CareTrust REIT (CTRE) risk factors, FY2024 10-K

Risks Related to Our Business and Operations

1. 01Unstable market and economic conditions may have serious adverse consequences on our business, results of operations and financial condition
2. 02Our tenants and borrowers depend on reimbursement from government and other third-party payors and if reimbursement rates from such payors are reduced by future legislative reform, it could cause our tenants’ and borrowers’ revenues to decline and could affect their ability to meet their obligations to us
3. 03We face potential adverse consequences of bankruptcy, insolvency or financial deterioration of our tenants or borrowers
4. 04Replacement tenants or operators may be difficult to identify and we may be required to incur substantial renovation costs to make our healthcare properties suitable for such tenants or operators
5. 05We have incurred and may in the future incur impairment charges, which could negatively impact our results of operations
6. 06The geographic concentration of some of our facilities could leave us vulnerable to an economic downturn, regulatory changes or acts of nature in those areas
7. 07We are subject to risks associated with public health crises and government measures to prevent the spread of infectious diseases
8. 08We pursue property acquisitions and seek strategic opportunities in the ordinary course of our business, which may result in significant usage of management resources or costs, and we may not fully realize the potential benefits of such transactions
9. 09Investments in consolidated joint ventures involve risks not present in investments in which we are the sole investor
10. 10Increased competition has resulted and may further result in lower net revenues for some of our tenants and borrowers and may affect their ability to meet their financial and other contractual obligations to us
11. 11Required regulatory approvals can delay or prohibit transfers of our healthcare properties, which could result in periods in which we are unable to receive rent for such properties
12. 12We may not be able to sell properties when we desire because real estate investments are relatively illiquid, which could materially and adversely affect our business, financial position or results of operations
13. 13We, our tenants or our borrowers may experience uninsured or underinsured losses, which could result in a significant loss of the capital we have invested in a property, decrease anticipated future revenues or cause us to incur unanticipated expenses
14. 14We are, and may continue to be, exposed to contingent rent escalators, which could hinder our profitability and growth
15. 15Cybersecurity incidents or other damage to the information systems and technology of us, our tenants or borrowers could harm our business
16. 16Bank failures or other events affecting financial institutions could have a material adverse effect on our, our tenants’ or our borrowers’ liquidity, results of operations, and financial condition

Risks Related to Laws and Regulations

1. 17Healthcare reform legislation impacts cannot accurately be predicted and could adversely affect our results of operations
2. 18Tenants and borrowers that fail to comply with applicable requirements of governmental reimbursement programs, such as Medicare or Medicaid, may cease to operate or be unable to meet their financial and other contractual obligations to us
3. 19If we, our tenants or borrowers fail to adhere to applicable privacy and data security laws, this could have a material adverse effect on us or on our tenants’ and borrowers’ ability to meet their obligations to us
4. 20Tenants and borrowers that fail to comply with federal, state and local licensure, certification and inspection laws and regulations may cease to operate or be unable to meet their financial and other contractual obligations to us
5. 21Environmental compliance costs and liabilities may materially impair the value of properties owned by us

Risks Related to Our Status as a REIT

1. 22If we fail to qualify or remain qualified as a REIT, we will be subject to U.S. federal income tax as a regular corporation and could face substantial tax liability, which could adversely affect our ability to raise capital or service our indebtedness
2. 23Legislative or other actions affecting REITs could have a negative effect on us
3. 24We could fail to qualify to be taxed as a REIT if income we receive from our tenants is not treated as qualifying income
4. 25Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends
5. 26REIT distribution requirements could adversely affect our ability to execute our business plan
6. 27Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow
7. 28Complying with REIT requirements may cause us to forgo otherwise attractive acquisition opportunities or liquidate otherwise attractive investments
8. 29Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities

Risks Related to Our Capital Resources and Indebtedness

1. 30From time to time, we may have substantial indebtedness and we are able to incur significant additional indebtedness
2. 31We may be unable to service our indebtedness
3. 32We rely on our subsidiaries for our operating funds
4. 33Covenants in our debt agreements restrict our activities and could adversely affect our business
5. 34Increases in interest rates could increase our existing and future debt borrowing costs and adversely affect our stock price
6. 35A credit rating downgrade could impair our ability to obtain additional debt financing on favorable terms, if at all, and significantly reduce the trading price of our common stock

Risks Related To Our Common Stock and Organizational Documents

1. 36Our charter restricts the ownership and transfer of our outstanding stock, which may have the effect of delaying, deferring or preventing a transaction or change of control of our company
2. 37Maryland law and provisions in our charter and bylaws may inhibit our stockholders from realizing a premium on their stock by delaying or preventing takeover attempts by third parties
3. 38Our bylaws contain a provision that exempts from the MGCL’s control share acquisition statute any and all acquisitions by any person of shares of our stock. However, there can be no assurance that this provision will not be amended or eliminated, in whole or in part, at any time in the future
4. 39Our bylaws provide that the Circuit Court for Baltimore City, Maryland will be the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees
5. 40We cannot assure you of our ability to pay dividends in the future