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CareTrust REIT, Inc. (CTRE)·Q4 2024 Earnings Summary

Executive Summary

  • Record Q4 investment activity ($696.5M at 9.9% stabilized yield) and strong operating results: total revenues $86.9M, net income $52.1M ($0.29 diluted EPS), normalized FFO $72.9M ($0.40/share), normalized FAD $74.3M ($0.41/share) .
  • Balance sheet and liquidity remain a differentiator: $1.2B revolver undrawn, cash ~$205M, Net Debt/Annualized Normalized Run-Rate EBITDA 0.5x; unsecured notes upgraded to investment grade (agency) .
  • 2025 guidance initiated: net income $1.35–$1.39/share, normalized FFO $1.68–$1.72/share, normalized FAD $1.72–$1.76/share; plan assumes 2.5% CPI escalators and no additional investments/financing .
  • External growth flywheel intact: pipeline ~$325M (post-Q4), subsequent ~$26.8M investments at 10.6% yield; management sees robust deal cadence into 2025 .
  • Estimates context: S&P Global consensus EPS/revenue data was unavailable at time of request due to system limit; comparisons vs estimates are not included (S&P Global consensus unavailable).

What Went Well and What Went Wrong

What Went Well

  • Record year and quarter: “We finished a record year with a record quarter… Our balance sheet, access to capital, team, partnerships, and opportunities to grow and diversify the portfolio are all in a stronger position than they were twelve months ago” .
  • Match-funded growth with equity and low leverage: ~$1.5B 2024 investments effectively match-funded with ~$1.5B equity; “Leverage continues at historic lows with a net debt-normalized EBITDA ratio of 0.5x” .
  • Tenant strength and portfolio coverage: Top-10 tenants covering at ~3.02x EBITDARM and ~2.37x EBITDAR; overall portfolio ~2.82x EBITDARM and ~2.21x EBITDAR; “early performance [of acquisitions] is in line with expectations” .

What Went Wrong

  • Non-cash/one-off headwinds elevated: Q4 impairment ($5.353M), provision for loan losses ($4.900M), transaction costs ($1.326M) weighed on GAAP results .
  • PACS uncertainty a watch item: Management in a “holding pattern” pending PACS earnings; no bad debt assumed in guidance .
  • Regulatory overhang: Minimum staffing rule creates sector uncertainty; management expects reversal but acknowledges it is “too early to be definitive” .

Financial Results

Quarterly performance vs prior quarters

MetricQ2 2024Q3 2024Q4 2024
Total Revenues ($USD Thousands)68,891 77,381 86,944
Rental Income ($USD Thousands)55,407 57,153 62,199
Net Income Attributable ($USD Thousands)10,758 33,441 52,135
Diluted EPS ($)0.07 0.21 0.29
Normalized FFO ($USD Millions)52.539 60.896 72.936
Normalized FFO per Share ($)0.36 0.38 0.40
Normalized FAD ($USD Millions)53.995 61.856 74.286
Normalized FAD per Share ($)0.37 0.39 0.41
Dividend per Share ($)0.29 0.29 0.29
  • QoQ: Revenues rose to $86.9M from $77.4M and $68.9M as investment activity scaled; diluted EPS increased to $0.29 from $0.21 and $0.07; normalized FFO per share up to $0.40 vs $0.38 and $0.36 .

Year-over-year comparison

MetricQ4 2023Q4 2024
Total Revenues ($USD Thousands)59,734 86,944
Rental Income ($USD Thousands)53,473 62,199
Net Income Attributable ($USD Thousands)26,296 52,135
Diluted EPS ($)0.22 0.29
Normalized FFO ($USD Millions)43.376 72.936
Normalized FFO per Share ($)0.36 0.40
Normalized FAD ($USD Millions)45.384 74.286
Normalized FAD per Share ($)0.37 0.41

KPIs and capital metrics

KPIQ2 2024Q3 2024Q4 2024
Rent & Interest Collected (%)98.3% 98.7% 98.8%
Net Debt / Annualized Normalized Run-Rate EBITDA (x)0.4x 0.08x 0.5x
Net Debt / Enterprise Value (%)2.6% 0.4% 3.5%
Cash on Hand ($USD Millions)~100 ~234 ~205
Revolver Availability ($USD Billions)$0.6 undrawn $0.6 undrawn $1.2 undrawn
Equity Issuance (Shares, Proceeds)12.1M; $306.5M 17.2M; $500.1M 15.9M; $507.8M
Quarterly Investments ($USD Millions, Yield)$267.7; 9.9% $440.8; 9.1% $696.5; 9.9%

Segment breakdown (as of Dec 31, 2024)

Asset TypeInvestment ($USD Thousands)Rent/Interest ($USD Thousands)Current Yield (%)
Skilled Nursing2,063,662 212,046 10.3%
Multi-Service Campus478,388 43,691 9.1%
Seniors Housing156,588 16,575 10.6%
Total Net-Leased Assets2,698,638 272,312 10.1%
Financing Receivable97,053 11,560 11.9%
Other Real Estate Related Investments791,469 74,913 9.5%
Total Investments3,587,160 358,785 10.0%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Income per Diluted Share ($)FY 2025—1.35–1.39 Initiated
Normalized FFO per Diluted Share ($)FY 2025—1.68–1.72 Initiated
Normalized FAD per Diluted Share ($)FY 2025—1.72–1.76 Initiated
Cash Rental Revenues ($USD Millions)FY 2025—~279 Outlook Provided
Interest Income from Financing Receivable ($USD Millions)FY 2025—11.5 (cash $9; noncash $2.5) Outlook Provided
Total Interest Income ($USD Millions)FY 2025—~84 (loans $76; cash $8) Outlook Provided
Interest Expense ($USD Millions)FY 2025—~21.3 incl. ~$4 amortization Outlook Provided
G&A Expense ($USD Millions)FY 2025—~30–37 incl. ~$11.7 deferred stock comp Outlook Provided
CPI Rent Escalators (%)FY 2025—2.5% assumption Maintained
Dividend per Share ($)Q4 20240.29 0.29 Maintained
Dividend per Share ($)Q1 2025 (post-Q4)0.29 0.335 (raised) Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Macro/funding mixHeavy use of ATM; $306.5M raised Q2 ; term loan prepaid; $500.1M ATM in Q3 Cost of revolver decreased; equity cost up; may use revolver then term out; leverage target 4–5x long term Balanced funding flexibility improving
Pipeline & yieldsPipeline ~$270M; YTD investments $764.5M at 9.5% Pipeline ~$325M; subsequent $26.8M at 10.6% yield; 2024 investments $1.5B at 9.7% Robust, replenishing
Regulatory/minimum staffing & MedicaidNot highlightedExpect staffing rule reversal; bipartisan support for Medicaid; watch Texas rates Cautiously constructive
Tenant coverage strengthTop-10 EBITDAR/EBITDARM: 2.30x/2.93x (Q2); 2.36x/3.00x (Q3) Top-10 ~2.37x/3.02x; overall ~2.21x/2.82x Stable/slightly improving
Seniors Housing (SHOP)Not indicatedEvaluating SHOP entry; seeking right entry point Optionality under review
Cap rates/yieldsNot disclosedSNF cap rates ~12.5–13.5%; yields ~9–10%; seniors housing slight compression Attractive underwriting environment
PACS exposureNot indicatedHolding pattern pending earnings; no bad debt in guidance Monitored risk, no guidance impact

Management Commentary

  • CEO: “We maximize the opportunity by recalibrating the team… resulting in $1.5 billion of investments, essentially match funded with $1.5 billion of equity issuance… The full effect of last year’s activities will result in meaningful FFO per share growth this year without any new investments” .
  • CEO: “If you liked our story last year, I think you’re going to love Chapter 2025” .
  • CFO: “Normalized FFO increased 68.1% over the prior year… to $72.9 million and normalized FAD increased 63.7% to $74.3 million… This guidance represents a range of FFO per share growth of 12% to 14.6%… without any additional investments” .
  • CIO: “We finished off the year with… approximately $700 million of new investments at an estimated stabilized yield of 9.9%… pipeline today sits at approximately $325 million” .

Q&A Highlights

  • Funding calculus: Management may utilize the revolver given lower cost vs equity, then term out later; leverage target remains 4–5x, with decisions based on visible pipeline .
  • Medicaid outlook: Expect stability; potential Texas increase (cautioned by past disappointments); broader bipartisan support reduces risk of cuts .
  • PACS: No bad debt assumed in 2025 guidance; awaiting PACS earnings; current stance is a holding pattern .
  • Cap rates: SNF cap rates ~12.5–13.5% with lease yields ~9–10%; seniors housing cap rates see minor compression .
  • Seniors Housing (SHOP): Multiple entry paths under consideration (acquisition or organic build); long-term demographics are compelling .

Estimates Context

  • S&P Global consensus EPS and revenue estimates for Q4 2024 and prior quarters were unavailable at the time of request due to a system limit on retrieval; therefore, explicit beats/misses vs Wall Street estimates are not provided (S&P Global consensus unavailable).
  • Implications for models: Analysts should incorporate 2025 guidance assumptions (187.5M diluted shares; cash rental revenues ~$279M; interest income components; interest expense ~$21.3M; G&A $30–$37M; CPI escalators 2.5%) when updating forecasts . The equity-funded 2024 investment base supports double-digit FFO/FAD per share growth without incremental deals per guidance .

Key Takeaways for Investors

  • Balance sheet and funding optionality are core advantages: $1.2B revolver undrawn, cash ~$205M, net leverage 0.5x, facilitating accretive deployment and potential revolver usage if equity cost remains elevated .
  • External growth runway remains robust: $325M pipeline with strong yields, diversified across operators and states; subsequent $26.8M at 10.6% yield demonstrates post-Q4 momentum .
  • Portfolio quality underpins resilience: High coverage metrics, broad rent diversification (top states and tenants), and stable collection rates (~99%) suggest durable cash flows .
  • 2025 guide supports double-digit per-share growth without additional investments; monitor execution, funding mix, and potential SHOP entry as catalysts .
  • Watch items: PACS outcome (no bad debt assumed), regulatory developments (minimum staffing), and potential Medicaid rate actions (e.g., Texas) .
  • Subsequent dividend increase to $0.335 (post-Q4) adds income appeal and signals confidence in FAD trajectory .
  • Tactical: In near term, news flow on large portfolio deals, funding choices (ATM vs revolver), and any regulatory clarity could drive stock moves; medium term, sustained deployment at ~9–10% yields with low leverage underpins the thesis .

Additional relevant press releases (Q4 period/context)

  • Doubled unsecured revolver to $1.2B (Dec 19, 2024) .
  • Acquired Midwest SNF portfolio for ~$437M (Dec 9, 2024) .
  • Priced upsized public offering at $32/share (Oct 31, 2024) .
  • Declared Q4 dividend of $0.29/share (Dec 16, 2024) .