CareTrust REIT Announces Third Quarter 2023 Operating Results

Conference Call Scheduled for Friday, November 10, 2023 at 1:00 pm ET

SAN CLEMENTE, Calif.–(BUSINESS WIRE)–CareTrust REIT, Inc. (NYSE:CTRE) today reported operating results for the quarter ended September 30, 2023, as well as other recent events.

For the quarter, CareTrust REIT reported:

• 97.5% of contractual rents collected;
• Net income of $8.7 million and net income per share of $0.08;
• Normalized FFO of $36.6 million and normalized FFO per share of $0.35;
• Normalized FAD of $38.8 million and normalized FAD per share of $0.37;
• A quarterly dividend of $0.28 per share, representing a payout ratio of approximately 76% on normalized FAD;
• Payment of the outstanding balance on the unsecured revolving credit facility;
• Publication of its 2022 Corporate Sustainability Report;
• Investments of $45.4 million in the quarter and $280.0 million YTD at an estimated stabilized yield of 9.9% and 9.8%, respectively, after rent ramps or rent resets under the lease are completed;
• Settlement of 16.3 million shares under its ATM Program, including both forward contract sales and direct issuances, for gross proceeds of $323.9 million;
• 4.9 million shares remain outstanding on a forward basis under its ATM Program, to be settled for expected gross proceeds of $98.0 million;
• Net Debt to Annualized Normalized Run Rate EBITDA of 2.5x

CareTrust’s President and Chief Executive Officer, Dave Sedgwick, commented on the quarter’s results, “We are pleased to report continued progress on all fronts as we head into 2024. We believe our portfolio, exceptional operators, and strong balance sheet are built to take advantage of the favorable investment landscape in front of us.” Mr. Sedgwick continued, “The entire team has excelled this year in facilitating a return to significant external growth and setting the table for 2024. There has been a continual flow of deals crossing our desk that we expect will continue in 2024. The investment pipeline today is roughly $175 million, not including larger portfolio deals we regularly review.”

The Company updated its portfolio management activity. After completing the sale of one seniors housing property in October, the Company has two seniors housing properties, one skilled nursing facility, and one portfolio of 11 skilled nursing facilities held for sale. With respect to portfolio performance in the quarter, the Company’s reported EBITDARM and EBITDAR lease coverage, excluding Provider Relief Funds, improved to 2.75x and 2.16x, respectively. Based on preliminary operator reports, skilled nursing and seniors housing occupancy slightly increased in August 2023 compared to June 2023 (excluding properties held for sale) to 76.5% from 75.9% and to 75.5% from 75.2%, respectively.

Financial Results for Quarter Ended September 30, 2023

Chief Financial Officer, Bill Wagner, reported that, for the third quarter, CareTrust reported net income of $8.7 million, or $0.08 per diluted weighted-average common share, normalized FFO of $36.6 million, or $0.35 per diluted weighted-average common share, and normalized FAD of $38.8 million, or $0.37 per diluted weighted-average common share.

Liquidity

As of quarter end, CareTrust reported net debt-to-annualized normalized run rate EBITDA of 2.5x, which is below the Company’s target leverage range of 4.0x to 5.0x, and a net debt-to-enterprise value of approximately 16.8%. Mr. Wagner stated that, as of today, the Company has no borrowings outstanding on its $600 million revolving credit line, with no scheduled debt maturities prior to 2026. He also disclosed that CareTrust currently has approximately $36 million in cash on hand. He further noted that the Company had $496.0 million in available authorization remaining on its at-the-market equity program as of September 30, 2023. During the period July 1, 2023 to November 8, 2023, the Company settled 12.8 million shares outstanding under ATM forward contracts at a weighted average sales price of $19.85 for gross proceeds of $253.5 million. In addition, during that same period, CareTrust sold 5.4 million shares in direct sales under the ATM Program at a weighted average sales price of $20.03 for gross proceeds of $108.0 million. As of November 8, 2023, 3.0 million shares of common stock at a weighted average initial sales price of $19.99 per share, before commissions and offering expenses, remain outstanding under ATM forward contracts. «With substantial availability on our revolver, and equity markets readily accessible to us at present, we continue to have a wide range of capital options for funding our opportunistic growth strategy,» said Mr. Wagner.

Dividend Maintained

During the quarter, CareTrust declared a quarterly dividend of $0.28 per common share. On an annualized basis, the payout ratio was approximately 80% based on third quarter 2023 normalized FFO, and 76% based on normalized FAD.

Conference Call

A conference call will be held on Friday, November 10, 2023, at 1:00 p.m. Eastern Time (10:00 a.m. Pacific Time), during which CareTrust’s management will discuss third quarter results, recent developments and other matters. The toll-free dial-in number is 1 (888) 510-2379 or toll dial-in number is 1 (646) 960-0691 and the conference ID number is 6808360. 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. This call will be recorded, and will be available for replay via the website for 30 days following the call.

About CareTrust™

CareTrust REIT, Inc. is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition, development and leasing of skilled nursing, seniors housing and other healthcare-related properties. With a nationwide portfolio of long-term net-leased properties, and a growing portfolio of quality operators leasing them, CareTrust REIT is pursuing both external and organic growth opportunities across the United States. More information about CareTrust REIT is available at www.caretrustreit.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

This press release contains, and the related conference call will include, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical statements of fact and statements regarding the Company’s intent, belief or expectations, including, but not limited to, statements regarding the following: future financial and financing plans; strategies related to the Company’s business and its portfolio, including acquisition opportunities and disposition plans; growth prospects; operating and financial performance; expectations regarding the settlement of ATM forward contracts and the making of distributions and payment of dividends; and the performance of the Company’s tenants and operators and their respective facilities.

Words such as “anticipate,” “believe,” “could,” “expect,” “estimate,” “intend,” “may,” “plan,” “seek,” “should,” “will,” “would,” and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements, though not all forward-looking statements contain these identifying words. The Company’s forward-looking statements are based on management’s current expectations and beliefs, and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although the Company believes that the assumptions underlying these forward-looking statements are reasonable, they are not guarantees and the Company can give no assurance that its expectations will be attained. Factors which could have a material adverse effect on the Company’s operations and future prospects or which could cause actual results to differ materially from expectations include, but are not limited to: (i) the impact of possible additional surges of COVID-19 infections or the risk of other pandemics, epidemics or infectious disease outbreaks, measures taken to prevent the spread of such outbreaks and the related impact on our business or the businesses of our tenants; (ii) the ability and willingness of our tenants to meet and/or perform their obligations under the triple-net leases we have entered into with them, including, without limitation, their respective obligations to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities; (iii) the risk that we may have to incur additional impairment charges related to our assets held for sale if we are unable to sell such assets at the prices we expect; (iv) the ability of our tenants to comply with applicable laws, rules and regulations in the operation of the properties we lease to them; (v) the ability and willingness of our tenants to renew their leases with us upon their expiration, and the ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we replace an existing tenant, as well as any obligations, including indemnification obligations, we may incur in connection with the replacement of an existing tenant; (vi) the availability of and the ability to identify (a) tenants who meet our credit and operating standards, and (b) suitable acquisition opportunities, and the ability to acquire and lease the respective properties to such tenants on favorable terms; (vii) the ability to generate sufficient cash flows to service our outstanding indebtedness; (viii) access to debt and equity capital markets; (ix) fluctuating interest rates and inflation; (x) the ability to retain our key management personnel; (xi) the ability to maintain our status as a real estate investment trust (“REIT”); (xii) changes in the U.S. tax law and other state, federal or local laws, whether or not specific to REITs; (xiii) other risks inherent in the real estate business, including potential liability relating to environmental matters and illiquidity of real estate investments; and (xiv) additional factors included in our Annual Report on Form 10-K for the year ended December 31, 2022 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023, June 30, 2023 and September 30, 2023, including in the sections entitled “Risk Factors” in Item 1A of such reports, as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the SEC.

This press release and the related conference call provides information about the Company’s financial results as of and for the quarter ended September 30, 2023 and is provided as of the date hereof, unless specifically stated otherwise. The Company expressly disclaims any obligation to update or revise any information in this press release or the related conference call (and replays thereof), including forward-looking statements, whether to reflect any change in the Company’s expectations, any change in events, conditions or circumstances, or otherwise.

As used in this press release or the related conference call, unless the context requires otherwise, references to “CTRE,” «CareTrust,» “CareTrust REIT” or the “Company” refer to CareTrust REIT, Inc. and its consolidated subsidiaries. GAAP refers to generally accepted accounting principles in the United States of America.

Contacts

CareTrust REIT, Inc.

(949) 542-3130

[email protected]

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