CareTrust REIT, Inc.

Care Trust REIT second quarter 2024 earnings conference 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 or follow by the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Lauren Beal, SVP Controller. You may begin.

Thank you and welcome to Care Trust REIT's second quarter 2024 earnings call. We will make forward-looking statements today based on management's current expectations, including statements regarding future financial performance, dividends, acquisitions, investments, financing plans, business strategies, and growth prospects. These forward-looking statements are subject to risks and uncertainties that could cause actual results to materially differ from our expectations. These risks are discussed in Care Trust REIT's most recent Form 10-K and 10-Q filings with the SEC. We do not undertake a duty to update or revise these statements, except as required by law. During the call, the company will reference non-GAAP metrics, such as EBITDA, FFO, and FAD, or FAD, A reconciliation of these measures to the most comparable GAAP financial measures is available in our earnings press release and Q2 2024 non-GAAP reconciliations that are available on the investor relations section of CareTrust's website at www.caretrustreit.com. A replay of this call will also be available on the website for a limited period. On the call this morning are Dave Sedgwick, President and Chief Executive Officer, Bill Wagner, Chief Financial Officer, and James Collister, Chief Investment Officer. I'll now turn the call over to Dave Sedgwick, Care Trust REITs President and CEO. Dave?

Well hello everybody and thank you for joining us. I'm very pleased with the strong first half of the year, particularly as we celebrated our 10 year anniversary this summer with some record performance. I'll speak first to our year to date results and outlook for the second half of the year. James will cover the investment landscape and Bill will review the quarter. Thus far in 2024, we have delivered the following. Record setting investments of approximately $765 million at an average yield of 9.5% and counting. Equity issuance of approximately 23.7 million shares for gross proceeds of $580 million. Year over year market cap growth of 84%. and an enterprise value of $4 billion for the first time. What's just as remarkable as the growth this year is the genuine sense that the momentum is actually building. Funding this growth with equity has not only been more accretive than it would have been with the debt this year, but it has continued to set up the company for supercharged growth for the foreseeable future. The first half performance is a result of moves made in recent years to our balance sheet, our team, and strategic investments and relationships that taken together have all positioned us to capitalize on opportunities as crosswinds have turned into tailwinds. In our June investor deck, I wrote about our articles of faith. First, the long-term thinking. The price we pay and the operator we choose is intended to result in long-term quality care. and as a result, value creation. We do not live for the quarter. Second, operator first. The most critical decision for any investment is matching the right operator with the right opportunity. Third, scale will come. We're not interested in growth for growth's sake. Each investment should stand on its own. And fourth, a conservative balance sheet. We believe in keeping leverage low to both protect against an uncertain macro environment and to capitalize on windows of opportunity to grow in a significant way. We may take modest short-term dilution when the pipeline justifies it. We have relied on these principles from day one, regardless of the direction of the wind, and we will continue to run the business in this way going forward. Now turning to the portfolio, you will see in the supplemental, lease coverage continues to show tremendous strength and security overall. Property level EBITDAR with a 5% management fee and EBITDARM coverage was reported at 2.17 times and 2.78 times respectively. The scale of underperforming operators remains relatively small and manageable. We have a couple transitions underway that will result in higher revenues next year from those properties than this year. And we've decided to sell a handful of chronic underperforming assets. The Midwest SNF portfolio that has been held for sale remains in held for sale status as of today. These transitions and dispositions taken together will effectively deal with all of the properties that have underpaid this year. With respect to occupancy, I'm pleased to report that in Q2, we finally reached and then surpassed the pre-pandemic skilled nursing occupancy levels. Skilled mix was down a little bit year over year, but we appear to be settling in at a new normal that is quite a bit higher than pre-pandemic skilled mix, about 330 bps higher. We still have a ways to go to get to pre-pandemic levels on the assisted living side, but we did see a 280 bps increase year over year and 180 bps increase quarter over quarter for the assisted living occupancy. As far as the industry and regulatory front, just a couple quick comments. Two days ago, Medicare announced fiscal year 2025's Medicare rates would increase 4.2%. And on behalf of Care Trust, I want to express our heartfelt gratitude to Mark Parkinson, who is retiring from the American Healthcare Association at the end of the year. He's provided terrific leadership to the association for a long time, not the least of which was during the pandemic. And we congratulate and welcome Cliff Porter as the new president and CEO of ACA. We wish both of these important industry leaders luck going forward. Finally, two things. First, I'm very proud of the Care Trust team. An extraordinary year like this doesn't happen without a talented team, a strong culture, and sacrifice. I'm grateful to work with the best pound for pound team I know. Second, I want to recognize the relentless pursuit of quality care and performance by our operators. We are truly blessed to work with some of the very finest operators in the country and proud to report significantly higher quality measures and star ratings than industry averages. James will now provide you with color on the investment landscape and reloaded pipeline. James.