations across a tighter geographic footprint. Based on the performance of these five communities in 2020, we expect that this reconstitution to be mildly accretive to earnings, and representing one of just many steps we've been taking to recover from the effects of the pandemic and realize the value inherent in our portfolio. Second, we've restructured our mobile physician services and our home care agencies to optimize payer mix and better contain expenses while largely retaining the upside potential of each of these lines of business. Third, We've completed the SPIN-related system infrastructure development and implementation of Sarbanes-Oxley Section 404 compliance. We have also invested in and will continue to invest in the development of our service center teams and their ability to accelerate our operational results. The combination of these efforts will allow for us to focus on our highest upside opportunities in our existing footprint and position us to continue to grow in 2022 and beyond. We are seeing these efforts bear fruit in the first quarter. Although there remain significant opportunities in both segments that we are excited to realize in 2022 and for many years to come, we continue to focus relentlessly on our biggest opportunities. As we announced in our press release yesterday, We are providing revised guidance for our full year of 2022 in light of the expected ramp in the Hospice ADC, the impact of the five senior living communities we're transferring to Ensign, and considering the lingering COVID-related impacts to staffing, labor, and revenue experience throughout 2021. We anticipate full year revenue in the range of $450 million to $460 million. and adjusted earnings per share in the range of 60 cents to 72 cents. Throughout 2021, we provided guidance based on the operating landscape at the time, and we assumed that we wouldn't have further impacts from COVID-19 surges, which consistently changed throughout the prior year. In our 2022 guidance, we have used the lessons we've learned from 2021, and our guidance is issued with a view of COVID and many of its impacts becoming endemic in the communities that we serve. We again want to thank our operators and clinical partners for their tireless efforts to navigate a very difficult operating environment in 2021, and we are grateful to look into 2022 greater stability and predictability in our operating results. And with that, I'll turn the time over to Brent to provide more detail on our fourth quarter operational results.