depreciation and amortization expense are necessary elements of our costs. Likewise, the payment of taxes is a
necessary element of our operations. Because Adjusted EBITDA excludes these and other items, it has material
limitations as a measure of our performance.
•Adjusted EBITDAR. Adjusted EBITDAR is defined as Adjusted EBITDA further adjusted to add back rent expense
payable to REITs, which consists of rent expense pursuant to the master lease agreement (the "Ventas Master
Lease") with Ventas, Inc. ("Ventas"), lease agreements associated with the MOB Transactions (defined below) and a
lease arrangement with Medical Properties Trust, Inc. ("MPT") for the Hackensack Meridian Mountainside Medical
Center.
Adjusted EBITDAR is a commonly used non-GAAP valuation measure used by our management, research analysts,
investors and other interested parties to evaluate and compare the enterprise value of different companies in our
industry. Adjusted EBITDAR excludes: (1) certain material noncash items and unusual or non-recurring items that we
do not expect to continue in the future; (2) certain other adjustments that do not impact our enterprise value; and
(3) rent expense payable to our REITs. We operate 30 acute care hospitals, 12 of which we lease from two REITs,
Ventas and MPT, pursuant to long-term lease agreements. Additionally, during 2022, we completed the sale of 18
medical office buildings to Ventas in exchange for $204.0 million and concurrently entered into agreements to lease
the real estate back from Ventas over a 12-year initial term with eight options to renew for additional five-year terms
(the "MOB Transactions"). Our management views the long-term lease agreements with Ventas and MPT, as well as
the MOB Transactions, as more like financing arrangements than true operating leases, with the rent payable to such
REITs being similar to interest expense. As a result, our capital structure is different than many of our competitors,
especially those whose real estate portfolio is predominately owned and not leased. Excluding the rent payable to
such REITs allows investors to compare our enterprise value to those of other healthcare companies without regard
to differences in capital structures, leasing arrangements and geographic markets, which can vary significantly among
companies. Our management also uses Adjusted EBITDAR as one measure in determining the value of prospective
acquisitions or divestitures. Finally, financial covenants in certain of our lease agreements, including the Ventas
Master Lease, use Adjusted EBITDAR as a measure of compliance. Adjusted EBITDAR does not reflect our cash
requirements for leasing commitments. As such, our presentation of Adjusted EBITDAR should not be construed as a
performance or liquidity measure.
Because not all companies use identical calculations, our presentation of Adjusted EBITDAR may not be comparable
to other similarly titled measures of other companies. While we believe this is a useful supplemental valuation
measure for investors and other users of our financial information, you should not consider Adjusted EBITDAR in
isolation or as a substitute for net income or any other items calculated in accordance with GAAP. Adjusted EBITDAR
has inherent material limitations as a valuation measure, because it adds back certain expenses to net income,
resulting in those expenses not being taken into account in the valuation measure. The payment of taxes and rent is
a necessary element of our valuation. Because Adjusted EBITDAR excludes these and other items, it has material
limitations as a measure of our valuation.
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform
Act of 1995 and are based on current expectations and assumptions that are subject to risks and uncertainties. Forward-
looking statements include all statements that are not historical facts. The words "anticipate," "assume," "believe,"
"continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "future," "will,"
"seek," "foreseeable," the negative version of these words, or similar terms and phrases are intended to identify forward-
looking statements. These forward-looking statements include, but are not limited to, statements regarding anticipated
financial performance and financial position, including our financial outlook for the full year 2024 and other statements
that are not historical facts. These forward-looking statements are neither promises nor guarantees, but involve risks and
uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements.
Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons,
including, but not limited to, the following: (1) changes in government healthcare programs, including Medicare and
Medicaid and supplemental payment programs and state directed payment arrangements; (2) reduction in the
reimbursement rates paid by commercial payors, our inability to retain and negotiate favorable contracts with private
third-party payors, or an increasing volume of uninsured or underinsured patients; (3) the highly competitive nature of
the healthcare industry; (4) inability to recruit and retain quality physicians, as well as increasing cost to contract with
hospital-based physicians; (5) increased labor costs resulting from increased competition for staffing or a continued or
