8-K
CareTrust REIT, Inc. (CTRE)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 5, 2020
CareTrust REIT, Inc.
(Exact name of registrant as specified in its charter)
| Maryland | 001-36181 | 46-3999490 |
|---|---|---|
| (State or other jurisdiction<br>of incorporation) | (Commission<br>File Number) | (IRS Employer<br>Identification No.) |
Registrant’s telephone number, including area code: (949) 542-3130
| 905 Calle Amanecer, Suite 300, San Clemente, CA | 92673 |
|---|---|
| (Address of principal executive offices) | (Zip Code) |
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.01 per share | CTRE | The Nasdaq Stock Market LLC |
| (Nasdaq Global Select Market) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On November 5, 2020, CareTrust REIT, Inc. (the “Company”) issued a press release announcing its financial results for the third quarter ended September 30, 2020. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section and shall not be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in any such filing.
Item 7.01 Regulation FD Disclosure.
A copy of the Company’s supplemental financial information for the third quarter ended September 30, 2020 is attached hereto as Exhibit 99.2 and is incorporated herein by reference. A copy of the supplemental financial information is also available on the “Investors” section of the Company’s website at www.caretrustreit.com.
Exhibit 99.2 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section and shall not be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in any such filing.
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits. |
|---|---|
| Exhibits | Description |
| --- | --- |
| 99.1 | Press Release of the Company, dated November 5, 2020 |
| 99.2 | Supplemental financial informationthe quarter ended September 30, 2020 |
| *104 | Cover Page Interactive Data File (embedded within the inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: November 5, 2020 | CARETRUST REIT, INC. | |
|---|---|---|
| By: | /s/ William M. Wagner | |
| William M. Wagner | ||
| Chief Financial Officer, Treasurer and Secretary |
Document
Exhibit 99.1
CareTrust REIT Announces Third Quarter 2020 Operating Results
Conference Call Scheduled for Friday, November 6, 2020 at 2:00 pm ET
SAN CLEMENTE, Calif., November 5, 2020 (GLOBE NEWSWIRE) -- CareTrust REIT, Inc. (Nasdaq:CTRE) today reported operating results for the quarter ended September 30, 2020, as well as other recent events.
For the quarter, CareTrust REIT reported:
•Net income of $21.6 million and net income per diluted weighted-average common share of $0.23;
•Normalized FFO of $32.5 million and normalized FFO per diluted weighted-average common share of $0.34;
•Normalized FAD of $33.9 million and normalized FAD per diluted weighted-average common share of $0.36; and
•A net debt-to-normalized EBITDA ratio of 3.1x, and a net debt-to-enterprise value of 22.0%, each as of quarter-end.
Lengthening the Runway
“Our tenants and their outstanding care teams continue to make impressive gains against the global pandemic," said Greg Stapley, CareTrust's Chairman and Chief Executive Officer. “Dealing with infection control issues around highly contagious diseases has never been easy, but they have been doing it for a long time and with the advent of widespread testing, more effective treatments and an overall better understanding of the virus, they are in a much better position with respect to COVID-19 than they were three short months ago,” he said.
Mr. Stapley noted that the costs associated with battling the virus are still elevated, and for most operators, occupancy and operating revenues have not yet returned to pre-pandemic levels. “Financially, most of our tenants’ operations still have a ways to go,” he said. He noted, however, that some of the Company’s seniors housing tenants have not experienced a census decline since February. He also noted that, while the occupancy decline for its skilled nursing tenants remains significant, increased revenues associated with elevated skilled mix continue to partially offset the occupancy impact. “The HHS provider relief funds have been critical for all but a couple of our tenants, and structural changes in reimbursement, including the waiver of the three-day qualifying stay requirement, the suspension of sequestration and the FMAP funding from several states, have all provided a meaningful cushion for most operators, allowing them to focus more on patients and staff and less on nickels and dimes,” he said.
Dave Sedgwick, CareTrust’s Chief Operating Officer, added that the question now is how far the provider relief funds granted to date, as well as any future anticipated funding, will carry the operators who need it as the pandemic plays out. “Our asset and portfolio management teams have put a tremendous amount of effort and analysis into understanding how each of our tenants is managing their way through the daily financial challenges presented by the COVID-19 response, and especially how far the government stimulus and other measures will take them if we see an extended recovery period,” said Mr. Sedgwick. “We are pleased to report that nearly all of our tenants appear to have enough runway to continue performing financially for the next few quarters while vaccines and other mitigants roll out, and we see a path to a soft landing for the ones who will need that runway,” he said.
Mr. Sedgwick reported that CareTrust has published the high-level results of its tenant-by-tenant analysis as an expanded lease coverage table in its quarterly supplemental report, released today alongside its 10-Q. The table shows coverage for the second quarter of 2020, which was the first full quarter of COVID-19’s impact on providers, and provides a snapshot of how tenants’ operations performed both with and without provider relief funding. “The coverage disclosures clearly show just how hard the early days of the pandemic were for most operators, and how important provider relief funds have been,” said Mr. Sedgwick. “And while we do not yet have full reporting for Q3, based on the data we’ve seen so far most providers will show improvement in their operating metrics for Q3, and we intend to continue being as transparent as possible in our disclosures around the ongoing financial health of our tenants going forward,” he added.
Financial Results for Quarter Ended September 30, 2020
Chief Financial Officer Bill Wagner reported that, for the third quarter, CareTrust generated net income of $21.6 million, or $0.23 per diluted weighted-average common share, normalized FFO of $32.5 million, or $0.34 per diluted weighted-average common share, and normalized FAD of $33.9 million, or $0.36 per diluted weighted-average common share. “We are once again pleased to be keeping earnings on track in the midst of an extended national emergency, while simultaneously maintaining industry-low leverage and positioning CareTrust for future growth,” said Mr. Wagner.
Liquidity
As of quarter end, CareTrust reported net debt-to-normalized EBITDA of approximately 3.1x, which is well under the Company's target leverage range of 4.0x to 5.0x, and represents a net debt-to-enterprise value of approximately 22.0%. Mr. Wagner stated that at quarter end the Company had no borrowings outstanding on its $600 million revolving credit line, and no scheduled debt maturities prior to 2024. He also disclosed that CareTrust currently has more than $24 million in cash on hand. He also noted that the Company's at-the-market equity program has $500 million in available authorization. "With both the debt and equity markets accessible to us at present, we have a wide range of capital options for funding our opportunistic growth strategy," said Mr. Wagner.
Pipeline Recovering
Turning to growth, Mark Lamb, CareTrust’s Chief Investment Officer, highlighted CareTrust’s recent acquisition of two skilled nursing facilities in Montana. “The Montana transaction was commenced after the pandemic lockdowns began, and represents our first pandemic-era deal,” he said. The $16.6 million acquisition included Apple Rehab Cooney, an 80-bed facility located on the campus of the St. Peter’s Health Regional Medical Center in Helena, Montana, and Elkhorn Healthcare & Rehabilitation, a 70-bed facility located in neighboring Clancy, Montana. Both facilities were added to CareTrust’s master lease with Salt Lake City-based Eduro Healthcare, increasing the annual cash rent due thereunder by approximately $1.55 million. Mr. Lamb also reported a noticeable pick up in CareTrust’s investment pipeline in the third quarter and since. "The pandemic largely brought transaction flow to a halt for several months, and refilling the pipe usually takes time," he said. He stated that since August, however, a marked increase in prospective deal flow has been keeping CareTrust's investment and underwriting teams fairly busy, with the current pipeline returning to the $125 million to $150 million level. "As a reminder, CareTrust generally defines its reportable pipeline as those deals that we are actively pursuing and believe we have a reasonable chance of successfully closing," he said.
2020 Guidance Increased
CareTrust increased its 2020 annual guidance projecting, on a per-diluted weighted-average common share basis, net income of approximately $0.83 to $0.84, normalized FFO of approximately $1.36 to $1.37, and normalized FAD of approximately $1.42 to $1.43. Mr. Wagner indicated that, notwithstanding the COVID-19 pandemic and related challenges, CareTrust has consistently collected approximately 99% of monthly rents while adding revenue from recent investments. "After some initial stress, our tenants are now managing through the challenges of COVID-19, and we project that they will continue to fare well over the near term," he added.
The guidance is based on a diluted weighted-average common share count of 95.4 million shares, and per CareTrust’s standard practice includes all investments, dispositions and loan repayments made to date, and assumes no new acquisitions, dispositions, new loans or loan repayments beyond those completed or announced to date and no new debt incurrences or new equity issuances. “Naturally, we note that material changes in economic and other factors related to the COVID-19 pandemic and the government’s responses thereto could alter our outlook at any time,” he concluded.
Dividend Maintained
During the quarter, CareTrust declared a quarterly dividend of $0.25 per common share. On an annualized basis, the payout ratio was approximately 74% based on third quarter 2020 normalized FFO, and 69% based on normalized FAD.
Conference Call
A conference call will be held on Friday, November 6, 2020, at 2:00 p.m. Eastern Time (11:00 a.m. Pacific Time), during which CareTrust’s management will discuss third quarter 2020 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 1377106. To listen to the call online, or to view any financial or other statistical information required by SEC Regulation G, please visit the Investors section of the CareTrust REIT website at http://investor.caretrustreit.com. The call will be recorded, and will be available for replay via the website for 30 days following the call.
About CareTrustTM
CareTrust REIT, Inc. is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition, development and leasing of skilled nursing, seniors housing and other healthcare-related properties. With a nationwide portfolio of long-term net-leased properties, and a growing portfolio of quality operators leasing them, CareTrust REIT is pursuing both external and organic growth opportunities across the United States. More information about CareTrust REIT is available at www.caretrustreit.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
This press release contains, and the related conference call will include, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical statements of fact and statements regarding the Company’s intent, belief or expectations, including, but not limited to, statements regarding 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 COVID-19 pandemic and the measures taken to prevent its spread and the related impact on our business or the businesses of our tenants; (ii) the ability and willingness of our tenants to meet and/or perform their obligations under the triple-net leases we have entered into with them, including, without limitation, their respective obligations to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities; (iii) the ability of our tenants to comply with applicable laws, rules and regulations in the operation of the properties we lease to them; (iv) the ability and willingness of our tenants to renew their leases with us upon their expiration, and the ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we replace an existing tenant, as well as any obligations, including indemnification obligations, we may incur in connection with the replacement of an existing tenant; (v) the availability of and the ability to identify (a) tenants who meet our credit and operating standards, and (b) suitable acquisition opportunities, and the ability to acquire and lease the respective properties to such tenants on favorable terms; (vi) the ability to generate sufficient cash flows to service our outstanding indebtedness; (vii) access to debt and equity capital markets; (viii) fluctuating interest rates; (ix) the ability to retain our key management personnel; (x) the ability to maintain our status as a real estate investment trust (“REIT”); (xi) changes in the U.S. tax law 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) additional factors included in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, including in the section entitled "Risk Factors" in Part II, Item 1A of such report, and in our Annual Report on Form 10-K for the year ended December 31, 2019, including in the section entitled “Risk Factors” in Item 1A of Part I of such report, as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the SEC.
This press release and the related conference call provides information about the Company's financial results as of and for the quarter ended September 30, 2020 and is provided as of the date hereof, unless specifically stated otherwise. The Company expressly disclaims any obligation to update or revise any information in this press release or the related conference call (and replays thereof), including forward-looking statements, whether to reflect any change in the Company’s expectations, any change in events, conditions or circumstances, or otherwise.
As used in this press release or the related conference call, unless the context requires otherwise, references to “CTRE,” "CareTrust," “CareTrust REIT” or the “Company” refer to CareTrust REIT, Inc. and its consolidated subsidiaries. GAAP refers to generally accepted accounting principles in the United States of America.
Contact:
CareTrust REIT, Inc.
(949) 542-3130
ir@caretrustreit.com
| CARETRUST REIT, INC. | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||
| (in thousands, except per share data) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||
| Revenues: | ||||||||||||||
| Rental income | $ | 45,036 | $ | 31,577 | $ | 130,007 | $ | 114,047 | ||||||
| Independent living facilities | 634 | 929 | 1,874 | 2,676 | ||||||||||
| Interest and other income | 17 | 808 | 2,314 | 2,450 | ||||||||||
| Total revenues | 45,687 | 33,314 | 134,195 | 119,173 | ||||||||||
| Expenses: | ||||||||||||||
| Depreciation and amortization | 13,086 | 13,420 | 39,485 | 38,759 | ||||||||||
| Interest expense | 5,519 | 7,064 | 18,082 | 21,209 | ||||||||||
| Property taxes | 857 | 1,025 | 2,179 | 2,307 | ||||||||||
| Independent living facilities | 568 | 806 | 1,660 | 2,232 | ||||||||||
| Impairment of real estate investments | — | 16,692 | — | 16,692 | ||||||||||
| Provision for loan losses | — | 1,076 | — | 1,076 | ||||||||||
| General and administrative | 4,105 | 3,502 | 12,921 | 11,418 | ||||||||||
| Total expenses | 24,135 | 43,585 | 74,327 | 93,693 | ||||||||||
| Other income (loss): | ||||||||||||||
| Gain (loss) on sale of real estate | — | 217 | (56) | 217 | ||||||||||
| Net income (loss) | $ | 21,552 | $ | (10,054) | $ | 59,812 | $ | 25,697 | ||||||
| Earnings (loss) per common share: | ||||||||||||||
| Basic | $ | 0.23 | $ | (0.11) | $ | 0.63 | $ | 0.28 | ||||||
| Diluted | $ | 0.23 | $ | (0.11) | $ | 0.63 | $ | 0.28 | ||||||
| Weighted-average number of common shares: | ||||||||||||||
| Basic | 95,214 | 95,103 | 95,195 | 92,409 | ||||||||||
| Diluted | 95,214 | 95,103 | 95,195 | 92,409 | ||||||||||
| Dividends declared per common share | $ | 0.25 | $ | 0.225 | $ | 0.75 | $ | 0.675 | ||||||
| CARETRUST REIT, INC. | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||
| RECONCILIATIONS OF NET INCOME (LOSS) TO NON-GAAP FINANCIAL MEASURES | ||||||||||||||
| (in thousands) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||
| Net income (loss) | $ | 21,552 | $ | (10,054) | $ | 59,812 | $ | 25,697 | ||||||
| Depreciation and amortization | 13,086 | 13,420 | 39,485 | 38,759 | ||||||||||
| Interest expense | 5,519 | 7,064 | 18,082 | 21,209 | ||||||||||
| Amortization of stock-based compensation | 972 | 981 | 2,819 | 3,122 | ||||||||||
| EBITDA | 41,129 | 11,411 | 120,198 | 88,787 | ||||||||||
| Impairment of real estate investments | — | 16,692 | — | 16,692 | ||||||||||
| Provision for loan losses | — | 1,076 | — | 1,076 | ||||||||||
| Provision for doubtful accounts and lease restructuring | — | 12,471 | — | 12,471 | ||||||||||
| Recovery of previously reversed rent | (1,047) | — | (1,047) | — | ||||||||||
| Lease termination revenue | (1,106) | — | (1,106) | — | ||||||||||
| Property operating expenses | — | 218 | (248) | 218 | ||||||||||
| (Gain) loss on sale of real estate | — | (217) | 56 | (217) | ||||||||||
| Normalized EBITDA | $ | 38,976 | $ | 41,651 | $ | 117,853 | $ | 119,027 | ||||||
| Net income (loss) | $ | 21,552 | $ | (10,054) | $ | 59,812 | $ | 25,697 | ||||||
| Real estate related depreciation and amortization | 13,078 | 13,404 | 39,445 | 38,709 | ||||||||||
| Impairment of real estate investments | — | 16,692 | — | 16,692 | ||||||||||
| (Gain) loss on sale of real estate | — | (217) | 56 | (217) | ||||||||||
| Funds from Operations (FFO) | 34,630 | 19,825 | 99,313 | 80,881 | ||||||||||
| Provision for loan losses | — | 1,076 | — | 1,076 | ||||||||||
| Provision for doubtful accounts and lease restructuring | — | 12,471 | — | 12,471 | ||||||||||
| Recovery of previously reversed rent | (1,047) | — | (1,047) | — | ||||||||||
| Lease termination revenue | (1,106) | — | (1,106) | — | ||||||||||
| Property operating expenses | — | 218 | (248) | 218 | ||||||||||
| Normalized FFO | $ | 32,477 | $ | 33,590 | $ | 96,912 | $ | 94,646 | ||||||
| CARETRUST REIT, INC. | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||
| RECONCILIATIONS OF NET INCOME (LOSS) TO NON-GAAP FINANCIAL MEASURES (continued) | ||||||||||||||
| (in thousands, except per share data) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||
| Net income (loss) | $ | 21,552 | $ | (10,054) | $ | 59,812 | $ | 25,697 | ||||||
| Real estate related depreciation and amortization | 13,078 | 13,404 | 39,445 | 38,709 | ||||||||||
| Amortization of deferred financing fees | 487 | 488 | 1,462 | 1,516 | ||||||||||
| Amortization of stock-based compensation | 972 | 981 | 2,819 | 3,122 | ||||||||||
| Straight-line rental income | (17) | (546) | (65) | (1,483) | ||||||||||
| Impairment of real estate investments | — | 16,692 | — | 16,692 | ||||||||||
| (Gain) loss on sale of real estate | — | (217) | 56 | (217) | ||||||||||
| Funds Available for Distribution (FAD) | 36,072 | 20,748 | 103,529 | 84,036 | ||||||||||
| Provision for loan losses | — | 1,076 | — | 1,076 | ||||||||||
| Provision for doubtful accounts and lease restructuring | — | 12,471 | — | 12,471 | ||||||||||
| Recovery of previously reversed rent | (1,047) | — | (1,047) | — | ||||||||||
| Lease termination revenue | (1,106) | — | (1,106) | — | ||||||||||
| Property operating expenses | — | 218 | (248) | 218 | ||||||||||
| Normalized FAD | $ | 33,919 | $ | 34,513 | $ | 101,128 | $ | 97,801 | ||||||
| FFO per share | $ | 0.36 | $ | 0.21 | $ | 1.04 | $ | 0.87 | ||||||
| Normalized FFO per share | $ | 0.34 | $ | 0.35 | $ | 1.02 | $ | 1.02 | ||||||
| FAD per share | $ | 0.38 | $ | 0.22 | $ | 1.09 | $ | 0.91 | ||||||
| Normalized FAD per share | $ | 0.36 | $ | 0.36 | $ | 1.06 | $ | 1.06 | ||||||
| Diluted weighted average shares outstanding [1] | 95,353 | 95,313 | 95,318 | 92,650 | ||||||||||
| [1] For the periods presented, the diluted weighted average shares have been calculated using the treasury stock method. | ||||||||||||||
| CARETRUST REIT, INC. | ||||||||||||||
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| CONSOLIDATED STATEMENTS OF OPERATIONS - 5 QUARTER TREND | ||||||||||||||
| (in thousands, except per share data) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||
| Ended | Ended | Ended | Ended | Ended | ||||||||||
| September 30, 2019 | December 31, 2019 | March 31, 2020 | June 30, 2020 | September 30, 2020 | ||||||||||
| Revenues: | ||||||||||||||
| Rental income | $ | 31,577 | $ | 41,620 | $ | 42,464 | $ | 42,507 | $ | 45,036 | ||||
| Independent living facilities | 929 | 713 | 625 | 615 | 634 | |||||||||
| Interest and other income | 808 | 1,895 | 1,251 | 1,046 | 17 | |||||||||
| Total revenues | 33,314 | 44,228 | 44,340 | 44,168 | 45,687 | |||||||||
| Expenses: | ||||||||||||||
| Depreciation and amortization | 13,420 | 13,063 | 13,160 | 13,239 | 13,086 | |||||||||
| Interest expense | 7,064 | 6,916 | 6,714 | 5,849 | 5,519 | |||||||||
| Property taxes | 1,025 | 741 | 485 | 837 | 857 | |||||||||
| Independent living facilities | 806 | 666 | 546 | 546 | 568 | |||||||||
| Impairment of real estate investments | 16,692 | — | — | — | — | |||||||||
| Provision for loan losses | 1,076 | — | — | — | — | |||||||||
| General and administrative | 3,502 | 3,740 | 4,054 | 4,762 | 4,105 | |||||||||
| Total expenses | 43,585 | 25,126 | 24,959 | 25,233 | 24,135 | |||||||||
| Other income (loss): | ||||||||||||||
| Gain (loss) on sale of real estate | 217 | 1,560 | (56) | — | — | |||||||||
| Net (loss) income | $ | (10,054) | $ | 20,662 | $ | 19,325 | $ | 18,935 | $ | 21,552 | ||||
| Diluted (loss) earnings per share | $ | (0.11) | $ | 0.22 | $ | 0.20 | $ | 0.20 | $ | 0.23 | ||||
| Diluted weighted average shares outstanding | 95,103 | 95,144 | 95,161 | 95,208 | 95,214 | |||||||||
| CARETRUST REIT, INC. | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| RECONCILIATIONS OF NET (LOSS) INCOME TO NON-GAAP FINANCIAL MEASURES - 5 QUARTER TREND | ||||||||||||||
| (in thousands) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||
| Ended | Ended | Ended | Ended | Ended | ||||||||||
| September 30, 2019 | December 31, 2019 | March 31, 2020 | June 30, 2020 | September 30, 2020 | ||||||||||
| Net (loss) income | $ | (10,054) | $ | 20,662 | $ | 19,325 | $ | 18,935 | $ | 21,552 | ||||
| Depreciation and amortization | 13,420 | 13,063 | 13,160 | 13,239 | 13,086 | |||||||||
| Interest expense | 7,064 | 6,916 | 6,714 | 5,849 | 5,519 | |||||||||
| Amortization of stock-based compensation | 981 | 982 | 884 | 963 | 972 | |||||||||
| EBITDA | 11,411 | 41,623 | 40,083 | 38,986 | 41,129 | |||||||||
| Impairment of real estate investments | 16,692 | — | — | — | — | |||||||||
| Provision for loan losses | 1,076 | — | — | — | — | |||||||||
| Provision for doubtful accounts and lease restructuring | 12,471 | 464 | — | — | — | |||||||||
| Recovery of previously reversed rent | — | — | — | — | (1,047) | |||||||||
| Lease termination revenue | — | — | — | — | (1,106) | |||||||||
| Property operating expenses | 218 | (84) | (217) | (31) | — | |||||||||
| (Gain) loss on sale of real estate | (217) | (1,560) | 56 | — | — | |||||||||
| Normalized EBITDA | $ | 41,651 | $ | 40,443 | $ | 39,922 | $ | 38,955 | $ | 38,976 | ||||
| Net (loss) income | $ | (10,054) | $ | 20,662 | $ | 19,325 | $ | 18,935 | $ | 21,552 | ||||
| Real estate related depreciation and amortization | 13,404 | 13,046 | 13,144 | 13,223 | 13,078 | |||||||||
| Impairment of real estate investments | 16,692 | — | — | — | — | |||||||||
| (Gain) loss on sale of real estate | (217) | (1,560) | 56 | — | — | |||||||||
| Funds from Operations (FFO) | 19,825 | 32,148 | 32,525 | 32,158 | 34,630 | |||||||||
| Provision for loan losses | 1,076 | — | — | — | — | |||||||||
| Provision for doubtful accounts and lease restructuring | 12,471 | 464 | — | — | — | |||||||||
| Recovery of previously reversed rent | — | — | — | — | (1,047) | |||||||||
| Lease termination revenue | — | — | — | — | (1,106) | |||||||||
| Property operating expenses | 218 | (84) | (217) | (31) | — | |||||||||
| Normalized FFO | $ | 33,590 | $ | 32,528 | $ | 32,308 | $ | 32,127 | $ | 32,477 | ||||
| CARETRUST REIT, INC. | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| RECONCILIATIONS OF NET (LOSS) INCOME TO NON-GAAP FINANCIAL MEASURES - 5 QUARTER TREND (continued) | ||||||||||||||
| (in thousands, except per share data) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||
| Ended | Ended | Ended | Ended | Ended | ||||||||||
| September 30, 2019 | December 31, 2019 | March 31, 2020 | June 30, 2020 | September 30, 2020 | ||||||||||
| Net (loss) income | $ | (10,054) | $ | 20,662 | $ | 19,325 | $ | 18,935 | $ | 21,552 | ||||
| Real estate related depreciation and amortization | 13,404 | 13,046 | 13,144 | 13,223 | 13,078 | |||||||||
| Amortization of deferred financing fees | 488 | 487 | 487 | 488 | 487 | |||||||||
| Amortization of stock-based compensation | 981 | 982 | 884 | 963 | 972 | |||||||||
| Straight-line rental income | (546) | 98 | (26) | (22) | (17) | |||||||||
| Impairment of real estate investments | 16,692 | — | — | — | — | |||||||||
| (Gain) loss on sale of real estate | (217) | (1,560) | 56 | — | — | |||||||||
| Funds Available for Distribution (FAD) | 20,748 | 33,715 | 33,870 | 33,587 | 36,072 | |||||||||
| Provision for loan losses | 1,076 | — | — | — | — | |||||||||
| Provision for doubtful accounts and lease restructuring | 12,471 | 464 | — | — | — | |||||||||
| Recovery of previously reversed rent | — | — | — | — | (1,047) | |||||||||
| Lease termination revenue | — | — | — | — | (1,106) | |||||||||
| Property operating expenses | 218 | (84) | (217) | (31) | — | |||||||||
| Normalized FAD | $ | 34,513 | $ | 34,095 | $ | 33,653 | $ | 33,556 | $ | 33,919 | ||||
| FFO per share | $ | 0.21 | $ | 0.34 | $ | 0.34 | $ | 0.34 | $ | 0.36 | ||||
| Normalized FFO per share | $ | 0.35 | $ | 0.34 | $ | 0.34 | $ | 0.34 | $ | 0.34 | ||||
| FAD per share | $ | 0.22 | $ | 0.35 | $ | 0.36 | $ | 0.35 | $ | 0.38 | ||||
| Normalized FAD per share | $ | 0.36 | $ | 0.36 | $ | 0.35 | $ | 0.35 | $ | 0.36 | ||||
| Diluted weighted average shares outstanding [1] | 95,313 | 95,340 | 95,306 | 95,295 | 95,353 | |||||||||
| [1] For the periods presented, the diluted weighted average shares have been calculated using the treasury stock method. | ||||||||||||||
| CARETRUST REIT, INC. | ||||||||||||||
| --- | --- | --- | --- | --- | --- | |||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||||
| (in thousands) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| September 30, 2020 | December 31, 2019 | |||||||||||||
| Assets: | ||||||||||||||
| Real estate investments, net | $ | 1,423,238 | $ | 1,414,200 | ||||||||||
| Other real estate investments, net | — | 33,300 | ||||||||||||
| Assets held for sale, net | — | 34,590 | ||||||||||||
| Cash and cash equivalents | 19,101 | 20,327 | ||||||||||||
| Accounts and other receivables, net | 2,093 | 2,571 | ||||||||||||
| Prepaid expenses and other assets | 7,097 | 10,850 | ||||||||||||
| Deferred financing costs, net | 2,287 | 3,023 | ||||||||||||
| Total assets | $ | 1,453,816 | $ | 1,518,861 | ||||||||||
| Liabilities and Equity: | ||||||||||||||
| Senior unsecured notes payable, net | $ | 296,479 | $ | 295,911 | ||||||||||
| Senior unsecured term loan, net | 198,872 | 198,713 | ||||||||||||
| Unsecured revolving credit facility | — | 60,000 | ||||||||||||
| Accounts payable and accrued liabilities | 18,232 | 14,962 | ||||||||||||
| Dividends payable | 24,197 | 21,684 | ||||||||||||
| Total liabilities | 537,780 | 591,270 | ||||||||||||
| Equity: | ||||||||||||||
| Common stock | 952 | 951 | ||||||||||||
| Additional paid-in capital | 1,163,418 | 1,162,990 | ||||||||||||
| Cumulative distributions in excess of earnings | (248,334) | (236,350) | ||||||||||||
| Total equity | 916,036 | 927,591 | ||||||||||||
| Total liabilities and equity | $ | 1,453,816 | $ | 1,518,861 | ||||||||||
| CARETRUST REIT, INC. | ||||||||||||||
| --- | --- | --- | --- | --- | ||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||
| (in thousands) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| For the Nine Months Ended September 30, | ||||||||||||||
| 2020 | 2019 | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||
| Net income | $ | 59,812 | $ | 25,697 | ||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
| Depreciation and amortization (including below-market ground leases) | 39,529 | 38,789 | ||||||||||||
| Amortization of deferred financing costs | 1,462 | 1,516 | ||||||||||||
| Amortization of stock-based compensation | 2,819 | 3,122 | ||||||||||||
| Straight-line rental income | (65) | (1,483) | ||||||||||||
| Adjustment for collectibility of rental income | — | 12,078 | ||||||||||||
| Noncash interest income | — | (31) | ||||||||||||
| Loss (gain) on sale of real estate | 56 | (217) | ||||||||||||
| Interest income distribution from other real estate investment | 1,346 | 463 | ||||||||||||
| Impairment of real estate investments | — | 16,692 | ||||||||||||
| Provision for loan losses | — | 1,076 | ||||||||||||
| Change in operating assets and liabilities: | ||||||||||||||
| Accounts and other receivables, net | 543 | (6,043) | ||||||||||||
| Prepaid expenses and other assets | 267 | (348) | ||||||||||||
| Accounts payable and accrued liabilities | 2,616 | 3,847 | ||||||||||||
| Net cash provided by operating activities | 108,385 | 95,158 | ||||||||||||
| Cash flows from investing activities: | ||||||||||||||
| Acquisitions of real estate, net of deposits applied | (42,075) | (298,557) | ||||||||||||
| Improvements to real estate | (5,713) | (1,230) | ||||||||||||
| Purchases of equipment, furniture and fixtures | (581) | (2,926) | ||||||||||||
| Investment in real estate mortgage and other loans receivable | (13,958) | (14,699) | ||||||||||||
| Principal payments received on real estate mortgage and other loans receivable | 80,873 | 11,959 | ||||||||||||
| Repayment of other real estate investment | 2,327 | 2,204 | ||||||||||||
| Escrow deposits for potential acquisitions of real estate | (1,000) | (22,920) | ||||||||||||
| Net proceeds from sales of real estate | 2,189 | 218 | ||||||||||||
| Net cash provided by (used in) investing activities | 22,062 | (325,951) | ||||||||||||
| Cash flows from financing activities: | ||||||||||||||
| Proceeds from (costs paid for) the issuance of common stock, net | (404) | 195,963 | ||||||||||||
| Proceeds from the issuance of senior unsecured term loan | — | 200,000 | ||||||||||||
| Borrowings under unsecured revolving credit facility | 15,000 | 235,000 | ||||||||||||
| Payments on unsecured revolving credit facility | (75,000) | (265,000) | ||||||||||||
| Payments on senior unsecured term loan | — | (100,000) | ||||||||||||
| Payments of deferred financing costs | — | (4,534) | ||||||||||||
| Net-settle adjustment on restricted stock | (1,986) | (2,524) | ||||||||||||
| Dividends paid on common stock | (69,283) | (59,155) | ||||||||||||
| Net cash (used in) provided by financing activities | (131,673) | 199,750 | ||||||||||||
| Net decrease in cash and cash equivalents | (1,226) | (31,043) | ||||||||||||
| Cash and cash equivalents, beginning of period | 20,327 | 36,792 | ||||||||||||
| Cash and cash equivalents, end of period | $ | 19,101 | $ | 5,749 | ||||||||||
| CARETRUST REIT, INC. | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| DEBT SUMMARY | ||||||||||||||
| (dollars in thousands) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| September 30, 2020 | ||||||||||||||
| Interest | Maturity | % of | Deferred | Net Carrying | ||||||||||
| Debt | Rate | Date | Principal | Principal | Loan Costs | Value | ||||||||
| Fixed Rate Debt | ||||||||||||||
| Senior unsecured notes payable | 5.250 | % | 2025 | $ | 300,000 | 60.0 | % | $ | (3,521) | $ | 296,479 | |||
| Floating Rate Debt | ||||||||||||||
| Senior unsecured term loan | 1.649 | % | [1] | 2026 | 200,000 | 40.0 | % | (1,128) | 198,872 | |||||
| Unsecured revolving credit facility | — | % | [2] | 2024 | [3] | — | — | — | [4] | — | ||||
| 1.649 | % | 200,000 | 40.0 | % | (1,128) | 198,872 | ||||||||
| Total Debt | 3.810 | % | $ | 500,000 | 100.0 | % | $ | (4,649) | $ | 495,351 | ||||
| [1] Funds can be borrowed at applicable LIBOR plus 1.50% to 2.20% or at the Base Rate (as defined) plus 0.50% to 1.20%. | ||||||||||||||
| [2] Funds can be borrowed at applicable LIBOR plus 1.10% to 1.55% or the Base Rate (as defined) plus 0.10% to 0.55%. | ||||||||||||||
| [3] Maturity date assumes exercise of two 6-month extension options. | ||||||||||||||
| [4] Deferred financing fees are not shown net for the unsecured revolving credit facility and are included in assets on the balance sheet. | ||||||||||||||
| CARETRUST REIT, INC. | ||||||||||||||
| --- | --- | |||||||||||||
| RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES | ||||||||||||||
| (shares in thousands) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| Updated Guidance | ||||||||||||||
| Full Year 2020 Guidance[1] | ||||||||||||||
| Low | High | |||||||||||||
| Net income | $ | 0.83 | $ | 0.84 | ||||||||||
| Real estate related depreciation and amortization | 0.55 | 0.55 | ||||||||||||
| (Gain) loss on sale of real estate | (0.00) | (0.00) | ||||||||||||
| Funds from Operations (FFO) | 1.38 | 1.39 | ||||||||||||
| Recovery of previously reversed rent | (0.01) | (0.01) | ||||||||||||
| Lease termination revenue | (0.01) | (0.01) | ||||||||||||
| Property operating expenses | (0.00) | (0.00) | ||||||||||||
| Normalized FFO | $ | 1.36 | $ | 1.37 | ||||||||||
| Net income | $ | 0.83 | $ | 0.84 | ||||||||||
| Real estate related depreciation and amortization | 0.55 | 0.55 | ||||||||||||
| Amortization of deferred financing fees | 0.02 | 0.02 | ||||||||||||
| Amortization of stock-based compensation | 0.04 | 0.04 | ||||||||||||
| Straight-line rental income | (0.00) | (0.00) | ||||||||||||
| (Gain) loss on sale of real estate | (0.00) | (0.00) | ||||||||||||
| Funds Available for Distribution (FAD) | 1.44 | 1.45 | ||||||||||||
| Recovery of previously reversed rent | (0.01) | (0.01) | ||||||||||||
| Lease termination revenue | (0.01) | (0.01) | ||||||||||||
| Property operating expenses | (0.00) | (0.00) | ||||||||||||
| Normalized FAD | $ | 1.42 | $ | 1.43 | ||||||||||
| Weighted average shares outstanding: | ||||||||||||||
| Diluted | 95,378 | 95,378 | ||||||||||||
| [1]This guidance assumes and includes (i) all investments, dispositions and loan repayments made to date, (ii) no new acquisitions, dispositions, new loans or loan repayments beyond those completed or announced to date and (iii) no new debt incurrences or new equity issuances. It does not contemplate future negative impacts, if any, that are related to the COVID-19 pandemic, which are highly uncertain and cannot be predicted at this time. |
Non-GAAP Financial Measures
EBITDA represents net income before interest expense (including amortization of deferred financing costs), amortization of stock-based compensation, and depreciation and amortization. Normalized EBITDA represents EBITDA as further adjusted to eliminate the impact of certain items that the Company does not consider indicative of core operating performance, such as real estate impairment charges, provision for loan losses, provision for doubtful accounts and lease restructuring, recovery of previously reversed rent, lease termination revenue, property operating expenses and gains or losses from dispositions of real estate. EBITDA and Normalized EBITDA do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. EBITDA and Normalized EBITDA do not purport to be indicative of cash available to fund future cash requirements, including the Company’s ability to fund capital expenditures or make payments on its indebtedness. Further, the Company’s computation of EBITDA and Normalized EBITDA may not be comparable to EBITDA and Normalized EBITDA reported by other REITs.
Funds from Operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts (“Nareit”), and Funds Available for Distribution (“FAD”) are important non-GAAP supplemental measures of operating performance for a REIT. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation except on land, such accounting presentation implies that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a REIT that uses historical cost accounting for depreciation could be less informative. Thus, Nareit created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP.
FFO is defined by Nareit as net income computed in accordance with GAAP, excluding gains or losses from dispositions of real estate investments, real estate depreciation and amortization and real estate impairment charges, and adjustments for unconsolidated partnerships and joint ventures. The Company computes FFO in accordance with Nareit’s definition.
FAD is defined as FFO excluding noncash income and expenses, such as amortization of stock-based compensation, amortization of deferred financing fees and the effects of straight-line rent. The Company considers FAD to be a useful supplemental measure to evaluate the Company’s operating results excluding these income and expense items to help investors, analysts and other interested parties compare the operating performance of the Company between periods or as compared to other companies on a more consistent basis.
In addition, the Company reports Normalized FFO and Normalized FAD, which adjust FFO and FAD for certain revenue and expense items that the Company does not believe are indicative of its ongoing operating results, such as provision for loan losses, provision for doubtful accounts and lease restructuring, recovery of previously reversed rent, lease termination revenue and property operating expenses. By excluding these items, investors, analysts and our management can compare Normalized FFO and Normalized FAD between periods more consistently.
While FFO, Normalized FFO, FAD and Normalized FAD are relevant and widely-used measures of operating performance among REITs, they do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. FFO, Normalized FFO, FAD and Normalized FAD do not purport to be indicative of cash available to fund future cash requirements.
Further, the Company’s computation of FFO, Normalized FFO, FAD and Normalized FAD may not be comparable to FFO, Normalized FFO, FAD and Normalized FAD reported by other REITs that do not define FFO in accordance with the current Nareit definition or that interpret the current Nareit definition or define FAD differently than the Company does.
The Company believes that net income, as defined by GAAP, is the most appropriate earnings measure. The Company also believes that the use of EBITDA, Normalized EBITDA, FFO, Normalized FFO, FAD and Normalized FAD, combined with the required GAAP presentations, improves the understanding of operating results of REITs among investors and makes comparisons of operating results among such companies more meaningful. The Company considers EBITDA and Normalized EBITDA useful in understanding the Company’s operating results independent of its capital structure, indebtedness and other charges that are not indicative of its ongoing results, thereby allowing for a more meaningful comparison of operating performance between periods and against other REITs. The Company considers FFO, Normalized FFO, FAD and Normalized FAD to be useful measures for reviewing comparative operating and financial performance because, by excluding gains or losses from real estate dispositions, impairment charges and real estate depreciation and amortization, and, for FAD and Normalized FAD, by excluding noncash income and expenses such as amortization of stock-based compensation, amortization of deferred financing fees, and the effects of straight-line rent, FFO, Normalized FFO, FAD and Normalized FAD can help investors compare the Company’s operating performance between periods and to other REITs.
exhibit992-ctreq320inanc
EXHIBIT 99.2EXHIBITEXHIBIT 99.2EXHIBITEXHIBIT 99.2EXHIBIT 99.299.2 99.2 Broadmoor Medical Lodge (Rockwall, TX)Downey Care Center (Downey, CA)
Disclaimers This supplement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical statements of fact and statements regarding our intent, belief or expectations, including, but not limited to, statements regarding future financial and financing positions, business and acquisition strategies, growth prospects, operating and financial performance, expectations regarding the making of distributions, payment of dividends, compliance with and changes in governmental regulations, and the performance of our operators and their respective facilities. Words such as “anticipate,” “believe,” “could,” "expect,” “estimate,” “intend,” “may,” “plan,” “seek,” “should,” “will,” “would,” and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements, though not all forward-looking statements contain these identifying words. Our forward-looking statements are based on our current expectations and beliefs, and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although we believe that the assumptions underlying these forward-looking statements are reasonable, they are not guarantees and we can give no assurance that our expectations will be attained. Factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from expectations include, but are not limited to: (i) the COVID-19 pandemic and the measures taken to prevent its spread and the related impact on our business or the businesses of our tenants; (ii) the ability and willingness of our tenants to meet and/or perform their obligations under the triple-net leases we have entered into with them, including, without limitation, their respective obligations to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities; (iii) the ability of our tenants to comply with applicable laws, rules and regulations in the operation of the properties we lease to them; (iv) the ability and willingness of our tenants to renew their leases with us upon their expiration, and the ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we replace an existing tenant, as well as any obligations, including indemnification obligations, we may incur in connection with the replacement of an existing tenant; (v) the availability of and the ability to identify (a) tenants who meet our credit and operating standards, and (b) suitable acquisition opportunities, and the ability to acquire and lease the respective properties to such tenants on favorable terms; (vi) the ability to generate sufficient cash flows to service our outstanding indebtedness; (vii) access to debt and equity capital markets; (viii) fluctuating interest rates; (ix) the ability to retain our key management personnel; (x) the ability to maintain our status as a real estate investment trust (“REIT”); (xi) changes in the U.S. tax law 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 included under “Risk Factors” in Part II, Item 1A of the Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 and in our Annual Report on Form 10-K for the year ended December 31, 2019, including in the section entitled “Risk Factors” in Item 1A of Part I of such report, as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the SEC. This supplement contains certain non-GAAP financial information relating to CareTrust REIT including EBITDA, Normalized EBITDA, FFO, Normalized FFO, FAD, Normalized FAD, and certain related ratios. Explanatory footnotes and a glossary explaining this non-GAAP information are included in this supplement. Reconciliations of these non-GAAP measures are also included in this supplement. Other financial information, including GAAP financial information, is also available on our website. Non-GAAP financial information does not represent financial performance under GAAP and should not be considered in isolation, as a measure of liquidity, as an alternative to net income, or as an indicator of any other performance measure determined in accordance with GAAP. You should not rely on non-GAAP financial information as a substitute for GAAP financial information, and should recognize that non-GAAP information presented herein may not compare to similarly-termed non-GAAP information of other companies (i.e., because they do not use the same definitions for determining any such non-GAAP information). This supplement also includes certain information regarding operators of our properties (such as EBITDARM Coverage, EBITDAR Coverage, and Occupancy), most of which are not subject to audit or SEC reporting requirements. The operator information provided in this supplement has been provided by the operators. We have not independently verified this information, but have no reason to believe that such information is inaccurate in any material respect. We are providing this information for informational purposes only. The Ensign Group, Inc. ("Ensign") and The Pennant Group, Inc. ("Pennant") are subject to the registration and reporting requirements of the SEC and are required to file with the SEC annual reports containing audited financial information and quarterly reports containing unaudited financial information. Ensign’s and Pennant's financial statements, as filed with the SEC, can be found at the SEC's website at www.sec.gov. 2 This supplement provides information about our financial results as of and for the quarter ended September 30, 2020 and is provided as of the date hereof, unless specifically stated otherwise. We expressly disclaim any obligation to update or revise any information in this supplement (including forward-looking statements), whether to reflect any change in our expectations, any change in events, conditions or circumstances, or otherwise. As used in this supplement, unless the context requires otherwise, references to “CTRE,” “CareTrust,” “CareTrust REIT” or the “Company” refer to CareTrust REIT, Inc. and its consolidated subsidiaries. GAAP refers to generally accepted accounting principles in the United States of America. 2
Company Profile Company Profile 3 CareTrust REIT is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition, CareTrust at a Glance 4 development and leasing of seniors housing and healthcare-related properties. CareTrust REIT generates revenues primarily by Investments 5 leasing properties to a diverse group of local, regional and national seniors housing operators, healthcare services providers, and Portfolio Overview other healthcare-related businesses. Top 10 Tenants Lease Coverage 6 Portfolio Performance 7 Since its debut as a standalone public company on June 1, 2014, and as of November 5, 2020, CareTrust REIT has expanded its tenant roster to 23 operators, and has grown its real estate portfolio to 214 net-leased healthcare properties across 28 states, Rent Diversification by Tenant 8 consisting of 21,779 operating beds/units. Geographic Diversification 9 Rent Diversification by State 10 Lease Maturities 11 Management Financial Overview Consolidated Statements of Operations 13 Greg Stapley Bill Wagner Reconciliation of EBITDA, FFO and FAD 14 Chairman and Chief Executive Officer Chief Financial Officer Consolidated Balance Sheets 16 Dave Sedgwick Mark Lamb Key Debt Metrics 17 Chief Operating Officer Chief Investment Officer Debt Summary 18 2020 Updated Guidance 19 Equity Capital Transactions 20 Board of Directors Other Financial Highlights 21 Greg Stapley Diana Laing Jon Kline Allen Barbieri Spencer Plumb Glossary 23 Chairman Contact Information Analyst Coverage CareTrust REIT, Inc. 905 Calle Amanecer, Suite 300 San Clemente, CA 92673 KeyBanc Capital Markets Raymond James Wells Fargo Securities (949) 542-3130 | ir@caretrustreit.com Jordan Sadler | (917) 318-2280 Jonathan Hughes | (727) 567-2438 Todd Stender | (562) 637-1371 www.caretrustreit.com RBC Capital Markets Mizuho Financial Group BMO Capital Markets Transfer Agent Michael Carroll | (440) 715-2649 Omotayo Okusanya | (646) 949-9672 John Kim | (212) 885-4115 Broadridge Corporate Issuer Solutions P.O. Box 1342 CapitalOne Securities Barclays Berenberg Brentwood, NY 11717 Dan Bernstein | (571) 835-7202 Steve Valiquette | (212) 526-5496 Connor Siversky | (646) 949-9037 (800) 733-1121 | shareholder@broadridge.com 3
CareTrust REIT, Inc. Nasdaq: CTRE Market Data (as of September 30, 2020) Closing Price: $17.80 52 Week Range: $24.56– $7.16 Market Cap: $1,704M Enterprise Value: $2,185M Outstanding Shares: 95.7M 214 28 States Credit Ratings Properties Credit Ratings S&P S&PCorporate Rating: B+ (positive) Corporate Rating: BB- (stable)Senior Unsecured Notes: BB- Senior Unsecured Notes: BB 23 Operators Moody’s Moody’sCorporate Rating: B1 (positive) Corporate Rating: Ba2 (negative)Senior Unsecured Notes: B1 21,779 $1,744.4 M Operating Senior Unsecured Notes: Ba2 Investments Beds/Units Note: 44 Amounts are as of September 30, 2020 and exclude our one operated seniors housing property.
Investments (dollars in thousands) Property Initial Initial Operating Cost per Initial Date Operator Type Location Facilities Investment[1] Beds/Units [2] Bed/Unit [3] Initial Rent [4] Yield[5] ALF, SNF, 6/1/2014 The Ensign Group Campus Various 94 $ 501,673 10,053 $ 50 $ 56,000 N/A 2014 Investments 6 33,609 157 166 3,076 9.2 % 2015 Investments 20 233,028 1,840 127 22,263 9.6 % 2016 Investments 35 288,023 2,800 101 26,084 9.1 % 2017 Investments 36 309,805 3,324 92 28,000 9.0 % 2018 Investments 12 111,950 1,103 101 9,955 8.9 % 2019 Investments 27 340,884 3,348 113 30,168 8.8 % 01/17/2020 Cascadia Healthcare SNF ID 1 18,675 99 189 1,669 8.9 % 02/12/2020 Bayshire, LLC ALF UT 1 7,396 62 119 590 8.0 % 09/01/2020 Eduro Healthcare, LLC SNF MT 2 16,620 150 111 1,550 9.3 % 2020 Investments 4 42,691 311 137 3,809 8.9 % Total Post Spin-off Investments[6] 140 1,359,990 12,883 108 123,355 9.1 % Total Investments[6] 234 $ 1,861,663 22,936 $ 82 $ 179,355 Notes: [1] Initial Investment for pre-spin properties represents Ensign's and Pennant's gross book value. Initial Investment for post-spin properties represents CareTrust REIT’s purchase price and transaction costs. [2] Initial Operating Beds/Units as of the acquisition date. [3] Cost per Bed/Unit excludes any preferred equity investments and mortgage loans receivable. [4] Initial Rent represents the annualized acquisition-date cash rent or deferred interest income on any preferred equity investments and excludes ground lease income. [5] Initial Yield represents Initial Rent divided by Initial Investment. [6] All amounts exclude our one operated seniors housing property and, except as otherwise indicated, include any preferred equity investments and mortgage loans receivable. 5
Top 10 Tenants Lease Coverage 6
Portfolio Performance (dollars in thousands) As of September 30, 2020 Operating % of Total % of Total Asset Type Facilities Beds/Units Investment [1] Investment Rent [2] Rent Current Yield [3] Skilled Nursing 154 15,733 $1,259,279 72.2% $123,897 73.0% 9.8% Multi-Service Campus 19 2,741 241,363 13.8% 20,482 12.1% 8.5% Seniors Housing 41 3,305 243,757 14.0% 25,352 14.9% 10.4% Total Net-Leased Assets [4] 214 21,779 $1,744,399 100.0% $169,731 100.0% 9.7% (dollars in thousands) As of June 30, 2020 Operating % of Total % of Total Asset Type Facilities Beds/Units Investment [1] Investment Rent [5] Rent Current Yield [3] Skilled Nursing 153 15,912 $1,242,617 71.9% $121,136 72.6% 9.7% Multi-Service Campus 18 2,460 241,366 14.0% 20,431 12.2% 8.5% Seniors Housing 41 3,287 243,757 14.1% 25,331 15.2% 10.4% Total Net-Leased Assets [6] 212 21,659 $1,727,740 100.0% $166,898 100.0% 9.7% (dollars in thousands) As of September 30, 2019 Operating % of Total % of Total Asset Type Facilities Beds/Units Investment [1] Investment Rent [7] Rent Current Yield [3] Skilled Nursing 147 15,059 $1,184,148 70.9% $116,111 72.5% 9.8% Multi-Service Campus 22 3,094 256,517 15.4% 23,208 14.5% 9.0% Seniors Housing 38 2,950 228,675 13.7% 20,794 13.0% 9.1% Total Net-Leased Assets [8] 207 21,103 $1,669,340 100.0% $160,113 100.0% 9.6% Notes: [1] Investment for pre-spin properties represents Ensign's and Pennant's gross book value. Investment for post-spin properties represents CareTrust REIT’s cumulative capital investment. Capital investment includes purchase price, transaction costs and landlord-funded capital expenditures, if any. [2] Rent represents September 2020 rent, annualized, or based on the initial cash rents annualized, and excludes ground lease income. Additionally, if a lease was entered into, amended or restructured subsequent to September 30, 2020, the new contractual cash rent is used. [3] Current Yield represents Rent divided by Investment. [4] All amounts exclude our one operated seniors housing property. [5] Rent represents June 2020 rent, annualized, or based on the initial cash rents annualized, and excludes ground lease income. Additionally, if a lease was entered into, amended or restructured subsequent to June 30, 2020, the new contractual cash rent is used. [6] All amounts exclude our one operated seniors housing property and one mortgage loan receivable. [7] Rent represents September 2019 rent, annualized, or based on the initial cash rents annualized, and excludes ground lease income. Additionally, if a lease was entered into, amended or restructured subsequent to September 30, 2019, the new contractual cash rent is used. [8] All amounts exclude our three seniors housing properties, one preferred equity investment and two mortgage loans receivable. Additionally, amounts exclude properties classified as held for sale as of September 30, 2019. See “Glossary” for additional information. 7
Rent Diversification by Tenant (dollars in thousands) As of September 30, 2020[1] Operating % of Total % of Total Facilities Beds/Units Investment[2] Investment Rent[3] Rent 1 The Ensign Group 85 8,883 $ 451,126 25.9 % $ 53,406 31.5 % 2 Priority Management Group 15 2,145 300,004 17.2 % 27,575 16.2 % 3 Cascadia Healthcare 13 1,112 122,535 7.0 % 11,588 6.8 % 4 Providence Group 8 1,067 127,759 7.3 % 10,029 5.9 % 5 Eduro Healthcare, LLC 8 902 87,380 5.0 % 8,154 4.8 % Total Top 5 Tenants 129 14,109 $ 1,088,804 62.4 % $ 110,752 65.2 % 6 The Pennant Group 11 1,193 57,165 3.3 % 7,837 4.6 % 7 Covenant Care 6 790 69,828 4.0 % 6,719 4.0 % 8 Premier Senior Living Group 8 385 68,564 3.9 % 6,382 3.8 % 9 WLC Management 8 772 46,363 2.7 % 4,833 2.8 % 10 Trillium Healthcare Group 11 735 46,025 2.6 % 4,800 2.8 % Total Top 10 Tenants 173 17,984 $ 1,376,749 78.9 % $ 141,323 83.2 % All Other Tenants 41 3,795 $ 367,650 21.1 % $ 28,408 16.8 % Total 214 21,779 $ 1,744,399 100.0 % $ 169,731 100.0 % Notes: [1] All amounts exclude our one operated seniors housing property. [2] Investment for pre-spin properties represents Ensign's and Pennant's gross book value. Investment for post-spin properties represents CareTrust REIT’s cumulative capital investment. Capital investment includes purchase price, transaction costs and landlord-funded capital expenditures, if any. [3] Rent represents September 2020 rent, annualized, or based on the initial cash rents annualized and excludes ground lease income. Additionally, if a lease was entered into, amended or restructured subsequent to September 30, 2020, the new contractual cash rent is used. 8
Top Five States TX 19.1% CA 21.1% LA 9.4% ID 8.0% 1 ALF AZ 7.3% Run-Rate Rent Others 35.1% 1 ALF TX 18.1% CA 18.7% LA 10.2% ID 7.9% 1 SNF AZ 3.5% Investment Others 41.6% CA 18.2% TX 20.9% ID 6.7% AZ 6.1% LA 5.3% Beds/Units Others 42.8% 9
Rent Diversification by State (dollars in thousands) As of September 30, 2020[1] Net-Leased Assets by State Operating % of Total % of Total Facilities Beds/Units Investment[2] Investment Rent[3] Rent 1 California 34 3,965 $ 326,321 18.7 % $ 35,748 21.1 % 2 Texas 37 4,557 315,741 18.1 % 32,479 19.1 % 3 Louisiana 8 1,164 178,407 10.2 % 16,030 9.4 % 4 Idaho 17 1,457 137,863 7.9 % 13,639 8.0 % 5 Arizona 11 1,337 60,753 3.5 % 12,470 7.3 % Top 5 States 107 12,480 $ 1,019,085 58.4 % $ 110,366 64.9 % 6 Ohio 13 1,270 156,408 9.0 % 8,005 4.7 % 7 Utah 13 1,392 85,071 4.9 % 7,334 4.3 % 8 Colorado 7 785 60,435 3.5 % 5,568 3.3 % 9 Washington 12 1,082 61,836 3.5 % 5,223 3.1 % 10 Iowa 15 986 53,488 3.1 % 4,864 2.9 % Top 10 States 167 17,995 $ 1,436,323 82.4 % $ 141,360 83.2 % All Other States 47 3,784 $ 308,076 17.6 % $ 28,371 16.8 % Total 214 21,779 $ 1,744,399 100.0 % $ 169,731 100.0 % Notes: [1] All amounts exclude our one operated senior housing property. [2] Investment for pre-spin properties represents Ensign's and Pennant's gross book value. Investment for post-spin properties represents CareTrust REIT’s cumulative capital investment. Capital investment includes purchase price, transaction costs and landlord-funded capital expenditures, if any. [3] Rent represents September 2020 rent, annualized, or based on the initial cash rents annualized and excludes ground lease income. Additionally, if a lease was entered into, amended or restructured subsequent to September 30, 2020, the new contractual cash rent is used. 10
Lease Maturities (dollars in thousands) As of September 30, 2020[1] Lease Maturity % of Total % of Total Year[2] Investment[3] Investment Rent[4] Rent 2026 58,157 3.3 % 5,241 3.1 % 2027 46,801 2.7 % 4,897 2.9 % 2028 68,193 3.9 % 7,573 4.5 % 2029 149,881 8.6 % 12,368 7.3 % 2030 207,160 11.9 % 18,925 11.1 % 2031 558,528 32.0 % 52,987 31.2 % 2032 208,443 11.9 % 19,652 11.6 % 2033 198,537 11.4 % 23,022 13.6 % 2034 248,699 14.3 % 25,066 14.7 % Total $ 1,744,399 100.0 % $ 169,731 100.0 % Providence Orangetree (Riverside, CA) Notes: [1] All amounts exclude our one operated senior housing property. [2] Lease Maturity Year represents the scheduled expiration year of the primary term of the lease and does not include tenant extension options or purchase options, if any. [3] Investment for pre-spin properties represents Ensign's and Pennant's gross book value. Investment for post-spin properties represents CareTrust REIT’s cumulative capital investment. Capital investment includes purchase price, transaction costs and landlord-funded capital expenditures, if any. [4] Rent represents September 2020 rent, annualized, or based on the initial cash rents annualized and excludes ground lease income. Additionally, if a lease was entered into, amended or restructured subsequent to September 30, 2020, the new contractual cash rent is used. 31.2% 13.6% 14.7% 11.1% 11.6% of Rent % 7.3% 4.5% 3.1% 2.9% 2026 2027 2028 2029 2030 2031 2032 2033 2034 Lease Maturity Year 11
Las Colinas (Ontario, CA) 12
Consolidated Statements of Operations (amounts in thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Revenues: Rental income $ 45,036 $ 31,577 $ 130,007 $ 114,047 Independent living facilities 634 929 1,874 2,676 Interest and other income 17 808 2,314 2,450 Total revenues 45,687 33,314 134,195 119,173 Expenses: Depreciation and amortization 13,086 13,420 39,485 38,759 Interest expense 5,519 7,064 18,082 21,209 Property taxes 857 1,025 2,179 2,307 Independent living facilities 568 806 1,660 2,232 Impairment of real estate investments — 16,692 — 16,692 Provision for loan losses — 1,076 — 1,076 General and administrative 4,105 3,502 12,921 11,418 Total expenses 24,135 43,585 74,327 93,693 Other income (loss): Gain (loss) on sale of real estate — 217 (56) 217 Net income (loss) $ 21,552 $ (10,054) $ 59,812 $ 25,697 Earnings (loss) per common share: Basic $ 0.23 $ (0.11) $ 0.63 $ 0.28 Diluted $ 0.23 $ (0.11) $ 0.63 $ 0.28 Weighted-average number of common shares: Basic 95,214 95,103 95,195 92,409 Diluted 95,214 95,103 95,195 92,409 Dividends declared per common share $ 0.25 $ 0.225 $ 0.75 $ 0.675 13
Reconciliation of EBITDA, FFO and FAD Quarter Quarter Quarter Quarter Quarter Ended Ended Ended Ended Ended (amounts in thousands, except per share data) September 30, 2019 December 31, 2019 March 31, 2020 June 30, 2020 September 30, 2020 Net (loss) income $ (10,054) $ 20,662 $ 19,325 $ 18,935 $ 21,552 Depreciation and amortization 13,420 13,063 13,160 13,239 13,086 Interest expense 7,064 6,916 6,714 5,849 5,519 Amortization of stock-based compensation 981 982 884 963 972 EBITDA 11,411 41,623 40,083 38,986 41,129 Impairment of real estate investments 16,692 — — — — Provision for loan losses 1,076 — — — — Provision for doubtful accounts and lease restructuring 12,471 464 — — — Recovery of previously reversed rent — — — — (1,047) Lease termination revenue — — — — (1,106) Property operating expenses 218 (84) (217) (31) — (Gain) loss on sale of real estate (217) (1,560) 56 — — Normalized EBITDA $ 41,651 $ 40,443 $ 39,922 $ 38,955 $ 38,976 Net (loss) income $ (10,054) $ 20,662 $ 19,325 $ 18,935 $ 21,552 Real estate related depreciation and amortization 13,404 13,046 13,144 13,223 13,078 Impairment of real estate investments 16,692 — — — — (Gain) loss on sale of real estate (217) (1,560) 56 — — Funds from Operations (FFO) 19,825 32,148 32,525 32,158 34,630 Provision for loan losses 1,076 — — — — Provision for doubtful accounts and lease restructuring 12,471 464 — — — Recovery of previously reversed rent — — — — (1,047) Lease termination revenue — — — — (1,106) Property operating expenses 218 (84) (217) (31) — Normalized FFO $ 33,590 $ 32,528 $ 32,308 $ 32,127 $ 32,477 See Glossary for additional information. 14
Reconciliation of EBITDA, FFO and FAD (continued) Quarter Quarter Quarter Quarter Quarter Ended Ended Ended Ended Ended (amounts in thousands, except per share data) September 30, 2019 December 31, 2019 March 31, 2020 June 30, 2020 September 30, 2020 Net (loss) income $ (10,054) $ 20,662 $ 19,325 $ 18,935 $ 21,552 Real estate related depreciation and amortization 13,404 13,046 13,144 13,223 13,078 Amortization of deferred financing fees 488 487 487 488 487 Amortization of stock-based compensation 981 982 884 963 972 Straight-line rental income (546) 98 (26) (22) (17) Impairment of real estate investments 16,692 — — — — (Gain) loss on sale of real estate (217) (1,560) 56 — — Funds Available for Distribution (FAD) 20,748 33,715 33,870 33,587 36,072 Provision for loan losses 1,076 — — — — Provision for doubtful accounts and lease restructuring 12,471 464 — — — Recovery of previously reversed rent — — — — (1,047) Lease termination revenue — — — — (1,106) Property operating expenses 218 (84) (217) (31) — Normalized FAD $ 34,513 $ 34,095 $ 33,653 $ 33,556 $ 33,919 FFO per share $ 0.21 $ 0.34 $ 0.34 $ 0.34 $ 0.36 Normalized FFO per share $ 0.35 $ 0.34 $ 0.34 $ 0.34 $ 0.34 FAD per share $ 0.22 $ 0.35 $ 0.36 $ 0.35 $ 0.38 Normalized FAD per share $ 0.36 $ 0.36 $ 0.35 $ 0.35 $ 0.36 Diluted weighted average shares outstanding [1] 95,313 95,340 95,306 95,295 95,353 [1] For the periods presented, the diluted weighted average shares have been calculated using the treasury stock method. See Glossary for additional information. 15
Consolidated Balance Sheets (dollars in thousands) September 30, 2020 December 31, 2019 Assets: Real estate investments, net $ 1,423,238 $ 1,414,200 Other real estate investments, net — 33,300 Assets held for sale, net — 34,590 Cash and cash equivalents 19,101 20,327 Accounts and other receivables, net 2,093 2,571 Prepaid expenses and other assets 7,097 10,850 Deferred financing costs, net 2,287 3,023 Total assets $ 1,453,816 $ 1,518,861 Liabilities and Equity: Senior unsecured notes payable, net $ 296,479 $ 295,911 Senior unsecured term loan, net 198,872 198,713 Unsecured revolving credit facility — 60,000 Accounts payable and accrued liabilities 18,232 14,962 Dividends payable 24,197 21,684 Total liabilities 537,780 591,270 Equity: Common stock 952 951 Additional paid-in capital 1,163,418 1,162,990 Cumulative distributions in excess of earnings (248,334) (236,350) Total equity 916,036 927,591 Total liabilities and equity $ 1,453,816 $ 1,518,861 16
Key Debt Metrics Net Debt to Normalized EBITDA [1][2] Net Debt to Enterprise Value [3] 36.5% 4.6 4.1 28.8% 28.0% 3.5 3.5 3.3 3.3 3.3 3.4 3.3 24.2% 3.2 3.1 22.3% 23.1% 22.0% 19.9% 21.2% 18.1% 19.1% 3/31/2018 6/30/2018 9/30/2018 3/31/2019 6/30/2019 9/30/2019 3/31/2020 6/30/2020 9/30/2020 12/31/2018 12/31/2019 3/31/2018 6/30/2018 9/30/2018 3/31/2019 6/30/2019 9/30/2019 3/31/2020 6/30/2020 9/30/2020 [1] Net Debt to Normalized EBITDA compares total debt as of the last day of the quarter to the annualized Normalized EBITDA for the quarter.12/31/2018 12/31/2019 [2] See "Financials & Filings - Quarterly Results" on the Investors section of our website at http://investor.caretrustreit.com for reconciliations of Normalized EBITDA to the most directly comparable GAAP measure for the periods presented. [3] Net Debt to Enterprise Value compares total debt as of the last day of the quarter to CareTrust REIT’s Enterprise Value as of the last day of the quarter. See “Glossary” for additional information. 17
Debt Summary (dollars in thousands) September 30, 2020 Interest Maturity % of Deferred Net Carrying Debt Rate Date Principal Principal Loan Costs Value Fixed Rate Debt Senior unsecured notes payable 5.250 % 2025 $ 300,000 60.0 % $ (3,521) $ 296,479 Floating Rate Debt Senior unsecured term loan 1.649 % [1] 2026 200,000 40.0 % (1,128) 198,872 Unsecured revolving credit facility — % [2] 2024 [3] — — — [4] — 1.649 % 200,000 40.0 % (1,128) 198,872 Total Debt 3.810 % $ 500,000 100.0 % $ (4,649) $ 495,351 Debt Maturity Schedule $300,000 $200,000 Principal 2020 2021 2022 2023 2024 2025 2026 Debt Maturity Year Notes: [1] Funds can be borrowed at applicable LIBOR plus 1.50% to 2.20% or at the Base Rate (as defined) plus 0.50% to 1.20%. [2] Funds can be borrowed at applicable LIBOR plus 1.10% to 1.55% or the Base Rate (as defined) plus 0.10% to 0.55%. [3] Maturity date assumes exercise of two, 6-month extension options. [4] Deferred financing fees are not shown net for the unsecured revolving credit facility and are included in assets on the balance sheet. 18
2020 Updated Guidance Full Year 2020 Guidance[1] (shares in thousands) Low High Net income $ 0.83 $ 0.84 Real estate related depreciation and amortization 0.55 0.55 (Gain) loss on sale of real estate (0.00) (0.00) Funds from Operations (FFO) 1.38 1.39 Recovery of previously reversed rent (0.01) (0.01) Lease termination revenue (0.01) (0.01) Property operating expenses (0.00) (0.00) Normalized FFO $ 1.36 $ 1.37 Net income $ 0.83 $ 0.84 Real estate related depreciation and amortization 0.55 0.55 Amortization of deferred financing fees 0.02 0.02 Amortization of stock-based compensation 0.04 0.04 Straight-line rental income (0.00) (0.00) (Gain) loss on sale of real estate (0.00) (0.00) Funds Available for Distribution (FAD) 1.44 1.45 Recovery of previously reversed rent (0.01) (0.01) Lease termination revenue (0.01) (0.01) Property operating expenses (0.00) (0.00) Normalized FAD $ 1.42 $ 1.43 Weighted average shares outstanding: Diluted 95,378 95,378 Notes: [1] This guidance assumes and includes (i) all investments, dispositions and loan repayments made to date, (ii) no new acquisitions, dispositions, new loans or loan repayments beyond those completed or announced to date and (iii) no new debt incurrences or new equity issuances. It does not contemplate future negative impacts, if any, that are related to the COVID-19 pandemic, which are highly uncertain and cannot be predicted at this time. See “Glossary” for additional information. 19
Equity Capital Transactions Follow-On Equity Offering Activity 2015 2016 2019[2] Q1 Q2 Q3 Q4 Total Number of Shares (000s) 16,330 — 9,775 — 6,325 16,100 6,641 Public Offering Price per Share $ 10.50 $ — $ 11.35 $ — $ 13.35 $ 12.14 [1] $ 23.35 Gross Proceeds (000s) $ 171,465 $ — $ 110,946 $ — $ 84,439 $ 195,385 $ 155,073 At-the-Market Offering Activity 2016 2017 2018 2019 2020[2] Q1 Q2 Q3 Total Number of Shares (000s) 924 10,574 10,265 2,459 — — — — Average Price per Share $ 15.31 $ 16.43 $ 17.76 $ 19.48 $ — $ — $ — $ — Gross Proceeds (000s) $ 14,147 $ 173,760 $ 182,321 $ 47,893 $ — $ — $ — $ — Notes: [1] Represents average offering price per share for follow-on equity offerings. [2] In connection with the entry into the equity distribution agreement and the commencement of the new $500.0 million ATM Program in March 2020 (the "New ATM Program") our “at-the-market” equity offering program pursuant to our prior equity distribution agreement, dated as of March 4, 2019, was terminated (the "Prior ATM Program"). There was no Prior ATM Program or New ATM Program activity for the nine months ended September 30, 2020. As of September 30, 2020, CareTrust REIT had $500.0 million available for future issuances under the New ATM Program. 20
Other Financial Highlights Dividend History $0.25 $0.25 $0.25 $0.225 $0.225 $0.225 $0.225 $0.205 $0.205 $0.205 $0.205 $0.185 $0.185 $0.185 $0.185 $0.17 $0.17 $0.17 $0.17 $0.16 $0.16 $0.16 $0.16 6/30/18 9/30/18 3/31/2015 6/30/2015 9/30/2015 3/31/2016 6/30/2016 9/30/2016 3/31/2017 6/30/2017 9/30/2017 3/31/2018 3/31/2019 6/30/2019 9/30/2019 3/31/2020 6/30/2020 9/30/2020 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 Normalized FFO Payout Ratio [1][2] 80% 73.5% 73.5% 73.5% 70.3% 66.7% 66.1% 66.1% 66.2% 64% 64% 63% 63% 63.8% 64.1% 64.1% 64.1% 64.1% 64.3% 64.3% 60.7% 60.7% 59.7% 3/31/2015 6/30/2015 9/30/2015 3/31/2016 6/30/2016 9/30/2016 3/31/2017 6/30/2017 9/30/2017 3/31/2018 6/30/2018 9/30/2018 3/31/2019 6/30/2019 9/30/2019 3/31/2020 6/30/2020 9/30/2020 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 Notes: [1] Normalized FFO Payout Ratio represents dividends declared divided by Normalized FFO, in each case for the applicable quarter. [2] See “Financials & Filings - Quarterly Results” on the Investors section of our website at http://investor.caretrustreit.com for a reconciliation of Normalized FFO and Normalized FFO per Share to the most directly comparable GAAP measure for the periods presented. See “Glossary” for additional information. 21
Other Financial Highlights (continued) Normalized FFO per Share [1] $0.35 $0.35 $0.34 $0.34 $0.34 $0.34 $0.31 $0.32 $0.32 $0.32 $0.32 $0.32 $0.29 $0.27 $0.27 $0.28 $0.28 $0.28 $0.28 $0.24 $0.25 $0.25 $0.20 3/31/2015 6/30/2015 9/30/2015 3/31/2016 6/30/2016 9/30/2016 3/31/2017 6/30/2017 9/30/2017 3/31/2018 6/30/2018 9/30/2018 3/31/2019 6/30/2019 9/30/2019 3/31/2020 6/30/2020 9/30/2020 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 Normalized FFO [1] $33,119 $33,590 $32,528 $32,308 $32,127 $32,477 $27,059 $27,937 $25,840 $23,639 $24,105 $24,532 $20,622 $21,028 $19,331 $17,160 $15,498 $16,258 $13,098 $12,021 $7,631 $7,934 $7,731 3/31/2015 6/30/2015 9/30/2015 3/31/2016 6/30/2016 9/30/2016 3/31/2017 6/30/2017 9/30/2017 3/31/2018 6/30/2018 9/30/2018 3/31/2019 6/30/2019 9/30/2019 3/31/2020 6/30/2020 9/30/2020 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 Notes: [1] See “Financials & Filings - Quarterly Results” on the Investors section of our website at http://investor.caretrustreit.com for a reconciliation of Normalized FFO and Normalized FFO per Share to the most directly comparable GAAP measure for the periods presented. See “Glossary” for additional information. 22
Glossary Assisted Living Facilities (“ALFs”) EBITDARM Coverage Licensed healthcare facilities that provide personal care services, support and Aggregate EBITDARM produced by all facilities under a master lease (or other housing for those who need help with daily living activities, such as bathing, eating grouping) for the trailing twelve-month period ended June 30, 2020 divided by the and dressing, yet require limited medical care. The programs and services may base rent payable to CareTrust REIT under such master lease (or other grouping) include transportation, social activities, exercise and fitness programs, beauty or for the same period; provided that if the master lease has been amended to barber shop access, hobby and craft activities, community excursions, meals in a change the base rent during or since such period, then the aggregate EBITDARM dining room setting and other activities sought by residents. These facilities are for such period is divided by the annualized monthly base rent currently in effect. often in apartment-like buildings with private residences ranging from single rooms In addition, we may exclude from coverage disclosures those facilities which are (i) to large apartments. Certain ALFs may offer higher levels of personal assistance for classified as Held for Sale, (ii) temporarily on Special Focus Facility (SFF) status, (iii) residents requiring memory care as a result of Alzheimer’s disease or other forms undergoing significant renovations that necessarily result in a material reduction in of dementia. Levels of personal assistance are based in part on local regulations. occupancy, or (iv) have been acquired for or recently transferred to new operators for turnaround and are pre-stabilized. EBITDA Net income before interest expense, income tax, depreciation and amortization Enterprise Value and amortization of stock-based compensation.[1] Share price multiplied by the number of outstanding shares plus total outstanding debt minus cash, each as of a specified date. EBITDAR Net income before interest expense, income tax, depreciation, amortization and Funds Available for Distribution (“FAD”) rent, after applying a standardized management fee (5% of facility operating FFO, excluding straight-line rental income adjustments, amortization of deferred revenues). financing fees and stock-based compensation expense.[2] EBITDAR Coverage Funds from Operations (“FFO”) Aggregate EBITDAR produced by all facilities under a master lease (or other Net income, excluding gains and losses from dispositions of real estate or other grouping) for the trailing twelve-month period ended June 30, 2020 divided by the real estate, before real estate depreciation and amortization and real estate base rent payable to CareTrust REIT under such master lease (or other grouping) impairment charges. CareTrust REIT calculates and reports FFO in accordance with for the same period; provided that if the master lease has been amended to change the definition and interpretive guidelines issued by the National Association of Real the base rent during or since such period, then the aggregate EBITDAR for such Estate Investment Trusts.[2] period is divided by the annualized monthly base rent currently in effect. In addition, we may exclude from coverage disclosures those facilities which are (i) HHS Relief Funds classified as Held for Sale, (ii) temporarily on Special Focus Facility (SFF) status, (iii) Provider relief funds distributed by the Department of Health and Human Services undergoing significant renovations that necessarily result in a material reduction in as part of the CARES act to support healthcare providers battle against the occupancy, or (iv) have been acquired for or recently transferred to new operators COVID-19 outbreak. Healthcare providers received four payments over three for turnaround and are pre-stabilized. phases of general distributions. Does not include funds as part of Medicaid's Federal Medical Assistance Percentage ("FMAP") or Medicare's Sequestration EBITDARM "Holiday". Earnings before interest expense, income tax, depreciation, amortization, cash rent, and a standardized management fee (5% of facility operating revenues). 23
Glossary Independent Living Facilities (“ILFs”) Seniors Housing Also known as retirement communities or senior apartments, ILFs are not Includes ALFs, ILFs, dedicated memory care facilities and similar facilities. healthcare facilities. ILFs typically consist of entirely self-contained apartments, complete with their own kitchens, baths and individual living spaces, as well as Skilled Nursing or Skilled Nursing Facilities (“SNFs”) parking for tenant vehicles. They are most often rented unfurnished, and generally Licensed healthcare facilities that provide restorative, rehabilitative and nursing can be personalized by the tenants, typically an individual or a couple over the age care for people not requiring the more extensive and sophisticated treatment of 55. These facilities offer various services and amenities such as laundry, available at an acute care hospital or long-term acute care hospital. Treatment housekeeping, dining options/meal plans, exercise and wellness programs, programs include physical, occupational, speech, respiratory, ventilator, and transportation, social, cultural and recreational activities, and on-site security. wound therapy. Multi-Service Campus Notes: Facilities that include a combination of Skilled Nursing beds and Seniors Housing [1] EBITDA and Normalized EBITDA do not represent cash flows from operations or units. net income as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. Normalized EBITDA EBITDA and Normalized EBITDA do not purport to be indicative of cash available to EBITDA, adjusted for certain income and expense items the Company does not fund future cash requirements, including the Company’s ability to fund capital believe are indicative of its ongoing results, such as certain real estate impairment expenditures or make payments on its indebtedness. Further, the Company’s charges, provision for loans, provision for doubtful accounts and lease computation of EBITDA and Normalized EBITDA may not be comparable to EBITDA restructuring, recovery of previously reversed rent, lease termination revenue, and Normalized EBITDA reported by other REITs. property operating expenses and gains or losses from dispositions of real estate or other real estate.[1] [2] CareTrust REIT believes FAD, FFO, Normalized FAD, and Normalized FFO (and their related per-share amounts) are important non-GAAP supplemental measures Normalized FAD of its operating performance. Because the historical cost accounting convention FAD, adjusted for certain income and expense items the Company does not believe used for real estate assets requires straight-line depreciation (except on land), such are indicative of its ongoing results, such as certain provision for loans, provision accounting presentation implies that the value of real estate assets diminishes for doubtful accounts and lease restructuring, recovery of previously reversed rent, predictably over time, even though real estate values have historically risen or lease termination revenue and lease restructuring and property operating fallen with market and other conditions. Moreover, by excluding items not expenses.[2] indicative of ongoing results, Normalized FAD and Normalized FFO can facilitate meaningful comparisons of operating performance between periods and between Normalized FFO other companies. However, FAD, FFO, Normalized FAD, and Normalized FFO (and FFO, adjusted for certain income and expense items the Company does not believe their per-share amounts) do not represent cash flows from operations or net are indicative of its ongoing results, and certain provision for loans, provision for income attributable to shareholders as defined by GAAP and should not be doubtful accounts and lease restructuring, recovery of previously reversed rent, considered an alternative to those measures in evaluating the Company’s liquidity lease termination revenue and property operating expenses.[2] or operating performance. 24
Grapevine Medical Lodge (Grapevine, TX)