The Pennant Group, Inc.

Thank you for standing by, and welcome to the Pinnock Group second quarter 2022 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. To ask a question during that time, please press star 1. I will now hand today's call over to Derek Bunker, Chief Investment Officer. Please go ahead.

Thank you, Tamika, and welcome, everyone. Thank you for joining us today. Here with me today, I have Brent Garasoli, our CEO. John Gochner, our president, and Jen Freeman, our CFO. Before we begin, I have a few short housekeeping matters. We filed our earnings press release and SENDQ yesterday. This announcement is available on the IR section of our website at tenantgroup.com. Replay of this call will also be available on our website until 5 p.m. Mountain Time on Friday, September 9, 2022. We want to remind anyone that may be listening to a replay of this call that all statements made are as of today, August 9, 2022, 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 in 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, Penn 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 Penning 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, HR, IT, legal, risk management, and other services to the other operating subsidiaries through contractual relationships. The words pennant, company, we, our, and us refer to the Penning Group, Inc., and its consolidated subsidiaries. All of our operating subsidiaries in 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 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 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 10Q. And with that, I'll turn the call over to Brent Garasoli, our CEO. Brent.

Thanks, Derek, and welcome everyone to our second quarter 2022 earnings call. Thank you for joining us today to discuss our quarterly results. To begin, I'd like to take a moment and personally thank Danny Walker for his partnership and friendship over the last decade. As was previously announced, Danny stepped aside as CEO on August 1st and continues in the role of chairman. His leadership was instrumental as we built this company from the early days of our history as a fledgling startup, experienced tremendous growth and expansion, and navigated the challenges as a new public company in the midst of a pandemic. Danny's influence will continue to be felt across the organization, and on behalf of the leadership team and all of Tenance, we will forever be grateful. As we enter another chapter in our story, we have a deep bench of seasoned and talented leaders across both segments in the service center that have been critical to our growth since the beginning and are prepared to accelerate our performance. Now, as I step into the CEO role, I want to reiterate our commitment to the core operational and cultural principles that have been instrumental to our success over our decade of history and articulate why we're so excited for the future. Our differentiators are one, our innovative operating model focused on empowering and developing strong local leaders. Two, our disciplined growth strategy. And three, our ability to achieve quality care outcomes in lower cost settings. First, our innovative operating model is the foundation of our success. Our operating model is founded on two tenets fundamental to our approach to healthcare services. One, that healthcare is a local endeavor where providers are most successful when key operational decision-making meets local community needs and occurs close to patients and employees. And two, peer accountability from operational and resource partners is more effective at driving clinical and financial results than traditional hierarchical or top-down accountability structures. Our model is innovative because each independent operation functions under the direction of local clinical and operational leaders, each of whom are empowered to make decisions based on the unique needs of the patients, partners, and communities they serve. We believe that our localized approach to program development and patient care leads prospective patients and referral sources to choose or recommend our operations. This is in contrast to typical models where control and key decision making is centralized at the corporate level. The peer accountability that drives successful financial and clinical outcomes is implemented through our unique cluster model, where every operation is part of a defined cluster, which is a group of geographically proximate operations working together to allow leaders to communicate and provide support and accountability to each other. This creates incentives for leaders to share best practices and real-time data and benchmark clinical and financial performance against their cluster partners. This cluster operating model is the key to success of our future operations. Second, our disciplined investment strategy, much of our historical growth can be attributed to our expertise in opportunistically acquiring strategic operations and transforming them into leaders in clinical quality, staff competency, and financial performance. When evaluating potential home health and hospice acquisitions, we look for small to medium-sized agencies with strong clinical and operational reputations that provide a platform for organic census growth and expense management. We look for senior living communities with a quality physical plan where our operational, sales and marketing, and wellness expertise can drive revenue increases through occupancy growth. additional care capabilities, and rate improvement with disciplined cost management. As we have done throughout our history, we will continue to drive organic growth and acquire additional operations in existing and new markets in a disciplined manner. Acquisitions are part of the DNA of our leaders and our resources, and we're ready to put more capital toward strategic growth. Our emphasis on local leadership and decision-making yields unique, customized solutions and programs that meet local market needs and improve clinical outcomes, which in turn accelerates revenue growth and profitability. In our home health and hospice business, our unique operating model allows us to achieve quality outcomes as measured by many industry and value-based metrics such as hospital readmission rates in a lower-cost setting. As the senior living industry continues to evolve toward more acute care, Our experience as a healthcare provider equips us to offer our residents a better quality of life experience at an affordable cost, thus appealing to a broader population. With our platform of complimentary service offerings, we believe that we are well positioned to take advantage of favorable demographic shifts, as well as industry trends that reward providers offering quality care in lower cost settings. In summary, We are equipped with a proven operating model designed to generate strong clinical and financial results, an investment strategy that creates value over the short and long term, a deep lineup of talented leaders that continues to grow and develop, and relationship-based clinical expertise critical to better patient outcomes and greater volume over time. We believe the combination of these qualities, unique dependence, allow us to acquire an increasing number of operations and generate value over the long term for all of our stakeholders. Over the last several quarters, we have built foundational strength through pandemic and spinoff-related system transitions. We've been building momentum over the course of this year, improving our cash flow and balance sheet, and we are poised to return to a brisk pace of strategic acquisition that will propel our growth over the next several years and beyond. We have our share of challenges to continue to overcome, and we still have significant inherent value to unlock. But we know where we are going, how to get there, and we are excited about the progress we're making toward operational excellence and our ability to generate and deploy cash toward accretive growth in an active M&A landscape. As we mentioned in our press release yesterday, we are affirming our revenue guidance for 2022, modestly narrowing our adjusted EPS guidance and introducing adjusted EBITDA guidance. We expect to provide annual adjusted EBITDA guidance going forward and hope this additional measure is helpful in evaluating our results and obtaining a better picture of our overall operating cash flow. We expected our results this year to ramp up sequentially as we continue to improve operationally. And so far, our performance is consistent with those expectations. We anticipate a similar incremental build over the course of the second half of the year. And with that, I've asked John to provide an update on our operational results.