Thanks everyone for being with us today. My name is Ben Hendrix. I'm the Healthcare Services and Managed Care analyst here at RBC. Very excited to be hosting Lynette Walbom, Chief Financial Officer, and John Gochnour, Chief Operating Officer from The Pennant Group. Thank you guys for joining us today. Happy to be here. Yeah, I wanted to just start off with the elephant in the room when it comes to Home Health. Clearly, we have a moratorium announced by the administration, a moratorium on new Medicare licensure. This has been getting a lot of incomings on our end, and I'm sure same as for you guys. Wanted to get your thoughts on that and how you're positioning around. Yeah. Thanks for the question, Ben, and I think when you look at the broader, what's been going on in the industry, this is not a surprise. I think the administration, Dr. Oz, and his team at CMS, have been really actively engaged in saying, "Hey. We've got to protect Medicare dollars. We've got to make sure that they're going to great providers who deliver great care for beneficiaries who need it. They saw a particular issue in California and have acted assertively. I think the moratorium reflects a more blunt instrument, a saying that, "Hey, we need to just press pause while we work through some of these more targeted enforcement mechanisms. We're going to press pause." When we look at it from The Pennant point of view, we don't see it having an immediate impact on our ability to accomplish our goals in 2026. I think from an initial enrollment perspective, we did have about 4 initial enrollments that we were planning to initiate. Most of them in rural communities where there's not a way to acquire to serve that community. It's more a situation where we needed to do a startup in order to meet a community need. I think that's why I call it a blunt instrument, is because I feel like there's a lot of communities that are not L.A. That don't have 1,000 Medicare providers that have been initiated in the last couple of years, and a moratorium affects all of those communities. We're anxious to see the administration go through its process and identify these more targeted mechanisms that we think will help reduce and eliminate fraud, waste, and abuse, ensure that those Medicare dollars go to great providers that are delivering life-changing care. I think from a short-term standpoint, we don't see an impact on our ability to meet our guidance and ability to accomplish our goals. From a long-term impact, we're going to continue to advocate for the ability for people to access care, and we think that's very important in these rural communities where we continue to see more and more patients aging into and needing our services. We'll continue to advocate for the ability to provide those services. We're grateful for the focus on combating fraud, waste, and abuse. We don't see an immediate impact on our business, but we do see long-term, a need to continue advocating for access to high quality Home Health and hospice services across the country. You mentioned a couple of rural areas where you would maybe put together some de novo developments, and that could be impeding that. Is that both on home health and the hospice side? Yep. Primarily on hospice, but one of those would be home health as well. I think our traditional de novo approach has been a hospice de novo approach. Looking to acquire an existing Home Health provider and then to add on hospice so that we can serve the full continuum of care. Again, we have several applications that were already pending that aren't disrupted by this moratorium. While we had a couple that we had intended to file in the next six months, we think we can push pause on those. without sacrificing our long-term goals. Okay. Near term, should we expect maybe a little bit of a shift towards more less rural, more established markets as we weather this or get through this and then maybe go back to the rural, or how are you thinking about your very near-term growth trajectory? Yeah. In all honesty, with the integration we're working on across Tennessee, Alabama, Georgia, with the intensive growth we had last year in the Northwest, we feel like we've got a lot of opportunity to continue to grow in our existing portfolio, to drive organic growth, and that this doesn't have any material impact on our ability to serve our communities. It just removes an opportunity to meet a need that we see. We see in some of these rural communities where they don't have as many providers, they don't have as much access to care, a place for a high-quality provider like us, who has proven capable of serving those more rural communities but can't get in because there's no one to acquire. I guess that's what I would say is, we don't see it materially impacting our ability to grow, our ability to serve both rural and population centers. There are specific areas that it will impede our ability to get there more quickly. Got you. Maybe we can step back and just talk about some volume trends more broadly. Home Health, same-store admissions have grown over 10% for five consecutive quarters. How you think about the drivers of that momentum, the sustainability? Is this hiring? Is this just unmet demand? How do you balance all that in terms of the strong volumes you're seeing? Yeah. I think it's a couple of things. First, our model is based on the idea healthcare is local, and if you best meet the needs of the local community, then they're going to choose you. I think part of that volume growth is the fact that we have amazing leaders who we've invested in tremendously at the local level, who are driving and meeting the needs of their community in unique ways. I think we have also been focused on strategic relationships and the development of innovative solutions. That can include working with ACO partners. It can include the development of our palliative and geriatric primary care programs in many of our established communities across the portfolio, where we're now able to add to our continuum, meet the needs of that community better, and therefore bring patients into our continuum of care. It can include more effective bridge programs, which is when a patient comes into our continuum through Home Health, and we identify through an evaluation of their symptoms and conversations with the family that they may be more appropriate for hospice, and help them transition to the right setting at the right time. I think the other things I'd highlight are technology. We've invested in an internally developed solution that helps identify those symptoms in 2 areas. 1 is in keeping people out of the hospital, but the other is appropriately bridging patients to the right setting at the right time. I think 1 of the things that we sort of offer our communities is, we've got this continuum of care. We can care for your patient. We can make sure that they are in the right setting at the right time to have the highest quality of life throughout that end-of-life process. I think we've also invested in our business development teams and creating a real career path for marketing professionals in the Home Health and hospice space. I think in a lot of our industry, that's been a more transactional relationship, where it's you come, you bring a book of business, you get paid on that book of business. Our feeling has been, if we exist to create life-changing opportunities for leaders, we need to do the same thing from a business development perspective. Come, bring your book of business, but also bring your unique talent, your native genius, and plug it into our model and grow with us. We want to help you develop as a person and as a leader, in addition to you being the person who goes out and drives referrals. I think that's when you think about our same-store growth, Home Health and hospice, that's what's driving it. We just had a very detailed hospice conversation with a prior company here. Your peers had a lot of pressure in 2025 with CAP. This seems to be a topic you guys have been able to manage very, very well. I assume that's mostly market related, but maybe you can give us your thoughts on CAP positioning for this year and maybe even next in the proposed rule. Yeah. Our focus, as with all things in our model, our belief is if you transparently show people the data that they need to see to manage something. They can manage it. Our finance team has done an amazing job of developing internally a CAP calculation tool that tracks everything from admissions to length of stay, to length of stay for different types of diagnoses, so that our operators have visibility into, "Here's the likely length of stay of this particular patient." They're able, with that data, to manage the CAP effectively. In most of our operations, I would say in 90% of our operations, we don't have any CAP liability, and we've got significant CAP cushion. In others, primarily in California, there's always going to be this management of the CAP because a patient is eligible for hospice for 180 days, six months if the illness runs its ordinary course. Because of the differentiation between the CAP amount and the reimbursement per day, they're only eligible to get paid for 100 days or 120 days. You have this inherent tension there that we have to be effective at managing from an operational standpoint. We always want patients to get the benefit of hospice as long as they're eligible and it's appropriate to deliver. It's been proven through a ton of data analysis that that saves the Medicare trust fund, and it absolutely enhances patients' quality of life. The CAP complicates that calculation, it's really about presenting transparent data, building relationships across a continuum of care so that you can get short length of stay admissions from hospital systems and from oncology programs, as well as longer lengths of stay where patients' illnesses are identified earlier, and they get the full benefit of hospice. Got you. In the 2027 proposed rule, it seems like we got a 2.4% overall rate update proposed, and that's in line with what the CAP increase is. Any thoughts on what that actually translate to for your footprint in terms of the rate? Is it above or below the 2.4 would you expect? It's right in that area. Our early calculation says maybe just a little bit higher, which is abnormal for us. We normally end up just a little bit lower. It's right in that 2.4%-2.6%. Got you. I wanted to move back to the Home Health for a second. You've noted some softness in Medicare fee-for-service volume, or other providers have. Your fee-for-service volume has held up pretty well. Can you discuss the strategies you have on the fee-for-service side and episodic reimbursement? Yeah. I think really for us, it goes back to what I was saying earlier. It's about meeting the need of the community, and when you meet the need of the community, you get chosen. in our industry right now, when you're the provider of choice. You're the employer of choice, so you have the staff, you're in a position to choose which referrals you accept, because there's more referral volume than there is capacity to serve. I think where we have established ourselves as a provider of choice in the community, we have the opportunity to accept more Medicare fee-for-service referrals where that's the best payer. When I look at that number, I think that reflects the strength of our local teams at meeting the needs of the community in a way that ensures that they have the ability to choose which referrals to accept. Where there's enough volume that it's really the constraint is talent, the constraint is the ability and capacity to serve, and where we can meet that and we can be the provider of choice, I think you're seeing that Medicare trend upwards. Now maybe that could be a full way into transitioning to the ramp-up of the Amedisys assets and how that's going. It seems like we're bringing in this big portfolio that we know comes from a group that has traditionally had a little bit more Medicare Advantage pressure. It seems like with a more of a local contracting focus, you guys have been, and some of your smaller Home Health platform peers have done a better job of managing that. I just wanted to just get your thoughts, and I know we've talked about this a lot, but your thoughts on how that's translating over to the integration of Amedisys and overall how that's going. I think when we're looking at that transition, it's going really well. We've had 3 waves that we've gone through that we've transitioned into our EMR, and that has been, while we see a bit of a dip in census as we're transitioning, we're seeing that rebound and we're going through our last few waves over the next 2, well, Q2 and Q3. We're bringing more power to those local operators to understand and really understand the drivers of what the revenue is, what their rate is for each of their payers, they're seeing and being able to better identify which patients they should take to drive some of that revenue. I think that is the piece that is really helping with the fee-for-service side. I also think that as we look at what our payer team is doing internally at the service center, the negotiation of those contracts as we're negotiating with payers in our Tennessee, Alabama, and Georgia markets, new markets that we're going into, we're seeing success in some of those negotiations and being able to drive rate there. Then nothing from the moratorium that's impacting this larger platform transaction specifically at all. Yeah. Not right now. I think our goal with that platform, it's a heavier, it's about two thirds Home Health, one third hospice. Our hope is over time that we would be able to expand the continuum to include hospice, which in Tennessee in many cases means doing de novos. We're so focused on integration right now that over the next six months, I don't think it has any relevance to us accomplishing our goals there. Mm-hmm. To what extent have you guys been able to kind of develop the Ensign Pennant continuum in that market? Yeah. It's actually something we're really excited about. I think we have a number of high quality, skilled nursing partners and Ensign having buildings out there was one of the things that made it attractive for us to go there. We share DNA, we share an approach. It's been exciting to work with, their leader out in Tennessee, started at Ensign at a very similar time to the time I did. We've been excited to collaborate with them and to work together in presenting to the southeast, this continuum of care that has had tremendous impact in Arizona and California and these other markets. To be able to take that out to Tennessee and offer something different to our referral source partners there is really exciting. It will really get off the ground once we're through the integration and into our systems where we can appropriately share data under value-based enterprise guidelines and everything like that. Great. I want to switch over to Senior Living. You guys saw really strong 1Q REVPAR growth, a little over 11%, is ahead of your mid-single digit growth outlook for the year. How do you plan on managing rate and occupancy for the balance of the year? I think as we look at both of those factors, rate and occupancy. We look at what our portfolio is doing and how much we've grown in the number of assets, I think as we look at those newer operations that we've brought in, they're lower occupancy generally. We see a lot of opportunity to drive occupancy there with some rate as we're looking at where their rates were at when we brought them on and where it's appropriate. I think that we'll see some opportunities for real occupancy growth on those operations. I think as we look at the rate side, one of the things that we've been focused on is making sure that we are adequately assessing the needs of our residents, and doing that on a regular basis to make sure we're addressing and being able to charge for the additional cares that we're providing as they are needing more care. That's another piece of the rate component that we continue to manage in both our same-store and new-store buildings. Can you remind us what kind of REVPAR you guys are able to pass through on some of your higher occupied facilities, higher occupancy bands, maybe above 80? When we're looking at that higher than 80%, and I think really for us, it's when we get to that 77%-78%, we're able to start driving more to the bottom line. We're seeing about a 30%-40% more flow-through on that piece as we're able to drive that occupancy. When we talk about occupancy and what our long-term target is, it's really getting to about an 85% occupancy. We do have buildings that are fully occupied, and we have wait lists on. I think that as we continue to acquire new assets that are at that lower occupancy, we'll see some noise on our occupancy level, but still driving towards that 85%. You guys have been known for pushing through some pretty impressive rate updates year-over-year, and past three years or so, especially. Can you talk about receptivity in your communities? How easy has it been? How has it impacted the move out, move in balance? I think as we are able to differentiate ourselves in the community as the place where you want to. or have your parent go to as they're needing to be in a place where they're receiving some assistance with their acts of daily living. I think that is one of the differentiators that has allowed us to make it easier for those residents to understand why there is an increase on the private pay side. I also think that on the Medicaid side, we've been able to find programs that have allowed us to drive some of the rate on the Medicaid side as well. There's a sophistication element as we've been operating this business over the last six years, we've been able to build out within our data function, a lot more sophisticated tools for measuring the market and what the market can bear. In some cases, we found that our rates were significantly below the market, and that's given us an opportunity to drive those rates closer to market value. We think we provide a really great medical service, and a home-like environment that's really attractive to a lot of families, and they're willing to pay for it. Right? We deliver the value, and they're willing to pay for it, and I think that's what's been so helpful. There's also this data component of making sure that we price right for the community we're in so that we can continue to move the occupancy dial. Mm-hmm. Lynette, you mentioned, I think, some of the clinical type services that is in there that is helping with the rate. Can you talk about to what degree you charge specifically for those services, or is that a service you provide that kind of floats the broader boat in terms of rate updates? When we look at the components, there's the flat room and board piece. Then there is a piece as we start to do more assistance. Again, it's not the medical assistance, but it's assisting with those acts of daily living. that we're getting the additional services or the additional fees for. I think that, as we adequately assess that, we're able to drive more. I think previously, those assessments weren't happening at a regular rate where we were able to drive that piece as we were talking to the family members of those residents, the residents themselves. Now, as we're having those communications on a regular basis, they're seeing the additional benefit their parent is receiving, and understanding why that rate is increasing. I want to talk about CapEx a little bit, and I know that with your strategy, and turning around these underperforming facilities, you're probably going to have a lot of EBITDA enhancing CapEx in the overall mix. Maybe you can talk about how you think generally about CapEx per member, and the split between maintenance and maybe EBITDA enhancing. On the CapEx front, we've acquired recently a couple of buildings that needed significant CapEx. for us to be able to fully occupy some of those buildings. We've renovated floors, that's a significant component, especially as we're looking at 2026 of what our CapEx spend will be. Will be full renovations of some floors on the buildings that we acquired at the end of Q4, that will be a piece of that. When we look at the rest of the CapEx spend, I think one of the pieces that we really are focusing on is how can we make this the place when a family's coming in that they look at and go, "This is the right home for my parent for them to spend the last years of their life." That's a piece that when we're seeing additional spend there over just the normal maintenance and just upkeep. I think when we look at 2026, we will have additional spend on both of those 2 factors of increasing the attractiveness of our buildings to residents as they're coming in. Also, some of these buildings that we acquired at a really great value. we'll see additional spend there. Got you. Just maybe a little bit of a macro question with the higher interest rates and housing prices, real estate transaction volumes kind of remain low right now. How has that impacted, would you say, your move-in activity, and would you expect a turnaround in rates to materially increase move-ins or change the dynamics that you're seeing in your markets in any way? I think a change in rates will drive some additional volume coming in. I think as we look at some of our population in our communities, we do have some Medicaid buildings where that's not felt as much, where these residents are in need of a home-like setting. The states that they're in have recognized that if we can keep them in these lower cost settings. in an assisted living setting versus in a higher acuity setting, they're able to save money from a state basis. I think that piece has allowed us to still drive occupancy on the Medicaid front, and I think it plays a slightly different factor than on the private pay side. Got you. Just one more macro on just wage inflation overall. I think we just talked to a hospital operator that saw a little bit softer wage inflation in the first quarter, but still expects maybe 100 basis points over pre-COVID levels. Is that in line with what you guys are expecting for the year, and how are you thinking about that? It's definitely what we experienced was slightly lower. in Q1. Still expecting probably around 5%-6% wage inflation throughout the end of the year. I think that we'll see some pressures there as some of the macroeconomic environment is impacting that wage inflation. Great. Well, that brings us right to time. Thank you guys very much for joining us today, and appreciate you visiting. Thanks, Ben. Thank you. Appreciate it.