Consolidated Results of Operations - Three-Month Periods
Ended September 30, 2024 and
2023:
KING OF
PRUSSIA, Pa., Oct. 24,
2024 /PRNewswire/ -- Universal Health Realty Income
Trust (NYSE:UHT) announced today that for the three-month period
ended September 30, 2024, net income was $4.0 million, or $.29 per diluted share, as compared to
$3.9 million, or $.28 per diluted share, during the third quarter
of 2023.
The increase in our net income of $125,000, or $.01
per diluted share, during the three-month period ended September 30, 2024, as compared to the third
quarter of 2023, consisted of the following: (i) an increase of
$451,000, or $.03 per diluted share, resulting from an
aggregate net increase in the income generated at various
properties, partially offset by; (ii) a decrease of $326,000, or $.02
per diluted share, resulting from an increase in interest expense
due primarily to an increase in our average outstanding borrowings
and a slight increase in our average borrowing rate.
As calculated on the attached Schedule of Non-GAAP Supplemental
Information ("Supplemental Schedule"), our funds from operations
("FFO") were $11.3 million, or
$.82 per diluted share, during the
third quarter of 2024, as compared to $11.2
million, or $.81 per diluted
share during the third quarter of 2023. The increase of
$124,000, or $.01 per diluted share, was due primarily to the
above-mentioned increase in our net income during the third quarter
of 2024, as compared to the third quarter of
2023.
Consolidated Results of Operations - Nine-Month Periods Ended
September 30, 2024 and 2023:
For the nine-month period ended September
30, 2024, net income was $14.6
million, or $1.05 per diluted
share, as compared to $11.8 million,
or $0.85 per diluted share during the
first nine months of 2023.
The increase in our net income of $2.8
million, or $.20 per diluted
share, during the first nine months of 2024, as compared to the
comparable period of 2023, consisted of the following: (i) an
increase of $2.5 million, or
$.18 per diluted share, resulting
from an aggregate net increase in the income generated at various
properties; (ii) an increase of $1.9
million, or $.13 per diluted
share, resulting from a reduction in the expenses related to our
property located in Chicago,
Illinois, including $1.1
million from demolition expenses incurred during the first
nine months of 2023, and $563,000
related to a property tax reduction recorded during the first nine
months of 2024 which related primarily to prior periods, partially
offset by; (iii) a decrease of $1.6
million, or $.11 per diluted
share, resulting from an increase in interest expense due primarily
to increases in our average borrowing rate as well as our average
outstanding borrowings.
As calculated on the attached Supplemental Schedule, our FFO
were $36.1 million, or $2.61 per diluted share, during the first nine
months of 2024, as compared to $33.2
million, or $2.40 per diluted
share during the comparable period of 2023. The increase of
$2.9 million, or $.21 per diluted share, was due primarily to the
above-mentioned increase in our net income during the first nine
months of 2024, as compared to the first nine months of
2023.
Dividend Information:
The third quarter dividend of $.73
per share, or $10.1 million in the
aggregate, was declared on September 4,
2024 and paid on September 30,
2024.
Capital Resources Information:
On September 30, 2024, we entered
into a second amended and restated credit agreement which increased
the borrowing capacity to $425
million (from $375 million
previously) and extended the maturity date to September 30, 2028 (from July, 2025
previously). We have the option to extend the maturity date
for up to two additional six-month periods.
At September 30, 2024, we had
$347.8 million of borrowings
outstanding pursuant to the terms of our $425 million revolving credit agreement and
$77.2 million of available borrowing
capacity as of that date, net of outstanding borrowings.
Sierra Medical Plaza I:
In March, 2023, construction was substantially completed on the
Sierra Medical Plaza I, an 86,000 square foot MOB located in
Reno, Nevada. This MOB is located
on the campus of the Northern Nevada Sierra Medical Center, a
hospital that is owned and operated by a wholly-owned subsidiary of
UHS, which was completed and opened during April, 2022. The master
flex lease agreement in connection with this building, which
commenced in March, 2023 and has a ten-year term scheduled to
expire on March 31, 2033, covers
approximately 68% of the rentable square feet of the MOB at an
initial minimum rent of $1.3 million
annually, plus a pro-rata share of the common area maintenance
expenses. This master flex lease agreement is subject to reduction
based upon the execution of third-party leases. The aggregate cost
of the MOB is estimated to be approximately $35 million, approximately $30 million of which was incurred as of
September 30, 2024.
Vacant Land/Specialty Facility:
Demolition of the former specialty hospital located in
Chicago, Illinois, was completed
during 2023. The aggregate demolition expenses amounted to
approximately $1.5 million
($1.1 million of which were incurred
during the first and second quarters of 2023 and $332,000 of which were incurred during the fourth
quarter of 2022). In addition, in December, 2023, we sold the
vacant specialty facility located in Corpus Christi,
Texas.
We continue to market the vacant properties located in
Chicago, Illinois and Evansville, Indiana. Future operating expenses
related to these properties, will be incurred by us during the time
they remain owned and unleased.
Financial Instruments:
In October, 2024, we entered into an interest rate
swap agreement on a total notional amount of $85 million with a fixed interest rate of 3.2725%
that we designated as a cash flow hedge. The interest rate swap
became effective on October 2, 2024
and is scheduled to mature on September
30, 2028. If one-month term SOFR is above 3.2725%, the
counterparty pays us, and if one-month term SOFR is less than
3.2725%, we pay the counterparty the difference between the fixed
rate of 3.2725% and one-month term SOFR.
This interest rate swap agreement replaced two interest rate
swaps agreements that expired on September
16, 2024 with a combined aggregate notional amount of
$85 million.
General Information, Forward-Looking Statements and Risk
Factors and Non-GAAP Financial Measures:
Universal Health Realty Income Trust, a real estate investment
trust, invests in healthcare and human-service related facilities
including acute care hospitals, behavioral health care hospitals,
specialty facilities, medical/office buildings, free-standing
emergency departments and childcare centers. We have investments or
commitments in seventy-six properties located in twenty-one
states.
This press release contains forward-looking statements based on
current management expectations. Numerous factors, including those
disclosed herein, as well as the operations and financial results
of each of our tenants, those related to healthcare industry trends
and those detailed in our filings with the Securities and Exchange
Commission (as set forth in Item 1A-Risk Factors and
in Item 7 - Forward-Looking Statements in our Form 10-K for
the year ended December 31, 2023 and
in Item 7 - Forward-Looking Statements and Certain Risk
Factors in our Form 10-Q for the quarter ended June 30, 2024), may cause the results to differ
materially from those anticipated in the forward-looking
statements. Readers should not place undue reliance on such
forward-looking statements which reflect management's view only as
of the date hereof. We undertake no obligation to revise or update
any forward-looking statements, or to make any other
forward-looking statements, whether as a result of new information,
future events or otherwise.
Many of the factors that could affect our future results are
beyond our control or ability to predict. Future operations and
financial results of our tenants, and in turn ours, could be
materially impacted by various developments including, but not
limited to, decreases in staffing availability and related
increases to wage expense experienced by our tenants resulting from
the shortage of nurses and other clinical staff and support
personnel, the impact of government and administrative regulation
of the health care industry; declining patient volumes and
unfavorable changes in payer mix caused by deteriorating
macroeconomic conditions (including increases in uninsured and
underinsured patients as the result of business closings and
layoffs); potential disruptions related to supplies required for
our tenants' employees and patients; and potential increases to
other expenditures.
In addition, the increase in interest rates has substantially
increased our borrowings costs and reduced our ability to access
the capital markets on favorable terms. Additional increases
in interest rates could have a significant unfavorable impact on
our future results of operations and the resulting effect on the
capital markets could adversely affect our ability to carry out our
strategy.
We believe that, if and when applicable, adjusted net income and
adjusted net income per diluted share (as reflected on the
Supplemental Schedule), which are non-GAAP financial measures
("GAAP" is Generally Accepted Accounting Principles in the United States of America), are helpful to
our investors as measures of our operating performance. In
addition, we believe that, when applicable, comparing and
discussing our financial results based on these measures, as
calculated, is helpful to our investors since it neutralizes the
effect in each year of material items that are non-recurring or
non-operational in nature including items such as, but not limited
to, gains on transactions.
Funds from operations ("FFO") is a widely recognized measure of
performance for Real Estate Investment Trusts ("REITs"). We believe
that FFO and FFO per diluted share, which are non-GAAP financial
measures, are helpful to our investors as measures of our operating
performance. We compute FFO, as reflected on the attached
Supplemental Schedules, in accordance with standards established by
the National Association of Real Estate Investment Trusts
("NAREIT"), which may not be comparable to FFO reported by other
REITs that do not compute FFO in accordance with the NAREIT
definition, or that interpret the NAREIT definition differently
than we interpret the definition. FFO adjusts for the effects of
certain items, such as gains or losses on transactions that
occurred during the periods presented. FFO does not represent
cash generated from operating activities in accordance with GAAP
and should not be considered to be an alternative to net income
determined in accordance with GAAP. In addition, FFO should not be
used as: (i) an indication of our financial performance determined
in accordance with GAAP; (ii) an alternative to cash flow from
operating activities determined in accordance with GAAP; (iii) a
measure of our liquidity, or; (iv) an indicator of funds available
for our cash needs, including our ability to make cash
distributions to shareholders. A reconciliation of our reported net
income to FFO is reflected on the Supplemental Schedules included
below.
To obtain a complete understanding of our financial performance
these measures should be examined in connection with net income,
determined in accordance with GAAP, as presented in the condensed
consolidated financial statements and notes thereto in this report
or in our other filings with the Securities and Exchange Commission
including our Report on Form 10-K for the year ended December 31, 2023 and our Report on Form 10-Q for
the quarter ended June 30, 2024.
Since the items included or excluded from these measures are
significant components in understanding and assessing financial
performance under GAAP, these measures should not be considered to
be alternatives to net income as a measure of our operating
performance or profitability. Since these measures, as presented,
are not determined in accordance with GAAP and are thus susceptible
to varying calculations, they may not be comparable to other
similarly titled measures of other companies. Investors are
encouraged to use GAAP measures when evaluating our financial
performance.
Universal Health
Realty Income Trust
|
Consolidated Statements
of Income
|
For the Three and Nine
Months Ended September 30, 2024 and 2023
|
(amounts in thousands,
except share information)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
September
30,
|
|
|
September
30,
|
|
|
|
2024
|
|
|
2023
|
|
|
2024
|
|
|
2023
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease revenue -
UHS facilities (a.)
|
|
$
|
8,248
|
|
|
$
|
8,274
|
|
|
$
|
25,366
|
|
|
$
|
24,297
|
|
Lease revenue -
Non-related parties
|
|
|
14,342
|
|
|
|
13,926
|
|
|
|
43,188
|
|
|
|
40,955
|
|
Other revenue -
UHS facilities
|
|
|
242
|
|
|
|
254
|
|
|
|
682
|
|
|
|
730
|
|
Other revenue -
Non-related parties
|
|
|
305
|
|
|
|
404
|
|
|
|
1,056
|
|
|
|
1,177
|
|
Interest income
on financing leases - UHS facilities
|
|
|
1,357
|
|
|
|
1,365
|
|
|
|
4,077
|
|
|
|
4,096
|
|
|
|
|
24,494
|
|
|
|
24,223
|
|
|
|
74,369
|
|
|
|
71,255
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
7,009
|
|
|
|
7,012
|
|
|
|
20,624
|
|
|
|
20,479
|
|
Advisory fees
to UHS
|
|
|
1,386
|
|
|
|
1,332
|
|
|
|
4,093
|
|
|
|
3,957
|
|
Other operating
expenses
|
|
|
7,609
|
|
|
|
7,854
|
|
|
|
22,115
|
|
|
|
23,625
|
|
|
|
|
16,004
|
|
|
|
16,198
|
|
|
|
46,832
|
|
|
|
48,061
|
|
Income before equity in
income of unconsolidated limited liability companies ("LLCs") and
interest expense
|
|
|
8,490
|
|
|
|
8,025
|
|
|
|
27,537
|
|
|
|
23,194
|
|
Equity in
income of unconsolidated LLCs
|
|
|
300
|
|
|
|
314
|
|
|
|
956
|
|
|
|
953
|
|
Interest
expense, net
|
|
|
(4,793)
|
|
|
|
(4,467)
|
|
|
|
(13,920)
|
|
|
|
(12,340)
|
|
Net income
|
|
$
|
3,997
|
|
|
$
|
3,872
|
|
|
$
|
14,573
|
|
|
$
|
11,807
|
|
Basic earnings per
share
|
|
$
|
0.29
|
|
|
$
|
0.28
|
|
|
$
|
1.06
|
|
|
$
|
0.86
|
|
Diluted earnings per
share
|
|
$
|
0.29
|
|
|
$
|
0.28
|
|
|
$
|
1.05
|
|
|
$
|
0.85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of shares outstanding - Basic
|
|
|
13,807
|
|
|
|
13,790
|
|
|
|
13,799
|
|
|
|
13,784
|
|
Weighted average number
of shares outstanding - Diluted
|
|
|
13,849
|
|
|
|
13,822
|
|
|
|
13,835
|
|
|
|
13,811
|
|
|
(a.) Includes bonus
rental on McAllen Medical Center, a UHS acute care hospital
facility, of $765 and $725 for the three-month periods ended
September 30, 2024 and 2023, respectively, and $2,306 and $2,219
for the nine-month periods ended September 30, 2024 and 2023,
respectively.
|
Universal Health
Realty Income Trust
|
Schedule of Non-GAAP
Supplemental Information ("Supplemental Schedule")
|
For the Three Months
Ended September 30, 2024 and 2023
|
(amounts in thousands,
except share information)
|
(unaudited)
|
|
Calculation of
Adjusted Net Income
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
|
September 30,
2024
|
|
|
September 30,
2023
|
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
Net income
|
|
$
|
3,997
|
|
|
$
|
0.29
|
|
|
$
|
3,872
|
|
|
$
|
0.28
|
|
Adjustments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Subtotal adjustments to
net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Adjusted net
income
|
|
$
|
3,997
|
|
|
$
|
0.29
|
|
|
$
|
3,872
|
|
|
$
|
0.28
|
|
|
Calculation of Funds
From Operations ("FFO")
|
|
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
|
September 30,
2024
|
|
|
September 30,
2023
|
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
Net income
|
|
$
|
3,997
|
|
|
$
|
0.29
|
|
|
$
|
3,872
|
|
|
$
|
0.28
|
|
Plus: Depreciation and
amortization expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
investments
|
|
|
7,009
|
|
|
|
0.51
|
|
|
|
7,012
|
|
|
|
0.51
|
|
Unconsolidated
affiliates
|
|
|
311
|
|
|
|
0.02
|
|
|
|
309
|
|
|
|
0.02
|
|
FFO
|
|
$
|
11,317
|
|
|
$
|
0.82
|
|
|
$
|
11,193
|
|
|
$
|
0.81
|
|
Dividend paid per
share
|
|
|
|
|
$
|
0.730
|
|
|
|
|
|
$
|
0.720
|
|
Universal Health
Realty Income Trust
|
Schedule of Non-GAAP
Supplemental Information ("Supplemental Schedule")
|
For the Nine Months
Ended September 30, 2024 and 2023
|
(amounts in thousands,
except share information)
|
(unaudited)
|
|
Calculation of
Adjusted Net Income
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
September 30,
2024
|
|
|
September 30,
2023
|
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
Net income
|
|
$
|
14,573
|
|
|
$
|
1.05
|
|
|
$
|
11,807
|
|
|
$
|
0.85
|
|
Adjustments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Subtotal adjustments to
net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Adjusted net
income
|
|
$
|
14,573
|
|
|
$
|
1.05
|
|
|
$
|
11,807
|
|
|
$
|
0.85
|
|
|
Calculation of Funds
From Operations ("FFO")
|
|
|
|
Nine Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
September 30,
2024
|
|
|
September 30,
2023
|
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
Net income
|
|
$
|
14,573
|
|
|
$
|
1.05
|
|
|
$
|
11,807
|
|
|
$
|
0.85
|
|
Plus: Depreciation and
amortization expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
investments
|
|
|
20,624
|
|
|
|
1.49
|
|
|
|
20,479
|
|
|
|
1.48
|
|
Unconsolidated
affiliates
|
|
|
918
|
|
|
|
0.07
|
|
|
|
900
|
|
|
|
0.07
|
|
FFO
|
|
$
|
36,115
|
|
|
$
|
2.61
|
|
|
$
|
33,186
|
|
|
$
|
2.40
|
|
Dividend paid per
share
|
|
|
|
|
$
|
2.185
|
|
|
|
|
|
$
|
2.155
|
|
Universal Health
Realty Income Trust
|
Consolidated Balance
Sheets
|
(amounts in thousands,
except share information)
|
(unaudited)
|
|
|
|
September
30,
|
|
|
December
31,
|
|
|
|
2024
|
|
|
2023
|
|
Assets:
|
|
|
|
|
|
|
Real Estate
Investments:
|
|
|
|
|
|
|
Buildings and
improvements and construction in progress
|
|
$
|
654,154
|
|
|
$
|
649,374
|
|
Accumulated
depreciation
|
|
|
(280,859)
|
|
|
|
(262,449)
|
|
|
|
|
373,295
|
|
|
|
386,925
|
|
Land
|
|
|
56,870
|
|
|
|
56,870
|
|
Net Real Estate Investments
|
|
|
430,165
|
|
|
|
443,795
|
|
Financing receivable
from UHS
|
|
|
82,921
|
|
|
|
83,279
|
|
Net Real Estate Investments and Financing receivable
|
|
|
513,086
|
|
|
|
527,074
|
|
Investments in limited
liability companies ("LLCs")
|
|
|
14,260
|
|
|
|
9,102
|
|
Other
Assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
6,372
|
|
|
|
8,212
|
|
Lease and other
receivables from UHS
|
|
|
6,995
|
|
|
|
6,180
|
|
Lease receivable -
other
|
|
|
8,580
|
|
|
|
8,166
|
|
Intangible assets (net
of accumulated amortization of $11.9 million and
$12.5 million, respectively)
|
|
|
7,758
|
|
|
|
9,110
|
|
Right-of-use land
assets, net
|
|
|
10,925
|
|
|
|
10,946
|
|
Deferred charges,
notes receivable and other assets, net
|
|
|
16,354
|
|
|
|
17,579
|
|
Total Assets
|
|
$
|
584,330
|
|
|
$
|
596,369
|
|
Liabilities:
|
|
|
|
|
|
|
Line of credit
borrowings
|
|
$
|
347,750
|
|
|
$
|
326,600
|
|
Mortgage notes
payable, non-recourse to us, net
|
|
|
19,662
|
|
|
|
32,863
|
|
Accrued
interest
|
|
|
736
|
|
|
|
490
|
|
Accrued expenses and
other liabilities
|
|
|
12,690
|
|
|
|
13,500
|
|
Ground lease
liabilities, net
|
|
|
10,925
|
|
|
|
10,946
|
|
Tenant reserves,
deposits and deferred and prepaid rents
|
|
|
10,928
|
|
|
|
11,036
|
|
Total Liabilities
|
|
|
402,691
|
|
|
|
395,435
|
|
Equity:
|
|
|
|
|
|
|
Preferred shares of
beneficial interest,
$.01 par value; 5,000,000 shares authorized;
none issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Common shares, $.01
par value;
95,000,000 shares authorized; issued and outstanding:
2024 - 13,849,424;
2023 - 13,823,899
|
|
|
138
|
|
|
|
138
|
|
Capital in excess of
par value
|
|
|
270,826
|
|
|
|
270,398
|
|
Cumulative net
income
|
|
|
840,634
|
|
|
|
826,061
|
|
Cumulative
dividends
|
|
|
(933,216)
|
|
|
|
(902,975)
|
|
Accumulated other
comprehensive income
|
|
|
3,257
|
|
|
|
7,312
|
|
Total Equity
|
|
|
181,639
|
|
|
|
200,934
|
|
Total Liabilities and Equity
|
|
$
|
584,330
|
|
|
$
|
596,369
|
|
View original
content:https://www.prnewswire.com/news-releases/universal-health-realty-income-trust-reports-2024-third-quarter-financial-results-302286522.html
SOURCE Universal Health Realty Income Trust