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01/10 05:05
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reflects a positive sentiment, with strong financial metrics such as increased FFO and AFFO, a steady dividend, and a busy deal pipeline. Though management provided moderate guidance, they expressed optimism about occupancy trends and market demand. The Q&A highlighted positive occupancy trends, a robust acquisition pipeline, and no major risks, reinforcing a positive outlook. Given the market cap, a 2% to 8% stock price increase is expected.
Medicaid rate increases Average increase of 3.5%, with top 5 skilled nursing tenants averaging just above 5%. This reflects a good year for Medicaid rate increases.
Medicare market rate Finalized upward from 2.8% to 3.2%, which is unusual but positive.
Triple net rent coverage Increased significantly across all asset classes, reaching new highs in skilled and senior housing triple-net.
Occupancy in skilled portfolio Continues to increase, with contract labor and employment levels now at pre-pandemic levels.
Cash NOI and cash NOI margin Up 5.3% and 70 basis points, respectively, on a sequential basis for the total managed portfolio.
Same-store managed senior housing portfolio revenue Grew 5.6% year-over-year.
Same-store portfolio occupancy Increased to 86% from 84.6% in Q2 2024. Domestic portfolio occupancy rose to 83.5%, gaining 190 basis points year-over-year.
RevPOR (Revenue per Occupied Room) Increased 3.9% year-over-year in the U.S. portfolio and 6.8% in the Canadian portfolio, where occupancy has been above 90% for over 5 quarters.
Cash NOI for same-store portfolio Grew 17.1% year-over-year. U.S. communities saw a 17.6% increase, while Canadian communities experienced a 15.9% increase.
Normalized FFO per share $0.37 for Q2 2025, a 6% improvement over the same period in 2024.
Normalized AFFO per share $0.38 for Q2 2025, a 6% improvement over the same period in 2024.
Cash rental income from triple-net portfolio Increased by $2.3 million from Q1 2025, driven by a $1.4 million increase in percentage rents and contractual annual rent increases.
Cash NOI from managed senior housing portfolio Increased to $25.3 million in Q2 2025 from $24.1 million in Q1 2025.
Net debt to adjusted EBITDA ratio 5x as of June 30, 2025, a decrease of 0.19x from March 31, 2025, and 0.45x from June 30, 2024.
Holiday Transition: Transitioned from Holiday to new operators Discovery, In Spirits, and Sunshine to improve portfolio performance.
Senior Housing Investments: Closed $122 million in senior housing investments and awarded $220 million more, expected to close by year-end.
Medicaid Rate Increases: Average Medicaid rate increases of 3.5%, with top 5 skilled nursing tenants averaging above 5%.
Medicare Market Update: Medicare rate finalized upward from 2.8% to 3.2%.
Triple Net Rent Coverage: Significant increase in all asset classes, reaching new highs in skilled and senior housing triple-net.
Occupancy and Skill Mix: Improved occupancy and skill mix in the skilled portfolio.
Labor Costs: Contract labor and employment levels returned to pre-pandemic levels.
Investment Pipeline: Targeting $500 million in investments for 2025, with $350 million in deals closed or in process.
SHOP Portfolio Expansion: Aiming to grow SHOP portfolio from 20% to 30% by 2026, requiring $1 billion in investments.
Holiday Transition: The company has not seen the same uplift in performance from the Holiday portfolio post-pandemic compared to the rest of its SHOP portfolio, leading to a decision to transition away from Holiday.
Medicaid and Medicare Reimbursement: While Medicaid rate increases are averaging 3.5% and Medicare rates have been finalized upward, there is inherent uncertainty in future reimbursement rates, which could impact financial performance.
High Cost of Capital and Materials: The high cost of capital, building materials, and labor is constraining the development of new inventory, potentially limiting growth opportunities.
Tenant Lease Collectibility: The company updated its estimate of collectibility for certain leases, indicating potential risks in tenant payment reliability.
Debt and Interest Rate Exposure: The company has refinanced $500 million in debt with a floating interest rate term loan, which, despite being hedged, introduces some exposure to interest rate fluctuations.
Medicaid rate increases: Expected to average 3.5%, with top 5 skilled nursing tenants averaging just above 5%.
Medicare market adjustment: Finalized upward from 2.8% to 3.2%.
Investment pipeline: Targeting $500 million in investments for 2025, with $200 million in awarded deals either closed or in the process of closing, and $300 million actively being worked on. Goal to increase SHOP (Senior Housing Operating Portfolio) from 20% to 30% by 2026, requiring $1 billion in investments.
Senior housing investments: Closed $122 million in senior housing investments so far in 2025, with $220 million more expected to close by year-end. Deal flow remains strong.
Same-store managed senior housing portfolio: Cash NOI growth expected to be in the low to mid-teens for 2025.
Earnings guidance for 2025: Net income expected to be $0.77 to $0.79 per share. Normalized FFO expected to be $1.45 to $1.47 per share. Normalized AFFO expected to be $1.49 to $1.51 per share, representing a 5% and 4% increase, respectively, over 2024.
Debt management: Entered into a new 5-year $500 million term loan to refinance existing debt, reducing the effective interest rate to 4.64% and extending the weighted average maturity to nearly 5 years.
Quarterly Cash Dividend: Sabra's Board of Directors declared a quarterly cash dividend of $0.30 per share of common stock. The dividend will be paid on August 29, 2025, to common stockholders of record as of the close of business on August 15, 2025. The dividend represents a payout of 79% of the second quarter normalized AFFO per share.
The earnings call highlights strong financial metrics, strategic investments, and optimistic guidance, particularly in the senior housing sector. Despite the maintenance of guidance, the focus on SHOP investments and refinancing of debt are positive indicators. The Q&A reveals management's confidence in future growth, with strategic steps to stabilize and improve occupancy. The market cap suggests moderate volatility, leading to a positive stock price prediction in the range of 2% to 8%.
The earnings call reflects a positive sentiment, with strong financial metrics such as increased FFO and AFFO, a steady dividend, and a busy deal pipeline. Though management provided moderate guidance, they expressed optimism about occupancy trends and market demand. The Q&A highlighted positive occupancy trends, a robust acquisition pipeline, and no major risks, reinforcing a positive outlook. Given the market cap, a 2% to 8% stock price increase is expected.
The earnings call reveals strong financial performance with a 6.3% revenue increase, improved occupancy rates, and solid cash NOI growth. The declaration of a $0.30 dividend and a decrease in net debt to adjusted EBITDA ratio indicate financial stability. Despite some concerns in the Q&A, such as unclear guidance on senior housing acquisitions and Medicaid impacts, the overall sentiment is positive. With a market cap of around $3.5 billion, the positive financial metrics and optimistic outlook are likely to result in a stock price increase of 2% to 8% over the next two weeks.
The earnings call reveals strong financial performance, with increased revenue, FFO, and AFFO per share. The company maintains a stable interest expense and a reduced net debt to EBITDA ratio, indicating financial health. Positive guidance on occupancy and pricing, along with a robust deal pipeline, supports growth. The dividend payout is stable, and while forward equity issuance may dilute shares, it is outweighed by the strong financials and optimistic market strategy. The Q&A section reveals confidence in deal closures and occupancy growth, reinforcing a positive outlook.
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