Ladies and gentlemen, thank you for joining us, and welcome to the Ensign Group, Inc. First Quarter 2026 Earnings Conference Call. Operator provides instructions. I will now hand the conference 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 p.m. Pacific on May 29, 2026. We want to remind anyone that may be listening to a replay of this call that all the statements made are as of today, May 1, 2026, 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 as 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 REIT, which is a captive real estate investment trust that invests in health care 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. 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. 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, and they should not be relied upon to the exclusion of GAAP reports. A GAAP to non-GAAP reconciliation is available in yesterday's press release and is available in our Form 10-Q. And with that, I'll turn the call over to Barry Port, our CEO. Barry?

Our local leaders and their teams continue to be an example of excellence in health care services as they earn the trust of patients, families and their local health care communities through high-quality outcomes. As each operation solidifies its reputation in respective markets, they're not only seeing more patients, but they're also being entrusted to care for increasingly complex cases, including a larger share of Medicare, managed care and other skilled patients. This is only possible because of the extraordinary clinical outcomes achieved by our dedicated and talented caregivers. As we've said many times, our consistent financial performance is a direct reflection of a relentless patient-focused culture, one that empowers our frontline teams to deliver exceptional care in a family-like environment where people genuinely care about one another. On the census front, our same-store and transitioning occupancy reached new record highs during the quarter of 84.3% and 85.1%, respectively. On the skilled mix front, our same-store and transitioning operations, skilled revenue and days increased by 9.6% and 5.1%, respectively, over the prior year quarter, and Medicare revenue increased by 9.8% and 9.2%, respectively. We also wanted to comment on some of the recent noise around managed care volumes. What we are seeing in inside affiliated operations does not support the concern of a broad-based slowdown in skilled nursing demand. While hospital and managed care volumes may ebb and flow as patients move through the system, that volatility tends to normalize for us, resulting in consistently strong occupancy and skilled mix trends as demonstrated by our current and recent quarter results. In fact, between Q4 and Q1, we saw growth across all skilled payers. Our same-store and transitioning managed care and Medicare census increased sequentially by 6.2% and 8.3%, respectively. The primary driver of these improvements continues to be the expanding trust from the communities we serve earned through consistent high-quality outcomes. Likewise, regarding commentary around increased clinical reviews and heightened scrutiny of post-acute utilization, this is not new. Our experience over many years is that this dynamic refines demand rather than reduces it. Our admission trends have remained consistently strong. As patient acuity continues to rise and payers look to move patients efficiently to lower cost settings, we have not seen any meaningful system-wide reduction in admissions or skilled mix. The patients who truly need skilled nursing are still coming. We're simply seeing a continued shift towards higher acuity admissions, which plays directly into our strengths. We have built our model around being the provider of choice in our local markets through strong clinical capabilities, deep hospital relationships and the ability to care for more complex patient types. As payers become more disciplined, that does not reduce our volume. In fact, in many cases, it shifts volumes more specifically higher acuity volume towards operators who can deliver outcomes. It is also important to remember that Ensign's model is highly diversified across many geographies, payers, referral sources and local community partners. We are not dependent on any single payer, region or utilization trend. Even when one plan tightens in a specific market, we have consistently offset that through other market share gains, stronger referral relationships, higher acuity admissions and growth across other channels. Our clinical leaders also continue to drive outstanding outcomes, which is particularly impressive given our growth over the past several years. According to the most recently published CMS data, same-store affiliated facilities outperformed their peers in annual survey results by 22% at the state level and 31% at the county level. This is especially notable given that many of these facilities were 1 or 2 star at acquisition. Additionally, our same-store operations outperformed industry peers in 5-star quality measures by 24% nationally and 20% at a state level. In fact, we ended the quarter with 85% of all of our operations at 4- or 5-star quality measures. These results reinforce our position as the provider of choice in our markets and demonstrate our ability to create long-term value through sustained clinical excellence. This clinical strength depends on attracting and retaining exceptional talent. We are encouraged by the depth of talent continuing to join our organization. On the retention side, we're seeing improvements in turnover, stable wage growth and reduced reliance on agency staffing even with increased occupancy. We are especially proud of the exceptionally low turnover among our directors of nursing, which has declined by 32% over the past 2 years. This level of leadership stability is a key driver of consistent high-quality care. In addition, we continue to acquire new operations with significant long-term upside and expect to maintain a healthy pace of growth. Since 2024, we have successfully sourced, underwritten and closed and transitioned 99 new operations across several markets, many of which are already performing at or above expectations. We also continue to benefit from powerful demographic tailwinds, which we expect to further support census momentum that we are seeing across our portfolio. While we are pleased with our current record same-store occupancy, we are equally excited about the remaining organic growth opportunity. At 84% occupancy, we still have meaningful runway with many of our most mature operations consistently achieving occupancy rates in the mid-90% range. This embedded growth remains one of the most compelling drivers of our long-term performance. Due to the strength of the first quarter and the acquisitions we announced yesterday, we are increasing our annual 2026 earnings guidance to $7.48 to $7.62 per diluted share, up from our original guidance of $7.41 to $7.61. We are also increasing our annual revenue guidance to $5.81 billion to $5.86 billion, up from $5.77 billion to $5.84 billion. The midpoint of our earnings guidance represents a 15% increase over 2025 and 37% growth 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. Next, I'll ask Chad to add some additional insights regarding our recent growth. Chad?

Thank you, Barry. During the quarter and since, we accelerated our growth by adding 22 new operations, including 21 real estate assets, bringing the number of operations acquired during 2025 and since to 71. These recent additions include 20 in Texas, 1 in Arizona and 1 in Wisconsin. In total, we added 2,662 new skilled nursing beds, 100 senior living units and 55 independent living units across 3 states. This growth brings the number of operations in our recently acquired group of operations to 17.4% of our entire portfolio. We were thrilled to complete these acquisitions and to expand our presence in some key markets in each of these states, particularly in Texas. Like in the recent Stonehenge acquisition we closed in Utah, this Texas portfolio is made up of very new, high-quality construction in populated and growing metro areas. As we've discussed in our recent past, in certain strategic situations, paying higher prices can be justified for performing assets that have newer physical plants. And while some of those deals may take a bit longer to generate the returns we expect, we've seen these deals pay off over time as our leaders implement the proper adjustments to key clinical and financial systems, along with establishing a culture of ownership and accountability. We continue to learn from and improve our transition process and believe that those lessons are showing through in the performance of our recently acquired acquisitions. In particular, as we continue to scale, we have leadership spread across many mature markets, enhancing ability to make larger deals smaller by breaking them into bite-size pieces, transitioning in the traditional Ensign way but with a local cluster-driven plan that gives each operation the time and attention they deserve. The performance of our newly acquired operations, particularly in the last few years, shows that our building-by-building approach to transitions works for single operations, small portfolios and larger portfolios, particularly when the larger deals span several markets and geographies. While we will certainly continue to evaluate and consider any deal that's out there, we are also very comfortable growing the way we've grown over the last few quarters with lots of transactions across many states, including small deals to larger portfolios and where it makes sense, higher-priced strategic assets. As we look at the current pipeline, we continue to see opportunities that include everything from larger portfolios, landlords looking to replace current tenants, nonprofits looking to divest of their post-acute assets and a steady flow of traditional one-off deals. We have several new additions lining up for Q2 and Q3 of 2026 as our local leadership teams and their partners at the service center work together to source, underwrite and carefully select the right opportunities. We continue to have a lot of success in closing deals with sellers who are not just interested in receiving top dollar, but care deeply about the quality and reputation of the company they select to inherit their legacy, and they choose us because they believe in our mission to dignify post-acute care. During the quarter, we were pleased to complete the construction of a replacement facility at one of our high-performing skilled nursing operations in San Diego County. Grossmont Post-acute in La Mesa, California, which is located next to Sharp Grossmont Hospital, was housed in an aging building that the landlord decided to replace with new medical office space. After several years and lots of hard work, we successfully completed the construction and have moved all the patients and staff to a brand-new state-of-the-art building while also adding 15 beds to the original license for a total of 105 beds. In just a few months of operation, Grossmont has increased daily census of skilled patients from around 72 to 95. We will continue to look for opportunities to add beds to successful operations and where appropriate, to invest in newer construction in markets we know well. Our local leaders continue to recruit future CEOs for Ensign affiliated operations, and we have a deep bench of CEOs in training that are eagerly preparing for their opportunity to lead. 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 store enough dry powder on our balance sheet to fund a significant amount of growth, including adding even more real estate assets to our portfolio. Therefore, our unique acquisition and transition strategy puts us in an excellent position to continue growing in a healthy and sustainable way. Lastly, we are also pleased with the continued growth of Standard Bearer, which added 21 new assets during the quarter and since. Standard Bearer is now comprised of 173 owned properties, of which 137 are leased to an Ensign affiliated operator and 37 are leased to third-party operators. We were excited to add to our 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 the industry. Going forward, Standard Bearer will work together with our existing operating partners and new relationships we are developing in order to acquire portfolios comprised of operations that Ensign would operate and facilities that high-quality third parties are interested in operating under a lease. Collectively, Standard Bearer generated rental revenue of $36.1 million for the quarter, of which $30.8 million was derived from Ensign affiliated operations. For the quarter, Standard Bearer reported $21.6 million in FFO and as of the end of the quarter, had an EBITDAR to rent coverage ratio of 2.7x. And with that, I will turn the call over to Spencer, our COO, to add more color around operations. Spencer?

Thanks, Chad, and hello, everyone. I wanted to share 2 outstanding operations that have achieved exceptional growth through clinical excellence, strong relationships with managed care organizations and proactive leadership development. The first operation is Sun West Choice Healthcare & Rehab, a 140-bed skilled nursing facility located in the Metro Phoenix area. Sun West illustrates the ongoing improvements that a strong same-store operation can achieve by recognizing its community niche and delivering high-quality outcomes with consistent customer service. When this operation was acquired in 2018, it faced serious clinical and staffing challenges as well as a poor reputation in its health care community. However, the Sun West team led by CEO Doug Bowen and COO Michelle Norton have methodically transformed their operation into a CMS 5-star facility of choice. Like many of our most mature operations, Sun West consistently remains essentially full with occupancy increasing only slightly from 95% in the first quarter of 2025 to 96% this quarter. However, revenues grew 10% over prior year quarter, driven by improved acuity-based reimbursement and a higher skilled mix. During the same period, skilled mix days increased 21%, fueled in large part by 37% growth in managed care. The Phoenix health care market is heavily penetrated by managed care plans, all of which emphasize strong outcomes, shorter length of stay and reduced hospitalizations. In this environment Sun West has focused on differentiating itself by building consistency in staffing with care staff turnover rates far better than the CMS average for Arizona. These managed care relationships, combined with sustained excellence in outcomes, particularly for high acuity patients, have allowed Sun West to develop specialty units for underserved and hard-to-place patient populations, including patients with severe dementia and behavioral needs. Today, these special units run at high occupancy and have strengthened the facility's clinical reputation, which in turn contributed to Sun West's 43% EBIT growth over prior year quarter. Our second facility highlight, Mystic Park Rehabilitation and Healthcare in San Antonio, Texas, has made significant progress since acquisition in late 2022. At the time of transition, the facility was facing serious clinical challenges and scrutiny from state regulators. Under the leadership of CEO Osiris White and COO Selena Cervantes, the operation has been fundamentally transformed. It now achieves a 5-star rating in CMS quality measures with survey points scoring 70% better than the state average. Recently published CMS data places Mystic Park in the top 10% for expected discharge function scores from CMS, reflecting significantly stronger than industry patient outcomes in skilled rehabilitation. Also, nursing staff turnover has declined to well below the state and national averages. Operational performance has followed these clinical gains. In Q1, skilled mix days increased 61% over prior year quarter, driving 19% revenue growth and a 163% increase in earnings during the same time frame. In addition to being an exceptional turnaround story, Mystic Park also illustrates how facility level excellence enables broader growth across our organization. For example, the leadership pipeline developed at the facility has supported the recently announced growth in Texas. Because of the stable team and strong systems at Mystic Park, Osiris, the CEO, was able to transfer to lead the newly formed North Houston market, which includes 4 of the 17 facilities acquired on May 1. Selena and the remaining Mystic team have selected a San Antonio-based AIT to be the next leader. And because he completed his training in the San Antonio market, he's well prepared to lead the facility's continued progress while benefiting from the team's strong experience and established systems. This model—stabilize, improve quality, develop leaders and scale—remains central to our ability to grow while maintaining cultural and clinical standards. And with that, I'll turn the time over to Suzanne to provide more detail on the company's financial performance and our guidance.

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 compared to the prior year quarter include the following: GAAP diluted earnings per share was $1.67, an increase of 21.9%. Adjusted diluted earnings per share was $1.85, an increase of 21.7%. Consolidated GAAP revenue and adjusted revenues were both $1.4 billion, an increase of 18.4%. GAAP net income was $99.7 million, an increase of 24.2% and adjusted net income was $110.2 million, an increase of 23.9%. Other key metrics as of March 31, 2026, include cash and cash equivalents of $539.5 million and cash flow from operations of $100.2 million. During the first 3 months of 2026, we spent more than $60 million to execute on our strategic growth plan. We made these investments from a position of strength as shown by our lease adjusted net debt-to-EBITDA ratio of 1.73x 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 sustainable growth in the long run. In early April, CMS released the proposed 2027 skilled nursing facility payment rule, which includes a net market basket increase of 2.4%. This increase provides reimbursement stability and is consistent with the expectations included in our guidance. In addition, we currently have more than $592 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 179 assets, 155 of which are owned completely debt-free. They continue to gain significant value over time, adding even more liquidity to help with future growth. The company paid quarterly cash dividends of $0.065 per share. 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 $7.48 and $7.62 per diluted share and our annual revenue guidance between $5.81 billion and $5.86 billion. We have evaluated multiple scenarios and based upon the strength in our performance and 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. Our 2026 guidance is based on diluted weighted average common shares outstanding of approximately 60 million, a tax rate of 25%, the inclusion of acquisitions closed and expected to be closed through the second quarter of 2026, the inclusion of management's expectations for reimbursement rates with the primary exclusion coming from stock-based compensation and system implementation costs. Additionally, other factors that could impact quarterly performance include variation in reimbursement systems, delays and changes in state budgets, seasonality in occupancy and skilled mix, the influence of the general economy, census and staffing, the short-term impact of our acquisition activities, variations in insurance accruals and other factors. And now I'll turn it back over to Barry.

Thanks, Suzanne. As we wrap up, I want to again express how honored and grateful we are to work alongside the incredible leaders, caregivers and support teams across our organization who make these results possible. What they do every day goes far beyond metrics. It changes lives. And as we see in very personal ways, I want to share a quick example. Recently, our CFO's father, Joe, underwent a complex bypass procedure that required extended recovery at our very own Victoria Healthcare and Rehabilitation Center. The caregivers and therapists there didn't just provide excellent care. They surrounded them with the kind of coordinated compassionate support that helps them regain his strength, walk again and ultimately return home strong and safe. That team represents the very best of what we do, but what they do is not unique. Stories like Joe's are playing out every day for thousands of patients at hundreds of our affiliated campuses all over the country every single day. Patients like Joe may not choose to be in our care, but they absolutely need to be and increasingly so as acuity rises and recovery becomes more complex. The role of high-quality skilled nursing has never been more essential. The demand is real, it is growing, and it's happening in every market we serve. And that's what gives us so much confidence in our future. Our performance this quarter is not the result of short-term dynamics or simple luck. It's the result of a model built on clinical excellence, local leadership and a culture that puts patients first. And when you combine that with the demographic tailwinds ahead of us and the continued trust that we are earning in our communities, we believe the opportunity in front of us is as strong as it's ever been. Thank you again for your continued interest and support. And with that, we'll now turn to the Q&A portion of our call. Operator, can you please provide instructions for the Q&A?

Operator provides instructions. Your first question comes from the line of Ben Hendrix with RBC Capital Markets.

Great. Very glad to hear that Joe is making a strong recovery. And then I just wanted to touch on some of the clinical review commentary. I really appreciate all the commentary and definitely appreciate the — and understand the ebb and flow of skilled intensity and that the clinical review is nothing new. But just wanted to get your comments on any broad trends you might be seeing in clinical review intensity, just given that so much of the Medicare Advantage population is in plans that are focused on retaining margin and rebuilding margin this year. And, like on a related note, when managed care plans kind of see facilities like Sun West see such massive increases in skilled mix and managed care mix, does that ever trigger higher clinical review? Any comments you have there?

Yes. I just think the comments around clinical review are being a bit overblown. It's really not a new phenomenon. It's something that's been embedded and in place for a long time, especially when, to your point, Ben, acuity is high. We're used to dealing with clinical review. We have an entire team that is dedicated to providing analysis and documentation to support the care that we're providing, both proactively and then also in response to any general inquiries. That team has been in place for many, many years. We're just not seeing any of the recent comments translate into our business. We saw growth in our United business. We saw significant growth in several other payers in the quarter and across the year. Our occupancy reached record levels this quarter, and our managed care and Medicare census both increased sequentially from Q4 to Q1. So what we think is happening is that some of the hospital softness not related to the managed care piece that you asked about was episodic, respiratory weather related. That tends to normalize by the time patients move through the system. On the Optum side, we view this less as demand going away, more as demand being refined. The higher acuity patients who truly need skilled nursing are still coming. And in many cases, we're capturing a larger share of those patients.

And just a quick follow-up on the EPS guidance. We're getting some questions around the guidance raise, specifically against that sizable M&A activity that you've recently announced. Just wondering if you could help us bridge to the guidance revision, specifically how much is driven by organic growth versus M&A? I believe some concern that maybe if M&A is contributing to the growth, is there an implication that maybe the organic is getting a little softer? Or is it just some conservatism in the number? Any comments there?

Yes, I think it's a great question. I think when we look at this acquisition that we closed today, our commentary on it has been that the physical plants are really, really good shape, and Chad can add more color on that. But really the type of acquisition that we're taking is a turnaround acquisition. And so when we embed turnaround acquisitions into our guidance like we have for years, you really see that bump in revenue at a disproportionate rate to the bump in EPS. And that's exactly what we would expect. We're super excited about this acquisition, but we would expect most of it not just to hit the revenue line and not to contribute to earnings at the same rate as our existing operations, and that's very consistent with what we've always seen when we're taking a turnaround operation.

Yes. That comment really relates to the next several months. I think obviously, long term, we expect them to be very, very successful and accretive like we've done for years.

We're really excited about the guidance raise. It reflects a strong Q1 and continued execution. There is some seasonality in play for Q2 and Q3 because those are the summer months. We usually see not as high a skilled mix during those months, and costs can rise relative to revenue because acuity tends to slow down a little bit.

We base our guidance on what we expect these to do, although I think you can also look backwards and listen to our commentary about how other recent acquisitions have contributed ahead of schedule. I wouldn't be surprised if that happened. If it does, we'll revise again. But it's not necessarily conservatism. We try to reflect an accurate picture of where we think these will contribute. But obviously, we've had to update and revise as time has gone on when things have gone faster than we scheduled to.

Operator provides instructions. Our next question comes from the line of David MacDonald with Truist.

Just a couple of questions. One, can you pull the deal pipeline apart for us a little bit? I mean if we look—the average deal size feels like it's getting a bit bigger. Can you guys just make some—just give us some sense of when you look at the pipeline of deals, has the average deal size relative to a handful of years ago gotten bigger? And then secondly, are you seeing opportunities to buy the real estate in more of those deals that are within the pipeline?

Yes. Thanks for the question. I think there definitely is a trend of more and more midsized regional portfolios coming to market. There's more supply of that type of deal. But it's not that we haven't had those in the past. We've emphasized this a bit in our calls over the last several quarters as well. We've approached these larger portfolios differently than we did in the past. If you go back to 2016 or so, we did a larger portfolio in Texas called the Legend deal. At the time, it was the biggest deal we've done, and we tried to do it like a merger and left a lot of their structure in place. That took us years to unwind. Since then, we've been successful in several larger deals by breaking them into bite-sized pieces and using our cluster model and local leadership structure to take a larger deal and make it 3 or 4 buildings per cluster market rather than 20. That's increased our appetite for larger acquisitions. So it's both: we've seen more of those come to market, and I think we're more confident we can do them successfully in our Ensign way. On the real estate question, I wouldn't say there's necessarily a trend of more real estate opportunities, and it wouldn't surprise me if a big acquisition included a lot of leased buildings. Our priorities remain the same: first priority would be to own and operate it if we can; second would be to do attractive long-term leases. We have great real estate partners we like to work with, including our REIT partners and private real estate holders. We're actively looking at doing those deals too. Third priority would be to own it and lease to a third party like we did in the Wisconsin senior living deal. Hopefully that helps.

And then just one quick follow-up. On labor, can you spend a minute on what you guys are doing on recruiting and retention that's driving such success on the labor side? And if I could sneak one more in—on the ERP system implementation, is there one or two areas you would call out where that has made your life meaningfully easier or improved efficiencies meaningfully?

On the labor question, it's a focus for us as an organization, but the way it works is our data systems give us more real-time and consistent ways to measure ourselves on labor metrics. Then you combine that with our model of CEO- and COO-caliber leaders in every operation that are clustered into groups where there's consistent sharing of best practices and accountability. Those are folded into markets where data and practices are shared more widely. We've seen, for example, improvements in overtime management and agency spending. There's a synchronization of local efforts, improved data visibility, best practice sharing and service center-provided macro tools that allow people to do it more effectively at the local level. We've seen overtime improve, agency spending improve, turnover improve, and it continues to be a major focus. We're not satisfied with where we are yet, but we're really grateful for the improvements.

We implemented our ERP system on January 1, so we're in the stage of working through the first quarter and the first month closing everything out. We're not at the full efficiency stage yet. The entire purpose of the ERP is to have more efficiency, better data and more information that we can pass to the field more quickly and at a more granular level. We're excited about the implementation. Right now it might feel like a little more work than less work, but the long-run opportunity from this system implementation will be material. It will make information easier, more accessible and change the entire back-end process for years to come.

Operator provides instructions. Our next question comes from the line of Raj Kumar with Stephens.

Just thinking about the overall philosophy and evolution of the model when we think outside of SNF and senior living and all the other things Ensign does within the post-acute continuum: when we think about certain areas of interest, does an I-SNP come to mind? I know you guys partner with plans, but in terms of expanding the quality of care and the control around that, has that ever been an area of interest? Just curious on your thoughts given your footprint in the post-acute spectrum.

I'll start and Suzanne is much more knowledgeable about this. The short answer is yes—it's something we're always looking at. We participate in it in several markets and watch it closely. There are pros and cons to the model. We tend to stick to what we know we are good at and partner closely with our managed care providers, who are probably more focused on this area than a pure-play operator could be. That said, there are obvious opportunities to control certain aspects of payment and to be more of a convener in that model.

We are always running pilot programs in different markets. They all look a little different and none are a large portion of our total operations, but that keeps us nimble and quick in testing concepts. We have lots of versions of quality improvement or specialty programs and some capitation programs. They are small pilots we continue to learn from, and if one performs well, we expand. It's not just us expanding it; it's educating our operations partners in the field so they can see the value and adopt it.

I appreciate the color. Maybe from a modeling perspective, integrating these large portfolios of assets, as you think about seasonality from a skill mix and occupancy perspective and the impact of onboarded portfolios to consolidated metrics, how should we think about that for the remainder of the year?

I would say our pattern would be typical to our normal pattern, outside of the COVID years: Q2 and Q3 tend to be more seasonally light for skilled mix, with a stronger Q4.

I think that's right.

Operator provides instructions. Our next question comes from the line of A.J. Rice with UBS.

First, the company and the sector came through the one big bill discussion pretty well. We're hearing some states are a little challenged in their budgeting, others are doing fine. Just wondering if you could speak to what you're seeing in your discussions regarding Medicaid rates and the outlook. Is it sort of steady state from your perspective? And maybe give some flavor on that.

Definitely steady state right now. What we're seeing is people looking beyond 2026 and 2027 and thinking about how to navigate waters where funds might be less fluid. To prepare, we're being super active: meeting with states and representatives, educating them about the services we deliver and advocating for our residents. We feel good about where Medicaid sits today because people recognize the services we deliver and the need for those services.

You talked about the I-SNP opportunity earlier. Another area you were piloting a few quarters ago was behavioral health, which has supply-demand constraints. Any update on institutional behavioral health? It sounds like there are other demo areas you're looking at—anything else exciting you would call out?

On behavioral health, there's continued innovation. As we visit markets, there's a drive from our operators to figure out what hospitals, communities and plans need. Demand for specialized behavioral health remains strong, and we've continued to develop and add units, obtaining contracts with state Medicaid systems and managed providers that need lower-cost settings like ours. In some cases, providers are asking us to expand to meet their needs. Non-SNF-based behavioral health is not something we're doing materially. Beyond that, with almost 400 operations, many ideas come from the field. Our role is to provide the framework to analyze regulatory backdrops, true demand and supply trends. We see a lot of pilot programs, and that distributed innovation across our operators is what allows us to grow and be excited about the future.

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