EX-99.3 4 sbraex9932023q1.htm Q1 2023 NON-GAAP RECONCILIATIONS Document

logo.jpg










Reconciliations of Non-GAAP Financial Measures

March 31, 2023

(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 March 31,
 20232022
Net (loss) income$(9,487)$40,602 
Add:
Depreciation and amortization of real estate assets52,827 45,256 
Depreciation, amortization and impairment of real estate assets related to unconsolidated joint ventures2,048 4,633 
Net loss on sales of real estate21,515 — 
Impairment of real estate7,064 — 
FFO$73,967 $90,491 
Write-offs of cash and straight-line rental income receivable and lease intangibles540 (182)
Lease termination income— (2,338)
Loss on extinguishment of debt1,541 271 
(Recovery of) provision for loan losses and other reserves(208)475 
Other normalizing items (1)
1,037 (48)
Normalized FFO$76,877 $88,669 
FFO$73,967 $90,491 
Stock-based compensation expense2,229 2,456 
Non-cash rental and related revenues(2,398)(4,474)
Non-cash interest income(392)(547)
Non-cash interest expense3,014 2,698 
Non-cash portion of loss on extinguishment of debt1,541 271 
(Recovery of) provision for loan losses and other reserves(208)475 
Other adjustments related to unconsolidated joint ventures69 (986)
Other adjustments106 183 
AFFO$77,928 $90,567 
Cash portion of lease termination income— (2,338)
Other normalizing items (1)
1,021 (186)
Normalized AFFO$78,949 $88,043 
Amounts per diluted common share:
Net loss$(0.04)$0.18 
FFO$0.32 $0.39 
Normalized FFO$0.33 $0.38 
AFFO$0.33 $0.39 
Normalized AFFO$0.34 $0.38 
Weighted average number of common shares outstanding, diluted:
Net (loss) income231,164,876 231,564,970 
FFO and Normalized FFO 231,892,769 231,564,970 
AFFO and Normalized AFFO 233,168,932 232,484,734 








(1)     Other normalizing items for FFO and AFFO include triple-net operating expenses, net of recoveries.
logo.jpg 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) 
Twelve Months Ended
March 31, 2023
Net loss$(127,694)
Interest109,039 
Income tax expense1,686 
Depreciation and amortization195,353 
EBITDA$178,384 
Loss from unconsolidated joint ventures38,290 
Other-than-temporary impairment of unconsolidated joint ventures57,778 
Distributions from unconsolidated joint venture370 
Stock-based compensation expense 7,226 
Acquisition costs41 
Provision for loan losses and other reserves and non-cash revenue write-offs16,905 
Impairment of real estate101,106 
Loss on extinguishment of debt1,681 
Other expense3,109 
Lease termination income(139)
Net loss on sales of real estate33,526 
Adjusted EBITDA (1)
$438,277 
Annualizing adjustments (2)
(6,309)
Annualized Adjusted EBITDA (3)
$431,968 
March 31, 2023
Secured debt$49,633 
Revolving credit facility79,563 
Term loans540,865 
Senior unsecured notes1,750,000 
Consolidated Debt2,420,061 
Cash and cash equivalents(33,532)
Net Debt$2,386,529 
March 31, 2023
Net Debt$2,386,529 
Annualized Adjusted EBITDA$431,968 
Net Debt to Adjusted EBITDA5.52x










(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.
logo.jpg See reporting definitions.                        3



SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Consolidated Statements of (Loss) Income
Supplemental Information
(in thousands)

Three Months Ended March 31,
 20232022
Cash rental income$89,657 $100,357 
Straight-line rental income1,347 2,694 
Straight-line rental income receivable write-offs(518)(139)
Above/below market lease amortization1,568 1,593 
Above/below market lease intangible write-offs— 326 
Operating expense recoveries3,816 5,055 
Rental and related revenues$95,870 $109,886 


logo.jpg See reporting definitions.                        4



SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Senior Housing - Managed Revenues and Cash NOI
(in thousands)

Three Months Ended
 March 31, 2023December 31, 2022September 30, 2022June 30, 2022March 31, 2022
Revenues:
Resident fees and services$56,721 $52,699 $47,610 $44,136 $42,227 
Resident fees and services not included in same store (1)
(18,189)(13,991)(10,433)(7,564)(6,959)
Same store resident fees and services$38,532 $38,708 $37,177 $36,572 $35,268 
Net (loss) income$(9,487)$(84,948)$(50,064)$16,805 $40,602 
Adjustments:
Net loss (income) not related to Senior Housing - Managed Consolidated956 87,968 50,741 (15,985)(40,695)
Depreciation and amortization11,131 10,524 10,228 9,290 9,216 
Net loss on sale of real estate10,484 — — — — 
Cash Net Operating Income$13,084 $13,544 $10,905 $10,110 $9,123 
Cash Net Operating Income not included in same store (1)
(2,720)(3,033)(2,409)(1,511)(1,315)
Same store Cash Net Operating Income$10,364 $10,511 $8,496 $8,599 $7,808 
























(1)    Includes adjustments for changes in the foreign currency exchange rate where applicable.
logo.jpg See reporting definitions.                        5



SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Annualized Cash NOI by Property Type
(in thousands)
Three Months Ended March 31, 2023
Skilled Nursing/ Transitional CareSenior HousingBehavioral HealthSpecialty Hospitals and Other
Senior Housing - Leased
Senior Housing - Managed Consolidated (1)
Senior Housing - Managed UnconsolidatedTotal Senior HousingOtherCorporateTotal
Net income (loss)$16,449 $5,284 $(8,531)$(838)$(4,085)$6,501 $3,262 $8,733 $(40,347)$(9,487)
Adjustments:
Depreciation and amortization32,670 4,368 11,131 — 15,499 3,173 1,461 — 24 52,827 
Interest211 228 — — 228 — — — 28,101 28,540 
General and administrative— — — — — — — — 10,502 10,502 
Provision for loan losses and other reserves— — — — — — — — (208)(208)
Impairment of real estate7,064 — — — — — — — — 7,064 
Loss on extinguishment of debt— — — — — — — — 1,541 1,541 
Other income— — — — — — — — (341)(341)
Net loss on sales of real estate9,555 1,476 10,484 — 11,960 — — — — 21,515 
Loss from unconsolidated joint ventures— — — 838 838 — — — — 838 
Income tax expense— — — — — — — — 728 728 
Sabra’s share of unconsolidated joint ventures’ Net Operating Income— — — 2,026 2,026 — — — — 2,026 
Net Operating Income$65,949 $11,356 $13,084 $2,026 $26,466 $9,674 $4,723 $8,733 $— $115,545 
Non-cash revenue and expense adjustments(1,368)(534)— — (534)(294)(143)(392)— (2,731)
Cash Net Operating Income$64,581 $10,822 $13,084 $2,026 $25,932 $9,380 $4,580 $8,341 $— $112,814 
Annualizing adjustments (2)
190,488 32,024 43,500 6,624 82,148 27,456 13,760 24,717 — 338,569 
Annualized Cash Net Operating Income$255,069 $42,846 $56,584 $8,650 $108,080 $36,836 $18,340 $33,058 $— $451,383 
Reallocation adjustments (3)
804 4,875 — — 4,875 24,426 — (30,105)— — 
Annualized Cash Net Operating Income, as adjusted$255,873 $47,721 $56,584 $8,650 $112,955 $61,262 $18,340 $2,953 $— $451,383 


(1)    Net Operating Income and Cash Net Operating Income include $0.1 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) 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.
(3)    Adjustments to reflect Annualized Cash Net Operating Income from mortgage and construction loans receivable and preferred equity investments in the related asset class of the underlying real estate.
logo.jpg See reporting definitions.                        6



SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Annualized Cash NOI by Payor Source
(in thousands)
Three Months Ended March 31, 2023
Private Payors (1)
Non-Private PayorsOtherCorporateTotal
Net income (loss)$4,893 $17,234 $8,733 $(40,347)$(9,487)
Adjustments:
Depreciation and amortization22,759 30,044 — 24 52,827 
Interest244 195 — 28,101 28,540 
General and administrative— — — 10,502 10,502 
Provision for loan losses and other reserves— — — (208)(208)
Impairment of real estate472 6,592 — — 7,064 
Loss on extinguishment of debt— — — 1,541 1,541 
Other income— — — (341)(341)
Net loss on sales of real estate13,916 7,599 — — 21,515 
Loss from unconsolidated joint ventures838 — — — 838 
Income tax expense— — — 728 728 
Sabra’s share of unconsolidated joint ventures’ Net Operating Income2,026 — — — 2,026 
Net Operating Income$45,148 $61,664 $8,733 $— $115,545 
Non-cash revenue and expense adjustments(1,095)(1,244)(392)— (2,731)
Cash Net Operating Income$44,053 $60,420 $8,341 $— $112,814 
Annualizing adjustments (2)
136,027 177,825 24,717 — 338,569 
Annualized Cash Net Operating Income$180,080 $238,245 $33,058 $— $451,383 








(1)    Net Operating Income and Cash Net Operating Income include $0.1 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) 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.
logo.jpg See reporting definitions.                        7



SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Annualized Cash NOI by Relationship
(in thousands)
Three Months Ended March 31, 2023
Signature HealthcareThe Ensign GroupAvamere Family of CompaniesSignature BehavioralHoliday AL Holdings LPRecovery Centers of AmericaLeo Brown GroupThe McGuire GroupCommuniCareHealthmark Group
All Other Relationships (1)
CorporateTotal
Net income (loss)$6,757 $6,206 $4,733 $5,831 $(9,207)$5,911 $2,660 $3,558 $2,890 $3,199 $(1,678)$(40,347)$(9,487)
Adjustments:
Depreciation and amortization3,615 4,022 3,154 2,242 5,034 303 3,052 1,782 1,057 829 27,713 24 52,827 
Interest— — — — — — 123 — — — 316 28,101 28,540 
General and administrative— — — — — — — — — — — 10,502 10,502 
Recovery of loan losses and other reserves— — — — — — — — — — — (208)(208)
Impairment of real estate— — — — — — — — — — 7,064 — 7,064 
Loss on extinguishment of debt— — — — — — — — — — — 1,541 1,541 
Other income— — — — — — — — — — — (341)(341)
Net loss on sales of real estate— — — — 10,484 — — — — — 11,031 — 21,515 
Loss from unconsolidated joint ventures— — — — — — — — — — 838 — 838 
Income tax expense— — — — — — — — — — — 728 728 
Sabra’s share of unconsolidated joint ventures’ Net Operating Income— — — — — — — — — — 2,026 — 2,026 
Net Operating Income$10,372 $10,228 $7,887 $8,073 $6,311 $6,214 $5,835 $5,340 $3,947 $4,028 $47,310 $— $115,545 
Non-cash revenue and expense adjustments4 — 46 (244)— (55)(361)(1,071)170 1 (1,221)— (2,731)
Cash Net Operating Income$10,376 $10,228 $7,933 $7,829 $6,311 $6,159 $5,474 $4,269 $4,117 $4,029 $46,089 $— $112,814 
Annualizing adjustments (2)
30,199 27,426 26,382 23,486 18,913 18,479 17,650 12,988 12,376 11,521 139,149 — 338,569 
Annualized Cash Net Operating Income$40,575 $37,654 $34,315 $31,315 $25,224 $24,638 $23,124 $17,257 $16,493 $15,550 $185,238 $— $451,383 





(1)    Net Operating Income and Cash Net Operating Income include $0.1 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) 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.
logo.jpg See reporting definitions.                        8


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.
logo.jpg See reporting definitions.                        9


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.
logo.jpg See reporting definitions.                        10