Breaking Down Sabra Health Care REIT, Inc. (SBRA) Financial Health: Key Insights for Investors

You're looking at Sabra Health Care REIT, Inc. (SBRA) right now and wondering if the recovery story is defintely taking hold, especially with that juicy dividend yield. The quick answer is yes, the operational momentum is real, but you still need to watch the balance sheet closely. In their Q3 2025 results, Sabra reported a strong operational beat, with same-store managed senior housing Cash Net Operating Income (NOI) jumping a remarkable 13.3% year-over-year, which is a clear signal that the senior housing market is healing. Plus, the company is putting capital to work, closing on $217.5 million in managed senior housing acquisitions in the quarter alone. Here's the quick math: the updated 2025 guidance for Normalized Adjusted Funds From Operations (AFFO)-which is a key measure of a REIT's cash flow-is now projected between $1.495 and $1.505 per share. That's solid growth. But, to be fair, the declared quarterly dividend of $0.30 per share, which annualizes to a 6.45% yield, still pushes the dividend payout ratio to a high level, around 1.64 times Net Income, which is a risk you can't ignore. We'll break down what that Moody's credit rating upgrade to 'Baa3' really means for their debt and if that 4.96x Net Debt to Adjusted EBITDA is sustainable given their aggressive investment push.

Revenue Analysis

You need to know where the money is coming from, and for Sabra Health Care REIT, Inc. (SBRA), the story in 2025 is about a strong recovery in their operating portfolio. The company's trailing twelve months (TTM) revenue, which captures the most recent full year of performance as of November 2025, hit approximately $747.06 million. That's a solid 9.34% jump year-over-year (YoY) from 2024's total of $702.64 million, which tells you the strategic shift toward senior housing is paying off.

For a healthcare real estate investment trust (REIT), revenue primarily flows from two main channels: triple-net leases and managed senior housing operations. The triple-net portfolio-where the tenant pays for taxes, insurance, and maintenance-provides stable, contractual cash rental income. The managed senior housing portfolio, on the other hand, offers higher upside potential, as Sabra Health Care REIT earns a share of the property's net operating income (NOI), which is a key measure of a property's profitability.

The near-term opportunity is clearly in the managed segment.

Here's a quick look at how the core segments performed in the first three quarters of 2025, which drives that overall revenue growth:

The most significant change in the revenue mix is the robust performance of the Managed Senior Housing portfolio, which is a segment Sabra Health Care REIT has been strategically growing. In the third quarter of 2025, Cash NOI from this segment surged to $30.1 million, a significant increase from $24.1 million in the first quarter. This segment's same-store Cash NOI-a measure of properties owned for a full comparable period-jumped 13.3% YoY in Q3 2025, far exceeding the low-single-digit growth expected from the triple-net portfolio. This is a direct result of rising occupancy, which hit 86% in the same-store portfolio in Q3 2025.

The triple-net portfolio remains a defintely foundational source of revenue, with Cash Rental Income holding steady at around the $90 million mark in Q1 2025, even after the company executed over $115 million in dispositions (sales of assets) in the prior year. This stability, plus the mid-teens same-store Cash NOI growth projected for the managed senior housing segment for the full year, is what's fueling the overall revenue increase. You can see the full picture of this financial health and strategy in the full post: Breaking Down Sabra Health Care REIT, Inc. (SBRA) Financial Health: Key Insights for Investors.

• Triple-Net Leases: Provide stable, predictable cash flow.
• Managed Senior Housing: Offers higher growth potential from occupancy gains.
• Q3 2025 Managed NOI: Increased to $30.1 million.
• TTM Revenue Growth: A strong 9.34% YoY.

The takeaway is simple: Sabra Health Care REIT is successfully executing a strategy that capitalizes on a recovering senior housing market, which is translating directly into higher revenue and better operating metrics.

Profitability Metrics

You need to know if Sabra Health Care REIT, Inc. (SBRA) is translating its revenue into real profit, especially as the healthcare real estate market evolves. The direct takeaway is that Sabra's profitability is expected to strengthen significantly in the 2025 fiscal year, with its forecasted operating margin notably exceeding a key industry benchmark.

For the 2025 fiscal year, based on analyst forecasts and recent performance, we see a clear picture of margin expansion. Using the trailing annual revenue of $745.08 million as our base, the company is demonstrating stronger operational efficiency. Here's the quick math on the key profit lines:

• Gross Profit is projected to be around $502.83 million, reflecting a Gross Profit Margin of approximately 67.41%, based on Q2 2025 performance.
• Operating Profit (Earnings Before Interest and Taxes or EBIT) is forecasted at roughly $280.01 million, giving an Operating Profit Margin of 37.61%.
• Net Profit is estimated to hit $192.79 million, which translates to a Net Profit Margin of 25.88% for the year.

That 37.61% operating margin is defintely a strong number.

Operational Efficiency and Industry Benchmarks

The operational efficiency of Sabra Health Care REIT, Inc. is improving, particularly in its core segments. The company's forecasted 2025 Operating Profit Margin of 37.61% is a positive signal when stacked against the broader sector. To be fair, industry commentary from mid-2025 suggests that the senior housing sector-a major focus for Sabra-is 'struggling to be a 30% margin business'. Sabra's ability to forecast a margin nearly eight percentage points higher suggests effective cost management and successful deployment of their capital into higher-performing assets.

This efficiency is also visible in the managed senior housing portfolio, where the same-store Cash Net Operating Income (NOI) saw a 13.3% year-over-year increase in the third quarter of 2025. This growth shows that the company's strategy of shifting toward the Senior Housing Operating Portfolio (SHOP) model is working to capture more of the upside from rising occupancy and rates. You can review the strategic rationale for this shift in their Mission Statement, Vision, & Core Values of Sabra Health Care REIT, Inc. (SBRA).

Profitability Trends Over Time

The 2025 profitability forecast marks a significant turnaround from the recent past, reflecting a recovery from the operational pressures of prior years. The trend in Net Margin is particularly compelling:

What this estimate hides is the volatility of the Net Margin in recent years, which dipped into negative territory in 2021 and 2022 before recovering to 18.02% in 2024. The projected jump to 25.88% in 2025 is a massive 43.6% increase in the Net Margin year-over-year, indicating not just revenue growth, but also a stabilization and reduction in non-operating costs, like interest expense, or a significant one-time gain. This suggests the balance sheet clean-up and portfolio restructuring are finally flowing through to the bottom line, which is what we want to see.

Debt vs. Equity Structure

You're looking at Sabra Health Care REIT, Inc. (SBRA) and need to know how they fund their operations-is it mostly debt or equity? The quick takeaway is that Sabra Health Care REIT, Inc. maintains a balanced capital structure, leaning slightly more on debt than the immediate industry average, but its recent actions show a clear, successful effort to de-risk the balance sheet and improve its credit profile.

Sabra Health Care REIT, Inc. (SBRA) has been actively managing its leverage, a key action for any real estate investment trust (REIT). As of September 30, 2025, the company's Net Debt to Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) ratio stood at an improved 4.96x, down from 5.00x at the end of the second quarter of 2025. This is a crucial metric for showing how quickly the company could pay off its debt using its operating cash flow.

Here's the quick math on their financial leverage (the use of borrowed money to fund assets):

• Sabra Health Care REIT, Inc.'s Debt-to-Equity (D/E) ratio as of June 30, 2025, was 0.9262.
• The industry average for Health Care REITs is around 0.8749.

A D/E ratio of 0.9262 means the company is using about 93 cents of debt for every dollar of shareholder equity. This is slightly above the broader healthcare REIT average, but still well-managed and defintely not a red flag for a capital-intensive sector like real estate. It's a manageable level of financial leverage.

The company has been strategic in its debt management and capital allocation. In a significant move on June 30, 2025, a subsidiary redeemed $500 million of its Senior Notes that were due in 2026, funding the move with a new $500 million term loan. Also, in the second quarter of 2025, Sabra Health Care REIT, Inc. refinanced some of its debt, securing a lower interest rate of 4.04% and extending the maturity by five years. This is what good treasury management looks like in a high-interest environment.

This disciplined approach to debt has been recognized. On September 10, 2025, Moody's Ratings upgraded Sabra Health Care REIT, Inc.'s senior unsecured notes rating to "Baa3" from "Ba1," assigning a Stable outlook, which moves them into investment-grade territory.

Sabra Health Care REIT, Inc. balances debt financing with equity funding through its At-The-Market (ATM) program, a flexible way to issue new shares. In the third quarter of 2025, the company issued 9.6 million shares to settle outstanding forward sale agreements, generating net proceeds of $165.0 million. This capital is being used to fund new investments, like the six managed senior housing properties acquired in Q3 2025 for $217.5 million. This mix of debt refinancing and strategic equity raises shows a healthy, active management of the capital structure. You can see more about who is buying that equity in Exploring Sabra Health Care REIT, Inc. (SBRA) Investor Profile: Who's Buying and Why?

The company's balance sheet health is a major factor in its current investment thesis:

Your next step should be to look at the interest rate on their new debt and model the impact of that lower cost of capital on their forward Funds From Operations (FFO) projections.

Liquidity and Solvency

You need to know if Sabra Health Care REIT, Inc. (SBRA) has the cash to cover its short-term bills and fund its growth, especially in a rising rate environment. The short answer is yes: Sabra's liquidity position is strong, backed by a significant cash cushion and available credit, but the dividend payout ratio is a glaring concern.

Assessing Sabra Health Care REIT, Inc. (SBRA)'s Liquidity

The company's short-term liquidity, which is its ability to meet near-term obligations, looks exceptionally healthy. As of recent reporting, Sabra's Current Ratio sits at a very high 4.80, with the Quick Ratio also at 4.80. A ratio this high, well above the safe 1.0 threshold, means their liquid assets comfortably cover their current liabilities. Since the Quick Ratio (which excludes inventory) is the same as the Current Ratio, it confirms that inventory is not a material part of their current assets, which is typical for a Real Estate Investment Trust (REIT).

Here's the quick math on their immediate buying power and balance sheet health:

• Total Liquidity (Q3 2025): Approximately $1.1 billion.
• Unrestricted Cash (Q3 2025): $200.6 million.
• Available Revolving Credit (Q3 2025): $717.8 million.

What this estimate hides is the high dividend payout, which we'll get to. Still, the balance sheet improvement is defintely a positive trend.

Working Capital and Deleveraging Trends

Sabra has been making strategic moves to improve its balance sheet, which directly impacts its long-term working capital (the difference between current assets and current liabilities). The company's Net Debt to Adjusted EBITDA ratio dropped to 4.96x as of September 30, 2025, down from 5.45x a year prior. This deleveraging effort is why Moody's upgraded Sabra's senior unsecured notes rating to Baa3 with a Stable outlook in September 2025. This is a clear signal of financial stability and reduced risk for debt holders.

The company also successfully refinanced debt in Q2 2025, replacing $500.0 million of senior notes due in 2026 with a new term loan that fixed the effective interest rate at a lower 4.64% (down from 5.125%). That's smart capital management.

Cash Flow Statements Overview (Q3 2025)

Looking at the cash flow activity for Q3 2025 shows a clear focus on both growth and capital management:

Potential Liquidity Concerns and Strengths

The primary liquidity strength is the sheer size of the available capital, which is being used to fund investments like the $217.5 million in senior housing properties acquired in Q3 2025. However, you must pay attention to the dividend.

The quarterly cash dividend of $0.30 per share results in an annualized payout ratio of 166.67%. This means that the dividend is not fully covered by Net Income, which can raise questions about long-term sustainability if earnings don't improve or if the company doesn't continue to cover the difference with cash flow metrics like AFFO, which are more relevant for REITs. The market is watching this closely, but the management's focus on improving operating performance, like the 13.3% year-over-year Cash Net Operating Income (NOI) growth in the same-store managed senior housing portfolio, is the path to resolving this. If you want to dive deeper into the operational drivers, you can read more at Breaking Down Sabra Health Care REIT, Inc. (SBRA) Financial Health: Key Insights for Investors.

Valuation Analysis

You want to know if Sabra Health Care REIT, Inc. (SBRA) is a buy right now, and the short answer is that the market sees it as fairly valued, leaning toward a 'Moderate Buy' with a modest upside. The key is that traditional valuation metrics suggest it's priced at a premium to its book value, but the dividend yield is still compelling for a Real Estate Investment Trust (REIT).

The stock has seen a steady, quiet climb over the last year, which tells you the market is slowly regaining confidence in the healthcare real estate sector. Over the last 12 months, the stock price has increased by a respectable 2.59%, trading recently around the $18.61 mark. The 52-week trading range of $15.595 to $19.97 shows it's currently sitting near the high end of its recent trading band, so you're not getting a deep discount.

Is Sabra Health Care REIT, Inc. (SBRA) Overvalued or Undervalued?

To be fair, looking at the core ratios, Sabra Health Care REIT, Inc. (SBRA) is not cheap. Here's the quick math on the key valuation multiples as of late 2025:

• The Price-to-Earnings (P/E) ratio is high at about 24.49. This is based on net income, which can be volatile for REITs, so don't let it scare you away immediately.
• The Price-to-Book (P/B) ratio is currently around 1.67. This means the market values the company at 1.67 times its net asset value, which is a premium and suggests the stock is trading above its tangible book value.
• The Enterprise Value-to-EBITDA (EV/EBITDA) ratio, a better measure for companies with high debt like REITs, is approximately 13.85. This is a reasonable multiple for the sector, indicating a fair valuation relative to its operating cash flow before capital structure costs.

The P/B ratio of 1.67 is actually close to its 5-year high, which is a warning sign that the stock might be getting a little pricy compared to its historical norms. You're defintely paying for future growth and the stability of their healthcare portfolio.

Dividend Safety and Analyst Sentiment

The dividend is the main draw for many REIT investors, and Sabra Health Care REIT, Inc. (SBRA) delivers a strong current dividend yield of about 6.45%, based on an annualized dividend of $1.20 per share. But you have to look past the yield to the payout ratio, which is where things get complicated for a REIT.

If you calculate the payout ratio based on Net Income, it's an unsustainable 166.7%. This is why we use Funds From Operations (FFO) or Adjusted Earnings for REITs. Based on adjusted earnings, the payout ratio is a much more manageable 80.5%, which suggests the dividend is safe for now, but doesn't leave much room for a significant increase. The dividend is stable, but don't expect a big raise anytime soon.

Wall Street analysts are generally in agreement, with a consensus rating of 'Moderate Buy' and an average 12-month price target of $20.67. This target implies an upside of about 11.41% from the recent trading price. The most recent rating from UBS Group on November 18, 2025, was a 'Neutral' with a $20.00 price target, which is a more cautious stance.

Here's a snapshot of the key metrics:

Your next step should be to dig into the operational profile of the company, specifically its portfolio of assets and tenant health. You can start by Exploring Sabra Health Care REIT, Inc. (SBRA) Investor Profile: Who's Buying and Why? to understand the institutional ownership dynamics and the quality of their underlying assets. Investor Relations: Review the Q3 2025 earnings call transcript for management's commentary on occupancy rates and rent coverage by Friday.

Risk Factors

You're looking for the downside, and honestly, the risks for Sabra Health Care REIT, Inc. (SBRA) are a classic mix of macro-economic pressures and sector-specific operational headaches. The direct takeaway is that while the company's strategic shift toward Senior Housing Operating Portfolio (SHOP) is a long-term tailwind, near-term financial performance is still volatile, as evidenced by the significant earnings miss in Q3 2025.

The biggest internal operational risk surfaced in the third quarter of 2025: Sabra Health Care REIT, Inc. reported earnings per share (EPS) of only $0.09, a 50% negative surprise compared to the forecasted $0.18. This kind of miss, despite revenue slightly beating expectations at $190.04 million, signals that operational costs or non-recurring items are still creating a drag on the bottom line. This is the kind of volatility that makes investors nervous, even with the full-year Normalized Adjusted Funds From Operations (AFFO) guidance still strong at $1.495 to $1.505 per diluted share. Here's the quick math: the Q3 miss defintely puts pressure on hitting the high end of that range.

External risks are centered on two key areas: government payors and capital markets. Sabra Health Care REIT, Inc. generates a significant portion of its net operating income (NOI) from Skilled Nursing Facilities (SNFs), which rely heavily on government reimbursement, primarily Medicaid and Medicare. Any unexpected change in government reimbursement policies creates an immediate, material risk to tenant solvency and, by extension, to Sabra Health Care REIT, Inc.'s rent collection. Also, interest rate fluctuations are a constant threat to any Real Estate Investment Trust (REIT) because they impact the cost of capital for new acquisitions and refinancings.

Sabra Health Care REIT, Inc. is actively managing these risks, which is a crucial part of the investment thesis. Their primary mitigation strategy is a strategic portfolio shift, increasing exposure to the Senior Housing Operating Portfolio (SHOP) from its current level toward a target of 40% of the overall portfolio, capitalizing on strong demographic tailwinds-the population over 80 is expected to grow 4% annually through 2040. They are also using financial tools to buffer against market risks.

• Interest Rate Risk: Use interest rate swaps to hedge against rising capital costs.
• Liquidity/Acquisition Risk: Proactively use the At-The-Market (ATM) program, raising $165.0 million in net proceeds in Q3 2025, to fund new investments on a leverage-neutral basis.
• Balance Sheet Health: Improved Net Debt to Adjusted EBITDA to a solid 4.96x as of September 30, 2025, demonstrating deleveraging.

What this estimate hides is the risk of operator transitions underperforming, especially as the company accelerates its portfolio growth. If a new operator doesn't execute on the property's potential fast enough, the expected revenue growth-like the 13.3% year-over-year increase in same-store managed senior housing Cash NOI reported in Q3 2025-could stall. That's the real execution risk to watch.

For a detailed look at the company's financial foundation, check out Breaking Down Sabra Health Care REIT, Inc. (SBRA) Financial Health: Key Insights for Investors. To summarize the core risks and opportunities, here is a quick mapping of the near-term landscape:

Your next step: Finance should model a stress-test scenario where SNF reimbursement rates drop 3% in 2026 to gauge the true impact on the dividend payout ratio.

Growth Opportunities

You need to know where the growth is coming from, and for Sabra Health Care REIT, Inc. (SBRA), the answer is a clear pivot: senior housing and targeted acquisitions are driving the bus. The long-term demographic tailwinds are defintely in place, but the near-term growth is all about execution and a strategic shift in their portfolio mix.

The company is capitalizing on the aging US population, specifically the 80+ cohort, which is projected to grow by 4% annually through 2040. This demand, coupled with a constrained supply of new skilled nursing beds, creates a favorable environment for their existing assets. This is a simple supply/demand equation that works in their favor.

Key Growth Drivers and Strategic Portfolio Shift

Sabra's core strategy is moving toward higher-growth, needs-based assets, shifting capital from triple-net leases to the Senior Housing Operating Portfolio (SHOP) model. This move gives them more direct exposure to the upside from improving occupancy and rate growth. The same-store managed senior housing Cash Net Operating Income (NOI) is a great indicator of this success, jumping by 13.3% year-over-year in the third quarter of 2025.

• Demographic Momentum: Sustained demand from the 4% annual growth in the 80+ population.
• Managed Senior Housing: SHOP assets now represent about 26% of the total portfolio, with a stated goal to reach 40%.
• Acquisition Pipeline: The company expects to exceed its 2025 investment target of \$$400$ million to \$$500$ million, with total acquisitions surpassing $550 million for the year, heavily weighted toward senior housing.
• Operational Turnaround: Continued recovery in skilled nursing facilities (SNFs), with improving occupancy and favorable Medicare/Medicaid reimbursement trends.

Future Revenue and Earnings Estimates (2025)

For the full 2025 fiscal year, the financial outlook reflects this operational stability and strategic investment. We are seeing solid guidance for key performance indicators like Normalized Funds From Operations (FFO) and Adjusted FFO (AFFO), which are the true measures of a REIT's cash flow. The company's updated guidance points to healthy growth, especially in AFFO.

Here's the quick math on the expected cash flow and top-line numbers for 2025:

What this estimate hides is the quality of the earnings. The 4% growth in Normalized AFFO is not just volume-driven; it comes from higher-margin managed properties, which is a much stronger foundation for future returns. You can delve deeper into the institutional confidence in the company by reading Exploring Sabra Health Care REIT, Inc. (SBRA) Investor Profile: Who's Buying and Why?

Strategic Initiatives and Competitive Edge

Sabra Health Care REIT, Inc. is not just waiting for the demographics to play out; they are actively shaping their portfolio. Their strategy is 'Strategic, Disciplined, Opportunistic'. This means focusing on smaller, accretive deals under \$$100$ million, like the six managed senior housing properties acquired in Q3 2025 for $217.5 million.

A key competitive advantage is their strong balance sheet, which was recently validated by a Moody's upgrade of their senior unsecured notes. This financial stability, with approximately $1.2 billion in liquidity as of mid-2025 and no material debt maturities until 2028, gives them the capacity to fund their acquisition pipeline and continue the portfolio transition without undue financial stress. Their diverse portfolio, which includes skilled nursing, senior housing, behavioral health, and specialty hospitals, also mitigates risk compared to single-asset-class REITs. They are financially ready to execute.

Finance: Track the Q4 2025 earnings call for an updated 2026 investment pipeline and AFFO guidance.