SBRA - Earnings call transcript Q4 2018 | Sabra Health Care REIT, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Sabra Health Care Fourth Quarter 2018 Earnings Conference Call. This call is being recorded. I would now like to turn over the call to Michael Costa, Executive Vice President of Finance. Please go ahead, Mr. Costa.

Michael Costa

you. Thank

expectations to I furnished this press statements to and our we risks or you XXXX, assume risks in expectations included to cause update XX.X in your XX-K the concerning quarter Form begin, be no our that subsequent Form we response regarding expectations obligation for and current as to and that disposition, statements questions this forward-looking our subject X-K undertake later in you with to acquisition, making to We expectations our our events our want the tenants we plans, still to valid. should that XX, remind materially, future results could we filed today position will earnings December and differ to and Before investment our not SEC management's the ended as operators, our are regarding comments reflect operations. release based These the the circumstances, results was on well listed uncertainties the and and actual that of forward-looking regarding financial statements including are and forward-looking morning, Exhibit morning. the in our as make year our SEC comments in are

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

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

Rick Matros

guidance primary everything couple that how The making Mike, about start reflects for talking about it's that and dispositions the guidance balance delevering of we've get transformation the the assumption into XX-month given -- the sheet details. been everybody recent between thanks a us joining today. been we're at necessary, to will company be affects Thanks, that issues going of by all and table time. an all and primarily doing exposure is the and and over which for in our difference period Harold the to the comments was us the the I'll been it's resets their that guidance, past Genesis and

you're of the that focus year sheet. sit us, remainder we're behind weeks so portfolio; here the if good deals time quiet as noise and the the done, and So get today, really and few about the to keep repositioning delever of we from some our is balance the away completing have the for

to the our environment. the a guidance in sheet you the course we'll assumption into in move best long-term put over competitive did everything we so we'll get table be that again, the So on as the benefits of acquisition the With an to balance reset delevering that it that the and do year. company pipeline perspective. there from it's And

year to expect expect more done to this deals of get and housing increased we so has There end where the $XXX see skilled reached increase. about it about Our acquisition pretty pipeline a stood $X some senior it see dramatically things of at and the is year million, where we're if continue lot to there, that that's housing starting since billion. to primarily in senior but we

that been levels think still cap for private either. pricing reasonable, be equity if appear so groups we keeping rates stable the change to of is see side, and are at that the we that to terms skilled we time, don't In pricing environment, relatively expect anything different senior housing from they've on don't a perspective are a the long beyond

operational In of quarter. for stable pretty our the our results were operational results; terms

operating coverage senior down, EBITDA up coverage Founder [ph], going settled Our good at for there, points, tenant, he their new an rebound, since and expect flat forward. have CEO our the much XX we American and There don't down that's change flat about our no sequentially, occupancy of skilled we by expect that slightly company. a changes our have rent management then North housing North tenant management sequentially, basis really was a one this of was changes summer any was was we skilled center skilled accounted that's American. unforeseen been by mix and number very in they've team, and things primary suddenly a was with the occupancy rent leaving offering had concerns in in

January to expect them on to have at they basis, $X.XX standalone we Looking continue to over back about [ph]; a bounced the course XXXX. so of improve

will to on I Talya attributable on the that's detail Talya did a that. two that. provide partners portfolio operating and managed of primarily Our get lot details mean well the to and our again, very will

Talya turn over to it you. that, let with So me

Talya Nevo-Hacohen

you, Rick. results the our will portfolio. operating I statistics Thank for managed about provide and some comments

provinces United capital December memory of care XX, represents that are three three retirement in Enlivant, communities, was the by in XX% invested living XX% housing billion As invested invested approximately States. balance Canada, the Sabra managed of XXXX, in $X managed in over had and in communities in assisted senior homes is that assets and

the located quarter I Virginia communities Delaware past well West wholly-owned results. very Sabra's first XX Enlivant will discuss portfolio, continue [ph]. outperform to perform So Enlivant and in Pennsylvania, fourth and over

after occupancy continued course that to driving revenue was and $X,XXX, XX.X% improvement Cash communities. but effective was not NOI XX.X% placed increase throughout XX% quarter fourth than rate with prior preceding in across only in steady XX greater higher joint the in United quarter Revenue with the of revenue growth the quarter rate quarter line Average than and higher Cash expense quarter the results higher a and rose come the the quarters per of line after declined increase quarter. rates sequential the XX.X%, with XXXX the was growth; prior portfolio, located occupancy. decline of more impacted which over increase the strong XX% a the XX.X% quarter much the higher seen the in the properties occupied states X.X% again quarter, compared unit than increase occupancy XX.X%, the was to Enlivant growth. multiple which previous XXXX. the margin in of margins of a was have the occupancy fourth by XXXX preceding Average occupied profitability. States of the in nearly venture XXX occupancy was by annual slightly solid X.X% margin and with X.X% that quarter the winter. great annual X% offset implementation the fourth of over than $X,XXX, We XX% also per reflects owns not finished this for at unit being reflecting did flu XX.X%, X.X% previous over quarter last Sabra

properties to British be for physical communities cash We focus In levels. opportunities end [ph]. Senior has agreed the that compared occupancy was of preceding XX.X% and Sienna venture Enlivant Canada. have and combination these by from to of continues had PPG the eight assisted XX.X% care the in ninth points. objectives than on in Columbia, X in an better net margin which excluded the strategic income in poverty impact by community and location, certain at it There higher revenue the various are NOI the and share. points margin market, growth fourth occupancy the pursue are the pursue direct preceding those to on Sabra percentage percentage of and where managed operating a portfolio Living At disposition XX.X% quarter, Enlivant we, four and we is the quarter, Sabra's increase and Sienna quarter, markets to Minnesota Living, limit acquisition care retirement Ontario Sienna Harold during buildings of the by jointly X and and the operated and the in call plant and owned a of in living margin two the [ph]. retirement by fourth and assisted the Bridge meantime homes one are assisted statistics. working continue homes joint together these Officer. Financial the will and remaining of in sold fourth eight three Calgary to XXXX assisted quarter care eight living operated Andrews, Senior community in portfolio which managed owned living memory Sabra in I turn will and Chief Ontario in Wisconsin living quarter Lisa memory manages community properties over Pathway in in Sabra's Bay memory [ph], now which

Harold Andrews

today. call Talya thanks everybody the joining for Thanks, and

a million in the and loss the exclude $XX.X to extinguishment centers in be primarily XXXX by compared on the XXXX $XX.X which portfolio $XXX.X with fourth debt or rents for ended which care cut million, share. of portfolio in respectively cash of million quarter to X, to and the to basis senior $X.X and effective was $XX.X with months Enlivant a of revenues partially million per million million the to centers attributed million to are related from in decreases rental NOI our record of $XX.X million $XXX.X cash primarily respectively. XXXX. of a to XXXX. million offset managed line associated are $XXX.X and and a normalized share Revenues $X.XX XXXX and is related revenues joint loan was quarter was XXXX. quarter write-off and three care $XX.X strong to bridge to last of the expected For a receivable primarily primarily fourth decrease the dispositions and compared our These December including million to Genesis normalized a XX, revenues to XXXX, January the prepayment The FFO rate to also care of during $XX.X growth in $X.X million third million senior million sold the rents of associated transitioned venture with XXXX. NOI associated $X.X be recognized secured revenue and $XXX.X we've million of lease respectively. senior HUD of FFO $XX.X and declines NOI declined These and holiday of managed $XX a NOI quarter impact due for straight by the on million portfolio, was

per the of above and costs, Additional acquisition during property and primarily $X.X care AFFO paid and associated million centers, XXXX, merger transition $XX.X amortization AFFO assets expenses million are care basis certain normalizing the or contractual $X.X normalized related declined include on declines for normalized quarter the items. per the $X.XX rent FFO merger the respectively. which to million intangible lease These non-managed unrecorded operators Compared $X.XX $XX.X taxes of fourth normalized centers with revenues CCP and during of and property result consisting of million costs. by a non-cash unpaid normalized consistent $X.XX and the and share expenses of FFO, and million quarter transition from share quarter. behalf senior to and new by during operating acceleration senior normalizing items the of $X.X was items market the owed on to with quarter. was of primarily FFO third excludes

million expenses CCP operating totaled cost non-managed a $XX.X from of quarter, for For million with to or of the legal sale the a stock-based are in for estate related transition includes of FFO million stockholders non-recurring of operators, normalized X.X% transition common expenses. million real of NOI incurred among million quarter of of $X.X expense, eliminated $X.X items the million the we G&A Recurring on net which prior $X.X recorded new with quarter. $XX loss the following; of the million compensation connection costs, to quarter and of property cash of cost G&A included loss properties $XX.X line attributable the and $XX.X million. $X.X in $X.X million of

compared to the million Our the interest Included interest quarter of expense for in interest in non-cash $X.X compared XXXX. $X.X million $XX.X XXXX. is million of to expense in $XX.X fourth quarter of expense fourth the million quarter totaled

venture our December of borrowings XX X.XX% basis unsecured credit interest debt average XX, facility under and of bore XXXX weighted increase Borrowings excluding As December XXXX, our at the XX, interest X.XX%. joint credit including share was facility points an the unsecured of revolving and at under Enlivant assets $XXX.X third of two We revolving aggregate rate the $XX.X million. XX one quarter nursing proceeds the XXXX. gross housing facility XXXX fourth of during million sold total XX in to skilled managed bringing total for housing quarter of facilities, facilities, sales gross over the senior XXXX proceeds for of our senior

weighted of were $XX $XX.X we cash pipeline accommodation a one of These of quarter including to cash with exchange yield the totaling cash housing our senior funded million During made from X.XX%. of full related net with by $XX.X proprietary with titleholders. community development $XX.X X.X% yield million average funds and a investments available million held investments

a As dividend common February XX% in of our currently adjusted XX, at were Interest compliance times X% equality On XX, EBITDA, with February share cash total debt clear company venture of debt to a XXXX. the to including to business announced with charge X.XX as $XXX XX, December December continue $X.XX EBITDA to to We X, directors strong the board coverage cash quarterly net sheet common its of value secured to The value XX, comprised credit governance on on debt as record XXXX debt facility stock. XXXX metrics. paid of of in under all unencumbered the and we revolving a to on maintain available XXX%. had funds and dividend Fixed of and XXXX XXXX debt of $XX. following of to close asset asset $XXX joint X.XXx; X.XXx. levy cash total Net unsecured balance debt stockholders adjusted per covered debt value unconsolidated the credit equivalents asset at of February times. X of

Normalized Net expectations FFO are our AFFO, $X.XX. is our $X.XX, income per to guidance and normalized Critical We $X.XX. $X.XX. to $X.XX $X earnings as FFO, $X.XX our to $XXXX also to XXXX range issued $X.XX to at $X.XX to venture X our sharing to Enlivant under our understanding exclusive of $X.XX our under share of follows. which live understanding a commitment times venture venture times debt. sheet And delivering joint the times Enlivant half and joint of inclusive joint debt of X share balance under X to in debt. and exclusive share for

stands currently EBITDA to than from of at higher of Our Senior the due portfolio $XX.X part historical is leverage X.XX of million. debt, loss which inclusive levels in JV our times the Care

ATM with We further expect to the morning. the goal sales to XXXX established in Equity program issuance equity with assets the of this accomplish we along this

reflects guidance issuance $X.XX from of under program of share. XXXX $X.XX Our to ATM the equity per that dilution

senior are the of vast million. operated Centers $X.X the XXXX in X, X% announced an are by Care Additional Care to Genesis majority The asset include Centers is further Those speculative sale of pursuant XXXX assets, $XX.X of NOI our acquisitions expected include care joint assumptions a Senior of and under dispositions excluded facilities managed our lease in comprised loss from wholly-owned a as housing FFO million Senior connection totaling but completed operator, receipt primarily $XXX activity identify consideration Same-store annual legacy These Collection management associated approximately were into being XXXX. from on The on Senior yield guidance in remaining and retirement of of April repositioning agreement Centers and of Enlivant quarters. million initial of dispositions resulting cash the termination cash with of excluded X.X%, February following. an to million. Termination all fee that capital AFFO. FFO $XX discussed of have agreement settlement AFFO. and from which million of post-petition normalized of did proprietary in cash impairment X% quarter into fourth the the purchase XX held entered currently million other XXXX during triggering a a lease our X% include X, primarily XX%. closing, include this is previously from of in annualized the transition in Senior holiday to $XXX with to normalized improvement termination; but effective costs the do facilities Centers April currently normalized rent master of provide of portfolio sale assumptions, for entry $XX.X for from million. concurrent venture we our sale Care Care April part three X, XX, pipeline normalized XXXX. option acquisition acquisitions, on not Total XXXX, of for $XXX.X holiday portfolio by prior $XX.X cash in dispositions We any million NOI and

a update Finally, I'll Genesis provide quick on asset the sales.

near are sold. We only three need with we completion of the these sales may be facilities to

in we sales proceeds $XX this year three remaining approval which the During shut are HUD those of the process, and expect still down the XX result, quarter, in gross total the has to second quarter. due assets The we as delayed earlier a for to sold government close million.

of $XX.X sold $XX.X continuing after for X.XX including we annualized expect cash As million approximately sales, have from to residual million NOI. rents And assets generating total sale years per X% each rinse closing. that open total Q&A. completion these with I'll expect current of to our residual per Genesis cash rinse up from Ultimately, of or year

Operator

And from Raymond our James. first Instructions] question Hughes is [Operator with Jonathan

Jonathan Hughes

there Up XXXX? in such he since can North you elaborate late big gave into on Rick, in this West bought that part prepared January you remarks, American portfolio a but of the left coverage why your you was on Coast; CEO why just

Rick Matros

But a bit, promote able the within January. looking regroup and in their actually of we them off saw the just of rebounding shows. portfolio, game And so I see couple sort pickup when certainly, showing was and can't one, to fact them personal, that we've of in to but elaborate of it able a bench it came the terms it to a you think actually I strong nice been really we keep I we when things; at CEO that a unexpected, So was were they new prefer from when also off way. bought really to threw

So it's with we any I could that. don't but more, share would just too I foresee If issues personal. John,

Jonathan Hughes

did What team, about it rest a Now, that's is mean, whole too replacement of I there? or suite the is of place the fair in enough. of C kind it kind the -- largely of

Rick Matros

is No, very in place. else body

Jonathan Hughes

on in then looking XX-cap senior at sub a to like terms I million were about proceeds What's And and of assets like guess. of book there Okay. cash owned investments value, on book more million looks the in those and but the $XXX gross of the expected composition it's it made? NOI dispositions addition the rate that care a centers, and loans $XXX repayments in value when loan the five gross

Harold Andrews

is John. being this a Harold, how acquisitions. made as comments So, care capital were call two-thirds Basically, sold those ads legacy about of from on like the

Genesis And of a is operations third all. or the for operations XX% I related to of of were yield in down. them it the about These this those assets of it, and bought So most the of sat two-thirds Sabra legacy of as say that a were XX% assets. part, four and to large or back that extent at kind about years, should that going three assets then probably strong no have are are number as are shut is because it handful really the historical

made or on You we reduced. grids have the been acquisition know, when early capital care,

care stuff primarily nursing that the So it to assets is skilled back and capital acquisition. went

Jonathan Hughes

think then you $XX issue about that share did to equity expect mention that's the we do year? using price? Okay, raises. include And Can around you the kind from earnings of throughout guidance, Just you the guidance how and current earlier does dilution helpful.

Rick Matros

lot think had around will the stock. I a noise a little while. people wait We've of

it out talk numbers revised third fill we until always in how you really put reaction. we it the a and here's much like issued Just about doesn't guidance, matter quarter, you

have at. two from be discount trading of are as time, we result able absolutely necessary perspective issues created itself us is our the himself been to the of that from backs, giving should which some think and quite but And a it's that the Genesis that things for we're company out has we for bounce [indiscernible], how to get impacted So is growing the kind that. under ongoing

done almost weeks away. where we're So,

Center down rebound. quiet expect finish company. then with I can people out and And and quiet kind us a predictability the behind X the from be time other more having the of should more after that'll on help prospective on Senior of some we leverage lot tone And us shells other and April Care leverage the pieces. a to So think

the still at it's a you balance just us, perspective, group forward exceptionally got a and enough very cheap XX of no If the to from to a large from sheet and strong and in and good affect better the going that's of and stock, lot operator valuation pure we've narrative look operators going agencies pretty much be single the ratings months had we ago a company. of liquidity

Jonathan Hughes

it. Got

one and that Okay. year terms in facility bucket Deletions coverage Then more expiring in level what's That's just helpful. Thanks. you are leashes these what's can one. in quick of on the provide XXXX next if it? operator

Harold Andrews

I'll saw amount that those this the I'll are maturing this doing offline. those here, you down right adjust a you say to come of I XXXX we're that lot now fair being a lot we're How year. have will way with a did on disclosing get are assets, you the we of the in that are me A sold but assets assets part lease that basis. and quarter. of that maturities all net number know it those just details so

that that big can I going anticipated a chunk of details away But some already and offline. require get re-editing. won't so you any on And is more

Operator

from Stifel. comes with Thank Vanacor Chad question you our and next

Chad Vanacor

Thank morning you, and good all.

environment? tough I last to split the Washington there's they're create of happening So, and then Washington, back how what's we go why some of happening those in that performed? management versus to California at Can a outside are in coverage California, and facilities plus get $X.XX. significantly American. operationally to what's Maybe drag $X.XX detail located to Washington's change from That on from want more North quarter,

Rick Matros

Yes.

drop of that underwrote period time look include [indiscernible]. do report, well. much a deep and them there isn't underwritten up an coverage. there. we to We pretty because of are So, Washington The acquisition performed difference facilities there actually

drop, you CEO in that's decline drop steady what big had ain't like months the for. last more accounted really So at that look a left. six The if once the

started So, and seeing real in Washington. summer year in real some But improvement difference the the started the end towards some I'd decline things we seeing no and January. the California started rectify say and between of

Harold Andrews

related primarily And the well. it's and think strong I rights strong. as occupancy their continues be and very expense it are to

bit is just little the management. I around it So think distraction a of expense

Rick Matros

one Which lot needed fix. now if they settled reasons the is to of get side in the CEO January to on on address the new your get and expense place some issues all in because systems just rebounded that. a and and revenue side, of controls easier new that's can in It kind the

Chad Vanacor

expenses mean, I labor labor-related they usage? All more right. would some say temp to those be

Rick Matros

No, Supply and food tackling that's -- supplies, really. stuff it's map. over it's actually blocking cost, the really all just

see Senior just that enough, And enough, concerns we did with did we excuse with I that's others. getting but a reality, happen a don't sometimes you've like it's founder good any someone all they're as you people the think But Chad, we do it we early. raising well and -- We see Care, been when we don't Genesis, that have together that you too concerns. flag have got rating we We take and know, sudden really there's if about did change here. pretty be often. know start it CEO, a where and the that with

Chad Vanacor

dilution thinking reinvestment a delevering. take delevering cash Okay. about order better you're this your in is Why use some willing to Then than in to XXXX? use just of cash, of

Rick Matros

expect up We think from level for happen. we Moody's a important well. think Well, leverage a certainly that it want to getting at upgrade but we higher again -- get [indiscernible] you've above as stable -- to potentially we'd We of all is important. outlook the it's ticked to be. back like and that's that an We got

that So all affects your cost to capital. of stuff

get may low. growth to don't our who be have we So it compare that think compared much really leverage the but larger grade, investment guys of may that's some the to to we from important. were not can perspective larger not leverage their going guys. the who than on much different smaller the necessarily also as And We guys keep

accrue investment. think that because getting it's the we on more going So, company the to down it allows our of perspective leverage will we our improve shareholders from us that of focus to the and cost capital to of if do benefit

Chad Vanacor

And just housing more one portfolio. just managed right. question, senior on All

for the You some quarter rate assumptions pretty brand in out of country in good occupancy in Rate up poor What portfolio? pretty kind put for expectations significantly XXXX. was making basis. that XXXX a some

Talya Nevo-Hacohen

For a very bit the it held forecast. for picked we've actually the purposes But portfolio we occupancy Red to, one you're think referring the [indiscernible] on the down little Pot. on back a on of and steady [ph] it's

Harold Andrews

XXXX, because increase acquired this you inclusive when over course in the joint venture, remember the at stabilized at numbers steady a look portfolio should we've venture obviously into occupancy was well you the of look When as entered of where underperforming joint a the see where occupancy be. you below do

it's the XXXX, pickup course of but some occupancy -- there's in nothing over So dramatic. that nothing

Rick Matros

one. which got pieces, It's wholly-owned exceptionally If a portfolio, it in different you've has couple XX%. almost fully occupied high occupancy. you effectively Over think of about the Chad,

So you've got to expectations temper there. your

around. joint different is Harold As venture whole because the was it said, a turn

So, what there the that picking wholly-owned, still assumptions guidance in in up of some assumptions there which in our the on be is in JV, would putting awesome. it we've be speed, and we're tempering might got expectations the terms

Operator

Thank you.

John question ahead. with go BMO next from comes Our Capital, please Kim

open. is line Your

John Kim

you. Thank

of really the the were focusing level? other focus the agencies also Fitch levering delevering, or the X.X at On this times was

Harold Andrews

who as stable. and a target us. by out reaffirmed Fitch a We was the only on X.X had us you for S&P rating put out agencies way laid a just report put specific our ratings times

don't that they level Fitch's the so, have of indicating. And same concern

John Kim

do get year how this raise your you much need And equity X.X? to to

Harold Andrews

make. timing the on we dispositions depend Well, amount it's the going and to of

not it's done. to so, get it but amount, and of we've to of will it course be going we'll be time lots an that And immaterial got something over XXXX the do

but later, we'd going timing sooner as till sense. we're So some make wait something said, stock the made Rick the like sure is than to do price to

Rick Matros

And it's do match it's way constructive the and way to ATM cheapest do to funds, using least the that. that as the

So, it and with again, prudent we'll patient it. about be

John Kim

Okay.

as guidance on share weighted far outstanding year? to nothing So, as for average share the

Harold Andrews

No, done. that is

John Kim

range? XX% variables of Enlivant what range I setting season pretty you far the the of to as the you X% see that there's from meet the same-store end but your end as have are other and guidance to the flu the high know On guidance low and comps do wide

Rick Matros

portfolio easier not mode, to so good it's predict got going a your much that's healthy to with really portfolio, steady know it. did be been have. state job improvement predict It's turnaround We much in been of really have it you it's how bit a it's but little to a a other you've really If difficult variables to but they're and going tighter a range. improvement had

So we it's that turnaround wider range. mode have really -- because it's a in

John Kim

And you hit of exercise $X the to do think if it? you portion the on remaining you when $XX that acquire portfolio; that to would option

Rick Matros

it of year. now next first Right quarter like looks

Operator

[indiscernible] with is Scotiabank. question next Our from

Unidentified Analyst

and morning thanks much everyone. Hi, to very good

that on a you bigger on prepared get nursing? -- good variability comfortable from with I skilled for that top the First coverage in how operator the matter operator you I picture appreciate appreciate any morning, given perspective, or in your could we maybe levels. expand are Maybe operators prepared see you headwinds comments

Rick Matros

it as really a least are important the slight few uptake, start happening the future demographic slight hide. look to call in at it so Well, a benefit is you've that are industry to that's and distant impact all demographic occupancy when we that at the of an as and seeing XX%, tangible, things point headwinds should the got too of nowhere not some we first are of low a dissipating, -- is,

patient that So pull-through get -- in, complete a a that's the that pull-through you bottom-line. to next that's

So you positive on have patient this impact point. a disproportionate additional at any

years it's you're Secondly, single access every then see reimbursement industry next to has it had. well October will you've operators good preparing with next government and increasing the happening industry over bodes best of see supply I several feels in industry, tries going the it. which your supply, issues interesting about the has much one probably really our PDPM the to how it, believe and system the be been But declining and decline more is that to for the got actually Medicare to ever have going it, deal Xst demographics, for the --

the think a management with look that's with dissipating, we our team buyback beyond buildings really that on we have lot and spent asset regular in the basis. headwinds operators strong I a a So are of out time operators,

of [indiscernible] doing that. discussions for sees their it with a on operating also regular we themselves had regular So regulatory and operational business their all a report and all and calls, trends basis, things having on basis

red to us of the but operators also the North waving relatively and So continue the to able be down be forward. comfortable flag started case we're in will going American for that read difficult it's not too very that's from past that contended in of couple a our comfortable one that's on to they operator, we're -- and and an concerned, we get with perspective why with we early

Unidentified Analyst

of with on necessarily indicative environment to a states that; some been one of negative piggybacking highlighted that's I guess portfolio of news difficult one and one one -- peers operating we but operators. not your been guess as Texas I saw report the your it's has of those

to and of you curious taken looking your steps in but So space thoughts maybe that talk that at Texas? about about just there exposure the appreciating on reduce environment you're your since could it's also how the you've State largest

Rick Matros

the much so CLM, is, state a is rarely worst of difficult secondly, in not can't of any where because a in being there Texas; primary country facilities and in environment it here outside place create that not Texas, pencils real it in but lot there of the very it's that Medicaid you or in other difficult [ph], you're skilled nursing Texas, and Texas to build the over-supply build in you'll lighter systems and in one see the there country; by trends it's it's one the company and then are a unlike rest pretty here country. the a very even markets, So were much of regulatory is factors environment there rates built

of a been And there so of has a in building result Texas. as that, lot

nursing. centers just even blowing half. in think exposure in we've combination, field housing, would that to oversupply number combine we senior we if that decision our even Medicaid that senior the a reduce to care had, a don't started completely looked I what easier made cutting in be the up rates hadn't in our similar you way have sort of so exposure and we'll normally market see just With the we a So so not great seen weak it's

as Texas the Health for silver or be to and make the it's right ongoing Now a Health as lobbying not that put it which made that in be are there much, a not, one voted going working would Care operators American there is, we'll Association, continue regional the happens and on seen. state or I in If that other to continue in now we've think to potential lobbying lining is industry; the strong as well it to in out it better operator provider or much control, to be of Care November, we've of tax the place as remains we operators of will are with in certain exposure lot dependent particular or happen, we even work state exposure better. that of Genesis overly operating [indiscernible] better and But any ourselves think wouldn't because or had always tired we an awful a any we've to operating on there in are to made ourselves much started individual in things allow say that's got us controlling your if do even one we us, whether to for commitment of and I region narrative Texas a pretty then that it's particular operator geographic XX% for company. for that the so tenant were the Association with case, obviously and and as the the to get environment Texas happen, some well an legislature inroads whether effort working so situation a be on one effort Texas, Sabra does

Operator

Thank you.

question with Please Michael Lewis go next SunTrust. from Our ahead. comes

is Your line open.

Michael Lewis

scenario ask, about to X.X%. guidance of -- issuing guess to low I end I yield the of wanted you right top your a silly question a is kind going this is of dividend, a is, where AFFO be that's this does the adjust equity some more you're normalized or dividend the the at is on there question point? at

Rick Matros

silly a right. never question, It's

question. the understand we So

to on We being will not stable. dividend. count growth is can in the that going adjusting everybody be not dividend, it but see We're

Michael Lewis

timing should and remaining in of the the how about think we buying Enlivant the JV? how about likelihood And interest the --

Rick Matros

realistic we at Well see the against pull at that look position looks timing to some, time. our appropriate be us better rest is a in the when XXXX getting we quarter will spend right now performance we the on their leverage XXXX, way of to first the and as it, forecast, their that down of put trigger

Michael Lewis

to structure Okay. Skilled big And this your ask conference but then Nursing I their call, be at failure. this has at question, in REIT peers Hager that proven earlier lastly, I said to just actually a month a on asked at wanted one the of picture George a Genesis

broad kind with this do or something it's with coverage blocking constantly some it and is the out some think You you here truth itself operator-specific, and do get experience work you that, think in and will of there and obviously experience issues have and is tackling or dealing passed? tight specifically, that them, more some will

Rick Matros

that, said debt waivers release a really rent on relief disappointed of gave and that him that landlords hear George since know defaults. that was particularly group them he quarter-after-quarter-after-quarter and I gave had I So him to

So that disappointing hear. really to was

I in this business. every with think things our culture

are know some an been And over so, been of for and make last actually as anybody years. is as environment. than with you're course there downtime, always this headwinds going downtimes at a XX me operator, decision we and those the for to the there they're everybody have so and sometimes looked If been uptimes going that the there less where headwinds of headwinds, business never victims else. those you through And deal better ourselves I

you decision if think them look in I made Genesis, traditional they has at it's rent, put every self-inflicted.

demonstrated haven't headwinds had them some with, cases really so they be given help that some has company operators, to again, of they've and helped deal the not REITs, REITs to much some was for cases in because disappointing in given them, help our they've all us So and help; needed to earned bankrupt. operatives we've giving good they're it them how the would if the that, other we've hear and it

Operator

Bernstein with One. Daniel Our next Capital question from is

Daniel Bernstein

mix you across your look if mix mix to wanted ask street going the actually you up, has skilled improved Medicaid I though. [ph], your been mix Medicaid about and skilled

bit wanted anything maybe, kind space. then of just about little -- a particular in some is Medicaid about your I the thoughts increasing trend? So understand portfolio And -- with your to census bucking that that

Rick Matros

the it you longer. got is patients, low, really done you for normally Medicaid in because hit it might skilled the to you admit important point than means higher Medicaid look see operator an may my any as do mix experience, no more you've indicator and whether that going leverage allows are One, inflection when you When business I've security increase of to is an occupancy the us you've as that patients minimize because your well; skilled it mix the means higher operator understands Medicaid. it then it most that really you is, where

And so in the state XX% a the earlier Medicaid in if to low about as Medicaid is helped I the that or your that occupancy if even demographic bottom-line. pull-through even weak, occupancy full you're your getting disproportionately patient and said occupancy, just bottom-line; where that's the slight in, improvements a rate XX%

don't it key many points help of stay. that occupancy is you to just admitted there low where normal cost. length do will operators extent Medicaid on want patients to are you've really to there more the admit in Medicaid have So patients reimbursed covering The too that their time

ago, XX years lot years stay Medicaid is patients today and skilled Medicaid -- industry nursing a it a than even much than skilled of have nursing say. patients Medicaid length the XX Now was shorter ago and most different in now patients

So you walk. occupancy, there line fine little it happening of happening than the a now had of to is kind but past, less always that danger always was in that when was

decisions higher lower with Medicaid very patient [ph], think on always they'd skilled higher more admit that and patients. on focused little highest are really the the acuity had [ph] they space you they've focus operators, our I and that in we've for of occupancy a about acuity rather mix just with rather live think sort made while I than

the little operative it every but exactly is of Medicare -- haul and to wrong a everybody increasing or insurance. isn't right you expense not see to bit the at long a want different, do Medicaid So there over

Daniel Bernstein

and grade. will in, I the what see we'll people high comes when incentivize [ph] happens PDPM do that to acuity guess to

Rick Matros

occupancy because primary are side. really of -- go the benefits it's admitting side, short-term nursing benefit I patients, good, rehab which to from stay that's rehab number more to designed pressure own issues of reimbursement patients system incentivize think to been that just only by obviously you've you're your while put right the the brings maybe you're to you length a got then; your PDPM; to definition perspective the is, on after there be my And your I'm creating the on going Yes, not continue going when a that's down.

get vicious of cycle. to sort of of the that PDPM, really you're one out benefits of So that's going

Daniel Bernstein

bringing did Although and rehab operators I up seems it maybe that on go PDPM, to me margin a on and we've rehab should back little that about a been in rehab have in-house. question hearing bit

back one So the on get is third-party? operators in-house impact if mean, corporate to a they is, looking coverage presume two, are lease that, on that? rehab that's thoughts or I I to kind And is were positive bring -- your want your I coverage

Rick Matros

variable you you where in-house trend huge in reason that it So everybody became rehab to bring wasn't and XXXX rehab made is you of product. certain Once come control sort RUG-IV level over a sense change it completely the of rehab years, line and was outsource really terms a of operators everybody predictable already revenue, system and developed, used had when to in-house in made that's count that that lot before can last revenue, number of it therapy more XX plus business. outsourced are predictable because a the can rehab in the our got who a a started another sense of RUG on the almost

it positive margin group and issue for exactly at those incentivized decline And looking you at are concurrent rehab when capped really it's they because in level experiential had years in under is PDPM definitely a ago, really at therapy even So it's patients around though rates bringing remember, industry these the been but terms and, capped so having going thought -- therapy. until to XX, basically Patients, experience out of the are and after the group concurrent what just to otherwise patient. you're rehab, back about the several Nursing because be get net XX% still a they going -- of to per day be were revenue the at they in XX%, and you're facilities

that going that allow therapy group you have of come to and the mitigate improve concurrent group therapy any to fact you're the opportunity your gives concurrent that margin. and straight bottom rather line, and than to have decline the So

some a you're margin you which going you're going that lot have palette go as not going mix simpler from And you're have because because after just simple going of think the improvement to margin mix be rid longer case having from a case after have rehab of system fact patients. to of completely the you're a short-term therapy getting system. stay, a then well, I makes of things go So patients into to concurrent to broader group will and improvement length and

of a in system. you mix case look more the also reimbursement If home at health recent that's changes

question? states good pushing which in transition Hope a the will to. will and haul think the long we something allow the Case Mix a answers forward that to Post-Acute neutral space system, System, a that So those of CMS look to over everybody is to us then thing site is your which is Skilled CMS always

Daniel Bernstein

later. guess have to I'll guys off was questions, few but I more that No, what, hop a great. you and talk I

Operator

Joseph with Our Instructions] question [Operator Citi. from is Nick next

Nicholas Joseph

Thanks.

assumed costs two? the in For charges of million what the guidance impairment XXXX, in transition $XX in expected breakdown the between

Harold Andrews

So it's Harold.

-- and transition that chunk need still property the big will assumed it paid a portfolio. costs, or $XX about million is the being of of that to on and an about be impairment sale loss on it's So balance taxes,

Operator

Thank our Lukas ahead. And from with Street. you. Please Green go next question is [ph]

Unidentified Analyst

of define Can good larger the $X.X Senior settlement, Centers' you the morning. on Thanks, color the than Care it is million? more size

Rick Matros

It a to is it a follow approval, was the outstanding. specific million more note that. affects than than $X.X court it's is larger more not us give but just They that and any asked it on,

Unidentified Analyst

of the a have you rough Do idea timing...

Rick Matros

news. it's totally It's good totally --

So.

Unidentified Analyst

out you bigger timing right. a rough Right, it is? of when have how much find we'll Do

Rick Matros

I comes would to timing when predict it coherence. never bankruptcy

Unidentified Analyst

there's... then And enough. Fair

Rick Matros

ourselves remaining by of had mean to the from there so the a deal but I to out, majority the terminating stuff protected court which ourselves -- bankruptcy, are make the clause that We we with. bankruptcy that we of just pulled we protected has a on. is couple matters leases, of the decision the what

Unidentified Analyst

thoughts curious And there's that on some are concern around Managed and, Rick Medicaid I'm just issue? what your

Rick Matros

all -- Medicaid we some how of Medicaid approach they before some on rate been Managed It and and and them good. been products not it. in depends And have good those see of have

a on bit So little early that. I it's think

the XX to Sabra's -- to Medicaid have most going probably experience Medicaid experience, Medicaid to have an really So the and But State pretty little even over we'll been as the not been with predict. in Managed that that we've back really experience it's see, but and we'll my of Medicaid close rates operator the hard years, rates had place, see. going

Operator

this to Matros final his Q&A remarks. And Rick I concludes you. for to like the our session back would for turn call Thank today.

Rick Matros

now Talya just bearing us as offline, Wealth lot see and for forward Harold know Thanks. be the to and hoping team there. getting initial and and of Conference to we've behind I parts you bunch moving of look everybody we'll a with to Thanks, I heading a looking it long and conversation the are for had call, and guys a we're any here Call you

Operator

thank the wonderful conference. may and ladies This you Have gentlemen, day. you participating a concludes and And for disconnect. in today's program all

Sabra Health Care REIT (SBRA) 25 Feb 192018 Q4 Earnings call transcript