Q2 2026 Ensign Group Inc Earnings Call

July 29, 2026

Speaker #1: Prepared remarks? We will host a question-and-answer session. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again.

Operator: His prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Mr. Keetch. Please go ahead.

Speaker #1: I will now hand the conference over to Mr. Keetch. Please go ahead.

Speaker #2: Thank you, Operator, and welcome everyone. We file our earnings press release on Monday, and it is available on the investor relations section of our website at ensigngroup.net.

Chad Keetch: Thank you, operator, and welcome everyone. We filed our earnings press release on Monday. It is available on the investor relations section of our website at ensigngroup.net. A replay of this call will also be available on our website until 5:00 PM Pacific on 28 August 2026. We want to remind anyone that may be listening to a replay of this call that all statements made are as of today, 29 July 2026. These statements have not been or will be updated subsequent to today's call. Also, any forward-looking statements made today are based on management's current expectations, assumptions, and beliefs about our business and the environment in which we operate. These statements are subject to risks and uncertainties that could cause our actual results to materially differ from those expressed or implied on today's call.

Speaker #2: A replay of this call will also be available on our website until 5:00 PM Pacific on August 28, 2026. We want to remind anyone that may be listening to a replay of this call that all statements made are as of today, July 29, 2026, and these statements have not been nor will be updated subsequent to today's call.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: Listener should not place under-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: 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, 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 services to the other independent subsidiaries through contractual relationships.

Speaker #2: Accept as required by federal securities laws, Enzine and its independent subsidiaries do not undertake to publicly update or revise any forward-looking statements or changes arise as a result of new information, future events, changing circumstances, or for any other reason.

Speaker #2: In addition, the Enzine 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.

Speaker #2: 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 professional liability as well as for workers' compensation insurance liabilities.

Chad Keetch: 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 professional liability, as well as for workers' compensation insurance liabilities. Ensign also owns Standard Bearer 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. 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.

Speaker #1: Sinners 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.

Speaker #2: Enzine also owns Standard Bear Healthcare REIT, Inc., which is a captive real estate investment trust that invests in healthcare, properties, and interest into lease agreements, with certain independent subsidiaries of Enzine as well as third-party tenants that are unaffiliated with the Enzine Group.

Speaker #1: Except as required by federal securities laws, Ensign and its independent subsidiaries do not undertake to publicly update or revise any forward-looking statements if changes arise as a result of new information, future events, changing circumstances, or for any other reason.

Speaker #2: The words "Enzine Company," "we," "our," and "us" refer to the Enzine Group Inc. and its consolidated subsidiaries. All of our independent subsidiaries, the service center, Standard Bear Healthcare REIT, and the insurance captive are operated by separate independent companies that have their own management employees and assets.

Speaker #1: 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 a service center provide accounting, payroll, human resources, information technology, legal, risk management, and other services to the other independent subsidiaries through contractual relationships.

Speaker #2: References herein to the consolidated company and its assets and activities as well as the use of the words "we," "us," and "our" in similar terms are not meant to imply nor should it be a construed as meaning that the Enzine Group has direct operating assets, employees, or revenue or that any of the subsidiaries are operated by the Enzine Group.

Chad Keetch: References herein to the consolidated company and its assets and activities, as well as the use of the words we, us, and 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 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 GAAP to non-GAAP reconciliation is available on Monday's press release and is available in our Form 10-Q. With that, I'll turn the call over to Barry Port, our CEO. Barry?

Speaker #1: 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.

Speaker #1: 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.

Speaker #2: 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.

Speaker #1: 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 Bear Healthcare REIT, and the insurance captive are operated by separate, independent companies that have their own management, employees, and assets.

Speaker #2: A GAAP to non-GAAP reconciliation is available on Monday's press release and is available in our Form 10-Q. With that, I'll turn the call over to Barry Port, our CEO.

Speaker #2: Barry?

Barry Port: Thanks, Chad. Before we get into our record results for the quarter, we want to spend a little time discussing what drives all of this consistency, namely, the mission that our organization was founded on and strives to achieve every day. At Ensign, we talk a lot about our mission, which is to dignify post-acute care in the eyes of the world through moments of truth. That mission is much more than a statement on a wall. It is the guiding principle behind nearly every decision that's made across our organization. We believe the best way to transform post-acute care is by consistently delivering exceptional outcomes and experiences that redefine what residents, families, and healthcare partners expect from skilled nursing. Our core values provide the foundation for that work, creating a shared culture that empowers nearly 60,000 partners to lead with compassion, accountability, ownership, and a relentless commitment to excellence.

Speaker #3: Hey, Chad. Before we get into our record results for the quarter, we wanted to spend a little time discussing what drives all of this consistency, namely the mission that our organization was founded on and strives to achieve every day.

Speaker #1: 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 Ensign Group.

Speaker #3: At Enzine, we talk a lot about our mission, which is to dignify post-acute care in the eyes of the world through moments of truth.

Speaker #3: That mission is much more than a statement on a wall. It is the guiding principle behind nearly every decision that's made across our organization.

Speaker #1: 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.

Speaker #3: We believe the best way to transform post-acute care is by consistently delivering exceptional outcomes and experiences that redefine what residents, families, and healthcare partners expect from skilled nursing.

Speaker #1: A GAAP to non-GAAP reconciliation is available in Monday's press release and is also included in our Form 10-Q. With that, I'll turn the call over to Barry Port, our CEO.

Speaker #3: Our core values provide the foundation for that work, creating a shared culture that empowers nearly 60,000 partners to lead with compassion, accountability, ownership, and a relentless commitment to excellence.

Speaker #1: Barry?

Speaker #2: Thanks, Chad. Before we get into our record results for the quarter, we wanted to spend a little time discussing what drives all of this consistency—namely, the mission that our organization was founded on and strives to achieve every day.

Speaker #3: If you visit one of our operations, nearly every single employee knows the value acronym. CAPLICO. And what each letter stands for. While CAPLICO may have begun as a set of values, over time it has become an operating discipline that influences hiring decisions, leadership development, employee retention, clinical execution, and ultimately the experience of residents and families.

Barry Port: If you visit one of our operations, nearly every single employee knows the value acronym, CAPLICO, and what each letter stands for. While CAPLICO may have begun as a set of values, over time, it has become an operating discipline that influences hiring decisions, leadership development, employee retention, clinical execution, and ultimately, the experience of residents and families. Together, our mission and values inspire local teams to strengthen each other and elevate care. We believe culture is not separate from performance. It is the foundation that makes sustainable clinical, operational, and financial performance possible. At the center of our clinical strategy is an integrated care model that empowers every healthcare discipline to participate fully in making our residents' lives better. We call this model OneClinical. In this model, therapy isn't an ancillary department. It's one half of our clinical brain.

Speaker #2: At Ensign, we talk a lot about our mission, which is to dignify post-acute care in the eyes of the world through moments of truth.

Speaker #2: That mission is much more than a statement on a wall. It is the guiding principle behind nearly every decision that's made across our organization.

Speaker #2: We believe the best way to transform post-acute care is by consistently delivering exceptional outcomes and experiences that redefine what residents, families, and healthcare partners expect from skilled nursing.

Speaker #3: Together, our mission and values inspire local teams to strengthen each other and elevate care. We believe culture is not separate from performance. It is the foundation that makes sustainable clinical, operational, and financial performance possible.

Speaker #2: Our core values provide the foundation for that work, creating a shared culture that empowers nearly 60,000 partners to lead with compassion, accountability, ownership, and a relentless commitment to excellence.

Speaker #3: At the center of our clinical strategy is an integrated care model that empowers every healthcare discipline to participate fully in making our residents' lives better.

Speaker #2: If you visit one of our operations, nearly every single employee knows the value acronym CAPLICO and what each letter stands for. While CAPLICO may have begun as a set of values, over time it has become an operating discipline that influences hiring decisions, leadership development, employee retention, clinical execution, and ultimately the experience of residents and families.

Speaker #3: We call this model One Clinical. In this model, therapy isn't an ancillary department. It's one half of our clinical brain. As opposed to most of the industry, the outsourced therapy or treat therapy is a separate department to fulfill a singular purpose; our therapists work alongside nursing as equal clinical partners.

Barry Port: As opposed to most of the industry that outsources therapy or treats therapy as a separate department to fulfill a singular purpose, our therapists work alongside nursing as equal clinical partners, bringing their expertise into every aspect of resident care. Together with our physician partners and our interdisciplinary teams, there is a continuous evaluation of emerging clinical evidence, sharing of best practices, and development of advanced clinical pathways that improve outcomes across our operations. Rather than treating diagnoses in isolation, they coordinate every discipline around a common set of goals, restoring function, improving quality of life, reducing avoidable complications, and helping residents achieve the best possible outcome.

Speaker #3: Bringing their expertise into every aspect of resident care. Together with our physician partners and our interdisciplinary teams, there is a continuous evaluation of emerging clinical evidence, sharing of best practices, and development of advanced clinical pathways that improve outcomes across our operations.

Speaker #2: Together, our mission and values inspire local teams to strengthen each other and elevate care. We believe culture is not separate from performance; it is the foundation that makes sustainable clinical, operational, and financial performance possible.

Speaker #2: At the center of our clinical strategies is an integrated care model that empowers every healthcare discipline to participate fully in making our residents' lives better.

Speaker #3: Rather than treating diagnoses and isolation, they coordinate every discipline around a common set of goals: restoring function, improving quality of life, reducing avoidable complications, and helping residents achieve the best possible outcome.

Speaker #2: We call this model One Clinical. In this model, therapy isn't an ancillary department—it's one half of our clinical brain. As opposed to most of the industry, which outsources therapy or treats therapy as a separate department to fulfill a singular purpose, our therapists work alongside nursing as equal clinical partners.

Speaker #3: While it may sound like a program, it's much more than that. It is a clinical operating model that guides how our affiliated operations deliver care every day.

Barry Port: While it may sound like a program, it's much more than that. It is a clinical operating model that guides how our affiliated operations deliver care every day, and we believe it is one of the most important differentiators of our organization that has been developed over decades. This integrated approach influences everything from fall prevention and wound care to behavior management, functional recovery, hospital utilization, quality measures, and even has led to the development of specialized clinical programs. It creates a culture of shared accountability where nursing, therapy, physicians, and other clinicians continually learn from one another and refine care based on objective, measurable outcomes. We believe this clinical patient-centric model is a durable competitive advantage that is uniquely perpetuated and refined through peer accountability in our cluster model. The proof of all this expertise and efficiency is evidenced in the outcomes.

Speaker #3: And we believe it is one of the most important differentiators of our organization that has been developed over decades. This integrated approach influences everything from fall prevention and wound care to behavior management, functional recovery, hospital utilization, quality measures, and even has led to the development of specialized clinical programs.

Speaker #2: Bringing their expertise into every aspect of resident care. Together with our physician partners and our interdisciplinary teams, there is a continuous evaluation of emerging clinical evidence, sharing of best practices, and development of advanced clinical pathways that improve outcomes across our operations.

Speaker #3: It creates a culture of shared accountability where nursing, therapy, physicians, and other clinicians continually learn from one another and refine care based on objective, measurable outcomes.

Speaker #2: Rather than treating diagnoses in isolation, they coordinate every discipline around a common set of goals: restoring function, improving quality of life, reducing avoidable complications, and helping residents achieve the best possible outcome.

Speaker #3: We believe this clinical patient-centric model is a durable, competitive advantage that is uniquely perpetuated and refined through peer accountability in our cluster model. And the proof of all this expertise and efficiency is evidenced in the outcomes.

Speaker #2: While it may sound like a program, it's much more than that. It is a clinical operating model that guides how our affiliated operations deliver care every day.

Speaker #2: And we believe it is one of the most important differentiators of our organization, developed over decades. This integrated approach influences everything from fall prevention and wound care to behavior management, functional recovery, hospital utilization, and quality measures. It has even led to the development of specialized clinical programs.

Speaker #3: According to the most recently published Centers for Medicare and Medicaid Services data for our same-store facilities, we achieved quality measure ratings that were 23% above the average in the states that we operate in.

Barry Port: According to the most recently published Centers for Medicare & Medicaid Services data for our same-store facilities, we achieved quality measure ratings that were 23% above the average in the states that we operate in. Likewise, these operations achieved CMS Cycle 1 survey inspection results that outperformed the average of facilities in our operating states by 18% and exceeded county-level averages by 26%. In addition, rehospitalization rates and long-stay emergency department visits were better than the national average by 15% and 24%, respectively, supporting successful resident recovery and continuity of care. We also have zero CMS Special Focus Facilities, having graduated several acquisitions that we acquired with that designation.

Speaker #3: Likewise, these operations achieved CMS cycle one survey inspection results that outperformed the average of facilities in our operating states by 18% and exceeded county-level averages by 26%.

Speaker #2: It creates a culture of shared accountability, where nursing, therapy, physicians, and other clinicians continually learn from one another and refine care based on objective, measurable outcomes.

Speaker #3: In addition, rehospitalization rates and long-stay emergency department visits were better than the national average by 15% and 24% respectively, supporting successful resident recovery and continuity of care.

Speaker #2: We believe this clinical, patient-centric model is a durable, competitive advantage that is uniquely perpetuated and refined through peer accountability in our cluster model. And the proof of all this expertise and efficiency is evidenced in the outcomes.

Speaker #3: We also have zero CMS special focus facilities, having graduated several acquisitions that we acquired with that designation. We ended the quarter with over 80% of our skilled nursing operations earning a CMS quality measure rating of 4 or 5 stars.

Speaker #2: According to the most recently published Centers for Medicare and Medicaid Services data for same-store facilities, we achieve quality measure ratings that were 23% above the average in the states that we operate in.

Barry Port: We ended the quarter with over 80% of our skilled nursing operations earning a CMS quality measure rating of four or five stars, exceeding the national averages in every single one of the 15 quality measurement categories, including all five claim-based measurements. This is also especially notable given that many of our acquisitions were one and two star when we took them over. Importantly, all these measures come from a variety of objective sources, including CMS measures, claims-based metrics, regulatory surveys, occupancy trends, and referral behavior. Whether viewed through quality ratings, survey performance, occupancy growth, referral trends, rehospitalization rates, emergency department utilization, or managed care relationships, we believe the consistency of these outcomes provides compelling evidence that our operating model is delivering meaningful results for residents and healthcare partners alike. These results are not the product of any single initiative.

Speaker #3: Exceeding the national averages in every single one of the 15 quality measurement categories including all five claim-based measurements. This is also especially notable given that many of our acquisitions were one and two star when we took them over.

Speaker #2: Likewise, these operations achieve CMS Cycle 1 survey inspection results that outperform the average of facilities in our operating states by 18% and exceed county-level averages by 26%.

Speaker #2: In addition, rehospitalization rates and long-stay emergency department visits were better than the national average by 15% and 24%, respectively, supporting successful resident recovery and continuity of care.

Speaker #3: Importantly, all these measures come from a variety of objective sources, including CMS measures, claims-based metrics, regulatory surveys, occupancy trends, and referral behavior. Whether viewed through quality ratings survey performance, occupancy growth, referral trends, rehospitalization rates, emergency department utilization, or managed care relationships, we believe the consistency of these outcomes provides compelling evidence that our operating model is delivering meaningful results for residents and healthcare partners alike.

Speaker #2: We also have zero CMS Special Focus facilities, having graduated several acquisitions that we acquired with that designation. We ended the quarter with over 80% of our skilled nursing operations earning a CMS Quality Measure rating of 4 or 5 stars.

Speaker #2: Exceeding the national averages in every single one of the 15 quality measurement categories, including all five claim-based measurements. This is also especially notable given that many of our acquisitions were one- and two-star when we took them over.

Speaker #3: These results are not the product of any single initiative. They reflect a cumulative impact of our operating model, our One Clinical approach, the integration of therapy and nursing, investments in technology and clinical tools, and the local leadership culture that drives accountability and execution at the bedside every day.

Barry Port: They reflect the cumulative impact of our operating model, our one clinical approach, the integration of therapy and nursing, investments in technology and clinical tools, and the local leadership culture that drives accountability and execution at the bedside every day. The strength of our clinical model ultimately depends on the quality and stability of our people. One of our foundational CAPLICO core values is Customers Second. The belief that by taking extraordinary care of our employees, they in turn will provide exceptional care to our residents. We have long believed that outstanding resident outcomes begins with engaged, supported, and empowered caregivers who know they are loved and appreciated. We are especially proud of the continued improvement in employee and leadership stability.

Speaker #2: Importantly, all these measures come from a variety of objective sources, including CMS measures, claims-based metrics, regulatory surveys, occupancy trends, and referral behavior. Whether viewed through quality ratings, survey performance, occupancy growth, referral trends, rehospitalization rates, emergency department utilization, or managed care relationships, we believe the consistency of these outcomes provides compelling evidence that our operating model is delivering meaningful results for residents and healthcare partners alike.

Speaker #3: The strength of our clinical model ultimately depends on the quality and stability of our people. One of our foundational CAPLICO core values is customer second.

Speaker #3: The belief that by taking extraordinary care of our employees, they in turn will provide exceptional care to our residents. We have long believed that outstanding resident outcomes begin with engaged, supported, and empowered caregivers who know they are loved and appreciated.

Speaker #2: These results are not the product of any single initiative. They reflect the cumulative impact of our operating model: our One Clinical approach, the integration of therapy and nursing, investments in technology and clinical tools, and the local leadership culture that drives accountability and execution at the bedside every day.

Speaker #3: We are especially proud of the continued improvement in employee and leadership stability. In particular, our Director of Nursing Turnover continues to improve and our overall RN retention rate is also 8% better than the average across our 17-state footprint using CMS reported data.

Barry Port: In particular, our Director of Nursing turnover continues to improve, our overall RN retention rate is also 8% better than the average across our 17-state footprint using CMS-reported data. Similarly, administrator turnover is an impressive 46% lower than the CMS-measured state average. We believe this level of leadership stability is one of the key differentiators of our organization. It creates continuity for our caregivers and residents and reinforces accountability at the local level and allows the investments we make in our clinical programs, technology, and resources to translate into consistently superior quality outcomes, care efficiency, regulatory performance, and financial results. As we've said many times, the improvement in our operating metrics like occupancy and skill mix and the corresponding financial results are a direct reflection of a relentless patient-focused culture. In today's healthcare environment, patient volumes and acuity levels are directly tied to objective and verifiable positive clinical outcomes.

Speaker #3: Similarly, Administrator Turnover is an impressive 46% lower than the CMS measured state average. We believe this level of leadership stability is one of the key differentiators of our organization.

Speaker #2: The strength of our clinical model ultimately depends on the quality and stability of our people. One of our foundational CAPLICO core values is "customer second."

Speaker #2: The belief is that by taking extraordinary care of our employees, they in turn will provide exceptional care to our residents. We have long believed that outstanding resident outcomes begin with engaged, supported, and empowered caregivers who know they are loved and appreciated.

Speaker #3: It creates continuity for our caregivers and residents and reinforces accountability at the local level and allows the investments we make in our clinical programs technology and resources to translate into consistently superior quality outcomes care efficiency, regulatory performance, and financial results.

Speaker #2: We are especially proud of the continued improvement in employee and leadership stability. In particular, our director of nursing turnover continues to improve, and our overall RN retention rate is also 8% better than the average across our 17-state footprint, using CMS-reported data.

Speaker #3: As we've said many times, the improvement in our operating metrics like occupancy and skill mix and the corresponding financial results are a direct reflection of a relentless patient-focused culture.

Speaker #2: Similarly, administrator turnover is an impressive 46% lower than the CMS measured state average. We believe this level of leadership stability is one of the key differentiators of our organization.

Speaker #3: In today's healthcare environment, patient volumes and acuity levels are directly tied to objective and verifiable positive clinical outcomes. As each operation solidifies its reputation and its respective market, they are not only being chosen to care for more and more patients, but they are also being entrusted to care for increasingly complex cases, including a larger share of Medicare managed care and other skilled patients.

Barry Port: As each operation solidifies its reputation in its respective market, they are not only being chosen to care for more and more patients, but they are also being entrusted to care for increasingly complex cases, including a larger share of Medicare, managed care, and other skilled patients. Patients, families, hospital systems, physicians, and managed care organizations continue to choose Ensign-affiliated operations at increasing rates because of the outcomes our teams achieve. This cannot and will not happen, especially consistently over a long period of time, without consistently achieving these industry-leading, high-quality clinical outcomes. In healthcare, trust is ultimately expressed through patient choice and referral behavior. Hospitals, physicians, managed care organizations, patients, and families make decisions every day about where care will be delivered. Occupancy growth is therefore more than a financial metric.

Speaker #2: It creates continuity for our caregivers and residents, reinforces accountability at the local level, and allows the investments we make in our clinical programs, technology, and resources to translate into consistently superior quality outcomes, care efficiency, regulatory performance, and financial results.

Speaker #3: Patients, families, hospital systems, physicians, and managed care organizations continue to choose Ensign affiliated operations at increasing rates because of the outcomes our teams achieve.

Speaker #2: As we've said many times, the improvement in our operating metrics like occupancy and skill mix and the corresponding financial results are a direct reflection of a relentless patient-focused culture.

Speaker #3: This cannot and will not happen especially consistently over a long period of time without consistently achieving these industry-leading high-quality clinical outcomes. In healthcare, trust is ultimately expressed through patient choice and referral behavior.

Speaker #2: In today's healthcare environment, patient volumes and acuity levels are directly verifiable positive clinical outcomes. As each operation solidifies its reputation in its respective market, they are not only being chosen to care for more and more patients, but they are also being entrusted to care for increasingly complex cases, including a larger share of Medicare managed care and other skilled patients.

Speaker #3: Hospitals, physicians, managed care organizations, patients, and families make decisions every day about where care will be delivered. Occupancy growth is therefore more than a financial metric.

Speaker #3: It's one of the clearest external validations that an operation is consistently delivering the outcomes and experience that stakeholders value. To highlight this point, on the census front, our same-store and transitioning occupancy for the second quarter was 84.1% and 84.7% respectively.

Barry Port: It's one of the clearest external validations that an operation is consistently delivering the outcomes and experience that stakeholders value. To highlight this point, on the census front, our same-store and transitioning occupancy for Q2 was 84.1% and 84.7%, respectively. As for our ability to attract high acuity patients, our combined same facilities and transitioning facilities revenue and days increased by 10.7% and 6.7%, respectively, over the prior year quarter. Also, managed care revenue increased by 6.1% and 16.2%, respectively, for same-store and transitioning operations over the prior year quarter, with skilled mix days up 6.2% and 9.4%, respectively, from Q2 of 2025. The primary driver of these improvements continues to be the expanding trust from the communities we serve, earned through consistent clinical outcomes.

Speaker #2: Patients, families, hospital systems, physicians, and managed care organizations continue to choose Ensign-affiliated operations at increasing rates because of the outcomes our teams achieve.

Speaker #2: This cannot and will not happen, especially consistently over a long period of time, without consistently achieving these industry-leading, high-quality clinical outcomes. In healthcare, trust is ultimately expressed through patient choice and referral behavior.

Speaker #3: As for our ability to attract high acuity patients, our combined same facilities and transitioning facilities revenue and days increased by 10.7% and 6.7% respectively over the prior year quarter.

Speaker #2: Hospitals, physicians, managed care organizations, patients, and families make decisions every day about where care will be delivered. Occupancy growth is therefore more than a financial metric.

Speaker #3: Also managed care revenue increased by 6.1% and 16.2% respectively for same-store and transitioning operations over the prior year quarter, with skilled mix days up 6.2% and 9.4% respectively from the second quarter of 2025.

Speaker #2: It's one of the clearest external validations that an operation is consistently delivering the outcomes and experience that stakeholders value. To highlight this point, on the census front, our same-store and transitioning occupancy for the second quarter was 84.1% and 84.7%, respectively.

Speaker #3: The primary driver of these improvements continues to be the expanding trust from the communities we serve earned through consistent clinical outcomes. In addition, we continue to acquire new operations with significant long-term upside and expect to maintain a healthy pace of growth as we expand our mission-driven approach to transform and dignify post-acute care.

Barry Port: In addition, we continue to acquire new operations with significant long-term upside and expect to maintain a healthy pace of growth as we expand our mission-driven approach to transform and dignify post-acute care. Since 2024, we have successfully sourced, underwritten, closed, and transitioned 102 new operations across several markets, many of which are already performing at or above expectations, both clinically and financially. We also continue to benefit from powerful demographic tailwinds, which we expect will further support the census momentum we are seeing across our portfolio. While we are pleased with our current same-store occupancy, we are equally excited about the remaining organic growth opportunity as we clinically and culturally transform these operations. At 84% occupancy, we still have meaningful runway, with many of our most mature operations consistently achieving occupancy in the mid-90% range. This embedded growth remains one of the most compelling drivers of our long-term performance.

Speaker #2: As for our ability to attract high-acuity patients, our combined same facilities and transitioning facilities revenue and days increased by 10.7% and 6.7%, respectively, over the prior year quarter.

Speaker #3: Since 2024, we have successfully sourced underwritten closed and transitioned 102 new operations across several markets, many of which are already performing at or above expectations both clinically and financially.

Speaker #2: Also, managed care revenue increased by 6.1% and 16.2%, respectively, for same-store and transitioning operations over the prior-year quarter, with skilled mix days up 6.2% and 9.4%, respectively, from the second quarter of 2025.

Speaker #3: We also continue to benefit from powerful demographic tailwinds which we expect will further support the census momentum we are seeing across our portfolio. While we are pleased with our current same-store occupancy, we are equally excited about the remaining organic growth opportunity as we clinically and culturally transform these operations.

Speaker #2: The primary driver of these improvements continues to be the expanding trust from the communities we serve, earned through consistent clinical outcomes. In addition, we continue to acquire new operations with significant long-term upside, and expect to maintain a healthy pace of growth as we expand our mission-driven approach to transform and dignify post-acute care.

Speaker #3: At 84% occupancy, we still have meaningful runway with many of our most mature operations consistently achieving occupancy in the mid-90% range. This embedded growth remains one of the most compelling drivers of our long-term performance.

Speaker #2: Since 2024, we have successfully sourced, underwritten, closed, and transitioned 102 new operations across several markets, many of which are already performing at or above expectations, both clinically and financially.

Speaker #3: Reflecting the strength of our same-store operations, continued operational momentum across our portfolio and the ability of our local teams to deliver strong clinical outcomes that deepen referral relationships and support sustainable growth, along with the contribution from acquisitions, we are increasing our annual 2026 earnings guidance to $7.75 to $7.85 per diluted share up from our previous guidance of $7.48 to $7.62, which we increased last quarter.

Barry Port: Reflecting the strength of our same-store operations, continued operational momentum across our portfolio, and the ability of our local teams to deliver strong clinical outcomes that deepen referral relationships and support sustainable growth, along with the contribution from acquisitions, we are increasing our annual 2026 earnings guidance to $7.75 to $7.85 per diluted share, up from our previous guidance of $7.48 to $7.62, which we increased last quarter. We are also increasing our annual revenue guidance to $5.87 billion to $5.92 billion, up from $5.81 billion to $5.86 billion. The midpoint of our earnings guidance represents an 18.7% increase over 2025 and a 41.8% growth rate over 2024. We remain highly confident in 2026 and expect our local teams to continue executing, innovating, and integrating new operations while delivering strong results.

Speaker #2: We also continue to benefit from powerful demographic tailwinds, which we expect will further support the census momentum we are seeing across our portfolio. While we are pleased with our current same-store occupancy, we are equally excited about the remaining organic growth opportunity as we clinically and culturally transform these operations.

Speaker #2: At 84% occupancy, we still have meaningful runway, with many of our most mature operations consistently achieving occupancy in the mid-90% range. This embedded growth remains one of the most compelling drivers of our long-term performance.

Speaker #3: We are also increasing our annual revenue guidance to $5.87 billion to $5.92 billion up from $5.81 billion to $5.86 billion. The midpoint of our earnings guidance represents an 18.7% increase over 2025 and a 41.8% growth rate over 2024.

Speaker #2: Reflecting the strength of our same-store operations, continued operational momentum across our portfolio, and the ability of our local teams to deliver strong clinical outcomes that deepen referral relationships and support sustainable growth—along with the contribution from acquisitions—we are increasing our annual 2026 earnings guidance to $7.75 to $7.85 per diluted share, up from our previous guidance of $7.48 to $7.62, which we increased last quarter.

Speaker #3: We remain highly confident in 2026 and expect our local teams to continue executing innovating and integrating new operations while delivering strong results. While we are proud of these results, we also recognize there's always more to learn, and more work to do.

Barry Port: While we are proud of these results, we also recognize there's always more to learn and more work to do. We remain focused on helping our local leaders find better ways to care for residents, support caregivers, and strengthen the operations they serve. Next, I'll ask Spencer to add some operational insights regarding our operations. Spencer?

Speaker #3: We remain focused on helping our local leaders find better ways to care for residents, support caregivers, and strengthen the operations they serve. Next, I'll ask Spencer to add some operational insights regarding our operations.

Speaker #2: We are also increasing our annual revenue guidance to $5.87 billion to $5.92 billion, up from $5.81 billion to $5.86 billion. The midpoint of our earnings guidance represents an 18.7% increase over 2025 and a 41.8% growth rate over 2024.

Speaker #3: Spencer?

Speaker #2: Thanks, Barry. And hello, everyone. Today, I'm excited to share a facility highlight that illustrates how leadership stability in clinical excellence can fundamentally transform a struggling operation.

Spencer Burton: Thanks, Barry, and hello, everyone. Today, I'm excited to share a facility highlight that illustrates how leadership stability and clinical excellence can fundamentally transform a struggling operation and dignify the healthcare experience for our patients, their families, and the frontline caregivers whose commitment and compassion make our mission possible. The Reserve, a 135-bed skilled nursing operation located in the Charleston, South Carolina metro area, is led by licensed nursing facility administrator, Greg Hicks, and RN Director of Nursing, Amanda Bruneau. When we acquired The Reserve in 2023, it was operating under state conservatorship following multiple failed CMS surveys with immediate jeopardy findings. In fact, in the annual survey prior to transition, The Reserve experienced the worst inspection performance of any skilled nursing facility in South Carolina, with a Cycle 1 score of 500 points.

Speaker #2: And dignify the healthcare experience for our patients, their families, and the frontline caregivers who's commitment and compassion make our mission possible. The reserve of 135-bed skilled nursing operation located in the Charleston South Carolina metro area is led by licensed nursing facility administrator, Greg Hicks, and RN director of nursing, Amanda Bruno.

Speaker #2: We remain highly confident in 2026 and expect our local teams to continue executing, innovating, and integrating new operations while delivering strong results. While we are proud of these results, we also recognize that there's always more to learn and more work to do.

Speaker #2: We remain focused on helping our local leaders find better ways to care for residents, support caregivers, and strengthen the operations they serve. Next, I'll ask Spencer to add some operational insights regarding our operations. Spencer?

Speaker #2: When we acquired the reserve in 2023, it was operating under state conservatorship following multiple failed CMS surveys with immediate jeopardy findings. In fact, in this annual survey prior to transition, the reserve experienced the worst inspection performance of any skilled nursing facility in South Carolina.

Speaker #3: Thanks, Barry, and hello, everyone. Today I'm excited to share a facility highlight that illustrates how leadership stability and clinical excellence can fundamentally transform a struggling operation.

Speaker #2: With a cycle one score of 500 points. Now remember, with surveys fewer points is better. So this 500-point survey was over 900% worse than the South Carolina state average.

Speaker #3: And dignify the healthcare experience for our patients, their families, and the frontline caregivers whose commitment and compassion make our mission possible. The Reserve, a 135-bed skilled nursing operation located in the Charleston, South Carolina metro area, is led by licensed nursing facility administrator Greg Hicks and RN Director of Nursing Amanda Bruno.

Spencer Burton: Now remember, with surveys, fewer points is better, so this 500-point survey was over 900% worse than the South Carolina state average. This and previous failures had led to the facility being designated as a CMS Special Focus Facility, which is essentially a last-ditch attempt by federal and state survey agencies to improve a facility's clinical quality before forcing it to shut down. The clinical challenges were exacerbated by leadership turnover and frontline staffing shortages that resulted in heavy reliance on agency staffing and an inability to accept new admissions. Trust was low with local hospital and managed care providers, which meant that occupancy stayed chronically low, and the facility's clinical and staffing challenges were accompanied by major financial deficits.

Speaker #2: This and previous failures had led to the facility being designated as a CMS special focus facility. Which is essentially a last-ditch attempt by federal and state survey agencies to improve a facility's clinical quality before forcing it to shut down.

Speaker #3: When we acquired the reserve in 2023, it was operating under state conservatorship following multiple failed CMS surveys with immediate jeopardy findings. In fact, in the annual survey prior to transition, the reserve experienced the worst inspection performance of any skilled nursing facility in South Carolina.

Speaker #2: The clinical challenges were exacerbated by leadership turnover and frontline staffing shortages that resulted in heavy reliance on agency staffing and an inability to accept new admissions.

Speaker #2: Trust was low with local hospital and managed care providers. Which meant that occupancy stayed chronically low. And the facility's clinical and staffing challenges were accompanied by major financial deficits.

Speaker #3: With a Cycle One score of 500 points—now remember, with surveys, fewer points is better. So, this 500-point survey was over 900% worse than the South Carolina state average.

Speaker #2: Where many saw the reserve as a problem facility, the local South Carolina cluster partners recognized an opportunity to live our organization's mission of dignifying care and transforming the experience of staff and residents alike.

Spencer Burton: Where many saw The Reserve as a problem facility, the local South Carolina cluster partners recognized an opportunity to live our organization's mission of dignifying care and transforming the experience of staff and residents alike. After a lot of internal debate and discussions with state regulators, the decision was made to acquire The Reserve and help it become what the community deserved. The first step in this turnaround was to find and empower the right leaders who not only had a vision for the facility, but could gain the trust and support of state regulators, hospital systems, and the local healthcare workforce.

Speaker #3: These and previous failures had led to the facility being designated as a CMS Special Focus Facility, which is essentially a last-ditch attempt by federal and state survey agencies to improve a facility's clinical quality before forcing it to shut down.

Speaker #2: So after a lot of internal debate, and discussions with state regulators, the decision was made to acquire the reserve and help it become what the community deserved.

Speaker #3: The clinical challenges were exacerbated by leadership turnover and frontline staffing shortages, which resulted in heavy reliance on agency staffing and an inability to accept new admissions.

Speaker #2: The first step in this turnaround was to find and empower the right leaders who not only but could gain the trust and support of state regulators hospital systems and the local healthcare workforce.

Speaker #3: Trust was low with local hospitals and managed care providers, which meant that occupancy stayed chronically low. The facility's clinical and staffing challenges were accompanied by major financial deficits.

Speaker #2: Those leaders included Greg Hicks, a seasoned administrator with a history of successful clinical turnarounds. And Amanda Bruno, a nurse leader with decades of critical care experience.

Spencer Burton: Those leaders included Greg Hicks, a seasoned administrator with a history of successful clinical turnarounds, and Amanda Bruneau, a nurse leader with decades of critical care experience who had been working as a unit manager at a sister facility while being mentored for months in our Director of Nursing in Training program. With the support of market resources and cluster partners, this duo rallied the facility's interdisciplinary leadership team and quickly established a culture centered on quality, accountability, and clinical execution. Over the past few years, the results have been spectacular. Just six months after acquisition, The Reserve graduated from the Special Focus Facility program and has now achieved three consecutive deficiency-free health inspections, going from a one-star CMS inspection rating to a five-star rating. Today, The Reserve's Cycle 1 score ranks it as the number one operation in the entire state for survey performance.

Speaker #3: Where many saw the reserve as a problem facility, the local South Carolina cluster partners recognized an opportunity to live our organization's mission of dignifying care and transforming the experience of staff and residents alike.

Speaker #2: Who had been working as a unit manager at a sister facility while being mentored for months in our director of nursing and training program.

Speaker #2: With the support of market resources and cluster partners, this duo rallied the facility's interdisciplinary leadership team and quickly established a culture centered on quality, accountability, and clinical execution.

Speaker #3: So after a lot of internal debate and discussions with state regulators, the decision was made to acquire the reserve and help it become what the community deserved.

Speaker #2: Over the past few years, the results have been spectacular. Just six months after acquisition, the reserve graduated from the federal special focus facility program and is now achieved three consecutive deficiency-free health inspections.

Speaker #3: The first step in this turnaround was to find and empower the right leaders who not only had a vision for the facility, but could gain the trust and support of state regulators, hospital systems, and the local healthcare workforce.

Speaker #2: Going from a one-star CMS inspection rating to a five-star rating. Today, the reserve's cycle one score ranks it as the number one operation in the entire state for survey performance.

Speaker #3: Those leaders included Greg Hicks, a seasoned administrator with a history of successful clinical turnarounds, and Amanda Bruno, a nurse leader with decades of critical care experience.

Speaker #3: who had been working as a unit manager at a sister facility while being mentored for months in our Director of Nursing and training program.

Speaker #2: The reserve's success mirrors an exciting trend of survey successes that we're having across Ensign affiliates. As Barry mentioned, our collective cycle one surveys average 26% better than the counties in which they operate.

Spencer Burton: The Reserve's success mirrors an exciting trend of survey successes that we're having across Ensign affiliates. As Barry mentioned, our collective Cycle 1 surveys average 26% better than the counties in which they operate. As of today, there's not a single Special Focus Facility among the 398 Ensign affiliates. The Reserve's success goes far beyond just survey performance. It currently enjoys a CMS five-star overall rating, as well as five stars for quality measures, including those that are claims-based. Some examples include significantly outperforming both state and national peers for lower use of antipsychotic medications, fewer emergency department visits, and lower rehospitalization rates for short-stay patients. These outcomes reflect disciplined clinical approaches deeply rooted in the OneClinical processes that Barry described earlier, where therapy and other care disciplines work hand-in-hand with nursing.

Speaker #3: With the support of market resources and cluster partners, this duo rallied the facility's interdisciplinary leadership team and quickly established a culture centered on quality, accountability, and clinical execution.

Speaker #2: And as of today, there's not a single special focus facility among the 398 Ensign affiliates. And the reserve's success goes far beyond just survey performance.

Speaker #3: Over the past few years, the results have been spectacular. Just six months after acquisition, the reserve graduated from the federal Special Focus Facility program, and has now achieved three consecutive deficiency-free health inspections.

Speaker #2: It currently enjoys a CMS five-star overall rating as well as five stars for quality measures. Including those that are claims-based. Some examples include significantly outperforming both state and national peers for lower use of antipsychotic medications fewer emergency department visits and lower rehab hospitalization rates for short stay patients.

Speaker #3: Going from a one-star CMS inspection rating to a five-star rating, today the reserve's Cycle One score ranks it as the number one operation in the entire state for survey performance.

Speaker #2: These outcomes reflect disciplined clinical approaches, deeply rooted in the one clinical processes that Barry described earlier. Where therapy and other care disciplines work hand in hand with nursing.

Speaker #3: The reserve's success mirrors an exciting trend of survey successes that we're having across Ensign affiliates. As Barry mentioned, our collective cycle one surveys average 26% better than the counties in which they operate.

Speaker #2: And speaking of nursing, the reserve has not only eliminated all contract nursing but has become one of the state's leading facilities for RN retention.

Spencer Burton: Speaking of nursing, The Reserve has not only eliminated all contract nursing, but has become one of the state's leading facilities for RN retention, with an RN turnover rate 28% better than the state average. Stability in the clinical team has allowed The Reserve to expand its ability to care for higher acuity patients and become a preferred provider for people who had previously had limited placement options in the Charleston area. In fact, earlier this year, The Reserve was awarded a contract with the South Carolina Department of Health and Human Services to care for patients requiring ventilator and tracheostomy services, making them the only facility with this approval in their geographic area. Quality outcomes and improved staff retention have also naturally led to improved operational performance. For example, prior to transition, the facility struggled with low occupancy that hovered around 60%.

Speaker #3: And as of today, there's not a single Special Focus Facility among the 398 Ensign affiliates. And the reserve's success goes far beyond just survey performance.

Speaker #2: With an RN turnover rate 28% better than the state average. Stability in the clinical team has allowed the reserve to expand its ability to care for higher acuity patients and become a preferred provider for people who had previously had limited placement options in the Charleston area.

Speaker #3: It currently enjoys a CMS five-star overall rating, as well as five stars for quality measures, including those that are claims-based. Some examples include significantly outperforming both state and national peers for lower use of antipsychotic medications, fewer emergency department visits, and lower rehab hospitalization rates for short-stay patients.

Speaker #2: In fact, earlier this year, the reserve was awarded a contract with the South Carolina Department of Health and Human Services to care for patients requiring ventilator and tracheostomy services.

Speaker #3: These outcomes reflect disciplined clinical approaches, deeply rooted in the clinical processes that Barry described earlier, where therapy and other care disciplines work hand in hand with nursing.

Speaker #2: Making them the only facility with this approval in their geographic area. Quality outcomes and improved staff retention have also naturally led to improved operational performance.

Speaker #3: And speaking of nursing, the Reserve has not only eliminated all contract nursing, but has become one of the state's leading facilities for RN retention.

Speaker #2: For example, prior to transition, the facility struggled with low occupancy that hovered around 60%. As the facility rebuilt trust with hospitals, physicians, and residents, referral relationships have strengthened and admissions accelerated.

Spencer Burton: As the facility rebuilt trust with hospitals, physicians, and residents, referral relationships have strengthened and admissions accelerated. In fact, during Q2, The Reserve touched 100% occupancy for the first time ever, and averaged 92% occupancy for the quarter, up from 83% in Q2 of 2025. During the same period, skilled days increased 39%, while managed care revenues increased by 69%. As expected, financial results have followed. The Reserve's total revenue and EBIT have improved every year since transition. Most recently, in Q2, revenue increased by 18%, and EBIT grew by 97% over prior year quarter. We expect these financial results will continue because they are the natural result of years of investment in creating clinical excellence and building relationships of trust in their healthcare community. Consistent results like these cannot and will not happen without delivering high-quality clinical care.

Speaker #3: With an RN turnover rate 28% better than the state average, stability in the clinical team has allowed the reserve to expand its ability to care for higher-acuity patients and become a preferred provider for people who had previously had limited placement options in the Charleston area.

Speaker #2: In fact, during Q2, the reserve touched 100% occupancy for the first time ever. And averaged 92% occupancy for the quarter up from 83% in quarter two of 2025.

Speaker #3: In fact, earlier this year, the Reserve was awarded a contract with the South Carolina Department of Health and Human Services to care for patients requiring ventilator and tracheostomy services.

Speaker #2: During the same period, skilled days increased 39% while managed care revenues increased by 69%. As expected, financial results have followed. The reserve's total revenue and EBIT have improved every year since transition.

Speaker #3: This makes them the only facility with this approval in their geographic area. Quality outcomes and improved staff retention have also naturally led to improved operational performance.

Speaker #2: Most recently, in Q2, revenue increased by 18% and EBIT grew by 97% over prior year quarter. And we expect these financial results will continue because they are the natural result of years of investment in creating clinical excellence.

Speaker #3: For example, prior to transition, the facility struggled with low occupancy that hovered around 60%. As the facility rebuilt trust with hospitals, physicians, and residents, referral relationships strengthened and admissions accelerated.

Speaker #2: And building relationships of trust in their healthcare community. Consistent results like these cannot and will not happen without delivering high-quality clinical care. Success in referral patterns, payer relationships, occupancy growth, skilled mix trends, and regulatory performance are all indicators of community trust.

Speaker #3: In fact, during Q2, the reserve reached 100% occupancy for the first time ever and averaged 92% occupancy for the quarter, up from 83% in Q2 of 2025.

Spencer Burton: Success in referral patterns, payer relationships, occupancy growth, skills mix trends, and regulatory performance are all indicators of community trust. Especially in metro markets like Charleston, people have choices, and the fact that so many are choosing The Reserve shows the trust and reputation that the team has fought so hard to earn. While there is still so much more work to be done at The Reserve, we are incredibly proud of the visionary leaders, the field resources, cluster partners, and of course, the compassionate caregivers who have driven this remarkable transformation. Their success reflects the power of the Ensign model at work, hiring and developing exceptional leaders, retaining and empowering strong clinical talent, leveraging the expertise and best practices available through transparency, and earning the trust of residents, families, referral partners, and regulators through consistently superior outcomes.

Speaker #3: During the same period, skilled days increased 39%, while managed care revenues increased by 69%. As expected, financial results have followed. The Reserve's total revenue and EBIT have improved every year since transition.

Speaker #2: And especially in metro markets like Charleston, people have choices. And the fact that so many are choosing the reserve shows the trust and reputation that the team has fought so hard to earn.

Speaker #3: Most recently, in Q2, revenue increased by 18%, and EBIT grew by 97% over the prior year quarter. We expect these financial results will continue, as they are the natural result of years of investment in creating clinical excellence.

Speaker #2: While there's still so much more work to be done at the reserve, we're incredibly proud of the visionary leaders, the field resources, cluster partners, and of course, the compassionate caregivers who have driven this remarkable transformation.

Speaker #3: And building relationships of trust in their healthcare community. Consistent results like these cannot, and will not, happen without delivering high-quality clinical care. Success in referral patterns, payer relationships, occupancy growth, skilled mix trends, and regulatory performance are all indicators of community trust.

Speaker #2: Their success reflects the power of the Ensign model at work. Hiring and developing exceptional leaders, retaining and empowering strong clinical talent, leveraging the expertise and best practices available through transparency, and earning the trust of residents, families, referral partners, and regulators through consistently superior outcomes.

Speaker #3: And especially in metro markets like Charleston, people have choices. The fact that so many are choosing The Reserve shows the trust and reputation that the team has fought so hard to earn.

Speaker #2: While every operation's path is unique, the principles behind this success are replicated throughout our organization. And are foundational to the industry-leading clinical, regulatory, and operational results that our affiliated operations continue to achieve.

Spencer Burton: While every operation's path is unique, the principles behind this success are replicated throughout our organization and are foundational to the industry-leading clinical, regulatory, and operational results that our affiliated operations continue to achieve. With that, I will turn it over to Chad to discuss more about our ongoing growth and acquisitions.

Speaker #3: While there's still so much more work to be done at the reserve, we're incredibly proud of the visionary leaders, the field resources, cluster partners, and, of course, the compassionate caregivers who have driven this remarkable transformation.

Speaker #2: With that, I'll turn it over to Chad to discuss more about our ongoing growth and acquisitions.

Speaker #3: Thank you, Spencer. During the quarter and since, we accelerated our growth by adding 20 new operations. All of which included the real estate assets.

Chad Keetch: Thank you, Spencer. During the quarter and since, we accelerated our growth by adding 20 new operations, all of which included the real estate assets, bringing the number of operations acquired during 2025 and since to 71. These recent additions include 19 in Texas and one in Iowa. In total, we added 2,392 new skilled nursing beds, 100 senior living beds, and 55 independent living beds across two states. This growth brings the number of operations in our recently acquired group of operations to 18% of our entire portfolio. We were thrilled to complete these acquisitions and expand our presence in Texas. These assets are made up of newly constructed, high-quality facilities in populated and growing metro areas, justifying a higher purchase price. These operations are almost all lower than our average occupancies for these geographies and all present significant clinical and operational hurdles.

Speaker #3: Their success reflects the power of the Ensign model at work: hiring and developing exceptional leaders, retaining and empowering strong clinical talent, leveraging the expertise and best practices available through transparency, and earning the trust of residents, families, referral partners, and regulators through consistently superior outcomes.

Speaker #3: Bringing the number of operations acquired during 2025 and since to 71. These recent additions include 19 in Texas and one in Iowa. In total, we added 2,392 new skilled nursing beds, 100 senior living beds, and 55 independent living beds across two states.

Speaker #3: While every operation's path is unique, the principles behind this success are replicated throughout our organization and are foundational to the industry-leading clinical, regulatory, and operational results that our affiliated operations continue to achieve.

Speaker #3: This growth brings a number of operations in our recently acquired group of operations to 18% of our entire portfolio. We were thrilled to compete these acquisitions and expand our presence in Texas.

Speaker #3: These assets are made up of newly constructed high-quality facilities in populated and growing metro areas, justifying a higher purchase price. However, these operations are almost all lower than our average occupancies for these geographies and all present significant clinical and operational hurdles.

Speaker #3: With that, I'll turn it over to Chad to discuss more about our ongoing growth and acquisitions.

Speaker #1: Thank you, Spencer. During the quarter and since, we accelerated our growth by adding 20 new operations, all of which included the real estate assets, bringing the number of operations acquired during 2025 and since to 71.

Speaker #3: While things have started to improve, we expect these, like most of our turnaround deals, will take more time to generate the returns we expect.

Chad Keetch: While things have started to improve, we expect these, like most of our turnaround deals, will take more time to generate the returns we expect. Over time, however, as our leaders and clinicians focus relentlessly on improving the quality of care and establishing a culture of ownership and accountability, we are confident that these operations will become the facility of choice in the markets they serve. We continue to learn from and improve our transition process and believe that those lessons are showing through in the performance. As we continue to scale, we are able to lean on our talented resources that are spread across many geographies, enhancing our ability to digest larger deals by breaking them into bite-sized pieces, transitioning in the traditional Ensign way, but with a local cluster-driven plan that gives each operation the time and attention they deserve.

Speaker #1: These recent additions include 19 in Texas and one in Iowa. In total, we added 2,392 new skilled nursing beds, 100 senior living beds, and 55 independent living beds across two states.

Speaker #3: Over time, however, as our leaders and clinicians focus relentlessly on proving the quality of care and establishing a culture of ownership and accountability, we are confident that these operations will become the facility of choice in the markets they serve.

Speaker #1: This growth brings the number of operations in our recently acquired group to 18% of our entire portfolio. We were thrilled to complete these acquisitions and expand our presence in Texas.

Speaker #3: We continue to learn from and improve our transition process and believe that those lessons are showing through in the performance. As we continue to scale, we are able to lean on our talented resources that are spread across many geographies.

Speaker #1: These assets are made up of newly constructed, high-quality facilities in populated and growing metro areas, justifying a higher purchase price. However, these operations are almost all lower than our average occupancies for these geographies, and all present significant clinical and operational hurdles.

Speaker #3: Enhancing our ability to digest larger deals by breaking them into bite-sized pieces, transitioning in the traditional Ensign way, but with the local cluster-driven plan that gives each operation the time and attention they deserve.

Speaker #1: While things have started to improve, we expect these, like most of our turnaround deals, will take more time to generate the returns we expect.

Speaker #3: In every single deal decision, the most important factor we consider is surrounding our plan for local leadership. Our mantra of "first who, then what" is at the heart of every single deal decision we make.

Chad Keetch: In every single deal decision, the most important factor we consider is surrounding our plan for local leadership. Our mantra of "First who, then what" is at the heart of every single deal decision we make. So far this year, we've been presented with over 350 acquisition opportunities within our geographies. Of those 350 operations, we've executed on 25 of them. There are many factors we consider when deciding whether to pursue a deal or not, but one of the most common reasons we pass on an acquisition is because we aren't satisfied with the question of who the leader will be. When we feel there is a cultural fit, we sometimes elect to leave the current administrator in place and leverage our training and cluster support model to help expose them to our culture, teach them our systems, and provide the right expectations for ownership and accountability.

Speaker #1: Over time, however, as our leaders and clinicians focus relentlessly on proving the quality of care and establishing a culture of ownership and accountability, we are confident that these operations will become the facility of choice in the markets they serve.

Speaker #3: So far this year, we've been presented with over 350 acquisition opportunities within our geographies. Of those 350 operations, we've executed on 25 of them.

Speaker #1: We continue to learn from and improve our transition process, and believe that those lessons are showing through in the performance. As we continue to scale, we are able to lean on our talented resources that are spread across many geographies, enhancing our ability to digest larger deals by breaking them into bite-sized pieces. We are transitioning in the traditional Ensign way, but with the local, cluster-driven plan that gives each operation the time and attention they deserve.

Speaker #3: There are many factors we consider when deciding whether to pursue a deal or not, but one of the most common reasons we pass on an acquisition is because we aren't satisfied with the question of who the leader will be.

Speaker #3: When we feel there is a cultural fit, we sometimes elect to leave the current administrator in place and leverage our training and cluster support model to help expose them to our culture, teach them our systems, and provide the right expectations for ownership and accountability.

Speaker #1: In every single deal decision, the most important factor we consider is surrounding our plan for local leadership. Our mantra of "first who, then what" is at the heart of every single deal decision we make.

Speaker #3: In some recent portfolio deals, for example, we selected to keep several impressive administrators. And because of this continuously refined process of onboarding, they have been very successful leaders.

Chad Keetch: In some recent portfolio deals, for example, we selected to keep several impressive administrators. Because of this continuously refined process of onboarding, they have been very successful leaders, many of whom are now CEOs of their respective operations. In the instances where we've made a change, we've either replaced the outgoing administrator with an experienced licensed administrator from another building or a licensed administrator that recently completed their AIT training program. In either case, each operation is surrounded by their local cluster partners and service center resources to help implement the clinical and operational systems required to transform a struggling building into a strong clinical partner to their local healthcare community. The performance of our newly acquired operations, particularly over the last few years, shows that our local leadership-driven approach to transitions works for single operations, small portfolios, and larger portfolios.

Speaker #1: So far this year, we've been presented with over 350 acquisition opportunities within our geographies. Of those 350 opportunities, we've executed on 25 of them.

Speaker #3: Many of whom are now CEOs of their respective operations. In the instances where we've made a change, we've either replaced the outgoing administrator with an experienced, licensed administrator from another building completed their AIT training program.

Speaker #1: There are many factors we consider when deciding whether to pursue a deal or not, but one of the most common reasons we pass on an acquisition is because we aren't satisfied with the question of who the leader will be.

Speaker #3: In either case, each operation is surrounded by their local cluster partners and service center resources to help implement the clinical and operational systems required to transform a struggling building into a strong clinical partner to their local healthcare community.

Speaker #1: When we feel there is a cultural fit, we sometimes elect to leave the current administrator in place and leverage our training and cluster support model to help expose him to our culture, teach him our systems, and provide the right expectations for ownership and accountability.

Speaker #3: The performance of our newly acquired operations, particularly over the last few years, shows that our local leadership-driven approach to transitions works for single operations, small portfolios, and larger portfolios.

Speaker #1: In some recent portfolio deals, for example, we selected to keep several impressive administrators, and because of this continuously refined process of onboarding, they have been very successful leaders.

Speaker #3: Our local leaders continue to recruit future CEOs for Ensign affiliated operations. We have a deep bench of CEOs in training that are eagerly preparing for the opportunity to lead.

Chad Keetch: Our local leaders continue to recruit future CEOs for Ensign-affiliated operations. We have a deep bench of CEOs in training that are eagerly preparing for the opportunity to lead. The type of leader we recruit is typically a person with significant experience leading people, very often in a different industry. These experienced leaders average 35 years old. It's not uncommon that applicants that join us are looking to pivot towards a second or even a third career path. We are constantly refilling the AIT ranks. Over the last year, we've had an average of approximately 54 AITs at various stages of the program, actively training and obtaining the hours necessary to obtain their license. This number is particularly impressive when you consider we've added 71 operations in just the last year and a half.

Speaker #1: Many of whom are now CEOs of their respective operations. In the instances where we've made a change, we've either replaced the outgoing administrator with an experienced, licensed administrator from another building, or a licensed administrator who recently completed their AIT training program.

Speaker #3: The type of leader we recruit is typically a person with significant experience leading people. Very often in a different industry. These experienced leaders average 35 years old.

Speaker #1: In either case, each operation is surrounded by their local cluster partners and service center resources to help implement the clinical and operational systems required to transform a struggling building into a strong clinical partner to their local healthcare community.

Speaker #3: And it's not uncommon that applicants that join us are looking to pivot towards a second or even a third career path. We are constantly refilling the AIT ranks.

Speaker #3: Over the last year, we've had an average of approximately 54 AITs at various stages of the program, actively training and obtaining the hours necessary to obtain their license.

Speaker #1: The performance of our newly acquired operations, particularly over the last few years, shows that our local leadership-driven approach to transitions works for single operations, small portfolios, and larger portfolios.

Speaker #3: This number is particularly impressive when you consider we've added 71 operations in just the last year and a half. We see a high demand from qualified applicants and can be very selective.

Speaker #1: Our local leaders continue to recruit future CEOs for Ensign-affiliated operations, and we have a deep bench of CEOs in training who are eagerly preparing for the opportunity to lead.

Speaker #3: Our local clusters drive the recruiting efforts for AITs and are very selective on who they will admit into the program. This high-quality influx of leadership talent combined with our decentralized transition model allows us to grow without being limited by typical corporate bottlenecks.

Chad Keetch: Our local clusters drive the recruiting efforts for AITs and are very selective on who they will admit into the program. This high-quality influx of leadership talent, combined with our decentralized transition model, allows us to grow without being limited by typical corporate bottlenecks. We also continue to maintain enough cash and available capacity under our line of credit to fund a significant amount of growth, including adding even more real estate assets to our portfolio. Our unique leadership and acquisition strategy puts us in an excellent position to continue growing in a healthy and sustainable way. Our model is driven by local leaders who are supported by a cluster of their peers, our model is truly scalable.

Speaker #1: The type of leader we recruit is typically a person with significant experience leading people, very often in a different industry. These experienced leaders average 35 years old, and it's not uncommon that applicants who join us are looking to pivot toward a second, or even a third, career path.

Speaker #3: We also continue to maintain enough cash and available capacity under our line of credit to fund a significant amount of growth. Including adding even more real estate assets to our portfolio.

Speaker #1: We're constantly refilling the AIT ranks. Over the last year, we've had an average of approximately 54 AITs at various stages of the program, actively training and obtaining the hours necessary to obtain their license.

Speaker #3: Therefore, our unique leadership and acquisition strategy puts us in an excellent position to continue growing in a healthy and sustainable way. Because our model is driven by local leaders who are supported by a cluster of their peers, our model is truly scalable.

Speaker #1: This number is particularly impressive when you consider we've added 71 operations in just the last year and a half. We see a high demand from qualified applicants and can be very selective.

Speaker #3: We are also very comfortable growing the way we have over the last few years, with lots of transactions across many states, including small deals and larger portfolios, and where it makes sense even higher price strategic assets.

Chad Keetch: We are also very comfortable growing the way we have over the last few years, with lots of transactions across many states, including small deals and larger portfolios, and where it makes sense, even higher-priced strategic assets. As we look at the current pipeline, our local leadership teams and their partners at the service center are working together to source and underwrite and carefully select the right opportunities. We have several new additions lining up for Q3 and Q4 and expect to be very busy for the remainder of the year, including operations within our existing footprint and acquisitions in new states. We continue to see opportunities that include everything from multi-facility portfolios, landlords looking to replace current tenants, nonprofits looking to divest of their post-acute assets, and a steady flow of traditional onesie-twosies.

Speaker #1: Our local clusters drive the recruiting efforts for AITs and are very selective about who they will admit into the program. This high-quality influx of leadership talent, combined with our decentralized transition model, allows us to grow without being limited by typical corporate bottlenecks.

Speaker #3: As we look at the current pipeline, our local leadership teams and their partners at the service center are working together to source and underwrite and carefully select the right opportunities.

Speaker #1: We also continue to maintain enough cash and available capacity under our line of credit to fund a significant amount of growth, including adding even more real estate assets to our portfolio.

Speaker #3: We have several new additions lining up for Q3 and Q4, and expect to be very busy for the remainder of the year. Including operations within our existing footprint and acquisitions in new states.

Speaker #1: Therefore, our unique leadership and acquisition strategy puts us in an excellent position to continue growing in a healthy and sustainable way. Because our model is driven by local leaders who are supported by a cluster of their peers, our model is truly scalable.

Speaker #3: We continue to see opportunities to include everything from multi-facility portfolios landlords looking to replace current tenants, nonprofits looking to divest of their post-acute assets, and a steady flow of traditional onesie-twosies.

Speaker #1: We are also very comfortable growing the way we have over the last few years, with lots of transactions across many states, including small deals and larger portfolios, and, where it makes sense, even higher-priced strategic assets.

Speaker #3: In terms of priority, we are first looking to grow in our existing markets as this allows us to be better partners to the healthcare communities by offering complementary services to hospitals, managed care organizations, and to their patients and families.

Chad Keetch: In terms of priority, we are first looking to grow in our existing markets, as this allows us to be better partners to the healthcare communities by offering complementary services to hospitals, managed care organizations, and to their patients and families. We're also looking to enter into some new states and look forward to closing some opportunities in new states later this year. Lastly, we are also pleased with the continued growth with Standard Bearer, which added 23 new assets during the quarter and since, including 2 senior living communities in Wisconsin and 1 memory care facility in California, all of which will be operated by a third party under triple net lease. Standard Bearer is now comprised of 177 owned properties, of which 140 are leased to an Ensign affiliated operator, and 38 of which are leased to third-party operators.

Speaker #1: As we look at the current pipeline, our local leadership teams and their partners at the service center are working together to source, underwrite, and carefully select the right opportunities.

Speaker #3: We're also looking to enter into some new states and look forward to closing some opportunities in new states later this year. Lastly, we are also pleased with the continued growth with Standard Bear.

Speaker #1: We have several new additions lining up for Q3 and Q4, and expect to be very busy for the remainder of the year, including operations within our existing footprint and acquisitions in new states.

Speaker #3: Which added 23 new assets during the quarter and since. Including two senior living communities in Wisconsin and one memory care facility in California, all of which will be operated by a third party under triple net lease.

Speaker #1: We continue to see opportunities to include everything from multi-facility portfolios, landlords looking to replace current tenants, nonprofits looking to divest of their post-acute assets, and a steady flow of traditional onesie-twosies.

Speaker #3: Standard Bear is now comprised of 177 owned properties of which 140 are leased to an Ensign affiliated operator and 38 of which are leased to third party operators.

Speaker #1: In terms of priority, we are first looking to grow in our existing markets, as this allows us to be better partners to the healthcare communities by offering complementary services to hospitals, managed care organizations, and to their patients and families.

Speaker #3: We are excited to continue to add to the growing list of relationships with unaffiliated operators which further diversifies our tenant base and helps our organization as a whole continue to advance our mission by working closely with like-minded operators that want to make a difference in this industry.

Chad Keetch: We are excited to continue to add to the growing list of relationships with unaffiliated operators, which further diversifies our tenant base and helps our organization as a whole continue to advance our mission by working closely with like-minded operators that want to make a difference in this industry. Standard Bearer will continue to work together with our existing operating partners and the new relationships we are developing in order to acquire portfolios comprised of operations that Ensign will operate and facilities with high-quality third parties are interested in operating under a lease. Collectively, Standard Bearer generated rental revenue of $44.1 million for the quarter, of which $37.8 million was derived from Ensign affiliated operations. For the quarter, Standard Bearer reported $24.7 million in FFO, and as of the end of the quarter, had an EBITDA to rent coverage ratio of 2.4 times.

Speaker #1: We're also looking to enter into some new states and look forward to closing some opportunities in new states later this year. Lastly, we are also pleased with the continued growth with Standard Bear.

Speaker #3: Standard Bear will continue to work together with our existing operating partners and the new relationships we are developing in order to acquire portfolios comprised of operations at Ensign will operate and facilities with high-quality third party are interested in operating under a lease.

Speaker #1: We added 23 new assets during the quarter and since, including two senior living communities in Wisconsin and one memory care facility in California, all of which will be operated by a third party under a triple net lease.

Speaker #3: Collectively, Standard Bear generated rental revenue of $44.1 million for the quarter, of which $37.8 million was derived from Ensign affiliated operations. For the quarter, Standard Bear reported $24.7 million in FFO and as of the end of the quarter had an EBITDA to rent coverage ratio of 2.4 times.

Speaker #1: Standard Bear is now comprised of 177 owned properties, of which 140 are leased to an Ensign-affiliated operator, and 38 of which are leased to third-party operators.

Speaker #1: We are excited to continue to add to the growing list of relationships with unaffiliated operators, which further diversifies our tenant base and helps our organization as a whole continue to advance our mission by working closely with like-minded operators that want to make a difference in this industry.

Speaker #3: And with that, I'll turn the call over to Suzanne to add more color around our numbers and our guidance. Suzanne?

Chad Keetch: With that, I'll turn the call over to Suzanne to add more color around our numbers and our guidance. Suzanne?

Speaker #2: Thank you, Chad, and good morning, everyone. Detailed financials for the quarter are contained in our 10Q and press release filed on Monday. Some additional highlights for the quarter compared to the prior year quarter include the following.

Suzanne Snapper: Thank you, Chad, and good morning, everyone. Detailed financials for the quarter are contained in our 10-Q and press release filed on Monday. Some additional highlights for the quarter compared to the prior year quarter include the following. GAAP diluted earnings per share was $1.68, an increase of 16.7%. Adjusted diluted earnings per share was $1.92, an increase of 20.8%. Consolidated GAAP revenue and adjusted revenues were both $1.4 billion, an increase of 17.3%. GAAP net income was $99.7 million, an increase of 18.2%. Adjusted net income was $114.3 million, an increase of 22.5%. Other key metrics as of 30 June 2026, include cash and cash equivalents of $262.3 million and cash flows from operations of $272.1 million. During the H1 of 2026, we spent more than $460 million to execute our strategic growth plan.

Speaker #1: Standard Bear will continue to work together with our existing operating partners and the new relationships we are developing in order to acquire portfolios comprised of operations that Ensign will operate, and facilities with high-quality third parties who are interested in operating under a lease.

Speaker #2: Gaps diluted earnings per share was $1.68, an increase of 16.7%. Adjusted diluted earnings per share was $1.92, an increase of 20.8%. Consolidated gap revenue and adjusted revenues were both 1.4 billion, an increase of 17.3%.

Speaker #1: Collectively, Standard Bear generated rental revenue of $44.1 million for the quarter, of which $37.8 million was derived from Ensign-affiliated operations. For the quarter, Standard Bear reported $24.7 million in FFO, and as of the end of the quarter, had an EBITDA-to-rent coverage ratio of 2.4 times.

Speaker #2: Gap net income was 99.7 million, an increase of 18.2%. And adjusted net income was $114.3 million. An increase of 22.5%. Other key metrics as of June 30th, 2026 include cash and cash equivalents of $262.3 million, and cash flows from operations of $272.1 million.

Speaker #1: And with that, I'll turn the call over to Suzanne to add more color around our numbers and our guidance. Suzanne?

Speaker #2: Thank you, Chad, and good morning, everyone. Detailed financials for the quarter are contained in our 10-Q and press release filed on Monday. Some additional highlights for the quarter, compared to the prior-year quarter, include the following.

Speaker #2: During the first half of 2026, we spent more than $460 million to execute on our strategic growth plan. We made these investments from a position of strength.

Speaker #2: GAAP diluted earnings per share was $1.68, an increase of 16.7%. Adjusted diluted earnings per share was $1.92, an increase of 20.8%. Consolidated GAAP revenue and adjusted revenues were both $1.4 billion, an increase of 17.3%.

Suzanne Snapper: We made these investments from a position of strength, as shown by our lease adjusted net debt to EBITDA ratio of 2x after taking these investments into consideration. Our continued ability to maintain low leverage even during periods of significant acquisitions, is particularly noteworthy and demonstrates our commitment to disciplined growth, as well as our belief that we can continue to achieve substantial growth in the long run. In addition, we currently have more than $592 million available under our line of credit, which when combined with the cash in our balance sheet, gives us more than $850 million in dry powder for future investments. We also own 183 assets, of which 159 are owned completely debt-free. They have gained significant value over time, adding even more liquidity to help with future growth. The company paid a cash dividend of six and a half cents per common share.

Speaker #2: As shown by our least adjusted net debt to EBITDA ratio of two times, after taking these investments into consideration. Our continued ability to maintain low leverage even during periods of significant acquisitions is particularly noteworthy and demonstrates our commitment to discipline growth.

Speaker #2: GAAP net income was $99.7 million, an increase of 18.2%, and adjusted net income was $114.3 million, an increase of 22.5%. Other key metrics as of June 30, 2026, include cash and cash equivalents of $262.3 million, and cash flows from operations of $272.1 million.

Speaker #2: As well as our belief that we can continue to achieve sustainable growth in the long run. In addition, we currently have more than 592 million available under our line of credit.

Speaker #2: Which when combined with the cash in our balance sheet gives us more than $850 million in dry powder for future investments. We also own 183 assets, of which 159 are owned completely debt-free.

Speaker #2: During the first half of 2026, we spent more than $460 million to execute our strategic growth plan. We made these investments from a position of strength.

Speaker #2: They have gained significant value over time adding even more liquidity to help with future growth. The company paid a cash dividend of 6.5 cents per common share.

Speaker #2: As shown by our lease-adjusted net debt to EBITDA ratio of 2 times, after taking these investments into consideration. Our continued ability to maintain low leverage, even during periods of significant acquisitions, is particularly noteworthy and demonstrates our commitment to disciplined growth.

Speaker #2: We have a long history of paying dividends and have increased the annual dividend for 23 consecutive years. As Barry mentioned, we are increasing our annual 2026 earnings guidance to between $7.75 and $7.85 per diluted share.

Suzanne Snapper: We have a long history of paying dividends and have increased the annual dividend for 23 consecutive years. As Barry mentioned, we are increasing our annual 2026 earnings guidance to between $7.75 and $7.85 per diluted share. Our annual revenue guidance between $5.87 billion to $5.92 billion. We have evaluated multiple scenarios and based upon the strength and performance and the positive momentum we've seen in occupancy and skilled mix, as well as the continued progress on labor, agency management, and other operational initiatives, we have confidence that we can achieve these results. Our 2026 guidance is based on diluted weighted average common shares outstanding of approximately 59.5 million, tax rate of 25%, the inclusion of acquisitions closed and expected to be closed during the Q3 of 2026, and the inclusion of management's expectations on reimbursement rates.

Speaker #2: As well as our belief that we can continue to achieve sustainable growth in the long run. In addition, we currently have more than $592 million available under our line of credit.

Speaker #2: And our annual revenue guidance between 5.87 billion to 5.92 billion. We have evaluated multiple scenarios and based upon the strength and performance and the positive momentum we see in occupancy, and skilled mix, as well as the continued progress on labor, agency management, and other operational initiatives, we have confidence that we can achieve these results.

Speaker #2: Which, when combined with the cash on our balance sheet, gives us more than $850 million in dry powder for future investments. We also own 183 assets, of which 159 are owned completely debt free.

Speaker #2: They have gained significant value over time, adding even more liquidity to help with future growth. The company paid a cash dividend of 6.5 cents per common share.

Speaker #2: Our 2026 guidance is based on diluted weighted average common shares outstanding of approximately 59.5 million. Tax rate of 25%, the inclusion of acquisitions close and expected to be closed during the third quarter of 2026, and the inclusion of management's expectations on reimbursement rates.

Speaker #2: With the primary exclusions coming from stock-based compensation and amortization of system implementation cost. Additionally, other factors that could impact our quarterly performance include variations in reimbursement systems, delays and changes in state budgets, seasonality in occupancy and skilled mix, the influence of the general economy on census and staffing, the short-term impact of our acquisition activities, variations in insurance calls and other factors.

Suzanne Snapper: With the primary exclusions coming from stock-based compensation and amortization of system implementation costs. Additionally, other factors that could impact our quarterly performance include variations in reimbursement systems, delays and changes in state budgets, seasonality and occupancy, and skilled mix, the influence of the general economy on census and staffing, the short-term impact of our acquisition activities, variations in insurance rules, and other factors. With that, I'll turn it back over to Barry. Barry?

Speaker #2: And our annual revenue guidance is between $5.87 billion and $5.92 billion. We have evaluated multiple scenarios, and based upon the strength and performance, the positive momentum we've seen in occupancy and skilled mix, as well as continued progress on labor, agency management, and other operational initiatives, we have confidence that we can achieve these results.

Speaker #2: And with that, I'll turn it back over to Barry. Barry?

Speaker #2: Our 2026 guidance is based on diluted weighted average common shares outstanding of approximately 59.5 million, a tax rate of 25%, the inclusion of acquisitions closed and expected to be closed during the third quarter of 2026, and the inclusion of management's expectations on reimbursement rates.

Speaker #3: Thanks, Suzanne. To wrap up, we again want to thank our exceptional team of caregivers, our local operational leaders, and our service center partners. Healthcare is ultimately a people business.

Barry Port: Thanks, Suzanne. To wrap up, we again want to thank our exceptional team of caregivers, our local operational leaders, and our service center partners. Healthcare is ultimately a people business. While we need to discuss occupancy, reimbursement, margins, and growth on these calls, those outcomes are the byproduct of something much more fundamental. Nearly 60,000 people who have chosen to care for others and who are united by a common set of values and purpose. Every day, thousands of caregivers, nurses, therapists, housekeepers, dietary staff, administrators, and countless others have opportunities to create moments that exceed expectations for coworkers, residents, and families during some of the most vulnerable times in their lives.

Speaker #3: While we need to discuss occupancy reimbursement, margins, and growth on these calls, those outcomes are the byproduct of something much more fundamental. Nearly 60,000 people who have chosen to care for others and who are united by a common set of values and purpose.

Speaker #2: With the primary exclusions coming from stock-based compensation and amortization of system implementation costs. Additionally, other factors that could impact our quarterly performance include variations in reimbursement systems, delays in changes in state budgets, seasonality in occupancy and skilled mix, the influence of the general economy on census and staffing, the short-term impact of our acquisition activities, variations in insurance calls, and other factors.

Speaker #3: Every day, thousands of caregivers, nurses, therapists, housekeepers, dietary staff, administrators, and countless others have opportunities to create moments that exceed expectations for coworkers, residents, and families.

Speaker #2: And with that, I'll turn it back over to Barry. Barry?

Speaker #3: During some of the most vulnerable times in their lives. That shared sense of purpose is difficult to quantify on a financial statement. But it is one of the greatest competitive advantages that we have.

Speaker #1: Thanks, Suzanne. To wrap up, we again want to thank our exceptional team of caregivers, our local operational leaders, and our service center partners. Healthcare is ultimately a people business.

Barry Port: That shared sense of purpose is difficult to quantify on a financial statement, but is one of the greatest competitive advantages that we have. It strengthens our culture, attracts leaders who share our values, improves clinical outcomes, and builds trust with referral partners, and ultimately creates long-term value for our shareholders. This quarter's results are another reflection of that enduring connection between purpose and performance. We believe exceptional outcomes ultimately create their own form of accountability because residents, families, referral partners, regulators, and payers all have the ability to independently validate whether an operation is truly delivering value. We remain grateful for our local leaders and frontline teams whose commitment to our mission continues to set our affiliated operations apart. With that, we'll now turn to the Q&A portion of our call. Operator, can you please provide instructions for the Q&A?

Speaker #3: It strengthens our culture. Attracts leaders who share our values. Improves clinical outcomes and builds trust with referral partners and ultimately creates long-term value for our shareholders.

Speaker #1: While we need to discuss occupancy, reimbursement, margins, and growth on these calls, those outcomes are the byproduct of something much more fundamental: nearly 60,000 people who have chosen to care for others and who are united by a common set of values and purpose.

Speaker #3: This quarter's results are another reflection of that enduring connection between purpose and performance. We believe exceptional outcomes ultimately create their own form of accountability because residents, families, referral partners, regulators, and payers all have the ability to independently validate whether an operation is truly delivering value.

Speaker #1: Every day, thousands of caregivers, nurses, therapists, housekeepers, dietary staff, administrators, and countless others have opportunities to create moments that exceed expectations for coworkers, residents, and families.

Speaker #3: We remain grateful for our local leaders and frontline teams whose commitment to our mission continues to set our affiliated operations apart. And with that, we'll now turn to the Q&A portion of our call.

Speaker #1: During some of the most vulnerable times in their lives, that shared sense of purpose is difficult to quantify on a financial statement, but it is one of the greatest competitive advantages that we have.

Speaker #3: Operator, can you please provide instructions to the Q&A?

Speaker #1: It strengthens our culture, attracts leaders who share our values, improves clinical outcomes, and builds trust with referral partners, and ultimately creates long-term value for our shareholders.

Speaker #4: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please raise your hand now.

Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please raise your hand now. If you have dialed in to today's call, please press star then one to raise your hand. Please stand by while we compile the Q&A roster. Your first question comes from the line of Raj Kumar with Stephens. Your line is now open. Go ahead.

Speaker #1: This quarter’s results are another reflection of that enduring connection between purpose and performance. We believe exceptional outcomes ultimately create their own form of accountability, because residents, families, referral partners, regulators, and payers all have the ability to independently validate whether an operation is truly delivering value.

Speaker #4: If you have dialed in to today's call, please press star then one to raise your hand. Please stand by while we compile the Q&A roster.

Speaker #4: Your first question comes from the line of Raj Kumar with Stevens. Your line is now open. Go ahead.

Speaker #1: We remain grateful for our local leaders and frontline teams, whose commitment to our mission continues to set our affiliated operations apart. And with that, we'll now turn to the Q&A portion of our call.

Speaker #5: Hey, appreciate the focus on the quality metric that you provided in your investor deck and today's commentary. Maybe kind of looking at some of the changes TMS has made behind the scenes.

Raj Kumar: Hey, appreciate the focus on the quality metric that you provided in your investor deck and today's commentary. Maybe kind of looking at some of the changes CMS has made behind the scenes. I believe the July 2026 cycle has some updated thresholds for the QM measure, where Ensign particularly excels in. I guess, maybe given your internal testing, would be curious on if you see any changes or any initial indications around changes to your QM ratings from the underlying changes in CMS methodology and then maybe as a quick follow-up to that, on the Special Focus Facility, have you seen any impacts to the kind of favorability side in terms of it being off of that list and attracting more of the patient base or referral base? Thank you.

Speaker #1: Operator, can you please provide instructions for the Q&A?

Speaker #5: I believe that July 2026 cycle had some updated thresholds for the QM measure where ensign particularly excels in. So I guess kind of maybe given maybe your internal testing would be curious on if you see any changes or any initial indications around changes to your QM ratings from the underlying changes in TMS methodology and then maybe as a quick follow-up to that, on the specialty focus facility.

Speaker #3: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please raise your hand now.

Speaker #3: If you have dialed in to today's call, please press star then 1 to raise your hand, star then 9 to raise your hand, and star then 6 to unmute.

Speaker #3: Please stand by while we compile the Q&A roster. Your first question comes from the line of Raj Kumar with Stevens. Your line is now open.

Speaker #5: Have you kind of seen any impacts to the kind of favorability side in terms of it being off of that list and attracting more of the patient-based referral base?

Speaker #3: Go ahead.

Speaker #4: Hey, appreciate the focus on the quality metric that you provided in your investor deck and today's commentary. Maybe we could look at some of the changes TMS has made behind the scenes.

Speaker #5: Thank you.

Speaker #3: Sure. Yeah, great question. So yeah, CMS announced that there's some meaningful changes to how they're doing their five-star rating. Again, that's not a surprise.

Spencer Burton: Sure. Yeah, great question. Yeah, CMS announced that there are some meaningful changes to how they're doing their five-star rating. Again, that's not a surprise. They talked about this 2 or 3 years ago. They said they were going to be doing this periodically to kind of continue to force a certain number of buildings to be in each of the star categories. The American Health Care Association did some analysis that talked about what could happen, losing a quality measure five-star rating. We are still doing preliminary analysis. We're working on it hard, with preliminary reports. We're seeing that it will affect us. It's going to affect everybody. We're actually pretty pleased with the way it's affecting us compared to what the American Health Care Association had expected. We're seeing a lot less impact.

Speaker #4: I believe that July 2026 cycle had some updated thresholds for the QM measure, where Ensign particularly excels in. So I guess kind of maybe given maybe your internal testing, would be curious on if you see any changes or any initial indications around changes to your QM ratings from the underlying changes in and then maybe as a quick follow-up to that, on the specialty focus facility, have you kind of seen any impacts to the kind of favorability side in terms of it being off of that list and attracting more of the patient-based referral-based?

Speaker #3: They talked about this two or three years ago. They said they were going to be doing this periodically. To kind of continue to force a certain number of buildings to be in each of the star categories.

Speaker #3: The American Healthcare Association did some analysis that talked about what could happen. With people moving out of losing a quality measure five-star, we are still doing preliminary analysis, we're working on it hard, with preliminary reports.

Speaker #3: We're seeing that it will affect us. It's going to affect everybody. But we're actually pretty pleased with the way it's affecting us compared to what the American Healthcare Association had expected.

Speaker #3: We're seeing a lot less impact. And in some cases, it's being counteracted by improvements in other areas in the five-star. So the overall net effect on overall five-stars is actually looking to not be that much for us at all.

Spencer Burton: In some cases, it's being counteracted by improvements in other areas in the five stars. The overall net effect on overall five stars is actually looking to not be that much for us at all.

Speaker #4: Thank you.

Speaker #1: Sure. Yeah, great question. So, yeah, CMS announced that there are some meaningful changes to how they're doing their Five-Star rating. Again, that's not a surprise.

Speaker #1: They talked about this two or three years ago. They said they were going to be doing this periodically, to kind of continue to force a certain number of buildings to be in each of the star categories.

Speaker #6: As far as the reserve goes, look, I think they've been gaining significant momentum over a long period of time. So we've seen a pretty big growth trajectory for them in terms of occupancy, being off the designation list.

Barry Port: As far as The Reserve goes, look, I think they've been gaining significant momentum over a long period of time. We've seen a pretty big growth trajectory for them in terms of occupancy. Being off the designation list, I don't know that it dramatically changes things because that momentum has been built over the course of 3 years now, and they've seen tremendous momentum despite the fact that they've technically been on that list. That just speaks to what local leaders can do to change a facility's reputation with the acute providers and managed care organizations when they can see meaningful results happen.

Speaker #1: The American Healthcare Association did some analysis that talked about what could happen. With people moving out of losing a quality measure five-star, we are still doing preliminary analysis, but working on it hard.

Speaker #6: I don't know that it dramatically changes things because that momentum has been built over the course of three years now. And they've seen tremendous momentum despite the fact that they've technically been on that list.

Speaker #1: With preliminary reports, we're seeing that it will affect us. It's going to affect everybody. But we're actually pretty pleased with the way it's affecting us compared to what the American Healthcare Association had expected.

Speaker #6: And that just speaks to what local leaders can do to change a facility's reputation with the acute providers and managed care organizations when they can see meaningful results happen.

Speaker #1: We're seeing a lot less impact, and in some cases, it's being counteracted by improvements in other areas in the five-star. So the overall net effect on overall five-stars is actually looking to not be that much for us at all.

Speaker #5: Great. And then maybe just one on I think you the board authorized a share repurchase program. I guess the company deploys capital through various means.

Raj Kumar: Great. Maybe just one on. I think the board authorized a share repurchase program. The company deploys capital through various means, M&A and internal investments being priority, with the healthy dividend. As we think about maybe that potential fourth pillar, do you see share repurchases being an ongoing type of investment or just more near-term driven?

Speaker #5: M&A and internal investments being priority. And then with the healthy dividend. But I guess as we kind of think about maybe that potential fourth pillar, do you kind of see share repurchases being an ongoing type of investment or just more kind of near-term driven?

Speaker #5: As far as the reserve goes, look, I think they've been gaining significant momentum over a long period of time. So we've seen a pretty big growth trajectory for them in terms of occupancy, being off the designation list.

Speaker #5: I don't know that it dramatically changes things, because that momentum has been built over the course of three years now. And they've seen tremendous momentum, despite the fact that they've technically been on that list.

Speaker #3: Well, look, we've had a share repurchase program for a while now. It's nothing new for us. I think we increased the amount a little bit just because we feel really confident about the direction we're headed and we feel like the pricing of our stock when we when our board approved the plan was undervalued.

Barry Port: Well, look, we've had a share repurchase program for a while now. It's nothing new for us. I think we increased the amount a little bit just because we feel really confident about the direction we're headed, and we feel like the pricing of our stock when our board approved the plan was undervalued.

Speaker #5: And that just speaks to what local leaders can do to change a facility's reputation with the acute providers and managed care organizations when they can see meaningful results happen.

Speaker #3: But.

Speaker #2: Yeah, I would just echo what Barry said. This is part of our strategy. Has always been part of our strategy. And as we continue to grow, you should expect that the number to go up.

Chad Keetch: I would just echo what Barry said. This is part of our strategy, has always been part of our strategy, and as we continue to grow, we should expect the number to go up. I think that just represents our overall growth there. Also all the liquidity that we still have. This is not going to impact the acquisition strategy at all, and we're going to continue to grow like we always have.

Speaker #4: Great. And then maybe just one— I think the board authorized a share repurchase program. I guess the company deploys capital through various means.

Speaker #2: And so I think that just represents kind of our overall growth there. And then also all the liquidity that we still have. So this is not going to impact the acquisition strategy at all.

Speaker #4: M&A and internal investments being a priority, and then with the healthy dividend. But I guess as we kind of think about maybe that potential fourth pillar, do you see share repurchases being an ongoing type of investment, or is it just more kind of near-term driven?

Speaker #2: And we're going to continue to grow like we always have.

Speaker #5: Perfect. Thank you.

Raj Kumar: Perfect. Thank you.

Speaker #4: The next question comes from the line of Ben Hendrix with RBC Capital Markets. Your line is now open. Please go ahead.

Operator: The next question comes from the line of Ben Hendrix with RBC Capital Markets. Your line is now open. Please go ahead.

Speaker #1: Well, look, we've had a share repurchase program for a while now. It's nothing new for us. I think we increased the amount a little bit just because we feel really confident about the direction we're headed.

Speaker #5: Great. Thank you very much. Appreciate the commentary and the case study on the reserve. In South Carolina, it seems like that was a pretty rapid turnaround in terms of the reduced contract labor and improved turnover there.

Ben Hendrix: Great. Thank you very much. Appreciate the commentary and the case study on The Reserve in South Carolina. Seems like that was a pretty rapid turnaround in terms of the reduced contract labor and improved turnover there. As I think about this large bolus of newly acquired facilities on the platform currently, how should we realistically think about the timeline through the newly acquired phase, into the transitioning phase, and then into the same-store bucket? Do you typically, or would you typically target getting that contract labor level down to target levels and improving retention to a steady state level? By extension, would we expect some upside to guidance if we were to see a transition at the speed of The Reserve within that portfolio?

Speaker #1: And we feel like the pricing of our stock, when we and our board approved the plan, was undervalued. But.

Speaker #2: Yeah, I would just echo what Barry said. This is part of our strategy—has always been part of our strategy. And as we continue to grow, you should expect that number to go up.

Speaker #5: As I think about this large bolus of newly acquired facilities, on the platform currently, how do we how should we realistically think about the timeline through the newly acquired phase into the transitioning phase and then into the same store bucket?

Speaker #2: And so I think that just represents kind of our overall growth there. And then also, all the liquidity that we still have. So this is not going to impact the acquisition strategy at all.

Speaker #5: Do you typically or would you typically target getting that contract labor level down to target levels and improving retention to kind of the to a steady state level?

Speaker #2: And we're going to continue to grow, like we always have.

Speaker #4: Perfect. Thank you.

Speaker #3: The next question comes from the line of Ben Hendricks with RBC Capital Markets. Your line is now open. Please go ahead.

Speaker #5: Would we expect in kind of by extension, would we expect some upside to guidance if we were to see a transition at the speed of the reserve?

Speaker #5: Within those that portfolio.

Speaker #4: Great, thank you very much. I appreciate the commentary and the case study on the reserve. In South Carolina, it seems like that was a pretty rapid turnaround in terms of the reduced contract labor and improved turnover there.

Speaker #3: Yeah, I'll start and I'll let my partners comment. Yes, the recent acquisitions we've done, I would say I just point to the fact that they are much more representative of typical turnaround transitions that we've talked about for years and years.

Barry Port: Yeah. I'll start and I'll let my partners comment. Yes. The recent acquisitions we've done, I would say, I would just point to the fact that they are much more representative of typical turnaround transitions that we've talked about for years and years. I think we've been fortunate to have some higher occupancy buildings with decent clinical reputations over the prior few years that have been, I would say, more rapid turnarounds just because of those two factors. Nevertheless, all of these represent amazing opportunities for us. They're all very low occupancy. They're all very low skill mix. That gets us really excited, because we know as we rebuild the clinical reputation, that the other things will follow in dramatic fashion. I think, we show in our investor deck on slide 22 how facilities improve over time.

Speaker #4: As I think about this large bolus of newly acquired facilities on the platform currently, how should we realistically think about the timeline through the newly acquired phase into the transitioning phase, and then into the same-store bucket?

Speaker #3: I think we've been fortunate to have some higher occupancy buildings with decent clinical reputations over the prior few years that have been I would say more rapid turnarounds just because of those two factors.

Speaker #4: Do you typically, or would you typically, target getting that contract labor level down to target levels and improving retention to kind of a steady-state level?

Speaker #3: But nevertheless, all of these represent amazing opportunities for us. They're all very low occupancy. They're all very low skilled mix. And that gets us really excited because we know as we rebuild the clinical reputation, that those things the other things will follow in dramatic fashion.

Speaker #4: Would we expect, kind of by extension, some upside to guidance if we were to see a transition at the speed of the reserve?

Speaker #4: Within that portfolio.

Speaker #3: So I think we show in our investor deck on slide 22 how facilities improve over time and it shows five quarters then 15 quarters and then 45 quarters.

Speaker #1: Yeah, I'll start, and I'll let my partners comment. Yes, the recent acquisitions we've done—I would say I'd just point to the fact that they are much more representative of typical turnaround transitions that we've talked about for years and years.

Barry Port: It shows five quarters, then 15 quarters, and then 45 quarters. We kind of see that growth trajectory. Your question about would we revise guidance if they performed more ahead of schedule, I think our answer to that is consistently yes. We plan things out to be as accurate as we can. We try to reflect accuracy in our guidance, sometimes things exceed our expectation, or not, then we'll revise accordingly if and when we need to. For now, those Texas acquisitions, they're not accretive. They probably won't be for a while. Again, that's all performing according to what we had projected and expected.

Speaker #3: You can kind of see that growth trajectory. Your question about would we raise would we revise guidance if they performed more ahead of schedule?

Speaker #1: I think we've been fortunate to have some higher-occupancy buildings with decent clinical reputations over the prior few years that have been, I would say, more rapid turnarounds, just because of those two factors.

Speaker #3: I think our answer to that is consistently yes. I mean, we plan things out to be as accurate as we can. We try to reflect accuracy in our guidance, but sometimes things exceed our expectation or not.

Speaker #1: But nevertheless, all of these represent amazing opportunities for us. They're all very low occupancy. They're all very low-skilled mix, and that gets us really excited because we know as we rebuild the clinical reputation, the other things will follow in dramatic fashion.

Speaker #3: And then we'll revise accordingly if and when we need to. But for now, those Texas acquisitions, they're not a creative. They probably won't be for a while.

Speaker #3: But again, that's all kind of performing according to what we had projected and expected.

Speaker #1: So, I think we show in our investor deck, on slide 22, how facilities improve over time. It shows five quarters, then fifteen quarters, and then forty-five quarters.

Speaker #2: And if the continued ship is baked into our guidance for Q3, Q4, so it would have to perform better than what we have baked in.

Chad Keetch: It's the continued shift is baked into our guidance for Q3, Q4. It would have to perform better than what we have baked in.

Speaker #5: Thank you for that. Last one for me, standard bearer. Three acquisitions of third-party managed facilities. Can you think about or give us some thoughts on how you're assessing third-party managers that mix in the overall standard bearer portfolio?

Ben Hendrix: Thank you for that. Last one from me on Standard Bearer, with three acquisitions of third-party managed facilities. Can you think about, or give us some thoughts on how you're assessing third-party managers, the mix in the overall Standard Bearer portfolio, and do you guys have a lot of diversification among managers, or do you have certain groups that you like to work with in particular? Thanks.

Speaker #1: You can kind of see that growth trajectory. Your question about would we raise—would we revise guidance if they performed more ahead of schedule?

Speaker #1: I think our answer to that is consistently yes. I mean, we plan things out to be as accurate as we can. We try to reflect accuracy in our guidance.

Speaker #5: And how much do you guys have a lot of diversification among managers or do you have a certain groups that you like to work with in particular?

Speaker #1: But sometimes things exceed our expectations, or not, and then we'll revise accordingly if and when we need to. But for now, those Texas acquisitions, they're not accretive.

Speaker #5: Thanks.

Speaker #3: Yeah. Great question. So in terms of priority, we always want to own it and operate it ourselves. So that's diversification being less of a priority, I would say, for standard bearer.

Barry Port: Yeah. Great question. In terms of priority, we always want to own it and operate it ourselves. That's diversification being less of a priority, I would say, for Standard Bearer. Pretty confident that Ensign-affiliated operators are amongst the best. We're leaning into that from a Standard Bearer point of view. Our second priority is to do really attractive long-term leases and operate, right? Where we're leasing from someone else that owns the real estate. Have tons of really valuable relationships with real estate partners and REITs and others out there that we continue to work with. Then, of course, the third scenario would be the one you just mentioned, where we own it and lease to a third party. Strategically, in most cases, right?

Speaker #1: They probably won't be for a while. But again, that's all kind of performing according to what we had projected and expected.

Speaker #3: Pretty confident that enzyme affiliated operators are amongst the best. And so we're leaning into that from a standard bearer point of view. So and then our second priority is to do really attractive long-term leases and operate, right, where we're leasing from someone else that owns a real estate.

Speaker #2: And if the continued ship is baked into our guidance for Q3 and Q4, so it would have to perform better than what we have baked in?

Speaker #4: Thank you for that. Last one from me—Standard Bearer. Three acquisitions of third-party managed facilities. Can you give us some thoughts on how you're assessing third-party managers as they mix into the overall Standard Bearer portfolio?

Speaker #3: Have tons of really valuable relationships with real estate partners and REITs and others out there that we continue to work with. And then, of course, the third scenario would be the one you just mentioned where we own it and lease to a third party.

Speaker #4: And do you guys have a lot of diversification among managers, or do you have certain groups that you like to work with in particular?

Speaker #3: Strategically, in most cases, right, the scenario where we lease to a third party is it's a portfolio deal that for whatever reason it's not a fit for all the buildings to be operated by Enzyme.

Barry Port: The scenario where we lease to a third party is it's a portfolio deal that for whatever reason it's not a fit for all the buildings to be operated by Ensign. Maybe there's a geographic situation or some other kind of operational hurdle that makes us only want some of the portfolio. That's where we kind of look to other third parties to say, "Okay, this is a state we're not in. Here's a few buildings that you could operate and lease from Standard Bearer." That's worked out really well for us, frankly, to be able to successfully close deals that in the past maybe we wouldn't have, if we weren't looking to lease to third parties.

Speaker #4: Thanks.

Speaker #1: Yeah, great question. So, in terms of priority, we always want to own it and operate it ourselves. So, that's diversification being less of a priority, I would say, for Standard Bearer.

Speaker #3: Maybe there's a geographic situation or some other kind of operational hurdle that makes us only want some of the portfolio. And that's where we've kind of looked to other third parties to say, okay, this is a state we're not in.

Speaker #1: Pretty confident that Ensign-affiliated operators are amongst the best, and so we're leaning into that from a standard-bearer point of view. And then our second priority is to do really attractive long-term leases and operate, right, where we're leasing from someone else that owns the real estate.

Speaker #3: Here's a few buildings that you could operate and lease from standard bearer. And that's worked out really well for us to frankly to be able to successfully close deals that in the past maybe we wouldn't have.

Speaker #1: We have tons of really valuable relationships with real estate partners, REITs, and others out there that we continue to work with. And then, of course, the third scenario would be the one you just mentioned, where we own it and lease to a third party.

Speaker #3: If we weren't looking to lease a third party. So there are some situations particularly with our former partners over at Dependent Group where we'll see a standalone senior living operation that's not something that Enzyme's looking to do at least broadly.

Barry Port: There are some situations, particularly with our former partners over at The Pennant Group, where we'll see a standalone senior living operation that's not something that Ensign's looking to do, at least as broadly. We've worked with them where they've actually brought us some opportunities to say, "Hey, we want to grow. Here's a wonderful assisted living facility. Will you guys buy it and lease to us?" They're clearly our largest third-party tenant is Affinia Group. We have a few others that are on the skilled nursing side, and continue to kind of expand that base of other parties. I can tell you that we get a lot of outreach from smaller operators out there that really want to be part of kind of what we're doing together. We're just excited about it.

Speaker #1: Strategically, in most cases, the scenario where we lease to a third party is it's a portfolio deal. For whatever reason, it's not a fit for all the buildings to be operated by Ensign.

Speaker #3: And so we've worked with them where they've actually brought us some opportunities to say, hey, we want to grow, here's a wonderful assisted living facility.

Speaker #1: Maybe there's a geographic situation or some other kind of operational hurdle that makes us only want some of the portfolio. And that's where we kind of look to other third parties to say, "Okay, this is a state we're not in."

Speaker #3: Would you guys buy it and lease to us? So they're clearly our largest third-party tenant is Dependent Group. We have a few others that are on the skilled nursing side.

Speaker #3: And continue to kind of expand that base of other parties. But I can tell you that we we get a lot of outreach from smaller operators out there that really want to be part of kind of what we're doing together.

Speaker #1: "Here's a few buildings that you could operate and lease from Standard Bearer." And that's worked out really well for us, frankly, to be able to successfully close deals that in the past maybe we wouldn't have.

Speaker #1: If we weren't looking to lease to a third party—there are some situations, particularly with our former partners over at the Pennant Group, where we'll see a standalone senior living operation. That's not something that Ensign's looking to do, at least broadly.

Speaker #3: And we're just excited about it. Again, probably the biggest challenge is to say, well, we want those for ourselves first, right? So but definitely a lot of folks out there that we look forward to working with and developing those relationships more and more every quarter.

Barry Port: Again, probably the biggest challenge is to say, "Well, we want those for ourselves first," right. Definitely a lot of folks out there that we look forward to working with and developing those relationships more and more every quarter.

Speaker #1: And so we've worked with them, where they've actually brought us some opportunities to say, "Hey, we want to grow. Here's a wonderful assisted living facility."

Speaker #5: Thank you very much.

Ben Hendrix: Thank you very much.

Speaker #1: Your next question comes from the line of A.J. Rice with UBS. Your line is now open. Please go ahead.

Speaker #1: "Would you guys buy it and lease it to us?" So, clearly, our largest third-party tenant is the Dependent Group. We have a few others that are on the skilled nursing side.

Operator: Your next question comes from the line of A.J. Rice with UBS. Your line is now open. Please go ahead.

Speaker #1: And continue to kind of expand that base of other parties. But I can tell you that we get a lot of outreach from smaller operators out there that really want to be part of what we're doing together.

Speaker #6: Hi everybody. Thanks. Maybe just ask on a couple on the payer side. What are you seeing in terms of your discussion with states? Anything changing there?

A.J. Rice: Hi, everybody. Thanks. Maybe just to ask on the payer side, what are you seeing in terms of your discussion with states? Anything changing there? Any updated rate outlook? Also in managed care contracting, are you seeing any changes there, and any comment on that end?

Speaker #6: What kind of any updated rate outlook? And then also in managed care contract. Are you seeing any changes there in any comment on that end?

Speaker #1: And we're just excited about it. Again, probably the biggest challenge is to say, "Well, we want those for ourselves first," right? But there are definitely a lot of folks out there that we look forward to working with and developing those relationships more and more every quarter.

Speaker #2: Yeah. Go ahead, Eric.

Chad Keetch: Yeah. Go ahead, Barry.

Speaker #3: Well, I was just going to say on the state budget side, it's always dynamic and there's always things that we're looking at. Medicaid's a big payer for us, but we're encouraged so far by what we're seeing.

Barry Port: Well, I was just going to say on the state budget side, it's always dynamic and there's always things that we're looking at. Medicaid's a big payer for us. We're encouraged so far by what we're seeing. We have active engagement in all of our states, and we have good, I think, visibility into the direction, at least for this year, and even parts into some of our states into next year. We feel good about our position in terms of rate stability. Certainly, we're not going to see any major increases, but to have stability and the line of sight into that is something we're excited about and appreciate. On the rate side with Medicare, you've seen that. That obviously encouraged by that increase. On the managed care side, we continue to benefit from great relationships with our managed care partners.

Speaker #4: Thank you very much.

Speaker #3: We have active engagement in all of our states and we have good, I think, visibility into the direction, at least for this year. And even parts into some of our states into next year.

Speaker #5: Your next question comes from the line of AJ Rice with UBS. Your line is now open. Please go ahead.

Speaker #3: So we feel good about our position in terms of rate stability. Certainly, we're not going to see any major increases, but to have stability and line of sight into that is something we're excited about and appreciate.

Speaker #6: Hi, everybody. Thanks. Maybe I'll just ask a couple on the payer side. What are you seeing in terms of your discussions with states? Anything changing there?

Speaker #6: What kind of any updated rate outlook? And then also, in managed care contracting, are you seeing any changes there, and any comment on that end?

Speaker #3: On the rate side with Medicare, you've seen that. That obviously encouraged by that increase. And then on the managed care side, we continue to benefit from great relationships with our managed care partners.

Speaker #2: Yeah. Go ahead, Eric.

Speaker #1: Well, I was just going to say, on the state budget side, it's always dynamic, and there are always things that we're looking at. Medicaid's a big payer for us.

Barry Port: Again, that's a very dynamic and kind of ever-changing relationship that we have with both rates and networks and facilities that are included and not. We have a really great team and they collaborate well, both with our local leaders and with the kind of local regionalized managed care offices to put ourselves in a really good position. We've seen some great growth also in VA, with the VA and our relationship with the Veterans Administration. We've become somewhat of a larger provider for them and have really kind of benefited from the relationship we've had with them, putting their program into many of our facilities as well.

Speaker #3: Again, that's a very dynamic and kind of ever-changing relationship that we have. On with both rates and networks and facilities that are included and not.

Speaker #1: But we're encouraged so far by what we're seeing. We have active engagement in all of our states, and we have good, I think, visibility into the direction—at least for this year.

Speaker #3: But we have a really great team and they collaborate well both with our local leaders and the kind of local regionalized managed care offices to put ourselves in a really good position.

Speaker #1: And even parts into some of our states into next year. So we feel good about our position in terms of rate stability. Certainly, we're not going to see any major increases, but to have stability.

Speaker #3: We've seen some great growth also in VA with the VA and our relationship with the Veterans Administration. We've become somewhat of a larger provider for them and have really kind of benefited from the relationship we've had with them putting their program into many of our facilities as well.

Speaker #1: And the line of sight into that is something we're excited about and appreciate. On the rate side with Medicare, you've seen that. We're obviously encouraged by that increase.

Speaker #1: And then on the managed care side, we continue to benefit from great relationships with our managed care partners. Again, that's a very dynamic and ever-changing relationship that we have.

Speaker #6: Okay. That's helpful. How about on the cost side, any comments on labor dynamics? What you're seeing there? Average wage increases, turnover rates, any update on that trend?

A.J. Rice: Okay, that's helpful. How about on the cost side? Any comments on labor dynamics, what you're seeing there, average wage increases, turnover rates? Any update on that trend?

Speaker #1: On with both rates and networks and facilities that are included and not. But we have a really great team, and they collaborate well, both with our local leaders and the kind of local, regionalized managed care offices, to put ourselves in a really good position.

Speaker #3: Yeah. So kind of operationally what we're seeing is a couple of things. We're seeing a lot of good stability at low levels on our contract labor usage.

Barry Port: Operationally what we're seeing is a couple of things. We're seeing a lot of good stability at low levels on our contract labor usage. Our biggest contract labor historically coming out of COVID was nursing registry, RNs and even CNAs, and that's been really flat for the last year at a low level, incrementally going down a little bit. We're really happy with what that is. Turnover, if you look industry-wide, the labor situation's gotten better for everybody, which we're excited about. That bodes well for all of us. We track our relative acceleration in our turnover trends going down versus what CMS provides for the industry as a whole. We're excited because while the industry is getting better, we're getting better at a quicker pace, and we're starting to get some separation on how quickly our turnover is going down.

Speaker #3: That applies our biggest contract labor historically coming out of COVID was nursing CNAs. And that's been really flat for the last year at a low level.

Speaker #1: We've seen some great growth also in VA with the VA and our relationship with the Veterans Administration. We've become somewhat of a larger provider for them.

Speaker #3: Incrementally going down a little bit, but we're really happy with what that is. And then turnover, if you look industry-wide, the labor situation has gotten better for everybody, which we're excited about.

Speaker #1: And have really kind of benefited from the relationship we've had with them, putting their program into many of our facilities as well.

Speaker #3: That bodes well for all of us. We track our relative acceleration in our turnover trends going down versus what CMS provides for the industry as a whole.

Speaker #6: Okay, that's helpful. How about on the cost side—any comments on labor dynamics? What are you seeing there as far as average wage increases, turnover rates, or any update on that trend?

Speaker #3: And we're excited because while the industry is getting better, we're getting better at a quicker pace. And we're starting to get some separation and how quickly our turnover is going down.

Speaker #1: Yeah. So operationally, what we're seeing is a couple of things. We're seeing a lot of good stability at low levels on our contract labor usage.

Speaker #3: So that's been a huge focus operation for us without people doing the frontline care. We really are nothing. And so we're super encouraged to see that.

Barry Port: That's been a huge focus operation for us. Without people doing the frontline care, we really are nothing. We're super encouraged to see that. As far as overtime continues to be something that's going in a good direction for us. That's important because obviously there's a cost associated with that, also just the quality that's given by people that are fresh and doing their best is something that we really emphasize. We're happy to see overtime go down.

Speaker #3: And then as far as overtime, overtime continues to be something that's going in a good direction for us. That's important because obviously there's a cost associated with that, but also just the quality that's given by people that are fresh and doing their best is something that we really emphasize.

Speaker #1: That applies. Our biggest contract labor historically coming out of COVID was nursing registry—RNs and even CNAs. And that's been really flat for the last year, at a low level.

Speaker #1: Incrementally going down a little bit, but we're really happy with where that is. And then turnover—if you look industry-wide, the labor situation has gotten better for everybody, which we're excited about.

Speaker #3: So we're happy to see overtime go like that.

Speaker #6: Okay. All right. Thanks so much.

A.J. Rice: Okay. All right. Thanks so much.

Speaker #1: That bodes well for all of us. We track our relative acceleration in our turnover trends going down, versus what CMS provides for the industry as a whole.

Speaker #1: Your next question comes from the line of Clark Murphy with Truest Securities. Your line is now open. Please go ahead.

Operator: Your next question comes from the line of Clarke Murphy with Truist Securities. Your line is now open. Please go ahead.

Speaker #1: And we're excited because, while the industry is getting better, we're getting better at a quicker pace. And we're starting to get some separation in how quickly our turnovers are going down.

Speaker #5: Hey, good afternoon, everyone. This is Clark on third day of McDonald. Just wanted to start with the Southeast is still a relatively new and underpenetrated area for you guys.

Clarke Murphy: Hey, good afternoon, everyone. This is Clarke, on for David MacDonald. Just wanted to start, the Southeast is still a relatively new and under-penetrated area for you guys. Could you just talk about how results have been in that area of the country? When I think about the commentary that you guys gave about getting to mid-90% occupancy among your more mature facilities, those facilities are largely outside of that region. Just wanted to see if there's anything kind of structurally different as far as what level those facilities could get to over time.

Speaker #1: So that's been a huge focus and operation for us. Without people doing the frontline care, we really are nothing, so we're super encouraged to see that.

Speaker #5: Could you just talk about how results have been in that area of the country and when I think about the commentary that you guys gave about getting to mid-90% occupancy among your more mature facilities?

Speaker #1: And then, as far as overtime, overtime continues to be something that's going in a good direction for us. That's important because, obviously, there's a cost associated with that, but also just the quality that's given by people that are fresh and doing their best is something that we really emphasize.

Speaker #5: I mean, those facilities are largely outside of that region. So just wanted to see if there's anything kind of structurally different as far as how what level those facilities could get to over time.

Speaker #1: So we're happy to see overtime going down.

Speaker #3: Well, we're really excited about the Southeast. I mean, it's a obviously it's a huge population center. And really good kind of labor environment and historically generally a good regulatory environment as well.

Barry Port: Well, we're really excited about the Southeast. Obviously, it's a huge population center, and really good kind of labor environment, and historically, generally a good regulatory environment as well. Also a huge healthcare kind of magnet too. Our success in Tennessee has been tremendous as a new state. We've seen

Speaker #6: Okay. All right. Thanks so much.

Speaker #5: Your next question comes from the line of Clark Murphy with Truist Securities. Your line is now open. Please go ahead.

Speaker #3: But also a huge healthcare kind of magnet too. I mean, our success in Tennessee has been tremendous as a new state. We've seen really great growth in both quality outcomes and earnings that accompany that.

Speaker #7: Hey, good afternoon, everyone. This is Clark on for David McDonald. Just wanted to start with the Southeast—it is still a relatively new and underpenetrated area for you guys.

Chad Keetch: A really great growth in both quality outcomes and earnings that accompany that in the state of Tennessee and are constantly evaluating new opportunities to grow in that state. South Carolina has been a really strong state for us. We've had some good growth there. We highlighted a South Carolina building there on our call. Albeit small, Alabama, we are adding another building there and feel really good about how things are moving in Alabama as well. There are other adjacent states in the southeast that we get excited about, too, and I wouldn't be surprised if we grew into some of those states either this year or next.

Speaker #7: Can you talk about how results have been in that area of the country? And when I think about the commentary you gave about getting to mid-90% occupancy among your more mature facilities?

Speaker #3: In the state of Tennessee and are constantly evaluating new opportunities to grow in that state. South Carolina has been a really strong state for us.

Speaker #7: I mean, those facilities are largely outside of that region, so I just wanted to see if there's anything kind of structurally different as far as what level those facilities could get to over time.

Speaker #3: We've had some good growth there. We highlighted a South Carolina building there on our call. And albeit small, Alabama, we are adding another building there and feel really good about how things are moving in Alabama as well.

Speaker #1: Well, we're really excited about the Southeast. I mean, it's obviously a huge population center, and really good kind of labor environment. And historically, generally, a good regulatory environment as well.

Speaker #3: But there are other adjacent states in the Southeast that we get excited about too. And it wouldn't be surprised if we grew into some of those states either this year or next.

Speaker #1: But also, it's a huge healthcare kind of magnet too. I mean, our success in Tennessee has been tremendous as a new state. We've seen really great growth in both quality outcomes and the earnings that accompany that.

Speaker #5: Got it. That's helpful. And then just as a follow-up kind of on the M&A front, when you guys acquire a facility, can you talk about when you're looking at the leadership team that's in place and you're making a decision to retain or not retain some of the key leadership positions?

Clarke Murphy: Got it. That's helpful. Then just as a follow-up on the M&A front. When you guys acquire a facility, can you talk about when you're looking at the leadership team that's in place and you're making the decision to retain or not retain some of the key leadership positions, can you just talk about how your approach to thinking about that has changed? I understand it probably varies a little bit at the local facility and geographic level, but just more broadly, how you're thinking about those relationships and putting in your own people versus leaving what's there would be helpful.

Speaker #1: In the state of Tennessee, we are constantly evaluating new opportunities to grow in that state. South Carolina has been a really strong state for us.

Speaker #5: Can you just talk about how you're approached in thinking about that has changed? I mean, I understand it probably varies a little bit at the local facility and geographic level, but just kind of more broadly how you're thinking about those relationships and kind of putting in your own people versus leaving what's there would be helpful.

Speaker #1: We've had some good growth there. We highlighted a South Carolina building on our call, and, albeit small, in Alabama we are adding another building there.

Speaker #1: And feel really good about how things are moving in Alabama as well. But there are other adjacent states in the Southeast that we get excited about, too.

Speaker #3: Yeah. This is a great question, Clark. I'll start with that and others can add. The great thing is there is a lot of amazing talent out there.

Spencer Burton: Yeah. This is a great question, Clarke. I'll start with that and others can add. The great thing is there is a lot of amazing talent out there. There's a lot of people who want to do the right things and a lot of skill that's not within our organization. We know that part of our mission to be what we want to be entails bringing people in from, call it, the outside if they fit certain attributes and criteria. We've improved our ability, I feel like, especially with some of the recent bigger deals called the last three years or so, to really make part of the underwriting process looking at the talent and making sure that it's part of our process to be able to get in there and get access so we can identify people that can be great. I very recently highlighted Tennessee.

Speaker #1: And it wouldn't surprise me if we grew into some of those states either this year or next.

Speaker #3: There's a lot of people who want to do the right things and a lot of skill that's not within our organization. And we know that part of our mission to be what we want to be entails bringing people in from, call it, the outside.

Speaker #7: Got it, that's helpful. And then, just as a follow-up, kind of on the M&A front—when you guys acquire a facility, can you talk about, when you're looking at the leadership team that's in place, how you make a decision to retain or not retain some of the key leadership positions?

Speaker #3: If they fit certain attributes and criteria, we've improved our ability, I feel like, especially with some of the recent bigger deals called the last three years or so, to really make part of the underwriting process looking at the talent.

Speaker #7: Can you just talk about how your approach to thinking about that has changed? I mean, I understand it probably varies a little bit at the local facility and geographic level.

Speaker #3: And making sure that it's part of our process to be able to get in there and get access. So we can identify people that can be great very recently highlighted Tennessee.

Speaker #7: But just kind of more broadly, how you're thinking about those relationships, and kind of putting in your own people versus leaving what's there, would be helpful.

Speaker #3: That's just one example. We've that acquisition, the majority the major majority of the leaders that are still operating those facilities were people who were already in Tennessee when we came into the state.

Spencer Burton: That's just one example. That acquisition, the major majority of the leaders that are still operating those facilities were people who were already in Tennessee when we came into the state, and there's some really great leaders there. That's played out in some of our bigger deals in California. I think it comes from having better processes for our local leaders to get access, then also service center supportive processes for doing trainings before the fact and vetting processes where we can really find good talent. Now, look, our AITs are always going to be a major part of this. That's not changing. We currently average around 50 AITs at any given time, people that are training with skilled leaders in existing operations and getting ready to take on this career.

Speaker #1: Yeah, this is a great question, Clark. I'll start with that, and others can add. The great thing is, there is a lot of amazing talent out there.

Speaker #3: And there's some really great leaders there. That's played out in some of our bigger deals in California. And even the recent Texas one. And I think it comes from having better processes for our local leaders to get access and then also service center supported processes for doing trainings before the fact and vetting processes where we can really find good talent.

Speaker #1: There are a lot of people who want to do the right things, and a lot of skill that's not within our organization. And we know that part of our mission to be what we want to be entails bringing people in from, call it, the outside.

Speaker #1: If they fit certain attributes and criteria, we've improved our ability—I feel like especially with some of the recent bigger deals, call it the last three years or so—to really make part of the underwriting process looking at the talent, and making sure that it's part of our process to be able to get in there and get access.

Speaker #3: Now look, our AITs are always going to be a major part of this. That's not changing. We currently average around 50 AITs at any given time.

Speaker #3: People that are training with skilled leaders in existing operations and getting ready to take on this career. And Chad's highlighted in the past that these are mature season 35-year-old average age people that they know what it's like to lead people.

Speaker #1: So we can identify people that can be great. Very recently, I highlighted Tennessee—that's just one example. With that acquisition, the majority, the major majority of the leaders that are still operating those facilities were people who were already in Tennessee when we came into the state.

Spencer Burton: Chad's highlighted in the past that these are mature, seasoned, 35-year-old average age people that they know what it's like to lead people. That will never stop being a big part of what we do. To grow like we want to grow in order to fulfill our mission, we've got to have outside people, too. I think we recognize that, and I think we're doing a better and better job of that.

Speaker #3: So that will never stop being a big part of what we do. But to grow like we want to grow in order to fulfill our mission, we've got to have outside people too.

Speaker #1: And there are some really great leaders there. That's played out in some of our bigger deals in California, and even the recent Texas one. I think it comes from having better processes for our local leaders to get access, and then also service center supportive processes for doing trainings before the fact, and vetting processes where we can really find good talent.

Speaker #3: And I think we recognize that. I think we're doing a better and better job of that.

Speaker #2: Yeah. The only thing I'd just add to that is obviously we're going through the process of underwriting and doing our due diligence. We're I guess there's this isn't necessarily new, but certainly something to highlight is getting access to those folks from the seller's point of view.

Chad Keetch: Yeah. The only thing I'd just add to that is, obviously we're going through the process of underwriting and doing our due diligence. I guess this isn't necessarily new, but certainly something to highlight is getting access to those folks from the seller's point of view so we could get to know them as we're doing the due diligence. I think that's been something that's been really successful for us is we usually jointly announce the acquisition where we're present at the same time that the current owners are announcing the deal. Just showing to the facility this kind of joint effort and anyway. That's a really positive thing that we always try to get. Sometimes sellers can be a little protective of that. Most of the time, especially recently, we've had a lot of early access, which really helps this process.

Speaker #1: Now, look, our AITs are always going to be a major part of this. That's not changing. We currently average around 50 AITs at any given time—people that are training with skilled leaders in existing operations and getting ready to take on this career.

Speaker #2: So we could kind of get to know them as we're doing the due diligence and I think that's been something that's been really successful for us is we usually jointly announce the acquisition or we're present at the same time that the current owners are announcing the deal.

Speaker #1: And Chad's highlighted in the past that these are mature, seasoned, 35-year-old average-age people that know what it's like to lead people. So that will never stop being a big part of what we do.

Speaker #2: And just showing to the facility this kind of joint effort and anyway. So that's a really positive thing that we always try to get.

Speaker #2: Sometimes sellers can be a little protective of that. And but most of the time, especially recently, we've had a lot of early access, which really helps this process.

Speaker #1: But to grow like we want to grow in order to fulfill our mission, we've got to have outside people too. And I think we recognize that.

Speaker #1: I think we're doing a better and better job of that.

Speaker #2: Yeah. The only thing I'd just add to that is, obviously, we're going through the process of underwriting and doing our due diligence. I guess this isn't necessarily new, but certainly something to highlight is getting access to those folks.

Operator: There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.

Speaker #2: From the seller's point of view, we can kind of get to know them as we're doing due diligence, and I think that's been something that's been really successful for us. We usually jointly announce the acquisition, or we're present at the same time that the current owners are announcing the deal.

Speaker #2: And just showing to the facility this kind of joint effort in any way. So that's a really positive thing that we always try to get. Sometimes sellers can be a little protective of that.

Speaker #2: And, but most of the time, especially recently, we've had a lot of early access, which really helps this process. Clark, if you're talking, you're on mute.

Speaker #7: That's all. I'm all set. Thanks, guys. Appreciate it.

Speaker #2: Okay. Thanks.

Speaker #3: There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.

Speaker #2: An hour on the money?

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