Sabra Health Care REIT (NASDAQ: SBRA) reported Q4 EPS of $0.18, $0.01 better than the analyst estimate of $0.17. Revenue for the quarter came in at $152.05 million versus the consensus estimate of $152.27 million.

FOURTH QUARTER 2020 RESULTS AND RECENT EVENTS

Following are the highlights of our results for the fourth quarter of 2020 and recent events:

• For the fourth quarter of 2020, net income attributable to common stockholders, FFO, Normalized FFO, AFFO and Normalized AFFO per diluted common share were $0.18, $0.42, $0.42, $0.42 and $0.41, respectively.
• EBITDARM Coverage for our Skilled Nursing/Transitional Care portfolio increased 0.09x over the third quarter of 2020 to 1.93x, and Skilled Mix improved 50 basis points to 39.5%. See further discussion on EBITDARM Coverage and Occupancy Percentage trends under “Portfolio Impact.”
• From the beginning of the COVID-19 pandemic through February 2021, we have collected 99.9% of our forecasted rents. While we have agreed to short-term, temporary pandemic-related rent deferral for two tenants of one to two months of rent, we have not granted any permanent pandemic-related rent concessions since the beginning of the pandemic. Total pandemic-related rent deferrals equal $0.4 million (0.1% of annualized Cash NOI).
• Our managed senior housing portfolio continues to experience occupancy pressures offset in part by continued growth in rates charged to residents. Excluding government grant income of $1.1 million and $4.2 million recognized in the fourth and third quarters of 2020, respectively, fourth quarter revenue declined 2.1% and cash net operating income declined 14.1% on a sequential quarter basis. The senior housing business has high operating leverage causing changes in revenue to have an outsized impact on cash net operating income.
• Our full year investment activity for 2020 totaled $168.4 million at a blended initial cash yield of 7.97%.
• During the fourth quarter of 2020, we issued 3.6 million shares of common stock under our at-the-market offering program (“ATM Program”) for net proceeds of $59.2 million, maintaining our strong net debt to adjusted EBITDA of 4.88x (5.49x including the unconsolidated joint venture). During the fourth quarter of 2020, we utilized the forward feature of the ATM Program, and as of December 31, 2020, 1.1 million shares with an initial weighted average price of $17.44, net of commissions, remained outstanding under forward sale agreements.
• Subsequent to December 31, 2020, Fitch Ratings (“Fitch”) revised its rating outlook for Sabra to Stable from Negative and both Fitch and S&P Global Ratings (“S&P”) affirmed the ratings for Sabra’s debt as 'BBB-'. Despite the challenges of the pandemic, we have remained vigilant in maintaining a strong balance sheet.
• On February 2, 2021, our Board of Directors declared a quarterly cash dividend of $0.30 per share of common stock. The dividend will be paid on February 26, 2021 to common stockholders of record as of the close of business on February 12, 2021. The dividend represents a payout of approximately 73% of our Normalized AFFO per diluted common share of $0.41.
• We added two new board members, Ann Kono and Clifton Porter, during the fourth quarter and a third new board member, Katie Cusack, in January of 2021. These members add fresh skillsets to our already strong, independent board including policy, finance and ESG expertise.
• In January 2021, we appointed Michael Costa, our Executive Vice President - Finance, to Chief Accounting Officer and, in such capacity, he has been designated as our principal accounting officer. He has held various leadership positions overseeing our accounting and finance functions since Sabra’s inception in November 2010.

GUIDANCE:

Sabra Health Care REIT sees Q1 2021 EPS of $0.16-$0.17, versus the consensus of $0.16.

The financial effects of the COVID-19 pandemic have made it more difficult to accurately forecast our future earnings, primarily within our Senior Housing - Managed portfolio. As a result, we are limiting our guidance at this time to the first quarter of 2021.

We expect the following amounts per diluted common share for the quarter ended March 31, 2021:

• Net income: $0.16 - $0.17
• FFO: $0.39 - $0.40
• AFFO: $0.38 - $0.39

The above estimates are based on the following key assumptions:

• Senior Housing - Managed Portfolio Average Quarterly Occupancy
  • Wholly-owned: 75.4% - 77.4%
  • Unconsolidated Joint Venture: 66.0% - 68.0%
• Investments and Dispositions
  • Investments of $39.0 million with a weighted average initial cash yield of 8.2%.
  • Dispositions and loan repayments of $6.2 million, with associated annualized Cash NOI of $0.4 million.
  • Capital expenditures in our wholly-owned Senior Housing- Managed portfolio of $3.2 million.
• Financing and Leverage Management
  • Maintain Net Debt to Annualized Adjusted EBITDA (including unconsolidated joint venture) below 5.50x on expected Annualized Adjusted EBITDA between $479 million and $481 million as of March 31, 2021.
  • Utilize availability under the revolver and issue between $100 million and $110 million of equity under our ATM Program to fund acquisitions and meet our goal of maintaining leverage below 5.50x.

For earnings history and earnings-related data on Sabra Health Care REIT (SBRA) click here.