Ladies and gentlemen, thank you for joining us, and welcome to The Ensign Group Q3 Earnings Call. [Operator Instructions]. At this time, I would like to turn the call over to Mr. Keetch. Please go ahead.

Thank you, operator, and welcome, everyone. We filed our earnings press release yesterday, and it is available on the Investor Relations section of our website at ensigngroup.net. A replay of this call will also be available on our website until 5:00 p.m. Pacific on November 30, 2025. We want to remind anyone that may be listening to a replay of this call that all statements made are as of today, November 4, 2025, and 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. 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. 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. Ensign also owns Standard Bearer Healthcare…

Thanks, Chad, and thank you all for joining us today. We're pleased to report another record quarter in several key areas. Before we jump into some of the financial highlights, I do want to provide some more detail about the primary driver of our success, which is the extraordinary outcomes achieved by the dedicated and talented clinical teams. While we are always trying to highlight our clinically driven culture, sometimes the financial outcomes take the forefront on calls like this. We do feel, however, it's important to point out again that our clinical performance continues to be the key differentiator for us. Simply put, our consistent financial results would not be possible without a relentless patient-focused culture that strives to deliver the highest quality clinical outcomes. According to the most recently published CMS data, same-store Ensign affiliated facilities outperformed their peers in their annual survey results by an impressive 24% at the state level and 33% at the county level. This exceptional performance is not just a snapshot. It reflects the sustained clinical excellence of our local leadership teams and caregivers. In that same CMS data set, Ensign-affiliated operations also maintained a 10% advantage in overall 4- and 5-star rated buildings when compared to their peers. What makes this especially notable is that the majority of these communities were 1- and 2-star facilities at the time of acquisition. Together, these results demonstrate our consistent ability to elevate quality of care, strengthen operational execution and create long-term value across our portfolio. We can't emphasize enough how hard our teams are working every day to give our patients and their families the best service possible while developing and sharing best practices with their peers in their own clusters and markets and beyond. These efforts are bearing fruit and showing through in several…

Thank you, Barry. We accelerated our growth by adding 22 new operations, including 10 real estate assets during the quarter and since. These include 2 larger deals, an 11-building portfolio in California and a 7-building portfolio in Utah. It also includes some single facility opportunities with one in Alabama, one in Wisconsin, one in Iowa and one in Idaho. In total, we added 1,857 new skilled nursing beds and 109 senior living units across 6 states. This growth brings a number of operations acquired during 2025 and since to 45. We are thrilled to complete the 11-building portfolio in California during the quarter after many months of preparing to transition these operations. These new acquisitions allow us to serve areas of California that we've been looking to enter for years. Consistent with other similar regional portfolios we've acquired in the past, our local team is prepared to execute on their specialized building-by-building transition plans several months in advance. So far, we've been very pleased with the progress in these transitions. As long-term operators, we've never sold a skilled nursing operation. When we agree to operate a new facility, we make a commitment to the staff, patients and the larger health care community that we are there for the long haul. Our company was founded in California, and these additions only serve to deepen our commitment to the growing populations of seniors in this great state that will benefit from our high-quality health care services over the coming decades. We were also thrilled to close on the Stonehenge portfolio in Utah. We have admired these operations for many years and are honored to continue their legacy as one of the most reputable providers in the state of Utah. This strategic acquisition adds high-quality, newer constructed properties to our existing footprint and…

Thanks, Chad, and hello, everyone. As always, we'd like to share a few examples of how operations in various stages of their maturity are contributing to our outstanding results. It's the aggregation of achievements like these that comprise the Ensign story. And we believe these examples are the best way to explain how we produce consistent results over time. As Barry and Chad both mentioned, one of the biggest drivers of Ensign's consistent growth that our same-store operations are continually pushing for quality and improvement year after year. A great example of that diligence is Beacon Harbor Healthcare & Rehabilitation located in Rockwall, Texas. Beacon is led by Executive Director, Cory Blomquist, and his clinical partner, COO, Don Thompson, who has guided a remarkably stable leadership team since the facility joined Ensign back in 2019. Beacon has long been a strong clinical and financial performer, and the team has been executing a thoughtful multiyear strategy to make the facility the clear provider of choice in their community. First and foremost, they've focused on taking care of their caregivers. Despite operating in a tough labor market, Beacon enjoys turnover well below state averages, runs low overtime and hasn't used a single nursing agency shift all year. Because their staff feel valued and supported, that care naturally extends to their patients. Second, the team has maintained their 5-star CMS quality rating, while growing their reputation for clinical excellence. They've also expanded their medical partnerships, adding cardiology, pulmonology and nephrology specialists and strengthened relationships with local hospitals, which enabled them to participate successfully in multiple ACOs and expanded managed care partnerships. The results speak for themselves. Occupancy has increased from 69.4% in Q3 of 2024 to 77.7% in Q3 of 2025, with Medicare days up 11% and managed care days up 21%. As…

Thank you, Spencer, and good morning, everyone. Detailed financials for the quarter are contained in our 10-Q and press release filed yesterday. Some additional highlights for the quarter include the following: GAAP diluted earnings per share was $1.42, an increase of 6%. Adjusted diluted earnings per share was $1.64, an increase of 18%. Consolidated GAAP revenue and adjusted revenues were both $1.3 billion, an increase of 19.8%. GAAP net income was $83.8 million, an increase of 6.9%. And adjusted net income was $96.5 million, an increase of 18.9%. Other key metrics as of September 30, 2025, include cash and cash equivalents of $443.7 million and cash flows from operations of $381 million. During the 9 months ended September 30, 2025, we spent more than $240 million to execute on our strategic growth plan, most of which have been in the works for months. We made these investments from a position of strength as shown by the lease adjusted net debt-to-EBITDA ratio of 1.86x after taking these investments into consideration. Our continued ability to maintain low leverage even during periods of significant growth is particularly noteworthy and demonstrates our commitment to disciplined growth as well as our belief that we can continue to achieve growth in the long run. In addition, we currently have approximately $593 million of available capacity under our line of credit, which, when combined with the cash on our balance sheet, gives us over $1 billion in dry powder for future investments. We also own 155 assets, of which 149 are held by Standard Bearer and 131 of which are owned completely debt-free and gaining significant value over time, adding even more liquidity to help with future growth. The company paid a quarterly cash dividend of $0.0625 per share for common stock. We have a long history…

Thanks, Suzanne. As we wrap up, we just want to reemphasize how grateful we are for our operational leaders, our clinicians, our field resources, our service center partners and most importantly, our frontline staff. So much is being done every day to improve the lives of those we care for, and those stories inspire all of us. Their level of dedication in creating an amazing experience for our residents and one another is truly remarkable. They are on a mission to dignify post-acute care in the eyes of the world and they show it through their collective ownership, which has led to these results. Looking ahead, we couldn't be more optimistic about our ability to continue our steady path forward as we build up the momentum from this quarter. And with that, we'll now turn it over to the Q&A portion of our call. Operator, would you please provide the instructions for Q&A.

[Operator Instructions] Your first question comes from the line of Ben Hendrix with RBC Capital Markets.

I appreciate the commentary about the managed care growth. How should we think about the room to run on the skilled mix side, specifically in the same-store portfolio? And what have you guys seen as a sustainable like fully ramped skill mix in some of your higher-performing facilities? Maybe a Beacon would be a good example of that?

Yes, it's a great question. I mean, I guess I would point you back to just the growth we've seen over the past several years. It's a steady and consistent growth and one that we expect to see continue. I mean, certainly, when you look at it on a same-store basis, 5.1% growth is a big jump in days. But it's -- as you look backwards, it's not entirely abnormal when you look at different quarters. But we are pleased with how it's growing, and it's growing not just in managed care, it's growing in Medicare as well and other skills. So look, I would tell you, just fundamentally, it's -- that's our business. We -- when we dive into these transitions and even look at how we continuously evolve on a same-store basis, the constant thought is how to add more services that meet the needs of our acute providers and our managed care partners. And so what you see is kind of a result of what we all work towards. Our operators are thoughtfully engaged in discussions with these partners to figure out what services are needed, how to add new skill sets, new programs, new capabilities that allow them not just to take the patients, but to achieve the outcomes that are being sought. Spencer or Suzanne, do you guys have any other comments you want to add to that?

I would just add, you referenced Beacon, the example that I shared earlier. I would say in a lot of these facilities, you don't see necessarily a cap happen even after 5 years. There is potential, for example, in Beacon for that skilled mix to continue to ramp up. There's still over occupancy potential as well. But I would say we have so many of our facilities that are more mature, but still have substantial upside on overall census, but especially on skilled. That really is, like Barry mentioned, when you increase your clinical capacities and you climb the acuity chain, you're going to see that skilled growth even faster than your overall growth. And that's what I hope and I expect we'll continue to see in coming years.

If you look at it from a days basis, that same store and the current quarter is saying that only 31.7% of our same-store days are from skilled. And so the opportunity that we have to grow skilled across the same-store portfolio is very large, and that's why we get super excited about the organic growth not just from the skilled mix, but also from the occupancy mix, as we said in our prepared remarks, sitting at only 83% and that opportunity to have basically tons of buildings actually added if we sold it up to the markets that Barry mentioned.

Appreciate that. Just a quick follow-up in some of your newer markets, like particularly I was saying about Alabama as you expand into that market. Can you talk about the managed care contracting environment that you see initially in those types of new markets? And how much you comment on how much of a lift it is to try to get those -- that contracting backdrop up to par with some of your more mature markets?

I'll start and others can add in. It's a process, right? I mean I think, we have relationships with a lot of the contractors because in some of these states like Tennessee, there is overlap with other states that we're already in, but it still takes time to get those contracts in place, and it takes time to make sure that we're ready for the patients, right? As we talked about in the prepared remarks, we're in a clinical business and growing our clinical care sets takes time. And then those partnerships to bond take up the time. And so again, you see acquisitions coming in at that lower skilled mix, you see them at lower rates. And then over time, we're able to grow it.

Your next question comes from the line of A.J. Rice with UBS.

So on the -- just a question maybe on the deal activity that you've seen this year. It sounds like the California and the Utah deals, were things that you've been pursuing for -- or thinking about for quite a while. And I wondered if there is anything in the current environment, that's allowing some of this deal activity to come through, that seems like it's on a little bit of a heightened pace is our expectations between buyers and sellers as to pricing or whatever more in sync now. And you mentioned a couple of markets where you were seeing expectations elevated. I wondered are there are other buyers stepping in? Or are those deals just not getting done at this point?

Yes. Great question. So on the deals that we were able to close, I wouldn't say there's any special market conditions that made these happen when they did. I think it's just a matter of thinking of the Utah deal as an example, the seller there, I mean these could be pretty emotional decisions for these sellers that have built these businesses over many years. And for him, and there's a couple of owners. But I think it was just a long process of kind of preparing themselves to sort of sell their business and move on to something else. And so in a lot of these cases, it's very much driven by who they're choosing to inherit their legacy. And so yes, that's kind of that example. California, obviously, that was unique because that was a portfolio that had about 30 buildings in it, and we were just taking a portion of it with the 11 buildings. So that was complicated just because there were so many moving parts with multiple operators, all trying to get their licenses, et cetera. So in terms of some of the other states, I mean, we definitely have seen pockets of pricing that we think is not supported by the fundamentals. Texas has been one of those where we've seen some financial buyers come in and start to cobble together portfolios at prices that just don't make any sense, long term. And so our focus, A.J., is just we're going to stay disciplined. And as Barry mentioned, we can have a choppy deal environment. But because of our multiple levers we have to pull, we're not dependent on deals just to continue our path that we've been on. So really excited about the deals we were able to close this year. And we already have some lined up for -- we have some that will close yet this year. And then we have some that are lining up for Q1 of next year. Kind of hard to predict beyond that, what the pipeline for '26 will look like. But I think our approach will stay the same. And we're opportunistic in our approach and pricing is a major factor, and we'll just stay true to our principles.

Okay. Maybe one other area. We talked before, and it seemed like it's more in the early stages, demo stages. But with this tightness in capacity and behavioral health, it sounded like you had some managed care companies asking you whether you could potentially take some of those residents, they're having trouble finding places on an inpatient psych unit or a facility to place them. I wondered if there was any update in those discussions? And are you seeing any traction with that?

Yes, lots of traction, A.J. We continue to add behavior units in several of our facilities in states like Arizona and California. We've got long-standing relationships with county programs with managed care partners and we continue to build on those and add more capacity as they have demand for it. It is certainly an area that we've got a lot of experience and success with and one we hope to continue to look at growing.

Your next question comes from the line of Raj Kumar with Stephens.

Yes, I appreciate all the commentary on the clinical and quality performance differentiation for Ensign. Maybe just kind of wanted to focus on the higher acuity and the skill mix uptrend over the past few years. And overall, when you kind of look at your local markets, do you get a sense that your facilities are taking market share from other care settings, kind of thinking about inpatient rehab facilities that serve more higher acuity members. Do you get a sense that there's some market share gain from that? Or is it just predominantly being driven by just the demographic demand trends?

Yes. I wouldn't say that there's a major shift between care settings necessarily. I mean, remember, we operated as an acute LTAC and we -- while there are certain patients that we could take in a skilled nursing setting, I wouldn't say there's a massive shifting of settings necessarily. I think it's more a function of just the increasing demand for higher acuity patients. We're seeing -- when you look at the demographics you're seeing certainly more patients in our target demographic, but we're also seeing more chronic illnesses and more comorbidities with our patients. And that's driven us to make sure that we adapt and can pivot and make sure that we've got the right training, the right personnel, the right ability to care for those patients and continue to add more and more of those complex services.

Got it. And then maybe just one more on kind of the organic growth potential ahead that you framed in your prepared remarks. Just maybe wondering if you could frame it from a market share perspective in terms of what the market share is in your mature markets? How much more room there is on that front? And then kind of maybe thinking about those transitioning and newly acquired facilities and the market share gain potential there?

Certainly, the organic opportunity is obviously something we pointed out and for good reason. There is massive upside in every one of our key markets for growth as we continue to develop and evolve. Suzanne mentioned establishing those managed care partnerships and how that takes some time. And as you kind of get through those hoops and establish those relationships, those gains happen over a long, long period of time. It's not something that happens in a year or even 2 years. It's something that happens over many years. Because even as you add new services, you've got to make sure that the results align with the addition of those services and that your partners, especially our managed care partners are satisfied with the outcomes that we're getting. So it's a long-standing evolution, but there's a ton of upside. We try to point out in our examples, how even some of the most mature buildings continue to make those gains. That's why -- there's usually at least 1 or 2 examples of buildings that we've had for a long, long period of time like Beacon, that have continued to evolve over the course of almost 10 years now and see gains, not just in an overall occupancy standpoint, but growth -- continued growth in skilled mix as they refine and adjust and add new services. So I don't know, Spencer, anything you want to add to that?

I think that's great. And there really is -- there's also this tailwind that's been going for a long, long time that we're working hard to make sure that we position ourselves right for. And that's this desire of payers to find the lowest-paying setting where high acuity services can be offered. And whether it's the latest ACO models that come out from CMS or whether it's just managed care doing what they do, that's something that really positions us to continue to do what Beacon is starting to do. They're part of a couple of ACOs, by example. As we continue to position ourselves as a high-quality, low-cost alternatives to some of these other settings, it really makes a difference and it gives us a lot of hope for the long run.

Your final question will come from the line of Clarke Murphy with Truist Securities.

So just wanted to come back to you guys continue to deliver really solid results and your newer facilities have been a particular area of strength. Can you just kind of give us a sense for if there are any common themes behind how quickly your new facilities are contributing to your overall results? And then I kind of wanted to just touch on your expansion a little bit in the Southeast. Anything you guys have noticed in that region that's meaningfully different than you thought or expected in terms of demand trends, labor availability, ability to attract clinical talent or just kind of anything else in the Southeast?

Maybe I can start a little bit and then Barry and Spencer can add in. I mean, I think when you look at that recently acquired bucket, we -- after the acquisitions that we just announced this week, we'll have 68 locations in that recently acquired bucket. And so when you were looking at the revenue contribution, it's quite significant compared to prior years with over mix. If you just look at through the quarter, we had about 15.5% of our revenue coming from that recently acquired bucket, and it will be even higher [indiscernible] in Q4. It's a large portion of what we're dealing [indiscernible] acquisitions been contributing. Now we've always said when they first come on with us, it takes a while to turn. And I think the managed care comments that we've been talking about, and that process that we've been talking about, and those clinical systems that we've been talking about are all part of that. And so that contribution at the beginning is pretty light when you start to go down to the bottom line, but over time, it grows.

I mean I think if you zoom out and look at our margins, in spite of the fact that these new acquisitions, and there have been a lot of them aren't really contributing nearly what they should be or what they will, our margins have stayed steady, which speaks to how well they were transitioned because usually, we see somewhat of a drag when we acquired the pace that we have been over the last many months. So they're certainly ahead of schedule from that perspective, but I would tell you that they're nowhere near what their potential will be, obviously. But contributing in a way that is pretty exciting for us as they come in ahead of their pro forma expectations. But as you look at the Southeast and our growing portfolio in that market, we're pretty excited about it. All of those transitions in Alabama and Tennessee have been really, really good transitions. They're not all contributing yet, but we see the potential. We have some amazing leaders out there, a couple of great market leaders and also some really great facility leaders who are really kind of moving the dial and showing some pretty significant signs of what we could be out there, which gives us a lot more confidence to keep growing out there. We continue to look for opportunities to strengthen that Southeast portfolio and add some more buildings.

Yes, I'd just add to your first question about, is there a process change? When you understand how we acquire, the process really is, you've got -- it's operations driven. You've got, in any given market, a large amount of operators and clinicians that are part of the acquisition, underwriting and transitioning process. And as you'd expect, as we have all those people doing it and as we've taken on deal over the last 4 or 5 years, we've learned a lot. And that gets shared. And our job is to make sure that there's a forum for best practice sharing. And we think what you see with some of these is that you see lessons learned that are being applied. And so while we're not guaranteeing that all acquisitions will go ever more smoothly. On the aggregate, you're seeing good practices from operators that are shared widely and then put into practice, and we've been really pleased with what's come of that with the speed of our improvements.

Great. And then just another quick one for me. Just -- I appreciate some of the higher-level labor comments that you guys gave. But is there anything that you can tell us a little bit more specifically in terms of metrics around wage inflation, turnover? Are you guys still not using any contract labor to achieve continued solid results? And just anything that you guys are doing on the labor front to drive improvement?

Go ahead, Spencer. You can start, and I'll follow up.

Yes. I'll start maybe really granularly and then we can go up from there. We are using some contract labor. It's very, very minimal. It's less than 1/5 of what we used just a couple of years ago kind of in the staffing crisis. What we tend to see is our new acquisitions of the 3 buckets tend to use the most. It's still relatively less than it used to be. But our same-store is very, very, very minimal. I mean it's the small minority of our same store that has any contract labor right now.

Yes. And just to add, certainly, it's close to pre-COVID level. But I would add that wage inflation is back to normal levels, low to mid-single digits. And as we saw before, turnover is probably, I think, on its fourth year of decline for us and just really solid overall labor trends.

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