Financial Data and Key Metrics Changes - Revenue for Q2 increased by 12% to $1.46 billion, while adjusted EBITDA rose by 17.2% to $318.6 million [12][17] - Total discharges for Q2 increased by 7.2%, with same-store discharges growing by 4.7% [5][12] - Net revenue per discharge increased by 4.2%, benefiting from a decrease in bad debt expense to 2% [12][14] Business Line Data and Key Metrics Changes - Discharges for neurological conditions and stroke grew by 126.7% in Q2 [6] - The discharge community rate was 84.8%, with discharge to acute and SNF rates at 8.5% and 5.8% respectively, outperforming industry averages [6][10] Market Data and Key Metrics Changes - The demand for inpatient rehabilitation services is significantly underserved, particularly as the U.S. population ages, with the Medicare beneficiary population projected to grow substantially [8][9] - The 65+ population is growing at a CAGR of approximately 3%, while the supply of licensed IRF beds has increased only nominally [9] Company Strategy and Development Direction - The company plans to open five additional hospitals and expand existing facilities, increasing total bed capacity significantly [7][17] - The focus remains on treating complex medical conditions, leveraging clinical expertise to develop best-in-class protocols [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of the inpatient rehabilitation market, citing a favorable regulatory environment and increasing demand [8][11] - The company is raising its 2025 guidance for net operating revenue and adjusted EBITDA based on strong Q2 performance [17] Other Important Information - The company repurchased approximately 232,000 shares for $24.7 million and increased its quarterly dividend to $0.19 per share [15] - Adjusted free cash flow increased by 30.5% to approximately $186 million, with year-to-date adjusted free cash flow up 31.7% [14][15] Q&A Session Summary Question: What are the occupancy rates and comfort levels for single bedroom facilities? - Occupancy in Q2 was 76.6%, up 210 basis points year-over-year, with plans to expand when occupancy stabilizes above 80% [20][22] Question: What are the company's thoughts on quality ratings and initiatives? - Management supports quality measurements and believes they would perform well if included in future regulations [24][25] Question: How does the company share quality results with stakeholders? - The company shares metrics like discharge community rates and patient satisfaction scores with referral sources and joint venture partners [30][31] Question: What is the story behind the increase in managed care pricing assumptions? - Growth in the VA Community Care Network has contributed to an increase in managed care pricing, now comprising almost 18% of the overall managed care business [34][36] Question: What are the expectations for EBITDA in the second half of the year? - The company anticipates incurring most preopening and ramp-up costs in the second half, with a slight increase in bad debt expected [40][41] Question: How is the company managing benefits expenses? - Benefits expenses increased by 18%, driven by high dollar medical claims, with a focus on managing these costs going forward [94][96] Question: What is the company's strategy regarding acquisitions? - Currently, there are no identified service lines for acquisition outside of inpatient rehab, with a focus on de novo expansions instead [68][69]