Reconciliations of Non-GAAP Financial Measures
December 31, 2022
(Unaudited)
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
FFO, Normalized FFO, AFFO and Normalized AFFO
(dollars in thousands, except per share data)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | Year Ended December 31, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| Net loss | $ | (84,948) | | | $ | (24,353) | | | $ | (77,605) | | | $ | (113,256) | |
| Add: | | | | | | | |
| Depreciation and amortization of real estate assets | 49,927 | | | 45,079 | | | 187,782 | | | 178,991 | |
| | | | | | | |
| Depreciation, amortization and impairment of real estate assets related to unconsolidated joint ventures | 6,239 | | | 9,600 | | | 22,095 | | | 26,129 | |
| Net loss (gain) on sales of real estate | 7,430 | | | (14,085) | | | 12,011 | | | (12,301) | |
| Net (gain) loss on sales of real estate related to unconsolidated joint ventures | — | | | 3 | | | (220) | | | 33 | |
| Impairment of real estate | 21,440 | | | 9,004 | | | 94,042 | | | 9,499 | |
| Other-than-temporary impairment of unconsolidated joint ventures | 57,778 | | | — | | | 57,778 | | | 164,126 | |
| FFO | $ | 57,866 | | | $ | 25,248 | | | $ | 295,883 | | | $ | 253,221 | |
| | | | | | | |
| Write-offs of cash and straight-line rental income receivable and lease intangibles | — | | | 18,745 | | | 15,831 | | | 40,759 | |
| Lease termination income | (139) | | | — | | | (2,477) | | | — | |
| Loss on extinguishment of debt | — | | | 32,862 | | | 411 | | | 34,622 | |
| Provision for credit and loan losses and other reserves | 153 | | | 2,045 | | | 141 | | | 3,935 | |
| Deferred tax valuation allowance related to unconsolidated joint ventures | 19,613 | | | — | | | 19,613 | | | — | |
Support payments paid to joint venture manager (1) | 6,370 | | | 7,350 | | | 12,250 | | | 9,800 | |
Other normalizing items (2) | 842 | | | 1,792 | | | 3,428 | | | 2,644 | |
| Normalized FFO | $ | 84,705 | | | $ | 88,042 | | | $ | 345,080 | | | $ | 344,981 | |
| FFO | $ | 57,866 | | | $ | 25,248 | | | $ | 295,883 | | | $ | 253,221 | |
| Stock-based compensation expense | 2,086 | | | 927 | | | 7,453 | | | 7,914 | |
| Non-cash rental and related revenues | (2,787) | | | 15,710 | | | 2,183 | | | 25,823 | |
| Non-cash interest income | (602) | | | (544) | | | (2,285) | | | (1,988) | |
| Non-cash interest expense | 2,794 | | | 2,979 | | | 11,094 | | | 8,368 | |
| Non-cash portion of loss on extinguishment of debt | — | | | 2,666 | | | 411 | | | 4,426 | |
| Provision for loan losses and other reserves | 153 | | | 2,045 | | | 141 | | | 3,935 | |
| | | | | | | |
| Deferred tax valuation allowance related to unconsolidated joint ventures | 19,613 | | | — | | | 19,613 | | | — | |
| Other adjustments related to unconsolidated joint ventures | (1,099) | | | (3,687) | | | (5,155) | | | (5,051) | |
| Other adjustments | 44 | | | 172 | | | 2,474 | | | 492 | |
| AFFO | $ | 78,068 | | | $ | 45,516 | | | $ | 331,812 | | | $ | 297,140 | |
| | | | | | | |
| Cash portion of lease termination income | (139) | | | — | | | (2,477) | | | — | |
| Cash portion of loss on extinguishment of debt | — | | | 30,196 | | | — | | | 30,196 | |
| Write-off of cash rental income | — | | | — | | | 71 | | | — | |
Support payments paid to joint venture manager (1) | 6,370 | | | 7,350 | | | 12,250 | | | 9,800 | |
Other normalizing items (2) | 827 | | | 1,752 | | | 1,077 | | | 2,715 | |
| Normalized AFFO | $ | 85,126 | | | $ | 84,814 | | | $ | 342,733 | | | $ | 339,851 | |
| Amounts per diluted common share: | | | | | | | |
| Net loss | $ | (0.37) | | | $ | (0.11) | | | $ | (0.34) | | | $ | (0.52) | |
| FFO | $ | 0.25 | | | $ | 0.11 | | | $ | 1.28 | | | $ | 1.15 | |
| Normalized FFO | $ | 0.37 | | | $ | 0.39 | | | $ | 1.49 | | | $ | 1.57 | |
| AFFO | $ | 0.34 | | | $ | 0.20 | | | $ | 1.43 | | | $ | 1.35 | |
| Normalized AFFO | $ | 0.37 | | | $ | 0.37 | | | $ | 1.47 | | | $ | 1.54 | |
| Weighted average number of common shares outstanding, diluted: | | | | | | | |
| Net loss | 230,986,260 | | | 227,519,771 | | | 230,947,895 | | | 219,073,027 | |
| FFO and Normalized FFO | 232,059,703 | | | 228,591,078 | | | 231,851,542 | | | 220,102,563 | |
| AFFO and Normalized AFFO | 232,868,137 | | | 228,992,103 | | | 232,784,543 | | | 220,526,512 | |
| | | | | | | |
(1) Funding for support payments did not require capital contributions from Sabra but rather were funded with proceeds received by our Enlivant unconsolidated joint venture from TPG for the issuance of senior preferred interests for 2022 and 4Q 2021 and with cash on hand at the joint venture for 2Q 2021.
(2) FFO and AFFO for year ended December 31, 2022 and 2021 includes $1.2 million and $0.4 million, respectively, earned during the period related to legacy Care Capital Properties, Inc. investments. FFO for the year ended December 31, 2022, includes $2.2 million of foreign currency transaction loss related to our Canadian borrowings. In addition, other normalizing items for FFO and AFFO include triple-net operating expenses, net of recoveries.
See reporting definitions. 2
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
EBITDA, Adjusted EBITDA, Annualized Adjusted EBITDA and Pro Forma Annualized Adjusted EBITDA
Net Debt and Net Debt to Adjusted EBITDA
(in thousands)
| | | | | | | |
| Year Ended | | |
| December 31, 2022 | | |
| | | |
| | | |
| Net loss | $ | (77,605) | | | |
| Interest | 105,471 | | | |
| Income tax expense | 1,242 | | | |
| Depreciation and amortization | 187,782 | | | |
| EBITDA | $ | 216,890 | | | |
| | | |
| Loss from unconsolidated joint ventures | 40,254 | | | |
| Other-than-temporary impairment of unconsolidated joint ventures | 57,778 | | | |
| | | |
| Stock-based compensation expense | 7,453 | | | |
| Merger and acquisition costs | 29 | | | |
| | | |
| Provision for loan losses and other reserves and non-cash revenue write-offs | 17,070 | | | |
| Impairment of real estate | 94,042 | | | |
| Loss on extinguishment of debt | 411 | | | |
| Other expense | 2,984 | | | |
| Lease termination income | (2,477) | | | |
| Net loss on sales of real estate | 12,011 | | | |
Adjusted EBITDA (1) | $ | 446,445 | | | |
| | | |
Annualizing adjustments (2) | (3,040) | | | |
Annualized Adjusted EBITDA (3) | $ | 443,405 | | | |
| | | |
| Pro Forma adjustments for: | | | |
Post-quarter dispositions and acquisitions (4) | (5,151) | | | |
Pro Forma Annualized Adjusted EBITDA (5) | $ | 438,254 | | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| December 31, 2022 | | |
| | | |
| Secured debt | $ | 50,123 | | | |
| Revolving credit facility | 178,525 | | | |
| Term loans | 540,745 | | | |
| Senior unsecured notes | 1,750,000 | | | |
| Consolidated Debt | 2,519,393 | | | |
| Cash and cash equivalents | (49,308) | | | |
Net Debt (6) | $ | 2,470,085 | | | |
Post-quarter dispositions and acquisitions (4) | (111,117) | | | |
| Pro Forma Net Debt | $ | 2,358,968 | | | |
| | | |
| December 31, 2022 | | |
| | | |
| Net Debt | $ | 2,358,968 | | | |
| Annualized Adjusted EBITDA | $ | 438,254 | | | |
| Net Debt to Adjusted EBITDA | 5.38x | | |
(1) Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation and amortization (“EBITDA”) excluding the impact of merger-related costs, stock-based compensation expense under the Company’s long-term equity award program and loan loss reserves.
(2) Annualizing adjustments give effect to the acquisitions and dispositions completed during the twelve months ended for the period as though such acquisitions and dispositions were completed as of the beginning of the period.
(3) Annualized Adjusted EBITDA is calculated as Adjusted EBITDA as adjusted to give effect to the adjustments described in footnote 2 above.
(4) Adjustment that gives effect to dispositions and acquisitions completed subsequent to the end of the period as though such dispositions and acquisitions were completed at the beginning of the period.
(5) Pro Forma Annualized Adjusted EBITDA is calculated as Annualized Adjusted EBITDA to give effect to the adjustment described in footnote 4 above.
(6) Net Debt assumes the January 4, 2023 amendment and restatement of our credit agreement was completed as of December 31, 2022.
See reporting definitions. 3
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Consolidated Statements of Loss
Supplemental Information
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | Year Ended December 31, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| Cash rental income | $ | 96,501 | | | $ | 99,023 | | | $ | 385,033 | | | $ | 404,503 | |
| Straight-line rental income | 1,219 | | | 1,945 | | | 8,261 | | | 13,059 | |
| Straight-line rental income receivable write-offs | — | | | (157) | | | (17,068) | | | (25,370) | |
| Above/below market lease amortization | 1,569 | | | 1,091 | | | 6,299 | | | 5,076 | |
| Above/below market lease intangible write-offs | — | | | (18,588) | | | 326 | | | (18,588) | |
| Operating expense recoveries | 4,029 | | | 3,869 | | | 17,735 | | | 18,036 | |
| Rental and related revenues | $ | 103,318 | | | $ | 87,183 | | | $ | 400,586 | | | $ | 396,716 | |
| | | | | | | |
See reporting definitions. 4
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Senior Housing - Managed Revenues
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| | December 31, 2022 | | September 30, 2022 | | June 30, 2022 | | March 31, 2022 | | December 31, 2021 |
Revenues: (1) | | | | | | | | | |
| Resident fees and services | $ | 52,699 | | | $ | 47,337 | | | $ | 43,731 | | | $ | 41,798 | | | $ | 40,089 | |
| Resident fees and services not included in same store | (7,982) | | | (4,257) | | | (1,250) | | | (911) | | | — | |
| Same store resident fees and services | $ | 44,717 | | | $ | 43,080 | | | $ | 42,481 | | | $ | 40,887 | | | $ | 40,089 | |
| | | | | | | | | |
(1) Revenues have been adjusted for changes in the foreign currency exchange rate where applicable.
See reporting definitions. 5
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Cash NOI by Property Type
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, 2022 |
| Skilled Nursing/ Transitional Care | | Senior Housing | | Behavioral Health | | Specialty Hospitals and Other | | | | | | |
| | Senior Housing - Leased | | Senior Housing - Managed Consolidated | | Senior Housing - Managed Unconsolidated (1) | | Total Senior Housing | | | | Other | | Corporate | | Total |
| Net income (loss) | $ | 14,536 | | | $ | 5,623 | | | $ | 3,020 | | | $ | (88,317) | | | $ | (79,674) | | | $ | 6,594 | | | $ | 3,232 | | | $ | 8,968 | | | $ | (38,604) | | | $ | (84,948) | |
| Adjustments: | | | | | | | | | | | | | | | | | | | |
| Depreciation and amortization | 29,289 | | | 5,476 | | | 10,524 | | | — | | | 16,000 | | | 3,155 | | | 1,461 | | | — | | | 22 | | | 49,927 | |
| Interest | 212 | | | 230 | | | — | | | — | | | 230 | | | — | | | — | | | — | | | 27,456 | | | 27,898 | |
| General and administrative | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 10,853 | | | 10,853 | |
| | | | | | | | | | | | | | | | | | | |
| Provision for loan losses and other reserves | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 153 | | | 153 | |
| Impairment of real estate | 21,440 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 21,440 | |
| | | | | | | | | | | | | | | | | | | |
| Other income | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (4) | | | (4) | |
| Net loss (gain) on sales of real estate | 7,519 | | | (89) | | | — | | | — | | | (89) | | | — | | | — | | | — | | | — | | | 7,430 | |
| Loss from unconsolidated JV | — | | | — | | | — | | | 88,317 | | | 88,317 | | | — | | | — | | | — | | | — | | | 88,317 | |
| Income tax expense | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 124 | | | 124 | |
| Sabra’s share of unconsolidated JV Net Operating Income | — | | | — | | | — | | | 464 | | | 464 | | | — | | | — | | | — | | | — | | | 464 | |
| | | | | | | | | | | | | | | | | | | |
| Net Operating Income | $ | 72,996 | | | $ | 11,240 | | | $ | 13,544 | | | $ | 464 | | | $ | 25,248 | | | $ | 9,749 | | | $ | 4,693 | | | $ | 8,968 | | | $ | — | | | $ | 121,654 | |
| | | | | | | | | | | | | | | | | | | |
| Non-cash revenue and expense adjustments | (1,998) | | | (293) | | | — | | | — | | | (293) | | | (296) | | | (175) | | | (602) | | | — | | | (3,364) | |
| | | | | | | | | | | | | | | | | | | |
| Cash Net Operating Income | $ | 70,998 | | | $ | 10,947 | | | $ | 13,544 | | | $ | 464 | | | $ | 24,955 | | | $ | 9,453 | | | $ | 4,518 | | | $ | 8,366 | | | $ | — | | | $ | 118,290 | |
| | | | | | | | | | | | | | | | | | | |
| Cash Net Operating Income not included in same store | (610) | | | (351) | | | (1,512) | | | (464) | | | (2,327) | | | 13 | | | (5) | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Same store Cash Net Operating Income | $ | 70,388 | | | $ | 10,596 | | | $ | 12,032 | | | $ | — | | | $ | 22,628 | | | $ | 9,466 | | | $ | 4,513 | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
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(1) Net Operating Income and Cash Net Operating Income include $0.1 million of Grant Income.
See reporting definitions. 6
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Cash NOI by Property Type
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, 2022 |
| Skilled Nursing/ Transitional Care | | Senior Housing | | Behavioral Health | | Specialty Hospitals and Other | | | | | | |
| | Senior Housing - Leased | | Senior Housing - Managed Consolidated | | Senior Housing - Managed Unconsolidated (1) | | Total Senior Housing | | | | Other | | Corporate | | Total |
| Net (loss) income | $ | (33,921) | | | $ | 4,602 | | | $ | 677 | | | $ | (4,384) | | | $ | 895 | | | $ | 6,639 | | | $ | 3,213 | | | $ | 8,940 | | | $ | (35,830) | | | $ | (50,064) | |
| Adjustments: | | | | | | | | | | | | | | | | | | | |
| Depreciation and amortization | 27,586 | | | 5,068 | | | 10,228 | | | — | | | 15,296 | | | 3,062 | | | 1,461 | | | — | | | 22 | | | 47,427 | |
| Interest | 214 | | | 233 | | | — | | | — | | | 233 | | | — | | | — | | | — | | | 26,624 | | | 27,071 | |
| General and administrative | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 9,676 | | | 9,676 | |
| | | | | | | | | | | | | | | | | | | |
| Recovery of loan losses and other reserves | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (217) | | | (217) | |
| Impairment of real estate | 60,857 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 60,857 | |
| Loss on extinguishment of debt | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 140 | | | 140 | |
| Other income | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (994) | | | (994) | |
| Net loss on sales of real estate | 80 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 80 | |
| Loss from unconsolidated JV | — | | | — | | | — | | | 4,384 | | | 4,384 | | | — | | | — | | | — | | | — | | | 4,384 | |
| Income tax expense | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 579 | | | 579 | |
| Sabra’s share of unconsolidated JV Net Operating Income | — | | | — | | | — | | | 4,160 | | | 4,160 | | | — | | | — | | | — | | | — | | | 4,160 | |
| | | | | | | | | | | | | | | | | | | |
| Net Operating Income | $ | 54,816 | | | $ | 9,903 | | | $ | 10,905 | | | $ | 4,160 | | | $ | 24,968 | | | $ | 9,701 | | | $ | 4,674 | | | $ | 8,940 | | | $ | — | | | $ | 103,099 | |
| | | | | | | | | | | | | | | | | | | |
| Non-cash revenue and expense adjustments | 13,304 | | | 263 | | | — | | | — | | | 263 | | | (304) | | | (210) | | | (589) | | | — | | | 12,464 | |
| Foreign exchange rate adjustment | — | | | — | | | (92) | | | — | | | (92) | | | — | | | — | | | — | | | — | | | (92) | |
| | | | | | | | | | | | | | | | | | | |
| Cash Net Operating Income | $ | 68,120 | | | $ | 10,166 | | | $ | 10,813 | | | $ | 4,160 | | | $ | 25,139 | | | $ | 9,397 | | | $ | 4,464 | | | $ | 8,351 | | | $ | — | | | $ | 115,471 | |
| | | | | | | | | | | | | | | | | | | |
| Cash Net Operating Income not included in same store | (1,691) | | | (71) | | | (1,024) | | | (4,160) | | | (5,255) | | | (10) | | | (8) | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Same store Cash Net Operating Income | $ | 66,429 | | | $ | 10,095 | | | $ | 9,789 | | | $ | — | | | $ | 19,884 | | | $ | 9,387 | | | $ | 4,456 | | | | | | | |
(1) Net Operating Income and Cash Net Operating Income include $0.1 million of Grant Income.
See reporting definitions. 7
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Cash NOI by Property Type
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2022 |
| Skilled Nursing/ Transitional Care | | Senior Housing | | Behavioral Health | | Specialty Hospitals and Other | | | | | | |
| | Senior Housing - Leased | | Senior Housing - Managed Consolidated (1) | | Senior Housing - Managed Unconsolidated (2) | | Total Senior Housing | | | | Other | | Corporate | | Total |
| Net income (loss) | $ | 32,201 | | | $ | 3,742 | | | $ | 820 | | | $ | (2,529) | | | $ | 2,033 | | | $ | 6,609 | | | $ | 3,207 | | | $ | 8,653 | | | $ | (35,898) | | | $ | 16,805 | |
| Adjustments: | | | | | | | | | | | | | | | | | | | |
| Depreciation and amortization | 26,214 | | | 5,246 | | | 9,290 | | | — | | | 14,536 | | | 2,939 | | | 1,461 | | | — | | | 22 | | | 45,172 | |
| Interest | 216 | | | 235 | | | — | | | — | | | 235 | | | — | | | — | | | — | | | 25,079 | | | 25,530 | |
| General and administrative | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 8,649 | | | 8,649 | |
| | | | | | | | | | | | | | | | | | | |
| Recovery of loan losses and other reserves | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (270) | | | (270) | |
| Impairment of real estate | 11,745 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 11,745 | |
| | | | | | | | | | | | | | | | | | | |
| Other expense | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 2,163 | | | 2,163 | |
| Net loss on sales of real estate | 2,615 | | | 1,886 | | | — | | | — | | | 1,886 | | | — | | | — | | | — | | | — | | | 4,501 | |
| Loss from unconsolidated JV | — | | | — | | | — | | | 2,529 | | | 2,529 | | | — | | | — | | | — | | | — | | | 2,529 | |
| Income tax expense | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 255 | | | 255 | |
| Sabra’s share of unconsolidated JV Net Operating Income | — | | | — | | | — | | | 5,055 | | | 5,055 | | | — | | | — | | | — | | | — | | | 5,055 | |
| | | | | | | | | | | | | | | | | | | |
| Net Operating Income | $ | 72,991 | | | $ | 11,109 | | | $ | 10,110 | | | $ | 5,055 | | | $ | 26,274 | | | $ | 9,548 | | | $ | 4,668 | | | $ | 8,653 | | | $ | — | | | $ | 122,134 | |
| | | | | | | | | | | | | | | | | | | |
| Non-cash revenue and expense adjustments | (2,592) | | | (436) | | | — | | | — | | | (436) | | | (319) | | | (216) | | | (547) | | | — | | | (4,110) | |
| Foreign exchange rate adjustment | — | | | — | | | (124) | | | — | | | (124) | | | — | | | — | | | — | | | — | | | (124) | |
| | | | | | | | | | | | | | | | | | | |
| Cash Net Operating Income | $ | 70,399 | | | $ | 10,673 | | | $ | 9,986 | | | $ | 5,055 | | | $ | 25,714 | | | $ | 9,229 | | | $ | 4,452 | | | $ | 8,106 | | | $ | — | | | $ | 117,900 | |
| | | | | | | | | | | | | | | | | | | |
| Cash Net Operating Income not included in same store | | | | | (67) | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Same store Cash Net Operating Income | | | | | $ | 9,919 | | | | | | | | | | | | | | | |
(1) Net Operating Income, Cash Net Operating Income and Same store Cash Net Operating Income include $0.1 million of Grant Income
(2) Net Operating Income and Cash Net Operating Income include $3.4 million of Grant Income.
See reporting definitions. 8
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Cash NOI by Property Type
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2022 |
| Skilled Nursing/ Transitional Care | | Senior Housing | | Behavioral Health | | Specialty Hospitals and Other | | | | | | |
| | Senior Housing - Leased | | Senior Housing - Managed Consolidated | | Senior Housing - Managed Unconsolidated | | Total Senior Housing | | | | Other | | Corporate | | Total |
| Net income (loss) | $ | 51,927 | | | $ | 6,797 | | | $ | (93) | | | $ | (2,802) | | | $ | 3,902 | | | $ | 6,314 | | | $ | 3,224 | | | $ | 10,992 | | | $ | (35,757) | | | $ | 40,602 | |
| Adjustments: | | | | | | | | | | | | | | | | | | | |
| Depreciation and amortization | 26,303 | | | 5,340 | | | 9,216 | | | — | | | 14,556 | | | 2,917 | | | 1,460 | | | — | | | 20 | | | 45,256 | |
| Interest | 217 | | | 376 | | | — | | | — | | | 376 | | | — | | | — | | | — | | | 24,379 | | | 24,972 | |
| General and administrative | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 10,396 | | | 10,396 | |
| | | | | | | | | | | | | | | | | | | |
| Provision for loan losses and other reserves | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 475 | | | 475 | |
| | | | | | | | | | | | | | | | | | | |
| Loss on extinguishment of debt | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 271 | | | 271 | |
| Other income | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (68) | | | (68) | |
| | | | | | | | | | | | | | | | | | | |
| Loss from unconsolidated JV | — | | | — | | | — | | | 2,802 | | | 2,802 | | | — | | | — | | | — | | | — | | | 2,802 | |
| Income tax expense | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 284 | | | 284 | |
| Sabra’s share of unconsolidated JV Net Operating Income | — | | | — | | | — | | | 3,543 | | | 3,543 | | | — | | | — | | | — | | | — | | | 3,543 | |
| | | | | | | | | | | | | | | | | | | |
| Net Operating Income | $ | 78,447 | | | $ | 12,513 | | | $ | 9,123 | | | $ | 3,543 | | | $ | 25,179 | | | $ | 9,231 | | | $ | 4,684 | | | $ | 10,992 | | | $ | — | | | $ | 128,533 | |
| | | | | | | | | | | | | | | | | | | |
| Non-cash revenue and expense adjustments | (2,947) | | | (935) | | | — | | | — | | | (935) | | | (342) | | | (228) | | | (547) | | | — | | | (4,999) | |
| Foreign exchange rate adjustment | — | | | — | | | (124) | | | — | | | (124) | | | — | | | — | | | — | | | — | | | (124) | |
| | | | | | | | | | | | | | | | | | | |
| Cash Net Operating Income | $ | 75,500 | | | $ | 11,578 | | | $ | 8,999 | | | $ | 3,543 | | | $ | 24,120 | | | $ | 8,889 | | | $ | 4,456 | | | $ | 10,445 | | | $ | — | | | $ | 123,410 | |
| | | | | | | | | | | | | | | | | | | |
| Cash Net Operating Income not included in same store | | | | | (184) | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Same store Cash Net Operating Income | | | | | $ | 8,815 | | | | | | | | | | | | | | | |
See reporting definitions. 9
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Cash NOI by Property Type
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, 2021 |
| Skilled Nursing/ Transitional Care | | Senior Housing | | Behavioral Health | | Specialty Hospitals and Other | | | | | | |
| | Senior Housing - Leased | | Senior Housing - Managed Consolidated | | Senior Housing - Managed Unconsolidated | | Total Senior Housing | | | | Other | | Corporate | | Total |
| Net income (loss) | $ | 26,649 | | | $ | 9,213 | | | $ | (626) | | | $ | (13,264) | | | $ | (4,677) | | | $ | 7,354 | | | $ | 7,135 | | | $ | 7,940 | | | $ | (68,754) | | | $ | (24,353) | |
| Adjustments: | | | | | | | | | | | | | | | | | | | |
| Depreciation and amortization | 26,302 | | | 5,353 | | | 8,787 | | | — | | | 14,140 | | | 3,124 | | | 1,494 | | | — | | | 19 | | | 45,079 | |
| Interest | 229 | | | 400 | | | — | | | — | | | 400 | | | — | | | — | | | — | | | 25,047 | | | 25,676 | |
| General and administrative | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 8,237 | | | 8,237 | |
| | | | | | | | | | | | | | | | | | | |
| Provision for loan losses and other reserves | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 2,045 | | | 2,045 | |
| Impairment of real estate | 9,004 | | | — | | | — | | | — | | | — | | | | | — | | | — | | | — | | | 9,004 | |
| Loss on extinguishment of debt | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 32,862 | | | 32,862 | |
| Other expense | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 13 | | | 13 | |
| Net gain on sales of real estate | (7,153) | | | (2,287) | | | — | | | — | | | (2,287) | | | (816) | | | (3,829) | | | — | | | — | | | (14,085) | |
| Loss from unconsolidated JV | — | | | — | | | — | | | 13,264 | | | 13,264 | | | — | | | — | | | — | | | — | | | 13,264 | |
| Income tax expense | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 531 | | | 531 | |
| Sabra’s share of unconsolidated JV Net Operating Income | — | | | — | | | — | | | (4,240) | | | (4,240) | | | — | | | — | | | — | | | — | | | (4,240) | |
| | | | | | | | | | | | | | | | | | | |
| Net Operating Income | $ | 55,031 | | | $ | 12,679 | | | $ | 8,161 | | | $ | (4,240) | | | $ | 16,600 | | | $ | 9,662 | | | $ | 4,800 | | | $ | 7,940 | | | $ | — | | | $ | 94,033 | |
| | | | | | | | | | | | | | | | | | | |
| Non-cash revenue and expense adjustments | 16,695 | | | (582) | | | — | | | — | | | (582) | | | (140) | | | (240) | | | (544) | | | — | | | 15,189 | |
| Foreign exchange rate adjustment | — | | | — | | | (122) | | | — | | | (122) | | | — | | | — | | | — | | | — | | | (122) | |
| | | | | | | | | | | | | | | | | | | |
| Cash Net Operating Income | $ | 71,726 | | | $ | 12,097 | | | $ | 8,039 | | | $ | (4,240) | | | $ | 15,896 | | | $ | 9,522 | | | $ | 4,560 | | | $ | 7,396 | | | $ | — | | | $ | 109,100 | |
| | | | | | | | | | | | | | | | | | | |
| Cash Net Operating Income not included in same store | | | | | — | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Same store Cash Net Operating Income | | | | | $ | 8,039 | | | | | | | | | | | | | | | |
See reporting definitions. 10
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Annualized Cash NOI by Property Type
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2022 |
| Skilled Nursing/ Transitional Care | | Senior Housing | | Behavioral Health | | Specialty Hospitals and Other | | | | | | |
| | Senior Housing - Leased | | Senior Housing - Managed Consolidated (1) | | Senior Housing - Managed Unconsolidated (2) | | Total Senior Housing | | | | Other | | Corporate | | Total |
| Net income (loss) | $ | 64,743 | | | $ | 20,764 | | | $ | 4,424 | | | $ | (98,032) | | | $ | (72,844) | | | $ | 26,156 | | | $ | 12,876 | | | $ | 37,553 | | | $ | (146,089) | | | $ | (77,605) | |
| Adjustments: | | | | | | | | | | | | | | | | | | | |
| Depreciation and amortization | 109,392 | | | 21,130 | | | 39,258 | | | — | | | 60,388 | | | 12,073 | | | 5,843 | | | — | | | 86 | | | 187,782 | |
| Interest | 859 | | | 1,074 | | | — | | | — | | | 1,074 | | | — | | | — | | | — | | | 103,538 | | | 105,471 | |
| General and administrative | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 39,574 | | | 39,574 | |
| | | | | | | | | | | | | | | | | | | |
| Provision for loan losses and other reserves | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 141 | | | 141 | |
| Impairment of real estate | 94,042 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 94,042 | |
| Loss on extinguishment of debt | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 411 | | | 411 | |
| Other expense | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 1,097 | | | 1,097 | |
| Net loss on sales of real estate | 10,214 | | | 1,797 | | | — | | | — | | | 1,797 | | | — | | | — | | | — | | | — | | | 12,011 | |
| Loss from unconsolidated JV | — | | | — | | | — | | | 98,032 | | | 98,032 | | | — | | | — | | | — | | | — | | | 98,032 | |
| Income tax expense | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 1,242 | | | 1,242 | |
| Sabra’s share of unconsolidated JV Net Operating Income | — | | | — | | | — | | | 13,222 | | | 13,222 | | | — | | | — | | | — | | | — | | | 13,222 | |
| | | | | | | | | | | | | | | | | | | |
| Net Operating Income | $ | 279,250 | | | $ | 44,765 | | | $ | 43,682 | | | $ | 13,222 | | | $ | 101,669 | | | $ | 38,229 | | | $ | 18,719 | | | $ | 37,553 | | | $ | — | | | $ | 475,420 | |
| | | | | | | | | | | | | | | | | | | |
| Non-cash revenue and expense adjustments | 5,768 | | | (1,400) | | | — | | | — | | | (1,400) | | | (1,262) | | | (830) | | | (2,285) | | | — | | | (9) | |
| | | | | | | | | | | | | | | | | | | |
| Cash Net Operating Income | $ | 285,018 | | | $ | 43,365 | | | $ | 43,682 | | | $ | 13,222 | | | $ | 100,269 | | | $ | 36,967 | | | $ | 17,889 | | | $ | 35,268 | | | $ | — | | | $ | 475,411 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Annualizing adjustments (3) | (20,685) | | | (777) | | | 11,520 | | | (7,367) | | | 3,376 | | | (174) | | | 389 | | | (2,110) | | | — | | | (19,204) | |
| | | | | | | | | | | | | | | | | | | |
| Annualized Cash Net Operating Income | $ | 264,333 | | | $ | 42,588 | | | $ | 55,202 | | | $ | 5,855 | | | $ | 103,645 | | | $ | 36,793 | | | $ | 18,278 | | | $ | 33,158 | | | $ | — | | | $ | 456,207 | |
| | | | | | | | | | | | | | | | | | | |
Reallocation adjustments (4) | 804 | | | 4,686 | | | — | | | — | | | 4,686 | | | 24,426 | | | — | | | (29,916) | | | — | | | — | |
| | | | | | | | | | | | | | | | | | | |
| Annualized Cash Net Operating Income, as adjusted | $ | 265,137 | | | $ | 47,274 | | | $ | 55,202 | | | $ | 5,855 | | | $ | 108,331 | | | $ | 61,219 | | | $ | 18,278 | | | $ | 3,242 | | | $ | — | | | $ | 456,207 | |
(1) Net Operating Income and Cash Net Operating Income include $0.1 million of Grant Income.
(2) Net Operating Income and Cash Net Operating Income include $3.6 million of Grant Income.
(3) Represents the annual effect of acquisitions, dispositions, lease modifications and scheduled rent increases completed during the period and mathematical adjustments needed to make Cash Net Operating Income for the period representative of Cash Net Operating Income for a full year. Annualizing adjustments also include the removal of triple-net operating expenses (net of recoveries), the Enlivant Joint Venture Cash NOI and the residual rents due to Sabra from prior asset sales under the Company’s 2017 memorandum of understanding with Genesis, as well as adjustments to reflect the reduction in Avamere's annual base rent effective February 1, 2022 and the February 1, 2023 transition of our North American portfolio to Ensign and Avamere.
(4) Adjustments to reflect Annualized Cash Net Operating Income from sales-type lease, mortgage and construction loans receivable and preferred equity investments in the related asset class of the underlying real estate.
See reporting definitions. 11
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Annualized Cash NOI by Payor Source
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2022 |
| Private Payors (1) | | Non-Private Payors | | Other | | Senior Housing - Managed Unconsolidated (2) | | Corporate | | Total |
| Net income (loss) | $ | 63,345 | | | $ | 64,266 | | | $ | 37,553 | | | $ | (96,680) | | | $ | (146,089) | | | $ | (77,605) | |
| Adjustments: | | | | | | | | | | | |
| Depreciation and amortization | 89,140 | | | 98,556 | | | — | | | — | | | 86 | | | 187,782 | |
| Interest | 1,151 | | | 782 | | | — | | | — | | | 103,538 | | | 105,471 | |
| General and administrative | — | | | — | | | — | | | — | | | 39,574 | | | 39,574 | |
| | | | | | | | | | | |
| Provision for loan losses and other reserves | — | | | — | | | — | | | — | | | 141 | | | 141 | |
| Impairment of real estate | 11,121 | | | 82,921 | | | — | | | — | | | — | | | 94,042 | |
| Loss on extinguishment of debt | — | | | — | | | — | | | — | | | 411 | | | 411 | |
| Other expense | — | | | — | | | — | | | — | | | 1,097 | | | 1,097 | |
| Net loss on sales of real estate | 3,595 | | | 8,416 | | | — | | | — | | | — | | | 12,011 | |
| Loss from unconsolidated JV | 1,352 | | | — | | | — | | | 96,680 | | | — | | | 98,032 | |
| Income tax expense | — | | | — | | | — | | | — | | | 1,242 | | | 1,242 | |
| Sabra’s share of unconsolidated JV Net Operating Income | 3,172 | | | — | | | — | | | 10,050 | | | — | | | 13,222 | |
| | | | | | | | | | | |
| Net Operating Income | $ | 172,876 | | | $ | 254,941 | | | $ | 37,553 | | | $ | 10,050 | | | $ | — | | | $ | 475,420 | |
| | | | | | | | | | | |
| Non-cash revenue and expense adjustments | (1,982) | | | 4,258 | | | (2,285) | | | — | | | — | | | (9) | |
| | | | | | | | | | | |
| Cash Net Operating Income | $ | 170,894 | | | $ | 259,199 | | | $ | 35,268 | | | $ | 10,050 | | | $ | — | | | $ | 475,411 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Annualizing adjustments (3) | 9,772 | | | (16,816) | | | (2,110) | | | (10,050) | | | — | | | (19,204) | |
| | | | | | | | | | | |
| Annualized Cash Net Operating Income | $ | 180,666 | | | $ | 242,383 | | | $ | 33,158 | | | $ | — | | | $ | — | | | $ | 456,207 | |
(1) Net Operating Income and Cash Net Operating Income include $0.1 million of Grant Income.
(2) Reflects our Enlivant unconsolidated joint venture which consists of 157 facilities and 6,996 units. Net Operating Income and Cash Net Operating Income include $3.6 million of Grant Income.
(3) Represents the annual effect of acquisitions, dispositions, lease modifications and scheduled rent increases completed during the period and mathematical adjustments needed to make Cash Net Operating Income for the period representative of Cash Net Operating Income for a full year. Annualizing adjustments also include the removal of triple-net operating expenses (net of recoveries), the Enlivant Joint Venture Cash NOI and the residual rents due to Sabra from prior asset sales under the Company’s 2017 memorandum of understanding with Genesis, as well as an adjustment to reflect the reduction in Avamere's annual base rent effective February 1, 2022 and the February 1, 2023 transition of our North American portfolio to Ensign and Avamere.
See reporting definitions. 12
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Annualized Cash NOI by Relationship
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2022 |
| Signature Healthcare | | The Ensign Group | | Avamere Family of Companies | | Signature Behavioral | | Holiday AL Holdings LP | | Recovery Centers of America | | Cadia Healthcare | | Leo Brown Group | | The McGuire Group | | CommuniCare | | All Other Relationships (1) | | Corporate | | Total |
| Net income (loss) | $ | 25,216 | | | $ | 12,237 | | | $ | 24,039 | | | $ | 23,164 | | | $ | 3,703 | | | $ | 23,029 | | | $ | (68,616) | | | $ | 8,644 | | | $ | 13,972 | | | $ | 8,201 | | | $ | (5,105) | | | $ | (146,089) | | | $ | (77,605) | |
| Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Depreciation and amortization | 14,365 | | | 18,024 | | | 12,737 | | | 8,969 | | | 20,152 | | | 1,211 | | | 10,244 | | | 8,064 | | | 7,127 | | | 4,475 | | | 82,328 | | | 86 | | | 187,782 | |
| Interest | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 494 | | | — | | | — | | | 1,439 | | | 103,538 | | | 105,471 | |
| General and administrative | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 39,574 | | | 39,574 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Provision for loan losses and other reserves | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 141 | | | 141 | |
| Impairment of real estate | — | | | — | | | — | | | — | | | — | | | — | | | 79,236 | | | — | | | — | | | 3,061 | | | 11,745 | | | — | | | 94,042 | |
| Loss on extinguishment of debt | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 411 | | | 411 | |
| Other expense | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 1,097 | | | 1,097 | |
| Net (gain) loss on sales of real estate | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (15) | | | 12,026 | | | — | | | 12,011 | |
| Loss from unconsolidated JV | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 98,032 | | | — | | | 98,032 | |
| Income tax expense | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 1,242 | | | 1,242 | |
| Sabra’s share of unconsolidated JV Net Operating Income | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 13,222 | | | — | | | 13,222 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Operating Income | $ | 39,581 | | | $ | 30,261 | | | $ | 36,776 | | | $ | 32,133 | | | $ | 23,855 | | | $ | 24,240 | | | $ | 20,864 | | | $ | 17,202 | | | $ | 21,099 | | | $ | 15,722 | | | $ | 213,687 | | | $ | — | | | $ | 475,420 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-cash revenue and expense adjustments | 8 | | | 12,210 | | | 2,267 | | | (1,072) | | | — | | | (231) | | | (823) | | | (1,498) | | | (4,530) | | | 595 | | | (6,935) | | | — | | | (9) | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash Net Operating Income | $ | 39,589 | | | $ | 42,471 | | | $ | 39,043 | | | $ | 31,061 | | | $ | 23,855 | | | $ | 24,009 | | | $ | 20,041 | | | $ | 15,704 | | | $ | 16,569 | | | $ | 16,317 | | | $ | 206,752 | | | $ | — | | | $ | 475,411 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Annualizing adjustments (2) | 594 | | | (3,817) | | | (5,163) | | | 254 | | | 3,627 | | | 629 | | | 807 | | | 1,847 | | | 247 | | | 181 | | | (18,410) | | | — | | | (19,204) | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Annualized Cash Net Operating Income | $ | 40,183 | | | $ | 38,654 | | | $ | 33,880 | | | $ | 31,315 | | | $ | 27,482 | | | $ | 24,638 | | | $ | 20,848 | | | $ | 17,551 | | | $ | 16,816 | | | $ | 16,498 | | | $ | 188,342 | | | $ | — | | | $ | 456,207 | |
(1) Net Operating Income and Cash Net Operating Income include $3.6 million of Grant Income.
(2) Represents the annual effect of acquisitions, dispositions, lease modifications and scheduled rent increases completed during the period and mathematical adjustments needed to make Cash Net Operating Income for the period representative of Cash Net Operating Income for a full year. Annualizing adjustments also include the removal of triple-net operating expenses (net of recoveries), the Enlivant Joint Venture Cash NOI and the residual rents due to Sabra from prior asset sales under the Company’s 2017 memorandum of understanding with Genesis, as well as an adjustment to reflect the reduction in Avamere's annual base rent effective February 1, 2022 and the February 1, 2023 transition of our North American portfolio to Ensign and Avamere.
See reporting definitions. 13
SABRA HEALTH CARE REIT, INC.
REPORTING DEFINITIONS
Adjusted EBITDA. Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation and amortization (“EBITDA”) excluding the impact of merger-related costs, stock-based compensation expense under the Company's long-term equity award program, and loan loss reserves. Adjusted EBITDA is an important non-GAAP supplemental measure of operating performance.
Annualized Cash Net Operating Income (“Annualized Cash NOI”). The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company considers Annualized Cash NOI an important supplemental measure because it allows investors, analysts and its management to evaluate the operating performance of its investments. The Company defines Annualized Cash NOI as Annualized Revenues less operating expenses and non-cash revenues and expenses. Annualized Cash NOI excludes all other financial statement amounts included in net income.
Annualized Revenues. The annual contractual rental revenues under leases and interest and other income generated by the Company’s loans receivable and other investments based on amounts invested and applicable terms as of the end of the period presented. Annualized Revenues do not include tenant recoveries or additional rents and are adjusted to (i) reflect actual payments received related to the twelve months ended at the end of the respective period for leases no longer accounted for on an accrual basis, (ii) exclude residual rents due to Sabra from prior asset sales under the Company’s 2017 memorandum of understanding with Genesis and (iii) reflect the reduction in Avamere’s annual base rent effective February 1, 2022.
Behavioral Health. Includes behavioral hospitals that provide inpatient and outpatient care for patients with mental health conditions, chemical dependence or substance addictions and addiction treatment centers that provide treatment services for chemical dependence and substance addictions, which may include inpatient care, outpatient care, medical detoxification, therapy and counseling.
Cash Net Operating Income (“Cash NOI”). The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company considers Cash NOI an important supplemental measure because it allows investors, analysts and its management to evaluate the operating performance of its investments. The Company defines Cash NOI as total revenues less operating expenses and non-cash revenues and expenses. Cash NOI excludes all other financial statement amounts included in net income.
Consolidated Debt. The principal balances of the Company’s revolving credit facility, term loans, senior unsecured notes, and secured indebtedness as reported in the Company’s consolidated financial statements.
Funds From Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”). The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company also believes that funds from operations, or FFO, as defined in accordance with the definition used by the National Association of Real Estate Investment Trusts (“Nareit”), and adjusted funds from operations, or AFFO (and related per share amounts) are important non-GAAP supplemental measures of the Company’s operating performance. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a real estate investment trust that uses historical cost accounting for depreciation could be less informative. Thus, Nareit created FFO as a supplemental measure of operating performance for real estate investment trusts that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP. FFO is defined as net income, computed in accordance with GAAP, excluding gains or losses from real estate dispositions and the Company’s share of gains or losses from real estate dispositions related to its unconsolidated joint ventures, plus real estate depreciation and amortization, net of amounts related to noncontrolling interests, plus the Company’s share of depreciation and amortization related to its unconsolidated joint ventures, and real estate impairment charges of both consolidated and unconsolidated entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. AFFO is defined as FFO excluding merger and acquisition costs, stock-based compensation expense, non-cash rental and related revenues, non-cash interest income, non-cash interest expense, non-cash portion of loss on extinguishment of debt, provision for loan losses and other reserves, non-cash lease termination income and deferred income taxes, as well as other non-cash revenue and expense items (including ineffectiveness gain/loss on derivative instruments, and non-cash revenue and expense amounts related to noncontrolling interests) and the Company’s share of non-cash adjustments related to its unconsolidated joint ventures. The Company believes that the use of FFO and AFFO (and the related per share amounts), combined with the required GAAP presentations, improves the understanding of the Company’s operating results among investors and makes comparisons of operating results among real estate investment trusts more meaningful. The Company considers FFO and AFFO to be useful measures for reviewing comparative operating and financial performance because, by excluding the applicable items listed above, FFO and AFFO can help investors compare the operating performance of the Company between periods or as compared to other companies. While FFO and AFFO are relevant and widely used measures of operating performance of real estate investment trusts, they do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. FFO and AFFO also do not consider the costs associated with capital expenditures related to the Company’s real estate assets nor do they purport to be indicative of cash available to fund the Company’s future cash requirements. Further, the Company’s computation of FFO and AFFO may not be comparable to FFO and AFFO reported by other real estate investment trusts that do not define FFO in accordance with the current Nareit definition or that interpret the current Nareit definition or define AFFO differently than the Company does.
Grant Income. Grant Income consists of funds specifically paid to communities in our Senior Housing - Managed portfolio from state or federal governments related to the pandemic and were incremental to the amounts that would have otherwise been received for providing care to residents.
Net Debt. The principal balances of the Company’s revolving credit facility, term loans, senior unsecured notes, and secured indebtedness as reported in the Company’s consolidated financial statements, net of cash and cash equivalents as reported in the Company’s consolidated financial statements.
Net Debt to Adjusted EBITDA. Net Debt to Adjusted EBITDA is calculated as Net Debt divided by Annualized Adjusted EBITDA, which is Adjusted EBITDA, as adjusted for annualizing adjustments that give effect to the acquisitions and dispositions completed during the respective period as though such acquisitions and dispositions were completed as of the beginning of the period presented.
Net Operating Income (“NOI”). The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company considers NOI an important supplemental measure because it allows investors, analysts and its management to evaluate the operating performance of its investments. The Company defines NOI as total revenues less operating expenses. NOI excludes all other financial statement amounts included in net income.
See reporting definitions. 14
SABRA HEALTH CARE REIT, INC.
REPORTING DEFINITIONS
Normalized FFO and Normalized AFFO. Normalized FFO and Normalized AFFO represent FFO and AFFO, respectively, adjusted for certain income and expense items that the Company does not believe are indicative of its ongoing operating results. The Company considers Normalized FFO and Normalized AFFO to be useful measures to evaluate the Company’s operating results excluding these income and expense items to help investors compare the operating performance of the Company between periods or as compared to other companies. Normalized FFO and Normalized AFFO do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. Normalized FFO and Normalized AFFO also do not consider the costs associated with capital expenditures related to the Company’s real estate assets nor do they purport to be indicative of cash available to fund the Company’s future cash requirements. Further, the Company’s computation of Normalized FFO and Normalized AFFO may not be comparable to Normalized FFO and Normalized AFFO reported by other real estate investment trusts that do not define FFO in accordance with the current Nareit definition or that interpret the current Nareit definition or define FFO and AFFO or Normalized FFO and Normalized AFFO differently than the Company does.
Senior Housing. Senior Housing communities include independent living, assisted living, continuing care retirement and memory care communities.
Senior Housing - Managed. Senior Housing communities operated by third-party property managers pursuant to property management agreements.
Skilled Nursing/Transitional Care. Skilled Nursing/Transitional Care facilities include skilled nursing, transitional care, multi-license designation and mental health facilities.
Specialty Hospitals and Other. Includes acute care, long-term acute care and rehabilitation hospitals, facilities that provide residential services, which may include assistance with activities of daily living, and other facilities not classified as Skilled Nursing/Transitional Care, Senior Housing or Behavioral Health.
See reporting definitions. 15 