Sabra Health Care REIT, Inc.

Good day, everyone. My name is Mandeep, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Sabra fourth quarter 2023 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, simply press star followed by one on your telephone keypad. I would now like to turn the call over to Lucas Hartwich, SVP Finance. Please go ahead, Mr. Hartwich.

Thank you and good morning. Before we begin, I want to remind you that we will be making forward-looking statements in our comments and in response to your questions concerning our expectations regarding our future financial position and results of operations, including our earnings guidance for 2024, and our expectations regarding our tenants and operators, and our expectations regarding our acquisition, disposition, and investment plans. These forward-looking statements are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially, including the risks listed in our Form 10-K for the year ended December 31, 2023. as well as in our earnings press release, included as Exhibit 99.1 to the Form 8K we furnished the SEC yesterday. We undertake no obligation to update our forward-looking statements to reflect subsequent events or circumstances, and you should not assume later in the quarter that the comments we make today are still valid. In addition, references will be made during this call to non-GAAP financial results. Investors are encouraged to review these non-GAAP financial measures as well as the explanation and reconciliation of these measures to the comparable gap results included on the financials page of the investor section of our website at SabraHealth.com. Our Form 10-K earnings release and supplement can also be accessed in the investor section of our website. And with that, let me turn the call over to Rick Matros, CEO, President, and Chair of Sabra Healthcare REIT. Thanks, Lucas.

Good day, everybody. Appreciate you joining us. We're pleased to report continuing stability and organic growth in our portfolio. In our skilled portfolio, occupancy is up 50 basis points sequentially and 290 basis points year over year. Our EBITDARM rent coverage is up .10 sequentially with similar improvement in our top 10 in the aggregate. While labor is tough, the improvement over the last year is material. Contract labor is down 29% on a patient day basis. And nursing all in is up just 4.3% on a patient day basis. And the combination of that coming down and our revenue for patient day growing at the rate that it's been growing in the skilled portfolio has put us in a position where in the aggregate, our portfolio's margins are pretty much where they were at pre-pandemic. And so the really good news there is we're not even a pre-pandemic occupancy. So we see a really terrific opportunity ahead of us in terms of margins improving over where they were on a pre-pandemic. We also continue to see improvement in the senior housing lease portfolio. Occupancy is up 130 basis points sequentially, and dorm rent coverage jumped 0.11. Talia will talk in detail about our SHOP portfolio. For both the skilled and senior housing portfolios, we expect occupancy to exceed pre-pandemic levels, as I said. But the reason is different for each of the two different asset classes. So for skilled, it's the demographic coupled with the declining product. And for senior housing, it's the demographic combined with the negligible new supply for the foreseeable future. We appreciated that CMS and numerous states have been capturing cost increases and reimbursement rates, and we're optimistic that will continue at the state level this summer and for fiscal year 2025 for CMS. Our behavioral and specialty hospital portfolio has had stable performance. We have provided full-year guidance for the first time since before the pandemic with 5% and 6% increases and normalized FFO and normalized AFFO respectively at the midpoint of guidance. We're also starting to see more investment opportunities, but no clear trends as of yet. And with that, I will turn the call over to Talia.