What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-03 compared with 2025-07-24 · 319 added, 308 removed, 1069 unchanged (37% of the section changed)

19 unchanged sentences

Our independent subsidiaries, each of which strive to be the operation of choice in the communities they serve, provide a broad spectrum of services.

As of June 30, 2025, we offered skilled nursing, long term acute care, senior living and rehabilitative care services through 347 skilled nursing and senior living facilities.

As of September 30, 2025, we offered skilled nursing, long term acute care, senior living and rehabilitative care services through 361 skilled nursing and senior living facilities.

Our real estate portfolio includes 148 owned real estate properties, which includes 112 facilities operated and managed by us, 36 operations leased to and operated by third-party operators and the Service Center location.

Of the 36 third-party operations, one senior living operation is located on the same real estate property as a skilled nursing operation that we own and operate.

The following table summarizes our independent subsidiaries and operational skilled nursing beds and senior living units by ownership status as of June 30, 2025:

The following table summarizes our independent subsidiaries and operational skilled nursing beds and senior living units by ownership status as of September 30, 2025:

Owned and Operated Leased (with a Purchase Option) Leased (without a Purchase Option) Total for Facilities Operated

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Refer to Results of Operations for further discussion.

Operational Expansions — During the six months ended June 30, 2025, we expanded our operations with the addition of 17 stand-alone skilled nursing operations, two stand-alone senior living and one campus operation.

These new operations added a total of 1,955 operational skilled nursing beds and 204 operational senior living units operated by our independent operating subsidiaries.

Subsequent to June 30, 2025, we expanded our operations with the addition of one stand-alone skilled nursing operation which added 120 operational skilled nursing beds operated by one of the Company's independent subsidiary.

Operational Expansions — During the nine months ended September 30, 2025, we expanded our operations with the addition of 28 stand-alone skilled nursing operations, five stand-alone senior living and one campus operation.

These new operations added a total of 3,384 operational skilled nursing beds and 313 operational senior living units operated by our independent subsidiaries.

Subsequent to September 30, 2025, we expanded our operations with the addition of eight stand-alone skilled nursing operations which added 428 operational skilled nursing beds operated by our Company's independent subsidiaries.

Seven of the eight expansions are part of a real estate portfolio that allows us to continue growing our footprint in the state of Utah.

For further discussion of expansions, see Note 6, and Operation Expansions in the Notes to the Interim Financial Statements.

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We expect the REIT structure to allow us to better demonstrate the growing value of our owned real estate and provide us with an efficient vehicle for future acquisitions of properties that could be operated by our independent subsidiaries or other third parties.

This structure gives us new pathways to growth with transactions we would not have considered in the past.

During the six months ended June 30, 2025, Standard Bearer added $195.0 million of real estate associated with 11 stand-alone skilled nursing operations, one stand-alone senior living operation and two campus operations.

During the nine months ended September 30, 2025, Standard Bearer added $228.9 million of real estate associated with 15 stand-alone skilled nursing operations, one stand-alone senior living operation and two campus operations.

Four of the acquisitions were related to exercising purchase options from CareTrust REIT, Inc.

(CareTrust) lease arrangements where our independent subsidiaries have been operating and managing these locations.

Of these additions, one stand-alone skilled nursing operation is leased to a third-party operator and the remaining additions are operated by our independent subsidiaries.

Subsequent to June 30, 2025, Standard Bearer added $20.8 million of real estate associated with two stand-alone skilled nursing operations, where one stand-alone skilled nursing facility was leased back to our independent operating subsidiary and the remaining real estate acquisition was leased to a third-party operator.

Of these additions, two stand-alone skilled nursing operations are leased to third-party operators and the remaining additions are operated by our independent subsidiaries.

Our existing relationships with third-party operators within our industry have allowed us to expand our growing REIT structure to operators outside of our organization.

Common Stock Repurchase Program — On February 21, 2025, the Board of Directors approved a stock repurchase program pursuant to which we may repurchase up to $20.0 million of our common stock under the program for a period of approximately 12 months from March 26, 2025.

Subsequent to September 30, 2025, Standard Bearer added approximately $65.0 million of real estate associated with seven stand-alone skilled nursing operations, as discussed above, where all of the stand-alone skilled nursing facilities were leased back to our independent subsidiaries.

Common Stock Repurchase Program — On February 21, 2025, the Board of Directors approved a stock repurchase program pursuant to which we were authorized to repurchase up to $20.0 million of our common stock under the program for a period of approximately 12 months from March 26, 2025.

During the first quarter of 2025, we purchased 84 shares of our common stock for $10.8 million.

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This repurchase program expired upon the repurchase of the fully authorized amount under the plan and is no longer in effect.

On May 15, 2025, the Board of Directors approved a stock repurchase program pursuant to which we can repurchase up to $20.0 million of our common stock under the program for a period of approximately 12 months from June 16, 2025.

During the second quarter of 2025, we did not repurchase any shares pursuant to this stock repurchase program.

On May 15, 2025, the Board of Directors approved a stock repurchase program pursuant to which we are authorized to repurchase up to $20.0 million of our common stock under the program for a period of approximately 12 months from June 16, 2025.

During the third quarter of 2025, we did not repurchase any shares pursuant to this stock repurchase program.

Litigation — During the three months ended September 30, 2025, we agreed to settle all alleged wage, hour or labor code-related violations asserted on a class or representative basis against our independent subsidiaries in California for purported violations occurring during the six year period ending December 2025, for $12,000, pending court approval.

Facility Information

The following table sets forth the location of our facilities and the number of operational beds and units located at our skilled nursing, senior living and campus facilities as of June 30, 2025:

The following table sets forth the location of our facilities and the number of operational beds and units located at our skilled nursing, senior living and campus facilities as of September 30, 2025:

Facility Counts Bed / Unit Counts

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South Carolina 9 — — 9 1,126 — 1,126

Nebraska 4 1 3 8 496 199 695

Iowa 7 — 2 9 602 31 633

Nevada 3 — — 3 483 — 483

Nebraska 4 1 3 8 496 199 695

Wisconsin 4 — — 4 302 — 302

Nevada 3 — — 3 483 — 483

Alaska 1 1 — 2 146 82 228

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(1) Campuses represent facilities that offer both skilled nursing and senior living services.

The following table provides summary information regarding the location of our owned and operated real estate properties as of June 30, 2025:

The following table provides summary information regarding the location of our owned and operated real estate properties as of September 30, 2025:

Facility Counts Bed / Unit Counts

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8 — — 8 764 — 764

Kansas 1 — 5 6 440 167 607

South Carolina 5 — — 5 544 — 544

Washington 6 — — 6 621 — 621

Kansas 1 — 5 6 445 167 612

Idaho 6 — — 6 590 — 590

South Carolina 5 — — 5 544 — 544

Wisconsin 4 — — 4 302 — 302

Nebraska 1 1 1 3 171 160 331

Tennessee 3 — — 3 300 — 300

Wisconsin 3 — — 3 182 — 182

Alaska 1 1 — 2 146 82 228

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(1) Campuses represent facilities that offer both skilled nursing and senior living services.

The following table provides summary information regarding the location of our owned real estate properties as of June 30, 2025:

The following table provides summary information regarding the location of our owned real estate properties as of September 30, 2025:

Owned and Operated by Ensign (1)

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Washington 6 3 — 9

Kansas 6 — — 6

Idaho 6 — — 6

Kansas 6 — — 6

South Carolina 5 — — 5

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The following table summarizes our overall skilled mix from our skilled nursing services for the periods indicated as a percentage of our total skilled nursing routine revenue and as a percentage of total skilled nursing patient days:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

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The following table summarizes our overall occupancy statistics for skilled nursing operations for the periods indicated:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

Occupancy for skilled services:

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These businesses are neither significant individually, nor in aggregate and therefore do not constitute a reportable segment.

Our Chief Executive Officer, who is our chief operating decision maker, or CODM, reviews financial information at the operating segment level.

Our Chief Executive Officer and Chairman of the Board, who is our chief operating decision maker, or CODM, reviews financial information at the operating segment level.

Revenue Sources

The following tables set forth our total service revenue by payor source generated by our skilled services segment and our "All Other" category and as a percentage of total revenue for the periods indicated (dollars in thousands):

Three Months Ended June 30,

Three Months Ended September 30,

Skilled Services All Other (3)

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TOTAL SERVICE REVENUE $ 1,239,096 $ 1,033,113 $ 50,683 $ 42,979 $ 1,289,779 $ 1,076,092

Three Months Ended June 30,

Three Months Ended September 30,

Skilled Services All Other (3)

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(3) All Other incorporates intercompany eliminations.

Six Months Ended June 30,

Nine Months Ended September 30,

Skilled Services All Other (3)

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TOTAL SERVICE REVENUE $ 3,536,226 $ 2,994,000 $ 142,007 $ 117,151 $ 3,678,233 $ 3,111,151

Six Months Ended June 30,

Nine Months Ended September 30,

Skilled Services All Other (3)

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The federal government, through CMS rulemaking, Presidential executive actions or Congressional legislation, and state and local governments have recently released the following proposed or final rulemaking, or administrative actions that may have an impact on our independent Skilled Nursing Facilities (SNFs) or Assisted Living Facilities (ALFs):

One Big Beautiful Bill (OBBB) — The OBBB was signed into law on July 4, 2025.

The OBBB implements numerous federal reforms targeting Medicaid financing, eligibility, and payment structures.

Federal Government Shutdow n — Congress was unable to pass a new spending package before October 1, 2025, and as a result, the federal government shut down.

At this time, we anticipate minimal impact on our businesses as both Medicare and Medicaid are mandatory health program payments that continue even during a lapse of appropriations.

HHS has a contingency plan to maintain necessary staffing and funding for certain programs during this time.

This includes continuing Medicare and Medicaid payments to providers and states.

There may be slight delays in payments, waiver approvals, changes of ownership approvals, and technical assistance due to fewer federal staff available to do this work, but we do not anticipate serious disruptions.

Given the reduction in federal staff, rule-making and other policy developments may be delayed.

CMS survey and certification surveys will focus on serious, complaint investigations and other survey activities (e.g., recertification, initial and less serious complaint investigations) by federal staff will be suspended.

One Big Beautiful Bill (OBBB) — The OBBB was signed into law on July 4, 2025, implementing a range of federal reforms targeting Medicaid financing, eligibility, and payment structures.

The following provisions of the OBBB are expected to impact Medicaid reimbursement mechanisms and enrollment dynamics relevant to our business.

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Additionally, the OBBB includes a provision to reduce Medicaid retroactive eligibility from 90 days to 30 days for most enrollees but is 60 days for long-term care residents and traditional Medicaid enrollees.

We believe that these provisions create the conditions for coverage interruptions, potential delays or denied payments.

We believe that these provisions could create the conditions for coverage interruptions, potential delays or denied payments.

Revisions to State-Directed Payments (SDPs) — Prior to the OBBB’s passage, state Medicaid programs could require Medicaid managed care organizations (MCOs) to pay providers certain rates, make uniform rate increases, or to use certain payment methods.

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In the absence of published Medicare payment rates, the OBBB limits SDPs to the Medicaid fee-for-service payment rate.

This provision could reduce overall state Medicaid financing flexibility, increasing the risk of lower SNF reimbursement rates.

Cap on Home Equity Excluded for Long-Term Care Eligibility Determination — The OBBB establishes a limit of $1.0 million for home equity that can be exempted from calculating an individual’s eligibility for Medicaid in seeking long-term care beginning January 1, 2028.

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The OBBB expanded the scope of these improper payments to include payments where insufficient information is available to confirm the recipient’s eligibility for payment.

We do not anticipate this provision of the OBBB to impact our revenue.

Home and Community Based Services (HCBS) – The OBBB allows states to obtain waivers from CMS so that Medicaid can be used to pay for HCBS rendered to beneficiaries who do not require an institutional level of care found in a SNF.

The OBBB requires these waiver applications to include a demonstration that the state’s waiver will not increase the average amount of time that beneficiaries who need institutional levels of care will have to wait for services, intending to avoid HCBS being used in lieu of adequate SNF access for Medicaid beneficiaries requiring institutional care.

Overall Impact on State Budgets - It is uncertain at this point how the overall budgets of states will be impacted by the OBBB due to reduced federal Medicaid contributions.

However, one potential risk to our revenue is due to the fact that the states will simply have less money in general.

Therefore, we anticipate states being forced to make difficult decisions in the future about where those funds are directed.

Overall Impact on State Budgets – The full effect of the OBBB on state budgets remains uncertain, particularly given the anticipated reduction in federal Medicaid contributions.

A key risk to our revenue is that states may generally have fewer financial resources available.

In response to how the overall budgets of states will be impacted by the OBBB due to reduced federal Medicaid contributions, some states have already taken legislative and regulatory actions to address the provisions of the OBBB and its potential impact.

For instance, on September 17, 2025, California enacted Senate Bill 105, a comprehensive budget bill for the 2025-2026 fiscal year.

This legislation allocates funding and makes budgetary adjustments across various state agencies, with notable emphasis on specific areas.

Among its provisions, Senate Bill 105 designates targeted funding for the state’s Medicaid program, Medi-Cal, to ensure alignment with the OBBB.

Similarly, Colorado enacted Senate Bill 0001 on August 28, 2025.

This law establishes a process for the governor to implement spending reductions if the state is unable to meet its fiscal obligations.

It also requires the governor to submit proposed spending reduction plans to a legislative budget committee, which is responsible for advising the governor on these matters.

Overall, we anticipate more states may face challenging choices regarding their state budgets, which will increase the risk of lower SNF reimbursement rates.

We will continue to monitor any such developments and advocate accordingly at the federal, state and local levels.

Medicare Annual Payment Rule — On April 11, 2025, CMS issued the SNF Prospective Payment System (PPS) Fiscal Year (FY) 2026 Proposed Rule with the following proposed impacts:

Impact to payment rates — CMS is required to calculate an annual Medicare market-basket update to the payment rates.

For fiscal year 2026, starting on October 1, 2025 and will run through September 30, 2026, CMS proposes to increase the SNF PPS rate by 2.8%.

The net increase is based on a 3.0% market basket adjustment to account for inflation, plus a 0.6% forecast error adjustment and a negative 0.8% productivity adjustment.

This increase does not include the SNF Value-Based Purchasing (VBP) Program reductions for certain SNFs subject to the net reduction in payments under the SNF VBP.

The SNF PPS FY 2026 Proposed Rule also includes updates to the PDPM, with CMS proposing revisions to ICD-10 code mappings to ensure alignment with current clinical guidance and support more accurate assignment of clinical categories.

These updates are intended to improve coding accuracy and better reflect patients’ primary diagnoses during SNF stays, potentially impacting reimbursement levels and case-mix classifications for the skilled nursing facilities operated by our independent subsidiaries.

Impact to the SNF VBP Program — Proposed changes to the SNF VBP Program within the SNF PPS FY 2026 Proposed Rule seek to finalize scoring methodology for the SNF Within-Stay Potentially Preventable Readmission (SNF WS PPR) measure, establish performance standards for fiscal years 2028 and 2029, and adopt a reconsideration process for review and correction disputes.

CMS also proposes to eliminate the Health Equity Adjustment to simplify the program’s incentive structure.

Impact to the SNF Quality Reporting Program (QRP) — With respect to the SNF QRP, CMS proposes to remove four standardized patient assessment data elements related to Social Determinants of Health (SDOH) from the Minimum Data Set (MDS), including those for living situation, food, and utilities, effective October 1, 2025.

The SNF PPS FY 2026 Proposed Rule also proposes to expand the QRP reconsideration process by allowing SNFs to request deadline extension and expanding the bases for CMS to grant such extension requests.

Other Proposed Impacts — Finally, the SNF PPS FY 2026 Proposed Rule includes a Request for Information seeking public comment on approaches to streamline Medicare regulations and reduce provider administrative burden.

Any material changes resulting from this rule could directly affect our SNF operations, particularly in areas such as reimbursement methodology, compliance reporting, and quality-based performance evaluations.

Medicare Annual Payment Rule — On July 31, 2025, CMS released the final rule for the SNF Prospective Payment System (PPS) Fiscal Year (FY) 2026 Final Rule outlining the following key changes:

FY 2026 Final Updates to the SNF Payment Rates — For fiscal year 2026, which begins on October 1, 2025 and ends on September 30, 2026, CMS has finalized a 3.2% increase to SNF PPS payment rates.

This increase is based on the final SNF market basket of 3.3%, plus a 0.6% market basket forecast error adjustment, and a negative 0.7% productivity adjustment.

This increase does not incorporate the SNF Value-Based Purchasing (VBP) Program reductions for certain SNFs subject to the net reduction in payments under the SNF VBP.

Patient-Driven Payment Model ( PDPM) ICD-10 code mappings – CMS finalized several technical revisions to the code mappings used to classify patients under the PDPM.

These revisions are intended to enhance the accuracy of patient classification, payment calculations and coding practices under the PDPM.

SNF Quality Reporting Program (QRP) — CMS has announced changes to the QRP that will take effect for residents admitted on or after October 1, 2025, impacting the FY 2027 SNF QRP.

Specifically, four standardized patient assessment data elements within the Social Determinants of Health (SDOH) category will be removed.

Additionally, CMS has updated the policy and process for submitting reconsideration requests, including amendments and codification of these procedures.

SNF Value-Based Purchase (VBP) Program — For the FY 2028 and FY 2029 program years, CMS has established performance standards to meet the statutory notice requirements.

Additionally, starting with the FY 2028 program year, CMS will implement the previously established scoring methodology for the SNF Within-Stay Potentially Preventable Readmission (SNF WS PPR) measure, which will be included in the program’s measure set for the first time.

To simplify the scoring process and provide clearer incentives for skilled nursing facilities (SNFs) to enhance the quality of care for all residents, CMS has decided to remove the Health Equity Adjustment.

Furthermore, beginning with the FY 2027 program year, CMS will introduce a reconsideration process.

This process will allow SNFs to request reconsideration if they are dissatisfied with CMS’s decision regarding a review and correction request.

Medicare Part B Fee Schedule — On July 14, 2025, CMS issued the 2026 Medicare Physician Fee Schedule (PFS) Proposed Rule, which outlines significant changes aimed at modernizing Medicare, improving care quality, and reducing unnecessary spending.

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CMS proposes a qualifying AAPM participant conversion factor of $33.59, representing a 3.83% increase over the 2025 conversion factor of $32.35.

The non-AAPM participant conversion factor is $33.42, a 3.62% increase over the 2025 conversion factor.

Payment Adjustments — CMS plans to reduce payments by 2.5% for certain services that aren’t based on time (like some therapy services), assuming providers are becoming more efficient.

This cut is meant to balance out other Medicare spending increases.

CMS’s proposed changes may influence how SNFs deliver and bill for physician and ancillary services.

The scope of reimbursable therapy and remote care services may increase, but payment levels may be affected in the future, whether positively or negatively, by broader efficiency and practice cost assumptions.

SNFs offering telehealth-based care or participating in care coordination models may benefit from expanded flexibility and new billing pathways.

The cumulative impact of these changes may also introduce operational complexity and compliance requirements.

We are actively evaluating the proposal and its potential operational and financial implications.

Improving Care and Access to Nurses Act (I CAN Act) – I CAN Act was introduced to the Senate on February 13, 2025 and expands the role of nurse practitioners (NPs) in SNFs and nursing homes by allowing them to certify, oversee, and supervise care under Medicare and Medicaid without requiring physician oversight, subject to state law.

If enacted it would grant NPs the authority to certify patient admissions, manage care plans, and provide supervision in SNFs and intermediate care facilities.

The non-AAPM participant conversion factor is $33.42, a 3.31% increase over such 2025 conversion factor.

Payment Adjustments — CMS intends to decrease payments by 2.5% for certain services that are not time-based, such as certain therapy services.

The rationale is that providers are expected to deliver these services more efficiently as they performed them repeatedly over time.

This reduction is designed to balance out other areas of Medicare spending increases.

Telehealth — CMS has proposed significant changes to the Medicare Telehealth List (MTSL), including expanding permanent flexibilities for virtual direct supervision.

One key change is the permanent lifting of frequency limits on providing subsequent nursing facility visits furnished via telehealth.

Previously, when adding some services to the MTSL, CMS has included certain frequency restrictions on how often physicians and other practitioners can furnish the service via telehealth (e.g., one subsequent nursing facility visit furnished through telehealth every 14 days).

Removing these restrictions will likely result in increased access to care and allow for additional services to be provided via telehealth.

CMS’s proposed changes could impact how SNFs deliver and bill for physician and ancillary services.

The scope of reimbursable therapy and remote care services may expand, but future payment levels could fluctuate, positively or negatively, based on broader assumptions about efficiency and practice cost.

SNFs that deliver telehealth-based care or participate in care coordination models may benefit from expanded flexibility and new billing pathways.

However, these changes may also introduce added operational complexity and new compliance requirements.

We are actively evaluating the proposal to understand its potential effects on our operations and financial outcomes.

Improving Care and Access to Nurses Act (I CAN Act) – I CAN Act was introduced in the Senate on February 13, 2025 and seek to expand the role of nurse practitioners (NPs) in SNFs and nursing homes.

Under this legislation, NPs would be permitted to certify, oversee, and supervise care under Medicare and Medicaid without requiring physician oversight, subject to state law.

If enacted, the Act would grant NPs the authority to certify patient admissions, manage care plans, and provide supervision in SNFs and intermediate care facilities.

These proposed changes could potentially reduce reliance on physicians, streamline patient transitions from hospitals to long-term care, and increase access to care particularly in rural and underserved areas.

Biden-Harris Administration's Nursing Home Care Priorities — Prior to the change in Presidential Administration in 2025, the Biden-Harris Administration sought reform around reimbursement, staffing levels, standards of care, increased transparency and public disclosure of ownership, and enhanced civil remedies as a means of enforcement against those facilities that do not satisfy CMS’s standards.

These rules are still in effect and enforceable.

For example, the SNF PPS FY 2025 Final Rule granted CMS greater sanctioning authority for ongoing or persistent deficiencies in Medicare-participating SNFs.

The bill was referred to the Senate Committee on Finance on February 13, 2025, and has not advanced further since then.

Biden-Harris Administration's Nursing Home Care Priorities — Prior to the change in Presidential Administration in 2025, the Biden-Harris Administration pursued reforms related to reimbursement, staffing levels, standards of care, increased transparency and public disclosure of ownership, and enhanced civil remedies as a means of enforcement against those facilities that do not satisfy CMS’s standards.

These regulations remain active and enforceable.

For instance, the SNF PPS FY 2025 Final Rule expanded CMS's authority to impose sanctions on Medicare-participating SNFs with ongoing or repeated deficiencies, with these enhanced enforcements taking effect at the start of the 2025.

These increased sanctioning authorities took effect in the 2025 federal fiscal year, which began on October 1, 2024.

With the new administration, it is currently unknown whether any of these rules will be reduced in their scope or application, or whether they will be increased in any respects.

The individuals appointed to serve as the Secretary of HHS and Director of CMS, respectively, have not yet provided any indication of what their priorities for anticipated future actions would be in this area.

With the publication of the SNF PPS FY2026 Final Rule, it appears the new administration does not intend to make significant changes to the scope, impact, or enforcement of these existing rules.

CMS Minimum Staffing Standards Final Rule — In April 2024, CMS issued its final rule establishing minimum staffing standards for skilled nursing facilities (Staffing Rule).

The Staffing Rule contains three primary staffing requirements and provides for a staggered and phase implementation over the next several years following the Staffing Rule’s publication.

The Staffing Rule has been met with opposition and legislation to halt its implementation.

On April 7, 2025, the U.S.

District Court for the Northern District of Texas issued a ruling to vacate it findings that CMS lacks authority to issue a regulation that replaces Congress’s preferred minimum staffing hours with its own.

On July 4, 2025, the OBBB was signed into law, which prohibits HHS from implementing, administering, or enforcing the Staffing Rule until October 1, 2034.

Litigation followed in federal courts located in Texas and Iowa, followed by appeals to the United States Courts of Appeals for the Fifth and Eight Circuits, respectively, in which CMS appealed court rulings holding that the Staffing Rule's staffing requirements were unenforceable.

CMS has moved to dismiss both of these appeals, which request the Fifth Circuit granted on September 19, 2025.

Notwithstanding CMS's reversal of its defense of the Staffing Rule, on September 2, 2025, CMS announced that it had drafted an interim final rule to repeal the Staffing Rule's minimum staffing standards.

Implementation of the Staffing Rule was further impaired by the passage of the OBBB on July 4, 2025, which prohibited HHS from implementing, administering, or enforcing the Staffing Rule until October 1, 2034.

Medicare presently accounts for approximately 24.9% of our skilled nursing services revenue year-to-date, being our second-largest revenue payor.

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Implementation of these and other types of measures has in the past, and could in the future, result in substantial reductions in our revenue and operating margins.

Patient-Driven Payment Model (PDPM) — The SNF PPS Rule included a case mix model called PDPM that focuses on the patient’s condition (clinically relevant factors) and resulting care needs to determine Medicare reimbursement.

PDPM utilizes clinically relevant factors for determining Medicare payment by using diagnosis codes and other patient characteristics as the basis for patient classification.

PDPM makes effective use of five case-mix adjusted payment components:

physician therapy, occupational therapy, speech language pathology, nursing and social services and non-therapy ancillary services.

It also uses a sixth non-case mix component to cover utilization of SNFs' resources that do not vary depending on resident characteristics.

PDPM is intended to achieve a more value-based, unified post-acute care payment system.

For example, PDPM adjusts Medicare payments based on each aspect of a resident’s care.

Under the SNF PPS PDPM system, the payment to SNFs and nursing homes is based heavily on the patient’s condition rather than the specific services provided by each SNF.

Patient-Driven Payment Model (PDPM) — The FY 2020 SNF PPS Rule implemented the Patient-Driven Payment Model (PDPM), a case mix methodology that bases Medicare reimbursement on the clinical condition and care needs of each patient.

Under PDPM, diagnosis codes and various patient characteristics are used to classify residents and determine payment levels.

The model incorporates five case-mix adjusted payment components - physician therapy, occupational therapy, speech language pathology, nursing and social services and non-therapy ancillary services - to reflect the complexity of care provided.

Additionally, PDPM includes a sixth non-case mix component to account for utilization of SNFs' resources that are unrelated to individual resident characteristics.

PDPM is intended to achieve a more value-based, unified approach to post-acute care payments system.

For example, it adjusts Medicare reimbursements to reflect the specific care requirements of each resident, rather than simply the volume or type of services delivered by the facility.

As a result, payments to SNFs and nursing homes are primarily determined by the patient’s clinical profile, promoting a system that better aligns payment with patient needs.

Skilled Nursing Facility - Quality Reporting Program (SNF QRP) — The Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) provided data reporting requirements for certain Post-Acute-Care (PAC) providers.

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These six measures will be measured on a quarterly basis.

These six new measures were included in the five-star rating starting in October 2022.

These six measures were included in the five-star rating starting in October 2022.

In addition, CMS also implemented a planned increase to the quality measure reporting thresholds, increasing each threshold by one-half of the average improvement of quality measure scores since CMS last set quality measure thresholds.

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The SNF PPS FY 2024 Final Rule also removed the Application of Functional Assessment/Care Plan measures from the SNF QRP.

Under the SNF PPS FY 2024 Final Rule, CMS will adopt two measures for the SNF QRP starting in FY 2026.

First, CMS will raise the Data Completion Thresholds for the MDS.

Under the SNF PPS FY 2024 Final Rule, CMS adopted two measures for the SNF QRP starting in FY 2026.

First, CMS raised the Data Completion Thresholds for the MDS.

SNFs must report required quality measure data and standardized resident assessment data gathered using the MDS for at least 90% of the assessments they submit to CMS.

SNFs who fail to meet this requirement will be subject to a 2.0% reduction on their applicable fiscal year payment starting in FY 2026.

Second, CMS will adopt the Patient/Resident COVID-19 Vaccine metric.

Second, CMS adopted the Patient/Resident COVID-19 Vaccine metric.

This metric highlights the number of patient stays in which SNF patients received the COVID-19 vaccine.

CMS’s SNF PPS FY 2025 Final Rule adopts several updates to the SNF QRP aimed at enhancing the integration of social determinants of health (SDOH) into patient assessments and ensuring the accuracy of reported data.

CMS’s SNF PPS FY 2025 Final Rule adopted several updates to the SNF QRP aimed at enhancing the integration of social determinants of health (SDOH) into patient assessments and ensuring the accuracy of reported data.

Starting in fiscal year 2027, CMS will introduce four new SDOH items related to living situation, food security, and utility access, and modify an existing item on transportation availability in the MDS.

Additionally, CMS requires that SNFs participating in the SNF QRP undergo a data validation process similar to that already implemented in the SNF Value-Based Purchasing (VBP) Program.

Also beginning in fiscal year 2027, SNFs participating in the SNF QRP program must participate in a validation program similar to that used for SNFs participating in the SNF VBP Program.

Medicare Annual Payment Rule — Refer to Proposed, Anticipated and Recently Issued Rulemaking and Administrative Actions above for additional information on the SNF PPS FY 2026 Proposed Rule.

Final Rule Fiscal Year 2025 SNF PPS - CMS' final rule for the SNF PPS for FY 2025 (SNF PPS FY 2025 Final Rule) results in a net 4.2% increase in SNF payments under Medicare Part A in fiscal year 2025, which started on October 1, 2024 and runs through September 30, 2025.

Starting in 2026, SNFs participating in the SNF QRP program will be required to take part in a validation program similar to that used for SNFs participating in the SNF VBP Program.

Each year, 1,500 SNFs will be randomly chosen to submit MDS records for review.

Facilities selected for this audit must provide the requested medical chart documentation within 45 calendar days of notification;

failure to do so will result in noncompliance and a 2% reduction in Medicare reimbursement for that fiscal year.

Additionally, as outlined in the SNF PPS FY 2026 Final Rule, four standardized patient assessment data elements within the Social Determinants of Health (SDOH) category will be modified for residents admitted on or after October 1, 2025, impacting the FY 2027 SNF QRP.

CMS has also finalized changes to the reconsideration request policy and process, formally amending and codifying procedures related to QRP data and evaluations.

Medicare Annual Payment Rule — Refer to Proposed, Anticipated and Recently Issued Rulemaking and Administrative Actions above for additional information on the SNF PPS FY 2026 Final Rule.

Final Rule Fiscal Year 2025 SNF PPS — Starting on October 1, 2024 through September 30, 2025, CMS' final rule for the SNF PPS for FY 2025 (SNF PPS FY 2025 Final Rule) results in a net 4.2% increase in SNF payments under Medicare Part A in fiscal year 2025.

The net increase was based on the SNF market basket of 3.0%, plus a 1.7% market basket forecast error adjustment, and a negative 0.5% productivity adjustment.

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Within this rule, CMS also updated the SNF PPS wage index using core-based statistical areas (CBSAs) to reflect regional wage costs.

The SNF PPS FY 2025 Final Rule also includes significant enhancements to CMS’s enforcement capabilities within nursing homes, aiming to reinforce the safety and quality of care.

The rule broadens CMS’s ability to use financial penalties to ensure sustained remediation of health and safety infractions, thereby motivating facilities to quickly comply with CMS regulations.

The rule eliminates the restrictions of per instance (PI) for isolated violations or per day (PD) for ongoing non-compliance restrictions, allowing for more flexible imposition of both PD and PI penalties, which would not exceed statutory daily limits.

This change is intended to provide CMS with enhanced tools to address violations more effectively and reflect the severity of the impact on residents’ health and safety.

Additionally, the SNF PPS FY 2025 includes updates to the QRP to better account for social determinants of health, adding items to be reported regarding these social determinants of health—living situation, food, and utilities—in the minimum data set each SNF is required to report to CMS.

The SNF PPS FY 2025 also contains an update to the SNF Value-Based Purchasing (VBP) Program, including how its measurements are retained or removed from use in evaluating quality of care, updates to technical measures so that measures can be updated using a sub-regulatory process, and administrative policies for updating and correcting data CMS relies on in calculating its measurements.

Home Health and Hospice Payment Rules Affecting SNFs — CMS’s final payment rules for other modalities of care delivery also affect the operations of SNFs.

The 2025 Home Health PPS Final Rule requires long-term care facilities, including SNFs, to make at least weekly reports to CMS regarding respiratory illnesses, including facility census, resident vaccination status for specified respiratory illnesses, confirmed resident cases and residents hospitalized from such illnesses.

Final Rule Fiscal Year 2024 SNF PPS — The SNF PPS FY 2024 Final Rule, which was effective October 1, 2023, updated the Medicare payment rates and modified the SNF QRP and the SNF VBP Program.

The SNF PPS FY 2024 Final Rule finalized the rates to be paid in fiscal year 2024, which started on October 1, 2023 and ran through September 30, 2024.

The net effect of these changes was an overall 4.0% increase in payments to SNFs in FY 2024.

The increase included a 6.4% net market basket update to the payment rates of 3.0%, plus a 3.6% market basket forecast error adjustment, less a 0.2% productivity adjustment, as well as a negative 2.3% adjustment in the FY 2024 SNF PPS rates due to the second phase of the Patient Driven Payment Model (PDPM) parity adjustment recalibration.

In addition, this final rule also updates the SNF QRP for FY 2024 and future years, including the adoption of two new quality reporting measures, modification of one measure and removal of three measures resulting in public reporting of four QRP measures.

Additionally, the SNF PPS FY 2024 Final Rule made changes to the SNF VBP Program, specifically adopting four new measures:

the nursing staff turnover measure, the discharge function score measure, the long stay hospitalization measure per 1,000 resident days and the percent of residents experiencing one or more falls with a major injury (long stay);

the existing SNF 30-day all-cause readmission measure (SNFRM) is replaced with the SNF within stay potentially preventable readmissions measure beginning in FY 2028.

SNF PPS FY 2024 Final Rule adopted the Nursing Staff Turnover (NST) measure for the SNF VBP program beginning with the FY 2026 program year.

This is a structural measure that has been collected and publicly reported on Care Compare, and the measure assesses the stability of the staffing within a SNF using nursing staff turnover.

The NST measure uses facility-reported, electronic data from CMS’ Payroll-Based Journal (PBJ) system to calculate annual turnover rates for nursing staff, including RNs, LPNs, and nurse assistants.

Facilities began reporting this measure in FY 2024, with payment effects beginning in FY 2026.

The NST measure looks at six consecutive quarters of data.

It starts with a baseline quarter and the first two quarters of the performance period to identify eligible employees.

Then, uses the next four quarters to find the number of employment cycles that ended in turnover.

Finally, the data from the sixth quarter is validated to identify gaps in days worked that began in the last 60 days of the fifth quarter used for the measure.

The measure score is then calculated by comparing the total number of eligible employees with 60-day gaps in working during the specified periods.

After submission, CMS may audit the data and if discrepancies are found, the consequences may include penalties, decreased ratings and suppression of metrics for the trailing 6 quarters.

Under the 2025 Home Health PPS Final Rule, long-term care facilities, including SNFs, are required to submit at least weekly reports to CMS on respiratory illnesses.

These reports must include information such as facility census, resident vaccination status for specified respiratory illnesses, confirmed resident cases and residents hospitalized from such illnesses.

Sequestration of Medicare Rates — The Budget Control Act of 2011 requires a mandatory, across the board reduction in federal spending, called sequestration.

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MPASA was referred to the House Ways and Means Committee and House Committee on Energy and Commerce on October 29, 2024, and referred to the Subcommittee on Health on December 17, 2024, with no further action taken on the bill, which did not pass into law before the end of the 118th Congress in December of 2024.

Skilled Nursing Facility Value-Based Purchasing (SNF-VBP) Program — The SNF-VBP Program rewards SNFs with incentive payments based on the quality of care they provide to Medicare beneficiaries, as measured by a hospital readmissions measure.

CMS annually adjusts its payment rules for SNFs using the SNF-VBP Program.

The program also introduced quality measures to assess how health information is shared and adopted several standardized patient assessment data elements that assess factors such as cognitive function and mental status, special services and social determinants of health.

CMS uses regulations to specify how it measures the performance for SNFs as well as the data that SNFs are to report to CMS.

The deadlines for baseline period quality measure quarterly reporting and performance periods and standards began in the 2023 program year.

The final rule for the fiscal year 2023 SNF PPS also provided for SNF-VBP program expansion beyond the use of its single, all-cause hospital readmission measure to determine payment, with the inclusion of measures in fiscal year 2026 for SNF healthcare associated infections requiring hospitalization (SNF HAI) and total nursing hours per resident day measures and in fiscal year 2027, the discharge to community post-acute care measure for SNFs, which assess the rate of successful discharges to the community from a SNF setting.

The SNF PPS FY 2024 Final Rule elected to replace the SNFRM measure with the SNF within-stay (WS) potentially preventable readmission (PPR) measure beginning in the FY 2028 program year.

The PPR measure assesses the risk-standardized rate of unplanned and potentially avoidable readmissions during SNF stays for Medicare fee-for-service beneficiaries.

The new SNF WS PPR measure refines the original Skilled Nursing Facility 30-Day Potentially Preventable Readmission (SNFPPR) measure, which followed the requirements of the Protecting Access to Medicare Act (PAMA) of 2014.

The refinement in the SNF WS PPR measure shifts the observation window from a fixed 30-day post-hospital discharge to the duration of the SNF stay.

Moreover, the time gap allowed between the prior inpatient discharge and the SNF admission has been extended from one day to 30 days.

These changes, based on feedback from expert panels and a 2015 partnership, better align the measure with the IMPACT Act's provisions and enhance the reliability of tracking preventable readmissions.

Additionally, the SNF WS PPR measure's calculations use two years of Medicare claims data to generate a provider-specific risk-standardized readmission rate.

The SNF PPS FY 2025 Final Rule adopted several operational and administrative updates to the SNF VBP Program.

The SNF rule adopted a policy to select, retain and remove measurements to ensure the VBP Program’s evaluation metrics remain relevant and effective for assessing care quality, as well as policies for updating technical measures and policies for reviewing and correcting data CMS relies upon to calculate its measures.

The rule allows CMS to update the case-mix methodology for the Total Nurse Staffing measure, and its policies to allow the review and revise measures, as well as review and correct data, allow SNFs to review and correct PBJ data from fiscal year 2026 and MDS data from fiscal year 2027, allowing CMS to fashion more accurate measures based on updated data.

Except for the increase in Medicare reimbursement made available under the OBBB discussed above, as of September 30, 2025, there has not been any further legislation proposed to combat this sequestration of Medicare rates.

Skilled Nursing Facility Value-Based Purchasing (SNF-VBP) Program — The SNF-VBP Program incentivizes SNFs by awarding payments based on the quality of care provided to Medicare beneficiaries, primarily measured through hospital readmission rates.

Each year, CMS adjusts its payment rules for SNFs using this program, which now includes additional quality measures such as sharing of health information and standardized patient assessment data elements that evaluate cognitive function and mental status, special services and social determinants of health.

CMS regulations outline both the performance metrics and the required data reporting for SNFs.

Reporting deadlines for baseline period and performance periods began with the 2023 program year.

The FY 2023 SNF PPS Final Rule expanded the SNF-VBP program beyond the single hospital readmission measure, adding new metrics for fiscal year 2026, such as healthcare associated infections requiring hospitalization (SNF HAI) and total nursing hours per resident day, and in fiscal year 2027, the discharge to community post-acute care measure for SNFs, which tracks of successful transitions from SNFs to community settings.

In the FY 2024 SNF PPS Final Rule, CMS elected to replace the SNFRM measure with the SNF within-stay (WS) potentially preventable readmission (PPR) measure starting in FY 2028.

The PPR measure assesses the risk-standardized rate of unplanned, avoidable readmissions during SNF stays for Medicare fee-for-service beneficiaries.

This new measure refines the previous 30-Day readmission metric by extending the observation period to the entire SNF stay and increasing the allowable gap between hospital discharge and the SNF admission to 30 days.

These changes better align with the IMPACT Act and enhance the reliability of preventable readmissions tracking.

The measure uses two years of Medicare claims data to calculate provider-specific risk-standardized readmission rate.

The FY 2025 SNF PPS Final Rule adopted several operational and administrative updates to the SNF VBP Program, including policies for selecting, updating and removing measurements to ensure ongoing relevance and effectiveness for assessing care quality.

CMS also updated technical measures and procedures for reviewing and correcting data used to calculate its measures.

SNFs can now review and correct PBJ data from fiscal year 2026 and MDS data from fiscal year 2027, allowing for more precise measurement based on updated data.

The FY 2026 SNF PPS Final Rule finalized several updates, including setting performance standards for the FY 2028 and FY 2029 program years to meet statutory notice requirements.

CMS will apply the previously established scoring methodology

to the SNF Within-Stay Potentially Preventable Readmission (WS PPR) measure starting in FY 2028.

Additionally, CMS removed the Health Equity Adjustment to simplify scoring and clarify incentives for quality improvement.

A new reconsideration process was also adopted, enabling SNFs to request a review if they are dissatisfied with CMS’s decision on a correction request, beginning with the FY 2027 program year.

Part B Rehabilitation Requirements — A portion of our revenue is paid by the Medicare Part B program under a fee schedule.

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and (2) providers in private practice, including speech-language pathologists, who perform and bill for multiple services in a single day.

Through the end of CY 2024, certain of our Part B services provided through telehealth would qualify for Medicare reimbursement based on flexibility first provided under the Emergency Waivers, which added physical therapy, occupational therapy and speech-language pathology to the list of approved telehealth Providers for the Medicare Part B programs provided by a SNF.

On March 9, 2024, President Biden signed the Consolidated Appropriations Act of 2024, which included a 2.93% update to the 2024 Physician Fee Schedule (PFS) Conversion Factor (CF) for dates of service March 9, 2024 through December 31, 2024.

This replaced the 1.25% update provided by the Consolidated Appropriations Act of 2023.

Through the end of 2024, certain of our Part B services provided through telehealth would qualify for Medicare reimbursement based on flexibility first provided under the Emergency Waivers, which added physical therapy, occupational therapy and speech-language pathology to the list of approved telehealth Providers for the Medicare Part B programs provided by a SNF.

During the Public Health Emergency (PHE), CMS added certain PT and OT services to the list of Medicare-covered telehealth services on a temporary basis, some of which were made permanent for use and new codes were added for PT, OT, or SLP telehealth services—including some “sometimes therapy” codes that were not subject to MPPR.

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On March 15, 2025, the President signed into law the Full-Year Continuing Appropriations and Extensions Act, 2025 that Congress passed on March 14, 2025, which extended these pandemic-era telehealth waivers for Medicare beneficiaries through September 30, 2025.

Under the Calendar Year (CY) 2025 Physician Fee Schedule (PFS) Final Rule (2025 PFS Final Rule), the 2.93% increase to the CY 2024 PFS Conversion Factor (CF) expired and CMS seeks to impose an estimated 0.05% adjustment based on changes in work relative value units (RVUs) for certain services.

As a result, the 2025 PFS Final Rule implements a reimbursement reduction of 2.83%, with a CF of $32.35, which is a reduction from the CY 2024 CF of $33.29.

The 2025 PFS Final Rule adopts a 3.6% increase to the threshold for coding modifier requirements for PT and SLP combined, totaling $2,410 for CY 2025 with the same threshold for OT services.

The threshold for targeted medical review for PT and OT (combined) and SLP is expected to remain at $3,000 through CY 2027.

While the OBBB does not affect the CY 2025 PFS Final Rule, the OBBB did provide a one-year 2.5% increase to the conversion factor for services provided between January 1, 2026 and January 1, 2027.

On July 14, 2027, CMS issued the CY 2026 PFS Proposed Rule (2026 PFS Proposed Rule), which increases Medicare reimbursement for provider services by a 2.5% increase in the conversion factor as set forth in the OBBB.

Under the 2025 PFS Final Rule, the 2.93% increase to the 2024 PFS CF expired and CMS seeks to impose an estimated 0.05% adjustment based on changes in work relative value units (RVUs) for certain services.

As a result, the 2025 PFS Final Rule implements a reimbursement reduction of 2.83%, with a CF of $32.35, which is a reduction from the 2024 CF of $33.29.

The 2025 PFS Final Rule adopts a 3.6% increase to the threshold for coding modifier requirements for PT and SLP combined, totaling $2,410 for 2025 with the same threshold for OT services.

The threshold for targeted medical review for PT and OT (combined) and SLP is expected to remain at $3,000 through 2027.

While the OBBB does not affect the 2025 PFS Final Rule, the OBBB did provide a one-year 2.5% increase to the conversion factor for services provided between January 1, 2026 and January 1, 2027.

On July 14, 2025, CMS issued the 2026 PFS Proposed Rule (2026 PFS Proposed Rule), which increases Medicare reimbursement for provider services by a 2.5% increase in the conversion factor as set forth in the OBBB.

The 2026 PFS Proposed Rule contains numerous significant changes regarding payment methods and models, encourages care coordination, reduces collection and reporting of data measurements, and continues certain telehealth flexibilities that began during the COVID-19 pandemic.

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CMS is also establishing new coding and payment for caregiver training services, including training services provided through eligible telehealth means.

On October 29, 2024, MPASA was introduced in the House of Representatives, seeking to increase the amount paid to physicians under Medicare by 4.73%.

MPASA was referred to the House Ways and Means Committee and House Committee on Energy and Commerce on October 29, 2024, and no further action has been taken on this bill.

On March 9, 2024, President Biden signed the Consolidated Appropriations Act, 2024, which included a 2.93% update to the CY 2024 PFS CF for dates of service March 9, 2024 through December 31, 2024.

This replaced the 1.25% update provided by the Consolidated Appropriations Act, 2023.

The 2024 PFS Final Rule was finalized in November 2023, which changed Medicare payments under the PFS and other Medicare Part B components.

The CY 2024 PFS Final Rule contained a conversion factor of $32.74, which was a decrease of $1.15 from the CY 2023 PFS conversion factor of $33.89.

This CY 2024 conversion factor was 3.4% lower than the CY 2023 conversion factor.

The billing period started on January 1, 2024 and ran through December 31, 2024.

The 2024 PFS Final Rule made payments when physicians and NPPs, involve caregivers in implementing an individualized plan of treatment or therapy.

These provisions incentivize the training of caregivers and provide additional funds to offset the costs of training these caregivers.

For PT and SLP combined, the threshold for coding modifier requirements increases to $2,330 for CY 2024 with the same threshold for OT services.

The KX modifier is added to medical claims to indicate the providing clinician attests that the services corresponding to that claim were medically necessary and that the justification for those services is contained within the patient’s medical records.

The 2024 PFS Final Rule allowed for general supervision of therapy assistants by PTs and OTs for remote therapeutic monitoring (RTM) services.

This change may affect the rate of reimbursement for PT and OT services in the future.

Additionally, the 2024 PFS Final Rule added certain health and well-being coaching services that Medicare reimbursed on a temporary basis for 2024.

The final rule also added risk assessments for social determinants of health to the list of telehealth services Medicare would reimburse.

Programs of All-Inclusive Care for the Elderly

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Under the qui tam or “whistleblower” provisions of the FCA, a private individual with knowledge of fraud may bring a claim on behalf of the federal government and receive a percentage of the federal government’s recovery.

The Biden-Harris Administration had also signaled an increasing focus on nursing home performance and the reimbursement nursing homes receive from federal healthcare payment programs.

The change in the presidency following the 2024 presidential elections may result in a change to this focus, in whole or in part.

There has not yet been public disclosure of the priorities of the new Presidential Administration, in addition to those of the anticipated new leaders of HHS and CMS, as they relate to SNFs and long-term care facilities.

Many states also have a false claim prohibition that mirrors or closely tracks the federal FCA.

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The Five Star Quality Ratings incorporated staffing data such as staff tenure and SNF weekend staffing beginning with the October 2022 refresh of the Nursing Home Compare website.

In June 2025, CMS announced changes to Nursing Home Care Compare and the Five Star Quality Rating system that will take effect on July 30, 2025.

Under these changes, CMS will no longer include the third most recent standard health survey in calculating the health inspection rating, and instead use only the two most recent surveys going forward.

The most recent survey will be weighted at 75% of the total score, with the second most recent survey result constituting the remaining 25% of the score.

CMS will also begin publishing aggregated five-star performance metrics for nursing home chains and will remove COVID-19 vaccination measures from facility profile pages.

Additionally, CMS is updating the long-stay antipsychotic measure to incorporate Medicare and Medicaid claims and Medicare Advantage encounter data, with the updated measure taking effect October 29, 2025, likely increasing national antipsychotic rates from approximately 14.6% to 17.0%.

In June 2025, CMS announced upcoming modifications to Nursing Home Care Compare platform and the Five Star Quality Rating system, set to take effect on July 30, 2025.

Under these changes, CMS discontinued the use of the third most recent standard health survey in calculating the health inspection rating, relying instead on only the two latest surveys.

The most recent survey will be weighted at 75% of the total score, while the second most recent survey result will contribute to the remaining 25% of the score.

Additionally, CMS will begin publishing aggregated five-star performance metrics for nursing home chains and will remove COVID-19 vaccination measures from facility profile pages.

CMS is also updating the long-stay antipsychotic measure to incorporate data from Medicare and Medicaid claims as well as Medicare Advantage encounter records.

This updated measure, effective January 28, 2026, is expected to increase the reported national antipsychotic rates from 14.6% to 17.0%.

We expect that this change will result in varying changes to individual facilities' ratings.

However, starting July 30, 2025, updates to Nursing Home Care Compare will be temporarily paused until October 2025 as CMS transitions to a cloud-based Internet Quality Improvement and Evaluation System (iQIES) for survey data management.

This pause is intended to give CMS time to validate the accuracy and integrity of the data and ensure that publicly reported information meets quality standards before resuming updates to the five-star ratings.

The move to iQIES, along with the other changes, may also result in further adjustments to the rating system and could prompt additional audits by CMS or state surveyors.

In January of 2025, CMS unfroze four of its quality measures that it previously froze with its April 2024 refresh.

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Additionally, the quality measure rating cut points were also adjusted to maintain their same overall distribution of ratings across measured facilities.

In July of 2024, CMS updated the Nursing Home Five-Star Quality Rating System’s Technical Users’ Guide to identify and explain a change in staffing case-mix methodology to adopt a model based on PDPM, changing the measures that CMS previously froze in April of 2024.

This update to the Technical Users’ Guide also extended the gap period (during which no work hours are reported) for defining nurse staffing turnover from 60 days to 90 days.

As a result of this update, for the three staffing turnover measures, individuals who no longer work in the nursing home are defined as eligible individuals who have a period of at least 90 consecutive days in which they do not work at all, increased from 60 days.

CMS also updated the risk-adjustment models for the four claims-based measures to reflect measures of functional abilities and goals, rather than residents’ functional status.

Finally, CMS revised the thresholds for the staffing measures and claims-based quality measures to maintain the same distribution by points for affected staffing and quality measures, maintaining the same proportions of available five- and four-star ratings for facilities.

In April of 2024, CMS updated its Nursing Home Five-Star Quality Rating System’s Technical Users’ Guide in several respects.

First, CMS froze four of the quality measures from any changes:

(1) percentage of residents who made improvements in function (short stay);

(2) percentage of residents whose need for help with activities of daily living has increased (long stay);

(3) percentage of residents whose ability to move independently worsened (long stay);

and (4) percentage of high-risk residents with pressure ulcers (long stay), which would have been unfrozen and modified as of January 2025.

The short-stay functional improvement measure is replaced in October of 2024 with a new cross-setting function measure used in the SNF QRP.

CMS also updated the staffing level case-mix adjustment methodology and froze three staffing level measures until July of 2024:

(1) adjusted RN staffing (HPRD);

(2) adjusted total nurse staffing (HPRD);

and (3) adjusted total nurse staffing on weekends (HPRD).

These frozen measures will not affect staff turnover measures.

Additionally, beginning in April of 2024, CMS revised the staffing rating methodology to give the lowest possible score for staffing turnover measures to providers who fail to submit staffing data or submit erroneous data.

In 2023, CMS revised the nursing-home level exclusion criteria used on the administrator turnover measure, adding information regarding the staff turnover measure and an updated ratings table, which identifies the points needed for each nursing facility to obtain certain star ratings.

Under these guidelines, only 10% of nursing facilities can receive a five-star rating in the state where it operates, with the bottom 20% receiving a one-star rating and the remaining 70% receiving a distribution of two-, three-, and four-star ratings.

Ownership Transparency Final Rule — CMS' final rule published in November 2023 requires SNFs to publicly disclose certain additional information regarding their ownership and managerial relationships, including the identity of any person or legal entity that:

In July 2024, CMS updated the Nursing Home Five-Star Quality Rating System to reflect several key changes.

The staffing case-mix methodology now uses the PDPM model, replacing measures that were previously frozen in April.

CMS also extended the definition of staffing turnover.

Employees are now considered “turned over” if they haven’t worked for 90 consecutive days, up from 60.

Additionally, CMS revised risk-adjustment models for claims-based measures to focus on residents’ functional abilities and goals, rather than just their status.

To maintain consistency in star ratings, CMS adjusted thresholds so the distribution of 4- and 5-star ratings remains stable.

In April 2024, CMS froze four quality measures and three staffing measures to prevent changes until a subsequent date.

It also updated the staffing rating methodology to assign the lowest score to facilities that fail to submit or submit incorrect staffing data.

Ownership Transparency Final Rule — In November 2023, CMS finalized a rule requiring SNFs to publicly disclose expanded information regarding their ownership and management structure, including the identity of any person or legal entity that:

(1) exercises financial, operational, or managerial control over any facility or part of a facility, or provides services to a facility that include its policies and procedures or cash management services;

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The rule also expands ownership and control interest disclosures to include information about each member of the facilities governing body, individuals or entities serving as officers, directors, members, partners or managing employees, and a comprehensive breakdown of the organizational structure of any additional disclosable party that is not a natural person along with a description of their relationships with the facility.

As of November of 2024, all SNFs are required to comply with this rule’s requirements.

Starting in November of 2024, all SNFs must comply with these requirements.

To facilitate compliance, CMS now requires SNFs to submit a new "SNF Attachment" to the standard CMS form 885A during revalidation.

On July 23, 2025, CMS announced that all SNFs must revalidate their enrollment using this new attachment by January 1, 2026, regardless of their previous revalidation date.

Certain states have adopted laws reflecting their concerns regarding ownership transparency.

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Additionally, in March 2024, the California Department of Health Care Access and Information of the California Health and Human Services Agency issued its notice of approval of regulatory action establishing policies and procedures that implement financial and ownership transparency requirements for California-licensed SNFs that are required by California law passed in 2021.

Additionally, on July 27, 2025, the State of Washington enacted H.B.

1686, directing state agencies to develop a plan and recommendations for creating a registry of health care entities, including SNFs.

State-level Legislation and Healthcare Reform

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These examples, highlight the varied approaches that occur from state to state, with different approaches making it either easier or harder for our independent subsidiaries to operate.

In addition, the impacts of the OBBB, as discussed above, will create varying approaches by state legislatures to address the provisions of such bill.

We continue to monitor and advocate for positions that protect the interest of our employees, residents and those of our independent subsidiaries at all levels of government, particularly at the state and local levels.

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The Chevron doctrine is frequently implicated in litigation over healthcare regulation, ranging from rules concerning staffing requirements and the validity of arbitration provisions, to requirements for healthcare workers to be vaccinated.

Subsequent analysis has focused on the limits of the Loper decision, including any deference that courts may still afford to administrative agencies when based on agency fact-finding and policy-making, particularly where such power is expressly delegated to the agency by statute.

Subsequent analysis has focused on the limits of the Loper decision, including any deference that courts may still afford to administrative agencies when based on agency fact-finding and policymaking, particularly where such power is expressly delegated to the agency by statute.

The Loper decision likely will have significant and lasting consequences for the promulgation and enforcement of federal regulations by HHS and CMS, and may bear on the depth and detail of future legislation that is passed and enacted as statutes by Congress so that such laws can be enforced without administrative rulemaking or agency enforcement mechanisms.

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As a result, these changes to the DOJ and FTC’s antitrust policies may be changed materially, not implemented, or reverted to prior statements that were withdrawn in February of 2023.

Several states in which we operate have enacted laws that mirror the Federal Hart-Scott-Rodino (HSR) Act.

The HSR Act mandates that parties involved in certain transactions must provide advance notice to the Department of Justice (DOJ) and the Federal Trade Commission (FTC) to obtain clearance, ensuring the transaction complies with federal antitrust regulations.

Similarly, these state-level HSR analogues require parties to notify state authorities and secure approval before finalizing mergers or acquisitions.

This regulatory trend has accelerated in 2025, with more states actively considering or enacting such legislation.

In some cases, state requirements align closely with the federal HSR Act, simply requiring that a copy of the federal HSR filing be submitted to a designated state agency.

However, other states have established distinct or more rigorous standards, sometimes necessitating state approval for transactions that would not trigger federal reporting obligations under the HSR Act.

Among the states where we operate, California implemented its relevant laws in 2024, and Washington expanded the scope of its HSR-like requirements with new legislation effective July 27, 2025.

Nevada, while it did not pass a comprehensive HSR analogue, does require notification or approval for certain healthcare transactions prior to closing.

These evolving state regulations add new layers of compliance for mergers and acquisitions, particularly in the healthcare sector.

California Office of Health Care Affordability

The California Office of Health Care Affordability (OHCA), under California law, requires healthcare entities to provide OHCA with written notice of proposed qualifying agreements or transactions (referred to as a “Material Change Notice”) at least 90 days prior to entering into the agreement or transaction.

Reportable transactions are determined based on a variety of factors outlined in the applicable regulations.

OHCA may coordinate with other state agencies, which may include the California Attorney General, California Department of Managed Care and Department of Insurance, to address the potential consequences of the agreement or transaction on the affected market.

If OHCA determines that a proposed agreement or transaction may have a risk of significant impact on certain aspects of the healthcare market, OHCA will conduct a Cost and Market Impact Review (CMIR) to analyze the issue in more detail.

This CMIR process involves a deeper analysis than OHCA’s initial review of the information contained in a reporting party’s Material Change Notice.

OHCA’s CMIR process may result in findings of anti-competitive effects that could generate a referral to the California Attorney General for further action.

From March 2025 through September 2025, we have cooperated with requests for information from OHCA regarding specific components of a proposed transaction in relation to purported concerns about market impact.

Despite this continued cooperation, on October 10, 2025, OHCA issued an investigatory subpoena to us to produce (among other things) certain confidential and proprietary documents.

We are reviewing the subpoena and will respond within the applicable time period.

Americans with Disabilities Act (ADA)

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OCR has been increasingly involved in the monitoring and enforcement of patient and resident rights, particularly under rulemaking completed under Section 1557 of the ACA.

However, recent litigation and political efforts have seen a reduction in enforcement of Section 1557.

Specifically, HHS announced that it would not enforce certain regulations promulgated under Section 1557 related to discrimination based on sex, gender identity, and pregnancy status.

Real Estate Investment Trust (REIT) Qualification

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RESULTS OF OPERATIONS

Our total revenue for the three months ended June 30, 2025 increased $191.5 million, or 18.5%, compared to the three months ended June 30, 2024, while our diluted GAAP earnings per share grew by 18.0%, from $1.22 to $1.44, compared to the three months ended June 30, 2024.

Our Same Facilities occupancy of 82.1% during the three months ended June 30, 2025, an increase of 2.0% compared to the same period in 2024, demonstrates our ability to gain additional market share even at our more mature operations.

Further, our Transitioning Facilities occupancy increased by 4.6% to 84.0% compared to the same period in 2024, highlighting our organic growth ability that results from transforming underperforming operations that we have acquired.

Our total revenue for the three months ended September 30, 2025 increased $214.6 million, or 19.8%, compared to the three months ended September 30, 2024, while our diluted GAAP earnings per share grew by 6.0%, from $1.34 to $1.42, compared to the three months ended September 30, 2024.

Our Same Facilities occupancy increased by 2.1% to 83.0% during the three months ended September 30, 2025 compared to the same period in 2024, demonstrating our ability to gain additional market share even at our more mature operations.

Further, our Transitioning Facilities occupancy increased by 3.6% to 84.4% compared to the same period in 2024, highlighting our ability to organically grow and transform underperforming operations that we have acquired.

Throughout most of our history, our business has been affected by seasonal fluctuations in occupancy and acuity, which are most prominent when comparing the summer and winter months of the calendar year.

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We have continued to make progress on targeted initiatives related to increasing occupancy and the level of acuity and complexity of the patients we serve in our facilities, attracting and developing our people and acquiring underperforming skilled nursing operations and integrating them with our proven cultural and operational principles.

During the six months ended June 30, 2025, we added 20 new operations.

During the nine months ended September 30, 2025, we added 34 new operations.

We consistently experience healthy growth in both revenue and overall results as we continue to work diligently with existing and recently acquired operations so that each operation can reach its full clinical and financial potential.

2 unchanged sentences

The following table sets forth details of operating results for our revenue, expenses and earnings, and their respective components, as a percentage of total revenue for the periods indicated:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

19 unchanged sentences

6.5 % 7.3 % 6.7 % 7.0 %

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

61 unchanged sentences

• gain on business interruption recoveries and loss on long-lived assets;

• gain on other investments;

• amortization of patient base intangible assets.

1 unchanged sentence

We calculate EBITDA as net income, adjusted for net losses attributable to noncontrolling interest, before (a) interest income, (b) provision for income taxes, (c) depreciation and amortization, and (d) interest expense.

EBITDA in the prior period has been recast to conform to the current period presentation.

Adjusted EBITDA

20 unchanged sentences

The table below reconciles income before provision for income taxes to Adjusted EBT for the periods presented:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

6 unchanged sentences

12,000 (555) 12,000 (1,425)

(Gain)/loss on business interruption recoveries and long-lived assets

(Gain)/loss on business interruption recoveries and long-lived assets, net

(1,660) 486 (2,660) 2,335

Gain on other investments (2)

(2,437) — (2,437) —

Acquisition related costs (3)

6 unchanged sentences

(1) Represents specific proceedings and adjustments arising outside of the ordinary course of business.

(2) Represents gains on the sale of investments that are not part of our core business operations.

These investments have no observable market prices and are held at historical cost basis until sold or impaired.

(3) Represents costs incurred to acquire operations that are not capitalizable.

1 unchanged sentence

The table below reconciles net income to EBITDA, Adjusted EBITDA and Adjusted EBITDAR for the periods presented:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

16 unchanged sentences

12,000 (555) 12,000 (1,425)

(Gain)/loss on business interruption recoveries and long-lived assets

(Gain)/loss on business interruption recoveries and long-lived assets, net

(1,660) 486 (2,660) 2,335

Gain on other investments (2)

(2,437) — (2,437) —

Acquisition related costs (3)

1 unchanged sentence

Costs incurred related to system implementations 701 89 1,472 2,522

437 2,357 771 2,433

ADJUSTED EBITDA

4 unchanged sentences

(1) Represents specific proceedings and adjustments arising outside of the ordinary course of business.

(2) Represents gains on the sale of investments that are not part of our core business operations.

These investments have no observable market prices and are held at historical cost basis until sold or impaired.

(3) Represents costs incurred to acquire operations that are not capitalizable.

Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024

Three Months Ended September 30, 2025 Compared to the Three Months Ended September 30, 2024

The following tables set forth details of operating results for our revenue and earnings, and their respective components, by our reportable segment for the periods indicated.

Three Months Ended June 30, 2025

Three Months Ended September 30, 2025

Skilled services Standard Bearer All Other Eliminations Consolidated

4 unchanged sentences

Segment income (loss) 153,126 9,622 (55,075) — 107,673

Loss on long-lived assets — — — — (1,073)

Income before provision for income taxes $ 106,600

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Skilled services Standard Bearer All Other Eliminations Consolidated

4 unchanged sentences

Segment income (loss) 128,489 7,274 (36,603) — 99,160

Loss on long-lived assets

Income before provision for income taxes $ 98,674

Our total revenue increased by $191.5 million, or 18.5%, compared to the three months ended June 30, 2024.

The increase in revenue was primarily driven by increases in occupancy of 2.0% and 4.6% from our skilled services in Same Facilities and Transitioning Facilities, respectively, coupled with increasing daily revenue rates.

In addition, our Recently Acquired Facilities revenue increased by $110.9 million, when compared to the same period in 2024 as a result of acquisitions.

Our total revenue increased by $214.6 million, or 19.8%, compared to the three months ended September 30, 2024.

The increase in revenue was primarily driven by increases in occupancy of 2.1% and 3.6% from our skilled services in Same Facilities and Transitioning Facilities, respectively, coupled with increasing skilled mix and daily revenue rates.

In addition, our Recently Acquired Facilities revenue increased by $135.2 million, when compared to the same period in 2024, primarily as a result of acquisitions from October 1, 2024 through September 30, 2025.

Skilled Services

The following tables present the skilled services revenue and key performance metrics by category during the three months ended June 30, 2025 and 2024:

Three Months Ended June 30,

The following tables present the skilled services revenue and key performance metrics by category during the three months ended September 30, 2025 and 2024:

Three Months Ended September 30,

2025 2024 Change % Change

10 unchanged sentences

Skilled mix by nursing revenue 48.9 % 48.5 % 0.4 % 0.8 %

Three Months Ended June 30,

Three Months Ended September 30,

2025 2024 Change % Change

9 unchanged sentences

Skilled mix by nursing revenue 50.5 % 49.5 % 1.0 % 2.0 %

Three Months Ended June 30,

Three Months Ended September 30,

2025 2024 Change % Change

9 unchanged sentences

Skilled mix by nursing revenue 50.9 % 48.9 % 2.0 % 4.1 %

Three Months Ended June 30,

Three Months Ended September 30,

2025 2024 Change % Change

14 unchanged sentences

(4) Recently Acquired Facility (Acquisitions) results represent all facilities purchased on or subsequent to January 1, 2024.

(5) Skilled services revenue and key performance metrics for a closed facility was not material and has been excluded from Same Facilities results during the three months ended June 30, 2024.

The facility was closed in 2024 as the program was transitioned from an intermediate care facility to a group home setting.

Skilled services revenue increased by $182.3 million, or 18.4%, compared to the three months ended June 30, 2024.

The increases in skilled services revenue were across all payer types, including increases in Medicaid revenue of $81.2 million, or 17.4%, Medicare revenue of $32.2 million, or 12.5%, managed care revenue of $38.5 million, or 20.1% and private revenue of $30.4 million, or 41.2%.

The increase in skilled services revenue was primarily driven by strong occupancy performance across our skilled services operations.

Our consolidated occupancy increased by 1.5% to 81.3%, during the three months ended June 30, 2025 compared to the same period in 2024, as a result of an increase in skilled days, driven by steady growth in our managed care, Medicare and long-term care Medicaid patients.

Skilled services revenue increased by $206.0 million, or 19.9%, compared to the three months ended September 30, 2024.

The increases in skilled services revenue were across all payer types, including increases in Medicaid revenue of $95.0 million, or 19.6%, and Medicare revenue of $39.7 million, or 15.1%.

The increase in skilled services revenue was primarily driven by strong occupancy and skilled mix performance across our skilled services operations.

Our consolidated occupancy increased by 1.7% to 82.3%, during the three months ended September 30, 2025 compared to the same period in 2024 across all payors, with an increase in skilled days from our operations within Same Facilities and Transitioning Facilities.

Revenue in our Same Facilities increased by $52.9 million, or 6.6%, compared to the same period in 2024, due to increased occupancy from strong skilled days and revenue per patient day.

Our diligent efforts to strengthen our partnerships with various managed care organizations, hospitals and local communities, increased our managed care revenue by 10.5%, mainly due to an increase in managed care days and revenue per patient day.

Our Medicare revenue increased by 4.6% mainly due to an increase in Medicare days and an increase in revenue per patient day.

In addition, Medicaid revenue increased by $13.2 million or 3.5%, mainly from the increase in Medicaid days and an increase in revenue per patient day, driven by daily rates, supplemental and quality improvement programs.

Revenue generated by our Transitioning Facilities increased by $19.6 million, or 11.6%, primarily due to improved occupancy growth, increases in skilled mix days and revenue per patient day.

The increases in revenue were derived from increasing in Managed Care revenue of 22.7%, Medicare revenue of 6.0%, Medicaid revenue of 8.9% and private revenue of 30.4%.

These increases demonstrate our ability to focus on increasing occupancy across payer types.

Skilled services revenue generated by Recently Acquired Facilities increased by approximately $110.9 million compared to the three months ended June 30, 2024 .

The increase was primarily due to 34 operational expansions between July 1, 2024 and June 30, 2025 across 14 states.

Our continuous efforts to strengthen our partnerships with various managed care organizations, hospitals and local communities, increased our managed care revenue by 6.6%, resulting from an increase in managed care days and revenue per patient day.

We continued to expand our Medicare patient base while also increasing our share of the growing Medicare Advantage market.

Our Medicare revenue increased by 3.8% due to an increase in Medicare days and revenue per patient day.

In addition, our other skilled revenue has continued to support the needs of the local communities through the expansion of the Veterans Affairs programs.

Revenue in our Transitioning Facilities increased by $18.0 million, or 10.3%, compared to the same period in 2024, due to improved occupancy growth, increases in skilled mix days and revenue per patient day.

The increases in revenue were derived from increased Managed Care revenue of 22.0%, Medicaid revenue of 7.6% and private and other revenue of 33.2%.

The increases are a result of an increase in patient days across all payer types, which reflect our operational fundamentals as we continue to transition and integrate these facilities.

Revenue in our Recently Acquired Facilities increased by approximately $135.2 million compared to the same period in 2024.

The 34 operational expansions between October 1, 2024 and September 30, 2025 across 12 states contributed $113.0 million of the total increase.

Historically, we have generally experienced lower occupancy rates and lower skilled mix at Recently Acquired Facilities and therefore, we anticipate lower overall occupancy during years of growth.

1 unchanged sentence

The following table reflects the change in skilled nursing average daily revenue rates by payor source, excluding services that are not covered by the daily rate (1) :

Three Months Ended June 30,

Three Months Ended September 30,

Same Facility Transitioning Acquisitions Total

10 unchanged sentences

(1) The rates are based on contractually agreed-upon amounts or rates, excluding the estimates of variable consideration under the revenue recognition standard, Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 606.

Our Medicare daily rates at Same Facilities and Transitioning Facilities increased by 5.1% and 3.8%, respectively, compared to the three months ended June 30, 2024.

The increase is attributable to the 4.2% net market basket increase that became effective in October 2024, and a shift toward higher acuity patients.

Our average Medicaid rates increased 4.4% due to state reimbursement increases, our participation in supplemental Medicaid payment programs and quality improvement programs in various states.

Our Medicare daily rates at Same Facilities and Transitioning Facilities increased by 5.6% and 6.3%, respectively, compared to the three months ended September 30, 2024.

The increase is attributable to the 4.2% net market basket increase that became effective in October 2024 as well as a shift toward higher acuity patients.

As hospitals continue to discharge individuals with more complex medical conditions to skilled nursing facilities, we are experiencing a greater proportion of higher acuity patients, which necessitates more advanced and specialized care.

Our average Medicaid rates increased 5.4% due to state reimbursement increases, our participation in Medicaid supplemental payment and quality improvement programs in various states.

Payor Sources as a Percentage of Skilled Nursing Services.

1 unchanged sentence

The following tables set forth our percentage of skilled nursing patient revenue and days by payor source:

Three Months Ended June 30,

Three Months Ended September 30,

Same Facility Transitioning Acquisitions Total

9 unchanged sentences

100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %

Three Months Ended June 30,

Three Months Ended September 30,

Same Facility Transitioning Acquisitions Total

11 unchanged sentences

The following table sets forth total cost of services for our skilled services segment for the periods indicated (dollars in thousands):

Three Months Ended June 30, Change

Three Months Ended September 30, Change

2025 2024 $ %

1 unchanged sentence

Revenue percentage 79.9 % 79.8 % 0.1 %

Cost of services related to our skilled services segment increased by $141.2 million, or 17.8% from the same period in 2024.

Cost of services as a percentage of revenue decreased to 79.5% from 79.9% during the same period as we continued to see a shift in revenue mix, stabilized labor markets and moderated insurance expenses, which were partially offset by increases in expense related to deferred compensation.

In addition, our cost of services as a percentage of revenue varies depending on the volume of acquisitions during the period, which typically have higher costs during the transition period.

Cost of services for our skilled services segment increased by $165.8 million, or 20.1% compared to the same period in 2024.

As a percentage of revenue, cost of services rose slightly to 79.9% from 79.8%.

This increase was primarily driven by higher operational expense associated with recent acquisitions and insurance expense.

Historically, our cost of services as a percentage of revenue varies depending on the volume of acquisitions during the period, which typically have higher costs during the transition period.

Standard Bearer

Three Months Ended June 30, Change

Three Months Ended September 30, Change

2025 2024 $ %

8 unchanged sentences

$ 19,331 $ 14,758 $ 4,573 31.0 %

Rental revenue — Our rental revenue, including revenue generated from our independent subsidiaries, increased by $8.1 million, or 34.7%, to $31.5 million, compared to the three months ended June 30, 2024.

The increase in revenue is primarily attributable to 20 real estate purchases, as well as annual rent increases since the three months ended June 30, 2024.

FFO — Our FFO increased by $3.9 million, or 26.6%, to $18.4 million, compared to the three months ended June 30, 2024.

Rental revenue — Our rental revenue, including revenue generated from our independent subsidiaries, increased by $8.2 million, or 33.5%, to $32.6 million, compared to the three months ended September 30, 2024.

The increase in revenue is primarily attributable to 26 real estate purchases, as well as annual rent increases since the three months ended September 30, 2024.

FFO — Our FFO increased by $4.6 million, or 31.0%, to $19.3 million, compared to the three months ended September 30, 2024.

The increase in rental revenue of $8.2 million was partially offset by increases in interest expense of $3.6 million associated with the agreements between Standard Bearer and us as we continue to grow our real estate portfolio.

All Other Revenue

Our other revenue increased by $10.0 million, or 21.1%, to $57.3 million, compared to the three months ended June 30, 2024.

Other revenue includes senior living revenue of $27.6 million, revenue from other ancillary services and rental income of $3.2 million.

Our other revenue increased by $9.4 million, or 18.4%, to $60.6 million, compared to the three months ended September 30, 2024.

Other revenue includes senior living revenue of $29.8 million, revenue from other ancillary services of $27.6 million and rental income of $3.2 million.

The increase in other revenue is primarily attributable to the increase in occupancy in our senior living operations and growth in our other ancillary services.

Consolidated Financial Expenses

Rent-cost of services — Our rent-cost of services as a percentage of revenue decreased by 0.4% to 4.7%, since our operational expansions included a higher mix of real estate purchases.

Rent-cost of services — Our rent-cost of services as a percentage of revenue decreased by 0.4% to 4.7%, as the expansions in our footprint have resulted from more real estate purchases than leased properties.

General and administrative expense — General and administrative expense increased $11.2 million or 19.9%, to $67.4 million.

This increase was primarily driven by additional headcount due to acquisition activities and increases in wages and benefits due to enhanced performance and growth.

General and administrative expense as a percentage of revenue increased by 0.2% to 5.6%.

General and administrative expense as a percentage of revenue remained consistent at 5.2%.

Depreciation and amortization — Depreciation and amortization expense increased $5.2 million, or 24.0%, to $26.6 million.

This increase was primarily related to the additional depreciation and amortization incurred as a result of our newly acquired operations and capital expenditures.

Depreciation and amortization expense as a percentage of revenue remained consistent at 2.0%.

Other income, net — Other income, net as a percentage of revenue increased by 0.1%.

This increase was primarily related to the additional depreciation and amortization incurred as a result of our newly acquired operations, which have a greater mix of real estate purchases than leases, and capital expenditure investments.

Depreciation and amortization increased 0.2%, to 2.1%, as a percentage of revenue.

Other income, net — Other income, net as a percentage of revenue decreased by 0.1%.

Other income primarily includes interest income from our investments, interest expense related to our debt and deferred compensation gains and losses.

Other income, net increased by $2.4 million due to gains in our deferred compensation plan which incurs gains or losses depending on market performance.

These gains were offset by a decline in interest income as we used cash on hand to fund more real estate purchases during the period.

During the three months ended June 30, 2025 and 2024, the deferred compensation plan had gains of $4.5 million and $0.5 million, respectively.

We also recorded an offsetting expense allocated between cost of services and general and administrative expenses for the respective periods.

Provision for income taxes — Our effective tax rate was 24.8% for the three months ended June 30, 2025, compared to 22.7% for the same period in 2024.

Other income, net increased by $1.0 million due to a $2.4 million realized gain on other investments not core to our business operations offset by a decrease in interest income of $1.4 million as we utilized our cash on hand to fund more real estate purchases during the period.

Provision for income taxes — Our effective tax rate was 21.3% for the three months ended September 30, 2025, compared to 20.4% for the same period in 2024.

The effective tax rate for both periods was driven by the impact of excess tax benefits from stock-based compensation, partially offset by non-deductible expenses including non-deductible compensation.

See Note 13, Income Taxes , in the Notes to the Interim Financial Statements for further discussion.

Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024

Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024

The following tables set forth details of operating results for our revenue and earnings, and their respective components, by our reportable segment for the periods indicated.

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

Skilled Services Standard Bearer All Other Eliminations Consolidated

3 unchanged sentences

Segment income (loss) 447,061 27,331 (147,781) — 326,611

Loss on long-lived assets

Income before provision for income taxes $ 325,538

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Skilled Services Standard Bearer All Other Eliminations Consolidated

3 unchanged sentences

Segment income (loss) 377,483 21,892 (116,704) — 282,671

Impairment of long-lived assets

Loss on long-lived assets

Income before provision for income taxes $ 280,336

Our total revenue increased by $354.4 million, or 17.3%, compared to the six months ended June 30, 2024.

Our total revenue increased by $569.0 million, or 18.2%, compared to the nine months ended September 30, 2024.

The increase in revenue was primarily driven by an increase in occupancy of 2.4% and 4.5% from our skilled services in Same Facilities and Transitioning Facilities, respectively, coupled with increasing daily revenue rates.

In addition, our Recently Acquired Facilities revenue increased by $206.6 million, when compared to the same period in 2024 as a result of acquisitions.

In addition, our Recently Acquired Facilities revenue increased by $341.7 million, when compared to the same period in 2024, primarily as a result of acquisitions from October 1, 2024 through September 30, 2025.

Skilled Services Segment

The following tables present the skilled services revenue and key performance metrics by category during the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

The following tables present the skilled services revenue and key performance metrics by category during the nine months ended September 30, 2025 and 2024:

Nine Months Ended September 30,

2025 2024 Change % Change

9 unchanged sentences

Skilled mix by nursing revenue 49.4 % 48.8 % 0.6 % 1.2 %

Six Months Ended June 30,

Nine Months Ended September 30,

2025 2024 Change % Change

9 unchanged sentences

Skilled mix by nursing revenue 51.3 % 49.5 % 1.8 % 3.6 %

Six Months Ended June 30,

Nine Months Ended September 30,

2025 2024 Change % Change

9 unchanged sentences

Skilled mix by nursing revenue 50.9 % 48.9 % 2.0 % 4.1 %

Six Months Ended June 30,

Nine Months Ended September 30,

2025 2024 Change % Change

14 unchanged sentences

(4) Recently Acquired Facility (Acquisitions) results represent all facilities purchased on or subsequent to January 1, 2024.

(5) Skilled services revenue and key performance metrics for a closed facility was not material and has been excluded from Same Facilities results during the six months ended June 30, 2024.

(5) Skilled services revenue and key performance metrics for a closed facility was not material and has been excluded from Same Facilities results during the nine months ended September 30, 2024.

The facility was closed in 2024 as the program was transitioned from an intermediate care facility to a group home setting.

Skilled services revenue increased $336.2 million, or 17.1%, compared to the six months ended June 30, 2024.

The increases in skilled services revenue were across all payer types, including increases in Medicaid revenue of of $148.7 million, or 16.3%, Medicare revenue of $54.4 million, or 10.4%, managed care revenue of $77.6 million, or 20.5% and private and other revenue of $55.5 million, or 38.5%.

The increase in skilled services revenue was primarily driven by strong occupancy performance across our skilled services operations.

Our consolidated occupancy increased by 1.9% to 81.6% during the six months ended June 30, 2025 compared to the same period in 2024, as a result of an increase in long-term care patients and an increase in Medicare and managed care skilled days.

Revenue in our Same Facilities increased $95.8 million, or 6.0%, compared to the same period in 2024, due to increased occupancy from long-term care patients, strong skilled days and revenue per patient day.

Our diligent efforts to strengthen our partnerships with various managed care organizations, hospitals and local communities, increased our managed care revenue by 11.5%, mainly due to increases in managed care days and revenue per patient day.

Skilled services revenue increased $542.2 million, or 18.1%, compared to the nine months ended September 30, 2024.

The increases in skilled services revenue were across all payer types, including increases in Medicaid revenue of $243.8 million, or 17.4%, and managed care revenue of $113.0 million, or 19.4%.

The increase in skilled services revenue was primarily driven by strong occupancy and skilled mix performance across our skilled services operations.

Our consolidated occupancy increased by 1.7% to 81.8% during the nine months ended September 30, 2025 compared to the same period in 2024 across all payors, with an increase in skilled days from our operations within Same Facilities and Transitioning Facilities.

Revenue in our Same Facilities increased $148.7 million, or 6.2%, compared to the nine months ended September 30, 2024, due to increased occupancy, strong skilled days and revenue per patient day.

Our continuous efforts to strengthen our partnerships with various managed care organizations, hospitals and local communities, increased our managed care revenue by 9.8%, resulting from an increase in managed care days and revenue per patient day.

We continued to grow our Medicare patient population in addition to capturing market share in the increases in Medicare Advantage enrollments of the overall Medicare eligible population.

Medicare revenue increased by 3.5% due to the increase in patient days and revenue per day.

In addition, Medicaid revenue increased by $21.5 million or 2.9%, mainly from the increases in Medicaid days and revenue per patient day, driven by daily rates, supplemental and quality improvement programs.

Revenue generated by our Transitioning Facilities increased $34.4 million, or 10.2%, primarily due to improved occupancy growth, increases in skilled mix days and revenue per patient day.

Our Medicare revenue increased by 3.6% due to an increase in Medicare days and revenue per day.

In addition, our other skilled revenue has continued to increase as we support the needs of the local communities through the expansion of the Veterans Affairs programs.

Revenue in our Transitioning Facilities increased $52.4 million, or 10.2%, compared to the nine months ended September 30, 2024, due to improved occupancy growth, increases in skilled mix days and revenue per patient day.

The increases in revenue were derived from managed care revenue of 21.9%, Medicare revenue of 3.6%, Medicaid revenue of 8.3% and private revenue of 27.8%.

These increases demonstrate our ability to focus on increasing occupancy across payer types.

Included in the six months ended June 30, 2024 is the revenue related to a facility that was not operating at full capacity starting in the first quarter of 2024 due to flooding.

Skilled services revenue generated by Recently Acquired Facilities increased by approximately $206.6 million compared to the six months ended June 30, 2024.

The increases were primarily due to 34 operational expansions between July 1, 2024 and June 30, 2025 across 14 states.

The increases are a result of an increase in patient days across all payer types, which reflect our operational fundamentals as we continue to transition and integrate these facilities.

Revenue in our Recently Acquired Facilities increased $341.7 million, compared to the nine months ended September 30, 2024.

The 34 operational expansions between October 1, 2024 and September 30, 2025 across 12 states contributed $213.0 million of the total increase.

Historically, we have generally experienced lower occupancy rates and lower skilled mix at Recently Acquired Facilities and therefore, we anticipate lower overall occupancy during years of growth.

1 unchanged sentence

The following table reflects the change in skilled nursing average daily revenue rates by payor source, excluding services that are not covered by the daily rate (1) :

Six Months Ended June 30,

Nine Months Ended September 30,

Same Facility Transitioning Acquisitions Total

10 unchanged sentences

Our Medicare daily rates at Same Facilities and Transitioning Facilities increased by 5.1% and 4.1%, respectively, compared to the six months ended June 30, 2024.

The increases are attributable to the 4.2% net market basket increase that became effective in October 2024 and a shift toward higher acuity patients.

Our average Medicaid rates increased 4.0% due to state reimbursement increases, our participation in supplemental Medicaid payment programs and quality improvement programs in various states.

Our Medicare daily rates at Same Facilities and Transitioning Facilities increased by 5.3% and 4.8%, respectively, compared to the nine months ended September 30, 2024.

The increases are attributable to the 4.2% net market basket increase that became effective in October 2024 as well as a shift toward higher acuity patients.

Our average Medicaid rates increased 4.5% due to state reimbursement increases, our participation in Medicaid supplemental payment and quality improvement programs in various states.

Payor Sources as a Percentage of Skilled Nursing Services — We use our skilled mix as a measure of the quality of reimbursements we receive at our independent skilled nursing facilities over various periods.

The following tables set forth our percentage of skilled nursing patient revenue and days by payor source:

Six Months Ended June 30,

Nine Months Ended September 30,

Same Facility Transitioning Acquisitions Total

8 unchanged sentences

TOTAL SKILLED NURSING 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %

Six Months Ended June 30,

Nine Months Ended September 30,

Same Facility Transitioning Acquisitions Total

10 unchanged sentences

The following table sets forth total cost of services for our skilled services segment for the periods indicated (dollars in thousands):

Six Months Ended June 30, Change

Nine Months Ended September 30, Change

2025 2024 $ %

2 unchanged sentences

Cost of services related to our skilled services segment increased by $430.9 million, or 18.1%, from the same period in 2024.

Cost of services as a percentage of revenue decreased to 79.4% from 79.5% as we continue to see a shift in revenue mix, stabilized labor markets and moderated insurance expenses.

Cost of services as a percentage of revenue remained consistent at 79.6% as we continued to see stabilization in the labor markets.

In addition, our cost of services as a percentage of revenue varies depending on the volume of acquisitions during the period, which typically have higher costs during the transition period.

Standard Bearer

Six Months Ended June 30, Change

Nine Months Ended September 30, Change

2025 2024 $ %

7 unchanged sentences

FFO $ 54,781 $ 43,371 $ 11,410 26.3 %

Rental revenue — Our rental revenue, including revenue generated from our independent subsidiaries, increased by $14.3 million, or 31.4%, to $59.9 million, compared to the six months ended June 30, 2024.

The increase in revenue is primarily attributable to 20 real estate purchases as well as annual rent increases since the six months ended June 30, 2024.

FFO — Our FFO increased by $6.8 million, or 23.9%, to $35.5 million, compared to the six months ended June 30, 2024.

Rental revenue — Our rental revenue, including revenue generated from our independent subsidiaries, increased by $22.5 million, or 32.1%, to $92.5 million, compared to the nine months ended September 30, 2024.

The increase in revenue is primarily attributable to 26 real estate purchases as well as annual rent increases since the nine months ended September 30, 2024.

FFO — Our FFO increased by $11.4 million, or 26.3%, to $54.8 million, compared to the nine months ended September 30, 2024.

The increase in rental revenue of $22.5 million is offset by increases in interest expense of $10.3 million associated with the debt arrangements between Standard Bearer and us as Standard Bearer continues to grow its real estate portfolio.

All Other Revenue

Our other revenue increased by $19.8 million, or 22.1%, to $109.8 million, compared to the six months ended June 30, 2024.

Other revenue for the six months ended June 30, 2025 includes senior living revenue of $51.7 million, revenue from other ancillary services of $51.9 million and rental income of $6.2 million.

Our other revenue increased by $29.3 million, or 20.8%, to $170.3 million, compared to the nine months ended September 30, 2024.

Other revenue for the nine months ended September 30, 2025 includes senior living revenue of $81.5 million, revenue from other ancillary services of $79.4 million and rental income of $9.4 million.

The increase in other revenue is primarily attributable to our senior living and other ancillary services.

Consolidated Financial Expenses

Rent-cost of services — Our rent-cost of services as a percentage of revenue decreased by 0.3% to 4.8%, as our operational expansions included a higher mix of real estate purchases.

Rent-cost of services — Our rent-cost of services as a percentage of revenue decreased by 0.3% to 4.8%, as the expansions in our footprint have resulted from more real estate purchases than leased properties.

General and administrative expense — General and administrative expense increased by $29.5 million or 17.4%, to $199.0 million.

This increase was primarily driven by additional headcount due to acquisition activities and increases in wages and benefits due to enhanced performance and growth.

General and administrative expense as a percentage of revenue decreased by 0.1% to 5.5%.

General and administrative expense as a percentage of revenue remained consistent at 5.4%.

Depreciation and amortization — Depreciation and amortization expense increased by $15.0 million, or 24.3%, to $76.6 million.

This increase was primarily related to the additional depreciation and amortization incurred as a result of our newly acquired operations and capital expenditures.

Depreciation and amortization remained consistent at 2.0%, as a percentage of revenue.

Depreciation and amortization increased 0.1%, to 2.0%, as a percentage of revenue.

Other income, net — Other income, net as a percentage of revenue decreased by 0.1%.

Other income, net primarily includes interest income from our investments, interest expense related to our debt and deferred compensation gains and losses.

Other income, net increased by $0.2 million due to gains in our deferred compensation plan which incurs gains or losses depending on market performance offset by less interest income as we funded more real estate purchases.

During the six months ended June 30, 2025 and 2024, the deferred compensation plan had gains of $4.2 million and $2.9 million, respectively.

We also recorded an offsetting expense allocated between cost of services and general and administrative expenses.

Provision for income taxes — Our effective tax rate was 24.7% for the six months ended June 30, 2025, compared to 22.9% for the same period in 2024.

Other income primarily includes interest income from our investments, interest expense related to our debt and deferred compensation gains and losses.

Other income, net increased by $1.2 million due to a $2.4 million realized gain on other investments not core to our business operations and a $1.2 million gain on our deferred compensation plan offset by a decrease in interest income of $2.9 million as we utilized our cash on hand to fund more real estate purchases during the period.

Changes in our deferred compensation plan are a result of gains or losses depending on market performance.

Provision for income taxes — Our effective tax rate was 23.6% for the nine months ended September 30, 2025, compared to 22.0% for the same period in 2024.

The effective tax rate for both periods was driven by the impact of excess tax benefits from stock-based compensation, partially offset by non-deductible expenses, including non-deductible compensation.

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Our principal sources of liquidity have historically been derived from our cash flows from operations and long-term debt issuance secured by our real property and borrowings under our revolving Credit Facility (defined below).

Our liquidity as of June 30, 2025 is impacted by cash generated from strong operational performance offset by investments made for our operational expansions and ancillary businesses as well as capital expenditures to improve the quality of care at our existing operations.

Our liquidity as of September 30, 2025 is impacted by cash generated from strong operational performance offset by investments made for our operational expansions as well as capital expenditures to improve the quality of care at our existing operations.

Historically, we have primarily financed the majority of our acquisitions through mortgages on our properties, our Credit Facility and cash generated from operations.

Cash paid to fund acquisitions was $213.6 million for the six months ended June 30, 2025 compared to cash paid of $66.0 million for the six months ended June 30, 2024.

Total capital expenditures for property and equipment were $92.5 million and $64.6 million for the six months ended June 30, 2025 and 2024, respectively.

Cash paid to fund acquisitions was $240.3 million for the nine months ended September 30, 2025 compared to $87.2 million for the nine months ended September 30, 2024.

Total capital expenditures for property and equipment were $143.7 million and $110.1 million for the nine months ended September 30, 2025 and 2024, respectively.

We currently have approximately $180.0 million budgeted for renovation projects in 2025.

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We may, in the future, seek to raise additional capital to fund growth, capital renovations, operations and other business activities, but such additional capital may not be available on acceptable terms, on a timely basis, or at all.

Our cash and cash equivalents of approximately $364.0 million as of June 30, 2025 consisted of bank deposits and money market funds.

In addition, as of June 30, 2025, we held investments of approximately $225.2 million.

We believe our investments that were in an unrealized loss position as of June 30, 2025 do not require an allowance for expected credit losses, nor has any event occurred subsequent to that date that would indicate so.

Our cash and cash equivalents of approximately $443.7 million as of September 30, 2025 consisted of bank deposits and money market funds.

In addition, as of September 30, 2025, we held investments of approximately $231.8 million.

We believe our investments that were in an unrealized loss position as of September 30, 2025 do not require an allowance for expected credit losses, nor has any event occurred subsequent to that date that would indicate so.

Our primary source of cash is from our ongoing operations.

Our positive cash flows have supported our business and have allowed us to pay regular dividends to our stockholders.

We currently anticipate that existing cash and total investments as of June 30, 2025, along with projected operating cash flows and available financing, will support our normal business operations for the foreseeable future.

We currently anticipate that existing cash and total investments as of September 30, 2025, along with projected operating cash flows and available financing, will support our normal business operations for the foreseeable future.

Share Repurchases

On May 15, 2025, the Board of Directors approved a stock repurchase program pursuant to which we may repurchase up to $20.0 million of our common stock under the program for a period of approximately 12 months from June 16, 2025.

During the second quarter of 2025, we did not repurchase any shares pursuant to this stock repurchase program.

On February 21, 2025, the Board of Directors approved a stock repurchase program pursuant to which we may repurchase up to $20.0 million of our common stock under the program for a period of approximately 12 months from March 26, 2025.

On February 21, 2025, the Board of Directors approved a stock repurchase program pursuant to which we were authorized to repurchase up to $20.0 million of our common stock under the program for a period of approximately 12 months from March 26, 2025.

During the first quarter of 2025, we repurchased 84 shares of our common stock for $10.8 million.

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The following table presents selected data from our condensed consolidated statement of cash flows for the periods presented:

Six Months Ended June 30,

Nine Months Ended September 30,

NET CASH PROVIDED BY/(USED IN):

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Financing activities (12,643) (825)

Net decrease in cash and cash equivalents

$ (100,629) $ (32,290)

Net (decrease)/increase in cash and cash equivalents $ (20,930) $ 22,440

Cash and cash equivalents beginning of period 464,598 509,626

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Cash provided by operating activities is net income adjusted for certain non-cash items and changes in operating assets and liabilities.

The $115.7 million increase in cash provided by operating activities for the six months ended June 30, 2025 compared to the same period in 2024 w as due to an increase in operational performance and timing of payments and accounts receivable collections.

The $134.2 million increase in cash provided by operating activities for the nine months ended September 30, 2025 compared to the same period in 2024 w as due to an increase in operational performance and timing of payments and accounts receivable collections.

Investing Activities

Investing cash flows consist primarily of capital expenditures, investment activities, insurance proceeds and cash used for acquisitions.

The $167.4 million increase in cash used in investing activities for the six months ended June 30, 2025 compared to the same period in 2024 was primarily used for acquisitions and capital expenditures as well as increased investment activity as part of our capital strategy.

The $165.8 million increase in cash used in investing activities for the nine months ended September 30, 2025 compared to the same period in 2024 was primarily used for acquisitions and capital expenditures.

Financing Activities

Financing cash flows consist primarily of cash provided by the issuance of common stock upon exercise of stock options, payment of dividends to stockholders, issuance and repayment of short-term and long-term debt and payment for share repurchases.

The $16.7 million increase in cash used by financing activities for the six months ended June 30, 2025 compared to the same period in 2024, was primarily due to $20.0 million of share repurchases in 2025 as part of our stock repurchase program.

The $11.8 million increase in cash used by financing activities for the nine months ended September 30, 2025 compared to the same period in 2024, was primarily due to $20.0 million of share repurchases in 2025 as part of our stock repurchase program offset by an increase in cash provided by the issuance of stock options.

Credit Facility with a Lending Consortium Arranged by Truist

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Mortgage Loans and Promissory Note

As of June 30, 2025, 23 of our subsidiaries had mortgage loans insured with HUD for an aggregate amount of $145.2 million, which subjects these subsidiaries to HUD oversight and periodic inspections.

As of September 30, 2025, 23 of our subsidiaries had mortgage loans insured with HUD for an aggregate amount of $144.3 million, which subjects these subsidiaries to HUD oversight and periodic inspections.

The mortgage loans bear effective interest rates at a range of 3.1% to 4.2%, including fixed interest rates at a range of 2.4% to 3.3% per annum.

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Operating Leases

As of June 30, 2025, 238 of our facilities have long-term lease arrangements, of which 96 of the operations are under eight triple-net Master Leases with CareTrust.

As of September 30, 2025, 249 of our facilities have long-term lease arrangements, of which 104 of the operations are under eight triple-net Master Leases with CareTrust.

The Master Leases consist of multiple leases, each with its own pool of properties, that have varying maturities and diversity in property geography.

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If we elect to renew the term of a Master Lease, the renewal will be effective as to all, but not less than all, of the leased property then subject to the Master Lease.

During the six months ended June 30, 2025, we, through Standard Bearer, exercised the option to purchase the real estate of four facilities from CareTrust for $44.6 million.

We also lease certain facilities and our administrative offices under non-cancelable operating leases, most of which have initial lease terms ranging from five to 20 years and are subject to annual escalation equal to the percentage change in the Consumer Price Index with a stated cap percentage.

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Most of these leases contain renewal options, certain of which involve rent increases.

Our 100 independent subsidiaries, excluding the subsidiaries that are operated under the Master Leases from CareTrust, are operated under 17 separate master lease arrangements.

Our 102 independent subsidiaries, excluding the subsidiaries that are operated under the Master Leases from CareTrust, are operated under 18 separate Master Leases.

Under these master leases, a default at a single facility could subject one or more of the other independent subsidiaries covered by the same master lease to the same default risk.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis