Executive Summary

Q3 2025 delivered solid top-line and SHOP performance: total revenues were $190.0M, GAAP diluted EPS was $0.09, Normalized FFO was $0.36, and Normalized AFFO was $0.38, with SHOP same-store Cash NOI up 13.3% YoY (15.9% ex-Holiday) .
Versus consensus, revenue beat while EPS missed: Revenue $190.0M vs $188.6M estimate; GAAP EPS $0.09 vs $0.185 estimate; management emphasized normalized FFO/AFFO in line with expectations and guided midpoints maintained for those metrics (EPS/Revenue consensus from S&P Global)* .
Guidance updated: Normalized FFO/AFFO midpoints unchanged at ~$1.46 and ~$1.50, respectively; GAAP EPS range lowered and AFFO range trimmed; assumptions reaffirmed (G&A ~$50M, cash interest ~$104M, diluted shares ~244.7M/245.7M) .
Strategy shift accelerates: SHOP concentration target raised to 40% (from 30%), Net Debt/Adj. EBITDA improved to 4.96x, and Moody’s upgraded senior unsecured rating to Baa3; robust acquisition pipeline positions 2026 for stronger contribution .

What Went Well and What Went Wrong

What Went Well

SHOP momentum: Same-store Cash NOI rose 13.3% YoY (15.9% ex-Holiday) with sequential margin improvement to 28.3%; occupancy trends and REVPOR growth underscore operating leverage .
Portfolio de-risking and balance sheet strength: Net Debt/Adj. EBITDA fell to 4.96x; cost of permanent debt was 3.94%; Moody’s upgraded to Baa3 with Stable outlook .
Strategic clarity: CEO raised SHOP concentration target to 40% and expects 2025 investments to exceed prior $500M target; “EBITDARM rent coverage hit another post-pandemic high” across triple-net .

What Went Wrong

GAAP EPS miss vs consensus amid transition/normalizing items: Q3 GAAP diluted EPS was $0.09 (write-offs and lease termination costs occurred alongside transitions), below S&P EPS consensus*; revenue beat but street focuses on EPS for headline prints .
Triple-net cash rental income down sequentially: -$3.5M QoQ driven by transitions of four assets to SHOP, asset sales, and normalization of percentage rents .
Holiday portfolio still a drag within same-store SHOP: management noted lower occupancy in ex-Holiday assets (~80%) weighed on same-store metrics, though stabilization is underway .

Financial Results

Core metrics by quarter (oldest → newest)

Metric	Q1 2025	Q2 2025	Q3 2025
Total Revenues ($USD Millions)	$183.5	$189.2	$190.0
GAAP Diluted EPS ($)	$0.17	$0.27	$0.09
FFO per Diluted Share ($)	$0.36	$0.44	$0.33
Normalized FFO per Diluted Share ($)	$0.35	$0.37	$0.36
AFFO per Diluted Share ($)	$0.37	$0.37	$0.37
Normalized AFFO per Diluted Share ($)	$0.37	$0.38	$0.38

Q3 2025 vs prior periods and estimates

Metric	Q3 2024	Q2 2025	Q3 2025 Actual	S&P Global Consensus	Beat/Miss
Revenue ($USD Millions)	$178.0	$189.2	$190.0	$188.6*	Bold beat
GAAP Diluted EPS ($)	$0.13	$0.27	$0.09	$0.185*	Bold miss

Values with asterisks retrieved from S&P Global.

Segment breakdown (Q3 2025, Cash NOI)

Property Type	Cash NOI ($USD Millions)
Skilled Nursing/Transitional Care	$63.0
Senior Housing – Leased	$9.8
Senior Housing – Managed (Consolidated)	$26.0
Senior Housing – Managed (Unconsolidated JV)	$4.0
Behavioral Health	$11.2
Specialty Hospitals & Other	$4.8

KPIs (SHOP and portfolio credit metrics)

KPI	Q1 2025	Q2 2025	Q3 2025
SHOP Same-Store Occupancy (%)	85.7	85.9	86.0
SHOP Same-Store REVPOR ($)	$4,282	$4,327	$4,361
SHOP Same-Store Cash NOI Growth YoY (%)	16.9	17.1	13.3 (15.9 ex-Holiday)
SHOP Consolidated Cash NOI Margin (%)	27.1	27.3	28.3
Net Debt / Adjusted EBITDA (x)	5.19	5.00	4.96
Triple-Net EBITDARM Coverage (x) – SNF / SH Leased / BH	2.19 / 1.41 / 3.77	2.27 / 1.49 / 3.87	2.35 / 1.52 / 3.90

Guidance Changes

Metric (Per Diluted Share)	Period	Previous Guidance (Q2 issue)	Current Guidance (Q3 issue)	Change
GAAP Net Income	FY 2025	$0.77–$0.79	$0.655–$0.665	Lowered
FFO	FY 2025	$1.52–$1.54	$1.465–$1.475	Lowered (narrowed)
Normalized FFO	FY 2025	$1.45–$1.47	$1.455–$1.465	Maintained (midpoint unchanged)
AFFO	FY 2025	$1.47–$1.49	$1.455–$1.465	Lowered
Normalized AFFO	FY 2025	$1.49–$1.51	$1.495–$1.505	Maintained (midpoint unchanged)
G&A Expense Assumption	FY 2025	~$50M incl. $11M SBC	~$50M incl. $11M SBC	Maintained
Cash Interest Expense	FY 2025	~$102M	~$104M	Slightly raised
Diluted Wtd. Avg. Shares (Norm. FFO / Norm. AFFO)	FY 2025	~241.5M / ~242.5M	~244.7M / ~245.7M	Raised (ATM/forwards)
Dividend	Quarterly	$0.30 declared Q2	$0.30 declared Q3; 79% of Norm. AFFO	Maintained

Assumptions reaffirmed: low-single-digit triple-net Cash NOI growth; mid-teens full-year same-store SHOP Cash NOI growth; no additional tenants moved to cash/accrual basis; only completed transactions included .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
SHOP strategy & mix	Targeting 20–30% SHOP; robust pipeline; same-store growth high-teens	Target raised to 40%; SHOP now ~26% of NOI; >$550M closed+awarded deals; 90–95% of pipeline in SHOP	Upshift to SHOP concentration
Holiday portfolio transition	Transition completed April; minimal disruption; still in same-store pool	Bottomed in July; improving monthly; lower occupancy (~80%) vs same-store avg 86%	Stabilizing, additive ahead
Pricing power & occupancy	QoQ REVPOR/occupancy gains; low new supply	Canada >90% occupancy driving >5% rate growth QoQ; expect US to follow; mid-single-digit rent growth outlook	Improving leverage & rates
Triple-net performance	Post-pandemic coverage highs; reimbursement tailwinds (Medicare/Medicaid)	Coverage hits new highs; SNF occupancy/skilled mix rising	Strengthening coverage
Balance sheet & ratings	Leverage trending lower; Fitch BBB- affirmed	Net Debt/EBITDA 4.96x; Moody’s upgrade to Baa3; no floating-rate in permanent stack	Improving credit profile
Cap rates, PE competition	Reasonable pricing; PE cautious re-entry	SHOP yields 7–8% with low double-digit levered IRR; PE tiptoeing back, not disrupting pricing	Attractive underwriting
Behavioral health	Incremental pathway during pandemic	Share expected to shrink; capital focused on SH/SNF	Downshift

Management Commentary

CEO: “Managed senior housing is growing more quickly than anticipated as a percentage of total NOI, and is now roughly 26%. As a result, we are updating our managed senior housing target concentration from 30% to 40%… For Sabra’s triple net portfolio, EBITDARM rent coverage hit another post-pandemic high, with healthy coverage across our top ten tenants.” .
CFO: “Normalized FFO per share of $0.36 and normalized AFFO per share of $0.38… dividend… represents a payout of 79% of our third-quarter normalized AFFO per share. Net debt-to-adjusted EBITDA is 4.96x… cost of permanent debt was 3.94%… next material maturity 2028.” .
CIO: “Closed plus awarded deals in 2025 total more than $550 million… Cash NOI and margin were up 18.6% and 90 bps sequentially in the total managed portfolio… occupancy increased 60 bps to 86.8%, and RevPAR rose 4.3% sequentially.” .

Q&A Highlights

Guidance vs strength: Maintained midpoints for normalized FFO/AFFO despite strong SHOP metrics because most investments close late-year, impacting 2026 more than 2025 .
Pricing power: With occupancy >90% in Canada, rates rose >5% QoQ; mid-single-digit annual rent increases expected into 2026 as US occupancy rises and supply remains limited .
Holiday stabilization: Operators right-sized labor; expect additive contribution as stabilization translates into top-line improvement over time .
Pipeline mix and underwriting: 90–95% of pipeline is SHOP; go-in yields 7–8% with low double-digit levered IRRs; stabilize occupancy in low/mid-90s across markets .
Balance sheet and ratings: All three agencies at IG; upgrade’s pricing impact modest but validates strategy; leverage-neutral funding via forward equity .
Strategy on BH: Behavioral health expected to shrink as a share; focus capital on senior housing and skilled nursing .

Estimates Context

Q3 2025 revenue beat S&P Global consensus ($190.0M actual vs $188.6M estimate); GAAP EPS missed ($0.09 actual vs $0.185 estimate). Management emphasis on normalized FFO/AFFO suggests street models may hold those midpoints steady, with revenue upward bias and GAAP EPS reflecting transition/normalizing items .
Expect 2026 estimate revisions as late-2025 acquisitions contribute a full run-rate and SHOP margin expansion persists; triple-net coverage strength and reimbursement tailwinds support stability .

Values marked with asterisks retrieved from S&P Global.

Key Takeaways for Investors

Bold beat on revenue and bold miss on GAAP EPS; focus on normalized FFO/AFFO, which tracked guidance midpoints, and dividend remained well covered (79% of normalized AFFO) .
SHOP strategy is the growth engine: concentration target raised to 40%, pipeline heavily SHOP, same-store margin now 28.3% with operating leverage from rising occupancy and REVPOR .
Balance sheet tailwinds: Net Debt/EBITDA at 4.96x, cost of debt 3.94%, next material maturity 2028; Moody’s upgrade strengthens funding flexibility for accretive deals .
Near-term narrative: Transition/normalizing items and share issuance temper GAAP EPS optics; headline miss can be a trading overhang, but cash-flow metrics and coverage trends are supportive .
2026 setup: Late-year closings and awarded deals (> $550M) should drive a fuller run-rate next year; expect estimate revisions to reflect SHOP contribution and margin expansion .
Risk monitor: Holiday stabilization pace, cap-rate competition, and reimbursement execution; management reiterated no appetite for opco investments and disciplined underwriting yields/IRR .
Catalysts: Additional SHOP acquisitions, occupancy/rate updates, credit momentum, and continued NOI/margin expansion in SHOP; supplemental disclosures provide granular proof points each quarter .

Citations:

Q3 press release and 8-K exhibits (financials, guidance, segment metrics) .
Earnings call transcript (prepared remarks and Q&A detail) .
Prior quarters for trend analysis (Q1/Q2 results, reimbursement) .

S&P Global estimates: Revenue Consensus Mean ($188.6M)* and Primary EPS Consensus Mean ($0.185)* for Q3 2025; values retrieved from S&P Global.

Sabra Health Care REIT, Inc. (SBRA)·Q3 2025 Earnings Summary