The Pennant Group, Inc.

Good day, and thank you for standing by. Welcome to the Pennant Group first quarter 2024 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to hand the call over to Kirk Chaney. You may begin.

Thank you, Michelle. Welcome, everyone, and thank you for joining us today. Here with me today, I have Brent Garasoli, our CEO, John Gochner, our President and COO, and Lynette Walbaum, our CFO. Before we begin, I have a few housekeeping matters. We filed our earnings press release and 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 May 6, 2025. We want to remind anyone who may be listening to a replay of this call that all statements are made as of today, May 7, 2024, and these statements have not been nor will they be updated after 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 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, 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, are, 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 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 Pennant Group, Inc. has direct operating assets, employees, or revenues, or that any of the subsidiaries are operated by the Pennant 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. The GAAP to non-GAAP reconciliation is available in yesterday's press release and is available in our 10Q. And with that, I will turn the call over to Brent Garasoli, our CEO. Brent?

Thanks, Kirk, and welcome, everyone, to our first quarter, the 2024 earnings call. Before we share results, I want to express deep appreciation to the local leaders and teams who care for our patients and residents each day. You are the foundation of Pennant's success and we are grateful for all you do. We are pleased to report that Q1 was a strong quarter and a great start to the year. On a consolidated basis compared to the prior year quarter, our revenue of $156.9 million increased by $30.5 million or 24.1%. Our adjusted EBITDA of $11.2 million increased by $3.3 million, or 41.8%, and our earnings per share of 20 cents increased by 7 cents, or 53.8%. We remain committed to our five key focus areas, leadership development, clinical excellence, employee experience, margin improvement, and growth. Focusing on these fundamentals has created a firm foundation in our core business and significant momentum across the company, as our investments in people, systems, and growth are bearing fruit. Leadership development remains a top priority. As we've consistently discussed in prior quarters, we are diligently focused on developing a robust pipeline of local leaders, and we continue to progress in our commitment to develop 100 local CEOs, as well as chief clinical officers and other C-level leaders. There are now 44 CEOs and 42 CCOs driving results throughout the organization, and we expect their ranks to continue to grow throughout the year. As a reminder, to earn the title of CEO, our leaders must not only achieve extraordinary clinical performance, culture, and growth, but also drive significant financial improvement in their operations. We have found that CEOs typically generate roughly $1 million more in annual earnings than our executive directors, as well as better clinical and cultural outcomes. We are also making meaningful progress on margin. Year over year, our consolidated adjusted EBITDA margin improved 90 basis points from 6.4% to 7.3%, reflecting improvement in each segment. We attribute these margin gains to three factors. First, margin is fundamentally connected to leadership. As we develop talented and entrepreneurial leaders who exercise discipline and diligence in their operations, they deliver exceptional financial results. Second, our innovative operating model encourages the sharing and adoption of best practices across the organization. And as local leaders implement these best practices, they consistently improve performance. Third, we continue to invest in best-in-class technology, tools, and systems. that our local leaders leverage to enhance their clinical and operational results. Turning to growth, Q1 represented a culmination of the significant efforts we have made on both the organic and acquisitional side, leading to a record quarter. This was highlighted by double-digit year-over-year percentage increases in same-store total home health admissions and hospice average daily census. This same store growth exemplifies the meaningful potential that exists at our established operations as they mature and expand. Coupled with successful integration of several recent transitions, our home health and hospice segment revenue increased 27.9% over the prior year quarter, evenly split between organic and acquisitional growth. On the senior living side, we have steadily increased our revenue per occupied unit as local teams effectively manage resident mix and adjust their prices to reflect the true costs of services they provide. Along with occupancy improvements and the successful transition of two new buildings in the quarter, our senior living segment revenue increased 14.2% over the prior year quarter. The momentum we've seen in Q1 demonstrates the power of our model to access the latent opportunity that exists in our current operations while also transitioning new operations into the platform. Operational excellence is a key part of the Pennant story and something upon which we pride ourselves. We want our investors to understand that when they become Pennant owners, they are partnering with a best-in-class operator as we harness our unique operating model to execute and grow. Since our spinoff and through the challenges of a global pandemic, we have matured as an organization and added leaders across the company and our management team throughout the field and at the service center. As a result, we have produced nine consecutive quarters of strong performance with earnings each quarter that exceeded the prior year period and have experienced triple-digit percentage growth in adjusted EBITDA and EPS. We have repeatedly and consistently done what we said we were going to do, and while we are encouraged by the progress that we've made, we're even more excited about the foundation that we've built and the future that lies ahead. With that, I'll turn the call over to John to provide more details on our first quarter operational results.