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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
 
 
 
 
 

FORM 8-K
 
 
 
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 8, 2018
 
 
 
 
 
CareTrust REIT, Inc.
(Exact name of registrant as specified in its charter)  
 
 
 
 
 
 
 
 
Maryland
001-36181
46-3999490
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)

Registrant’s telephone number, including area code: (949) 542-3130
 
 
 
905 Calle Amanecer, Suite 300,
San Clemente, CA
92673
(Address of principal executive offices)
(Zip Code)
Not Applicable
(Former name or former address, if changed since last report.)
 
 
 
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company   ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐
 
 
 
 
 






Item 2.02
Results of Operations and Financial Condition.

On May 8, 2018, CareTrust REIT, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter ended March 31, 2018. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section and shall not be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in any such filing.

Item 7.01
Regulation FD Disclosure

A copy of the Company’s supplemental financial information for the first quarter ended March 31, 2018 is attached hereto as Exhibit 99.2 and is incorporated herein by reference. A copy of the supplemental financial information is also available on the “Investors” section of the Company’s website at www.caretrustreit.com.

Exhibit 99.2 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section and shall not be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in any such filing.

Item 9.01. Financial Statements and Exhibits.

 
(d)
Exhibits.
 
 
 
 
Exhibits
  
Description
 
 
  
 
 
 







SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
Date: May 8, 2018
 
CARETRUST REIT, INC.
 
 
 
 
 
 
By:
/s/ William M. Wagner
 
 
 
 
William M. Wagner
 
 
 
Chief Financial Officer, Treasurer and Secretary



Exhibit
Exhibit 99.1
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12237947&doc=28

CareTrust REIT Announces First Quarter 2018 Operating Results; Revises Guidance Upward

Conference Call Scheduled for Wednesday, May 9, 2018 at 1:00 pm ET
SAN CLEMENTE, Calif., May 8, 2018 (GLOBE NEWSWIRE) -- CareTrust REIT, Inc. (Nasdaq:CTRE) today reported operating results for the quarter ended March 31, 2018, as well as other recent events.
For the quarter, CareTrust REIT reported:
Net income of $14.6 million, an increase of 42%, and net income per diluted weighted-average common share of $0.19, an increase of 27% over Q1 2017;
Normalized FFO of $24.1 million, an increase of 25%, and normalized FFO per diluted weighted-average common share $0.32, an increase of 10% over Q1 2017;
Normalized FAD of $24.9 million, an increase of 22%, and normalized FAD per diluted weighted-average common share of $0.33, an increase of 10% over Q1 2017;
Investments of approximately $47.4 million (inclusive of transaction costs) at a blended initial cash yield of 9%, acquiring six skilled nursing facilities in two separate transactions; and
A net debt-to-normalized EBITDA ratio of 4.6x and a debt-to-enterprise value of 37%, each as of quarter-end.

Planned Re-Tenantings Completed
Post quarter-end, CareTrust REIT completed the previously-announced planned re-tenanting of the remaining Pristine Ohio assets, as well as one other re-tenanting. “We are pleased to report that the last of the Ohio assets formerly leased to subsidiaries of Pristine Senior Living were successfully transferred to two outstanding operators, on schedule and with minimal disruption to operations,” said Greg Stapley, CareTrust’s Chairman and Chief Executive Officer. He also reported that two other CareTrust properties, which were formerly leased to affiliates of OnPointe Health, were also transferred to other current CareTrust operators post quarter-end.
Mr Stapley noted, that all of the asset transfers were accomplished at approximately the same rents as the outgoing operators were paying, and that all of the assets are now covered by multi-facility master leases. “Best of all, we are thrilled to have added two new operator relationships with Trio Healthcare and Hillstone Healthcare, and look forward to growing with these outstanding operators in the years to come,” he added.
Financial Results for Quarter Ended March 31, 2018
Chief Financial Officer Bill Wagner reported that for the first quarter, CareTrust REIT generated net income of $14.6 million, or $0.19 per diluted weighted-average common share, normalized FFO of $24.1 million, or $0.32 per diluted weighted-average common share, and normalized FAD of $24.9 million, or $0.33 per diluted weighted-average common share. “We are pleased to be delivering a quarter-over-quarter increase in normalized FFO per share of 10%,” said Mr. Wagner.
Liquidity
Discussing CareTrust REIT’s investments and current liquidity, Mr. Wagner reported that the $47 million in new investments in the quarter were funded with a combination of cash on hand and approximately $35 million in draws on the Company’s $400 million unsecured revolver. He noted that the revolving credit facility includes a $250 million “accordion” feature that can be exercised by the Company at its option to increase liquidity. As of today, approximately $200 million is drawn on the line.

He also reported that there had been no activity in the quarter on the Company’s at-the-market equity program but, he added, “Our ATM program remains a significant instrument in the Company’s capital-raising repertoire, with up to $236 million remaining in authorization at present.” Mr. Wagner further reported that CareTrust REIT’s net debt-to-normalized EBITDA ratio was 4.6x and its debt-to-enterprise value was 37%, each at quarter-end, which is well within management’s target leverage range. He also noted that CareTrust REIT continues to have no property-level debt and, taking into account existing extension rights, no debt maturing before 2020.

2018 Guidance Revised Upward



Mr. Wagner provided CareTrust REIT's 2018 revised earnings guidance, projecting on a per-diluted weighted-average common share basis, net income of approximately $0.70 to $0.72, normalized FFO of approximately $1.26 to $1.28, and normalized FAD of approximately $1.32 to $1.34. He noted that the updated 2018 guidance is based on a diluted weighted-average common share count of 75.9 million shares and assumes no new acquisitions beyond those made to date, no new debt incurrences or new equity issuances, and 2.0% CPI-based rent escalators under CareTrust REIT's long-term net leases.

Dividend Increased

During the quarter, CareTrust REIT increased its quarterly dividend by over 10% from $0.185 to $0.205 per common share. “On an annualized basis, our quarterly dividend represents a payout ratio of approximately 64% based on the first quarter 2018 normalized FFO, and 62% on normalized FAD,” said Mr. Wagner. “At this level, our dividend remains among the best-protected of all our industry peers, while simultaneously providing additional growth capital for reinvestment and a solid overall return to our shareholders,” he added.

Significant Events During the Quarter and Since
On February 1, 2018, CareTrust REIT acquired Copper Ridge, a skilled nursing facility with 100 operating beds in Butte, Montana, for approximately $5.8 million, inclusive of transaction costs. The facility was added to the existing master lease of Eduro Healthcare LLC.
On February 27, 2018, CareTrust REIT announced that it had entered into a lease termination agreement with Pristine Senior Living for the nine remaining CareTrust properties it then occupied, with a target completion date of April 30, 2018. The planned operational transfers were timely completed, and on May 1, 2018, Trio Healthcare, Inc. took over operations at the seven facilities based primarily in the Dayton, Ohio area under a new 15-year master lease, while Hillstone Healthcare, Inc. assumed the operation of the two facilities in Willard and Toledo, Ohio under a new 12-year master lease. Pristine had previously relinquished operations at seven other CareTrust facilities in the Cincinnati area to another CareTrust tenant, Trillium Healthcare, Inc., which has been operating those facilities since December 1, 2017.
On March 1, 2018, CareTrust REIT acquired a set of five skilled nursing facilities located in the Grand Rapids, Michigan area, in a sale-leaseback transaction with affiliates of Metron Integrated Health Systems, Inc., the portfolio’s longtime owner-operator. CareTrust paid approximately $41.6 million, inclusive of transaction costs, for the 422 operating-bed portfolio, which was leased back to Metron under a 15-year master lease. CareTrust REIT has indicated that it expects to grow with Metron in the future.
On March 13, 2018, CareTrust REIT terminated two separate standalone leases with affiliates of OnPointe Health. Following discussions between OnPointe and CareTrust, the parties mutually agreed to transfer the two facilities to other operators. On May 1, 2018, affiliates of Eduro Healthcare LLC and Providence Group Inc., two existing CareTrust tenants, took over operations at the facilities in Albuquerque, New Mexico and Brownsville, Texas, respectively, and the facilities were added to their respective master leases. The contract rent payable by the incoming operators is approximately the same as the rent OnPointe was paying.
On March 26, 2018, CareTrust REIT disposed of its Cross portfolio, a group of small assisted living assets located in Idaho and leased to affiliates of Cross Healthcare, LLC. “We purchased these assets in 2014 with the expectation that the Cross-CareTrust relationship would grow,” said Mark Lamb, CareTrust’s Director of Investments. He explained that when that expectation changed, CareTrust determined to recycle the capital into higher-yielding investment with a growth-oriented tenant. He further noted that the assets had been acquired for approximately $12.1 million in a 2014 sale-leaseback, and the sales price was approximately $13.0 million.
Conference Call

A conference call will be held on Wednesday, May 9, 2018, at 1:00 p.m. Eastern Time (10:00 a.m. Pacific Time), during which CareTrust REIT’s management will discuss first quarter 2018 results, recent developments and other matters. The dial-in number for this call is (844) 220-4972 (U.S.) or (317) 973-4053 (International). The conference ID number is 8786663. 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 188 net-leased healthcare properties and three operated seniors housing properties in 24 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 the Company’s 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 the Company’s tenants and 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. The Company’s forward-looking statements are based on management’s 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 the Company believes that the assumptions underlying these forward-looking statements are reasonable, they are not guarantees and the Company can give no assurance that its expectations will be attained. Factors which could have a material adverse effect on the Company’s 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 Company tenants to meet and/or perform their obligations under the triple-net leases the Company has 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 the Company in connection with such spin-off, including its triple-net long-term leases with the Company, and any of its obligations to indemnify, defend and hold the Company harmless from and against various claims, litigation and liabilities; (iii) the ability and willingness of the Company’s tenants to comply with laws, rules and regulations in the operation of the properties the Company leases to them; (iv) the ability and willingness of the Company’s tenants, including Ensign, to renew their leases with the Company upon expiration and the ability to reposition Company properties on the same or better terms in the event of nonrenewal or in the event the Company replaces an existing tenant, and obligations, including indemnification obligations, that the Company 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 the Company’s outstanding indebtedness; (vii) access to debt and equity capital markets; (viii) fluctuating interest rates; (ix) the ability to retain key management personnel; (x) the ability to maintain the Company’s 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 the Company’s filings with the Securities and Exchange Commission (“SEC”), including those in the Company‘s Annual Report on Form 10-K for the year ended December 31, 2017 under the heading entitled “Risk Factors,” as such risk factors may be amended, supplemented or superseded from time to time by other reports the Company files with the SEC.
Information in this press release or the related conference call is provided as of March 31, 2018, unless specifically stated otherwise. The Company expressly disclaims 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 the Company’s 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," “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.
Contact:
CareTrust REIT, Inc.
(949) 542-3130
ir@caretrustreit.com






CARETRUST REIT, INC.
CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share data)
(unaudited)
 
 
Three Months Ended March 31,
 
 
2018
 
2017
Revenues:
 
 
 
 
Rental income
$
33,816

 
$
27,339

 
Tenant reimbursements
2,968

 
2,321

 
Independent living facilities
799

 
793

 
Interest and other income
518

 
155

 
Total revenues
38,101

 
30,608

Expenses:
 
 
 
 
Depreciation and amortization
11,577

 
9,076

 
Interest expense
7,092

 
5,879

 
Property taxes
2,968

 
2,321

 
Independent living facilities
716

 
661

 
General and administrative
3,192

 
2,390

 
Total expenses
25,545

 
20,327

Other income:
 
 
 
 
Gain on sale of real estate
2,051

 

Net income
$
14,607

 
$
10,281

 
 
 
 
 
Earnings per common share:
 
 
 
 
Basic
$
0.19

 
$
0.15

 
Diluted
$
0.19

 
$
0.15

 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
Basic
75,504

 
66,951

 
Diluted
75,504

 
66,951

 
 
 
 
 
Dividends declared per common share
$
0.205

 
$
0.185







CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
 (unaudited)
 
 
 
Three Months Ended March 31,
 
 
 
2018
 
2017
 
 
 
 
 
 
Net income
 
$
14,607

 
$
10,281

 
Depreciation and amortization
 
11,577

 
9,076

 
Interest expense
 
7,092

 
5,879

 
Amortization of stock-based compensation
 
904

 
536

EBITDA
 
34,180

 
25,772

 
Gain on sale of real estate
 
(2,051
)
 

Normalized EBITDA
 
$
32,129

 
$
25,772

 
 
 
 
 
 
Net income
 
$
14,607

 
$
10,281

 
Real estate related depreciation and amortization
 
11,549

 
9,050

 
Gain on sale of real estate
 
(2,051
)
 

Funds from Operations (FFO)
 
24,105

 
19,331

Normalized FFO
 
$
24,105

 
$
19,331







CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES (continued)
 (in thousands, except per share data)
 (unaudited)
 
 
 
Three Months Ended March 31,
 
 
 
2018
 
2017
 
 
 
 
 
 
Net income
 
$
14,607

 
$
10,281

 
Real estate related depreciation and amortization
 
11,549

 
9,050

 
Amortization of deferred financing fees
 
484

 
561

 
Amortization of stock-based compensation
 
904

 
536

 
Straight-line rental income
 
(591
)
 
(72
)
 
Gain on sale of real estate
 
(2,051
)
 

Funds Available for Distribution (FAD)
 
24,902

 
20,356

Normalized FAD
 
$
24,902

 
$
20,356

 
 
 
 
 
 
FFO per share
 
$
0.32

 
$
0.29

Normalized FFO per share
 
$
0.32

 
$
0.29

 
 
 
 
 
 
FAD per share
 
$
0.33

 
$
0.30

Normalized FAD per share
 
$
0.33

 
$
0.30

 
 
 
 
 
 
 
Diluted weighted-average shares outstanding [1]
 
75,657

 
67,133

 
 
 
 
 
 
 
 [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 data)
(unaudited)
 
Quarter
Quarter
Quarter
Quarter
Quarter
 
Ended
Ended
Ended
Ended
Ended
 
March 31, 2017
June 30, 2017
September 30, 2017
December 31, 2017
March 31, 2018
Revenues:
 
 
 
 
 
Rental income
$
27,339

$
28,511

$
29,404

$
32,379

$
33,816

Tenant reimbursements
2,321

2,389

2,543

3,001

2,968

Independent living facilities
793

789

825

821

799

Interest and other income
155

1,140

176

396

518

Total revenues
30,608

32,829

32,948

36,597

38,101

Expenses:
 
 
 
 
 
Depreciation and amortization
9,076

9,335

9,745

11,003

11,577

Interest expense
5,879

6,219

5,592

6,506

7,092

Loss on the extinguishment of debt

11,883




Property taxes
2,321

2,389

2,543

3,001

2,968

Independent living facilities
661

644

698

730

716

Impairment of real estate investment

890




Reserve for advances and deferred rent



10,414


General and administrative
2,390

2,977

3,059

2,691

3,192

Total expenses
20,327

34,337

21,637

34,345

25,545

Other income:
 
 
 
 
 
Gain on disposition of other real estate investment

3,538




Gain on sale of real estate




2,051

Net income
$
10,281

$
2,030

$
11,311

$
2,252

$
14,607

 
 
 
 
 
 
Diluted earnings per share
$
0.15

$
0.03

$
0.15

$
0.03

$
0.19

 
 
 
 
 
 
Diluted weighted average shares outstanding
66,951

72,564

75,471

75,476

75,504






CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES - 5 QUARTER TREND
(in thousands, except per share data)
 (unaudited)
 
Quarter
Quarter
Quarter
Quarter
Quarter
 
Ended
Ended
Ended
Ended
Ended
 
March 31, 2017
June 30, 2017
September 30, 2017
December 31, 2017
March 31, 2018
 
 
 
 
 
 
Net income
$
10,281

$
2,030

$
11,311

$
2,252

$
14,607

Depreciation and amortization
9,076

9,335

9,745

11,003

11,577

Interest expense
5,879

6,219

5,592

6,506

7,092

Amortization of stock-based compensation
536

600

656

624

904

EBITDA
25,772

18,184

27,304

20,385

34,180

Impairment of real estate investment

890




Gain on sale of real estate




(2,051
)
Loss on the extinguishment of debt

11,883




Deferred preferred return

(544
)



Reserve for advances and deferred rent



10,414


Gain on disposition of other real estate investment

(3,538
)



Normalized EBITDA
$
25,772

$
26,875

$
27,304

$
30,799

$
32,129

 
 
 
 
 
 
Net income
$
10,281

$
2,030

$
11,311

$
2,252

$
14,607

Real estate related depreciation and amortization
9,050

9,309

9,717

10,973

11,549

Impairment of real estate investment

890




Gain on disposition of other real estate investment

(3,538
)



Gain on sale of real estate




(2,051
)
Funds from Operations (FFO)
19,331

8,691

21,028

13,225

24,105

Reserve for advances and deferred rent



10,414


Deferred preferred return

(544
)



Effect of the senior unsecured notes payable redemption

12,475




Normalized FFO
$
19,331

$
20,622

$
21,028

$
23,639

$
24,105






CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES - 5 QUARTER TREND (continued)
 (in thousands, except per share data)
 (unaudited)
 
Quarter
Quarter
Quarter
Quarter
Quarter
 
Ended
Ended
Ended
Ended
Ended
 
March 31, 2017
June 30, 2017
September 30, 2017
December 31, 2017
March 31, 2018
 
 
 
 
 
 
Net income
$
10,281

$
2,030

$
11,311

$
2,252

$
14,607

Real estate related depreciation and amortization
9,050

9,309

9,717

10,973

11,549

Amortization of deferred financing fees
561

529

484

485

484

Amortization of stock-based compensation
536

600

656

624

904

Straight-line rental income
(72
)
(43
)
(2
)
(227
)
(591
)
Impairment of real estate investment

890




Gain on disposition of other real estate investment

(3,538
)



Gain on sale of real estate




(2,051
)
Funds Available for Distribution (FAD)
20,356

9,777

22,166

14,107

24,902

Reserve for advances and deferred rent



10,414


Deferred preferred return

(544
)



Effect of the senior unsecured notes payable redemption

12,475




Normalized FAD
$
20,356

$
21,708

$
22,166

$
24,521

$
24,902

 
 
 
 
 
 
FFO per share
$
0.29

$
0.12

$
0.28

$
0.17

$
0.32

Normalized FFO per share
$
0.29

$
0.28

$
0.28

$
0.31

$
0.32

 
 
 
 
 
 
FAD per share
$
0.30

$
0.13

$
0.29

$
0.19

$
0.33

Normalized FAD per share
$
0.30

$
0.30

$
0.29

$
0.32

$
0.33

 
 
 
 
 
 
Diluted weighted-average shares outstanding [1]
67,133

72,803

75,659

75,692

75,657

 
 
 
 
 
 
 [1]  For the periods presented, the diluted weighted-average shares have been calculated using the treasury stock method. 










CARETRUST REIT, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
 
 
 
 
March 31, 2018
 
December 31, 2017
Assets:
 
 
 
 
Real estate investments, net
$
1,177,140

 
$
1,152,261

Other real estate investments, net
18,031

 
17,949

Cash and cash equivalents
14,195

 
6,909

Accounts and other receivables, net
5,999

 
5,254

Prepaid expenses and other assets
1,919

 
895

Deferred financing costs, net
1,447

 
1,718

 
 
 
Total assets
$
1,218,731

 
$
1,184,986

 
 
 
 
 
 
 
Liabilities and Equity:
 
 
 
Senior unsecured notes payable, net
$
294,584

 
$
294,395

Senior unsecured term loan, net
99,540

 
99,517

Unsecured revolving credit facility
200,000

 
165,000

Accounts payable and accrued liabilities
15,111

 
17,413

Dividends payable
15,608

 
14,044

 
 
 
Total liabilities
624,843

 
590,369

 
 
 
 
 
 
 
Equity:
 
 
 
 
Common stock
755

 
755

Additional paid-in capital
783,509

 
783,237

Cumulative distributions in excess of earnings
(190,376
)
 
(189,375
)
 
 
 
Total equity
593,888

 
594,617

 
 
 
Total liabilities and equity
$
1,218,731

 
$
1,184,986







CARETRUST REIT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
For the Three Months Ended March 31,
 
2018
 
2017
Cash flows from operating activities:
 
 
 
Net income
$
14,607

 
$
10,281

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization (including a below-market ground lease)
11,582

 
9,080

Amortization of deferred financing costs
484

 
561

Amortization of stock-based compensation
904

 
536

Straight-line rental income
(591
)
 
(72
)
Noncash interest income
(106
)
 
(155
)
Gain on sale of real estate
(2,051
)
 

Change in operating assets and liabilities:
 
 
 
Accounts and other receivables, net
(155
)
 
(1,964
)
Prepaid expenses and other assets
(36
)
 
13

Accounts payable and accrued liabilities
(2,579
)
 
1,886

Net cash provided by operating activities
22,059

 
20,166

Cash flows from investing activities:
 
 
 
Acquisitions of real estate
(47,103
)
 
(54,568
)
Improvements to real estate
(11
)
 
(89
)
Purchases of equipment, furniture and fixtures
(27
)
 
(117
)
Principal payments received on mortgage loan receivable
23

 

Escrow deposits for acquisition of real estate
(1,000
)
 
(700
)
Net proceeds from the sale of real estate
13,004

 

Net cash used in investing activities
(35,114
)
 
(55,474
)
Cash flows from financing activities:
 
 
 
Proceeds from the issuance of common stock, net
(10
)
 
108,166

Borrowings under unsecured revolving credit facility
60,000

 
45,000

Payments on unsecured revolving credit facility
(25,000
)
 
(113,000
)
Net-settle adjustment on restricted stock
(605
)
 

Dividends paid on common stock
(14,044
)
 
(11,075
)
Net cash provided by financing activities
20,341

 
29,091

Net increase (decrease) in cash and cash equivalents
7,286

 
(6,217
)
Cash and cash equivalents, beginning of period
6,909

 
7,500

Cash and cash equivalents, end of period
$
14,195

 
$
1,283







CARETRUST REIT, INC.
DEBT SUMMARY
(dollars in thousands)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31, 2018
 
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

 
50.0
%
 
$
(5,416
)
 
$
294,584

 
 
 
 
 
 
 
 
 
 
 
 
Floating Rate Debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior unsecured term loan
3.837
%
[1]
2023
 
100,000

 
16.7
%
 
(460
)
 
99,540

 
 
 
 
 
 
 
 
 
 
 
 
Unsecured revolving credit facility
3.624
%
[2]
2020
[3]
200,000

 
33.3
%
 

[4]
200,000

 
3.695
%
 
 
 
300,000

 
50.0
%
 
(460
)
 
299,540

 
 
 
 
 
 
 
 
 
 
 
 
Total Debt
4.473
%
 
 
 
$
600,000

 
100.0
%
 
$
(5,876
)
 
$
594,124

 
 
 
 
 
 
 
 
 
 
 
 
[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)
 
 
 
 
 
 
 
 
 
 
 2018 Guidance
 
 
 
 
 
 
 
 
 
 
 
 
Low
 
High
Net income
$
0.70

 
$
0.72

 
Real estate related depreciation and amortization
0.59

 
0.59

 
Gain on sale of real estate
(0.03
)
 
(0.03
)
Funds from Operations (FFO)
1.26

 
1.28

Normalized FFO
$
1.26

 
$
1.28

 
 
 
 
 
Net income
$
0.70

 
$
0.72

 
Real estate related depreciation and amortization
0.59

 
0.59

 
Amortization of deferred financing fees
0.03

 
0.03

 
Amortization of stock-based compensation
0.05

 
0.05

 
Straight-line rental income
(0.02
)
 
(0.02
)
 
Gain on sale of real estate
(0.03
)
 
(0.03
)
Funds Available for Distribution (FAD)
1.32

 
1.34

Normalized FAD
$
1.32

 
$
1.34

Weighted average shares outstanding:
 
 
 
 
Diluted
75,916

 
75,916










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 deferred preferred return, losses on the extinguishment of debt, reserve for advances and deferred rent 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 investments, 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, indebtedness and non-recurring charges, 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

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12237947&doc=28




exhibit992ctreq12018fina
EXHIBIT 99.2 EXHIBITEXHIBIT 99.2 99.2 TheCascadia Rio at ofCabezon Nampa (Rio (Nampa, Rancho, ID) NM) The Rio at Cabezon (Rio Rancho, NM)


 
Disclaimers • This supplement contains 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, 2017 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. • This supplement contains certain non-GAAP financial information relating to CareTrust REIT including EBITDA, Normalized EBITDA, FFO, Normalized FFO, FAD, Normalized FAD, and certain related ratios. Explanatory footnotes and a glossary explaining this non-GAAP information are included in this supplement. Reconciliations of these non-GAAP measures are also included in this supplement. Other financial information, including GAAP financial information, is also available on our website. Non-GAAP financial information does not represent financial performance under GAAP and should not be considered in insolation, as a measure of liquidity, as an alternative to net income, or as an indicator of any other performance measure determined in accordance with GAAP. You should not rely on non-GAAP financial information as a substitute for GAAP financial information, and should recognize that non-GAAP information presented herein may not compare to similarly-termed non-GAAP information of other companies (i.e., because they do not use the same definitions for determining any such non-GAAP information). • This supplement also includes certain information regarding operators of our properties (such as EBITDARM Coverage, EBITDAR Coverage, and Occupancy), most of which are not subject to audit or SEC reporting requirements. The operator information provided in this supplement has been provided by the operators. We have not independently verified this information, but have no reason to believe that such information is inaccurate in any material respect. We are providing this information for informational purposes only. Ensign is subject to the registration and reporting requirements of the SEC and is required to file with the SEC annual reports containing audited financial information and quarterly reports containing unaudited financial information. Ensign’s financial statements, as filed with the SEC, can be found at Ensign’s website http://www.ensigngroup.net. • Information2 in this supplement is provided as of March 31, 2018, unless specifically stated otherwise. We expressly disclaim any obligation to update or revise any information in this supplement (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 supplement, unless the context requires otherwise, references to “CTRE,” “CareTrust,” “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. 2


 
Company Profile Company Profile 3 CareTrust at a Glance 4 CareTrust REIT is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition and leasing Investments 5 of seniors housing and healthcare-related properties. CareTrust REIT generates revenues primarily by leasing properties to a diverse Portfolio Overview group of local, regional and national seniors housing operators, healthcare services providers, and other healthcare-related businesses. Portfolio Performance 6 Tenant Summary 7 Since its debut as a standalone public company on June 1, 2014, and as of May 8, 2018, CareTrust REIT has expanded its tenant roster Rent Diversification by Tenant 8 to 19 operators, and has grown its real estate portfolio to 188 net-leased healthcare properties and three operated seniors housing properties across 24 states, consisting of 18,528 operating beds/units. As of May 8, 2018, we also had other real estate investments Geographic Diversification 9 consisting of two preferred equity investments and a mortgage loan receivable. Rent Diversification by State 10 Lease Maturities 11 Management Financial Overview Consolidated Income Statements 13 Greg Stapley Bill Wagner Reconciliation of EBITDA, FFO and FAD 14 Chairman and Chief Executive Officer Chief Financial Officer Consolidated Balance Sheets 16 Key Debt Metrics 17 Dave Sedgwick Mark Lamb Director of Investments Debt Summary 18 Vice President of Operations 2018 Guidance 19 Equity Capital Transactions 20 Board of Directors Other Financial Highlights 21 Glossary 22 Greg Stapley David Lindahl Jon Kline Allen Barbieri Spencer Plumb Chairman Contact Information Analyst Coverage CareTrust REIT, Inc. 905 Calle Amanecer, Suite 300 San Clemente, CA 92673 KeyBanc Capital Markets Raymond James Wells Fargo Securities Jordan Sadler | (917) 318-2280 Jonathan Hughes | (727) 567-2438 Todd Stender | (562) 637-1371 (949) 542-3130 | ir@caretrustreit.com www.caretrustreit.com RBC Capital Markets Stifel, Nicolaus & Company BMO Capital Markets Michael Carroll | (440) 715-2649 Chad Vanacore | (518) 587-2581 John Kim | (212) 885-4115 Transfer Agent CapitalOne Securities JMP Research Stephens Broadridge Corporate Issuer Solutions Dan Bernstein | (571) 835-7202 Peter Martin | (415) 835-8904 Dana Hambly, CFA | (615) 279-4329 P.O. Box 1342 Brentwood, NY 11717 Cantor Fitzgerald & Company (800) 733-1121 | shareholder@broadridge.com Joe France | (212) 915-1239 3


 
CareTrust REIT, Inc. Nasdaq: CTRE Market Data (as of March 31, 2018) Closing Price: $13.40 52 Week Range: $19.86 – $12.96 Market Cap: $1,020M Enterprise Value: $1,606M Outstanding Shares: 76.1M 188 24 States Credit Ratings Properties Credit Ratings S&P S&PCorporate Rating: B+ (positive) CorporateSenior Unsecured Rating: BB-Notes: (stable) BB- Senior Unsecured Notes: BB Moody’s 19 Operators Moody’sCorporate Rating: B1 (positive) CorporateSenior Unsecured Rating: Ba3Notes: (positive) B1 18,528 $1,377.0 M Senior Unsecured Notes: Ba3 Operating Investments Beds/Units Note: 44 Amounts are as of March 31, 2018 and exclude our three operated seniors housing properties, two preferred equity investments and a mortgage loan receivable.


 
Investments (dollars in thousands) Initial Initial Investment Operating Cost per Date Operator Property Type Location Facilities [1] Bed/Unit [2] Bed/Unit [3] Initial Rent [4] Initial Yield[5] ALF, SNF, 6/1/2014 The Ensign Group Campus Various 94 $ 501,673 10,053 $ 50 $ 56,000 N/A 2014 Investments 6 33,609 157 166 3,076 9.2% 2015 Investments 20 233,028 1,840 127 22,263 9.6% 2016 Investments 35 288,023 2,800 101 26,084 9.1% 2017 Investments 36 309,805 3,324 92 28,000 9.0% 02/01/2018 Eduro Healthcare, LLC SNF MT 1 5,799 100 58 540 9.3% 03/01/2018 Metron Integrated Health SNF MI 5 41,570 422 99 3,735 9.0% Systems 2018 Investments 6 47,369 522 91 4,275 9.0% Total Post Spin-off Investments 103 911,834 8,643 105 83,698 9.2% Total Investments[6] 197 $ 1,413,507 18,696 $ 72 $ 139,698 Notes: [1] Initial Investment for pre-spin properties represents Ensign's gross book value. Initial Investment for post-spin properties represents CareTrust REIT’s purchase price and transaction costs. [2] Initial Operating Beds/Units as of the acquisition date. [3] Total Cost per Bed/Unit excludes preferred equity investments and mortgage loan receivable. [4] Initial Rent represents the annualized acquisition-date cash rent or deferred interest income on preferred equity investments. [5] Initial Yield represents Initial Rent divided by Initial Investment. [6] All amounts exclude our three operated seniors housing properties and include the preferred equity investments and a mortgage loan receivable. 5


 
Portfolio Performance (dollars in thousands) As of March 31, 2018 Operating % of Total % of Total Asset Type Facilities Beds/Units Investment [1] Investment Rent [2] Rent Current Yield [3] Skilled Nursing 136 13,285 $ 979,515 71.1% $ 99,234 72.8% 10.1% Multi-Service Campus 16 2,264 177,146 12.9% 17,531 12.9% 9.9% Seniors Housing 36 2,979 220,338 16.0% 19,504 14.3% 8.9% Total Net-Leased Asset [4] 188 18,528 $ 1,376,999 100.0% $ 136,269 100.0% 9.9% Total Portfolio Total Portfolio less The Ensign Group & Transitioned Facilities[6] For the period ended December 31, 2017 [5] For the period ended December 31, 2017 [5] EBITDAR EBITDARM EBITDAR EBITDARM Asset Type Coverage Coverage Occupancy Coverage Coverage Occupancy Skilled Nursing 1.70x 2.24x 78.1% 1.42x 1.87x 80.8% Multi-Service Campus 1.80x 2.25x 78.9% 1.64x 1.97x 78.0% Seniors Housing 1.34x 1.58x 84.4% 1.16x 1.35x 88.1% Total 1.65x 2.14x 79.2% 1.37x 1.76x 82.3% Notes: [1] Investment for pre-spin properties represents Ensign's gross book value. Investment for post-spin properties represents CareTrust REIT’s cumulative capital investment. Capital investment includes purchase price, transaction costs and landlord-funded capital expenditures, if any. [2] Rent represents March 2018 rent, annualized, or based on the initial cash rents annualized. [3] Current Yield represents Rent divided by Investment. [4] All amounts exclude our three operated seniors housing properties, two preferred equity investments and a mortgage loan receivable. [5] EBITDAR Coverage, EBITDARM Coverage and Occupancy include information provided by our tenants. We have not independently verified this information, but have no reason to believe that such information is inaccurate in any material respect. [6] Transitioned facilities include 16 Pristine Senior Living facilities transitioned in December 2017 & May 2018, 4 Better Senior Living facilities transitioned in December 2017, 3 Cross Healthcare facilities sold in March 2018 and 2 OnPointe Health facilities transitioned in May 2018. See “Glossary” for additional information. 6


 
Tenant Summary 7


 
Rent Diversification by Tenant (dollars in thousands) As of March 31, 2018 Operating % of Total % of Total Facilities Beds/Units Investment[1] Investment Rent[2] Rent 1 The Ensign Group 92 9,698 501,246 36.4% 57,672 42.3% 2 Trillium Healthcare Group 18 1,362 127,278 9.2% 11,568 8.5% 3 Priority Management Group 7 981 116,229 8.4% 10,585 7.8% 4 Pristine Senior Living[4] 9 861 110,497 8.0% 9,451 6.9% 5 Cascadia Healthcare 11 914 86,168 6.3% 7,899 5.8% Total Top 5 Tenants 137 13,816 941,418 68.3% 97,175 71.3% 6 Providence Group 3 528 69,160 5.0% 6,072 4.5% 7 Premier Senior Living Group 8 385 68,564 5.0% 6,034 4.4% 8 WLC Management 7 644 37,424 2.7% 3,804 2.8% 9 Metron Integrated Health Systems 5 422 41,570 3.0% 3,735 2.7% 10 Covenant Care 3 393 34,415 2.5% 3,225 2.4% Total Top 10 Tenants 163 16,188 1,192,551 86.5% 120,045 88.1% All Other Tenants 25 2,340 184,448 13.5% 16,224 11.9% Total [3] 188 18,528 $ 1,376,999 100.0% $ 136,269 100.0% Notes: [1] Investment for pre-spin properties represents Ensign's gross book value. Investment for post-spin properties represents CareTrust REIT’s cumulative capital investment. Capital investment includes purchase price, transaction costs and landlord-funded capital expenditures, if any. [2] Rent represents March 2018 rent, annualized, or based on the initial cash rents annualized. [3] All amounts exclude our three operated seniors housing properties and our two preferred equity investments and mortgage loan receivable. [4] As of May 1, 2018, Pristine Senior Living is no longer a tenant. 8


 
Top Five States OH: 12.0% AZ: 6.6% ID: 7.6% CA: 19.1% 1 ALF TX: 19.1% Others: 35.6% Run-Rate Rent Run-Rate 1 ALF OH: 13.9% AZ: 4.4% ID: 7.4% CA: 16.5% 1 SNF Investment TX: 19.2% Others: 38.6% OH: 8.0% AZ: 7.2% ID: 6.7% CA: 16.0% TX: 21.2% Beds/Units Others: 40.9% 9


 
Rent Diversification by State (dollars in thousands) As of March 31, 2018 Net-Leased Assets by State Operating % of Total % of Total Facilities Beds/Units Investment[1] Investment Rent[2] Rent 1 Texas 32 3,930 $ 263,735 19.2% $ 26,077 19.1% 2 California 25 2,971 226,538 16.5% 26,065 19.1% 3 Ohio 16 1,488 191,749 13.9% 16,396 12.0% 4 Idaho 15 1,241 101,602 7.4% 10,395 7.6% 5 Arizona 10 1,327 60,753 4.4% 8,994 6.6% Top 5 States 98 10,957 844,377 61.4% 87,927 64.4% 6 Michigan 9 611 72,222 5.2% 6,544 4.8% 7 Washington 12 1,015 61,730 4.5% 6,254 4.6% 8 Utah 11 1,201 77,322 5.6% 6,037 4.4% 9 Iowa 15 986 53,488 3.9% 5,520 4.1% 10 Colorado 6 633 40,819 3.0% 4,101 3.0% Top 10 States 151 15,403 1,149,958 83.6% 116,383 85.3% All Other States 37 3,125 227,041 16.4% 19,886 14.7% Total[3] 188 18,528 $ 1,376,999 100.0% $ 136,269 100.0% Notes: [1] Investment for pre-spin properties represents Ensign's gross book value. For post-spin properties, Investment represents CareTrust REIT’s cumulative capital investment. Capital investment includes purchase price, transaction costs and landlord-funded capital expenditures, if any. [2] Rent represents March 2018 rent, annualized, or based on the initial cash rents annualized. [3] All amounts exclude our three operated seniors housing properties and our two preferred equity investments and our mortgage loan receivable. 10


 
Lease Maturities (dollars in thousands) As of March 31, 2018 Lease Maturity % of Total % of Total Year[1] Investment[2] Investment Rent[3] Rent 2019 $ 34,415 2.5% $ 3,225 2.4% 2026 58,157 4.2% 6,445 4.7% 2027 55,929 4.1% 5,718 4.2% 2028 79,914 5.8% 7,785 5.7% 2029 114,771 8.3% 9,801 7.2% 2030[4] 323,270 23.5% 29,222 21.4% 2031 338,386 24.7% 31,867 23.3% 2032 238,780 17.3% 24,727 18.1% 2033 106,061 7.7% 14,960 11.0% 2034[5] 12,733 0.9% 1,199 0.9% 2035 — — — — 2036[5] 14,583 1.0% 1,320 1.1% $ 1,376,999 100.0% $ 136,269 100.0% Notes: [1] Lease Maturity Year represents the scheduled expiration year of the primary term of the lease and does not include tenant extension options, if any. [2] Investment for pre-spin properties represents Ensign's gross book value. For post-spin properties, Investment represents CareTrust REIT’s cumulative capital investment, excluding our three operated seniors housing properties, our two preferred equity investments and a mortgage loan receivable. Capital investment includes purchase price, transaction costs and landlord-funded capital expenditures, if any. [3] Rent represents March 2018 rent, annualized. [4] Includes approximately $9.4 million of Pristine Senior Living rent for which maturities are now in 2030 and 2033. [5] Includes approximately $2.5 million of OnPointe Health rent for which maturities are now in 2030 and 2032. 23.3% 21.4% 18.1% 11.0% of Rent 7.2% 5.7% % 4.7% 4.2% 2.4% 0.9% 1.1% 2019 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Lease Maturity Year 11


 
12


 
Consolidated Income Statements (amounts in thousands, except per share data) Three Months Ended March 31, 2018 2017 Revenues: Rental income $ 33,816 $ 27,339 Tenant reimbursements 2,968 2,321 Independent living facilities 799 793 Interest and other income 518 155 Total revenues 38,101 30,608 Expenses: Depreciation and amortization 11,577 9,076 Interest expense 7,092 5,879 Property taxes 2,968 2,321 Independent living facilities 716 661 General and administrative 3,192 2,390 Total expenses 25,545 20,327 Other income: Gain on sale of real estate 2,051 — Net income $ 14,607 $ 10,281 Earnings per common share: Basic $ 0.19 $ 0.15 Diluted $ 0.19 $ 0.15 Weighted-average number of common shares: Basic 75,504 66,951 Diluted 75,504 66,951 Dividends declared per common share $ 0.205 $ 0.185 13


 
Reconciliation of EBITDA, FFO and FAD Quarter Quarter Quarter Quarter Quarter Ended Ended Ended Ended Ended (dollars in thousands) March 31, 2017 June 30, 2017 September 30, 2017 December 31, 2017 March 31, 2018 Net income $ 10,281 $ 2,030 $ 11,311 $ 2,252 $ 14,607 Depreciation and amortization 9,076 9,335 9,745 11,003 11,577 Interest expense 5,879 6,219 5,592 6,506 7,092 Amortization of stock-based compensation 536 600 656 624 904 EBITDA 25,772 18,184 27,304 20,385 34,180 Impairment of real estate investment — 890 — — — Gain on sale of real estate — — — — (2,051) Loss on the extinguishment of debt — 11,883 — — — Deferred preferred return — (544) — — — Reserve for advances and deferred rent — — — 10,414 — Gain on disposition of other real estate investment — (3,538) — — — Normalized EBITDA $ 25,772 $ 26,875 $ 27,304 $ 30,799 $ 32,129 Net income $ 10,281 $ 2,030 $ 11,311 $ 2,252 $ 14,607 Real estate related depreciation and amortization 9,050 9,309 9,717 10,973 11,549 Impairment of real estate investment — 890 — — — Gain on disposition of other real estate investment — (3,538) — — — Gain on sale of real estate — — — — (2,051) Funds from Operations (FFO) 19,331 8,691 21,028 13,225 24,105 Reserve for advances and deferred rent — — — 10,414 — Deferred preferred return — (544) — — — Effect of the senior unsecured notes payable redemption — 12,475 — — — Normalized FFO $ 19,331 $ 20,622 $ 21,028 $ 23,639 $ 24,105 See Glossary for additional information. 14


 
Reconciliation of EBITDA, FFO and FAD (continued) Quarter Quarter Quarter Quarter Quarter Ended Ended Ended Ended Ended (amounts in thousands, except per share data) March 31, 2017 June 30, 2017 September 30, 2017 December 31, 2017 March 31, 2018 Net income $ 10,281 $ 2,030 $ 11,311 $ 2,252 $ 14,607 Real estate related depreciation and amortization 9,050 9,309 9,717 10,973 11,549 Amortization of deferred financing fees 561 529 484 485 484 Amortization of stock-based compensation 536 600 656 624 904 Straight-line rental income (72) (43) (2) (227) (591) Impairment of real estate investment — 890 — — — Gain on disposition of other real estate investment — (3,538) — — — Gain on sale of real estate — — — — (2,051) Funds Available for Distribution (FAD) 20,356 9,777 22,166 14,107 24,902 Reserve for advances and deferred rent — — — 10,414 — Deferred preferred return — (544) — — — Effect of the senior unsecured notes payable redemption — 12,475 — — — Normalized FAD $ 20,356 $ 21,708 $ 22,166 $ 24,521 $ 24,902 FFO per share $ 0.29 $ 0.12 $ 0.28 $ 0.17 $ 0.32 Normalized FFO per share $ 0.29 $ 0.28 $ 0.28 $ 0.31 $ 0.32 FAD per share $ 0.30 $ 0.13 $ 0.29 $ 0.19 $ 0.33 Normalized FAD per share $ 0.30 $ 0.30 $ 0.29 $ 0.32 $ 0.33 Diluted weighted-average shares outstanding [1] 67,133 72,803 75,659 75,692 75,657 [1] For the periods presented, the diluted weighted-average shares have been calculated using the treasury stock method. See Glossary for additional information. 15


 
Consolidated Balance Sheets (dollars in thousands) March 31, 2018 December 31, 2017 Assets: Real estate investments, net $ 1,177,140 $ 1,152,261 Other real estate investments, net 18,031 17,949 Cash and cash equivalents 14,195 6,909 Accounts and other receivables, net 5,999 5,254 Prepaid expenses and other assets 1,919 895 Deferred financing costs, net 1,447 1,718 Total assets $ 1,218,731 $ 1,184,986 Liabilities and Equity: Senior unsecured notes payable, net $ 294,584 $ 294,395 Senior unsecured term loan, net 99,540 99,517 Unsecured revolving credit facility 200,000 165,000 Accounts payable and accrued liabilities 15,111 17,413 Dividends payable 15,608 14,044 Total liabilities 624,843 590,369 Equity: Common stock 755 755 Additional paid-in capital 783,509 783,237 Cumulative distributions in excess of earnings (190,376) (189,375) Total equity 593,888 594,617 Total liabilities and equity $ 1,218,731 $ 1,184,986 16


 
Key Debt Metrics Debt to Normalized EBITDA [1][2] Debt to Enterprise Value [3] 7.06 42.3% 43.1% 37.4% 34.9% 35.0% 33.2% 5.37 5.18 31.3% 30.8% 5.00 4.87 4.70 4.59 4.67 4.53 24.1% 25.5% 22.1% 3.75 3.72 5 5 6 6 6 6 7 7 7 7 8 5 5 6 6 6 6 7 7 7 7 8 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 0 1 1 0 0 1 1 0 0 1 1 0 1 1 0 0 1 1 0 0 1 1 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 9 2 3 6 9 2 3 6 9 2 3 9 2 3 6 9 2 3 6 9 2 3 1 1 1 1 1 1 [1] Debt to Normalized EBITDA compares total debt as of the last day of the quarter to the annualized Normalized EBITDA for the quarter. [2] See "Financials & Filings - Quarterly Results" on the Investors section of our website at http://investor.caretrustreit.com for reconciliations of Normalized EBITDA to the most directly comparable GAAP measure for the periods presented. [3] Debt to Enterprise Value compares total debt as of the last day of the quarter to CareTrust REIT’s Enterprise Value as of the last day of the quarter. See “Glossary” for additional information. 17


 
Debt Summary (dollars in thousands) March 31, 2018 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 50.0% $ (5,416) $ 294,584 Floating Rate Debt Senior unsecured term loan 3.837% [1] 2023 100,000 16.7% (460) 99,540 Unsecured revolving credit facility 3.624% [2] 2020 [3] 200,000 33.3% — [4] 200,000 3.695% 300,000 50.0% (460) 299,540 Total Debt 4.473% $ 600,000 100.0% $ (5,876) $ 594,124 $300,000 $200,000 $100,000 Principal 2018 2019 2020 2021 2022 2023 2024 2025 Debt Maturity Year Notes: [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 at 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. 18


 
Updated 2018 Guidance (shares in thousands) Low High Net income $ 0.70 $ 0.72 Real estate related depreciation and amortization 0.59 0.59 Gain on sale of real estate (0.03) (0.03) Funds from Operations (FFO) 1.26 1.28 Normalized FFO $ 1.26 $ 1.28 Net income $ 0.70 $ 0.72 Real estate related depreciation and amortization 0.59 0.59 Amortization of deferred financing fees 0.03 0.03 Amortization of stock-based compensation 0.05 0.05 Straight-line rental income (0.02) (0.02) Gain on sale of real estate (0.03) (0.03) Funds Available for Distribution (FAD) 1.32 1.34 Normalized FAD $ 1.32 $ 1.34 Weighted average shares outstanding: Diluted 75,916 75,916 See “Glossary” for additional information. 19


 
Equity Capital Transactions Follow-On Equity Offering Activity 2015 2016 Q1 Q2 Q3 Q4 Total Number of Shares (000s) 16,330 — 9,775 — 6,325 16,100 Public Offering Price per Share $ 10.50 $ — $ 11.35 $ — $ 13.35 $ 12.14 [1] Gross Proceeds (000s) $ 171,465 $ — $ 110,946 $ — $ 84,439 $ 195,385 At-the-Market Offering Activity 2016 2017 2018 Q1 Number of Shares (000s) 924 10,574 — Average Price per Share $ 15.31 $ 16.43 $ — Gross Proceeds (000s) $ 14,147 $ 173,760 $ — Notes: [1] Represents average offering price per share for follow-on equity offerings. 20


 
Other Financial Highlights Dividend History Normalized FFO Payout Ratio [1][2] 66.1% 66.1% $0.205 64.8% 64.0% 63.8% $0.185 $0.185 $0.185 $0.185 63.0% 63.0% $0.17 $0.17 $0.17 $0.17 60.7% 60.7% $0.16 59.7% 5 6 6 6 6 7 7 7 7 8 5 6 6 6 6 7 7 7 7 8 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 1 1 0 0 1 1 0 0 1 1 1 1 0 0 1 1 0 0 1 1 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 2 3 6 9 2 3 6 9 2 3 2 3 6 9 2 3 6 9 2 3 1 1 1 1 1 1 Normalized FFO per Share [2] Normalized FFO [2] $23,639 $24,105 $0.32 $0.31 $20,622 $21,028 $19,331 $0.29 $17,160 $0.28 $0.28 $0.28 $0.28 $16,258 $0.27 $0.27 $15,498 $13,098 $0.25 $12,021 5 6 6 6 6 7 7 7 7 8 5 6 6 6 6 7 7 7 7 8 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 1 1 0 0 1 1 0 0 1 1 1 1 0 0 1 1 0 0 1 1 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 2 3 6 9 2 3 6 9 2 3 2 3 6 9 2 3 6 9 2 3 1 1 1 1 1 1 Notes: [1] Normalized FFO Payout Ratio represents dividends declared divided by Normalized FFO, in each case for the applicable quarter. [2] See “Financials & Filings - Quarterly Results” on the Investors section of our website at http://investor.caretrustreit.com for a reconciliation of Normalized FFO and Normalized FFO per Share to the most directly comparable GAAP measure. See “Glossary” for additional information. 22


 
Glossary Assisted Living Facilities (“ALFs”) EBITDARM Coverage Licensed healthcare facilities that provide personal care services, support and housing Aggregate EBITDARM produced by all facilities under a master lease (or other for those who need help with daily living activities, such as bathing, eating and grouping) divided by the base rent payable to CareTrust REIT under such master lease dressing, yet require limited medical care. The programs and services may include (or other grouping) for the same period. For this supplement, the reported period is transportation, social activities, exercise and fitness programs, beauty or barber shop the trailing twelve-month period ended December 31, 2017. Notwithstanding the access, hobby and craft activities, community excursions, meals in a dining room foregoing, for any facility for which CareTrust REIT has not received four consecutive setting and other activities sought by residents. These facilities are often in apartment- quarters of post-acquisition operating reports, the quarterly EBITDARM used in this like buildings with private residences ranging from single rooms to large apartments. calculation is the proforma EBITDARM utilized in CareTrust REIT’s underwriting Certain ALFs may offer higher levels of personal assistance for residents requiring process annualized. Beginning with the fifth quarter of reported post-acquisition memory care as a result of Alzheimer’s disease or other forms of dementia. Levels of operating performance, each reported quarter EBITDARM replaces the oldest personal assistance are based in part on local regulations.  underwriting proforma quarter EBITDARM, until all previously-used proforma quarters EBITDARM amounts are eliminated from the calculation. EBITDA Net income before interest expense, income tax, depreciation and amortization and Enterprise Value amortization of stock-based compensation.[1] Share price multiplied by the number of outstanding shares plus total outstanding debt, each as of a specified date. EBITDAR Net income before interest expense, income tax, depreciation, amortization and rent, Funds Available for Distribution (“FAD”) after applying a standardized management fee (5% of facility operating revenues). FFO, excluding straight-line rental income adjustments and amortization of deferred financing fees and stock-based compensation expense.[2] EBITDAR Coverage Aggregate EBITDAR produced by all facilities under a master lease (or other grouping) Funds from Operations (“FFO”) divided by the base rent payable to CareTrust REIT under such master lease (or other Net income, excluding gains and losses from dispositions of real estate or other real grouping) for the same period. For this supplement, the reported period is the trailing estate, before real estate depreciation and amortization and real estate impairment twelve-month period ended December 31, 2017. Notwithstanding the foregoing, for charges. CareTrust REIT calculates and reports FFO in accordance with the definition any facility for which CareTrust REIT has not received four consecutive quarters of and interpretive guidelines issued by the National Association of Real Estate post-acquisition operating reports, the quarterly EBITDAR used in this calculation is Investment Trusts.[2] the proforma EBITDAR utilized in CareTrust REIT’s underwriting process, annualized. Beginning with the fifth quarter of reported post-acquisition operating performance, Independent Living Facilities (“ILFs”) each reported quarter EBITDAR replaces the oldest underwriting proforma quarter Also known as retirement communities or senior apartments, ILFs are not healthcare EBITDAR, until all previously-used proforma quarters EBITDAR amounts are eliminated facilities. ILFs typically consist of entirely self-contained apartments, complete with from the calculation. their own kitchens, baths and individual living spaces, as well as parking for tenant vehicles. They are most often rented unfurnished, and generally can be personalized EBITDARM by the tenants, typically an individual or a couple over the age of 55. These facilities Earnings before interest expense, income tax, depreciation, amortization, cash rent, offer various services and amenities such as laundry, housekeeping, dining options/ and a standardized management fee (5% of facility operating revenues). meal plans, exercise and wellness programs, transportation, social, cultural and recreational activities, and on-site security. 23


 
Glossary Multi-Service Campus Notes: Facilities that include a combination of Skilled Nursing beds and Seniors Housing [1] EBITDA and Normalized EBITDA do not represent cash flows from operations or units. 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 Normalized EBITDA and Normalized EBITDA do not purport to be indicative of cash available to fund future EBITDA, adjusted for certain income and expense items the Company does not believe cash requirements, including the Company’s ability to fund capital expenditures or are indicative of its ongoing results, such as certain acquisition costs, real estate make payments on its indebtedness. Further, the Company’s computation of EBITDA impairment charges, losses on the extinguishment of debt, certain deferred preferred and Normalized EBITDA may not be comparable to EBITDA and Normalized EBITDA returns, reserve for advances and deferred rent and gains or losses from dispositions reported by other REITs. of real estate or other real estate.[1] [2] CareTrust REIT believes FAD, FFO, Normalized FAD, and Normalized FFO (and their Normalized FAD related per-share amounts) are important non-GAAP supplemental measures of its FAD, adjusted for certain income and expense items the Company does not believe operating performance. Because the historical cost accounting convention used for are indicative of its ongoing results, such as certain reserves for advances and deferred real estate assets requires straight-line depreciation (except on land), such accounting rent, certain deferred preferred returns, and the effect of the senior unsecured notes presentation implies that the value of real estate assets diminishes predictably over payable redemption.[2] time, even though real estate values have historically risen or fallen with market and other conditions. Moreover, by excluding items not indicative of ongoing results, Normalized FFO Normalized FAD and Normalized FFO can facilitate meaningful comparisons of FFO, adjusted for certain income and expense items the Company does not believe operating performance between periods and between other companies. However, are indicative of its ongoing results, and certain reserves for advances and deferred FAD, FFO, Normalized FAD, and Normalized FFO (and their per-share amounts) do not rent, certain deferred preferred returns, and the effect of the senior unsecured notes represent cash flows from operations or net income attributable to shareholders as payable redemption.[2] defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. Occupancy A facility’s occupied operating beds/units divided by the total available operating beds/units for that facility, in each case for the trailing twelve-months ended December 31, 2017; provided that Occupancy for any facility acquired during such twelve-months period may be normalized. Seniors Housing Includes ALFs, ILFs, dedicated memory care facilities and similar facilities. Skilled Nursing or Skilled Nursing Facilities (“SNFs”) Licensed healthcare facilities that provide restorative, rehabilitative and nursing care for people not requiring the more extensive and sophisticated treatment available at an acute care hospital or long-term acute care hospital. Treatment programs include physical, occupational, speech, respiratory, ventilator, and wound therapy. 24


 
Cascadia of Nampa (Nampa, ID)