View:
Document


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

FORM 8-K
 
 
 
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 7, 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.   ☐





Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.01 per share
CTRE
The Nasdaq Stock Market LLC
(Nasdaq Global Select Market)
 
 
 
 
 






Item 2.02
Results of Operations and Financial Condition.

On May 7, 2019, CareTrust REIT, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter ended March 31, 2019. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

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

Item 7.01
Regulation FD Disclosure

A copy of the Company’s supplemental financial information for the first quarter ended March 31, 2019 is attached hereto as Exhibit 99.2 and is incorporated herein by reference. A copy of the supplemental financial information is also available on the “Investors” section of the Company’s website at www.caretrustreit.com.

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

Item 9.01. Financial Statements and Exhibits.

 
(d)
Exhibits.
 
 
 
 
Exhibits
  
Description
 
 
  
 
 
 







SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
Date: May 7, 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=12886467&doc=28

CareTrust REIT Announces First Quarter 2019 Operating Results

Conference Call Scheduled for Wednesday, May 8, 2019 at 1:00 pm ET
SAN CLEMENTE, Calif., May 7, 2019 (GLOBE NEWSWIRE) -- CareTrust REIT, Inc. (Nasdaq:CTRE) today reported operating results for the quarter ended March 31, 2019, as well as other recent events.
For the quarter, CareTrust REIT reported:
Net income of $16.1 million, a quarter-over-quarter increase of 10%, and net income per diluted weighted-average common share of $0.18;
Normalized FFO of $27.9 million, a quarter-over-quarter increase of 16%, and normalized FFO per diluted weighted-average common share of $0.32;
Normalized FAD of $29.0 million, a quarter-over-quarter increase of 16%, and normalized FAD per diluted weighted-average common share of $0.33;
A net debt-to-normalized EBITDA ratio of 3.3x, and a net debt-to-enterprise value of 18%, each as of quarter-end.

Fast Start to 2019
CareTrust also reported approximately $290 million in new investments in the quarter and since. Greg Stapley, CareTrust's Chairman and Chief Executive Officer, said, “We are pleased to be bringing some great new assets into the portfolio, but we are most excited about adding two outstanding healthcare providers to our growing list of top-flight tenants, and growing with three others.”
He also noted that, despite the significant growth in the company’s asset base, CareTrust has maintained a conservative 3.3x net debt-to-normalized EBITDA via $47.9 million in sales during the quarter from its at-the-market equity program and an overnight equity raise in early April that netted an additional $148.4 million. “Match-funding accretive acquisitions to optimize leverage is a high-priority element of our disciplined growth approach,” said Mr. Stapley. He added that the low leverage and early growth had positioned the Company well to execute on its opportunistic growth strategy through the rest of 2019. “With our quick start, we can afford to be especially selective as we sift through the opportunities to find good assets and great operators to run them, and we remain firmly committed to that discipline,” he concluded.
Financial Results for Quarter Ended March 31, 2019
Chief Financial Officer Bill Wagner reported that, for the first quarter, CareTrust generated net income of $16.1 million, or $0.18 per diluted weighted-average common share, normalized FFO of $27.9 million, or $0.32 per diluted weighted-average common share, and normalized FAD of $29.0 million, or $0.33 per diluted weighted-average common share. “We are pleased to be delivering a 16% quarter-over-quarter increase in both normalized FFO and normalized FAD while simultaneously issuing equity to significantly reduce our leverage and prepare for the future,” said Mr. Wagner.
Liquidity
Discussing the Company’s balance sheet, Mr. Wagner reported that, as of quarter end, CareTrust’s net debt-to-normalized EBITDA ratio was approximately 3.3x and its net debt-to-enterprise value ratio was approximately 18%. He also disclosed that, as of today, the Company’s net debt-to-normalized EBITDA ratio stands at approximately 3.3x. “Our current debt levels are well under management’s stated 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 also reported that on February 8, 2019, CareTrust expanded its borrowing capacity from $400.0 million to $600.0 million and extended the maturity date under its unsecured revolving credit facility, 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 110 bps - 155 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 also reported that during the quarter CareTrust issued approximately 2.5 million shares of common stock through its at-the-market program at an average price of $19.48 per share, for $47.9 million in gross proceeds. “Our ATM program remains a significant asset 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 also noted that during the quarter CareTrust refreshed the program, which had essentially exhausted its original 2017 $300.0 million authorization, with a new $300.0 million program, and added that the new program has its full $300.0 million in authorization remaining at present.
Mr. Wagner also reported that after the quarter, CareTrust issued an additional 6.6 million shares of common stock for net proceeds of approximately $148.4 million in an overnight offering that was approximately four times oversubscribed. “We are gratified by the market’s robust response to our equity offering, and have put the funds right to work at a solid yield with our $215 million Louisiana and Texas acquisition completed April 1, 2019,” he said.
2019 Guidance
Mr. Wagner provided 2019 earnings guidance, projecting on a per-diluted weighted-average common share basis net income of approximately $0.84 to $0.86, normalized FFO of approximately $1.35 to $1.37, and normalized FAD of approximately $1.40 to $1.42. He noted that the 2019 guidance is based on a diluted weighted-average common share count of 93.5 million shares and assumes no new acquisitions or dispositions beyond those completed to date, no new debt incurrences or new equity issuances, and estimated 1.5% CPI-based rent escalators under CareTrust's long-term net leases.
Dividend Declared
During the quarter, CareTrust declared a quarterly dividend of $0.225 per common share. “On an annualized basis, our quarterly dividend represents a payout ratio of approximately 70% based on the first quarter 2019 normalized FFO, and 68% 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
During the first quarter, 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 transaction costs. At closing, CareTrust and existing tenant WLC Management Firm, LLC added the campus to WLC’s master lease by amending and restating their 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 $854,000. CareTrust funded the acquisition using cash on hand.
CareTrust also acquired a 492-bed, four-property skilled nursing portfolio in California in a sale-leaseback transaction with subsidiaries of existing tenant Covenant Care, Inc. Mark Lamb, CareTrust’s Chief Investment Officer, noted that the transaction allowed CareTrust to consolidate the four newly-acquired facilities and four other assets held under three existing leases with Covenant Care into a new 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 transaction costs, with approximately $4.0 million in initial annual cash rent. The new master lease carries an initial term of 15 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%, 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. In a subsequent pre-planned transfer of operations, Covenant Care transferred possession of one of the four operations acquired by CareTrust in the sale/leaseback to an operating subsidiary of existing CareTrust tenant The Ensign Group, and the facility was added to one of CareTrust’s master leases with Ensign.
Subsequent to quarter-end, CareTrust acquired seven skilled nursing facilities and one multi-service campus in Louisiana, which were re-tenanted at closing with CareTrust's existing tenant Priority Management Group, LLC. The transaction also included three skilled nursing facilities and one continuing care retirement community in Texas, which were re-tenanted with Texas-based Southwest LTC, Ltd. under a new master lease with CareTrust. The lease with Southwest LTC, Ltd. carries an initial term of 15 years, with two five-year renewal options and CPI-based rent escalators. The aggregate purchase price for the 12-property portfolio was approximately $215.0 million, inclusive of capital expenditure commitments and estimated transaction costs, and initial annual cash rents from the investment are approximately $19.0 million. The portfolio acquisition was initially funded using approximately $185.0 million in borrowings under CareTrust’s $600 million revolving credit facility, with the remainder funded with cash on hand, and the revolving borrowings largely paid down shortly thereafter with the net proceeds of CareTrust’s $148.4 million overnight equity offering completed in early April.
Also subsequent to quarter-end, CareTrust acquired a 118-operating bed skilled nursing facility in Dallas, Texas, and leased it to Next Gen P, LLC. The total investment was approximately $10.0 million, inclusive of estimated transaction costs, and the new master lease carries an annual cash rent of approximately $900,000. CareTrust funded the acquisition using cash on hand.



Conference Call

A conference call will be held on Wednesday, May 8, 2019, at 1:00 p.m. Eastern Time (10:00 a.m. Pacific Time), during which CareTrust’s management will discuss first quarter 2019 results, recent developments and other matters. The dial-in number for this call is (844) 220-4972 (U.S.) or (317) 973-4053 (International). The conference ID number is 8252819. 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 212 net-leased healthcare properties and three operated seniors housing properties in 28 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, including, without limitation, their respective 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 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, as well as any 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 (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; (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 March 31, 2019, 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 March 31,
 
 
2019
 
2018
Revenues:
 
 
 
 
Rental income
$
38,347

 
$
33,816

 
Tenant reimbursements

 
2,968

 
Independent living facilities
860

 
799

 
Interest and other income
451

 
518

 
Total revenues
39,658

 
38,101

Expenses:
 
 
 
 
Depreciation and amortization
11,902

 
11,577

 
Interest expense
6,860

 
7,092

 
Property taxes
826

 
2,968

 
Independent living facilities
707

 
716

 
General and administrative
3,310

 
3,192

 
Total expenses
23,605

 
25,545

Other income:
 
 
 
 
Gain on sale of real estate

 
2,051

Net income
$
16,053

 
$
14,607

 
 
 
 
 
Earnings per common share:
 
 
 
 
Basic
$
0.18

 
$
0.19

 
Diluted
$
0.18

 
$
0.19

 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
Basic
88,010

 
75,504

 
Diluted
88,010

 
75,504

 
 
 
 
 
Dividends declared per common share
$
0.225

 
$
0.205







CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES
(in thousands)
 (Unaudited)
 
 
 
Three Months Ended March 31,
 
 
 
2019
 
2018
 
 
 
 
 
 
Net income
 
$
16,053

 
$
14,607

 
Depreciation and amortization
 
11,902

 
11,577

 
Interest expense
 
6,860

 
7,092

 
Amortization of stock-based compensation
 
994

 
904

EBITDA
 
35,809

 
34,180

 
Gain on sale of real estate
 

 
(2,051
)
Normalized EBITDA
 
$
35,809

 
$
32,129

 
 
 
 
 
 
Net income
 
$
16,053

 
$
14,607

 
Real estate related depreciation and amortization
 
11,884

 
11,549

 
Gain on sale of real estate
 

 
(2,051
)
Funds from Operations (FFO)
 
27,937

 
24,105

Normalized FFO
 
$
27,937

 
$
24,105







CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES (continued)
 (in thousands, except per share data)
 (Unaudited)
 
 
 
Three Months Ended March 31,
 
 
 
2019
 
2018
 
 
 
 
 
 
Net income
 
$
16,053

 
$
14,607

 
Real estate related depreciation and amortization
 
11,884

 
11,549

 
Amortization of deferred financing fees
 
541

 
484

 
Amortization of stock-based compensation
 
994

 
904

 
Straight-line rental income
 
(463
)
 
(591
)
 
Gain on sale of real estate
 

 
(2,051
)
Funds Available for Distribution (FAD)
 
29,009

 
24,902

Normalized FAD
 
$
29,009

 
$
24,902

 
 
 
 
 
 
FFO per share
 
$
0.32

 
$
0.32

Normalized FFO per share
 
$
0.32

 
$
0.32

 
 
 
 
 
 
FAD per share
 
$
0.33

 
$
0.33

Normalized FAD per share
 
$
0.33

 
$
0.33

 
 
 
 
 
 
 
Diluted weighted average shares outstanding [1]
 
88,266

 
75,657

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








CARETRUST REIT, INC.
CONSOLIDATED INCOME STATEMENTS - 5 QUARTER TREND
(in thousands, except per share data)
 (Unaudited)
 
Quarter
Quarter
Quarter
Quarter
Quarter
 
Ended
Ended
Ended
Ended
Ended
 
March 31, 2018
June 30, 2018
September 30, 2018
December 31, 2018
March 31, 2019
Revenues:
 
 
 
 
 
Rental income
$
33,816

$
34,708

$
35,332

$
36,217

$
38,347

Tenant reimbursements
2,968

3,016

2,990

2,950


Independent living facilities
799

845

871

864

860

Interest and other income
518

400

317

330

451

Total revenues
38,101

38,969

39,510

40,361

39,658

Expenses:
 
 
 
 
 
Depreciation and amortization
11,577

11,299

11,351

11,539

11,902

Interest expense
7,092

7,285

6,805

6,678

6,860

Property taxes
2,968

3,016

2,990

2,950

826

Independent living facilities
716

744

766

738

707

General and administrative
3,192

3,358

3,088

2,917

3,310

Total expenses
25,545

25,702

25,000

24,822

23,605

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





Net income
$
14,607

$
13,267

$
14,510

$
15,539

$
16,053

 
 
 
 
 
 
Diluted earnings per share
$
0.19

$
0.17

$
0.18

$
0.18

$
0.18

 
 
 
 
 
 
Diluted weighted average shares outstanding
75,504

76,374

81,490

84,084

88,010






CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES - 5 QUARTER TREND
(in thousands, except per share data)
 (Unaudited)
 
Quarter
Quarter
Quarter
Quarter
Quarter
 
Ended
Ended
Ended
Ended
Ended
 
March 31, 2018
June 30, 2018
September 30, 2018
December 31, 2018
March 31, 2019
 
 
 
 
 
 
Net income
$
14,607

$
13,267

$
14,510

$
15,539

$
16,053

Depreciation and amortization
11,577

11,299

11,351

11,539

11,902

Interest expense
7,092

7,285

6,805

6,678

6,860

Amortization of stock-based compensation
904

924

988

1,032

994

EBITDA
34,180

32,775

33,654

34,788

35,809

Gain on sale of real estate
(2,051
)




Normalized EBITDA
$
32,129

$
32,775

$
33,654

$
34,788

$
35,809

 
 
 
 
 
 
Net income
$
14,607

$
13,267

$
14,510

$
15,539

$
16,053

Real estate related depreciation and amortization
11,549

11,265

11,330

11,520

11,884

Gain on sale of real estate
(2,051
)




Funds from Operations (FFO)
24,105

24,532

25,840

27,059

27,937

Normalized FFO
$
24,105

$
24,532

$
25,840

$
27,059

$
27,937






CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES - 5 QUARTER TREND (continued)
 (in thousands, except per share data)
 (Unaudited)
 
Quarter
Quarter
Quarter
Quarter
Quarter
 
Ended
Ended
Ended
Ended
Ended
 
March 31, 2018
June 30, 2018
September 30, 2018
December 31, 2018
March 31, 2019
 
 
 
 
 
 
Net income
$
14,607

$
13,267

$
14,510

$
15,539

$
16,053

Real estate related depreciation and amortization
11,549

11,265

11,330

11,520

11,884

Amortization of deferred financing fees
484

484

484

486

541

Amortization of stock-based compensation
904

924

988

1,032

994

Straight-line rental income
(591
)
(342
)
(698
)
(702
)
(463
)
Gain on sale of real estate
(2,051
)




Funds Available for Distribution (FAD)
24,902

25,598

26,614

27,875

29,009

Normalized FAD
$
24,902

$
25,598

$
26,614

$
27,875

$
29,009

 
 
 
 
 
 
FFO per share
$
0.32

$
0.32

$
0.32

$
0.32

$
0.32

Normalized FFO per share
$
0.32

$
0.32

$
0.32

$
0.32

$
0.32

 
 
 
 
 
 
FAD per share
$
0.33

$
0.33

$
0.33

$
0.33

$
0.33

Normalized FAD per share
$
0.33

$
0.33

$
0.33

$
0.33

$
0.33

 
 
 
 
 
 
Diluted weighted average shares outstanding [1]
75,657

76,545

81,687

84,324

88,266

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










CARETRUST REIT, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
 
 
 
 
March 31, 2019
 
December 31, 2018
Assets:
 
 
 
 
Real estate investments, net
$
1,259,336

 
$
1,216,237

Other real estate investments, net
29,419

 
18,045

Cash and cash equivalents
214,354

 
36,792

Accounts and other receivables, net
8,360

 
11,387

Prepaid expenses and other assets
8,759

 
8,668

Deferred financing costs, net
3,758

 
633

 
 
 
Total assets
$
1,523,986

 
$
1,291,762

 
 
 
 
 
 
 
Liabilities and Equity:
 
 
 
Senior unsecured notes payable, net
$
295,342

 
$
295,153

Senior unsecured term loan, net
198,555

 
99,612

Unsecured revolving credit facility
185,000

 
95,000

Accounts payable and accrued liabilities
13,972

 
15,967

Dividends payable
20,086

 
17,783

 
 
 
Total liabilities
712,955

 
523,515

 
 
 
 
 
 
 
Equity:
 
 
 
 
Common stock
884

 
859

Additional paid-in capital
1,012,295

 
965,578

Cumulative distributions in excess of earnings
(202,148
)
 
(198,190
)
 
 
 
Total equity
811,031

 
768,247

 
 
 
Total liabilities and equity
$
1,523,986

 
$
1,291,762








CARETRUST REIT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 
For the Three Months Ended March 31,
 
2019
 
2018
Cash flows from operating activities:
 
 
 
Net income
$
16,053

 
$
14,607

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization (including a below-market ground lease)
11,906

 
11,582

Amortization of deferred financing costs
541

 
484

Amortization of stock-based compensation
994

 
904

Straight-line rental income
(463
)
 
(591
)
Noncash interest income
(10
)
 
(106
)
Gain on sale of real estate

 
(2,051
)
Change in operating assets and liabilities:
 
 
 
Accounts and other receivables, net
(1,220
)
 
(155
)
Prepaid expenses and other assets
(116
)
 
(36
)
Accounts payable and accrued liabilities
2,389

 
(2,579
)
Net cash provided by operating activities
30,074

 
22,059

Cash flows from investing activities:
 
 
 
Acquisitions of real estate
(52,697
)
 
(47,103
)
Improvements to real estate
(452
)
 
(11
)
Purchases of equipment, furniture and fixtures
(1,806
)
 
(27
)
Investment in real estate mortgage and other loans receivable
(11,389
)
 

Principal payments received on real estate mortgage and other loans receivable
411

 
23

Escrow deposits for acquisitions of real estate
(375
)
 
(1,000
)
Net proceeds from the sale of real estate
131

 
13,004

Net cash used in investing activities
(66,177
)
 
(35,114
)
Cash flows from financing activities:
 
 
 
Proceeds from the issuance of common stock, net
47,260

 
(10
)
Proceeds from the issuance of senior unsecured term loan
200,000

 

Borrowings under unsecured revolving credit facility
185,000

 
60,000

Payments on unsecured revolving credit facility
(95,000
)
 
(25,000
)
Payments on senior unsecured term loan
(100,000
)
 

Payments of deferred financing costs
(4,390
)
 

Net-settle adjustment on restricted stock
(1,495
)
 
(605
)
Dividends paid on common stock
(17,710
)
 
(14,044
)
Net cash provided by financing activities
213,665

 
20,341

Net increase in cash and cash equivalents
177,562

 
7,286

Cash and cash equivalents, beginning of period
36,792

 
6,909

Cash and cash equivalents, end of period
$
214,354

 
$
14,195







CARETRUST REIT, INC.
DEBT SUMMARY
(dollars in thousands)
 (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31, 2019
 
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

 
43.8
%
 
$
(4,658
)
 
$
295,342

 
 
 
 
 
 
 
 
 
 
 
 
Floating Rate Debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior unsecured term loan
3.989
%
[1]
2026
 
200,000

 
29.2
%
 
(1,445
)
 
198,555

 
 
 
 
 
 
 
 
 
 
 
 
Unsecured revolving credit facility
3.599
%
[2]
2024
[3]
185,000

 
27.0
%
 

[4]
185,000

 
3.802
%
 
 
 
385,000

 
56.2
%
 
(1,445
)
 
383,555

 
 
 
 
 
 
 
 
 
 
 
 
Total Debt
4.436
%
 
 
 
$
685,000

 
100.0
%
 
$
(6,103
)
 
$
678,897

 
 
 
 
 
 
 
 
 
 
 
 
[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 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.







CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES
 (shares in thousands)
 (Unaudited)
 
 
 
 
 
 
 
 
 
 
 2019 Guidance
 
 
 
 
 
 
 
 
 
 
 
 
Low
 
High
Net income
$
0.84

 
$
0.86

 
Real estate related depreciation and amortization
0.51

 
0.51

Funds from Operations (FFO)
1.35

 
1.37

Normalized FFO
$
1.35

 
$
1.37

 
 
 
 
 
Net income
$
0.84

 
$
0.86

 
Real estate related depreciation and amortization
0.51

 
0.51

 
Amortization of deferred financing fees
0.02

 
0.02

 
Amortization of stock-based compensation
0.04

 
0.04

 
Straight-line rental income
(0.01
)
 
(0.01
)
Funds Available for Distribution (FAD)
1.40

 
1.42

Normalized FAD
$
1.40

 
$
1.42

Weighted average shares outstanding:
 
 
 
 
Diluted
93,498

 
93,498










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=12886467&doc=28




exhibit992ctreq12019fina
EXHIBITEXHIBITEXHIBIT 99.2 99.2 99.2 Avantara Crown Point (Parker, CO) Downey Care Center (Downey, 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, including, without limitation, their respective obligations to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities; (ii) the ability of our tenants to comply with applicable laws, rules and regulations in the operation of the properties we lease to them; (iii) 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; (iv) 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; (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 law 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 included in our Annual Report on Form 10-K for the year ended December 31, 2018, 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. 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 the SEC's website at www.sec.gov. Information in this supplement is provided as of March 31, 2019, unless specifically stated otherwise. We expressly disclaim any obligation to update or revise any information in this supplement (including2 forward-looking statements), whether to reflect any change in our expectations, any change in events, conditions or circumstances, or otherwise. As used in this supplement, unless the context requires otherwise, references to “CTRE,” “CareTrust,” “CareTrust REIT” or the “Company” refer to CareTrust REIT, Inc. and its consolidated subsidiaries. GAAP refers to generally accepted accounting principles in the United States of America. 2


 
Company Profile Company Profile 3 CareTrust at a Glance 4 CareTrust REIT is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition and leasing Investments 5 of seniors housing and healthcare-related properties. CareTrust REIT generates revenues primarily by leasing properties to a diverse Portfolio Overview group of local, regional and national seniors housing operators, healthcare services providers, and other healthcare-related businesses. Portfolio Performance 6 Tenant Summary 7 Since its debut as a standalone public company on June 1, 2014, and as of May 7, 2019, CareTrust REIT has expanded its tenant roster Rent Diversification by Tenant 8 to 22 operators, and has grown its real estate portfolio to 212 net-leased healthcare properties and three operated seniors housing properties across 28 states, consisting of 21,520 operating beds/units. As of May 7, 2019, we also had other real estate investments Geographic Diversification 9 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 March 31, 2019) Closing Price: $23.46 52 Week Range: $24.10– $12.73 Market Cap: $2,087M Enterprise Value: $2,557M Outstanding Shares: 88.9M 199 27 States Credit Ratings Properties Credit Ratings S&P S&PCorporate Rating: B+ (positive) CorporateSenior Unsecured Rating: BB-Notes: (positive) BB- Senior Unsecured Notes: BB Moody’s 20 Operators Moody’sCorporate Rating: B1 (positive) CorporateSenior Unsecured Rating: Ba2Notes: (stable) B1 19,668 $1,503.8 M Senior Unsecured Notes: Ba2 Operating Investments Beds/Units Note: 44 Amounts are as of March 31, 2019 and exclude our three operated seniors housing properties, two preferred equity investments and two mortgage loans receivable.


 
Investments (dollars in thousands) Property Initial Initial Operating Cost per Initial Yield Date Operator Type Location Facilities Investment[1] Bed/Unit [2] Bed/Unit [3] Initial Rent [4] [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% 2018 Investments 12 111,950 1,103 101 9,955 8.9% 01/31/2019 WLC Management Campus IL 1 8,940 128 70 854 9.6% 02/11/2019 Covenant Care SNF CA 4 43,938 492 89 3,983 9.1% 02/11/2019 Covenant Care[7] SNF IL 5 11,389 440 26 1,025 9.0% 04/01/2019 PMG and Southwest LTC ("Project Gulf Coast") SNF, Campus LA/TX 12 214,958 1,734 124 19,030 8.9% 05/01/2019 Next Gen P, LLC SNF TX 1 10,019 118 85 900 9.0% 2019 Investments 23 289,244 2,912 112 25,792 8.9% Total Post Spin-off Investments[6] 132 1,265,659 12,136 107 115,170 9.1% Total Investments[6] 226 $ 1,767,332 22,189 $ 80 $ 171,170 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 two mortgage loans 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 two mortgage loans 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 March 31, 2019 Operating % of Total % of Total Asset Type Facilities Beds/Units Investment [1] Investment Rent [2] Rent Current Yield [3] Skilled Nursing 144 14,190 $1,069,094 71.1% $109,743 72.7% 10.3% Multi-Service Campus 19 2,662 212,789 14.1% 21,215 14.0% 10.0% Seniors Housing 36 2,816 221,929 14.8% 20,063 13.3% 9.0% Total Net-Leased Assets [4] 199 19,668 $1,503,812 100.0% $151,021 100.0% 10.0% Total Portfolio Total Portfolio less The Ensign Group & Transitioned Facilities[6] For the twelve-month period ended December 31, 2018 [5] For the twelve-month period ended December 31, 2018 [5] EBITDAR EBITDARM EBITDAR EBITDARM Asset Type Coverage Coverage Occupancy Coverage Coverage Occupancy Skilled Nursing 1.81x 2.37x 77.0% 1.44x 1.93x 77.6% Multi-Service Campus 1.72x 2.16x 77.5% 1.54x 1.91x 76.9% Seniors Housing 1.30x 1.53x 83.4% 1.04x 1.22x 87.2% Total 1.73x 2.23x 78.1% 1.37x 1.78x 79.2% Notes: [1] Investment for pre-spin properties represents Ensign's gross book value. Investment for post-spin properties represents CareTrust REIT’s cumulative capital investment. Capital investment includes purchase price, transaction costs and landlord-funded capital expenditures, if any. [2] Rent represents March 2019 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 two mortgage loans 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 and 2 OnPointe Health facilities transitioned in May 2018. See “Glossary” for additional information. 6


 
Tenant Summary 7


 
Rent Diversification by Tenant (dollars in thousands) As of March 31, 2019 Operating % of Total % of Total Facilities Beds/Units Investment[1] Investment Rent[2] Rent 1 The Ensign Group 93 9,860 510,121 33.9% 59,842 39.6% 2 Trillium Healthcare Group 18 1,362 128,778 8.6% 11,879 7.9% 3 Priority Management Group 7 981 121,285 8.1% 11,297 7.5% 4 Trio Healthcare 7 672 89,358 5.9% 8,785 5.8% 5 Cascadia Healthcare 11 914 86,168 5.7% 8,035 5.3% Total Top 5 Tenants 136 13,789 935,710 62.2% 99,838 66.1% 6 Providence Group 4 654 83,743 5.6% 7,760 5.1% 7 Covenant Care 6 789 69,478 4.6% 6,523 4.3% 8 Eduro Healthcare, LLC 6 752 70,760 4.7% 6,456 4.3% 9 Premier Senior Living Group 8 385 68,564 4.6% 6,181 4.1% 10 WLC Management 8 772 46,363 3.1% 4,725 3.1% Total Top 10 Tenants 168 17,141 1,274,618 84.8% 131,483 87.0% All Other Tenants 31 2,527 229,194 15.2% 19,538 13.0% Total [3] 199 19,668 $ 1,503,812 100.0% $ 151,021 100.0% Notes: [1] Investment for pre-spin properties represents Ensign's gross book value. Investment for post-spin properties represents CareTrust REIT’s cumulative capital investment. Capital investment includes purchase price, transaction costs and landlord-funded capital expenditures, if any. [2] Rent represents March 2019 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 two mortgage loans receivable. 8


 
Top Five States OH: 11.3% AZ: 6.1% CA: 21.5% ID: 7.0% 1 ALF TX: 18.1% Others: 36.0% Run-Rate Rent Run-Rate 1 ALF OH: 12.9% AZ: 4.0% CA: 19.2% ID: 6.8% 1 SNF TX: 17.9% Investment Others: 39.2% OH: 7.5% AZ: 6.7% CA: 18.2% ID: 6.3% TX: 21.1% Beds/Units Others: 40.2% 9


 
Rent Diversification by State (dollars in thousands) As of March 31, 2019 Net-Leased Assets by State Operating % of Total % of Total Facilities Beds/Units Investment[1] Investment Rent[2] Rent 1 California 30 3,584 $ 289,365 19.2% $ 32,438 21.5% 2 Texas 34 4,145 268,791 17.9% 27,370 18.1% 3 Ohio 16 1,484 194,378 12.9% 17,098 11.3% 4 Idaho 15 1,241 101,602 6.8% 10,596 7.0% 5 Arizona 10 1,327 60,753 4.0% 9,219 6.1% Top 5 States 105 11,781 914,889 60.8% 96,721 64.0% 6 Michigan 10 669 76,624 5.1% 7,065 4.7% 7 Washington 12 1,015 61,730 4.1% 6,405 4.2% 8 Utah 12 1,306 77,322 5.1% 6,188 4.1% 9 Colorado 7 770 60,435 4.0% 5,945 3.9% 10 Iowa 15 986 53,488 3.6% 5,665 3.8% Top 10 States 161 16,527 1,244,488 82.7% 127,989 84.7% All Other States 38 3,141 259,324 17.3% 23,032 15.3% Total[3] 199 19,668 $ 1,503,812 100.0% $ 151,021 100.0% Notes: [1] Investment for pre-spin properties represents Ensign's gross book value. For post-spin properties, Investment represents CareTrust REIT’s cumulative capital investment. Capital investment includes purchase price, transaction costs and landlord-funded capital expenditures, if any. [2] Rent represents March 2019 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 two mortgage loans receivable. 10


 
Lease Maturities (dollars in thousands) As of March 31, 2019 Lease Maturity % of Total % of Total Year[1] Investment[2] Investment Rent[3] Rent 2026 58,157 3.9% 6,606 4.4% 2027 55,929 3.7% 5,861 3.9% 2028 79,914 5.3% 7,977 5.3% 2029 115,381 7.7% 10,086 6.7% 2030 283,398 18.8% 25,512 16.9% 2031 343,442 22.8% 33,049 21.9% 2032 216,919 14.4% 23,014 15.2% 2033 234,830 15.6% 27,668 18.3% 2034 115,842 7.8% 11,248 7.4% Total[4] $ 1,503,812 100.0% $ 151,021 100.0% 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 March 2019 rent, annualized. [4] All amounts exclude our three operated seniors housing properties and our two preferred equity investments and two mortgage loans receivable. 21.9% 18.3% 16.9% 15.2% 6.7% 7.4% of Rent 4.4% 5.3% % 3.9% 2026 2027 2028 2029 2030 2031 2032 2033 2034 Lease Maturity Year 11


 
12


 
Consolidated Income Statements (amounts in thousands, except per share data) Three Months Ended March 31, 2019 2018 Revenues: Rental income $ 38,347 $ 33,816 Tenant reimbursements[1] — 2,968 Independent living facilities 860 799 Interest and other income 451 518 Total revenues 39,658 38,101 Expenses: Depreciation and amortization 11,902 11,577 Interest expense 6,860 7,092 Property taxes 826 2,968 Independent living facilities 707 716 General and administrative 3,310 3,192 Total expenses 23,605 25,545 Other income: Gain on sale of real estate — 2,051 Net income $ 16,053 $ 14,607 Earnings per common share: Basic $ 0.18 $ 0.19 Diluted $ 0.18 $ 0.19 Weighted-average number of common shares: Basic 88,010 75,504 Diluted 88,010 75,504 Dividends declared per common share $ 0.225 $ 0.205 Notes: [1] Prior to the adoption of the ASU 842, we recognized tenant recoveries as tenant reimbursement revenues regardless of whether the third party was paid by the lessor or lessee. In the three months ended March 31, 2019, we recognized real estate taxes of $0.8 million, which were paid by us directly to third parties and classified as rental income on our condensed consolidated income statement. 13


 
Reconciliation of EBITDA, FFO and FAD Quarter Quarter Quarter Quarter Quarter Ended Ended Ended Ended Ended (amounts in thousands, except per share data) March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 March 31, 2019 Net income $ 14,607 $ 13,267 $ 14,510 $ 15,539 $ 16,053 Depreciation and amortization 11,577 11,299 11,351 11,539 11,902 Interest expense 7,092 7,285 6,805 6,678 6,860 Amortization of stock-based compensation 904 924 988 1,032 994 EBITDA 34,180 32,775 33,654 34,788 35,809 Gain on sale of real estate (2,051) — — — — Normalized EBITDA $ 32,129 $ 32,775 $ 33,654 $ 34,788 $ 35,809 Net income $ 14,607 $ 13,267 $ 14,510 $ 15,539 $ 16,053 Real estate related depreciation and amortization 11,549 11,265 11,330 11,520 11,884 Gain on sale of real estate (2,051) — — — — Funds from Operations (FFO) 24,105 24,532 25,840 27,059 27,937 Normalized FFO $ 24,105 $ 24,532 $ 25,840 $ 27,059 $ 27,937 See Glossary for additional information. 14


 
Reconciliation of EBITDA, FFO and FAD (continued) Quarter Quarter Quarter Quarter Quarter Ended Ended Ended Ended Ended (amounts in thousands, except per share data) March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 March 31, 2019 Net income $ 14,607 $ 13,267 $ 14,510 $ 15,539 $ 16,053 Real estate related depreciation and amortization 11,549 11,265 11,330 11,520 11,884 Amortization of deferred financing fees 484 484 484 486 541 Amortization of stock-based compensation 904 924 988 1,032 994 Straight-line rental income (591) (342) (698) (702) (463) Gain on sale of real estate (2,051) — — — — Funds Available for Distribution (FAD) 24,902 25,598 26,614 27,875 29,009 Normalized FAD $ 24,902 $ 25,598 $ 26,614 $ 27,875 $ 29,009 FFO per share $ 0.32 $ 0.32 $ 0.32 $ 0.32 $ 0.32 Normalized FFO per share $ 0.32 $ 0.32 $ 0.32 $ 0.32 $ 0.32 FAD per share $ 0.33 $ 0.33 $ 0.33 $ 0.33 $ 0.33 Normalized FAD per share $ 0.33 $ 0.33 $ 0.33 $ 0.33 $ 0.33 Diluted weighted average shares outstanding [1] 75,657 76,545 81,687 84,324 88,266 [1] For the periods presented, the diluted weighted average shares have been calculated using the treasury stock method. See Glossary for additional information. 15


 
Consolidated Balance Sheets (dollars in thousands) March 31, 2019 December 31, 2018 Assets: Real estate investments, net $ 1,259,336 $ 1,216,237 Other real estate investments, net 29,419 18,045 Cash and cash equivalents 214,354 36,792 Accounts and other receivables, net 8,360 11,387 Prepaid expenses and other assets 8,759 8,668 Deferred financing costs, net 3,758 633 Total assets $ 1,523,986 $ 1,291,762 Liabilities and Equity: Senior unsecured notes payable, net $ 295,342 $ 295,153 Senior unsecured term loan, net 198,555 99,612 Unsecured revolving credit facility 185,000 95,000 Accounts payable and accrued liabilities 13,972 15,967 Dividends payable 20,086 17,783 Total liabilities 712,955 523,515 Equity: Common stock 884 859 Additional paid-in capital 1,012,295 965,578 Cumulative distributions in excess of earnings (202,148) (198,190) Total equity 811,031 768,247 Total liabilities and equity $ 1,523,986 $ 1,291,762 16


 
Key Debt Metrics Net Debt to Normalized EBITDA [1][2] Net Debt to Enterprise Value [3] 5.1 36.5% 34.1% 4.6 4.5 4.6 30.8% 30.5% 4.4 28.8% 4.1 24.1% 24.7% 24.2% 3.7 22.3% 3.6 3.5 20.2% 3.3 3.3 18.1% 6 6 7 7 7 7 8 8 8 8 9 6 6 7 7 7 7 8 8 8 8 9 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 0 1 1 0 0 1 1 0 0 1 1 0 1 1 0 0 1 1 0 0 1 1 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 9 2 3 6 9 2 3 6 9 2 3 9 2 3 6 9 2 3 6 9 2 3 1 1 1 1 1 1 [1] 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] Net Debt to Enterprise Value compares total debt as of the last day of the quarter to CareTrust REIT’s Enterprise Value as of the last day of the quarter. See “Glossary” for additional information. 17


 
Debt Summary (dollars in thousands) March 31, 2019 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 43.8% $ (4,658) $ 295,342 Floating Rate Debt Senior unsecured term loan 3.989% [1] 2026 200,000 29.2% (1,445) 198,555 Unsecured revolving credit facility 3.599% [2] 2024 [3] 185,000 27.0% — [4] 185,000 3.802% 385,000 56.2% (1,445) 383,555 Total Debt 4.436% $ 685,000 100.0% $ (6,103) $ 678,897 Debt Maturity Schedule $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 1.50% 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 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. 18


 
2019 Guidance (shares in thousands) Low High Net income $ 0.84 $ 0.86 Real estate related depreciation and amortization 0.51 0.51 Funds from Operations (FFO) 1.35 1.37 Normalized FFO $ 1.35 $ 1.37 Net income $ 0.84 $ 0.86 Real estate related depreciation and amortization 0.51 0.51 Amortization of deferred financing fees 0.02 0.02 Amortization of stock-based compensation 0.04 0.04 Straight-line rental income (0.01) (0.01) Funds Available for Distribution (FAD) 1.40 1.42 Normalized FAD $ 1.40 $ 1.42 Weighted average shares outstanding: Diluted 93,498 93,498 See “Glossary” for additional information. 19


 
Equity Capital Transactions Follow-On Equity Offering Activity[1] 2015 2016 2019[2] Q1 Q2 Q3 Q4 Total Q1 Q2[3] 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 At-the-Market Offering Activity 2016 2017 2018 2019 Q1[2] Number of Shares (000s) 924 10,574 10,265 2,459 Average Price per Share $ 15.31 $ 16.43 $ 17.76 $ 19.48 Gross Proceeds (000s) $ 14,147 $ 173,760 $ 182,321 $ 47,893 Notes: [1] Represents average offering price per share for follow-on equity offerings. [2] In connection with the entry into the equity distribution agreement and the commencement of the new $300.0 million ATM Program in March 2019 (the "New ATM Program") our “at-the-market” equity offering program pursuant to our prior equity distribution agreement, dated as of May 17, 2017, was terminated. There was no New ATM Program activity for the three months ended March 31, 2019. As of March 31, 2019, CareTrust REIT had $300.0 million available for future issuances under the New ATM Program. [3] On April 15, 2019, we completed an underwritten public offering pursuant to which we sold 6,641,250 shares of our common stock, par value $0.01 per share, at an initial price to the public of $23.35, including 866,250 shares of common stock sold pursuant to the full exercise of an option to purchase additional shares of common stock granted to the underwriters, resulting in approximately $148.4 million in net proceeds, after deducting the underwriting discount and estimated gross offering expenses. 20


 
Other Financial Highlights Dividend History Normalized FFO Payout Ratio [1][2] $0.225 66.1% 66.1% 70.3% 60.7% 63.8% 64.1% 64.1% 64.1% 64.1% $0.205 $0.205 $0.205 $0.205 59.7% $0.185 $0.185 $0.185 $0.185 $0.17 6 7 7 7 7 8 8 8 8 9 6 7 7 7 7 8 8 8 8 9 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 3 3 /2 /2 / / / / / / / / / / 1 1 0 0 1 1 / / 1 1 1 1 0 0 1 1 0 0 1 1 3 3 3 3 3 3 6 9 3 3 3 3 3 3 3 3 3 3 3 3 / / / / / / / / / / / / / / / / / / 2 3 6 9 2 3 2 3 2 3 6 9 2 3 6 9 2 3 1 1 1 1 1 1 Normalized FFO per Share [2] Normalized FFO [2] $27,937 $0.32 $0.32 $0.32 $0.32 $0.32 $27,059 $0.31 $25,840 $24,532 $23,639 $24,105 $0.29 $20,622 $21,028 $19,331 $0.28 $0.28 $0.28 $17,160 6 7 7 7 7 8 8 8 8 9 6 7 7 7 7 8 8 8 8 9 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 1 1 0 0 1 1 0 0 1 1 1 1 0 0 1 1 0 0 1 1 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 2 3 6 9 2 3 6 9 2 3 2 3 6 9 2 3 6 9 2 3 1 1 1 1 1 1 Notes: [1] Normalized FFO Payout Ratio represents dividends declared divided by Normalized FFO, in each case for the applicable quarter. [2] See “Financials & Filings - Quarterly Results” on the Investors section of our website at http://investor.caretrustreit.com for a reconciliation of Normalized FFO and Normalized FFO per Share to the most directly comparable GAAP measure 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 December 31, 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 December 31, 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 December 31, 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)