CareTrust REIT Announces Second Quarter 2018 Operating Results; Updates 2018 Guidance

SAN CLEMENTE, Calif., Aug. 01, 2018 (GLOBE NEWSWIRE) — CareTrust REIT, Inc. (Nasdaq:CTRE) today reported operating results for the quarter ended June 30, 2018, as well as other recent events. 

For the quarter, CareTrust REIT reported: 

  • Net income of $13.3 million, and net income per diluted weighted-average common share of $0.17;
  • Normalized FFO of $24.5 million, an increase of 19%, and normalized FFO per diluted weighted-average common share of $0.32, an increase of 14% over Q2 2017;
  • Normalized FAD of $25.6 million, an increase of 18%, and normalized FAD per diluted weighted-average common share of $0.33, an increase of 10% over Q2 2017;
  • A net debt-to-normalized EBITDA ratio of 4.1x and a debt-to-enterprise value of 29%, each as of quarter-end. 

Pipeline Rebuilding 

Commenting on the Company’s lighter-than-usual year-to-date acquisition pace, Greg Stapley, CareTrust REIT’s Chairman and Chief Executive Officer, noted that the Company has been adhering to its core discipline of deploying capital at solid returns and reasonable prices. “In our view, the market for good assets has been overheated since the fourth quarter of 2017, and we will never hesitate to head for the sidelines if the right deals aren’t there,” he said. He noted that, while no acquisitions were closed in the second quarter, one has closed since, and more are underway. “We are pleased to report that deal flow has picked up markedly in the second quarter, and our pipeline is getting back to where it has been historically,” he concluded.

Financial Results for Quarter Ended June 30, 2018 

Chief Financial Officer Bill Wagner reported that, for the second quarter, CareTrust REIT generated net income of $13.3 million, or $0.17 per diluted weighted-average common share, normalized FFO of $24.5 million, or $0.32 per diluted weighted-average common share, and normalized FAD of $25.6 million, or $0.33 per diluted weighted-average common share. “We are pleased to be delivering a quarter-over-quarter increase in normalized FFO per share of 14%,” said Mr. Wagner. 


Discussing CareTrust REIT’s current liquidity, Mr. Wagner noted that the acquisition-light quarter allowed the Company to significantly pay down the outstanding balance on its $400 million revolving credit facility. “We have used retained FFO and proceeds of equity sales under our at-the-market equity program to reduce our loan balance to approximately $130 million as of today, leaving plenty of liquidity for near-term growth,” he said. He further noted that the revolving credit facility includes an additional $250 million “accordion” feature that can be exercised by the Company if additional liquidity is needed. 

Mr. Wagner also reported that, during the quarter and since, CareTrust REIT issued approximately 4.9 million shares of common stock through the Company’s at-the-market equity program at an average price of $16.50 per share, for $80.2 million in gross proceeds. “Our ATM program remains a significant instrument in the Company’s capital-raising repertoire, with up to $155.9 million remaining in authorization at present,” he said. Mr. Wagner stated that CareTrust REIT’s net debt-to-normalized EBITDA ratio was 4.1x and its debt-to-enterprise value was 29%, each at quarter-end, which is well within management’s target leverage range. He also noted that CareTrust REIT continues to have no property-level debt and, taking into account existing extension rights, no debt maturing before 2020. 

2018 Guidance Updated 

Mr. Wagner updated CareTrust REIT’s 2018 earnings guidance, projecting on a per-diluted weighted-average common share basis, net income of approximately $0.71 to $0.73, normalized FFO of approximately $1.26 to $1.28, and normalized FAD of approximately $1.32 to $1.34. He noted that the 2018 guidance is based on a diluted weighted-average common share count of 78.4 million shares and assumes no new acquisitions beyond those made to date, no new debt incurrences or new equity issuances, and 2.0% CPI-based rent escalators under CareTrust REIT’s long-term net leases. 

Dividend Declared 

During the quarter, CareTrust REIT declared a quarterly dividend of $0.205 per common share. “On an annualized basis, our quarterly dividend represents a payout ratio of approximately 64% based on the second quarter 2018 normalized FFO, and 62% on normalized FAD,” said Mr. Wagner. “At this level, our dividend remains among the best-protected of all our industry peers, while simultaneously providing additional growth capital for reinvestment and a solid overall return to our shareholders,” he added. 

New Officers 

CareTrust REIT also announced that David Sedgwick, CareTrust’s Vice President of Operations since 2014, has been named Chief Operating Officer, and that Mark Lamb, CareTrust’s Director of Investments since 2014, has been named Chief Investment Officer. “Mark and Dave have been key contributors to CareTrust’s growth and success since inception, and we couldn’t be more pleased to have them assume these roles,” said Mr. Stapley. He called the recognitions “hard-earned and well-deserved,” adding that the two new officers have performed at the highest levels throughout their tenure with CareTrust REIT.

Acquisitions in the Quarter and Since 

Subsequent to quarter-end, CareTrust REIT acquired a 99-bed skilled nursing facility in Aberdeen, South Dakota, which was formerly operated by an affiliate of HCR ManorCare. CareTrust REIT added the property to its existing master lease with Salt Lake City-based Eduro Healthcare, LLC, which took over operations on July 18, 2018 and rechristened the facility Prairie Heights Healthcare Center.  The total investment was approximately $9.7 million, inclusive of transaction costs, and the initial increase in annual cash rent under Eduro’s master lease was approximately $870,000. The Eduro master lease has approximately twelve years remaining on the initial term and carries CPI-based annual escalators. CareTrust REIT funded the acquisition using cash on hand. 

Planned Re-Tenantings Completed 

Also during the quarter, CareTrust REIT completed the previously-announced planned re-tenanting of nine Ohio assets. “We are pleased to report that the last of the Ohio assets formerly leased to subsidiaries of Pristine Senior Living were successfully transferred to two outstanding operators, on schedule and with minimal disruption to facility operations and our rent stream,” said Mr. Stapley. He also reported that two other properties, which were formerly leased to affiliates of OnPointe Health, were successfully transferred to other current CareTrust operators during the quarter, also without any material rent loss. 

Conference Call 

A conference call will be held on Thursday, August 2, 2018, at 1:00 p.m. Eastern Time (10:00 a.m. Pacific Time), during which CareTrust REIT’s management will discuss second quarter 2018 results, recent developments and other matters. The dial-in number for this call is (844) 220-4972 (U.S.) or (317) 973-4053 (International). The conference ID number is 7496046. To listen to the call online, or to view any financial or other statistical information required by SEC Regulation G, please visit the Investors section of the CareTrust REIT website at The call will be recorded, and will be available for replay via the website for 30 days following the call. 

About CareTrust REITTM 

CareTrust REIT, Inc. is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition and leasing of seniors housing and healthcare-related properties. With 189 net-leased healthcare properties and three operated seniors housing properties in 25 states, CareTrust REIT is pursuing opportunities across the nation to acquire properties that will be leased to a diverse group of local, regional and national seniors housing operators, healthcare services providers, and other healthcare-related businesses. More information about CareTrust REIT is available at

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

This press release contains, and the related conference call will include, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements include all statements that are not historical statements of fact and statements regarding the Company’s intent, belief or expectations, including, but not limited to, statements regarding future financial and financing positions, business and acquisition strategies, growth prospects, operating and financial performance, expectations regarding the making of distributions, payment of dividends, compliance with and changes in governmental regulations, and the performance of the Company’s tenants and operators and their respective facilities. 

Words such as “anticipate,” “believe,” “could,” “expect,” “estimate,” “intend,” “may,” “plan,” “seek,” “should,” “will,” “would,” and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements, though not all forward-looking statements contain these identifying words. The Company’s forward-looking statements are based on management’s current expectations and beliefs, and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although the Company believes that the assumptions underlying these forward-looking statements are reasonable, they are not guarantees and the Company can give no assurance that its expectations will be attained. Factors which could have a material adverse effect on the Company’s operations and future prospects or which could cause actual results to differ materially from expectations include, but are not limited to:  (i) the ability to achieve some or all of the expected benefits from the completed spin-off from The Ensign Group, Inc. (“Ensign”);  (ii) the ability and willingness of Company tenants to meet and/or perform their obligations under the triple-net leases the Company has entered into with them and the ability and willingness of Ensign to meet and/or perform its obligations under the contractual arrangements that it entered into with the Company in connection with such spin-off, including its triple-net long-term leases with the Company, and any of its obligations to indemnify, defend and hold the Company harmless from and against various claims, litigation and liabilities; (iii) the ability and willingness of the Company’s tenants to comply with laws, rules and regulations in the operation of the properties the Company leases to them; (iv) the ability and willingness of the Company’s tenants, including Ensign, to renew their leases with the Company upon expiration and the ability to reposition Company properties on the same or better terms in the event of nonrenewal or in the event the Company replaces an existing tenant, and obligations, including indemnification obligations, that the Company may incur in connection with the replacement of an existing tenant; (v) the availability of and the ability to identify suitable acquisition opportunities and the ability to acquire and lease the respective properties on favorable terms; (vi) the ability to generate sufficient cash flows to service the Company’s outstanding indebtedness; (vii) access to debt and equity capital markets; (viii) fluctuating interest rates; (ix) the ability to retain key management personnel; (x) the ability to maintain the Company’s status as a real estate investment trust (“REIT”); (xi) changes in the U.S. tax laws and other state, federal or local laws, whether or not specific to REITs; (xii) other risks inherent in the real estate business, including potential liability relating to environmental matters and illiquidity of real estate investments; and (xiii) any additional factors identified in the Company’s filings with the Securities and Exchange Commission (“SEC”), including those in the Company‘s Annual Report on Form 10-K for the year ended December 31, 2017 under the heading entitled “Risk Factors,” as such risk factors may be amended, supplemented or superseded from time to time by other reports the Company files with the SEC. 

Information in this press release or the related conference call is provided as of June 30, 2018, unless specifically stated otherwise.  The Company expressly disclaims any obligation to update or revise any information in this press release or the related conference call (and replays thereof), including forward-looking statements, whether to reflect any change in the Company’s expectations, any change in events, conditions or circumstances, or otherwise. 

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

CareTrust REIT, Inc.
(949) 542-3130 

(in thousands, except per share data)
    For the Three Months Ended June 30,   For the Six Months Ended June 30,
    2018   2017   2018   2017
  Rental income $ 34,708     $ 28,511     $ 68,524     $ 55,850  
  Tenant reimbursements 3,016     2,389     5,984     4,710  
  Independent living facilities 845     789     1,644     1,582  
  Interest and other income 400     1,140     918     1,295  
  Total revenues 38,969     32,829     77,070     63,437  
  Depreciation and amortization 11,299     9,335     22,876     18,411  
  Interest expense 7,285     6,219     14,377     12,098  
  Loss on the extinguishment of debt     11,883         11,883  
  Property taxes 3,016     2,389     5,984     4,710  
  Independent living facilities 744     644     1,460     1,305  
  Impairment of real estate investment     890         890  
  General and administrative 3,358     2,977     6,550     5,367  
  Total expenses 25,702     34,337     51,247     54,664  
Other income:              
  Gain on sale of real estate         2,051      
  Gain on disposition of other real estate investment     3,538         3,538  
Net income $ 13,267     $ 2,030     $ 27,874     $ 12,311  
Earnings per common share:              
  Basic $ 0.17     $ 0.03     $ 0.36     $ 0.17  
  Diluted $ 0.17     $ 0.03     $ 0.36     $ 0.17  
Weighted average shares outstanding:              
  Basic 76,374     72,564     75,941     69,773  
  Diluted 76,374     72,564     75,941     69,773  
Dividends declared per common share $ 0.205     $ 0.185     $ 0.41     $ 0.37  


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(in thousands, except per share data)
      Three Months Ended June 30,   Six Months Ended June 30,
      2018   2017   2018   2017
Net income   $ 13,267     $ 2,030     $ 27,874     $ 12,311  
  Depreciation and amortization   11,299     9,335     22,876     18,411  
  Interest expense   7,285     6,219     14,377     12,098  
  Amortization of stock-based compensation   924     600     1,828     1,136  
EBITDA   32,775     18,184     66,955     43,956  
  Loss on the extinguishment of debt       11,883         11,883  
  Deferred preferred return       (544 )       (544 )
  Impairment of real estate investment       890         890  
  Gain on sale of real estate           (2,051 )    
  Gain on disposition of other real estate investment       (3,538 )       (3,538 )
Normalized EBITDA   $ 32,775     $ 26,875     $ 64,904     $ 52,647  
Net income   $ 13,267     $ 2,030     $ 27,874     $ 12,311  
  Real estate related depreciation and amortization   11,265     9,309     22,814     18,359  
  Impairment of real estate investment       890