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 2021 Operating Results

08/05/21
Conference Call Scheduled for Friday, August 6, 2021 at 1:00 pm ET

SAN CLEMENTE, Calif., Aug. 05, 2021 (GLOBE NEWSWIRE) -- CareTrust REIT, Inc. (Nasdaq:CTRE) today reported operating results for the quarter ended June 30, 2021, as well as other recent events.

For the quarter, CareTrust REIT reported:

  • 100% of contractual rents collected;
  • Net income of $21.3 million, a 12.6% increase over the prior year, and net income per share of $0.22;
  • Normalized FFO of $35.8 million, an 11.4% increase over the prior year, and normalized FFO per share of $0.37;
  • Normalized FAD of $38.1 million, a 13.5% increase over the prior year, and normalized FAD per share of $0.40;
  • A quarterly dividend of $0.265 per share, representing a payout ratio of approximately 66% on normalized FAD; and
  • A $0.02 per share increase to previously-released 2021 guidance, to normalized FFO of approximately $1.48 to $1.50 per share and normalized FAD of approximately $1.57 to $1.59 per share.

Signs of a Rebound

“We are pleased to see occupancy among our skilled nursing tenants beginning to recover,” said Greg Stapley, CareTrust’s Chairman and Chief Executive Officer. He reported that the portfolio’s skilled nursing facilities have grown census to 69.9% since reaching last January’s reported lows of 66.9%, inching closer every month to their pre-pandemic occupancy of 77.7%. “We are also hearing reports of a pickup in tours at some of our assisted living tenants’ facilities, although their overall census has not yet moved much from the March low of 73.5%,” he added, noting that the average pre-pandemic census in the assisted living portfolio was about 84.5%.

Mr. Stapley cautioned that despite growing vaccination rates and the lifting of most restrictions on the general population, skilled nursing and seniors housing providers are still in full pandemic mode. “As the current wave of Delta-variant infections raises the possibility of more limitations on the activities of daily living, the skilled nursing and seniors housing industries continue to battle back from the downdraft in census that bottomed in the first quarter of this year,” he said. “Not surprisingly, skilled nursing and seniors housing facilities, which were a favorite target for finger pointing in the early days of the pandemic, have today become some of the safest and healthiest places for vulnerable seniors and post-acute patients to be,” he added.

Dave Sedgwick, CareTrust’s President and Chief Operating Officer, reported that assisted living operators have been hit particularly hard by the pandemic’s occupancy drops and expense increases. “While the skilled nursing providers have been thrown a lifeline in the form of provider relief funds and other measures, seniors housing providers have seen little to no government support to date despite the critical role they play in caring for our nation’s seniors,” he said. He noted that CareTrust’s assisted living providers have not been unaffected, with one provider who was operating pre-stabilized facilities at the beginning of the pandemic requesting some flexibility in keeping their rent current.

CareTrust again provided its enhanced COVID-era disclosure around tenant lease coverage. Referencing the Company's quarterly supplemental report issued earlier today, Mr. Sedgwick said, “Our objective is to be as transparent and helpful as possible by reporting lease coverage on an EBITDAR and EBITDARM basis – both excluding CARES Act funding and including and amortizing the CARES Act funds received to-date.” He noted that since last quarter’s supplemental, the US Department of Health and Human Services has updated the utilization and reporting guidelines for CARES Act funds, and the supplemental’s disclosure follows the updated guidance.

$400M Bond Issuance & Redemption of 2025 Notes

During the quarter, CareTrust and its subsidiaries completed a private offering of $400.0 million aggregate principal amount of 3.875% Senior Notes due 2028. The new notes were issued at par and produced net proceeds of approximately $393.8 million after deducting underwriting fees and other offering expenses. The new notes mature on June 30, 2028 and the proceeds were used to redeem CareTrust's $300 million 5.25% senior notes due 2025, and to repay approximately $85.9 million in short-term variable-rate borrowings outstanding under CareTrust's revolving credit facility.

Financial Results for Quarter Ended June 30, 2021 

Chief Financial Officer Bill Wagner reported that, for the second quarter, CareTrust generated net income of $21.3 million, or $0.22 per diluted weighted-average common share, normalized FFO of $35.8 million, or $0.37 per diluted weighted-average common share, and normalized FAD of $38.1 million, or $0.40 per diluted weighted-average common share.

Liquidity

As of quarter end, CareTrust reported net debt-to-annualized normalized run rate EBITDA of 3.7x, well under the Company's target leverage range of 4.0x to 5.0x, and a net debt-to-enterprise value of approximately 22.1%. Mr. Wagner stated that as of today the Company had approximately $100 million outstanding on its $600 million revolving credit line, with no scheduled debt maturities prior to 2024. He also disclosed that CareTrust currently has more than $24 million in cash on hand. He further noted that the Company sold approximately 288,000 shares through its at-the-market equity program in the quarter, for gross proceeds of approximately $6.9 million, and that the current program has approximately $476.5 million in available authorization remaining. "With substantial availability on our revolver, and equity markets readily accessible to us at present, we continue to have a wide range of capital options for funding our opportunistic growth strategy," said Mr. Wagner.

Continued Portfolio Growth

In the quarter and since, Care Trust added three properties to its portfolio in two separate transactions. On April 30, the Company acquired El Centro Post-Acute Center, a 123-bed skilled nursing facility located adjacent to the El Centro Regional Medical Center in El Centro, California. Dave Sedgwick, CareTrust’s President and Chief Operating Officer, described the Imperial County market as “significantly under-bedded, with only 250 skilled nursing beds to absorb the 9,500 annual discharges from its two hospitals, and over 25% of local Medicare referrals being sent more than an hour away to Yuma and San Diego.”

The El Centro facility was added to CareTrust’s existing master lease with San Diego-based Bayshire Senior Communities, which sourced the off-market transaction and turned to CareTrust to finance the $9.6 million purchase plus $150,000 for initial capital improvements. Annual cash rent under the Bayshire master lease increased by approximately $804,000 in the first year and $940,000 in the second, with CPI-based increases thereafter.

Subsequent to quarter end, CareTrust acquired the 119-bed Sedona Trace Health & Wellness Center in Austin, Texas and the 122-bed Cedar Pointe Health & Wellness Center in nearby Cedar Park, Texas. CareTrust purchased the two assets, which were constructed in 2017, from the original developer in an off-market transaction for approximately $32.5 million inclusive of transaction costs. At closing the two properties were added to one of the eight existing staggered-term master lease pools between CareTrust and affiliates of The Ensign Group, Inc., which took over operations effective August 1, 2021. Ensign made an upfront rent reduction payment of $5.0 million at closing, and annual cash rent under the amended master lease was increased by approximately $2.2 million, resulting in a first-year cash-on-cash yield to CareTrust of approximately 8.0%. The initial term of the amended master lease was simultaneously extended by ten years, for a remaining initial term of approximately 17 years, with three five-year renewal options and CPI-based annual rent escalators.

Both transactions were funded using CareTrust’s $600 million unsecured revolving credit facility, which had remaining availability of approximately $500 million immediately following the most recent purchase.

Pipeline Steady

Mark Lamb, CareTrust's Chief Investment Officer, reported that for 2021 to date CareTrust has deployed approximately $184.2 million at an initial weighted average cash yield of 7.3%. "This year more than any other has highlighted the importance of our longstanding relationships in the industry, as all of our acquisitions have been off-market or narrowly-marketed deals,” he said. He noted that pricing for both skilled nursing and seniors housing assets has been significantly dislocated from property level financials, but the Company continues to underwrite carefully and look for good opportunities. Mr. Lamb quoted CareTrust’s active deal pipeline as being in the $100 million to $125 million range, noting that it is mostly comprised of single assets and smaller portfolios with a significant tilt toward skilled nursing assets.

2021 Guidance Updated

CareTrust updated its annual guidance for 2021, on a per-diluted weighted-average common share basis, reducing net income to approximately $0.79 to $0.81 after taking into account the effects of the 2025 notes refinancing, and increasing normalized FFO to approximately $1.48 to $1.50 and normalized FAD to approximately $1.57 to $1.59. The guidance is based on a diluted weighted-average common share count of 96.9 million shares, and per CareTrust's standard practice includes all investments, dispositions and loan repayments made to date, and assumes no new acquisitions, dispositions, new loans or loan repayments beyond those completed or announced to date, no new debt incurrences or new equity issuances, and estimated 2.0% CPI-based rent escalators under CareTrust's long-term net leases escalating in the remainder of 2021.

Mr. Wagner sounded a note of caution, however, alluding to the ongoing effects of the global pandemic and the operating headwinds still facing the Company’s tenants, especially assisted living providers that have received little to no government financial support to date. “Naturally, we note that material changes in economic and other factors related to the COVID-19 pandemic, the government’s responses thereto and the resulting impact on our tenants’ abilities to timely pay rent could alter our outlook at any time,” Mr. Wagner concluded.

Dividend Maintained

During the quarter, CareTrust declared a quarterly dividend of $0.265 per common share. On an annualized basis, the payout ratio was approximately 72% based on second quarter 2021 normalized FFO, and 66% based on normalized FAD.

Conference Call

A conference call will be held on Friday, August 6, 2021, at 1:00 p.m. Eastern Time (10:00 a.m. Pacific Time), during which CareTrust’s management will discuss second quarter 2021 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 2899317. 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 CareTrustTM

CareTrust REIT, Inc. is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition, development and leasing of skilled nursing, seniors housing and other healthcare-related properties. With a nationwide portfolio of long-term net-leased properties, and a growing portfolio of quality operators leasing them, CareTrust REIT is pursuing both external and organic growth opportunities across the United States. 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 COVID-19 pandemic, including the risk of additional surges of COVID-19 infections due to the rate of public acceptance and efficacy of COVID-19 vaccines or to new and more contagious and/or vaccine resistant variants, and the measures taken to prevent the spread of COVID-19 and the related impact on our business or the businesses of our tenants; (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, including, without limitation, their respective obligations to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities; (iii) the ability of our tenants to comply with applicable laws, rules and regulations in the operation of the properties we lease to them; (iv) the ability and willingness of our tenants to renew their leases with us upon their 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, as well as any obligations, including indemnification obligations, we may incur in connection with the replacement of an existing tenant; (v) the availability of and the ability to identify (a) tenants who meet our credit and operating standards, and (b) suitable acquisition opportunities, and the ability to acquire and lease the respective properties to such tenants 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 law 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) additional factors included in our Annual Report on Form 10-K for the year ended December 31, 2020, including in the section entitled “Risk Factors” in Item 1A of Part I of such report, as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the SEC.

This press release and the related conference call provides information about the Company's financial results as of and for the quarter ended June 30, 2021 and is provided as of the date hereof, 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.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share data)
(Unaudited)
    For the Three Months Ended June 30,   For the Six Months Ended June 30,
    2021   2020   2021   2020
Revenues:              
  Rental income $ 47,744     $ 42,507     $ 92,990       $ 84,971    
  Independent living facilities     615           1,240    
  Interest and other income 514     1,046     1,019       2,297    
  Total revenues 48,258     44,168     94,009       88,508    
Expenses:              
  Depreciation and amortization 13,843     13,239     27,316       26,399    
  Interest expense 6,534     5,849     12,296       12,563    
  Property taxes 766     837     1,462       1,322    
  Independent living facilities     546           1,092    
  General and administrative 5,798     4,762     10,940       8,816    
  Total expenses 26,941     25,233     52,014       50,192    
Other loss:              
  Loss on sale of real estate         (192 )     (56 )  
Net income $ 21,317     $ 18,935     $ 41,803       $ 38,260    
                 
Earnings per common share:              
  Basic $ 0.22     $ 0.20     $ 0.43       $ 0.40    
  Diluted $ 0.22     $ 0.20     $ 0.43       $ 0.40    
                 
Weighted-average number of common shares:              
  Basic 96,082     95,208     95,732       95,185    
  Diluted 96,120     95,208     95,755       95,185    
                 
Dividends declared per common share $ 0.265     $ 0.25     $ 0.53       $ 0.50    


CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES
(in thousands)
(Unaudited)
      Three Months Ended June 30,   Six Months Ended June 30,
      2021   2020   2021   2020
                   
Net income   $ 21,317     $ 18,935       $ 41,803       $ 38,260    
  Depreciation and amortization   13,843     13,239       27,316       26,399    
  Interest expense   6,534     5,849       12,296       12,563    
  Amortization of stock-based compensation   1,810     963       3,395       1,847    
EBITDA   43,504     38,986       84,810       79,069    
  Lease termination revenue             (63 )        
  Property operating expenses       (31 )           (248 )  
  Loss on sale of real estate             192       56    
Normalized EBITDA   $ 43,504     $ 38,955       $ 84,939       $ 78,877    
                   
Net income   $ 21,317     $ 18,935       $ 41,803       $ 38,260    
  Real estate related depreciation and amortization   13,837     13,223       27,303       26,367    
  Loss on sale of real estate             192       56    
Funds from Operations (FFO)   35,154     32,158       69,298       64,683    
  Effect of the senior unsecured notes payable redemption   642           642          
  Lease termination revenue             (63 )        
  Property operating expenses       (31 )           (248 )  
Normalized FFO   $ 35,796     $ 32,127       $ 69,877       $ 64,435    


CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES (continued)
(in thousands, except per share data)
(Unaudited)
      Three Months Ended June 30,   Six Months Ended June 30,
      2021   2020   2021   2020
                   
Net income   $ 21,317       $ 18,935       $ 41,803       $ 38,260    
  Real estate related depreciation and amortization   13,837       13,223       27,303       26,367    
  Amortization of deferred financing fees   495       488       982       975    
  Amortization of stock-based compensation   1,810       963       3,395       1,847    
  Straight-line rental income   (8 )     (22 )     (20 )     (48 )  
  Loss on sale of real estate               192       56    
Funds Available for Distribution (FAD)   37,451       33,587       73,655       67,457    
  Effect of the senior unsecured notes payable redemption   642             642          
  Lease termination revenue               (63 )        
  Property operating expenses         (31 )           (248 )  
Normalized FAD   $ 38,093       $ 33,556       $ 74,234       $ 67,209    
                   
FFO per share   $ 0.36       $ 0.34       $ 0.72       $ 0.68    
Normalized FFO per share   $ 0.37       $ 0.34       $ 0.73       $ 0.68    
                   
FAD per share   $ 0.39       $ 0.35       $ 0.77       $ 0.71    
Normalized FAD per share   $ 0.40       $ 0.35       $ 0.77       $ 0.71    
                   
  Diluted weighted average shares outstanding [1]   96,366       95,295       95,995       95,300    
                   
  [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
  June 30,
2020
September 30,
2020
December 31,
2020
March 31,
2021
June 30,
2021
Revenues:          
Rental income $ 42,507   $ 45,036   $ 43,605   $ 45,246     $ 47,744  
Independent living facilities 615   634   203        
Interest and other income 1,046   17   329   505     514  
Total revenues 44,168   45,687   44,137   45,751     48,258  
Expenses:          
Depreciation and amortization 13,239   13,086   13,275   13,473     13,843  
Interest expense 5,849   5,519   5,579   5,762     6,534  
Property taxes 837   857   657   696     766  
Independent living facilities 546   568   209        
General and administrative 4,762   4,105   3,381   5,142     5,798  
Total expenses 25,233   24,135   23,101   25,073     26,941  
Other income (loss):        
Gain (loss) on sale of real estate     19   (192 )    
Net income $ 18,935   $ 21,552   $ 21,055   $ 20,486     $ 21,317  
           
Diluted earnings per share $ 0.20   $ 0.23   $ 0.22   $ 0.21     $ 0.22  
           
Diluted weighted average shares outstanding 95,208   95,214   95,244   95,385     96,120  


CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES - 5 QUARTER TREND
(in thousands)
(Unaudited)
  Quarter Quarter Quarter Quarter Quarter
  Ended Ended Ended Ended Ended
  June 30,
2020
September 30,
2020
December 31,
2020
March 31,
2021
June 30,
2021
           
Net income $ 18,935     $ 21,552     $ 21,055     $ 20,486     $ 21,317  
Depreciation and amortization 13,239     13,086     13,275     13,473     13,843  
Interest expense 5,849     5,519     5,579     5,762     6,534  
Amortization of stock-based compensation 963     972     971     1,585     1,810  
EBITDA 38,986     41,129     40,880     41,306     43,504  
Recovery of previously reversed rent     (1,047 )            
Lease termination revenue     (1,106 )   (73 )   (63 )    
Property operating expenses (31 )                
(Gain) loss on sale of real estate         (19 )   192      
Normalized EBITDA $ 38,955     $ 38,976     $ 40,788     $ 41,435     $ 43,504  
           
Net income $ 18,935     $ 21,552     $ 21,055     $ 20,486     $ 21,317  
Real estate related depreciation and amortization 13,223     13,078     13,268     13,466     13,837  
(Gain) loss on sale of real estate         (19 )   192      
Funds from Operations (FFO) 32,158     34,630     34,304     34,144     35,154  
Effect of the senior unsecured notes payable redemption                 642  
Recovery of previously reversed rent     (1,047 )            
Lease termination revenue     (1,106 )   (73 )   (63 )    
Property operating expenses (31 )                
Normalized FFO $ 32,127     $ 32,477     $ 34,231     $ 34,081     $ 35,796  


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
  June 30,
2020
September 30,
2020
December 31,
2020
March 31,
2021
June 30,
2021
           
Net income $ 18,935     $ 21,552     $ 21,055     $ 20,486     $ 21,317    
Real estate related depreciation and amortization 13,223     13,078     13,268     13,466     13,837    
Amortization of deferred financing fees 488     487     488     487     495    
Amortization of stock-based compensation 963     972     971     1,585     1,810    
Straight-line rental income (22 )   (17 )   (12 )   (12 )   (8 )  
(Gain) loss on sale of real estate         (19 )   192        
Funds Available for Distribution (FAD) 33,587     36,072     35,751     36,204     37,451    
Effect of the senior unsecured notes payable redemption                 642    
Recovery of previously reversed rent     (1,047 )              
Lease termination revenue     (1,106 )   (73 )   (63 )      
Property operating expenses (31 )                  
Normalized FAD $ 33,556     $ 33,919     $ 35,678     $ 36,141     $ 38,093    
           
FFO per share $ 0.34     $ 0.36     $ 0.36     $ 0.36     $ 0.36    
Normalized FFO per share $ 0.34     $ 0.34     $ 0.36     $ 0.36     $ 0.37    
           
FAD per share $ 0.35     $ 0.38     $ 0.37     $ 0.38     $ 0.39    
Normalized FAD per share $ 0.35     $ 0.36     $ 0.37     $ 0.38     $ 0.40    
           
Diluted weighted average shares outstanding [1] 95,295     95,353     95,429     95,621     96,366    
           
[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)
        June 30, 2021   December 31, 2020
Assets:        
Real estate investments, net $ 1,575,403       $ 1,448,099    
Other real estate investments 15,150       15,000    
Assets held for sale, net       7,226    
Cash and cash equivalents 1,771       18,919    
Restricted cash 309,187          
Accounts and other receivables 1,786       1,823    
Prepaid expenses and other assets, net 7,570       10,450    
Deferred financing costs, net 1,552       2,042    
    Total assets $ 1,912,419       $ 1,503,559    
             
Liabilities and Equity:      
Senior unsecured notes payable, net $ 690,890       $ 296,669    
Senior unsecured term loan, net 199,031       198,925    
Unsecured revolving credit facility 50,000       50,000    
Accounts payable and accrued liabilities 16,804       19,572    
Dividends payable 26,085       24,251    
    Total liabilities 982,810       589,417    
             
Equity:        
Common stock 963       952    
Additional paid-in capital 1,189,402       1,164,402    
Cumulative distributions in excess of earnings (260,756 )     (251,212 )  
    Total equity 929,609       914,142    
    Total liabilities and equity $ 1,912,419       $ 1,503,559    


CARETRUST REIT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
  For the Six Months Ended June 30,
  2021   2020
Cash flows from operating activities:      
Net income $ 41,803       $ 38,260    
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization (including below-market ground leases) 27,345       26,428    
Amortization of deferred financing costs 1,012       975    
Amortization of stock-based compensation 3,395       1,847    
Straight-line rental income (20 )     (48 )  
Loss on sale of real estate 192       56    
Interest income distribution from other real estate investment       1,346    
Change in operating assets and liabilities:      
Accounts and other receivables (93 )     806    
Prepaid expenses and other assets, net 88       528    
Accounts payable and accrued liabilities (3,165 )     (2,256 )  
Net cash provided by operating activities 70,557       67,942    
Cash flows from investing activities:      
Acquisitions of real estate, net of deposits applied (147,807 )     (25,905 )  
Purchases of equipment, furniture and fixtures and improvements to real estate (3,463 )     (6,234 )  
Investment in real estate mortgage and other loans receivable (700 )     (13,958 )  
Principal payments received on real estate mortgage and other loans receivable 113       66,961    
Repayment of other real estate investment       2,327    
Net proceeds from sales of real estate 6,814       2,134    
Net cash (used in) provided by investing activities (145,043 )     25,325    
Cash flows from financing activities:      
Proceeds from (costs paid for) the issuance of common stock, net 22,946       (404 )  
Proceeds from the issuance of senior unsecured notes payable 400,000          
Borrowings under unsecured revolving credit facility 170,000       15,000    
Payments on unsecured revolving credit facility (170,000 )     (75,000 )  
Payments of deferred financing costs (5,577 )        
Net-settle adjustment on restricted stock (1,331 )     (1,986 )  
Dividends paid on common stock (49,513 )     (45,406 )  
Net cash provided by (used in) financing activities 366,525       (107,796 )  
Net increase (decrease) in cash, cash equivalents and restricted cash 292,039       (14,529 )  
Cash, cash equivalents, and restricted cash as of the beginning of period 18,919       20,327    
Cash, cash equivalents, and restricted cash as of the end of period $ 310,958       $ 5,798    


CARETRUST REIT, INC.
DEBT SUMMARY
(dollars in thousands)
(Unaudited)
                       
          June 30, 2021[1]
  Interest   Maturity       % of   Deferred   Net
Carrying
Debt Rate   Date   Principal   Principal   Loan
Costs
  Value
                       
Fixed Rate Debt                      
                       
Senior unsecured notes payable 3.875 %   2028   $ 400,000     61.5 %   $ (6,158 )     $ 393,842  
Floating Rate Debt                      
                       
Senior unsecured term loan 1.595 % [2] 2026   200,000     30.8 %   (969 )     199,031  
Unsecured revolving credit facility 1.196 % [3] 2024 [4] 50,000     7.7 %       [5] 50,000  
  1.515 %       250,000     38.5 %   (969 )     249,031  
                       
Total Debt 2.967 %       $ 650,000     100.0 %   $ (7,127 )     $ 642,873  
                       
[1] Table excludes $300.0 million of aggregate principal amount of 5.25% senior unsecured notes redeemed on July 1, 2021.
[2] Funds can be borrowed at applicable LIBOR plus 1.50% to 2.20% or at the Base Rate (as defined) plus 0.50% to 1.20%.
[3] Funds can be borrowed at applicable LIBOR plus 1.10% to 1.55% or the Base Rate (as defined) plus 0.10% to 0.55%.
[4] Maturity date assumes exercise of two 6-month extension options.
[5] 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)
       
       
2021 Guidance Updated
       
       
    Full Year 2021 Guidance[1]
    Low High
Net income $ 0.79   $ 0.81  
  Real estate related depreciation and amortization 0.57   0.57  
  (Gain) loss on sale of real estate    
Funds from Operations (FFO) 1.36   1.38  
  Lease termination revenue    
  Effect of the senior unsecured notes payable redemption 0.12   0.12  
Normalized FFO $ 1.48   $ 1.50  
       
Net income $ 0.79   $ 0.81  
  Real estate related depreciation and amortization 0.57   0.57  
  Amortization of deferred financing fees 0.02   0.02  
  Amortization of stock-based compensation 0.07   0.07  
  Straight-line rental income    
  (Gain) loss on sale of real estate    
Funds Available for Distribution (FAD) 1.45   1.47  
  Lease termination revenue    
  Effect of the senior unsecured notes payable redemption 0.12   0.12  
Normalized FAD $ 1.57   $ 1.59  
Weighted average shares outstanding:    
  Diluted 96,909   96,909  
       
[1]This guidance assumes and includes (i) all investments, dispositions and loan repayments made to date, (ii) no new acquisitions, dispositions, new loans or loan repayments beyond those completed or announced to date, (iii) no new debt incurrences or new equity issuances, (iv) estimated 2.00% CPI-based rent escalators under CareTrust's long-term net leases, and (v) assumes all contractual cash rents are paid by the end of the year. It does not contemplate future negative impacts, if any, that are related to the COVID-19 pandemic, which are highly uncertain and cannot be predicted at this time.

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 recovery of previously reversed rent, lease termination revenue, property operating expenses, gains or losses from dispositions of real estate, real estate impairment charges, provision for loan losses, and provision for doubtful accounts and lease restructuring, as applicable. 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. 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 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 noncash income and expenses, such as amortization of stock-based compensation, amortization of deferred financing fees 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 provision for loan losses, provision for doubtful accounts and lease restructuring, recovery of previously reversed rent, lease termination revenue and property operating expenses. 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 other charges that are not indicative of its ongoing results, 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 noncash income and expenses such as amortization of stock-based compensation, amortization of deferred financing fees, 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.


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