Universal Health Realty me Trust(UHT) - 2025 Q2 - Quarterly Results

Financial Performance Summary Second Quarter 2025 Results 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] First Half 2025 Results 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] Dividend and Capital Resources 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] - 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] Business Overview and Risk Factors Company Profile 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] Forward-Looking Statements and Risk Factors 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] - 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] - 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] Non-GAAP Financial Measures Definition and Use of Non-GAAP Measures 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][13] - 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] - 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] Consolidated Financial Statements (Unaudited) Consolidated Statements of Income 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 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 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 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 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 |