Sabra Healthcare Reit ((SBRA)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The latest earnings call for Sabra Healthcare Reit painted a picture of robust growth and a generally positive outlook, despite some ongoing challenges. The sentiment during the call was optimistic, with strong performance in the company’s senior housing and skilled portfolios. These successes were overshadowed slightly by concerns about workforce availability and potential Medicaid cuts, but Sabra’s financial growth and solid balance sheet set a promising stage for 2025.
Senior Housing and Skilled Portfolio Performance
Sabra’s senior housing and skilled portfolio has shown continued strength, with SHOP same-store occupancy increasing by 80 basis points sequentially and margins improving by 20 basis points. The SHOP cash NOI stood impressively at 17.9% for the quarter, reflecting the company’s strategic focus and operational efficiency in these sectors.
All-Time High EBITDARM Coverage
A significant highlight from the earnings call was Sabra achieving an all-time high EBITDARM coverage of 2.09. This achievement is a testament to the company’s strong operational performance, with skilled margins reaching levels not seen in years.
2024 Financial Growth
Sabra reported a 7% year-over-year normalized AFFO growth, signaling robust financial health. The company anticipates further growth in 2025, buoyed by higher volume deals, which will likely enhance their financial standing even more.
Managed Senior Housing Portfolio Growth
The managed senior housing portfolio showed commendable growth, with sequential revenue growth of 3.5% and cash NOI growth of 5.4%. Year-over-year, revenue grew by 7.4%, with Canadian communities notably achieving a revenue increase of 10.6%.
Strong Balance Sheet and Liquidity
As of December 31, 2024, Sabra maintained a solid balance sheet with a net debt to adjusted EBITDA ratio of 5.27x and remarkable liquidity of $980 million, positioning the company well to navigate future opportunities and challenges.
Workforce Availability Challenges
Workforce availability remains a challenge within the sector, although Sabra has implemented strategies to mitigate these issues. This ongoing challenge requires continued focus to ensure sustained operational success.
Political and Regulatory Concerns
Potential Medicaid cuts pose a political risk; however, Sabra is confident that natural guardrails are in place to protect against significant impacts. The company remains vigilant in monitoring these developments to mitigate any adverse effects.
Triple-Net Portfolio Decline
Cash rental income for the triple-net portfolio was reported at $90 million, reflecting a decline of $1.8 million. This decrease was primarily due to the timing of cash basis tenant rents and asset sales, highlighting a need for strategic adjustments.
Forward-Looking Guidance
Looking ahead, Sabra provided guidance for 2025, forecasting normalized FFO per share between $1.43 and $1.46 and normalized AFFO per share between $1.48 and $1.51, indicating approximately 4% growth over 2024. The company anticipates cash NOI growth in the same-store managed senior housing portfolio to be in the low to mid-teens, with stronger performance expected in the first half of the year. Furthermore, Sabra plans to continue leveraging its successful strategies from 2024 and aims to capitalize on an increased number of opportunities, especially in the SHOP category.
In summary, Sabra Healthcare Reit’s earnings call reflects a robust performance with a strong focus on strategic growth and operational efficiency. The company’s positive outlook for 2025, underpinned by a solid financial base and strategic initiatives, positions it well to navigate future challenges and opportunities in the healthcare real estate sector.
