CareTrust REIT Beats Estimates for FFO, Revenue for 3Q

CareTrust REIT Inc. (NYSE: CTRE) beat Wall Street estimates in reporting earnings this week for the third quarter of 2026. The company’s stock closed on Nov. 6 at $38.21, up $1.03, or 2.77 percent.

Funds from Operations (FFO) came in at $127 million, or 54 cents per share, for the quarter, a couple of pennies higher than analyst calls for 52 cents per share. The number was 20 percent higher than 3Q from a year-ago.

FFO takes net income and adds back items such as depreciation and amortization.

Other financial highlights:

-          Net income was $83.7 million, or 35 cents per share.

-          Revenue was $176.4 million vs. analyst estimates for $171 million.

-          Full-year FFO guidance was raised to the range of $2.08 to $2.09 per share.

-          CareTrust has invested $2.9 billion year-to-date.

Operational highlights during the third quarter:

-          CareTrust announced a strategic relationship with L&T, which was expected to deliver double-digit growth through UK care homes and SHOP.

-          The company said it maintains a low leverage profile with net debt to EBITDA at 2.7 times.

Earnings Call

Company President and CEO David Sedgwick, speaking to analysts on the earnings results, said he wanted to put the company’s growth in perspective.

“Let me put those figures in context. Over the last few years since Q4 ’22, healthcare REITs have grown assets by 27 percent. CareTrust’s asset base has grown by 375 percent. And looking at FFO per share growth from ’23 through estimates for this year, healthcare REIT FFO per share will have grown 30 percent. CareTrust will have grown 47 percent,” he said.

“Looking at forward estimates today, CareTrust trades at the lowest growth-adjusted multiple of all healthcare REITs.”

Sedgwick said if anyone ever wondered why the company has maintained extremely low leverage and “stockpiles of dry powder” while also growing at a record pace, “it’s precisely for a market like this. In times of rising rates and uncertainty, sellers prioritize the buyer who will close, and that’s us. I’ll remind you that our meteoric growth rise began, and in no small measure was due to the Fed’s aggressive rate hiking in ’22 and ’23 and during the subsequent higher-for-longer environment.”

UK Expansion

On the L&T news, he said the owner of L&T, Lawrence Tomlinson, has built more than 250 care homes and his team is now engineered to deliver around 30 care homes per year.

“No other developer in the UK comes close to that pace. Standardization, vertical integration, and a talented and driven team are the special ingredients that make L&T one of one,” Sedgwick said.

“So, in a season of fierce competition for SHOP assets, L&T provides us with a truly differentiated SHOP growth engine that will deliver double-digit returns with future-proofed real estate. In addition to L&T, the core growth engines continue to compound. In the third quarter alone, we closed approximately $740 million of investments at a blended stabilized yield of 8.3 percent,” he added.

In total, the company’s third quarter investment activity largely consisted of: 1) the acquisition of the Southwest skilled nursing portfolio for approximately $399 million; 2) approximately $269 million of senior housing triple net investments led by a 16-home UK care homes portfolio sourced and executed by its London-based team; and 3) a 2-community addition to its SHOP platform in Utah for approximately $65 million.

All told, CareTrust has 628 properties, 58,775 beds/units, 391 skilled nursing triple-net, 224 seniors housing triple-net, and 4 seniors housing operating.

Comments or questions? Contact Patrick Connole at pconnole@parkplacelive.com.