SBRA

Sabra Health Care REIT, Inc. (SBRA) - Q1 2026 Filing Summary

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended March 31, 2026. Sabra Health Care REIT, Inc. is a self-administered, self-managed REIT that acquires, finances, and owns real estate in the healthcare sector, primarily skilled nursing/transitional care facilities, senior housing communities (both leased and managed), behavioral health facilities, and specialty hospitals. The company operates through an umbrella partnership (UPREIT) structure.

Key Financial Metrics

Note: Liquidity includes unrestricted cash ($116.5M), available revolver capacity ($645.0M), and forward sale agreements ($451.0M).

Material Changes vs. Prior Period

• Revenue Growth: Total revenues increased 21% to $221.8 million, driven primarily by a 51% increase in "Resident fees and services" ($116.7M vs. $77.4M) due to the acquisition of 14 Senior Housing - Managed communities and the transition of seven facilities to the managed model.
• Expense Increases: Operating expenses for the Senior Housing - Managed portfolio rose 45% to $81.9 million, reflecting the expanded portfolio and increased labor costs. Depreciation and amortization increased 22% to $53.1 million due to new acquisitions.
• Portfolio Activity: The company acquired four facilities (three Senior Housing - Managed, one skilled nursing) for $96.1 million. Three skilled nursing facilities were classified as held for sale and subsequently sold for $79.4 million.
• Debt Utilization: Net borrowings from the Revolving Credit Facility increased by $137.8 million during the quarter to fund acquisitions and operations.

Guidance, Outlook, and Risks

• Dividends: The Board declared a quarterly cash dividend of $0.30 per share, payable May 29, 2026. The company maintains a policy of distributing at least 90% of taxable income to maintain REIT status.
• Capital Markets: The company established a new $750 million At-The-Market (ATM) equity offering program in August 2025. As of March 31, 2026, $353.4 million remains available, with 20.5 million shares outstanding under forward sale agreements.
• Medicare Rates: Fiscal year 2026 Medicare rates for skilled nursing facilities increased by an estimated net 3.2%. A proposed rule for FY 2027 suggests a 2.4% net increase.
• Risks: Key risks include tenant/borrower credit quality, labor shortages and cost inflation, regulatory changes (specifically Medicare reimbursement and staffing standards), and interest rate volatility. The company notes that prolonged deterioration in Senior Housing - Managed results could lead to impairment charges.

Investor Verification Checklist

• Senior Housing - Managed Performance: Verify occupancy rates and operating margins for the 14 newly acquired managed communities to ensure they meet pro forma expectations.
• Debt Covenants: Confirm continued compliance with the Credit Agreement and Senior Notes covenants, particularly the fixed charge coverage ratio, given the increased interest expense.
• Asset Dispositions: Review the terms and proceeds of the subsequent sale of the three skilled nursing facilities ($79.4M) to assess capital recycling efficiency.
• Forward Sale Agreements: Monitor the settlement of the 20.5 million shares under forward sale agreements to understand potential dilution and cash inflow timing.
• Impairment Watch: Monitor the two closed facilities that incurred a $0.4 million impairment charge for any further valuation adjustments.