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ctre-20220804
0001590717false00015907172022-08-042022-08-04

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): August 4, 2022
CareTrust REIT, Inc.
(Exact name of registrant as specified in its charter)  
Maryland001-3618146-3999490
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
Registrant’s telephone number, including area code: (949542-3130
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))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareCTRENew York Stock Exchange
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 August 4, 2022, CareTrust REIT, Inc. (the “Company”) issued a press release announcing its financial results for the second quarter ended June 30, 2022. 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 second quarter ended June 30, 2022 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
  
104Cover Page Interactive Data File (embedded within the inline XBRL document)





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: August 4, 2022
CARETRUST REIT, INC.
By:
/s/ William M. Wagner
 
William M. Wagner
Chief Financial Officer and Treasurer


Document

Exhibit 99.1
https://cdn.kscope.io/68fb5bc8b90b4d5a335f07b2c34e9289-logoer.gif

CareTrust REIT Announces Second Quarter 2022 Operating Results

Conference Call Scheduled for Friday, August 5, 2022 at 1:00 pm ET
SAN CLEMENTE, Calif., August 4, 2022 (BUSINESS WIRE) -- 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 Company's business and its portfolio, including plans to sell, re-tenant or repurpose selected Company assets, the Company's 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 Company's 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.
Contact:
CareTrust REIT, Inc.
(949) 542-3130
ir@caretrustreit.com




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,
2022202120222021
Revenues:
Rental income$46,806 $47,744 $92,813 $92,990 
Interest and other income747 514 1,216 1,019 
Total revenues47,553 48,258 94,029 94,009 
Expenses:
Depreciation and amortization12,559 13,843 26,134 27,316 
Interest expense6,303 6,534 12,045 12,296 
Property taxes1,254 766 2,674 1,462 
Impairment of real estate investments1,701 — 61,384 — 
Provision for loan losses, net— — 3,844 — 
Property operating expenses89 — 536 — 
General and administrative4,978 5,798 10,193 10,940 
Total expenses26,884 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:
Basic96,564 96,082 96,487 95,732 
Diluted96,598 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,
2022202120222021
Net income (loss)$20,669 $21,317 $(22,595)$41,803 
Depreciation and amortization12,559 13,843 26,134 27,316 
Interest expense6,303 6,534 12,045 12,296 
Amortization of stock-based compensation1,394 1,810 2,915 3,395 
EBITDA40,925 43,504 18,499 84,810 
Impairment of real estate investments1,701 — 61,384 — 
Provision for loan losses, net— — 3,844 — 
Provision for doubtful accounts and lease restructuring— — 977 — 
Lease termination revenue— — — (63)
Property operating expenses631 — 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 amortization12,553 13,837 26,124 27,303 
Impairment of real estate investments1,701 — 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 expenses631 — 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,
2022202120222021
Net income (loss)$20,669 $21,317 $(22,595)$41,803 
Real estate related depreciation and amortization12,553 13,837 26,124 27,303 
Amortization of deferred financing fees520 495 1,040 982 
Amortization of stock-based compensation1,394 1,810 2,915 3,395 
Straight-line rental income(5)(8)(11)(20)
Impairment of real estate investments1,701 — 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 expenses631 — 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)
QuarterQuarterQuarterQuarterQuarter
EndedEndedEndedEndedEnded
June 30, 2021September 30, 2021December 31, 2021March 31, 2022June 30, 2022
Revenues:
Rental income$47,744 $48,087 $49,118 $46,007 $46,806 
Interest and other income514 518 619 469 747 
Total revenues48,258 48,605 49,737 46,476 47,553 
Expenses:
Depreciation and amortization13,843 13,968 14,056 13,575 12,559 
Interest expense6,534 5,692 5,689 5,742 6,303 
Property taxes766 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 administrative5,798 5,196 10,738 5,215 4,978 
Total expenses26,941 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 outstanding96,120 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)
QuarterQuarterQuarterQuarterQuarter
EndedEndedEndedEndedEnded
June 30, 2021September 30, 2021December 31, 2021March 31, 2022June 30, 2022
Net income (loss)$21,317 $11,918 $18,261 $(43,264)$20,669 
Depreciation and amortization13,843 13,968 14,056 13,575 12,559 
Interest expense6,534 5,692 5,689 5,742 6,303 
Amortization of stock-based compensation1,810 1,802 5,635 1,521 1,394 
EBITDA43,504 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— — 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 amortization13,837 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 redemption642 — — — — 
Provision for loan losses, net— — — 3,844 — 
Provision for doubtful accounts and lease restructuring— — — 977 — 
Property operating expenses— — 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)
QuarterQuarterQuarterQuarterQuarter
EndedEndedEndedEndedEnded
June 30, 2021September 30, 2021December 31, 2021March 31, 2022June 30, 2022
Net income (loss)$21,317 $11,918 $18,261 $(43,264)$20,669 
Real estate related depreciation and amortization13,837 13,964 14,051 13,571 12,553 
Amortization of deferred financing fees495 519 521 520 520 
Amortization of stock-based compensation1,810 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 redemption642 — — — — 
Provision for loan losses, net— — — 3,844 — 
Provision for doubtful accounts and lease restructuring— — — 977 — 
Property operating expenses— — 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, 2022December 31, 2021
Assets:
Real estate investments, net$1,390,286 $1,589,971 
Other real estate investments115,168 15,155 
Assets held for sale, net141,767 4,835 
Cash and cash equivalents30,267 19,895 
Accounts and other receivables875 2,418 
Prepaid expenses and other assets, net6,837 7,512 
Deferred financing costs, net572 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, net199,242 199,136 
Unsecured revolving credit facility205,000 80,000 
Accounts payable, accrued liabilities and deferred rent liabilities21,749 25,408 
Dividends payable26,807 26,285 
Total liabilities847,504 725,091 
Equity:
Common stock966 963 
Additional paid-in capital1,195,282 1,196,839 
Cumulative distributions in excess of earnings(357,980)(282,045)
Total equity838,268 915,757 
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,
20222021
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 costs1,040 1,012 
Amortization of stock-based compensation2,915 3,395 
Straight-line rental income(11)(20)
Adjustment for collectibility of rental income977 — 
Noncash interest income(13)— 
(Gain) loss on sale of real estate(186)192 
Impairment of real estate investments61,384 — 
Provision for loan losses, net3,844 — 
Change in operating assets and liabilities:
Accounts and other receivables578 (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 activities68,302 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 estate959 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 facility125,000 170,000 
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 activities67,714 366,525 
Net increase in cash and cash equivalents10,372 292,039 
Cash and cash equivalents as of the beginning of period19,895 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
InterestMaturity% ofDeferredNet Carrying
DebtRateDatePrincipalPrincipalLoan CostsValue
Fixed Rate Debt
Senior unsecured notes payable3.875 %2028$400,000 49.7 %$(5,294)$394,706 
Floating Rate Debt
Senior unsecured term loan3.166 %[1]2026200,000 24.8 %(758)199,242 
Unsecured revolving credit facility2.747 %[2]2024[3]205,000 25.5 %— [4]205,000 
2.954 %405,000 50.3 %(758)404,242 
Total Debt3.412 %$805,000 100.0 %$(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.

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exhibit992-ctreq22022fin
Financial Supplement Second Quarter 2022 Exhibit 99.2


 
Disclaimers 02 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 plans, business and acquisition strategies, growth prospects, operating and financial performance, expectations regarding the making of distributions, payment of dividends, 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 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) any 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 Securities and Exchange Commission (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 or on our website. See “Financials and Filings – Quarterly Results” on the Investors section of our website at investor.caretrustreit.com. Non-GAAP financial information does not represent financial performance under GAAP and should not be considered in isolation, 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. The Ensign Group, Inc. ("Ensign"), The Pennant Group, Inc. ("Pennant") and Assisted 4 Living, Inc., the parent company of Trillium Healthcare Group ("Trillium"), are subject to the registration and reporting requirements of the SEC and are required to file with the SEC annual reports containing audited financial information and quarterly reports containing unaudited financial information. Ensign’s and Pennant's financial statements, as filed with the SEC, can be found at the SEC's website at www.sec.gov. This supplement provides information about our financial results as of and for the quarter ended June 30, 2022 and is provided as of the date hereof, 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.


 
Table of Contents CONTACT INFORMATION 03 CareTrust REIT, Inc. 905 Calle Amanecer, Suite 300 San Clemente, CA 92673 (949) 542-3130 ir@caretrustreit.com www.CareTrustReit.com Transfer Agent Broadridge Corporate Issuer Solutions P.O. Box 1342 Brentwood, NY 11717 (800) 733-1121 shareholder@broadridge.com Camarillo Senior Living (Camarillo, CA) COMPANY PROFILE 04 CARETRUST SNAPSHOT 05 INVESTMENTS 06 PORTFOLIO OVERVIEW 07-13 Top 10 Tenants Lease Coverage Portfolio Performance Rent Diversification by Tenant Geographic Diversification Rent Diversification by State Lease Maturities Tenant Purchase Options FINANCIAL OVERVIEW 14-21 Consolidated Statements of Operations Reconciliation of EBITDA, FFO and FAD Consolidated Balance Sheets Key Debt Metrics Debt Summary Equity Capital Transactions Other Financial Highlights GLOSSARY 22-23


 
Company Profile MANAGEMENT Dave Sedgwick – President & Chief Executive Officer Bill Wagner - Chief Financial Officer Mark Lamb - Chief Investment Officer James Callister - Executive Vice President CareTrust REIT is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition, development and leasing of seniors housing and healthcare-related properties. CareTrust REIT generates revenues primarily by leasing properties to a diverse group of local, regional and national seniors housing operators, healthcare services providers, and other healthcare-related businesses. Since its debut as a standalone public company on June 1, 2014, and as of June 30, 2022, CareTrust REIT has expanded its tenant roster to 18 operators, and has grown its real estate portfolio to 198 net-leased healthcare properties across 21 states, consisting of 21,537 operating beds/units, excluding 27 properties classified as held for sale as of June 30, 2022 and three facilities which are in the process of being repurposed. As of June 30, 2022, CareTrust REIT also had one senior secured loan receivable and two mezzanine loans receivable. BOARD OF DIRECTORS Diana Laing - Chair Anne Olson Spencer Plumb Careina Williams Dave Sedgwick ANALYST COVERAGE* Baird – David Rogers | (216) 737-7341 Barclays - Steve Valiquette | (212) 526-5496 Berenberg - Connor Siversky | (646) 949-9037 BMO Capital Markets - Juan Sanabria | (312) 845-4074 CapitalOne Securities - Dan Bernstein | (571) 835-7202 Credit Suisse - Tayo Okusanya | (212) 325-1402 KeyBanc Capital Markets - Austin Wurschmidt | (917) 368-2311 Raymond James - Jonathan Hughes | (727) 567-2438 RBC Capital Markets - Michael Carroll | (440) 715-2649 Stifel - Steve Manaker | (212) 271-3716 * This information is provided as of August 4, 2022. This list may be incomplete and is subject to change as firms initiate or discontinue coverage of CareTrust. Please note that any opinions, estimates, or forecasts regarding our historical or predicted performance made by these analysts are theirs alone and do not represent opinions, estimates, or forecasts of CareTrust or our management. CareTrust does not by our reference or distribution of the information above imply our endorsement of or concurrence with any opinions, estimates, or forecasts of these analysts. Interested persons may obtain copies of analysts’ reports on their own as we do not distribute these reports. Several of these firms may, from time to time, own our stock and/or hold other long or short positions in our stock and may provide compensated services to us. 04


 
CARETRUST REIT, INC. NYSE: CTRE Market Data (as of June 30, 2022) ◦ Closing Price: $18.44 ◦ 52 Week Range: $24.58 – $15.90 ◦ Market Cap: $1,789M ◦ Enterprise Value: $2,564M ◦ Outstanding Shares: 97.029M Credit Ratings ◦ Corporate Rating: BB (stable) ◦ Senior Unsecured Notes: BB+ ◦ Corporate Rating: BB+ (stable) ◦ Senior Unsecured Notes: BB+ FitchS&P ◦ Corporate Rating: Ba2 (stable) ◦ Senior Unsecured Notes: Ba2 Moody’s $1,753.7M INVESTMENTS 198 PROPERTIES 21,537 OPERATING BEDS/UNITS 18 OPERATORS 21 STATES Note: Portfolio amounts presented above are as of June 30, 2022 and exclude our one senior secured loan receivable and two mezzanine loans receivable. Additionally, amounts exclude 27 properties classified as held for sale as of June 30, 2022 and three facilities which are in the process of being repurposed. General Note: Totals may not add due to rounding. Snapshot 05


 
Notes: [1] Initial Investment for pre-spin properties represents Ensign's and Pennant's gross book value. Initial Investment for post-spin properties represents CareTrust REIT’s purchase price and transaction costs and includes commitments for capital expenditures that are not rent producing. [2] Initial Operating Beds/Units as of the acquisition date. [3] Initial Rent represents the annualized acquisition-date cash rent, deferred interest income on any preferred equity investments and interest income on any mortgage loans receivable, senior secured loans receivable and mezzanine loans. Initial Rent excludes ground lease income. [4] Initial Yield represents Initial Rent divided by Initial Investment and excludes properties not under a long-term master lease. [5] All amounts, except as otherwise indicated, include any preferred equity investments, mortgage loans receivable and mezzanine loans receivable. [6] Initial yield on the senior secured term loan is 8.5% less a 0.125% subservicing fee. Investments (dollars in thousands) 06 Date Operator Property Type Location Facilities Initial Investment[1] Initial Operating Beds/Units [2] Initial Rent [3] Initial Yield[4] 6/1/2014 The Ensign Group ALF, SNF, Campus Various 94 $ 501,673 10,053 $ 56,000 N/A 2014 Investments 6 33,609 157 3,076 9.2 % 2015 Investments 20 233,028 1,840 22,263 9.6 % 2016 Investments 35 288,023 2,800 26,084 9.1 % 2017 Investments 36 309,805 3,324 28,000 9.0 % 2018 Investments 12 111,950 1,103 9,955 8.9 % 2019 Investments 27 340,884 3,348 30,168 8.8 % 2020 Investments 17 105,267 961 9,398 8.9 % 2021 Investments 10 196,576 1,247 13,103 7.3 % 2/1/2022 Eduro Healthcare, LLC SNF TX 1 8,918 135 815 9.1 % 3/1/2022 WLC Management Firm, LLC SNF Campus IL 1 13,095 130 1,235 9.4 % 6/30/2022 Senior Secured Loan SNF, SNF Campus Mid-Atlantic 18 75,000 1,796 6,281 8.4 % [6] 6/30/2022 Mezzanine Loan SNF, SNF Campus Mid-Atlantic N/A 25,000 N/A 2,750 11.0 % 8/1/2022 Senior Secured Loan SNF CA 5 22,250 600 1,891 8.5 % 2022 Investments 25 144,263 2,661 12,972 9.0 % Total Post Spin-off Investments[5] 188 1,763,405 17,441 155,019 8.9 % Total Investments[5] 282 $ 2,265,078 27,494 $ 211,019


 
Notes: [1] Lease Coverage excludes 27 properties classified as held for sale as of June 30, 2022 and three facilities which are in the process of being repurposed. [2] EBITDAR Coverage and EBITDARM Coverage are based on financial 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. Coverage metrics are based on contractual cash rents in place during the period presented unless a lease has been entered into or amended since the end of the period, in which case the current contractual rent is used. [3] Ensign and Pennant have announced that they have returned all or a portion of the provider relief funds issued to them by the U.S. Department of Health and Human Services ("HHS") pursuant to the CARES Act in connection with the COVID-19 pandemic ("HHS Relief Funds"). [4] Coverage metrics in this section exclude all HHS Relief Funds received and retained to date, if any. [5] Coverage metrics in this section include all known HHS Relief Funds received and retained as reported to us through August 1, 2022, if any, and amortizes the retained HHS Relief Funds ratably over the period of availability based on when the HHS Relief Funds were received in accordance with HHS' current guidelines for using the HHS Relief Funds for allowable purposes, except for phase 4 funding which is amortized ratably from the date the funds are received through June 30, 2022. The calculations further assume that (i) none of the HHS Relief Funds retained to date will be returned to HHS, and (ii) no additional HHS Relief Funds will be distributed to providers in the future. [6] No coverage metrics were received for the period prior to lease commencement for facilities acquired in March and April 2021. See "Glossary" for additional information. Top 10 Tenants Lease Coverage [1] 07 Twelve Months Ended March 31, 2020 Twelve Months Ended March 31, 2022 Twelve Months Ended March 31, 2022 Pre COVID-19 Excludes Use of HHS Funds[4] Includes Amortized HHS Funds[5] EBITDAR Coverage[2] EBITDARM Coverage[2] EBITDAR Coverage[2] EBITDARM Coverage[2] EBITDAR Coverage[2] EBITDARM Coverage[2] 1 The Ensign Group[3] 3.02x 3.79x 3.38x 4.19x 3.38x 4.19x 2 Priority Management Group 1.50x 1.81x 1.32x 1.62x 1.55x 1.87x 3 Cascadia Healthcare 1.61x 2.07x 1.80x 2.26x 2.06x 2.54x 4 Providence Group 1.03x 1.45x 1.45x 1.99x 1.67x 2.23x 5 Eduro Healthcare, LLC 1.17x 1.65x 1.68x 2.19x 2.02x 2.54x 6 Covenant Care 1.37x 1.94x 0.53x 1.07x 0.76x 1.31x 7 The Pennant Group[3] 1.27x 1.48x 0.78x 0.96x 0.78x 0.96x 8 Bayshire Senior Communities[6] 1.32x 1.60x 0.69x 1.05x 0.72x 1.08x 9 WLC Management 2.15x 2.59x 1.74x 2.19x 2.21x 2.70x 10 Aspen Senior Living[6] — — 0.47x 0.71x 0.47x 0.71x Total Top 10 Tenants 2.12x 2.67x 2.13x 2.70x 2.26x 2.83x All Other Tenants 1.01x 1.44x 0.99x 1.43x 1.30x 1.76x Total 2.00x 2.54x 2.02x 2.57x 2.16x 2.72x


 
Portfolio Performance 08 Notes: [1] Investment for pre-spin properties represents Ensign's and Pennant'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 June 2022 contractual cash rent, annualized, and excludes ground lease income. Additionally, if a lease was entered into, amended or restructured subsequent to June 30, 2022, the initial or amended contractual cash rent is used. [3] Current Yield represents Rent divided by Investment. [4] All amounts exclude our one senior secured loan receivable and two mezzanine loans receivable. Additionally, amounts exclude 27 properties classified as held for sale as of June 30, 2022 and three facilities which are in the process of being repurposed. [5] Rent represents March 2022 contractual cash rent, annualized, and excludes ground lease income. Additionally, if a lease was entered into, amended or restructured subsequent to March 31, 2022, the initial or amended contractual cash rent is used. [6] All amounts exclude our one mezzanine loan receivable. Additionally, amounts exclude two assisted living facilities under a short-term master lease as of March 31, 2022. [7] Rent represents June 2021 contractual cash rent, annualized, and excludes ground lease income. Additionally, if a lease was entered into, amended or restructured subsequent to June 30, 2021, the initial or amended contractual cash rent is used. [8] All amounts exclude our one mezzanine loan receivable. See “Glossary” for additional information. (dollars in thousands) As of June 30, 2022 Asset Type Facilities Operating Beds/Units Investment[1] % of Total Investment Rent[2] % of Total Rent Current Yield[3] Skilled Nursing 154 16,208 $ 1,301,148 74.2 % $ 135,041 75.5 % 10.4 % Multi-Service Campus 24 3,466 363,306 20.7 % 31,729 17.7 % 8.7 % Seniors Housing 20 1,863 89,218 5.1 % 12,194 6.8 % 13.7 % Total Net-Leased Assets[4] 198 21,537 $ 1,753,672 100.0 % $ 178,964 100.0 % 10.2 % (dollars in thousands) As of March 31, 2022 Asset Type Facilities Operating Beds/Units Investment[1] % of Total Investment Rent[5] % of Total Rent Current Yield[3] Skilled Nursing 160 16,668 $ 1,361,526 68.1 % $ 136,803 70.2 % 10.0 % Multi-Service Campus 25 3,675 390,686 19.6 % 32,550 16.7 % 8.3 % Seniors Housing 41 3,393 245,760 12.3 % 25,652 13.3 % 10.4 % Total Net-Leased Assets[6] 226 23,736 $ 1,997,972 100.0 % $ 195,005 100.0 % 9.8 % (dollars in thousands) As of June 30, 2021 Asset Type Facilities Operating Beds/Units Investment[1] % of Total Investment Rent[7] % of Total Rent Current Yield[3] Skilled Nursing 158 16,373 $ 1,318,722 67.9 % $ 131,524 70.3 % 10.0 % Multi-Service Campus 24 3,611 376,033 19.4 % 30,082 16.1 % 8.0 % Seniors Housing 41 3,317 246,865 12.7 % 25,392 13.6 % 10.3 % Total Net-Leased Assets[8] 223 23,301 $ 1,941,620 100.0 % $ 186,998 100.0 % 9.6 %


 
Rent Diversification by Tenant 09 Notes: [1] All amounts exclude our one senior secured loan receivable and two mezzanine loans receivable. Additionally, amounts exclude 27 properties classified as held for sale as of June 30, 2022 and three facilities which are in the process of being repurposed. [2] Rent represents June 2022 contractual cash rent, annualized, and excludes ground lease income. Additionally, if a lease was entered into, amended or restructured subsequent to June 30, 2022, the initial or amended contractual cash rent is used. (dollars in thousands) As of June 30, 2022[1] Facilities Operating Beds/Units Rent[2] % of Total Rent 1 The Ensign Group 98 10,431 $ 66,078 36.9 % 2 Priority Management Group 15 2,144 29,088 16.3 % 3 Cascadia Healthcare 12 1,053 12,329 6.9 % 4 Providence Group 8 1,044 10,638 5.9 % 5 Eduro Healthcare, LLC 9 990 9,315 5.2 % Total Top 5 Tenants 142 15,662 $ 127,448 71.2 % 6 Covenant Care 7 935 8,555 4.8 % 7 The Pennant Group 8 913 7,098 4.0 % 8 Bayshire Senior Communities 5 596 6,462 3.6 % 9 WLC Management 9 919 6,293 3.5 % 10 Aspen Senior Living 2 319 5,640 3.2 % Total Top 10 Tenants 173 19,344 $ 161,496 90.2 % All Other Tenants 25 2,193 $ 17,468 9.8 % Total 198 21,537 $ 178,964 100.0 %


 
Geographic Diversification (% of run-rate rent) 10 * Less than 1%. Note: Numbers are as of June 30, 2022 and exclude our one senior secured loan receivable and two mezzanine loans receivable. Additionally, amounts exclude 27 properties classified as held for sale as of June 30, 2022 and three facilities which are in the process of being repurposed. 7% * 28% 23% 9% 8% 7% 4% 4% 3% 3% 3% 2%1% 1% 1% 1% 1% 1% * * * *


 
Rent Diversification by State 11 Notes: [1] All amounts exclude our one senior secured loan receivable and two mezzanine loans receivable. Additionally, amounts exclude 27 properties classified as held for sale as of June 30, 2022 and three facilities which are in the process of being repurposed. [2] Rent represents June 2022 contractual cash rent, annualized, and excludes ground lease income. Additionally, if a lease was entered into, amended or restructured subsequent to June 30, 2022, the initial or amended contractual cash rent is used. (dollars in thousands) As of June 30, 2022[1] Net-Leased Assets by State Facilities Operating Beds/Units Rent[2] % of Total Rent 1 California 40 4,856 $ 49,505 27.7 % 2 Texas 43 5,597 40,733 22.8 % 3 Louisiana 8 1,164 17,045 9.5 % 4 Idaho 17 1,474 14,611 8.2 % 5 Arizona 11 1,355 13,102 7.3 % Top 5 States 119 14,446 $ 134,996 75.4 % 6 Utah 13 1,374 7,662 4.3 % 7 Illinois 9 919 6,293 3.5 % 8 Colorado 7 779 5,826 3.3 % 9 Iowa 15 970 5,029 2.8 % 10 Washington 10 941 4,823 2.7 % Top 10 States 173 19,429 $ 164,629 92.0 % All Other States 25 2,108 $ 14,335 8.0 % Total 198 21,537 $ 178,964 100.0 %


 
Lease Maturities 12 Notes: [1] All amounts exclude our one senior secured loan receivable and two mezzanine loans receivable. Additionally, amounts exclude 27 properties classified as held for sale as of June 30, 2022 and three facilities which are in the process of being repurposed. [2] Lease Maturity Year represents the scheduled expiration year of the primary term of the lease and does not include tenant extension options or purchase options, if any. [3] Rent represents June 2022 contractual cash rent, annualized, and excludes ground lease income. Additionally, if a lease was entered into, amended or restructured subsequent to June 30, 2022, the initial or amended contractual cash rent is used. Lease Maturity Year % o f T ot al R en t (dollars in thousands) As of June 30, 2022[1] Lease Maturity Year[2] Rent[3] % of Total Rent 2024 $ 1,537 0.9 % 2027 5,342 3.0 % 2029 9,051 5.1 % 2030 11,205 6.3 % 2031 49,219 27.5 % 2032 17,708 9.9 % 2033 19,694 11.0 % 2034 40,945 22.9 % 2036 13,862 7.7 % 2038 10,401 5.7 % Total $ 178,964 100.0 % — — 0.9% — — 3.0% — 5.1% 6.3% 27.5% 9.9% 11.0% 22.9% — 7.7% — 5.7% 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038


 
Tenant Purchase Options 13 Notes: [1] Option type includes: A - Fixed base price plus a specified share on any appreciation. B - Fixed base price. C- Fixed capitalization rate on lease revenue. [2] Rent represents June 2022 contractual cash rent, annualized, and excludes ground lease income. Additionally, if a lease was entered into, amended or restructured subsequent to June 30, 2022, the initial or amended contractual cash rent is used. [3] Option window is open for six months. [4] Option window is open until the expiration of the lease term. [5] Purchase option reflects two option types. [6] Includes properties classified as held for sale at June 30, 2022. (dollars in thousands) As of June 30, 2022 Asset Type Properties Lease Expiration Next Option Open Date Option Type[1] Current Cash Rent[2] % of Total Rent[2] ALF 5[6] October 2034 1/1/2023 [3] A $ 2,287 1.16 % SNF 11 November 2030 1/1/2023 [3] C 4,944 2.50 % SNF 1 March 2029 4/1/2022 [4] B / C [5] 805 0.41 % SNF / Campus 2 October 2032 1/1/2023 [3] B 1,065 0.54 % SNF 4 November 2034 12/1/2024 [4] B 3,796 1.92 % ALF 2[6] October 2034 1/1/2026 [3] A 1,598 0.81 % 7.33 %


 
Consolidated Statements of Operations 14 (amounts in thousands, except per share data) 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


 
See "Glossary" for additional information. Reconciliation of EBITDA, FFO and FAD 15 (amounts in thousands) Quarter Ended June 30, 2021 Quarter Ended September 30, 2021 Quarter Ended December 31, 2021 Quarter Ended March 31, 2022 Quarter Ended 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 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 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


 
[1] For the periods presented, the diluted weighted average shares have been calculated using the treasury stock method. See "Glossary" for additional information. Reconciliation of EBITDA, FFO and FAD (continued) 16 (amounts in thousands, except per share data) Quarter Ended June 30, 2021 Quarter Ended September 30, 2021 Quarter Ended December 31, 2021 Quarter Ended March 31, 2022 Quarter Ended 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


 
Consolidated Balance Sheets 17 (amounts in thousands) 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


 
Notes: [1] Net Debt to Annualized Normalized Run Rate EBITDA compares net debt as of the last day of the quarter to Annualized Normalized Run Rate EBITDA for the quarter which assumes investments closed during the quarter occurred on the first day of the quarter. See “Financials & Filings – Quarterly Results” on the Investors section of our website at http://investor.caretrustreit.com for reconciliations of Normalized EBITDA and Normalized Run Rate EBITDA to the most directly comparable GAAP measure for the periods presented. [2] Net Debt to Enterprise Value compares net 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. Net Debt to Enterprise Value [2]Net Debt to Annualized Normalized Run Rate EBITDA [1] Key Debt Metrics 18 3.3 3.4 3.2 3.1 3.2 3.7 3.7 3.7 3.7 3.9 4.3 12/31/19 03/31/20 06/30/20 09/30/20 12/31/20 03/31/21 06/30/21 09/30/21 12/31/21 03/31/22 06/30/22 21.2% 28.0% 23.1% 22.0% 20.0% 22.1% 22.1% 25.1% 23.0% 26.6% 30.2% 12/31/19 03/31/20 06/30/20 09/30/20 12/31/20 03/31/21 06/30/21 09/30/21 12/31/21 03/31/22 06/30/22


 
Notes: [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. Debt Maturity Schedule Debt Summary 19 — — $205,000 — $200,000 — $400,000 202 2 202 3 202 4 202 5 202 6 202 7 202 8 Debt Maturity Year Pri nci pa l (dollars in thousands) June 30, 2022 Debt Interest Rate Maturity Date Principal % of Principal Deferred Loan Costs Net Carrying 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


 
Notes: [1] Represents average offering price per share for follow-on equity offerings. [2] As of June 30, 2022, CareTrust REIT had $476.5 million available for future issuances under the ATM Program. Follow-On Equity Offering Activity At-the-Market Offering Activity Equity Capital Transactions 20 2015 2016 2019 Q1 Q2 Q3 Q4 Total Number of Shares (000s) 16,330 — 9,775 — 6,325 16,100 6,641 Public Offering Price per Share $ 10.50 $ — $ 11.35 $ — $ 13.35 $ 12.14 [1] $ 23.35 Gross Proceeds (000s) $ 171,465 $ — $ 110,946 $ — $ 84,439 $ 195,385 $ 155,073 2016 2017 2018 2019 2020 2021 2022[2] Q1 Q2 Number of Shares (000s) 924 10,574 10,265 2,459 — 990 — — Average Price per Share $ 15.31 $ 16.43 $ 17.76 $ 19.48 $ — $ 23.74 $ — $ — Gross Proceeds (000s) $ 14,147 $ 173,760 $ 182,321 $ 47,893 $ — $ 23,505 $ — $ —


 
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 for the periods presented. See Glossary for additional information. Dividend History Normalized FFO Payout Ratio [1][2] Normalized FFO per Share [2] Normalized FFO [2] (in millions) Other Financial Highlights 21 $0.225 $0.250$0.250$0.250$0.250 $0.265 $0.265 $0.265 $0.265 $0.275 $0.275 12/31/19 03/31/20 06/30/20 09/30/20 12/31/20 03/31/21 06/30/21 09/30/21 12/31/21 03/31/22 06/30/22 66.2% 73.5% 73.5% 73.5% 69.4% 73.6% 71.6% 69.7% 67.9% 74.3% 74.3% 12/31/19 03/31/20 06/30/20 09/30/20 12/31/20 03/31/21 06/30/21 09/30/21 12/31/21 03/31/22 06/30/22 $0.34 $0.34 $0.34 $0.34 $0.36 $0.36 $0.37 $0.38 $0.39 $0.37 $0.37 12/31/19 03/31/20 06/30/20 09/30/20 12/31/20 03/31/21 06/30/21 09/30/21 12/31/21 03/31/22 06/30/22 $32.5 $32.3 $32.1 $32.5 $34.2 $34.1 $35.8 $36.7 $37.3 $35.9 $35.6 12/31/19 03/31/20 06/30/20 09/30/20 12/31/20 03/31/21 06/30/21 09/30/21 12/31/21 03/31/22 06/30/22


 
Funds from Operations (“FFO”) Net income, excluding gains and losses from dispositions of real estate or other real estate, before real estate depreciation and amortization and real estate impairment charges. CareTrust REIT calculates and reports FFO in accordance with the definition and interpretive guidelines issued by the National Association of Real Estate Investment Trusts.[2] HHS Relief Funds Provider relief funds distributed by the Department of Health and Human Services as part of the CARES act to support healthcare providers’ battle against the COVID-19 outbreak. Healthcare providers received five payments over four phases of general distributions. Does not include funds as part of Medicaid’s Federal Medical Assistance Percentage (“FMAP”), Medicare’s Sequestration “Holiday” or Paycheck Protection Program loans (“PPP”). Independent Living Facilities (“ILFs”) Also known as retirement communities or senior apartments, ILFs are not healthcare facilities. ILFs typically consist of entirely self-contained apartments, complete with 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 by the tenants, typically an individual or a couple over the age of 55. These facilities offer various services and amenities such as laundry, housekeeping, dining options/meal plans, exercise and wellness programs, transportation, social, cultural and recreational activities, and on-site security. Assisted Living Facilities (“ALFs”) Licensed healthcare facilities that provide personal care services, support and housing for those who need help with daily living activities, such as bathing, eating and dressing, yet require limited medical care. The programs and services may include transportation, social activities, exercise and fitness programs, beauty or barber shop access, hobby and craft activities, community excursions, meals in a dining room setting and other activities sought by residents. These facilities are often in apartment-like buildings with private residences ranging from single rooms to large apartments. Certain ALFs may offer higher levels of personal assistance for residents requiring memory care as a result of Alzheimer’s disease or other forms of dementia. Levels of personal assistance are based in part on local regulations.  EBITDA Net income before interest expense, income tax, depreciation and amortization and amortization of stock-based compensation.[1] EBITDAR Net income before interest expense, income tax, depreciation, amortization and cash rent, after applying a standardized management fee (5% of facility operating revenues). EBITDAR Coverage Aggregate EBITDAR produced by all facilities under a master lease (or other grouping) for the trailing twelve-month period ended March 31, 2022 divided by the base rent payable to CareTrust REIT under such master lease (or other grouping) for the same period; provided that if the master lease has been amended to change the base rent during or since such period, then the aggregate EBITDAR for such period is divided by the annualized monthly base rent currently in effect. EBITDAR reflects the application of a standard 5% management fee. In addition, we may exclude from coverage disclosures those facilities which are (i) classified as Held for Sale, (ii) temporarily on Special Focus Facility (SFF) status, (iii) undergoing significant renovations that necessarily result in a material reduction in occupancy, or (iv) have been acquired for or recently transferred to new operators for turnaround and are pre-stabilized. EBITDARM Earnings before interest expense, income tax, depreciation, amortization, cash rent, and a standardized management fee (5% of facility operating revenues). EBITDARM Coverage Aggregate EBITDARM produced by all facilities under a master lease (or other grouping) for the trailing twelve- month period ended March 31, 2022 divided by the base rent payable to CareTrust REIT under such master lease (or other grouping) for the same period; provided that if the master lease has been amended to change the base rent during or since such period, then the aggregate EBITDARM for such period is divided by the annualized monthly base rent currently in effect. In addition, we may exclude from coverage disclosures those facilities which are (i) classified as Held for Sale, (ii) temporarily on Special Focus Facility (SFF) status, (iii) undergoing significant renovations that necessarily result in a material reduction in occupancy, or (iv) have been acquired for or recently transferred to new operators for turnaround and are pre-stabilized. Enterprise Value Share price multiplied by the number of outstanding shares plus total outstanding debt minus cash, each as of a specified date. Funds Available for Distribution (“FAD”) FFO, excluding straight-line rental income adjustments, amortization of deferred financing fees and stock-based compensation expense.[2] Glossary 22


 
Multi-Service Campus Facilities that include a combination of Skilled Nursing beds and Seniors Housing units, including Continuing Care Retirement Communities. Normalized EBITDA EBITDA, adjusted for certain income and expense items the Company does not believe are indicative of its ongoing results, such as real estate impairment charges, provision for loan losses, provision for doubtful accounts and lease restructuring, recovery of previously reversed rent, lease termination revenue, property operating expenses, non- routine transaction costs, loss on extinguishment of debt and gains or losses from dispositions of real estate or other real estate.[1] Normalized FAD FAD, adjusted for certain income and expense items the Company does not believe are indicative of its ongoing results, such as provision for loan losses, provision for doubtful accounts and lease restructuring, effect of the senior unsecured notes payable redemption, recovery of previously reversed rent, lease termination revenue, non- routine transaction costs, loss on extinguishment of debt and property operating expenses.[2] Normalized FFO FFO, adjusted for certain income and expense items the Company does not believe are indicative of its ongoing results, such as provision for loan losses, provision for doubtful accounts and lease restructuring, effect of the senior unsecured notes payable redemption, recovery of previously reversed rent, lease termination revenue, accelerated amortization of stock-based compensation, non-routine transaction costs, loss on extinguishment of debt and property operating expenses.[2] 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. Notes: [1] 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. [2] CareTrust REIT believes FAD, FFO, Normalized FAD, and Normalized FFO (and their related per-share amounts) are important non-GAAP supplemental measures of its operating performance. 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, 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 FAD and Normalized FFO can facilitate meaningful comparisons of operating performance between periods and between other companies. However, FAD, FFO, Normalized FAD, and Normalized FFO (and their related per-share amounts) do not represent cash flows from operations or net income attributable to shareholders as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. Glossary 23