Investors

As baby boomers age, Medicare enrollment rises, and so does the need for more high quality senior care facilities. CareTrust remains bullish on the senior healthcare space.

Press Release

CareTrust REIT Announces Second Quarter 2017 Operating Results

08/02/17
Conference Call Scheduled for Thursday, August 3, 2017 at 12:00 pm ET

SAN CLEMENTE, Calif., Aug. 02, 2017 (GLOBE NEWSWIRE) -- CareTrust REIT, Inc. (NASDAQ:CTRE) reported today operating results for the second quarter of 2017, as well as other recent events.

During the quarter, CareTrust REIT:

  • Posted net income of $0.03, normalized FFO of $0.28 and normalized FAD of $0.30, all per diluted weighted-average common share;

  • Sold 3.4 million shares under its at-the-market equity offering program, raising $63.9 million of gross proceeds which were used to fund acquisitions and reduce borrowings under its $400 million revolving credit facility to zero as of quarter-end;

  • Invested approximately $35.8 million (inclusive of transaction costs) at a blended initial cash yield of 9.3%, including three skilled nursing facilities and one assisted living and memory care facility;

  • Issued $300 million of new 5.25% senior notes due 2025, the net proceeds of which were used to redeem CareTrust REIT’s existing $260 million 5.875% senior notes due 2021 and repay borrowings under the revolving credit facility; and

  • Reduced its debt-to-EBITDA ratio to 3.72x and its debt-to-enterprise value to 22%, each as of quarter-end.

Laying the Groundwork for Future Growth

Greg Stapley, CareTrust REIT’s Chairman and Chief Executive Officer, reported that the company made significant progress toward its long-term goals in the quarter. “We believe we have laid the groundwork for a solid second half of 2017, and a great start to 2018,” he said. “With our new 5.25% senior notes and our new $300 million at-the-market program, we have lowered our cost of capital, reduced the balance on our $400 million revolving credit line to zero, and significantly extended our debt maturity ladder,” he added.

He further reported that, in the quarter and since, CareTrust REIT completed $51.3 million in new acquisitions at a blended initial cash yield of 9.2%, investing in both existing and new tenant relationships. “Our continuously improving cost of capital has positioned us to be an even stronger player in an increasingly-active market for quality healthcare assets, and our current pipeline is the strongest it has ever been” he said. “That said, our team remains committed to our disciplined ‘operator-first’ investment approach, and we continue to be optimistic about CareTrust REIT’s ability to create long-term shareholder value,” he concluded.

Financial Results for the Quarter Ended June 30, 2017

Chief Financial Officer Bill Wagner reported that for the quarter, CareTrust REIT generated net income of $2.0 million, or $0.03 per diluted weighted-average common share, normalized FFO of $20.6 million, or $0.28 per diluted weighted-average common share, and normalized FAD of $21.7 million, or $0.30 per diluted weighted-average common share. He noted that the adjustments to net income in the quarter included one-time adjustments related to the refinancing of CareTrust REIT’s 5.875% senior notes, offset slightly by interest received and gain on the disposition of its preferred equity investment in a newly-constructed Colorado assisted living and memory care facility.

Capital Events and Liquidity

Discussing CareTrust REIT’s current liquidity, Mr. Wagner highlighted the company’s $300 million issuance of new 5.25% senior notes due 2025. “Through this issuance we were able to fully redeem our old 5.875% senior notes due 2021, thereby reducing our interest expense and extending our runway,” he said.

He also reported significant activity in the company’s new $300 million at-the-market equity offering program. During the quarter, CareTrust REIT issued approximately 3.4 million shares of common stock through the program at an average price of $18.82 per share, for $63.9 million in gross proceeds. "Our ATM continues to draw solid investor interest and provides an excellent source of liquidity to match-fund our small-to-medium sized transactions,” said Mr. Wagner.

Mr. Wagner further reported a zero outstanding balance under CareTrust REIT’s $400 million unsecured revolving credit facility at quarter-end, and noted that the revolving credit facility continues to remain undrawn at present. He added that CareTrust REIT’s debt-to-EBITDA ratio was approximately 3.72x, and its debt-to-enterprise value was 22%, each at quarter-end. He also noted that CareTrust REIT continues to have no property-level debt and, taking into account existing extension rights, no debt maturing before 2023.

2017 FFO and FAD Guidance Revised Upward

Updating CareTrust REIT's previously-issued 2017 earnings guidance, Mr. Wagner reported that, on a per-diluted weighted-average common share basis, CareTrust REIT expects net income of approximately $0.50 to $0.52. He also reported that, notwithstanding the significant equity issuances in the quarter, the company has increased its guidance ranges for normalized FFO to approximately $1.13 to $1.15, and for normalized FAD to approximately $1.19 to $1.21, both on a per-diluted weighted-average common share basis. This 2017 guidance assumes no new acquisitions beyond those made to date, no new debt incurrences or additional equity issuances, and no future CPI-based rent escalators under CareTrust REIT’s long-term net-leases beyond those made to date.

Dividend

During the quarter, CareTrust REIT declared a quarterly dividend of $0.185 per common share. “On an annualized basis, our quarterly dividend represents a payout ratio of approximately 65% based on the midpoint of our 2017 normalized FFO guidance,” said Mr. Wagner. “At this level, our dividend remains among the best-protected of all our industry peers, while giving us ample additional growth capital to reinvest and providing a solid overall return to our shareholders,” he added.

Conference Call

A conference call will be held on Thursday, August 3, at 12:00 p.m. Eastern Time (9:00 a.m. Pacific Time), during which CareTrust REIT’s management will discuss second quarter results, recent developments and other matters affecting CareTrust REIT’s business and prospects. The dial-in number for this call is (844) 220-4972 (U.S.) or (317) 973-4053 (International). The conference ID number is 61282740. To listen to the call online, or to view any financial or other statistical information required by SEC Regulation G, please visit the Investors section of the CareTrust REIT website at http://investor.caretrustreit.com. The call will be recorded, and will be available for replay via the website for 30 days following the call.

About CareTrust REITTM

CareTrust REIT, Inc. is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition and leasing of seniors housing and healthcare-related properties. With 164 net-leased healthcare properties and three operated seniors housing properties in 23 states, CareTrust REIT is pursuing opportunities across the nation to acquire properties that will be leased to a diverse group of local, regional and national seniors housing operators, healthcare services providers, and other healthcare-related businesses. More information about CareTrust REIT is available at www.caretrustreit.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

This press release contains, and the related conference call will include, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements include all statements that are not historical statements of fact and statements regarding our intent, belief or expectations, including, but not limited to, statements regarding future financial and financing positions, business and acquisition strategies, growth prospects, operating and financial performance, expectations regarding the making of distributions, payment of dividends, compliance with and changes in governmental regulations, and the performance of our operators and their respective facilities.

Words such as “anticipate,” “believe,” “could,” “expect,” “estimate,” “intend,” “may,” “plan,” “seek,” “should,” “will,” “would,” and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements, though not all forward-looking statements contain these identifying words. Our forward-looking statements are based on our current expectations and beliefs, and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although we believe that the assumptions underlying these forward-looking statements are reasonable, they are not guarantees and we can give no assurance that our expectations will be attained. Factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from expectations include, but are not limited to:  (i) the ability to achieve some or all of the expected benefits from the completed spin-off from The Ensign Group, Inc. (“Ensign”);  (ii) the ability and willingness of our tenants to meet and/or perform their obligations under the triple-net leases we have entered into with them and the ability and willingness of Ensign to meet and/or perform its obligations under the contractual arrangements that it entered into with us in connection with such spin-off, including its triple-net long-term leases with us, and any of its obligations to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities; (iii) the ability and willingness of our tenants to comply with laws, rules and regulations in the operation of the properties we lease to them; (iv) the ability and willingness of our tenants, including Ensign, to renew their leases with us upon expiration and the ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we replace an existing tenant, and obligations, including indemnification obligations, that we may incur in connection with the replacement of an existing tenant; (v) the availability of and the ability to identify suitable acquisition opportunities and the ability to acquire and lease the respective properties on favorable terms; (vi) the ability to generate sufficient cash flows to service our outstanding indebtedness; (vii) access to debt and equity capital markets; (viii) fluctuating interest rates; (ix) the ability to retain our key management personnel; (x) the ability to maintain our status as a real estate investment trust (“REIT”); (xi) changes in the U.S. tax laws and other state, federal or local laws, whether or not specific to REITs; (xii) other risks inherent in the real estate business, including potential liability relating to environmental matters and illiquidity of real estate investments; and (xiii) any additional factors identified in our filings with the Securities and Exchange Commission (“SEC”), including those in our Annual Report on Form 10-K for the year ended December 31, 2016 under the heading entitled “Risk Factors,” as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the SEC.

Information in this press release or the related conference call is provided as of June 30, 2017, unless specifically stated otherwise.  We expressly disclaim any obligation to update or revise any information in this press release or the related conference call (and replays thereof), including forward-looking statements, whether to reflect any change in our expectations, any change in events, conditions or circumstances, or otherwise.

As used in this press release or the related conference call, unless the context requires otherwise, references to “CTRE,” “CareTrust REIT” or the “Company” refer to CareTrust REIT, Inc. and its consolidated subsidiaries. GAAP refers to generally accepted accounting principles in the United States of America.



CARETRUST REIT, INC.
CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)
(unaudited)
    Three Months Ended June 30,   Six Months Ended June 30,
    2017   2016   2017   2016
Revenues:              
  Rental income $ 28,511     $ 22,781     $ 55,850     $ 43,678  
  Tenant reimbursements 2,389     1,929     4,710     3,726  
  Independent living facilities 789     730     1,582     1,411  
  Interest and other income 1,140     261     1,295     515  
  Total revenues 32,829     25,701     63,437     49,330  
Expenses:              
  Depreciation and amortization 9,335     7,892     18,411     15,185  
  Interest expense 6,219     5,440     12,098     11,301  
  Loss on the extinguishment of debt 11,883         11,883     326  
  Property taxes 2,389     1,929     4,710     3,726  
  Independent living facilities 644     598     1,305     1,218  
  Impairment of real estate investment 890         890      
  General and administrative 2,977     2,211     5,367     4,441  
  Total expenses 34,337     18,070     54,664     36,197  
Other income:              
  Gain on disposition of other real estate investment 3,538         3,538      
Net income $ 2,030     $ 7,631     $ 12,311     $ 13,133  
                 
Earnings per common share:              
  Basic $ 0.03     $ 0.13     $ 0.17     $ 0.25  
  Diluted $ 0.03     $ 0.13     $ 0.17     $ 0.25  
                 
Weighted average shares outstanding:              
  Basic 72,564     57,478     69,773     52,789  
  Diluted 72,564     57,478     69,773     52,789  
                 
Dividends declared per common share $ 0.185     $ 0.17     $ 0.37     $ 0.34  
                 


CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES
 (in thousands, except per share amounts)
 (unaudited)
        Three Months Ended June 30,   Six Months Ended June 30,
        2017   2016   2017   2016
                     
Net income   $ 2,030     $ 7,631     $ 12,311     $ 13,133  
  Depreciation and amortization   9,335     7,892     18,411     15,185  
  Interest expense   6,219     5,440     12,098     11,301  
  Amortization of stock-based compensation   600     437     1,136     868  
EBITDA   18,184     21,400     43,956     40,487  
  Loss on the extinguishment of debt   11,883         11,883     326  
  Deferred preferred return   (544 )       (544 )    
  Impairment of real estate investment   890         890      
  Gain on disposition of other real estate investment   (3,538 )       (3,538 )    
Normalized EBITDA   $ 26,875     $ 21,400     $ 52,647     $ 40,813  
                     
Net income   $ 2,030     $ 7,631     $ 12,311     $ 13,133  
  Real estate related depreciation and amortization   9,309     7,867     18,359     15,137  
  Impairment of real estate investment   890         890      
  Gain on disposition of other real estate investment   (3,538 )       (3,538 )    
Funds from Operations (FFO)   8,691     15,498     28,022     28,270  
  Deferred preferred return   (544 )       (544 )    
  Effect of the senior unsecured notes payable redemption   12,475         12,475      
  Write-off of deferred financing fees               326  
Normalized FFO   $ 20,622     $ 15,498     $ 39,953     $ 28,596  
                     
Net income   $ 2,030     $ 7,631     $ 12,311     $ 13,133  
  Real estate related depreciation and amortization   9,309     7,867     18,359     15,137  
  Amortization of deferred financing fees   529     561     1,090     1,117  
  Amortization of stock-based compensation   600     437     1,136     868  
  Straight-line rental income   (43 )       (115 )    
  Impairment of real estate investment   890         890      
  Gain on disposition of other real estate investment   (3,538 )       (3,538 )    
Funds Available for Distribution (FAD)   9,777     16,496     30,133     30,255  
  Deferred preferred return   (544 )       (544 )    
  Effect of the senior unsecured notes payable redemption   12,475         12,475      
  Write-off of deferred financing fees               326  
Normalized FAD   $ 21,708     $ 16,496     $ 42,064     $ 30,581  
                     
FFO per share   $ 0.12     $ 0.27     $ 0.40     $ 0.53  
Normalized FFO per share   $ 0.28     $ 0.27     $ 0.57     $ 0.54  
                     
FAD per share   $ 0.13     $ 0.29     $ 0.43     $ 0.58  
Normalized FAD per share   $ 0.30     $ 0.29     $ 0.60     $ 0.58  
                     
Diluted weighted average shares outstanding [1]   72,803   57,667   69,984   52,954
                     
  [1] For the periods presented, the diluted weighted average shares have been calculated using the treasury stock method.


CARETRUST REIT, INC.
CONSOLIDATED INCOME STATEMENTS - 5 QUARTER TREND
(in thousands, except per share amounts)
(unaudited)
  Quarter Quarter Quarter Quarter Quarter
  Ended Ended Ended Ended Ended
  June 30,
2016
September 30,
2016
December 31,
2016
March 31,
2017
June 30,
2017
Revenues:          
Rental income $ 22,781   $ 24,179   $ 25,269   $ 27,339   $ 28,511  
Tenant reimbursements 1,929   2,089   2,031   2,321   2,389  
Independent living facilities 730   766   793   793   789  
Interest and other income 261   72   150   155   1,140  
Total revenues 25,701   27,106   28,243   30,608   32,829  
Expenses:          
Depreciation and amortization 7,892   8,248   8,532   9,076   9,335  
Interest expense 5,440   5,743   5,829   5,879   6,219  
Loss on the extinguishment of debt         11,883  
Property taxes 1,929   2,089   2,031   2,321   2,389  
Independent living facilities 598   708   623   661   644  
Impairment of real estate investment         890  
Acquisition costs   203   2      
General and administrative 2,211   2,283   2,573   2,390   2,977  
Total expenses 18,070   19,274   19,590   20,327   34,337  
Other income (expense):          
Loss on sale of real estate     (265 )    
Gain on disposition of other real estate investment         3,538  
Net income $ 7,631   $ 7,832   $ 8,388   $ 10,281   $ 2,030  
           
Diluted earnings per common share $ 0.13   $ 0.13   $ 0.14   $ 0.15   $ 0.03  
           
Diluted weighted average shares outstanding 57,478   57,595   60,875   66,951   72,564  
           


CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES - 5 QUARTER TREND
 (in thousands, except per share amounts) 
 (unaudited)
  Quarter Quarter Quarter Quarter Quarter
  Ended Ended Ended Ended Ended
  June 30,
2016
September 30,
2016
December 31,
2016
March 31,
2017
June 30,
2017
           
Net income $ 7,631   $ 7,832   $ 8,388   $ 10,281   $ 2,030  
Depreciation and amortization 7,892   8,248   8,532   9,076   9,335  
Interest expense 5,440   5,743   5,829   5,879   6,219  
Amortization of stock-based compensation 437   339   339   536   600  
EBITDA 21,400   22,162   23,088   25,772   18,184  
Acquisition costs   203   2      
Loss on sale of real estate     265      
Loss on the extinguishment of debt         11,883  
Deferred preferred return         (544 )
Impairment of real estate investment         890  
Gain on disposition of other real estate investment         (3,538 )
Normalized EBITDA $ 21,400   $ 22,365   $ 23,355   $ 25,772   $ 26,875  
           
Net income $ 7,631   $ 7,832   $ 8,388   $ 10,281   $ 2,030  
Real estate related depreciation and amortization 7,867   8,223   8,505   9,050   9,309  
Loss on sale of real estate     265      
Impairment of real estate investment         890  
Gain on disposition of other real estate investment         (3,538 )
Funds from Operations (FFO) 15,498   16,055   17,158   19,331   8,691  
Acquisition costs   203   2      
Deferred preferred return         (544 )
Effect of the senior unsecured notes payable redemption         12,475  
Normalized FFO $ 15,498   $ 16,258   $ 17,160   $ 19,331   $ 20,622  
           


CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES - 5 QUARTER TREND (continued)
 (in thousands, except per share amounts)
 (unaudited)
  Quarter Quarter Quarter Quarter Quarter
  Ended Ended Ended Ended Ended
  June 30,
2016
September 30,
2016
December 31,
2016
March 31,
2017
June 30,
2017
           
Net income $ 7,631   $ 7,832   $ 8,388   $ 10,281   $ 2,030  
Real estate related depreciation and amortization 7,867   8,223   8,505   9,050   9,309  
Amortization of deferred financing fees 561   561   561   561   529  
Amortization of stock-based compensation 437   339   339   536   600  
Straight-line rental income   (78 ) (72 ) (72 ) (43 )
Loss on sale of real estate     265      
Impairment of real estate investment         890  
Gain on disposition of other real estate investment         (3,538 )
Funds Available for Distribution (FAD) 16,496   16,877   17,986   20,356   9,777  
Acquisition costs   203   2      
Deferred preferred return         (544 )
Effect of the senior unsecured notes payable redemption         12,475  
Normalized FAD $ 16,496   $ 17,080   $ 17,988   $ 20,356   $ 21,708  
           
FFO per share $ 0.27   $ 0.28   $ 0.28   $ 0.29   $ 0.12  
Normalized FFO per share $ 0.27   $ 0.28   $ 0.28   $ 0.29   $ 0.28  
           
FAD per share $ 0.29   $ 0.29   $ 0.29   $ 0.30   $ 0.13  
Normalized FAD per share $ 0.29   $ 0.30   $ 0.29   $ 0.30   $ 0.30  
           
Diluted weighted average shares outstanding [1] 57,667   57,739   61,028   67,133   72,803  
           
 [1]  For the periods presented, the diluted weighted average shares have been calculated using the treasury stock method.


CARETRUST REIT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
        June 30, 2017   December 31, 2016
        (unaudited)    
Assets        
Real estate investments, net $ 972,832     $ 893,918  
Other real estate investments 5,192     13,872  
Cash and cash equivalents 35,066     7,500  
Accounts and other receivables 9,425     5,896  
Prepaid expenses and other assets 5,282     1,369  
Deferred financing costs, net 2,260     2,803  
      Total assets $ 1,030,057     $ 925,358  
             
Liabilities and Equity      
Senior unsecured notes payable, net $ 294,043     $ 255,294  
Senior unsecured term loan, net 99,469       99,422
Unsecured revolving credit facility     95,000  
Accounts payable and accrued liabilities 14,521     12,137  
Dividends payable 14,048     11,075  
      Total liabilities 422,081     472,928  
             
Equity:        
Common stock 755     648  
Additional paid-in capital 782,073     611,475  
Cumulative distributions in excess of earnings (174,852 )   (159,693 )
      Total equity 607,976     452,430  
      Total liabilities and equity $ 1,030,057     $ 925,358  
             


CARETRUST REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
  Six Months Ended June 30,
  2017   2016
Cash flows from operating activities:      
Net income $ 12,311     $ 13,133  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization (including a below market ground lease) 18,419     15,191  
Amortization of deferred financing costs 1,131     1,117  
Loss on extinguishment of debt 11,883     326  
Amortization of stock-based compensation 1,136     868  
Straight-line rental income (115 )    
Non-cash interest income (320 )   (515 )
Interest income distribution from other real estate investment 1,500      
Impairment of real estate investment 890      
Change in operating assets and liabilities:      
Accounts and other receivables (3,414 )   (1,743 )
Prepaid expenses and other assets (311 )   (291 )
Accounts payable and accrued liabilities 1,791     27  
Net cash provided by operating activities 44,901
    28,113  
Cash flows from investing activities:      
Acquisitions of real estate (96,641 )   (144,149 )
Improvements to real estate (598 )   (170 )
Purchases of equipment, furniture and fixtures (233 )   (89 )
Sale of other real estate investment 7,500      
Escrow deposits for acquisitions of real estate (4,335 )    
Net cash used in investing activities (94,307 )   (144,408 )
Cash flows from financing activities:      
Proceeds from the issuance of common stock, net 170,485     105,889  
Proceeds from the issuance of senior unsecured notes payable 300,000      
Proceeds from the issuance of senior unsecured term loan     100,000  
Borrowings under unsecured revolving credit facility 63,000     115,000  
Payments on senior unsecured notes payable (267,639 )    
Payments on unsecured revolving credit facility (158,000 )   (92,000 )
Payments on the mortgage notes payable     (95,022 )
Payments of deferred financing costs (5,511 )   (1,332 )
Net-settle adjustment on restricted stock (866 )   (515 )
Dividends paid on common stock (24,497 )   (17,548 )
Net cash provided by financing activities 76,972     114,472  
Net increase (decrease) in cash and cash equivalents 27,566     (1,823 )
Cash and cash equivalents beginning of period 7,500     11,467  
Cash and cash equivalents end of period $ 35,066     $ 9,644  
       


CARETRUST REIT, INC.
DEBT SUMMARY
(dollars in thousands)
(unaudited)
                   
          June 30, 2017
  Interest   Maturity     % of Deferred   Net Carrying
Debt Rate   Date   Principal Principal Loan Costs   Value
                   
Fixed Rate Debt                  
                   
Senior unsecured notes payable 5.250 %   2025   $ 300,000   75.0 % $ (5,957 )   $ 294,043  
                   
Floating Rate Debt                  
                   
Senior unsecured term loan 3.176 % [1] 2023   100,000   25.0 % (531 )   99,469  
                   
Unsecured revolving credit facility 2.976 % [2] 2020 [3]   0.0 %   [4]  
  3.176 %       100,000   25.0 % (531 )   99,469  
                   
Total Debt 4.732 %       $ 400,000   100.0 % $ (6,488 )   $ 393,512  
                   
[1] Funds can be borrowed at applicable LIBOR plus 1.95% to 2.60% or at the Base Rate (as defined) plus 0.95% to 1.6%.
[2] Funds can be borrowed at applicable LIBOR plus 1.75% to 2.40% or the Base Rate (as defined) plus 0.75% to 1.4%.
[3] Maturity date assumes exercise of two 6-month extension options.
[4] Deferred financing fees are not shown net for the unsecured revolving credit facility and are included in assets on the balance sheet.


       
CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES
 (shares in thousands)
 (unaudited)
       
       
 2017 Guidance
       
       
    Low High
Net income $ 0.50    $ 0.52  
  Real estate related depreciation and amortization   0.51   0.51  
  Impairment of real estate investment   0.01   0.01  
  Gain on disposition of other real estate investment (0.05 ) (0.05 )
Funds from Operations (FFO)   0.97     0.99  
  Deferred preferred return (0.01 ) (0.01 )
  Effect of the senior unsecured notes payable redemption   0.17     0.17  
Normalized FFO $ 1.13     $ 1.15  
       
Net income $ 0.50     $ 0.52  
  Real estate related depreciation and amortization   0.51     0.51  
  Amortization of deferred financing fees   0.03     0.03  
  Amortization of stock-based compensation   0.03     0.03  
  Straight-line rental income (0.00 (0.00 )
  Impairment of real estate investment   0.01     0.01  
  Gain on disposition of other real estate investment (0.05 ) (0.05 )
Funds Available for Distribution (FAD)   1.03     1.05  
  Deferred preferred return (0.01 ) (0.01 )
  Effect of the senior unsecured notes payable redemption 0.17   0.17  
Normalized FAD $ 1.19     $ 1.21  
Weighted average shares outstanding:    
  Diluted   72,959     72,959  

 

Non-GAAP Financial Measures

EBITDA represents net income before interest expense (including amortization of deferred financing costs), amortization of stock-based compensation, and depreciation and amortization. Normalized EBITDA represents EBITDA as further adjusted to eliminate the impact of certain items that the Company does not consider indicative of core operating performance, such as real estate impairment charges, expensed acquisition costs, certain preferred returns, losses on the extinguishment of debt, and gains or losses from dispositions of real estate or other real estate. EBITDA and normalized EBITDA 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. EBITDA and normalized EBITDA do not purport to be indicative of cash available to fund future cash requirements, including the Company’s ability to fund capital expenditures or make payments on its indebtedness. Further, the Company’s computation of EBITDA and normalized EBITDA may not be comparable to EBITDA and normalized EBITDA reported by other REITs.

Funds from Operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), and Funds Available for Distribution (“FAD”) are important non-GAAP supplemental measures of operating performance for a REIT. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation except on land, such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a REIT that uses historical cost accounting for depreciation could be less informative. Thus, NAREIT created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP.

FFO is defined by NAREIT as net income computed in accordance with GAAP, excluding gains or losses from dispositions of real estate or other real estate, real estate depreciation and amortization and real estate impairment charges, and adjustments for unconsolidated partnerships and joint ventures. The Company computes FFO in accordance with NAREIT’s definition.

FAD is defined as FFO excluding non-cash income and expenses, such as amortization of stock-based compensation, amortization of deferred financing costs and the effects of straight-line rent. The Company considers FAD to be a useful supplemental measure to evaluate the Company’s operating results excluding these income and expense items to help investors, analysts and other interested parties compare the operating performance of the Company between periods or as compared to other companies on a more consistent basis.

In addition, the Company reports normalized FFO and normalized FAD, which adjust FFO and FAD for certain revenue and expense items that the Company does not believe are indicative of its ongoing operating results, such as written-off deferred financing fees, expensed acquisition costs, certain preferred returns, the effect of the senior unsecured notes payable redemption and other unanticipated charges. By excluding these items, investors, analysts and our management can compare normalized FFO and normalized FAD between periods more consistently.

While FFO, normalized FFO, FAD and normalized FAD are relevant and widely-used measures of operating performance among REITs, they 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. FFO, normalized FFO, FAD and normalized FAD do not purport to be indicative of cash available to fund future cash requirements.

Further, the Company’s computation of FFO, normalized FFO, FAD and normalized FAD may not be comparable to FFO, normalized FFO, FAD and normalized FAD reported by other REITs that do not define FFO in accordance with the current NAREIT definition or that interpret the current NAREIT definition or define FAD differently than the Company does.

The Company believes that net income, as defined by GAAP, is the most appropriate earnings measure. The Company also believes that the use of EBITDA, normalized EBITDA, FFO, normalized FFO, FAD and normalized FAD, combined with the required GAAP presentations, improves the understanding of operating results of REITs among investors and makes comparisons of operating results among such companies more meaningful. The Company considers EBITDA and normalized EBITDA useful in understanding the Company’s operating results independent of its capital structure and indebtedness, thereby allowing for a more meaningful comparison of operating performance between periods and against other REITs. The Company considers FFO, normalized FFO, FAD and normalized FAD to be useful measures for reviewing comparative operating and financial performance because, by excluding gains or losses from real estate dispositions, impairment charges and real estate depreciation and amortization, and, for FAD and normalized FAD, by excluding non-cash income and expenses such as amortization of stock-based compensation, amortization of deferred financing costs, and the effects of straight-line rent, FFO, normalized FFO, FAD and normalized FAD can help investors compare the Company’s operating performance between periods and to other REITs.

 

CareTrust REIT, Inc.
(949) 542-3130
ir@caretrustreit.com

Primary Logo

CareTrust REIT

© CareTrust REIT 2017 | All Rights Reserved.

All logos and trademarks are the property of their respective owners.

Privacy Policy