National Health Investors(NHI) - 2022 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The net income per diluted common share for Q2 2022 was $0.47, down from $0.85 in Q2 2021, but up $0.29 from Q1 2022 [17] - NAREIT FFO per diluted common share decreased to $0.71 from $1.05 sequentially, impacted by Bickford write-offs [26] - Normalized FFO increased to $1.26 from $1.10 sequentially, with funds available for distribution rising to $56.3 million [27][28] - The balance sheet showed a reduction in debt by over $330 million in the last 12 months, with leverage at 4.0x, at the low end of the targeted range [15][30] Business Line Data and Key Metrics Changes - The senior housing operating portfolio (SHOP) contributed over $3 million of NOI, excluding non-recurring transition costs, aligning with forecasts [11] - Senior housing coverage improved to 1.11x in Q1 2022 from 0.98x in Q4 2021, while total company coverage improved to 1.68x from 1.54x [14] - The SHOP portfolio's NOI for Q2 was $3.2 million, with expectations for annualized contributions in the low-to-mid teens [44][75] Market Data and Key Metrics Changes - The company completed over $356 million in asset sales, including $288.2 million in senior housing sales with low EBITDARM coverage [13] - The average occupancy in the current portfolio improved by 190 basis points to 84.5% since recent asset sales [42] Company Strategy and Development Direction - The company is focused on portfolio optimization, having completed significant dispositions and lease restructurings, particularly with Bickford [8][13] - Future growth is anticipated through the SHOP segment and operational improvements, with a focus on stabilizing occupancy before pursuing RevPOR growth [50][72] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges in the industry, including elevated operating costs and labor constraints, but expressed optimism about recovery and growth potential [9][21] - The company is in excellent financial health, with significant capital available for deployment without the need for equity issuance [53] Other Important Information - The second quarter dividend of $0.90 per share was declared, representing a payout ratio of 69.5% for normalized FFO [29] - The company has approximately $416 million available under its ATM program, with no equity issuance expected in the near term [31] Q&A Session Summary Question: Why move Bickford to cash basis now? - Management cited multiple factors, including external debts and auditor concerns, leading to the decision to convert to cash accounting [57][58] Question: What options exist if Bickford does not remain a going concern? - Management indicated potential for restructuring or transitioning to new operators, emphasizing the portfolio's strong cash flow [59][60] Question: What are the expectations for SHOP portfolio RevPOR growth? - Management focused on improving occupancy first, with expectations for gradual margin improvements over time [68][70] Question: What is the outlook for the deferral balance? - Management acknowledged ongoing deferrals but expressed confidence in minimizing them and improving overall portfolio health [76][78]