Good day, ladies and gentlemen, and thank you for standing by. And welcome to The Ensign Group Inc.'s Fourth Quarter Fiscal Year 2012 Earnings Conference Call. [Operator Instructions] As a reminder today's conference may be recorded. It is now my pleasure to turn the floor to Greg Stapley, Executive Vice President. Please go ahead, sir.

Thanks you, Hewey. And thanks, everyone for being on the call. Welcome. We're glad to have you with us today. We filed our 10-K accompanying the press release yesterday. Both are available on the Investor Relations section of our website at www.ensigngroup.net. A replay of this call will also be available there until 5 p.m. Pacific Time on Friday, March 8, 2013. As you know, we always start with a few housekeeping matters. First, 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 differ materially from those expressed or implied on the 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 does 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, any Ensign business we may mention today is operated by a separate independent operating subsidiary that has its own management, employees and assets. References to the consolidated company and its assets and activities, as well as the use of terms we, us, our and similar verbiage are not meant to imply that The Ensign Group, Inc. has direct operating assets, employees or revenue or that the various operations, the Service Center or captive insurance subsidiary are operated by the same entity. 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…

Thanks, Greg. Good morning, everyone. In our first full comparison quarter since the October 2011 Medicare cuts and therapy changes, our adjusted earnings were up 27.1%. As you'll recall, Ensign gives annual earnings guidance. We increased that annual guidance in August. We're pleased to report the results came in at the high end of our guidance at increased guidance during a challenging year and also exceeded analysts' consensus for the year. More importantly, although there was some normal lumpiness in the individual quarters as is usually the case, we saw our operators improved markedly quarter-by-quarter throughout the year, mitigating the effects of the cuts and achieving an overall adjusted earnings per share increase on the year of 8.5% over 2011, again, despite the enormous cuts and right within the increased guidance we published last August. In addition, consolidated revenues were up 9.6% on the quarter and 8.8% on the year. Same-store skilled revenue was up 5.3% in the quarter, despite a 3% drop for the year and same-store occupancy was up 20 basis points on the quarter and 53 basis points on the year. We're especially pleased to report that same-store skilled revenue mix grew by 117 basis points to 53.9% of revenues in the quarter. So despite continuing troubles in much of the rest of the industry, we've made up a lot of 2011's lost ground in the past 4 quarters, and things at Ensign are trending in the right direction, as we told that they would back in August of 2011 after the 2011 cuts were first announced. With a very difficult 2012 behind us, we can confidently say once again that our operators and their dedicated teams are collectively second to none in producing outstanding clinical and financial performance and in becoming the facilities of choice in the communities that they serve. As we've noted in the past, our business can be a bit lumpy from quarter-to-quarter, but we're pleased to have been able to project performance fairly accurately on an annual basis to date. With 2012 in the books, we're looking forward to 2013 with great enthusiasm. We're pleased to be issuing 2013 annual guidance with projected revenues of $915 million to $931 million and adjusted earnings of $2.79 to $2.88 per diluted share, which Suzanne will discuss in a moment. Today, despite some uncertainties still on the horizon, all of which is just another iteration of the uncertainty we constantly contend with our industry. We feel very confident and even enthusiastic about the future and our prospects for continued growth and performance. It's easy to do well when the operating environment is stable, but Ensign's local leaders stand tallest in times of uncertainty. As their colleagues, we wish to extend our heartfelt thanks and give full credit to our local operational partners and clinical leaders who have performed spectacularly well in a very rough operating environment this year. With that, I'll turn the time over to Greg to briefly discuss our recent growth. Greg?

Thanks, Christopher. Like operations, 2012 was a good year for acquisitions as well, with ViceSmiths [ph] and OneElf [ph] adding to our growing portfolio in 2012. Together, these transactions brought our total senior housing and inpatient care portfolio to 108 facilities in 11 states, with 12,198 skilled beds, 1,799 assisted and independent living units. Of the 108 facilities we operate, 86 are Ensign-owned and 65 of those are owned free of mortgage debt. Our nascent home health and hospice business added 3 home health and 3 hospice agencies in 2012 and since, bringing their total to 7 home health and 6 hospice agencies. They grew both organically and by acquisition, with the number of patients on service in home health up by approximately 56% quarter-over-quarter, with 53 percentage points of that coming organically. And hospice was up by 94%, with 60 percentage points of that also coming organically. In addition, our urgent care business, which remains largely at an early trial stage, opened its first 3 locations late in the year, and it has 2 more slated to open in the first quarter of 2013. Some expected startup losses in these new businesses will negatively impact Q1 and Q2, but we anticipate that these pilot locations will start to become accretive by the end of the third quarter. We also acquired in Q4 a small mobile ancillary services company. Like the home health, hospice and urgent care businesses, this acquisition is a product of our innovative new ventures program, which allows our proven operators to seek out and develop compelling business opportunities in areas that are related to our core business. We expect this business, though relatively small, to also be accretive this year. We continue to seek compelling opportunities to spread the Ensign operating philosophy across the country, and we have additional acquisition growth and diversification prospects in the pipeline. We continue to generate strong free cash flow that can be used to fund the growth. In addition, we just announced another $75 million expansion and extension of our revolving credit line, giving us up to $150 million of loan commitments that we can tap into as well. And we continue to have tremendous untapped equity in our real estate portfolio that we can use to access additional growth capital, as well as a very strong balance sheet, which together leave the growth landscape wide open for us, if as and when we see compelling opportunities. And with that, I'll hand it back to Christopher.

Thanks, Greg. As you can see by looking at the past year, our operations are trending in the right direction almost across the board, and did so in a very tough operating environment. We often get asked how we survive and thrive under circumstances that deal significant setbacks to others. We always respond that it happens not because of any corporate mandate but rather as an aggregation of 100 separate solutions developed by 100 different leaders who oversee 100 different markets. They tell us what will work in our unique markets, and we do our best to support them as they lead out to literally change their corner of the world. For this reason, our operating structure relies heavily on having superior local leaders at each operation, who are both equipped and empowered to assemble the best teams available and to quickly make the changes and innovations their unique situations require. The value of this local leadership structure has never been more evident than in the past 5 quarters, as we fought our way back, while the broader industry has struggled to recover from the October 2011 Medicare cuts and therapy rule changes. I wish I could tell you about all of them, but let me just mention 3 very different leadership teams in 3 very different facilities, all of whom are proven to be particularly good over time. In our recently acquired bucket, Stillhouse Rehab and Healthcare Center in Paris, Texas, which we just acquired in June of last year 2012, has blasted out of the gate under the leadership of Kevin Reese and Danica Simmons. Operationally challenged and running deep in the red at acquisitions, Stillhouse was in need of real leadership. Rather than run their 59% occupied building as a 150-bed building, Kevin and Danica rightsized their…

Thank you, Christopher, and good morning, everyone. Before we discuss our operational results, which were very good overall, I'd like to take just a moment to highlight 2 unusual items that show up in the financial this quarter and impact GAAP EPS. First, as Greg already mentioned, after years of cooperating with the government, we are finally at a point where we can take an initial reserve against our hope for resolution of the DOJ civil investigation. The liability we recorded is, of course, an estimate, with many moving parts and it could materially change as the discussions move forward. But we are encouraged that the discussion is moving, and we view the possibility of a resolution as a tremendous positive for the company and its stakeholders. Second, the quarter included a noncash adjustment of $2.2 million for the impairment of the fair valuation of Doctor's Express, Ensign's urgent care franchise system. The initial value of Doctors Express was based in part on the fair valuation of a noncontrolling interest, which is an accounting analysis and not based on cash paid for the transaction. So back to operations. Our litigating efforts with respect to last year's Medicare cut and therapy rule changes came full circle this quarter, with this being the first quarter where our results are in an apples-to-apples basis. We are pleased to be reporting adjusted non-GAAP fourth quarter earnings of $0.61, exceeding Q4's 2011 of 27%. In addition, for the full year's results, non-GAAP earnings per share increased by 8.5%, despite 3 quarters of 11% Medicare rate cuts that took effect in the fourth quarter of last year's. As always, we provide a reconciliation of GAAP to non-GAAP results in yesterday's release. In reviewing the strength of our financial position for the 12-month ended December 31, cash…

Thanks Suzanne, and thanks to everyone who's been on the call. We hope that this is helpful to you. We want to conclude by thanking our outstanding partners in the field at the service center and across the organization for their continued efforts to make Ensign the best company in the health care industry. We'd like to thank our shareholders again for their support and for your confidence. And, Hewey, I guess if you'd like to instruct everyone on the Q&A procedure, that would be helpful.

[Operator Instructions] Our first question comes from the line of Kevin Campbell with Avondale Partners.

I wanted to sort of start with your fourth quarter results. Typically, fourth quarter is usually seasonally better period for you guys, and yet you're down $0.01 sequentially from the third. So maybe if you could just talk about some of the things that impacted fourth quarter results that didn't impact third? Or why you didn't see that normal pick back up in the fourth quarter?

Yes. Boy, Kevin, there's probably a number of items. None of which are really about the basis of operations. We -- one thing that was quite a bit different this year and this is where we talk about lumpiness all the time, we have -- we're self-insured on a lot of our insurance fronts. And so that forces us to make estimates each quarter. And we do our best by actuarially and by reviewing the claims and what have you. And this year, our health care and workers' comp was a little bit higher in the fourth quarter than it was in the third -- well, substantially higher in the fourth quarter than it was in the third quarter, which created the difference between third and fourth quarter. And it's probably one of the reasons we try to emphasize over and over and over again that our annual guidance is something that we feel very comfortable with and the quarterly stuff is a little bit lumpy because of -- that insurance is influential.

All right. And I'm curious on the pipeline and the potential pace of deals. A quarter or 2 back, you guys had talked about some potentially larger deals that could happen at year end and obviously, nothing really good. If you could just give us a little color on [ph] why there weren't any larger acquisitions. I know you had smaller ones, but why that didn't happen and maybe how we should be thinking about the pace and size of the pipeline going forward?

Great. Kevin, this is Greg. The pipeline looks pretty good. We see the kind -- we do have some stuff in the pipeline. I would characterize them as traditional Ensign type opportunistic deals, more in the one-off or small group type deals. And I see no reasons why we couldn't grow this year as much as we grew last year, although that's not a prediction. With respect to larger portfolio deals, we continue to look at them. We continue to get in there and pitch for them. We made a pitch last year for some of the kindred buildings that came out later in the year. Our -- the numbers, which we thought we could make those work were not the same numbers. That some smaller operators thought they could do it out apparently, and so we were not successful. But we'll continue to look at those portfolios as they come around and do our best with them. One of the challenges that you see when we get into those larger portfolio deals is that the kind of competition we see from them is markedly different than what we see on the more traditional Ensign type deals. And so we are continuing to work out how we might figure a way around that and to compete in that market.

And Kevin, we're not -- I think you know this, but we're not so anxious to grow by leaps and bounds that we're willing to compromise the discipline we've shown in the way that we acquired these operations and the way we acquire these physical plants. It's -- we don't really want to compete in a world that -- where the pricing is not what we feel comfortable paying.

Yes. Your revenue growth guidance looks like its about 12% or so revenue growth year-over-year in '13. Maybe you could just talk a little bit about what the key drivers are there [indiscernible] sequester for instance, you've got some headwinds. So what's really driving that solid revenue growth?

A portion of it is driven by some of the new businesses that we've embedded into. They still represent a very small portion of our company's total revenues. I think that based on our projections, the combination of home health, hospice, the ancillary business we've picked up and urgent care could potentially represent 4% to 4.5% of our total revenues at the end of this year. But I will tell you that a large portion of our growth, less than half, but a large portion of our growth will come in those arenas, most of that probably being in the home health and hospice, since we took on a number of acquisitions late in the year or early this year. And one of our large acquisitions, we only had for 2/3 of the year last year. So that's where some of it comes from. Plus we still have a number of operations in that transitional and new acquisition bucket that are improving rapidly, and those are probably -- those 2 areas, the ancillary business and the new acquisition and transitional facilities, I'm sure represent the lion's share of that growth. I'll also tell you just to -- we anticipated an increase from a state or 2 last year that wasn't official yet. And some of that we feel very confident will come this year and it will come retroactively, and that's where a small portion is derived as well.

Okay. The recent acquisitions you've done thus far in 2013 plus the ancillary one at year end, which really had no revenue impact, can you just give us the combined total annual revenues from those deals? Just because it obviously had no impact in 4Q, but we can factor that into our models going forward.

Yes. So between those 4, the impact is about $15 million.

[Operator Instructions] Our next question comes from the line of Rob Mains with Stifel, Nicolaus. Robert M. Mains - Stifel, Nicolaus & Co., Inc., Research Division: When you talk about some of the challenges you faced this year, the MPPR cuts that were included in the Doc Fix, I'm assuming since you don't have a therapy business, that's kind of de minimis for you in terms of impact?

Yes. Rob, that's probably in the realm of -- annualized, it's probably about $750,000. Robert M. Mains - Stifel, Nicolaus & Co., Inc., Research Division: Okay, that's pretty small. And you said that you've got some positive momentum on some of your states for Medicaid. Can you kind of give us a run-through of where Medicaid stands in some of your key states, please?

Yes. So in Florida, our key states -- the one that we probably talked a little bit about in the past, I'm not sure if we have or not, but we talked amongst ourselves, I guess. In Arizona, we're anticipating getting -- I guess, I should remind everyone on the call, we've been hit there over and over and over again. But in -- we're anticipating, retroactive to the beginning this year or the latter part of last year, about a 5% -- a little over 5% increase. However, that's offset by some fees and results in about a 4% increase overall. And so we expect that to be impactful. In California, we expect it to be -- we expect to get a small net...

Yes. I think like -- in California, what we've seen -- kind of [ph] come out with is that in the second part of the year that we think we're going to get it back of about 3% in the second part of the year. So...

But that's offset by a fee, and that's why I stumbled a little bit. We'll have an accompanying, what is called QA fee. And so that will probably be reduced by a significant number. But we expect it to be a net positive. Just to correct myself on Arizona, I was looking at the dollars, so we expect that actually to be about a 9% increase, which resulted for us in about a $4 million increase. And again, that's an annual increase. And remember that we've been hit there many, many times over the past year, so it's nice to have a little bit of a reprieve there. And then in Utah, which is another big market for us, we don't expect much. We think that it'll be about flat. We have had some increases there in the past, I think in 2011 and 2012. And then in Texas, we do understand that there's a budget surplus there. And so we're hopeful that some of the -- we -- I don't want to get into too much detail, but we've had some therapy changes made there relative to Part B. Co-pay was removed at the beginning of last year, and we have some hopes that maybe that will be reversed the middle part of this year. And those are our bigger markets. All the other states are smaller for us. Robert M. Mains - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And x any kind of acquisitions, can you give us an idea where CapEx might fall this year?

Yes. I think that our CapEx will fall somewhere between $35 million and $38 million. And we -- I should mention, even though we're larger, Rob, we've renovated a large portion of our portfolio, and that could rise as our acquisition pool rises, but with our existing portfolio, I think we'll stay pretty close to that number. Robert M. Mains - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And then, Greg, your comments about acquisitions. Some of the other companies that have may -- various kind of health care acquisitions had big fourth quarter because sellers want to get stuff done before tax rates went up on 1/1. Since you didn't see that, and I know you're not guiding to acquisitions, but is there any reason why the pace of acquisitions for you wouldn't be kind of ratably over the course of the year rather than backloaded?

No, I think you're probably right on that. The kind of acquisitions that we do when I talk about a typical Ensign opportunistic acquisition, the flow on those is pretty steady. They don't carry a lot of Medicare census in the building, so they're not deeply affected by some of the reimbursement headwinds that other facility might be affected by. And so just the flow is the flow. And I don't see big change in it, as I look out down the road this year. Robert M. Mains - Stifel, Nicolaus & Co., Inc., Research Division: Right. And then last question, those typical Ensign acquisitions, I assume you're not seeing a whole lot of competition for them?

No, we actually are seeing a little more competition, Rob. Money is cheap and capital is now falling back into the industry, and we see a few more of the capital providers who are willing to do the -- what historically have been the tougher deals. But we compete very well in that environment. Robert M. Mains - Stifel, Nicolaus & Co., Inc., Research Division: I'm sorry, who do you see? Is it operators or is it financial backers? Or...

It's financial backers. We're seeing more capital.

[Operator Instructions] Presenters, at this time, I'm showing no additional questioners in the queue. I like to turn the program back over to Mr. Christensen for any additional or closing remarks.

Thank you, Hewey. I appreciate your time and your help. And thanks to everyone for giving us your time. I appreciate the time you spent with us.

Thank you, presenters. Again, ladies and gentlemen, this does conclude today's conference. Thank you for your participation, and have a wonderful day. Attendees, you may log off at this time.