CareTrust REIT Closes Acquisition of Care REIT plc, Enters UK Market
With the completion of this transaction, CareTrust adds to its portfolio 132 care homes comprising approximately 7,500 beds and two healthcare facilities leased to the UK's National Health Service, located throughout England, Scotland, and Northern Ireland. All properties are subject to long-term, triple-net leases across 14 operators, with a weighted average remaining lease term of approximately 20.2 years and annual inflation-based rent escalators, most with a 2% floor and 4% cap.
'We are thrilled to close on the acquisition of Care REIT, marking our first M&A deal, our first international investment, and the single largest transaction in our history,' said Dave Sedgwick, President and Chief Executive Officer of CareTrust. 'Last year's exponential growth set the table for double digit growth in 2025. This strategic acquisition is transformative for our company, significantly diversifying our portfolio by operator, geography, payor source, and asset class. The acquisition strengthens our growth profile, while adding approximately $68.6 million of annualized rental revenue and a strong EBITDARM coverage ratio of 2.2x.'
Mr. Sedgwick continued, 'While we are excited about the Day 1 impact of this acquisition on our near-term outlook, we also see this transaction as an engine for growth, not just a one-off investment. With the UK's favorable demographics, strong need-based care demand, and fragmented provider landscape, we believe there is ample opportunity to scale. At the same time, we structured our UK entrance so as not to detract from investing in our core U.S. markets and operator relationships, which we remain deeply committed to expand simultaneously with the UK. The Care REIT acquisition brings with it an experienced UK-based team who is hungry to expand our footprint in that market with existing and new operators.'
'Our relationships with our new tenants are off to a strong and collaborative start, many of whom we got to know in the process of carefully evaluating our UK market entrance,' added James Callister, CareTrust's Chief Investment Officer. 'We're already finding alignment in our mutual desire to expand thoughtfully and sustainably while taking advantage of current market conditions. Many of these operators are eager to grow their own portfolios and have already engaged with us in exploring additional investment opportunities in the care home space. We believe that by leveraging our competitive advantages—deep underwriting and operating experience, pristine balance sheet, access to and cost of capital, and certainty of closing—we can help our UK operators further their missions to successfully deliver strong outcomes for their patients, residents, and communities, and for our stakeholders alike.'
Mr. Callister also reiterated that the Company's replenished US investment pipeline sits at approximately $500 million of near-term, actionable opportunities—not including larger portfolios the Company is reviewing—and that it is actively seeking additional growth opportunities in the US and abroad.
2025 Guidance and Liquidity
In conjunction with the closing of the Care REIT acquisition, Bill Wagner, CareTrust's Chief Financial Officer, updated management's 2025 guidance to include the impact of the transaction, projecting net income of approximately $1.42 to $1.45 per common share, normalized FFO of approximately $1.75 to $1.78 per common share, and normalized FAD of approximately $1.75 to $1.78 per common share. He noted that the 2025 guidance is based on diluted weighted-average common shares outstanding of 190.6 million and assumes the following:
All investments and dispositions made to date;
No new debt incurrences or new equity issuances; and
Estimated 2.5% rent escalators under the Company's inflation-based triple net leases.
'We are excited by the near- and long-term growth potential the Care REIT transaction unlocks, and we believe it positions us to deliver compounding value to stakeholders over time,' said Bill Wagner, Chief Financial Officer. 'After a period of integration, which we anticipate lasting through 2025, we expect to achieve annual run rate synergies of approximately $5 million. Incorporating the realization of these savings, we anticipate the fully-synergized acquisition to be approximately 9.4% accretive to normalized FFO per share and 5.7% accretive to normalized FAD per share, both relative to the guidance in place when the acquisition was announced on March 11, 2025.'
Based on the British Pound Sterling to U.S. Dollar exchange rate on May 9, 2025, the terms of the Care REIT acquisition represent a total purchase price of approximately $840.5 million, of which $595.4 million represents cash consideration to acquire Care REIT common shares, together with the assumption of $245.1 million net debt and exclusive of transaction fees. Mr. Wagner noted that the Company intends to pay off the assumed debt and recapitalize the portfolio through a combination of cash on hand, a draw from its revolving credit facility, and a new $500 million unsecured term loan expected to be finalized in the second quarter, subject to ordinary closing conditions. Prior to completion of this refinancing, net debt-to-normalized EBITDA is expected to be below 2.0x.
Piper Sandler Ltd and JP Morgan Securities LLC acted as financial advisors and Jones Day acted as legal advisor to CareTrust.
About CareTrust ™
CareTrust REIT, Inc. is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition, development and leasing of skilled nursing, seniors housing and other healthcare-related properties. With a portfolio of long-term net-leased properties spanning the United States and United Kingdom, and a growing portfolio of quality operators leasing them, CareTrust is pursuing both external and organic growth opportunities across the US and internationally. More information about CareTrust REIT is available at www.caretrustreit.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical statements of fact and statements regarding the Company's intent, belief or expectations, including, but not limited to, statements regarding the following: future financial and financing plans; strategies related to the Company's business and its portfolio, including acquisition opportunities and disposition plans; expectations regarding the integration of Care REIT plc; growth prospects; operating and financial performance; and the performance of the Company's tenants and operators and their respective facilities.
Words such as 'anticipate,' 'believe,' 'could,' 'expect,' 'estimate,' 'intend,' 'may,' 'plan,' 'seek,' 'should,' 'will,' 'would,' and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements, though not all forward-looking statements contain these identifying words. The Company's forward-looking statements are based on management's current expectations and beliefs, and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although the Company believes that the assumptions underlying these forward-looking statements are reasonable, they are not guarantees and the Company can give no assurance that its expectations will be attained. Factors which could have a material adverse effect on the Company's operations and future prospects or which could cause actual results to differ materially from expectations include, but are not limited to: (i) our ability to integrate Care REIT's operations into our business and achieve the benefits expected to result from the acquisition; (ii) the ability and willingness of our tenants and borrowers to meet and/or perform their obligations under the agreements we have entered into with them, including without limitation, their respective obligations to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities; (iii) the risk that we may have to incur additional impairment charges related to our assets held for sale if we are unable to sell such assets at the prices we expect; (iv) the impact of healthcare reform legislation, including minimum staffing level requirements, on the operating results and financial conditions of our tenants and borrowers; (v) the ability of our tenants and borrowers to comply with applicable laws, rules and regulations in the operation of the properties we lease to them or finance; (vi) the ability and willingness of our tenants to renew their leases with us upon their expiration, and the ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we replace an existing tenant, as well as any obligations, including indemnification obligations, we may incur in connection with the replacement of an existing tenant; (vii) the availability of and the ability to identify (a) tenants who meet our credit and operating standards, and (b) suitable acquisition opportunities and the ability to acquire and lease the respective properties to such tenants on favorable terms; (viii) the ability to generate sufficient cash flows to service our outstanding indebtedness; (ix) access to debt and equity capital markets; (x) fluctuating interest and foreign currency exchange rates; (xi) the impact of public health crises, including significant COVID-19 outbreaks as well as other pandemics or epidemics; (xii) the ability to retain our key management personnel; (xiii) the ability to maintain our status as a real estate investment trust ('REIT'); (xiv) changes in the U.S. tax law and other state, federal or local laws, whether or not specific to REITs; (xv) other risks inherent in the real estate business, including potential liability relating to environmental matters and illiquidity of real estate investments; and (xvi) any additional factors included in our Annual Report on Form 10-K for the year ended December 31, 2024, and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, including in the sections entitled 'Risk Factors' in Item 1A of such reports, as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the SEC.
The Company expressly disclaims any obligation to update or revise any information in this press release, including forward-looking statements, whether to reflect any change in the Company's expectations, any change in events, conditions or circumstances, or otherwise.
As used in this press release, unless the context requires otherwise, references to 'CTRE,' "CareTrust," 'CareTrust REIT' or the 'Company' refer to CareTrust REIT, Inc. and its consolidated subsidiaries. GAAP refers to generally accepted accounting principles in the United States of America.
Non-GAAP Financial Measures
Funds from Operations ('FFO'), as defined by the National Association of Real Estate Investment Trusts ('Nareit'), and Funds Available for Distribution ('FAD') are important non-GAAP supplemental measures of operating performance for a REIT. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation except on land, such accounting presentation implies that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a REIT that uses historical cost accounting for depreciation could be less informative. Thus, Nareit created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP.
FFO is defined by Nareit as net income computed in accordance with GAAP, excluding gains or losses from dispositions of real estate investments, real estate related depreciation and amortization and real estate impairment charges, adjustments for the share of consolidated joint ventures, and adjustments for unconsolidated partnerships and joint ventures. Noncontrolling interests' pro rata share information is prepared by applying noncontrolling interests' actual ownership percentage for the period and is intended to reflect noncontrolling interests' proportionate economic interest in the financial position and operating results of properties in our portfolio. The Company computes FFO attributable to CareTrust REIT, Inc. in accordance with Nareit's definition.
FAD attributable to CareTrust REIT, Inc. is defined as FFO attributable to CareTrust REIT, Inc. excluding noncash income and expenses, such as amortization of stock-based compensation, amortization of deferred financing fees, amortization of above and below market intangibles, amortization of lease incentives, the effects of straight-line rent, adjustments for the share of consolidated joint ventures and non-cash interest income. The Company considers FAD attributable to CareTrust REIT, Inc. to be a useful supplemental measure to evaluate the Company's operating results excluding these income and expense items to help investors, analysts and other interested parties compare the operating performance of the Company between periods or as compared to other companies on a more consistent basis.
In addition, the Company reports Normalized FFO attributable to CareTrust REIT, Inc. and Normalized FAD attributable to CareTrust REIT, Inc., which adjust FFO and FAD for certain revenue and expense items that the Company does not believe are indicative of its ongoing operating results, such as write-off of deferred financing costs, provision for loan losses, non-routine transaction costs, provision for doubtful accounts and lease restructuring, loss on extinguishment of debt, extraordinary incentive plan payment, unrealized loss on other real estate related investments, recovery of previously reversed rent, lease termination revenue and property operating expenses. By excluding these items, investors, analysts and our management can compare Normalized FFO and Normalized FAD between periods more consistently.
While FFO, Normalized FFO, FAD and Normalized FAD are relevant and widely-used measures of operating performance among REITs, they do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company's liquidity or operating performance. FFO, Normalized FFO, FAD and Normalized FAD do not purport to be indicative of cash available to fund future cash requirements.
Further, the Company's computation of FFO, Normalized FFO, FAD and Normalized FAD may not be comparable to FFO, Normalized FFO, FAD and Normalized FAD reported by other REITs that do not define FFO in accordance with the current Nareit definition or that interpret the current Nareit definition or define FAD differently than the Company does.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
7 minutes ago
- Yahoo
Coherent (NYSE:COHR) Beats Q2 Sales Expectations But Stock Drops 16.9%
Materials and photonics company Coherent (NYSE:COHR) reported revenue ahead of Wall Street's expectations in Q2 CY2025, with sales up 16.4% year on year to $1.53 billion. On the other hand, next quarter's revenue guidance of $1.53 billion was less impressive, coming in 0.6% below analysts' estimates. Its non-GAAP profit of $1 per share was 8.7% above analysts' consensus estimates. Is now the time to buy Coherent? Find out in our full research report. Coherent (COHR) Q2 CY2025 Highlights: Revenue: $1.53 billion vs analyst estimates of $1.51 billion (16.4% year-on-year growth, 1.4% beat) Adjusted EPS: $1 vs analyst estimates of $0.92 (8.7% beat) Adjusted Operating Income: $275 million vs analyst estimates of $275 million (18% margin, in line) Revenue Guidance for Q3 CY2025 is $1.53 billion at the midpoint, below analyst estimates of $1.54 billion Adjusted EPS guidance for Q3 CY2025 is $1.03 at the midpoint, roughly in line with what analysts were expecting Operating Margin: 0.4%, down from 4.8% in the same quarter last year Free Cash Flow was -$1 million, down from $62.41 million in the same quarter last year Market Capitalization: $18.12 billion Jim Anderson, CEO, said, 'We delivered a strong fiscal 2025 with revenue growth of 23% and non-GAAP EPS expansion of 191%. We believe we are well positioned to continue to drive strong revenue and profit growth over the long-term given our exposure to key growth drivers such as AI datacenters. We also continue to optimize and focus our portfolio with the recently announced agreement to sell our Aerospace and Defense business. As we enter a new fiscal year, we are excited about the growth opportunities ahead of us.' Company Overview Created through the 2022 rebranding of II-VI Incorporated, a company with roots dating back to 1971, Coherent (NYSE:COHR) develops and manufactures advanced materials, lasers, and optical components for applications ranging from telecommunications to industrial manufacturing. Revenue Growth Reviewing a company's long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. With $5.81 billion in revenue over the past 12 months, Coherent is one of the larger companies in the business services industry and benefits from a well-known brand that influences purchasing decisions. As you can see below, Coherent's sales grew at an incredible 19.5% compounded annual growth rate over the last five years. This is an encouraging starting point for our analysis because it shows Coherent's demand was higher than many business services companies. We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Coherent's annualized revenue growth of 6.1% over the last two years is below its five-year trend, but we still think the results were respectable. This quarter, Coherent reported year-on-year revenue growth of 16.4%, and its $1.53 billion of revenue exceeded Wall Street's estimates by 1.4%. Company management is currently guiding for a 13.5% year-on-year increase in sales next quarter. Looking further ahead, sell-side analysts expect revenue to grow 10.6% over the next 12 months, an improvement versus the last two years. This projection is healthy and implies its newer products and services will fuel better top-line performance. Software is eating the world and there is virtually no industry left that has been untouched by it. That drives increasing demand for tools helping software developers do their jobs, whether it be monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming. Click here to access a free report on our 3 favorite stocks to play this generational megatrend. Adjusted Operating Margin Adjusted operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It's also useful for comparing profitability across companies because it excludes non-recurring expenses, interest on debt, and taxes. Coherent has been an efficient company over the last five years. It was one of the more profitable businesses in the business services sector, boasting an average adjusted operating margin of 17.7%. Analyzing the trend in its profitability, Coherent's adjusted operating margin decreased by 1.5 percentage points over the last five years. This raises questions about the company's expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. This quarter, Coherent generated an adjusted operating margin profit margin of 18%, in line with the same quarter last year. This indicates the company's overall cost structure has been relatively stable. Earnings Per Share Revenue trends explain a company's historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions. Coherent's EPS grew at an unimpressive 6.9% compounded annual growth rate over the last five years, lower than its 19.5% annualized revenue growth. However, its adjusted operating margin actually improved during this time, telling us that non-fundamental factors such as interest expenses and taxes affected its ultimate earnings. We can take a deeper look into Coherent's earnings to better understand the drivers of its performance. As we mentioned earlier, Coherent's adjusted operating margin was flat this quarter but declined by 1.5 percentage points over the last five years. Its share count also grew by 52.2%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders. Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business. For Coherent, its two-year annual EPS growth of 9.9% was higher than its five-year trend. Accelerating earnings growth is almost always a great sign. In Q2, Coherent reported adjusted EPS of $1, up from $0.61 in the same quarter last year. This print beat analysts' estimates by 8.7%. Over the next 12 months, Wall Street expects Coherent's full-year EPS of $3.60 to grow 27.3%. Key Takeaways from Coherent's Q2 Results It was good to see Coherent beat analysts' revenue and EPS expectations this quarter. On the other hand, its revenue guidance for next quarter slightly missed. Overall, this print was mixed. The market seemed to be hoping for more, and the stock traded down 17% to $94.78 immediately following the results. Big picture, is Coherent a buy here and now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it's free. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
7 minutes ago
- Yahoo
Fidelis Insurance (NYSE:FIHL) Misses Q2 Revenue Estimates
Specialty insurance provider Fidelis Insurance (NYSE:FIHL) fell short of the market's revenue expectations in Q2 CY2025, but sales rose 9.1% year on year to $589.3 million. Its non-GAAP profit of $0.12 per share was significantly above analysts' consensus estimates. Is now the time to buy Fidelis Insurance? Find out in our full research report. Fidelis Insurance (FIHL) Q2 CY2025 Highlights: Net Premiums Earned: $538 million vs analyst estimates of $611.5 million (7.4% year-on-year growth, 12% miss) Revenue: $589.3 million vs analyst estimates of $646.7 million (9.1% year-on-year growth, 8.9% miss) Combined Ratio: 104% vs analyst estimates of 110% (670 basis point beat) Adjusted EPS: $0.12 vs analyst estimates of -$0.33 (significant beat) Book Value per Share: $22.04 vs analyst estimates of $21.68 (1.1% year-on-year growth, 1.7% beat) Market Capitalization: $1.85 billion Dan Burrows, Group Chief Executive Officer of Fidelis Insurance Group, commented: 'We have continued to successfully execute on our strategy of balancing the pursuit of profitable underwriting opportunities with returning meaningful capital to shareholders." Company Overview Founded in Bermuda in 2014 and designed to adapt nimbly to evolving market conditions, Fidelis Insurance (NYSE:FIHL) is a global specialty insurer and reinsurer that provides customized coverage across property, specialty, and bespoke risk solutions. Revenue Growth Insurance companies earn revenue from three primary sources: The core insurance business itself, often called underwriting and represented in the income statement as premiums Income from investing the 'float' (premiums collected upfront not yet paid out as claims) in assets such as fixed-income assets and equities Fees from various sources such as policy administration, annuities, or other value-added services Fidelis Insurance's annualized revenue growth rate of 21.8% over the last two years was incredible for an insurance business. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business. This quarter, Fidelis Insurance's revenue grew by 9.1% year on year to $589.3 million, missing Wall Street's estimates. Net premiums earned made up 76.8% of the company's total revenue during the last four years, meaning insurance operations are Fidelis Insurance's largest source of revenue. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business. Markets consistently prioritize net premiums earned growth over investment and fee income, recognizing its superior quality as a core indicator of the company's underwriting success and market penetration. Software is eating the world and there is virtually no industry left that has been untouched by it. That drives increasing demand for tools helping software developers do their jobs, whether it be monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming. Click here to access a free report on our 3 favorite stocks to play this generational megatrend. Book Value Per Share (BVPS) Insurance companies are balance sheet businesses, collecting premiums upfront and paying out claims over time. The float–premiums collected but not yet paid out–are invested, creating an asset base supported by a liability structure. Book value per share (BVPS) captures this dynamic by measuring these assets (investment portfolio, cash, reinsurance recoverables) less liabilities (claim reserves, debt, future policy benefits). BVPS is essentially the residual value for shareholders. We therefore consider BVPS very important to track for insurers and a metric that sheds light on business quality because it reflects long-term capital growth and is harder to manipulate than more commonly-used metrics like EPS. Disappointingly for investors, Fidelis Insurance's BVPS grew at a mediocre 11% annual clip over the last two years. Over the next 12 months, Consensus estimates call for Fidelis Insurance's BVPS to grow by 21.4% to $21.68, elite growth rate. Key Takeaways from Fidelis Insurance's Q2 Results It was good to see Fidelis Insurance beat analysts' EPS and combined ratio expectations this quarter. We were also happy its book value per share outperformed Wall Street's estimates. On the other hand, its revenue and net premiums earned fell short. Overall, this print was mixed but still had some key positives. The stock remained flat at $17.51 immediately after reporting. So do we think Fidelis Insurance is an attractive buy at the current price? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
Business Wire
8 minutes ago
- Business Wire
Kemper Announces $150 Million Accelerated Share Repurchase
CHICAGO--(BUSINESS WIRE)-- Kemper Corporation (NYSE: KMPR) announced today that it has entered into an accelerated share repurchase transaction ('ASR') under an agreement with Goldman Sachs & Co. LLC to repurchase $150 million of its outstanding common stock. The ASR will be completed under Kemper's previously announced $550 million share repurchase authorizations. "This accelerated share repurchase reflects our strong confidence in the business and our disciplined approach to creating shareholder value,' said Joseph P. Lacher, Jr., President and CEO. 'We believe our shares are undervalued, and this transaction represents a compelling use of capital. We remain focused on executing our balanced capital deployment strategy, utilizing resources to support long-term value creation." Under the ASR agreement, on August 14, 2025, Kemper will pay $150 million to Goldman Sachs and expects to receive an initial delivery of 2,279,203 shares of Kemper common stock, representing a significant majority of the shares of Kemper common stock it expects to repurchase under the ASR agreement. The total number of shares to be repurchased pursuant to the ASR agreement will be based on the volume-weighted average price of Kemper common stock on specified dates during the term of the ASR agreement, less a discount, and subject to customary adjustments pursuant to the terms and conditions of the ASR agreement. The transactions under the ASR agreement are expected to be completed within approximately three months. About Kemper The Kemper family of companies is one of the nation's leading specialized insurers. With approximately $13 billion in assets, Kemper is improving the world of insurance by providing affordable and easy-to-use personalized solutions to individuals, families and businesses through its Kemper Auto and Kemper Life brands. Kemper serves over 4.7 million policies, is represented by approximately 24,000 agents and brokers, and has approximately 7,500 associates dedicated to meeting the ever-changing needs of its customers. Learn more about Kemper.
