Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Sabra Reports Fourth Quarter 2023 Results; Introduces 2024 Guidance By: Sabra Health Care REIT, Inc. via Business Wire February 27, 2024 at 16:05 PM EST Sabra Health Care REIT, Inc. (“Sabra,” the “Company” or “we”) (Nasdaq: SBRA) today announced its results of operations for the fourth quarter of 2023. FOURTH QUARTER 2023 RESULTS AND RECENT EVENTS Results per diluted common share for the fourth quarter of 2023 were as follows: Net Income: $0.07 FFO: $0.30 Normalized FFO: $0.32 AFFO: $0.32 Normalized AFFO: $0.33 EBITDARM Coverage Summary: Skilled Nursing/Transitional Care: 1.78x (1.72x excluding Provider Relief Funds) Senior Housing - Leased: 1.28x Behavioral Health: 1.85x Specialty Hospitals & Other: 7.00x During the fourth quarter of 2023, Sabra expanded its relationship with Ignite Medical Resorts through the $38.8 million acquisition of two skilled nursing facilities with a cash lease yield of 9.5%. On February 1, 2024, Sabra’s Board of Directors declared a quarterly cash dividend of $0.30 per share of common stock. The dividend will be paid on February 29, 2024 to common stockholders of record as of the close of business on February 13, 2024. 2024 GUIDANCE We are introducing 2024 earnings guidance ranges as follows (attributable to common stockholders, per diluted common share): Net Income: $0.53 - $0.57 FFO: $1.33 - $1.37 Normalized FFO: $1.34 - $1.38 AFFO: $1.38 - $1.42 Normalized AFFO: $1.39 - $1.43 Earnings guidance above assumes no 2024 acquisition or disposition activity. Commenting on the fourth quarter’s results, Rick Matros, CEO and Chair, said, “We are pleased with the continued progress toward stability and growth that we experienced in the fourth quarter of 2023. Occupancy and rent coverage continued to improve in our skilled nursing and senior housing platforms. We expanded our relationship with Ignite Medical Resorts, an operator who had outstanding success navigating through the pandemic. For the first time since the pandemic, Sabra has introduced full-year guidance as we look forward to a return to earnings growth. Achieving the midpoint of our Normalized FFO per share and Normalized AFFO per share guidance range would represent a year-over-year increase of 5% and 6%, respectively. We want to thank all of our stakeholders for their continued support.” LIQUIDITY As of December 31, 2023, we had approximately $946.9 million of liquidity, consisting of unrestricted cash and cash equivalents of $41.3 million and available borrowings of $905.6 million under our revolving credit facility. As of December 31, 2023, we also had $500.0 million available under the ATM program. CONFERENCE CALL AND COMPANY INFORMATION A conference call with a simultaneous webcast to discuss the 2023 fourth quarter results will be held on Wednesday, February 28, 2024, at 10:00 am Pacific Time. The webcast URL is https://events.q4inc.com/attendee/290282806. The dial-in number for U.S. participants is (888) 596-4144. For participants outside the U.S., the dial-in number is (646) 968-2525. The conference ID number is 1382596. A digital replay of the call will be available on the Company’s website at www.sabrahealth.com. The Company’s supplemental information package for the fourth quarter will also be available on the Company’s website in the “Investors” section. ABOUT SABRA As of December 31, 2023, Sabra’s investment portfolio included 378 real estate properties held for investment (consisting of (i) 241 Skilled Nursing/Transitional Care facilities, (ii) 43 senior housing communities (“Senior Housing - Leased”), (iii) 61 senior housing communities operated by third-party property managers pursuant to property management agreements (“Senior Housing - Managed”), (iv) 18 Behavioral Health facilities and (v) 15 Specialty Hospitals and Other facilities), 14 investments in loans receivable (consisting of two mortgage loans and 12 other loans), five preferred equity investments and two investments in unconsolidated joint ventures. As of December 31, 2023, Sabra’s real estate properties held for investment included 37,834 beds/units, spread across the United States and Canada. FORWARD-LOOKING STATEMENTS SAFE HARBOR This release contains “forward-looking” statements as defined in the Private Securities Litigation Reform Act of 1995. Any statements that do not relate to historical or current facts or matters are forward-looking statements. These statements may be identified, without limitation, by the use of “expects,” “believes,” “intends,” “should” or comparable terms or the negative thereof. Examples of forward-looking statements include all statements regarding our expectations regarding earnings growth; and our other expectations regarding our future financial position (including our earnings guidance for 2024, as well as the assumptions set forth therein), results of operations, cash flows, liquidity, business strategy, growth opportunities, potential investments and dispositions, and plans and objectives for future operations and capital raising activity. Our actual results may differ materially from those projected or contemplated by our forward-looking statements as a result of various factors, including, among others, the following: increased labor costs and historically low unemployment; increases in market interest rates and inflation; pandemics or epidemics, including COVID-19, and the related impact on our tenants, borrowers and Senior Housing - Managed communities; operational risks with respect to our Senior Housing - Managed communities; competitive conditions in our industry; the loss of key management personnel; uninsured or underinsured losses affecting our properties; potential impairment charges and adjustments related to the accounting of our assets; the potential variability of our reported rental and related revenues as a result of Accounting Standards Update (“ASU”) 2016-02, Leases, as amended by subsequent ASUs; risks associated with our investment in our unconsolidated joint ventures; catastrophic weather and other natural or man-made disasters, the effects of climate change on our properties and a failure to implement sustainable and energy-efficient measures; increased operating costs and competition for our tenants, borrowers and Senior Housing - Managed communities; increased healthcare regulation and enforcement; our tenants’ dependency on reimbursement from governmental and other third-party payor programs; the effect of our tenants, operators or borrowers declaring bankruptcy or becoming insolvent; our ability to find replacement tenants and the impact of unforeseen costs in acquiring new properties; the impact of litigation and rising insurance costs on the business of our tenants; the impact of required regulatory approvals of transfers of healthcare properties; environmental compliance costs and liabilities associated with real estate properties we own; our tenants’, borrowers’ or operators’ failure to adhere to applicable privacy and data security laws, or a material breach of our or our tenants’, borrowers’ or operators’ information technology; our concentration in the healthcare property sector, particularly in skilled nursing/transitional care facilities and senior housing communities, which makes our profitability more vulnerable to a downturn in a specific sector than if we were investing in multiple industries; the significant amount of and our ability to service our indebtedness; covenants in our debt agreements that may restrict our ability to pay dividends, make investments, incur additional indebtedness and refinance indebtedness on favorable terms; adverse changes in our credit ratings; our ability to make dividend distributions at expected levels; our ability to raise capital through equity and debt financings; changes and uncertainty in macroeconomic conditions and disruptions in the financial markets; risks associated with our ownership of property outside the U.S., including currency fluctuations; the relatively illiquid nature of real estate investments; our ability to maintain our status as a real estate investment trust (“REIT”) under the federal tax laws; compliance with REIT requirements and certain tax and tax regulatory matters related to our status as a REIT; changes in tax laws and regulations affecting REITs; the ownership limits and takeover defenses in our governing documents and under Maryland law, which may restrict change of control or business combination opportunities; and the exclusive forum provisions in our bylaws. Additional information concerning risks and uncertainties that could affect our business can be found in our filings with the Securities and Exchange Commission (the “SEC”), including in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023. We do not intend, and we undertake no obligation, to update any forward-looking information to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events, unless required by law to do so. TENANT AND BORROWER INFORMATION This release includes information regarding certain of our tenants that lease properties from us and our borrowers, most of which are not subject to SEC reporting requirements. The information related to our tenants and borrowers that is provided in this release has been provided by, or derived from information provided by, such tenants and borrowers. We have not independently verified this information. We have no reason to believe that such information is inaccurate in any material respect. We are providing this data for informational purposes only. NOTE REGARDING NON-GAAP FINANCIAL MEASURES This release includes the following financial measures defined as non-GAAP financial measures by the SEC: funds from operations (“FFO”), Normalized FFO, Adjusted FFO (“AFFO”), Normalized AFFO, FFO per diluted common share, Normalized FFO per diluted common share, AFFO per diluted common share and Normalized AFFO per diluted common share. These measures may be different than non-GAAP financial measures used by other companies, and the presentation of these measures is not intended to be considered in isolation or as a substitute for financial information prepared and presented in accordance with U.S. generally accepted accounting principles. An explanation of these non-GAAP financial measures is included under “Reporting Definitions” in this release, and reconciliations of these non-GAAP financial measures to the GAAP financial measures we consider most comparable are included on the Investors section of our website at https://ir.sabrahealth.com/investors/financials/quarterly-results. SABRA HEALTH CARE REIT, INC. CONSOLIDATED STATEMENTS OF INCOME (LOSS) (dollars in thousands, except per share data) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Revenues: Rental and related revenues (1) $ 93,037 $ 103,318 $ 376,266 $ 400,586 Resident fees and services 61,256 52,699 236,153 186,672 Interest and other income 9,104 8,968 35,095 37,553 Total revenues 163,397 164,985 647,514 624,811 Expenses: Depreciation and amortization 42,876 49,927 183,087 187,782 Interest 27,940 27,898 112,964 105,471 Triple-net portfolio operating expenses 4,689 4,640 17,932 19,623 Senior housing - managed portfolio operating expenses 45,189 39,155 177,313 142,990 General and administrative 16,679 10,853 47,472 39,574 (Recovery of) provision for loan losses and other reserves (358 ) 153 191 141 Impairment of real estate 7,268 21,440 14,332 94,042 Total expenses 144,283 154,066 553,291 589,623 Other (expense) income: Loss on extinguishment of debt — — (1,541 ) (411 ) Other income (expense) 28 4 2,598 (1,097 ) Net loss on sales of real estate (732 ) (7,430 ) (76,625 ) (12,011 ) Total other expense (704 ) (7,426 ) (75,568 ) (13,519 ) Income before loss from unconsolidated joint ventures and income tax expense 18,410 3,493 18,655 21,669 Loss from unconsolidated joint ventures (761 ) (88,317 ) (2,897 ) (98,032 ) Income tax expense (493 ) (124 ) (2,002 ) (1,242 ) Net income (loss) $ 17,156 $ (84,948 ) $ 13,756 $ (77,605 ) Net income (loss), per: Basic common share $ 0.07 $ (0.37 ) $ 0.06 $ (0.34 ) Diluted common share $ 0.07 $ (0.37 ) $ 0.06 $ (0.34 ) Weighted average number of common shares outstanding, basic 231,224,840 230,986,260 231,203,391 230,947,895 Weighted average number of common shares outstanding, diluted 233,200,180 230,986,260 232,792,778 230,947,895 (1) See page 5 for additional details regarding Rental and related revenues. SABRA HEALTH CARE REIT, INC. CONSOLIDATED STATEMENTS OF INCOME (LOSS) - SUPPLEMENTAL INFORMATION (in thousands) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Cash rental income $ 87,233 $ 96,501 $ 352,277 $ 385,033 Straight-line rental income 1,693 1,219 5,392 8,261 Straight-line rental income receivable write-offs (1,004 ) — (2,514 ) (17,068 ) Above/below market lease amortization 1,229 1,569 5,821 6,299 Above/below market lease intangible write-offs — — — 326 Operating expense recoveries 3,886 4,029 15,290 17,735 Rental and related revenues $ 93,037 $ 103,318 $ 376,266 $ 400,586 SABRA HEALTH CARE REIT, INC. CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share data) December 31, 2023 December 31, 2022 Assets Real estate investments, net of accumulated depreciation of $1,021,086 and $913,345 as of December 31, 2023 and December 31, 2022, respectively $ 4,617,261 $ 4,959,343 Loans receivable and other investments, net 420,624 411,396 Investment in unconsolidated joint ventures 136,843 134,962 Cash and cash equivalents 41,285 49,308 Restricted cash 5,434 4,624 Lease intangible assets, net 30,897 40,131 Accounts receivable, prepaid expenses and other assets, net 133,806 147,908 Total assets $ 5,386,150 $ 5,747,672 Liabilities Secured debt, net $ 47,301 $ 49,232 Revolving credit facility 94,429 196,982 Term loans, net 537,120 526,129 Senior unsecured notes, net 1,735,253 1,734,431 Accounts payable and accrued liabilities 136,981 142,259 Lease intangible liabilities, net 32,532 42,244 Total liabilities 2,583,616 2,691,277 Equity Preferred stock, $0.01 par value; 10,000,000 shares authorized, zero shares issued and outstanding as of December 31, 2023 and December 31, 2022 — — Common stock, $0.01 par value; 500,000,000 shares authorized, 231,266,020 and 231,009,295 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively 2,313 2,310 Additional paid-in capital 4,494,755 4,486,967 Cumulative distributions in excess of net income (1,718,279 ) (1,451,945 ) Accumulated other comprehensive income 23,745 19,063 Total equity 2,802,534 3,056,395 Total liabilities and equity $ 5,386,150 $ 5,747,672 SABRA HEALTH CARE REIT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 31, 2023 2022 Cash flows from operating activities: Net income (loss) $ 13,756 $ (77,605 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 183,087 187,782 Non-cash rental and related revenues (8,699 ) 2,183 Non-cash interest income (372 ) (2,285 ) Non-cash interest expense 12,265 11,094 Stock-based compensation expense 7,917 7,453 Loss on extinguishment of debt 1,541 411 Provision for loan losses and other reserves 191 141 Net loss on sales of real estate 76,625 12,011 Impairment of real estate 14,332 94,042 Other-than-temporary impairment of unconsolidated joint ventures — 57,778 Loss from unconsolidated joint ventures 2,897 40,254 Distributions of earnings from unconsolidated joint ventures 3,469 — Other non-cash items (3,704 ) 2,167 Changes in operating assets and liabilities: Accounts receivable, prepaid expenses and other assets, net (11,078 ) (6,443 ) Accounts payable and accrued liabilities 8,344 (13,250 ) Net cash provided by operating activities 300,571 315,733 Cash flows from investing activities: Acquisition of real estate (78,530 ) (92,204 ) Origination and fundings of loans receivable (11,418 ) (23,812 ) Origination and fundings of preferred equity investments (11,023 ) (8,021 ) Additions to real estate (84,855 ) (54,473 ) Escrow deposits for potential investments — (780 ) Repayments of loans receivable 9,274 5,272 Repayments of preferred equity investments 5,460 5,376 Investment in unconsolidated joint ventures (5,235 ) (142,910 ) Net proceeds from the sales of real estate 247,622 87,304 Net proceeds from sales-type lease 25,490 — Deposits for potential sale of real estate — 8,000 Insurance proceeds 5,801 — Distributions in excess of earnings from unconsolidated joint ventures 544 — Net cash provided by (used in) investing activities 103,130 (216,248 ) Cash flows from financing activities: Net (repayments of) borrowings from revolving credit facility (104,338 ) 204,046 Proceeds from term loans 12,188 — Principal payments on term loans — (63,750 ) Principal payments on secured debt (1,979 ) (17,516 ) Payments of deferred financing costs (18,142 ) (20 ) Payment of contingent consideration (17,900 ) (2,500 ) Issuance of common stock, net (2,682 ) (4,810 ) Dividends paid on common stock (277,447 ) (277,157 ) Net cash used in financing activities (410,300 ) (161,707 ) Net decrease in cash, cash equivalents and restricted cash (6,599 ) (62,222 ) Effect of foreign currency translation on cash, cash equivalents and restricted cash (614 ) 268 Cash, cash equivalents and restricted cash, beginning of period 53,932 115,886 Cash, cash equivalents and restricted cash, end of period $ 46,719 $ 53,932 SABRA HEALTH CARE REIT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (in thousands) Year Ended December 31, 2023 2022 Supplemental disclosure of cash flow information: Interest paid $ 102,409 $ 97,723 Income taxes paid $ 1,670 $ 1,657 Supplemental disclosure of non-cash investing activities: Decrease in loans receivable and other investments due to acquisition of real estate $ 4,644 $ 14,311 SABRA HEALTH CARE REIT, INC. FUNDS FROM OPERATIONS (FFO), NORMALIZED FFO, ADJUSTED FUNDS FROM OPERATIONS (AFFO) AND NORMALIZED AFFO (dollars in thousands, except per share data) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Net income (loss) $ 17,156 $ (84,948 ) $ 13,756 $ (77,605 ) Add: Depreciation and amortization of real estate assets 42,876 49,927 183,087 187,782 Depreciation, amortization and impairment of real estate assets related to unconsolidated joint ventures 2,192 6,239 8,697 22,095 Net loss on sales of real estate 732 7,430 76,625 12,011 Net gain on sales of real estate related to unconsolidated joint ventures — — — (220 ) Impairment of real estate 7,268 21,440 14,332 94,042 Other-than-temporary impairment of unconsolidated joint ventures — 57,778 — 57,778 FFO $ 70,224 $ 57,866 $ 296,497 $ 295,883 Write-offs of cash and straight-line rental income receivable and lease intangibles 1,030 — 2,519 15,831 Lease termination income — (139 ) — (2,477 ) Loss on extinguishment of debt — — 1,541 411 (Recovery of) provision for loan losses and other reserves (358 ) 153 191 141 Deferred tax valuation allowance related to unconsolidated joint ventures — 19,613 — 19,613 Support payments paid to joint venture manager (1) — 6,370 — 12,250 Other normalizing items (2) 4,551 842 1,546 3,428 Normalized FFO $ 75,447 $ 84,705 $ 302,294 $ 345,080 FFO $ 70,224 $ 57,866 $ 296,497 $ 295,883 Stock-based compensation expense 2,449 2,086 7,917 7,453 Non-cash rental and related revenues (1,918 ) (2,787 ) (8,699 ) 2,183 Non-cash interest income 8 �� (602 ) (372 ) (2,285 ) Non-cash interest expense 3,086 2,794 12,265 11,094 Non-cash portion of loss on extinguishment of debt — — 1,541 411 (Recovery of) provision for loan losses and other reserves (358 ) 153 191 141 Deferred tax valuation allowance related to unconsolidated joint ventures — 19,613 — 19,613 Other adjustments related to unconsolidated joint ventures 131 (1,099 ) 502 (5,155 ) Other adjustments (3) 141 44 365 2,474 AFFO $ 73,763 $ 78,068 $ 310,207 $ 331,812 Cash portion of lease termination income — (139 ) — (2,477 ) Write-off of cash rental income — — — 71 Support payments paid to joint venture manager (1) — 6,370 — 12,250 Other normalizing items (2) 4,536 827 1,485 1,077 Normalized AFFO $ 78,299 $ 85,126 $ 311,692 $ 342,733 Amounts per diluted common share: Net income (loss) $ 0.07 $ (0.37 ) $ 0.06 $ (0.34 ) FFO $ 0.30 $ 0.25 $ 1.27 $ 1.28 Normalized FFO $ 0.32 $ 0.37 $ 1.30 $ 1.49 AFFO $ 0.32 $ 0.34 $ 1.33 $ 1.43 Normalized AFFO $ 0.33 $ 0.37 $ 1.33 $ 1.47 Weighted average number of common shares outstanding, diluted: Net income (loss) 233,200,180 230,986,260 232,792,778 230,947,895 FFO and Normalized FFO 233,200,180 232,059,703 232,792,778 231,851,542 AFFO and Normalized AFFO 234,021,772 232,868,137 233,883,279 232,784,543 (1) Funding for support payments did not require capital contributions from Sabra but rather were funded with proceeds received by our Enlivant unconsolidated joint venture from TPG for the issuance of senior preferred interests. (2) Other normalizing items for FFO and AFFO for the three months ended December 31, 2023 include a $3.8 million catch-up adjustment related to changes in performance-based assumptions on management's compensation. Other normalizing items for FFO and AFFO for the year ended December 31, 2023 include $3.7 million of gain on insurance proceeds and $1.6 million of transition expenses related to the transition of 14 Senior Housing - Managed communities to new operators. Other normalizing items for FFO for the year ended December 31, 2022 include $2.2 million of foreign currency transaction loss related to our Canadian borrowings. In addition, other normalizing items for FFO and AFFO include triple-net operating expenses, net of recoveries and certain adjustments for amounts recorded in the current period that relate to a prior period. (3) Other adjustments for the year ended December 31, 2022 includes $2.2 million of foreign currency transaction loss related to our Canadian borrowings. REPORTING DEFINITIONS Behavioral Health Includes behavioral hospitals that provide inpatient and outpatient care for patients with mental health conditions, chemical dependence or substance addictions and addiction treatment centers that provide treatment services for chemical dependence and substance addictions, which may include inpatient care, outpatient care, medical detoxification, therapy and counseling. EBITDARM Earnings before interest, taxes, depreciation, amortization, rent and management fees (“EBITDARM”) for a particular facility accruing to the operator/tenant of the property (not the Company), for the period presented. The Company uses EBITDARM in determining EBITDARM Coverage. EBITDARM has limitations as an analytical tool. EBITDARM does not reflect historical cash expenditures or future cash requirements for facility capital expenditures or contractual commitments. In addition, EBITDARM does not represent a property’s net income or cash flows from operations and should not be considered an alternative to those indicators. The Company utilizes EBITDARM to evaluate the core operations of the properties by eliminating management fees, which may vary by operator/tenant and operating structure, and as a supplemental measure of the ability of the Company’s operators/tenants and relevant guarantors to generate sufficient liquidity to meet related obligations to the Company. EBITDARM Coverage Represents the ratio of EBITDARM to cash rent for owned facilities (excluding Senior Housing - Managed communities) for the period presented. EBITDARM Coverage is a supplemental measure of a property’s ability to generate cash flows for the operator/tenant (not the Company) to meet the operator’s/tenant’s related cash rent and other obligations to the Company. However, its usefulness is limited by, among other things, the same factors that limit the usefulness of EBITDARM. EBITDARM Coverage includes only Stabilized Facilities and excludes facilities for which data is not available or meaningful. Funds From Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”)* The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company also believes that funds from operations, or FFO, as defined in accordance with the definition used by the National Association of Real Estate Investment Trusts (“Nareit”), and adjusted funds from operations, or AFFO (and related per share amounts) are important non-GAAP supplemental measures of the Company’s operating performance. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a real estate investment trust that uses historical cost accounting for depreciation could be less informative. Thus, Nareit created FFO as a supplemental measure of operating performance for real estate investment trusts that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP. FFO is defined as net income, computed in accordance with GAAP, excluding gains or losses from real estate dispositions and the Company’s share of gains or losses from real estate dispositions related to its unconsolidated joint ventures, plus real estate depreciation and amortization, net of amounts related to noncontrolling interests, plus the Company’s share of depreciation and amortization related to its unconsolidated joint ventures, and real estate impairment charges of both consolidated and unconsolidated entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. AFFO is defined as FFO excluding merger and acquisition costs, stock-based compensation expense, non-cash rental and related revenues, non-cash interest income, non-cash interest expense, non-cash portion of loss on extinguishment of debt, provision for loan losses and other reserves, non-cash lease termination income and deferred income taxes, as well as other non-cash revenue and expense items (including ineffectiveness gain/loss on derivative instruments, and non-cash revenue and expense amounts related to noncontrolling interests) and the Company’s share of non-cash adjustments related to its unconsolidated joint ventures. The Company believes that the use of FFO and AFFO (and the related per share amounts), combined with the required GAAP presentations, improves the understanding of the Company’s operating results among investors and makes comparisons of operating results among real estate investment trusts more meaningful. The Company considers FFO and AFFO to be useful measures for reviewing comparative operating and financial performance because, by excluding the applicable items listed above, FFO and AFFO can help investors compare the operating performance of the Company between periods or as compared to other companies. While FFO and AFFO are relevant and widely used measures of operating performance of real estate investment trusts, 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 and AFFO also do not consider the costs associated with capital expenditures related to the Company’s real estate assets nor do they purport to be indicative of cash available to fund the Company’s future cash requirements. Further, the Company’s computation of FFO and AFFO may not be comparable to FFO and AFFO reported by other real estate investment trusts that do not define FFO in accordance with the current Nareit definition or that interpret the current Nareit definition or define AFFO differently than the Company does. Normalized FFO and Normalized AFFO* Normalized FFO and Normalized AFFO represent FFO and AFFO, respectively, adjusted for certain income and expense items that the Company does not believe are indicative of its ongoing operating results. The Company considers Normalized FFO and Normalized AFFO to be useful measures to evaluate the Company’s operating results excluding these income and expense items to help investors compare the operating performance of the Company between periods or as compared to other companies. Normalized FFO and Normalized AFFO 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. Normalized FFO and Normalized AFFO also do not consider the costs associated with capital expenditures related to the Company’s real estate assets nor do they purport to be indicative of cash available to fund the Company’s future cash requirements. Further, the Company’s computation of Normalized FFO and Normalized AFFO may not be comparable to Normalized FFO and Normalized AFFO reported by other real estate investment trusts that do not define FFO in accordance with the current Nareit definition or that interpret the current Nareit definition or define FFO and AFFO or Normalized FFO and Normalized AFFO differently than the Company does. Senior Housing Senior Housing communities include independent living, assisted living, continuing care retirement and memory care communities. Senior Housing - Managed Senior Housing communities operated by third-party property managers pursuant to property management agreements. Skilled Nursing/Transitional Care Skilled Nursing/Transitional Care facilities include skilled nursing, transitional care, multi-license designation and mental health facilities. Specialty Hospitals and Other Includes acute care, long-term acute care and rehabilitation hospitals, facilities that provide residential services, which may include assistance with activities of daily living, and other facilities not classified as Skilled Nursing/Transitional Care, Senior Housing or Behavioral Health. Stabilized Facility At the time of acquisition, the Company classifies each facility as either stabilized or non-stabilized. In addition, the Company may classify a facility as non-stabilized after acquisition. Circumstances that could result in a facility being classified as non-stabilized include newly completed developments, facilities undergoing major renovations or additions, facilities being repositioned or transitioned to new operators, and significant transitions within the tenants’ business model. Such facilities are typically reclassified to stabilized upon the earlier of maintaining consistent performance or 24 months after the date of classification as non-stabilized. Stabilized Facilities generally exclude (i) facilities held for sale, (ii) strategic disposition candidates, (iii) facilities being transitioned to a new operator, (iv) facilities being transitioned from being leased by the Company to being operated by the Company and (v) leased facilities acquired during the three months preceding the period presented. *Non-GAAP Financial Measures Reconciliations, definitions and important discussions regarding the usefulness and limitations of the Non-GAAP Financial Measures used in this release can be found at https://ir.sabrahealth.com/investors/financials/quarterly-results. View source version on businesswire.com: https://www.businesswire.com/news/home/20240227748505/en/Contacts Investor & Media Inquiries: (888) 393-8248 or investorinquiries@sabrahealth.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Sabra Reports Fourth Quarter 2023 Results; Introduces 2024 Guidance By: Sabra Health Care REIT, Inc. via Business Wire February 27, 2024 at 16:05 PM EST Sabra Health Care REIT, Inc. (“Sabra,” the “Company” or “we”) (Nasdaq: SBRA) today announced its results of operations for the fourth quarter of 2023. FOURTH QUARTER 2023 RESULTS AND RECENT EVENTS Results per diluted common share for the fourth quarter of 2023 were as follows: Net Income: $0.07 FFO: $0.30 Normalized FFO: $0.32 AFFO: $0.32 Normalized AFFO: $0.33 EBITDARM Coverage Summary: Skilled Nursing/Transitional Care: 1.78x (1.72x excluding Provider Relief Funds) Senior Housing - Leased: 1.28x Behavioral Health: 1.85x Specialty Hospitals & Other: 7.00x During the fourth quarter of 2023, Sabra expanded its relationship with Ignite Medical Resorts through the $38.8 million acquisition of two skilled nursing facilities with a cash lease yield of 9.5%. On February 1, 2024, Sabra’s Board of Directors declared a quarterly cash dividend of $0.30 per share of common stock. The dividend will be paid on February 29, 2024 to common stockholders of record as of the close of business on February 13, 2024. 2024 GUIDANCE We are introducing 2024 earnings guidance ranges as follows (attributable to common stockholders, per diluted common share): Net Income: $0.53 - $0.57 FFO: $1.33 - $1.37 Normalized FFO: $1.34 - $1.38 AFFO: $1.38 - $1.42 Normalized AFFO: $1.39 - $1.43 Earnings guidance above assumes no 2024 acquisition or disposition activity. Commenting on the fourth quarter’s results, Rick Matros, CEO and Chair, said, “We are pleased with the continued progress toward stability and growth that we experienced in the fourth quarter of 2023. Occupancy and rent coverage continued to improve in our skilled nursing and senior housing platforms. We expanded our relationship with Ignite Medical Resorts, an operator who had outstanding success navigating through the pandemic. For the first time since the pandemic, Sabra has introduced full-year guidance as we look forward to a return to earnings growth. Achieving the midpoint of our Normalized FFO per share and Normalized AFFO per share guidance range would represent a year-over-year increase of 5% and 6%, respectively. We want to thank all of our stakeholders for their continued support.” LIQUIDITY As of December 31, 2023, we had approximately $946.9 million of liquidity, consisting of unrestricted cash and cash equivalents of $41.3 million and available borrowings of $905.6 million under our revolving credit facility. As of December 31, 2023, we also had $500.0 million available under the ATM program. CONFERENCE CALL AND COMPANY INFORMATION A conference call with a simultaneous webcast to discuss the 2023 fourth quarter results will be held on Wednesday, February 28, 2024, at 10:00 am Pacific Time. The webcast URL is https://events.q4inc.com/attendee/290282806. The dial-in number for U.S. participants is (888) 596-4144. For participants outside the U.S., the dial-in number is (646) 968-2525. The conference ID number is 1382596. A digital replay of the call will be available on the Company’s website at www.sabrahealth.com. The Company’s supplemental information package for the fourth quarter will also be available on the Company’s website in the “Investors” section. ABOUT SABRA As of December 31, 2023, Sabra’s investment portfolio included 378 real estate properties held for investment (consisting of (i) 241 Skilled Nursing/Transitional Care facilities, (ii) 43 senior housing communities (“Senior Housing - Leased”), (iii) 61 senior housing communities operated by third-party property managers pursuant to property management agreements (“Senior Housing - Managed”), (iv) 18 Behavioral Health facilities and (v) 15 Specialty Hospitals and Other facilities), 14 investments in loans receivable (consisting of two mortgage loans and 12 other loans), five preferred equity investments and two investments in unconsolidated joint ventures. As of December 31, 2023, Sabra’s real estate properties held for investment included 37,834 beds/units, spread across the United States and Canada. FORWARD-LOOKING STATEMENTS SAFE HARBOR This release contains “forward-looking” statements as defined in the Private Securities Litigation Reform Act of 1995. Any statements that do not relate to historical or current facts or matters are forward-looking statements. These statements may be identified, without limitation, by the use of “expects,” “believes,” “intends,” “should” or comparable terms or the negative thereof. Examples of forward-looking statements include all statements regarding our expectations regarding earnings growth; and our other expectations regarding our future financial position (including our earnings guidance for 2024, as well as the assumptions set forth therein), results of operations, cash flows, liquidity, business strategy, growth opportunities, potential investments and dispositions, and plans and objectives for future operations and capital raising activity. Our actual results may differ materially from those projected or contemplated by our forward-looking statements as a result of various factors, including, among others, the following: increased labor costs and historically low unemployment; increases in market interest rates and inflation; pandemics or epidemics, including COVID-19, and the related impact on our tenants, borrowers and Senior Housing - Managed communities; operational risks with respect to our Senior Housing - Managed communities; competitive conditions in our industry; the loss of key management personnel; uninsured or underinsured losses affecting our properties; potential impairment charges and adjustments related to the accounting of our assets; the potential variability of our reported rental and related revenues as a result of Accounting Standards Update (“ASU”) 2016-02, Leases, as amended by subsequent ASUs; risks associated with our investment in our unconsolidated joint ventures; catastrophic weather and other natural or man-made disasters, the effects of climate change on our properties and a failure to implement sustainable and energy-efficient measures; increased operating costs and competition for our tenants, borrowers and Senior Housing - Managed communities; increased healthcare regulation and enforcement; our tenants’ dependency on reimbursement from governmental and other third-party payor programs; the effect of our tenants, operators or borrowers declaring bankruptcy or becoming insolvent; our ability to find replacement tenants and the impact of unforeseen costs in acquiring new properties; the impact of litigation and rising insurance costs on the business of our tenants; the impact of required regulatory approvals of transfers of healthcare properties; environmental compliance costs and liabilities associated with real estate properties we own; our tenants’, borrowers’ or operators’ failure to adhere to applicable privacy and data security laws, or a material breach of our or our tenants’, borrowers’ or operators’ information technology; our concentration in the healthcare property sector, particularly in skilled nursing/transitional care facilities and senior housing communities, which makes our profitability more vulnerable to a downturn in a specific sector than if we were investing in multiple industries; the significant amount of and our ability to service our indebtedness; covenants in our debt agreements that may restrict our ability to pay dividends, make investments, incur additional indebtedness and refinance indebtedness on favorable terms; adverse changes in our credit ratings; our ability to make dividend distributions at expected levels; our ability to raise capital through equity and debt financings; changes and uncertainty in macroeconomic conditions and disruptions in the financial markets; risks associated with our ownership of property outside the U.S., including currency fluctuations; the relatively illiquid nature of real estate investments; our ability to maintain our status as a real estate investment trust (“REIT”) under the federal tax laws; compliance with REIT requirements and certain tax and tax regulatory matters related to our status as a REIT; changes in tax laws and regulations affecting REITs; the ownership limits and takeover defenses in our governing documents and under Maryland law, which may restrict change of control or business combination opportunities; and the exclusive forum provisions in our bylaws. Additional information concerning risks and uncertainties that could affect our business can be found in our filings with the Securities and Exchange Commission (the “SEC”), including in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023. We do not intend, and we undertake no obligation, to update any forward-looking information to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events, unless required by law to do so. TENANT AND BORROWER INFORMATION This release includes information regarding certain of our tenants that lease properties from us and our borrowers, most of which are not subject to SEC reporting requirements. The information related to our tenants and borrowers that is provided in this release has been provided by, or derived from information provided by, such tenants and borrowers. We have not independently verified this information. We have no reason to believe that such information is inaccurate in any material respect. We are providing this data for informational purposes only. NOTE REGARDING NON-GAAP FINANCIAL MEASURES This release includes the following financial measures defined as non-GAAP financial measures by the SEC: funds from operations (“FFO”), Normalized FFO, Adjusted FFO (“AFFO”), Normalized AFFO, FFO per diluted common share, Normalized FFO per diluted common share, AFFO per diluted common share and Normalized AFFO per diluted common share. These measures may be different than non-GAAP financial measures used by other companies, and the presentation of these measures is not intended to be considered in isolation or as a substitute for financial information prepared and presented in accordance with U.S. generally accepted accounting principles. An explanation of these non-GAAP financial measures is included under “Reporting Definitions” in this release, and reconciliations of these non-GAAP financial measures to the GAAP financial measures we consider most comparable are included on the Investors section of our website at https://ir.sabrahealth.com/investors/financials/quarterly-results. SABRA HEALTH CARE REIT, INC. CONSOLIDATED STATEMENTS OF INCOME (LOSS) (dollars in thousands, except per share data) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Revenues: Rental and related revenues (1) $ 93,037 $ 103,318 $ 376,266 $ 400,586 Resident fees and services 61,256 52,699 236,153 186,672 Interest and other income 9,104 8,968 35,095 37,553 Total revenues 163,397 164,985 647,514 624,811 Expenses: Depreciation and amortization 42,876 49,927 183,087 187,782 Interest 27,940 27,898 112,964 105,471 Triple-net portfolio operating expenses 4,689 4,640 17,932 19,623 Senior housing - managed portfolio operating expenses 45,189 39,155 177,313 142,990 General and administrative 16,679 10,853 47,472 39,574 (Recovery of) provision for loan losses and other reserves (358 ) 153 191 141 Impairment of real estate 7,268 21,440 14,332 94,042 Total expenses 144,283 154,066 553,291 589,623 Other (expense) income: Loss on extinguishment of debt — — (1,541 ) (411 ) Other income (expense) 28 4 2,598 (1,097 ) Net loss on sales of real estate (732 ) (7,430 ) (76,625 ) (12,011 ) Total other expense (704 ) (7,426 ) (75,568 ) (13,519 ) Income before loss from unconsolidated joint ventures and income tax expense 18,410 3,493 18,655 21,669 Loss from unconsolidated joint ventures (761 ) (88,317 ) (2,897 ) (98,032 ) Income tax expense (493 ) (124 ) (2,002 ) (1,242 ) Net income (loss) $ 17,156 $ (84,948 ) $ 13,756 $ (77,605 ) Net income (loss), per: Basic common share $ 0.07 $ (0.37 ) $ 0.06 $ (0.34 ) Diluted common share $ 0.07 $ (0.37 ) $ 0.06 $ (0.34 ) Weighted average number of common shares outstanding, basic 231,224,840 230,986,260 231,203,391 230,947,895 Weighted average number of common shares outstanding, diluted 233,200,180 230,986,260 232,792,778 230,947,895 (1) See page 5 for additional details regarding Rental and related revenues. SABRA HEALTH CARE REIT, INC. CONSOLIDATED STATEMENTS OF INCOME (LOSS) - SUPPLEMENTAL INFORMATION (in thousands) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Cash rental income $ 87,233 $ 96,501 $ 352,277 $ 385,033 Straight-line rental income 1,693 1,219 5,392 8,261 Straight-line rental income receivable write-offs (1,004 ) — (2,514 ) (17,068 ) Above/below market lease amortization 1,229 1,569 5,821 6,299 Above/below market lease intangible write-offs — — — 326 Operating expense recoveries 3,886 4,029 15,290 17,735 Rental and related revenues $ 93,037 $ 103,318 $ 376,266 $ 400,586 SABRA HEALTH CARE REIT, INC. CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share data) December 31, 2023 December 31, 2022 Assets Real estate investments, net of accumulated depreciation of $1,021,086 and $913,345 as of December 31, 2023 and December 31, 2022, respectively $ 4,617,261 $ 4,959,343 Loans receivable and other investments, net 420,624 411,396 Investment in unconsolidated joint ventures 136,843 134,962 Cash and cash equivalents 41,285 49,308 Restricted cash 5,434 4,624 Lease intangible assets, net 30,897 40,131 Accounts receivable, prepaid expenses and other assets, net 133,806 147,908 Total assets $ 5,386,150 $ 5,747,672 Liabilities Secured debt, net $ 47,301 $ 49,232 Revolving credit facility 94,429 196,982 Term loans, net 537,120 526,129 Senior unsecured notes, net 1,735,253 1,734,431 Accounts payable and accrued liabilities 136,981 142,259 Lease intangible liabilities, net 32,532 42,244 Total liabilities 2,583,616 2,691,277 Equity Preferred stock, $0.01 par value; 10,000,000 shares authorized, zero shares issued and outstanding as of December 31, 2023 and December 31, 2022 — — Common stock, $0.01 par value; 500,000,000 shares authorized, 231,266,020 and 231,009,295 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively 2,313 2,310 Additional paid-in capital 4,494,755 4,486,967 Cumulative distributions in excess of net income (1,718,279 ) (1,451,945 ) Accumulated other comprehensive income 23,745 19,063 Total equity 2,802,534 3,056,395 Total liabilities and equity $ 5,386,150 $ 5,747,672 SABRA HEALTH CARE REIT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 31, 2023 2022 Cash flows from operating activities: Net income (loss) $ 13,756 $ (77,605 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 183,087 187,782 Non-cash rental and related revenues (8,699 ) 2,183 Non-cash interest income (372 ) (2,285 ) Non-cash interest expense 12,265 11,094 Stock-based compensation expense 7,917 7,453 Loss on extinguishment of debt 1,541 411 Provision for loan losses and other reserves 191 141 Net loss on sales of real estate 76,625 12,011 Impairment of real estate 14,332 94,042 Other-than-temporary impairment of unconsolidated joint ventures — 57,778 Loss from unconsolidated joint ventures 2,897 40,254 Distributions of earnings from unconsolidated joint ventures 3,469 — Other non-cash items (3,704 ) 2,167 Changes in operating assets and liabilities: Accounts receivable, prepaid expenses and other assets, net (11,078 ) (6,443 ) Accounts payable and accrued liabilities 8,344 (13,250 ) Net cash provided by operating activities 300,571 315,733 Cash flows from investing activities: Acquisition of real estate (78,530 ) (92,204 ) Origination and fundings of loans receivable (11,418 ) (23,812 ) Origination and fundings of preferred equity investments (11,023 ) (8,021 ) Additions to real estate (84,855 ) (54,473 ) Escrow deposits for potential investments — (780 ) Repayments of loans receivable 9,274 5,272 Repayments of preferred equity investments 5,460 5,376 Investment in unconsolidated joint ventures (5,235 ) (142,910 ) Net proceeds from the sales of real estate 247,622 87,304 Net proceeds from sales-type lease 25,490 — Deposits for potential sale of real estate — 8,000 Insurance proceeds 5,801 — Distributions in excess of earnings from unconsolidated joint ventures 544 — Net cash provided by (used in) investing activities 103,130 (216,248 ) Cash flows from financing activities: Net (repayments of) borrowings from revolving credit facility (104,338 ) 204,046 Proceeds from term loans 12,188 — Principal payments on term loans — (63,750 ) Principal payments on secured debt (1,979 ) (17,516 ) Payments of deferred financing costs (18,142 ) (20 ) Payment of contingent consideration (17,900 ) (2,500 ) Issuance of common stock, net (2,682 ) (4,810 ) Dividends paid on common stock (277,447 ) (277,157 ) Net cash used in financing activities (410,300 ) (161,707 ) Net decrease in cash, cash equivalents and restricted cash (6,599 ) (62,222 ) Effect of foreign currency translation on cash, cash equivalents and restricted cash (614 ) 268 Cash, cash equivalents and restricted cash, beginning of period 53,932 115,886 Cash, cash equivalents and restricted cash, end of period $ 46,719 $ 53,932 SABRA HEALTH CARE REIT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (in thousands) Year Ended December 31, 2023 2022 Supplemental disclosure of cash flow information: Interest paid $ 102,409 $ 97,723 Income taxes paid $ 1,670 $ 1,657 Supplemental disclosure of non-cash investing activities: Decrease in loans receivable and other investments due to acquisition of real estate $ 4,644 $ 14,311 SABRA HEALTH CARE REIT, INC. FUNDS FROM OPERATIONS (FFO), NORMALIZED FFO, ADJUSTED FUNDS FROM OPERATIONS (AFFO) AND NORMALIZED AFFO (dollars in thousands, except per share data) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Net income (loss) $ 17,156 $ (84,948 ) $ 13,756 $ (77,605 ) Add: Depreciation and amortization of real estate assets 42,876 49,927 183,087 187,782 Depreciation, amortization and impairment of real estate assets related to unconsolidated joint ventures 2,192 6,239 8,697 22,095 Net loss on sales of real estate 732 7,430 76,625 12,011 Net gain on sales of real estate related to unconsolidated joint ventures — — — (220 ) Impairment of real estate 7,268 21,440 14,332 94,042 Other-than-temporary impairment of unconsolidated joint ventures — 57,778 — 57,778 FFO $ 70,224 $ 57,866 $ 296,497 $ 295,883 Write-offs of cash and straight-line rental income receivable and lease intangibles 1,030 — 2,519 15,831 Lease termination income — (139 ) — (2,477 ) Loss on extinguishment of debt — — 1,541 411 (Recovery of) provision for loan losses and other reserves (358 ) 153 191 141 Deferred tax valuation allowance related to unconsolidated joint ventures — 19,613 — 19,613 Support payments paid to joint venture manager (1) — 6,370 — 12,250 Other normalizing items (2) 4,551 842 1,546 3,428 Normalized FFO $ 75,447 $ 84,705 $ 302,294 $ 345,080 FFO $ 70,224 $ 57,866 $ 296,497 $ 295,883 Stock-based compensation expense 2,449 2,086 7,917 7,453 Non-cash rental and related revenues (1,918 ) (2,787 ) (8,699 ) 2,183 Non-cash interest income 8 �� (602 ) (372 ) (2,285 ) Non-cash interest expense 3,086 2,794 12,265 11,094 Non-cash portion of loss on extinguishment of debt — — 1,541 411 (Recovery of) provision for loan losses and other reserves (358 ) 153 191 141 Deferred tax valuation allowance related to unconsolidated joint ventures — 19,613 — 19,613 Other adjustments related to unconsolidated joint ventures 131 (1,099 ) 502 (5,155 ) Other adjustments (3) 141 44 365 2,474 AFFO $ 73,763 $ 78,068 $ 310,207 $ 331,812 Cash portion of lease termination income — (139 ) — (2,477 ) Write-off of cash rental income — — — 71 Support payments paid to joint venture manager (1) — 6,370 — 12,250 Other normalizing items (2) 4,536 827 1,485 1,077 Normalized AFFO $ 78,299 $ 85,126 $ 311,692 $ 342,733 Amounts per diluted common share: Net income (loss) $ 0.07 $ (0.37 ) $ 0.06 $ (0.34 ) FFO $ 0.30 $ 0.25 $ 1.27 $ 1.28 Normalized FFO $ 0.32 $ 0.37 $ 1.30 $ 1.49 AFFO $ 0.32 $ 0.34 $ 1.33 $ 1.43 Normalized AFFO $ 0.33 $ 0.37 $ 1.33 $ 1.47 Weighted average number of common shares outstanding, diluted: Net income (loss) 233,200,180 230,986,260 232,792,778 230,947,895 FFO and Normalized FFO 233,200,180 232,059,703 232,792,778 231,851,542 AFFO and Normalized AFFO 234,021,772 232,868,137 233,883,279 232,784,543 (1) Funding for support payments did not require capital contributions from Sabra but rather were funded with proceeds received by our Enlivant unconsolidated joint venture from TPG for the issuance of senior preferred interests. (2) Other normalizing items for FFO and AFFO for the three months ended December 31, 2023 include a $3.8 million catch-up adjustment related to changes in performance-based assumptions on management's compensation. Other normalizing items for FFO and AFFO for the year ended December 31, 2023 include $3.7 million of gain on insurance proceeds and $1.6 million of transition expenses related to the transition of 14 Senior Housing - Managed communities to new operators. Other normalizing items for FFO for the year ended December 31, 2022 include $2.2 million of foreign currency transaction loss related to our Canadian borrowings. In addition, other normalizing items for FFO and AFFO include triple-net operating expenses, net of recoveries and certain adjustments for amounts recorded in the current period that relate to a prior period. (3) Other adjustments for the year ended December 31, 2022 includes $2.2 million of foreign currency transaction loss related to our Canadian borrowings. REPORTING DEFINITIONS Behavioral Health Includes behavioral hospitals that provide inpatient and outpatient care for patients with mental health conditions, chemical dependence or substance addictions and addiction treatment centers that provide treatment services for chemical dependence and substance addictions, which may include inpatient care, outpatient care, medical detoxification, therapy and counseling. EBITDARM Earnings before interest, taxes, depreciation, amortization, rent and management fees (“EBITDARM”) for a particular facility accruing to the operator/tenant of the property (not the Company), for the period presented. The Company uses EBITDARM in determining EBITDARM Coverage. EBITDARM has limitations as an analytical tool. EBITDARM does not reflect historical cash expenditures or future cash requirements for facility capital expenditures or contractual commitments. In addition, EBITDARM does not represent a property’s net income or cash flows from operations and should not be considered an alternative to those indicators. The Company utilizes EBITDARM to evaluate the core operations of the properties by eliminating management fees, which may vary by operator/tenant and operating structure, and as a supplemental measure of the ability of the Company’s operators/tenants and relevant guarantors to generate sufficient liquidity to meet related obligations to the Company. EBITDARM Coverage Represents the ratio of EBITDARM to cash rent for owned facilities (excluding Senior Housing - Managed communities) for the period presented. EBITDARM Coverage is a supplemental measure of a property’s ability to generate cash flows for the operator/tenant (not the Company) to meet the operator’s/tenant’s related cash rent and other obligations to the Company. However, its usefulness is limited by, among other things, the same factors that limit the usefulness of EBITDARM. EBITDARM Coverage includes only Stabilized Facilities and excludes facilities for which data is not available or meaningful. Funds From Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”)* The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company also believes that funds from operations, or FFO, as defined in accordance with the definition used by the National Association of Real Estate Investment Trusts (“Nareit”), and adjusted funds from operations, or AFFO (and related per share amounts) are important non-GAAP supplemental measures of the Company’s operating performance. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a real estate investment trust that uses historical cost accounting for depreciation could be less informative. Thus, Nareit created FFO as a supplemental measure of operating performance for real estate investment trusts that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP. FFO is defined as net income, computed in accordance with GAAP, excluding gains or losses from real estate dispositions and the Company’s share of gains or losses from real estate dispositions related to its unconsolidated joint ventures, plus real estate depreciation and amortization, net of amounts related to noncontrolling interests, plus the Company’s share of depreciation and amortization related to its unconsolidated joint ventures, and real estate impairment charges of both consolidated and unconsolidated entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. AFFO is defined as FFO excluding merger and acquisition costs, stock-based compensation expense, non-cash rental and related revenues, non-cash interest income, non-cash interest expense, non-cash portion of loss on extinguishment of debt, provision for loan losses and other reserves, non-cash lease termination income and deferred income taxes, as well as other non-cash revenue and expense items (including ineffectiveness gain/loss on derivative instruments, and non-cash revenue and expense amounts related to noncontrolling interests) and the Company’s share of non-cash adjustments related to its unconsolidated joint ventures. The Company believes that the use of FFO and AFFO (and the related per share amounts), combined with the required GAAP presentations, improves the understanding of the Company’s operating results among investors and makes comparisons of operating results among real estate investment trusts more meaningful. The Company considers FFO and AFFO to be useful measures for reviewing comparative operating and financial performance because, by excluding the applicable items listed above, FFO and AFFO can help investors compare the operating performance of the Company between periods or as compared to other companies. While FFO and AFFO are relevant and widely used measures of operating performance of real estate investment trusts, 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 and AFFO also do not consider the costs associated with capital expenditures related to the Company’s real estate assets nor do they purport to be indicative of cash available to fund the Company’s future cash requirements. Further, the Company’s computation of FFO and AFFO may not be comparable to FFO and AFFO reported by other real estate investment trusts that do not define FFO in accordance with the current Nareit definition or that interpret the current Nareit definition or define AFFO differently than the Company does. Normalized FFO and Normalized AFFO* Normalized FFO and Normalized AFFO represent FFO and AFFO, respectively, adjusted for certain income and expense items that the Company does not believe are indicative of its ongoing operating results. The Company considers Normalized FFO and Normalized AFFO to be useful measures to evaluate the Company’s operating results excluding these income and expense items to help investors compare the operating performance of the Company between periods or as compared to other companies. Normalized FFO and Normalized AFFO 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. Normalized FFO and Normalized AFFO also do not consider the costs associated with capital expenditures related to the Company’s real estate assets nor do they purport to be indicative of cash available to fund the Company’s future cash requirements. Further, the Company’s computation of Normalized FFO and Normalized AFFO may not be comparable to Normalized FFO and Normalized AFFO reported by other real estate investment trusts that do not define FFO in accordance with the current Nareit definition or that interpret the current Nareit definition or define FFO and AFFO or Normalized FFO and Normalized AFFO differently than the Company does. Senior Housing Senior Housing communities include independent living, assisted living, continuing care retirement and memory care communities. Senior Housing - Managed Senior Housing communities operated by third-party property managers pursuant to property management agreements. Skilled Nursing/Transitional Care Skilled Nursing/Transitional Care facilities include skilled nursing, transitional care, multi-license designation and mental health facilities. Specialty Hospitals and Other Includes acute care, long-term acute care and rehabilitation hospitals, facilities that provide residential services, which may include assistance with activities of daily living, and other facilities not classified as Skilled Nursing/Transitional Care, Senior Housing or Behavioral Health. Stabilized Facility At the time of acquisition, the Company classifies each facility as either stabilized or non-stabilized. In addition, the Company may classify a facility as non-stabilized after acquisition. Circumstances that could result in a facility being classified as non-stabilized include newly completed developments, facilities undergoing major renovations or additions, facilities being repositioned or transitioned to new operators, and significant transitions within the tenants’ business model. Such facilities are typically reclassified to stabilized upon the earlier of maintaining consistent performance or 24 months after the date of classification as non-stabilized. Stabilized Facilities generally exclude (i) facilities held for sale, (ii) strategic disposition candidates, (iii) facilities being transitioned to a new operator, (iv) facilities being transitioned from being leased by the Company to being operated by the Company and (v) leased facilities acquired during the three months preceding the period presented. *Non-GAAP Financial Measures Reconciliations, definitions and important discussions regarding the usefulness and limitations of the Non-GAAP Financial Measures used in this release can be found at https://ir.sabrahealth.com/investors/financials/quarterly-results. View source version on businesswire.com: https://www.businesswire.com/news/home/20240227748505/en/Contacts Investor & Media Inquiries: (888) 393-8248 or investorinquiries@sabrahealth.com
Sabra Health Care REIT, Inc. (“Sabra,” the “Company” or “we”) (Nasdaq: SBRA) today announced its results of operations for the fourth quarter of 2023. FOURTH QUARTER 2023 RESULTS AND RECENT EVENTS Results per diluted common share for the fourth quarter of 2023 were as follows: Net Income: $0.07 FFO: $0.30 Normalized FFO: $0.32 AFFO: $0.32 Normalized AFFO: $0.33 EBITDARM Coverage Summary: Skilled Nursing/Transitional Care: 1.78x (1.72x excluding Provider Relief Funds) Senior Housing - Leased: 1.28x Behavioral Health: 1.85x Specialty Hospitals & Other: 7.00x During the fourth quarter of 2023, Sabra expanded its relationship with Ignite Medical Resorts through the $38.8 million acquisition of two skilled nursing facilities with a cash lease yield of 9.5%. On February 1, 2024, Sabra’s Board of Directors declared a quarterly cash dividend of $0.30 per share of common stock. The dividend will be paid on February 29, 2024 to common stockholders of record as of the close of business on February 13, 2024. 2024 GUIDANCE We are introducing 2024 earnings guidance ranges as follows (attributable to common stockholders, per diluted common share): Net Income: $0.53 - $0.57 FFO: $1.33 - $1.37 Normalized FFO: $1.34 - $1.38 AFFO: $1.38 - $1.42 Normalized AFFO: $1.39 - $1.43 Earnings guidance above assumes no 2024 acquisition or disposition activity. Commenting on the fourth quarter’s results, Rick Matros, CEO and Chair, said, “We are pleased with the continued progress toward stability and growth that we experienced in the fourth quarter of 2023. Occupancy and rent coverage continued to improve in our skilled nursing and senior housing platforms. We expanded our relationship with Ignite Medical Resorts, an operator who had outstanding success navigating through the pandemic. For the first time since the pandemic, Sabra has introduced full-year guidance as we look forward to a return to earnings growth. Achieving the midpoint of our Normalized FFO per share and Normalized AFFO per share guidance range would represent a year-over-year increase of 5% and 6%, respectively. We want to thank all of our stakeholders for their continued support.” LIQUIDITY As of December 31, 2023, we had approximately $946.9 million of liquidity, consisting of unrestricted cash and cash equivalents of $41.3 million and available borrowings of $905.6 million under our revolving credit facility. As of December 31, 2023, we also had $500.0 million available under the ATM program. CONFERENCE CALL AND COMPANY INFORMATION A conference call with a simultaneous webcast to discuss the 2023 fourth quarter results will be held on Wednesday, February 28, 2024, at 10:00 am Pacific Time. The webcast URL is https://events.q4inc.com/attendee/290282806. The dial-in number for U.S. participants is (888) 596-4144. For participants outside the U.S., the dial-in number is (646) 968-2525. The conference ID number is 1382596. A digital replay of the call will be available on the Company’s website at www.sabrahealth.com. The Company’s supplemental information package for the fourth quarter will also be available on the Company’s website in the “Investors” section. ABOUT SABRA As of December 31, 2023, Sabra’s investment portfolio included 378 real estate properties held for investment (consisting of (i) 241 Skilled Nursing/Transitional Care facilities, (ii) 43 senior housing communities (“Senior Housing - Leased”), (iii) 61 senior housing communities operated by third-party property managers pursuant to property management agreements (“Senior Housing - Managed”), (iv) 18 Behavioral Health facilities and (v) 15 Specialty Hospitals and Other facilities), 14 investments in loans receivable (consisting of two mortgage loans and 12 other loans), five preferred equity investments and two investments in unconsolidated joint ventures. As of December 31, 2023, Sabra’s real estate properties held for investment included 37,834 beds/units, spread across the United States and Canada. FORWARD-LOOKING STATEMENTS SAFE HARBOR This release contains “forward-looking” statements as defined in the Private Securities Litigation Reform Act of 1995. Any statements that do not relate to historical or current facts or matters are forward-looking statements. These statements may be identified, without limitation, by the use of “expects,” “believes,” “intends,” “should” or comparable terms or the negative thereof. Examples of forward-looking statements include all statements regarding our expectations regarding earnings growth; and our other expectations regarding our future financial position (including our earnings guidance for 2024, as well as the assumptions set forth therein), results of operations, cash flows, liquidity, business strategy, growth opportunities, potential investments and dispositions, and plans and objectives for future operations and capital raising activity. Our actual results may differ materially from those projected or contemplated by our forward-looking statements as a result of various factors, including, among others, the following: increased labor costs and historically low unemployment; increases in market interest rates and inflation; pandemics or epidemics, including COVID-19, and the related impact on our tenants, borrowers and Senior Housing - Managed communities; operational risks with respect to our Senior Housing - Managed communities; competitive conditions in our industry; the loss of key management personnel; uninsured or underinsured losses affecting our properties; potential impairment charges and adjustments related to the accounting of our assets; the potential variability of our reported rental and related revenues as a result of Accounting Standards Update (“ASU”) 2016-02, Leases, as amended by subsequent ASUs; risks associated with our investment in our unconsolidated joint ventures; catastrophic weather and other natural or man-made disasters, the effects of climate change on our properties and a failure to implement sustainable and energy-efficient measures; increased operating costs and competition for our tenants, borrowers and Senior Housing - Managed communities; increased healthcare regulation and enforcement; our tenants’ dependency on reimbursement from governmental and other third-party payor programs; the effect of our tenants, operators or borrowers declaring bankruptcy or becoming insolvent; our ability to find replacement tenants and the impact of unforeseen costs in acquiring new properties; the impact of litigation and rising insurance costs on the business of our tenants; the impact of required regulatory approvals of transfers of healthcare properties; environmental compliance costs and liabilities associated with real estate properties we own; our tenants’, borrowers’ or operators’ failure to adhere to applicable privacy and data security laws, or a material breach of our or our tenants’, borrowers’ or operators’ information technology; our concentration in the healthcare property sector, particularly in skilled nursing/transitional care facilities and senior housing communities, which makes our profitability more vulnerable to a downturn in a specific sector than if we were investing in multiple industries; the significant amount of and our ability to service our indebtedness; covenants in our debt agreements that may restrict our ability to pay dividends, make investments, incur additional indebtedness and refinance indebtedness on favorable terms; adverse changes in our credit ratings; our ability to make dividend distributions at expected levels; our ability to raise capital through equity and debt financings; changes and uncertainty in macroeconomic conditions and disruptions in the financial markets; risks associated with our ownership of property outside the U.S., including currency fluctuations; the relatively illiquid nature of real estate investments; our ability to maintain our status as a real estate investment trust (“REIT”) under the federal tax laws; compliance with REIT requirements and certain tax and tax regulatory matters related to our status as a REIT; changes in tax laws and regulations affecting REITs; the ownership limits and takeover defenses in our governing documents and under Maryland law, which may restrict change of control or business combination opportunities; and the exclusive forum provisions in our bylaws. Additional information concerning risks and uncertainties that could affect our business can be found in our filings with the Securities and Exchange Commission (the “SEC”), including in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023. We do not intend, and we undertake no obligation, to update any forward-looking information to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events, unless required by law to do so. TENANT AND BORROWER INFORMATION This release includes information regarding certain of our tenants that lease properties from us and our borrowers, most of which are not subject to SEC reporting requirements. The information related to our tenants and borrowers that is provided in this release has been provided by, or derived from information provided by, such tenants and borrowers. We have not independently verified this information. We have no reason to believe that such information is inaccurate in any material respect. We are providing this data for informational purposes only. NOTE REGARDING NON-GAAP FINANCIAL MEASURES This release includes the following financial measures defined as non-GAAP financial measures by the SEC: funds from operations (“FFO”), Normalized FFO, Adjusted FFO (“AFFO”), Normalized AFFO, FFO per diluted common share, Normalized FFO per diluted common share, AFFO per diluted common share and Normalized AFFO per diluted common share. These measures may be different than non-GAAP financial measures used by other companies, and the presentation of these measures is not intended to be considered in isolation or as a substitute for financial information prepared and presented in accordance with U.S. generally accepted accounting principles. An explanation of these non-GAAP financial measures is included under “Reporting Definitions” in this release, and reconciliations of these non-GAAP financial measures to the GAAP financial measures we consider most comparable are included on the Investors section of our website at https://ir.sabrahealth.com/investors/financials/quarterly-results. SABRA HEALTH CARE REIT, INC. CONSOLIDATED STATEMENTS OF INCOME (LOSS) (dollars in thousands, except per share data) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Revenues: Rental and related revenues (1) $ 93,037 $ 103,318 $ 376,266 $ 400,586 Resident fees and services 61,256 52,699 236,153 186,672 Interest and other income 9,104 8,968 35,095 37,553 Total revenues 163,397 164,985 647,514 624,811 Expenses: Depreciation and amortization 42,876 49,927 183,087 187,782 Interest 27,940 27,898 112,964 105,471 Triple-net portfolio operating expenses 4,689 4,640 17,932 19,623 Senior housing - managed portfolio operating expenses 45,189 39,155 177,313 142,990 General and administrative 16,679 10,853 47,472 39,574 (Recovery of) provision for loan losses and other reserves (358 ) 153 191 141 Impairment of real estate 7,268 21,440 14,332 94,042 Total expenses 144,283 154,066 553,291 589,623 Other (expense) income: Loss on extinguishment of debt — — (1,541 ) (411 ) Other income (expense) 28 4 2,598 (1,097 ) Net loss on sales of real estate (732 ) (7,430 ) (76,625 ) (12,011 ) Total other expense (704 ) (7,426 ) (75,568 ) (13,519 ) Income before loss from unconsolidated joint ventures and income tax expense 18,410 3,493 18,655 21,669 Loss from unconsolidated joint ventures (761 ) (88,317 ) (2,897 ) (98,032 ) Income tax expense (493 ) (124 ) (2,002 ) (1,242 ) Net income (loss) $ 17,156 $ (84,948 ) $ 13,756 $ (77,605 ) Net income (loss), per: Basic common share $ 0.07 $ (0.37 ) $ 0.06 $ (0.34 ) Diluted common share $ 0.07 $ (0.37 ) $ 0.06 $ (0.34 ) Weighted average number of common shares outstanding, basic 231,224,840 230,986,260 231,203,391 230,947,895 Weighted average number of common shares outstanding, diluted 233,200,180 230,986,260 232,792,778 230,947,895 (1) See page 5 for additional details regarding Rental and related revenues. SABRA HEALTH CARE REIT, INC. CONSOLIDATED STATEMENTS OF INCOME (LOSS) - SUPPLEMENTAL INFORMATION (in thousands) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Cash rental income $ 87,233 $ 96,501 $ 352,277 $ 385,033 Straight-line rental income 1,693 1,219 5,392 8,261 Straight-line rental income receivable write-offs (1,004 ) — (2,514 ) (17,068 ) Above/below market lease amortization 1,229 1,569 5,821 6,299 Above/below market lease intangible write-offs — — — 326 Operating expense recoveries 3,886 4,029 15,290 17,735 Rental and related revenues $ 93,037 $ 103,318 $ 376,266 $ 400,586 SABRA HEALTH CARE REIT, INC. CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share data) December 31, 2023 December 31, 2022 Assets Real estate investments, net of accumulated depreciation of $1,021,086 and $913,345 as of December 31, 2023 and December 31, 2022, respectively $ 4,617,261 $ 4,959,343 Loans receivable and other investments, net 420,624 411,396 Investment in unconsolidated joint ventures 136,843 134,962 Cash and cash equivalents 41,285 49,308 Restricted cash 5,434 4,624 Lease intangible assets, net 30,897 40,131 Accounts receivable, prepaid expenses and other assets, net 133,806 147,908 Total assets $ 5,386,150 $ 5,747,672 Liabilities Secured debt, net $ 47,301 $ 49,232 Revolving credit facility 94,429 196,982 Term loans, net 537,120 526,129 Senior unsecured notes, net 1,735,253 1,734,431 Accounts payable and accrued liabilities 136,981 142,259 Lease intangible liabilities, net 32,532 42,244 Total liabilities 2,583,616 2,691,277 Equity Preferred stock, $0.01 par value; 10,000,000 shares authorized, zero shares issued and outstanding as of December 31, 2023 and December 31, 2022 — — Common stock, $0.01 par value; 500,000,000 shares authorized, 231,266,020 and 231,009,295 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively 2,313 2,310 Additional paid-in capital 4,494,755 4,486,967 Cumulative distributions in excess of net income (1,718,279 ) (1,451,945 ) Accumulated other comprehensive income 23,745 19,063 Total equity 2,802,534 3,056,395 Total liabilities and equity $ 5,386,150 $ 5,747,672 SABRA HEALTH CARE REIT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 31, 2023 2022 Cash flows from operating activities: Net income (loss) $ 13,756 $ (77,605 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 183,087 187,782 Non-cash rental and related revenues (8,699 ) 2,183 Non-cash interest income (372 ) (2,285 ) Non-cash interest expense 12,265 11,094 Stock-based compensation expense 7,917 7,453 Loss on extinguishment of debt 1,541 411 Provision for loan losses and other reserves 191 141 Net loss on sales of real estate 76,625 12,011 Impairment of real estate 14,332 94,042 Other-than-temporary impairment of unconsolidated joint ventures — 57,778 Loss from unconsolidated joint ventures 2,897 40,254 Distributions of earnings from unconsolidated joint ventures 3,469 — Other non-cash items (3,704 ) 2,167 Changes in operating assets and liabilities: Accounts receivable, prepaid expenses and other assets, net (11,078 ) (6,443 ) Accounts payable and accrued liabilities 8,344 (13,250 ) Net cash provided by operating activities 300,571 315,733 Cash flows from investing activities: Acquisition of real estate (78,530 ) (92,204 ) Origination and fundings of loans receivable (11,418 ) (23,812 ) Origination and fundings of preferred equity investments (11,023 ) (8,021 ) Additions to real estate (84,855 ) (54,473 ) Escrow deposits for potential investments — (780 ) Repayments of loans receivable 9,274 5,272 Repayments of preferred equity investments 5,460 5,376 Investment in unconsolidated joint ventures (5,235 ) (142,910 ) Net proceeds from the sales of real estate 247,622 87,304 Net proceeds from sales-type lease 25,490 — Deposits for potential sale of real estate — 8,000 Insurance proceeds 5,801 — Distributions in excess of earnings from unconsolidated joint ventures 544 — Net cash provided by (used in) investing activities 103,130 (216,248 ) Cash flows from financing activities: Net (repayments of) borrowings from revolving credit facility (104,338 ) 204,046 Proceeds from term loans 12,188 — Principal payments on term loans — (63,750 ) Principal payments on secured debt (1,979 ) (17,516 ) Payments of deferred financing costs (18,142 ) (20 ) Payment of contingent consideration (17,900 ) (2,500 ) Issuance of common stock, net (2,682 ) (4,810 ) Dividends paid on common stock (277,447 ) (277,157 ) Net cash used in financing activities (410,300 ) (161,707 ) Net decrease in cash, cash equivalents and restricted cash (6,599 ) (62,222 ) Effect of foreign currency translation on cash, cash equivalents and restricted cash (614 ) 268 Cash, cash equivalents and restricted cash, beginning of period 53,932 115,886 Cash, cash equivalents and restricted cash, end of period $ 46,719 $ 53,932 SABRA HEALTH CARE REIT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (in thousands) Year Ended December 31, 2023 2022 Supplemental disclosure of cash flow information: Interest paid $ 102,409 $ 97,723 Income taxes paid $ 1,670 $ 1,657 Supplemental disclosure of non-cash investing activities: Decrease in loans receivable and other investments due to acquisition of real estate $ 4,644 $ 14,311 SABRA HEALTH CARE REIT, INC. FUNDS FROM OPERATIONS (FFO), NORMALIZED FFO, ADJUSTED FUNDS FROM OPERATIONS (AFFO) AND NORMALIZED AFFO (dollars in thousands, except per share data) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Net income (loss) $ 17,156 $ (84,948 ) $ 13,756 $ (77,605 ) Add: Depreciation and amortization of real estate assets 42,876 49,927 183,087 187,782 Depreciation, amortization and impairment of real estate assets related to unconsolidated joint ventures 2,192 6,239 8,697 22,095 Net loss on sales of real estate 732 7,430 76,625 12,011 Net gain on sales of real estate related to unconsolidated joint ventures — — — (220 ) Impairment of real estate 7,268 21,440 14,332 94,042 Other-than-temporary impairment of unconsolidated joint ventures — 57,778 — 57,778 FFO $ 70,224 $ 57,866 $ 296,497 $ 295,883 Write-offs of cash and straight-line rental income receivable and lease intangibles 1,030 — 2,519 15,831 Lease termination income — (139 ) — (2,477 ) Loss on extinguishment of debt — — 1,541 411 (Recovery of) provision for loan losses and other reserves (358 ) 153 191 141 Deferred tax valuation allowance related to unconsolidated joint ventures — 19,613 — 19,613 Support payments paid to joint venture manager (1) — 6,370 — 12,250 Other normalizing items (2) 4,551 842 1,546 3,428 Normalized FFO $ 75,447 $ 84,705 $ 302,294 $ 345,080 FFO $ 70,224 $ 57,866 $ 296,497 $ 295,883 Stock-based compensation expense 2,449 2,086 7,917 7,453 Non-cash rental and related revenues (1,918 ) (2,787 ) (8,699 ) 2,183 Non-cash interest income 8 �� (602 ) (372 ) (2,285 ) Non-cash interest expense 3,086 2,794 12,265 11,094 Non-cash portion of loss on extinguishment of debt — — 1,541 411 (Recovery of) provision for loan losses and other reserves (358 ) 153 191 141 Deferred tax valuation allowance related to unconsolidated joint ventures — 19,613 — 19,613 Other adjustments related to unconsolidated joint ventures 131 (1,099 ) 502 (5,155 ) Other adjustments (3) 141 44 365 2,474 AFFO $ 73,763 $ 78,068 $ 310,207 $ 331,812 Cash portion of lease termination income — (139 ) — (2,477 ) Write-off of cash rental income — — — 71 Support payments paid to joint venture manager (1) — 6,370 — 12,250 Other normalizing items (2) 4,536 827 1,485 1,077 Normalized AFFO $ 78,299 $ 85,126 $ 311,692 $ 342,733 Amounts per diluted common share: Net income (loss) $ 0.07 $ (0.37 ) $ 0.06 $ (0.34 ) FFO $ 0.30 $ 0.25 $ 1.27 $ 1.28 Normalized FFO $ 0.32 $ 0.37 $ 1.30 $ 1.49 AFFO $ 0.32 $ 0.34 $ 1.33 $ 1.43 Normalized AFFO $ 0.33 $ 0.37 $ 1.33 $ 1.47 Weighted average number of common shares outstanding, diluted: Net income (loss) 233,200,180 230,986,260 232,792,778 230,947,895 FFO and Normalized FFO 233,200,180 232,059,703 232,792,778 231,851,542 AFFO and Normalized AFFO 234,021,772 232,868,137 233,883,279 232,784,543 (1) Funding for support payments did not require capital contributions from Sabra but rather were funded with proceeds received by our Enlivant unconsolidated joint venture from TPG for the issuance of senior preferred interests. (2) Other normalizing items for FFO and AFFO for the three months ended December 31, 2023 include a $3.8 million catch-up adjustment related to changes in performance-based assumptions on management's compensation. Other normalizing items for FFO and AFFO for the year ended December 31, 2023 include $3.7 million of gain on insurance proceeds and $1.6 million of transition expenses related to the transition of 14 Senior Housing - Managed communities to new operators. Other normalizing items for FFO for the year ended December 31, 2022 include $2.2 million of foreign currency transaction loss related to our Canadian borrowings. In addition, other normalizing items for FFO and AFFO include triple-net operating expenses, net of recoveries and certain adjustments for amounts recorded in the current period that relate to a prior period. (3) Other adjustments for the year ended December 31, 2022 includes $2.2 million of foreign currency transaction loss related to our Canadian borrowings. REPORTING DEFINITIONS Behavioral Health Includes behavioral hospitals that provide inpatient and outpatient care for patients with mental health conditions, chemical dependence or substance addictions and addiction treatment centers that provide treatment services for chemical dependence and substance addictions, which may include inpatient care, outpatient care, medical detoxification, therapy and counseling. EBITDARM Earnings before interest, taxes, depreciation, amortization, rent and management fees (“EBITDARM”) for a particular facility accruing to the operator/tenant of the property (not the Company), for the period presented. The Company uses EBITDARM in determining EBITDARM Coverage. EBITDARM has limitations as an analytical tool. EBITDARM does not reflect historical cash expenditures or future cash requirements for facility capital expenditures or contractual commitments. In addition, EBITDARM does not represent a property’s net income or cash flows from operations and should not be considered an alternative to those indicators. The Company utilizes EBITDARM to evaluate the core operations of the properties by eliminating management fees, which may vary by operator/tenant and operating structure, and as a supplemental measure of the ability of the Company’s operators/tenants and relevant guarantors to generate sufficient liquidity to meet related obligations to the Company. EBITDARM Coverage Represents the ratio of EBITDARM to cash rent for owned facilities (excluding Senior Housing - Managed communities) for the period presented. EBITDARM Coverage is a supplemental measure of a property’s ability to generate cash flows for the operator/tenant (not the Company) to meet the operator’s/tenant’s related cash rent and other obligations to the Company. However, its usefulness is limited by, among other things, the same factors that limit the usefulness of EBITDARM. EBITDARM Coverage includes only Stabilized Facilities and excludes facilities for which data is not available or meaningful. Funds From Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”)* The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company also believes that funds from operations, or FFO, as defined in accordance with the definition used by the National Association of Real Estate Investment Trusts (“Nareit”), and adjusted funds from operations, or AFFO (and related per share amounts) are important non-GAAP supplemental measures of the Company’s operating performance. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a real estate investment trust that uses historical cost accounting for depreciation could be less informative. Thus, Nareit created FFO as a supplemental measure of operating performance for real estate investment trusts that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP. FFO is defined as net income, computed in accordance with GAAP, excluding gains or losses from real estate dispositions and the Company’s share of gains or losses from real estate dispositions related to its unconsolidated joint ventures, plus real estate depreciation and amortization, net of amounts related to noncontrolling interests, plus the Company’s share of depreciation and amortization related to its unconsolidated joint ventures, and real estate impairment charges of both consolidated and unconsolidated entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. AFFO is defined as FFO excluding merger and acquisition costs, stock-based compensation expense, non-cash rental and related revenues, non-cash interest income, non-cash interest expense, non-cash portion of loss on extinguishment of debt, provision for loan losses and other reserves, non-cash lease termination income and deferred income taxes, as well as other non-cash revenue and expense items (including ineffectiveness gain/loss on derivative instruments, and non-cash revenue and expense amounts related to noncontrolling interests) and the Company’s share of non-cash adjustments related to its unconsolidated joint ventures. The Company believes that the use of FFO and AFFO (and the related per share amounts), combined with the required GAAP presentations, improves the understanding of the Company’s operating results among investors and makes comparisons of operating results among real estate investment trusts more meaningful. The Company considers FFO and AFFO to be useful measures for reviewing comparative operating and financial performance because, by excluding the applicable items listed above, FFO and AFFO can help investors compare the operating performance of the Company between periods or as compared to other companies. While FFO and AFFO are relevant and widely used measures of operating performance of real estate investment trusts, 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 and AFFO also do not consider the costs associated with capital expenditures related to the Company’s real estate assets nor do they purport to be indicative of cash available to fund the Company’s future cash requirements. Further, the Company’s computation of FFO and AFFO may not be comparable to FFO and AFFO reported by other real estate investment trusts that do not define FFO in accordance with the current Nareit definition or that interpret the current Nareit definition or define AFFO differently than the Company does. Normalized FFO and Normalized AFFO* Normalized FFO and Normalized AFFO represent FFO and AFFO, respectively, adjusted for certain income and expense items that the Company does not believe are indicative of its ongoing operating results. The Company considers Normalized FFO and Normalized AFFO to be useful measures to evaluate the Company’s operating results excluding these income and expense items to help investors compare the operating performance of the Company between periods or as compared to other companies. Normalized FFO and Normalized AFFO 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. Normalized FFO and Normalized AFFO also do not consider the costs associated with capital expenditures related to the Company’s real estate assets nor do they purport to be indicative of cash available to fund the Company’s future cash requirements. Further, the Company’s computation of Normalized FFO and Normalized AFFO may not be comparable to Normalized FFO and Normalized AFFO reported by other real estate investment trusts that do not define FFO in accordance with the current Nareit definition or that interpret the current Nareit definition or define FFO and AFFO or Normalized FFO and Normalized AFFO differently than the Company does. Senior Housing Senior Housing communities include independent living, assisted living, continuing care retirement and memory care communities. Senior Housing - Managed Senior Housing communities operated by third-party property managers pursuant to property management agreements. Skilled Nursing/Transitional Care Skilled Nursing/Transitional Care facilities include skilled nursing, transitional care, multi-license designation and mental health facilities. Specialty Hospitals and Other Includes acute care, long-term acute care and rehabilitation hospitals, facilities that provide residential services, which may include assistance with activities of daily living, and other facilities not classified as Skilled Nursing/Transitional Care, Senior Housing or Behavioral Health. Stabilized Facility At the time of acquisition, the Company classifies each facility as either stabilized or non-stabilized. In addition, the Company may classify a facility as non-stabilized after acquisition. Circumstances that could result in a facility being classified as non-stabilized include newly completed developments, facilities undergoing major renovations or additions, facilities being repositioned or transitioned to new operators, and significant transitions within the tenants’ business model. Such facilities are typically reclassified to stabilized upon the earlier of maintaining consistent performance or 24 months after the date of classification as non-stabilized. Stabilized Facilities generally exclude (i) facilities held for sale, (ii) strategic disposition candidates, (iii) facilities being transitioned to a new operator, (iv) facilities being transitioned from being leased by the Company to being operated by the Company and (v) leased facilities acquired during the three months preceding the period presented. *Non-GAAP Financial Measures Reconciliations, definitions and important discussions regarding the usefulness and limitations of the Non-GAAP Financial Measures used in this release can be found at https://ir.sabrahealth.com/investors/financials/quarterly-results. View source version on businesswire.com: https://www.businesswire.com/news/home/20240227748505/en/
