UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2016
OR
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM                        TO

Commission file number: 001-37356

Care Capital Properties, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization) 37-1781195 (I.R.S. Employer Identification No.)

191 North Wacker Drive, Suite 1200

Chicago, Illinois

(Address of Principal Executive Offices)

60606

(Zip Code)

(312) 881-4700

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x    No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x (Do not check if a smaller reporting company) Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨    No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class of Common Stock:	Outstanding at November 8, 2016:
Common Stock, $0.01 par value	83,960,353

CARE CAPITAL PROPERTIES, INC.

FORM 10-Q

INDEX

		Page
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements of Care Capital Properties, Inc. and Predecessors (unaudited)
	Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015	1
	Combined Consolidated Statements of Income and Comprehensive Income for the Three and Nine Months Ended September 30, 2016 and 2015	2
	Combined Consolidated Statements of Equity for the Nine Months Ended September 30, 2016 and the Year Ended December 31, 2015	3
	Combined Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2016 and 2015	4
	Notes to Combined Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46
Item 4.	Controls and Procedures	47
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 6.	Exhibits	49
Signatures		50

PART I—FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

CARE CAPITAL PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share amounts)

	September 30, 2016			December 31, 2015
Assets
Real estate investments:
Land and improvements	$	261,987		$	287,193
Buildings and improvements	2,757,240			2,984,257
Construction in progress	42,186			33,646
Acquired lease intangibles	94,125			101,869
	3,155,538			3,406,965
Accumulated depreciation and amortization	(670,117		)	(704,210		)
Net real estate property	2,485,421			2,702,755
Net investment in direct financing lease	22,416			22,075
Net real estate investments	2,507,837			2,724,830
Secured and unsecured loans receivable, net	65,679			29,727
Cash	22,477			16,995
Goodwill	128,673			145,374
Other assets	74,495			38,043
Total assets	$	2,799,161		$	2,954,969
Liabilities and equity
Liabilities:
Term loans, senior notes and other debt	$	1,439,473		$	1,524,863
Tenant deposits	47,232			57,974
Lease intangible liabilities, net	115,191			130,348
Accounts payable and other liabilities	39,772			24,048
Deferred income taxes	1,932			1,889
Total liabilities	1,643,600			1,739,122
Commitments and contingencies
Equity:
Preferred stock, $0.01 par value; 10,000 shares authorized, unissued at September 30, 2016 and December 31, 2015	—			—
Common stock, $0.01 par value; 300,000 shares authorized, 83,970 and 83,803 shares issued at September 30, 2016 and December 31, 2015, respectively	840			838
Additional paid-in capital	1,271,168			1,264,650
Dividends in excess of net income	(108,709		)	(51,056		)
Treasury stock, 11 and 0 shares at September 30, 2016 and December 31, 2015, respectively	(329		)	—
Accumulated other comprehensive income	(8,742		)	—
Total CCP equity	1,154,228			1,214,432
Noncontrolling interest	1,333			1,415
Total equity	1,155,561			1,215,847
Total liabilities and equity	$	2,799,161		$	2,954,969

See Accompanying Notes to the Combined Consolidated Financial Statements.

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CARE CAPITAL PROPERTIES, INC. AND PREDECESSORS

COMBINED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited)

(In thousands, except per share amounts)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2016			2015			2016			2015
Revenues:
Rental income, net	$	82,428		$	80,595		$	246,095		$	237,100
Income from investments in direct financing lease and loans	1,893			955			4,530			2,680
Real estate services fee income	1,897			763			5,080			763
Interest and other income	1,073			4			1,791			67
Total revenues	87,291			82,317			257,496			240,610
Expenses:
Interest	14,271			4,090			35,210			4,075
Depreciation and amortization	25,494			27,752			82,324			80,688
Impairment on real estate investments and associated goodwill	12,397			3,750			17,925			16,648
General, administrative and professional fees	9,477			9,216			26,317			21,499
Deal costs	490			991			2,516			4,746
Loss on extinguishment of debt	4,359			—			5,461			—
Other expenses, net	3,700			158			3,919			1,278
Total expenses	70,188			45,957			173,672			128,934
Income before income taxes, real estate dispositions and noncontrolling interests	17,103			36,360			83,824			111,676
Income tax expense	(229		)	(1,024		)	(779		)	(1,024		)
Gain on real estate dispositions	2,143			856			2,895			856
Net income	19,017			36,192			85,940			111,508
Net income attributable to noncontrolling interests	7			26			13			138
Net income attributable to CCP	$	19,010		$	36,166		$	85,927		$	111,370
Net income	19,017			36,192			85,940			111,508
Other comprehensive gain (loss) - derivatives	3,193			—			(8,742		)	—
Total comprehensive income	22,210			36,192			77,198			111,508
Comprehensive income attributable to noncontrolling interests	7			26			13			138
Comprehensive income attributable to CCP	$	22,203		$	36,166		$	77,185		$	111,370
Earnings per common share:
Basic:
Net income attributable to CCP	$	0.23		$	0.43		$	1.03		$	1.33
Diluted:
Net income attributable to CCP	$	0.23		$	0.43		$	1.03		$	1.33
Dividends declared per common share	$	0.57		$	0.57		$	1.71		$	0.57
Weighted average shares used in computing earnings per common share:
Basic	83,609			83,488			83,583			83,488
Diluted	83,752			83,558			83,674			83,558

See Accompanying Notes to the Combined Consolidated Financial Statements.

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CARE CAPITAL PROPERTIES, INC. AND PREDECESSORS

COMBINED CONSOLIDATED STATEMENTS OF EQUITY

For the Nine Months Ended September 30, 2016 and the Year Ended December 31, 2015

(Unaudited)

(In thousands, except per share amounts)

	Net Parent Investment			Common Stock Par Value		Additional Paid-In Capital		Dividends in Excess of Net Income			Treasury Stock			Accumulated Other Comprehensive Income			Total CCP Equity			Noncontrolling Interests			Total Equity
Balance, January 1, 2015	2,118,216			—		—		—			—			—			2,118,216			4,863			2,123,079
Net income attributable to CCP	98,700			—		—		44,466			—			—			143,166			—			143,166
Net change in noncontrolling interests	—			—		—		—			—			—			—			(225		)	(225		)
Acquisition of noncontrolling interest	—			—		123		—			—			—			123			(3,223		)	(3,100		)
Net contribution from parent prior to separation	306,629			—		—		—			—			—			306,629			—			306,629
Distribution to parent	(1,273,000		)	—		—		—			—			—			(1,273,000		)	—			(1,273,000		)
Issuance of common stock at separation	—			835		—		—			—			—			835			—			835
Issuance of common stock for acquisition	—			3		11,543		—			—			—			11,546			—			11,546
Transfer of remaining net parent investment to additional paid-in capital	(1,250,545		)	—		1,250,545		—			—			—			—			—			—
Stock-based compensation	—			—		2,439		—			—			—			2,439			—			2,439
Dividends to common stockholders - $1.14 per share	—			—		—		(95,522		)	—			—			(95,522		)	—			(95,522		)
Balance, December 31, 2015	$	—		$	838	$	1,264,650	$	(51,056	)	$	—		$	—		$	1,214,432		$	1,415		$	1,215,847
Net income attributable to CCP	—			—		—		85,927			—			—			85,927			—			85,927
Net change in noncontrolling interest	—			—		—		—			—			—			—			(82		)	(82		)
Issuance of common stock for acquisition	—			2		1,371		—			—			—			1,373			—			1,373
Stock-based compensation	—			—		5,147		—			(329		)	—			4,818			—			4,818
Other comprehensive income	—			—		—		—			—			(8,742		)	(8,742		)	—			(8,742		)
Dividends to common stockholders - $1.71 per share	—			—		—		(143,580		)	—			—			(143,580		)	—			(143,580		)
Balance, September 30, 2016	$	—		$	840	$	1,271,168	$	(108,709	)	$	(329	)	$	(8,742	)	$	1,154,228		$	1,333		$	1,155,561

See Accompanying Notes to the Combined Consolidated Financial Statements.

3

CARE CAPITAL PROPERTIES, INC. AND PREDECESSORS

COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	For the Nine Months Ended September 30,
	2016			2015
Cash flows from operating activities:
Net income	$	85,940		$	111,508
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and impairment on real estate investments and associated goodwill	97,287			94,170
Decrease in value of damaged property, net of estimated insurance proceeds	3,570			—
Amortization of above and below market lease intangibles, net	(5,905		)	(6,835		)
Amortization of deferred financing fees	3,548			646
Accretion of direct financing lease	(1,120		)	(996		)
Amortization of leasing costs and other intangibles	2,912			3,166
Amortization of stock-based compensation	4,323			1,760
Straight-lining of rental income, net	(62		)	(125		)
Gain on real estate dispositions	(2,895		)	(856		)
Loss on extinguishment of debt	5,461			—
Income tax expense (benefit)	45			(42		)
Other	(76		)	(102		)
Changes in operating assets and liabilities:
Increase in other assets	(3,282		)	(3,789		)
(Decrease) increase in tenant deposits	(7,171		)	6,601
Increase in accounts payable and other liabilities	6,340			935
Net cash provided by operating activities	188,915			206,041
Cash flows from investing activities:
Net investment in real estate property	—			(454,832		)
Investment in loans receivable	(63,321		)	(20,091		)
Proceeds from real estate dispositions	94,400			1,510
Proceeds from loans receivable	57,523			1,040
Development project expenditures	(29,391		)	(12,629		)
Capital expenditures	(3,612		)	(13,504		)
Net cash provided by (used in) investing activities	55,599			(498,506		)
Cash flows from financing activities:
Net change in borrowings under revolving credit facility	(93,000		)	138,000
Proceeds from debt	935,000			1,400,000
Repayment of debt	(926,000		)	—
Payment of deferred financing costs	(10,400		)	(20,209		)
Distributions to noncontrolling interests	(94		)	(266		)
Cash distribution to common stockholders	(143,580		)	(47,754		)
Distribution to parent	—			(1,273,000		)
Purchase of treasury stock	(958		)	—
Net contribution from parent prior to separation	—			103,714
Net cash (used in) provided by financing activities	(239,032		)	300,485
Net increase in cash	5,482			8,020
Cash at beginning of period	16,995			2,424
Cash at end of period	$	22,477		$	10,444
Supplemental schedule of non-cash activities:
Other acquisition-related investment activities for acquisitions prior to August 17, 2015	$	—		$	152,179
Transfer of real estate to receivables	31,712			—
Issuance of common stock for acquisition of specialty valuation firm	—			11,546
Transfer of remaining net parent investment to additional paid-in capital	—			1,250,545
Settlement of accrued acquisition costs via transfer of stock	1,373			—
Change in accrued capital expenditures	347			—
Transfer of liability accounted stock-based compensation awards to equity	1,453			—
Changes in tenant deposits	(4,739		)	—

See Accompanying Notes to the Combined Consolidated Financial Statements.

4

CARE CAPITAL PROPERTIES, INC. AND PREDECESSORS

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1—Description of Business

Care Capital Properties, Inc. (together with its consolidated subsidiaries, unless the context otherwise requires or indicates, “we,” “us,” “our,” “our company” or “CCP”) is a self-administered, self-managed real estate investment trust (“REIT”) with a diversified portfolio of skilled nursing facilities (“SNFs”) and other healthcare assets operated by private regional and local care providers. We generate our revenues primarily by leasing our properties to unaffiliated tenants under long-term triple-net leases, pursuant to which the tenants are obligated to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures. In addition, we originate and manage a small portfolio of secured and unsecured loans, made primarily to our SNF operators and other post-acute care providers.

As of September 30, 2016, our portfolio consisted of 340 properties operated by 38 private regional and local care providers, spread across 36 states and containing a total of approximately 38,000 beds/units. We conduct all of our operations through our wholly owned operating partnership, Care Capital Properties, LP (“Care Capital LP”), and its subsidiaries.

Our company was originally formed in April 2015 to hold the post-acute/SNF portfolio of Ventas, Inc. (“Ventas”) and its subsidiaries operated by regional and local care providers (the “CCP Business”). Effective as of 11:59 p.m. on August 17, 2015, Ventas completed its spin-off of the CCP Business by distributing one share of our common stock for every four shares of Ventas common stock held as of the close of business on August 10, 2015. As a result, we began operating as an independent public company and our common stock commenced trading on the New York Stock Exchange under the symbol “CCP” on August 18, 2015.

Prior to the spin-off, CCP was a wholly owned subsidiary of Ventas. Prior to or concurrently with the spin-off, Ventas engaged in certain reorganization transactions to consolidate the ownership of its interests in 355 properties and certain loans receivable that comprised the CCP Business and transfer those interests to us. For periods prior to our separation from Ventas, references herein to “we,” “us,” or “our” refer to the CCP Business after giving effect to the transfer of the assets and liabilities from Ventas in connection with the separation.

In connection with the spin-off, we entered into a separation and distribution agreement, as well as a transition services agreement, a tax matters agreement and an employee matters agreement, with Ventas. Under the transition services agreement, Ventas provided us with various accounting, tax and information technology services on a transitional basis through August 31, 2016, in exchange for a fee of $2.5 million, paid in four quarterly installments.

At the time of the separation and distribution, we had not conducted any business as a separate company and had no material assets or liabilities. We elected to be treated as a REIT for federal income tax purposes, beginning with our tax year ended December 31, 2015, and since the distribution have been operating in a manner that we believe will allow us to qualify as a REIT. The operations of the CCP Business transferred to us by Ventas are presented herein as if the transferred business was our business for all historical periods described and at the carrying value of such assets and liabilities reflected in Ventas’s books and records.

Subject to the limitation under the REIT asset test rules, we are permitted to own up to 100% of the stock of one or more taxable REIT subsidiaries (“TRSs”). We have elected for one of our subsidiaries to be treated as a TRS, which is subject to federal, state and local income taxes.

For periods prior to our separation from Ventas, our combined consolidated financial statements included in this Quarterly Report on Form 10-Q reflect Ventas’s interests in 358 properties (including two properties that ultimately were not transferred to us as part of the separation and one property that was sold during the second quarter of 2015).

The combined consolidated financial statements for periods prior to the separation have been prepared on a standalone basis from Ventas’s consolidated financial statements and accounting records and reflect the financial position, results of operations and cash flows of the CCP Business as it was operated as part of Ventas prior to the distribution, in conformity with U.S. generally accepted accounting principles (“GAAP”). The consolidated financial statements for the three and nine months ended September 30, 2016 reflect our financial position, results of operations and cash flows in conformity with GAAP.

For periods prior to our separation from Ventas, our equity balance (net parent investment) in the combined consolidated financial statements represents the excess of total assets over total liabilities, including the intercompany balances between us and Ventas. Net parent investment is primarily impacted by contributions from Ventas, which are the result of treasury activities and net funding provided by or distributed to Ventas prior to the separation. For periods subsequent to our

5

CARE CAPITAL PROPERTIES, INC. AND PREDECESSORS

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

separation from Ventas, our equity balance in the consolidated financial statements represents our equity activity starting August 18, 2015.

Note 2—Accounting Policies

The accompanying combined consolidated financial statements have been prepared in accordance with GAAP for interim financial information set forth in the Accounting Standards Codification (“ASC”), as published by the Financial Accounting Standards Board (“FASB”), and with the Securities and Exchange Commission (“SEC”) instructions to Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim periods have been included. Operating results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. The accompanying combined consolidated financial statements and related notes should be read in conjunction with our audited combined consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on March 10, 2016.

Principles of Combination and Consolidation and Basis of Presentation

Our unaudited combined consolidated financial statements for periods prior to our separation from Ventas do not represent the financial position and results of operations of a legal entity, but rather a combination of entities under common control that have been “carved out” of Ventas’s consolidated financial statements, and reflect significant assumptions and allocations. All intercompany transactions and balances have been eliminated in consolidation, and our net income is reduced by the portion of net income attributable to noncontrolling interests.

For periods prior to the separation, the combined consolidated financial statements include the attribution of certain assets and liabilities that were historically held at the Ventas corporate level, but which were specifically identifiable or attributable to us. All transactions between us and Ventas were considered to be effectively settled in the combined consolidated financial statements at the time the transaction was recorded. The total net effect of the settlement of these intercompany transactions is reflected as net contribution from or distribution to parent in the combined consolidated statements of cash flows as a financing activity. No other related party transactions or relationships are reflected in the combined consolidated financial statements for those periods.

For periods prior to the separation, the combined consolidated financial statements also include an allocation of expenses related to certain Ventas corporate functions, including executive oversight, treasury, finance, legal, human resources, tax planning, internal audit, financial reporting, information technology and investor relations. These expenses have been allocated to us based on direct usage or benefit where specifically identifiable, with the remainder allocated pro rata primarily on the basis of revenue, headcount or other measures. We consider the expense methodology and results to be reasonable for all periods presented. However, the allocations may not be indicative of the actual expense that would have been incurred had we operated as an independent, publicly traded company for those periods. We believe that the assumptions and estimates used in preparation of the underlying combined consolidated financial statements are reasonable. However, the combined consolidated financial statements herein do not necessarily reflect what our financial position, results of operations or cash flows would have been if we had been a standalone company during the full periods presented, nor are they necessarily indicative of our future results of operations, financial position or cash flows.

Our consolidated financial statements for periods subsequent to our separation from Ventas include our accounts and the accounts of our wholly owned subsidiaries and the joint venture entities over which we exercise control. All intercompany transactions and balances have been eliminated in consolidation, and our net income is reduced by the portion of net income attributable to noncontrolling interests.

Noncontrolling Interests

We present the portion of any equity that we do not own in entities that we control (and thus consolidate) as noncontrolling interests and classify such interests as a component of consolidated equity, separate from total equity, on our consolidated balance sheets. For consolidated joint ventures with pro rata distribution allocations, we allocate net income or loss between the joint venture partners based on their respective stated ownership percentages. We account for purchases or sales of equity interests that do not result in a change of control as equity transactions, either through net parent investment for periods prior to our separation from Ventas or through additional paid-in capital for periods subsequent to our separation from Ventas. In addition, we include net income or loss attributable to noncontrolling interests in net income in our combined consolidated statements of income and comprehensive income.

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CARE CAPITAL PROPERTIES, INC. AND PREDECESSORS

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of September 30, 2016 and December 31, 2015, we had a controlling interest in one joint venture entity that owned one SNF. The noncontrolling interest percentage for this joint venture was 49.0% at September 30, 2016 and December 31, 2015.

Accounting Estimates

The preparation of combined consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions regarding future events that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base these estimates on our experience and assumptions we believe to be reasonable under the circumstances. However, if our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, we may have applied a different accounting treatment, resulting in a different presentation of our financial statements. We periodically reevaluate our estimates and assumptions, and in the event they prove to be different from actual results, we make adjustments in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain.

Net Real Estate Property

Our investment in net real estate property is recorded on our consolidated balance sheets at historical cost, less accumulated depreciation and amortization. These real estate assets are initially measured upon their acquisition. We account for acquisitions using the acquisition method and allocate the cost of the businesses acquired among tangible and recognized intangible assets and liabilities based upon their estimated fair values as of the acquisition date.

• Land—We determine the value of land either by considering the sales prices of similar properties in recent transactions or based on internal analyses of recently acquired and existing comparable properties within our portfolio.

• Buildings—We estimate the fair value of buildings acquired on an as-if-vacant basis and depreciate the building value over the estimated remaining life of the building, generally not to exceed 35 years.

• Other tangible fixed assets—We determine the fair value of other fixed assets, such as site improvements and furniture, fixtures and equipment, based upon the replacement cost and depreciate such value over the assets' estimated remaining useful lives as determined at the applicable acquisition date.

• In-place lease intangibles—The fair value of in-place leases reflects our estimate of the cost to obtain tenants and an estimated value of the absorption period to reflect the value of the rent and recovery costs foregone during a reasonable lease-up period as if the acquired space was vacant. We amortize these intangibles through amortization expense over the remaining life of the associated lease plus assumed bargain renewal periods, if any.

• Market lease intangibles—We estimate the fair value of any above and/or below market leases by discounting the difference between the estimated market rent and in-place lease rent. We amortize these intangibles to revenue over the remaining life of the associated lease plus assumed bargain renewal periods, if any. If a lease is terminated prior to its stated expiration or not renewed upon expiration, we recognize all unamortized lease-related intangibles associated with that lease in operations at that time.

• Purchase option intangibles—We estimate the fair value of purchase option intangible liabilities by discounting the difference between the applicable property's acquisition date fair value and an estimate of its future option price. We do not amortize the resulting intangible liability over the term of the lease, but rather adjust the recognized value of the asset or liability upon sale.

• Goodwill—Goodwill represents the excess of the purchase price paid over the fair value of the acquired net assets. We do not amortize goodwill.

Impairment of Long-Lived and Intangible Assets and Goodwill

We periodically evaluate our long-lived assets, primarily consisting of investments in real estate, for impairment indicators. If indicators of impairment are present, we evaluate the carrying value of the related real estate investments in relation to the future undiscounted cash flows of the underlying operations. In performing this evaluation, we consider market conditions and our current intentions with respect to the retention or disposition of the asset. We adjust the net carrying value of leased properties and other long-lived assets to fair value if the sum of the expected future undiscounted cash flows, including sale proceeds, is less than carrying value. We recognize any shortfall from carrying value as an impairment loss in the current period.

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CARE CAPITAL PROPERTIES, INC. AND PREDECESSORS

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

If impairment indicators arise with respect to intangible assets with finite useful lives, we evaluate impairment by comparing the carrying amount of the asset to the estimated future undiscounted net cash flows expected to be generated by the asset. If estimated future undiscounted net cash flows are less than the carrying amount of the asset, then we estimate the fair value of the asset and compare the estimated fair value to the intangible asset's carrying value. We recognize any shortfall from carrying value as an impairment loss in the current period.

We test goodwill for impairment at least annually, and more frequently if indicators arise. We assess qualitative factors, such as current macroeconomic conditions, state of the capital markets and our overall financial and operating performance, to determine the likelihood that the fair value of the reporting unit is less than its carrying amount. If we determine it is more likely than not that the fair value of the reporting unit is less than its carrying amount, we proceed with the two-step approach to evaluating impairment. First, we estimate the fair value of the reporting unit and compare it to the reporting unit's carrying value. If the carrying value exceeds fair value, we proceed with the second step, which requires us to assign the fair value of the reporting unit to all of the assets and liabilities of the reporting unit as if it had been acquired in a business combination at the date of the impairment test. The excess fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied value of goodwill and is used to determine the amount of impairment. We recognize an impairment loss to the extent the carrying value of goodwill exceeds the implied value in the current period. Additionally, when we classify our real estate assets as assets held for sale, we evaluate the entire disposal group, including the associated goodwill, for impairment.

Estimates of fair value used in our evaluation of goodwill, real estate investments and intangible assets are based upon discounted future cash flow projections or other acceptable valuation techniques that are based, in turn, upon Level 3 inputs in the fair value hierarchy (as described below), such as revenue and expense growth rates, capitalization rates, discount rates or other available market data. Our ability to accurately predict future operating results and cash flows and to estimate and allocate fair values impacts the timing and recognition of impairments. While we believe our assumptions are reasonable, changes in these assumptions may have a material impact on our financial results.

Assets Held for Sale and Discontinued Operations

We expect to sell properties from time to time for various reasons, including favorable market conditions or the exercise of purchase options by tenants. We classify certain long-lived assets as held for sale once the criteria, as defined by GAAP, have been met. Long-lived assets to be disposed of are reported at the lower of their carrying amount or fair value minus cost to sell and are no longer depreciated.

Net Investment in Direct Financing Lease

We lease one SNF under an agreement that is classified as a direct financing lease, as the tenant has a purchase obligation at the end of the lease term. The net investment in direct financing lease is recorded as a receivable on our consolidated balance sheets and represents the total undiscounted rental payments (including the tenant's purchase obligation), plus the estimated unguaranteed residual value, less the unearned lease income. Unearned lease income represents the excess of the minimum lease payments and residual values over the cost of the investment. Unearned lease income is deferred and amortized to income over the lease term to provide a constant yield when collectibility of the lease payments is reasonably assured. Income from our net investment in direct financing lease was $0.6 million and $0.6 million for the three months ended September 30, 2016 and 2015, respectively, and $1.9 million and $1.8 million for the nine months ended September 30, 2016 and 2015, respectively.

Loans Receivable

We determine the fair value of loans receivable acquired in connection with a business combination by discounting the estimated future cash flows using current interest rates at which similar loans with the same terms and length to maturity would be made to borrowers with similar credit ratings. We do not establish a valuation allowance at the acquisition date, as the amount of estimated future cash flows reflects our judgment regarding their uncertainty. We recognize the difference between the acquisition date fair value and the total expected cash flows as interest income using the effective interest method over the life of the applicable loan. We immediately recognize in income any unamortized balances if the loan is repaid before its contractual maturity.

Subsequent to the acquisition date, we evaluate changes regarding the uncertainty of future cash flows and the need for a valuation allowance, as appropriate. We regularly evaluate the collectibility of loans receivable based on factors such as corporate and facility-level financial and operational reports, compliance with financial covenants set forth in the applicable loan agreement, the financial strength of the borrower and any guarantors, the payment history of the borrower and current economic conditions. If our evaluation of these factors indicates it is probable that we will not be able to collect all amounts due under the terms of the applicable loan agreement, we provide a reserve against the portion of the receivable that we estimate may not be collected.

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NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Centralized Cash Management

For periods prior to our separation from Ventas, we and our wholly owned subsidiaries had been subject to Ventas’s centralized cash management system. All payments were controlled and made by Ventas, resulting in intercompany transactions between us and Ventas that did not settle in cash. The net effect of these intercompany transactions is reflected in net contribution from or net distribution to parent on our combined consolidated statements of cash flows and combined consolidated statements of equity.

Subsequent to the separation, we maintain our own centralized cash management system, in addition to separate cash accounts associated with our joint venture entities.

Tenant Deposits

Tenant deposits consist of security deposits and amounts provided by our tenants for future real estate taxes, insurance expenditures and tenant improvements related to our properties and their operations.

Fair Values of Financial Instruments

Fair value is a market-based measurement, not an entity-specific measurement, and we determine fair value based on the assumptions that we expect market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, GAAP establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity's own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize unadjusted quoted prices for identical assets or liabilities in active markets that we have the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are directly or indirectly observable for the asset or liability. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets and other inputs for the asset or liability that are observable at commonly quoted intervals, such as interest rates and yield curves. Level 3 inputs are unobservable inputs for the asset or liability, which typically are based on our own assumptions, because there is little, if any, related market activity. If the determination of the fair value measurement is based on inputs from different levels of the hierarchy, the level within which the entire fair value measurement falls is the lowest level input that is significant to the fair value measurement in its entirety. If the volume and level of market activity for an asset or liability has decreased significantly relative to the normal market activity for such asset or liability (or similar assets or liabilities), then transactions or quoted prices may not accurately reflect fair value. In addition, if there is evidence that a transaction for an asset or liability is not orderly, little, if any, weight is placed on that transaction price as an indicator of fair value. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

We use the following methods and assumptions in estimating the fair value of our financial instruments.

• Cash—The carrying amount of cash reported on our consolidated balance sheets approximates fair value.

• Loans receivable—We estimate the fair value of loans receivable using Level 2 and Level 3 inputs: we discount future cash flows using current interest rates at which similar loans with the same terms and length to maturity would be made to borrowers with similar credit ratings.

• Term loans, senior notes and other debt—We estimate the fair value of term loans, senior notes and other debt using Level 2 inputs: we discount the future cash flows using current interest rates and credit spreads at which we could obtain similar borrowings. See “Note 9—Borrowing Arrangements and Derivatives and Hedging Activities.”

• Derivatives—We estimate the fair value of our derivatives using Level 2 inputs. See “Note 9—Borrowing Arrangements and Derivatives and Hedging Activities.”

Revenue Recognition

Triple-Net Leased Properties

Certain of our triple-net leases provide for periodic and determinable increases in base rent. We recognize base rental revenues under these leases on a straight-line basis over the applicable lease term when collectibility is reasonably assured. Recognizing rental income on a straight-line basis generally results in recognized revenues during the first half of a lease term exceeding the cash amounts contractually due from our tenants, creating a straight-line rent receivable that is included in other assets on our consolidated balance sheets.

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NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Our remaining leases provide for periodic increases in base rent only if certain revenue parameters or other substantive contingencies are met. We recognize the increased rental revenue under these leases as the related parameters or contingencies are met, rather than on a straight-line basis over the applicable lease term.

Other

We recognize income from other rent, lease termination fees and all other income when all of the following criteria are met in accordance with SEC Staff Accounting Bulletin 104: (i) the applicable agreement has been fully executed and delivered; (ii) services have been rendered; (iii) the amount is fixed or determinable; and (iv) collectibility is reasonably assured.

Allowances

We assess our rent receivables, including straight-line rent receivables, to determine whether an allowance is appropriate. We base our assessment of rent receivables (other than straight-line rent receivables) on several factors, including, among other things, payment history, the financial strength of the tenant and any guarantors, the value of the underlying collateral, if any, and current economic conditions, including government reimbursement. If our evaluation of these factors indicates that we may not be able to recover the full value of the receivable, we provide an allowance against the portion of the receivable that we estimate may not be recovered. We also base our assessment of straight-line rent receivables on several factors, including, among other things, the financial strength of the tenant and any guarantors, the historical operations and operating trends of the property, the historical payment pattern of the tenant and the type of property. If our evaluation of these factors indicates that we may not be able to collect the rent payments due in the future, we provide an allowance against the recognized straight-line rent receivable asset for the portion, up to its full value, that we estimate may not be collected. If we change our assumptions or estimates regarding the collectibility of future rent payments required by a lease, we may adjust the allowance to increase or reduce the rental revenue recognized in the period we make such change in our assumptions or estimates.

Interest Income

We recognize interest income from loans, including discounts and premiums, using the effective interest method when collectibility is reasonably assured. We apply the effective interest method on a loan-by-loan basis and recognize discounts and premiums as yield adjustments over the related loan term.

Federal Income Tax

Ventas elected to be treated as a REIT under the applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), for every year beginning with the year ended December 31, 1999. Accordingly, with respect to periods prior to our separation from Ventas, Ventas generally was not subject to federal income tax. We elected to be treated as a REIT under the applicable provisions of the Code, beginning with the year ended December 31, 2015.

Segment Reporting

As of September 30, 2016 and December 31, 2015, we operated through a single reportable business segment: triple-net leased properties. We invest in SNFs and other healthcare properties throughout the United States and lease those properties to healthcare operating companies under “triple-net” or “absolute-net” leases that obligate the tenants to pay all property-related expenses.

Derivative Instruments and Hedging Activities

We record all derivative financial instruments on our consolidated balance sheets at fair value as of the reporting date.  Our accounting for changes in the fair value of derivative financial instruments depends on our intended use of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for matching of the timing of gain or loss recognition on the hedging instrument with the recognition of changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge, or to the earnings effect of the hedged forecasted transactions in a cash flow hedge.

In accordance with the FASB’s fair value measurement guidance in Accounting Standards Update (“ASU”) No. 2011-04, Fair Value Measurement (Topic 820), we have elected to measure the credit risk of our derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. We do not use our derivative financial instruments for trading or speculative purposes.

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NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Our derivatives were 100% effective, and, therefore, we did not record any hedge ineffectiveness in earnings during the three and nine months ended September 30, 2016. We did not offset our derivative financial instrument liability against any derivative financial instrument assets as of September 30, 2016.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Recently Issued or Adopted Relevant Accounting Standards

In 2014, the FASB issued ASU No. 2014-09, Revenue From Contracts With Customers (“ASU 2014-09”), which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. In July 2015, the FASB provided for a one-year deferral of the effective date for ASU 2014-09, which will become effective for us beginning January 1, 2018. We are continuing to evaluate this guidance; however, we do not expect its adoption to have a significant impact on our combined consolidated financial statements, as substantially all of our revenue consists of rental income from triple-net leasing arrangements, which are specifically excluded from ASU 2014-09.

In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”), which, among other things, requires lessees to recognize most leases on the balance sheet and therefore will increase reported assets and liabilities of such lessees. ASU 2016-02 supersedes Topic 840, Leases, and is effective for us for annual and interim periods in fiscal years beginning after December 15, 2018. ASU 2016-02 mandates a modified retrospective transition method for all entities. We are continuing to evaluate the application of this guidance and its effect on our combined consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which provides for an impairment model that is based on expected losses rather than incurred losses. Under ASU 2016-13, an entity recognizes as an allowance its estimate of expected credit losses. ASU 2016-13 is effective for us beginning January 1, 2020. We are continuing to evaluate this guidance; however, we do not expect its adoption will have a significant effect on our consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”),thataddresses eight classification issues related to the statement of cash flows. ASU 2016-15 is effective for us for fiscal years beginning after December 15, 2017. We are continuing to evaluate the application of this guidance and its effect on our consolidated financial statements.

Note 3—Triple-Net Lease Arrangements

Our properties were located in 36 states as of September 30, 2016, with properties in only one state (Texas) accounting for more than 10% of our total revenues for the three months then ended.

As of September 30, 2016, Senior Care Centers, LLC (together with its subsidiaries, “SCC”) and Avamere Group, LLC (together with its subsidiaries, “Avamere”) operated approximately 20.7% and 10.9% respectively, of our real estate investments based on gross book value.

For the three months ended September 30, 2016, approximately 16.0%, 14.1% and 10.8% of our total revenues were derived from our lease and loan agreements with SCC, Signature HealthCARE, LLC (together with its subsidiaries, “Signature”) and Avamere, respectively. For the three months ended September 30, 2015, approximately 13.2% and 10.8% of our total revenues were derived from our lease and loan agreements with SCC and Avamere, respectively. For the nine months ended September 30, 2016, approximately 16.2%, 14.2% and 10.7% of our total revenues were derived from our lease and loan agreements with SCC, Signature and Avamere, respectively. For the nine months ended September 30, 2015, approximately 10.3% and 10.1% of our total revenues were derived from our lease and loan agreements with SCC and Avamere, respectively. Each of our leases with SCC, Signature and Avamere is a triple-net lease that obligates the tenant to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures. Our leases with SCC and Signature have guaranty and/or cross-default provisions tied to other leases with the same tenant or its affiliates, and our lease with Avamere is a pooled multi-facility master lease.

If SCC, Signature or Avamere becomes unable or unwilling to satisfy its obligations to us or to renew its leases with us upon expiration of the terms thereof, our financial condition and results of operations could decline significantly. We cannot assure you that SCC, Signature or Avamere will be able to effectively conduct its operations, operate our properties profitably or maintain and improve our properties, nor can we assure you that it will have sufficient assets, income, access to financing

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NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

and/or insurance coverage to enable it to satisfy its respective obligations to us and third parties. Any failure, inability or unwillingness by SCC, Signature or Avamere to meet its obligations could have a material adverse effect on our business, financial condition, results of operations and liquidity. We also cannot assure you that SCC, Signature or Avamere will elect to renew its respective leases with us upon expiration of the leases or that we will be able to reposition any non-renewed properties on a timely basis or on the same or better economic or other terms, if at all.

Our straight-line rent receivable balance was $0.6 million and $0.6 million, net of allowances of $93.7 million and $87.4 million, as of September 30, 2016 and December 31, 2015, respectively. We recognized charges for straight-line rent allowances within rental income, net in our combined consolidated statements of income and comprehensive income of $3.2 million and $5.9 million for the three months ended September 30, 2016 and 2015, respectively, and $14.4 million and $19.5 million for the nine months ended September 30, 2016 and 2015, respectively.

Note 4—Acquisitions and Dispositions of Real Estate Property

Acquisitions

On December 31, 2015, we completed the acquisition of the 6.82% noncontrolling interest in one of our former joint ventures for $3.1 million.

On September 1, 2015, we completed the acquisition of eight properties (seven SNFs and one campus with both skilled nursing and assisted living facilities) and simultaneously entered into a long-term master lease with SCC to operate the acquired portfolio. We purchased the assets for approximately $190 million in cash and made a $20 millionfive-year, fully amortizing loan to SCC, resulting in a total transaction value of approximately $210 million. We funded this transaction through cash on hand and borrowings under our unsecured revolving credit facility and term loans (see “Note 9—Borrowing Arrangements and Derivatives and Hedging Activities”).

On August 14, 2015, we completed the acquisition of a specialty healthcare and seniors housing valuation firm in exchange for the issuance of 339,602 shares of our common stock. This specialty valuation firm subsidiary represents our TRS. Pursuant to the purchase agreement, we agreed to issue additional shares to the sellers to the extent that the value of the common stock originally issued to the sellers based on the volume-weighted average price (“VWAP”) of the common stock over the 30 days immediately prior to the six-month anniversary of the closing of the acquisition was less than approximately $11.5 million. In February 2016, we issued 56,377 shares of our common stock, valued at $1.4 million, to the sellers as additional consideration pursuant to the purchase agreement.

In January 2015, Ventas completed the acquisition of American Realty Capital Healthcare Trust, Inc. (“HCT”) in a stock and cash transaction, which included 14 SNFs, two specialty hospitals and four seniors housing properties that were transferred to us in connection with the separation. Also in January 2015, Ventas completed the acquisition of 12 SNFs for an aggregate purchase price of $234.9 million, all of which were transferred to us in connection with the separation and are currently operated by SCC.

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NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Estimated Fair Value

We accounted for our 2015 acquisitions under the acquisition method in accordance with ASC 805. The following table summarizes the acquisition date fair values of the assets acquired and liabilities assumed, which we determined using Level 2 and Level 3 inputs (in thousands):

Land and improvements	$	38,361
Buildings and improvements	515,620
Acquired lease intangibles	14,138
Goodwill (1)	56,275
Other assets	8,034
Total assets acquired	632,428
Tenant deposits	8,801
Lease intangible liabilities	3,729
Accounts payable and other liabilities	1,343
Total liabilities assumed	13,873
Net assets acquired	$	618,555

(1) As it relates to the HCT acquisition, goodwill was allocated to us on a relative fair value basis from total goodwill recognized by Ventas. A $1.8 million reduction of the original amount of goodwill due to HCT was recognized in 2015.

Deal Costs

Deal costs for both periods consist of expenses primarily related to transactions, whether consummated or not, and operator transitions. These costs are expensed as incurred in the applicable periods. For the nine months ended September 30, 2016 and 2015, we expensed $2.5 million and $4.7 million, respectively, of these costs, of which $0.3 million and $4.7 million, respectively, related to acquisitions completed during the year ended December 31, 2015. Deal costs for the nine months ended September 30, 2015 include an allocation of expenses incurred by Ventas related to the HCT acquisition based on relative property net operating income (“NOI”).

Assets Held for Sale and Dispositions

As of September 30, 2016 and December 31, 2015, we classified 32 properties and 10 properties, respectively, as assets held for sale, which are included in other assets on our consolidated balance sheets.

In September 2016, we sold one specialty hospital, which was classified as held for sale, for proceeds of $6.4 million. We recognized a gain on the sale of this asset of $2.2 million.

In July 2016, we sold two SNFs, which were classified as held for sale, for aggregate proceeds of $11.0 million. We did not recognize a gain or loss on the sales of these assets.

In June 2016, we sold one SNF, which was classified as held for sale, for proceeds of $1.5 million. We did not recognize a gain or loss on the sale of this asset.

In May 2016, we sold seven properties, which were classified as held for sale, in a single transaction for aggregate consideration of $95.1 million. We recognized a gain on the sale of these assets of $0.8 million. Concurrently with the sale, we made a mezzanine loan to an affiliate of the purchasers in the amount of $25.0 million. See “Note 6—Loans Receivable.”

In February 2016, we sold seven SNFs, which were classified as held for sale, for aggregate consideration of $9.9 million. We recognized a loss on the sales of these assets of $0.1 million. In connection with the sale of one SNF, we made an 18-month secured loan to the purchaser in the amount of $4.5 million. See “Note 6—Loans Receivable.”

In the fourth quarter of 2015, we sold four SNFs, which were classified as held for sale, for aggregate proceeds of $4.5 million. We recognized a loss on the sales of these assets of $0.2 million. Of the properties sold in the quarter, two were acquired in the HCT transaction and transferred to us in connection with the separation. Six properties acquired in the HCT transaction were classified as held for sale as of December 31, 2015.

In August 2015, we sold one SNF for proceeds of $1.5 million and recognized a gain on the sale of $0.9 million.

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NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In June 2015, we sold one SNF at its carrying value, resulting in neither a gain nor a loss.

For the three and nine months ended September 30, 2016, we recognized a $3.6 million net loss related to one SNF located in West Virginia that sustained property damage due to a casualty. Subsequent to the casualty, we received notice from the state that we would be unable to restore the property to its intended use. The net loss reflects a decline in the carrying value of the asset, offset by the estimated insurance proceeds we expect to recover. This amount is included in other expenses, net on our combined consolidated income statements.

Note 5—Summary Specialty Valuation Firm Statement of Operations

Below is a summary of the statement of operations for the specialty valuation firm we acquired in August 2015 for the three and nine months ended September 30, 2016 and 2015:

	For the Three Months Ended September 30,					For the None Months Ended September 30,
	2016		2015 (1)			2016		2015 (1)
	(In thousands)
Revenues:
Real estate services fee income	$	1,897	$	763		$	5,080	$	763
Total revenues	1,897		763			5,080		763
Expenses:
Depreciation and amortization	184		94			551		94
General, administrative and professional fees	1,351		704			4,076		704
Total expenses	1,535		798			4,627		798
Income before income taxes	362		(35		)	453		(35		)
Income tax expense	127		(42		)	230		(42		)
Net income	$	235	$	7		$	223	$	7

(1) Amounts relate only to the period from the date of our acquisition through September 30, 2015.

Note 6—Loans Receivable

Below is a summary of our loans receivable as of September 30, 2016 and December 31, 2015.

	September 30, 2016				December 31, 2015
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(In thousands)
Secured loans receivable, net	$	9,425	$	8,940	$	5,255	$	4,494
Unsecured loans receivable, net	56,254		55,793		24,472		24,188
Total secured and unsecured loans receivable, net	$	65,679	$	64,733	$	29,727	$	28,682

Secured loans receivable, net represents one loan that has a stated interest rate of 9.75% per annum, matures in 2018 and is secured by one SNF and one loan that has a stated interest rate of 10.0% per annum, matures in 2017 and is also secured by one SNF.

In August 2016, we made a $3.0 million working capital loan to an existing operator in connection with the transition of three SNFs to that operator. The loan bears interest at an annual rate of 5.0%. As of September 30, 2016, this working capital loan had an outstanding principal balance of $1.6 million.

In May 2016, we sold seven properties for $95.1 million. Concurrently with the sale, we made a four-year mezzanine loan to an affiliate of the purchasers in the amount of $25.0 million that has a stated interest rate of 10.0% per annum. This loan is secured by equity interests in subsidiaries of the borrower and is cross-collateralized and cross-defaulted to our lease agreements with affiliates of the borrower.

In March 2016, in connection with the transition of 14 SNFs from our existing tenant to two replacement operators, we agreed to make working capital loans in an aggregate amount of up to $13.0 million to the replacement operators. In addition, we purchased a $7.3 million self-liquidating working capital loan secured by accounts receivable of the former tenant

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NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

that has been repaid in full. The outstanding working capital loans bear interest at an annual rate of LIBOR plus 3.5%, and as of September 30, 2016, this working capital loan had an outstanding principal balance of $8.6 million.

In February 2016, we sold one SNF to the existing operator for $4.5 million. In connection with the sale, we made a $4.5 million loan to the purchaser that has a stated interest rate of 10.0% per annum and matures in 2017. This loan is secured by the property and is cross-collateralized and cross-defaulted to our lease agreements with affiliates of the borrower. For GAAP accounting purposes, interest payments on the note represent unrecognized profit, which is presented net against the loan receivable amount.

In December 2015, we made a $1.0 million, four-year fully amortizing loan to Signature in connection with its acquisition from Elmcroft Senior Living, Inc. of the operations of 18 SNFs owned by us. The loan has a stated interest rate of 8.0% per annum.

In September 2015, we made a $20.0 millionfive-year, fully amortizing loan to SCC. The loan bears interest at an annual rate of LIBOR plus 5%, which is subject to periodic increase over the term of the loan. As of September 30, 2016, this loan had an outstanding principal balance of $16.0 million.

Fair value estimates as reflected in the table above are subjective in nature and based upon several important assumptions, including estimates of future cash flows, risks, discount rates and relevant comparable market information associated with each financial instrument. The use of different market assumptions and estimation methodologies may have a material effect on the reported estimated fair value amounts. Accordingly, the estimates presented above are not necessarily indicative of the amounts we would realize in a current market exchange.

Note 7—Intangibles and Goodwill

The following is a summary of our intangibles and goodwill as of September 30, 2016 and December 31, 2015:

	September 30, 2016				December 31, 2015
	Balance			Remaining Weighted Average Amortization Period in Years	Balance			Remaining Weighted Average Amortization Period in Years
	(Dollars in thousands)
Intangible assets:
Above market lease intangibles	$	58,716		11.2	$	64,516		11.4
In-place lease intangibles	35,409			12.9	37,353			13.4
Tradename, technology and customer relationships	2,950			3.8	2,950			4.5
Accumulated amortization	(43,689		)	N/A	(45,390		)	N/A
Goodwill	128,673			N/A	145,374			N/A
Net intangible assets	$	182,059		11.6	$	204,803		12.3
Intangible liabilities:
Below market lease intangibles	$	182,914		14.7	$	194,141		14.9
Above market ground lease intangibles	1,907			52.2	1,907			52.9
Accumulated amortization	(75,176		)	N/A	(75,052		)	N/A
Purchase option intangibles	5,546			N/A	9,352			N/A
Net intangible liabilities	$	115,191		15.3	$	130,348		15.5

N/A—Not Applicable.

Above market lease intangibles and in-place lease intangibles are included in acquired lease intangibles within real estate investments on our consolidated balance sheets. Below market lease intangibles, above market ground lease intangibles and purchase option intangibles are included in lease intangible liabilities, net on our consolidated balance sheets. Tradename, technology and customer relationships are associated with our specialty valuation firm subsidiary and included in other assets on our consolidated balance sheets. For the nine months ended September 30, 2016 and 2015, our net amortization related to all of these intangibles was $3.6 million and $4.5 million, respectively. The estimated net amortization related to these intangibles for the remainder of 2016 and the subsequent four years is as follows: remainder of 2016 - $1.0 million; 2017 - $4.0 million; 2018 - $3.9 million; 2019 - $4.4 million; and 2020 - $4.2 million.

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NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table displays a rollforward of the carrying amount of goodwill from January 1, 2015 to September 30, 2016 (in thousands):

Balance as of January 1, 2015	$	88,959
Additions	56,992
Disposals	(577		)
Balance as of December 31, 2015	145,374
Additions	—
Disposals and reclassifications to assets held for sale	(16,701		)
Balance as of September 30, 2016	$	128,673

Note 8—Other Assets

The following is a summary of our other assets as of September 30, 2016 and December 31, 2015:

	September 30, 2016		December 31, 2015
	(In thousands)
Straight-line rent receivables, net	$	642	$	579
Deferred lease costs	5,570		6,895
Assets held for sale	49,145		15,035
Other assets, net	19,138		15,534
Total other assets	$	74,495	$	38,043

Note 9—Borrowing Arrangements and Derivatives and Hedging Activities

Borrowing Arrangements

The following is a summary of our term loans, senior notes and other debt as of September 30, 2016 and December 31, 2015:

	September 30, 2016		December 31, 2015
	(In thousands)
Unsecured revolving credit facility	$	50,000	$	143,000
Unsecured term loan due 2017	—		600,000
Secured term loan due 2019	135,000		—
Unsecured term loan due 2020	474,000		800,000
Unsecured term loan due 2023	200,000		—
5.125% senior notes due 2026	500,000		—
5.38% senior notes due 2027	100,000		—
Total	1,459,000		1,543,000
Unamortized debt issuance costs	19,527		18,137
Term loans, senior notes and other debt	$	1,439,473	$	1,524,863

In July 2016, Care Capital LP issued and sold $500 million aggregate principal amount of 5.125% Senior Notes due 2026 (the “Notes due 2026”) to qualified institutional buyers pursuant to Rule 144A and to certain persons outside of the United States pursuant to Regulation S, each under the Securities Act, for total proceeds of $500 million before the initial purchasers’ discount and expenses. The Notes due 2026 are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by CCP and Care Capital LP’s general partner, Care Capital Properties GP, LLC (“Care Capital GP”). Care Capital LP may, at its option, redeem the Notes due 2026 at any time in whole or from time to time in part at a redemption price equal to 100% of their principal amount, together with accrued and unpaid interest thereon, if any, to (but excluding) the

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CARE CAPITAL PROPERTIES, INC. AND PREDECESSORS

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

date of redemption, plus, if redeemed prior to May 15, 2026, a make-whole premium. We used the net proceeds from the sale of the Notes due 2026 to repay all of the remaining indebtedness outstanding under our $600 million unsecured term loan due 2017 (the “$600 million Term Loan”) and a portion of the indebtedness outstanding under our $800 million unsecured term loan due 2020 (the “$800 million Term Loan”).    

Also in July 2016, certain wholly owned subsidiaries of Care Capital LP, as borrowers (the “Borrowers”), entered into a Loan Agreement with a syndicate of banks providing for a $135 million term loan (the “$135 million Term Loan”) that bears interest at a fluctuating rate per annum equal to LIBOR for a one-month interest period plus 1.80% and matures in July 2019. The $135 million Term Loan is secured by first lien mortgages and assignments of leases and rents on specified facilities owned by the Borrowers. The payment and performance of the Borrowers’ obligations under the $135 million Term Loan are guaranteed by CCP and Care Capital LP. We used the net proceeds from the $135 million Term Loan to repay a portion of the indebtedness outstanding under the $800 million Term Loan. Although there can be no assurances, we expect to refinance the $135 million Term Loan using proceeds of a loan obtained from The Department of Housing and Urban Development (HUD).

In May 2016, Care Capital LP issued and sold $100.0 million aggregate principal amount of 5.38% Senior Notes due May 17, 2027 (the “Notes due 2027”) through a private placement in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), for total proceeds of $100.0 million before expenses. The Notes due 2027 are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by CCP and Care Capital GP. We used the net proceeds from the issuance and sale of the Notes due 2027 to repay a portion of the indebtedness outstanding under the $600 million Term Loan.

In January 2016, Care Capital LP, as borrower, and CCP and Care Capital GP, as guarantors, entered into a Term Loan and Guaranty Agreement with a syndicate of banks that provides for a $200 million unsecured term loan due 2023 (the “$200 million Term Loan”) at an interest rate of LIBOR plus an applicable margin based on Care Capital LP’s unsecured long-term debt ratings, which was 1.80% at September 30, 2016. We used the net proceeds from borrowings under the $200 million Term Loan to repay a portion of the indebtedness outstanding under the $600 million Term Loan. Also in January 2016, we entered into agreements to swap a total of $600 million of outstanding indebtedness, effectively converting the interest on that debt from floating rates to fixed rates. The swap agreements have original terms of 4.6 years and seven years.

On August 17, 2015, Care Capital Properties, LP, as borrower, and CCP, Care Capital GP and certain subsidiaries of Care Capital LP, as guarantors, entered into a Credit and Guaranty Agreement (the “Credit Agreement”), comprised of a $600 million unsecured revolving credit facility (the “Revolver”), the $600 million Term Loan and the $800 million Term Loan (together with the Revolver and the $600 million Term Loan, the “Facility”). The Revolver has an initial term of four years, but may be extended, at Care Capital LP’s option subject to compliance with the terms of the Credit Agreement and payment of a customary fee, for two additional six-month periods. The $600 million and$800 million Term Loans mature in August 2017 and August 2020, respectively. The Credit Agreement also includes an accordion feature that permits Care Capital LP to increase the aggregate borrowing capacity under the Facility to $2.5 billion. In September 2015, subsidiaries of Care Capital LP were released as guarantors under the Credit Agreement.

Borrowings under the Facility bear interest at a fluctuating rate per annum equal to LIBOR plus an applicable margin based on Care Capital LP’s unsecured long-term debt ratings. At September 30, 2016, the applicable margin was 1.30% for Revolver borrowings and 1.50% for Term Loan borrowings, and we had approximately $550 million of unused borrowing capacity available under the Revolver.

As of September 30, 2016, the fair value and carrying value of our term loans and other debt were both $1.5 billion.

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CARE CAPITAL PROPERTIES, INC. AND PREDECESSORS

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of September 30, 2016, our indebtedness had the following maturities:

	Principal Amount Due at Maturity		Revolver (1)		Total Maturities
	(In thousands)
2016	$	—	$	—	$	—
2017	—		—		—
2018	—		—		—
2019	135,000		50,000		185,000
2020	474,000		—		474,000
Thereafter	800,000		—		800,000
Total Maturities	$	1,409,000	$	50,000	$	1,459,000

(1) As of September 30, 2016, we had $22.5 million of cash, resulting in $27.5 million of net borrowings outstanding under the Revolver. The Revolver may be extended, at Care Capital LP’s option, for two additional six-month periods.

Derivatives and Hedging Activities

We are exposed to certain risks arising from both our business operations and economic conditions. We principally manage our exposures to a wide variety of business and operational risks through management of our core business activities. We manage economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources, and duration of our debt funding and the use of derivative financial instruments. Specifically, we enter into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected cash receipts and our known or expected cash payments principally related to our investments and borrowings.

Cash Flow Hedges of Interest Rate Risk

Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish these objectives, we primarily use interest rate swaps as part of our interest rate risk management strategy. As of September 30, 2016, we had eight outstanding interest rate swaps with a combined notional amount of $600 million that were designated as cash flow hedges of interest rate risk. During the nine months ended September 30, 2016, these derivatives were used to hedge the variable cash flows associated with existing variable rate debt.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (“AOCI”) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our variable rate debt. During the next 12 months, we estimate that an additional $3.8 million will be reclassified as an increase to interest expense.

The table below presents the fair value of our derivative financial instruments, as well as their classification on our consolidated balance sheet as of September 30, 2016 (in thousands):

	Liability Derivative
Derivatives Designated as Hedging Instruments	Balance Sheet Location	September 30, 2016 Fair Value
Interest rate contracts	Accounts payable and other liabilities	$	8,742

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CARE CAPITAL PROPERTIES, INC. AND PREDECESSORS

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The table below presents the effect of our derivative financial instruments on our consolidated statements of income and comprehensive income for the three and nine months ended September 30, 2016 (in thousands):

Derivatives in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in AOCI on Derivative (Effective Portion)			Location of Gain/Loss Reclassified from AOCI into Income (Effective Portion)	Amount of Loss Reclassified from AOCI into Income (Effective Portion)
Three months ended September 30, 2016
Interest rate contracts	$	1,948		Interest expense	$	(1,245	)
Nine months ended September 30, 2016
Interest rate contracts	$	(12,215	)	Interest expense	$	(3,473	)

Our derivatives were 100% effective, and therefore, we did not record any hedge ineffectiveness in earnings during the three and nine months ending September 30, 2016. We did not offset our derivative financial instrument liability against any derivative financial instrument assets as of September 30, 2016.

Credit-Risk-Related Contingent Features

Our agreements with each of our derivative counterparties provide that we could be in default on our derivative obligations if the underlying indebtedness is accelerated by the lender due to our default on that indebtedness. As of September 30, 2016, the fair value of our derivatives was a liability of $9.1 million, which includes accrued interest but excludes any adjustment for nonperformance risk, but we were not required to, nor did we, post any collateral related to these agreements. If we had breached any of our derivative agreements at September 30, 2016, we could have been required to settle our obligations under the agreements at their termination value of $9.1 million.

Fair Value Disclosure of Derivative Financial Instruments

Currently, we use interest rate swaps to manage our interest raterisk. The valuation of these instruments is determined using widely accepted valuation techniques, including a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates derived from observable market forward interest rate curves.

To comply with the provisions of ASC 820, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements (such as collateral postings, thresholds, mutual puts and guarantees).

Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs (such as estimates of current credit spreads) to evaluate the likelihood of default by us and our counterparties. We have determined that the significance of the impact of the credit valuation adjustments made to our derivative contracts, which determination was based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of our derivatives held as of September 30, 2016 were classified as Level 2 of the fair value hierarchy. We did not hold any derivatives as of December 31, 2015.

The table below presents our derivative financial instrument liability measured at fair value on a recurring basis as of September 30, 2016, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):

	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at September 30, 2016
Derivative financial instrument liability	$	—	$	8,742	$	—	$	8,742

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CARE CAPITAL PROPERTIES, INC. AND PREDECESSORS

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 10—Income Taxes

We elected to be treated as a REIT under the Code, beginning with the taxable year ended December 31, 2015. So long as we qualify as a REIT under the Code, we generally will not be subject to federal income tax. We test our compliance with the REIT requirements on a quarterly and annual basis. We also review our distributions and projected distributions each year to ensure we have met and will continue to meet the annual REIT distribution requirements. However, as a result of our structure, we may be subject to income or franchise taxes in certain states and municipalities.

Subject to the limitation under the REIT asset test rules, we are permitted to own up to 100% of the stock of one or more TRSs. We have elected for one of our subsidiaries to be treated as a TRS, which is subject to federal, state and local income taxes.

Although the TRS will be required to pay minimal federal income taxes for the nine months ended September 30, 2016, the related federal income tax liability may increase in future periods.

Our consolidated provision for income taxes for the three and nine months ended September 30, 2016 was an expense of $0.2 million and $0.8 million, respectively. Our consolidated provision for income taxes for each of the three and nine months ended September 30, 2015 was an expense of $1.0 million.

Our net deferred tax liabilities totaled $1.9 million as of September 30, 2016 and primarily reflect differences between the financial reporting and tax bases of fixed and intangible assets. The net deferred tax liability was also $1.9 million as of December 31, 2015.

Generally, we are subject to audit under the statute of limitations by the Internal Revenue Service (“IRS”) for the year ended December 31, 2015 and subsequent years.

As of September 30, 2016 and December 31, 2015, we had no uncertain tax positions which would require us to record a tax exposure liability.

Note 11—Stock-Based Compensation

Prior to our separation from Ventas, certain of our employees participated in stock-based compensation plans administered by Ventas. In connection with the spin-off, outstanding Ventas equity awards held by our employees were converted into awards of our common stock.

In August 2015, we adopted the Care Capital Properties, Inc. 2015 Incentive Plan (the “Plan”), pursuant to which options to purchase common stock, shares of restricted stock or restricted stock units and other equity awards may be granted to our employees, directors and consultants. A total of 7,000,000 shares of our common stock was reserved initially for issuance under the Plan.

During the nine months ended September 30, 2016, we granted stock-based compensation awards to employees and directors under the Plan having a grant date fair value of $6.0 million. Awards to employees generally vest in three equal annual installments beginning on the date of grant or on the first anniversary of the date of grant. Awards to directors vest in full on the day immediately preceding our next annual meeting of stockholders.

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CARE CAPITAL PROPERTIES, INC. AND PREDECESSORS

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 12—Earnings Per Share

Basic and diluted earnings per share for the portion of the three and nine months ended September 30, 2015 prior to our separation from Ventas were retroactively restated for the number of basic and diluted shares outstanding immediately following the separation. The following table shows the amounts used in computing our basic and diluted earnings per common share:

	For The Three Months Ended September 30,				For The Nine Months Ended September 30,
	2016		2015		2016		2015
	(In thousands, except per share amounts)
Numerator for basic and diluted earnings per share:
Net income attributable to CCP	$	19,010	$	36,166	$	85,927	$	111,370
Denominator:
Denominator for basic earnings per share—weighted average shares	83,609		83,488		83,583		83,488
Effect of dilutive securities:
Stock options	11		70		3		70
Restricted stock	132		—		88		—
Denominator for diluted earnings per share—adjusted weighted average shares	83,752		83,558		83,674		83,558
Basic earnings per share:
Net income attributable to CCP	$	0.23	$	0.43	$	1.03	$	1.33
Diluted earnings per share:
Net income attributable to CCP	$	0.23	$	0.43	$	1.03	$	1.33

Note 13—Stockholders’ Equity

Equity

Effective as of 11:59 p.m. on August 17, 2015, Ventas completed its spin-off of the CCP Business by distributing one share of our common stock for every four shares of Ventas common stock held as of the close of business on August 10, 2015. As a result, we began operating as an independent public company and our common stock commenced trading on the New York Stock Exchange under the symbol “CCP” as of August 18, 2015.

On August 14, 2015, we completed the acquisition of a specialty healthcare and seniors housing valuation firm in exchange for the issuance of 339,602 shares of our common stock. Pursuant to the purchase agreement, we agreed to issue additional shares to the sellers to the extent the value of the common stock originally issued to the sellers based on the VWAP of the common stock over the 30 days immediately prior to the six-month anniversary of the closing of the acquisition was less than approximately $11.5 million. In February 2016, we issued 56,377 shares of our common stock, valued at $1.4 million, to the sellers as additional consideration pursuant to the purchase agreement.

Dividends

On September 30, 2016, we paid a cash dividend in the amount of $0.57 per share to the holders of record of our common stock as of September 16, 2016. On June 30, 2016, we paid a cash dividend in the amount of $0.57 per share to the holders of record of our common stock as of June 10, 2016. On March 31, 2016, we paid a cash dividend in the amount of $0.57 per share to the holders of record of our common stock as of March 21, 2016.

Note 14—Litigation

We are involved from time to time in various legal proceedings that arise in the ordinary course of our business, including, but not limited to commercial disputes, environmental matters, and litigation in connection with transactions including acquisitions and divestitures. We believe that such litigation, claims and administrative proceedings will not have a material adverse impact on our financial position or our results of operations. We record a liability when a loss is considered probable and the amount can be reasonably estimated.

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CARE CAPITAL PROPERTIES, INC. AND PREDECESSORS

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Our tenants and, in some cases, their affiliates may be required by the terms of their leases and other agreements with us to indemnify, defend and hold us harmless against certain actions, investigations and claims arising in the ordinary course of their business and related to the operations of our properties. In addition, third parties from whom we acquired certain of our assets and, in some cases, their affiliates may be required by the terms of the related conveyance documents to indemnify, defend and hold us harmless against certain actions, investigations and claims related to the acquired assets and arising prior to our ownership or related to excluded assets and liabilities. In some cases, a portion of the purchase price consideration is held in escrow for a specified period of time as collateral for these indemnification obligations. We cannot provide any assurance that our tenants, their affiliates or other obligated third parties will defend us in any such matters, that our tenants, their affiliates or other obligated third parties will have sufficient assets, income and access to financing to enable them to satisfy their defense and indemnification obligations to us or that any purchase price consideration held in escrow will be sufficient to satisfy claims for which we are entitled to indemnification.

Note 15 —Subsequent Events

We entered into definitive agreements to sell a total of 23 properties in two separate transactions for aggregate proceeds of approximately $151 million. The sale of three properties is expected to close in November, and the closing of the second transaction is expected to occur in the first quarter of 2017.

In November 2016, we entered into a definitive agreement to acquire five SNFs and three seniors housing communities for $39 million in a sale leaseback transaction with an existing operator. The transaction is expected to close before year end.

Completion of each of our pending transactions is subject to the satisfaction of customary closing conditions. We cannot assure you that any of these transactions will close or, if they do, when the closings will occur.

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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless the context otherwise requires or indicates, references herein to “we,” “us,” “our,” “our company,” and “CCP” generally mean Care Capital Properties, Inc. and its consolidated subsidiaries.

Cautionary Statements

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements regarding our or our tenants’ or borrowers’ expected future financial condition or performance, dividends or dividend plans, business strategies, acquisitions or other investment opportunities, dispositions, continued qualification as a real estate investment trust (“REIT”), and plans and objectives of management for future operations, and statements that include words such as “believe,” “expect,” “anticipate,” “intend,” “may,” “could,” “should,” “will,” and other similar expressions are forward-looking statements. These forward-looking statements are inherently uncertain, and actual results may differ materially from our expectations. Except as required by law, we do not undertake a duty to update these forward-looking statements, which speak only as of the date on which they are made.

Factors that could cause our actual future results and trends to differ materially from those anticipated are discussed under “Risk Factors” in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on March 10, 2016, and include without limitation:

• the ability and willingness of our tenants, borrowers and other counterparties to satisfy their obligations under their respective contractual arrangements with us, including, in some cases, their obligations to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities;

• the ability of our tenants and borrowers to maintain the financial strength and liquidity necessary to satisfy their respective obligations and liabilities to third parties, including obligations under their existing credit facilities and other indebtedness;

• our success in executing our business strategy and our ability to identify, underwrite, finance, consummate and integrate suitable acquisitions and investments;

• macroeconomic conditions such as a disruption of or lack of access to the capital markets, changes in the debt rating on U.S. government securities, default or delay in payment by the United States of its obligations, and changes in the federal or state budgets resulting in the reduction or nonpayment of Medicare or Medicaid reimbursement rates;

• the nature and extent of competition in the markets in which our properties are located;

• the impact of pending and future healthcare reform and regulations, including cost containment measures, quality initiatives and changes in reimbursement methodologies, policies, procedures and rates;

• increases in our borrowing costs as a result of changes in interest rates and other factors;

• the ability of our tenants to operate our properties in compliance with applicable laws, rules and regulations (and the cost of such compliance), to deliver high-quality services, to hire and retain qualified personnel, to attract residents and patients, and to participate in government or managed care reimbursement programs;

• changes in general economic conditions or economic conditions in the markets in which we may, from time to time, compete for investments, capital and talent, and the effect of those changes on our earnings and financing sources;

• our ability to pay down, refinance, restructure or extend future indebtedness as it becomes due;

• our ability and willingness to maintain our qualification as a REIT in light of economic, market, legal, tax and other considerations;

• final determination of our taxable net income for the current and future years;

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• the ability and willingness of our tenants to renew their leases with us upon expiration of the leases, our ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we exercise our right to replace an existing tenant, and obligations, including indemnification obligations, we may incur in connection with the replacement of an existing tenant;

• year-over-year changes in the Consumer Price Index (“CPI”) and the effect of those changes on the rent escalators contained in our leases and on our earnings;

• our ability and the ability of our tenants and borrowers to obtain and maintain adequate property, liability and other insurance from reputable, financially stable providers;

• the impact of increased operating costs and uninsured professional liability claims on our and our tenants’ and borrowers’ liquidity, financial condition and results of operations and our ability and the ability of our tenants and borrowers to accurately estimate the magnitude of those costs and claims;

• consolidation in the healthcare industry resulting in a change of control of, or a competitor’s investment in, one or more of our tenants or borrowers or significant changes in the senior management of any of our tenants or borrowers;

• the impact of litigation or any financial, accounting, legal or regulatory issues, including government investigations, enforcement proceedings and punitive settlements, that may affect us or our tenants or borrowers; and

• changes in accounting principles, or their application or interpretation, and our ability to make estimates and the assumptions underlying the estimates, which could have an effect on our earnings.

Many of these factors are beyond our control and the control of our management.

Company Overview

We are a self-administered, self-managed REIT with a diversified portfolio of skilled nursing facilities (“SNFs”) and other healthcare assets operated by private regional and local care providers. We generate our revenues primarily by leasing our properties to unaffiliated tenants under long-term triple-net leases, pursuant to which the tenants are obligated to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures. In addition, we originate and manage a small portfolio of secured and unsecured loans, made primarily to our SNF operators and other post-acute care providers.

Our company was originally formed in April 2015 to hold the post-acute/SNF portfolio of Ventas, Inc. (“Ventas”) and its subsidiaries operated by regional and local care providers (the “CCP Business”). Effective as of 11:59 p.m. on August 17, 2015, Ventas completed its spin-off of the CCP Business by distributing one share of our common stock for every four shares of Ventas common stock held as of the close of business on August 10, 2015. As a result, we began operating as an independent public company and our common stock commenced trading on the New York Stock Exchange (“NYSE”) under the symbol “CCP” as of August 18, 2015.

Prior to the spin-off, CCP was a wholly owned subsidiary of Ventas. Prior to or concurrently with the separation, Ventas engaged in certain reorganization transactions to consolidate the ownership of its interests in 355 properties and certain loans receivable that comprised the CCP Business and transfer those interests to us. For periods prior to our separation from Ventas, references herein to “we,” “us,” or “our” refer to the CCP Business after giving effect to the transfer of the assets and liabilities from Ventas in connection with the separation.

In connection with the spin-off, we entered into a separation and distribution agreement, as well as a transition services agreement, a tax matters agreement and an employee matters agreement, with Ventas. Under the transition services agreement, Ventas provided us with various accounting, tax and information technology services on a transitional basis through August 31, 2016, in exchange for a fee of $2.5 million, paid in four quarterly installments.

At the time of the separation and distribution, we had not conducted any business as a separate company and had no material assets or liabilities. We elected to be treated as a REIT for federal income tax purposes, beginning with our tax year ended December 31, 2015, and since the distribution have been operating in a manner that we believe will allow us to qualify as a REIT. The operations of the CCP Business transferred to us by Ventas are presented herein as if the transferred business was our business for all historical periods described and at the carrying value of those assets and liabilities reflected in Ventas’s books and records.

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Subject to the limitation under the REIT asset test rules, we are permitted to own up to 100% of the stock of one or more taxable REIT subsidiaries (“TRSs”). We have elected for one of our subsidiaries to be treated as a TRS, which is subject to federal, state and local income taxes.

For periods prior to our separation from Ventas, our combined consolidated financial statements included in this Quarterly Report on Form 10-Q reflect Ventas’s interests in 358 properties (including two properties that ultimately were not transferred to us as part of the separation and one property that was sold during the second quarter of 2015).

The combined consolidated financial statements for periods prior to the separation have been prepared on a standalone basis from Ventas’s consolidated financial statements and accounting records and reflect the financial position, results of operations and cash flows of the CCP Business as it was operated as part of Ventas prior to the distribution, in conformity with U.S. generally accepted accounting principles (“GAAP”). The consolidated financial statements for the three and nine months ended September 30, 2016 reflect our financial position, results of operations and cash flows in conformity with GAAP.

For periods prior to our separation from Ventas, our equity balance (net parent investment) in the combined consolidated financial statements represents the excess of total assets over total liabilities, including the intercompany balances between us and Ventas. Net parent investment is primarily impacted by contributions from Ventas, which are the result of treasury activities and net funding provided by or distributed to Ventas prior to the separation. For periods subsequent to our separation from Ventas, our equity balance in the consolidated financial statements represents our equity activity starting August 18, 2015.

Corporate and Operating Environment

We evaluate our operating performance and allocate resources based on a single reportable business segment: triple-net leased properties. We generate our revenues primarily by leasing our properties to unaffiliated tenants under long-term triple-net leases, pursuant to which the tenants are obligated to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures. In addition, we originate and manage a small portfolio of secured and unsecured loans made primarily to our SNF operators and other post-acute providers.

As of September 30, 2016, our portfolio consisted of 340 properties operated by 38 private regional and local care providers, spread across 36 states, and containing a total of approximately 38,000 beds/units. We conduct all of our operations through our wholly owned operating partnership, Care Capital Properties, LP (“Care Capital LP”), and its subsidiaries.

2016 Highlights and Recent Developments

• In January 2016, we entered into a Term Loan and Guaranty Agreement (the “Term Loan Agreement”) with a syndicate of banks that provides for a $200 million unsecured term loan due 2023 (the “$200 million Term Loan”). Also in January 2016, we entered into agreements to swap a total of $600 million of outstanding indebtedness, effectively converting the interest on that debt from floating rates to fixed rates. The swap agreements have original terms of 4.6 years and seven years.

• In February 2016, we issued 56,377 shares of our common stock, valued at $1.4 million, to the sellers as additional consideration for the acquisition of our specialty healthcare and seniors housing valuation firm pursuant to the purchase agreement.

• In February 2016, we transitioned three SNFs from the existing tenant to a new operator under the same rental terms.

• In February 2016, we sold seven SNFs for aggregate consideration of $9.9 million. In connection with the sale of one SNF, we made an 18-month secured loan to the purchaser in the amount of $4.5 million.

• On March 31, 2016, we paid the first quarterly installment of our 2016 dividend in the amount of $0.57 per share to the holders of record of our common stock on March 21, 2016.

• In March 2016, we entered into a transition and settlement agreement regarding a consensual transition of 14 SNFs from the existing tenant to two replacement operators. The tenant had ceased paying rent to us beginning January 1, 2016. Also in March 2016, we entered into separate master leases with the replacement operators to become effective upon receipt of the required state regulatory approvals, and the replacement operators assumed management of the properties pursuant to management agreements with the tenant. In connection with these transitions, we made or purchased certain working capital loans, of which $8.6 million aggregate principal amount was outstanding at September 30, 2016. Subsequent to the transition through September 30, 2016, we recognized a total of $2.0 million of past due rent due attributable to the previous operator.

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• In May 2016, Care Capital LP issued and sold $100.0 million aggregate principal amount of 5.38% Senior Notes due May 17, 2027 (the “Notes due 2027”) through a private placement in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act, for total proceeds of $100.0 million before expenses. The Notes due 2027 are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by CCP and Care Capital LP’s general partner, Care Capital Properties GP, LLC (“Care Capital GP”).

• In May 2016, we sold seven properties pursuant to the exercise of tenant purchase options for aggregate consideration of $95.1 million. Concurrently with this sale, we made a four-year mezzanine loan to an affiliate of the purchasers in the amount of $25.0 million.

• In June 2016, we sold one SNF to the existing operator for $1.5 million.

• On June 30, 2016, we paid the second quarterly installment of our 2016 dividend in the amount of $0.57 per share to the holders of record of our common stock on June 10, 2016.

• In July 2016, Care Capital LP issued and sold $500 million aggregate principal amount of 5.125% Senior Notes due 2026 (the “Notes due 2026”) to qualified institutional buyers pursuant to Rule 144A and to certain persons outside of the United States, pursuant to Regulations S, each under the Securities Act, for total proceeds of $500 million before the initial purchasers’ discount and expenses. The Notes due 2026 are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by CCP and Care Capital GP.

• Also in July 2016, certain wholly owned subsidiaries of Care Capital LP entered into a Loan Agreement with a syndicate of banks providing for a $135 million term loan (the “$135 million Term Loan”) that bears interest at a fluctuating rate per annum equal to LIBOR for a one-month interest period plus 1.80% and matures in July 2019. The $135 million Term Loan is secured by first lien mortgages and assignments of leases and rents on specified facilities owned by the borrowers. The payment and performance of the borrowers’ obligations under the $135 million Term Loan are guaranteed by CCP and Care Capital LP.

• In July 2016, we sold two SNFs for aggregate proceeds of $11.0 million.

• In September 2016, we sold one specialty hospital for proceeds of $6.4 million.

• On September 30, 2016, we paid the third quarterly installment of our 2016 dividend in the amount of $0.57 per share to the holders of record of our common stock on September 16, 2016.

• We entered into definitive agreements to sell a total of 23 properties in two separate transactions for aggregate proceeds of approximately $151 million.  We expect to complete the sale of three properties in November and we expect to complete the second transaction in the first half of 2017, subject, in each case, to the satisfaction of customary closing conditions. However, we cannot assure you as to whether or when the closings will occur.

• In November 2016, we entered into a definitive agreement to acquire five SNFs and three seniors housing communities for $39 million in a sale leaseback transaction with an existing operator. We expect to complete the acquisition, which remains subject to our due diligence review and other customary closing conditions, by December 31, 2016, although we cannot assure you as to whether or when the closing will occur.

Recent Developments Regarding Government Regulation

On July 25, 2016, in support of the shift from fee-for-service to value-based payments under Medicare, the Department of Health & Human Services (“HHS”) proposed, among other things, mandatory new bundled payment models for cardiac care and an expansion of the existing bundled payment model for hip replacements to other hip surgeries. This proposal advances HHS’s goal to have 50% of traditional Medicare payments flowing through alternative payment models by 2018. For the new cardiac bundles, participants would be hospitals in 98 metropolitan statistical areas (“MSAs”) to be randomly selected, and for the expanded hip bundles, participation would be limited to the same 67 MSAs that were selected for the existing Comprehensive Care for Joint Replacement model. Implementation of the new and expanded models, if finalized, would be phased in over a five-year period, beginning July 2017. This is a proposed rule and is not final. Comments on the proposed rule were due by September 24, 2016 and the final rule has not yet been issued. We are currently analyzing the potential impact of HHS’s proposal on our skilled nursing operators.

On September 28, 2016, the Centers for Medicare & Medicaid Services (“CMS”) issued its final rule significantly revising the requirements that long-term care facilities, including SNFs and long-term acute care hospitals, must meet to participate in the Medicare and Medicaid programs. The provisions in the rule, which finalizes CMS’s original proposal issued in July 2015 and is the first comprehensive update to long-term care facility standards since 1991, are targeted at reducing

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unnecessary hospital readmissions and infections, improving the quality of care, and strengthening safety measures for residents in these facilities. Changes in the final rule, to be implemented in three phases, include:

• A prohibition on the use of pre-dispute binding arbitration agreements with residents, effective as of November 28, 2016;

• The requirement that long-term care facility staff members be properly trained to care for residents with dementia and to prevent elder abuse;

• Ensuring that long-term care facilities take into consideration the health of residents when determining staff levels;

• Improved care planning, including consideration of the residents’ wishes, provision of necessary information for follow-up after discharge, and transmission of discharge plans to receiving facilities;

• Allowing dietitians and therapy providers to write orders in their areas of expertise when physicians delegate that responsibility to them and state licensing laws allow it; and

• Updates to long-term care facilities’ infection prevention and control programs, including requiring infection prevention and control officers and antibiotic stewardship programs.

We are currently analyzing the implications of this final rule on our operators. On November 7, 2016, a judge in the U.S. District Court for the Northern District of Mississippi granted the American Health Care Association a preliminary injunction barring CMS from implementing the prohibition on the use of pre-dispute arbitration agreements under the final rule while the parties continue to litigate the case.

SNF Medicare Reimbursement

On August 5, 2016, CMS published its final rule updating the prospective payment system for SNFs (“SNF PPS”) for the 2017 fiscal year (October 1, 2016 through September 30, 2017). Under the final rule, the SNF PPS standard federal payment rate would increase by 2.4% in fiscal year 2017, reflecting a 2.7% increase in the market basket index, less a 0.3% productivity factor adjustment. CMS estimates that net payments to SNFs as a result of the final rule would increase by approximately $920 million in fiscal year 2017. In addition, CMS adopted additional measures pertaining to the SNF Quality Reporting Program, as well as the SNF Value-Based Purchasing Program, and other standards aimed at implementing value-based purchasing for SNFs.

We regularly assess the financial implications of CMS’s rules and other federal legislation on our SNF operators, but we cannot assure you that any pending or future updates to SNF PPS or Medicare reimbursement for SNFs, or any future payment reforms related to bundled payment programs, value-based purchasing efforts or otherwise, will not have a material adverse effect on our operators’ liquidity, financial condition or results of operations or on their ability to satisfy their obligations to us.

SNF Medicaid Reimbursement

On April 25, 2016, CMS released its final rule setting forth a range of new requirements and regulations for states and Medicaid managed care plans, including implementation of medical loss ratios, actuarial soundness standards, availability of services, adequate capacity and network adequacy standards, as well as the requirement that states establish Medicaid managed care quality ratings, among other things.

Critical Accounting Policies and Estimates

Our combined consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q have been prepared in accordance with GAAP for interim financial information set forth in the Accounting Standards Codification (“ASC”), as published by the Financial Accounting Standards Board (“FASB”). GAAP requires us to make estimates and assumptions regarding future events that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We base these estimates on our experience and assumptions we believe to be reasonable under the circumstances. However, if our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, we may have applied a different accounting treatment, resulting in a different presentation of our financial statements. We periodically reevaluate our estimates and assumptions, and in the event they prove to be different from actual results, we make adjustments in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. We believe that the critical accounting policies described below, among others, affect our more significant estimates and judgments used in the preparation of our financial statements. For more information regarding our critical

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accounting policies, see “Note 2—Accounting Policies” of the Notes to Combined Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Business Combinations

We account for acquisitions using the acquisition method and record the cost of our acquisitions among tangible and recognized intangible assets and liabilities based upon their estimated fair values as of the acquisition date. Recognized intangibles primarily include the value of in-place leases, acquired lease contracts and goodwill. We do not amortize goodwill, which represents the excess of the purchase price paid over the fair value of the acquired net assets.

Our method for recording the purchase price of acquired investments in real estate requires us to make subjective assessments for determining fair value of the assets acquired and liabilities assumed. These estimates require significant judgment and in some cases involve complex calculations. These assessments directly impact our results of operations, as amounts estimated for certain assets and liabilities have different depreciation or amortization lives. In addition, we amortize the value assigned to above and/or below market leases as a component of revenue, unlike in-place leases and other intangibles, which we include in depreciation and amortization in our combined consolidated statements of income and comprehensive income.

We estimate the fair value of buildings acquired on an as-if-vacant basis, or replacement cost basis, and depreciate the building value over the estimated remaining life of the building, generally not to exceed 35 years. We determine the fair value of other fixed assets, such as site improvements and furniture, fixtures and equipment, based upon the replacement cost and depreciate such value over the assets’ estimated remaining useful lives as determined at the applicable acquisition date. We determine the value of land by considering the sales prices of similar properties in recent transactions.

The fair value of acquired lease-related intangibles, if any, reflects: (i) the estimated value of any above and/or below market leases, determined by discounting the difference between the estimated market rent and in-place lease rent; and (ii) the estimated value of in-place leases related to the cost to obtain tenants, including leasing commissions, and an estimated value of the absorption period to reflect the value of the rent and recovery costs foregone during a reasonable lease-up period as if the acquired space was vacant. We amortize any acquired lease-related intangibles to revenue or amortization expense over the remaining life of the associated lease plus assumed bargain renewal periods, if any. If a lease is terminated prior to its stated expiration or not renewed upon expiration, we recognize all unamortized lease-related intangibles associated with that lease in operations at that time.

Impairment of Long-Lived and Intangible Assets and Goodwill

We periodically evaluate our long-lived assets, primarily consisting of investments in real estate, for impairment indicators. If indicators of impairment are present, we evaluate the carrying value of the related real estate investments in relation to the future undiscounted cash flows of the underlying operations. In performing this evaluation, we consider market conditions and our current intentions with respect to the retention or disposition of the asset. We adjust the net book value of leased properties and other long-lived assets to fair value if the sum of the expected future undiscounted cash flows, including sales proceeds, is less than book value. We recognize any shortfall from carrying value as an impairment loss in the current period.

If impairment indicators arise with respect to intangible assets with finite useful lives, we evaluate impairment by comparing the carrying amount of the asset to the estimated future undiscounted net cash flows expected to be generated by the asset. If estimated future undiscounted net cash flows are less than the carrying amount of the asset, then we estimate the fair value of the asset and compare the estimated fair value to the intangible asset’s carrying value. We recognize any shortfall from carrying value as an impairment loss in the current period.

We test goodwill for impairment at least annually, and more frequently if indicators arise. We assess qualitative factors, such as current macroeconomic conditions, state of the equity and capital markets and our overall financial and operating performance, to determine the likelihood that the fair value of the reporting unit is less than its carrying amount. If we determine it is more likely than not that the fair value of the reporting unit is less than its carrying amount, we proceed with the two-step approach to evaluating impairment. First, we estimate the fair value of the reporting unit and compare it to the reporting unit’s carrying value. If the carrying value exceeds fair value, we proceed with the second step, which requires us to assign the fair value of the reporting unit to all of the assets and liabilities of the reporting unit as if it had been acquired in a business combination at the date of the impairment test. The excess fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied value of goodwill and is used to determine the amount of impairment. We recognize an impairment loss to the extent the carrying value of goodwill exceeds the implied value in the current period.

Estimates of fair value used in our evaluation of goodwill, investments in real estate and intangible assets are based upon discounted future cash flow projections or other acceptable valuation techniques that are based, in turn, upon Level 3

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inputs in the fair value hierarchy, such as revenue and expense growth rates, capitalization rates, discount rates or other available market data. Our ability to accurately predict future operating results and cash flows and to estimate and allocate fair values impacts the timing and recognition of impairments. While we believe our assumptions are reasonable, changes in these assumptions may have a material impact on our financial results.

Revenue Recognition

Triple-Net Leased Properties

Certain of our triple-net leases provide for periodic and determinable increases in base rent. We recognize base rental revenues under these leases on a straight-line basis over the applicable lease term when collectibility is reasonably assured. Recognizing rental income on a straight-line basis generally results in recognized revenues during the first half of a lease term exceeding the cash amounts contractually due from our tenants, creating a straight-line rent receivable that is included in other assets on our consolidated balance sheets.

Our remaining leases provide for periodic increases in base rent only if certain revenue parameters or other substantive contingencies are met. We recognize the increased rental revenue under these leases as the related parameters or contingencies are met, rather than on a straight-line basis over the applicable lease term.

Other

We recognize income from rent, lease termination fees and all other income when all of the following criteria are met in accordance with SEC Staff Accounting Bulletin 104: (i) the applicable agreement has been fully executed and delivered; (ii) services have been rendered; (iii) the amount is fixed or determinable; and (iv) collectibility is reasonably assured.

Allowances

We assess our rent receivables, including straight-line rent receivables, to determine whether an allowance is appropriate. We base our assessment of rent receivables (other than straight-line rent receivables) on several factors, including, among other things, payment history, the financial strength of the tenant and any guarantors, the value of the underlying collateral, if any, and current economic conditions, including government reimbursement. If our evaluation of these factors indicates that we may not be able to recover the full value of the receivable, we provide an allowance against the portion of the receivable that we estimate may not be recovered. We also base our assessment of straight-line rent receivables on several factors, including, among other things, the financial strength of the tenant and any guarantors, the historical operations and operating trends of the property, the historical payment pattern of the tenant and the type of property. If our evaluation of these factors indicates that we may not be able to collect the rent payments due in the future, we provide an allowance against the recognized straight-line rent receivable asset for the portion, up to its full value, that we estimate may not be collected. If we change our assumptions or estimates regarding the collectibility of future rent payments required by a lease, we may adjust the allowance to increase or reduce the rental revenue recognized in the period we make such change in our assumptions or estimates.

Interest Income

We recognize interest income from loans, including discounts and premiums, using the effective interest method when collectibility is reasonably assured. We apply the effective interest method on a loan-by-loan basis and recognize discounts and premiums as yield adjustments over the related loan term.

Federal Income Tax

Ventas elected to be treated as a REIT under the applicable provisions of Internal Revenue Code of 1986, as amended (the “Code”), for every year beginning with the year ended December 31, 1999. Accordingly, with respect to periods prior to our separation from Ventas, Ventas generally was not subject to federal income tax. We elected to be treated as a REIT under the applicable provisions of the Code, beginning with the year ended December 31, 2015.

Recently Issued or Adopted Relevant Accounting Standards

In 2014, the FASB issued ASU No. 2014-09, Revenue From Contracts With Customers (“ASU 2014-09”), which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. In July 2015, the FASB provided for a one-year deferral of the effective date for ASU 2014-09, which will become effective for us beginning January 1, 2018. We are continuing to evaluate this guidance; however, we do not expect its

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adoption to have a significant impact on our combined consolidated financial statements, as substantially all of our revenue consists of rental income from leasing arrangements, which are specifically excluded from ASU 2014-09.

In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”), which, among other things, requires lessees to recognize most leases on the balance sheet and therefore will increase reported assets and liabilities of such lessees. ASU 2016-02 supersedes Topic 840, Leases, and is effective for us for annual and interim periods in fiscal years beginning after December 15, 2018. ASU 2016-02 mandates a modified retrospective transition method for all entities. We are continuing to evaluate the application of this guidance and its effect on our combined consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which provides for an impairment model that is based on expected losses rather than incurred losses. Under ASU 2016-13, an entity recognizes as an allowance its estimate of expected credit losses. ASU 2016-13 is effective for us beginning January 1, 2020. We are continuing to evaluate this guidance; however, we do not expect its adoption will have a significant effect on our consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”),thataddresses eight classification issues related to the statement of cash flows. ASU 2016-15 is effective for us for fiscal years beginning after December 15, 2017. We are continuing to evaluate the application of this guidance and its effect on our consolidated financial statements.

Components of Revenues and Expenses

Rental Income, Net

Our revenues are attributable primarily to rental income earned in connection with the leasing of our SNFs and other healthcare properties to unaffiliated tenants under long-term triple-net leases. We generally do not expect to incur direct operating expenses in connection with these leases, as they obligate the tenant to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures. However, from time to time, we may fund expenses during an operator transition or enter into agreements with our tenants to fund certain capital expenditures.

Our revenues generally consist of fixed rental amounts (subject to annual contractual escalations) received from our tenants in accordance with the applicable lease terms and do not vary based on the underlying operating performance of the properties. Therefore, while occupancy rates may affect the profitability of our tenants’ operations, they do not directly impact our revenues or financial results.

The following table sets forth average continuing occupancy rates related to the properties we owned at September 30, 2016 (excluding properties classified as held for sale) for the trailing 12 months ended June 30, 2016 (which is the most recent information available to us from our tenants).

	Number of Properties Owned at September 30, 2016	Average Occupancy For the Trailing 12 Months Ended June 30, 2016 (1)
SNFs	279	78.3	%
Specialty hospitals and healthcare assets	15	84.8
Seniors housing communities and campuses(2)	14	81.2

(1) Excludes certain properties for which we do not receive occupancy information.

(2) Campuses are defined as multi-level properties.

The information in the table above has been derived from occupancy data provided to us by multiple third-party operators who may perform such computations using different methodologies and/or on an inconsistent basis from period to period. Furthermore, the occupancy rates shown in the table above are based primarily on licensed beds, which may differ from beds in operation at any point in time, and are generally lower than occupancy rates based on operational beds. While we have no reason to believe that the information we receive from our operators is inaccurate in any material respect, we cannot and do not verify this information either through an independent investigation or otherwise.

Real Estate Services Fee Income

Our real estate services fee income is derived from the operations of our specialty valuation firm subsidiary and represents revenue resulting from the provision of services such as appraisal reports, preliminary market studies, market studies, self-contained appraisal reports for in-court tax appeals and in-court expert testimonials.

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Interest Expense

We did not incur any interest expense prior to August 17, 2015. Following the spin-off, we have incurred interest expense in connection with borrowings under our revolving credit facility, term loans and senior notes, and we amortize debt issuance costs related to our indebtedness. Borrowings under our revolving credit facility and unsecured term loans bear interest at a fluctuating rate per annum equal to LIBOR plus an applicable margin based on our leverage or, if applicable, unsecured long-term debt ratings. As of September 30, 2016, these borrowings were based on our unsecured long-term debt ratings and the applicable margin was 1.30% for revolver borrowings, 1.50% for borrowings under our $600 million unsecured term loan due 2017 (the “$600 million Term Loan”) and $800 million unsecured term loan due 2020 (the “$800 million Term Loan”) and 1.80% for borrowings under our $200 million Term Loan. Our Notes due 2027 and Notes due 2026 bear interest at fixed rates of 5.38% and 5.125%, respectively, per annum. Our $135 million Term Loan bears interest at LIBOR plus 1.80%. Interest expense is inclusive of our interest costs, as well as amortization of our debt issuance costs. To mitigate some of the interest rate risk associated with our floating rate debt, in January 2016, we entered into various agreements to swap $400 million principal amount of our $800 million Term Loan from LIBOR plus 1.50% into an all-in fixed interest rate of 2.73% and to swap the full principal amount of our $200 million Term Loan from LIBOR plus 1.80% into an all-in fixed interest rate of 3.25%.

General, Administrative and Professional Fees

For periods prior to our separation from Ventas, the combined consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q reflect the operating results and financial position of the CCP Business as it was operated by Ventas, rather than as an independent company. We have incurred and expect to incur additional expenses to operate as an independent company, including costs for various corporate headquarters functions and incremental costs to operate a standalone support services infrastructure.

Under our transition services agreement with Ventas, Ventas provided certain corporate support services for us on a transitional basis through August 31, 2016 for a fee of $2.5 million, paid in four quarterly installments. The services provided under the transition services agreement were services that we historically received from Ventas and allowed us to operate independently prior to establishing a standalone support services infrastructure.

Commencing August 18, 2015, our general administrative and professional fee expenses are direct expenses attributable to our operations. These expenses also include costs incurred under the transition services agreement with Ventas, as well as the general, administrative and professional fee expenses incurred by our specialty healthcare and seniors housing valuation firm subsidiary. During the transition period, we incurred non-recurring expenses to expand our infrastructure, some of which have been redundant with costs incurred under the transition services agreement with Ventas. In addition, we have incurred other non-recurring costs, such as expenses related to efforts to become fully compliant with Section 404 of the Sarbanes-Oxley Act by December 31, 2016, initial set-up of our information systems and initial debt ratings.

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Results of Historical Operations

Three Months Ended September 30, 2016 and 2015

The table below shows our results of operations for the three months ended September 30, 2016 and 2015 and the effect of changes in those results from period to period on our net income attributable to CCP.

	For the Three Months Ended September 30,						Increase (Decrease) to Net Income
	2016			2015			$			%
	(Dollars in thousands)
Revenues:
Rental income, net	$	82,428		$	80,595		$	1,833		2.3	%
Income from investments in direct financing lease and loans	1,893			955			938			98.2
Real estate services fee income	1,897			763			1,134			148.6
Interest and other income	1,073			4			1,069			nm
Total revenues	87,291			82,317			4,974			6.0
Expenses:
Interest	14,271			4,090			(10,181		)	nm
Depreciation and amortization	25,494			27,752			2,258			8.1
Impairment on real estate investments and associated goodwill	12,397			3,750			(8,647		)	nm
General, administrative and professional fees	9,477			9,216			(261		)	(2.8	)
Deal costs	490			991			501			50.6
Loss on extinguishment of debt	4,359			—			(4,359		)	nm
Other expenses, net	3,700			158			(3,542		)	nm
Total expenses	70,188			45,957			(24,231		)	(52.7	)
Income before income taxes, real estate dispositions and noncontrolling interests	17,103			36,360			(19,257		)	(53.0	)
Income tax expense	(229		)	(1,024		)	795			77.6
Gain on real estate dispositions	2,143			856			1,287			150.4
Net income	19,017			36,192			(17,175		)	(47.5	)
Net income attributable to noncontrolling interests	7			26			19			73.1
Net income attributable to CCP	$	19,010		$	36,166		(17,156		)	(47.4	)

nm - not meaningful

Rental Income, Net

Rental income increased during the three months ended September 30, 2016 over the prior year primarily due to rent attributable to properties acquired in 2015 and contractual rent escalations pursuant to the terms of our existing leases, offset by operator transitions and dispositions in 2016.

The following table compares results of continuing operations for our 300 same-store properties. Same-store refers to properties owned by us for the full period in each comparison period, excluding properties classified as assets held for sale.

	For the Three Months Ended September 30,				Increase (Decrease)  to Rental Income, Net
	2016		2015		$		%
	(Dollars in thousands)
Rental income	$	73,765	$	71,464	$	2,301	3.2	%

Same-store rental income increased during the three months ended September 30, 2016 over the prior year primarily as a result of contractual escalations under our leases and redevelopment activities.

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Income from Investments in Direct Financing Lease and Loans

Income from investments in direct financing lease and loans, which represents the income from our direct financing lease and our secured and unsecured loans receivable, increased in 2016 over the prior year due to the additional loans we made in 2015 and 2016.

Real Estate Services Fee Income

Real estate services fee income represents revenue generated by our specialty valuation firm subsidiary, which we acquired in August 2015, for services such as appraisal reports, preliminary market studies, market studies, self-contained appraisal reports for in-court tax appeals and in-court expert testimonials.

Interest

This item represents the interest expense and amortization of debt issuance costs incurred in connection with borrowings under our revolving credit facility, term loans and senior notes. The increase in the three months ended September 30, 2016 is due the fact that we did not have any outstanding indebtedness prior to the spin-off, as well as the refinancing in 2016 of certain indebtedness incurred in connection with the spin-off.

Depreciation and Amortization

Depreciation and amortization expense decreased during the three months ended September 30, 2016 compared to the same period in 2015 primarily due to dispositions completed in 2016, offset by the properties acquired during 2015.

Impairment on Real Estate Investments and Associated Goodwill

We recognized impairments of $12.4 million on real estate investments and associated goodwill during the three months ended September 30, 2016, compared to $3.8 million during the same period in 2015, related to the reclassification of properties as held for sale.

General, Administrative and Professional Fees

General, administrative and professional fees for the three months ended September 30, 2015 included an allocation of expenses related to certain Ventas corporate functions prior to August 18, 2015, including executive oversight, treasury, finance, legal, human resources, tax planning, internal audit, financial reporting, information technology and investor relations. Subsequent to our separation from Ventas, our general and administrative and professional fee expenses are direct expenses attributable to our operations. General, administrative and professional fees for the three months ended September 30, 2016 include $0.4 million of fees paid under our transition services agreement with Ventas, as well as expenses incurred by our specialty valuation firm subsidiary in the amount of $1.4 million. In addition, we have incurred various non-recurring costs, including expenses related to efforts to become fully compliant with Section 404 of the Sarbanes-Oxley Act by December 31, 2016 and initial set-up of our information systems.

Deal Costs

Deal costs for both periods consist of expenses primarily related to transactions, whether consummated or not, and operator transitions. The decrease for the three months ended September 30, 2016 from the prior year is primarily due to an acquisition completed in the third quarter of 2015.

Loss on Extinguishment of Debt

The loss on extinguishment of debt resulted from the write-off of unamortized debt issuance costs associated with the repayment of the remaining indebtedness outstanding under the $600 million Term Loan and a portion of indebtedness outstanding under the $800 million Term Loan with proceeds from the issuance and sale of the Notes due 2026 and the $135 million Term Loan.

Other Expenses, Net

Other expenses, net consists primarily of certain reimbursable expenses related to our triple-net leased portfolio.  In addition, for the three months ended September 30, 2016, we recognized a $3.6 million net loss related to one SNF located in West Virginia that sustained property damage due to a casualty.  Subsequent to the casualty, we received notice from the state that we would be unable to restore the property to its intended use.  The net loss reflects a decline in the carrying value of the asset, offset by the estimated insurance proceeds we expect to recover.

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Gain on Real Estate Dispositions

This item represents the gains on the sales of three assets during the three months ended September 30, 2016 and one asset during the three months ended September 30, 2015.

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Nine Months Ended September 30, 2016 and 2015

The table below shows our results of operations for the nine months ended September 30, 2016 and 2015 and the effect of changes in those results from period to period on our net income attributable to CCP.

	For the Nine Months Ended September 30,						Increase (Decrease) to Net Income
	2016			2015			$			%
	(Dollars in thousands)
Revenues:
Rental income, net	$	246,095		$	237,100		$	8,995		3.8	%
Income from investments in direct financing lease and loans	4,530			2,680			1,850			69.0
Real estate services fee income	5,080			763			4,317			148.6
Interest and other income	1,791			67			1,724			nm
Total revenues	257,496			240,610			16,886			7.0
Expenses:
Interest	35,210			4,075			(31,135		)	nm
Depreciation and amortization	82,324			80,688			(1,636		)	(2.0	)
Impairment on real estate investments and associated goodwill	17,925			16,648			(1,277		)	nm
General, administrative and professional fees	26,317			21,499			(4,818		)	(22.4	)
Deal costs	2,516			4,746			2,230			47.0
Loss on extinguishment of debt	5,461			—			(5,461		)	nm
Other expenses, net	3,919			1,278			(2,641		)	(206.7	)
Total expenses	173,672			128,934			(44,738		)	(34.7	)
Income before income taxes, real estate dispositions and noncontrolling interests	83,824			111,676			(27,852		)	(24.9	)
Income tax expense	(779		)	(1,024		)	245			77.6
Gain on real estate dispositions	2,895			856			2,039			150.4
Net income	85,940			111,508			(25,568		)	(22.9	)
Net income attributable to noncontrolling interests	13			138			125			90.6
Net income attributable to CCP	$	85,927		$	111,370		(25,443		)	(22.8	)

nm - not meaningful

Rental Income, Net

Rental income increased during the nine months ended September 30, 2016 over the prior year primarily due to rent attributable to properties acquired in 2015 and contractual rent escalations pursuant to the terms of our existing leases, offset by operator transitions and dispositions in 2016.

The following table compares results of continuing operations for our 273 same-store properties.

	For the Nine Months Ended September 30,				Increase (Decrease)  to Rental Income, Net
	2016		2015		$		%
	(Dollars in thousands)
Rental income	$	189,213	$	185,241	$	3,972	2.1	%

Same-store rental income increased during the nine months ended September 30, 2016 over the prior year primarily as a result of contractual escalations under our leases and redevelopment activities, offset by operator transitions in 2016.

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Income from Investments in Direct Financing Lease and Loans

Income from investments in direct financing lease and loans, which represents the income from our direct financing lease and our secured and unsecured loans receivable, increased in 2016 over the prior year due to the additional loans we made in 2015 and 2016.

Real Estate Services Fee Income

Real estate services fee income represents revenue generated by our specialty valuation firm subsidiary, which we acquired in August 2015, for services such as appraisal reports, preliminary market studies, market studies, self-contained appraisal reports for in-court tax appeals and in-court expert testimonials.

Interest

This item represents the interest expense and amortization of debt issuance costs incurred in connection with borrowings under our revolving credit facility, term loans and senior notes. The increase in the nine months ended September 30, 2016 is due the fact that we did not have any outstanding indebtedness prior to the spin-off, as well as the refinancing in 2016 of certain indebtedness incurred in connection with the spin-off.

Depreciation and Amortization

Depreciation and amortization expense increased during the nine months ended September 30, 2016 compared to the same period in 2015 primarily due to the properties acquired during 2015, offset by the properties sold or classified as held for sale in 2016.

Impairment on Real Estate Investments and Associated Goodwill

We recognized a $17.9 million impairment on real estate investments and associated goodwill during the nine months ended September 30, 2016, compared to $16.6 million during the same period in 2015, related to the reclassification of properties as held for sale.

General, Administrative and Professional Fees

General, administrative and professional fees for the nine months ended September 30, 2015 included an allocation of expenses related to certain Ventas corporate functions prior to August 18, 2015, including executive oversight, treasury, finance, legal, human resources, tax planning, internal audit, financial reporting, information technology and investor relations. Subsequent to our separation from Ventas, our general and administrative and professional fee expenses are direct expenses attributable to our operations. General, administrative and professional fees for the nine months ended September 30, 2016 includes $1.6 million of fees paid under our transition services agreement with Ventas, as well as expenses incurred by our specialty valuation firm subsidiary in the amount of $4.1 million. In addition, we have incurred various non-recurring costs, including expenses related to efforts to become fully compliant with Section 404 of the Sarbanes-Oxley Act by December 31, 2016 and initial set-up of our information systems.

Deal Costs

Deal costs for both periods consist of expenses primarily related to transactions, whether consummated or not, and operator transitions. The decrease for the nine months ended September 30, 2016 from the prior year is primarily due to acquisitions completed during the first nine months of 2015.

Loss on Extinguishment of Debt

The loss on extinguishment of debt resulted from the write-off of unamortized debt issuance costs associated with the repayment of the remaining indebtedness outstanding under the $600 million Term Loan and a portion of indebtedness outstanding under the $800 million Term Loan with proceeds from the $200 million Term Loan, the issuance and sale of the Notes due 2027 and the Notes due 2026 and the $135 million Term Loan.

Other Expenses, Net

Other expenses, net consists primarily of certain reimbursable expenses related to our triple-net leased portfolio.  In addition, for the nine months ended September 30, 2016, we recognized a $3.6 million net loss related to one SNF located in West Virginia that sustained property damage due to a casualty.  Subsequent to the casualty, we received notice from the state that we would be unable to restore the property to its intended use.  The net loss reflects a decline in the carrying value of the asset, offset by the estimated insurance proceeds we expect to recover.

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Gain on Real Estate Dispositions

This item represents the net gains on the sales of 18 assets during the nine months ended September 30, 2016 and two assets during the nine months ended September 30, 2015.

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Non-GAAP Financial Measures

We believe that net income, as defined by GAAP, is the most appropriate earnings measurement. However, we consider certain non-GAAP financial measures to be useful supplemental measures of our operating performance. A non-GAAP financial measure is a measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are not excluded from or included in the most directly comparable measure calculated and presented in accordance with GAAP. Described below are the non-GAAP financial measures used by management to evaluate our operating performance and that we consider most useful to investors, together with reconciliations of these measures to the most directly comparable GAAP measures.

The non-GAAP financial measures we present herein may not be comparable to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions. You should not consider these measures as alternatives to net income (determined in accordance with GAAP) as indicators of our financial performance or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of our liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs. In order to facilitate a clear understanding of our combined consolidated historical operating results, you should examine these measures in conjunction with net income as presented in our combined consolidated financial statements and other financial data included elsewhere in this Quarterly Report on Form 10-Q.

Funds From Operations and Normalized Funds From Operations

Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. However, since real estate values historically have risen or fallen with market conditions, many industry investors deem presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. For that reason, we consider Funds From Operations (“FFO”) and normalized FFO to be appropriate measures of operating performance of an equity REIT. In particular, we believe that normalized FFO is useful because it allows investors, analysts and our management to compare our operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences caused by unanticipated items and other events such as transactions.

We use the National Association of Real Estate Investment Trusts (“NAREIT”) definition of FFO. NAREIT defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of real estate property and impairment write-downs of depreciable real estate, plus real estate depreciation and amortization, and after adjustments for joint ventures. Adjustments for joint ventures will be calculated to reflect FFO on the same basis. We define normalized FFO as FFO excluding income taxes, stock-based compensation expense associated with spin-related conversion of awards, transition services fee expense, deal costs, initial debt rating agency costs, amortization of other intangibles (which may be recurring in nature), loss on extinguishment of debt, non-cash items included in interest and other income and other expenses, net, and lease modification fee.

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The following table summarizes our FFO and normalized FFO for the periods presented:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2016			2015			2016			2015
	(In thousands)
Net income attributable to CCP	$	19,010		$	36,166		$	85,927		$	111,370
Adjustments:
Real estate depreciation and amortization	25,302			27,617			81,758			80,367
Real estate depreciation related to noncontrolling interests	(32		)	(68		)	(106		)	(202		)
Impairment on real estate investments and associated goodwill	12,397			3,750			17,925			16,648
Gain on real estate dispositions	(2,143		)	(856		)	(2,895		)	(856		)
FFO attributable to CCP	54,534			66,609			182,609			207,327
Adjustments:
Income tax expense	229			1,024			779			1,024
Stock-based compensation expense associated with spin-related conversion of awards	—			542			—			542
Transition services fee expense	401			293			1,605			293
Deal costs	490			991			2,516			4,746
Initial debt rating agency costs	—			477			—			477
Amortization of other intangibles	173			89			516			89
Loss on extinguishment of debt	4,359			—			5,461			—
Non-cash items included in interest and other income and other expenses, net	2,498			—			1,821			—
Lease modification fee	(17		)	—			227			—
Normalized FFO attributable to CCP	$	62,667		$	70,025		$	195,534		$	214,498

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Adjusted EBITDA

We consider Adjusted EBITDA an important supplemental measure to net income because it provides an additional manner in which to evaluate our operating performance. We define Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, impairment on real estate investments and associated goodwill, excluding stock-based and other compensation adjustments, deal costs, loss on extinguishment of debt, gains (or losses) from sales of real estate property, non-cash items included in interest and other income and other expenses, net, transition services fee expense, initial debt rating agency costs and lease modification fee. In calculating this measure, we consider the effect on net income of our investments and dispositions that were completed during the periods shown, as if those transactions had been completed as of the beginning of the applicable period, as well as income related to completed transactions that are required to be treated as installment sales under GAAP. The following table sets forth a reconciliation of our Adjusted EBITDA to net income for the periods presented:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2016			2015			2016			2015
	(In thousands)
Net income	$	19,017		$	36,192		$	85,940		$	111,508
Adjustments for investments and dispositions during the period	(190		)	—			(2,980		)	—
Adjusted net income	18,827			36,192			82,960			111,508
Add back:
Interest	14,271			4,090			35,210			4,075
Income tax expense	229			1,024			779			1,024
Depreciation and amortization	25,494			27,752			82,324			80,688
Impairment on real estate investments and associated goodwill	12,397			3,750			17,925			16,648
Stock-based and other compensation adjustments	2,196			2,341			5,004			2,341
Deal costs	490			991			2,516			4,746
Loss on extinguishment of debt	4,359			—			5,462			—
Gain on real estate dispositions	(2,143		)	(856		)	(2,895		)	(856		)
Non-cash items included in interest and other income and other expenses, net	2,498			—			1,821			—
Transition services fee expense	401			293			1,605			293
Initial debt rating agency costs	—			477			—			477
Lease modification fee	(17		)	—			227			—
Adjusted EBITDA	$	79,002		$	76,054		$	232,938		$	220,944

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NOI

We also consider NOI an important supplemental measure to net income because it enables investors, analysts and our management to assess our unlevered property-level operating results and to compare our operating results with the operating results of other real estate companies and between periods on a consistent basis. We define NOI as total revenues, less real estate services fee income and interest and other income. Cash receipts may differ due to straight-line recognition of certain rental income and the application of other GAAP policies. The following table sets forth a reconciliation of our NOI to net income for the periods presented:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2016			2015			2016			2015
	(In thousands)
Net income	$	19,017		$	36,192		$	85,940		$	111,508
Adjustments:
Real estate services fee income	(1,897		)	—			(5,080		)	—
Interest and other income	(1,073		)	(4		)	(1,791		)	(67		)
Interest	14,271			4,090			35,210			4,075
Depreciation and amortization	25,494			27,752			82,324			80,688
Impairment on real estate investments and associated goodwill	12,397			3,750			17,925			16,648
General, administrative and professional fees	9,477			9,216			26,317			21,499
Deal costs	490			991			2,516			4,746
Loss on extinguishment of debt	4,359			—			5,461			—
Other expenses, net	3,700			158			3,919			1,278
Income tax expense	229			1,024			779			1,024
Gain on real estate dispositions	(2,143		)	(856		)	(2,895		)	(856		)
NOI	$	84,321		$	82,313		$	250,625		$	240,543

Asset/Liability Management

Asset/liability management, a key element of enterprise risk management, is designed to support the achievement of our business strategy, while ensuring that we maintain appropriate and tolerable levels of market risk (primarily interest rate risk) and credit risk. Effective management of these risks is a contributing factor to the absolute levels and variability of our FFO and net worth. The following discussion addresses our integrated management of assets and liabilities.

Market Risk

We are exposed to market risk related to changes in interest rates with respect to borrowings under floating rate obligations. These market risks result primarily from changes in LIBOR rates or prime rates. We have entered into interest rate swaps with a notional amount of $600 million to mitigate a portion of this risk.

As of September 30, 2016 and December 31, 2015, the fair value of our loans receivable, based on our estimates of currently prevailing rates for comparable loans, was $64.7 million and $28.7 million, respectively. See “Note 6—Loans Receivable” of the Notes to Combined Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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Concentration and Credit Risk

We use concentration ratios to identify, understand and evaluate the potential impact of economic downturns and other adverse events that may affect our asset types, geographic locations and tenants. We evaluate concentration risk in terms of real estate investment mix and operations mix. Investment mix measures the percentage of our investments that is concentrated in a specific asset type or that is operated by a particular tenant. Operations mix measures the percentage of our operating results that is attributed to a specific asset type or a particular tenant. The following tables reflect our concentration risk as of the dates and for the periods presented:

	As of September 30, 2016		As of December 31, 2015
Investment mix by asset type (1):
SNFs	87.9	%	88.3	%
Seniors housing communities and campuses (2)	7.1		7.3
Specialty hospitals and healthcare assets	5.0		4.4
Investment mix by tenant (1):
Senior Care Centers, LLC	20.7		19.2
Avamere Group, LLC	11.0		10.0
Signature HealthCARE, LLC	8.7		8.5
All other	59.7		62.3

(1) Ratios are based on the gross book value of tangible real estate property (excluding assets classified as held for sale) as of each reporting date.

(2) Campuses are defined as multi-level properties.

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2016		2015		2016		2015
Operations mix by asset type (1):
SNFs	86.1	%	88.9	%	87.3	%	89.7	%
Seniors housing communities and campuses (2)	4.9		5.1		5.1		4.4
Specialty hospitals and healthcare assets	3.4		3.9		3.3		4.5
All other	5.6		2.1		4.3		1.4
Operations mix by tenant (1):
Senior Care Centers, LLC	16.0		13.2		16.2		10.3
Avamere Group, LLC	10.8		10.8		10.7		10.1
Signature HealthCARE, LLC	14.1		9.9		14.2		9.9
All other	59.1		66.1		58.9		69.7

(1) Ratios are based on revenues for each period presented.

(2) Campuses are defined as multi-level properties.

We derive substantially all of our revenues by leasing assets under long-term triple-net leases with annual escalators, subject to certain limitations. Some of these escalators are contingent upon the satisfaction of specified facility revenue parameters or based on increases in CPI, with caps, floors or collars.

Our three largest operators in aggregate accounted for approximately 41.1% of our total revenues for the nine months ended September 30, 2016. The failure or unwillingness of any of these tenants to satisfy its obligations to us or to renew its leases with us upon expiration of the terms thereof could have a material adverse effect on our business, financial condition, results of operations and liquidity. We cannot provide any assurances that these tenants and/or their respective subsidiaries or

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affiliates will be able to effectively conduct their operations, operate our properties profitably or maintain and improve our properties, nor can we provide any assurances that they will have sufficient assets, income, access to financing and/or insurance coverage to enable them to satisfy their respective lease and other obligations to us and third parties. We also cannot provide any assurances that these tenants, and in particular our three largest operators, will elect to renew their leases with us upon expiration or that we will be able to reposition any non-renewed properties on a timely basis or on the same or better economic and other terms, if at all.

Across the United States, SNF operators are facing various operational, legal and regulatory challenges due to, among other things, decreases in occupancy due to shorter lengths of stay, increased labor costs, staffing shortages and higher expenses associated with the defense and settlement of governmental investigations, enforcement proceedings, and legal actions related to professional and general liability claims. While revenues from government reimbursement have been relatively stable, Medicare and Medicaid rates are, and may continue to be, subject to cuts and other pressure from federal and state budgetary constraints. At the same time, operating expenses have been steadily rising, driven by higher wages and benefits in the highly competitive market for qualified nurses and other healthcare professionals, especially in states that have established minimum staffing requirements. These challenges have led to declines in operating margins and rent coverage ratios for some of our tenants, and from time to time, these tenants have asked us to consider certain financial accommodations, such as rent reductions or deferrals, among other things. Although we are engaged in discussions with certain tenants, including one of our largest operators, we cannot predict the outcome of any of these discussions or the impact that any accommodations we agree to make may have on our financial results. In addition, while these tenants remained current on rent through November, we cannot provide any assurances that they will be able to successfully manage their operations going forward and continue to meet their respective lease and other obligations to us.

We regularly monitor and assess any changes in the relative credit risk of all of our tenants and related guarantors, although we pay particular attention to those tenants that we deem to present higher credit risks due to performance, concentration of our revenues, or recourse provisions contained in our leases. The ratios and metrics we use to evaluate a tenant’s liquidity and creditworthiness depend on facts and circumstances specific to that tenant, including without limitation the tenant’s credit history and economic conditions related to the tenant, its operations and the markets and industries in which the tenant operates. Such facts and circumstances may vary over time. Among other things, we may (i) review and analyze information regarding the real estate, post-acute and healthcare industries generally, publicly available information regarding the tenant, and information required to be provided by the tenant under the terms of its lease agreements with us, including covenant calculations required to be provided to us by the tenant, (ii) examine monthly and/or quarterly financial statements of the tenant to the extent publicly available or otherwise provided under the terms of our lease agreements, and (iii) participate in periodic discussions and in-person meetings with representatives of the tenant.  Using this information, we calculate multiple financial ratios (which may, but do not necessarily, include net debt to EBITDAR (earnings before interest, taxes, depreciation, amortization and rent) or EBITDARM (earnings before interest, taxes, depreciation, amortization, rent and management fees), fixed charge coverage and tangible net worth), after making certain adjustments based on our judgment, and assess other metrics we deem relevant to an understanding of the tenant’s credit risk.

We also evaluate concentration risk as it pertains to the geographic location of our properties. For the three months ended September 30, 2016, our properties were located in 36 states across the United States, with properties in only one state (Texas - 21%) accounting for more than 10% of our total revenues.

Triple-Net Lease Expirations

As our triple-net leases expire, we face the risk that our tenants may elect not to renew those leases and, in the event of non-renewal, we may be unable to reposition the applicable properties on a timely basis or on the same or better economic and other terms, if at all. Although our lease terms are staggered, the non-renewal of some or all of our triple-net leases in any given year could have a material adverse effect on our business, financial condition, results of operations and liquidity, our ability to service our indebtedness and other obligations and our ability to make distributions to our stockholders, as required for us to qualify as a REIT. During the three months ended September 30, 2016, none of our triple-net leases were renewed or expired without renewal that had a material impact on our financial condition or results of operations for that period.

Our leases with respect to 11 SNFs located in Texas have not been renewed by the existing tenant and therefore will expire on December 31, 2016 and January 1, 2017. Although we intend to re-lease or sell these properties by the end of 2016, any such transaction will be subject to regulatory approval and other conditions, and we cannot assure you that we will be able to do so on a timely basis, if at all. The tenant is required to continue to perform all of its obligations, including without limitation, payment of all rental amounts, under the applicable lease for the non-renewed assets until expiration of the current lease term. Moreover, we own or have the rights to all licenses at the properties, and the tenant has extensive and detailed obligations to cooperate and ensure an orderly transition of the properties to another operator.

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We expect that the re-leasing or sale of the non-renewed assets will have no impact on our result of operations in 2016 and will not materially impact our results of operations in 2017. However, we cannot provide any assurances of the actual impact these transactions will have on our future operations, nor can we assure you as to whether, when or on what terms we will be able to re-lease or sell any or all of the non-renewed assets to qualified healthcare operators. Our ability to re-lease or sell the non-renewed assets could be significantly delayed or limited by state licensing or other laws, as well as by the Medicare and Medicaid change-of-ownership rules, and we could incur substantial additional expenses in connection with any licensing or change-of-ownership proceedings. In addition, we may be required to fund certain expenses and incur obligations to preserve the value of, and avoid the imposition of liens on, the non-renewed assets while they are being re-leased or sold.

Liquidity and Capital Resources

For periods prior to our separation from Ventas, we and our wholly owned subsidiaries were subject to Ventas’s centralized cash management system. All payments were controlled and made by Ventas, resulting in intercompany transactions between us and Ventas that did not settle in cash.

For periods subsequent to our separation from Ventas, we maintained our own centralized cash management system in addition to the separate cash accounts associated with our joint venture entities.

As of September 30, 2016 and December 31, 2015, we had a total of $22.5 million and $17.0 million, respectively, of unrestricted cash.

During the nine months ended September 30, 2016, our principal sources of liquidity were cash flows from operations, cash on hand, borrowings under our revolving credit facility and term loans, issuances of senior notes, and dispositions of assets.

For the next 12 months, our principal liquidity needs are to: (i) fund operating expenses; (ii) meet our debt service requirements (estimated interest expense of $54.0 million), and refinance debt; (iii) fund acquisitions, investments and commitments, including re-development activities; and (iv) make distributions to our stockholders, as required for us to qualify as a REIT. We expect that these liquidity needs generally will be satisfied by a combination of cash flows from operations, borrowings under our revolving credit facility, dispositions of assets, and issuances of debt and equity securities. However, an inability to access liquidity through one or any combination of these capital sources concurrently could have an adverse effect on us.

Unsecured Revolving Credit Facility and Term Loans

In January 2016, Care Capital LP, as borrower, and CCP and Care Capital Properties GP, LLC, as guarantors, entered into the Term Loan Agreement relating to the $200 million Term Loan. Borrowings under the $200 million Term Loan currently bear interest at a fluctuating rate per annum equal to LIBOR plus an applicable margin based on Care Capital LP’s unsecured long-term debt ratings, which was 1.80% at September 30, 2016. We used the net proceeds from borrowings under the $200 million Term Loan to repay a portion of the indebtedness outstanding under the $600 million Term Loan.

As of September 30, 2016, we also had $50.0 million of borrowings outstanding under our unsecured revolving credit facility (the “Revolver”), $474 million of borrowings under our $800 million Term Loan (together with the Revolver and the $600 million Term Loan, the “Facility”), and $550.0 million of unused borrowing capacity available under the Revolver. The Revolver has an initial term of four years, but may be extended, at Care Capital LP’s option subject to compliance with the terms of the credit agreement and payment of a customary fee, for two additional six-month periods. The $800 million Term Loans matures in August 2020. The credit agreement also includes an accordion feature that permits Care Capital LP to increase the aggregate borrowing capacity under the Facility to $2.5 billion.

In January 2016, we entered into various agreements to swap $400 million principal amount of the $800 million Term Loan from LIBOR plus 1.50% into an all-in fixed interest rate of 2.73% and to swap the full principal amount of the $200 million Term Loan from LIBOR plus 1.80% into an all-in fixed interest rate of 3.25%.

Senior Notes

In May 2016, Care Capital LP issued and sold $100.0 million aggregate principal amount of Notes due 2027 through a private placement in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act, for total proceeds of $100.0 million before expenses. The Notes due 2027 are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by CCP and Care Capital GP. We used the net proceeds from the sale of the Notes due 2027 to repay a portion of the indebtedness outstanding under the $600 million Term Loan.

In July 2016, Care Capital LP issued and sold $500 million aggregate principal amount of Notes due 2026 to qualified institutional buyers pursuant to Rule 144A and to certain persons outside of the United States pursuant to Regulation S, each

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under the Securities Act, for total proceeds of $500 million before the initial purchasers’ discount and expenses. The Notes due 2026 are fully and unconditionally guaranteed, jointly and severally, by CCP and Care Capital GP. Care Capital LP may, at its option, redeem the Notes due 2026 at any time in whole or from time to time in part at a redemption price equal to 100% of their principal amount, together with accrued and unpaid interest thereon, if any, to (but excluding) the date of redemption, plus, if redeemed prior to May 15, 2026, a make-whole premium. We used the net proceeds from the sale of the Notes due 2026 to repay all of the remaining indebtedness outstanding under the $600 million Term Loan and a portion of the indebtedness outstanding under the $800 million Term Loan.

The Notes due 2026 and the guarantees thereof are Care Capital LP’s, CCP’s and Care Capital GP’s respective senior unsecured obligations, ranking equally in right of payment with all of such entities’ existing and future senior unsecured indebtedness and senior in right of payment to all of such entities’ future unsecured subordinated indebtedness. The Notes due 2026 and the guarantees will be effectively subordinated in right of payment to all of such entities’ respective future secured indebtedness to the extent of the value of the collateral securing such secured indebtedness and structurally subordinated to the indebtedness and other liabilities, including any preferred stock, of Care Capital LP’s subsidiaries.

Mortgage Indebtedness

In July 2016, certain wholly owned subsidiaries of Care Capital LP, as borrowers (the “Borrowers”), entered into a Loan Agreement with a syndicate of banks identified therein providing for the $135 million Term Loan that bears interest at a fluctuating rate per annum equal to LIBOR for a one-month interest period plus 1.80% and matures in July 2019. The $135 million Term Loan is secured by first lien mortgages and assignments of leases and rents on specified facilities owned by the Borrowers. The payment and performance of the Borrowers’ obligations under the $135 million Term Loan are guaranteed by CCP and Care Capital LP. We used the proceeds from the $135 million Term Loan to repay a portion of the indebtedness outstanding under the $800 million Term Loan. Although there can be no assurances, we expect to refinance the $135 million Term Loan using proceeds of a loan obtained from The Department of Housing and Urban Development (HUD).

Equity

In August 2015, we adopted the Care Capital Properties, Inc. 2015 Incentive Plan (the “Plan”), pursuant to which options to purchase common stock, shares of restricted stock or restricted stock units and other equity awards may be granted to our employees, directors and consultants. A total of 7,000,000 shares of our common stock was reserved initially for issuance under the Plan.

In September 2016, we filed with the SEC an automatic shelf registration statement on Form S-3 relating to the sale, from time to time, of an indeterminable amount of common stock, preferred stock, depository shares, warrants and senior and subordinated notes.

Dividends

Ventas elected to be treated as a REIT under the applicable provisions of the Code for every year beginning with the year ended December 31, 1999. Accordingly, with respect to periods prior to our separation from Ventas, Ventas generally was not subject to federal income tax. We elected to be treated as a REIT under the applicable provisions of the Code, beginning with the year ended December 31, 2015. By qualifying for taxation as a REIT, we generally will not be subject to federal income tax on net income that we currently distribute to stockholders, which substantially eliminates the “double taxation” (i.e., taxation at both the corporate and stockholder levels) that results from investment in a C corporation (i.e., a corporation generally subject to full corporate-level tax).

We expect that our cash flows will exceed our REIT taxable income due to depreciation and other non-cash deductions in computing REIT taxable income and that we will be able to satisfy the 90% distribution requirement. However, from time to time, we may not have sufficient cash on hand or other liquid assets to meet this requirement or we may decide to retain cash or distribute such greater amount as may be necessary to avoid income and excise taxation. If we do not have sufficient cash on hand or other liquid assets to enable us to satisfy the 90% distribution requirement, or if we desire to retain cash, we may borrow funds, issue equity securities, pay taxable stock dividends, if possible, distribute other property or securities or engage in a transaction intended to enable us to meet the REIT distribution requirements or any combination of the foregoing.

On March 31, 2016, we paid a cash dividend in the amount of $0.57 per share to the holders of record of our common stock on March 21, 2016. On June 30, 2016, we paid a cash dividend in the amount of $0.57 per share to the holders of record of our common stock as of June 10, 2016. On September 30, 2016, we paid a cash dividend in the amount of $0.57 per share to the holders of record of our common stock as of September 16, 2016.

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Capital Expenditures

The terms of our triple-net leases generally obligate our tenants to pay all capital expenditures necessary to maintain and improve our triple-net leased properties. However, from time to time, we may fund the capital expenditures for our triple-net leased properties through loans to the tenants or advances, which may increase the amount of rent payable with respect to the properties in certain cases. In addition, from time to time, we may enter into agreements with our tenants to fund capital expenditures without reimbursement. We expect to fund any capital expenditures for which we may become responsible upon expiration of our triple-net leases or in the event that our tenants are unable or unwilling to meet their obligations under those leases with cash flows from operations or through borrowings under our Revolver.

Cash Flows

The following table sets forth our sources and uses of cash flows for the periods presented:

	For the Nine Months Ended September 30,						Increase (Decrease) to Cash
	2016			2015			$			%
	(Dollars in thousands)
Cash at beginning of period	$	16,995		$	2,424		$	14,571		nm
Net cash provided by operating activities	188,915			206,041			(17,126		)	(8.3	)%
Net cash provided by (used in) investing activities	55,599			(498,506		)	554,105			111.2
Net cash (used in) provided by financing activities	(239,032		)	300,485			(539,517		)	(179.5	)
Cash at end of period	$	22,477		$	10,444		12,033			nm

nm - not meaningful

Cash Flows from Operating Activities

Cash flows from operating activities decreased in 2016 over the prior year primarily due to interest expense. Prior to the spin-off, we did not have any outstanding indebtedness.

Cash Flows from Investing Activities

Cash flows from investing activities during the nine months ended September 30, 2016 and 2015 consisted of cash paid for our investments in real estate ($0.0 million and $454.8 million in 2016 and 2015, respectively), investment in loans receivable ($63.3 million and $20.1 million in 2016 and 2015, respectively), proceeds from real estate dispositions and loans receivable ($151.9 million and $2.6 million in 2016 and 2015, respectively), development project expenditures ($29.4 million and $12.6 million in 2016 and 2015, respectively), and capital expenditures ($3.6 million and $13.5 million in 2016 and 2015, respectively).

Cash Flows from Financing Activities

Cash used in financing activities during the nine months ended September 30, 2016 consisted primarily of the net change in borrowings under our Revolver, the repayment of debt, the payment of deferred financing costs and distributions to common stockholders, partially offset by proceeds from the issuance of debt. Cash provided by financing activities during the nine months ended September 30, 2015 consisted primarily of the net change in borrowings under our Revolver, proceeds from the issuance of debt and net contribution from parent prior to the separation, partially offset by the payment of deferred financing costs, distributions to common stockholders and distribution to parent.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following discussion of our exposure to various market risks contains forward-looking statements that involve risks and uncertainties. These projected results have been prepared utilizing certain assumptions considered reasonable in light of information currently available to us. Nevertheless, because of the inherent unpredictability of interest rates and other factors, actual results could differ materially from those projected in such forward-looking information.

As of September 30, 2016 and December 31, 2015, the fair value of our loans receivable, based on our estimates of currently prevailing rates for comparable loans, was $64.7 million and $28.7 million, respectively.

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We are exposed to market risk related to changes in interest rates with respect to borrowings under floating rate obligations. These market risks result primarily from changes in LIBOR rates or prime rates. We have entered into interest rate swaps with a notional amount of $600 million to mitigate a portion of this risk.

ITEM 4.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2016. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective as of September 30, 2016.

Internal Control over Financial Reporting

During the third quarter of 2016, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

The information contained in “Note 14—Litigation” of the Notes to Combined Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q is incorporated by reference into this Item 1. Except as set forth therein, there have been no new material legal proceedings and no material developments in any legal proceedings reported in the Information Statement.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The table below summarizes repurchases of our common stock made during the quarter ended September 30, 2016:

	Number of Shares Repurchased (1)	Average Price Per Share
July 1 through July 31	—	$	—
August 1 through August 31	11,184	29.51
September 1 through September 30	—	—

(1) Repurchases represent shares withheld to pay taxes on the vesting of restricted stock granted to employees under our 2015 Incentive Plan. The value of the shares withheld is the closing price of our common stock on the date the vesting occurred (or, if not a trading day, the immediately preceding trading day).

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ITEM 6.    EXHIBITS

Exhibit Number	Description of Document	Location of Document
4.1	Indenture dated as of July 14, 2016 by and among Care Capital LP, as issuer, CCP and Care Capital GP, as guarantors, and Regions Bank, as trustee.	Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K, filed on July 15, 2016.
4.2	Registration Rights Agreement dated as of July 14, 2016 among Care Capital LP, CCP, Care Capital GP and the initial purchasers named therein.	Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K, filed on July 15, 2016.
10.1	Purchase Agreement, dated July 7, 2016, among CCP, Care Capital LP, Care Capital GP and the Initial Purchasers named therein.	Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on July 8, 2016.
10.2	Loan Agreement dated as of July 25, 2016 by and among Capital One, National Association, as administrative agent, co-lead arranger and book runner, Regions Capital Markets, as co-lead arranger, the lenders identified therein, and wholly owned subsidiaries of Care Capital LP listed on Exhibit B thereto, as borrowers.	Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on July 29, 2016.
10.3	Guaranty of Payment and Performance dated July 25, 2016 by CCP and Care Capital LP for the benefit of Capital One, National Association, as administrative agent.	Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K, filed on July 29, 2016.
10.4	Employee Protection and Non-Competition Agreement dated as of October 4, 2016 between CCP and Anna N. Fitzgerald.	Incorporated by reference to Exhibit 10.1 to our current Report on Form 8-K, filed on September 27, 2016.
12.1	Statement Regarding Computation of Ratio of Earnings to Fixed Charges.	Filed herewith.
31.1	Certification of Raymond J. Lewis, Chief Executive Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.	Filed herewith.
31.2	Certification of Lori B. Wittman, Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.	Filed herewith.
32.1	Certification of Raymond J. Lewis, Chief Executive Officer, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350.	Filed herewith.
32.2	Certification of Lori B. Wittman, Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350.	Filed herewith.
101	Interactive Data File.	Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November 10, 2016

CARE CAPITAL PROPERTIES, INC.
By:	/s/ RAYMOND J. LEWIS
	Raymond J. Lewis Chief Executive Officer
By:	/s/ LORI B. WITTMAN
	Lori B. Wittman Executive Vice President and Chief Financial Officer

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EXHIBIT INDEX

Exhibit Number	Description of Document	Location of Document
4.1	Indenture dated as of July 14, 2016 by and among Care Capital LP, as issuer, CCP and Care Capital GP, as guarantors, and Regions Bank, as trustee.	Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K, filed on July 15, 2016.
4.2	Registration Rights Agreement dated as of July 14, 2016 among Care Capital LP, CCP, Care Capital GP and the initial purchasers named therein.	Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K, filed on July 15, 2016.
10.1	Purchase Agreement, dated July 7, 2016, among CCP, Care Capital LP, Care Capital GP and the Initial Purchasers named therein.	Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on July 8, 2016.
10.2	Loan Agreement dated as of July 25, 2016 by and among Capital One, National Association, as administrative agent, co-lead arranger and book runner, Regions Capital Markets, as co-lead arranger, the lenders identified therein, and wholly owned subsidiaries of Care Capital LP listed on Exhibit B thereto, as borrowers.	Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed on July 29, 2016.
10.3	Guaranty of Payment and Performance dated July 25, 2016 by CCP and Care Capital LP for the benefit of Capital One, National Association, as administrative agent.	Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K, filed on July 29, 2016.
10.4	Employee Protection and Non-Competition Agreement dated as of October 4, 2016 between CCP and Anna N. Fitzgerald.	Incorporated by reference to Exhibit 10.1 to our current Report on Form 8-K, filed on September 27, 2016.
12.1	Statement Regarding Computation of Ratio of Earnings to Fixed Charges.	Filed herewith.
31.1	Certification of Raymond J. Lewis, Chief Executive Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.	Filed herewith.
31.2	Certification of Lori B. Wittman, Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.	Filed herewith.
32.1	Certification of Raymond J. Lewis, Chief Executive Officer, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350.	Filed herewith.
32.2	Certification of Lori B. Wittman, Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350.	Filed herewith.
101	Interactive Data File.	Filed herewith.

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