Good day, ladies and gentlemen, and thank you for your patience. You've joined the Ensign Group First Quarter Fiscal Year 2013 Earnings Conference Call. [Operator Instructions] As a reminder this conference may be recorded. I would now like to turn the call over to your host, Executive Vice President, Greg Stapley. Greg, Sir, you may begin.

Thanks, Latiff. And thanks, everyone, for being on the call today. We filed the 10-Q and company 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 5:00 p.m. Pacific time Friday, May 24, 2013. Before we get to what's a really very busy start to the year, we always open with a few housekeeping items. 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 materially differ 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 like 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 any of the various operations, the Service Center or captive insurance subsidiaries 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…

Thanks, Greg. Good morning, everyone. Our performance in the first quarter was modestly up across-the-board, both sequentially and quarter-over-quarter as we began to ramp up for 2013. You'll recall that we've always advised that our business can be fairly lumpy from quarter-to-quarter. And while we're pleased to be reporting significantly improved performance in the first quarter, to outsiders this will probably look like one of those quarters. We continue to have many levers we can pull to achieve our operating goals for the year. We're maintaining the annual guidance we recently announced which projected revenues of $950 million to $931 million and adjusted earnings of $2.72 to $2.81 per diluted share, which Suzanne will discuss more in just a moment. For the quarter, we're pleased to report an increase in revenues of 8% and growth and adjusted net income of 10.1% and adjusted earnings growth of 6.6% over the prior-year quarter. In addition, same-store skilled mix was up 124 basis points, same-store skilled revenue dollars were up 450 basis points and same-store managed care revenue was up 11.2% as well. All of which are exciting key indicators in today's evolving operating environment. I'll discuss that last one more in just a moment. The quarter would have even been better had it not been for a few large but unusual items that hit all at once. For example, we've reported in the second quarter of last year that 2 of our top performing operations in South Texas had suffered major storm damage and would be partially out of commission for some time. While we're pleased to report that those facilities are now coming back fully online, the business interruption insurance proceeds that we expected to receive to cover their higher-than-normal operating expenses for the past few quarters have not yet been…

Thanks. In Q1, we have won a very nice skilled nursing facility in Texas to our growing portfolio. We also opened our first ground-up development, Sloan's Lake Rehab Center in Denver, Colorado, and it is on track to date as it works its way toward fill up and stabilization. Since quarter end, we've added 3 additional skilled nursing facilities in Texas. And just yesterday, we announced a successful acquisition of 3 more facilities, 1 skilled nursing and 1 assisted living in the greater Seattle area and a skilled nursing facility in the Metropolitan Omaha market. This growth has brought our total senior housing and in-patient care portfolio to 116 facilities in 11 states with 11,108 skilled beds and 1,889 assisted and independent living units in operation. Of the 116 properties we operate, 93 are Ensign-owned and 72 of those are owned free of mortgage debt. Cornerstone, our Home Health and Hospice business, has added 3 new home health and 3 new hospice agencies in the quarter and since. It may now take a well-deserved step back on acquisition in order to digest its recent acquisitions, but we've seen numerous opportunities in that space and expect to continue growing those businesses as their existing base matures. To date, we have acquired and develop 9 home health and 7 hospice agencies. In addition, we sold our Doctors Express franchise business on favorable terms just following the quarter, but remain committed to our non-franchised urgent care business Immediate Clinic. Immediate Clinic opened up 2 more locations in the quarter, bringing its total footprint to 5 open and operating clinics, all of which are in the greater Seattle market with more locations in the pipeline. As we announced previously, some expected start-up losses in these new businesses will negatively impact the first half of the year, but we still anticipate that these private locations will start becoming accretive in the second half. We continue to see 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 growth. In addition, the majority of our $150 million revolving credit line remains available and we have tremendous untapped equity in our real estate portfolio, as well as a very strong balance sheet, all of which can be use to access additional growth capital should we need it. With that, I'll hand it back to Christopher.

Thanks, Greg. With a growing portfolio that extends across 11 different states, numerous different markets and several different business lines, Ensign is becoming increasingly diverse in its asset base and operations. While this breadth of diversity might challenge a traditional top-down organization, our unique locally-focused business model lends itself well to performing across multiple very different markets. This is because our individual facility and market leaders have the vision, the motivation, the ability and the authority to tailor their individual business plans to the markets and communities they serve. Each will face very different problems and each will innovate and come up with unique solutions. I just want to mention 3 quick examples. At the Victoria Care Center in Ventura, California, CEO, John Gardner and Director of Nursing and Chief Operating Officer, Jimmy Lopez [ph] have reached deep into their market by establishing what's called, PARC. The post-acute rehab center inside their operation, PARC, with innovative inpatient and outpatient therapy programs, outstanding clinical outcomes and specialized attention to the individualized needs and objectives of doctors and their patients, PARC has caught the attention of the medical community and their local managed care organizations in an unprecedented way. As a result, Victoria's managed care days have jumped nearly 25%, driving overall occupancy up by 475 basis points and producing an increase in EBIT of 42% over last year's quarter. At the Arroyo Vista Nursing Center in San Diego, California, Director of Nursing and Chief Operating Officer, Josie Ledesma and Marion [ph], her Executive Director, have done a remarkable job of turning what was once a sleepy long-forgotten convalescent home that was built in 1928, into a modern, busy and well-regarded skilled nursing and rehab center. By focusing squarely on clinical outcomes and building relationships with the medical community and managed care…

Thank you, Christopher, and good morning, everyone. While we discuss our operational results, I'd like to just highlight for everyone a couple of unusual items that showed up in the financials this quarter and impacted GAAP EPS. First, as Greg already mentioned, after years of cooperating with the government, we are finally at a point where we can finalize our reserve for the settlement of the DOJ civil investigation. The additional $33 million charge we recorded is not expected to change, but negotiation of the settlement document and the corporate integrity agreement are ongoing and the settlement is tentative until finalized and approved. While the announcement certainly hurt, we do not expect the settlement payment to have a materially adverse effect on the company's long-term financial position, business plan, or prospects. However, the resolution will obviously have an impact on the company's GAAP operating results and cash flows for 2013. However, overall, we view the resolution of this investigation as a tremendously positive development for operators and shareholders. In addition, the company is incurring ongoing costs associated with the compliance activities. We have always had a compliance program, but we have been building over compliance team significantly since late last year. Some of those additional costs started to show up in our G&A expense this quarter, and we expect some fairly heavy startup cost in Q2 and Q3 before they level off. We also expect to have some monitoring cost and other costs under the corporate integrity agreement, as well as some additional interest expense on a portion of the settle amount when it is paid. We have estimated that these combined costs at approximately $2 million for the year -- excuse me, $2.5 million for the year. Finally, the quarter included a noncash charge of $2.8 million to write-off…

Okay. Thanks, Suzanne, and thanks to everyone on the call. We hope this discussion is helpful and we plan to continue it at our upcoming investor conferences. We'll be at Bank of America Merrill Lynch conference in May and at the Jefferies' conference in June and hope to see many of you there. As always, I 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 healthcare industry. We'd also like to thank our shareholders again for your support and confidence. Latiff, do you mind instructing us on the Q&A procedure?

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

I wanted to just start with the Medicare rate proposals that came out last night and get your thoughts on that, how it stands relative to the expectations you have built on your guidance? And then any commentary on the re-basing of the market basket or the calendar days for therapy utilization?

Yes, I guess, I'll start. This is Christopher. I think it was fairly similar to what we assumed it would be. There weren't a lot of surprises. I suppose it was -- if it were one way or the other, it might have been slightly less than we assumed. But again, only slightly. And...

On the therapy part, that's consistent with how we've been counting and looking at therapy and how we're rolling stuff into the NDS [ph] already. So we did not expect the secondary position with regards to the therapy qualification then that should really impact us.

Okay. Great. And looking at the occupancy, can you give us some sense as to what impact the renovation had, occupancy-wise? And also just maybe a little bit more clarity on the stopping of intake for flu. Just -- flu actually drives that profit, why would they stop? I'm assuming to present -- or prevent sort of further spread of the flu but maybe just some additional color on that.

Yes, I mean, your last comment is correct. It's the right thing to do when there is any meaningful outbreak of flu. It's not take any admissions until we're sure that it's cleared up so that we don't spread it. And it spreads to about -- often spread from 1 facility to another. But it didn't impacted over the first quarter about 16 of our operations, pretty large number. And that's only for a few weeks at a time, but still 16 facilities over average of 2.5 the 3 week period is meaningful. I don't know, it would take me a second to come up with the impact. I can answer that first part a little bit better than that. The wings that were shutdown in those 5 operations impacted us to the tune of about 110 to 120 basis points. And as we said in the script, it was buried in there were somewhere probably. Three of those are back online and the other 2 should be finished sometime during the second quarter.

And just to clarify, those were in the same store bucket, so that's really when you look at that same-store bucket of occupancy and look at the analysis.

Okay. That's helpful. And the onetime items, I just want to make sure I caught them off. You mentioned the storm damage in Texas and the business interruptions, the California Medicaid rates and the renovations, were there -- was there anything else that were in that bucket of onetime items for $0.05?

No, nothing. I mean those were all significant items. The other things wouldn't be significant.

Okay. And as we look at those 3, was one of them any more important than the other or was it kind of about, of the $0.05, about 1/3, 1/3, a 1/3 to each?

Well, the third one is a little more -- the first 2 is easy to calculate. The third one is a little more difficult to calculate because they assume that they would be full or not. But I would say that the -- trying to remember the order that I shared them. The insurance of the first one, right?

Yes.

Yes, I would say that was probably the most impactful. I don't want to -- if you exclude what we already assume would occur in California, without the retroactive 5 months hitting in 1 quarter, that was -- that probably is about 40% to 50% of the amount.

Just remember that on the buildings that had the damage, it's a double impact. It's the -- there's interruption for us, what they would have done had they not have the damage in the first place. So it's a double impact.

Okay. And then, Christopher, I think in the press release, you guys sort of -- you talked about the solid foundation for ramping growth in 2013. So at what point should we start to expect some leverage on the G&A and the cost of services line from that ramping? It sounds like G&A, you'll be building out your compliance for 1 quarter or 2, so maybe you won't see any leverage there until the back last quarter of the year. But what about the cost of services?

You know, I don't think because of our growth, I think on a percentage basis, I don't think you'll see a meaningful change there. From an overall dollar standpoint, you will. But, not in terms of percentage of revenues. That makes sense?

Yes, and that's what I'm driving at so...

Yes, I mean, as was stated, I think that we'll -- as you said, third, fourth quarter, we'll see a little bit of an uptick because of some of the things that might accompany that CIA. But I don't think you'll see anything increase again as a percentage of expenses, or a percentage of revenues.

I would just encourage you to use an adjusted cost -- service number when you figure of that percentage versus the GAAP number, because the GAAP number does have some of those unusual items in there.

Our next question comes from Rob Mains of Stifel. Robert M. Mains - Stifel, Nicolaus & Co., Inc., Research Division: The most recent the couple of recent announcements, the Nebraska acquisition, how many beds was that facility? It wasn't there in the press release.

It was 70 beds. Robert M. Mains - Stifel, Nicolaus & Co., Inc., Research Division: 70 beds. And am I correct in assuming that we should read into 6 facilities done in a fairly short order? Is that just how the timing works out? That there's nothing that's making the pipeline either particularly robust or deal's easier to close right now than it might have been a month or 2 ago?

I wish we could tell you, Rob. This is Greg. I wish we can tell you exactly what's going on out there because we do see the pipeline becoming more robust. I don't know if it has anything to do with the fact that some of the big REITs in our space have announced that they're taking a step back in the skilled nursing side of the industry. That may have something to do with it because I think, in the past couple of years, they were the ones driving at pricing. But for performing assets, we still see pricing up in areas where we don't really like it. But the stuff that we chase, as we said in the past, that pricing stays fairly constant and we are seeing a fair number of deals that we think we like or could like coming down the pipe. So it could be a big year for us. We never know and we can't make any predictions, but this is what they call a target-rich environment. Robert M. Mains - Stifel, Nicolaus & Co., Inc., Research Division: And can I surmise from your comments that there's not a lot of competition for those targets?

Well, there's still competition for them but funding for some of that competition is going to be more difficult if the REITs take a step back and truly do that as they said there they're going to. Robert M. Mains - Stifel, Nicolaus & Co., Inc., Research Division: And then M&A for Home Health and Hospice, how active is that?

Super active. We probably see an opportunity a day down here. Robert M. Mains - Stifel, Nicolaus & Co., Inc., Research Division: And same questions, pricing, competition?

Pricing. I can't comment on competition for them, but the pricing is generally pretty effective. Remember that on the Home Health and Hospice agencies, our strategy is and organic growth strategy. We acquire small agencies, small licenses. In fact, if you look at the one we mentioned, I think, in the press release yesterday, Custom [ph], that agency really was essentially nonfunctional. We bought the license and then bolted that thing on to an existing hospice company that we had in the Dallas market. So they will grow organically in those 2 businesses and so the pricing is -- it's nothing consequential but it's pretty darn low when you're acquiring that way.

Our next question comes from Dana Hambly of Stephens.

On the business interruption insurance, had you anticipated getting that in the first quarter?

Yes, we did. We did. We were a little surprised that it didn't come through in the first quarter, but we feel comfortable that it will happen very soon.

So it could be any day now. Okay. And then Chris, you mentioned that I think I saw an article recently about the REITs stepping away as well and they talked about presumably from reimbursement risk. A year ago at this time, I think you commented that it was maybe one of the worst environments you've ever seen in the skilled nursing sector. A year later, how are you feeling about the sector and generally how you feel about reimbursement in general?

Well, I don't remember my comment, but it is -- we -- what I meant to say is that pricing was a bit perplexing back then and I think that we are seeing adjustments in pricing as people step away. And I think that that's way you're seeing us begin to close on some transactions again. We really do try to be -- I'm sure we've made mistakes but we try to be disciplined in the way that we buy these things. And when pricing rises, we do -- it's not that there's been a shortage of deals at all during any of that period of time. It's just the way the pricing has moved. And pricing does seem to be -- hopefully it continues, but it does seem to be more favorable now than it was a year ago.

Okay. I think in the past you had mentioned maybe more financial buyers in the last couple of quarters, those other guys that seem to be drying up right now?

This is Greg. I think, as I said a minute ago, that the performing assets the financial buyers typically chase and pricing for those still seems to be where it's been for the most part. Those are finance-able deals. It's the underperforming, the nonperforming the stuff, the pro forma performing stuff that you really are going to have a hard time financing if you're not a cash buyer like we are. And those are the ones that we're -- pricing isn't necessary changing a lot and it doesn't change a lot. But the number or the supply of deals has moved up a bit it.

There are select markets that have been key to us in the past where we had seen these financial buyers come in surprisingly on underperforming assets and pay multiple -- well, there's no multiple. They pay in amounts we just wouldn't pay. And those -- that pace does seem to be slowing. But as Greg said, it isn't across our entire platform. It really is just in select markets.

Okay. Then a last one for me. You just opened the Sloan. That was a new development. Any plans on any future development or would we expect that to be kind of the few and far between?

Well, I think it will be slow. Until we see pricing different than it is now, pricing gets very expensive, I think you'll see us. But I do, Dana, that we do want that skill set. And so you will see us do one here and one there over a lengthy period of time.

At this time, I'd like to turn the call over to CEO, Christopher Christensen for any closing remarks.

Well, I appreciate your help, Latiff. And I again want to thank everyone for giving us your time this Thursday morning and appreciate your support and belief in us. That's it. Thanks.

Thank you, sir. And thank you, ladies and gentlemen, for your participation. That does conclude the Ensign Group's First Quarter Fiscal Year 2013 Earnings Conference Call. You may disconnect your lines at this time. Have a great day.