CareTrust REIT, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Care Trust REIT third quarter 2020 earnings call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1 on your telephone. If you require any further assistance, please press star 1 and 0. I would now like to introduce our first call. Lauren Beal, you may begin.

Thank you, and welcome to Care Trust REIT's third quarter 2020 earnings call. Participants should be aware that this call is being recorded. and listeners are advised that any forward-looking statements made on today's call are based on management's current expectations, assumptions, and beliefs about CareTrust's business and the environment in which it operates. These statements may include projections regarding future financial performance, dividends, acquisitions, investments, returns, financings, and other matters, and may or may not reference other matters affecting the company's business or the businesses of its tenants, including factors that are beyond their control, such as natural disasters, pandemics, such as COVID-19, and governmental actions. The company's statements today and its business generally are subject to risks and uncertainties that could cause actual results to materially differ from those expressed or implied herein. Listeners should not place undue reliance on forward-looking statements and are encouraged to review Care Trust SEC filings for a more complete discussion of factors that could impact results, as well as any financial or other statistical information required by SEC Regulation G. Except as required by law, Care Trust REIT and its affiliates do not undertake to publicly update or revise any forward-looking statements where changes arise as a result of new information, future events, changing circumstances, or for any other reason. During the call, the company will reference non-GAAP metrics such as EBITDA, FFO, and FAD, or FAD, and normalized EBITDA, FFO, and FAD. When viewed together with GAAP results, the company believes these measures can provide a more complete understanding of its business, but cautions that they should not be relied upon to the exclusion of GAAP reports. Care Trust yesterday filed its Form 10-Q, an accompanying press release, and its quarterly financial supplement, each of which can be accessed on the investor relations section of Care Trust's website at www.caretrustreit.com. A replay of this call will also be available on the website for a limited period of time. Management on the call this morning includes Bill Wagner, Chief Financial Officer, Dave Sedgwick, Chief Operating Officer, Mark Lamb, Chief Investment Officer, and Eric Gillis, Vice President of Portfolio Management and Investments. I will now turn the call over to Greg Stapley, Care Trust REITs Chairman and CEO.

Thanks, Lauren, and good morning or good afternoon, wherever you are, everyone. Q3 ran pretty much according to script. Solid rent collections, improved testing capabilities, declining mortality rates, and improving skilled mix to offset continued weakness in census. Anecdotally, day-to-day operations seem much more stable than they were initially, and we believe that seniors housing and skilled nursing industries are far more prepared to handle the third wave than they were six months ago. Engaging their near-term prospects, we have dug into the operational analysis of our portfolio at a more granular level than ever to understand and project how our tenants are likely to fare in the coming months under a variety of possible scenarios. We are pleased to be reporting, and we gave you some new data points to help you understand this in our supplemental yesterday, that the HHS provider relief funds appear to be providing our skilled nursing operators with enough runway to continue operating comfortably for the next few quarters while vaccines, new therapeutics, and other mitigating measures roll out. We've expanded and enhanced our lease coverage reporting in order to show you exactly how these operators did in Q2, which was the first full quarter of pandemic impact, both with and without provider relief funds, and we continue to track both metrics on a month-by-month basis. Now, there are a lot of ways to calculate the impact of the relief funds on financial performance and operator health, and different operators are doing it very differently. But our methodology for estimating the amount of relief funds to show in the with relief funds coverage number is very conservative. We spread all receipts to date rateably over the 15 month period from last April to next June 30th. We use that period because June 30, 2021 is when providers hit the use it or lose it point under current HHS regulations. Those regulations incidentally have been pretty fluid to date and a number of the deadlines announced by the government in connection with stimulus programs have been pushed out, sometimes repeatedly. At present, with over $30 billion in CARES Act funding still unallocated, we expect, but we're not projecting or counting on, we expect some additional relief funding as well as possibly some additional time to use the funds as the pandemic plays out. But we will stick with our conservative measurement methodology until the announced ground rules change. So bottom line, we see several more quarters of fairly predictable and manageable operating performance, especially if the promised vaccines are effective and rolled out quickly. And we also see a path to a soft landing for most operators if we get into an extended recovery. We will continue to advocate for our healthcare providers as the pandemic continues to unfold, and we intend to continue providing you with as much meaningful data and transparency about them as we can. As for Care Trust, I'm pleased to report that we remain in great shape. From April through October, we collected over 98% of rents and, with the exception of one small seniors housing tenant, November rent collections are on track and continuing to come in as expected. With nothing drawn on our revolver and $25 million in cash on hand, we have the lowest leverage in company history today at less than three times net debt to EBITDA at the moment. Interest costs on our floating rate debt are at historic lows, and we have no debt maturities on the horizon before 2024. We were also able to post some modest external growth in the quarter despite the pandemic and the challenges that it poses for underwriting. And we've grown our pipeline despite the disruption in M&A activity in our space since April. Finally, we're raising and narrowing guidance for the year from our previous normalized FFO per share of 132 to 134 and normalized FAD per share of 135 8 to 140, to our now projected normalized FFO per share of 136 to 137, and normalized FAB per share of 142 to 143. Finally, just looking forward, we feel good about our prospects for both collections and external growth over the next three quarters or so, which is about as good as our crystal ball ever gets, and we see great potential for a great 2021. So first, I'll turn it over to Dave for some more color on what's happening out there. Then Mark will jump in with acquisitions, and Bill will finish off with the financials. Then we'll open it up for Q&A. Dave?