Sabra(US:SBRA)2024-08-08 21:15Financial Data and Key Metrics Changes - The company reported a normalized FFO per share of $0.35 and normalized AFFO per share of $0.36, both up $0.01 from the first quarter results [12] - Cash NOI growth was 17.7% year-over-year and 9.9% sequentially [10] - The updated full year 2024 guidance for net income is $0.52 to $0.55, FFO $1.33 to $1.36, and normalized FFO $1.36 to $1.39 [13][14] Business Line Data and Key Metrics Changes - The skilled nursing portfolio's EBITDAR rent coverage increased, with nine of the top ten operators showing improved rent coverage [5] - Managed senior housing portfolio had a 9.3% quarterly cash NOI growth and a 1.7% cash NOI margin increase [9] - The behavioral health segment's rent coverage was reported at 3.69, indicating strong performance despite fluctuations [7][35] Market Data and Key Metrics Changes - Medicaid rate increases are estimated to be roughly 7%, which is 200 basis points higher than last year's increases [6] - The skilled nursing mix increased by 110 basis points, with EBITDA margins now higher than pre-pandemic levels [6][7] - Canadian senior housing occupancy exceeded 91%, with cash NOI margin at nearly 32% [10] Company Strategy and Development Direction - The company plans to continue investing in skilled nursing and behavioral health segments, with an expectation of increased opportunities in the coming months [8] - The focus remains on creating a stronger base for growth in 2025, with an emphasis on operational recovery and improved rent coverage [8][11] - The company is selective in capital placement, aiming for investments that enhance the portfolio [20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, citing improved occupancy and operational leverage in senior housing [24][26] - The company anticipates continued stability in its triple-net portfolio, which is a key driver of its positive outlook for the remainder of the year [23] - Management noted that the recovery from the pandemic has restored predictability to the business, enhancing confidence in future performance [24][50] Other Important Information - The company declared a quarterly cash dividend of $0.30 per share, representing a payout of 83% of the second quarter normalized AFFO per share [16] - The net debt to adjusted EBITDA ratio was reported at 5.45 times, indicating compliance with all debt covenants [15] Q&A Session Summary Question: Can you provide more details on the occupancy ramp expectations for the managed segment? - Management noted consistent growth in occupancy across both assisted living and independent living, with Canadian occupancy around 90% [17][18] Question: What is the investment pipeline looking like? - The company is reviewing approximately $0.75 billion in deals, with a focus on selective investments that enhance the portfolio [20] Question: How does the company view the impact of SHOP on guidance? - The performance in the core portfolio and stability in the triple-net portfolio are the main drivers of optimism for the second half of the year [23] Question: What is the expected trend for Medicaid rate increases next year? - Management anticipates continued outsized Medicaid rates next year, although moderation is expected in subsequent years as inflation stabilizes [32] Question: How does the company plan to fund investment growth? - The company plans to utilize a combination of equity and debt, leveraging its ATM program and revolving credit facility for funding [34]