Sabra Reports Second Quarter 2024 Results; Increases 2024 Guidance
SECOND QUARTER 2024 RESULTS AND RECENT EVENTS
-
Results per diluted common share for the second quarter of 2024 were as follows:
-
Net Income:
$0.10 -
FFO:
$0.35 -
Normalized FFO:
$0.35 -
AFFO:
$0.36 -
Normalized AFFO:
$0.36
-
Net Income:
-
EBITDARM Coverage Summary:
- Skilled Nursing/Transitional Care: 1.85x
Senior Housing - Leased: 1.35xBehavioral Health , Specialty Hospitals and Other: 3.69x
- Same store managed senior housing Cash NOI increased 17.7% on a year-over-year basis.
-
Investment activity through
June 30, 2024 amounts to$60.1 million at an expected initial cash yield of 8.7%. Additionally, subsequent to quarter end, Sabra closed on the$75.8 million acquisition of two managed senior housing communities operated by theLeo Brown Group , with an initial expected cash yield of 8.0%.
-
During the second quarter of 2024, Sabra closed on the disposition of four facilities for gross proceeds of
$6.7 million with a trailing-twelve-month cash yield of 5.0%. Additionally, subsequent to quarter end, Sabra closed on the disposition of four properties for gross proceeds of$34.9 million with a trailing-twelve-month cash yield of 4.0%.
-
Year-to-date, Sabra has utilized the forward feature under its at-the-market equity offering program to allow for the sale of up to 4.7 million shares at an initial weighted average price of
$14.72 per share, net of commissions. As ofAugust 7, 2024 , 2.0 million shares remained outstanding under the forward sale agreements, with an initial weighted average price of$15.11 per share, net of commissions.
-
As of
June 30, 2024 , Net Debt to Adjusted EBITDA was 5.45x.
-
Reimbursement trends remain positive, highlighted by the
Centers for Medicare & Medicaid Services recently finalizing a 4.2% Medicare rate increase for skilled nursing facilities that goes into effect onOctober 1, 2024 . In addition, many states have also increased support for the skilled nursing industry through various means, including Medicaid base rate increases, and rebasing cost measures to better capture inflationary pressures. In aggregate, we estimate the increase in Medicaid rates across Sabra’s portfolio will average approximately 7%, most of which went into effect as ofJuly 1, 2024 .
-
On
August 7, 2024 , Sabra’s Board of Directors declared a quarterly cash dividend of$0.30 per share of common stock. The dividend will be paid onAugust 30, 2024 , to common stockholders of record as of the close of business onAugust 19, 2024 .
2024 GUIDANCE
Sabra has increased its 2024 earnings guidance ranges as follows (attributable to common stockholders, per diluted common share):
-
Net Income:
$0.48 -$0.51 -
FFO:
$1.33 -$1.36 -
Normalized FFO:
$1.36 -$1.39 -
AFFO:
$1.39 -$1.42 -
Normalized AFFO:
$1.41 -$1.44
Guidance ranges assume year-over-year same store Cash NOI growth in the mid-to-high teens for the managed senior housing portfolio. Guidance also incorporates all announced investment and disposition activity, as well as announced activity under the at-the-market equity offering program. Guidance does not assume additional investment, disposition, or capital transactions beyond those already disclosed.
The foregoing guidance ranges reflect management’s view of current and future market conditions. There can be no assurance that the Company’s actual results will not differ materially from the estimates set forth above. Except as otherwise required by law, the Company assumes no, and hereby disclaims any, obligation to update any of the foregoing guidance ranges as a result of new information or new or future developments.
Commenting on the second quarter’s results,
LIQUIDITY
As of
CONFERENCE CALL AND COMPANY INFORMATION
A conference call with a simultaneous webcast to discuss the 2024 second quarter results will be held on
ABOUT SABRA
As of
FORWARD-LOOKING STATEMENTS SAFE HARBOR
This release contains “forward-looking” statements as defined in the Private Securities Litigation Reform Act of 1995. Any statements that do not relate to historical or current facts or matters are forward-looking statements. These statements may be identified, without limitation, by the use of “expects,” “believes,” “intends,” “should” or comparable terms or the negative thereof. Examples of forward-looking statements include all statements regarding our expectations regarding earnings growth; and our other expectations regarding our future financial position (including our earnings guidance for 2024, as well as the assumptions set forth therein), expectations regarding Medicare and Medicaid reimbursement trends and rate increases, our expectations regarding occupancy, results of operations, cash flows, liquidity, business strategy, growth opportunities, potential investments and dispositions and our expectations regarding our investment activity, and plans and objectives for future operations and capital raising activity.
Our actual results may differ materially from those projected or contemplated by our forward-looking statements as a result of various factors, including, among others, the following: increased labor costs and historically low unemployment; increases in market interest rates and inflation; pandemics or epidemics, including COVID-19, and the related impact on our tenants, borrowers and senior housing - managed communities; operational risks with respect to our senior housing - managed communities; competitive conditions in our industry; the loss of key management personnel; uninsured or underinsured losses affecting our properties; potential impairment charges and adjustments related to the accounting of our assets; the potential variability of our reported rental and related revenues as a result of Accounting Standards Update (“ASU”) 2016-02, Leases, as amended by subsequent ASUs; risks associated with our investment in our unconsolidated joint ventures; catastrophic weather and other natural or man-made disasters, the effects of climate change on our properties and a failure to implement sustainable and energy-efficient measures; increased operating costs and competition for our tenants, borrowers and senior housing - managed communities; increased healthcare regulation and enforcement; our tenants’ dependency on reimbursement from governmental and other third-party payor programs; the effect of our tenants, operators or borrowers declaring bankruptcy or becoming insolvent; our ability to find replacement tenants and the impact of unforeseen costs in acquiring new properties; the impact of litigation and rising insurance costs on the business of our tenants; the impact of required regulatory approvals of transfers of healthcare properties; environmental compliance costs and liabilities associated with real estate properties we own; our tenants’, borrowers’ or operators’ failure to adhere to applicable privacy and data security laws, or a material breach of our or our tenants’, borrowers’ or operators’ information technology; our concentration in the healthcare property sector, particularly in skilled nursing/transitional care facilities and senior housing communities, which makes our profitability more vulnerable to a downturn in a specific sector than if we were investing in multiple industries; the significant amount of and our ability to service our indebtedness; covenants in our debt agreements that may restrict our ability to pay dividends, make investments, incur additional indebtedness and refinance indebtedness on favorable terms; adverse changes in our credit ratings; our ability to make dividend distributions at expected levels; our ability to raise capital through equity and debt financings; changes and uncertainty in macroeconomic conditions and disruptions in the financial markets; risks associated with our ownership of property outside the
Additional information concerning risks and uncertainties that could affect our business can be found in our filings with the
TENANT AND BORROWER INFORMATION
This release includes information regarding certain of our tenants that lease properties from us and our borrowers, most of which are not subject to
NOTE REGARDING NON-GAAP FINANCIAL MEASURES
This release includes the following financial measures defined as non-GAAP financial measures by the
|
||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME |
||||||||||||||||
(dollars in thousands, except per share data) |
||||||||||||||||
|
|
|
|
|
||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Revenues: |
|
|
|
|
|
|
|
|||||||||
Rental and related revenues (1) |
$ |
99,096 |
|
|
$ |
94,274 |
|
|
$ |
190,872 |
|
|
$ |
190,144 |
|
|
Resident fees and services |
|
67,939 |
|
|
|
58,428 |
|
|
|
133,970 |
|
|
|
115,149 |
|
|
Interest and other income |
|
9,106 |
|
|
|
8,464 |
|
|
|
18,046 |
|
|
|
17,197 |
|
|
Total revenues |
|
176,141 |
|
|
|
161,166 |
|
|
|
342,888 |
|
|
|
322,490 |
|
|
Expenses: |
|
|
|
|
|
|
|
|||||||||
Depreciation and amortization |
|
41,681 |
|
|
|
44,142 |
|
|
|
84,595 |
|
|
|
96,969 |
|
|
Interest |
|
29,314 |
|
|
|
28,328 |
|
|
|
57,722 |
|
|
|
56,868 |
|
|
Triple-net portfolio operating expenses |
|
4,398 |
|
|
|
4,771 |
|
|
|
8,722 |
|
|
|
8,939 |
|
|
Senior housing - managed portfolio operating expenses |
|
50,355 |
|
|
|
43,964 |
|
|
|
100,024 |
|
|
|
87,601 |
|
|
General and administrative |
|
12,741 |
|
|
|
9,532 |
|
|
|
24,631 |
|
|
|
20,034 |
|
|
(Recovery of) provision for loan losses |
|
(161 |
) |
|
|
429 |
|
|
|
(298 |
) |
|
|
221 |
|
|
Impairment of real estate |
|
15,335 |
|
|
|
— |
|
|
|
18,472 |
|
|
|
7,064 |
|
|
Total expenses |
|
153,663 |
|
|
|
131,166 |
|
|
|
293,868 |
|
|
|
277,696 |
|
|
Other income (expense): |
|
|
|
|
|
|
|
|||||||||
Loss on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,541 |
) |
|
Other income |
|
78 |
|
|
|
— |
|
|
|
838 |
|
|
|
341 |
|
|
Net gain (loss) on sales of real estate |
|
1,776 |
|
|
|
(7,833 |
) |
|
|
1,776 |
|
|
|
(29,348 |
) |
|
Total other income (expense) |
|
1,854 |
|
|
|
(7,833 |
) |
|
|
2,614 |
|
|
|
(30,548 |
) |
|
Income before income (loss) from unconsolidated joint ventures and income tax expense |
|
24,332 |
|
|
|
22,167 |
|
|
|
51,634 |
|
|
|
14,246 |
|
|
Income (loss) from unconsolidated joint ventures |
|
80 |
|
|
|
(653 |
) |
|
|
(515 |
) |
|
|
(1,491 |
) |
|
Income tax expense |
|
(437 |
) |
|
|
(326 |
) |
|
|
(890 |
) |
|
|
(1,054 |
) |
|
Net income |
$ |
23,975 |
|
|
$ |
21,188 |
|
|
$ |
50,229 |
|
|
$ |
11,701 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Net income, per: |
|
|
|
|
|
|
|
|||||||||
Basic common share |
$ |
0.10 |
|
|
$ |
0.09 |
|
|
$ |
0.22 |
|
|
$ |
0.05 |
|
|
Diluted common share |
$ |
0.10 |
|
|
$ |
0.09 |
|
|
$ |
0.22 |
|
|
$ |
0.05 |
|
|
Weighted average number of common shares outstanding, basic |
|
231,620,291 |
|
|
|
231,204,531 |
|
|
|
231,536,286 |
|
|
|
231,184,355 |
|
|
Weighted average number of common shares outstanding, diluted |
|
233,750,823 |
|
|
|
232,244,588 |
|
|
|
233,583,871 |
|
|
|
232,214,443 |
|
(1) |
See the following table for additional details regarding Rental and related revenues. |
|
||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME - SUPPLEMENTAL INFORMATION |
||||||||||||||||
(in thousands) |
||||||||||||||||
|
|
|
|
|
||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Cash rental income |
$ |
93,527 |
|
|
$ |
87,381 |
|
|
$ |
182,563 |
|
|
$ |
177,038 |
|
|
Straight-line rental income |
|
1,176 |
|
|
|
1,503 |
|
|
|
2,328 |
|
|
|
2,850 |
|
|
Write-offs of cash and straight-line rental income receivable and lease intangibles |
|
— |
|
|
|
— |
|
|
|
(2,954 |
) |
|
|
(518 |
) |
|
Above/below market lease amortization |
|
1,211 |
|
|
|
1,568 |
|
|
|
2,422 |
|
|
|
3,136 |
|
|
Operating expense recoveries |
|
3,182 |
|
|
|
3,822 |
|
|
|
6,513 |
|
|
|
7,638 |
|
|
Rental and related revenues |
$ |
99,096 |
|
|
$ |
94,274 |
|
|
$ |
190,872 |
|
|
$ |
190,144 |
|
|
|
||||||||
CONSOLIDATED BALANCE SHEETS |
||||||||
(dollars in thousands, except per share data) |
||||||||
|
|
|
|
|
||||
|
|
|
|
|
||||
Assets |
|
|
|
|||||
Real estate investments, net of accumulated depreciation of |
$ |
4,566,159 |
|
|
$ |
4,617,261 |
|
|
Loans receivable and other investments, net |
|
439,015 |
|
|
|
420,624 |
|
|
Investment in unconsolidated joint ventures |
|
129,773 |
|
|
|
136,843 |
|
|
Cash and cash equivalents |
|
36,398 |
|
|
|
41,285 |
|
|
Restricted cash |
|
5,911 |
|
|
|
5,434 |
|
|
Lease intangible assets, net |
|
27,722 |
|
|
|
30,897 |
|
|
Accounts receivable, prepaid expenses and other assets, net |
|
146,138 |
|
|
|
133,806 |
|
|
Total assets |
$ |
5,351,116 |
|
|
$ |
5,386,150 |
|
|
Liabilities |
|
|
|
|||||
Secured debt, net |
$ |
46,315 |
|
|
$ |
47,301 |
|
|
Revolving credit facility |
|
130,367 |
|
|
|
94,429 |
|
|
Term loans, net |
|
534,281 |
|
|
|
537,120 |
|
|
Senior unsecured notes, net |
|
1,735,653 |
|
|
|
1,735,253 |
|
|
Accounts payable and accrued liabilities |
|
112,832 |
|
|
|
136,981 |
|
|
Lease intangible liabilities, net |
|
29,693 |
|
|
|
32,532 |
|
|
Total liabilities |
|
2,589,141 |
|
|
|
2,583,616 |
|
|
Equity |
|
|
|
|||||
Preferred stock, |
|
— |
|
|
|
— |
|
|
Common stock, |
|
2,343 |
|
|
|
2,313 |
|
|
Additional paid-in capital |
|
4,536,645 |
|
|
|
4,494,755 |
|
|
Cumulative distributions in excess of net income |
|
(1,808,158 |
) |
|
|
(1,718,279 |
) |
|
Accumulated other comprehensive income |
|
31,145 |
|
|
|
23,745 |
|
|
Total equity |
|
2,761,975 |
|
|
|
2,802,534 |
|
|
Total liabilities and equity |
$ |
5,351,116 |
|
|
$ |
5,386,150 |
|
|
|
||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
(in thousands) |
||||||||
|
|
|
||||||
|
|
Six Months Ended |
||||||
|
|
2024 |
|
2023 |
||||
Cash flows from operating activities: |
|
|
|
|||||
Net income |
$ |
50,229 |
|
|
$ |
11,701 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|||||
Depreciation and amortization |
|
84,595 |
|
|
|
96,969 |
|
|
Non-cash rental and related revenues |
|
(1,796 |
) |
|
|
(5,469 |
) |
|
Non-cash interest income |
|
12 |
|
|
|
(388 |
) |
|
Non-cash interest expense |
|
6,139 |
|
|
|
6,091 |
|
|
Stock-based compensation expense |
|
3,862 |
|
|
|
3,233 |
|
|
Loss on extinguishment of debt |
|
— |
|
|
|
1,541 |
|
|
(Recovery of) provision for loan losses |
|
(298 |
) |
|
|
221 |
|
|
Net (gain) loss on sales of real estate |
|
(1,776 |
) |
|
|
29,348 |
|
|
Impairment of real estate |
|
18,472 |
|
|
|
7,064 |
|
|
Loss from unconsolidated joint ventures |
|
515 |
|
|
|
1,491 |
|
|
Distributions of earnings from unconsolidated joint ventures |
|
2,659 |
|
|
|
1,112 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|||||
Accounts receivable, prepaid expenses and other assets, net |
|
(8,706 |
) |
|
|
(6,277 |
) |
|
Accounts payable and accrued liabilities |
|
(20,984 |
) |
|
|
(8,019 |
) |
|
Net cash provided by operating activities |
|
132,923 |
|
|
|
138,618 |
|
|
Cash flows from investing activities: |
|
|
|
|||||
Acquisition of real estate |
|
(36,128 |
) |
|
|
(39,630 |
) |
|
Origination and fundings of loans receivable |
|
(19,752 |
) |
|
|
(9,050 |
) |
|
Origination and fundings of preferred equity investments |
|
(1,021 |
) |
|
|
(10,676 |
) |
|
Additions to real estate |
|
(25,360 |
) |
|
|
(37,995 |
) |
|
Repayments of loans receivable |
|
1,189 |
|
|
|
8,062 |
|
|
Repayments of preferred equity investments |
|
4,727 |
|
|
|
4,130 |
|
|
Investment in unconsolidated joint ventures |
|
(344 |
) |
|
|
(4,797 |
) |
|
Net proceeds from the sales of real estate |
|
6,158 |
|
|
|
168,904 |
|
|
Net proceeds from sales-type lease |
|
— |
|
|
|
25,490 |
|
|
Distributions in excess of earnings from unconsolidated joint ventures |
|
— |
|
|
|
544 |
|
|
Net cash (used in) provided by investing activities |
|
(70,531 |
) |
|
|
104,982 |
|
|
Cash flows from financing activities: |
|
|
|
|||||
Net borrowings from (repayments of) revolving credit facility |
|
36,939 |
|
|
|
(98,857 |
) |
|
Proceeds from term loans |
|
— |
|
|
|
12,188 |
|
|
Principal payments on secured debt |
|
(1,010 |
) |
|
|
(983 |
) |
|
Payments of deferred financing costs |
|
(80 |
) |
|
|
(18,128 |
) |
|
Payment of contingent consideration |
|
— |
|
|
|
(17,900 |
) |
|
Issuance of common stock, net |
|
36,403 |
|
|
|
(2,153 |
) |
|
Dividends paid on common stock |
|
(138,894 |
) |
|
|
(138,711 |
) |
|
Net cash used in financing activities |
|
(66,642 |
) |
|
|
(264,544 |
) |
|
Net decrease in cash, cash equivalents and restricted cash |
|
(4,250 |
) |
|
|
(20,944 |
) |
|
Effect of foreign currency translation on cash, cash equivalents and restricted cash |
|
(160 |
) |
|
|
(608 |
) |
|
Cash, cash equivalents and restricted cash, beginning of period |
|
46,719 |
|
|
|
53,932 |
|
|
Cash, cash equivalents and restricted cash, end of period |
$ |
42,309 |
|
|
$ |
32,380 |
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|||||
Interest paid |
$ |
50,847 |
|
|
$ |
52,591 |
|
|
Supplemental disclosure of non-cash investing activities: |
|
|
|
|||||
Decrease in loans receivable and other investments due to acquisition of real estate |
$ |
— |
|
|
$ |
4,644 |
|
|
|
||||||||||||||||
FUNDS FROM OPERATIONS (FFO), NORMALIZED FFO, |
||||||||||||||||
ADJUSTED FUNDS FROM OPERATIONS (AFFO) AND NORMALIZED AFFO |
||||||||||||||||
(dollars in thousands, except per share data) |
||||||||||||||||
|
|
|
|
|||||||||||||
|
Three Months Ended |
|
Six Months Ended |
|||||||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|||||||||
Net income |
$ |
23,975 |
|
|
$ |
21,188 |
|
|
$ |
50,229 |
|
|
$ |
11,701 |
|
|
Add: |
|
|
|
|
|
|
|
|||||||||
Depreciation and amortization of real estate assets |
|
41,681 |
|
|
|
44,142 |
|
|
|
84,595 |
|
|
|
96,969 |
|
|
Depreciation, amortization and impairment of real estate assets related to unconsolidated joint ventures |
|
2,208 |
|
|
|
2,202 |
|
|
|
4,437 |
|
|
|
4,250 |
|
|
Net (gain) loss on sales of real estate |
|
(1,776 |
) |
|
|
7,833 |
|
|
|
(1,776 |
) |
|
|
29,348 |
|
|
Impairment of real estate |
|
15,335 |
|
|
|
— |
|
|
|
18,472 |
|
|
|
7,064 |
|
|
FFO |
$ |
81,423 |
|
|
$ |
75,365 |
|
|
$ |
155,957 |
|
|
$ |
149,332 |
|
|
Write-offs of cash and straight-line rental income receivable and lease intangibles |
|
— |
|
|
|
— |
|
|
|
2,921 |
|
|
|
540 |
|
|
Loss on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,541 |
|
|
(Recovery of) provision for loan losses |
|
(161 |
) |
|
|
429 |
|
|
|
(298 |
) |
|
|
221 |
|
|
Other normalizing items (1) |
|
1,274 |
|
|
|
1,301 |
|
|
|
2,395 |
|
|
|
2,069 |
|
|
Normalized FFO |
$ |
82,536 |
|
|
$ |
77,095 |
|
|
$ |
160,975 |
|
|
$ |
153,703 |
|
|
FFO |
$ |
81,423 |
|
|
$ |
75,365 |
|
|
$ |
155,957 |
|
|
$ |
149,332 |
|
|
Stock-based compensation expense |
|
1,341 |
|
|
|
1,004 |
|
|
|
3,862 |
|
|
|
3,233 |
|
|
Non-cash rental and related revenues |
|
(2,387 |
) |
|
|
(3,071 |
) |
|
|
(1,796 |
) |
|
|
(5,469 |
) |
|
Non-cash interest income |
|
5 |
|
|
|
4 |
|
|
|
12 |
|
|
|
(388 |
) |
|
Non-cash interest expense |
|
3,068 |
|
|
|
3,077 |
|
|
|
6,139 |
|
|
|
6,091 |
|
|
Non-cash portion of loss on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,541 |
|
|
(Recovery of) provision for loan losses |
|
(161 |
) |
|
|
429 |
|
|
|
(298 |
) |
|
|
221 |
|
|
Other adjustments related to unconsolidated joint ventures |
|
135 |
|
|
|
169 |
|
|
|
288 |
|
|
|
238 |
|
|
Other adjustments |
|
429 |
|
|
|
291 |
|
|
|
839 |
|
|
|
693 |
|
|
AFFO |
$ |
83,853 |
|
|
$ |
77,268 |
|
|
$ |
165,003 |
|
|
$ |
155,492 |
|
|
Other normalizing items (1) |
|
1,126 |
|
|
|
1,286 |
|
|
|
2,232 |
|
|
|
2,038 |
|
|
Normalized AFFO |
$ |
84,979 |
|
|
$ |
78,554 |
|
|
$ |
167,235 |
|
|
$ |
157,530 |
|
|
Amounts per diluted common share: |
|
|
|
|
|
|
|
|||||||||
Net income |
$ |
0.10 |
|
|
$ |
0.09 |
|
|
$ |
0.22 |
|
|
$ |
0.05 |
|
|
FFO |
$ |
0.35 |
|
|
$ |
0.32 |
|
|
$ |
0.67 |
|
|
$ |
0.64 |
|
|
Normalized FFO |
$ |
0.35 |
|
|
$ |
0.33 |
|
|
$ |
0.69 |
|
|
$ |
0.66 |
|
|
AFFO |
$ |
0.36 |
|
|
$ |
0.33 |
|
|
$ |
0.70 |
|
|
$ |
0.67 |
|
|
Normalized AFFO |
$ |
0.36 |
|
|
$ |
0.34 |
|
|
$ |
0.71 |
|
|
$ |
0.67 |
|
|
Weighted average number of common shares outstanding, diluted: |
|
|
|
|
|
|
||||||||||
Net income, FFO and Normalized FFO |
|
233,750,823 |
|
|
|
232,244,588 |
|
|
|
233,583,871 |
|
|
|
232,214,443 |
|
|
AFFO and Normalized AFFO |
|
234,907,744 |
|
|
|
233,586,255 |
|
|
|
234,821,672 |
|
|
|
233,560,237 |
|
(1) |
Other normalizing items for FFO and AFFO primarily include triple-net operating expenses, net of recoveries. |
REPORTING DEFINITIONS
Adjusted EBITDA*
Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation and amortization (“EBITDA”) excluding the impact of merger-related costs, stock-based compensation expense under the Company’s long-term equity award program, and loan loss reserves. Adjusted EBITDA is an important non-GAAP supplemental measure of operating performance.
Includes behavioral hospitals that provide inpatient and outpatient care for patients with mental health conditions, chemical dependence or substance addictions and addiction treatment centers that provide treatment services for chemical dependence and substance addictions, which may include inpatient care, outpatient care, medical detoxification, therapy and counseling.
Cash Net Operating Income (“Cash NOI”)
The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company considers Cash NOI an important supplemental measure because it allows investors, analysts and its management to evaluate the operating performance of its investments. The Company defines Cash NOI as total revenues less operating expenses and non-cash revenues and expenses. Cash NOI excludes all other financial statement amounts included in net income.
EBITDARM
Earnings before interest, taxes, depreciation, amortization, rent and management fees (“EBITDARM”) for a particular facility accruing to the operator/tenant of the property (not the Company), for the period presented. The Company uses EBITDARM in determining EBITDARM Coverage. EBITDARM has limitations as an analytical tool. EBITDARM does not reflect historical cash expenditures or future cash requirements for facility capital expenditures or contractual commitments. In addition, EBITDARM does not represent a property’s net income or cash flows from operations and should not be considered an alternative to those indicators. The Company utilizes EBITDARM to evaluate the core operations of the properties by eliminating management fees, which may vary by operator/tenant and operating structure, and as a supplemental measure of the ability of the Company’s operators/tenants and relevant guarantors to generate sufficient liquidity to meet related obligations to the Company.
EBITDARM Coverage
Represents the ratio of EBITDARM to cash rent for owned facilities (excluding
Funds From Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”)*
The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company also believes that funds from operations, or FFO, as defined in accordance with the definition used by the
Investment
Represents the carrying amount of real estate assets after adding back accumulated depreciation and amortization and excludes net intangible assets and liabilities.
Net Debt*
The principal balances of the Company’s revolving credit facility, term loans, senior unsecured notes, and secured indebtedness as reported in the Company’s consolidated financial statements, net of cash and cash equivalents as reported in the Company’s consolidated financial statements.
Net Debt to Adjusted EBITDA*
Net Debt to Adjusted EBITDA is calculated as Net Debt divided by Annualized Adjusted EBITDA, which is Adjusted EBITDA, as adjusted for annualizing adjustments that give effect to the acquisitions and dispositions completed during the respective period as though such acquisitions and dispositions were completed as of the beginning of the period presented.
Net Operating Income (“NOI”)*
The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company considers NOI an important supplemental measure because it allows investors, analysts and its management to evaluate the operating performance of its investments. The Company defines NOI as total revenues less operating expenses. NOI excludes all other financial statement amounts included in net income.
Normalized FFO and Normalized AFFO*
Normalized FFO and Normalized AFFO represent FFO and AFFO, respectively, adjusted for certain income and expense items that the Company does not believe are indicative of its ongoing operating results. The Company considers Normalized FFO and Normalized AFFO to be useful measures to evaluate the Company’s operating results excluding these income and expense items to help investors compare the operating performance of the Company between periods or as compared to other companies. Normalized FFO and Normalized AFFO do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. Normalized FFO and Normalized AFFO also do not consider the costs associated with capital expenditures related to the Company’s real estate assets nor do they purport to be indicative of cash available to fund the Company’s future cash requirements. Further, the Company’s computation of Normalized FFO and Normalized AFFO may not be comparable to Normalized FFO and Normalized AFFO reported by other real estate investment trusts that do not define FFO in accordance with the current Nareit definition or that interpret the current Nareit definition or define FFO and AFFO or Normalized FFO and Normalized AFFO differently than the Company does.
Skilled Nursing/Transitional Care
Skilled Nursing/Transitional Care facilities include skilled nursing, transitional care, multi-license designation and mental health facilities.
Specialty Hospitals and Other
Includes acute care, long-term acute care and rehabilitation hospitals, facilities that provide residential services, which may include assistance with activities of daily living, and other facilities not classified as Skilled Nursing/Transitional Care,
Stabilized Facility
At the time of acquisition, the Company classifies each facility as either stabilized or non-stabilized. In addition, the Company may classify a facility as non-stabilized after acquisition. Circumstances that could result in a facility being classified as non-stabilized include newly completed developments, facilities undergoing major renovations or additions, facilities being repositioned or transitioned to new operators, and significant transitions within the tenants’ business model. Such facilities are typically reclassified to stabilized upon the earlier of maintaining consistent performance or 24 months after the date of classification as non-stabilized. Stabilized Facilities generally exclude (i) facilities held for sale, (ii) strategic disposition candidates, (iii) facilities being transitioned to a new operator, (iv) facilities being transitioned from being leased by the Company to being operated by the Company and (v) leased facilities acquired during the three months preceding the period presented.
*Non-GAAP Financial Measures
Reconciliations, definitions and important discussions regarding the usefulness and limitations of the Non-GAAP Financial Measures used in this release can be found at https://ir.sabrahealth.com/investors/financials/quarterly-results.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240807615711/en/
Investor & Media Inquiries: (888) 393-8248 or investorinquiries@sabrahealth.com
Source: