UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 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 1-9321 UNIVERSAL HEALTH REALTY INCOME TRUST (Exact name of registrant as specified in its charter) MARYLAND 23-6858580 (State or othe ...

Core Viewpoint - Universal Health Realty Income Trust (UHT) experienced a decline in stock price and financial performance for the second quarter of 2025, attributed to various operational challenges and increased expenses [1][2][8]. Financial Performance - UHT reported a net income of $4.5 million ($0.32 per diluted share) for Q2 2025, down 14.9% from $5.3 million ($0.38 per diluted share) in Q2 2024, reflecting a 15.8% year-over-year drop in earnings per share (EPS) [2]. - Funds from operations (FFO) decreased 4.8% to $11.8 million ($0.85 per diluted share) from $12.4 million ($0.90 per diluted share) year-over-year [3]. - Revenue remained relatively flat, increasing slightly to $24.9 million from $24.7 million a year earlier [3]. Revenue Breakdown - Lease revenue from Universal Health Services (UHS) facilities fell 0.9% to $8.4 million from $8.5 million, while lease revenue from non-related parties rose 1.5% to $14.6 million from $14.4 million [4]. Key Business Metrics - For the six-month period ended June 30, 2025, UHT's net income declined 12.4% to $9.3 million ($0.67 per diluted share) from $10.6 million ($0.76 per diluted share) [5]. - FFO for the same period decreased 4.3% to $23.7 million ($1.71 per diluted share) from $24.8 million ($1.79 per diluted share) [5]. Expense Analysis - Total expenses for Q2 2025 increased 5.8% to $16 million from $15.2 million, primarily due to higher depreciation and operating costs [6]. - Interest expense grew 2.9% to $4.7 million from $4.6 million due to elevated borrowings [6]. Balance Sheet Overview - As of June 30, 2025, UHT held $6.6 million in cash and cash equivalents, down from $7.1 million as of December 31, 2024 [7]. - Total assets declined to $573 million from $580.9 million at year-end 2024, while total equity fell to $165.2 million from $179.5 million [12]. Management Commentary - Management highlighted ongoing operational headwinds, including staffing shortages, wage pressures, regulatory uncertainties, and macroeconomic challenges affecting patient volumes [8]. - Concerns were raised regarding potential cuts in Medicaid funding and the impact of further interest rate hikes on borrowing costs [9]. Capital and Dividend Updates - UHT reported available borrowing capacity of $70.2 million under its $425 million credit facility, net of $354.8 million in outstanding borrowings [10]. - A second-quarter dividend of $0.74 per share was declared, up from $0.73 a year earlier, totaling $10.3 million [11]. Other Developments - Investment in limited liability companies increased to $20.9 million from $13.9 million at the end of 2024, with no new acquisitions or divestitures reported [12].

[Financial Performance Summary](index=1&type=section&id=Financial%20Performance%20Summary) [Second Quarter 2025 Results](index=1&type=section&id=Consolidated%20Results%20of%20Operations%20-%20Three-Month%20Periods%20Ended%20June%2030%2C%202025%20and%202024) In the second quarter of 2025, Universal Health Realty Income Trust experienced a decline in both net income and Funds From Operations (FFO) compared to the same period in 2024, primarily driven by a non-recurring property tax reduction, higher interest expenses, and a net decrease in income from various properties Q2 2025 vs. Q2 2024 Financial Highlights | Metric | Q2 2025 | Q2 2024 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Income | $4.5 million | $5.3 million | -$0.8 million | -15.1% | | Diluted EPS | $0.32 | $0.38 | -$0.06 | -15.8% | | FFO | $11.8 million | $12.4 million | -$0.6 million | -4.8% | | FFO per Diluted Share | $0.85 | $0.90 | -$0.05 | -5.6% | - The decrease in net income of **$784,000** was attributed to three main factors: a **$563,000** decrease due to a one-time property tax reduction in Q2 2024; a **$137,000** decrease from higher interest expense on increased credit agreement borrowings; and a **$84,000** decrease from a net decline in income across various properties[2](index=2&type=chunk) [First Half 2025 Results](index=1&type=section&id=Consolidated%20Results%20of%20Operations%20-%20Six-Month%20Periods%20Ended%20June%2030%2C%202025%20and%202024) For the six-month period ended June 30, 2025, net income was $9.3 million, a decrease from $10.6 million in the comparable 2024 period, primarily due to a property tax reduction recorded in 2024, an aggregate decrease in income from various properties, and higher interest expenses H1 2025 vs. H1 2024 Financial Highlights | Metric | H1 2025 | H1 2024 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Income | $9.3 million | $10.6 million | -$1.3 million | -12.3% | | Diluted EPS | $0.67 | $0.76 | -$0.09 | -11.8% | - The **$1.3 million** decrease in net income for the first half of 2025 resulted from: a **$563,000** decrease related to a 2024 property tax reduction in Chicago; a **$486,000** aggregate net decrease in income from various properties; and a **$259,000** decrease due to increased interest expense from higher average borrowings[5](index=5&type=chunk) [Dividend and Capital Resources](index=2&type=section&id=Dividend%20and%20Capital%20Resources%20Information) The Trust declared and paid a second quarter dividend of $0.74 per share, and as of June 30, 2025, maintained $70.2 million in available borrowing capacity under its $425 million credit agreement expiring in September 2028 - A dividend of **$0.74 per share**, totaling **$10.3 million**, was declared on June 11, 2025, and paid on June 30, 2025[6](index=6&type=chunk) - As of June 30, 2025, the Trust had **$354.8 million** in borrowings and **$70.2 million** of available capacity under its **$425 million** credit agreement[7](index=7&type=chunk) [Business Overview and Risk Factors](index=2&type=section&id=Business%20Overview%20and%20Risk%20Factors) [Company Profile](index=2&type=section&id=General%20Information) Universal Health Realty Income Trust is a real estate investment trust (REIT) specializing in healthcare and human-service related properties, with a portfolio of seventy-six facilities located in twenty-one states - The Trust invests in healthcare and human-service facilities and holds investments in **seventy-six properties** across **twenty-one states**[8](index=8&type=chunk) [Forward-Looking Statements and Risk Factors](index=2&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) The company identifies several significant risks that could impact future performance, including potential reductions in federal Medicaid funding, tenant operational challenges, adverse macroeconomic conditions, and the impact of rising interest rates on borrowing costs and capital access - The company warns that future results could be materially impacted by various factors, including tenant operations, healthcare industry trends, and risks detailed in SEC filings[9](index=9&type=chunk) - Key operational and industry risks include: reductions in federal Medicaid funding; staffing shortages and increased wage expenses for tenants; deteriorating macroeconomic conditions leading to lower patient volumes; and potential supply chain disruptions and cost increases[10](index=10&type=chunk) - Rising interest rates have substantially increased borrowing costs and could adversely affect the company's ability to execute its strategy and access capital markets on favorable terms[11](index=11&type=chunk) [Non-GAAP Financial Measures](index=2&type=section&id=Non-GAAP%20Financial%20Measures) [Definition and Use of Non-GAAP Measures](index=2&type=section&id=Definition%20and%20Use%20of%20Non-GAAP%20Measures) The Trust utilizes non-GAAP financial measures, such as Funds from Operations (FFO) and adjusted net income, to offer investors a clearer perspective on its operating performance by excluding the impact of non-recurring or non-operational items, though these measures are not replacements for GAAP metrics - The company believes non-GAAP measures like adjusted net income are helpful to investors as they neutralize the effect of non-recurring or non-operational items[12](index=12&type=chunk)[13](index=13&type=chunk) - Funds from Operations (FFO) is presented as a widely recognized performance measure for REITs, calculated according to NAREIT standards, but it is not an alternative to GAAP net income or cash flow[14](index=14&type=chunk) - Investors are advised to use GAAP measures when evaluating financial performance and to understand that non-GAAP measures may not be comparable to those of other companies[15](index=15&type=chunk) [Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Consolidated%20Financial%20Statements%20%28Unaudited%29) [Consolidated Statements of Income](index=4&type=section&id=Universal%20Health%20Realty%20Income%20Trust%20Consolidated%20Statements%20of%20Income) For the six months ended June 30, 2025, total revenues slightly decreased to $49.4 million from $49.9 million year-over-year, while total expenses rose to $31.5 million, contributing to a decline in net income to $9.3 million compared to $10.6 million in the first half of 2024 Consolidated Income Statement Highlights (Six Months Ended June 30) | (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenues | $49,416 | $49,875 | | Total Expenses | $31,538 | $30,828 | | Interest expense, net | $(9,386) | $(9,127) | | **Net income** | **$9,269** | **$10,576** | | **Diluted EPS** | **$0.67** | **$0.76** | [Reconciliation of Net Income to FFO](index=5&type=section&id=Schedule%20of%20Non-GAAP%20Supplemental%20Information) The company provides a reconciliation from GAAP Net Income to non-GAAP Funds From Operations (FFO), with FFO for the six months ended June 30, 2025, at $23.7 million ($1.71 per share), down from $24.8 million ($1.79 per share) in the prior-year period, primarily adjusted by adding back depreciation and amortization expense [Three-Month Period Ended June 30, 2025](index=5&type=section&id=For%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) For the second quarter of 2025, FFO was $11.8 million, or $0.85 per diluted share, compared to $12.4 million, or $0.90 per diluted share, in Q2 2024, calculated by starting with net income of $4.5 million and adding back $7.3 million in depreciation and amortization Q2 FFO Calculation (in thousands, except per share data) | | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income | $4,492 | $5,276 | | Plus: Depreciation & Amortization | $7,302 | $7,109 | | **FFO** | **$11,794** | **$12,385** | | **FFO per Diluted Share** | **$0.85** | **$0.90** | [Six-Month Period Ended June 30, 2025](index=6&type=section&id=For%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) For the first half of 2025, FFO was $23.7 million, or $1.71 per diluted share, a decrease from $24.8 million, or $1.79 per diluted share, in H1 2024, derived from a net income of $9.3 million plus $14.5 million in depreciation and amortization H1 FFO Calculation (in thousands, except per share data) | | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net income | $9,269 | $10,576 | | Plus: Depreciation & Amortization | $14,455 | $14,222 | | **FFO** | **$23,724** | **$24,798** | | **FFO per Diluted Share** | **$1.71** | **$1.79** | [Consolidated Balance Sheets](index=7&type=section&id=Universal%20Health%20Realty%20Income%20Trust%20Consolidated%20Balance%20Sheets) As of June 30, 2025, the Trust's total assets stood at $573.0 million, down from $580.9 million at the end of 2024, while total liabilities increased to $407.9 million from $401.3 million, mainly due to a rise in line of credit borrowings, resulting in a decrease in total equity to $165.2 million from $179.5 million Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Net Real Estate Investments | $417,355 | $425,934 | | Total Assets | $573,016 | $580,862 | | Line of credit borrowings | $354,800 | $348,900 | | Total Liabilities | $407,864 | $401,321 | | Total Equity | $165,152 | $179,541 |

Consolidated Results - For the three-month period ended June 30, 2025, net income was $4.5 million, or $0.32 per diluted share, compared to $5.3 million, or $0.38 per diluted share, in the same period of 2024 [1] - For the six-month period ended June 30, 2025, net income was $9.3 million, or $0.67 per diluted share, down from $10.6 million, or $0.76 per diluted share, in the comparable period of 2024 [4] Income Decrease Analysis - The decrease in net income of $784,000, or $0.06 per diluted share, in Q2 2025 was attributed to: 1. A property tax reduction recorded in Q2 2024 amounting to $563,000, or $0.04 per diluted share [2] 2. An increase in interest expense of $137,000, or $0.01 per diluted share, due to higher average borrowings [2] 3. A net decrease in income from various properties totaling $84,000, or $0.01 per diluted share [2] - For the first six months of 2025, the net income decrease of $1.3 million, or $0.09 per diluted share, was due to: 1. The same property tax reduction of $563,000, or $0.04 per diluted share [5] 2. A decrease in income from various properties of $486,000, or $0.04 per diluted share [5] 3. An increase in interest expense of $259,000, or $0.01 per diluted share [5] Funds from Operations (FFO) - FFO for Q2 2025 was $11.8 million, or $0.85 per diluted share, compared to $12.4 million, or $0.90 per diluted share, in Q2 2024, reflecting a decrease of $591,000, or $0.05 per diluted share [3] - For the first six months of 2025, FFO was $23.7 million, or $1.71 per diluted share, down from $24.8 million, or $1.79 per diluted share, in the same period of 2024 [18] Dividend Information - A dividend of $0.74 per share, totaling $10.3 million, was declared on June 11, 2025, and paid on June 30, 2025 [6] Capital Resources - As of June 30, 2025, the company had $70.2 million of available borrowing capacity under a $425 million credit agreement, which is set to expire on September 30, 2028 [7] General Information - Universal Health Realty Income Trust invests in healthcare-related facilities, including hospitals and medical office buildings, with investments in 76 properties across 21 states [8]

Core Viewpoint - Universal Health Realty Income Trust (UHT) has been downgraded to a "Neutral" rating from "Outperform" due to rising growth headwinds, weakening profitability, and reduced leasing momentum [1] Leasing Performance - UHT's core leasing performance remains steady, with lease revenues declining 2.2% year over year to $22.7 million in Q1 2025, primarily due to lower tenant reimbursements [2] - Base rents remained stable, and bonus rents from McAllen Medical Center increased 4.3% to $817,000 [2] - Universal Health Services (UHS), the largest tenant, accounts for approximately 40% of revenues and has extended leases through 2030, ensuring long-term income stability [2] Dividend Yield - UHT offers a forward dividend yield of about 7.43%, supported by healthy coverage metrics [3] - The company paid a Q1 dividend of $0.735 per share, funded by $11.9 million in Funds from Operations (FFO), covering the $10.2 million distribution at a 1.17 ratio [3] - FFO per share declined 3.9% to $0.86, while operating cash flow remained stable at $11.6 million [3] Interest Rate Management - Interest costs rose 2.7% year over year to $4.7 million in Q1, influenced by higher average borrowing rates [4] - UHT's use of fixed-rate swaps reduced its average effective borrowing rate to 5.935%, down from 6.96% the previous year [4] - The company hedges $165 million in notional debt through 2028, generating $773,000 in swap settlements this quarter [4] Leasing Activity and Risks - Leasing activity was muted in Q1 2025, with no acquisitions and lower occupancy levels, leading to a 2.4% drop in total revenues to $24.5 million [5] - Revenues from UHS facilities decreased 3.9% to $8.3 million, highlighting concentration risk with expiring contracts in 2026 [5] Idle Assets Impact - Two non-revenue-generating assets incurred $170,000 in direct expenses, contributing to capital inefficiency [6] - The Evansville facility has been vacant since 2019, with no near-term leasing prospects [6] Variable Rate Exposure - A significant portion of UHT's debt remains tied to variable SOFR-based rates, with $349.5 million outstanding under its revolving credit facility [8] - Only $165 million is hedged through fixed-rate swaps, leaving nearly $185 million exposed to future interest rate increases [8] Overall Outlook - The downgrade to "Neutral" reflects concerns over earnings compression, constrained financial flexibility, and reliance on a single tenant [9] - UHT remains a stable REIT with a history of dividend payments, but lacks clear growth catalysts under current market conditions [9]

PART I. FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Q1 2025 and 2024, showing a decrease in net income from **$5.3 million** to **$4.8 million** and diluted earnings per share from **$0.38** to **$0.34** Condensed Consolidated Statements of Income (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | **Total Revenues** | $24,548 | $25,141 | | **Total Expenses** | $15,514 | $15,678 | | **Net Income** | $4,777 | $5,300 | | **Diluted Earnings Per Share** | $0.34 | $0.38 | Condensed Consolidated Balance Sheets (Mar 31, 2025 vs Dec 31, 2024) | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | **Total Assets** | $573,482 | $580,862 | | **Total Liabilities** | $401,316 | $401,321 | | **Total Equity** | $172,166 | $179,541 | Condensed Consolidated Statements of Cash Flows (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $11,611 | $11,738 | | **Net Cash used in Investing Activities** | $(1,897) | $(8,945) | | **Net Cash used in Financing Activities** | $(9,837) | $(3,308) | [Relationship with UHS and Related Party Transactions](index=9&type=section&id=Note%202%3A%20Relationship%20with%20Universal%20Health%20Services%2C%20Inc.%20%28%22UHS%22%29%20and%20Related%20Party%20Transactions) This note details the Trust's significant relationship with Universal Health Services, Inc. (UHS), including a subsidiary acting as Advisor, UHS-related tenants contributing **40%** of Q1 2025 revenues, and UHS owning **5.7%** of the Trust's shares - UHS-related tenants generated approximately **40%** of the Trust's consolidated revenues in Q1 2025, down slightly from **41%** in Q1 2024[33](index=33&type=chunk)[50](index=50&type=chunk) - A wholly-owned subsidiary of UHS serves as the Advisor under an annually renewable agreement, with the advisory fee approximately **$1.4 million** for Q1 2025, based on **0.70%** of average invested real estate assets[47](index=47&type=chunk)[48](index=48&type=chunk) - UHS holds options to purchase several leased hospital facilities at their appraised fair market value upon lease term expiration or other specified events[36](index=36&type=chunk) - As of March 31, 2025, UHS owned **5.7%** of the Trust's outstanding shares of beneficial interest[49](index=49&type=chunk) [Summarized Financial Information of Equity Affiliates](index=15&type=section&id=Note%205%3A%20Summarized%20Financial%20Information%20of%20Equity%20Affiliates) This note summarizes the Trust's equity method investments in four unconsolidated LLCs/LPs, which own medical office buildings, with the Trust's share of net income increasing to **$412,000** in Q1 2025 - The Trust has investments in four unconsolidated LLCs/LPs, owning non-controlling interests of **33%** to **95%**[55](index=55&type=chunk)[58](index=58&type=chunk) Share of Net Income from Equity Affiliates | Period | Share of Net Income (in thousands) | | :--- | :--- | | Q1 2025 | $412 | | Q1 2024 | $384 | - The combined mortgage notes payable by these unconsolidated LLCs, which are non-recourse to the Trust, totaled **$14.9 million** as of March 31, 2025[61](index=61&type=chunk) [Debt and Financial Instruments](index=18&type=section&id=Note%208%3A%20Debt%20and%20Financial%20Instruments) This note details the Trust's **$349.5 million** in Credit Agreement borrowings and **$19.0 million** in non-recourse mortgage notes as of March 31, 2025, along with **$165 million** in interest rate swaps to manage variable-rate debt risk - In September 2024, the Credit Agreement was amended to increase borrowing capacity to **$425 million** and extend the maturity date to September 30, 2028[74](index=74&type=chunk) - As of March 31, 2025, outstanding borrowings under the Credit Agreement were **$349.5 million**, leaving **$75.5 million** of available capacity[78](index=78&type=chunk) - The Trust has three active interest rate swap agreements with a total notional amount of **$165 million** to hedge against variable interest rate exposure[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) - Total non-recourse mortgages notes payable were **$19.0 million** (net) as of March 31, 2025[81](index=81&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 financial results, highlighting a decrease in net income to **$4.8 million** and FFO to **$11.9 million** due to lower revenues and increased interest expense, while affirming sufficient liquidity for the next twelve months - Net income decreased by **$523,000** year-over-year, attributed to a **$593,000** decrease in revenues and a **$122,000** increase in net interest expense[109](index=109&type=chunk)[113](index=113&type=chunk) Funds From Operations (FFO) Comparison | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | FFO (in thousands) | $11,930 | $12,413 | | FFO per Diluted Share | $0.86 | $0.90 | - Net cash provided by operating activities was **$11.6 million**, which was sufficient to cover the **$10.2 million** in dividends paid during Q1 2025[115](index=115&type=chunk)[125](index=125&type=chunk) - The company believes its operating cash flows, available credit (**$75.5 million**), and access to capital markets provide sufficient liquidity for the next twelve months[130](index=130&type=chunk)[128](index=128&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Q1 2025 net income decreased to **$4.8 million** from **$5.3 million** in Q1 2024, primarily due to a **$0.6 million** revenue drop from lower occupancy and a **$122,000** increase in net interest expense, leading to a decline in FFO to **$11.9 million** Financial Performance Summary (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change | Primary Reason | | :--- | :--- | :--- | :--- | :--- | | Net Income | $4.8M | $5.3M | -$0.5M | Lower revenue, higher interest expense | | Revenues | $24.5M | $25.1M | -$0.6M | Decreased occupancy at MOBs | | FFO | $11.9M | $12.4M | -$0.5M | Decrease in net income | - Interest expense increased by **$122,000** YoY, mainly due to an **$872,000** decrease in income from interest rate swaps, which was partially offset by a **$615,000** decrease in interest on the Credit Agreement[114](index=114&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The Trust maintained stable operating cash flow at **$11.6 million** in Q1 2025, covering **$10.2 million** in dividends, with significantly reduced investing activities and sufficient capital resources for the next year, including **$75.5 million** available on its credit facility - Net cash provided by operating activities was stable at **$11.6 million** in Q1 2025 compared to **$11.7 million** in Q1 2024[115](index=115&type=chunk)[124](index=124&type=chunk) - Dividends paid in Q1 2025 totaled **$10.2 million** ($.735 per share), an increase from **$10.0 million** ($.725 per share) in Q1 2024[125](index=125&type=chunk)[51](index=51&type=chunk) - Net cash used in investing activities was **$1.9 million** in Q1 2025, a sharp decrease from **$8.9 million** in Q1 2024, which included larger equity investments in LLCs and construction costs[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) - A shelf registration on Form S-3 for up to **$100 million** in securities became effective in April 2024, though no shares have been issued under it as of March 31, 2025[122](index=122&type=chunk)[123](index=123&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Trust's primary market risk is interest rate fluctuations on its **$349.5 million** variable-rate debt, mitigated by **$165 million** in interest rate swaps, with a **1%** rate change estimated to impact net income by **$1.8 million** annually - The primary market risk is interest rate changes on its **$349.5 million** of variable-rate debt outstanding as of March 31, 2025[152](index=152&type=chunk) - The Trust uses three active interest rate swap agreements on a total notional amount of **$165 million** to manage this risk, with the fair value of these swaps being a net asset of **$4.2 million** as of March 31, 2025[149](index=149&type=chunk)[152](index=152&type=chunk) - A hypothetical **1%** change in interest rates would impact net income by approximately **$1.8 million**, after accounting for the effect of the existing swaps[153](index=153&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the Trust's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during Q1 2025 - The CEO and CFO concluded that the Trust's disclosure controls and procedures were effective as of the end of the period covered by this report[155](index=155&type=chunk) - There were no changes in internal control over financial reporting during the first quarter of 2025 that have materially affected, or are reasonably likely to materially affect, internal controls[156](index=156&type=chunk) PART II. OTHER INFORMATION [Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the 2024 Annual Report on Form 10-K - There have been no material changes in risk factors from those disclosed in the 2024 Annual Report on Form 10-K[158](index=158&type=chunk) [Other Information](index=44&type=section&id=Item%205.%20Other%20Information) No Board members or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025 - No Board members or officers adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q1 2025[159](index=159&type=chunk) [Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - The filing includes CEO and CFO certifications as required by Rule 13a-14(a)/15d-14(a) and Section 906 of the Sarbanes-Oxley Act of 2002[160](index=160&type=chunk) - Inline XBRL Instance Document and related taxonomy files are included as exhibits[160](index=160&type=chunk) [Signatures](index=45&type=section&id=Signatures) The report was signed on May 8, 2025, by Alan B. Miller, Chairman of the Board, President and Chief Executive Officer, and Charles F. Boyle, Senior Vice President and Chief Financial Officer - The report was signed on May 8, 2025, by Alan B. Miller, Chairman of the Board, President and Chief Executive Officer, and Charles F. Boyle, Senior Vice President and Chief Financial Officer[162](index=162&type=chunk)

[Q1 2025 Financial Highlights](index=1&type=section&id=Q1%202025%20Financial%20Highlights) This section highlights the Trust's Q1 2025 financial performance, including a decline in net income and FFO, alongside details on dividend declarations and available capital [Consolidated Results of Operations](index=1&type=section&id=Consolidated%20Results%20of%20Operations) Universal Health Realty Income Trust's Q1 2025 net income decreased to $4.8 million from $5.3 million in Q1 2024, primarily due to lower property income and increased interest expenses | Metric | Q1 2025 | Q1 2024 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Income | $4.8 million | $5.3 million | -$0.5 million | -9.4% | | Diluted EPS | $0.34 | $0.38 | -$0.04 | -10.5% | - The decrease in net income was primarily due to a **$401,000** (or **$.03 per share**) net decrease in income from various properties and a **$122,000** (or **$.01 per share**) increase in interest expense, driven by higher average borrowings and a higher effective borrowing rate[3](index=3&type=chunk) [Funds From Operations (FFO)](index=1&type=section&id=Funds%20From%20Operations%20(FFO)) Q1 2025 Funds from Operations (FFO) decreased to $11.9 million, or $.86 per diluted share, from $12.4 million, or $.90 per diluted share, in Q1 2024, mainly due to lower net income | Metric | Q1 2025 | Q1 2024 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | FFO | $11.9 million | $12.4 million | -$0.5 million | -4.0% | | FFO per Diluted Share | $0.86 | $0.90 | -$0.04 | -4.4% | [Dividend and Capital Resources](index=1&type=section&id=Dividend%20and%20Capital%20Resources) The Trust declared a Q1 2025 dividend of $.735 per share and maintained $75.5 million in available borrowing capacity under its $425 million credit agreement - A dividend of **$.735 per share**, totaling **$10.2 million**, was declared on March 11, 2025, and paid on March 31, 2025[5](index=5&type=chunk) - As of March 31, 2025, the Trust had **$349.5 million** in borrowings and **$75.5 million** of available capacity under its **$425 million** credit agreement[6](index=6&type=chunk) [Business Overview and Outlook](index=1&type=section&id=Business%20Overview%20and%20Outlook) This section provides an overview of the Trust's healthcare real estate investments and outlines key operational and financial risks [Company Profile and Risk Factors](index=1&type=section&id=Company%20Profile%20and%20Risk%20Factors) Universal Health Realty Income Trust is a REIT investing in 76 healthcare facilities across 21 states, facing risks from funding reductions, tenant challenges, and rising interest rates - The Trust invests in healthcare facilities, including acute care hospitals, behavioral health hospitals, and medical office buildings, with a portfolio of **76 properties** in **21 states**[7](index=7&type=chunk)[8](index=8&type=chunk) - Key operational and financial risks include reductions in federal funding for state Medicaid programs, tenant challenges from staffing shortages and increased wage expenses, deteriorating macroeconomic conditions leading to declining patient volumes, and increased borrowing costs due to rising interest rates[10](index=10&type=chunk)[11](index=11&type=chunk) [Non-GAAP Financial Measures](index=2&type=section&id=Non-GAAP%20Financial%20Measures) The company utilizes non-GAAP measures like FFO and adjusted net income to clarify operating performance, emphasizing they are supplemental to GAAP metrics - The Trust believes non-GAAP measures like adjusted net income and FFO are helpful to investors for measuring operating performance by excluding non-recurring or non-operational items[12](index=12&type=chunk) - FFO is a widely recognized performance measure for REITs, computed in accordance with NAREIT standards, and is not a substitute for net income or cash flow from operating activities under GAAP[13](index=13&type=chunk) - Investors are encouraged to use GAAP measures when evaluating financial performance and to understand that non-GAAP measures may not be comparable to similarly titled measures of other companies[15](index=15&type=chunk) [Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements, including statements of income, FFO reconciliation, and balance sheets [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) For Q1 2025, total revenues were $24.5 million, with net income of $4.8 million, reflecting a decrease from Q1 2024 due to lower revenues and stable expenses | (In thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Total Revenues** | **$24,548** | **$25,141** | | Total Expenses | $15,514 | $15,678 | | Interest expense, net | $(4,669) | $(4,547) | | **Net Income** | **$4,777** | **$5,300** | | **Diluted EPS** | **$0.34** | **$0.38** | [Schedule of Non-GAAP Supplemental Information](index=5&type=section&id=Schedule%20of%20Non-GAAP%20Supplemental%20Information) The company reconciles GAAP Net Income to FFO, showing Q1 2025 Net Income of $4.8 million adjusted by $7.2 million in depreciation to yield an FFO of $11.9 million Calculation of Funds From Operations (FFO) - Q1 2025 vs Q1 2024 (In thousands) | (In thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net income** | **$4,777** | **$5,300** | | Plus: Depreciation and amortization | $7,153 | $7,113 | | **FFO** | **$11,930** | **$12,413** | | FFO per Diluted Share | $0.86 | $0.90 | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets were $573.5 million, total liabilities $401.3 million, and total equity $172.2 million, with equity decreasing due to dividend distributions | (In thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Net Real Estate Investments | $420,962 | $425,934 | | **Total Assets** | **$573,482** | **$580,862** | | Line of credit borrowings | $349,500 | $348,900 | | **Total Liabilities** | **$401,316** | **$401,321** | | **Total Equity** | **$172,166** | **$179,541** |

Consolidated Results - For the three-month period ended March 31, 2025, net income was $4.8 million, or $0.34 per diluted share, compared to $5.3 million, or $0.38 per diluted share, in the first quarter of 2024, indicating a decrease of $523,000 or $0.04 per diluted share [1][2][14] - The decrease in net income was attributed to a $401,000 decrease in income from various properties and a $122,000 increase in interest expense due to higher average borrowings and effective borrowing rates [2][3] Funds from Operations (FFO) - FFO for the first quarter of 2025 was $11.9 million, or $0.86 per diluted share, down from $12.4 million, or $0.90 per diluted share, in the first quarter of 2024, reflecting a decrease of $483,000 or $0.04 per diluted share [3][15] - The decline in FFO was primarily due to the decrease in net income during the same period [3] Dividend Information - A dividend of $0.735 per share, totaling $10.2 million, was declared on March 11, 2025, and paid on March 31, 2025 [4] Capital Resources - As of March 31, 2025, the company had $75.5 million of available borrowing capacity under a $425 million credit agreement, which is set to expire on September 30, 2028 [5] General Information - Universal Health Realty Income Trust is a real estate investment trust that invests in healthcare and human-service related facilities, with investments in 76 properties across 21 states [6]

Core Viewpoint - Universal Health Realty Income Trust (UHT) demonstrated strong earnings growth in Q4 2024, outperforming the S&P 500 Index during the same period, driven by increased income from properties and reduced operating expenses [1][2][8]. Financial Performance - UHT reported a net income of $4.7 million, or $0.34 per diluted share, for Q4 2024, a 29.7% increase from $3.6 million, or $0.26 per diluted share, in Q4 2023 [2]. - For the full year 2024, net income rose 24.9% to $19.2 million, or $1.39 per diluted share, compared to $15.4 million, or $1.11 per diluted share, in 2023 [3]. - Adjusted net income for Q4 2024 increased by $836,000, or $0.06 per diluted share, supported by a $1.2 million rise in income from various properties [2][3]. Funds from Operations (FFO) - FFO for Q4 2024 increased by 3.3% to $11.8 million, or $0.85 per diluted share, compared to $11.4 million, or $0.82 per diluted share, in the prior year [4]. - For the full year, FFO grew 7.4% to $47.9 million, or $3.46 per diluted share, from $44.6 million, or $3.23 per diluted share, in 2023 [4]. Revenue Breakdown - Lease revenue from Universal Health Services (UHS) facilities remained stable at $8.3 million in Q4 2024, while lease revenue from non-related parties increased by 3.1% to $14.5 million [5]. - For the full year 2024, lease revenue from UHS facilities increased by 3.1% to $33.6 million, and lease revenue from non-related parties rose by 4.8% to $57.7 million [6]. Operating Expenses - Operating expenses in Q4 2024 totaled $15.4 million, down 4.8% from $16.2 million in Q4 2023, aided by reduced depreciation and amortization [7]. - For the full year, operating expenses were $62.2 million, down 3.1% from $64.2 million in 2023 [7]. Management Commentary - The company attributed its earnings growth to increased income from various properties and lower property-related expenses, particularly in Chicago, where previous demolition costs had negatively impacted results [8]. Liquidity and Debt Management - To enhance liquidity, UHT amended its credit agreement in September 2024, increasing its borrowing capacity to $425 million and extending the maturity date to September 30, 2028 [9]. - At year-end, the company had $348.9 million in outstanding borrowings and $76.1 million in available borrowing capacity [9]. Interest Rate Management - UHT entered into a new interest rate swap agreement in October 2024, locking in a fixed rate of 3.2725% on $85 million of debt through September 2028, replacing two expired swaps with a lower combined rate [11]. Future Outlook - Management did not provide specific financial guidance for 2025 but indicated that macroeconomic conditions, particularly interest rates and property-related expenses, will continue to influence performance [12]. Other Developments - The company completed the construction of Sierra Medical Plaza I in Reno, NV, in March 2023, which is currently 68% leased [13]. - UHT sold a vacant specialty facility in Corpus Christi, TX, in December 2023 for $3.9 million, recording a $232,000 loss on divestiture [14].

Financial Performance - For the three-month period ended December 31, 2024, net income was $4.7 million, or $0.34 per diluted share, compared to $3.6 million, or $0.26 per diluted share in Q4 2023, representing a 30.6% increase in net income[1][2] - Adjusted net income for Q4 2024 increased by $836,000, or $0.06 per diluted share, primarily due to a $1.2 million increase in income from various properties, partially offset by a $337,000 increase in interest expense[3] - For the twelve-month period ended December 31, 2024, net income was $19.2 million, or $1.39 per diluted share, compared to $15.4 million, or $1.11 per diluted share in 2023, indicating a 24.7% increase[5][7] - Adjusted net income for the year ended December 31, 2024, increased by $3.6 million, or $0.26 per diluted share, driven by a $3.5 million increase in income from various properties and a $2.0 million reduction in expenses related to a property in Chicago[8] - Adjusted net income for the twelve months ended December 31, 2024, was $19,234,000, compared to $15,632,000 in 2023, representing a year-over-year increase of 23.4%[35] Funds from Operations (FFO) - Funds from operations (FFO) for Q4 2024 were $11.8 million, or $0.85 per diluted share, compared to $11.4 million, or $0.82 per diluted share in Q4 2023, reflecting a 3.3% increase[4] - FFO for the year ended December 31, 2024, was $47.9 million, or $3.46 per diluted share, compared to $44.6 million, or $3.23 per diluted share in 2023, marking a 7.4% increase[9] - Funds From Operations (FFO) for the three months ended December 31, 2024, was $11,758,000, compared to $11,384,000 in 2023, indicating a growth of 3.3%[33] Revenue and Assets - Total revenues for the three months ended December 31, 2024, increased to $24,642,000 from $24,320,000 in the same period of 2023, representing a growth of 1.3%[29] - Total assets decreased to $580,862,000 as of December 31, 2024, from $596,369,000 as of December 31, 2023, a decline of 2.6%[39] - The company’s net real estate investments decreased to $425,934,000 as of December 31, 2024, from $443,795,000 in 2023, a decline of 4.0%[39] Liabilities and Borrowings - Total liabilities increased to $401,321,000 as of December 31, 2024, compared to $395,435,000 in 2023, reflecting a rise of 1.5%[39] - As of December 31, 2024, the company had $348.9 million in borrowings outstanding under its $425 million revolving credit agreement, with $76.1 million of available borrowing capacity[12] Dividends - The fourth quarter dividend declared was $0.735 per share, totaling $10.1 million, paid on December 31, 2024[10] - The company reported a dividend paid per share of $0.735 for the three months ended December 31, 2024, up from $0.725 in the same period of 2023[33] Interest Rate Management - In October 2024, the company entered into an interest rate swap agreement with a notional amount of $85 million at a fixed rate of 3.2725%, effective until September 30, 2028[13] Property Management - The company continues to market vacant properties in Chicago and Evansville, with future operating expenses expected to be incurred until these properties are leased[18] Shareholder Information - Basic earnings per share for the three months ended December 31, 2024, rose to $0.34 from $0.26 in 2023, marking a 30.8% increase[31] - The weighted average number of shares outstanding for diluted earnings per share was 13,850,608 for the year ended December 31, 2024, compared to 13,823,899 in 2023, showing a slight increase[39]