Thank you for waiting. My name is Eric, and I will be your conference operator today. I would like to welcome everyone to the Sonida Senior Living Second Quarter 2025 Earnings Call. I will now turn the call over to Jason Finkelstein from Investor Relations. Please go ahead.

Thank you, operator. All statements made today, August 11, 2025, which are not historical facts may be deemed to be forward-looking statements within the meaning of federal security laws. The company expressly disclaims any obligation to update these statements in the future. Actual results or performance may differ materially from forward-looking statements. Certain factors that can cause actual results to differ are detailed in the earnings release that the company issued earlier today as well as in the reports that the company files with the SEC from time to time, including the risk factors contained in the annual report on Form 10-K and quarterly report on Form 10-Q. Please see today's press release for the full safe harbor statement, which may be found in the 8-K filing from this morning at the company's Investor Relations page at investors.sonidaseniorliving.com. Please note that during this call, the company will present non-GAAP financial measures. For reconciliations of these non-GAAP measures to the most comparable GAAP measure, please see today's earnings release. If you'd like to follow along during today's call. You can find Sonida's second quarter 2025 earnings presentation in the Investor Relations section of the company's website. In addition, we have included supplemental earnings information within our presentation consistent with prior quarter releases. On today's call, I am joined by President and CEO, Brandon Ribar; and Chief Financial Officer, Kevin Detz. At this time, I'd like to turn the call over to Brandon for opening remarks.

Thank you, Jason. Good morning, and thank you for joining us on our second quarter earnings call. Entering the year, we outlined a plan to deliver year-over-year net operating income growth in line with the high end of our peers. And as we approach the last third of 2025, we remain on track to achieve these goals. The second quarter of 2025 continued to deliver growth on both a sequential and year-over-year basis. Adjusted EBITDA grew 26.1% year-over-year in the second quarter, reflecting our ability to maintain G&A levels while driving NOI growth despite a difficult year-over-year comp. Same-store net operating income grew 1.8% year-over-year and nearly 4% sequentially. On a total portfolio at share basis, NOI improved 5% sequentially. The year-over-year NOI growth was considerably slower than recent quarters driven by the challenging comp of an especially strong NOI margin in Q2 2024 as well as some specific challenges over the past quarter. Kevin will elaborate further on the details of the results, but I want to touch on a few key elements of the past quarter that we do not expect to repeat moving forward. First, our business experienced an unusually high uptick in resident deaths with resident move-outs exceeding Q2 of 2024 by 18% in our same-store portfolio, limiting our year-over-year occupancy growth. Our clinical teams implemented an enhanced response process with more targeted efforts to address risk in our resident population, especially in those communities with elevated move-outs. These efforts contributed to improvement in the back half of the quarter, and these improved processes will remain in place moving forward. Resident length of stay has slightly increased overall this year and remains an area of intense focus. Combined with a 4% year-over-year increase in quarterly same-store move-ins and strong lead volume, we ended the quarter positioned for strong summer growth, which I will touch on in a moment. The second component of the NOI comparison with the prior year was the completion of significant investments in technology that have improved the quality of our operations and resident programming but created a cost drag when comparing year-over-year. We expect to see a continued return on these investments moving forward, driven by both rate and level of care fees as well as further benefiting our labor management practices. Finally, we completed significant changes to our operating and sales support overhead structure to further invest in our sales and marketing capabilities while maintaining G&A levels flat on a run rate basis. To improve consistency of systems, process, and communication across the organization, we reduced our operating structure from 3 to 2 divisions while investing further in our sales and marketing and training capabilities. These changes allow us to more quickly integrate new communities into the portfolio and drive successful sales and clinical practices across the business. Three months into the change, we are clearly seeing the desired outcomes, and I'm proud of our team for not just minimizing the disruption to the business but reacting nimbly to drive accelerated growth thus far in Q3. At the end of July, we had a record high occupancy for our same-store portfolio of 88.2%. This positions the business for a strong back half of the year and for continued sequential NOI growth in Q3. I'm also encouraged that we achieved growth in June and July while also driving our average rate for RevPAR to the highest quarterly level in the portfolio's history in Q2. These two key metrics position the business to deliver significant revenue and margin growth in the back half of the year and beyond. Switching to performance on the acquisition front. Our portfolio of 19 operating communities acquired in 2024 recently reached another milestone at the end of July, finishing the month above 82% occupied at share for the first time. The increased occupancy from a baseline of 77.5% on November 1, 2024, at the time we completed the last of our 2024 acquisitions, combined with ongoing rate growth should accelerate NOI growth in this segment for the second half of 2025. Kevin will provide further detail on the expense side of the business within the acquisition portfolio. Overall, the transactions remain in line or exceed underwriting on the whole. Our strategic inorganic growth plan remains on track as we completed two acquisitions in Q2 and today announced the third acquisition set to close in Q3. Each of these acquisitions reflect our commitment to purchasing high-quality, newer vintage assets in strong markets where our operating capabilities can drive significant NOI growth. We continue to identify deals with stabilized cap rates exceeding 10% while densifying in target markets leveraging our G&A and the strength of our regional operating leadership. Finally, in July, we celebrated the opening of our newest community located in Cincinnati. The community was purchased at the end of 2024, and we obtained licensure followed by welcoming 11 new residents from our waiting list last month. Before I turn the call over to Kevin, I'll spend just a few minutes on our sales efforts and team development, both critical to Sonida's growth story and bright future. On the sales front, we invested in marketing, sales training, and regional management roles in Q2 and have seen immediate results from improvement in each phase of the sales process. Lead volume in July exceeded our average for the first half of 2025 by 16%, driven by enhanced digital marketing processes. More importantly, digital leads through non-aggregator channels increased by 48% in July, and move-ins through Sonida channels comprised 67% of the total. The bottom line is that our move-ins hit an all-time high without increasing reliance on third-party paid referral relationships or material discounting and concessions. These additional resources will focus substantial time and effort on the outlier performers within the total portfolio and will enhance our capabilities for accelerating performance in new acquisitions. Our bottom 10 communities in occupancy, including 6 acquisition communities acquired with significant vacancy, represent one-third of our total vacant units. Each community is located in a growing market with a strong opportunity for improvement in the second half of 2025. Additionally, nearly half of our communities remain over 90% occupied with a record 8 communities operating at 100%. Switching to team development. We continue to experience material reductions in both employee turnover and leadership turnover within our communities. Kevin will share additional details on company-wide trends, and I'm confident these retention levels are a result of the investments we have made in wages, benefits, and the positive and supportive culture in Sonida. As mentioned in previous calls, our incentive plans are structured to promote the development of stable, tenured community teams. We believe investment in our community leadership and nursing talent to deliver a high-quality offering consistently supports resident rate growth and reduces the cost of employee turnover. I'll now turn the call over to Kevin for a detailed discussion of our Q2 financial performance.

Thanks, Brandon. Before I discuss our second quarter operating results, I wanted to start with Slide 11 and remind participants of our three portfolio categories: same-store, acquisition, and repositioning. In addition to the 20 communities acquired in 2024, the acquisition portfolio also now includes both of our second quarter single community acquisitions. Starting on Slide 12 with the same-store comparisons of sequential and year-over-year quarters. Year-over-year occupancy grew 40 basis points from 86.1% to 86.5% on a same-store basis, coupled with a 5% RevPAR increase over the same period. Annualized same-store revenues increased $12 million or 5.1%. On the margin side, at 28% flat, the company obtained its second highest quarterly NOI margin post-COVID, with only Q2 2024 margin of 28.9% exceeding that. It is important to note that Q2 2024 same-store NOI margin was favorably impacted by approximately 60 basis points of one-time utility refunds recognized in the period and, to a lesser extent, not yet having fully realized the run rate cost of the company's staggered implementation of its investments in technology. Sequentially, same-store occupancy decreased 30 basis points from Q1 2025. I will expand more on the company's recent and expected occupancy trends in more detail later in the presentation. Moving on to Slide 13. Our 2024 acquisition communities continued to deliver growth. Note that these figures include the actual results of our two joint venture investments from 2024, the December 31, 2024 acquisition of our Aerie Hills community that opened in July, and one month of June operations for both our Q2 community acquisitions. Our sequential increase in revenues of 8.1% reflects a strong annual March 1 rate increase actualized for one full quarter as well as a one-month revenue contribution from the two communities acquired in the quarter. Acquisition portfolio NOI at share and sequential quarters was roughly flat. For comparative purposes, Q1 2025 included $300,000 in one-time insurance and utility credit during the quarter following the acquisition, and to a lesser extent, the operating expenses incurred on Aerie Hills in advance of its July opening. These occurrences, coupled with one month of operating expenses in June on the two 2025 acquisition communities, resulted in the temporary NOI margin change between sequential quarters. With the settling of transition expenses in forward quarters and a strong start to occupancy for the third quarter, we anticipate margin stabilization and growth. Moving to total portfolio at share on Slide 14, the company grew its year-over-year total portfolio NOI at share by 20% or $14 million on an annualized basis. Note that the overall decrease in year-over-year occupancy and margin percentage for the total portfolio share is attributed to the inclusion of acquisition communities at lower average occupancy and margin levels starting in late Q2 2024. Over to Slide 15, where we will review occupancy in more depth. Comparing to the same quarter in 2024, same-store occupancy increased 40 basis points. Net move-ins increased by 20 net residents or 14% on an annualized basis. However, the net occupancy increase is muted due to the highest historical quarter of move-outs in Q2 2025, juxtaposed with the lowest historical quarter of move-outs in Q2 2024, resulting in an 18% or 88 resident difference in total move-outs. Breaking down these anomalous quarters even further, nearly half of this increase, or 43 of the incremental 88 residents, was attributable to increased deaths over the same period. Halfway through the quarter, we have seen Q3's occurrence of move-outs through death drop back down to lower historical levels. Closing out occupancy for our same-store portfolio nearly halfway through the third quarter, I am pleased to report that occupancy has moved up significantly from June reporting levels. The company increased its same-store occupancy by 90 basis points from 87.0% to 87.9% when comparing the first day of July to the first day of August, which is a trend we expect to continue in Q3. Moving ahead to the rate discussion on Slide 16. As a reminder, on a same-store basis, the average annual rent renewal rate on March 1 was 6.9%, which was applicable to 71% of the total same-store residents. Comparing the rate profile to Q2 2024, the company continues to drive private pay increases with a nearly 5% increase across quarters. Over the past year, the company has invested in its on-site clinical resources and clinical technology platforms, both contributing to an increase in level of care fees by 11% year-over-year. Additionally, the migration away from premium and contract labor to more permanent upskilled clinical functions further supports the overall resident experience and the reduction in discounts and concessions of 13% when compared to the same quarter in 2024. Diving into more of the margin drivers, we will move ahead to Slide 17 to discuss same-store operating expense trends. As a percentage of revenue, total labor excluding benefits improved 40 basis points from the previous quarter. This was a result of the company keeping daily total labor costs flat over the same period, with Q2 having one more Labor Day than Q1. This flow-through profile is anchored by a strong employee base with increasing year-over-year retention, with the exception of a single community that comprised 73% of the quarter's total contract labor costs; contract labor continues to remain low and infrequent across the entire portfolio. This lone community has no contract labor present in the community today. On a year-over-year basis, same-store direct labor increased approximately $1.5 million, with revenues growing at approximately double this rate over the same period. Note that half of the increase in direct labor is attributable to upgrading wages for our clinical workers. This investment has led to an outsized level of care revenue increases through more timely and accurate care assessments as discussed earlier. More importantly, the investment in our community clinical teams has led to an annualized retention increase of 17%. From a total company perspective, the investment into our clinical teams should also strengthen the clinical acuity expertise needed for further expansion into both assisted and memory levels of care. On the non-labor expense front, absolute costs increased only $200,000 from Q1 to Q2 2025 and actually decreased on a per-day basis. Over the last 12 months, the non-labor expense profile has remained flat. This is largely the result of our ability to hold fixed cost increases to inflationary levels in areas such as insurance and real estate taxes, while now having fully recognized the run rate impact of the programs and technologies that we've implemented over the last 12 to 18 months. Closing up the P&L for this quarter's earnings, our G&A continues to show stabilization following 2024's one-time build-out of our business development and operational excellence functions to support overall growth initiatives. G&A levels for the year remain slightly below normalized run rate Q4 levels due to a slight reduction in total FTEs over those periods, as well as focused spending controls tied into a revised operating cadence implemented in the second half of 2024. Finally, Brandon addressed a significant personnel restructure in his opening remarks. From a financial perspective, the company was able to realign its operating divisions from 3 to 2 and invest in key sales, marketing, and training roles at a net zero impact to G&A. Notwithstanding future material acquisitions, the company does not expect any meaningful changes to its current G&A composition. Consequently, the two community acquisitions this year were brought in without adding FTEs at the above community level. Moving to the balance sheet on Slide 18. I am pleased to announce another significant achievement relative to the company's improving balance sheet. Last week, we successfully closed on a restated financing agreement with Ally Bank that provides for an additional 5 years of term, which includes two 1-year extensions and a variable interest rate of SOFR plus 2.65% with a step down to SOFR plus 2.45% subject to achievement of certain performance thresholds. The initial proceeds of $122 million were used to pay off the current Ally term loan of $113 million, with the remaining borrowings collateralizing the additional Alpharetta community acquired in June. The revised Ally term loan provides for an additional $15 million in delayed draws as certain financial covenants are attained. With the December 2024 amendment of our Fannie Mae loans and the restated Ally term loan, approximately 80% of our debt has an effective maturity date of early 2029 or later, with our credit facility representing 11% and expiring in mid-2027. Our total debt at share is comprised of 59% fixed-rate debt. With the inclusion of the credit facility, the weighted average interest rate is 5.6% for the portfolio, with the variable rate debt nearly fully hedged. Currently, the company has $75 million of capacity remaining under its facility, with approximately $33 million immediately available at the end of the second quarter. The company anticipates an increase in availability as the underlying borrowing base assets securing the facility continue to expand our NOI profile. The company continues to execute on its long-term strategy of pushing out low-rated loan maturities and delevering the balance sheet with a target of 7x based on acquisition NOI stabilization, continued same-store growth, and responsible debt management. Finally, as of today, the company is in compliance with all financial covenants required under its mortgages and credit facility. On Slide 19, we will revisit the perspective of achieving $100 million of NOI, which is based on 2024's pro forma in-place NOI of $78 million and an assumption-driven placeholder for growth through community stabilization of $22 million. We are excited to realize $12 million in annualized NOI growth based on an annualized June NOI, with more NOI upside available through continued stabilization of the 2024 and 2025 acquisitions and a very strong start to occupancy halfway through the third quarter. As a result, we continue to believe that this $100 million of NOI is an achievable near-term target with a meaningful upside thereafter. Back to you, Brandon.

Thanks, Kevin. Looking ahead to the broader 2025 investment landscape, we remain disciplined in deploying capital where we see accretive opportunities that offer compelling risk-adjusted returns and clear strategic value. Despite the increased investor interest in senior housing, we see a significant pipeline of opportunities that for a variety of reasons remain less competitive, especially among non-stabilized assets. As we continue to refine our operational integration playbook, we believe we are uniquely positioned to capitalize on this opportunity set. The acquisition announced today reflects these trends. The 98-unit community was built less than 10 years ago and is in a high-growth, high-income submarket of Dallas-Fort Worth. The community has struggled to stabilize operations in the past couple of years, and we believe a targeted aesthetic refresh, along with a renewed operational and sales focus, will drive meaningful NOI growth. Our investment team remains very busy as a significant amount of high-quality assets are coming to market, and we look to leverage all of the tools at our disposal as an owner-operator to accretively grow the portfolio. Sonida's focus on results-driven operational strategies, operational excellence, and capital allocation yielded another quarter of strong performance. The combination of in-place revenue and NOI growth, responsible and attractive investment activity, and broader application of our owner-operator platform uniquely positions Sonida as a leader within the senior living and real estate landscape. We have significant occupancy rate and margin growth opportunity in our portfolio today with more than $60 million of annual revenue potential simply from filling up in-place vacancy at current market rates, and we are optimistic about the future upside in the business. We believe our sustainable growth outlook remains dependent on our commitment to culture and the development of a best-in-class team across all facets of Sonida. The integration of new communities has succeeded due to the dedication of our existing operating teams and the willingness of our new team members to put in the time and effort required to learn new systems, trust in Sonida's team-focused culture, and adjust when challenges inevitably arise. I'm highly confident we have built a business poised to sustain a high pace of growth while operating our communities with the needs and joy of our residents and employees as our foundation. This concludes our prepared remarks. Operator, please open the line for any questions.

Your first question comes from the line of Ronald Kamdem with Morgan Stanley.

Just two quick ones for me. Just can we dig in a little bit deeper in some of the move-out and specifically move-in activity looks like a nice pickup in July? So you mentioned some personnel changes, just a little bit more detail of what changed, what you did differently to be able to drive that moving activity in July would be helpful.

In terms of what we saw as the drivers for July, one, just as we looked at the move-out activity that you referenced for Q2, we did see April on a year-over-year basis. Last year's April move-outs were significantly lower. This year, we did see a bit of an uptick in deaths just in that specific month. But clinical teams responded and saw those numbers coming down towards the second half of the quarter and then also saw a nice movement in July. So on the sales and marketing front, we've really invested heavily in our digital marketing capabilities and have been very focused on lead generation and traffic through our own web channels and through our own kind of Google searches that are not related to the third-party aggregators. That's where we've seen a ton of success. To see our move-ins in July really exceed any point previously, but also to see that those move-ins were generated from non-paid sources gives us a lot of confidence in where we're going for the second half of the year because the move-ins are not coming with additional costs. It was really what we were able to convert through our own web traffic and leads generated by our community teams and not from third parties that we saw a really strong uptick in July and are continuing to monitor that in August. The folks that we brought on board with the sales and marketing expertise came from other industries, and I think they've brought a really sophisticated approach to generating interest from new potential residents and their family members, and we look for that to continue.

I would like to ask for more information regarding the acquisition front. You mentioned the age of the buildings, but could you provide details on occupancy, stabilized yields, and your perspective on these opportunities?

Yes. So I'd say generally, the ones that we're seeing have occupancy in ranges that are in kind of like the mid-70s to low 80s, where they're not broken communities, but they definitely will benefit from bringing in our sales and marketing capabilities. We've also seen really good experience just on the bottom half of the P&L, where their expense control procedures and general processes don't have the same level of sophistication as we do. So we've gotten good pickup on the expense side right out of the gate with our acquisitions and still continue to feel confident in targeting those low double-digit types of stabilization levels on a cap rate perspective. We see good pickup and accretive deals that are still out there, definitely, that we're going after, as evidenced by the one that we just announced today as well, where it's in a market here in DFW that's growing rapidly. The opportunity to come in very quickly and move on both rate and expense management gives us a lot of confidence about this one that we've recently announced.

Your next question comes from the line of Ben Hendrix with RBC Capital Markets.

Just a quick question on your labor environment. I think your press release said $2.2 million increase in labor cost. It seems like that may have outpaced same-store RevPAR growth of 4.4% by 35 or 40 basis points, though that might not be an apples-to-apples comparison. Just first of all, is that an accurate read? And then as you talked about some of these incentive and retention investments, as those pan out, how do you think about RevPAR versus the labor cost spread going forward over the second half and into next year?

So on the labor front, we've talked about in the past and continue to highlight that we want to ensure that we're paying for good stability in our strong leadership, especially in leadership roles and nursing roles. Over the last year, as evidenced in Q2, we have increased wages on the nursing front. So we did a targeted effort on that to ensure that we're at or on the high end of the market where appropriate. We don't expect ongoing consistent increases on a quarterly basis because we did that on a relatively targeted basis. What we're really pleased about is that we've seen a significant downturn in overall turnover of our employees. This stability is going to lead to consistency in outcomes as well as being able to drive rates to a higher level. So I believe an offsetting expense pressure from a wage perspective is that we've gotten our rates to the highest level for any quarter in the company's history. Our goal is to continue to move the rates while managing the investments we've made in nursing and in the labor structure over the last year. Our focus is to maintain stability while continuing to grow occupancy. The increase on the wage front was primarily wage related rather than hours related, enabling us to add residents without increasing the number of labor hours. Our thesis is to continue investing in strong talent to avoid needing to add additional FTEs as occupancy grows, especially in higher occupied communities. Therefore, our expectation and internal goals are to see rate and top-line increases continue to surpass any inflationary pressures from an expense perspective. So we see opportunities to expand margin in the second half of the year and beyond.

There are no further questions at this time. Ladies and gentlemen, this concludes the conference for today. Thank you all for joining, and you may now disconnect.