What changed in this filing

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Item 1. Business

2023-02-09 compared with 2022-02-16 · 107 added, 87 removed, 413 unchanged (32% of the section changed)

CareTrust REIT is a self-administered, publicly-traded REIT engaged in the ownership, acquisition, development and leasing of skilled nursing, seniors housing and other healthcare-related properties.

As of December 31, 2021, CareTrust REIT’s real estate portfolio consisted of 227 skilled nursing facilities (“SNFs”), multi-service campuses, assisted living facilities (“ALFs”) and independent living facilities (“ILFs”) consisting of 23,650 operational beds and units located in 29 sta tes with the highest concentration of properties by rental income located in California, Texas, Louisiana, Idaho and Arizona.

As of December 31, 2021, we also had other real estate investments consisting of one mezzanine loan receivable with a carrying value of $15.2 million.

From January 1, 2021 through February 16, 2022, we acquired five SNFs and four multi-service campuses for approximate ly $192.5 million, which includes capitalized acquisition costs.

These acquisitions are expected to generate initial annual cash revenues of approximately $13.9 million and an initial blended yield of approximately 7.4%.

In addition, we acquired two ALFs for approximately $12.4 million, which includes capitalized acquisition costs.

We are in the process of identifying an operator for the two ALFs, which are currently not operational.

From January 1, 2021 through February 16, 2022, we sold one SNF and one land parcel, resulting in a net loss on sale of property of $0.1 million.

CareTrust REIT is a self-administered, publicly-traded REIT engaged in the ownership, acquisition, financing, development and leasing of skilled nursing, seniors housing and other healthcare-related properties.

As of December 31, 2022, CareTrust REIT’s real estate portfolio consisted of 216 skilled nursing facilities (“SNFs”), multi-service campuses, assisted living facilities (“ALFs”) and independent living facilities (“ILFs”) consisting of 22,831 operational beds and units located in 28 sta tes with the highest concentration of properties by rental inco me located in California, Texas, Louisiana, Idaho and Arizona.

As of December 31, 2022, we also had other real estate related investments consisting of three real estate secured loans receivable and two mezzanine loans receivable with a carrying value of $156.4 million.

The following table summarizes the Company’s acquisitions from January 1, 2022 through February 9, 2023 (dollars in thousands):

Type of Property Purchase Price (1)

Initial Annual Cash Rent Number of Properties Number of Beds/Units (2)

Skilled nursing $ 8,918 $ 815 1 135

Multi-service campuses 13,003 1,235 1 130

Total $ 21,921 $ 2,050 2 265

(1) Purchase price includes capitalized acquisition costs.

(2) The number of beds/units includes operating beds at the acquisition date.

The following table summarizes other real estate related investments by the Company from January 1, 2022 through February 9, 2023 (dollars in thousands):

Investment Type Investment Annual Initial Interest Income (1)

Number of Properties Number of Beds/Units (2)

Senior mortgage secured loan receivable $ 75,000 $ 6,281 18 1,796

Mezzanine loan receivable 25,000 2,750 N/A N/A

Mortgage secured loan receivable 22,250 1,891 5 600

Mortgage secured loan receivable 24,900 2,241 4 690

Total $ 147,150 $ 13,163 27 3,086

(1) Represents annualized acquisition-date interest income on any mortgage secured loans receivable and mezzanine loans, less subservicing fees, if applicable.

For floating rate loans, interest income has been calculated using the benchmark rate floor.

(2) The number of beds/units includes operating beds at the investment date.

From January 1, 2022 through December 31, 2022, we sold seven SNFs, five ALFs, one multi-service campus and one land parcel, resulting in a net loss on sale of property of $3.8 million.

Subsequent to December 31, 2022, we sold one ALF.

We generate revenues primarily by leasing healthcare-related properties to healthcare operators in triple-net lease arrangements, under which the tenant is solely responsible for the costs related to the property (including property taxes, insurance, maintenance and repair costs and capital expenditures, subject to certain exceptions in the case of properties leased to Ensign and Pennant).

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We also anticipate diversifying our portfolio over time, including by acquiring properties in different geographic markets, and in different asset classes.

In addition, we actively monitor the clinical, regulatory and financial operating results of our tenants, and work to identify opportunities within their operations and markets that could improve their operating results at our facilities.

In addition, we actively monitor the clinical, regulatory and financial operating results of our tenants, and work to identify opportunities within their operations and

markets that could improve their operating results at our facilities.

We communicate such observations to our tenants;

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We have replaced tenants in the past, and may elect to replace tenants in the future, if they fail to meet the terms and conditions of their leases with us.

In addition, we have, and may from time to time in the future, repurpose facilities for other uses, such as behavioral health.

The replacement tenants may include tenants with whom we have had no prior landlord-tenant relationship as well as current tenants with whom we are comfortable expanding our relationships.

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The number of SNFs has declined modestly over the past several years.

According to the American Health Care Association, the nursing home industry was comprised of approximately 15,700 facilities as of December 2016, as compared with over 16,700 facilities as of December 2000.

According to the American Health Care Association, the nursing home industry was comprised of approximately 15,200 facilities as of July 2022, as compared with over 15,600 facilities as of July 2016.

We expect that the supply/demand imbalance in the skilled nursing industry will increasingly favor skilled nursing and assisted living providers due to the shift of patient care to lower cost settings and an aging population.

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Census reported that there were over 56 million people in the United States in 2020 over the age of 65.

Census estimates this group to be one of the fastest growing segments of the United States population, projecting that it will almost double between 2020 and 2060.

Census estimates this group to be one of the faste st growing segments of the United States population, projecting that it will almost double between 2020 and 2060.

According to the Centers for Medicare & Medicaid Services, nursing home care facilities and continuing care retirement expenditures are projected to grow from approximately $196.8 billion in 2020, which includes federal expenditures in response to the COVID-19 pandemic, to approximately $273 billion in 2030.

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Charges for these services are generally paid from a combination of government reimbursement and private sources.

As of December 31, 2021, our portfolio include d 184 SNFs, 24 of w hich are located on campuses that also have ALFs or ILFs, which we refer to as multi-service campuses (see below under “Multi-Service Campuses”).

As of December 31, 2022, our portfolio included 178 SNFs, 24 o f w hich are located on campuses that also have ALFs or ILFs, which we refer to as multi-service campuses (see below under “Multi-Service Campuses”).

• Assisted Living Facilities .

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As of December 31, 2022, our portfolio included 36 ALFs, some of which also contain independent living and memory care units.

Included in the 41 ALFs is one ALF classified as held for sale as of December 31, 2021 .

Included in the 36 ALFs are five ALFs classified as held for sale as of December 31, 2022, two facilities which are in the process of being repurposed and two facilities which are non-operational.

• Independent Living Facilities .

ILFs, also known as retirement communities or senior apartments, are not healthcare facilities and are not licensed to provide healthcare services to residents.

The facilities typically consist of entirely self-contained apartments, complete with their own kitchens, baths and individual living spaces, as well as parking

for tenant vehicles.

They are most often rented unfurnished, and generally can be personalized by the tenants, typically an individual or a couple over the age of 55.

The facilities typically consist of entirely self-contained apartments, complete with their own kitchens, baths and individual living spaces, as well as parking for tenant vehicles.

They are most often rented unfurnished, and generally can be personalized by the tenants, and are typically occupied by an individual or a couple over the age of 55.

These facilities offer various services and amenities such as laundry, housekeeping, dining options/meal plans, exercise and wellness programs, transportation, social, cultural and recreational activities, on site security and emergency response programs .

As of December 31, 2021, our portfolio included 2 ILFs.

As of December 31, 2022, our portfolio includ ed 2 ILFs.

• Multi-Service Campuses.

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These facilities are often marketed as an opportunity for residents to “age in place,” and tend to attract couples where the individuals may require or benefit from differing levels of care.

As of December 31, 2021, our portfolio included 24 facilities that we classify as multi-service campuses.

Our portfolio of SNFs, ALFs, ILFs and multi-service campuses is broadly diversified by geographic location throughout the United States, with concentrations i n California, Texas, Louisiana, Idaho and Arizona ba sed on rental income.

As of December 31, 2022, our portfolio includ ed 24 fa cilities that we classify as multi-service campuses.

Our portfolio of SNFs, ALFs, ILFs and multi-service campuses is broadly diversified by geographic location throughout the United States, with concentrations in California, Texas, Louisiana, Idaho and Arizona ba sed on rental income.

Significant Master Leases

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During the year ended December 31, 2020, the Company acquired four additional facilities leased to subsidiaries of Ensign on a triple-net basis under two separate master lease agreements, each of which contains a purchase option.

As of December 31, 2021, annualized contractual rental income from the Ensign Master Leas es was $59.7 million, and annualized contractual rental income from all Ensign leases was $63.5 million , representing 31% and 33% of total annualized contractual rental income, respectively.

As of December 31, 2022, annualized contractual rental income from the Ensign Master Leases was $62.3 million, and annualized contractual rental income from all Ensign leases was $66.2 million, representing 33% and 35% of total annualized contractual rental income, respectively.

Rent is escalated annually in June under the Ensign Master Leases, and in December for the four additional facilities leased to Ensign, by an amount equal to the product of (1) the lesser of the percentage change in the Consumer Price Index (“CPI”) (but not less than zero) or 2.5%, and (2) the prior year’s rent .

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The PMG Master Lease commenced on December 1, 2016, and provides for an initial term of fifteen years, with two five-year renewal options.

As of December 31, 2021, annualized contractual rental income from the PMG Master Lease wa s $28.9 million, representing 15% of total annualized contractual rental income.

As of December 31, 2022, annualized contractual rental income from the PMG Master Lease was $30.2 million, representing 16% of total annualized contractual rental income.

See “Risk Factors - Risks Related to Our Business - We are dependent on the healthcare operators that lease our properties to successfully operate their business and make contractual lease payments, and an event that materially and adversely affects their business, financial position or results of operations could materially and adversely affect our business, financial position or results of operations.”

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UT 13 1,374 9 913 1 272 3 189

OH 13 1,320 9 736 4 584 — —

AZ 11 1,340 8 971 — — 3 369

WA 10 936 9 839 — — 1 97

LA 8 1,164 7 949 1 215 — —

IL 9 916 7 642 2 274 — —

LA 8 1,164 7 949 1 215 — —

CO 7 779 5 511 — — 2 268

OH 6 612 3 256 3 356 — —

NE 5 366 3 220 2 146 — —

VA 5 302 — — — — 5 302

FL 4 420 — — — — 4 420

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WI 3 206 — — — — 3 206

MN 2 62 — — — — 2 62

NC 2 104 — — — — 2 104

NJ 2 98 — — — — 2 98

MN 2 62 — — — — 2 62

IN 1 162 — — — — 1 162

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Percentage occupancy in the below table is computed by dividing the average daily number of beds occupied by the total number of beds available for use during the periods indicated (beds are included in the computation following the date of acquisition, or through the date of disposition, only).

In addition, the following table excludes the two non-operational ALFs while we identify an operator.

Year Ended December 31,

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ALFs and ILFs 74 % 73 %

Facilities Operated by CareTrust REIT:

ILFs — % 91 %

(1) Occupancy data excludes two facilities which are in the process of being repurposed and two non-operational ALFs while we identify an operator.

(2) Occupancy data excludes two non-operational ALFs while we identify an operator.

(3) Occupancy data derived solely from information provided by our tenants without independent verification by us.

The leased facility financial performance data is presented one quarter in arrears.

(2) As of December 31, 2021, we did not own and operate any ILFs.

Occupancy data for the year ended December 31, 2020 includes the one ILF we owned and operated that was sold in November 2020.

Property Type - Rental Income:

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AZ 12,968 7 % 12,652 7 %

OH 9,071 5 % 9,225 5 %

UT 7,612 4 % 7,453 4 %

IL 6,074 3 % 4,893 3 %

CO 5,796 3 % 5,642 3 %

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WA 4,793 3 % 4,936 3 %

IL 4,893 3 % 4,824 3 %

VA 3,449 2 % 3,248 2 %

OH 4,128 2 % 9,071 5 %

MI 3,003 2 % 3,081 2 %

WI 3,045 2 % 2,937 2 %

MT 2,188 1 % 2,128 1 %

NV 2,177 1 % 2,123 1 %

FL 1,681 1 % 1,572 1 %

NC 1,172 1 % 1,135 1 %

MN 1,064 1 % 1,038 1 %

NM 1,023 * 1,008 1 %

NE 995 1 % 970 *

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SD 944 1 % 917 *

IN 855 * 829 1 %

NM 937 * 1,023 *

WV 751 * 727 *

MD 588 * 567 *

VA 539 * 3,449 2 %

WI 520 * 3,045 2 %

ND 461 * 448 *

OR 411 * 399 *

MD 247 * 588 *

FL 222 * 1,681 1 %

IN 130 * 855 *

Total $ 187,506 100 % $ 190,195 100 %

• Represents less than 1%

ILFs Operated by CareTrust REIT:

In November 2020, we sold our one remaining owned and operated ILF to a third party leaving us with no remaining owned and operated ILFs at December 31, 2020 or December 31, 2021.

Investment and Financing Policies

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We intend to invest primarily in SNFs and seniors housing, including AL Fs and ILFs.

We are currently looking at expanding our investments into behavioral health facilities in 2022, and we may determine in the future to expand our investments to include medical office buildings, long-term acute care hospitals and inpatient rehabilitation facilities.

We are expanding our investments into behavioral health facilities and we may determine in the future to expand our investments to include medical office buildings, long-term acute care hospitals and inpatient rehabilitation facilities.

Our properties are located in 28 s tates and we intend to continue to acquire properties in other states throughout the United States.

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Our properties are located in 28 different states, with concentrations in California, Texas, Louisiana, Idaho and Arizona based on rental income.

The properties in any one state do not account for more th an 25% of our total rental income as of December 31, 2021.

The properties in any one state do not account for more th a n 27% of our total rental income as of December 31, 2022.

We believe this geographic diversification will limit the effect of changes in any one market on our overall performance.

Long-Term, Triple-Net Lease Structure.

All of our properties are leased to our tenants under long-term, triple-net leases, pursuant to which the operators are responsible for all facility maintenance and repair, insurance required in connection with the leased properties and the business conducted on the leased properties, taxes levied on or with respect to the leased properties and all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties.

All of our properties, except two properties under a short-term lease, are leased to our tenants under long-term, triple-net leases, pursuant to which the operators are responsible for all facility maintenance and repair, insurance required in connection with the leased properties and the business conducted on the leased properties, taxes levied on or with respect to the leased properties and all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties.

Financially Secure Primary Tenant.

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Experienced Management Team.

Sedgwick was appointed as our Chief Executive Officer effective January 1, 2022, succeeding Gregory K.

Stapley in that role.

Sedgwick was appointed as our Chief Executive Officer effective January 1, 2022.

At the time of his appointment, Mr.

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Sedgwick has been a licensed nursing home administrator since 2001.

Stapley was named as our Executive Chairman effective January 1, 2022, a role that we expect he will fulfill during an approximately six-month transition period, following which he and his wife Deborah will commence a three-year, full-time volunteer leadership assignment overseeing one of the approximately 400 worldwide missions of The Church of Jesus Christ of Latter-day Saints.

He served as our President and Chief Executive Officer from 2013 to 2021, and as Chairman of the Board from 2014 to the present.

Stapley has more than 30 years of experience in the acquisition, development, financing and disposition of real estate including healthcare facilities and office, retail and industrial properties, including nearly 15 years at Ensign where he was a co-founder and was instrumental in assembling the portfolio that we now lease to Ensign and Pennant.

Our Chief Financial Officer, William M.

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Most notably, he worked for both Nationwide Health Properties, Inc., a healthcare REIT, and Sunstone Hotel Investors, Inc., a lodging REIT, serving as Senior Vice President and Chief Accounting Officer of each company prior to joining us as our Chief Financial Officer.

Lamb has served as our Chief Investment Officer since August 2018.

Lamb previously served as our Director of Investments from July 2014 to August 2018, and has been instrumental in building the Company’s portfolio since becoming a public company.

Lamb is a licensed nursing home administrator and, prior to join ing the Company in 2014, served as an administrator at one of Plum Healthcare’s flagship post-acute facilities from 2011 to 2014.

Prior to 2011, Mr.

Lamb served in acquisition and portfolio management capacities for various entities for more than nine years.

Our exe cutives have years of public company experience, including experience accessing both debt and equity capital markets to fund growth and maintain a flexible capital structure.

Callister was appointed as our Executive Vice President effective July 2022 and Chief Investment Officer effective December 31, 2022, succeeding Mark D.

Lamb in that role.

Callister continues to serve as Secretary, and previously served as General Counsel from February 2021 to July 2022.

Prior to joining the Company, Mr.

Callister worked as a real estate attorney and a partner at the law firm of Sherry Meyerhoff Hanson & Crance LLP and, before that, at the law firm of O’Melveny & Myers LLP.

Since 2008, he has worked almost exclusively on healthcare REIT transactions, closing on acquisitions or financings of over 300 skilled nursing, seniors housing, and independent living facilities.

Callister has assisted in the structure, negotiating and closing of all of our acquisitions since our formation as a REIT.

As an attorney, Mr.

Callister worked for nearly 20 years in private practice representing and advising clients in a diverse array of real estate transactions.

Callister’s transactions-based legal experience has focused on the representation of publicly-traded REITs in the acquisition, disposition, leasing, and financing of healthcare-related properties.

Callister holds a B.A.

in History from Brigham Young University and a J.D.

Reuben Clark Law School at Brigham Young University, where he graduated magna cum laude.

Flexible UPREIT Structure.

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Conducting business through the Operating Partnership allows us flexibility in the manner in which we structure the acquisition of properties.

In particular, an UPREIT structure enables us to acquire additional properties from sellers in exchange for limited partnership units, which provides property owners the opportunity to defer the tax consequences that would otherwise arise from a sale of their real properties and other assets to us.

In particular, an UPREIT structure enables us to acquire additional properties from sellers in exchange for limited

partnership units, which provides property owners the opportunity to defer the tax consequences that would otherwise arise from a sale of their real properties and other assets to us.

As a result, this structure allows us to acquire assets in a more efficient manner and may allow us to acquire assets that the owner would otherwise be unwilling to sell because of tax considerations.

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We employ what we believe to be a disciplined, opportunistic acquisition strategy with a focus on the acquisition of SNFs, ALFs and ILFs.

We are currently looking at expanding our investments into behavioral health facilities in 2022, and we may determine in the future to expand our acquisitions to include medical office buildings, long-term acute care hospitals and inpatient rehabilitation facilities.

As we acquire additional properties, we expect to further diversify by geography, asset class and tenant within the healthcare and healthcare-related sectors.

We plan to expand our investments into behavioral health facilities and we may determine in the future to expand our investments to include medical office buildings, long-term acute care hospitals and inpatient rehabilitation facilities.

As we acquire, or invest in, additional properties, we expect to further diversify by geography, asset class and tenant within the healthcare and healthcare-related sectors.

Maintain Balance Sheet Strength and Liquidity.

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Increased competition will make it more challenging to identify and successfully capitalize on acquisition opportunities that meet our investment objectives.

Our ability to compete is also impacted by national and local economic trends, availability of investment

alternatives, availability and cost of capital, construction and renovation costs, existing laws and regulations, new legislation and population trends.

Our ability to compete is also impacted by national and local economic trends, availability of investment alternatives, availability and cost of capital, construction and renovation costs, existing laws and regulations, new legislation and population trends.

In addition, revenues from our properties are dependent on the ability of our tenants and operators to compete with other healthcare operators.

Healthcare operators compete on a local and regional basis for residents and patients and their ability to successfully attract and retain residents and patients depends on key factors such as the number of facilities in the local market, the types of services available, the quality of care, reputation, age and appearance of each facility and the cost of care in each locality.

Healthcare operators compete on a local and regional basis for residents and patients and their ability to

successfully attract and retain residents and patients depends on key factors such as the number of facilities in the local market, the types of services available, the quality of care, reputation, age and appearance of each facility and the cost of care in each locality.

Private, federal and state payment programs and the effect of other laws and regulations may also have a significant impact on the ability of our tenants and operators to compete successfully for residents and patients at the properties.

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We are working to implement sustainable practices in our corporate offices and to provide tenant education, support and incentives to make sustainable improvements at our net-leased properties.

In 2020, we published our inaugural annual Corporate Responsibility Report (our “ESG Report”) as part of our ongoing commitment to provide regular reporting on our environmental, social and governance (“ESG”) priorities.

In 2022, we published our second annual Corporate Responsibility Report (our “ESG Report”) as part of our ongoing commitment to provide regular reporting on our environmental, social and governance (“ESG”) priorities.

Our ESG Report outlines our high priority ESG initiatives and goals for our company and our property portfolio.

Also in 2020, we published our Tenant Code of Conduct & Corporate Responsibility (our “Tenant ESG Program”).

The Tenant ESG Program provides our eligible triple-net tenants with monetary inducements to make sustainable improvements to our properties.

Incentive options include a wide variety of opportunities for tenants to upgrade everything from energy and environmental systems to water-saving landscaping and more.

During 2020, with the assistance of Goby, our ESG consultant, we designed a monitoring plan to collect key environmental data from a pilot group of 50 of our net-leased properties.

In our 2022 ESG Report, we included a Global Reporting Initiative (“GRI”) Index in reference to the GRI Standards to further align with applicable global standards for sustainability reporting.

During 2020, with the assistance of Conservice ESG, our ESG consultant, we designed a monitoring plan to collect key environmental data from a pilot group of 50 of our net-leased properties.

The plan’s objective was to begin benchmarking energy and water usage and the impact of our facilities on greenhouse gas emissions and climate change.

During 2021, we implemented the plan’s monitoring systems and began collecting data for this pilot group.

During 2021, we implemented the plan’s monitoring systems and began collecting data for this pilot group of 50 properties, increasing to almost 100 properties by the end of 2022.

We expect the data to help us identify the most promising opportunities for improvement in our portfolio, set informed ESG goals and measure progress over time.

In addition, as a landlord and capital supplier to a key segment of the healthcare industry, we will seek further opportunities to encourage and incentivize fair and healthy work environments for healthcare workers and suitable living conditions for patients and residents, and to promote diversity, inclusion and the ethical treatment of employees, residents, patients and others wherever our activities and influence can be felt.

Also in 2020, we published our Tenant Code of Conduct & Corporate Responsibility (our “Tenant ESG Program”).

The Tenant ESG Program provides our eligible triple-net tenants with monetary inducements to make sustainable improvements to our properties.

Incentive options include a wide variety of opportunities for tenants to upgrade everything from energy and environmental systems to water-saving landscaping and more.

Our board of directors has authorized annual allocations of up to $500,000 to fund the Tenant ESG Program.

As disclosed in our 2022 ESG Report, we tracked $260,000 in environmental improvements at our properties from August 2021 to October 2022.

In 2022, we created and implemented an ESG checklist to be used to review new potential acquisitions.

The checklist will help our team better identify and address ESG-related risk and opportunities in each potential acquisition including how tenant-operators can track utility energy and water usage, whether properties are in parts of the country where the U.S.

Department of Energy has helped enable energy data for benchmarking purposes and how tenants can grow, develop and enhance their own ESG policies.

In addition, we created and implemented an ESG training program to train all employees on our ESG commitments to increase awareness.

The foregoing principles and additional ESG initiatives are reflected in our Environmental, Social and Governance policy adopted on October 29, 2021, and previously published Policy on Human Capital, Policy on Human Rights and Responsibilities, Policy on Environmental Sustainability and our proprietary Tenant ESG Program.

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Our Policy on Human Capital reflects our commitment to the dignity and rights of all people, especially our employees and others whose professional lives may be impacted by our properties and business activities.

It represents a critical commitment to, and investment in, the current and long-term health and well-being of our organization and its people.

It represents a critical commitment to, and investment in, the current and long-term health and well-being of

our organization and its people.

We believe our success depends on our ability to attract, develop and retain key personnel.

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We believe we offer competitive compensation (including salary, incentive bonus and equity) and benefits packages (including a 401(k) plan with a fixed employer contribution, Flexible Spending Accounts (FSAs), employer-funded employee assistance program (EAP), a generous vacation, holiday and personal time off policy, and an array of voluntary benefits options and other benefits for employees and their families).

Our compensation program is designed to attract and

reward talented individuals who possess the skills necessary to support our business objectives, assist in the achievement of our strategic goals and create long-term value for our stockholders.

As of December 31, 2021, we employed 16 full-time employees (including our executive officers), none of whom is subject to a collective bargaining agreement.

Our compensation program is designed to attract and reward talented individuals who possess the skills necessary to support our business objectives, assist in the achievement of our strategic goals and create long-term value for our stockholders.

As of December 31, 2022, we emplo yed 15 full-time employees (including our executive officers), none of whom is subject to a collective bargaining agreement.

At the onset of the COVID-19 pandemic, we temporarily closed our corporate office and most of our employees were working remotely;

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We believe that employee turnover is costly in direct and indirect ways, and we are committed to employee retention and satisfaction .

During the year ended December 31, 2021, we experienced turnover of two full-time employees, excluding our executive officers.

In addition, during the year ended December 31, 2021, we announced plans to transition the role of our Chief Executive Officer from Mr.

During the year ended December 31, 2022, we experienced turnover of one full-time employee, excluding our executive officers.

I n addition, during the year ended December 31, 2022, we transitioned the role of our Chief Executive Officer from Mr.

Stapley to Mr.

Sedgwick, effective January 1, 2022.

Sedgwick, effective January 1, 2022, and our Chief Investment Officer from Mr.

Callister, effective December 31, 2022.

Training and Education.

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Violations of healthcare fraud and abuse laws carry civil, criminal and administrative sanctions, including punitive sanctions, monetary penalties, imprisonment, denial of Medicare and Medicaid reimbursement and potential exclusion from Medicare, Medicaid or other federal or state healthcare programs.

These laws are enforced by a variety of federal, state and local agencies and can also be enforced by private litigants through, among other things, federal and state false claims acts, which allow private litigants to bring qui tam or “whistleblower” actions.

These laws are enforced by a variety of federal, state and local agencies and can also be enforced by private litigants through,

among other things, federal and state false claims acts, which allow private litigants to bring qui tam or “whistleblower” actions.

Ensign and our other tenants are (and many of our future tenants are expected to be) subject to these laws, and some of them may in the future become the subject of governmental enforcement actions if they fail to comply with applicable laws.

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When a violation occurs, the government may proceed criminally or civilly.

If the government proceeds criminally, a violation is a felony and

may result in imprisonment for up to five years, fines of up to $25,000 and mandatory exclusion from participation in all federal health care programs.

If the government proceeds criminally, a violation is a felony and may result in imprisonment for up to five years, fines of up to $25,000 and mandatory exclusion from participation in all federal health care programs.

If the government proceeds civilly, it may impose a civil monetary penalty of $50,000 per violation and an assessment of not more than three times the total amount of remuneration involved, and it may exclude the parties from participation in all federal health care programs.

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Given the divided nature of Congress, it is unclear whether Congress will successfully expand health insurance coverage and assess alternative health care delivery and payment systems.

For example, on November 19, 2021, the United States House of Representatives passed the Build Back Better Act, H.R.

5376, 117th Cong.

(2021) (“BBB”), which, among other things, would extend the subsidies available to certain individuals who purchase marketplace coverage pursuant to the Affordable Care Act, expand access to the Affordable Care Act marketplace healthcare plans for individuals living in certain states, and increase the federal Medicaid matching funds for certain home and community-based services.

Though the Democratic Party currently controls the United States House of Representatives (by a slim majority) and Senate (by virtue of the Vice President casting the tie-breaking vote), it is unclear whether BBB will ultimately become law because BBB, which the Democrats have attempted to pass via Congress’s budget reconciliation process, may not have the support of enough Democratic senators.

Other healthcare reform legislation would likely require at least some support from both Republican and Democratic lawmakers to become law.

At this time, it is uncertain whether any additional healthcare reform legislation will ultimately become law and we cannot predict the ultimate content, timing or effect of any healthcare reform legislation or the impact of potential legislation on our business.

The Republican Party currently controls the United States House of Representatives (by a slim majority) and the Democratic Party currently controls the Senate (by a slim majority).

Due to this, healthcare reform legislation would likely require at least some support from both Republican and Democratic lawmakers to become law and it is uncertain whether any healthcare reform legislation will ultimately become law.

We cannot predict the ultimate content, timing or effect of any healthcare reform legislation or the impact of potential legislation on our business.

If our tenants’ residents do not have insurance, it could adversely impact the tenants’ ability to satisfy their obligations to us.

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Those reports must be submitted to at least one law enforcement agency and the applicable Centers for Medicare & Medicaid Services (“CMS”) Survey Agency.

Covered individuals who fail to report under Section 1150B are subject to various penalties, including civil monetary penalties

of up to $300,000 and possible exclusion from participation in any Federal health care program.

Medicare regulations require SNFs to establish and implement written policies to ensure the reporting of crimes that occur in federally funded SNFs in accordance with Section 1150B.

Covered individuals who fail to report under Section 1150B are subject to various penalties, including civil monetary penalties of up to $300,000 and possible exclusion from participation in any Federal health care program.

Medicare regulations require

SNFs to establish and implement written policies to ensure the reporting of crimes that occur in federally funded SNFs in accordance with Section 1150B.

In August 2017, the HHS Office of Inspector General (“OIG”) issued a preliminary report regarding quality of care concerns by operators of SNFs.

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Some of these federal and state statutes may directly impact us.

connection with such property, as well as other potential costs relating to hazardous or toxic substances (including government fines and damages for injuries to persons and adjacent property).

Under various federal, state and local environmental laws, ordinances and regulations, an owner of real property, such as us, may be liable for the costs of removal or remediation of hazardous or toxic substances at, under or disposed of in connection with such property, as well as other potential costs relating to hazardous or toxic substances (including government

fines and damages for injuries to persons and adjacent property).

The cost of any required remediation, removal, fines or personal or property damages and the owner’s liability therefore could exceed or impair the value of the property and/or the assets of the owner.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business