EX-99.3 4 sbraex9932025q4.htm Q4 2025 NON-GAAP RECONCILIATIONS Document

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Reconciliations of Non-GAAP Financial Measures

December 31, 2025

(Unaudited)



SABRA HEALTH CARE REIT, INC.
2026 OUTLOOK

The table below sets forth our 2026 guidance (per diluted common share):
 LowHigh
Net income attributable to Sabra Health Care REIT, Inc.$0.60 $0.64 
Add:
Depreciation and amortization of real estate assets0.86 0.86 
Depreciation and amortization of real estate assets related to unconsolidated joint ventures0.03 0.03 
FFO / Normalized FFO attributable to Sabra Health Care REIT, Inc.$1.49 $1.53 
FFO attributable to Sabra Health Care REIT, Inc.$1.49 $1.53 
Stock-based compensation expense0.05 0.05 
Non-cash rental and related revenues(0.03)(0.03)
Non-cash interest expense0.04 0.04 
AFFO / Normalized AFFO attributable to Sabra Health Care REIT, Inc.$1.55 $1.59 


Earnings guidance above assumes:
•low-single-digit Cash NOI growth for the triple-net portfolio at the midpoint, ignoring the impact of acquisitions and dispositions;
•average full-year Cash NOI growth for the same-store Senior Housing - Managed portfolio in the low to mid-teens;
•general and administrative expenses at the midpoint of $52 million, which includes $12 million of stock-based compensation expense;
•cash interest expense of $103 million at the midpoint;
•weighted average share count of 255 million and 256 million for Normalized FFO and Normalized AFFO, respectively;
•no tenants are placed on cash-basis or moved to accrual-basis for revenue recognition after December 31, 2025; and
•only investments, dispositions and capital markets activity completed as of February 12, 2026.


The foregoing guidance ranges reflect management's view of current and future market conditions. There can be no assurance that the Company's actual results will not differ materially from the estimates set forth above. Except as otherwise required by law, the Company assumes no, and hereby disclaims any, obligation to update any of the foregoing guidance ranges as a result of new information or new or future developments.

logo2a.jpg See reporting definitions.                        2


SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
FFO, Normalized FFO, AFFO and Normalized AFFO
(dollars in thousands, except per share data)

Three Months Ended December 31,Year Ended December 31,
 2025202420252024
Net income attributable to Sabra Health Care REIT, Inc.$27,225 $46,695 $155,609 $126,712 
Add:
Depreciation and amortization of real estate assets51,405 42,308 186,996 169,623 
Depreciation and amortization of real estate assets related to noncontrolling interests(123)— (163)— 
Depreciation and amortization of real estate assets related to unconsolidated joint ventures1,639 2,213 7,584 8,893 
Net loss (gain) on sales of real estate9,063 (6,064)3,519 (2,095)
Impairment of real estate648 — 7,322 18,472 
FFO attributable to Sabra Health Care REIT, Inc.$89,857 $85,152 $360,867 $321,605 
Write-offs of cash and straight-line rental income receivable and lease intangibles— 508 7,759 6,032 
Lease termination income, net of expense— — (1,518)— 
Loss on extinguishment of debt— — 1,154 — 
Recovery of loan losses(407)(125)(1,047)(571)
Other normalizing items (1)
1,711 (1,057)(14,303)1,662 
Normalized FFO attributable to Sabra Health Care REIT, Inc.$91,161 $84,478 $352,912 $328,728 
FFO attributable to Sabra Health Care REIT, Inc.$89,857 $85,152 $360,867 $321,605 
Stock-based compensation expense3,070 2,539 11,360 8,987 
Non-cash rental and related revenues(1,840)(1,627)(1,020)(3,856)
Non-cash interest expense2,362 1,729 7,970 10,479 
Non-cash portion of loss on extinguishment of debt— — (1,730)— 
Recovery of loan losses(407)(125)(1,047)(571)
Other adjustments related to unconsolidated joint ventures76 71 313 472 
Other adjustments (2)
393 (144)(15,142)1,072 
AFFO attributable to Sabra Health Care REIT, Inc.$93,511 $87,595 $361,571 $338,188 
Lease termination income, net of expense— — (1,518)— 
Cash portion of loss on extinguishment of debt— — 2,884 — 
Write-off of cash rental income— 25 — 732 
Other normalizing items (1)
1,703 (704)2,474 1,846 
Normalized AFFO attributable to Sabra Health Care REIT, Inc.$95,214 $86,916 $365,411 $340,766 
Amounts per diluted common share attributable to Sabra Health Care REIT, Inc.:
Net income$0.11 $0.19 $0.64 $0.54 
FFO$0.36 $0.36 $1.48 $1.36 
Normalized FFO$0.36 $0.35 $1.44 $1.39 
AFFO$0.37 $0.36 $1.47 $1.43 
Normalized AFFO$0.38 $0.36 $1.49 $1.44 
Weighted average number of common shares outstanding, diluted:
Net income, FFO and Normalized FFO252,768,271 239,640,053 244,497,242 236,045,862 
AFFO and Normalized AFFO 253,621,566 240,395,180 245,583,191 237,116,036 
(1)     Other normalizing items for FFO and AFFO for the three months ended December 31, 2025 include a $1.8 million catch-up adjustment related to changes in performance-based assumptions on management's compensation. Other normalizing items for FFO for the year ended December 31, 2025 include a $17.2 million gain reclassified from other comprehensive loss related to six previously terminated interest rate swaps as the related forecasted transactions were determined to be probable not to occur and $3.5 million of transition expenses related to the transition of Senior Housing - Managed communities to new operators. Other normalizing items for AFFO for the year ended December 31, 2025 include $3.5 million of transition expenses related to the transition of Senior Housing - Managed communities to new operators. Other normalizing items for FFO and AFFO for the three months and year ended December 31, 2024 include $0.5 million of gain on insurance proceeds. In addition, other normalizing items for FFO and AFFO include triple-net operating expenses, net of recoveries.
(2)    Other adjustments for the year ended December 31, 2025 include a $17.2 million gain reclassified from other comprehensive loss related to six terminated interest rate swaps as the related forecasted transactions were determined to be probable not to occur.
logo2a.jpg See reporting definitions.                        3



SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
EBITDA, Adjusted EBITDA, Adjusted EBITDA, as adjusted and Adjusted EBITDA, as adjusted, annualized
Net Debt and Net Debt to Adjusted EBITDA
(in thousands)

Three Months Ended
December 31, 2025
Net income$27,147 
Interest28,940 
Income tax expense491 
Depreciation and amortization51,405 
EBITDA107,983 
Income from unconsolidated joint ventures(1,652)
Distributions from unconsolidated joint ventures2,159 
Stock-based compensation expense 3,070 
Acquisition and transaction costs453 
Recovery of loan losses(407)
Impairment of real estate648 
Other income(91)
Net loss on sales of real estate9,063 
Adjusted EBITDA (1)
121,226 
Adjustments for current period activity (2)
2,677 
Adjusted EBITDA, as adjusted$123,903 
Adjusted EBITDA, as adjusted, annualized$495,612 
December 31, 2025
Secured debt$44,021 
Revolving credit facility217,584 
Term loans1,039,425 
Senior unsecured notes1,250,000 
Consolidated Debt2,551,030 
Cash and cash equivalents(71,537)
Net Debt$2,479,493 
December 31, 2025
Net Debt$2,479,493 
Adjusted EBITDA, as adjusted, annualized$495,612 
Net Debt to Adjusted EBITDA5.00x








(1)    Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation and amortization (“EBITDA”) excluding the impact of merger-related costs, stock-based compensation expense under the Company’s long-term equity award program and loan loss reserves.
(2)    Adjustments for current period activity give effect to the acquisitions and dispositions completed during the period as though such acquisitions and dispositions were completed as of the beginning of the period and adjust for certain income and expense items that the Company does not believe are indicative of its operating results for the current period.
logo2a.jpg See reporting definitions.                        4



SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Consolidated Statements of Income
Supplemental Information
(in thousands)

Three Months Ended December 31,Year Ended December 31,
 2025202420252024
Cash rental income$87,514 $89,995 $358,928 $363,905 
Straight-line rental income782 876 4,464 4,289 
Write-offs of cash and straight-line rental income receivable and lease intangibles— (508)(7,759)(6,032)
Above/below market lease amortization1,058 1,233 4,315 4,867 
Operating expense recoveries3,563 4,472 14,183 14,466 
Rental and related revenues$92,917 $96,068 $374,131 $381,495 


logo2a.jpg See reporting definitions.                        5



SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Senior Housing - Managed Revenues and Cash NOI
(in thousands)

Three Months Ended
 December 31, 2024March 31, 2025June 30, 2025September 30, 2025December 31, 2025
Revenues:
Resident fees and services$76,865 $77,447 $78,985 $92,017 $108,434 
Resident fees and services attributable to noncontrolling interests— — — (117)(312)
Resident fees and services - pro rata$76,865 $77,447 $78,985 $91,900 $108,122 
Income (loss) from unconsolidated joint ventures:
Resident fees and services10,646 10,192 10,989 11,524 11,611 
Resident fees and services not included in same store (1)
(18,382)(17,959)(19,341)(32,054)(46,146)
Same store resident fees and services - pro rata$69,129 $69,680 $70,633 $71,370 $73,587 
Net income$46,695 $40,304 $65,542 $22,517 $27,147 
Adjustments:
Net income not related to Senior Housing - Managed(36,888)(32,747)(56,463)(14,590)(17,533)
Depreciation and amortization12,538 13,654 14,372 19,989 23,730 
Other income(1,334)— (1,038)(619)(73)
Loss (income) from unconsolidated joint ventures96 (218)(832)(1,226)(1,652)
Sabra's share of unconsolidated joint ventures' Net Operating Income3,131 3,202 3,713 4,034 4,061 
Net Operating Income - consolidated$24,238 $24,195 $25,294 $30,105 $35,680 
Net Operating Income attributable to noncontrolling interests— — — (39)(92)
Net Operating Income - pro rata$24,238 $24,195 $25,294 $30,066 $35,588 
Non-cash revenue adjustments(90)(137)51 5 4 
Cash Net Operating Income - pro rata$24,148 $24,058 $25,345 $30,071 $35,592 
Cash Net Operating Income not included in same store (1)
(3,590)(3,026)(2,724)(7,744)(12,448)
Same store Cash Net Operating Income - pro rata$20,558 $21,032 $22,621 $22,327 $23,144 







(1)    Includes adjustments for changes in the foreign currency exchange rate where applicable by applying the average exchange rate for the current period to prior period results.
logo2a.jpg See reporting definitions.                        6



SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Cash NOI by Property Type
(in thousands)

Three Months Ended December 31, 2025
Skilled Nursing/ Transitional CareSenior HousingBehavioral HealthSpecialty Hospitals and Other
Senior Housing - LeasedSenior Housing - Managed ConsolidatedSenior Housing - Managed UnconsolidatedTotal Senior HousingOtherCorporateTotal
Net income (loss)$34,841 $5,676 $7,962 $1,652 $15,290 $7,757 $3,352 $10,551 $(44,644)$27,147 
Adjustments:
Depreciation and amortization19,954 2,675 23,730 — 26,405 3,495 1,462 — 89 51,405 
Interest191 201 — — 201 — — — 28,548 28,940 
General and administrative— — — — — — — — 15,908 15,908 
Recovery of loan losses— — — — — — — — (407)(407)
Impairment of real estate648 — — — — — — — — 648 
Other (income) expense— — (73)— (73)— — — 15 (58)
Net loss on sales of real estate9,063 — — — — — — — — 9,063 
Income from unconsolidated joint ventures— — — (1,652)(1,652)— — — — (1,652)
Income tax expense— — — — — — — — 491 491 
Sabra’s share of unconsolidated joint ventures’ Net Operating Income— — — 4,061 4,061 — — — — 4,061 
Net Operating Income - consolidated$64,697 $8,552 $31,619 $4,061 $44,232 $11,252 $4,814 $10,551 $— $135,546 
Net Operating Income attributable to noncontrolling interests— — (92)— (92)— — — — (92)
Net Operating Income - pro rata$64,697 $8,552 $31,527 $4,061 $44,140 $11,252 $4,814 $10,551 $— $135,454 
Non-cash revenue and expense adjustments(1,617)(239)— 4 (235)(39)58 — — (1,833)
Cash Net Operating Income - pro rata$63,080 $8,313 $31,527 $4,065 $43,905 $11,213 $4,872 $10,551 $— $133,621 










logo2a.jpg         See reporting definitions.                                  7

SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Cash NOI, Annualized Cash NOI and Annualized Cash NOI, as adjusted by Property Type
(in thousands)

Year Ended December 31, 2025
Skilled Nursing/ Transitional CareSenior HousingBehavioral HealthSpecialty Hospitals and Other
Senior Housing - LeasedSenior Housing - Managed ConsolidatedSenior Housing - Managed UnconsolidatedTotal Senior HousingOtherCorporateTotal
Net income (loss)$169,734 $17,455 $30,249 $3,928 $51,632 $31,745 $13,397 $43,618 $(154,616)$155,510 
Adjustments:
Depreciation and amortization81,358 13,357 71,745 — 85,102 14,313 5,847 — 376 186,996 
Interest776 821 — — 821 — — — 110,892 112,489 
General and administrative— — — — — — — — 53,710 53,710 
Recovery of loan losses— — — — — — — — (1,047)(1,047)
Impairment of real estate7,322 — — — — — — — — 7,322 
Loss on extinguishment of debt— — — — — — — — 1,154 1,154 
Other income— — (1,730)— (1,730)— — — (12,306)(14,036)
Net loss (gain) on sales of real estate5,247 — — — — (1,728)— — — 3,519 
Income from unconsolidated joint ventures— — — (3,928)(3,928)— — — — (3,928)
Income tax expense— — — — — — — — 1,837 1,837 
Sabra’s share of unconsolidated joint ventures’ Net Operating Income— — — 15,010 15,010 — — — — 15,010 
Net Operating Income - consolidated$264,437 $31,633 $100,264 $15,010 $146,907 $44,330 $19,244 $43,618 $— $518,536 
Net Operating Income attributable to noncontrolling interests— — (131)— (131)— — — — (131)
Net Operating Income - pro rata$264,437 $31,633 $100,133 $15,010 $146,776 $44,330 $19,244 $43,618 $— $518,405 
Non-cash revenue and expense adjustments(9,720)8,942 — (77)8,865 (343)116 7 — (1,075)
Cash Net Operating Income - pro rata$254,717 $40,575 $100,133 $14,933 $155,641 $43,987 $19,360 $43,625 $— $517,330 
Annualizing adjustments (1)
(675)(6,516)30,458 1,329 25,271 751 239 (7,734)— 17,852 
Annualized Cash Net Operating Income - pro rata$254,042 $34,059 $130,591 $16,262 $180,912 $44,738 $19,599 $35,891 $— $535,182 
Reallocation adjustments (2)
1,780 6,996 — — 6,996 24,426 — (33,202)— — 
Annualized Cash Net Operating Income, as adjusted - pro rata$255,822 $41,055 $130,591 $16,262 $187,908 $69,164 $19,599 $2,689 $— $535,182 

(1)    Represents the annual effect of acquisitions, dispositions, lease modifications and scheduled rent increases completed during the period and mathematical adjustments needed to make Cash Net Operating Income for the period representative of Cash Net Operating Income for a full year.
(2)    Adjustments to reflect Annualized Cash Net Operating Income from mortgage and construction loans receivable and preferred equity investments in the related asset class of the underlying real estate.
logo2a.jpg         See reporting definitions.                                  8

SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Annualized Cash NOI by Payor Source
(in thousands)

Year Ended December 31, 2025
Private PayorsNon-Private PayorsOtherCorporateTotal
Net income (loss)$102,787 $163,721 $43,618 $(154,616)$155,510 
Adjustments:
Depreciation and amortization106,171 80,449 — 376 186,996 
Interest805 792 — 110,892 112,489 
General and administrative— — — 53,710 53,710 
Recovery of loan losses— — — (1,047)(1,047)
Impairment of real estate1,212 6,110 — — 7,322 
Loss on extinguishment of debt— — — 1,154 1,154 
Other income(1,730)— — (12,306)(14,036)
Net (gain) loss on sales of real estate(3,540)7,059 — — 3,519 
Income from unconsolidated joint ventures(3,928)— — — (3,928)
Income tax expense— — — 1,837 1,837 
Sabra’s share of unconsolidated joint ventures’ Net Operating Income15,010 — — — 15,010 
Net Operating Income - consolidated$216,787 $258,131 $43,618 $— $518,536 
Net Operating Income attributable to noncontrolling interests(131)— — — (131)
Net Operating Income - pro rata$216,656 $258,131 $43,618 $— $518,405 
Non-cash revenue and expense adjustments6,314 (7,396)7 — (1,075)
Cash Net Operating Income - pro rata$222,970 $250,735 $43,625 $— $517,330 
Annualizing adjustments (1)
25,125 461 (7,734)— 17,852 
Annualized Cash Net Operating Income - pro rata$248,095 $251,196 $35,891 $— $535,182 









(1)    Represents the annual effect of acquisitions, dispositions, lease modifications and scheduled rent increases completed during the period and mathematical adjustments needed to make Cash Net Operating Income for the period representative of Cash Net Operating Income for a full year.
logo2a.jpg         See reporting definitions.                                  9

SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Annualized Cash NOI by Relationship
(in thousands)

Year Ended December 31, 2025
Ensign GroupAvamere Family of CompaniesSignature HealthcareSignature BehavioralRecovery Centers of AmericaThe McGuire GroupAll Other RelationshipsCorporateTotal
Net income (loss)$28,446 $34,302 $28,690 $24,663 $25,428 $15,284 $153,313 $(154,616)$155,510 
Adjustments:
Depreciation and amortization12,990 11,298 12,050 8,956 2,145 9,187 129,994 376 186,996 
Interest— — — — — — 1,597 110,892 112,489 
General and administrative— — — — — — — 53,710 53,710 
Recovery of loan losses— — — — — — — (1,047)(1,047)
Impairment of real estate— — — — — — 7,322 — 7,322 
Loss on extinguishment of debt— — — — — — — 1,154 1,154 
Other income— — — — — — (1,730)(12,306)(14,036)
Net (gain) loss on sales of real estate— (103)— — — — 3,622 — 3,519 
Income from unconsolidated joint ventures— — — — — — (3,928)— (3,928)
Income tax expense— — — — — — — 1,837 1,837 
Sabra’s share of unconsolidated joint ventures’ Net Operating Income— — — — — — 15,010 — 15,010 
Net Operating Income - consolidated$41,436 $45,497 $40,740 $33,619 $27,573 $24,471 $305,200 $— $518,536 
Net Operating Income attributable to noncontrolling interests— — — — — — (131)— (131)
Net Operating Income - pro rata$41,436 $45,497 $40,740 $33,619 $27,573 $24,471 $305,069 $— $518,405 
Non-cash revenue and expense adjustments94 (4,668)6 (170)(61)(3,525)7,249 — (1,075)
Cash Net Operating Income - pro rata$41,530 $40,829 $40,746 $33,449 $27,512 $20,946 $312,318 $— $517,330 
Annualizing adjustments (1)
66 131 (581)274 65 (299)18,196 — 17,852 
Annualized Cash Net Operating Income - pro rata$41,596 $40,960 $40,165 $33,723 $27,577 $20,647 $330,514 $— $535,182 








(1)    Represents the annual effect of acquisitions, dispositions, lease modifications and scheduled rent increases completed during the period and mathematical adjustments needed to make Cash Net Operating Income for the period representative of Cash Net Operating Income for a full year.
logo2a.jpg         See reporting definitions.                                  10
SABRA HEALTH CARE REIT, INC.
REPORTING DEFINITIONS
Adjusted EBITDA. Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation and amortization (“EBITDA”) excluding the impact of merger-related costs, stock-based compensation expense under the Company's long-term equity award program, and loan loss reserves. Adjusted EBITDA is an important non-GAAP supplemental measure of operating performance.
Annualized Cash Net Operating Income (“Annualized Cash NOI”). The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company considers Annualized 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 Annualized Cash NOI as Annualized Revenues less operating expenses and non-cash revenues and expenses. Annualized Cash NOI excludes all other financial statement amounts included in net income and is presented at Sabra's pro rata share.
Annualized Revenues. The annual contractual rental revenues under leases and interest and other income generated by the Company’s loans receivable and other investments based on amounts invested and applicable terms as of the end of the period presented. Annualized Revenues do not include tenant recoveries and are adjusted to reflect actual payments received related to the twelve months ended at the end of the respective period for leases no longer accounted for on an accrual basis.
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 and is presented at Sabra's pro rata share.
Consolidated Debt. The principal balances of the Company’s revolving credit facility, term loans, senior unsecured notes, and secured indebtedness as reported in the Company’s consolidated financial statements.
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 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 (recovery of) 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 noncapitalizable acquisition costs, transaction costs related to operator transitions and organizational or other restructuring activities, 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.
Net Debt. The principal balances of the Company’s revolving credit facility, term loans, senior unsecured notes, and secured indebtedness as reported in the Company’s consolidated financial statements, net of cash and cash equivalents as reported in the Company’s consolidated financial statements.
Net Debt to Adjusted EBITDA. Net Debt to Adjusted EBITDA is calculated as Net Debt divided by Annualized Adjusted EBITDA, which is Adjusted EBITDA, as adjusted for annualizing adjustments that give effect to the acquisitions and dispositions completed during the respective period as though such acquisitions and dispositions were completed as of the beginning of the period presented.
Net Operating Income (“NOI”). The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company considers NOI an important supplemental measure because it allows investors, analysts and its management to evaluate the operating performance of its investments. The Company defines NOI as total revenues less operating expenses. NOI excludes all other financial statement amounts included in net income.
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SABRA HEALTH CARE REIT, INC.
REPORTING DEFINITIONS
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.
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.
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