Investor Presentation

Transcription

1 Willow Bend Nursing & Rehabilitation Center, Mesquite, TX Orem Rehabilitation & Skilled Nursing, Orem, UT Investor Presentation June 2017 Julia Temple Healthcare Center, Englewood, CO

2 Safe Harbor Statement This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of Forward-looking statements include all statements that are not historical statements of fact and statements regarding our intent, belief or expectations, including, but not limited to, statements regarding future financial and financing positions, business and acquisition strategies, growth prospects, operating and financial performance, expectations regarding the making of distributions, payment of dividends, compliance with and changes in governmental regulations, and the performance of our operators and their respective facilities. Words such as "anticipate," "believe," "could," expect," "estimate," "intend," "may," "plan," "seek," "should," "will," "would," and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements, though not all forward-looking statements contain these identifying words. Our forward-looking statements are based on our current expectations and beliefs, and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although we believe that the assumptions underlying these forward-looking statements are reasonable, they are not guarantees and we can give no assurance that our expectations will be attained. Factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from expectations include, but are not limited to: (i) the ability to achieve some or all of the expected benefits from the completed spin-off from The Ensign Group, Inc. ("Ensign"); (ii) the ability and willingness of Ensign to meet and/or perform its obligations under the contractual arrangements that it entered into with us in connection with such spin-off, including its triple-net long-term leases with us, and any of its obligations to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities; (iii) the ability and willingness of our tenants to (a) comply with laws, rules and regulations in the operation of the properties we lease to them, (b) generate cash-flows from operations sufficient to meet their obligations to us and other vendors, and (c) renew their leases with us upon expiration, or in the alternative, (d) our ability to reposition and re-let our properties on the same or better terms in the event of nonrenewal or replacement of an existing tenant and any obligations, including indemnification obligations, that we may incur in replacing an existing tenant; (iv) the availability of, and the ability to identify and acquire, suitable acquisition opportunities and lease the same to reliable tenants on accretive terms; (v) the ability to generate sufficient cash flows to service our outstanding indebtedness; (vi) access to debt and equity capital markets; (vii) fluctuating interest rates; (viii) the ability to retain and properly incentivize key management personnel; (ix) the ability to maintain our status as a real estate investment trust ("REIT"); (x) changes in the U.S. tax laws and other state, federal or local laws, whether or not specific to REITs; (xi) other risks inherent in the real estate business, including potential liability relating to environmental matters and illiquidity of real estate investments; and (xii) any additional factors identified in our filings with the Securities and Exchange Commission ( SEC ), including those in our Annual Report on Form 10-K for the year ended December 31, 2016 under the heading entitled "Risk Factors." This presentation contains certain non-gaap financial information relating to CareTrust REIT, including EBITDA and certain related ratios. Explanatory footnotes regarding this non-gaap information are included in this presentation. Reconciliations of these non-gaap measures are also included in this supplement. Other financial information, including GAAP financial information, is also available on our website. Non-GAAP financial information does not represent financial performance under GAAP and should not be considered in insolation, as a measure of liquidity, as an alternative to net income, or as an indicator of any other performance measure determined in accordance with GAAP. You should not rely on non-gaap financial information as a substitute for GAAP financial information, and should recognize that non-gaap information presented herein may not compare to similarlytermed non-gaap information of other companies (i.e., because they do not use the same definitions for determining any such non-gaap information). This presentation also includes certain information regarding operators of our properties (such as EBITDAR lease coverage), most of which are not subject to audit or SEC reporting requirements. The operator information provided in this presentation has been provided by the operators. We have not independently verified this information, but have no reason to believe that such information is inaccurate in any material respect. We are providing this information for informational purposes only. Ensign is subject to the registration and reporting requirements of the SEC and is required to file with the SEC annual reports containing audited financial information and quarterly reports containing unaudited financial information. Ensign s financial statements, as filed with the SEC, can be found at Ensign s website Information in this presentation is provided as of March 31, 2017, unless specifically stated otherwise. We expressly disclaim any obligation to update or revise any information in this presentation (including forward-looking statements), whether to reflect any change in our expectations, any change in events, conditions or circumstances, or otherwise. As used in this presentation, unless the context otherwise requires, references to CTRE, CareTrust, CareTrust REIT or the Company refer to CareTrust REIT, Inc. and its consolidated subsidiaries. GAAP refers to generally accepted accounting principles in the United States of America. Investing in the future of healthcare 2

3 CareTrust REIT Strengths Outstanding Tenant Roster Management with Extensive Healthcare Operating and Real Estate Experience Superior Tenant Rent Coverage Littleton Care and Rehabilitation Center, Littleton, CO Leading Primary Tenant: Ensign Significant Diversification Since Spin-Off Southland Care Center, Norwalk, CA Robust Pipeline of Accretive Growth Opportunities Well-Protected Dividend Ample Liquidity for Growth Whittier Hills Healthcare Center, Whittier, CA Investing in the future of healthcare 3

4 Company Update Debt-to-Normalized EBITDA of 4.0x (1)(2) and Debt-to-Enterprise Value (2)(3) of 25% Maintain Strong Balance Sheet Healthy fixed charge coverage ratio above 4.9x (1)(2) Refinanced % Senior Notes with % Senior Unsecured Notes in May 2017 Upgraded by S&P from B to B+ and by Moody s from B2 to B1 in Q Closed $288.0 million of investments in 2016 at a blended cash yield of 9.1% (4) Fund Accretive Acquisitions Enhance Portfolio Composition Closed $91.2 million of investments YTD 2017 at a blended cash yield of 9.2% (4) Used retained capital from 62% 2016 FFO payout ratio to fund accretive acquisitions, drive pershare growth and enhance credit statistics Expanded geographic footprint to 22 states and further diversified tenant base to 18 operators (5) Decreased Ensign tenant concentration to 50%, and no other tenant above 17% (6) (1) Refer to appendix (slide 23) for a reconciliation of Net Income (Loss) to Normalized EBITDA (2) Pro forma for May $300 million senior notes issuance and the use of proceeds therefrom and real estate acquisitions through June 2, 2017 (3) Enterprise Value is defined as implied market cap (fully diluted shares outstanding) plus total debt, preferred equity and minority interest, less cash and cash equivalents (4) Inclusive of transaction costs (5) As of June 2, 2017 (6) Calculated based on Q actuals Investing in the future of healthcare 4

5 Company Update 2017 Acquisition Activity Continued Access to Capital Primary Tenant Update Acquired 11 facilities, investing $91.2 million with a blended cash yield of 9.2% (1) $28.2 million in senior housing investments with a blended cash yield of 8.7% (1) $63.0 million in skilled nursing investments with a blended cash yield of 9.5% (1) Increased unsecured revolving credit facility by $100.0 million to $400.0 million Expanded accordion feature for an additional $250.0 million of potential capacity Procured $100.0 million unsecured term loan, using proceeds to repay higher cost indebtedness of approximately $95 million under a legacy secured term loan with General Electric Capital Corporation Closed a $111 million common stock offering in March 2016 and a $84 million common stock offering in November 2016 Raised $125.0 million via At-The-Market equity offering program from August 2016 April 2017 and initiated new $300.0 million At-The-Market equity offering program in May 2017 Refinanced $260.0 million % Senior Notes with $300.0 million % Senior Unsecured Notes in May 2017 Ensign's EBITDAR lease coverage ratio grew from 1.85x as of the 2014 Spin-Off to 2.06x as of March 31, 2017 (2) (1) Inclusive of transaction costs (2) EBITDAR Lease Coverage Ratio is a supplemental measure of an operator/tenant s ability to meet their cash rent and other obligations to CareTrust REIT. This data is derived solely from information provided by operators/tenants and relevant guarantors without independent verification by CareTrust REIT. EBITDAR represents net income before interest expense, income tax, depreciation and amortization, and rent, after applying a standardized management fee (5% of facility operating revenues) Investing in the future of healthcare 5

6 Total Return % (1/1/2016 6/2/2017) 90.0% 60.0% 30.0% Company Update: Differentiation & Outperformance CareTrust REIT s performance has been differentiated through its partnerships with well-capitalized regional operators and operationally-focused underwriting. CareTrust REIT consistently outperformed throughout 2016 despite industry headwinds In February 2016, several SNF operators announced worse-than-expected 4Q15 operating results Since then, CareTrust REIT s operationally-focused underwriting and ability to identify and work with strong regional operators has separated CTRE from the pack, and continues to widen the alpha over the industry CTRE s regional operationally-focused strategy gains momentum versus peers as several aggressively underwritten national operators stumble $111 million equity follow-on offering $84 million equity follow-on offering $110 million raised via At- The-Market equity program in Q $300 million Senior Notes Refinancing 82.1% 18.3% - 2.1% (30.0%) Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 CTRE Operator Index (1) HC Index (2) 82.1% 0.4% 17.0% 21.7% 30.0% (4.2%) (0.4%) CCP HCP OHI HCN LTC SBRA CTRE Source(s): Capital IQ (1) Includes BKD, CSU, ENSG, GEN, HLS, KND, NHC, and SEM (2) Includes CCP, CHCT, DOC, HCN, HCP, HR, HTA, LTC, MPW, NHI, OHI, SBRA, SNH, SNR, UHT, and VTR Investing in the future of healthcare 6

7 Growing Portfolio of Senior Care Assets Tenant Month Acquired State Facility Type # of Facilities Beds/Units (1) Initial Investment (2) Initial Cash Yield (3) Total 2014 Acquisitions Nov and Dec ID, MN, VA ALF/MC $33.6 million 9.2% Total 2015 Acquisitions Jan Oct CO, WA, GA, FL, OH SNF/ALF 20 1,840 $233.0 million 9.6% Trillium Healthcare Feb-16 Iowa SNF $32.7 million 9.7% New Haven Assisted Living Feb-16 Texas ALF 1 30 $4.9 million 8.2% Priority Life Care Mar-16 IN, WI, MD ALF $21.2 million 8.3% Better Senior Living Consulting M ar-16 Florida ALF 1 74 $5.7 million 9.6% Trillium Healthcare M ar-16 Iowa SNF 1 71 $5.0 million 9.7% Pristine Senior Living Apr-16 Ohio SNF Campus/SNF $15.2 million 9.3% Premier Senior Living M ay-16 North Carolina ALF/M C 2 67 $11.8 million 8.7% Twenty / 20 M anagement M ay-16 Virginia ALF/M C/ILF $10.1 million 8.5% Cascadia Healthcare M ay-16 Idaho SNF 1 98 $8.9 million 9.6% Premier Senior Living (4) Jun-16 M ichigan ALF/M C $30.7 million 9.0% Cascadia Healthcare Jul-16 Idaho Preferred Equity 1 N/A $2.3 million 11.7% West Harbor Healthcare Aug-16 California SNF 1 59 $6.9 million 9.7% Covenant Care Aug-16 California SNF, Campus, ALF $34.4 million 8.9% Cascadia Healthcare Sep-16 Idaho Preferred Equity 1 N/A $2.4 million 11.7% Priority Management Group Dec-16 Texas SNF, Campus $95.9 million 8.9% Total 2016 Acquisitions Feb - Dec CA, FL, IA, ID, IN, MD, MI, NC, OH, TX, VA, WI ALF/ILF/MC/SNF 35 2,800 $288.1 million 9.1% Premier Senior Living Feb-17 Wisconsin ALF 2 88 $26.1 million 8.3% WLC M anagement M ar-17 Illinois SNF $29.2 million 10.0% Better Senior Living Consulting M ay-17 Florida ALF 1 89 $2.1 million 14.1% Cascadia Healthcare M ay-17 Idaho SNF $6.5 million 9.0% OnPointe Health Jun-17 TX / NM SNF $27.3 million 9.0% YTD 2017 Acquisitions Feb - Jun IL, WI, FL, ID, TX, NM ALF/SNF 11 1,013 $91.2 million 9.2% Investments Made Since Spin-Off 72 5,810 $645.9 million 9.3% (1) Initial operating beds / units as of acquisition date (2) Initial investment represents purchase price and transaction costs (3) Initial cash yield represents the initial rent (or deferred interest income on preferred equity investments) divided by initial investment (4) Premier Senior Living s initial cash yield calculation excludes a first-year rent concession of $202K. There are no other rent concessions under the 15-year lease term Investing in the future of healthcare 7

8 CareTrust REIT at a Glance # of Properties # of Beds/Units Gross Real Estate Assets (1) EBITDAR Lease Coverage Ratio(2)(3) # of States ,214 $1,158 MM 1.71x 22 Portfolio Asset Mix (4) SNF 67% Spin Portfolio Post-Spin Acquisitions Note: As of 6/2/2017; Spin portfolio represents 96 owned assets at the time of CTRE S spin-off from Ensign (CTRE owned 97 assets at the time of the transaction, however, one asset was sold in 2016) (1) Calculated as gross real estate investment, or the sum of real estate investment (excluding accumulated depreciation) as of June 2, 2017 inclusive of transaction costs (2) EBITDAR Lease Coverage Ratio is a supplemental measure of an operator/tenant s ability to meet their cash rent and other obligations to CareTrust REIT. This data includes information provided by operators/tenants and relevant guarantors without independent verification by CareTrust REIT. EBITDAR represents net income before interest expense, income tax, depreciation and amortization, and rent, after applying a standardized management fee (5% of facility operating revenues) (3) Trailing twelve months ending December 31, 2016; includes CareTrust REIT s pro forma underwriting coverage for the first four post-acquisition quarters, and represents the 158 leased properties as of 3/31/2017 (4) Portfolio Asset Mix based on number of facilities as of June 2, 2017 Investing in the future of healthcare AL / IL 23% Campus 10% 8

9 Significant Diversification Since Spin-Off CareTrust REIT has significantly grown and diversified since its Spin-Off Gross Assets CTRE (Post Spin-Off) CTRE (June 2, 2017) (1) $606 million $1,158 million (2) Change Since Spin-Off +91% Scale # of Beds/Units 10,385 16, % # of Properties % Run-Rate Cash Rent $56 million $116 million +107% Operational Ensign Tenant Concentration (3) Skilled Nursing Concentration (4) 100% 85% 50% 77% (50%) (8%) Debt-to-Normalized EBITDA (5) 6.7x 4.0x (2.7x) Financial Debt-to-EV (6) 47% 25% (22%) Secured Debt-to-Gross Assets 16% 0% (16%) (1) Pro forma for May $300 million senior notes issuance and the use of proceeds therefrom and real estate acquisitions through June 2, 2017 (2) Calculated as gross real estate investment, or the sum of real estate investment (excluding accumulated depreciation) as of June 2, 2017 inclusive of transaction costs (3) Based on Q actuals (4) Based on number of facilities, inclusive of SNF campus facilities as of June 2, 2017 Investing in the future of healthcare (5) Refer to appendix (slide 23) for a reconciliation of Net Income (Loss) to Normalized EBITDA (6) Enterprise Value is defined as implied market cap (fully diluted shares outstanding) plus total debt, preferred equity and minority interest, less cash and cash equivalents 9

10 We Fish in a Different Pond CareTrust REIT operates in a fragmented market that is largely underserved by other capital providers Focus on higher-yielding pool of opportunities versus larger competitors, with smaller deals continuing to move the needle Limited competition for SNFs, mid-market senior housing assets and one-off deals Large competitors chasing larger portfolios with compressed cap rates Investing in the future of healthcare 10

11 Key Company Highlights Experienced Management Team Strong Track Record of Operating Performance Strong and Improving Credit Metrics Strong Long-Term Net Lease Maturities Strong and Diversified Tenant Base Strong Tenant Rent Coverage Disciplined Financial Policy Well-Protected Dividend Investing in the future of healthcare 11

12 1 Experienced Management Team Greg Stapley, Chief Executive Officer Co-Founder of Ensign, instrumental in assembling the real estate portfolio now owned by CareTrust REIT 31 years of experience in the acquisition, development and disposition of real estate Previously General Counsel of a 192-location national retailer and a partner at Jennings Strouss & Salmon, a large law firm in Phoenix, AZ Bill Wagner, Chief Financial Officer Served as SVP and CAO of Nationwide Health Properties, Inc. and Sunstone Hotel Investors, Inc. 26 years of accounting and finance experience, primarily in real estate, including 12 years with publicly-traded REITs Ernst & Young Kenneth Leventhal Real Estate Group Dave Sedgwick, Vice President Operations Ensign s Chief Human Capital Officer from ; trained over 100 Ensign nursing home administrators Licensed nursing home administrator; Regional Operations Director; 13 years of experience in skilled nursing operations Led five SNFs as CEO; developed Ensign s approach to cultural, clinical and financial performance Mark Lamb, Director of Investments Director of Investments at Nationwide Health Properties, underwriting over $1 billion of new investments across the Seniors Housing and Skilled Nursing sectors Licensed nursing home administrator; led three SNFs as Administrator for Plum Healthcare & North American Health Care in California Investment Associate at The Bascom Group, a private equity real estate investment firm Investing in the future of healthcare 12

13 # of Properties Real Estate Investment ( 000s) Total Revenues ( 000s) Normalized EBITDA ( 000s) 2 Strong Track Record of Operating Performance Total Revenues Normalized EBITDA (1) $120,000 $100,000 $104,679 $86,533 $100,000 $80,000 $80,000 $60,000 $40,000 $58,897 $74,951 $60,000 $40,000 $36,680 $60,945 $20,000 $20,000 $0 $0 YE 2014 YE 2015 YE 2016 YE 2014 YE 2015 YE 2016 # of Properties (as of December 31) Real Estate Investments (as of December 31) (2) 180 $1,200, $1,052, $1,000, $800,000 $773, $600,000 $400,000 $436, $200, (1) Refer to appendix (slide 23) for a reconciliation of net income to Normalized EBITDA (2) Real Estate Investment net of transaction costs $ Investing in the future of healthcare 13

14 3 Strong and Improving Credit Metrics CareTrust REIT compares favorably to the universe of publicly rated Triple Net and Healthcare REIT peers across credit metrics. CTRE believes there is continued room for credit ratings improvement Key Credit Metrics CareTrust REIT Range of Metrics for Rated Healthcare REITs and Triple Net REITs (1) <<< Strongest Weakest >>> Existing Notes Rating (1)(2) B1 / BB- Peer Best Baa1 / BBB+ Peer Worst Ba3 / BB- B1 / BB- Net Debt-to-Normalized EBITDA (2)(3) 4.0x Net Debt + Pref-to-EV (3)(4) 25% 4.0x 25% Peer Best Peer Worst 4.1x 5.9x Peer Best Peer Worst 30% 44% Interest Coverage (5) 4.9x Secured Debt-to-GAV (6) 0.0% Peer Best Peer Worst 5.8x 4.9x 3.2x Peer Best Peer Worst 0.0% 12.9% FFO Payout Ratio (7) 64% 64% Peer Best Peer Worst 72% 89% Source: Company Filings; Note(s): Debt statistics for all companies use principal debt balances; Data for Peers is as of latest filing (1) NNN Weighted Average index consists of O, VER, GLPI, WPC, NNN, SRC, EPR, GPT, STOR, SIR, LXP, FCPT and is weighted by market cap; Healthcare Peers include: CCP, HCP, HCN, MPW, OHI, SBRA, SNH, VTR (2) Refer to appendix (slide 23) for a reconciliation of Net Income (Loss) to Normalized EBITDA (3) Pro forma for May $300 million senior notes issuance and the use of proceeds therefrom and real estate acquisitions through June 2, 2017 Represents CTRE s performance versus peer range Represents peer range of metrics (4) Enterprise Value is defined as implied market cap (fully diluted shares outstanding) plus total debt, preferred equity and minority interest, less cash and cash equivalents (5) Interest expense is latest filed quarter annualized adjusted for $300 million Senior Unsecured Notes issuance (6) Gross Asset Value is defined as Total Assets plus depreciation (7) Payout ratio as of latest quarterly filing Investing in the future of healthcare 14

15 4 Strong Long-Term Net Lease Maturities Properties are leased to tenants under long-term, triple net leases, limiting renewal risk and removing costs related to the property % of Total Rent by Lease Maturity Year (1)(2) 30.0% 25.0% 26.3% 25.7% 20.0% 15.0% 10.0% 5.0% 2.8% Maturity of New Senior Unsecured Notes 6.6% 5.0% 6.8% 6.6% 10.4% 9.8% 0.0% Leasing Highlights Weighted Average Lease Maturity of 13.8 years Long-term leases limit renewal risk Triple net leases remove costs related to the property Almost all of the triple net lease agreements provide for an annual rent escalator based on the percentage change in the Consumer Price Index (1) Lease Maturity Year represents the scheduled expiration year of the primary term of the lease and does not include tenant extension options, if any (2) As of 3/31/2017. Percent of Total Rent calculated using March 2017 rent, annualized Investing in the future of healthcare 15

16 5 Strong and Diversified Tenant Base CareTrust REIT has reduced its operator concentration to 50%, while its primary tenant, Ensign, continues to show strong EBITDAR coverage. Ensign is a leading post-acute operator that is conservatively capitalized and has significant rent coverage Ensign Adjusted EBITDAR (1) Operator Rent Concentration (2) Other 17% ($ in millions) $221 $262 Premier 5% Trillium 4% Ensign 50% $60 $73 $87 $107 $128 $144 $149 $159 PMG 8% Pristine 16% Ensign 1.4x Net Debt / Adj. EBITDA (3) Ensign EBITDAR Coverage of 2.1x (4) Source(s): Company filings (1) EBITDAR consists of net income before (a) interest expense, net, (b) provisions for income taxes, (c) depreciation and amortization and (d) rent-cost of services. Adjusted EBITDAR further adjusts EBITDAR to exclude revenue and expenses which are infrequent in nature and are variable in nature, or which do not represent current revenues or cash expenditures (2) Based on Q actuals (3) Net Debt as of 3/31/2017. Adjusted EBITDA annualized for 1Q 2017 (4) Ensign Coverage represents trailing twelve months ending March 31, 2017; EBITDAR Lease Coverage Ratio is a supplemental measure of an operator/tenant s ability to meet their cash rent and other obligations to CareTrust REIT. This data includes information provided by operators/tenants and relevant guarantors without independent verification by CareTrust REIT. EBITDAR represents net income before interest expense, income tax, depreciation and amortization, and rent, after applying a standardized management fee (5% of facility operating revenues) Investing in the future of healthcare 16

17 6 Strong Tenant Rent Coverage EBITDAR Tenant Lease Coverage Ratios 1.90x 1.80x 1.70x 1.60x 1.50x 1.40x 1.30x 1.20x 1.10x 1.00x 0.90x 0.80x 0.70x 1.71x 1.54x 1.51x 1.33x 1.30x 1.19x 1.11x 0.84x (1) (2) (3) (4) (5) (6) (7) (8) CTRE SBRA LTC OHI CCP HCN HCP QCP Note(s): EBITDAR Lease Coverage Ratio is a supplemental measure of an operator/tenant s ability to meet their cash rent and other obligations to CareTrust REIT. This data includes information provided by operators/tenants and relevant guarantors without independent verification by CareTrust REIT. EBITDAR represents net income before interest expense, income tax, depreciation and amortization, and rent, after applying a standardized management fee (5% of facility operating revenues) (1) Trailing twelve months ended December 31, 2016; includes CareTrust REIT s pro forma underwriting coverage for the first four post-acquisition quarters, and represents the total portfolio (2) As of Q reported period, one quarter in arrears, and represents SBRA s SNF portfolio (3) As of Q reported period, one quarter in arrears, and represents LTC s SNF portfolio (4) As of Q reported period, one quarter in arrears, and represents OHI s total portfolio (5) As of Q reported period, one quarter in arrears, and represents CCP s total portfolio (6) As of Q reported period, one quarter in arrears, and represents HCN s long term / post-acute and senior housing triple-net portfolio (7) As of Q reported period, one quarter in arrears, and represents HCP s senior housing triple-net portfolio (8) Trailing twelve months ending December 31, 2016 and represents QCP s HCRMC portfolio (94% of revenues) Investing in the future of healthcare 17

18 $ Outstanding (in millions) 7 Disciplined Financial Policy Strong Liquidity Targeting Sustainable Leverage Substantial Unencumbered Asset Pool No Near-Term Maturities Disciplined Financial Policy Liquidity of approximately $390 million (1), including availability under our $400 million unsecured revolver as of June 2, 2017 Raised $125.0 million (2) via At-The-Market equity offering program from August 2016 April 2017 Initiated new $300 million ATM program in May 2017 The Company continues to maintain conservative leverage goals Debt-to-Enterprise Value between 25% to 40% Debt-to-Normalized EBITDA between 4.0x to 5.0x CareTrust REIT has $1,158 million (3) in Gross Assets and the Company s Secured Debt-to-Gross Asset Value ratio is 0.0% May 2017 $300 million Senior Unsecured Notes Offering extended the Company s weighted average maturity profile from 4.4 years to 7.5 years $400.0 $200.0 $ Balanced use of debt and equity to fund acquisitions Goals and policies in place to achieve investment grade rating Revolver Term Loan 5.25% Senior Notes (1) Pro forma for May $300 million senior notes issuance and use of proceeds therefrom and real estate acquisitions through June 2, 2017 (2) Does not include transaction costs (3) Calculated as gross real estate investment, or the sum of real estate investment (excluding accumulated depreciation) inclusive of transaction costs Investing in the future of healthcare 18

19 EBITDAR Tenant Lease Coverage (1) 8 Well-Protected Dividend CareTrust REIT s industry-leading lease coverage and payout ratio provide CTRE meaningful organic growth capital and create a uniquely compelling risk-adjusted return profile Best-in-class EBITDAR lease coverage Lowest FFO payout ratio in peer group 2.5x Lower Growth Capital & Stronger Operational Coverage Greater Growth Capital & Stronger Operational Coverage 1.5x EBITDAR Lease Coverage Ratio of 1.71x (2) 2017 Q1 FFO payout ratio of 64% (3) (1) Lower Growth Capital & Weaker Operational Coverage 0.5x 90% 80% 70% FFO Payout Ratio (2) Greater Growth Capital & Weaker Operational Coverage 60% 50% Note: FFO Payout Ratio based on Q FFO and dividend per share (1) HCP FFO adjusted for the QCP spin-off (2) EBITDAR Lease Coverage Ratio is a supplemental measure of an operator/tenant s ability to meet their cash rent and other obligations to CareTrust REIT. This data is derived solely from information provided by operators/tenants and relevant guarantors without independent verification by CareTrust REIT. EBITDAR represents net income before interest expense, income tax, depreciation and amortization, and rent, after applying a standardized management fee (5% of facility operating revenues) (3) FFO represents net income calculated in accordance with GAAP before gains or losses from real estate dispositions, real estate depreciation and amortization and impairment charges, and adjustments for unconsolidated partnerships and joint ventures Investing in the future of healthcare 19

20 Investing in the future of healthcare Appendix

21 16,715 16,554 16,441 16,256 16,066 15,965 15,861 15,772 15,771 15,679 15,669 15,655 15,667 15,666 15,663 15,655 Favorable Demand and Supply Trends The long-term outlook for the post-acute industry remains favorable, driven by strong fundamentals, including: 1) aging population 2) industry supply constraints 3) increased cost of treatment alternatives Age 65+ Population '90 '95 '00 '05 '10 '15 '20E '25E '30E '35E '40E Americans aged 65+ or older are expected to increase significantly. This demographic is a key driver for demand of post-acute / skilled nursing facilities US SNF Properties Supply continues to be constrained as Certificate of Need states push absorption and increase occupancy A shift from Fee-for-Service to bundled payments and uncertainty around the ACA position the lowest cost most efficient providers of care at an advantage Source(s): AHCA, CMS OSCAR data, U.S. Census Bureau, Medpac '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 Relative Cost of Treatment Across Care Providers $10,501 $7,897 $6,165 $10,618 $8,905 $115,463 $74,689 $67,104 $44,633 $34,196 $31,496 $26,051 $26,051 $17,135 $18,487 SNF IRF LTAC Tracheotomy with Vent Respiratory with Vent Joint Replacement Hip Fracture Stroke Investing in the future of healthcare 21

22 SNF Reimbursement Rates Skilled nursing reimbursement rates appear stable and increasing over time On October 1, 2016 skilled nursing providers received a 2.4% increase to overall Medicare rates for FY17 Source(s): Eljay LLC, Hansen, Hunter and Company for AHCA and composite of CMS, AHCA, AQNHC, OSCAR, Eljay LLC and Avalere Group Data; ENSG company filings (1) Amounts represent the Medicare rates for all facilities acquired on or before 2007 in each year Investing in the future of healthcare 22

23 Reconciliation of EBITDA For the Quarter Ended March 31, 2017 For the Year Ended December 31, Quarter Annualized (1) (in thousands) (in thousands) Net income (loss) $10,281 $41,124 $29,353 $10,034 ($8,143) Depreciation and amortization 9,076 36,304 31,965 24,133 23,000 Interest expense 5,879 23,516 23,199 25,256 21,622 Amortization of stock-based compensation 536 2,144 1,546 1, EBITDA $25,772 $103,088 $86,063 $60,945 $36,633 Acquisition Costs Loss on sale of real estate Normalized EBITDA $25,772 $103,088 $86,533 $60,945 $36,680 Note: Normalized EBITDA or net income before interest expense, income taxes, depreciation and amortization, amortization of deferred financing costs and stock-based compensation, acquisition costs and loss on the sale of real estate (1) Annualized amounts represent results for the quarter ended March 31, 2017 multiplied times four and are provided for informational purposes only. Annualized amounts are not necessarily indicative of results that will be achieved for the year ending December 31, 2017 or any other future period. Results for the quarter ended March 31, 2017 only reflect the results of the Wisconsin Acquisitions from February 1, 2017 and the Illinois Acquisitions from March 1, 2017 Investing in the future of healthcare 23