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

FORM 8-K
 
 
 
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 13, 2019
 
 
 
 
 
CareTrust REIT, Inc.
(Exact name of registrant as specified in its charter)  
 
 
 
 
 
 
 
 
Maryland
001-36181
46-3999490
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)

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

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

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






Item 2.02
Results of Operations and Financial Condition.

On February 13, 2019, CareTrust REIT, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and full fiscal year ended December 31, 2018. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

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

Item 7.01
Regulation FD Disclosure

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

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

Item 9.01. Financial Statements and Exhibits.

 
(d)
Exhibits.
 
 
 
 
Exhibits
  
Description
 
 
  
 
 
 







SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
Date: February 13, 2019
 
CARETRUST REIT, INC.
 
 
 
 
 
 
By:
/s/ William M. Wagner
 
 
 
 
William M. Wagner
 
 
 
Chief Financial Officer, Treasurer and Secretary



Exhibit
Exhibit 99.1
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12704610&doc=28

CareTrust REIT Announces Fourth Quarter and Fiscal 2018 Operating Results

Conference Call Scheduled for Thursday, February 14, 2019 at 1:00 pm ET
SAN CLEMENTE, Calif., February 13, 2019 (GLOBE NEWSWIRE) -- CareTrust REIT, Inc. (Nasdaq:CTRE) today reported operating results for the quarter and year ended December 31, 2018, as well as other recent events.
For the quarter, CareTrust REIT reported:
Net income of $15.5 million and net income per diluted weighted-average common share of $0.18;
Normalized FFO of $27.1 million, a quarter-over-quarter increase of 14%, and normalized FFO per diluted weighted-average common share of $0.32, a quarter-over-quarter increase of 3% over Q4 2017;
Normalized FAD of $27.9 million, an increase of 14%, and normalized FAD per diluted weighted-average common share of $0.33, a quarter-over-quarter increase of 3% over Q4 2017;
A net debt-to-normalized EBITDA ratio of 3.3x and a debt-to-enterprise value of 24%, each as of quarter-end.

Continuing Progress
Commenting on the Company’s progress in the quarter, Greg Stapley, CareTrust's Chairman and Chief Executive Officer, said, “After a slow start to 2018, we were pleased to finish the year with several solid acquisitions and our most robust pipeline in a long time.” He reported that, in the quarter and since, the Company acquired $100.3 million in new assets, added another impressive new operator to its expanding tenant pool and match-funded its recent and anticipated near-term growth in part with $97.9 million in gross proceeds from its at-the-market equity program.
He noted that the Company’s disciplined approach to growth had positioned the Company well to execute on its opportunistic growth model going into 2019. “With leverage at an all-time low and the equity markets as accommodative as we’ve seen them, we have lots of runway to intelligently manage our growth and our balance sheet through 2019, and beyond,” he said. “However, we still have to dig carefully through the opportunities to find reasonably-priced assets and, above all, the right operators to shepherd them, and we remain firmly committed to that discipline,” he concluded.
Financial Results for Quarter Ended and Year Ended December 31, 2018
Chief Financial Officer Bill Wagner reported that, for the fourth quarter, CareTrust generated net income of $15.5 million, or $0.18 per diluted weighted-average common share, normalized FFO of $27.1 million, or $0.32 per diluted weighted-average common share, and normalized FAD of $27.9 million, or $0.33 per diluted weighted-average common share. “We are pleased to be delivering a 14% quarter-over-quarter increase in normalized FAD, posting a 3% increase in both FFO and FAD per share while simultaneously issuing equity to significantly reduce our leverage and prepare for the future,” said Mr. Wagner.
For the full year 2018, Mr. Wagner reported that CareTrust generated net income of $57.9 million, or $0.72 per diluted weighted-average common share, normalized FFO of $101.5 million or $1.28 per diluted weighted-average common share and normalized FAD of $105.0 million or $1.32 per diluted weighted-average common share.
Liquidity
Discussing the Company’s balance sheet, Mr. Wagner reported that, as of year end, CareTrust’s net debt-to-normalized EBITDA ratio was approximately 3.3x and its debt-to-enterprise value ratio was approximately 24%. He also disclosed that, as of today, the Company’s net debt-to-normalized EBITDA ratio stands at 3.3x. “Our current debt levels are well under management’s target leverage range of 4.0x to 5.0x net debt-to-normalized EBITDA, allowing us substantial optionality with respect to how we choose to fund significant growth going forward,” he said. He estimated that the Company could conservatively fund approximately $400.0 million in new growth without looking to the equity markets and without exceeding the midpoint of its target leverage range, although he was careful not to say that the Company would do so. “The equity markets continue to offer capital to us at attractive pricing, but it’s just good to know that we have plenty of liquidity without going there if there’s ever a disruption on the equity side,” he added.



He reported that the Company used a combination of retained FFO and proceeds of equity sales under its at-the-market program to reduce the outstanding balance under CareTrust’s previous $400.0 million revolving credit line to approximately $95.0 million at year end. He also noted that CareTrust continues to have no property-level debt.
He also reported that on February 8, 2019, CareTrust expanded its borrowing capacity and extended the maturity date under its unsecured revolving credit facility from $400.0 million to $600.0 million, and simultaneously entered into a $200.0 million, seven-year, non-amortizing unsecured term loan. The term loan proceeds were used to pay off CareTrust's existing $100.0 million unsecured term loan and the then-outstanding $85.0 million balance on its unsecured revolving credit facility. The remaining term loan proceeds went to cash on hand, where it was used in large part to fund the February 11, 2019 Covenant Care transaction.
The amended unsecured revolver and unsecured term loan have grid-based pricing of LIBOR plus 125 bps - 190 bps and LIBOR plus 150 bps - 220 bps, respectively. Additionally, the unsecured revolver carries an accordion feature which allows for up to $500.0 million of additional borrowing capacity when exercised, subject to customary terms and conditions. Mr. Wagner noted that the Company still has approximately $22.0 million in cash on hand and, taking into account existing extension rights, no debt maturing before 2024.
Mr. Wagner also reported that CareTrust issued approximately 2.5 million shares of common stock through the at-the-market program during the quarter at an average price of $19.98 per share, for $50.0 million in gross proceeds. He also reported that the Company has issued another approximately 2.5 million shares since January 1, 2019 at an average price of $19.48 per share, for $47.9 million in additional gross proceeds. “Our ATM program remains a significant instrument in the Company’s toolbox, as it significantly enhances our ability to match-fund the smaller acquisitions that have been our bread and butter,” he said. He added that the program, originally established in May 2017 with a $300.0 million authorization, still has approximately $5.8 million in authorization remaining at present.
2019 Guidance Issued
Mr. Wagner provided CareTrust REIT's 2019 earnings guidance, projecting on a per-diluted weighted-average common share basis, net income of approximately $0.78 to $0.80, normalized FFO of approximately $1.30 to $1.32, and normalized FAD of approximately $1.35 to $1.37. He noted that the 2019 guidance is based on a diluted weighted-average common share count of 88.6 million shares and assumes no new transactions beyond those completed to date, no new debt incurrences or new equity issuances, and 2.0% CPI-based rent escalators under CareTrust's long-term net leases.
Dividend Declared
During the quarter, CareTrust paid a quarterly dividend of $0.205 per common share, bringing the total dividend payout for 2018 to $0.82 per common share. “On an annualized basis, our quarterly dividend represents a payout ratio of approximately 64% based on the fourth quarter 2018 normalized FFO, and 62% on normalized FAD,” said Mr. Wagner. “At this level, our dividend remains among the best-protected of all our industry peers, while simultaneously providing additional growth capital for reinvestment and a solid overall return to our shareholders,” he added.
Portfolio Growth in the Quarter and Since
CareTrust invested $116.4 million in new capital during the year, including approximately $112.0 million in new asset acquisitions and approximately $4.4 million in rental-producing capital expenditures provided to tenants in the existing portfolio. “We are pleased that our operators are keeping the assets in good order, and renovating and renewing them periodically through meaningful capital investments,” said Eric Gillis, CareTrust’s Director of Asset Management. “These investments are illustrative of the belief our operators have in the strength of their operations and their long-term prospects for success,” he added.
During the fourth quarter, CareTrust completed the second leg of a two-property transaction, acquiring The Meadows on University, a 110-bed skilled nursing facility in Fargo, North Dakota. The total investment was approximately $14.4 million, inclusive of transaction costs. CareTrust added the properties to its existing master lease with Salt Lake City-based Eduro Healthcare, LLC, producing an annual cash rent increase of approximately $1.294 million. CareTrust funded the acquisition using cash on hand.
CareTrust also acquired Madison Park Healthcare, a 55-bed/unit skilled nursing and assisted living campus in Huntington, West Virginia, in a sale-leaseback transaction. The transaction allowed the operator, Tennessee-based Providence Health Group, Inc., to recapitalize the facility and acquire the portion of the operation it did not own. The total investment was approximately $7.2 million, inclusive of transaction costs, and the new master lease carries an annual cash rent of approximately $676,000. CareTrust funded the acquisition using cash on hand and borrowings under its revolving credit facility.
CareTrust also acquired Metron of Forest Hills, a 58-bed/unit skilled nursing facility in Forest Hills, Michigan, in a sale-leaseback with existing tenant Metron Integrated Health Systems. The total investment was approximately $4.4 million, inclusive of transaction costs, and producing initial annual cash rent of approximately $394,000. CareTrust funded the acquisition using cash on hand.
Finally, during the quarter CareTrust acquired a 134-operating bed skilled nursing facility in Parker, Colorado, and leased it to Eduro Healthcare, LLC. The total investment was approximately $19.6 million, inclusive of transaction costs, and the annual cash rent due under the amended and restated Eduro master lease increased by approximately $1.75 million. The acquisition was funded using cash on hand.



CareTrust has also completed two transactions since quarter end. In the first, CareTrust acquired Oakview Healthcare, a 128-bed/unit skilled nursing and assisted living campus in Mt. Carmel, Illinois. The total investment was approximately $9.0 million, inclusive of estimated transaction costs. In conjunction with the transaction, CareTrust and existing tenant WLC Management Firm, LLC entered into an amended and restated master lease as of February 1, 2019, with CPI-based annual rent escalators and a new 15-year term plus two five-year renewal options. The annual cash rent due under the WLC master lease increased by approximately $853,000. CareTrust funded the acquisition using cash on hand.
In the second, CareTrust acquired a 503-bed, four-property skilled nursing portfolio in California in a sale-leaseback transaction with subsidiaries of existing tenant Covenant Care, Inc. As part of the transaction, CareTrust and Covenant Care entered into a new master lease, which combined the four newly-acquired facilities with four Covenant Care facilities already in CareTrust’s existing portfolio. Mark Lamb, CareTrust’s Chief Investment Officer, noted that the transaction not only brought four very good properties into the CareTrust portfolio, but also allowed CareTrust to consolidate three existing leases with Covenant Care into a single, unified long-term master lease for all of CareTrust’s Covenant Care-operated assets. The total investment for the sale-leaseback was approximately $43.9 million, inclusive of estimated transaction costs, with approximately $4.0 million in initial annual cash rent. The new master lease carries an initial term of fifteen years, with two five-year renewal options and CPI-based rent escalators, while the three standalone leases that were consolidated and eliminated had remaining lease terms of less than five years. In conjunction with the sale-leaseback, CareTrust also provided Covenant Care with a short-term $11.4 million secured term loan at an interest rate of 9.0%. The loan is secured by a first mortgage on a five-property, 440-bed skilled nursing portfolio owned and operated by Covenant Care subsidiaries in Illinois. The sale-leaseback and secured term loan were funded using cash on hand.
Conference Call

A conference call will be held on Thursday, February 14, 2019, at 1:00 p.m. Eastern Time (10:00 a.m. Pacific Time), during which CareTrust’s management will discuss fourth quarter and full year 2018 results, recent developments and other matters. The dial-in number for this call is (855) 232-8954 (U.S.) or (844) 220-4972 (International). The conference ID number is 1598754. To listen to the call online, or to view any financial or other statistical information required by SEC Regulation G, please visit the Investors section of the CareTrust REIT website at http://investor.caretrustreit.com. The call will be recorded, and will be available for replay via the website for 30 days following the call.

About CareTrustTM 

CareTrust REIT, Inc. is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition and leasing of seniors housing and healthcare-related properties. With 199 net-leased healthcare properties and three operated seniors housing properties in 27 states, CareTrust is pursuing opportunities across the nation to acquire properties that will be leased to a diverse group of local, regional and national seniors housing operators, healthcare services providers, and other healthcare-related businesses. More information about CareTrust is available at www.caretrustreit.com.



Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
This press release contains, and the related conference call will include, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical statements of fact and statements regarding the Company’s intent, belief or expectations, including, but not limited to, statements regarding future financial and financing positions, business and acquisition strategies, growth prospects, operating and financial performance, expectations regarding the making of distributions, payment of dividends, compliance with and changes in governmental regulations, and the performance of the Company’s tenants and operators and their respective facilities.
Words such as “anticipate,” “believe,” “could,” “expect,” “estimate,” “intend,” “may,” “plan,” “seek,” “should,” “will,” “would,” and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements, though not all forward-looking statements contain these identifying words. The Company’s forward-looking statements are based on management’s current expectations and beliefs, and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although the Company believes that the assumptions underlying these forward-looking statements are reasonable, they are not guarantees and the Company can give no assurance that its expectations will be attained. Factors which could have a material adverse effect on the Company’s operations and future prospects or which could cause actual results to differ materially from expectations include, but are not limited to: (i) the ability and willingness of Company tenants to meet and/or perform their obligations under the triple-net leases the Company has entered into with them and the ability and willingness of The Ensign Group, Inc. (“Ensign”) to meet and/or perform its obligations under the contractual arrangements that it entered into with the Company in connection with the spin-off from Ensign, including its triple-net long-term leases with the Company, and any of its obligations to indemnify, defend and hold the Company harmless from and against various claims, litigation and liabilities; (ii) the ability and willingness of the Company’s tenants to comply with laws, rules and regulations in the operation of the properties the Company leases to them; (iii) the ability and willingness of the Company’s tenants, including Ensign, to renew their leases with the Company upon expiration and the ability to reposition Company properties on the same or better terms in the event of nonrenewal or in the event the Company replaces an existing tenant, and obligations, including indemnification obligations, that the Company may incur in connection with the replacement of an existing tenant; (iv) the availability of and the ability to identify suitable acquisition opportunities and the ability to acquire and lease the respective properties on favorable terms; (v) the ability to generate sufficient cash flows to service the Company’s outstanding indebtedness; (vi) access to debt and equity capital markets; (vii) fluctuating interest rates; (viii) the ability to retain key management personnel; (ix) the ability to maintain the Company’s status as a real estate investment trust (“REIT”); (x) changes in the U.S. tax laws and other state, federal or local laws, whether or not specific to REITs; (xi) other risks inherent in the real estate business, including potential liability relating to environmental matters and illiquidity of real estate investments; and (xii) any additional factors identified in the Company’s filings with the Securities and Exchange Commission (“SEC”), including those in the Company‘s Annual Report on Form 10-K for the year ended December 31, 2018 under the heading entitled “Risk Factors,” as such risk factors may be amended, supplemented or superseded from time to time by other reports the Company files with the SEC.
Information in this press release or the related conference call is provided as of December 31, 2018, unless specifically stated otherwise. The Company expressly disclaims any obligation to update or revise any information in this press release or the related conference call (and replays thereof), including forward-looking statements, whether to reflect any change in the Company’s expectations, any change in events, conditions or circumstances, or otherwise.
As used in this press release or the related conference call, unless the context requires otherwise, references to “CTRE,” "CareTrust," “CareTrust REIT” or the “Company” refer to CareTrust REIT, Inc. and its consolidated subsidiaries. GAAP refers to generally accepted accounting principles in the United States of America.
Contact:
CareTrust REIT, Inc.
(949) 542-3130
ir@caretrustreit.com






CARETRUST REIT, INC.
CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share data)
(unaudited)
 
 
For the Three Months Ended December 31,
 
For the Twelve Months Ended December 31,
 
 
2018
 
2017
 
2018
 
2017
Revenues:
 
 
 
 
 
 
 
 
Rental income
$
36,217

 
$
32,379

 
$
140,073

 
$
117,633

 
Tenant reimbursements
2,950

 
3,001

 
11,924

 
10,254

 
Independent living facilities
864

 
821

 
3,379

 
3,228

 
Interest and other income
330

 
396

 
1,565

 
1,867

 
Total revenues
40,361

 
36,597

 
156,941

 
132,982

Expenses:
 
 
 
 
 
 
 
 
Depreciation and amortization
11,539

 
11,003

 
45,766

 
39,159

 
Interest expense
6,678

 
6,506

 
27,860

 
24,196

 
Loss on the extinguishment of debt

 

 

 
11,883

 
Property taxes
2,950

 
3,001

 
11,924

 
10,254

 
Independent living facilities
738

 
730

 
2,964

 
2,733

 
Impairment of real estate investment

 

 

 
890

 
Reserve for advances and deferred rent

 
10,414

 

 
10,414

 
General and administrative
2,917

 
2,691

 
12,555

 
11,117

 
Total expenses
24,822

 
34,345

 
101,069

 
110,646

Other income:
 
 
 
 
 
 
 
 
Gain on sale of real estate

 

 
2,051

 

 
Gain on disposition of other real estate investment

 

 

 
3,538

Net income
$
15,539

 
$
2,252

 
$
57,923

 
$
25,874

 
 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
 
Basic
$
0.18

 
$
0.03

 
$
0.73

 
$
0.35

 
Diluted
$
0.18

 
$
0.03

 
$
0.72

 
$
0.35

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
 
Basic
84,059

 
75,476

 
79,386

 
72,647

 
Diluted
84,084

 
75,476

 
79,392

 
72,647

 
 
 
 
 
 
 
 
 
Dividends declared per common share
$
0.205

 
$
0.185

 
$
0.82

 
$
0.74







CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
 (unaudited)
 
 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
 
 
Net income
 
$
15,539

 
$
2,252

 
$
57,923

 
$
25,874

 
Depreciation and amortization
 
11,539

 
11,003

 
45,766

 
39,159

 
Interest expense
 
6,678

 
6,506

 
27,860

 
24,196

 
Amortization of stock-based compensation
 
1,032

 
624

 
3,848

 
2,416

EBITDA
 
34,788

 
20,385

 
135,397

 
91,645

 
Loss on the extinguishment of debt
 

 

 

 
11,883

 
Deferred preferred return
 

 

 

 
(544
)
 
Impairment of real estate investment
 

 

 

 
890

 
Reserve for advances and deferred rent
 

 
10,414

 

 
10,414

 
Gain on sale of real estate
 

 

 
(2,051
)
 

 
Gain on disposition of other real estate investment
 

 

 

 
(3,538
)
Normalized EBITDA
 
$
34,788

 
$
30,799

 
$
133,346

 
$
110,750

 
 
 
 
 
 
 
 
 
 
Net income
 
$
15,539

 
$
2,252

 
$
57,923

 
$
25,874

 
Real estate related depreciation and amortization
 
11,520

 
10,973

 
45,664

 
39,049

 
Impairment of real estate investment
 

 

 

 
890

 
Gain on sale of real estate
 

 

 
(2,051
)
 

 
Gain on disposition of other real estate investment
 

 

 

 
(3,538
)
Funds from Operations (FFO)
 
27,059

 
13,225

 
101,536

 
62,275

 
Reserve for advances and deferred rent
 

 
10,414

 

 
10,414

 
Deferred preferred return
 

 

 

 
(544
)
 
Effect of the senior unsecured notes payable redemption
 

 

 

 
12,475

Normalized FFO
 
$
27,059

 
$
23,639

 
$
101,536

 
$
84,620







CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES (continued)
 (in thousands, except per share data)
 (unaudited)
 
 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
 
 
Net income
 
$
15,539

 
$
2,252

 
$
57,923

 
$
25,874

 
Real estate related depreciation and amortization
 
11,520

 
10,973

 
45,664

 
39,049

 
Amortization of deferred financing fees
 
486

 
485

 
1,938

 
2,059

 
Amortization of stock-based compensation
 
1,032

 
624

 
3,848

 
2,416

 
Straight-line rental income
 
(702
)
 
(227
)
 
(2,333
)
 
(344
)
 
Impairment of real estate investment
 

 

 

 
890

 
Gain on sale of real estate
 

 

 
(2,051
)
 

 
Gain on disposition of other real estate investment
 

 

 

 
(3,538
)
Funds Available for Distribution (FAD)
 
27,875

 
14,107

 
104,989

 
66,406

 
Reserve for advances and deferred rent
 

 
10,414

 

 
10,414

 
Deferred preferred return
 

 

 

 
(544
)
 
Effect of the senior unsecured notes payable redemption
 

 

 

 
12,475

Normalized FAD
 
$
27,875

 
$
24,521

 
$
104,989

 
$
88,751

 
 
 
 
 
 
 
 
 
 
FFO per share
 
$
0.32

 
$
0.17

 
$
1.28

 
$
0.85

Normalized FFO per share
 
$
0.32

 
$
0.31

 
$
1.28

 
$
1.16

 
 
 
 
 
 
 
 
 
 
FAD per share
 
$
0.33

 
$
0.19

 
$
1.32

 
$
0.91

Normalized FAD per share
 
$
0.33

 
$
0.32

 
$
1.32

 
$
1.22

 
 
 
 
 
 
 
 
 
 
 
Diluted weighted average shares outstanding [1]
 
84,324

 
75,692

 
79,582

 
72,853

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








CARETRUST REIT, INC.
CONSOLIDATED INCOME STATEMENTS - 5 QUARTER TREND
(in thousands, except per share data)
(unaudited)
 
Quarter
Quarter
Quarter
Quarter
Quarter
 
Ended
Ended
Ended
Ended
Ended
 
December 31, 2017
March 31, 2018
June 30, 2018
September 30, 2018
December 31, 2018
Revenues:
 
 
 
 
 
Rental income
$
32,379

$
33,816

$
34,708

$
35,332

$
36,217

Tenant reimbursements
3,001

2,968

3,016

2,990

2,950

Independent living facilities
821

799

845

871

864

Interest and other income
396

518

400

317

330

Total revenues
36,597

38,101

38,969

39,510

40,361

Expenses:
 
 
 
 
 
Depreciation and amortization
11,003

11,577

11,299

11,351

11,539

Interest expense
6,506

7,092

7,285

6,805

6,678

Property taxes
3,001

2,968

3,016

2,990

2,950

Independent living facilities
730

716

744

766

738

Reserve for advances and deferred rent
10,414





General and administrative
2,691

3,192

3,358

3,088

2,917

Total expenses
34,345

25,545

25,702

25,000

24,822

Other income:
 
 
 
 
 
Gain on sale of real estate

2,051




Net income
$
2,252

$
14,607

$
13,267

$
14,510

$
15,539

 
 
 
 
 
 
Diluted earnings per share
$
0.03

$
0.19

$
0.17

$
0.18

$
0.18

 
 
 
 
 
 
Diluted weighted average shares outstanding
75,476

75,504

76,374

81,490

84,084






CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES - 5 QUARTER TREND
(in thousands, except per share data)
 (unaudited)
 
Quarter
Quarter
Quarter
Quarter
Quarter
 
Ended
Ended
Ended
Ended
Ended
 
December 31, 2017
March 31, 2018
June 30, 2018
September 30, 2018
December 31, 2018
 
 
 
 
 
 
Net income
$
2,252

$
14,607

$
13,267

$
14,510

$
15,539

Depreciation and amortization
11,003

11,577

11,299

11,351

11,539

Interest expense
6,506

7,092

7,285

6,805

6,678

Amortization of stock-based compensation
624

904

924

988

1,032

EBITDA
20,385

34,180

32,775

33,654

34,788

Reserve for advances and deferred rent
10,414





Gain on sale of real estate

(2,051
)



Normalized EBITDA
$
30,799

$
32,129

$
32,775

$
33,654

$
34,788

 
 
 
 
 
 
Net income
$
2,252

$
14,607

$
13,267

$
14,510

$
15,539

Real estate related depreciation and amortization
10,973

11,549

11,265

11,330

11,520

Gain on sale of real estate

(2,051
)



Funds from Operations (FFO)
13,225

24,105

24,532

25,840

27,059

Reserve for advances and deferred rent
10,414





Normalized FFO
$
23,639

$
24,105

$
24,532

$
25,840

$
27,059






CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES - 5 QUARTER TREND (continued)
 (in thousands, except per share data)
 (unaudited)
 
Quarter
Quarter
Quarter
Quarter
Quarter
 
Ended
Ended
Ended
Ended
Ended
 
December 31, 2017
March 31, 2018
June 30, 2018
September 30, 2018
December 31, 2018
 
 
 
 
 
 
Net income
$
2,252

$
14,607

$
13,267

$
14,510

$
15,539

Real estate related depreciation and amortization
10,973

11,549

11,265

11,330

11,520

Amortization of deferred financing fees
485

484

484

484

486

Amortization of stock-based compensation
624

904

924

988

1,032

Straight-line rental income
(227
)
(591
)
(342
)
(698
)
(702
)
Gain on sale of real estate

(2,051
)



Funds Available for Distribution (FAD)
14,107

24,902

25,598

26,614

27,875

Reserve for advances and deferred rent
10,414





Normalized FAD
$
24,521

$
24,902

$
25,598

$
26,614

$
27,875

 
 
 
 
 
 
FFO per share
$
0.17

$
0.32

$
0.32

$
0.32

$
0.32

Normalized FFO per share
$
0.31

$
0.32

$
0.32

$
0.32

$
0.32

 
 
 
 
 
 
FAD per share
$
0.19

$
0.33

$
0.33

$
0.33

$
0.33

Normalized FAD per share
$
0.32

$
0.33

$
0.33

$
0.33

$
0.33

 
 
 
 
 
 
Diluted weighted average shares outstanding [1]
75,692

75,657

76,545

81,687

84,324

 
 
 
 
 
 
 [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)
(audited)
 
 
 
 
December 31, 2018
 
December 31, 2017
Assets:
 
 
 
 
Real estate investments, net
$
1,216,237

 
$
1,152,261

Other real estate investments, net
18,045

 
17,949

Cash and cash equivalents
36,792

 
6,909

Accounts and other receivables, net
11,387

 
5,254

Prepaid expenses and other assets
8,668

 
895

Deferred financing costs, net
633

 
1,718

 
 
 
Total assets
$
1,291,762

 
$
1,184,986

 
 
 
 
 
 
 
Liabilities and Equity:
 
 
 
Senior unsecured notes payable, net
$
295,153

 
$
294,395

Senior unsecured term loan, net
99,612

 
99,517

Unsecured revolving credit facility
95,000

 
165,000

Accounts payable and accrued liabilities
15,967

 
17,413

Dividends payable
17,783

 
14,044

 
 
 
Total liabilities
523,515

 
590,369

 
 
 
 
 
 
 
Equity:
 
 
 
 
Common stock
859

 
755

Additional paid-in capital
965,578

 
783,237

Cumulative distributions in excess of earnings
(198,190
)
 
(189,375
)
 
 
 
Total equity
768,247

 
594,617

 
 
 
Total liabilities and equity
$
1,291,762

 
$
1,184,986








CARETRUST REIT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(audited)
 
Year Ended December 31,
 
2018
 
2017
Cash flows from operating activities:
 
 
 
Net income
$
57,923

 
$
25,874

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization (including a below-market ground lease)
45,783

 
39,176

Amortization of deferred financing costs
1,938

 
2,100

Loss on the extinguishment of debt

 
11,883

Amortization of stock-based compensation
3,848

 
2,416

Straight-line rental income
(2,333
)
 
(344
)
Noncash interest income
(238
)
 
(686
)
Gain on sale of real estate
(2,051
)
 

Interest income distribution from other real estate investment

 
1,500

Reserve for advances and deferred rent

 
10,414

Impairment of real estate investment

 
890

Change in operating assets and liabilities:
 
 
 
Accounts and other receivables, net
(3,800
)
 
(9,428
)
Prepaid expenses and other assets
(270
)
 
(273
)
Accounts payable and accrued liabilities
(1,443
)
 
5,278

Net cash provided by operating activities
99,357

 
88,800

Cash flows from investing activities:
 
 
 
Acquisitions of real estate
(111,640
)
 
(296,517
)
Improvements to real estate
(7,230
)
 
(748
)
Purchases of equipment, furniture and fixtures
(1,782
)
 
(403
)
Investment in real estate mortgage and other loans receivable
(5,648
)
 
(12,416
)
Principal payments received on real estate mortgage and other loans receivable
3,227

 
25

Sale of other real estate investment

 
7,500

Escrow deposits for acquisitions of real estate
(5,000
)
 

Net proceeds from the sale of real estate
13,004

 

Net cash used in investing activities
(115,069
)
 
(302,559
)
Cash flows from financing activities:
 
 
 
Proceeds from the issuance of common stock, net
179,882

 
170,323

Proceeds from the issuance of senior unsecured notes payable

 
300,000

Borrowings under unsecured revolving credit facility
65,000

 
238,000

Payments on senior unsecured notes payable

 
(267,639
)
Payments on unsecured revolving credit facility
(135,000
)
 
(168,000
)
Payments of deferred financing costs

 
(6,063
)
Net-settle adjustment on restricted stock
(1,288
)
 
(866
)
Dividends paid on common stock
(62,999
)
 
(52,587
)
Net cash provided by financing activities
45,595

 
213,168

Net increase (decrease) in cash and cash equivalents
29,883

 
(591
)
Cash and cash equivalents, beginning of period
6,909

 
7,500

Cash and cash equivalents, end of period
$
36,792

 
$
6,909







CARETRUST REIT, INC.
DEBT SUMMARY
(dollars in thousands)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
Interest
 
Maturity
 
 
 
% of
 
Deferred
 
Net Carrying
Debt
Rate
 
Date
 
Principal
 
Principal
 
Loan Costs
 
Value
 
 
 
 
 
 
 
 
 
 
 
 
Fixed Rate Debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior unsecured notes payable
5.250
%
 
2025
 
$
300,000

 
60.6
%
 
$
(4,847
)
 
$
295,153

 
 
 
 
 
 
 
 
 
 
 
 
Floating Rate Debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior unsecured term loan[5]
4.472
%
[1]
2023
 
100,000

 
20.2
%
 
(388
)
 
99,612

 
 
 
 
 
 
 
 
 
 
 
 
Unsecured revolving credit facility[5]
4.272
%
[2]
2020
[3]
95,000

 
19.2
%
 

[4]
95,000

 
4.375
%
 
 
 
195,000

 
39.4
%
 
(388
)
 
194,612

 
 
 
 
 
 
 
 
 
 
 
 
Total Debt
4.905
%
 
 
 
$
495,000

 
100.0
%
 
$
(5,235
)
 
$
489,765

 
 
 
 
 
 
 
 
 
 
 
 
[1] Funds can be borrowed at applicable LIBOR plus 1.95% to 2.60% or at the Base Rate (as defined) plus 0.95% to 1.6%.
[2] Funds can be borrowed at applicable LIBOR plus 1.75% to 2.40% or the Base Rate (as defined) plus 0.75% to 1.4%.
[3] Maturity date assumes exercise of two 6-month extension options.
[4] Deferred financing fees are not shown net for the unsecured revolving credit facility and are included in assets on the balance sheet.
[5] On February 8, 2019, CareTrust REIT entered into an amended and restated credit and guaranty agreement, which now provides for an unsecured revolving credit facility with revolving commitments in an aggregate principal amount of $600.0 million and an unsecured term loan credit facility in an aggregate principal amount of $200.0 million. The proceeds of the term loan have been used, in part, to repay in full all outstanding borrowings under the term loan and revolving credit facility under the prior credit agreement. As of February 13, 2018, there were no outstanding borrowings under the revolving credit facility.








CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES
 (shares in thousands)
 (unaudited)
 
 
 
 
 
 
 
 
 
 
 2019 Guidance
 
 
 
 
 
 
 
 
 
 
 
 
Low
 
High
Net income
$
0.78

 
$
0.80

 
Real estate related depreciation and amortization
0.52

 
0.52

Funds from Operations (FFO)
1.30

 
1.32

Normalized FFO
$
1.30

 
$
1.32

 
 
 
 
 
Net income
$
0.78

 
$
0.80

 
Real estate related depreciation and amortization
0.52

 
0.52

 
Amortization of deferred financing fees
0.02

 
0.02

 
Amortization of stock-based compensation
0.05

 
0.05

 
Straight-line rental income
(0.02
)
 
(0.02
)
Funds Available for Distribution (FAD)
1.35

 
1.37

Normalized FAD
$
1.35

 
$
1.37

Weighted average shares outstanding:
 
 
 
 
Diluted
88,593

 
88,593










Non-GAAP Financial Measures
EBITDA represents net income before interest expense (including amortization of deferred financing costs), amortization of stock-based compensation, and depreciation and amortization. Normalized EBITDA represents EBITDA as further adjusted to eliminate the impact of certain items that the Company does not consider indicative of core operating performance, such as real estate impairment charges, certain deferred preferred return, losses on the extinguishment of debt, reserve for advances and deferred rent and gains or losses from dispositions of real estate or other real estate investments. EBITDA and Normalized EBITDA do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. EBITDA and Normalized EBITDA do not purport to be indicative of cash available to fund future cash requirements, including the Company’s ability to fund capital expenditures or make payments on its indebtedness. Further, the Company’s computation of EBITDA and Normalized EBITDA may not be comparable to EBITDA and Normalized EBITDA reported by other REITs.
Funds from Operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), and Funds Available for Distribution (“FAD”) are important non-GAAP supplemental measures of operating performance for a REIT. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation except on land, such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a REIT that uses historical cost accounting for depreciation could be less informative. Thus, NAREIT created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP.
FFO is defined by NAREIT as net income computed in accordance with GAAP, excluding gains or losses from dispositions of real estate or other real estate investments, real estate depreciation and amortization and real estate impairment charges, and adjustments for unconsolidated partnerships and joint ventures. The Company computes FFO in accordance with NAREIT’s definition.
FAD is defined as FFO excluding 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 losses on the extinguishment of debt, certain deferred preferred returns, the effect of the senior unsecured notes payable redemption and other unanticipated charges. By excluding these items, investors, analysts and our management can compare Normalized FFO and Normalized FAD between periods more consistently.
While FFO, Normalized FFO, FAD and Normalized FAD are relevant and widely-used measures of operating performance among REITs, they do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. FFO, Normalized FFO, FAD and Normalized FAD do not purport to be indicative of cash available to fund future cash requirements.
Further, the Company’s computation of FFO, Normalized FFO, FAD and Normalized FAD may not be comparable to FFO, Normalized FFO, FAD and Normalized FAD reported by other REITs that do not define FFO in accordance with the current NAREIT definition or that interpret the current NAREIT definition or define FAD differently than the Company does.
The Company believes that net income, as defined by GAAP, is the most appropriate earnings measure. The Company also believes that the use of EBITDA, Normalized EBITDA, FFO, Normalized FFO, FAD and Normalized FAD, combined with the required GAAP presentations, improves the understanding of operating results of REITs among investors and makes comparisons of operating results among such companies more meaningful. The Company considers EBITDA and Normalized EBITDA useful in understanding the Company’s operating results independent of its capital structure, indebtedness and 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.


http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12704610&doc=28




exhibit992ctreq42018f5b1
EXHIBITEXHIBITEXHIBITEXHIBIT 99.2 99.2 99.299.2 Avantara Crown Point (Parker, CO) The Villas at Saratoga (Saratoga, CA)


 
Disclaimers This supplement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical statements of fact and statements regarding our intent, belief or expectations, including, but not limited to, statements regarding future financial and financing positions, business and acquisition strategies, growth prospects, operating and financial performance, expectations regarding the making of distributions, payment of dividends, compliance with and changes in governmental regulations, and the performance of our operators and their respective facilities. Words such as “anticipate,” “believe,” “could,” "expect,” “estimate,” “intend,” “may,” “plan,” “seek,” “should,” “will,” “would,” and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements, though not all forward-looking statements contain these identifying words. Our forward-looking statements are based on our current expectations and beliefs, and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although we believe that the assumptions underlying these forward-looking statements are reasonable, they are not guarantees and we can give no assurance that our expectations will be attained. Factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from expectations include, but are not limited to: (i) the ability and willingness of our tenants to meet and/or perform their obligations under the triple-net leases we have entered into with them and the ability and willingness of The Ensign Group, Inc. ("Ensign") to meet and/or perform its obligations under the contractual arrangements that it entered into with us in connection with the spin-off from Ensign, including its triple-net long-term leases with us, and any of its obligations to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities; (ii) the ability and willingness of our tenants to comply with laws, rules and regulations in the operation of the properties we lease to them; (iii) the ability and willingness of our tenants, including Ensign, to renew their leases with us upon expiration and the ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we replace an existing tenant, and obligations, including indemnification obligations, that we may incur in connection with the replacement of an existing tenant; (iv) the availability of and the ability to identify suitable acquisition opportunities and the ability to acquire and lease the respective properties on favorable terms; (v) the ability to generate sufficient cash flows to service our outstanding indebtedness; (vi) access to debt and equity capital markets; (vii) fluctuating interest rates; (viii) the ability to retain our key management personnel; (ix) the ability to maintain our status as a real estate investment trust (“REIT”); (x) changes in the U.S. tax laws and other state, federal or local laws, whether or not specific to REITs; (xi) other risks inherent in the real estate business, including potential liability relating to environmental matters and illiquidity of real estate investments; and (xii) any additional factors identified in our filings with the Securities and Exchange Commission (“SEC”), including those in our Annual Report on Form 10-K for the year ended December 31, 2018 under the heading entitled “Risk Factors,” as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the SEC. This supplement contains certain non-GAAP financial information relating to CareTrust REIT including EBITDA, Normalized EBITDA, FFO, Normalized FFO, FAD, Normalized FAD, and certain related ratios. Explanatory footnotes and a glossary explaining this non-GAAP information are included in this supplement. Reconciliations of these non-GAAP measures are also included in this supplement. Other financial information, including GAAP financial information, is also available on our website. Non-GAAP financial information does not represent financial performance under GAAP and should not be considered in 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. Ensign is subject to the registration and reporting requirements of the SEC and is required to file with the SEC annual reports containing audited financial information and quarterly reports containing unaudited financial information. Ensign’s financial statements, as filed with the SEC, can be found at Ensign’s website http://www.ensigngroup.net. Information2 in this supplement is provided as of December 31, 2018, unless specifically stated otherwise. We expressly disclaim any obligation to update or revise any information in this supplement (including forward-looking statements), whether to reflect any change in our expectations, any change in events, conditions or circumstances, or otherwise. As used in this supplement, unless the context requires otherwise, references to “CTRE,” “CareTrust,” “CareTrust REIT” or the “Company” refer to CareTrust REIT, Inc. and its consolidated subsidiaries. GAAP refers to generally accepted accounting principles in the United States of America. 2


 
Company Profile Company Profile 3 CareTrust at a Glance 4 CareTrust REIT is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition and leasing Investments 5 of seniors housing and healthcare-related properties. CareTrust REIT generates revenues primarily by leasing properties to a diverse Portfolio Overview group of local, regional and national seniors housing operators, healthcare services providers, and other healthcare-related businesses. Portfolio Performance 6 Tenant Summary 7 Since its debut as a standalone public company on June 1, 2014, and as of February 13, 2019, CareTrust REIT has expanded its tenant Rent Diversification by Tenant 8 roster to 20 operators, and has grown its real estate portfolio to 199 net-leased healthcare properties and three operated seniors housing properties across 27 states, consisting of 19,706 operating beds/units. As of February 13, 2019, we also had other real estate Geographic Diversification 9 investments consisting of two preferred equity investments and two mortgage loans receivable. Rent Diversification by State 10 Lease Maturities 11 Management Financial Overview Consolidated Income Statements 13 Greg Stapley Bill Wagner Reconciliation of EBITDA, FFO and FAD 14 Chairman and Chief Executive Officer Chief Financial Officer Consolidated Balance Sheets 16 Key Debt Metrics 17 Dave Sedgwick Mark Lamb Chief Investment Officer Debt Summary 18 Chief Operating Officer 2019 Guidance 19 Equity Capital Transactions 20 Board of Directors Other Financial Highlights 21 Glossary 22 Greg Stapley Diana Laing Jon Kline Allen Barbieri Spencer Plumb Chairman Contact Information CareTrust REIT, Inc. 905 Calle Amanecer, Suite 300 Analyst Coverage San Clemente, CA 92673 (949) 542-3130 | ir@caretrustreit.com www.caretrustreit.com KeyBanc Capital Markets Raymond James Wells Fargo Securities Jordan Sadler | (917) 318-2280 Jonathan Hughes | (727) 567-2438 Todd Stender | (562) 637-1371 RBC Capital Markets Stifel, Nicolaus & Company BMO Capital Markets Transfer Agent Michael Carroll | (440) 715-2649 Chad Vanacore | (518) 587-2581 John Kim | (212) 885-4115 Broadridge Corporate Issuer Solutions P.O. Box 1342 CapitalOne Securities JMP Research Stephens Brentwood, NY 11717 Dan Bernstein | (571) 835-7202 Peter Martin | (415) 835-8904 Dana Hambly, CFA | (615) 279-4329 (800) 733-1121 | shareholder@broadridge.com 3


 
CareTrust REIT, Inc. Nasdaq: CTRE Market Data (as of December 31, 2018) Closing Price: $18.46 52 Week Range: $20.65– $12.73 Market Cap: $1,595M Enterprise Value: $2,053M Outstanding Shares: 86.4M 194 27 States Credit Ratings Properties Credit Ratings S&P S&PCorporate Rating: B+ (positive) CorporateSenior Unsecured Rating: BB-Notes: (stable) BB- Senior Unsecured Notes: BB Moody’s 20 Operators Moody’sCorporate Rating: B1 (positive) CorporateSenior Unsecured Rating: Ba3Notes: (positive) B1 19,086 $1,448.8 M Senior Unsecured Notes: Ba3 Operating Investments Beds/Units Note: 44 Amounts are as of December 31, 2018 and exclude our three operated seniors housing properties, two preferred equity investments and a mortgage loan receivable.


 
Investments (dollars in thousands) Property Initial Initial Operating Cost per Date Operator Type Location Facilities Investment[1] Bed/Unit [2] Bed/Unit [3] Initial Rent [4] Initial Yield[5] ALF, SNF, 6/1/2014 The Ensign Group Campus Various 94 $ 501,673 10,053 $ 50 $ 56,000 N/A 2014 Investments 6 33,609 157 166 3,076 9.2% 2015 Investments 20 233,028 1,840 127 22,263 9.6% 2016 Investments 35 288,023 2,800 101 26,084 9.1% 2017 Investments 36 309,805 3,324 92 28,000 9.0% 02/01/2018 Eduro Healthcare, LLC SNF MT 1 5,799 100 58 540 9.3% 03/01/2018 Metron Integrated Health Systems SNF MI 5 41,570 422 99 3,735 9.0% 07/18/2018 & 10/24/2018 Eduro Healthcare, LLC SNF SD & ND 2 14,428 209 69 1,294 9.0% 09/01/2018 Kalesta Healthcare, LLC Campus CA 1 18,892 122 155 1,564 8.3% 10/31/2018 Providence Health Group, LLC Campus WV 1 7,243 55 132 676 9.3% 11/15/2018 Metron Integrated Health Systems SNF MI 1 4,402 58 76 394 9.0% 12/19/2018 Eduro Healthcare, LLC SNF CO 1 19,616 137 143 1,752 8.9% 2018 Investments 12 111,950 1,103 101 9,955 8.9% 01/31/2019 WLC Management Campus IL 1 8,981 128 70 854 9.5% 02/11/2019 Covenant Care SNF CA 4 43,979 492 89 3,997 9.1% 02/11/2019 Covenant Care[7] SNF IL 5 11,389 440 26 1,025 9.0% 2019 Investments 1 64,349 1,060 85 5,876 9.1% Total Post Spin-off Investments[6] 110 1,040,764 10,284 104 95,254 9.2% Total Investments[6] 204 $ 1,542,437 20,337 $ 76 $ 151,254 Notes: [1] Initial Investment for pre-spin properties represents Ensign's gross book value. Initial Investment for post-spin properties represents CareTrust REIT’s purchase price and transaction costs. [2] Initial Operating Beds/Units as of the acquisition date. [3] Total Cost per Bed/Unit excludes preferred equity investments and a mortgage loan receivable. [4] Initial Rent represents the annualized acquisition-date cash rent or deferred interest income on preferred equity investments. [5] Initial Yield represents Initial Rent divided by Initial Investment. [6] All amounts exclude our three operated seniors housing properties and, except as otherwise indicated, include the preferred equity investments and a mortgage loan receivable. [7] Term loan secured by first mortgages on five skilled nursing facilities owned and operated by Covenant Care subsidiaries. 5


 
Portfolio Performance (dollars in thousands) As of December 31, 2018 Operating % of Total % of Total Asset Type Facilities Beds/Units Investment [1] Investment Rent [2] Rent Current Yield [3] Skilled Nursing 140 13,698 $1,023,435 70.6% $105,317 72.4% 10.3% Multi-Service Campus 18 2,521 203,775 14.1% 20,291 13.9% 10.0% Seniors Housing 36 2,867 221,599 15.3% 19,954 13.7% 9.0% Total Net-Leased Assets [4] 194 19,086 $1,448,809 100.0% $145,562 100.0% 10.0% Total Portfolio Total Portfolio less The Ensign Group & Transitioned Facilities[6] For the twelve-month period ended September 30, 2018 [5] For the twelve-month period ended September 30, 2018 [5] EBITDAR EBITDARM EBITDAR EBITDARM Asset Type Coverage Coverage Occupancy Coverage Coverage Occupancy Skilled Nursing 1.75x 2.30x 76.8% 1.40x 1.87x 77.5% Multi-Service Campus 1.64x 2.07x 77.0% 1.49x 1.85x 76.8% Seniors Housing 1.39x 1.63x 83.6% 1.11x 1.29x 88.3% Total 1.68x 2.17x 77.9% 1.34x 1.75x 79.4% Notes: [1] Investment for pre-spin properties represents Ensign's gross book value. Investment for post-spin properties represents CareTrust REIT’s cumulative capital investment. Capital investment includes purchase price, transaction costs and landlord-funded capital expenditures, if any. [2] Rent represents December 2018 rent, annualized, or based on the initial cash rents annualized. [3] Current Yield represents Rent divided by Investment. [4] All amounts exclude our three operated seniors housing properties and our two preferred equity investments and a mortgage loan receivable. [5] EBITDAR Coverage, EBITDARM Coverage and Occupancy include information provided by our tenants. We have not independently verified this information, but have no reason to believe that such information is inaccurate in any material respect. [6] Transitioned facilities include 16 Pristine Senior Living facilities transitioned in December 2017 & May 2018, 4 Better Senior Living facilities transitioned in December 2017, 3 Cross Healthcare facilities sold in March 2018 and 2 OnPointe Health facilities transitioned in May 2018. See “Glossary” for additional information. 6


 
Tenant Summary 7


 
Rent Diversification by Tenant (dollars in thousands) As of December 31, 2018 Operating % of Total % of Total Facilities Beds/Units Investment[1] Investment Rent[2] Rent 1 The Ensign Group 92 9,801 501,246 34.6% 59,114 40.5% 2 Trillium Healthcare Group 18 1,362 128,278 8.9% 11,879 8.1% 3 Priority Management Group 7 981 120,098 8.3% 11,231 7.7% 4 Trio Healthcare 7 672 89,249 6.2% 8,785 6.0% 5 Cascadia Healthcare 11 914 86,168 5.9% 8,035 5.5% Total Top 5 Tenants 135 13,730 925,039 63.9% 99,044 67.8% 6 Providence Group 4 654 83,743 5.8% 7,796 5.3% 7 Eduro Healthcare, LLC 6 752 70,760 4.9% 6,368 4.4% 8 Premier Senior Living Group 8 385 68,564 4.7% 6,181 4.2% 9 Metron Integrated Health Systems 6 480 45,972 3.2% 4,129 2.8% 10 WLC Management 7 644 37,424 2.6% 3,804 2.7% Total Top 10 Tenants 166 16,645 1,231,502 85.1% 127,322 87.2% All Other Tenants 28 2,441 217,307 14.9% 18,510 12.8% Total [3] 194 19,086 $ 1,448,809 100.0% $ 145,832 100.0% Notes: [1] Investment for pre-spin properties represents Ensign's gross book value. Investment for post-spin properties represents CareTrust REIT’s cumulative capital investment. Capital investment includes purchase price, transaction costs and landlord-funded capital expenditures, if any. [2] Rent represents December 2018 rent, annualized, or based on the initial cash rents annualized. [3] All amounts exclude our three operated seniors housing properties and our two preferred equity investments and a mortgage loan receivable. 8


 
Top Five States OH: 11.7% AZ: 6.3% ID: 7.3% CA: 19.5% 1 ALF TX: 18.7% Others: 36.5% Run-Rate Rent Run-Rate 1 ALF OH: 13.4% AZ: 4.2% ID: 7.0% CA: 16.9% 1 SNF TX: 18.5% Investment Others: 40.0% OH: 7.8% AZ: 7.0% CA: 16.4% ID: 6.5% TX: 20.6% Beds/Units Others: 41.7% 9


 
Rent Diversification by State (dollars in thousands) As of December 31, 2018 Net-Leased Assets by State Operating % of Total % of Total Facilities Beds/Units Investment[1] Investment Rent[2] Rent 1 California 26 3,130 $ 245,431 16.9% $ 28,455 19.5% 2 Texas 32 3,939 267,604 18.5% 27,332 18.7% 3 Ohio 16 1,484 193,769 13.4% 17,097 11.7% 4 Idaho 15 1,241 101,602 7.0% 10,596 7.3% 5 Arizona 10 1,327 60,753 4.2% 9,219 6.3% Top 5 States 99 11,121 869,159 60.0% 92,699 63.5% 6 Michigan 10 669 76,624 5.3% 7,007 4.8% 7 Washington 12 1,015 61,730 4.3% 6,405 4.4% 8 Utah 11 1,248 77,322 5.3% 6,188 4.2% 9 Iowa 15 986 53,488 3.7% 5,665 3.9% 10 Colorado 7 770 60,435 4.2% 5,910 4.1% Top 10 States 154 15,809 1,198,758 82.8% 123,874 84.9% All Other States 40 3,277 250,051 17.2% 21,958 15.1% Total[3] 194 19,086 $ 1,448,809 100.0% $ 145,832 100.0% Notes: [1] Investment for pre-spin properties represents Ensign's gross book value. For post-spin properties, Investment represents CareTrust REIT’s cumulative capital investment. Capital investment includes purchase price, transaction costs and landlord-funded capital expenditures, if any. [2] Rent represents December 2018 rent, annualized, or based on the initial cash rents annualized. [3] All amounts exclude our three operated seniors housing properties and our two preferred equity investments and a mortgage loan receivable. 10


 
Lease Maturities (dollars in thousands) As of December 31, 2018 Lease Maturity % of Total % of Total Year[1] Investment[2] Investment Rent[3] Rent 2024[5] $ 34,415 2.4% $ 3,269 2.2% 2025 — — — — — 2026 58,157 4.0% 6,606 4.5% 2027 55,929 3.9% 5,861 4.0% 2028 79,914 5.5% 7,969 5.5% 2029 115,306 8.0% 9,984 6.8% 2030 282,898 19.5% 25,424 17.4% 2031 385,817 26.6% 36,301 25.0% 2032 210,526 14.5% 23,537 16.1% 2033 225,847 15.6% 26,881 18.5% Total[4] $ 1,448,809 100.0% $ 145,832 100.0% Providence Orangetree (Riverside, CA) Notes: [1] Lease Maturity Year represents the scheduled expiration year of the primary term of the lease and does not include tenant extension options, if any. [2] Investment for pre-spin properties represents Ensign's gross book value. For post-spin properties, Investment represents CareTrust REIT’s cumulative capital investment. Capital investment includes purchase price, transaction costs and landlord-funded capital expenditures, if any. [3] Rent represents December 2018 rent, annualized. [4] All amounts exclude our three operated seniors housing properties and our two preferred equity investments and a mortgage loan receivable. [5] Represents three standalone Covenant Care leases which, on February 11, 2019, were eliminated and consolidated into a single unified master lease with other Covenant Care-operated assets, with an initial lease term ending in 2034. 25.0% 17.4% 18.5% 16.1% of Rent 6.8% 5.5% % 4.5% 4.0% 2.2% 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Lease Maturity Year 11


 
12


 
Consolidated Income Statements (amounts in thousands, except per share data) Three Months Ended December 31, Twelve Months Ended December 31, 2018 2017 2018 2017 Revenues: Rental income $ 36,217 $ 32,379 $ 140,073 $ 117,633 Tenant reimbursements 2,950 3,001 11,924 10,254 Independent living facilities 864 821 3,379 3,228 Interest and other income 330 396 1,565 1,867 Total revenues 40,361 36,597 156,941 132,982 Expenses: Depreciation and amortization 11,539 11,003 45,766 39,159 Interest expense 6,678 6,506 27,860 24,196 Loss on the extinguishment of debt — — — 11,883 Property taxes 2,950 3,001 11,924 10,254 Independent living facilities 738 730 2,964 2,733 Impairment of real estate investment — — — 890 Reserve for advances and deferred rent — 10,414 — 10,414 General and administrative 2,917 2,691 12,555 11,117 Total expenses 24,822 34,345 101,069 110,646 Other income: Gain on sale of real estate — — 2,051 — Gain on disposition of other real estate investment — — — 3,538 Net income $ 15,539 $ 2,252 $ 57,923 $ 25,874 Earnings per common share: Basic $ 0.18 $ 0.03 $ 0.73 $ 0.35 Diluted $ 0.18 $ 0.03 $ 0.72 $ 0.35 Weighted-average number of common shares: Basic 84,059 75,476 79,386 72,647 Diluted 84,084 75,476 79,392 72,647 Dividends declared per common share $ 0.205 $ 0.185 $ 0.82 $ 0.74 13


 
Reconciliation of EBITDA, FFO and FAD Quarter Quarter Quarter Quarter Quarter Ended Ended Ended Ended Ended (amounts in thousands, except per share data) December 31, 2017 March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 Net income $ 2,252 $ 14,607 $ 13,267 $ 14,510 $ 15,539 Depreciation and amortization 11,003 11,577 11,299 11,351 11,539 Interest expense 6,506 7,092 7,285 6,805 6,678 Amortization of stock-based compensation 624 904 924 988 1,032 EBITDA 20,385 34,180 32,775 33,654 34,788 Reserve for advances and deferred rent 10,414 — — — — Gain on sale of real estate — (2,051) — — — Normalized EBITDA $ 30,799 $ 32,129 $ 32,775 $ 33,654 $ 34,788 Net income $ 2,252 $ 14,607 $ 13,267 $ 14,510 $ 15,539 Real estate related depreciation and amortization 10,973 11,549 11,265 11,330 11,520 Gain on sale of real estate — (2,051) — — — Funds from Operations (FFO) 13,225 24,105 24,532 25,840 27,059 Reserve for advances and deferred rent 10,414 — — — — Normalized FFO $ 23,639 $ 24,105 $ 24,532 $ 25,840 $ 27,059 See Glossary for additional information. 14


 
Reconciliation of EBITDA, FFO and FAD (continued) Quarter Quarter Quarter Quarter Quarter Ended Ended Ended Ended Ended (amounts in thousands, except per share data) December 31, 2017 March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 Net income $ 2,252 $ 14,607 $ 13,267 $ 14,510 $ 15,539 Real estate related depreciation and amortization 10,973 11,549 11,265 11,330 11,520 Amortization of deferred financing fees 485 484 484 484 486 Amortization of stock-based compensation 624 904 924 988 1,032 Straight-line rental income (227) (591) (342) (698) (702) Gain on sale of real estate — (2,051) — — — Funds Available for Distribution (FAD) 14,107 24,902 25,598 26,614 27,875 Reserve for advances and deferred rent 10,414 — — — — Normalized FAD $ 24,521 $ 24,902 $ 25,598 $ 26,614 $ 27,875 FFO per share $ 0.17 $ 0.32 $ 0.32 $ 0.32 $ 0.32 Normalized FFO per share $ 0.31 $ 0.32 $ 0.32 $ 0.32 $ 0.32 FAD per share $ 0.19 $ 0.33 $ 0.33 $ 0.33 $ 0.33 Normalized FAD per share $ 0.32 $ 0.33 $ 0.33 $ 0.33 $ 0.33 Diluted weighted average shares outstanding [1] 75,692 75,657 76,545 81,687 84,324 [1] For the periods presented, the diluted weighted average shares have been calculated using the treasury stock method. See Glossary for additional information. 15


 
Consolidated Balance Sheets (dollars in thousands) December 31, 2018 December 31, 2017 Assets: Real estate investments, net $ 1,216,237 $ 1,152,261 Other real estate investments, net 18,045 17,949 Cash and cash equivalents 36,792 6,909 Accounts and other receivables, net 11,387 5,254 Prepaid expenses and other assets 8,668 895 Deferred financing costs, net 633 1,718 Total assets $ 1,291,762 $ 1,184,986 Liabilities and Equity: Senior unsecured notes payable, net $ 295,153 $ 294,395 Senior unsecured term loan, net 99,612 99,517 Unsecured revolving credit facility 95,000 165,000 Accounts payable and accrued liabilities 15,967 17,413 Dividends payable 17,783 14,044 Total liabilities 523,515 590,369 Equity: Common stock 859 755 Additional paid-in capital 965,578 783,237 Cumulative distributions in excess of earnings (198,190) (189,375) Total equity 768,247 594,617 Total liabilities and equity $ 1,291,762 $ 1,184,986 16


 
Key Debt Metrics Net Debt to Normalized EBITDA [1][2] Debt to Enterprise Value [3] 37.4% 5.1 4.9 34.9% 35.0% 4.6 4.6 31.3% 30.8% 4.4 4.5 29.0% 4.1 25.5% 24.1% 25.0% 24.1% 3.7 22.1% 3.6 3.5 3.3 6 6 6 7 7 7 7 8 8 8 8 6 6 6 7 7 7 7 8 8 8 8 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 0 0 1 1 0 0 1 1 0 0 1 0 0 1 1 0 0 1 1 0 0 1 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 6 9 2 3 6 9 2 3 6 9 2 6 9 2 3 6 9 2 3 6 9 2 1 1 1 1 1 1 [1] Net Debt to Normalized EBITDA compares total debt as of the last day of the quarter to the annualized Normalized EBITDA for the quarter. [2] See "Financials & Filings - Quarterly Results" on the Investors section of our website at http://investor.caretrustreit.com for reconciliations of Normalized EBITDA to the most directly comparable GAAP measure for the periods presented. [3] Debt to Enterprise Value compares total debt as of the last day of the quarter to CareTrust REIT’s Enterprise Value as of the last day of the quarter. See “Glossary” for additional information. 17


 
Debt Summary (dollars in thousands) December 31, 2018 Interest Maturity % of Deferred Net Carrying Debt Rate Date Principal Principal Loan Costs Value Fixed Rate Debt Senior unsecured notes payable 5.250% 2025 $ 300,000 60.6% $ (4,847) $ 295,153 Floating Rate Debt [5] Senior unsecured term loan 4.472% [1] 2023 100,000 20.2% (388) 99,612 [5] Unsecured revolving credit facility 4.272% [2] 2020 [3] 95,000 19.2% — [4] 95,000 4.375% 195,000 39.4% (388) 194,612 Total Debt 4.905% $ 495,000 100.0% $ (5,235) $ 489,765 Maturity as of February 13, 2019[5] $300,000 $200,000 Principal 2019 2020 2021 2022 2023 2024 2025 2026 Debt Maturity Year Notes: [1] Funds can be borrowed at applicable LIBOR plus 1.95% to 2.60% or at the Base Rate (as defined) plus 0.95% to 1.6%. [2] Funds can be borrowed at applicable LIBOR plus 1.75% to 2.40% or at the Base Rate (as defined) plus 0.75% to 1.4%. [3] Maturity date assumes exercise of two, 6-month extension options. [4] Deferred financing fees are not shown net for the unsecured revolving credit facility and are included in assets on the balance sheet. [5] On February 8, 2019, CareTrust REIT entered into an amended and restated credit and guaranty agreement, that now provides an unsecured revolving credit facility with revolving commitments in an aggregate principal amount of $600.0 million and an unsecured term loan credit facility in an aggregate principal amount of $200.0 million. The proceeds of the term loan have been used, in part, to repay in full all outstanding borrowings under the prior term loan and prior revolving credit facility under the prior credit agreement. 18


 
2019 Guidance (shares in thousands) Low High Net income $ 0.78 $ 0.80 Real estate related depreciation and amortization 0.52 0.52 Funds from Operations (FFO) 1.30 1.32 Normalized FFO $ 1.30 $ 1.32 Net income $ 0.78 $ 0.80 Real estate related depreciation and amortization 0.52 0.52 Amortization of deferred financing fees 0.02 0.02 Amortization of stock-based compensation 0.05 0.05 Straight-line rental income (0.02) (0.02) Funds Available for Distribution (FAD) 1.35 1.37 Normalized FAD $ 1.35 $ 1.37 Weighted average shares outstanding: Diluted 88,593 88,593 See “Glossary” for additional information. 19


 
Equity Capital Transactions Follow-On Equity Offering Activity 2015 2016 Q1 Q2 Q3 Q4 Total Number of Shares (000s) 16,330 — 9,775 — 6,325 16,100 Public Offering Price per Share $ 10.50 $ — $ 11.35 $ — $ 13.35 $ 12.14 [1] Gross Proceeds (000s) $ 171,465 $ — $ 110,946 $ — $ 84,439 $ 195,385 At-the-Market Offering Activity 2016 2017 2018 Q1 Q2 Q3 Q4[2] Total Number of Shares (000s) 924 10,574 — 2,989 4,772 2,504 10,265 Average Price per Share $ 15.31 $ 16.43 $ — $ 16.13 $ 17.62 $ 19.98 $ 17.76 Gross Proceeds (000s) $ 14,147 $ 173,760 $ — $ 48,198 $ 84,077 $ 50,046 $ 182,321 Notes: [1] Represents average offering price per share for follow-on equity offerings. [2] As of December 31, 2018, CareTrust REIT had approximately $53.7 million available for future issuances under the ATM Program. Subsequent to December 31, 2018, we sold 2.5 million shares of common stock at an average price of $19.48 per share for $47.9 million in gross proceeds. 20


 
Other Financial Highlights Dividend History Normalized FFO Payout Ratio [1][2] $0.205 $0.205 $0.205 $0.205 66.1% 66.1% 60.7% 60.7% 63.8% 59.7% 64.1% 64.1% 64.1% 64.1% $0.185 $0.185 $0.185 $0.185 $0.17 $0.17 6 6 7 7 7 7 8 8 8 8 6 6 7 7 7 7 8 8 8 8 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 /1 /1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 2 2 2 2 2 2 2 2 2 /2 /2 /2 /2 /2 /2 /2 3 3 /2 / / / / / / / / / / 0 1 1 0 0 1 1 / / 1 0 1 1 0 0 1 1 0 0 1 3 3 3 3 3 3 3 6 9 3 3 3 3 3 3 3 3 3 3 3 / / / / / / / / / / / / / / / / / / 9 2 3 6 9 2 3 2 9 2 3 6 9 2 3 6 9 2 1 1 1 1 1 1 Normalized FFO per Share [2] Normalized FFO [2] $0.32 $0.32 $0.32 $0.32 $27,059 $25,840 $0.31 $24,532 $23,639 $24,105 $20,622 $21,028 $0.29 $19,331 $17,160 $0.28 $0.28 $0.28 $0.28 $16,258 6 6 7 7 7 7 8 8 8 8 6 6 7 7 7 7 8 8 8 8 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 0 1 1 0 0 1 1 0 0 1 0 1 1 0 0 1 1 0 0 1 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 9 2 3 6 9 2 3 6 9 2 9 2 3 6 9 2 3 6 9 2 1 1 1 1 1 1 Notes: [1] Normalized FFO Payout Ratio represents dividends declared divided by Normalized FFO, in each case for the applicable quarter. [2] See “Financials & Filings - Quarterly Results” on the Investors section of our website at http://investor.caretrustreit.com for a reconciliation of Normalized FFO and Normalized FFO per Share to the most directly comparable GAAP measure for the periods presented. See “Glossary” for additional information. 21


 
Glossary Assisted Living Facilities (“ALFs”) EBITDARM Coverage Licensed healthcare facilities that provide personal care services, support and housing Aggregate EBITDARM produced by all facilities under a master lease (or other for those who need help with daily living activities, such as bathing, eating and grouping) divided by the base rent payable to CareTrust REIT under such master lease dressing, yet require limited medical care. The programs and services may include (or other grouping) for the same period. For this supplement, the reported period is transportation, social activities, exercise and fitness programs, beauty or barber shop the trailing twelve-month period ended September 30, 2018. Notwithstanding the access, hobby and craft activities, community excursions, meals in a dining room foregoing, for any facility for which CareTrust REIT has not received four consecutive setting and other activities sought by residents. These facilities are often in apartment- quarters of post-acquisition operating reports, the quarterly EBITDARM used in this like buildings with private residences ranging from single rooms to large apartments. calculation is the proforma EBITDARM utilized in CareTrust REIT’s underwriting Certain ALFs may offer higher levels of personal assistance for residents requiring process annualized. Beginning with the fifth quarter of reported post-acquisition memory care as a result of Alzheimer’s disease or other forms of dementia. Levels of operating performance, each reported quarter EBITDARM replaces the oldest personal assistance are based in part on local regulations.  underwriting proforma quarter EBITDARM, until all previously-used proforma quarters EBITDARM amounts are eliminated from the calculation. EBITDA Net income before interest expense, income tax, depreciation and amortization and Enterprise Value amortization of stock-based compensation.[1] Share price multiplied by the number of outstanding shares plus total outstanding debt, each as of a specified date. EBITDAR Net income before interest expense, income tax, depreciation, amortization and rent, Funds Available for Distribution (“FAD”) after applying a standardized management fee (5% of facility operating revenues). FFO, excluding straight-line rental income adjustments and amortization of deferred financing fees and stock-based compensation expense.[2] EBITDAR Coverage Aggregate EBITDAR produced by all facilities under a master lease (or other grouping) Funds from Operations (“FFO”) divided by the base rent payable to CareTrust REIT under such master lease (or other Net income, excluding gains and losses from dispositions of real estate or other real grouping) for the same period. For this supplement, the reported period is the trailing estate, before real estate depreciation and amortization and real estate impairment twelve-month period ended September 30, 2018. Notwithstanding the foregoing, for charges. CareTrust REIT calculates and reports FFO in accordance with the definition any facility for which CareTrust REIT has not received four consecutive quarters of and interpretive guidelines issued by the National Association of Real Estate post-acquisition operating reports, the quarterly EBITDAR used in this calculation is Investment Trusts.[2] the proforma EBITDAR utilized in CareTrust REIT’s underwriting process, annualized. Beginning with the fifth quarter of reported post-acquisition operating performance, Independent Living Facilities (“ILFs”) each reported quarter EBITDAR replaces the oldest underwriting proforma quarter Also known as retirement communities or senior apartments, ILFs are not healthcare EBITDAR, until all previously-used proforma quarters EBITDAR amounts are eliminated facilities. ILFs typically consist of entirely self-contained apartments, complete with from the calculation. their own kitchens, baths and individual living spaces, as well as parking for tenant vehicles. They are most often rented unfurnished, and generally can be personalized EBITDARM by the tenants, typically an individual or a couple over the age of 55. These facilities Earnings before interest expense, income tax, depreciation, amortization, cash rent, offer various services and amenities such as laundry, housekeeping, dining options/ and a standardized management fee (5% of facility operating revenues). meal plans, exercise and wellness programs, transportation, social, cultural and recreational activities, and on-site security. 22


 
Glossary Multi-Service Campus Notes: Facilities that include a combination of Skilled Nursing beds and Seniors Housing [1] EBITDA and Normalized EBITDA do not represent cash flows from operations or units. net income as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. EBITDA Normalized EBITDA and Normalized EBITDA do not purport to be indicative of cash available to fund future EBITDA, adjusted for certain income and expense items the Company does not believe cash requirements, including the Company’s ability to fund capital expenditures or are indicative of its ongoing results, such as certain acquisition costs, real estate make payments on its indebtedness. Further, the Company’s computation of EBITDA impairment charges, losses on the extinguishment of debt, certain deferred preferred and Normalized EBITDA may not be comparable to EBITDA and Normalized EBITDA returns, reserve for advances and deferred rent and gains or losses from dispositions reported by other REITs. of real estate or other real estate.[1] [2] CareTrust REIT believes FAD, FFO, Normalized FAD, and Normalized FFO (and their Normalized FAD related per-share amounts) are important non-GAAP supplemental measures of its FAD, adjusted for certain income and expense items the Company does not believe operating performance. Because the historical cost accounting convention used for are indicative of its ongoing results, such as certain reserves for advances and deferred real estate assets requires straight-line depreciation (except on land), such accounting rent, certain deferred preferred returns, and the effect of the senior unsecured notes presentation implies that the value of real estate assets diminishes predictably over payable redemption.[2] time, even though real estate values have historically risen or fallen with market and other conditions. Moreover, by excluding items not indicative of ongoing results, Normalized FFO Normalized FAD and Normalized FFO can facilitate meaningful comparisons of FFO, adjusted for certain income and expense items the Company does not believe operating performance between periods and between other companies. However, are indicative of its ongoing results, and certain reserves for advances and deferred FAD, FFO, Normalized FAD, and Normalized FFO (and their per-share amounts) do not rent, certain deferred preferred returns, and the effect of the senior unsecured notes represent cash flows from operations or net income attributable to shareholders as payable redemption.[2] defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. Occupancy A facility’s occupied operating beds/units divided by the total available operating beds/units for that facility, in each case for the trailing twelve-months ended September 30, 2018; provided that Occupancy for any facility acquired during such twelve-months period may be normalized. Seniors Housing Includes ALFs, ILFs, dedicated memory care facilities and similar facilities. Skilled Nursing or Skilled Nursing Facilities (“SNFs”) Licensed healthcare facilities that provide restorative, rehabilitative and nursing care for people not requiring the more extensive and sophisticated treatment available at an acute care hospital or long-term acute care hospital. Treatment programs include physical, occupational, speech, respiratory, ventilator, and wound therapy. 23


 
Cascadia of Nampa (Nampa, ID)