Sabra Healthcare Reit ((SBRA)) has held its Q1 earnings call. Read on for the main highlights of the call.
The recent earnings call for Sabra Healthcare REIT painted a generally positive picture for the company, with record highs in key financial metrics and a robust pipeline of deals. The management expressed optimism about the company’s financial performance, despite acknowledging ongoing challenges related to labor, limited skilled nursing opportunities, and potential changes in Medicaid policies.
Record Highs in Skilled Nursing and Senior Housing Metrics
Sabra Healthcare REIT reported new highs in skilled nursing and triple-net senior housing EBITDA and rent coverage, reaching 2.19 and 1.41, respectively. Behavioral health metrics also achieved their highest level since 2023, hitting 3.77, indicating strong operational performance in these sectors.
Improved Occupancy and Deal Pipeline
The company saw an increase in skilled nursing occupancy by 80 basis points sequentially, while triple-net senior housing occupancy rose by 50 basis points. The deal pipeline is notably active, with over $200 million in deals awarded, suggesting a promising outlook for future growth.
Strong Performance in Managed Senior Housing Portfolio
Sabra’s managed senior housing portfolio demonstrated robust growth, with same-store revenue increasing by 6.3% year-over-year. U.S. communities saw a cash NOI growth of 14.4%, and Canadian communities experienced a 24.7% increase, reflecting strong demand and operational efficiency.
Solid Financial Performance
The company’s financial performance showed improvement, with normalized FFO per share rising to $0.35 from $0.34, and normalized AFFO per share increasing to $0.37 from $0.35 year-over-year. Cash NOI from the managed senior housing portfolio rose to $24.1 million from $19.1 million, indicating healthy financial growth.
Improved Leverage Ratios and Dividend Announcement
Sabra reported a decrease in its net debt to adjusted EBITDA ratio to 5.19x, maintaining ample liquidity of over $1 billion. The company declared a quarterly cash dividend of $0.30 per share, reflecting confidence in its financial stability and future prospects.
Labor Challenges
Despite improvements in contract labor costs, Sabra continues to face labor challenges, with costs not yet returning to pre-pandemic levels. This remains a critical area of concern for the company moving forward.
Limited Attractive SNF Opportunities
The market for skilled nursing facilities presents limited attractive opportunities, with many potential acquisitions proving unprofitable. This poses a challenge for Sabra as it seeks to expand its portfolio.
Potential Impact of Medicaid Overhang
The company is navigating an ongoing Medicaid overhang, with potential changes to provider taxes that could impact revenue streams. While specifics remain uncertain, this is a factor that Sabra is closely monitoring.
Forward-Looking Guidance
Looking ahead, Sabra Healthcare REIT remains optimistic about its growth trajectory. The company reaffirmed its 2025 earnings guidance, highlighting continued growth in skilled nursing and senior housing metrics. With a strong acquisition pipeline and a solid balance sheet, Sabra is well-positioned to capitalize on future opportunities.
In summary, the earnings call for Sabra Healthcare REIT was marked by a positive sentiment, underscored by record highs in key metrics and a strong deal pipeline. While challenges such as labor issues and Medicaid uncertainties persist, the company’s financial performance and strategic initiatives suggest a promising outlook for the future.