CareTrust REIT, Inc. (CTRE) Earnings & Analysis

Latest quarter

CareTrust reported Q3 FY2026 revenue of $176.4 million, up 33.2% from $132.4 million a year earlier. Diluted earnings per share remained at $0.35. Free cash flow was $154.9 million, compared with $51.5 million a year earlier.

Compared with the preceding quarter, CareTrust’s filing says rental income increased by approximately $9.0 million. The company attributed most of the increase in contractual rent to recent real estate investments, with higher rents from existing tenants also contributing. Resident fees and services rose by $2.6 million, or 56%, primarily because of senior housing acquisitions under its operating portfolio.

The filing says interest income from financing receivables increased by $2.3 million from the preceding quarter, primarily reflecting a full quarter’s contribution from receivables originated earlier in the year. CareTrust reported a Q3 gross margin of 98.4%, compared with 98.2% a year earlier. CFO Derek Bunker said normalized funds from operations per share rose 20% to $0.54.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO David Sedgwick said CareTrust closed approximately $740 million of investments in the third quarter at a blended stabilized yield of 8.3%. He said the company had invested approximately $2.9 billion year to date across its growth businesses.

Sedgwick described the relationship with U.K. developer LNT as a way to combine care homes with CareTrust’s senior housing operating portfolio, or SHOP. He said the homes start under triple-net leases, with conversion to SHOP after their initial ramp-up. In response to questions about the deal’s pricing, he said the initial lease yield was not the sole measure of its value: CareTrust expects a first SHOP net operating income yield in the high-7% to low-8% range in 2 to 3 years. Sedgwick said the initial deal covers 45 newly developed homes and that LNT’s pipeline beyond the homes under contract exceeds 150 sites.

Asked about portfolio composition, Sedgwick said he expects SHOP in the U.S. and U.K. to become a meaningful part of CareTrust’s portfolio, but the company has not set a target. He said a target could restrict its ability to pursue skilled nursing investments.

On tenant finances, Sedgwick said stabilized skilled nursing EBITDAR lease coverage reached 2.62x. He said CareTrust sometimes accepts a lower investment yield for higher tenant coverage and recently replaced a Midwest skilled nursing operator with an existing tenant willing to increase rent by 6%.

CFO Derek Bunker said CareTrust closed a $700 million unsecured term loan after quarter-end and expanded its revolving credit facility to $2 billion. He said proceeds from the term loan were used to repay revolving borrowings and fund investments. Asked about capital sources, Bunker said the company could continue using other forms of capital when their pricing and duration improve on the revolver.

Guidance

CareTrust lowered its full-year 2026 net income forecast to approximately $1.50 to $1.51 per share from its previous range. CFO Derek Bunker said the company raised the low end of its normalized FFO and normalized funds available for distribution guidance, to $2.08 to $2.09 per share and $2.04 to $2.05 per share, respectively.

Bunker said the outlook assumes no new investments, loans or dispositions beyond those made or announced year to date, and no new debt or equity issuances beyond those made year to date.