Sabra Health Care REIT, Inc. ("Sabra," the "Company" or "we") (NASDAQ:SBRA) today announced its results of operations for the third quarter of 2023.

THIRD QUARTER 2023 RESULTS AND RECENT EVENTS

Results per diluted common share for the third quarter of 2023 were as follows:
- Net Loss: $(0.07)
- FFO: $0.33
- Normalized FFO: $0.33
- AFFO: $0.35
- Normalized AFFO: $0.34
EBITDARM Coverage Summary:
- Skilled Nursing/Transitional Care: 1.68x (1.61x excluding Provider Relief Funds)
- Senior Housing - Leased: 1.17x
- Behavioral Health: 1.92x
- Specialty Hospitals & Other: 6.72x
During the third quarter of 2023, Sabra generated $80 million of gross proceeds from the disposition of 13 skilled nursing and two senior housing facilities. Net proceeds were used to reduce the outstanding balance on the Company's revolving credit facility.
As previously disclosed, Sabra successfully transitioned the 11 wholly-owned senior housing managed properties formerly operated by Enlivant to Inspirit Senior Living on July 6, 2023. Performance has so far exceeded expectations, highlighted by occupancy in September 2023 increasing more than 230 bps compared to June 2023.
On November 6, 2023, Sabra's Board of Directors declared a quarterly cash dividend of $0.30 per share of common stock. The dividend will be paid on November 30, 2023 to common stockholders of record as of the close of business on November 17, 2023.

BUSINESS UPDATE

Same-Store - Senior Housing Managed

Sabra's same-store senior housing managed portfolio performed well as it continues to recover from the pandemic, highlighted by a 170 bps sequential increase in quarterly occupancy, to 81.9%. On a year-over-year basis, third quarter revenue grew by 6.5% driven primarily by higher REVPOR. Healthy top-line growth combined with roughly flat operating expenses resulted in a 28.2% year-over-year increase in quarterly Cash NOI for this portfolio.

Commenting on the third quarter's results, Rick Matros, CEO and Chair, said, "We believe our business is moving further and further away from the pandemic-induced bottom. While we expect labor issues to persist, we do see continued improvement. Despite this challenge, occupancy and rent coverage in our skilled and senior housing NNN portfolios remain on an upward trajectory. During the quarter, our senior housing managed portfolio showed strong improvement in all critical metrics. Our balance sheet continues to be exemplary and that, together with our strategy of focusing on our internal growth, has led to improvements in our cost of capital. With an improved cost of capital, the door to external growth has started to open in some cases. To the extent we execute on these opportunities, we are focused on conservatively underwriting lower risk singles and doubles."

LIQUIDITY

As of September 30, 2023, we had approximately $1.0 billion of liquidity, consisting of unrestricted cash and cash equivalents of $33.3 million and available borrowings of $967.4 million under our revolving credit facility. As of September 30, 2023, we also had $500.0 million available under the ATM program.

CONFERENCE CALL AND COMPANY INFORMATION

A conference call with a simultaneous webcast to discuss the 2023 third quarter results will be held on Tuesday, November 7, 2023 at 10:00 am Pacific Time. The webcast URL is https://events.q4inc.com/attendee/646608122. The dial-in number for U.S. participants is (888) 880-4448. For participants outside the U.S., the dial-in number is (646) 960-0572. The conference ID number is 1382596. A digital replay of the call will be available on the Company's website at www.sabrahealth.com. The Company's supplemental information package for the third quarter will also be available on the Company's website in the "Investors" section.

ABOUT SABRA

As of September 30, 2023, Sabra's investment portfolio included 377 real estate properties held for investment (consisting of (i) 240 Skilled Nursing/Transitional Care facilities, (ii) 43 senior housing communities ("Senior Housing - Leased"), (iii) 61 senior housing communities operated by third-party property managers pursuant to property management agreements ("Senior Housing - Managed"), (iv) 18 Behavioral Health facilities and (v) 15 Specialty Hospitals and Other facilities), 12 investments in loans receivable (consisting of two mortgage loans and 10 other loans), five preferred equity investments and two investments in unconsolidated joint ventures. As of September 30, 2023, Sabra's real estate properties held for investment included 37,606 beds/units, spread across the United States and Canada.

FORWARD-LOOKING STATEMENTS SAFE HARBOR

This release contains "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. Any statements that do not relate to historical or current facts or matters are forward-looking statements. These statements may be identified, without limitation, by the use of "expects," "believes," "intends," "should" or comparable terms or the negative thereof. Examples of forward-looking statements include all statements regarding our expectations regarding labor, occupancy and rent coverage trends; our expectations regarding continued recovery from the pandemic; and our other expectations regarding our future financial position, results of operations, cash flows, liquidity, business strategy, growth opportunities, potential investments and dispositions, and plans and objectives for future operations and capital raising activity.

Our actual results may differ materially from those projected or contemplated by our forward-looking statements as a result of various factors, including, among others, the following: pandemics or epidemics, including COVID-19, and the related impact on our tenants, borrowers and Senior Housing - Managed communities; increased labor costs and historically low unemployment; increases in market interest rates and inflation; operational risks with respect to our Senior Housing - Managed communities; competitive conditions in our industry; the loss of key management personnel; uninsured or underinsured losses affecting our properties; potential impairment charges and adjustments related to the accounting of our assets; the potential variability of our reported rental and related revenues as a result of Accounting Standards Update ("ASU") 2016-02, Leases, as amended by subsequent ASUs; risks associated with our investment in our unconsolidated joint ventures; catastrophic weather and other natural or man-made disasters, the effects of climate change on our properties and a failure to implement sustainable and energy-efficient measures; increased operating costs and competition for our tenants, borrowers and Senior Housing - Managed communities; increased healthcare regulation and enforcement; our tenants' dependency on reimbursement from governmental and other third-party payor programs; the effect of our tenants, operators or borrowers declaring bankruptcy or becoming insolvent; our ability to find replacement tenants and the impact of unforeseen costs in acquiring new properties; the impact of litigation and rising insurance costs on the business of our tenants; the impact of required regulatory approvals of transfers of healthcare properties; environmental compliance costs and liabilities associated with real estate properties we own; our tenants', borrowers' or operators' failure to adhere to applicable privacy and data security laws, or a material breach of our or our tenants', borrowers' or operators' information technology; our concentration in the healthcare property sector, particularly in skilled nursing/transitional care facilities and senior housing communities, which makes our profitability more vulnerable to a downturn in a specific sector than if we were investing in multiple industries; the significant amount of and our ability to service our indebtedness; covenants in our debt agreements that may restrict our ability to pay dividends, make investments, incur additional indebtedness and refinance indebtedness on favorable terms; adverse changes in our credit ratings; our ability to make dividend distributions at expected levels; our ability to raise capital through equity and debt financings; changes and uncertainty in macroeconomic conditions and disruptions in the financial markets; risks associated with our ownership of property outside the U.S., including currency fluctuations; the relatively illiquid nature of real estate investments; our ability to maintain our status as a real estate investment trust ("REIT") under the federal tax laws; compliance with REIT requirements and certain tax and tax regulatory matters related to our status as a REIT; changes in tax laws and regulations affecting REITs; the ownership limits and takeover defenses in our governing documents and under Maryland law, which may restrict change of control or business combination opportunities; and the exclusive forum provisions in our bylaws.

Additional information concerning risks and uncertainties that could affect our business can be found in our filings with the Securities and Exchange Commission (the "SEC"), including in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022. We do not intend, and we undertake no obligation, to update any forward-looking information to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events, unless required by law to do so.

TENANT AND BORROWER INFORMATION

This release includes information regarding certain of our tenants that lease properties from us and our borrowers, most of which are not subject to SEC reporting requirements. The information related to our tenants and borrowers that is provided in this release has been provided by, or derived from information provided by, such tenants and borrowers. We have not independently verified this information. We have no reason to believe that such information is inaccurate in any material respect. We are providing this data for informational purposes only.

NOTE REGARDING NON-GAAP FINANCIAL MEASURES

This release includes the following financial measures defined as non-GAAP financial measures by the SEC: Cash NOI, funds from operations ("FFO"), Normalized FFO, Adjusted FFO ("AFFO"), Normalized AFFO, FFO per diluted common share, Normalized FFO per diluted common share, AFFO per diluted common share and Normalized AFFO per diluted common share. These measures may be different than non-GAAP financial measures used by other companies, and the presentation of these measures is not intended to be considered in isolation or as a substitute for financial information prepared and presented in accordance with U.S. generally accepted accounting principles. An explanation of these non-GAAP financial measures is included under "Reporting Definitions" in this release, and reconciliations of these non-GAAP financial measures to the GAAP financial measures we consider most comparable are included on the Investors section of our website at https://ir.sabrahealth.com/investors/financials/quarterly-results.

SABRA HEALTH CARE REIT, INC. CONSOLIDATED STATEMENTS OF (LOSS) INCOME (dollars in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Revenues:
Rental and related revenues ⁽¹⁾	$	93,085		$	84,214		$	283,229		$	297,268
Resident fees and services		59,748			47,610			174,897			133,973
Interest and other income		8,794			8,940			25,991			28,585
Total revenues		161,627			140,764			484,117			459,826
Expenses:
Depreciation and amortization		43,242			47,427			140,211			137,855
Interest		28,156			27,071			85,024			77,573
Triple-net portfolio operating expenses		4,304			5,120			13,243			14,983
Senior housing - managed portfolio operating expenses		44,523			36,705			132,124			103,835
General and administrative		10,759			9,676			30,793			28,721
Provision for (recovery of) loan losses and other reserves		328			(217	)		549			(12	)
Impairment of real estate		—			60,857			7,064			72,602
Total expenses		131,312			186,639			409,008			435,557
Other (expense) income:
Loss on extinguishment of debt		—			(140	)		(1,541	)		(411	)
Other income (expense)		2,229			994			2,570			(1,101	)
Net loss on sales of real estate		(46,545	)		(80	)		(75,893	)		(4,581	)
Total other (expense) income		(44,316	)		774			(74,864	)		(6,093	)
(Loss) income before loss from unconsolidated joint ventures and income tax expense		(14,001	)		(45,101	)		245			18,176
Loss from unconsolidated joint ventures		(645	)		(4,384	)		(2,136	)		(9,715	)
Income tax expense		(455	)		(579	)		(1,509	)		(1,118	)
Net (loss) income	$	(15,101	)	$	(50,064	)	$	(3,400	)	$	7,343
Net (loss) income, per:
Basic common share	$	(0.07	)	$	(0.22	)	$	(0.01	)	$	0.03
Diluted common share	$	(0.07	)	$	(0.22	)	$	(0.01	)	$	0.03
Weighted average number of common shares outstanding, basic		231,224,692			230,982,227			231,197,375			230,936,032
Weighted average number of common shares outstanding, diluted		231,224,692			230,982,227			231,197,375			231,779,750

⁽¹⁾

See page 5 for additional details regarding Rental and related revenues.

SABRA HEALTH CARE REIT, INC. CONSOLIDATED STATEMENTS OF (LOSS) INCOME - SUPPLEMENTAL INFORMATION (in thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Cash rental income	$	88,006		$	92,966		$	265,044		$	288,532
Straight-line rental income		849			2,006			3,699			7,042
Straight-line rental income receivable write-offs		(992	)		(16,606	)		(1,510	)		(17,068	)
Above/below market lease amortization		1,456			1,569			4,592			4,730
Above/below market lease intangible write-offs		—			—			—			326
Operating expense recoveries		3,766			4,279			11,404			13,706
Rental and related revenues	$	93,085		$	84,214		$	283,229		$	297,268

SABRA HEALTH CARE REIT, INC. CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share data)

	September 30, 2023			December 31, 2022
Assets
Real estate investments, net of accumulated depreciation of $1,002,484 and $913,345 as of September 30, 2023 and December 31, 2022, respectively	$	4,603,014		$	4,959,343
Loans receivable and other investments, net		417,947			411,396
Investment in unconsolidated joint ventures		135,755			134,962
Cash and cash equivalents		33,256			49,308
Restricted cash		5,602			4,624
Lease intangible assets, net		32,749			40,131
Accounts receivable, prepaid expenses and other assets, net		152,239			147,908
Total assets	$	5,380,562		$	5,747,672

Liabilities
Secured debt, net	$	47,789		$	49,232
Revolving credit facility		32,623			196,982
Term loans, net		534,011			526,129
Senior unsecured notes, net		1,735,055			1,734,431
Accounts payable and accrued liabilities		128,039			142,259
Lease intangible liabilities, net		34,192			42,244
Total liabilities		2,511,709			2,691,277
Equity
Preferred stock, $0.01 par value; 10,000,000 shares authorized, zero shares issued and outstanding as of September 30, 2023 and December 31, 2022		—			—
Common stock, $0.01 par value; 500,000,000 shares authorized, 231,219,523 and 231,009,295 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively		2,312			2,310
Additional paid-in capital		4,491,917			4,486,967
Cumulative distributions in excess of net income		(1,665,045	)		(1,451,945	)
Accumulated other comprehensive income		39,669			19,063
Total equity		2,868,853			3,056,395
Total liabilities and equity	$	5,380,562		$	5,747,672

SABRA HEALTH CARE REIT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

	Nine Months Ended September 30,
	2023			2022
Cash flows from operating activities:
Net (loss) income	$	(3,400	)	$	7,343
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		140,211			137,855
Non-cash rental and related revenues		(6,781	)		4,970
Non-cash interest income		(380	)		(1,683	)
Non-cash interest expense		9,179			8,300
Stock-based compensation expense		5,468			5,367
Loss on extinguishment of debt		1,541			411
Provision for (recovery of) loan losses and other reserves		549			(12	)
Net loss on sales of real estate		75,893			4,581
Impairment of real estate		7,064			72,602
Loss from unconsolidated joint ventures		2,136			9,715
Distributions of earnings from unconsolidated joint ventures		1,705			—
Other non-cash items		(3,704	)		2,167
Changes in operating assets and liabilities:
Accounts receivable, prepaid expenses and other assets, net		(10,660	)		(5,631	)
Accounts payable and accrued liabilities		3,013			2,161
Net cash provided by operating activities		221,834			248,146
Cash flows from investing activities:
Acquisition of real estate		(39,630	)		(83,985	)
Origination and fundings of loans receivable		(9,614	)		(4,500	)
Origination and fundings of preferred equity investments		(11,015	)		(5,813	)
Additions to real estate		(63,794	)		(33,809	)
Escrow deposits for potential investments		—			(836	)
Repayments of loans receivable		8,674			4,885
Repayments of preferred equity investments		4,828			4,173
Investment in unconsolidated joint ventures		(4,797	)		(128,019	)
Net proceeds from the sales of real estate		248,222			62,816
Net proceeds from sales-type lease		25,490			—
Insurance proceeds		6,001			—
Distributions in excess of earnings from unconsolidated joint ventures		544			—
Net cash provided by (used in) investing activities		164,909			(185,088	)
Cash flows from financing activities:
Net (repayments of) borrowings from revolving credit facility		(165,338	)		147,353
Proceeds from term loans		12,188			—
Principal payments on term loans		—			(63,750	)
Principal payments on secured debt		(1,479	)		(17,030	)
Payments of deferred financing costs		(18,135	)		(6	)
Payment of contingent consideration		(17,900	)		(2,500	)
Issuance of common stock, net		(2,194	)		(4,394	)
Dividends paid on common stock		(208,079	)		(207,861	)
Net cash used in financing activities		(400,937	)		(148,188	)
Net decrease in cash, cash equivalents and restricted cash		(14,194	)		(85,130	)
Effect of foreign currency translation on cash, cash equivalents and restricted cash		(880	)		392
Cash, cash equivalents and restricted cash, beginning of period		53,932			115,886
Cash, cash equivalents and restricted cash, end of period	$	38,858		$	31,148
Supplemental disclosure of cash flow information:
Interest paid	$	72,911		$	68,778
Supplemental disclosure of non-cash investing activities:
Decrease in loans receivable and other investments due to acquisition of real estate	$	4,644		$	14,311

SABRA HEALTH CARE REIT, INC. FUNDS FROM OPERATIONS (FFO), NORMALIZED FFO, ADJUSTED FUNDS FROM OPERATIONS (AFFO) AND NORMALIZED AFFO (dollars in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Net (loss) income	$	(15,101	)	$	(50,064	)	$	(3,400	)	$	7,343
Add:
Depreciation and amortization of real estate assets		43,242			47,427			140,211			137,855
Depreciation, amortization and impairment of real estate assets related to unconsolidated joint ventures		2,255			6,090			6,505			15,856
Net loss on sales of real estate		46,545			80			75,893			4,581
Net gain on sales of real estate related to unconsolidated joint ventures		—			—			—			(220	)
Impairment of real estate		—			60,857			7,064			72,602
FFO	$	76,941		$	64,390		$	226,273		$	238,017
Write-offs of cash and straight-line rental income receivable and lease intangibles		939			16,370			1,371			15,831
Lease termination income		—			—			—			(2,338	)
Loss on extinguishment of debt		—			140			1,541			411
Provision for (recovery of) loan losses and other reserves		328			(217	)		549			(12	)
Support payments paid to joint venture manager ⁽¹⁾		—			2,254			—			5,880
Other normalizing items ⁽²⁾		(1,003	)		(65	)		1,066			2,586
Normalized FFO	$	77,205		$	82,872		$	230,800		$	260,375
FFO	$	76,941		$	64,390		$	226,273		$	238,017
Stock-based compensation expense		2,235			2,117			5,468			5,367
Non-cash rental and related revenues		(1,312	)		13,031			(6,781	)		4,970
Non-cash interest income		8			(589	)		(380	)		(1,683	)
Non-cash interest expense		3,088			2,798			9,179			8,300
Non-cash portion of loss on extinguishment of debt		—			140			1,541			411
Provision for (recovery of) loan losses and other reserves		328			(217	)		549			(12	)
Other adjustments related to unconsolidated joint ventures		133			(2,378	)		371			(4,056	)
Other adjustments ⁽³⁾		61			36			224			2,430
AFFO	$	81,482		$	79,328		$	236,444		$	253,744
Cash portion of lease termination income		—			—			—			(2,338	)
Write-off of cash rental income		—			—			—			71
Support payments paid to joint venture manager ⁽¹⁾		—			2,254			—			5,880
Other normalizing items ⁽²⁾		(1,017	)		(80	)		1,021			250
Normalized AFFO	$	80,465		$	81,502		$	237,465		$	257,607
Amounts per diluted common share:
Net (loss) income	$	(0.07	)	$	(0.22	)	$	(0.01	)	$	0.03
FFO	$	0.33		$	0.28		$	0.97		$	1.03
Normalized FFO	$	0.33		$	0.36		$	0.99		$	1.12
AFFO	$	0.35		$	0.34		$	1.01		$	1.09
Normalized AFFO	$	0.34		$	0.35		$	1.02		$	1.11
Weighted average number of common shares outstanding, diluted:
Net (loss) income		231,224,692			230,982,227			231,197,375			231,779,750
FFO and Normalized FFO		232,835,849			231,993,295			232,566,392			231,779,750
AFFO and Normalized AFFO		233,988,463			232,858,600			233,878,874			232,810,528

⁽¹⁾		Funding for support payments did not require capital contributions from Sabra but rather were funded with proceeds received by our Enlivant unconsolidated joint venture from TPG for the issuance of senior preferred interests.
⁽²⁾		Other normalizing items for FFO and AFFO for the three and nine months ended September 30, 2023 include $3.7 million of gain on insurance proceeds in both periods and $1.3 million and $1.4 million of transition expenses related to the transition of 14 Senior Housing - Managed communities to new operators, respectively. Other normalizing items for FFO for the nine months ended September 30, 2022 include $2.2 million of foreign currency transaction loss related to our Canadian borrowings. In addition, other normalizing items for FFO and AFFO include triple-net operating expenses, net of recoveries and certain adjustments for amounts recorded in the current period that relate to a prior period.
⁽³⁾		Other adjustments for the nine months ended September 30, 2022 includes $2.2 million of foreign currency transaction loss related to our Canadian borrowings.

REPORTING DEFINITIONS

Behavioral Health

Includes behavioral hospitals that provide inpatient and outpatient care for patients with mental health conditions, chemical dependence or substance addictions and addiction treatment centers that provide treatment services for chemical dependence and substance addictions, which may include inpatient care, outpatient care, medical detoxification, therapy and counseling.

Cash Net Operating Income ("Cash NOI")*

The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company considers Cash NOI an important supplemental measure because it allows investors, analysts and its management to evaluate the operating performance of its investments. The Company defines Cash NOI as total revenues less operating expenses and non-cash revenues and expenses. Cash NOI excludes all other financial statement amounts included in net income.

EBITDARM

Earnings before interest, taxes, depreciation, amortization, rent and management fees ("EBITDARM") for a particular facility accruing to the operator/tenant of the property (not the Company), for the period presented. The Company uses EBITDARM in determining EBITDARM Coverage. EBITDARM has limitations as an analytical tool. EBITDARM does not reflect historical cash expenditures or future cash requirements for facility capital expenditures or contractual commitments. In addition, EBITDARM does not represent a property's net income or cash flows from operations and should not be considered an alternative to those indicators. The Company utilizes EBITDARM to evaluate the core operations of the properties by eliminating management fees, which may vary by operator/tenant and operating structure, and as a supplemental measure of the ability of the Company's operators/tenants and relevant guarantors to generate sufficient liquidity to meet related obligations to the Company.

EBITDARM Coverage

Represents the ratio of EBITDARM to cash rent for owned facilities (excluding Senior Housing - Managed communities) for the period presented. EBITDARM Coverage is a supplemental measure of a property's ability to generate cash flows for the operator/tenant (not the Company) to meet the operator's/tenant's related cash rent and other obligations to the Company. However, its usefulness is limited by, among other things, the same factors that limit the usefulness of EBITDARM. EBITDARM Coverage includes only Stabilized Facilities and excludes facilities for which data is not available or meaningful.

Funds From Operations ("FFO") and Adjusted Funds from Operations ("AFFO")*

The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company also believes that funds from operations, or FFO, as defined in accordance with the definition used by the National Association of Real Estate Investment Trusts ("Nareit"), and adjusted funds from operations, or AFFO (and related per share amounts) are important non-GAAP supplemental measures of the Company's operating performance. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a real estate investment trust that uses historical cost accounting for depreciation could be less informative. Thus, Nareit created FFO as a supplemental measure of operating performance for real estate investment trusts that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP. FFO is defined as net income, computed in accordance with GAAP, excluding gains or losses from real estate dispositions and the Company's share of gains or losses from real estate dispositions related to its unconsolidated joint ventures, plus real estate depreciation and amortization, net of amounts related to noncontrolling interests, plus the Company's share of depreciation and amortization related to its unconsolidated joint ventures, and real estate impairment charges of both consolidated and unconsolidated entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. AFFO is defined as FFO excluding merger and acquisition costs, stock-based compensation expense, non-cash rental and related revenues, non-cash interest income, non-cash interest expense, non-cash portion of loss on extinguishment of debt, provision for loan losses and other reserves, non-cash lease termination income and deferred income taxes, as well as other non-cash revenue and expense items (including ineffectiveness gain/loss on derivative instruments, and non-cash revenue and expense amounts related to noncontrolling interests) and the Company's share of non-cash adjustments related to its unconsolidated joint ventures. The Company believes that the use of FFO and AFFO (and the related per share amounts), combined with the required GAAP presentations, improves the understanding of the Company's operating results among investors and makes comparisons of operating results among real estate investment trusts more meaningful. The Company considers FFO and AFFO to be useful measures for reviewing comparative operating and financial performance because, by excluding the applicable items listed above, FFO and AFFO can help investors compare the operating performance of the Company between periods or as compared to other companies. While FFO and AFFO are relevant and widely used measures of operating performance of real estate investment trusts, they do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company's liquidity or operating performance. FFO and AFFO also do not consider the costs associated with capital expenditures related to the Company's real estate assets nor do they purport to be indicative of cash available to fund the Company's future cash requirements. Further, the Company's computation of FFO and AFFO may not be comparable to FFO and AFFO reported by other real estate investment trusts that do not define FFO in accordance with the current Nareit definition or that interpret the current Nareit definition or define AFFO differently than the Company does.

Grant Income

Grant income consists of funds specifically paid to communities in our Senior Housing - Managed portfolio from state or federal governments related to the pandemic and were incremental to the amounts that would have otherwise been received for providing care to residents.

Normalized FFO and Normalized AFFO*

Normalized FFO and Normalized AFFO represent FFO and AFFO, respectively, adjusted for certain income and expense items that the Company does not believe are indicative of its ongoing operating results. The Company considers Normalized FFO and Normalized AFFO to be useful measures to evaluate the Company's operating results excluding these income and expense items to help investors compare the operating performance of the Company between periods or as compared to other companies. Normalized FFO and Normalized AFFO do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company's liquidity or operating performance. Normalized FFO and Normalized AFFO also do not consider the costs associated with capital expenditures related to the Company's real estate assets nor do they purport to be indicative of cash available to fund the Company's future cash requirements. Further, the Company's computation of Normalized FFO and Normalized AFFO may not be comparable to Normalized FFO and Normalized AFFO reported by other real estate investment trusts that do not define FFO in accordance with the current Nareit definition or that interpret the current Nareit definition or define FFO and AFFO or Normalized FFO and Normalized AFFO differently than the Company does.

REVPOR

REVPOR represents the average revenues generated per occupied unit per month at Senior Housing - Managed communities for the period indicated. It is calculated as resident fees and services revenues, excluding Grant Income, divided by average monthly occupied unit days. REVPOR includes only Stabilized Facilities.

Senior Housing

Senior Housing communities include independent living, assisted living, continuing care retirement and memory care communities.

Senior Housing - Managed

Senior Housing communities operated by third-party property managers pursuant to property management agreements.

Skilled Nursing/Transitional Care

Skilled Nursing/Transitional Care facilities include skilled nursing, transitional care, multi-license designation and mental health facilities.

Specialty Hospitals and Other

Includes acute care, long-term acute care and rehabilitation hospitals, facilities that provide residential services, which may include assistance with activities of daily living, and other facilities not classified as Skilled Nursing/Transitional Care, Senior Housing or Behavioral Health.

Stabilized Facility

At the time of acquisition, the Company classifies each facility as either stabilized or non-stabilized. In addition, the Company may classify a facility as non-stabilized after acquisition. Circumstances that could result in a facility being classified as non-stabilized include newly completed developments, facilities undergoing major renovations or additions, facilities being repositioned or transitioned to new operators, and significant transitions within the tenants' business model. Such facilities are typically reclassified to stabilized upon the earlier of maintaining consistent occupancy (85% for Skilled Nursing/Transitional Care facilities and 90% for Senior Housing communities) or 24 months after the date of classification as non-stabilized. Stabilized Facilities exclude (i) facilities held for sale, (ii) strategic disposition candidates, (iii) facilities being transitioned to a new operator, (iv) facilities being transitioned from being leased by the Company to being operated by the Company and (v) leased facilities acquired during the three months preceding the period presented.

*Non-GAAP Financial Measures

Reconciliations, definitions and important discussions regarding the usefulness and limitations of the Non-GAAP Financial Measures used in this release can be found at https://ir.sabrahealth.com/investors/financials/quarterly-results.

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Sabra Reports Third Quarter 2023 Results