Core Insights - Universal Health Realty Income Trust (UHT) is a small-cap REIT focused on the healthcare sector, demonstrating slow but steady growth over the past decade [1] - The company operates in a growing niche, offers a high dividend yield, and has potential for capital appreciation [1] - The investment strategy emphasizes identifying undervalued companies with strong fundamentals and potential catalysts for growth [1] Company Overview - UHT is characterized by its ownership of healthcare properties and has maintained a consistent growth trajectory [1] - The company is positioned to reward shareholders through dividends and capital appreciation opportunities [1] Investment Strategy - The focus is on companies that provide healthy dividends and exhibit clear potential for capital appreciation [1] - The investment approach includes filtering for companies that are temporarily undervalued compared to their fundamentals, peers, and historical performance [1] - A preference for businesses with high odds for capital appreciation driven by foreseeable catalysts is highlighted [1]

Real Estate Investments - As of September 30, 2025, the company has 77 real estate investments or commitments located in 21 states, including 6 hospital facilities and 61 medical/office buildings[99]. Revenue Sources - Approximately 39% of the company's consolidated revenues during the three-month period ended September 30, 2025, were derived from one operator, UHS[103]. Financial Performance - Net income for the three-month period ended September 30, 2025, was $4.0 million, unchanged from the same period in 2024[111]. - Revenues increased by $808,000 to $25.3 million during the three-month period ended September 30, 2025, compared to $24.5 million in the same period of 2024[112]. - For the nine-month period ended September 30, 2025, net income was $13.3 million, a decrease of $1.3 million from $14.6 million in the corresponding period of 2024[111]. - Funds From Operations (FFO) increased by $908,000 to $12.2 million during the third quarter of 2025, compared to $11.3 million in the third quarter of 2024[119]. - FFO for the first nine months of 2025 decreased by $166,000 to $35.9 million, compared to $36.1 million in the same period of 2024[120]. Interest and Expenses - The increase in interest rates over the past few years has significantly raised the company's interest expense, negatively impacting net income and cash provided by operating activities[104]. - Interest expense remained stable at $4.8 million for the three-month periods ended September 30, 2025, and 2024, while it increased to $14.2 million from $13.9 million for the nine-month periods[122]. - The average effective cost of borrowings decreased to 5.93% during the third quarter of 2025, down from 6.93% in the comparable quarter of 2024[122]. - Other operating expenses totaled $19.8 million for the nine-month period ended September 30, 2025, compared to $19.5 million in the same period of 2024[117]. Legislative and Economic Risks - Legislation enacted on July 4, 2025, may limit Medicaid enrollment and expenditure, potentially reducing revenues for the operators of the company's properties[104]. - The company faces inflationary pressures affecting its tenants, which could impact their ability to make rental payments[104]. - The company is subject to various legislative initiatives that may result in major changes in the healthcare delivery system, potentially impacting operators' financial conditions[105]. - The Budget Control Act of 2011 has imposed annual Medicare payment reductions, which may affect the operators of the company's properties[105]. - The company faces potential negative financial impacts from legislative changes affecting health care delivery and reimbursement[110]. - The company is exposed to risks from economic conditions that could lead to declines in patient volumes and occupancy rates at its medical office buildings[105]. Cash Flow and Financing Activities - Net cash provided by operating activities increased to $35.5 million for the nine months ended September 30, 2025, up from $33.8 million in the same period of 2024, representing a $1.7 million increase[124]. - Net cash used in investing activities was $12.4 million during the first nine months of 2025, compared to $11.2 million in the same period of 2024[126]. - Net cash used in financing activities decreased to $23.2 million for the nine months ended September 30, 2025, down from $24.4 million in the same period of 2024[129]. - Dividends paid amounted to $30.7 million in the first nine months of 2025, compared to $30.2 million in the same period of 2024[135]. - The company declared and paid dividends that were approximately $4.8 million greater than net cash provided by operating activities during the first nine months of 2025[135]. - The company received $8.2 million of net borrowings pursuant to its Credit Agreement during the nine months ended September 30, 2025[130]. - The company expects to finance all capital expenditures and acquisitions using internally generated funds and additional funds from its Credit Agreement[139]. Borrowings and Credit Agreement - The company had $357.1 million of outstanding borrowings under its $425 million Credit Agreement as of September 30, 2025, with $67.9 million of available borrowing capacity[146]. - The maturity date of the credit agreement has been extended to September 30, 2028, from July 2025, and the aggregate borrowing capacity has increased to $425 million from $375 million[142]. - The applicable margin over the Adjusted Term SOFR rate for revolving loans was 1.20% as of September 30, 2025[144]. - Aggregate borrowings under the credit agreement for the quarter ended September 30, 2025, were $14.9 million, compared to $17.2 million for the same quarter in 2024[147]. - The company remains in compliance with all covenants in the credit agreement as of September 30, 2025[148]. Tangible Net Worth and Leverage - As of September 30, 2025, the company's tangible net worth was $152.5 million, exceeding the covenant requirement of $125 million[149]. - The total leverage ratio was 44.0% as of September 30, 2025, remaining below the maximum limit of 60%[149]. - The company had various non-recourse mortgages with a combined carrying value of approximately $18.7 million as of September 30, 2025[151]. - The fair value of the mortgages outstanding as of September 30, 2025, was approximately $17.6 million, compared to a carrying value of approximately $18.7 million[151]. - The company has no off-balance sheet arrangements as of September 30, 2025[152].

Financial Performance - For the three-month period ended September 30, 2025, net income was $4.0 million, or $0.29 per diluted share, unchanged from the same period in 2024[1][2] - For the nine-month period ended September 30, 2025, net income decreased to $13.3 million, or $0.96 per diluted share, from $14.6 million, or $1.05 per diluted share in the same period of 2024[4] - The decrease in net income for the first nine months of 2025 included a $730,000 reduction in income from various properties and a $900,000 nonrecurring depreciation expense[5][6] - Net income for the nine months ended September 30, 2025, was $13,285,000, a decrease of 8.8% from $14,573,000 in 2024[25] - Funds From Operations (FFO) for the nine months ended September 30, 2025, was $35,949,000, slightly down from $36,115,000 in 2024, resulting in a per diluted share of $2.59 compared to $2.61[25] Dividends - The third quarter dividend declared was $0.74 per share, totaling $10.3 million, paid on September 30, 2025[7] - The company paid a dividend of $2.215 per share for the nine months ended September 30, 2025, compared to $2.185 per share in 2024, reflecting an increase of 1.4%[25] Assets and Liabilities - Total assets decreased to $568,037,000 as of September 30, 2025, from $580,862,000 at the end of 2024, reflecting a decline of approximately 2.2%[27] - Net real estate investments decreased to $411,575,000 as of September 30, 2025, from $425,934,000 at the end of 2024, a decline of about 3.4%[27] - Total liabilities increased to $409,463,000 as of September 30, 2025, compared to $401,321,000 at the end of 2024, marking an increase of approximately 2.8%[27] Cash and Investments - Cash and cash equivalents slightly decreased to $6,916,000 as of September 30, 2025, from $7,097,000 at the end of 2024[27] - Investments in limited liability companies (LLCs) rose to $20,817,000 as of September 30, 2025, up from $13,948,000 in 2024, indicating a significant increase of approximately 49.5%[27] Borrowing and Credit - As of September 30, 2025, the company had $67.9 million of available borrowing capacity under its $425 million credit agreement[8] - The increase in interest expense was primarily due to higher average borrowings under the credit agreement[5] - The line of credit borrowings increased to $357,050,000 as of September 30, 2025, from $348,900,000 at the end of 2024, reflecting an increase of approximately 2.9%[27] Future Developments - In October 2025, the company entered into a ground lease to develop Palm Beach Gardens Medical Plaza I, an 80,000 square foot medical office building, with an estimated cost of $34 million[9][10] - The construction of the medical office building is expected to commence in November 2025[10] - The company has investments or commitments in 77 properties located in 21 states[11]

Core Insights - Universal Health Realty Income Trust reported net income of $4.0 million, or $0.29 per diluted share, for Q3 2025, unchanged from Q3 2024 [1][2] - For the nine-month period ended September 30, 2025, net income decreased to $13.3 million, or $0.96 per diluted share, compared to $14.6 million, or $1.05 per diluted share in the same period of 2024 [3][4] Financial Performance - Q3 2025 net income included a one-time settlement increase of $275,000, offset by a net decrease of $256,000 primarily due to reduced income from various properties and $900,000 in nonrecurring depreciation [2] - Funds from operations (FFO) for Q3 2025 increased by $908,000 to $12.2 million, or $0.88 per diluted share, compared to $11.3 million, or $0.82 per diluted share in Q3 2024 [2][17] - For the first nine months of 2025, FFO decreased by $166,000 to $35.9 million, or $2.59 per diluted share, compared to $36.1 million, or $2.61 per diluted share in the same period of 2024 [4][18] Dividend Information - A dividend of $0.74 per share, totaling $10.3 million, was declared on September 22, 2025, and paid on September 30, 2025 [5][20] Capital Resources - As of September 30, 2025, the company had $67.9 million of available borrowing capacity under a $425 million credit agreement, which is set to expire on September 30, 2028 [6] Development Projects - In October 2025, the company entered into a ground lease to develop Palm Beach Gardens Medical Plaza I, an 80,000 square foot medical office building in Florida, with an estimated cost of $34 million [7][8]

Core Viewpoint - Universal Health Realty Income Trust (UHT) is recognized as one of the best REIT dividend stocks to buy, highlighting its strong dividend history and financial stability [1][5]. Group 1: Company Overview - UHT is a real estate investment trust focused on healthcare and human services-related properties, owning 76 properties across 21 states [2]. - The company has a robust cash balance, with an operating cash flow of $909 million in the last quarter and a cash balance of $137.6 million at the end of the quarter [3]. Group 2: Dividend Performance - UHT declared a quarterly dividend of $0.74 per share, consistent with its previous dividend, and has increased its dividends for 41 consecutive years, resulting in a dividend yield of 7.59% as of October 1 [5]. Group 3: REIT Status and Performance Factors - To maintain its REIT status, UHT must distribute at least 90% of its taxable income as dividends, which ties its performance to the acquisition and management of profitable healthcare properties [4]. - The company must navigate changes in healthcare reimbursement regulations and manage debt effectively, especially in the context of rising interest rates [4].

Core Viewpoint - The article discusses the best dividend stocks in the REIT sector, highlighting their defensive nature during market volatility and the importance of predictable cash flows [1][2]. Industry Overview - REITs are primarily domestic and less exposed to international commerce, making them a defensive investment during market dislocations due to their lease-driven income and strong margins [1]. - The predictable earnings of REITs have historically resulted in good returns, particularly attractive during market volatility [2]. - Various real estate segments may be impacted differently by economic factors such as tariffs, with industrial real estate facing challenges from economic slowdowns and supply chain issues [2]. Market Activity - The office market, which suffered during the pandemic, is showing signs of recovery, with a 42% year-over-year increase in transaction volume, reaching $25.9 billion in the first half of the year [3]. Methodology - The article's methodology involved scanning a database of nearly 1,000 hedge funds to identify REIT companies that pay regular dividends, narrowing down to 12 companies popular among elite funds [5]. Company Highlights - **Universal Health Realty Income Trust (NYSE: UHT)**: Focuses on healthcare properties, owns 76 properties across 21 states, reported an operating cash flow of $909 million, and has a dividend yield of 7.59% as of October 1 [8][9][11]. - **Arbor Realty Trust, Inc. (NYSE: ABR)**: A mortgage REIT focusing on multifamily properties, has stable long-term cash flows, offers a quarterly dividend of $0.30 per share, and has a dividend yield of 10.75% as of October 1 [12][14]. - **Innovative Industrial Properties, Inc. (NYSE: IIPR)**: Specializes in cannabis-related facilities, has 108 properties across 19 states, offers a quarterly dividend of $1.90 per share, and has a dividend yield of 13.75% as of October 1 [15][18].

Real Estate Investments - As of June 30, 2025, the company has 76 real estate investments or commitments located in 21 states, including 6 hospital facilities and 60 medical/office buildings[100]. Revenue Sources - Approximately 40% of the company's consolidated revenues during the three and six-month periods ended June 30, 2025, were derived from one operator, UHS[101]. Financial Performance - Net income for the three-month period ended June 30, 2025, was $4.5 million, a decrease of $784,000 from $5.3 million in the same period of 2024[110]. - Revenues increased by $134,000 to $24.9 million during the three-month period ended June 30, 2025, compared to $24.7 million in the same period of 2024[110]. - Funds From Operations (FFO) decreased by $591,000 to $11.8 million during the second quarter of 2025, compared to $12.4 million in the second quarter of 2024[114]. - FFO per diluted share was $0.85 for the three months ended June 30, 2025, compared to $0.90 for the same period in 2024[114]. - Other operating expenses totaled $6.7 million during the second quarter of 2025, compared to $6.0 million in the second quarter of 2024[111]. Interest Expense - The increase in interest rates over the past few years has significantly raised the company's interest expense, negatively impacting net income and cash provided by operating activities[102]. - Interest expense increased by $137,000 to $4.7 million during the three-month period ended June 30, 2025, compared to $4.6 million in the same period of 2024[116]. - Interest expense for the three-month period ended June 30, 2025, was $4.717 million, an increase of $137,000 compared to $4.580 million in the same period of 2024[116][117]. - The average effective cost of borrowings decreased to 5.93% during the second quarter of 2025, down from 6.92% in the comparable quarter of 2024[117]. Cash Flow - Net cash provided by operating activities was $25.3 million during the six-month period ended June 30, 2025, compared to $23.9 million in the same period of 2024, reflecting a $1.4 million increase[120]. - Net cash provided by operating activities was $25.3 million for the six months ended June 30, 2025, compared to $23.9 million for the same period in 2024, reflecting a 5.9% increase[129]. - Net cash used in investing activities was $10.7 million during the first six months of 2025, compared to $9.7 million in the same period of 2024[120]. Dividends - The company declared and paid dividends of $20.5 million during the six months ended June 30, 2025, slightly higher than the $20.2 million paid in the same period of 2024[130]. Borrowings and Credit Agreement - The company had $354.8 million of outstanding borrowings under its $425 million Credit Agreement as of June 30, 2025, with $70.2 million of available borrowing capacity[140]. - The second amendment to the Credit Agreement increased the aggregate borrowing capacity to $425 million and extended the maturity date to September 30, 2028[137]. - The applicable margin over the Adjusted Term SOFR rate for revolving loans was 1.20% as of June 30, 2025[139]. - The company received $5.9 million of net borrowings pursuant to its Credit Agreement during the six months ended June 30, 2025[124]. - The company expects to finance all capital expenditures and acquisitions using internally generated funds and additional borrowings under its Credit Agreement[133]. - The company maintained compliance with all covenants in the Credit Agreement as of June 30, 2025, including a total leverage ratio of 43.8%[142]. - The company reported aggregate borrowings of $19.6 million and repayments of $14.3 million for the quarter ended June 30, 2025[141]. - The total leverage ratio was 43.8% as of June 30, 2025, remaining below the covenant limit of 60%[143]. - The company had a tangible net worth of $158.7 million as of June 30, 2025, exceeding the covenant requirement of $125 million[143]. - The company has various non-recourse mortgages with a combined carrying value of approximately $18.9 million as of June 30, 2025[146]. - The company has no off-balance sheet arrangements as of June 30, 2025[147]. - The company anticipates that the majority of potential new borrowings will be used to fund investments[142]. Legislative and Market Risks - Legislation enacted on July 4, 2025, may limit Medicaid enrollment and expenditure, potentially reducing revenues for operators of the company's properties[102]. - The Budget Control Act of 2011 has imposed annual Medicare payment reductions of up to 2% through 2032, which may affect the operators of the company's properties[102]. - The company has experienced inflationary pressures affecting its tenants, which may impact their ability to make rental payments[102]. - The general real estate market has faced increased competition and decreases in occupancy and rental rates, adversely affecting the company's operating results[102]. - The company faces uncertainties regarding future legislative changes that could impact the healthcare delivery system and its operators[105]. Operational Risks - Cybersecurity threats pose a risk to the company's operations, with potential significant costs related to data security incidents[103]. - The company is subject to potential conflicts of interest as a subsidiary of UHS serves as its Advisor[102]. - The company experienced a decrease in occupancy rates at certain Medical Office Buildings (MOBs), impacting revenue during the first six months of 2025[110]. - During the six-month period ended June 30, 2025, the company funded $6.8 million in equity investments in unconsolidated LLCs, $3.7 million in real estate investments, and a $335,000 net advance to a third-party partner[121].

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].

Core Insights - Universal Health Realty Income Trust reported a year-over-year decline in net income and FFO per share, attributed to the absence of a prior-year property tax benefit and increased interest costs [1][5] - Revenue showed a slight increase compared to the previous year, indicating stable but pressured financial performance [1][5] - The company announced a slight dividend increase, with the dividend paid per share rising to $0.74 from $0.73 a year ago [1][9] Financial Performance - EPS (GAAP, diluted) decreased to $0.32 from $0.38, a decline of 15.8% [2] - FFO per share (non-GAAP, diluted) fell to $0.85 from $0.90, a decrease of 5.6% [2] - Revenue increased to $24.9 million from $24.7 million, reflecting a 0.8% growth [2] - Net income dropped to $4.5 million from $5.3 million, a decline of 14.8% [2] Business Model and Strategic Priorities - The company operates as a healthcare-focused REIT with a portfolio of 76 properties across 21 states, leasing to both related and third-party healthcare providers [3] - A key aspect of the business model is the relationship with Universal Health Services, Inc. (UHS), which serves as a major tenant and external advisor [3][4] - The company aims to maintain compliance with REIT status by distributing at least 90% of its taxable income as dividends [4] Operating Environment - Lease income from UHS facilities remained stable at $8.4 million, while lease revenue from third-party tenants was $14.57 million [6] - Approximately 40% of revenue for the year ended December 31, 2024, came from UHS facilities, indicating a consistent revenue stream [6] - Operating expenses increased, with higher depreciation, amortization, and interest expenses due to increased borrowings [7] Risks and Challenges - The company expressed caution regarding the healthcare operating environment, highlighting tenant risks related to staffing shortages, government healthcare funding, and patient volumes [8] - Nearly 27% of the company's revenue in both 2024 and 2023 was derived from tenants reliant on federal and state programs like Medicare and Medicaid, indicating potential vulnerability [8] Future Outlook - Management did not provide financial guidance for upcoming quarters, emphasizing risks associated with interest rates, tenant financial health, and changes in government healthcare reimbursement [10] - The company noted that further increases in interest rates could impact future results by raising borrowing costs [10]

[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 |