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 2022 Operating Results

08/04/22

Conference Call Scheduled for Friday, August 5, 2022 at 1:00 pm ET

SAN CLEMENTE, Calif.--(BUSINESS WIRE)--Aug. 4, 2022-- CareTrust REIT, Inc. (NYSE:CTRE) today reported operating results for the quarter ended June 30, 2022, as well as other recent events.

For the quarter, CareTrust REIT reported:

  • 93.9% of contractual rents collected;
  • Net income of $20.7 million and net income per share of $0.21;
  • Normalized FFO of $35.6 million, a 0.7% decrease over the prior year, and normalized FFO per share of $0.37;
  • Normalized FAD of $37.5 million, a 1.7% decrease over the prior year, and normalized FAD per share of $0.39; and
  • A quarterly dividend of $0.275 per share, representing a payout ratio of approximately 71% on normalized FAD.

Operating Environment

CareTrust’s President and Chief Executive Officer, Dave Sedgwick, discussed the business environment and the Company's Q2 results. "Inflation, rising rates, and mounting indications of a recession present both challenges and opportunities for us and for our operating partners," he said. Mr. Sedgwick noted that recessionary cycles have historically been a net benefit to the skilled nursing sector as labor tends to loosen while demand remains unaffected. Mr. Sedgwick continued, "These extraordinary times of rising borrowing rates could result in price moderation for assets and tip the scales to buyers like us who present more certainty to close in the coming quarters."

Key Metrics

Looking at the quarter, Mr. Sedgwick highlighted rent and occupancy data. He said, “We collected approximately 94% of contractual rents, including cash deposits, in the quarter.” He added that average quarterly occupancy for skilled nursing operators grew by 1.4%, or 98 basis points, over Q1. And, for seniors housing, occupancy grew 2.8%, or 215 basis points. “All things considered, Q2 was a stable quarter for us and Q3 is starting off much the same.”

Portfolio Optimization

James Callister, Executive Vice President, provided an update on the portfolio optimization work this year. “We are in the process of negotiating LOIs or purchase agreements on the skilled nursing and seniors housing assets we have brought to market,” he said. He noted that in some cases, the Company was pursuing parallel paths of selling and re-tenanting and that some of the assets held for sale could be retained and re-leased.

Investments in the Quarter

During the quarter, CareTrust extended a $75 million "C" piece financing as part of a larger multi-tranche senior secured term loan and has extended a $25 million mezzanine loan in connection with the acquisition of an 18-property portfolio in the Mid-Atlantic. The portfolio includes approximately 2,000 skilled nursing beds. The "C" tranche of the senior secured term loan carries a five-year maturity and an annual effective interest rate of approximately 8.4%. The mezzanine loan bears interest at 11% and has a ten-year term. Both loans were funded using borrowings under the Company's unsecured revolving credit facility.

Commenting on the investment activity, Mark Lamb, CareTrust’s Chief Investment Officer, said, “We are thrilled with the $100 million debt investment in the quarter because it allowed us to strengthen our relationship with one of the premier operators in the eastern states while also providing a longer term than usual for the mezzanine part. The same is true for the $22.3 million we invested on Monday with an existing operating relationship in California." Mr. Lamb added, "Our primary focus continues to be growth through acquisition, and we are encouraged by these bread and butter growth opportunities returning to the market."

Guidance Discussion

Chief Financial Officer Bill Wagner commented on issuing guidance at this stage in CareTrust's asset management plan. “While considerable progress continues to be made on our disposition strategy, we need more visibility into the timing of the dispositions and possible re-tenanting work before issuing guidance for this year.”

Financial Results for Quarter Ended June 30, 2022

Mr. Wagner reported that, for the second quarter, CareTrust reported net income of $20.7 million, or $0.21 per diluted weighted-average common share, normalized FFO of $35.6 million, or $0.37 per diluted weighted-average common share, and normalized FAD of $37.5 million, or $0.39 per diluted weighted-average common share.

Liquidity

As of quarter end, CareTrust reported net debt-to-annualized normalized run rate EBITDA of 4.3x, which is within the Company's target leverage range of 4.0x to 5.0x, and a net debt-to-enterprise value of approximately 30.2%. Mr. Wagner stated that as of today, the Company had approximately $215 million outstanding on its $600 million revolving credit line, with no scheduled debt maturities prior to 2024. He also disclosed that CareTrust currently has approximately $16 million in cash on hand. He further noted that the Company currently has approximately $476.5 million in available authorization remaining on its at-the-market equity program. "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.

Dividend Maintained

During the quarter, CareTrust declared a quarterly dividend of $0.275 per common share. On an annualized basis, the payout ratio was approximately 74% based on second quarter 2022 normalized FFO, and 71% based on normalized FAD.

Conference Call

A conference call will be held on Friday, August 5, 2022, at 1:00 p.m. Eastern Time (10:00 a.m. Pacific Time), during which CareTrust’s management will discuss second quarter 2022 results, recent developments and other matters. Investors and participants must register for the call in advance by visiting https://register.vevent.com/register/BI0afb919ca39e430f867bc4d07d2deaa5. After registering, participants will receive dial-in information and a passcode. To listen to the call online, or to view a replay of the call, 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.

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 the following: future financial and financing plans; strategies related to the Companys business and its portfolio, including plans to sell, re-tenant or repurpose selected Company assets, the Companys planned expansion into behavioral health properties and acquisition plans; growth prospects; operating and financial performance; expectations regarding the making of distributions and payment of dividends; 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 risk that we may have to incur additional impairment charges related to our assets held for sale if we are unable to sell such assets at the prices we expect; (iv) the ability of our tenants to comply with applicable laws, rules and regulations in the operation of the properties we lease to them; (v) 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; (vi) 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; (vii) the ability to generate sufficient cash flows to service our outstanding indebtedness; (viii) access to debt and equity capital markets; (ix) fluctuating interest rates; (x) the ability to retain our key management personnel; (xi) the ability to maintain our status as a real estate investment trust (“REIT”); (xii) changes in the U.S. tax law and other state, federal or local laws, whether or not specific to REITs; (xiii) other risks inherent in the real estate business, including potential liability relating to environmental matters and illiquidity of real estate investments; and (xiv) additional factors included in our Annual Report on Form 10-K for the year ended December 31, 2021, 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 Companys financial results as of and for the quarter ended June 30, 2022 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.

CARETRUST REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)

 

For the Three Months Ended
June 30,

 

For the Six Months Ended
June 30,

 

2022

 

2021

 

2022

 

2021

Revenues:

 

 

 

 

 

 

 

Rental income

$

46,806

 

$

47,744

 

$

92,813

 

 

$

92,990

 

Interest and other income

 

747

 

 

514

 

 

1,216

 

 

 

1,019

 

Total revenues

 

47,553

 

 

48,258

 

 

94,029

 

 

 

94,009

 

Expenses:

 

 

 

 

 

 

 

Depreciation and amortization

 

12,559

 

 

13,843

 

 

26,134

 

 

 

27,316

 

Interest expense

 

6,303

 

 

6,534

 

 

12,045

 

 

 

12,296

 

Property taxes

 

1,254

 

 

766

 

 

2,674

 

 

 

1,462

 

Impairment of real estate investments

 

1,701

 

 

 

 

61,384

 

 

 

 

Provision for loan losses, net

 

 

 

 

 

3,844

 

 

 

 

Property operating expenses

 

89

 

 

 

 

536

 

 

 

 

General and administrative

 

4,978

 

 

5,798

 

 

10,193

 

 

 

10,940

 

Total expenses

 

26,884

 

 

26,941

 

 

116,810

 

 

 

52,014

 

Other income (loss):

 

 

 

 

 

 

 

Gain (loss) on sale of real estate

 

 

 

 

 

186

 

 

 

(192

)

Net income (loss)

$

20,669

 

$

21,317

 

$

(22,595

)

 

$

41,803

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share:

 

 

 

 

 

 

 

Basic

$

0.21

 

$

0.22

 

$

(0.24

)

 

$

0.43

 

Diluted

$

0.21

 

$

0.22

 

$

(0.24

)

 

$

0.43

 

 

 

 

 

 

 

 

 

Weighted-average number of common shares:

 

 

 

 

 

 

 

Basic

 

96,564

 

 

96,082

 

 

96,487

 

 

 

95,732

 

Diluted

 

96,598

 

 

96,120

 

 

96,487

 

 

 

95,755

 

 

 

 

 

 

 

 

 

Dividends declared per common share

$

0.275

 

$

0.265

 

$

0.55

 

 

$

0.53

 

CARETRUST REIT, INC.

RECONCILIATIONS OF NET INCOME (LOSS) TO NON-GAAP FINANCIAL MEASURES

(in thousands)

(Unaudited)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

20,669

 

$

21,317

 

$

(22,595

)

 

$

41,803

 

Depreciation and amortization

 

 

12,559

 

 

13,843

 

 

26,134

 

 

 

27,316

 

Interest expense

 

 

6,303

 

 

6,534

 

 

12,045

 

 

 

12,296

 

Amortization of stock-based compensation

 

 

1,394

 

 

1,810

 

 

2,915

 

 

 

3,395

 

EBITDA

 

 

40,925

 

 

43,504

 

 

18,499

 

 

 

84,810

 

Impairment of real estate investments

 

 

1,701

 

 

 

 

61,384

 

 

 

 

Provision for loan losses, net

 

 

 

 

 

 

3,844

 

 

 

 

Provision for doubtful accounts and lease restructuring

 

 

 

 

 

 

977

 

 

 

 

Lease termination revenue

 

 

 

 

 

 

 

 

 

(63

)

Property operating expenses

 

 

631

 

 

 

 

1,862

 

 

 

 

(Gain) loss on sale of real estate

 

 

 

 

 

 

(186

)

 

 

192

 

Normalized EBITDA

 

$

43,257

 

$

43,504

 

$

86,380

 

 

$

84,939

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

20,669

 

$

21,317

 

$

(22,595

)

 

$

41,803

 

Real estate related depreciation and amortization

 

 

12,553

 

 

13,837

 

 

26,124

 

 

 

27,303

 

Impairment of real estate investments

 

 

1,701

 

 

 

 

61,384

 

 

 

 

(Gain) loss on sale of real estate

 

 

 

 

 

 

(186

)

 

 

192

 

Funds from Operations (FFO)

 

 

34,923

 

 

35,154

 

 

64,727

 

 

 

69,298

 

Effect of the senior unsecured notes payable redemption

 

 

 

 

642

 

 

 

 

 

642

 

Provision for loan losses, net

 

 

 

 

 

 

3,844

 

 

 

 

Provision for doubtful accounts and lease restructuring

 

 

 

 

 

 

977

 

 

 

 

Lease termination revenue

 

 

 

 

 

 

 

 

 

(63

)

Property operating expenses

 

 

631

 

 

 

 

1,862

 

 

 

 

Normalized FFO

 

$

35,554

 

$

35,796

 

$

71,410

 

 

$

69,877

 

CARETRUST REIT, INC.

RECONCILIATIONS OF NET INCOME (LOSS) TO NON-GAAP FINANCIAL MEASURES (continued)

(in thousands, except per share data)

(Unaudited)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

20,669

 

 

$

21,317

 

 

$

(22,595

)

 

$

41,803

 

Real estate related depreciation and amortization

 

 

12,553

 

 

 

13,837

 

 

 

26,124

 

 

 

27,303

 

Amortization of deferred financing fees

 

 

520

 

 

 

495

 

 

 

1,040

 

 

 

982

 

Amortization of stock-based compensation

 

 

1,394

 

 

 

1,810

 

 

 

2,915

 

 

 

3,395

 

Straight-line rental income

 

 

(5

)

 

 

(8

)

 

 

(11

)

 

 

(20

)

Impairment of real estate investments

 

 

1,701

 

 

 

 

 

 

61,384

 

 

 

 

(Gain) loss on sale of real estate

 

 

 

 

 

 

 

 

(186

)

 

 

192

 

Funds Available for Distribution (FAD)

 

 

36,832

 

 

 

37,451

 

 

 

68,671

 

 

 

73,655

 

Effect of the senior unsecured notes payable redemption

 

 

 

 

 

642

 

 

 

 

 

 

642

 

Provision for loan losses, net

 

 

 

 

 

 

 

 

3,844

 

 

 

 

Provision for doubtful accounts and lease restructuring

 

 

 

 

 

 

 

 

977

 

 

 

 

Lease termination revenue

 

 

 

 

 

 

 

 

 

 

 

(63

)

Property operating expenses

 

 

631

 

 

 

 

 

 

1,862

 

 

 

 

Normalized FAD

 

$

37,463

 

 

$

38,093

 

 

$

75,354

 

 

$

74,234

 

 

 

 

 

 

 

 

 

 

FFO per share

 

$

0.36

 

 

$

0.36

 

 

$

0.67

 

 

$

0.72

 

Normalized FFO per share

 

$

0.37

 

 

$

0.37

 

 

$

0.74

 

 

$

0.73

 

 

 

 

 

 

 

 

 

 

FAD per share

 

$

0.38

 

 

$

0.39

 

 

$

0.71

 

 

$

0.77

 

Normalized FAD per share

 

$

0.39

 

 

$

0.40

 

 

$

0.78

 

 

$

0.77

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding [1]

 

 

96,672

 

 

 

96,366

 

 

 

96,687

 

 

 

95,995

 

 

 

 

 

 

 

 

 

 

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

CARETRUST REIT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS - 5 QUARTER TREND

(in thousands, except per share data)

(Unaudited)

 

Quarter

Quarter

Quarter

Quarter

Quarter

 

Ended

Ended

Ended

Ended

Ended

 

June 30,
2021

September 30,
2021

December 31,
2021

March 31,
2022

June 30,
2022

Revenues:

 

 

 

 

 

Rental income

$

47,744

$

48,087

 

$

49,118

$

46,007

 

$

46,806

Interest and other income

 

514

 

518

 

 

619

 

469

 

 

747

Total revenues

 

48,258

 

48,605

 

 

49,737

 

46,476

 

 

47,553

Expenses:

 

 

 

 

 

Depreciation and amortization

 

13,843

 

13,968

 

 

14,056

 

13,575

 

 

12,559

Interest expense

 

6,534

 

5,692

 

 

5,689

 

5,742

 

 

6,303

Property taxes

 

766

 

1,004

 

 

1,108

 

1,420

 

 

1,254

Impairment of real estate investments

 

 

 

 

 

59,683

 

 

1,701

Provision for loan losses, net

 

 

 

 

 

3,844

 

 

Property operating expenses

 

 

 

 

 

447

 

 

89

General and administrative

 

5,798

 

5,196

 

 

10,738

 

5,215

 

 

4,978

Total expenses

 

26,941

 

25,860

 

 

31,591

 

89,926

 

 

26,884

Other (loss) income:

 

 

 

 

Loss on extinguishment of debt

 

 

(10,827

)

 

 

 

 

Gain on sale of real estate

 

 

 

 

115

 

186

 

 

Total other (loss) income

 

 

(10,827

)

 

115

 

186

 

 

Net income (loss)

$

21,317

$

11,918

 

$

18,261

$

(43,264

)

$

20,669

 

 

 

 

 

 

Diluted earnings (loss) per share

$

0.22

$

0.12

 

$

0.19

$

(0.45

)

$

0.21

 

 

 

 

 

Diluted weighted average shares outstanding

96,120

96,297

 

 

96,552

96,410

 

96,598

CARETRUST REIT, INC.

RECONCILIATIONS OF NET INCOME (LOSS) TO NON-GAAP FINANCIAL MEASURES - 5 QUARTER TREND

(in thousands)

(Unaudited)

 

Quarter

Quarter

Quarter

Quarter

Quarter

 

Ended

Ended

Ended

Ended

Ended

 

June 30,
2021

September 30,
2021

December 31,
2021

March 31,
2022

June 30,
2022

 

 

 

 

 

 

Net income (loss)

$

21,317

$

11,918

$

18,261

 

$

(43,264

)

$

20,669

Depreciation and amortization

 

13,843

 

13,968

 

14,056

 

 

13,575

 

 

12,559

Interest expense

 

6,534

 

5,692

 

5,689

 

 

5,742

 

 

6,303

Amortization of stock-based compensation

 

1,810

 

1,802

 

5,635

 

 

1,521

 

 

1,394

EBITDA

 

43,504

 

33,380

 

43,641

 

 

(22,426

)

 

40,925

Impairment of real estate investments

 

 

 

 

 

59,683

 

 

1,701

Provision for loan losses, net

 

 

 

 

 

3,844

 

 

Provision for doubtful accounts and lease restructuring

 

 

 

 

 

977

 

 

Property operating expenses

 

 

 

8

 

 

1,231

 

 

631

Gain on sale of real estate

 

 

 

(115

)

 

(186

)

 

Non-routine transaction costs

 

 

 

1,418

 

 

 

 

Loss on extinguishment of debt

 

 

10,827

 

 

 

 

 

Normalized EBITDA

$

43,504

$

44,207

$

44,952

 

$

43,123

 

$

43,257

 

 

 

 

 

 

Net income (loss)

$

21,317

$

11,918

$

18,261

 

$

(43,264

)

$

20,669

Real estate related depreciation and amortization

 

13,837

 

13,964

 

14,051

 

 

13,571

 

 

12,553

Impairment of real estate investments

 

 

 

 

 

59,683

 

 

1,701

Gain on sale of real estate

 

 

 

(115

)

 

(186

)

 

Funds from Operations (FFO)

 

35,154

 

25,882

 

32,197

 

 

29,804

 

 

34,923

Effect of the senior unsecured notes payable redemption

 

642

 

 

 

 

 

 

Provision for loan losses, net

 

 

 

 

 

3,844

 

 

Provision for doubtful accounts and lease restructuring

 

 

 

 

 

977

 

 

Property operating expenses

 

 

 

8

 

 

1,231

 

 

631

Accelerated amortization of stock-based compensation

 

 

 

3,696

 

 

 

 

Non-routine transaction costs

 

 

 

1,418

 

 

 

 

Loss on extinguishment of debt

 

 

10,827

 

 

 

 

 

Normalized FFO

$

35,796

$

36,709

$

37,319

 

$

35,856

 

$

35,554

CARETRUST REIT, INC.

RECONCILIATIONS OF NET INCOME (LOSS) 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,
2021

September 30,
2021

December 31,
2021

March 31,
2022

June 30,
2022

 

 

 

 

 

 

Net income (loss)

$

21,317

 

$

11,918

 

$

18,261

 

$

(43,264

)

$

20,669

 

Real estate related depreciation and amortization

 

13,837

 

 

13,964

 

 

14,051

 

 

13,571

 

 

12,553

 

Amortization of deferred financing fees

 

495

 

 

519

 

 

521

 

 

520

 

 

520

 

Amortization of stock-based compensation

 

1,810

 

 

1,802

 

 

5,635

 

 

1,521

 

 

1,394

 

Straight-line rental income

 

(8

)

 

(6

)

 

(6

)

 

(6

)

 

(5

)

Impairment of real estate investments

 

 

 

 

 

 

 

59,683

 

 

1,701

 

Gain on sale of real estate

 

 

 

 

 

(115

)

 

(186

)

 

 

Funds Available for Distribution (FAD)

 

37,451

 

 

28,197

 

 

38,347

 

 

31,839

 

 

36,832

 

Effect of the senior unsecured notes payable redemption

 

642

 

 

 

 

 

 

 

 

 

Provision for loan losses, net

 

 

 

 

 

 

 

3,844

 

 

 

Provision for doubtful accounts and lease restructuring

 

 

 

 

 

 

 

977

 

 

 

Property operating expenses

 

 

 

 

 

8

 

 

1,231

 

 

631

 

Non-routine transaction costs

 

 

 

 

 

1,418

 

 

 

 

 

Loss on extinguishment of debt

 

 

 

10,827

 

 

 

 

 

 

 

Normalized FAD

$

38,093

 

$

39,024

 

$

39,773

 

$

37,891

 

$

37,463

 

 

 

 

 

 

 

FFO per share

$

0.36

 

$

0.27

 

$

0.33

 

$

0.31

 

$

0.36

 

Normalized FFO per share

$

0.37

 

$

0.38

 

$

0.39

 

$

0.37

 

$

0.37

 

 

 

 

 

 

 

FAD per share

$

0.39

 

$

0.29

 

$

0.40

 

$

0.33

 

$

0.38

 

Normalized FAD per share

$

0.40

 

$

0.40

 

$

0.41

 

$

0.39

 

$

0.39

 

 

 

 

 

 

 

Diluted weighted average shares outstanding [1]

 

96,366

 

 

96,592

 

 

96,646

 

 

96,701

 

 

96,672

 

 

 

 

 

 

 

[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, 2022

 

December 31, 2021

Assets:

 

 

 

Real estate investments, net

$

1,390,286

 

 

$

1,589,971

 

Other real estate investments

 

115,168

 

 

 

15,155

 

Assets held for sale, net

 

141,767

 

 

 

4,835

 

Cash and cash equivalents

 

30,267

 

 

 

19,895

 

Accounts and other receivables

 

875

 

 

 

2,418

 

Prepaid expenses and other assets, net

 

6,837

 

 

 

7,512

 

Deferred financing costs, net

 

572

 

 

 

1,062

 

Total assets

$

1,685,772

 

 

$

1,640,848

 

 

 

 

 

Liabilities and Equity:

 

 

 

Senior unsecured notes payable, net

$

394,706

 

 

$

394,262

 

Senior unsecured term loan, net

 

199,242

 

 

 

199,136

 

Unsecured revolving credit facility

 

205,000

 

 

 

80,000

 

Accounts payable, accrued liabilities and deferred rent liabilities

 

21,749

 

 

 

25,408

 

Dividends payable

 

26,807

 

 

 

26,285

 

Total liabilities

 

847,504

 

 

 

725,091

 

 

 

 

 

Equity:

 

 

 

Common stock

 

966

 

 

 

963

 

Additional paid-in capital

 

1,195,282

 

 

 

1,196,839

 

Cumulative distributions in excess of earnings

 

(357,980

)

 

 

(282,045

)

Total equity

 

838,268

 

 

 

915,757

 

Total liabilities and equity

$

1,685,772

 

 

$

1,640,848

 

CARETRUST REIT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

For the Six Months Ended June 30,

 

2022

 

2021

Cash flows from operating activities:

 

 

 

Net (loss) income

$

(22,595

)

 

$

41,803

 

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

Depreciation and amortization (including below-market ground leases)

 

26,167

 

 

 

27,345

 

Amortization of deferred financing costs

 

1,040

 

 

 

1,012

 

Amortization of stock-based compensation

 

2,915

 

 

 

3,395

 

Straight-line rental income

 

(11

)

 

 

(20

)

Adjustment for collectibility of rental income

 

977

 

 

 

 

Noncash interest income

 

(13

)

 

 

 

(Gain) loss on sale of real estate

 

(186

)

 

 

192

 

Impairment of real estate investments

 

61,384

 

 

 

 

Provision for loan losses, net

 

3,844

 

 

 

 

Change in operating assets and liabilities:

 

 

 

Accounts and other receivables

 

578

 

 

 

(93

)

Prepaid expenses and other assets, net

 

(1,724

)

 

 

88

 

Accounts payable, accrued liabilities and deferred rent liabilities

 

(4,074

)

 

 

(3,165

)

Net cash provided by operating activities

 

68,302

 

 

 

70,557

 

Cash flows from investing activities:

 

 

 

Acquisitions of real estate, net of deposits applied

 

(21,915

)

 

 

(147,807

)

Purchases of equipment, furniture and fixtures and improvements to real estate

 

(3,628

)

 

 

(3,463

)

Investment in real estate related and other loans receivable

 

(102,086

)

 

 

(700

)

Principal payments received on real estate related and other loans receivable

 

1,026

 

 

 

113

 

Net proceeds from sales of real estate

 

959

 

 

 

6,814

 

Net cash used in investing activities

 

(125,644

)

 

 

(145,043

)

Cash flows from financing activities:

 

 

 

Proceeds from the issuance of common stock, net

 

 

 

 

22,946

 

Proceeds from the issuance of senior unsecured notes payable

 

 

 

 

400,000

 

Borrowings under unsecured revolving credit facility

 

125,000

 

 

 

170,000

 

Payments on unsecured revolving credit facility

 

 

 

 

(170,000

)

Payments on debt extinguishment and deferred financing costs

 

 

 

 

(5,577

)

Net-settle adjustment on restricted stock

 

(4,469

)

 

 

(1,331

)

Dividends paid on common stock

 

(52,817

)

 

 

(49,513

)

Net cash provided by financing activities

 

67,714

 

 

 

366,525

 

Net increase in cash and cash equivalents

 

10,372

 

 

 

292,039

 

Cash and cash equivalents as of the beginning of period

 

19,895

 

 

 

18,919

 

Cash and cash equivalents as of the end of period

$

30,267

 

 

$

310,958

 

CARETRUST REIT, INC.

DEBT SUMMARY

(dollars in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2022

 

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

 

49.7

%

 

$

(5,294

)

 

$

394,706

Floating Rate Debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior unsecured term loan

3.166

%

[1]

2026

 

 

200,000

 

24.8

%

 

 

(758

)

 

 

199,242

Unsecured revolving credit facility

2.747

%

[2]

2024

[3]

 

205,000

 

25.5

%

 

 

 

[4]

 

205,000

 

2.954

%

 

 

 

 

405,000

 

50.3

%

 

 

(758

)

 

 

404,242

 

 

 

 

 

 

 

 

 

 

 

 

Total Debt

3.412

%

 

 

 

$

805,000

 

100.0

%

 

$

(6,052

)

 

$

798,948

 

 

 

 

 

 

 

 

 

 

 

 

[1] 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%.

[2] Funds can be borrowed at applicable LIBOR plus 1.10% to 1.55% or at the Base Rate (as defined) plus 0.10% to 0.55%.

[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.

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, non-routine transaction costs, loss on extinguishment of debt, 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, non-routine transaction costs, provision for doubtful accounts and lease restructuring, loss on extinguishment of debt, 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.

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

Source: CareTrust REIT, Inc.

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