Sabra Health Care REIT (SBRA) 9 May 242024 Q1 Earnings call transcript

Good day, everyone. My name is Katherine, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sabra Health Care REIT First Quarter Earnings Call [Operator Instructions] Now I would like to turn the call over to Lukas Hartwich, SVP Finance. Please go ahead, Mr. Hartwich.

you. Thank morning. Good

future I expectations be begin, disposition in remind that and earnings regarding regarding you to operations, expectations results Before reiterating our our including forward-looking want investment tenants statements and will our our expectations our making questions for and acquisition, position in we plans. and your of XXXX, we guidance concerning to financial regarding our our response alterators, comments, and

and the X-K are are that XX-K statements on as in December based as as XX.X ended and results current expectations XX, the our year SEC to forward-looking yesterday. furnished uncertainties included well subject Exhibit to These in could to we management's risks the differ risks Form actual to earnings cause our the release Form XXXX, materially, for including listed press

forward-looking comments obligation or that later no the update circumstances, to today you undertake in should and events We to assume we still are not our reflect valid. subsequent quarter make the statements

made to included will page of explanation review financial to the non-GAAP Investors addition, measures, results. GAAP references comparable website these our to call financials sabrahealth.com. Investors encouraged during non-GAAP of measures well reconciliation at this as are and financial as on the the the results these section In of be

Rick call to of Investors Our And Form over XX-Q, Sabra earnings CEO with turn release Health also Chair be our of website. section the REIT. let and in the President supplement accessed Care can that, and me Matros,

have everybody, Hope all good a day. joining us. Thanks, Lukas. for Thanks, you

quarters. couple continuation a So really of this just is last of the quarter

operating performance continues Our improve. to

to has us Our balance grow. strength a in position sheet

EBITDA continues pre-pandemic coverage. nursing exceeding job to skilled [indiscernible] coverage and Our

pre-pandemic to triple-net improve lease levels. coverage near Our senior housing is that continues

Our top it's than stronger been. ever XX is

points quarters. our in Our sequentially, skilled mix than higher been is XXX skilled several it's is and basis up occupancy

triple higher housing Our than net occupancy. senior is occupancy prepandemic

below pandemic. the want since X it's growth we of early improve, to dropping to higher peak to although Our where the higher than months Contract still occupancy continues ago, labor than levels, with were well been continues SHOP see. years we

primarily both has Our and to In SHOP, deal flow we Skilled sales notes] opportunities. see improving are towards starting and skilled some buyers. nursing pricing [SHOP] [ finally moved is

have deals to be this current on call. While we don't announce announce to to based activity, new quarter on second investments a new quarter, our expect position in we earnings

performance. the We And I'll reassess to early our better going SHOP QX to anticipated turn that, But Talya. on until call very including wait running are with guidance. it's year, our the in than still forecast, our we're since to over

to and housing [leased] grew Thank the quarter other you, previously joint well. which at by Rick. were and Sabra's year-over-year, I portfolio all managed share ventures properties X continues leased. underscore communities perform including communities senior during portfolio, X operators, The to

been on the quarterly moderating While by portfolio community quarterly income total, several Growing demand for This expenses. operating a quarters. trends at XX.X% growth added net XX% to over cash we've basis. had the revenue occupancy managed Sabra's and the saw noting and and has just limited growth, a REVPOR driven the that was gains contribution year-over-year driving a past

Chair agency positions in the as joint of the and are usage. together, Wage XX needs reducing properties, in the which includes board housing balance filling even and including same open ventures ] decelerated portfolio, are overtime growth has Canada. eliminating inner manage [ XX store Sabra's U.S. at

portfolio the year-over-year, same-store non the headline numbers assets and X.X% communities growing for grew by revenue with Excluding X.X%. quarter Canadian stimulus, stabilized our are revenue government

recovery been our quarter revenue communities REVPOR's expense lower XX.X% The the line come basis, quarter particularly XXXX, Canadian for has of period. with in Canadian skewed is in on a the community first housing Cash by in the lacked in by X.X% over expense X.X% has Canadian growth XXXX REVPOR in by down past quarter senior U.S. quarter quarter for now the Canada our with a this our usual our into increased than of NOI U.S. XXXX. the portfolio NOI communities. growing first year-over-year first Cash X.X% item up. catching outpaced in growth U.S. on of a quarter increased the year-over-year while Drivers basis. of grew in quarter and community, our sequential

Sabra's senior we thrive improving provide the stabilized complete behavioral steadily our investment health with coverage. stabilization. approximately and time conversion and for as lease for said, rent lease assets to net up total levels at occupancy housing $XXX XX%, Our reach continues about and past to quarter in remained pre-pandemic portfolio Rick as above million

note the specialty turn there. health You I And have categories that, to behavioral Michael Officer. XX.X% properties our in with disclosure Sabra's behavioral Sabra's in Costa, combined, in combined contributing coverage will supplemental, will hospitals call we our represent stabilized X about NOI Chief with that and only properties these over Financial XX because of

Thanks, Talya.

a $X.XX cash $X.XX, before increase increase increase For share $X.X since share from [ year-over-year the was following: up increased FFO per stronger and normalized both sequential the driven coming AFFO XXXX, X%, of the rents majority recognized first AFFO by $X.XX and in primarily business interruption normalized the [ a cash collections tenants, fourth that property ] pandemic. $X.X received fourth related G&A to representing $XXX,XXX in improvement from that quarter. triple-net to the insurance income $XXX,XXX in compensation million quarter NOI FFO damage our to leased sequential due basis normalized share as our of both both, ] in quarter managed results. A This first portfolio, a with per transition last we Year-over-year, per X managed XXXX our per improved and of previously normalized share performance-based basis. the in portfolio a fire quarter. housing from cash that as year, well of the suffered the compared senior on fourth occurred from were performance to facilities million true-ups, related to expense, reduction normalized a of

outstanding to higher under interest This $XXX,XXX was credit a in revolving due borrowings partially by increase offset our expense facility. cash

As Rick performance XXXX quarter estimate. than slightly we what our better had earlier, guidance first noted came forecast our in in

are the we pleased out and time, given will call. these this we our in feel most our revisit XXXX for with early year, quarter at to prudent reaffirm second it's ranges this While it's performance, that year earnings guidance full we ranges

basis to of XXXX $X.XX. to year normalized $X.XX, are FFO $X.XX, $X.XX, diluted on to per $X.XX full $X.XX follows: ] FFO [FFO Our to $X.XX, as Adjusted $X.XX ranges $X.XX share to income, net guidance a $X.XX adjusted FFO Normalized

assume our not disposition activity. guidance reminder, any acquisition does or a As

briefly our Now balance turning to sheet.

to XXXX. Our net as adjusted debt X.XXx of EBITDA March ratio XX, was

to As the well result improvements our our portfolio earnings we as expect in pandemic, from our continues this to both leverage. as its recovery

million, debt borrowings As of ample of of $XXX of March XX, and liquidity credit revolving with compliance we under of our covenants our of cash XXXX, have and equivalents and all are $XXX cash unrestricted million, facility. consisting in available million, $XX

close course will May per X, XXXX, Sabra's of on Board Directors share of dividend record of May the payout payout represents Q&A. up with and improve XXXX, XX% on adequately May of percentage covered over as of cash expected the XX, XXXX. stockholders lines quarter open dividend that, AFFO stock. Finally, of The of to to business per first our of on common is normalized XX, we'll $X.XX common a quarterly paid and the The And declared of is this XXXX. be a share, dividend for

KeyBanc. question the of first from Austin Wurschmidt line Your Instructions] from comes [Operator

growth, to on SHOP hit to the kind explicit contribution low from portfolio? respect that wanted include to Just And of wanted the I just said and the of kind provide same-store to that last that towards felt but I didn't that right mid-teens that, you unconsolidated joint to guidance, the quarter. low is clarify, you with know a pointed figure? does mid-teens venture

contribution does ventures comparative and it's joint It's a from include not the same-store number. on a year-over-year a It number basis. the

Got it.

the structure? now lease a So from are moved these the that transition facilities benefit from includes this RIDEA from of triple-net to the

anything these net our were before in triple also That's right. performing that assets if contributing we about XXXX. a net And They transitioned. weren't to you think weren't They triple assets. NOI it,

just helpful. one Got then clarification. another That's it. for me, And

change been looked the to cash Healthcare? came there number like down NOI cash NOI any It the a contribution from Signature quarterly has So bit.

So just anything curious if there's there.

issue comes in the March was a It just that in really. quarter. timing Since just door. It March part XX, when shortly basis, Yes. first as. a the And a on we recorded came timing cash of in the payment the simply issue was we're after revenues cash

run that gets of catch-up a be with we in kind there'll prior So expect? payment rate them the on quarterly the second quarter par should that

the fact plus payments you quarter. on expect, be quarter a bit that little higher, of the would catch-up we the to balanced Yes, because have second regular during payment that

next line comes Dennerlein of the America. Joshua question Your from Bank of of

impact of take out and from And we a portfolio? your your the I kind on potential plays to staffing final of know on you wanted then get out think just the How from with curious should CMS. -- it's this should just ruling how just the here? about think do we like couple Rick, years minimum like phase, how

industry it's same And in simply that -- the trade and is rule I've stated expect the on stated association, that as can action we've the overturn available. by ludicrous think been legislative along, as publicly labor I been to both I past space to the all this. the isn't is legal saying think now the because you as and see the

kind like Okay. the operators? be your just is, overturned as you is just if won't they there saying any are might like process thought to portfolio, And it find stays like even able get how like on or your impact it labor? Or doesn't -- of

has our you're than process going for that's you of X place, of staffing It's even noted, start stay actually contract -- of it, certainly, if relative perspective. depends to it's But -- labor, average on a market. improving noted, think as not I and not labor it national in as years. the shape in Well, I phase-in to sort higher we has for too And another are good Most from buildings couple dramatically. been improved pretty years. a

And things more. will improve presumably, so

completely bit it going to number So be a lot that's operators markets, to of a out certain in fill little it's But positions. hard a there to putting isn't matter anticipate. of unable a just

nothing it's care. punishing it's of with with about. That's really what got -- that's quality really got it's nursing so It's do books. to everything And to do what

both acuity, in fits in there thing. every that that of And the critical the and one But LPNs, the LPN, criticisms of business. out of could staff with the final assistants, in size those in lack a total didn't really which point based RNs, inclusion of is you And even it's backbone hours to number terms are they same the left terms really operator here of that --they fill bring nursing address got a about other the the one that's This mix all. not hours operators you've on NPs. in between that's LPNs, buildings facilities but rule,

one So that that work, does we'll better tell -- evidence lead size at, outcomes. you does clearly fits you not to all any quality pretty look and not

So -- just not does and correlation an -- what and to be, that arbitrary putting that, number addition outcomes between in there's as of well. no quality staffing should

of more So and But all sure aspects to that's than hear. it. I what you probably needed covered make

of next from Michael Griffin of line the Your question comes Citigroup.

if speculative I acquisitions you're this seeing gets kind that the Obviously, there. bit to pipeline annualize acquisition you sort and of what any But of end. not wanted you're touch out a the in of midpoint guidance. low earnings quarter on giving you to

So year? from a yield you you do stabilized on much how they are a perspective? this whether acquisitions, how think thinking contribute about to basis earnings And

Well, flow seeing tell just Rick elaborate earlier. we're I'll lot. is what phase up, you said a but on Deal what back to seeing, had we're

deals past best that's I the well. for us we've that the ones suspect seeing are off we're think coming in this market. our And true are I said to that as the peers

[ acquiring we're we're some loans that's to assets, are although open more We not doing on focused where ], focused. the

bit we're like the a key operators to much But a really waits that's be close and contribution anything we're really when and else. we quite of piece. do but from XXXX to to quite ] is [ repeat -- And seeing who in we're How So seen. business. get dependent done keep the bit, we we'd on that. to seeing We'll everyone apprised going be --

much come ] that mentioned expectations generally Biogen Rick true. [ sellers' have pricing closer. That's

and managing opportunity carefully, so And balance sheet opportunities our that we the to but deals we're are see exists, worthwhile. [indiscernible]

Rick. ahead, Go

in any has guidance, The only the emphasis where my because assumptions doesn't with other nothing to we is my guidance do you acquisitions in we'd second make thought statement ahead this include of in know, of be year. we're acquisitions that already remarks, any quarter opening point assumptions revisiting I our about about as about

great But of on closing the your of So the muted that have fuel you're year, impact stuff a be most if and more it's point, to last that. months top growth just of XXXX. to the is going X over would just to into reality more X Talya's going serves of or

to Great. just then quick Are terms? on more Is -- That's a that's And HUD follow-up or at Talya. seeing in for hot there financing there that, the for any environment helpful. appetite any bridge financing you out SNFs? favorable

call is past. on quite ] gone ago, were The that at bridge on and of to much to to that's cheap. ago, that. lenders We've in [ people to to that valuation We a bit cost [indiscernible] Yes, years different that expense in based was, X.X cost in lending doing the We've it theories capital it years the X.X targeting capital, looked was do interested head. pretty bridge challenge nonbank of it, lending not been are basis now forward seeing not than and from head bridge a it's head segment. now

also to change. is And the with our Yes. of to do relation we to in have operators. loans really loans we reiterate, relationships specifically have philosophy That

know portfolio we an So a are grow? even current here? relationship interest opportunities, it it to and how helpful are is really loans. the there though our don't doing to we a of is trying there peers own in opportunity building have when So load Is operator

the lobbying That's maybe that you last mean, up question things in I can it's take looking trying any I staffing then one as And initiatives of minimum I into you a whether you. industry concrete different gears you're just at, litigation touched Got may. ground mandate of Rick. earlier. this fight helpful, the one, kind is thing. give committees seeing the industry to if the courts. But know hard that on the certain on implications to

Yes.

So I -- in legal bipartisan everything is hill, it's of to to in much on groundwork there has too is the a really there say the can't Much talk action. that place than bill been other done as not that about support of terms well.

most is anything else. [relate most going focus on focused So all, so trade ] probably specifically, that, of is -- the of beyond can't to but our I -- And strategy. about the be or the industry association legislative

from Your from next question comes the line of Malhotra Mizuho. Vikram

results. understand going maybe just sharp back I the trended. how of Just quarter just cadence want to kind to the the first growth

I up and you XX-plus X%. saw call, year-over-year think mentioned percent you ended January, at growth last

has sense you what if So April Feb in give I'm happened wondering how of could, like you could March? just And us a and trended? just

Well, of on I and occupancies end they and -- have some the spot through are spot April April, versus first quarter. occupancies are the

X% higher. about to Our X.X%

know piece spot I over REVPOR, I labor -- to -- the continuing expenses, seeing And that is REVPOR don't is happen I growth finally we've think seen for continued specifically but its don't there. decelerate growth. big is occupancy So we're grow. have

we're some largely while it's the to of growth. still as growth, filling wage seeing vacant So opposed positions labor incremental

So at I have this an NOI point. you April for don't [indiscernible] share to number cash

low quarter. if right mentioned the exceedingly year drop I'd in repairs running was run comp as issue And now. and there normal It in the press at release, where will they're a we there off as a quarter, thing the say other earlier and big rate a wasn't to and maintenance noted is, simply was prior the

lower number the comp for mid-teens in And so for normalizing have those growth would expenses, we quarter. our been that and for

had that few also just as includes venture I in we thing underscore The also quarter last to at spoke about managed it, clarify, same-store ventures assets another the XX ago to portfolio same-store want I had Yes. the about a minutes portfolio [indiscernible] assets. joint -- is joint share. talked it XX because

about talking different also here. we're So pools

[indiscernible]. So

year, Would that of but like know number, given like it I for your as adjusted for we do that like comment less year? team's balance specific about don't of team's the XX, decelerating? go through How think I the balance trajectory about know, an growth team's the cadence of it's hold accelerating or XX the whether see be true should we comment, say should but you to year, a comment for the the fair just

guidance. REVPOR to in Yes. recovery, first is I we we reported we what pivot be for to [ have mean, back think had is continue I reaffirm to it's going line for quarter forecast And guidance. occupancy dependent on we with but ] what to what

information So the I that think should all provide needs.

We don't way to that get meeting either trends that are going in guidance. growth of exceeding any see the or

like of being And but comp seems you're about just given earlier mean just on. I your you should what early kind exceeded Yes. SHOP you easier expenses. it it I sounded guess, you mentioned year through conservative, expectations, the had the mentioned then get like

words mean like not sounds higher, that's could if you sounds numbers but about components, -- in mouth, I thinking your could you're it. those but like it -- I was take putting the go just So I'm it way you

you're just in could can clarify -- acquisitions, you you forward? as estate do thinking loans, Just talk portfolios see the just to you U.S. like opposed on these to let's going the real more you portfolios about about say funding how

Sure.

to I things. dependent think be on of a it's couple going

a SHOP is source I yield just we're proceeds some relative and sales given sales could match is the well but And we business, when a available for make that investment sense there that see on extent we fund at out will look deals, could pair To line be use redeploy on fund at But also if in see assets. we a there's our off, our look to from other at or in, a it to senior with to any us of to use on have of course blended proceeds a of for come we to that SNF deals base, think currently, credit. up totality still, always not basis, you capital would normal there's use looking us housing our there a the NAV that as the if skilled we trading capital deals, SNF we ton ATM. with opportunity our that stock blended think deals, blended first nursing into deals pipeline. basis where there's to that basis, the there's of yield when

it. Got

just when, comments And Okay. to sorry, Any one push how that the comes how final, just sense clarify. if out proposal? in July ruling from higher the I of kind of then Medicare June plays or last number that together or Any initial sense the the the think out?

the in the until August. come will week still first and We're in August, it of period, comment usually out

So now. I but where as would not it greater think where that we'll higher, lower. it it be is to I the I stays opposed lower, see, it but are odds anticipate is it going anticipate don't but to being

from question Wedbush. line Your comes of the next Rich Anderson of

crazy operators the So But possibly this a here, mandate comments? for of anyway. maybe But do hope have Or where about they'll of their to peers a requests it your another comments, all it are and and agree, I it change we the not direction incites had don't senses, and are could is want I understand to through in what thing, that lot direction? the from know thanks went said, what ahead how staffing, that minimum can as does would it's political today? it could to administration, we XX,XXX you saying, come we a more what the that REITs that, CMS does X,XXX if with industry -- separate of change more go mean the a CMS' I stands what to now change. be. change

can the legislatively. We believe address we issue successfully

not to ignored comments to all get what and the of could no this out and You're [indiscernible] that all XX,XXX rush have right, thoughtfully they those far XX,XXX they way as even essentially because they did. reviewed they comments there's

industry with potentially the position action no with rather to option than left and it's legislative no action So as well. legal take

say, exempt years in as it done percentage any subject be, this then is have done idea Have work X actually this X-year you is percentage phase be your Do that from the and it this And Okay. have relates to -- it this you you work stands. might might standpoint? from of to as -- well, to yet? what legislation the an portfolio, a geographic currently

think this, it's X to out. that No, people impact recovering. doesn't the still to go years away work, is if not it are But I Rich, do just of premature because X

hold. you to So if of we've to will, got remedies, the some see this the to industry is get that going if mandate time right now undertake rid takes

do be time. plenty don't If suggest. we think effort, that great. plenty still time that, there'll you in succeed have we'll of we in as I of If to succeed

first And that. Okay. and in I to said all then SHOP a It start take line. and into same-store. that the last as figure for you said well? switching March at outperforming? think in to that next the to look February Is in I going comps off But a SHOP quarter. does guidance understand And good quarter, me, you

guidelines. of internal Our SHOP our ahead is forecast somewhat

can me, on same internal a for you Okay. what, remember. guidance remind And I store, if forecast are your don't just

same-store asking our is? what our growth guidance in you're NOI Sorry, assumption

Yes, for SHOP.

right? I answered folks like what basis we out, mean call, didn't an that our reasonable it year-over-year, previous is put on I other we portfolio. talked have But earlier Rich, are growth that what number feels on on saying and about Yes. mid-teens was given the calls, NOI

of Okay. that I missed part I'm it. sorry,

Fak Baird. Your next Alex line from of question comes the of [ ]

bit on -- IL AL growth the and where NOI between some and little maybe been that's First talk one give Can me. you for a color trending?

numbers I different we've past, to not fundamentally about as Well, they would in the are specific give talked say, that going we're businesses. the

[ impact care effectively [ back a IL do because the facility, than So ] tools stronger been even which in XXXX. Acuity really the AL the to IL, isn't got simply you be got though in health growth PLR which is growth, there's why more line than we Creek the is to revenue ], you've going letter

point would other the less during the that AL, got this hit pandemic make had there. IO to I portfolio the be and -- is so the never there's So hard as recovery

Got Was down it. by that was that any quarter-over-quarter. occupancy and less? two And driven one we them, the combined you more of or noticed

No, I think of just -- periodically especially that of through we saw in were our and detail. that, really supplement. what go was we was an all outlier disclosures our we and And level granular given that

basically we So our conform what to show. peers made our disclosures

question next Michael Your line of Street. Stroyeck from comes Green the of

occupancy Could that of the to sizable spot you SNF to coverages? and then an today? you impact levels for company XX% have sit for assuming where occupancy share spot levels How just it, in call that, just pre-covid coverage range. would can get the And on portfolio expect back

to be going It's pretty sizable.

On our the asked last Anderson call year-end on it. Rich call,

are with coverage, occupancy, in I'm a higher of get about, Given leverage back Xx but to coverage. [indiscernible] material lower were going settled dynamic possibly And it's margins to is there, actually pull-through occupancy, a it to to going is the occupancy pre-pandemic pre-pandemic that going they that on now a impact you're talking at which consolidated not get means coverage operational where clearly have level. our that say than

us. for positive all that's So

impact. now from material it's to a hard going it's what here on of basis higher, have going occupancy impact sit is but So this is the clearly XXX coverage, is X say points exact years to and to near be

Got it.

is How then portfolio? terms the upside be of in able that much vacancy order is maybe one just a in still in bit differently, headcount on And SHOP Okay. achieve more the there said portfolio. there? Or staffing needed maybe to occupancy of to there labor quite

the I no. is answer think

I actionable. the opportunity been time, been full think that and over has hire [indiscernible] labor agency, reduce and actually very to very important time it's and

So what to operators on assets. on XX% that seen, of our I've in are would occupancy say stabilized XX% I based the range already

just because to to so and able alluding operating be to And rate take a advantage they've leverage to then, positioned up and all sell. your staffed of actually they're

the labor no admissions SHOP holding So one's on because of back in issues portfolio.

[Operator no to are this back Instructions] call turn time. the further questions Matros. over at There I Rick

Thank here We're for always additional available you joining us. for all conversations.

you in good you. talk If offline. were a meantime, to the you'll have Thank hope day. And

This concludes today's conference call.

disconnect. now may You