Financial Performance - For the three months ended June 30, 2025, the net loss attributable to common stockholders was $24.2 million, a significant improvement from a net loss of $119.9 million in the same period of 2024 [256]. - Revenue from tenants decreased to $85.3 million for the three months ended June 30, 2025, down from $88.8 million in 2024, representing a decline of 3.9% [256]. - The total expenses for the three months ended June 30, 2025, were $93.5 million, a decrease of $95.5 million compared to $189.0 million in 2024 [256]. - The company reported a net operating income (NOI) of $21.2 million for the OMF segment for the three months ended June 30, 2025, down 14.9% from $24.9 million in 2024 [257]. - The SHOP NOI for the three months ended June 30, 2025 was $10.2 million, representing a 15.5% increase from $8.9 million in 2024 [259]. - Net loss attributable to common stockholders for the six months ended June 30, 2025 was $29.2 million, significantly improved from a loss of $138.9 million in 2024 [277]. - Funds from Operations (FFO) attributable to stockholders for Q2 2025 was $5.4 million, a significant improvement from a loss of $96.5 million in Q2 2024 [332]. - Adjusted Funds from Operations (AFFO) attributable to stockholders for Q2 2025 was $9.1 million, compared to $4.4 million in Q2 2024 [332]. Revenue and Expenses - Revenue from tenants in the SHOP segment increased to $56.1 million for the three months ended June 30, 2025, up 3.6% from $54.1 million in 2024 [259]. - Revenue from tenants in the OMF segment decreased by 13.5% to $59.9 million for the six months ended June 30, 2025, down from $69.3 million in 2024 [278]. - The OMF NOI for the six months ended June 30, 2025 was $40.7 million, reflecting an 18.3% decrease from $49.8 million in 2024 [278]. - Total expenses for the six months ended June 30, 2025 were $191.9 million, a decrease of $86.5 million from $278.5 million in 2024 [277]. - General and administrative expenses rose by $0.7 million to $5.4 million for the three months ended June 30, 2025, mainly due to stock-based compensation [266]. - General and administrative expenses decreased by $0.8 million to $10.6 million for the six months ended June 30, 2025, compared to $11.4 million in the same period of 2024 [289]. - Interest expense decreased by $1.9 million to $15.8 million for the three months ended June 30, 2025, attributed to lower average indebtedness and interest rates [269]. - Interest expense decreased by $3.8 million to $30.4 million for the six months ended June 30, 2025, from $34.1 million in the same period of 2024 [292]. Asset and Capital Management - As of June 30, 2025, the company owned 175 properties, comprising 7.3 million rentable square feet across 30 states [244]. - The gross asset value of the company's total real estate investments was $2.2 billion as of June 30, 2025 [253]. - As of June 30, 2025, total debt leverage ratio was approximately 44.9%, with net debt totaling $1.0 billion against a gross asset value of $2.2 billion [309]. - As of June 30, 2025, the company had $706.2 million in mortgage notes payable at a weighted-average annual interest rate of 4.64% [313]. - Aggregate capital expenditures for the six months ended June 30, 2025, were $12.4 million, with expectations of stable quarterly rates for the remainder of the year [319]. - The company disposed of 15 held-for-use OMFs and three held-for-use SHOPs for an aggregate contract sales price of $189.8 million, resulting in a gain on sale of $27.6 million [321]. Stock and Dividends - The company declared and issued quarterly dividends entirely in shares of common stock from October 2020 through January 2024, with no further stock dividends planned [247]. - A reverse stock split was effective on September 30, 2024, combining every four shares of common stock into one [249]. - The company authorized a stock repurchase program for up to $50.0 million of Series A and Series B Preferred Stock, with no stated expiration date [323]. - During Q2 2025, the company repurchased 56,916 shares of Series A Preferred Stock at an average price of $14.46 and 66,213 shares of Series B Preferred Stock at an average price of $13.83 [324]. - Distributions on Series A Preferred Stock are $1.84375 per share annually, equivalent to 7.375% of the $25.00 liquidation preference, while Series B Preferred Stock distributions are $1.78125 per share annually, equivalent to 7.125% [334]. - Total cash distributions for Q2 2025 amounted to $3.4 million, with 52.5% going to Series A Preferred Stockholders and 46.2% to Series B Preferred Stockholders [339]. - The company has not paid cash dividends on common stock since mid-2020, opting instead for stock dividends until January 2024 [335]. Operational Changes - The company internalized its advisory and property management functions on September 27, 2024, transitioning to a dedicated workforce [245]. - Operating fees to related parties were $12.8 million for the six months ended June 30, 2024, with no fees incurred in the same period of 2025 due to Internalization [286]. - Termination fees to related parties amounted to $98.2 million for the six months ended June 30, 2024, resulting from the termination of the advisory agreement [287]. Cash Flow - Cash flows provided by operating activities decreased by $22.1 million during the six months ended June 30, 2025, primarily due to the full repayment of a $30.3 million promissory note [300]. - Cash flows from investing activities increased by $91.7 million during the six months ended June 30, 2025, primarily due to proceeds from the sale of 15 held-for-use OMFs [301]. - Cash flows used in operations for the six months ended June 30, 2025, were $13.2 million, indicating insufficient cash generation to fund current distribution rates [341]. Market Risks - The company faces inflation risks, with a 3.0% increase in the 12-month Consumer Price Index as of June 30, 2025, potentially impacting lease agreements without indexed escalation provisions [343]. - OMF tenants are generally required to pay their pro rata share of property operating and maintenance expenses, which may impact their ability to pay rent if these costs exceed revenue increases [345]. - Leases at SHOPs typically do not have rent escalations, but can be renewed at market rates, which is crucial as inflation increases labor costs [346]. - There has been no material change in the company's exposure to market risk during the six months ended June 30, 2025 [348].
HEALTHCARE(HTIA) - 2025 Q2 - Quarterly Report