Sabra(US:SBRA)2025-08-04 20:07PART I. FINANCIAL INFORMATION Item 1. Financial Statements The financial statements for the period ended June 30, 2025, show an increase in total assets to $5.33 billion, with net income rising significantly to $105.8 million Consolidated Balance Sheets As of June 30, 2025, total assets increased slightly to $5.33 billion from $5.30 billion at year-end 2024, primarily driven by a rise in cash and cash equivalents Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $5,327,997 | $5,303,679 | | Real estate investments, net | $4,479,291 | $4,513,734 | | Cash and cash equivalents | $95,175 | $60,468 | | Total Liabilities | $2,616,512 | $2,562,391 | | Revolving credit facility | $163,023 | $106,554 | | Senior unsecured notes, net | $1,736,398 | $1,736,025 | | Total Equity | $2,711,485 | $2,741,288 | Consolidated Statements of Income For the six months ended June 30, 2025, total revenues increased to $372.7 million, and net income more than doubled to $105.8 million, significantly boosted by gains on real estate sales and other income Six Months Ended June 30, (in thousands, except per share data) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total revenues | $372,693 | $342,888 | | Total expenses | $291,708 | $293,868 | | Net gain on sales of real estate | $9,974 | $1,776 | | Net income | $105,846 | $50,229 | | Diluted EPS | $0.44 | $0.22 | Three Months Ended June 30, (in thousands, except per share data) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total revenues | $189,150 | $176,141 | | Net income | $65,542 | $23,975 | | Diluted EPS | $0.27 | $0.10 | Consolidated Statements of Comprehensive Income For the six months ended June 30, 2025, comprehensive income was $82.9 million, lower than net income due to a total other comprehensive loss of $23.0 million Comprehensive Income Summary (in thousands) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net income | $105,846 | $50,229 | | Total other comprehensive (loss) income | $(22,971) | $7,400 | | Comprehensive income | $82,875 | $57,629 | Consolidated Statements of Equity Total equity decreased from $2.74 billion to $2.71 billion at June 30, 2025, primarily due to common dividends and other comprehensive loss, partially offset by net income and stock issuance - Key movements in equity for the six months ended June 30, 2025 included $105.8 million of net income, offset by $145.1 million in common dividends ($0.60 per share) and a $23.0 million other comprehensive loss25 - The company issued 2.2 million shares of common stock, net, resulting in proceeds of $24.7 million during the first six months of 202525 Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash from operating activities increased to $161.2 million, while investing and financing activities resulted in net cash outflows Six Months Ended June 30, (in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $161,222 | $132,923 | | Net cash used in investing activities | $(61,576) | $(70,531) | | Net cash used in financing activities | $(64,517) | $(66,642) | | Net increase (decrease) in cash | $35,129 | $(4,250) | Notes to Consolidated Financial Statements The notes detail accounting policies, real estate acquisitions of $61.1 million, dispositions yielding $10.0 million in gains, and the subsequent redemption of $500 million in senior notes - During the first six months of 2025, the company acquired one Senior Housing - Managed community and 24 units for a total consideration of $61.1 million41 - The company disposed of six facilities for net consideration of $37.1 million, resulting in a net gain on sale of $10.0 million53 - Subsequent to the quarter end, on July 31, 2025, the company redeemed all $500.0 million of its 5.125% senior unsecured notes due 202666 - The company utilized its at-the-market (ATM) program, issuing 1.8 million shares to settle forward sale agreements for net proceeds of $29.9 million106107 - As of June 30, 2025, 15.1 million shares remained outstanding under forward sale agreements107 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses revenue growth driven by increased resident fees, significant net income growth from asset sales and other income, a strong liquidity position, and recent debt refinancing activities Overview Sabra operates as a REIT focused on healthcare real estate, growing its portfolio through acquisitions and selective asset sales, and recently refinanced debt by redeeming 2026 notes - The company's primary business is acquiring, financing, and owning healthcare real estate leased to third-party tenants or operated by third-party managers117118 - In the first six months of 2025, Sabra acquired one Senior Housing - Managed community and 24 units for $61.1 million126 - The company sold six facilities for $37.1 million, generating a $10.0 million net gain as part of its capital recycling initiative127 - On July 31, 2025, the company redeemed all $500.0 million of its 5.125% senior unsecured notes due 2026, financed by a new term loan128 Results of Operations For the six months ended June 30, 2025, total revenues increased by 8.7% to $372.7 million, and net income surged to $105.8 million, boosted by property sales gains and other income Comparison of Results (Six Months Ended June 30, in thousands) | Line Item | 2025 | 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Rental and related revenues | $195,860 | $190,872 | $4,988 | 3% | | Resident fees and services | $156,432 | $133,970 | $22,462 | 17% | | Interest expense | $54,648 | $57,722 | $(3,074) | (5)% | | Impairment of real estate | $4,103 | $18,472 | $(14,369) | (78)% | | Other income | $14,747 | $838 | $13,909 | 1,660% | - The $22.5 million increase in Resident fees and services was driven by $12.5 million from acquisitions and the remainder from increased occupancy and rates152 - Other income for the six months of 2025 included a $17.2 million gain from the reclassification of previously terminated interest rate swaps162 Funds from Operations and Adjusted Funds from Operations For the six months ended June 30, 2025, FFO increased to $191.3 million ($0.79 per share), and AFFO was $177.4 million ($0.73 per share), reflecting improved operating performance FFO and AFFO Reconciliation Summary (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net income | $105,846 | $50,229 | | FFO | $191,278 | $155,957 | | AFFO | $177,354 | $165,003 | FFO and AFFO Per Diluted Share (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | FFO per diluted common share | $0.79 | $0.67 | | AFFO per diluted common share | $0.73 | $0.70 | Liquidity and Capital Resources As of June 30, 2025, Sabra had approximately $1.2 billion in liquidity, actively utilizing its ATM equity program, and subsequently redeemed $500.0 million in senior notes - Total liquidity as of June 30, 2025, was approximately $1.2 billion169 - The company utilized its ATM program, issuing 1.8 million shares for net proceeds of $29.9 million in the first six months of 2025173174 - As of June 30, 2025, $109.3 million remained available under the program174 - On July 31, 2025, the company redeemed all $500.0 million of its 2026 Senior Notes, financed with proceeds from a new $500.0 million term loan maturing in 2030182187 - The company has a commitment for future capital expenditures of approximately $16 million as of June 30, 2025189 Concentration of Credit Risk Management believes its portfolio is reasonably diversified by healthcare property type and geography, with no single tenant accounting for 10% or more of total revenues - The company's portfolio of 359 properties is diversified across the U.S. and Canada198 - No single tenant relationship represented 10% or more of total revenues for the first six months of 2025198 Skilled Nursing Facility Reimbursement Rates For the six months ended June 30, 2025, 37.8% of revenues were from skilled nursing facilities, with CMS providing an estimated net increase of 3.2% in Medicare rates for fiscal year 2026 - CMS issued a final rule for fiscal year 2026 providing an estimated net increase of 3.2% for skilled nursing facility Medicare rates, effective October 1, 2025202 - A 10-year moratorium has been placed on CMS enforcement of the Minimum Staffing Standards, but new Assessment Requirements remain in effect, which could still present staffing challenges for tenants200 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes to the quantitative and qualitative disclosures about market risk from its 2024 Annual Report on Form 10-K - No material changes to market risk disclosures were reported for the period204 Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025205 - No material changes to internal control over financial reporting occurred during the quarter206 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reports that neither it nor any of its subsidiaries are party to any material legal proceedings outside of the ordinary course of business - The company is not involved in any material legal proceedings209 Item 1A. Risk Factors There have been no material changes in the company's assessment of its risk factors from those disclosed in its 2024 Annual Report on Form 10-K - No material changes to risk factors were reported for the period210 Item 5. Other Information The company reported no other information for this item - None211 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, a new credit agreement, certifications, and XBRL data files - Exhibits filed include the Credit Agreement dated July 30, 2025, Sarbanes-Oxley Act certifications, and XBRL interactive data files212213