Q2 2024 Ensign Group Inc Earnings Call

Operator: Hello, and welcome to the Ensign Group Inc. Q2 2024 earnings call. At this time, I would like to turn the call over to Mr. Keetch. Please go ahead.

Operator: Hello and welcome to the Ensign Group Inc. Q2 2024 earnings call.

Hello, and welcome to the Ensign Group, Inc.

Inc, Q2, 'twenty 'twenty four earnings call at this time I would like to turn the call over to Mr. Keetch. Please go ahead.

Chad Keetch: At this time, I would like to turn the call over to Mr. Keetch.

Chad Keetch: Please go ahead. Thank you, operator, and welcome everyone. We filed our earnings press release yesterday, and it is available on the investor relations section of our website at enzymegroup.net.

Chad A. Keetch: Thank you, operator, and welcome, everyone. We filed our earnings press release yesterday, and it is available in the investor relations section of our website at ensigngroup.net. A replay of this call will also be available on our website until 5 p.m. Pacific on Friday, August 30, 2024. We want to remind anyone that may be listening to a replay of this call that all statements made are as of today, July 26, 2024, and these statements have not been nor will be updated subsequent to today's call.

Chad A. Keetch: Thank you operator, and welcome everyone. We filed our earnings press release yesterday and it is available on the Investor Relations section of our website at Ensign group Dot net a replay of this call will also be available on our website until five PM Pacific on Friday August 32024, we want to remind anyone that may be listening to a.

Chad Keetch: A replay of this call will also be available on our website until 5 p.m. Pacific on Friday, August 30th, 2024.

Chad Keetch: We want to remind anyone that may be listening to a replay of this call that all statements made are as of today, July 26th, 2024, and these statements have not been, nor 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 on today's call.

Chad A. Keetch: A replay of this call that all statements made are as of today July 26, 2024, and these statements have not been nor will be updated subsequent to today's call.

Chad A. Keetch: 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.

Chad A. Keetch: 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.

Chad Keetch: 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.

Chad A. Keetch: 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, Ensign and its independent subsidiaries 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, Ensign Group Inc. is a holding company with no direct operating assets, employees, or revenue.

Chad A. Keetch: 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.

Chad Keetch: Except as required by federal securities laws, Enzyme and its independent subsidiaries 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.

Chad A. Keetch: Sept as required by federal Securities laws, Ensign and its independent subsidiaries do not undertake to publicly update or revise any forward looking statements where changes arise as a result of new information future events change.

Chad A. Keetch: Changing circumstances or for any other reason in addition, the Ensign 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 <unk>.

Chad Keetch: In addition, the enzyme 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 independent subsidiaries through contractual relationships with such subsidiaries. In addition, our captive insurance subsidiary, which we refer to as the insurance captive, provides certain claims-made coverage to our operating companies for general and professional liability, as well as for workers' compensation insurance liabilities. Enzyne also owns Standard Bear Health Care Rate Inc., which is a captive real estate investment trust that invests in health care properties and enters into lease agreements with certain independent subsidiaries of Enzyne, as well as third party tenants that are unaffiliated with the Enzyne group.

Chad A. Keetch: 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 other independent subsidiaries through contractual relationships with such subsidiaries. In addition, our captive insurance subsidiary, which we refer to as the insurance captive, provides certain claims-made coverage to our operating companies for general and professional liability as well as for workers' compensation insurance liability. Ensign also owns Standard Bear Healthcare REIT, Inc., which is a captive real estate investment trust that invests in healthcare properties and enters into lease agreements with certain independent subsidiaries of Ensign, as well as third-party tenants that are unaffiliated with the Ensign Group.

Chad A. Keetch: Services to the other independent subsidiaries through contractual relationships with such subsidiaries. In addition, our captive insurance subsidiary, which we refer to as the insurance captive provides certain claims made coverage to our operating companies for general and professional liability as well as for workers' compensation insurance liabilities.

Chad A. Keetch: <unk> also owns standard-bearer health care REIT, Inc, which is a captive real estate investment trust that invest in health care properties and entered into lease agreements with certain independent subsidiaries of enzyme as well as third party tenants that are unaffiliated with the Ensign group.

Chad Keetch: The words enzyme, company, we, our, and us refer to the Enzyme Group Inc. and its consolidated subsidiaries.

Chad A. Keetch: The words Ensign, Company, We, Our, and Us refer to the Ensign Group Inc. and its consolidated subsidiaries. All of our independent subsidiaries, the Service Center, Standard Bearer Healthcare REIT, and the Insurance Captive, are operated by separate independent companies that have their own management employees and assets.

Chad A. Keetch: The words enzyme company, we our and US refer to the Ensign Group, Inc. And its consolidated subsidiaries all of our independent subsidiaries. The service Center Standard-bearer healthcare REIT and the insurance captive are operated by a separate independent companies that have their own management employees and assets.

Chad Keetch: All of our independent subsidiaries, the service center, Standard Bear Health Care rate, and the insurance captive are operated by separate independent companies that have their own management, employees, and assets.

Chad A. Keetch: References herein to the Consolidated Company and its assets and activities, as well as the use of the words we, us, our, and similar terms, are not meant to imply, nor should they be construed as meaning, that the Ensign Group has direct operating assets, employees, or revenue, or that any of the subsidiaries are operated by the Ensign 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 gap to non-gap reconciliation is available in yesterday's press release and is available in our Form 10-Q. And with that, I'll turn the call over to Barry Port, our CEO. Barry? Thanks, Chad.

Chad Keetch: References here into the consolidated company and its assets and activities, as well as the use of the words we, us, our, and similar terms, are not meant to imply, nor should it be construed as meaning that the enzyme group has direct operating assets, employees, or revenue, or that any of the subsidiaries are operated by the enzyme group.

References herein to the consolidated company and its assets and activities as well as the use of the words, we us our and similar terms are not meant to imply nor should it be construed as meaning that the ensign group has direct operating assets employees or revenue or that any of the subsidiaries are operated by the <unk>.

Chad Keetch: Also, we supplement our gap reporting with non-GAAP metrics. When viewed together with our gap 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.

Chad A. Keetch: 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.

Chad Keetch: A gap to non-gap reconciliation is available in yesterday's press release and is available in our Form 10-Q.

Chad A. Keetch: A GAAP to non-GAAP reconciliation is available in yesterday's press release and is available in our Form 10-Q.

Barry Port: and with that I'll turn the call over to Barry Port, or CEO Barry. Thanks, Chad, and thank you all for joining us today. We're thrilled to report another record quarter and are excited about the continued momentum our teams have created across our entire portfolio. We're an of our local leaders and how they continue to consistently drive outstanding clinical and financial performance as they work together with their cluster partners to practice proven operational principles. We're very pleased to see our growth over the prior year quarter in occupancy and skilled mixed days in our same store and transitioning operations, particularly in our managed care population.

Chad A. Keetch: And with that I'll turn the call over to Barry Port our CEO Barry.

Barry R. Port: Thanks, Chad, and thank you all for joining us today. We're thrilled to report another record quarter and excited about the continued momentum our teams have created across our entire portfolio. We're in awe of our local leaders and how they continue to consistently drive outstanding clinical and financial performance as they work together with their cluster partners to practice proven operational principles. We're very pleased to see our growth over the prior year quarter in occupancy and skilled mix days in our same store and transitioning operations, particularly in our managed care population.

Barry R. Port: Thanks, Chad and thank you all for joining US today, we are thrilled to report another record quarter and are excited about the continued momentum our teams have created across our entire portfolio.

Barry R. Port: We're in all of our local leaders and how they continue to consistently drive outstanding clinical and financial performance as they work together with their cluster partners to practice proven operational principles.

Barry R. Port: We're very pleased to see our growth over the prior year quarter in occupancy and skilled mix days in our same store and transitioning operations, particularly in our managed care population.

Barry Port: Our same store occupancy, which reached 80.8% for the quarter, an increase of 2.8% over the prior year quarter. In addition, we saw an increase in the same store and transitioning skilled service revenue during the quarter of 6.8% and 6.0%, respectively. With that pace of growth, we are as excited as ever about the incredible amount of built-in upside that exists in our portfolio as so many of our operations continue to march towards occupancy levels that dozens of our most mature same-store operations regularly achieve, which are in the 90s. I also want to emphasize that for 25 years we have acquired lower occupancy operations at very attractive prices, which has resulted in an enormous long-term ramp in value creation.

Barry R. Port: Our same store occupancy reached 80.8% for the quarter, an increase of 2.8% over the prior year quarter. In addition, we saw an increase in same store and transitioning skilled service revenue during the quarter of 6.8% and 6.0%, respectively.

Barry R. Port: Our same store occupancy, which reached 88% for the quarter, an increase of two 8% over the prior year quarter.

Barry R. Port: In addition, we saw an increase in the same store and transitioning skilled service revenue during the quarter of six 8% and 6% respectively.

Barry R. Port: With that pace of growth, we are as excited as ever about the incredible amount of built-in upside that exists in our portfolio as so many of our operations continue to march towards occupancy levels that dozens of our most mature same-store operations regularly achieve, which are in the 90-plus percent range. I also want to emphasize that for 25 years, we have acquired lower occupancy operations at very attractive prices, which has resulted in an enormous long-term increase in value creation.

Barry R. Port: With that pace of growth, we are as excited as ever about the incredible amount of built in upside that exists in our portfolio as so many of our operations continue to March towards occupancy levels that dozens of our most mature same store operations regularly achieve which are in the 90 plus percent range.

Barry R. Port: I want to emphasize that for 25 years, we have acquired lower occupancy operations at very attractive prices.

Barry R. Port: Which has resulted in an enormous long term brands and value creation.

Barry R. Port: So with consolidated occupancies where they are, we get very excited about the significant organic growth potential that is inherent in our existing portfolio. As our operators continue to build on a solid foundation of strong clinical results, cultural excellence, and sustainable real estate expenses, we are confident that our partners will continue to capitalize on the occupancy and skilled mix growth inherent in our portfolio, which will allow us to consistently achieve the results that we have delivered over time.

Barry Port: So, with consolidated occupancies where they are, we get very excited about the significant organic growth potential that is inherent in our existing portfolio. As our operators continue to build on a solid foundation of strong clinical results, cultural excellence, and sustainable real estate expenses, we are confident that our partners will continue to capitalize on the occupancy and skilled mixed growth inherent in our portfolio, which will allow us to consistently achieve the results that we have delivered over time. Also, as you saw on our press release yesterday, we have been busy acquiring new operations and are transitioning, and recently acquired buckets now represent 27% of our total operational beds.

Barry R. Port: So we've consolidated Occupancies, where they are we get very excited about the significant organic growth potential that is inherent in our existing portfolio.

Barry R. Port: As our operators continue to build on our solid foundation of strong clinical results cultural excellence and sustainable real estate expenses. We are confident that our partners will continue to capitalize on the occupancy and skilled mix growth inherent in our portfolio, which will allow us to consistently achieve the results that we have.

Barry R. Port: <unk> delivered over time.

Barry R. Port: Also, as you saw in our press release yesterday, we've been busy acquiring new operations, and our transitioning and recently acquired buckets now represent 27% of our total operational beds. Again, we want to emphasize that this represents massive organic growth potential within those existing growth buckets. To give some perspective, our occupancy and skilled mix days for the skilled nursing operations in the transitioning bucket were 75.7% and 21.7%, respectively, while our same store occupancy and skilled mix days were 80.8% and 31.5%, respectively.

Barry R. Port: Also as you saw in our press release yesterday, we've been busy acquiring new operations and our transitioning and recently acquired buckets now represent 27% of our total operational beds.

Barry Port: Again, we want to emphasize that this represents massive organic growth potential within those existing growth buckets. To give some perspective, our occupancy and skilled mixed days for the skilled nursing operations in the transitioning bucket were 75.7% and 21.7%, respectively, while our same store occupancy and skilled mixed days were 80.8% and 31.5%, respectively. As we've shown over two decades, we expect our teams to continue to unlock the significant upside in each of these new operations as they mature. Our focus on customer second continues to ensure that our caregivers and their teams are recognized for their amazing daily achievements, which has now resulted in lower turnover for the 11th quarter in a row and also a decrease in the use of staffing agencies for the 6th quarter in a row.

Barry R. Port: Again, we want to emphasize that this represents massive organic growth potential within those existing growth buckets.

Barry R. Port: To give some perspective, our occupancy and skilled mix days for the skilled nursing operations and the transitioning bucket were 75, 7% and 21, 7%, respectively. While our same store occupancy and skilled mix days were 88% and 31, 5% respectively.

Barry R. Port: As we've shown over two decades, we expect our teams to continue to unlock significant upside in each of these new operations as they mature. Our focus on Customer Second continues to ensure that our caregivers and their teams are recognized for their amazing daily achievements, which has now resulted in lower turnover for the 11th quarter in a row and also a decrease in the use of staffing agencies for the 6th quarter in a row.

Barry R. Port: As we've shown over two decades, we expect our teams to Peter.

Barry R. Port: Unlocked a significant upside in each of these new operations as they mature.

Barry R. Port: Our focus on customer second continues to ensure that our caregivers and their teams are recognized for their amazing daily achievements, which has now resulted in lower turnover for the 11th quarter in a row and also a decrease in the use of staffing agencies for the sixth quarter in a row.

Barry Port: All of this has occurred while our teams have simultaneously been assisting the newly acquired operations integrate into their local clusters and begin the process of improving clinically and financially.

Barry R. Port: And all of this has occurred while our teams have simultaneously been assisting the newly acquired operations to integrate into their local clusters and begin the process of improving clinically and financially. Due to our solid results, including our stable skilled mix and growing occupancy, as well as continued strength from our recent acquisitions, we are increasing and narrowing our annual 2024 earnings guidance to between $5.38 to $5.50 per diluted share, up from $5.29 to $5.47 per diluted share.

Barry R. Port: And all of this has occurred while our teams have simultaneously been assisting the newly acquired operations integrate into their local clusters and begin the process of improving clinically and financially.

Barry Port: Julie. Due to our sole results, including our stable skill mix and growing occupancy, as well as continued strength from our recent acquisitions, we are increasing and narrowing our annual 2024 earnings guidance to between $5.38 to $5.50 per diluted share, up from $5.29 cents to $5.47 per diluted share. This new midpoint of our 2024 earnings guidance represents an increase of more than 14 percent over our 2023 results, and it's 31 percent higher than our 2022 results. We are also raising our annual revenue guidance to between $4.20 billion and $4.22 billion, up from our previous guidance of $4.13 billion to $4.17 billion.

Barry R. Port: Due to our solid results, including our stable skilled mix in growing occupancy as well as continued strength from our recent acquisitions, we are increasing and narrowing our annual 2024 earnings guidance to between $5 38 to $5 50 per diluted share up from $5 <unk>.

Barry R. Port: Nine.

Barry R. Port: To $5 47 per diluted share this new mid point of our 2024 earnings guidance represents an increase of more than 14% over our 2023 results and is 31% higher than our 2022 results. We are also raising our annual revenue guidance to between $4.

Barry R. Port: This new midpoint of our 2024 earnings guidance represents an increase of more than 14% over our 2023 results and is 31% higher than our 2022 results. We are also raising our annual revenue guidance to between $4.20 billion and $4.22 billion, up from our previous guidance of $4.13 billion to $4.17 billion. We are also excited about the upcoming year and are confident that our partners will continue to manage and innovate while balancing the addition of newly acquired operations.

$201 billion to $4 2 billion up from our previous guidance of $4, one 3 billion to $4 $1 7 billion.

Barry Port: We are also excited about the upcoming year and are confident that our partners will continue to manage and innovate while balancing the addition of newly acquired operations. This performance does not do to some large event or even a singular transformative transaction, but instead is the result of consistent growth and performance quarter after quarter. All of these achievements are entirely due to the efforts and commitment of our local leadership teams, caregivers, field resources, and service center partners. There are so many opportunities in front of us to improve in the expense management and drive occupancy and skill mix as we continue to successfully unlock value in all of our operations.

Barry R. Port: We are also excited about the upcoming year and are confident that our partners will continue to manage and innovate while balancing. The addition of newly acquired operations. This performance is not due to some large event or even a singular transformative transaction, but instead is the result of consistent.

Barry R. Port: This performance is not due to some large event or even a singular transformative transaction but instead is the result of consistent growth and performance quarter after quarter. All of these achievements are entirely due to the efforts and commitment of our local leadership teams, caregivers, field resources, and service center partners. There are so many opportunities in front of us to improve expense management and drive occupancy and skilled mix as we continue to successfully unlock value in all of our operations.

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Barry R. Port: And performance quarter after quarter.

Barry R. Port: All of these achievements are entirely due to the efforts and commitment of our local leadership teams caregivers field resources and service Center partners.

Barry R. Port: There are so many opportunities in front of us to improve in the expense management and drive occupancy and skilled mix as we continue to successfully unlock value in all of our operations.

Barry Port: We remain poised to again showcase our ability to find, acquire, and transition performing and underperforming operations by applying proven and signed principles developed over 25 years.

Barry R. Port: We remain poised to again showcase our ability to find, acquire, and transition performing and underperforming operations by applying proven business principles developed over 25 years. Next, I'll ask Chad to add some additional insights regarding our recent growth.

We remain poised to again showcase our ability to find acquire and transition performing and underperforming operations by applying proven ensign principles developed over 25 years.

Chad Keetch: Next, I'll ask Chad to add some additional insights regarding our recent growth.

Barry R. Port: Next I'll ask Chad to add some additional insight regarding our recent growth Chad.

Chad Keetch: Chad. Thanks, Barry. We continue to add to our growing portfolio and are very excited about the 10 new operations and six real estate assets we added during the quarter, bringing the number of operations acquired during the year to 15. These new acquisitions include the following new operations: three in Colorado, three in Tennessee, two in Arizona, two in Kansas, two in Utah, one in Iowa, one in Nevada, and one in Texas, totaling 1,326 new skilled nursing beds, 202 senior living units, and 43 new LTAC beds. Of these 15 new operations, seven of them included the real estate assets which were acquired by Standard Bearer and leased to an enzyme affiliated operator.

Chad: Thanks Barry.

Chad A. Keetch: We continue to add to our growing portfolio and are very excited about the 10 new operations and six real estate assets we added during the quarter, bringing the number of operations acquired during the year to 15. These new acquisitions include the following new operations: three in Colorado, three in Tennessee, two in Arizona, two in Kansas, two in Utah, one in Iowa, one in Nevada, and one in Texas. Totaling 1,326 new skilled nursing beds, 202 senior living units, and 43 new LTAC beds.

Chad: We continue to add to our growing portfolio and are very excited about the 10, new operations and six real estate assets, we added during the quarter, bringing the number of operations acquired during the year to 15.

Chad: These new acquisitions include the following new operations three in Colorado, three in Tennessee, two in Arizona, two in Kansas two.

Chad: In Utah.

Chad: One in Iowa, one in Nevada, and one in Texas totaling $1 326, new skilled nursing beds, and 202 senior living units and 43, new <unk> beds.

Chad A. Keetch: Of these 15 new operations, 7 of them included real estate assets which were acquired by Standard Bear and leased to an Ensign-affiliated operator. Each of these additions was carefully selected amongst the many opportunities available to us and were chosen because of their huge clinical and financial potential. We continue to prioritize growth in our established geographies as it allows our clusters to work together with their acute care partners to provide a comprehensive solution to their health care needs.

Chad: Of these 15, new operations seven of them included the real estate assets, which were acquired by standard bear and lease to an enzyme affiliated operator.

Chad Keetch: Each of these additions were all carefully selected amongst the many opportunities available to us and were chosen because of the huge clinical and financial potential. We continue to prioritize growth in our established geographies as it allows our clusters to work together with their acute care partners to provide a comprehensive solution to their healthcare needs. In particular, we are very excited to grow in Arizona where we have a deep and longstanding relationships with the largest hospital systems in the state. However, we are also excited to build clusters in new states or in markets where we have a significant room to add more density and expect additional growth in some of our newer markets in the next several months.

Chad: Each of these additions were all carefully selected amongst the many opportunities available to us and were chosen because of the huge clinical and financial potential.

Chad: We continue to prioritize growth in our established geographies as it allows our clusters to work together with their acute care partners to provide a comprehensive solution to their health care needs. In particular, we are very excited to grow in Arizona, where we have a deep and long standing relationships with the largest hospital systems in the state. However.

Chad A. Keetch: In particular, we are very excited to grow in Arizona, where we have a deep and long-standing relationship with the largest hospital systems in the state. However, we are also excited to build clusters in new states or in markets where we have significant room to add more density, and we expect additional growth in some of our newer markets in the next several months. We continue to see a very healthy pipeline of new acquisition opportunities and are lining up some exciting new additions that we expect to close in the third and fourth quarters. Our scalable, decentralized growth model is not dependent on a centralized team of experts but instead is driven by local leadership.

Chad: However, we are also excited to build in clusters in new states or in markets, where we have significant room to add more density and expect additional growth in some of our newer markets in the next several months.

Chad Keetch: We continue to see a very healthy pipeline of new acquisition opportunities and are lining up some exciting new additions that we expect to close in the third and fourth quarters. Our scalable, decentralized growth model is not dependent on a centralized team of experts, but instead is driven by local leadership. In times like these when deal opportunities are abundant, we rely on a proven set of deal criteria, including a deep local knowledge of their respective health care markets to ensure that we remain disciplined and grow in a very healthy way. One of the foundational elements of our consistent performance has been to insist that the prices we pay are commensurate with the historical operational performance, which will result in a cost structure that allows us to achieve healthy returns over a long period of time.

Chad: We continue to see a very healthy pipeline of new acquisition opportunities and are lining up some exciting new additions that we expect to close in the third and fourth quarters.

Chad: Our scalable decentralized growth model is not dependent on a centralized team of experts, but instead is driven by local leadership.

Spencer W. Burton: In times like these, when deal opportunities are abundant, we rely on a proven set of deal criteria, including deep local knowledge of their respective healthcare markets, to ensure that we remain disciplined and grow in a very healthy way. One of the foundational elements of our consistent performance has been to insist that the prices we pay are commensurate with historical operational performance, which will result in a cost structure that allows us to achieve healthy returns over a long period of time.

Chad: In times like these when deal opportunities are abundant we rely on our proven set of deal criteria, including a deep local knowledge of their respective healthcare markets to ensure that we remain disciplined and grow in a very healthy way.

Chad: One of the foundational elements of our consistent performance has been to insist that the prices. We pay are commensurate with the historical operational performance, which will result in a cost structure that allows us to achieve healthy returns over a long period of time.

Chad Keetch: However, we do not just grow for the sake of growth or acquire revenue or by earnings. Accordingly, we will sacrifice short-term margins and metrics growth for the long-term built-in organic upside. As we have consistently communicated, executed, and delivered, our intention is to continue to grow when we see deals that will be accreted to shareholders for years to come.

Spencer W. Burton: However, we do not just grow for the sake of growth, or acquire revenue, or buy earnings. Accordingly, we will sacrifice short-term margins and metrics growth for the long-term built-in organic upside. As we have consistently communicated, executed, and delivered, our intention is to continue to grow when we see deals that will be accreted to shareholders for years to come. We continue to provide additional disclosure on Standard Bearer, which is currently comprised of 115 owned properties.

Chad: However, we do not just grow for the sake of growth or acquire revenue or by earnings. Accordingly, we will sacrifice short term margins and metrics growth for the long term built in organic upside.

Chad: As we have consistently communicated executed and delivered our intention is to continue to grow when we see deals that will be accretive to shareholders for years to come.

Chad Keetch: We continue to provide additional disclosure on Standard Bear, which is currently comprised of 115 owned properties. Of these assets, 86 are leased to an enzyme-affiliated operator, and 30 are leased to third-party operators. All of these properties are subject to triple net long-term leases and generated rental revenue of 23.4 million for the quarter, of which 19.2 million was derived from an enzyme-affiliated operation. Also, for the quarter, we reported 14.5 million in FFO, and as of the end of the quarter had an EBITDA-to-rent coverage ratio of 2.4 times.

Speaker Change: We continue to provide additional disclosure on standard of care, which is currently comprised of 115 owned properties of these assets 86 are leased to an enzyme affiliated operator and 30 or at least to third party operators. All of these properties are subject to triple net long term leases and generated rental revenue of $23 4 million for the quarter.

Spencer W. Burton: Of these assets, 86 are leased to an Ensign-affiliated operator, and 30 are leased to third-party operators. All of these properties are subject to triple net long-term leases and generated rental revenue of $23.4 million for the quarter, of which $19.2 million was derived from an Ensign operation. Also, for the quarter, we reported $14.5 million in FFO and, as of the end of the quarter, had an EBITDAR to rent coverage ratio of 2.4 times. And with that, I'll call Spencer, our COO, to add more color around operations. Spencer? Thank you.

Speaker Change: Of which $19 2 million was derived from an ensign affiliated operation also for the quarter, We reported $14 5 million in <unk> and as of the end of the quarter had an EBITDAR to rent coverage ratio of two four times.

Spencer Burton: And with that, I'll call us to enter our COO to add more color around operations. Spencer? Thanks, Chad, and hello, everyone. I'm excited to present two operational examples that can hopefully give you deeper insight into the incredible work that our affiliated teams are doing day and night to continue to achieve the consistent results that we see quarter after quarter. As Barry mentioned earlier, more than a fourth of all of our operations are either in the recently acquired or transitioned categories.

Speaker Change: And with that ill close Spencer, our COO to add more color around operations Spencer.

Spencer W. Burton: Thanks Chad, and hello everyone. I'm excited to present two operational examples that can hopefully give you deeper insight into the incredible work that our affiliated teams are doing day and night to continue to achieve the consistent results that we see quarter after quarter. As Barry mentioned earlier, more than a fourth of all of our operations are either in the recently acquired or transitioning categories. Because of that, the first facility I'll highlight is a transitioning facility called Arrowhead Springs Healthcare, located in San Bernardino, California. When it was acquired in February of 2022, this 119-bed SNF suffered from low occupancy and a poor reputation in the healthcare community.

Spencer: Thanks, Chad and Hello, everyone I'm excited to present to operational examples that can hopefully give you a deeper insight into the incredible work that our affiliated teams are doing day and night to continue to achieve the consistent results that we see quarter after quarter.

Spencer: As Barry mentioned earlier more than a fourth of all of our operations are either in the recently acquired or transitioning categories.

Spencer Burton: Because of that, the first facility I'll highlight is a transitioning facility called Arrowhead Springs Healthcare, located in San Bernardino, California. When it was acquired in February of 2022, this 119-bed sniff suffered from low occupancy and a poor reputation in the healthcare community. Despite the tremendous challenges, Executive Director Jeff Beltran and COO Iman Bravo, together with the Arrowhead leadership team, saw the facility's potential and systematically went to work. First year was difficult as the team poured themselves into establishing clinical systems, remodeling the building, and forging partnerships with local hospitals and managed care organizations. The results have been astounding.

Spencer W. Burton: Despite the tremendous challenges, Executive Director Jeff Beltran and COO Eamon Bravo, together with the Arrowhead leadership team, saw the facility's potential and systematically went to work. The first year was difficult as the team poured themselves into establishing clinical systems, remodeling the building, and forging partnerships with local hospitals and managed care organizations. The results have been astounding. For example, CMS's overall star rating has increased from 3 stars at acquisition to 5 stars today.

Spencer: Because of that the first facility I'll highlight is the transitioning facility called Arrowhead Springs healthcare located in San Bernardino, California.

Spencer W. Burton: Overall occupancy has jumped from 76% at acquisition to over 96% in Q2 of this year, with skilled Medicare and managed care days increasing by over 56% over the prior year quarter. As you would expect, the growing census has increased the need for additional staffing, but because Arrowhead has become a great place to work, they've been able to hire and retain employees and reduce spending on contract nursing labor from over $140,000 per month a year ago to $0 last month.

Spencer: When it was acquired in February of 2020 to 119 beds Smith suffered from low occupancy and a poor reputation in the health care community.

Spencer: Despite the tremendous challenges executive director, Jess Beltran, and COO Eamonn Bravo together with Arrowhead leadership team saw the facility's potential and systematically went to work.

Spencer: First year was difficult as the team towards themselves into establishing clinical systems remodeling, the building and forging partnerships with local hospitals and managed care organizations. The results have been astounding.

Spencer Burton: For example, CMS overall star rating has increased from three stars at acquisition to five stars today. Overall occupancy has jumped from 76% at acquisition to over 96% in Q2 of this year, with skilled Medicare and managed care days increasing by over 56% over the prior year quarter. As you would expect, growing census has increased the need for additional staffing, but because Arrowhead has become a great place to work, they've been able to hire and retain employees and reduce spending on contract nursing labor from over $140,000 per month a year ago to $0 last month. Not surprisingly, as the facility has become healthy, so have earnings, with EBITR improving by 95% over a prior year quarter.

Spencer: For example.

Spencer: CMS overall star rating has increased from three stars at acquisition to five stars today.

Spencer: Overall occupancy has jumped from 76% of acquisition to over 96% in Q2 of this year with skilled Medicare and managed care days, increasing by over 56% over the prior year quarter.

Spencer: As you would expect growing census has increased the need for additional staffing.

Spencer: Arrowhead has become a great place to work they have been able to hire and retain employees and reduced spending on contract nursing labor from over $140000 per month, a year ago to $0 last month.

Spencer W. Burton: Not surprisingly, as the facility has become healthy, so have earnings, with EBITDA improving by 95% over a prior year quarter. The turnaround at Arrowhead is a great example of the meaningful progress being made at so many of our newly acquired and transitioning operations. We are grateful for the work being done and excited to watch as these operations continue to improve and contribute to our organization for years to come. Now, as excited as we are about these transitioning facilities, we're equally enthusiastic about the ongoing growth we see in our same store operations, which continue to reach new heights.

Spencer: Not surprisingly as the facilities become healthy so have earnings with EBITDAR, improving by 95% over prior year quarter.

Spencer Burton: Turn around at Arrowhead is a great example of the meaningful progress being made at so many of our newly acquired and transitioning operations. Grateful for the work being done and excited to watch as these operations continue to improve and contribute to our organization for years to come.

Speaker Change: Turnaround at Arrowhead is a great example of the meaningful progress being made at so many of our newly acquired a transitioning operations.

Speaker Change: Grateful for the work being done and excited to watch as these operations continue to improve and contribute to our organization for years to come.

Spencer Burton: Now, as excited as we are about these transitioning facilities, we're equally enthusiastic about the ongoing growth we see in our same store operations, which continue to reach new heights. One example of this is Rainier Rehabilitation in Puyallup, Washington, led by CEO Brett Watson and COO Stacey Chapman. Despite being acquired a decade ago, the team at Rainier continues to find ways to improve quality and grow earnings. The Foundation at Rainier is an obsession with clinical excellence. This shows in its CMS 5-star rating for health inspections, quality measures, and overall. In fact, the Rainier team has scored deficiency-free in their past two annual surveys, in spite of Washington having one of the most difficult survey environments in the entire nation.

Speaker Change: Now as excited as we are about these transitioning facilities, we're equally enthusiastic about the ongoing growth we see in our same store operations, which continue to reach new heights.

Spencer W. Burton: One example of this is Rainier Rehabilitation in Puyallup, Washington, led by CEO Brett Watson and COO Stacey Chapman. Despite being acquired a decade ago, the team at Rainier continues to find ways to improve quality and grow earnings. The foundation at Rainier is an obsession with clinical excellence, and this shows in its CMS 5-star rating for health inspections, quality measures, and overall. In fact, the Rainier team has scored deficiency-free in its past two annual surveys, in spite of Washington having one of the most difficult survey environments in the entire nation.

One example of this is rainier rehabilitation and few Walla, Washington led by CEO, Brett Watson and COO Stacy Chapman.

Speaker Change: Despite being acquired a decade ago. The team at Ranger continues to find ways to improve quality and grow earnings.

Speaker Change: The foundation at Rainier is an obsession with clinical excellence.

Speaker Change: This shows in at CMS, five star rating for health inspections quality measures and overall.

Speaker Change: In fact, they're a near team has scored deficiency free in their past two annual surveys in spite of Washington, having one of the most difficult survey environments in the entire nation.

Spencer Burton: Because of the strong clinical reputation, Rainier has become the number one facility in this state for ventilator-dependent and other high-acuity patients. Managed care organizations and hospital systems have taken notice, and Rainier had been awarded numerous preferred provider contracts in recent years. As a result, occupancy and skilled mix continued to increase, and the facility recently hit its maximum operational capacity and had to start a waiting list for admissions. In the second quarter, this mature operation grew revenues by 17 percent, and its evit by 34 percent over prior year quarter.

Spencer W. Burton: Because of its strong clinical reputation, Rainier has become the number one facility in the state for ventilator-dependent and other high-acuity patients. Managed care organizations and hospital systems have taken notice, and Rainier has been awarded numerous preferred provider contracts in recent years. As a result, occupancy and skilled mix continue to increase, and the facility recently hit its maximum operational capacity and had to start a waiting list for admission. In the second quarter, this mature operation grew revenues by 17% and its EBIT by 34% over the prior year quarter.

Speaker Change: Because of the strong clinical reputation <unk> has become the number one facility in the state for ventilator dependent and other high acuity patients.

Speaker Change: Managed care organizations and hospital systems have taken notice and <unk> has been awarded numerous preferred provider contracts in recent years.

Speaker Change: As a result occupancy and skilled mix continued to increase and the facility recently hit its maximum operational capacity and had to start a waiting list for admissions.

Speaker Change: In the second quarter. This mature operation grew revenues by 17% and its EBIT by 34% over prior year quarter.

Spencer Burton: But perhaps Rainier's most impressive contribution comes from the culture that they have established. People want to be part of Rainier. Their turnover rate for employee scores among the best in Washington. And when people do leave, it's often to take on increased responsibility at sister facilities or new acquisitions. For example, Dacey and the Rainier team have trained multiple nurses who are now transforming care at sister facilities as directors of nursing, and continuing to spread Rainier's influence and impact far beyond the facility.

Spencer W. Burton: But perhaps Rainier's most impressive contribution comes from the culture that they've established. People want to be part of Rainier. Their turnover rate for employees is among the best in Washington. And when people do leave, it's often to take on increased responsibility at sister facilities or new acquisitions, for example.

Speaker Change: But perhaps most impressive contribution comes from the culture that they have established people wanted to be part of Rainier.

Speaker Change: Our turnover rate for employee scores among the best in Washington, and when people do leave it's often to take on increased responsibility at sister facilities or new acquisitions for example, Stacy.

Suzanne D. Snapper: Stacy and the Rainier team have trained multiple nurses who are now transforming care at sister facilities as directors of nursing and continuing to spread Rainier's influence and impact far beyond the facility. With that, I'll turn the time over to Suzanne to provide more detail on the company's financial performance and our guidance, and then we'll open it up for questions.

Speaker Change: Stacy in the Ranger team have trained multiple nurses, who are now transforming care at sister facilities as directors of nursing and continuing to spread Rangers influence and impact far beyond the facility.

Suzanne Snapper: With that, I'll turn the time over to Suzanne to provide more detail on the company's financial performance and our guidance, and then we'll open it up for questions. Suzanne? Thank you, Spencer, and good morning, everyone.

Speaker Change: With that I'll turn the time over to Suzanne to provide more detail on the company's financial performance and our guidance and then we'll open it up for questions Suzanne.

Suzanne D. Snapper: Thank you Spencer and good morning everyone. Detailed financials for the quarter are contained in our 10-Q and press release filed yesterday. Some additional highlights for the quarter include GAAP's diluted earnings per share of $1.22, an increase of 8.9 percent. Adjusted diluted earnings per share was $1.32, an increase of 13.8 percent. Consolidated Gap revenues and Adjusted revenues were both $1 billion, an increase of 12.5%. Gap net income was $71 million, an increase of 11%.

Suzanne: Thank you Spencer and good morning, everyone detailed financials for the quarter are contained in our 10-Q and press release filed yesterday.

Suzanne Snapper: Detailed financials for the quarter are contained in our 10-Q and press release file yesterday. From additional highlights for the quarter include, gap-deleted earnings per share was $1.22, an increase of 8.9 percent. Adjusted deleted earnings per share was $1.32, an increase of 13.8 percent. Consolidated gap revenues and adjusted revenues were both $1 billion, an increase of 12.5 percent. gap net income with 71 million and increase of 11%. Adjusted net income with 76.4 million and increase of 15.3%. Other key metrics as of June 30th, 2024, includes cash and cash equivalent with 477.3 million and cash flow from operations of 112.2 million.

Suzanne: Some additional highlights for the quarter include GAAP diluted earnings per share was $1 22, an increase of eight 9%.

Suzanne: Adjusted diluted earnings per share was $1 32, an increase of 13, 8%.

Suzanne: Solidago GAAP revenue and adjusted revenues were about $1 billion.

Suzanne: An increase of 12, 5%.

Suzanne: GAAP net income was $71 million an increase of 11%.

Suzanne D. Snapper: Adjusted net income was $76.4 million, an increase of 15.3%. Other key metrics as of June 30, 2024 include cash and cash equivalents of $477.3 million and cash flow from operations of $112.2 million. The company paid a quarterly cash dividend of $0.06 per common share.

Suzanne: Adjusted net income was $76 4 million an increase of 15, 3%.

Suzanne: Other key metrics as of June 32020, foreign credit cash.

Suzanne: Cash and cash equivalent of $177 3 million.

Suzanne: Cash flow from operations of $112 2 million.

Suzanne Snapper: The company paid a quarterly cash dividend of six cents per common share. We have a long history of paying dividends and have increased the annual dividend for 21 consecutive years. We also continue to deliver our portfolio, achieving at least adjusted net debt to EBIT our ratio of 1.99 times. Delivering periods of growth is particularly not worth it and demonstrates our commitment to discipline growth as we believe that we can continue to achieve sustainable growth in the long run. In addition, we currently have approximately 573 million of available capacity under our line of credit, which, when combined with cash on the balance sheet, gives us over a billion dollars of dry powder for future investments.

Suzanne: The company paid a quarterly cash dividend of six cents per common share we have a long history of paying dividends and have increased the annual dividend for 21 consecutive years.

Suzanne D. Snapper: We have a long history of paying dividends and have increased the annual dividend for 21 consecutive years. We also continue to de-lever our portfolio, achieving a least adjusted net debt to EBITDA ratio of 1.99 times. Delivering in periods of growth is particularly noteworthy and demonstrates our commitment to disciplined growth as we believe that we can continue to achieve sustainable growth in the long run. In addition, we currently have approximately $573 million of available capacity under our line of credit, which, when combined with cash on the balance sheet, gives us over $1 billion of dry powder for future investment. We also own 120 assets, of which 115 are held by Standard Bear, and 96 of which are owned completely debt-free and are gaining significant value over time, adding even more liquidity to help with future growth.

Suzanne: We also continued to delever our portfolio, achieving our lease adjusted net debt to EBITDA ratio of 199 times.

Speaker Change: Levering Im curious if growth is particularly noteworthy and demonstrates our commitment to disciplined growth as we believe that we can continue to achieve sustainable growth in the long run.

Speaker Change: In addition, we currently have approximately $573 million of available capacity under our line of credit, which when combined with cash on the balance sheet give us over $1 billion of dry powder for future investments.

Suzanne Snapper: We also own 120 assets, of which 115 are helped by Standard Bear and 96 of which are on completely debt three and are gaining significant value over time, adding even more liquidity to help with future growth.

Speaker Change: We also own a 120 assets.

Peter: 100, <unk>, Peter help us Andrew Bird and 96 of which are completely debt free and are gaining significant value over time, adding even more liquidity to help with future growth.

Suzanne Snapper: We also want to remind you that CMS, minimum staffing rule, which if it survives, will have a multi-year phase-in period and will have no material impact on us in 2024.

Suzanne D. Snapper: We also wanted to remind you that the CMS Minimum Staffing Rule, which if it survives, will have a multi-year phase-in period and will have no material impact on us in 2024. As Barry mentioned, we are increasing and narrowing our annual 2024 earnings guidance to between $5.38 to $5.50 per deleted share, up from $5.29 to $5.47 per deleted share. We are also raising our annual revenue guidance to between $4.2 billion and $4.22 billion, up from the previous guidance of $4.13 billion to $4.17 billion.

Speaker Change: We also wanted to remind you that CNS minimum staffing well, which it is Dubai will have a multiyear phase in period.

Speaker Change: Have no material impact on us in 2024.

Suzanne Snapper: As Barry mentioned, we are increasing and narrowing our annual 2024 earnings guidance to between $5.38 to $5.50 per diluted share, up from $5.29 to $5.47 per diluted share. We are also raising our annual revenue guidance to between $4.2 billion and $4.22 billion, up from the previous guidance of $4.13 billion to $4.17 billion. We have evaluated multiple scenarios, and based on the strengths of our performance and the strong momentum we see in occupancy and skilled mix, as well as the continued progress on agency management and other operational initiatives, we are competent that we can achieve these results.

Speaker Change: As Barry mentioned, we are increasing and narrowing our annual 2024 earnings guidance to between $5 38 to.

Speaker Change: The $5 50 per.

Speaker Change: Our diluted share upfront.

Speaker Change: Upfront $5 29 to $5.47 per diluted share.

We are also raising our annual revenue guidance to between $4 2 billion and $4 <unk> billion up from the previous guidance of $4. One 3 billion to $4. One 7 billion, we have evaluated multiple scenarios and postponed to strengthen our performance and a strong momentum posting in occupancy and skilled mix as well as the continued.

Suzanne D. Snapper: We have evaluated multiple scenarios, and based on the strength in our performance and the strong momentum we've seen in occupancy and the skilled mix, as well as the continued progress on agency management and other operational initiatives, we are confident that we can achieve these results. Our 2024 guidance is based on diluted weighted average common shares outstanding of approximately $58.5 million, a tax rate of 25 percent, the inclusion of acquisitions closed and expected to close in 2024, the inclusion of management expectations for Medicare and Medicaid reimbursement rates, net of provider, and with the primary exclusions coming from stock-based compensation, litigation, and system implementation.

Speaker Change: An agent.

And other operational initiatives, we're confident that we can achieve these results.

Suzanne Snapper: Our 2024 guidance is based on diluted, weighted average common shares of standing of approximately $58.5 million. A tax rate of 25%; the inclusion of acquisitions closed and expected to close in 2024; the inclusion of management's expectations for Medicare and Medicaid reimbursement rates, net of provider tax; and with the primary exclusions coming from stock-based compensation, litigation, and system of implementation. Other factors that could impact coirly performance include variations in reimbursement systems, delays in changes in state budgets, even outing occupancy and skilled mix, the influence of general economy, census, and staffing, the short-term impact of our acquisition activities, variations in insurance, codes, and other factors.

Speaker Change: Our 2024 guidance is based on diluted weighted average common shares outstanding of approximately $58 5 million.

Speaker Change: Tax rate, 25% the inclusion of acquisitions expected to close in 2020 for the inclusion of management's expectations for Medicare and Medicaid reimbursement rates net of provider tax.

Speaker Change: And with the primary exclusion coming from stock based compensation litigation and system implementation.

Suzanne D. Snapper: Other factors that could impact quarterly performance include variations in reimbursement systems, delays in changes in state budgets, season-elevating occupancy and skilled mix, the influence of the general economy, census, and staffing, the short-term impact of our acquisition activities, variations in insurance codes, and other factors.

Speaker Change: Other factors that could impact quarterly performance include variations in reimbursement systems delays and changes in state budgets seasonality in occupancy and skilled mix.

Speaker Change: Influencer, Danielle economy census, and staffing.

Speaker Change: Short term impact of our acquisition activity.

Speaker Change: Patients in insurance closing other factors and with that I'll turn the call back over to Barry Barry.

Barry R. Port: And with that, I'll turn the call back over to Barry. Okay?

Barry Port: And with that, I'll turn the call back over to Barry. As we wrap up, I must reiterate again how incredibly honored and grateful we are to work alongside our facility leaders, field resources, clinical partners, and service center team that are behind these record-setting results. We are always impressed by their incredible industry-leading leadership as they focus on supporting our collective mission to dignify post-acute care in new and innovative ways. This commitment has blessed the lives of so many, including our own. We're excited about our future because of these amazing partners, and we have complete faith in them and the culture they have collectively built and continue to improve.

Barry R. Port: Suzanne, as we wrap up, I must reiterate again how incredibly honored and grateful we are to work alongside our facility leaders, field resources, clinical partners, and service center team that are behind these record-setting results. We are always impressed by their incredible industry-leading leadership as they focus on supporting our collective mission to dignify post-acute care in new and innovative ways. This commitment has blessed the lives of so many, including our own. We're excited about our future because of these amazing partners, and we have complete faith in them and the culture they have collectively built and continue to improve. We'll now turn it over to the Q&A portion of our call. Sarah, can you give us instructions on how to proceed?

Barry R. Port: Suzanne as as we wrap up I must reiterate again, how incredibly honored and grateful we are to work alongside our facility leaders field resources clinical partners and service center team that are behind these record setting results were always impressed by their incredible industry, leading leadership as they focus.

Barry R. Port: On supporting our collective mission to Dignify post acute care in new and innovative ways.

Barry R. Port: This commitment has blessed the lives of so many including our own were excited about our future because of these amazing partners. We have complete faith in them and the culture. They have collectively built and continue to improve we.

Operator: We'll now turn it over to the Q&A portion of our call.

Barry R. Port: I will now turn it over to the Q&A portion of our call Sarah can you.

Operator: Sarah, can you give us instructions on how to proceed? Yes, thank you. If you would like to ask a question, please press star one on your telephone keypad.

Sarah: Give us instructions on how to proceed.

Operator: Yes, thank you. If you would like to ask a question, please press star one on your telephone keypad. If you wish to withdraw your question, simply press star one again, and please ensure that your line is not muted when called upon. Your first question comes from the line of Kay Quy with Macquarie. Your line is open.

Sarah: Yes. Thank you if you would like to ask a question. Please press star one on your telephone keypad.

Operator: If you wish to withdraw your questions, simply press star one again, and please ensure that your line is not muted when called upon.

Sarah: I wish to withdraw your question simply press Star one again.

Sarah: These ensure that your line is not muted when called upon.

Scott Fidel: Your first question comes from the line of Take Clean with McCuary. Your line is open. Hi, thank you. My first question is on our principal momentum and upside last quarter. Ensign's office is surpassed pre-pandemic levels. You had another 200 plus basis point office growth this quarter, which is above pre-pandemic averages. So, in the prepare remarks, Barry, you alluded to the upside compared to the more mature operations and 90% occupancy.

Speaker Change: Your first question comes from the line of <unk> with Macquarie. Your line is open.

Barry R. Port: Hey, thank you. My first question is on occupancy momentum and upside. Last quarter, ensign occupancies had surpassed pre-pandemic levels. You had another 200-plus basis point occupancy growth this quarter, which is above pre-pandemic averages. So in your prepared remarks, Barry, you alluded to the upside compared to the more mature operations at 90% occupancy. I'm wondering if you could share with us your thoughts on current momentum, the amount of time it typically takes to unlock the upside, and also the key hurdles you need to clear to get there. Thanks. Yeah.

Speaker Change: Hi, Thank you my.

<unk>: My first question is on occupancy momentum and upside.

Speaker Change: Last quarter enzymes occupancies have surpassed pre pandemic levels you had another 200 plus basis point occupancy growth this quarter, which is above pre pandemic averages. So in the prepared remarks, Barry you alluded to the upside compared to the more mature operations at 90% occupancy I'm wondering if you could share with us your thoughts on <unk>.

Barry Port: I'm wondering if you could share with us your thoughts on current momentum, the amount of time it typically takes to unlock the upside, and also the key hurdles you need to clear to get there. Thanks. Yeah, thanks, Towsk. Great question. We've been seeing steady occupancy growth for a long time now, obviously through the recovery period of the pandemic, but even since. And you can see this in hospital occupancy data that's been coming out recently. The demand is strong. We're seeing that translate at the post-cute level as well. And it's getting back to pre-pandemic occupancy level. Really was obviously a focus for a long time, but it's not really a ceiling.

Tim the amount of time, it typically take to unlock the upside and also the key hurdles you need to clear to get there. Thanks.

Barry R. Port: Yeah, thanks, Tal. It's a great question.

Tim: Yes. Thanks.

Speaker Change: Great question.

Speaker Change: We've been seeing steady occupancy growth for a long time now.

Speaker Change: Obviously through the recovery period of the pandemic, but even since we.

Speaker Change: And you can see this in hospital occupancy data that's been coming out recently.

<unk> is strong we're seeing that translate.

Barry R. Port: You know, we've been seeing steady occupancy growth for a long time now, obviously through the recovery period of the pandemic, but even since we, and you can see this in, you know, hospital occupancy data that's been coming out recently. The demand is strong. We're seeing that translate at the post-acute level as well. And getting back to the pre-pandemic occupancy level really was, you know, obviously a focus for a long time, but it's not really a ceiling.

Speaker Change: At our at our.

Speaker Change: Post acute level as well.

And it's a.

Speaker Change: It's getting back to pre pandemic occupancy level really was obviously a focus for a long time, but but it's not really a ceiling as you remember leading up to the pandemic our occupancy growth was strong at.

Barry R. Port: And as you remember, leading up to the pandemic, our occupancy growth was strong at that time as well, and we see those trends continuing now. And also, I'd point out that, you know, we typically expect more seasonality than I think we've been seeing in the last two kinds of summer seasons, and we haven't seen as sharp a decline in occupancy, which just is another indicator to us that demand is strong and will continue to be strong for us throughout the rest of this year.

Barry Port: As you remember, leading up to the pandemic, our occupancy growth was strong, you know, at that time as well. And we see those trends continuing now. And also, I'd point out that, you know, we expect typically, you know, more seasonalities, and I think we've been seeing the last two, kind of summer seasons. And we haven't seen as sharp a decline in occupancy, which is another indicator to us that demand is strong and will continue to be strong for us throughout the rest of this year. Got it. That's helpful.

At that time as well.

Speaker Change: And we see those trends continuing.

Speaker Change: Now.

Speaker Change: And then also I'd point out that we.

We expect typically.

Speaker Change: More seasonality than I think we've been seeing the last two kind of summer.

Speaker Change: Seasons, and we we havent seen as sharp a decline in occupancy which is another indicator to us that.

That demand is strong and will continue to be strong for us throughout the rest of this year.

Barry R. Port: Got it, that's helpful. And the second question is on investment. Could you update us on the current pipeline in terms of volume, pricing, and breakdown between stable versus turnaround opportunities, portfolio versus individual transactions, and leased versus owned deals?

Speaker Change: Got it Thats helpful.

Scott Fidel: And the second question is on investment. Could you update us on the current pipeline in terms of volume pricing and breakdown between stable versus turnaround opportunities, portfolio versus individual transactions, and these versus owned deals? Those are acquisitions at the beginning of the month for lots of kind of operational and billing reasons, but so you'll anticipate there'll be some more announcements coming up here and literally next week. And then, you know, lining up for the rest of the year, you know, there's always sort of a kind of a Q3, Q4 push for a lot of sellers that want to get deals done, you know, in this tax year.

Speaker Change: And the second question is on the investment could you update us on the current pipeline in terms of volume and pricing and breakdown between stable business turnaround opportunities portfolio versus individual transactions and leased versus owned deals.

Barry R. Port: Sure, yeah, so, you know, the pipeline is very healthy, 15 so far this year. We always close our acquisitions at the beginning of the month for lots of kind of operational and billing reasons, but so you'll anticipate there'll be some more announcements coming up here and literally next week. And then, you know, lining up for the rest of the year, you know, there's always sort of a kind of a Q3, Q4 push for a lot of sellers that want to get deals done, you know, in this tax year. So you'll see, you know, an increase in activity. In terms of the deals, they're really all over the board, Tal. They come from, you know, the small moms and pops.

Speaker Change: Sure yes so.

Speaker Change: The pipeline is very healthy.

Speaker Change: <unk> so far this year, we always close our acquisitions at the beginning of the month for.

Speaker Change: Lots of kind of operational and billing reasons, but.

Speaker Change: So we anticipate there'll be some more announcements coming up here in literally next week.

Speaker Change: And then lining up for the rest of the year. There is always sort of a kind of a Q3 Q4 push to for a lot of sellers that want to get deals done.

Barry Port: So, you'll see, you know, an increase in activity in terms of the deals; they're really all over the board to how they come from, you know, the small moms and pops. There are some regional portfolios too that were well down the road and, you know, preparing to close on as well. So, you'll see us to, you know, participate in some, you know, in a larger way than just a mom-and-pop deal in a few of our states. And, you know, in terms of geography, you know, as we said in the prepared marks, seven out of the 14 states that were in, you know, saw growth.

Speaker Change: This tax year so.

Speaker Change: So youll see.

Speaker Change: An increase in activity in terms of the deals are really all over the board.

Speaker Change: I come from the small moms and Pops.

Barry R. Port: There are some regional portfolios, too, that are well down the road and, you know, preparing to close on as well. So you'll see us participate in some in a larger way than just a mom and pop deal in a few of our states. And you know, in terms of geography, as we said in the prepared remarks, seven out of the 14 states that we're in saw growth.

Speaker Change: There are some regional portfolios too that were.

Speaker Change: Well down the road and.

Preparing to close on as well.

Speaker Change: So youll see us to participate in some.

Speaker Change: In a larger way than just a mom and pop deal.

Speaker Change: In a few of our states.

Speaker Change: And in terms of geography.

Speaker Change: We said in the prepared remarks seven out of the <unk>.

Speaker Change: 14 states that we're in saw growth I think youll continue to see sort of that distribution across multiple markets.

Barry Port: I think you'll continue to see sort of that distribution across multiple markets, which is really an important point. You know, it's really healthy for us to grow in that way because, you know, our local approach to transitioning, you know, is a scalable approach that, you know, when we grow in Colorado, it doesn't, you know, we don't feel it in Washington or other parts of the company, right. So, we're really excited about the deal opportunities and kind of where they are. You know, obviously the states were in, or there's tons of room to continue to expand and add density in those states.

Barry R. Port: I think you'll continue to see sort of that distribution across multiple markets, which is really an important point. You know, it's really healthy for us to grow in that way because, you know, our local approach to transitioning is a scalable approach that, you know, when we grow in Colorado, it doesn't, you know, we don't feel it in Washington or other parts of the company, right? So it's, we're really excited about the deal opportunities and kind of where they are.

Speaker Change: Which is really an important point.

Speaker Change: It's really healthy for us to grow in that way because our local approach to transitioning.

Speaker Change: As a scalable approach that when we grow in.

Speaker Change: Colorado It doesn't.

Speaker Change: I don't feel it in Washington, or other parts of the company right. So.

Speaker Change: It's we're really excited about about the deal opportunities and kind of where they are.

Barry R. Port: You know, obviously, the states we're in, there's tons of room to continue to expand and add density in those states. We'll continue to do that, but you'll also see us making some additions in new states and growing in some of our newer states throughout the rest of the year as well.

Speaker Change: Obviously, the states, we're in or there's tons of room to continue to expand and add density in those states. We will continue to do that but youll also see us.

Barry Port: We'll continue to do that, but you'll also see us making some additions in new states and growing in some of our newer states, you know, throughout the rest of the year as well. Got it. It's very broad-based.

Speaker Change: Making some additions in new states and growing in some of our newer states.

Speaker Change: Throughout the rest of the year as well.

Barry R. Port: Got it. Sounds like it's very broad-based. Lastly, I want to ask about the Chevron doctrine, which the Supreme Court just overturned. I think it will have a lasting impact on many current and pending health care regulations. Could you comment on the latest thinking on minimum staffing standards and any other regulations that the SNF industry could challenge in the future? And also, given the current election cycle, your expectation of the future regulatory landscape? Thank you. I would say,

Speaker Change: Got it sounds like it's very broad based.

Scott Fidel: Lastly, I want to ask about the Chevron doctrine, which the Supreme Court just overturned. I think you have a lasting impact on many current and pending healthcare regulations.

Speaker Change: Lastly, I wanted to ask about the Chevron doctrine, which Supreme Court overturned and I think it will have lasting impact on many current and pending healthcare regulations could you comment on the latest thinking on the minimal staffing standards and any other regulation.

Barry Port: Could you comment on the latest thinking on the minimum staffing standards and any other regulations that the SNF industry could contest in the future, and also given the current election cycle and your expectation on future regulatory landscape? Thank you. I would say there's just been a slight change in our confidence since our last quarter, and our confidence has increased, obviously, since last quarter because of the Chevron ruling. The same attorney that brought that case before the Supreme Court is the same attorney that's representing ACCA and our industry lawsuit related to the minimum staffing rule. It does play a significant impact.

Speaker Change: Industry could contest in the future and also given the current election cycle your expectation on future regulatory landscape. Thank you.

Speaker Change: Okay.

Barry R. Port: I would say there's just been a slight change in our confidence since our last quarter, and our confidence has increased, obviously, since last quarter because of the Chevron ruling. The same attorney that brought that case before the Supreme Court is the same attorney that's representing us. ACCA and our industry lawsuit related to the minimum staffing rule, and it does have a significant impact. However, our case was strong before that ruling. It's even stronger because of that ruling.

I would say.

Speaker Change: There's just been a slight change in our confidence since since our.

Speaker Change: Last quarter in that.

Speaker Change: Our conferences increased obviously since last quarter because of the Chevron ruling.

Speaker Change: The the same attorney that brought that case before the Supreme Court has the same attorney visits representing.

Acre in our industry lawsuit.

Speaker Change: Related to the minimum staffing rule.

Speaker Change: And it does play a significant impact our case was strong before that ruling is even stronger because of that ruling.

Barry Port: Our case was strong before that ruling. It's even stronger because of that ruling. Our confidence is only increased as that ruling has come out. We still feel really good about legislative options that are on the table for us as well, with the bill that's essentially passed through Congress and the Senate and is kind of waiting now for next steps. Look, I think just overall there's a unified front that our association has, LeadingAge has, and the rest of the industry has in making sure that overreaching legislation like this, or not even legislation, overreaching regulatory mandates don't really have a place in what we're trying to do as an industry to improve quality care because this does advance quality care.

Barry R. Port: And so, our confidence has only increased as that ruling has come out. We still feel really good about the legislative options that are on the table for us as well, with a bill that's essentially passed through Congress and the Senate and is kind of waiting now for next steps. And look, I think just overall, there's a unified front that our association has, Leading Age has, and the rest of the industry has in making sure that overreaching legislation like this, or not even legislation, overreaching regulatory mandates don't really have a place in what we're trying to do as an industry to improve quality care because this doesn't advance quality care. So we'll continue to join with our partners in the fight against this, and we feel good about the direction we're headed.

Speaker Change: And so we are our confidence has only increased.

Speaker Change: That ruling has come out.

Speaker Change: We still feel really good about legislative options that are on the table for us as well.

Speaker Change: With the bill that.

Speaker Change: Essentially pass through Congress and the Senate.

Speaker Change: And kind of waiting now for.

Speaker Change: Next steps and.

Speaker Change: And look I think just just overall there is a unified front that our association has leading age has an.

And the rest of the industry has it making sure that.

Speaker Change: That overreaching legislation like this we're not even legislation overreaching regulatory mandates.

Speaker Change: Don't really have.

Speaker Change: A place and what we're trying to do as an industry to improve quality care.

Speaker Change: Because this doesn't advance quality care.

Scott Fidel: So we'll continue to join with our partners in the fight against this, and we feel we feel good about the direction we're headed. Great. I appreciate the comments. Thank you. Thanks, Charles.

Speaker Change: So we'll continue to have joined with our partners in the fight against this and we feel we feel good about the direction we're headed.

Speaker Change: Okay.

Operator: Great. I appreciate the cover. Thank you.

Speaker Change: Great I appreciate the color. Thank you.

Tom: Thanks, Tom.

Operator: Your next question comes from the line of Scott Fidel with Stevens. Your line is open.

Scott Fidel: Your next question comes from the line of Scott Fidel with Stephen. Your line is open. Oh, hi everyone. Thanks. I actually wanted first question just to follow up on the comments, Barry, that you made around not necessarily seeing the typical seasonality playing out here entering the summer, which makes you feel pretty confident about demand and was hoping that you can maybe flesh out on what you're seeing on the demand side at this point. And in particular, just thinking about some of the other observations that we've heard around the industry recently, particularly from some of the managed Medicaid companies who have talked about seeing enough tech in utilization amongst their populations and then also some rising acuity as well in the Medicaid population.

Speaker Change: Your next question comes from the line of Scott Sidell with Stephens. Your line is open.

Scott J. Fidel: Oh, hi. Hi, everyone. Thanks.

Speaker Change: Hi.

Speaker Change: Thanks.

Actually wanted first question just a follow up on the comment that you made around.

Barry R. Port: I actually wanted, first question, just to follow up on the comment, Barry, that you made around not necessarily seeing the typical seasonality playing out here entering the summer, which makes you feel pretty confident about demand, and I was hoping that you could maybe flesh out what you're seeing on the demand side at this point, and in particular, just thinking about some of the other observations that we've heard around the industry recently, particularly from some of the managed Medicaid companies who have talked Obviously, there's been effects from redetermination.

Scott J. Fidel: Not necessarily seeing the typical seasonality playing out here answering this summer, which makes you feel pretty confident about demand and was hoping that you could maybe flesh out.

Speaker Change: What youre seeing on the demand side at this point and in particular.

Speaker Change: Just thinking about some of the other observations that we've heard around the industry recently, particularly from some of the managed Medicaid companies.

Who have talked about seeing.

Speaker Change: Seeing an uptick in and utilization.

Speaker Change: Amongst their populations and then also some rising acuity as well in the Medicaid population. Obviously, there has been a factor of Redetermination. So so I was hoping maybe you could sort of double click on the <unk>.

Scott Fidel: Obviously, there's been effects from re-determination. So we're hoping maybe you can sort of double-click on the demand dynamic and then also around that acuity dynamic. Obviously, that's something that enzymes focuses on to around the higher acuity patients. And whether in general, you're seeing a trend towards more of those types of patients, you know, potentially representing here. Services.

Speaker Change: On the demand dynamic and then also around that acuity dynamic.

Barry R. Port: So, I was hoping maybe you could sort of double-click on the demand dynamic and then also around that acuity dynamic. Obviously, that's something that Ensign focuses on, too, around the higher acuity patients and whether, in general, you're seeing a trend towards more of those types of patients potentially coming here for service.

Speaker Change: Obviously, that's something that downtime focuses ontario around the higher acuity patients and whether in general you're seeing a trend towards more of those types of patients.

Speaker Change: Potentially representing here for services.

Barry Port: Great question, Scott, and we definitely are seeing an increase in the acuity profile across all payer groups, including Medicaid, which is why we've spent a great deal of time, or our leaders have spent a great deal of time looking at and trying to find ways to enhance services, acuity services for those types of patients, which include behavioral health and subacute services, and others. That segment of our skilled population continues to grow. You pointed out managed care and particularly Medicare Advantage. There's a research study out that showed that their penetration is now over 50%. I'll tell you that from our perspective, we've long embraced this movement to Medicare Advantage.

Barry R. Port: Great question, Scott, and we definitely are seeing an increase in the acuity profile across all payer groups, including Medicaid, which is why we've spent a great deal of time, or our leaders have spent a great deal of time, looking at and trying to find ways to enhance services for those types of patients, which include behavioral health and subacute services and others. That segment of our skilled population continues to grow. You pointed out managed care and, particularly, Medicare Advantage. There's a recent study out that shows that their penetration is now over 50%.

Speaker Change: Yes, great Great question Scott.

Speaker Change: We definitely are seeing an increase in the acuity profile across all payer groups, including Medicaid, which is why we've spent a great deal of time, our leaders have spent a great deal of time.

Speaker Change: Looking at and trying to find ways to enhance.

Speaker Change: The services acuity services for those types of patients which include behavioral health.

Speaker Change: And sub acute services and others.

Speaker Change: That segment of our of our skilled population continues to grow.

Speaker Change: You pointed out managed care in particular Medicare advantage there.

Speaker Change: Steady out that show that their penetration is now over 50% and I will tell you that from our perspective, we've long kind of embraced.

Barry R. Port: And I'll tell you that from our perspective, we've long kind of embraced this movement to Medicare Advantage. We know that it's gonna continue to grow and be a more significant payer for us. And we've seen that play out because we have embraced the relationships that we have with them. We've done all that we can to try to adapt the way we operate and how we measure things to align with the things that are important to them and their members.

Speaker Change: This movement to Medicare advantage, we know that it's going to continue to grow and be a more significant.

Barry Port: We know that it's going to continue to grow and be a more significant payer for us, and we've seen that play out because we've embraced the relationships that we have with them. We've done all that we can to try to adapt the way we operate and how we measure things to align with the things that are important to them and their members. As a result of that, we've seen really solid growth in our patient population, our payer mix, as we partnered closely with Medicare Advantage and managed care payers. I would point that out as one area of growth for us that has been significant and continues to be increasingly significant in our leader strategy in each of their markets.

Speaker Change: Payer for us and we've seen that play out.

Speaker Change: Because we've embraced the relationships that we have with them. We've done all that we can to try to adapt.

Speaker Change: The way, we operate and how we measure things to align with.

The things that are important to them and their members.

Barry R. Port: And as a result of that, we've seen really solid growth in our patient population and our payer mix, as we have partnered closely with Medicare Advantage and managed care payers. So, I would point that out as one area of growth for us that has been significant and continues to be increasingly significant in our leader strategy in each of their markets. But, overall, you know, and, you know, as we're kind of in the middle of summer, I can tell you that demand is strong, and our occupancy, overall occupancy, you know, both on a consolidated basis and on a same store basis, continues to show solid improvement even at a time when we normally don't. And, you know, all those factors are kind of important in the, you know, the landscape as we look forward through the rest of this year.

And as a result of that we've seen really solid growth.

Speaker Change: In our patient population, our payer mix as we partnered closely with Medicare advantage and managed care payers.

Speaker Change: Yeah.

Speaker Change: Point that out as one area of growth for us that is has been significant and continues to be increasingly significant.

Speaker Change: In our leader strategy in each of their markets, but overall.

Barry Port: Overall, as we're kind of in the middle of summer, I can tell you that demand is strong in our occupancy. Overall occupancy, both on a consolidated basis, I don't know, same store basis, continue to show solid improvement even at a time when we normally don't. All those factors for us are kind of important in the landscape as we look forward through the rest of this year. Okay, great.

As we're kind of in the middle of summer.

Speaker Change: I can tell you that demand is strong and our occupancy overall occupancy both on a consolidated basis and on a same store basis.

Speaker Change: <unk> to show.

Speaker Change: Solid improvement even.

Speaker Change: At a time when we normally don't.

Speaker Change: And all of those factors for us are kind of important in the landscape.

Speaker Change: The landscape as we look forward through the rest of this year.

Barry R. Port: Okay, great. And then, follow-up question: I just wanted to ask a bit about on the labor side, and you mentioned the improvements in both turnover and agency temporary labor now on a pretty sustained basis. I was hoping you could talk about, you know, at this point, sort of looking at the second quarter, where your agency utilization was relative to peak, and then also in terms of wage trends, maybe to give us an update on sort of what you're seeing and what you're expecting now for wage trends for the full year, and whether that's changed at all from the initial outlook that was embedded in your guidance.

Speaker Change: Okay, Great and then follow up question just wanted to.

Scott Fidel: Then, follow-up question. I just wanted to ask a bit about on the labor side, and you had mentioned the improvements in both turnover and agency town flavor now on a pretty sustained basis. I was hoping you could talk about, at this point, sort of looking at the second quarter, where your agency utilization was relative to peak, and then also in terms of wage trends, maybe to give us an update on sort of what you're seeing and what you're expecting now for wage trends for the full year and whether that's changed at all from the initial outlook that was embedded in your guide.

Speaker Change: Ask a bit about on the labor side and you had mentioned the improvement in both turnover.

Speaker Change: And agency temp labor now on a pretty sustained basis I was hoping you could talk about at this point sort of looking at the second quarter, where your agency utilization wise relative to peak and then also in terms of wage trends, maybe if you could give us an update on sort of what youre seeing.

Guy: And what Youre expecting now for wage trends for the full year and whether that's changed at all from from the initial outlook Guy that was embedded in your guidance.

Barry R. Port: Yeah, and I'll let others comment if I don't cover all of that, but we, we, wage trends are very positive. We've seen a massive moderation from the wage inflation that we saw over the last couple of years, and that moderation has been happening over the last, I would say, year or so. We are now back down to what I would call more normal trends of wage inflation that are in the kind of low to mid-single-digit range, as opposed to even double-digit trends that we were seeing historically through the worst of wage inflation. And then, you know, obviously, we talked about this in our prepared remarks.

Barry Port: Yeah, I'll let others comment if I don't cover all of that, but we wage trends are very positive. We've seen a massive moderation from the wage inflation that we saw over the last couple of years. And that moderation has been happening over the last, I would say, year or so. We're now back down to what I would call more normal trends of wage inflation that are in the kind of low to mid single digit range, as opposed to even double digit trends that we were seeing historically through the worst of the wage inflation period. And then, you know, obviously, we talked about this in our prepared remarks. Turnover has been solidly improving over many, many quarters, as has our use of nursing agency.

Speaker Change: Yes.

Speaker Change: I'll, let others comment.

So I don't cover all of that but.

Speaker Change: We.

Speaker Change: Wage trends are very positive we've seen a massive moderation from the wage.

<unk> that we saw over the last couple of years and that that moderation has been happening over the last I would say year or so.

Speaker Change: We're now back down to what I would call more normal trends of wage inflation.

Speaker Change: That are in the kind of low.

Speaker Change: Mid mid single low to mid single digit range as opposed to <unk>.

Speaker Change: Even double digit trends that we're seeing historically through the worst.

Speaker Change: The wage inflation.

Barry R. Port: Turnover has been solidly improving over many, many quarters, as has our use of nursing agencies. We're not back down to pre-COVID nurse agency utilization levels, and most of that has to do with the acquisitions that we've been taking on over time, they tend to be more troubled in this area than we've seen historically. Our leaders have taken the challenge on and have dealt with it in a pretty magnificent way.

Speaker Change: <unk>.

Speaker Change: And then.

Speaker Change: Obviously, we talked about this in our prepared remarks turnover has has been solidly improving over many many quarters as has our use of nursing agency.

Barry Port: We're not back down to pre-COVID nurse agency utilization levels. And most of that has to do with the acquisitions that we've been taking on over time. They tend to be more troubled in this area than we've seen historically. Our leaders have taken the challenge on and have dealt with it in a pretty magnificent way. But as we take on growth, we're still seeing a lot of facilities that we're taking with pretty significant agency challenges that we're having to help manage as we integrate those into our portfolio. So that will keep us from probably getting back to where we were historically for a while, maybe another year or two, because I don't see those trends in the industry as a whole dramatically improving from where they are today.

Speaker Change: We're not back down to pre Covid.

Speaker Change: Nurse agency utilization levels and most of that has to do with <unk>.

Speaker Change: With the.

Speaker Change: The.

Speaker Change: The acquisitions that we've been taking on over time, they tend to be more troubled in this area than we've seen historically.

We are leaders have taken the challenge on and have dealt with it in a pretty magnificent way.

Barry R. Port: But, you know, as we take on growth, we're still seeing a lot of facilities that we take on with pretty significant agency challenges that we're having to help manage as we integrate those into our portfolio. So that will keep us from probably getting back to where we were historically for a while, maybe another year or two, because I don't see those trends in the industry as a whole dramatically improving from where they are today.

Speaker Change: But as.

Speaker Change: As we take on.

Speaker Change: Growth.

Speaker Change: We're still seeing a lot of the facilities that we're taking with pretty significant agency challenges that we're having to help help manage as we as we integrate those into our portfolio.

Speaker Change: So that will keep us from probably getting back to where we were historically for a while maybe another year or two because I don't I don't see those trends.

Speaker Change: In the industry as a whole dramatically improving from where they are today, but.

Barry Port: But that said, if you were to take a look at where we are on a same-store basis with agency, we've made massive strides, and we're not too far above where we were on a pre-pandemic basis. So that's all super positive for us. And with regard to the consensus, I think what we've seen has really been baked in; that everything's kind of coming within the range, other than obviously we did raise. And so that has, because we did have a little bit of experience of having a little bit better on the occupancy front, and then really realizing the results of the additional occupancy through the earnings.

Speaker Change: But that said if you if you were to take a look at where we are in a same store basis with with agency. We've made massive strides and we're not too far above where we were on a prepaid.

Barry R. Port: But that said, if you were to take a look at where we are on a same-store basis with agency, we've made massive strides, and we're not too far above where we were on a pre-pandemic basis. So that's all super positive for us.

Speaker Change: Pre pandemic.

Speaker Change: So that's all super positive for us.

Barry R. Port: And with regard to the consensus, I think what we've seen has really baked in. It has been baked in that everything's kind of coming within the range other than, obviously, we did raise and so that has because we did have a little bit of experience of having it a little bit better on the occupancy front and then really realizing those results of the additional occupancy through the strength of the earnings.

With regards to the consensus I think what we've seen is really think it has been thank Dan that everything's connect coming within the range other than.

Speaker Change: Obviously, we did raise in sale that that has because it could have a little bit of experience of having a little bit better on the occupancy front and then really realizing as a result of the additional occupancy through that the earnings.

Scott Fidel: Okay, great. That was helpful.

Barry R. Port: Okay, great. That was very helpful.

Speaker Change: Okay, Great that was helpful. And then just last question just on the upgraded outlook that you provided.

Barry Port: And then just last question, just on the upgraded outlook that you provided, it does seem like that would imply expectations for a bit of incremental margin improvement in the back half of the year. Obviously, you've got the strong accelerating top line growth as well. Just wanted to just get your update on whether there's any sort of seasonality that we should be thinking about around the EBITDA margin trends in the back half of the year, or whether you expect those to be relatively consistent in the third. Yeah, I think when we kind of look out for the year and we're looking at the overall guidance, it's going to be relatively consistent. Obviously, with Q4 being stronger like it always has been, and so that it's very consistent with what we always put out there on the margin and on the overall.

Speaker Change: It does seem like that would imply expectations for.

Speaker Change: Incremental margin improvement in the back half of the year, obviously, you've got the strong accelerating top line growth as well just wanted to just get your update on whether there is any sort of seasonality that we should be thinking about around the EBITDA margin trends in the back half of the year.

Scott J. Fidel: And then just last question, just on the upgraded outlook that you provided, it does seem like that would imply expectations for a bit of incremental margin improvement in the back half of the year. Obviously, you've got the strong accelerating top line growth as well. Just wanted to get your update on whether there's any sort of seasonality that we should be thinking about around the EBITDA margin trends in the back half of the year, or whether you expect those to be relatively consistent in the third and fourth quarters.

Speaker Change: Or whether you expect those to be relatively consistent.

Speaker Change: In the third and fourth quarter.

Barry R. Port: Yeah, I think when we kind of look out for the year and we're looking at the overall guidance, it's going to be relatively consistent, obviously, with Q4 being stronger like it always has been and so it's very consistent with what we've always put out there on the margin and on the overall. Okay, great. Thank you.

Yes, I think when we kind of look out for the year and we're looking at the overall guidance, it's going to be relatively consistent obviously with Q4 being stronger like always has been and so.

Speaker Change: It's very consistent with what we've always put out there on the margin.

Speaker Change: And on their behalf.

Barry Port: Okay, great.

Speaker Change: Okay, great. Thank you.

Operator: Thank you.

Benjamin Hendrix: Your next question comes from the line of Ben Hendrix with RBC Capital Markets. Your line is open. Great. Thank you very much. Just a quick follow-up question on the acquisitions in the quarter.

Operator: Your next question comes from the line of Ben Hendrix with RBC Capital Markets. Your line is open.

Benjamin Hendrix: Your next question comes from the line of Ben <unk> with RBC capital markets. Your line is open.

Benjamin Hendrix: Great, thank you very much. Just a quick follow-up question on the acquisitions in the quarter. Clearly, more M&A toward some newer markets. I was wondering if you could kind of give us an idea of the critical mass necessary in a new market to kind of get the cluster flywheel, if you will, rolling, such that, I guess I'm trying to figure out at what point does the Tennessee market start to realize the same synergies, the same efficiencies from the cluster model that you might see in Arizona? Kind of when do we reach that critical point?

Speaker Change: Great. Thank you very much just a quick follow up question on the acquisitions in the quarter clearly more M&A toward some newer markets I'm wondering if you could kind of give us an idea of.

Barry Port: Clearly more M&A toward some newer markets, knowing if you can kind of give us an idea of the critical mass necessary in a new market to get the kind of get the cluster flywheel, if you will, rolling such that you know I guess I'm trying to figure out at what point does like the Tennessee market start to realize the same center of the same efficiencies from the cluster model that you might see in Arizona. When do we reach that critical mass? Yeah, it's a great question. I'll let these guys chime in too. So you know certainly you know three to four buildings is kind of an ideal cluster size. Five is a large cluster; you get past that, then you start getting almost too big, and you need to have another cluster.

Speaker Change: And the critical mass necessary in a new market to get the kind of guess the cluster flywheel, if you will rolling.

Speaker Change: <unk>.

Speaker Change: I'm trying to figure out at what point does like the Tennessee markets start to realize the same synergies and efficiencies from the cluster model that you might see in Arizona.

Speaker Change: When do we reach that critical mass.

Barry R. Port: Yeah, it's a great question. I'll let these guys chime in, too.

Speaker Change: Yes, it's a great question I'll, let these guys chime in too so certainly.

Barry R. Port: So certainly, three to four buildings is kind of an ideal cluster size, while five is a large cluster. You get past that, then you start getting almost too big, and you need to have another cluster. So, just in terms of how we look at it, that's kind of the perfect size. And the reason for that is you want to have, as these groups get together, they have full access to each other's performances. And if it's too big, it's a little easier to kind of fly under the radar, so to speak.

Speaker Change: Three to four buildings it was kind of.

Speaker Change: Ideal cluster size five is a large cluster you get pass that then then you start getting almost too big and you need to have another cluster.

Barry Port: So in just in terms of you know how we look at it that that that's kind of you know sort of the perfect size and the reason for that is you know you want to have these groups get together you know they have full access into each other's performance and you know if it's too big you know it's just it's a little easier to kind of you know fly under the radar so to speak. So you know having it be the right size is certainly important. You know as we look at kind of new states and new markets, you know certainly the cluster is a very important part of that.

Speaker Change: And just in terms of how we look at it.

Speaker Change: Sort of the perfect size and the reason for that is you want to have these groups get together they have full access into each other's performance and.

Speaker Change: If it's too big.

Speaker Change: It's a little easier to kind of.

Speaker Change: Fly under the radar so to speak.

Barry R. Port: So having it be the right size is certainly important. As we look at kind of new states and new markets, certainly the cluster is a very important part of that. But also, there's sort of a market strategy, too, which is having resources that are unique to the state and that geography. And the bigger we get in a state, the more we can justify additional resources, clinical, financial, other folks that aren't necessarily in a building but are there to assist and help these clusters function and have all the best practices and information that they need to be the top operators in the state. So that's the other part of it.

Speaker Change: So having it be the right size is certainly important.

As we look at kind of new states and new markets certainly the cluster is very important part of that but also there is sort of a market strategy too which is having having resources that are that are unique to the state in that geography.

Barry Port: But also there's sort of a market, you know, strategy to which is, you know, having having resources that are that are unique to the state and in that geography. And the bigger we get in a state, the more we can right justify additional resources: clinical, financial, other, other, other folks that aren't necessarily in a building but are there to, you know, assist and help these clusters function and have all the best practices and information that they need to be, you know, the top operator in the state. So, so that's the other part of it, you know. So, speaking of Tennessee, you know, we have a cluster now. You know, we certainly want to, you know, continue to grow clusters, and as we do that, you know, then we can, you know, start just buying additional, additional sort of, you know, market resources, so.

Speaker Change: And the bigger we get in a state the more we can.

Speaker Change: Justify additional resources clinical financial other others other folks that aren't necessarily in our building, but but are there too.

Speaker Change: Assist and help these these clusters function.

Speaker Change: Have all the best practices and information that they need to be.

Speaker Change: The top operator in the state. So so that's the other part of it so speaking of Tennessee, we have a cluster now.

Barry R. Port: So speaking of Tennessee, we have a cluster now. We certainly want to continue to grow the clusters. And as we do that, then we can start justifying additional sorts of market resources. So we see Tennessee as a state that could be Bandera-like, which is Arizona. It's a very attractive market for us. We've got a top-notch leader, Tyler Albertson, who's been an Enzyme leader for a very long time and just very talented at building that team that we're talking about.

Speaker Change: We certainly want to continue to grow clusters and as we do that.

Speaker Change: Then we can start just flying additional.

Speaker Change: Additional sort of market resources so.

Barry Port: So you know we see Tennessee is a state that could be you know, you know, bandarra like which is Arizona. It's a very attractive market for us. We've got a top notch leader, Tyler Auberson, who's been an enzyme leader for a very long time and just very talented in building that team that we're talking about. So we're looking closely at deals in Tennessee and expect to have some announcements there, you know, hopefully, you know, throughout the year. And you know obviously these things kind of come in stages; you know we sort of have to digest things in a way before you can, you know, kind of take the next step. But you know, we've got three there; you know, the next step would be to add more, you know, kind of get a market, then sort of get our feet under us again, and then, you know, sort of do it like that is how I would anticipate that playing out.

Speaker Change: We see Tennessee is a state that could be.

Speaker Change: Yes.

Speaker Change: Van der alike, which is Arizona.

Speaker Change: It's <unk>.

Tyler Albertson: Very attractive market for us we've got a top notch leader Tyler Albertson has been and then Zane leader for a very long time and.

Just very talented in building that team that we're talking about so.

Barry R. Port: So we're looking closely at deals in Tennessee and expect to have some announcements there, hopefully, throughout the year. And obviously, these things kind of come in stages. We sort of have to digest things in a way before we can kind of take the next step. So we've got three there. The next step would be to add more, kind of get a market, then sort of get our feet under us again, and then sort of do it like that. That is how I would anticipate that playing out.

Speaker Change: We're looking closely at deals in Tennessee, and expect to have some announcements there hopefully throughout the year.

Speaker Change: Obviously, these things kind of come in stages.

Speaker Change: Have to digest things in a way before you can.

Speaker Change: Kind of take the next step but.

Speaker Change: Yes.

Speaker Change: So.

Speaker Change: Three there a next step would be to add more kind of get a market then sort of get our feet under us again, and then sort of do it like that is how I would anticipate that playing out anything I missed there Spencer.

Barry Port: Anything I miss, their Spencer very no okay. Great. Thanks.

Barry R. Port: Anything I missed there, Spencer or Barry? No? OK.

Speaker Change: Okay.

Speaker Change: Yes.

Benjamin Hendrix: Great, thanks. And then also, following up on your commentary on the Chevron ruling, I mean, clearly, a lot of focus on the implications for minimum staffing, but I was thinking more broadly in the longer term about the implications for rate setting. It seems like, especially during the transition to PDPM a few years ago, there was a lot of rebasing around, I guess, budget neutrality assumptions and what have you. I just wanted to see what your thoughts are there and how the rate setting environment might change under this rule. Thanks. We don't anticipate any problems.

Great. Thanks, and then just also following up on your commentary on the Chevron ruling I mean, clearly a lot of focus on implications for the minimum staffing, but I was thinking more broadly and longer term for applications for rate setting it seems like especially during their transition to <unk>.

Benjamin Hendrix: And then just also following up on your commentary on the Chevron ruling. I mean, clearly a lot of focus on implications for the minimum staffing, but I was thinking more broadly and longer term for implications for rate setting.

Barry Port: It seems like, especially during the transition to PDPM, a few years back, there's a lot of rebasing around budget neutrality assumptions. What have you just wanted to see? What are your thoughts there and how these rate setting environment might change into this rule? Thanks. We don't anticipate any changes on how rate setting will move forward. I think those groups kind of work independently. And our anticipation is that we'll continue to see a very typical methodology and attitude towards rates going forward. I'm still in an inflationary environment, and I think CMS is aware of that, and I think trying to do the right thing for as far as rates go at a CMS level.

Speaker Change: A few years back there's a lot a lot a rebase things around I guess budget neutrality assumptions what have you I just wanted to see what what.

Speaker Change: Your thoughts are there and how the rate setting environment might change into this role.

Barry R. Port: We don't anticipate any changes in how rate-setting will move forward. I think those groups kind of work independently.

Speaker Change: We don't anticipate any changes on how rate setting we'll move forward.

Speaker Change: I think those groups kind of work independently.

Barry R. Port: And our anticipation is that we'll continue to see very typical methodology and attitude towards rates going forward. We're still in an inflationary environment, and I think CMS is aware of that, and I think it is trying to do the right thing as far as rates go at a CMS level. And as far as at the state level, when you look at kind of where we were, even with FMAP funding to supplement a lot of our Medicaid rates, and where we are today, where FMAP is now gone, we're actually right where we were even with the supplemental funding, meaning we've been made whole kind of on an average state-by-state basis. And we have really good visibility into where our rates are headed on a state-by-state basis, which gives us pretty good confidence about stability in rates overall.

Speaker Change: And.

Speaker Change: Our anticipation is that we'll continue to see.

Very typical.

Speaker Change: Methodology and attitude towards rates going forward and we are still in an inflationary environment.

Speaker Change: And I think CMS is aware of that and I think trying to do the right thing for us as far as rates go.

Speaker Change: CMS level.

Barry Port: And as far as at a state level, when you look at where we are, even with FMAT funding to supplement a lot of our Medicaid rates and where we are today, where FMAT is now gone, we're actually right where we were, even with the supplemental funding. Meaning we've been made whole on an average state-by-state basis, and we have really good visibility into where our rates are headed on a state-by-state basis, which gives us pretty good confidence about stability and rates overall. Thank you.

Speaker Change: And as far as at a state level.

Speaker Change: And when you look at kind of where we were even with <unk> funding to supplement a lot of our Medicaid rates and where we are today, where <unk> is now gone.

Speaker Change: We're actually right, where we were even with the supplemental funding.

Speaker Change: Meaning we've been made whole on a kind of an average state by state basis.

Speaker Change: And.

But.

Speaker Change: We have really good visibility into where our rates are headed on a state by state basis, which gives us pretty good confidence about stability in rates overall.

Speaker Change: Thank you.

Operator: Thank you. This concludes the question and answer session as well as today's call. We thank you for joining us. You may now disconnect your lines.

Speaker Change: Thank you. This concludes the question and answer session as well as today's call. We thank you for joining you may now disconnect your lines.

Operator: This concludes the question-and-answer session as well as today's call. We thank you for joining. You may now disconnect your lines.

Speaker Change: Okay.

Speaker Change: Yeah.