Financial Data and Key Metrics Changes - The company reported normalized FFO of $0.14 per share for the second quarter of 2025, which reflects the impact of incremental quarterly interest related to $2,500,000,000 refinance debt completed earlier this year [17] - Cash revenue from new properties increased from approximately $3,400,000 in the first quarter to $11,000,000 in the second quarter, with expectations to reach approximately $17,000,000 by the third quarter [9][20] - The company recorded approximately $111,000,000 in net impairments and fair market value adjustments, primarily related to its investment in PHP [18] Business Line Data and Key Metrics Changes - The portfolio of new tenants continues to report encouraging performance trends, with increasing EBITDARM coverage ratios across asset types year over year [11] - Circle, a UK operator, reported an increase in EBITDARM coverage, while Priory maintained steady performance with EBITDARM coverage of around 2.3 times [12] - LifePoint Health reported strong top-line revenue growth driven by increased admissions, with trailing twelve-month admissions increasing by 18% year over year [14] Market Data and Key Metrics Changes - The joint venture in Germany successfully completed a refinancing transaction at a 5.1% fixed rate, demonstrating investor appetite for high-quality healthcare infrastructure in Europe [10] - In the South Florida market, HSA reported a volume improvement with discharges for the first six months of 2025 being almost 7% higher than the same period in 2024 [15] Company Strategy and Development Direction - The company aims to offer hospitals permanent capital solutions to enhance financial flexibility and operational agility, especially in light of recent Medicaid funding changes [8] - The company is focused on increasing financial flexibility through asset sales, retenanting valuable hospital real estate, and refinancing debt [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to reach total annualized cash rent of more than $1,000,000,000 by year-end 2026, supported by steady contributions from the stabilized portfolio and new operators [10] - Management noted that operators are not overly concerned about the changes in Medicaid and ACA, with expectations of potential revenue improvements [50] Other Important Information - The company has retained optionality in its strategies, including monetization of valuable hospital real estate and further debt refinancing opportunities [25] - The company is currently monitoring the performance of certain assets, particularly those with coverage issues, but remains optimistic about future resolutions [66] Q&A Session Summary Question: Can you provide some color on HSA's performance? - Management confirmed that HSA has been paying rent and is current on their obligations, expressing confidence in their ability to ramp up as expected [27][28] Question: Can you elaborate on the prospect recovery process? - Management explained that a global settlement was reached, and they expect further announcements regarding the auction of properties soon [33][34] Question: What is the status of the asset sales mentioned? - Management confirmed that the expected sales of approximately $100,000,000 are anticipated to close before year-end, primarily involving leftover properties [38] Question: How is the company addressing the changes to the inpatient-only list? - Management indicated that operators have not expressed concerns regarding the transition from inpatient to outpatient services [58] Question: What is the current status of the Columbia assets? - Management noted that while the facilities are performing well, reimbursement issues are affecting cash collection, but they expect resolution in the near future [66]

Financial Data and Key Metrics Changes - The company reported a GAAP net loss of $0.20 per share and normalized FFO of positive $0.14 per share for Q1 2025, affected by the partial quarter impact of February debt refinancing transactions and increased stock compensation expense [18][19][20] - The second quarter normalized FFO is expected to be reduced by approximately $0.02 per share due to higher interest expenses from refinancing transactions [18][19] Business Line Data and Key Metrics Changes - The new tenants in the transitional portfolio are ramping up operations, with cash rents expected to increase significantly by Q4 2026, with specific operators like HSA and HonorHealth showing strong performance and operational improvements [10][12][13] - The established portfolio continues to perform well, with operators like Circle Health and Priory benefiting from increased private medical insurance utilization and strong reimbursement trends [14][15][16] Market Data and Key Metrics Changes - Across the portfolio, operators reported strong revenues driven by reimbursement rate increases and admission trends, with an uptick in year-over-year EBITDARM coverage across asset types [10][11] - In the U.S., LifePoint Health reported a 17% year-over-year increase in admissions at Conemaugh Memorial, indicating strong operational performance [16] Company Strategy and Development Direction - The company aims to empower operators by providing affordable capital solutions, enhancing financial flexibility and operational agility, especially in a challenging economic environment [6][7] - The focus remains on creating value for shareholders through accretive growth opportunities and increasing cash flows from a diversified portfolio [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the healthcare industry, noting that operators are reporting strong results despite macroeconomic challenges [5][6] - The company is optimistic about reaching total annualized cash rent of over $1 billion once new tenants are fully ramped, with ongoing support from government officials and healthcare advocates [9][26] Other Important Information - The company issued over $2.5 billion in secured bonds at a blended coupon rate of approximately 7.8%, strengthening its balance sheet and providing liquidity through 2026 [7] - The company recorded approximately $73 million in impairments and fair market value adjustments to investments, reflecting ongoing challenges in certain markets [19][20] Q&A Session Summary Question: Risks to Steward transitioned assets and ramp-up ability - Management does not foresee risks to the ramp-up of new operators, citing limited uncollected amounts and strong operational performance despite disruptions [31][32] Question: Details on the $40 million investment - The investment was made during the quarter to repurchase assets originally part of Steward campuses, which are expected to generate rent [33][34][35] Question: Monitoring regulatory changes and potential Medicaid cuts - Management is not concerned about potential changes to Medicare or Medicaid, as tenants are currently not nervous about these changes [40][41] Question: Updates on operators in Colombia and other situations - The operator in Colombia is performing well despite political challenges, and another operator is back on track after a strong quarter [45][46] Question: Timing for Prospect process following court approval - The company expects to identify potential new tenants for Prospect hospitals by late May or early June, with closing contingent on regulatory approvals [48]