Ventas(US:VTR)2022-11-04 20:56PART I—FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (Unaudited) This section presents Ventas, Inc.'s unaudited consolidated financial statements, including balance sheets, income statements, cash flows, and detailed notes for the periods ended September 30, 2022 Consolidated Balance Sheets Total assets decreased to $24.30 billion, driven by reduced real estate investments, while liabilities slightly increased and total equity declined Consolidated Balance Sheet Summary (in thousands) | Account | As of Sep 30, 2022 | As of Dec 31, 2021 | | :--- | :--- | :--- | | Total Assets | $24,300,411 | $24,717,786 | | Net real estate investments | $22,355,016 | $22,870,429 | | Cash and cash equivalents | $145,146 | $149,725 | | Total Liabilities | $13,609,704 | $13,491,743 | | Senior notes payable and other debt | $12,210,984 | $12,027,544 | | Total Equity | $10,431,912 | $10,945,760 | Consolidated Statements of Income Q3 2022 total revenues increased to $1.04 billion, but net income attributable to common stockholders significantly declined to $1.3 million due to lower gains on real estate dispositions Q3 2022 vs Q3 2021 Income Statement Highlights (in thousands) | Metric | Q3 2022 | Q3 2021 | | :--- | :--- | :--- | | Total Revenues | $1,037,276 | $976,078 | | Net Income | $3,063 | $62,774 | | Net Income (loss) attributable to common stockholders | $1,256 | $60,680 | | Diluted EPS | $0.00 | $0.16 | Nine Months 2022 vs 2021 Income Statement Highlights (in thousands) | Metric | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | | Total Revenues | $3,077,768 | $2,805,563 | | Net Income | $2,453 | $95,664 | | Net Income (loss) attributable to common stockholders | $(2,428) | $89,862 | | Diluted EPS | $(0.01) | $0.24 | Consolidated Statements of Cash Flows Net cash from operations increased to $852.9 million, investing activities remained stable, and financing cash outflow significantly decreased due to lower debt repayments Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Cash Flow Category | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $852,910 | $760,315 | | Net cash used in investing activities | $(725,321) | $(716,343) | | Net cash used in financing activities | $(124,956) | $(299,612) | | Net (decrease) in cash | $2,633 | $(255,640) | Notes to Consolidated Financial Statements Detailed notes cover business segments, accounting policies, credit risk, acquisitions, debt structure, and segment performance, including operations across Triple-Net, SHOP, and Office segments - Ventas operates through three reportable business segments: triple-net leased properties, senior housing operating portfolio (SHOP), and office operations30 - As of September 30, 2022, the company's three largest tenants/operators by property count are Brookdale Senior Living (121 properties), Ardent Health Partners (30 properties), and Kindred Healthcare (29 properties); Atria and Sunrise are the largest managers for the SHOP portfolio3132 - During the nine months ended September 30, 2022, the company acquired 22 properties for an aggregate purchase price of $445.9 million104 - The company recognized impairments of $55.0 million for the nine months ended September 30, 2022, a significant reduction from the $173.0 million recognized in the same period of 2021108 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition, operations, and liquidity, covering COVID-19 impacts, investment activities, capital structure, and detailed performance analysis by SHOP, Office, and Triple-Net segments - During Q3 2022, Ventas received $20.2 million in grants from the Provider Relief Fund for its SHOP segment to mitigate losses from COVID-19180 - As of September 30, 2022, the company had approximately $2.5 billion in liquidity, including undrawn capacity on its revolving credit facility and cash on hand, net of commercial paper borrowings180 - In June 2022, the company replaced a $200.0 million unsecured term loan due 2023 with a new $500.0 million unsecured term loan that matures in 2027180 Results of Operations Q3 2022 total NOI increased by 3.0% to $465.2 million, primarily driven by a 61.5% surge in SHOP NOI, despite declines in Triple-Net and Office segments Q3 2022 vs Q3 2021 Net Operating Income (NOI) by Segment (in thousands) | Segment | Q3 2022 NOI | Q3 2021 NOI | % Change | | :--- | :--- | :--- | :--- | | SHOP | $168,611 | $104,380 | 61.5% | | Office operations | $135,316 | $137,622 | (1.7)% | | Triple-net leased properties | $146,359 | $178,111 | (17.8)% | | Total NOI | $465,211 | $451,811 | 3.0% | Nine Months 2022 vs 2021 Net Operating Income (NOI) by Segment (in thousands) | Segment | Nine Months 2022 NOI | Nine Months 2021 NOI | % Change | | :--- | :--- | :--- | :--- | | SHOP | $494,812 | $326,340 | 51.6% | | Office operations | $409,873 | $410,177 | (0.1)% | | Triple-net leased properties | $439,724 | $487,962 | (9.9)% | | Total NOI | $1,384,198 | $1,298,299 | 6.6% | - The increase in SHOP NOI was driven by acquisitions (primarily New Senior), positive occupancy trends, and higher HHS grants, partially offset by inflationary impacts on operating expenses194 - The decrease in Triple-Net NOI was primarily due to rental income from communities that were transitioned to the SHOP portfolio or sold prior to Q3 2022202 Liquidity and Capital Resources Ventas maintains liquidity through cash flows, debt/equity issuances, and its $2.75 billion revolving credit facility, with $2.7 billion undrawn as of September 30, 2022 - Principal sources of liquidity include cash from operations, debt/equity issuances, the unsecured revolving credit facility, commercial paper program, and asset sales247 - The company has a $2.75 billion unsecured revolving credit facility maturing in January 2025, with $2.7 billion undrawn as of September 30, 2022251252 - The company participates in a $1.0 billion "at-the-market" (ATM) equity offering program, with the full amount remaining available as of September 30, 2022257 Cash Flows Nine-month operating cash flow increased by $92.6 million to $852.9 million, investing cash flow remained stable, and financing cash outflow decreased by $174.7 million Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Cash Flow Category | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $852,910 | $760,315 | $92,595 | | Net cash used in investing activities | $(725,321) | $(716,343) | $(8,978) | | Net cash used in financing activities | $(124,956) | $(299,612) | $174,656 | Quantitative and Qualitative Disclosures About Market Risk Ventas faces market risk from interest rate fluctuations on its $1.4 billion variable-rate debt and foreign currency exposure from its UK and Canadian operations - The company is exposed to market risk from interest rates on its variable rate debt and foreign currency fluctuations from its UK and Canadian operations279280290 - As of September 30, 2022, total debt was $12.3 billion, with $10.9 billion (88.5%) at fixed rates and $1.4 billion (11.5%) at variable rates285 - A hypothetical 100 basis point increase in interest rates on the $1.4 billion of variable-rate debt would increase annual interest expense by approximately $14.1 million288 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2022, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2022291 - No material changes were made to the internal control over financial reporting during the third quarter of 2022292 PART II—OTHER INFORMATION Legal Proceedings No new material legal proceedings or significant developments in previously reported cases were identified - There have been no new material legal proceedings or material developments in existing proceedings since the 2021 Annual Report295 Risk Factors No significant new risk factors were identified during Q3 2022 compared to prior disclosures - No significant new risk factors were identified in Q3 2022296 Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 32 shares at $52.46 each during Q3 2022, primarily for tax withholding on vested employee restricted stock - During Q3 2022, the company repurchased 32 shares of common stock at an average price of $52.46 per share; these were shares withheld to cover taxes on vested restricted stock for employees298 Exhibits This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and financial data in XBRL format - Exhibits filed include CEO/CFO certifications (31.1, 31.2, 32.1, 32.2) and financial statements formatted in Inline XBRL (101)301