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]