Everyone, I'm Ben Hendrix, Healthcare Services and Managed Care Analyst here at RBC Capital Markets. We're very pleased today to have management from the Ensign Group. We are hosting Barry Port, Chief Executive Officer, Chad Keetch, Chief Financial Officer, and President Steve Farnsworth. Thank you guys very much for joining us today. Great to be here. Yeah, so congratulations on a record-setting first quarter, same store and transitioning occupancy at all-time highs, you know, and skilled census growth still growing at a strong clip. Maybe you can kind of talk about what you're seeing in the market and the sustainability of the improvements y'all are seeing. Yeah, we feel really, really good about where we are. I mean, as most of you know, we make it our business to acquire underperforming post-acute assets, primarily skilled nursing, and enjoy the organic growth that comes as a result of that. We have seen really strong trends over the past couple of post-COVID years. That growth, fortunately, has been sustained and something that obviously we feel excited about continuing. It certainly helps that we've got really good maturity in a lot of key markets that we've been in for a long time where we have established relationships with both acute providers and managed care plans. Also, you know, we've got a fortunate tailwind of demographics. I think there are 11,000 folks a day that turn 65 years old. Our population is a little bit older than that, but that trend has been one that has, I think, fueled what I think are some really strong admission trends that we've seen over the past couple of years. We feel really good about where things are headed for the future. We think that the growth rate that we've seen over the last couple of years is certainly sustainable. We get excited about the upside that, you know, 81% consolidated occupancy means for us for the future. Even if our pace of acquisition growth slowed, we've got all that inherent organic growth opportunity ahead of us with really strong trends. Your same store occupancy has now surpassed pre-COVID levels. You know, kind of how do you guys think about a target and where kind of that sweet spot is in terms of maintaining occupancy for the long term? Yeah, I mean, I think, and you two can correct me if you feel like I'm hot, but we don't see really a cap, honestly. I mean, we certainly, when you look at individual markets, there's a, I guess, a maturity kind of standard that seems to exist. You know, if you're talking about buildings in California, you can realistically get to 100% occupancy. If you're talking about mature buildings in certain markets in Texas, you can get to high 80s, low 90s, but maybe not all the way to 100 necessarily. Even there, what we find important to explain in our growth story is it's not really just a function of getting to a, you know, kind of a maximum capacity for occupancy. It is very common for us to see mature buildings that are 15- 20 years old consistently change their patient profile mix, their skilled mix, and add service offerings to diversify that mix in a more margin-positive way. That is a phenomenon we see over and over again. If you pay attention to our earnings calls, you'll hear us cite examples of buildings that are doing just that, buildings that we've had for 20 years that are still seeing continued performance improvement because while they may have reached a kind of an artificial threshold in terms of overall occupancy, they're changing their patient mix and diversifying their service offerings to better serve the needs of the acute hospitals and managed care plans. Yeah, just to add to that, I think something that, you know, those that maybe haven't been following us may not fully realize is, you know, we're constantly diluting those occupancy numbers by acquiring these low-occupancy buildings. If we were to just shut off our acquisition program, you would see that pattern sort of continue. Because we, you know, we're constantly buying these immature buildings and folding them, you know, each year, we sort of reset those buckets and dilute it again, right? But that's okay with us. We've got, you know, this really great model that you have your acquisitions, but then you also can drive organic growth. Both those have just allowed us to almost hedge in a year where maybe deal pricing is irrational, we can take a step back from that and just focus on organic growth. You know, when the buying opportunities are great, we can focus on that. You know, through the years, you've seen sort of a pretty steady, you know, financial result, you know, outcomes, even in kind of, you know, an environment where acquisitions aren't necessarily always, you know, always steady, I guess, if that makes sense. Yeah, one thing that's always struck me is the growth potential within your same store portfolio, specifically through being able to add capabilities, whether that be bedside dialysis or other kind of rehabilitation-focused capabilities. Maybe you can kind of talk about the levers you have there. When you think about increasing a transitioning facility into the same store bucket and continuing to get enhanced skilled mix there, what are the main levers you pull? Yeah, I mean, some are fairly simple and not too terribly novel. You know, you know, specific cardiac programs or bariatric programs or certain types of speech and occupational therapy. Others venture into kind of the more, I'd say, complex world of care that's closer to maybe an LTAC or something like that that you would see, like advanced respiratory programs for folks that are on ventilators or trachs that are inpatient to us. Maybe sometimes they're long-term ventilator patients. That requires a high degree of complex care. It also commands, you know, much better rates to care for that complex patient. It's things like that. We also have a lot of facilities that are doing behavioral programs and dementia programs. You know, the list goes on and on and on. Some of these programs are kind of on the cutting edge. They're newer. Behavioral health has become a kind of a bigger lever that we've looked at lately, that facilities that have the physical plant capability to add on a unit or to start to more carve out a unit that is specific to behavioral health. That's been one that we've grown lately as well. I think it speaks to the local leadership model, the clinical leadership. It allows local leaders to clinically align with hospital needs through a continuum of care, as well as managed care networks. There is a lot of efficiency to that and speed. We do not have a master clinical plan, and every state has a standardized approach. It is very locally driven, speaks to that. Just want to think about, you mentioned that you maybe get higher rates for some of these clinical capabilities, but it still seems like it would be a pretty big cost advantage over an inpatient rehab or an LTAC, for example, on that side. Just to what extent do you believe you're disintermediating some of that volume in your markets? Yeah, I mean, I believe we are. I mean, I certainly think that there's always going to be room for us to move up the acuity chain. We've seen that happen over the, you know, certainly the 20 years that I've been with the organization. Patients that I would see come into a facility that I was running, some of those still exist. If I look today and see the difference, it's just a much sicker patient with, you know, more comorbidities, with more complex needs that require more clinical capability too. Again, to Steve's point, with our locally driven model where we have clinicians and facility leaders that align with what the needs are of the hospital and add the necessary talent, equipment, services at a local level, you can achieve what's needed by our acute partners and make sure you deliver that. Moving over on the M&A side, you've added 47 new operations since January of last year, new states like Alabama and Oregon. And you are also, Tennessee is fairly new, but you're actually building some pretty significant scale there. So maybe you can discuss, you know, your acquisition strategy, how you balance entering new markets versus, you know, building that density in your clusters in existing markets. Yeah, great question. So, and there's really opportunity everywhere. You know, you mentioned the 47 acquisitions, you know, kind of the last year or so. And, you know, we probably looked at more like 500, like seriously evaluated and, you know, took a lot of time to work through that process. But that just gives you a sense for how selective we're able to be. In terms of priority, I mean, you know, the lowest hanging fruit is to grow in the markets we know really well. You have seen us do some acquisitions in California and Arizona and Texas. Really, every market we're in, there's significant opportunity to continue to add scale. There really is a lot of benefit. Steve mentioned how, you know, we have got this really strong local approach. When you can approach a hospital system like Arizona, for example, Banner Health is a major player in that market. And, you know, when we can approach Banner as sort of a network and say, we have all these different services in these different buildings and these geographies and, you know, work together with them, it really does provide a lot of benefit. That is our first priority, to grow in markets we are in, and there is lots of opportunity to continue to do that. We could just focus in those markets and still, you know, do 40-50-60 deals a year. However, you know, there is a lot of opportunity in new states as well. That is driven primarily by our leaders that have an itch to go do something entrepreneurial and enter a market that they probably have some kind of connection in. Really, every new state we go into sort of starts with someone within our organization that wants to go there. You mentioned Tennessee. You know, one of our longtime leaders has been with the organization 20 years, you know, moved his family to Nashville. He started to look for acquisitions, you know, a couple of years before we actually acquired our first building. You know, we acquired one or two. Then, like you said, we started to build a cluster there of now we have a dozen operations. A similar thing in Alabama, you know, we have one building there. One of our leaders moved there. Oregon was very leader-driven. We are in Alaska now. You know, it's kind of funny when we go into a new state, it sort of opens the floodgates to new deals that maybe sellers did not think of Ensign before and now they do. You mentioned Alabama, you know, we probably did not see many acquisition opportunities there before, but now we have a single building. In the last four or five months, we have seen more in Alabama than we probably have in our entire history. There is an effect there that we start to see additional opportunities as we go into new states. I am really excited to do that. Yeah, I would tell you in terms of priority, certainly the markets we are in and know well. Then, I would say markets that are adjacent to markets we are in is probably the next priority. You know, over time, we can continue to expand into additional regions. Really excited about kind of the southeast, you know, South Carolina, Tennessee, Alabama, you know, Georgia will be sort of a next logical step. Oregon's been a state we haven't been in for a long time. That's in Steve's area. Really excited about what we can do there. Alaska. Alaska. Not a ton of facilities in Alaska, but still really excited about, you know, what we're seeing in those markets. Gotcha. As you get deeper into the southeast and into Oregon and potentially Alaska, what do you generally see in terms of the different dynamics, whether it be labor dynamics, whether it be regulatory differences, you know, kind of how do we navigate those and what has been your experience? Yeah, Steve's perfect. You can answer that. I think the big part of it is how methodical we are before we go into a new state. For it to be an intelligent risk, there's a lot of homework that goes into that. As Chad mentioned, we've had our eye on Oregon for probably 5- 10 years and passed up on a number of deals. We didn't have the right leadership. We didn't have the right support at the time. Doing our homework on rate methodology, regulatory environment, without that, there's a lot of inherent risk going into a new state without having all of that in place. I've always appreciated the methodical approach to the intelligent risk to growing into a new state. As far as the labor market goes, for example, in Oregon, with the Medicaid rate methodologies, there's some nuance there with staffing ratios, et cetera. A standardized approach of, well, this is what we average in the Northwest. It should be the same in Oregon. Does not apply. There is a lot of detail that goes into entering a new state to do it the right way with the right leader to ensure the long-term success of that. I mean, it's why we are so selective and picky about making the acquisition be about the leadership instead of just the deal. If we let the deals lead us to new states, it would kind of defeat what we feel like is part of our playbook for success. When we have a leader that's committed to the success of a deal in a new state, we know they're going to integrate into the Healthcare Association. They're going to really understand the landscape for labor and forge the right relationships. They're going to dive into partnerships with hospitals and managed care plans and learn the reimbursement and regulatory environment really well. That has been really key to us entering new states is the, you know, kind of the first two approach of how are we going to do this successfully with the right leader in place. I guess in tangential to the regulatory environment, you know, you guys have provided some great color on your thoughts on the policy backdrop. I know you guys have some exposure to supplemental payments in some states. With the latest House activity, just want to get your latest thoughts. Anything changing your view of the policy backdrop? No, I, you know, I'm really grateful for all the support we've had from both our industry association and other leaders in our space that have joined in the effort to educate members of Congress and make sure they understand the issues and how they affect reimbursement at both a federal and a state level. A lot of members of Congress are well-intended and trying to be fiscally prudent, but sometimes there's a lack of understanding about the ripple effect that certain changes to certain programs have. We've been fortunate to have a great deal of receptivity in our efforts to really just educate members of Congress. We've been able to appeal to, you know, moderate Republicans. As you know, it's a reconciliation effort. They are kind of controlling the process. As we've been able to sit down and meet with them, there's been a really solid, you know, kind of receptivity and understanding of how and why and where makes sense. Luckily, where the bill sits currently, it's made its way into the Senate. All of our biggest concerns have been addressed. We feel like we're in a pretty good position. Of course, we're not at the finish line yet. We've got work to do to make sure it makes its way through the Senate and if it becomes a bill that passes at all. We feel really good about where we're at. We've had lots of meetings with lots of senators and members of the House, including leadership in both the House and the Senate. We feel like we're in a good place. Gotcha. I want to move on to talk a little bit about Standard Bearer and the real estate side a little bit. I know that typically with your M&A, you maybe step into an underperforming asset. Sometimes it's a fairly capital-light transaction. Now that we're looking at pickup in real estate in the first quarter, it seems it was more of a capital outlay. Maybe you can kind of talk about how you target your real estate assets and your real estate investing and what we can expect for the future. Sure. Yeah. Before I was kind of talking about just sort of geography and our priorities there, but, you know, more generally, you know, if we were to prioritize, you know, how we look at an acquisition, number one would be we want to own it and operate it ourselves, right? Anytime we see an acquisition opportunity, we try and seek to own the real estate. That is not always an opportunity. Sometimes it is a REIT or someone else that owns it. You know, our second priority would be to operate it and lease it in a really attractive lease. That speaks to sort of our operator-focused strategy. The third one would be to own it and lease to someone else. As Standard Bearer continues to grow and gain some steam, I think that third category is something that we are excited about. You know, but at the same time, you know, again, if we can operate it, we feel like we're a pretty quality operator that, you know, if you're a real estate investor, you know, the quality of the tenant is the most important factor, right, to having value in your real estate. That will be our focus. You know, I think the thing that's exciting, and we've had a couple of deals like this recently, in the past, because we were so operator-focused, we'd be presented with a portfolio of, say, you know, 10 buildings. Usually, you know, the seller wants to deal with just one buyer. You know, we're so picky as operators, we would say, well, gosh, we only want, you know, 8 of those 10. Then we would lose the deal to someone else that was willing to buy all of it. With Standard Bearer, you know, we just did this in the Northwest where we said, okay, some of these aren't a fit for us operationally, but we really like the real estate. We bought the whole portfolio and operated the portion that we wanted and then found a really high-quality third-party tenant to lease to. That is an acquisition we just announced and closed. We are starting to see more of those. I think it does open opportunities that maybe in the past we did not have. That is really exciting. Look, our mission as an organization is to dignify post-acute care in the eyes of the world. You know, we represent, you know, barely, you know, I think just under 2% of the industry. I think we are one of the larger operators out there. We can't possibly, you know, I mentioned before, we saw 490 deals in the last year, and we're only able to do 47 of them. We feel like there's a lot that we can offer the industry by partnering with really quality tenants and other operators that see the world the way we do. You know, we have a really strong balance sheet. If we can use that to, you know, yes, to generate a nice return on kind of capital, but also impact the industry in a positive way, that gets really exciting to us. We think there is a lot of operators out there that are, I mean, there are that are really excited about working with us as partners and not just, you know, a pocketbook or money or a landlord, but someone that is, you know, in the, you know, in the weeds and operating ourselves and can offer a whole bunch more than just capital. We are excited about it. Great. We're always trying to peer under the hood and get an idea of y'all's secret sauce in terms of how you make your operating decisions. You know, when we think about, you know, as such a strong operator with such demonstrated strong results, when you think about turning your real estate over to a third party rather than running it yourselves, is that decision made more on the leadership basis? Or how do you think about, you know, turning it over to a qualified third party versus managing it yourself? Yeah, that's a great question. Steve can speak to this too. But, you know, a lot of it's geography. You know, sometimes there's, you know, just leadership availability in certain areas is just not as present at the moment. And deals have to happen pretty fast. So sometimes it's just a matter of we're not quite ready to be in that particular geography. Other factors could be labor unions. You know, we don't have, you know, we're about to enter into our first union contracts in our whole organization. But, you know, this deal we just announced, there was a building right across the street from one of our existing properties. We don't have a union. This building did. And, you know, sometimes, you know, we have staff that will, you know, move between buildings. Having that union complexity, you know, was something that we did not want to, you know, enter into. That was an example. There are probably others. Oh, I would just say too that, I mean, make no mistake. I mean, we like the way we do things. We feel like we're, you know, good operators. There are a lot of good operators out there in our space and ones that are either constrained to grow because of capital resources or infrastructure or, you know, whatever the reasons might be. We do see it as part of our mission to partner with those organizations and help where we can. Not to say that they all need us to do that, but we see that both as an opportunity and an obligation. Having a vehicle like our REIT can allow us to do that. Also, just our passion for the space also drives us to get to know some of these other operators and understand some of their unique capabilities. We do not have to do it all. We think there are ways we can be partners with some of these where it is beneficial for us, but also beneficial for them and the industry. Great. Thanks, guys. I think that brings us to time. I appreciate y'all being here with us today. You bet. Thanks, Ben. Thank you.