1、Equity Research 3 September 2019 CORE Barclays Capital Inc.and/or one of its affiliates does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.In
2、vestors should consider this report as only a single factor in making their investment decision.PLEASE SEE ANALYST CERTIFICATION(S)AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 281.Restricted-Internal U.S.Health Care Services Healthcare Real Estate Roadmap Initiate on 7 Companies:We are initiating cov
3、erage of seven additional HC companies,including five HC REITs(on top of Welltower)and two senior housing operators,Brookdale(BKD)and Capital Senior Living(CSU),where real estate ownership is a key variable.The overall REIT sector is in favor right now(+26%total returns YTD;vs SPX up 18%),with HC RE
4、ITs close behind(+21%YTD);however,HC property types are seeing mixed operational results.We see the greatest near-term growth opportunities in life sciences and medical office buildings in key regions of the U.S.(California and Boston).Among large diversified HC REITs,HCP Inc.(HCP)has the greatest l
5、everage to this while waiting for a turnaround in its senior housing assets.Ventas is also thriving in life sciences,but the portfolio is not yet large enough to offset its challenges in Senior Housing.So with flattish SSNOI growth currently at VTR,but industry-leading SSNOI growth at HCP,we initiat
6、e with an OW rating on HCP,and EW rating on VTR due to its valuation vs.growth.As an aside,WELL(OW)is the only company(REIT or public provider)posting positive SSNOI trends in its senior housing portfolio.SNF REITs A Time to Shine:Initiate CTRE and SBRA with OW ratings:HC REITs tied to the skilled n
7、ursing facilities(SNF)have historically commanded the lowest valuations in the group.However,we believe now is one of the more opportunistic times to be positive,as our channel checks suggest the new Medicare PDPM reimbursement system for SNFs starting 10/1/2019 is likely to provide a material tailw
8、ind to the sector.So we initiate Sabra(SBRA)and Care Trust REIT(CTRE)with OW ratings.CTREs SNF portfolio enjoys better coverage ratios vs.SBRA,but SBRAs 30%discounted valuation to CTRE also makes its equity attractive at current levels.Initiate Senior Housing Operators-BKD at EW,CSU at UW:The new ma
9、nagement team at Brookdale has done an excellent job,in our view,of stabilizing the ship in 2018 and 2019 YTD following negative operating leverage related to Senior Housing industry oversupply.Capital Senior Living also recently made management changes,but many of its key operating metrics are stil
10、l trending in the wrong direction in 2019.Our sense is both companies current asset portfolio may still be subject to less favorable supply/demand trends and population growth relative to national averages.So while both companies should eventually have positive leverage to the silver wave of senior
11、population growth starting in 2022,they may still struggle with the supply tsunami in 2019-21.As such,we initiate BKD at EW($8 PT)and CSU at UW($3 PT).Initiate Medical Properties Trust(MPW)with OW rating:MPW is the only pure-play HC REIT catering to the acute hospital sector.The companys management
12、are former hospital operators,and this expertise gives MPW a unique calling card when seeking new business opportunities.A recent wave of transactions for MPW both domestically and internationally further validates the business model,and should help drive some of the fastest FFO growth in the HC REI
13、T sector in 2020(20%).We also view favorably the much higher rent coverage ratios for acute hospitals vs.other HC property types.INITIATING COVERAGE U.S.Health Care Services NEUTRAL Unchanged For a full list of our ratings,price targets and earnings in this report,please see table on page 2 U.S.Heal
14、th Care Services Steve Valiquette+1 212 526 5496 BCI,US Morgan McCarthy+1 212 526 1168 BCI,US Andrew Mok,CFA+1 212 526 2687 Andrew.M BCI,US Jonathan Yong+1 212 526 3647 BCI,US Barclays|U.S.Health Care Services 3 September 2019 2 Summary of our Ratings,Price Targets and Earnings Estimates in this Rep
15、ort Company Rating Price Price Target EPS FY1(E)EPS FY2(E)Old New 30-Aug-19 Old New%Chg Old New%Chg Old New%Chg U.S.Health Care Services Neu Neu Brookdale Senior Living Inc.(BKD)N/A EW 8.18 N/A 8.00-N/A-1.05-N/A-0.99-Capital Senior Living Corporation(CSU)N/A UW 4.61 N/A 3.00-N/A-1.46-N/A-1.22-CareTr
16、ust REIT,Inc.(CTRE)N/A OW 23.79 N/A 26.00-N/A 1.35-N/A 1.49-HCP,Inc.(HCP)N/A OW 34.71 N/A 37.00-N/A 1.73-N/A 1.81-Medical Properties Trust Inc.(MPW)N/A OW 18.59 N/A 20.00-N/A 1.29-N/A 1.57-Sabra Health Care REIT,Inc.(SBRA)N/A OW 21.62 N/A 24.00-N/A 1.87-N/A 1.89-Ventas,Inc.(VTR)N/A EW 73.39 N/A 74.0
17、0-N/A 3.80-N/A 3.90-Source:Barclays Research.Share prices and target prices are shown in the primary listing currency and EPS estimates are shown in the reporting currency.FY1(E):Current fiscal year estimates by Barclays Research.FY2(E):Next fiscal year estimates by Barclays Research.Stock Rating:OW
18、:Overweight;EW:Equal Weight;UW:Underweight;RS:Rating Suspended Industry View:Pos:Positive;Neu:Neutral;Neg:Negative Barclays|U.S.Health Care Services 3 September 2019 3 U.S.Health Care Services Industry View:NEUTRAL Brookdale Senior Living Inc.(BKD)Stock Rating:EQUAL WEIGHT Income statement($mn)2018A
19、 2019E 2020E 2021E CAGR Price(30-Aug-2019)USD 8.18 Price Target USD 8.00 Why Equal Weight?Brookdale is the largest owner of senior housing in the US and now in full stride in its multi-year,strategic“turnaround plan”to improve the operations of its core SH business.Upside case USD 11.00 Earlier leve
20、rage to the Silver Tsunami may lead to a higher multiple on our 2020 adjusted EV/EBITDAR forecast.Downside case USD 5.00 The companys turnaround efforts take longer than expected and operating metrics deteriorate further,leading to a lower multiple on our 2020 adjusted EV/EBITDAR forecast.Upside/Dow
21、nside scenarios Revenue 4,531 4,069 4,064 4,158-2.8%EBITDA(adj)510 424 437 457-3.5%EBIT(adj)36 23 34 45 7.4%Pre-tax income(adj)-578-202-190-159 N/A Net income(adj)-528-196-184-154 N/A FFO per share N/A N/A N/A N/A N/A EPS(adj)N/A N/A N/A N/A N/A Diluted shares(mn)187.5 186.5 186.5 186.5-0.2%DPS($)0.
22、00 0.00 0.00 0.00 N/A Margin and return data Average EBITDA(adj)margin(%)11.2 10.4 10.7 11.0 10.9 EBIT(adj)margin(%)0.8 0.6 0.8 1.1 0.8 Pre-tax(adj)margin(%)-12.8-5.0-4.7-3.8-6.5 Net(adj)margin(%)-11.7-4.8-4.5-3.7-6.2 ROIC(%)N/A N/A N/A N/A N/A ROA(%)-8.2-2.7-2.6-2.2-3.9 ROE(%)-51.8-27.0-32.3-34.4-3
23、6.4 Balance sheet and cash flow($mn)CAGR Tangible fixed assets 5,300 5,192 5,127 5,054-1.6%Intangible fixed assets 394 1,516 1,478 1,440 54.1%Cash and equivalents 398 267 211 208-19.5%Total assets 6,467 7,357 7,179 7,042 2.9%Short and long-term debt 3,640 3,573 3,573 3,573-0.6%Other long-term liabil
24、ities 1,330 2,318 2,318 2,318 20.4%Total liabilities 5,449 6,624 6,602 6,590 6.5%Net debt/(funds)3,227 3,247 3,302 3,306 0.8%Shareholders equity 1,019 727 571 447-24.0%Change in working capital N/A N/A N/A N/A N/A Cash flow from operations 204 134 220 271 10.0%Capital expenditure-225-267-275-275 N/A
25、 Free cash flow-22-133-55-4 N/A Valuation and leverage metrics Average P/FFO(x)N/A N/A N/A N/A N/A P/E(adj)(x)N/A N/A N/A N/A N/A EV/EBITDA(adj)(x)12.2 14.7 14.4 13.7 13.7 FCF yield(%)-0.3-2.1-0.9-0.1-0.9 EV/sales(x)1.4 1.5 1.5 1.5 1.5 P/BV(x)1.5 2.1 2.7 3.4 2.4 Dividend yield(%)0.0 0.0 0.0 0.0 0.0
26、Total debt/capital(%)78.1 83.1 86.2 88.9 84.1 Cash flow from operations per share($)1.09 0.72 1.18 1.45 1.11 Selected operating metrics Volume growth(%)N/A N/A N/A N/A Price growth(%)N/A N/A N/A N/A Bad debt expense N/A N/A N/A N/A Source:Company data,Barclays Research Note:FY End Dec Barclays|U.S.H
27、ealth Care Services 3 September 2019 4 U.S.Health Care Services Industry View:NEUTRAL Capital Senior Living Corporation(CSU)Stock Rating:UNDERWEIGHT Income statement($mn)2018A 2019E 2020E 2021E CAGR Price(30-Aug-2019)USD 4.61 Price Target USD 3.00 Why Underweight?CSU,one of the top 10 largest owners
28、 of senior housing in the US,has recently implemented a strategic“turnaround plan”to improve the operations of its core SH business under new CEO.Upside case USD 6.00 Earlier leverage to the Silver Tsunami may lead to a higher multiple on our 2020 adjusted EV/EBITDAR forecast.Downside case USD 1.00
29、The companys turnaround efforts take longer than expected and operating metrics deteriorate further,leading to a lower multiple on our 2020 adjusted EV/EBITDAR forecast.Upside/Downside scenarios Revenue 460 451 448 448-0.8%EBITDA(adj)91 80 82 83-3.2%EBIT(adj)8 6 11 12 13.2%Pre-tax income(adj)-55-45-
30、38-37 N/A Net income(adj)-54-46-38-37 N/A EPS(adj)($)-1.80-1.46-1.22-1.19 N/A Diluted shares(mn)29.8 31.4 31.4 31.4 1.7%DPS($)0.00 0.00 0.00 0.00 N/A Margin and return data Average EBITDA(adj)margin(%)19.8 17.8 18.3 18.4 18.6 EBIT(adj)margin(%)1.8 1.4 2.5 2.7 2.1 Pre-tax(adj)margin(%)-12.0-10.0-8.4-
31、8.2-9.7 Net(adj)margin(%)-11.7-10.2-8.5-8.3-9.7 ROIC(%)N/A N/A N/A N/A N/A ROA(%)-4.7-3.5-3.0-3.0-3.5 ROE(%)-92.6-221.9 383.3 89.8 39.6 Balance sheet and cash flow($mn)CAGR Tangible fixed assets 891 1,032 1,100 1,059 5.9%Intangible fixed assets 31 31 19 17-18.9%Cash and equivalents 31 37 51 66 28.0%
32、Total assets 1,149 1,321 1,292 1,265 3.2%Short and long-term debt 974 968 968 968-0.2%Other long-term liabilities 19 28 28 24 7.9%Total liabilities 883 1,029 1,102 1,114 8.0%Net debt/(funds)942 931 917 902-1.4%Shareholders equity 35 6-26-57 N/A Change in working capital 3 6 2 2-12.6%Cash flow from o
33、perations 37 30 32 33-4.0%Capital expenditure-22-22-18-18 N/A Free cash flow 15 8 14 15-0.7%Valuation and leverage metrics Average P/E(adj)(x)N/A N/A N/A N/A N/A EV/sales(x)2.6 2.7 2.7 2.6 2.6 EV/EBITDA(adj)(x)13.3 15.0 14.5 14.3 14.3 EV/EBIT(adj)(x)145.3 198.0 106.4 97.3 136.8 Equity FCF yield(%)N/
34、A N/A N/A N/A N/A P/BV(x)3.9 23.8-5.5-2.5 4.9 Dividend yield(%)0.0 0.0 0.0 0.0 0.0 Total debt/capital(%)96.5 99.4 102.8 106.3 101.2 Source:Company data,Barclays Research Note:FY End Dec Barclays|U.S.Health Care Services 3 September 2019 5 U.S.Health Care Services Industry View:NEUTRAL CareTrust REIT
35、,Inc.(CTRE)Stock Rating:OVERWEIGHT Income statement($mn)2018A 2019E 2020E 2021E CAGR Price(30-Aug-2019)USD 23.79 Price Target USD 26.00 Why Overweight?CTREs seasoned management team has used a disciplined approach to grow accretively via acquisition primarily in the SNF asset category,and now invest
36、ors seem to have minimal concern today about the companys tenant concentration vs.five years ago.Upside case USD 32.00 The company generates more accelerated growth than we projected,leading to an expansion of it multiple on our 2020 FFO estimate.Downside case USD 18.00 Slower FFO growth to peer may
37、 lead to a lower multiple on our 2020 FFO estimates.Upside/Downside scenarios Revenue 157 177 196 220 11.9%EBITDA(adj)133 159 177 201 14.6%EBIT(adj)84 103 115 131 16.2%Pre-tax income(adj)56 73 86 102 22.3%Net income(adj)58 65 86 102 20.9%FFO per share($)1.28 1.35 1.49 1.73 10.5%EPS(adj)($)0.73 0.70
38、0.90 1.06 13.3%DPS($)0.82 0.90 0.92 0.94 4.5%Margin and return data Average EBITDA(adj)margin(%)85.0 90.2 90.5 91.2 89.2 EBIT(adj)margin(%)53.4 58.5 58.9 59.7 57.6 Pre-tax(adj)margin(%)35.6 41.0 44.1 46.5 41.8 Net(adj)margin(%)36.9 37.0 44.1 46.5 41.1 ROIC(%)N/A N/A N/A N/A N/A ROA(%)4.7 4.6 5.6 6.6
39、 5.4 ROE(%)8.5 7.6 9.1 10.7 9.0 Balance sheet and cash flow($mn)CAGR Tangible fixed assets 1,216 1,458 1,401 1,338 3.2%Intangible fixed assets 18 27 27 27 14.0%Cash and equivalents 37 16 78 162 63.8%Total assets 1,292 1,523 1,531 1,553 6.3%Short and long-term debt 490 539 539 539 3.3%Other long-term
40、 liabilities 0 0 0 0 N/A Total liabilities 524 576 581 586 3.9%Net debt/(funds)453 524 461 377-5.9%Shareholders equity 768 947 949 966 7.9%Change in working capital-6-2 4 4 N/A Cash flow from operations 99 120 152 175 20.8%Capital expenditure-9-5-1-1 N/A Free cash flow 90 115 151 174 24.4%Valuation
41、and leverage metrics Average P/FFO(x)18.6 17.6 15.9 13.8 16.5 P/E(adj)(x)32.6 34.0 26.5 22.4 28.9 EV/EBITDA(adj)(x)34.1 31.1 28.0 24.3 29.4 FCF yield(%)2.0 2.3 3.0 3.6 2.7 EV/sales(x)29.0 28.0 25.3 22.2 26.1 P/BV(x)2.5 2.3 2.4 2.4 2.4 Dividend yield(%)3.4 3.8 3.9 3.9 3.8 Total debt/capital(%)38.9 36
42、.3 36.2 35.8 36.8 Cash flow from operations per share($)1.25 1.28 1.58 1.81 1.48 Source:Company data,Barclays Research Note:FY End Dec Barclays|U.S.Health Care Services 3 September 2019 6 U.S.Health Care Services Industry View:NEUTRAL HCP,Inc.(HCP)Stock Rating:OVERWEIGHT Income statement($mn)2018A 2
43、019E 2020E 2021E CAGR Price(30-Aug-2019)USD 34.71 Price Target USD 37.00 Why Overweight?The company has undergone a major transformation over the last 3 years,resulting in an improved portfolio with key overhangs on the stock removed and a better positioning grow its NOI moving forward.Upside case U
44、SD 41.00 Greater NOI growth or occupancy improvement than we are currently projecting leading to an expansion of its P/FFO multiple on our 2020 estimate,implying$41 upside.Downside case USD 28.00 Slower growth to peers or greater than anticipated occupancy declines may lead to a lower P/FFO multiple
45、 on our 2020 estimate,implying downside of$28.Upside/Downside scenarios Revenue 1,836 1,898 1,995 2,095 4.5%EBITDA(adj)1,140 1,142 1,204 1,269 3.6%EBIT(adj)495 377 421 450-3.2%Pre-tax income(adj)132 65 183 210 16.7%Net income(adj)1,058 80 219 197-42.9%FFO per share($)1.83 1.73 1.81 1.92 1.8%EPS(adj)
46、($)2.23 0.17 0.44 0.39-44.0%Diluted shares(mn)475.4 484.9 499.0 503.0 1.9%DPS($)1.48 1.48 1.49 1.51 0.7%Margin and return data Average EBITDA(adj)margin(%)61.7 59.9 60.1 60.3 60.5 EBIT(adj)margin(%)26.8 19.8 21.0 21.4 22.2 Pre-tax(adj)margin(%)7.0 3.1 8.8 9.7 7.2 Net(adj)margin(%)57.3 4.2 10.9 9.3 2
47、0.4 ROIC(%)N/A N/A N/A N/A N/A ROA(%)7.9 0.6 1.6 1.5 2.9 ROE(%)18.8 1.4 3.9 3.7 7.0 Balance sheet and cash flow($mn)CAGR Tangible fixed assets 10,318 11,193 10,741 10,407 0.3%Intangible fixed assets 956 1,039 1,069 1,104 4.9%Cash and equivalents 111 73 203 192 20.2%Total assets 12,719 13,453 13,162
48、12,851 0.3%Short and long-term debt 5,568 6,291 6,291 6,291 4.2%Other long-term liabilities 0 0 0 0 N/A Total liabilities 6,206 7,094 7,149 7,209 5.1%Net debt/(funds)5,929 6,195 6,065 6,076 0.8%Shareholders equity 5,944 5,794 5,448 5,078-5.1%Change in working capital-860-67-25 25 N/A Cash flow from
49、operations 849 789 975 1,026 6.5%Capital expenditure-610-450-350-350 N/A Free cash flow 239 339 625 676 41.5%Valuation and leverage metrics Average P/FFO(x)19.0 20.1 19.1 18.0 19.1 P/E(adj)(x)15.6 N/A 79.1 88.8 61.2 EV/EBITDA(adj)(x)34.9 35.3 33.8 32.2 34.1 FCF yield(%)0.6 0.8 1.5 1.7 1.2 EV/sales(x
50、)21.7 21.3 20.4 19.5 20.7 P/BV(x)2.8 2.9 3.2 3.4 3.1 Dividend yield(%)4.3 4.3 4.3 4.3 4.3 Total debt/capital(%)48.4 52.1 53.6 55.3 52.3 Cash flow from operations per share($)1.79 1.63 1.95 2.04 1.85 Selected operating metrics Volume growth(%)N/A N/A N/A N/A Price growth(%)N/A N/A N/A N/A Bad debt ex
