CareTrust REIT Names David Sedgwick New CEO as Rumors of Possible Sale Swirl

CareTrust REIT (Nasdaq: CTRE) will ring in 2022 with a new CEO, the real estate investment trust announced Friday, amid reports that the company may be considering a sale.

David Sedgwick, currently CareTrust’s president and chief operating officer, will succeed founding chairman and CEO Greg Stapley, who will continue to serve as executive chairman during a six-month transition period.

The news comes at the end of what has been a busy year for the real estate investment trust and its tenants, which had 160 skilled nursing facilities in its portfolio to end the third quarter of 2021.

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CareTrust’s largest tenant, The Ensign Group, announced plans to form its own captive REIT in October, after achieving sequential growth in occupancy for the fourth consecutive quarter, though Stapley previously said he didn’t expect that to “change things” between the two.

CareTrust was first created as a real estate subsidiary of Ensign and spun off to become a standalone public company in 2014. The REIT has seen a total shareholder return of approximately 156% since the spin-off.

Stapley plans to commence a three-year, full-time volunteer assignment for The Church of Jesus Christ of Latter-day Saints following the six-month transition period.

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“We have long prepared for this day, and there is no better successor to fill the chief executive role than Dave,” Stapley said in a press release announcing the transition. “Dave is the perfect combination of healthcare operating experience, real estate and finance knowledge, and capital markets acumen, and he brings tremendous energy, insight and relationships to the role.”

Prior to joining CareTrust in 2014, Sedgwick has held various operational and leadership roles within The Ensign Group from 2001 to 2014.

“There has been no daylight between Greg, me and the rest of the leadership team when it comes to our shared vision of matching great opportunities with great operators,” Sedgwick said in the press release. “I remain committed to that vision, and confident in our ability to drive long-term value for stakeholders.”

CareTrust beat analyst estimates on revenue by $17 million, coming in at $48.6 million for the quarter ending Sept. 30, according to SeekingAlpha, as Sedgwick expects its skilled nursing assets to return to pre-pandemic occupancy by next summer.

Skilled nursing census increased from 69.7% in June to 71.5% in September for CareTrust, though it still remains down from pre-pandemic occupancy of 77.7%.

As of early November, about 60% of the REIT’s skilled nursing operators were within 90% of their pre-pandemic census or better. Overall, skilled mix remains about 300 basis points higher than pre-pandemic levels.

With SNFs trading at all-time highs, CareTrust’s active deal pipeline is between $125 million and $150 million, comprising mainly single asset and smaller portfolios. It has an even mix of skilled nursing and senior housing portfolios.

CareTrust’s board of directors also announced that Diana M. Laing has been appointed as lead independent director. She has been a member of the board since 2019.

“As a Board, we have watched Mr. Sedgwick’s development as a leader and strategist over the years and have developed a great respect for his industry knowledge and management style,” she said in the press release.

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