National Health Investors(NHI) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights NHI reported strong Q2 2025 results, exceeding expectations, leading to raised full-year guidance and an increased quarterly dividend CEO Comments NHI's CEO reported a strong quarter, exceeding expectations, leading to raised full-year guidance and an increased quarterly dividend, driven by acquisitions and SHOP growth - NHI is raising its full year guidance and announced an increase to its quarterly dividend due to strong quarterly results and good visibility into the second half of the year[3] - Outperformance was driven by acquisitions, excellent year-over-year SHOP growth, and continued collections on deferral repayments[4] - The balance sheet is strong with net debt to adjusted EBITDA below the target range and over $750 million in liquidity and capital resources[4] - Seven properties were recently transitioned to the SHOP portfolio, with significant organic growth opportunities, and additional SHOP acquisitions are expected[5] Financial Performance Highlights (Q2 2025) NHI reported a slight decrease in diluted Net Income per common share for Q2 2025, but increases in FFO, Normalized FFO, and Normalized FAD, influenced by specific expenses and gains Key Financial Metrics (per diluted common share) | Metric (per diluted common share) | Q2 2025 | Q2 2024 | YoY Change | YoY Change (%) | | :-------------------------------- | :------ | :------ | :--------- | :------------- | | Net income attributable to common stockholders | $0.79 | $0.81 | ($0.02) | -2.47% | | NAREIT FFO | $1.19 | $1.18 | $0.01 | 0.85% | | Normalized FFO | $1.22 | $1.18 | $0.04 | 3.39% | | Normalized FAD (in millions) | $56.0 | $51.8 | $4.2 | 8.11% | - Net income attributable to common stockholders for Q2 2025 included approximately $1.3 million in proxy contest and related expenses[6] - Net income, NAREIT FFO, and Normalized FFO for Q2 2025 included approximately $1.5 million in gains from equity method investment and $1.4 million in net reductions of credit loss expense[8] - Normalized FAD for Q2 2025 included approximately $1.9 million in repayment of previously deferred rent and related interest[8] Financial Results and Guidance NHI's Q2 2025 saw increased rental income and SHOP NOI, alongside rising expenses, leading to updated full-year guidance with raised Normalized FFO and FAD Second Quarter 2025 Financial Performance NHI's second quarter 2025 financial performance saw a 6.9% increase in rental income and 29.4% in SHOP segment NOI, alongside rising legal and administrative expenses Second Quarter 2025 Financial Performance Metrics | Metric | Q2 2025 (approx.) | Q2 2024 (approx.) | YoY Change (approx.) | YoY Change (%) (approx.) | | :-------------------------------- | :---------------- | :---------------- | :------------------- | :----------------------- | | Rental income | $70.3 million | $65.8 million | $4.5 million | 6.9% | | Interest income and other | $6.2 million | $5.8 million | $0.4 million | 6.1% | | SHOP segment NOI | $3.8 million | $2.9 million | $0.9 million | 29.4% | | Legal expenses | $1.1 million | $0.2 million | $0.9 million | 450.0% | | General and administrative costs | $6.1 million | $4.9 million | $1.3 million | 26.5% | | Loan and realty (gains) losses, net | $1.4 million gain | $1.1 million loss | $2.5 million swing | N/A | | Gains on sales of real estate properties, net | $0.1 million gain | $1.5 million gain | ($1.4 million) | -93.3% | - Rental income increased primarily due to net new investments funded since June 2024[8] - SHOP segment NOI increase was primarily due to increased revenue from higher occupancy levels and Revenue per Occupied Room (RevPOR)[8] - Legal expenses increased primarily from costs incurred in connection with the transition of Discovery properties into the SHOP segment[8] Updated Full Year 2025 Guidance NHI updated its full-year 2025 guidance, raising Normalized FFO and Normalized FAD per diluted common share, while slightly lowering NAREIT FFO, based on new investment and SHOP growth assumptions Updated Full Year Guidance (per diluted common share) | Metric (per diluted common share) | Previous Guidance Range | Updated Guidance Range | | :-------------------------------- | :---------------------- | :--------------------- | | NAREIT FFO | $4.64 - $4.70 | $4.46 - $4.50 | | Normalized FFO | $4.68 - $4.73 | $4.78 - $4.82 | | Normalized FAD (in millions) | $223.8 - $226.4 | $227.9 - $229.8 | - Guidance assumes $105 million in unidentified new investments at an initial average yield of 8.1%[20] - Same-store SHOP NOI growth is projected in a range of 13% - 16% year over year[20] - SHOP conversion NOI is expected to be $3.6 million - $3.7 million[20] Portfolio and Capital Activity NHI transitioned Discovery properties to SHOP, made new investments, received loan repayments, maintained a strong balance sheet, and utilized its ATM equity program Discovery Transition NHI terminated its triple-net master lease with Discovery Senior Living for six facilities, transitioning operations to a new independent manager under a RIDEA-compliant SHOP structure - Effective August 1, 2025, NHI terminated its triple-net master lease with Discovery Senior Living for five assisted living and memory care facilities and one independent living facility[9] - Operations of these six facilities were transitioned to a new independent manager, and the properties (aggregate net carrying value of approximately $125.7 million) were reclassified into the SHOP segment[9] - NHI expects to record an aggregate $8.8 million reduction in rental income in Q3 2025, including $12.1 million in write-offs related to straight-line rent receivable[10] Portfolio Activity & Pipeline NHI acquired six memory care communities for $63.5 million, committed to a $28.0 million construction loan, received a $2.5 million loan repayment, and has a robust investment pipeline - NHI acquired a portfolio of six memory care communities in Nebraska for $63.5 million, leased under a 15-year triple-net master lease with an initial rate of 8.0% and 2.0% annual escalators[14] - NHI agreed to fund up to $28.0 million on a construction loan for an 84-unit assisted living and memory care facility in Wyoming, Michigan, with an annual interest rate of 9.0%[14] - Received $2.5 million in partial repayment on a non-performing mezzanine loan, resulting in a $1.3 million reduction to the credit loss reserve and credit loss expense[14] - NHI has approximately $129.9 million of Board-approved investment opportunities (LOIs) with an average initial yield of 8.0%, primarily sale-leaseback and loans with purchase options in senior housing[14] - The company is evaluating an additional pipeline of approximately $343.0 million in investments, including SHOP, sale-leaseback, and loans with purchase options for senior housing assets[14] Balance Sheet & Liquidity As of June 30, 2025, NHI maintained a strong financial profile with $1.1 billion in net debt, $378.0 million outstanding on its credit facility, and a net debt to adjusted EBITDA ratio of 3.9x - As of June 30, 2025, the Company had $1.1 billion in net debt, including $378.0 million outstanding on its $700.0 million revolving credit facility[12] - During Q2 2025, NHI repaid all remaining Fannie Mae outstanding principal and accrued interest of $75.7 million[12] - The Company has $315.8 million available under its at-the-market equity program as of June 30, 2025[12] - NHI's net debt to adjusted EBITDA ratio is 3.9x, which is below the Company's target range of 4.0x – 5.0x[13] - NHI maintains investment grade credit ratings from Moody's, S&P Global, and Fitch Ratings[13] At the Market (ATM) Equity Program In Q2 2025, NHI sold approximately 1.3 million shares for $91.8 million via ATM forward sales agreements and settled 0.8 million shares for $58.0 million from previous agreements - In Q2 2025, NHI sold approximately 1.3 million shares on a forward basis at a weighted average price of $71.41 per common share, totaling approximately $91.8 million, through ATM forward sales agreements[15] - In Q2 2025, the Company settled 0.8 million shares of common stock from previous ATM forward sales agreements for proceeds of $58.0 million at a weighted average forward price of $74.71 per common share[16] - As of June 30, 2025, 1.4 million shares of common stock remained available under ATM forward sales agreements, representing aggregate net proceeds of $102.3 million[17] Company Information National Health Investors (NHI) is a NYSE-listed REIT specializing in senior housing and medical investments, with an upcoming Q2 earnings conference call About National Health Investors National Health Investors, Inc. (NHI) is a NYSE-listed REIT specializing in various financing and ownership structures for need-driven and discretionary senior housing and medical investments - National Health Investors, Inc. (NYSE: NHI) was incorporated in 1991 and is a real estate investment trust (REIT)[22] - NHI specializes in sale, leasebacks, joint-ventures, senior housing operating partnerships, and mortgage and mezzanine financing[22] - The portfolio consists of independent living, assisted living and memory care communities, entrance-fee retirement communities, skilled nursing facilities and specialty hospitals[22] Investor Relations NHI will host a conference call on Thursday, August 7, 2025, at 10:00 a.m. ET to discuss its second quarter results, with a live webcast available on its website - NHI will host a conference call on Thursday, August 7, 2025, at 10:00 a.m. ET to discuss second quarter results[21] - The live broadcast of the conference call will be available online at www.nhireit.com, with a replay available for one year[21] Non-GAAP Financial Measures This section reconciles GAAP net income to non-GAAP measures like FFO, Normalized FFO, FAD, and NOI, providing definitions and usage caveats Reconciliation of FFO, Normalized FFO, and Normalized FAD This section provides a detailed reconciliation of Net Income attributable to common stockholders to NAREIT FFO, Normalized FFO, and Normalized FAD for Q2 2025 and 2024 FFO, Normalized FFO, and Normalized FAD Reconciliation (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income attributable to common stockholders | $36,938 | $35,227 | $71,051 | $66,142 | | NAREIT FFO attributable to common stockholders | $55,891 | $51,229 | $108,241 | $98,942 | | Normalized FFO attributable to common stockholders | $57,199 | $51,229 | $109,813 | $99,728 | | Normalized FAD attributable to common stockholders | $55,957 | $51,779 | $111,958 | $102,758 | | NAREIT FFO per diluted common share | $1.19 | $1.18 | $2.34 | $2.27 | | Normalized FFO per diluted common share | $1.22 | $1.18 | $2.37 | $2.29 | Reconciliation of NOI This section reconciles Net Operating Income (NOI) to Net Income for Q2 2025 and 2024, breaking down NOI by segment Net Operating Income (NOI) Reconciliation (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $36,689 | $34,952 | $70,506 | $65,610 | | Total NOI | $77,352 | $71,731 | $152,908 | $140,196 | | NOI by segment: | | | | | | Real Estate Investments | $73,496 | $68,702 | $145,924 | $134,097 | | SHOP | $3,821 | $2,953 | $6,907 | $5,894 | | Non-segment / corporate | $35 | $76 | $77 | $205 | Notes on Non-GAAP Financial Measures This section defines FFO, Normalized FFO, Normalized FAD, and NOI, emphasizing they are supplemental measures not comparable to GAAP alternatives - FFO, as defined by NAREIT, is net income attributable to common stockholders, excluding gains/losses on sales of real estate, impairments, and real estate depreciation/amortization[27] - Normalized FFO excludes from FFO certain infrequent or unpredictable items to improve comparability between periods[27] - Normalized FAD further adjusts Normalized FFO by excluding straight-line rent revenue, amortization of debt issuance costs, non-cash share-based compensation, and certain non-cash items related to equity method investments[29][30] - NOI is defined as total revenues less tenant reimbursements and property operating expenses, used to evaluate property-level operating performance on an unleveraged basis[31] - These supplemental performance measures may not be comparable to similarly titled measures used by other REITs and should not be considered an alternative to GAAP net income or net cash flows from operating activities[26] Consolidated Financial Statements This section presents NHI's condensed consolidated statements of income and selected balance sheet data for Q2 2025 and prior periods Condensed Consolidated Statements of Income This section presents the condensed consolidated statements of income for Q2 2025 and 2024, detailing revenues, expenses, and net income attributable to common stockholders Condensed Consolidated Statements of Income (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $90,662 | $84,970 | $179,958 | $166,482 | | Total expenses | $55,607 | $51,771 | $111,615 | $102,891 | | Net income | $36,689 | $34,952 | $70,506 | $65,610 | | Net income attributable to common stockholders | $36,938 | $35,227 | $71,051 | $66,142 | | Earnings per share - diluted | $0.79 | $0.81 | $1.53 | $1.52 | Selected Condensed Consolidated Balance Sheet Data This section provides selected condensed consolidated balance sheet data as of June 30, 2025, and December 31, 2024, showing key asset and liability figures Selected Condensed Consolidated Balance Sheet Data (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Real estate properties, net | $2,316,452 | $2,211,253 | | Mortgage and other notes receivable, net | $252,939 | $268,926 | | Cash and cash equivalents | $18,640 | $24,289 | | Straight-line rent receivable | $89,097 | $87,150 | | Debt, net | $1,118,835 | $1,146,041 | | National Health Investors, Inc. stockholders' equity | $1,479,645 | $1,366,475 | Legal Disclaimer This section provides a legal disclaimer regarding forward-looking statements, outlining inherent risks and uncertainties that may affect actual results Forward-Looking Statements This section serves as a legal disclaimer, identifying forward-looking statements and cautioning investors about inherent risks and uncertainties that could cause actual results to differ materially - The press release includes forward-looking statements regarding future financial position, results of operations, cash flows, business strategy, acquisitions, and growth opportunities[36] - Forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from projections[36] - Key risks include the operating success of tenants, potential bankruptcy, concentration of portfolio, governmental regulations, liability claims, success of property development, illiquidity of real estate, inflation, interest rates, and the ability to qualify as a REIT[36] - The Company assumes no obligation to update any forward-looking statements, and investors are urged to review disclosures in Form 10-K and Form 10-Q[36]