American Healthcare REIT(US:AHR)2025-08-08 18:00Financial Data and Key Metrics Changes - The company reported normalized FFO of $0.42 per fully diluted share, representing a 27% year-over-year increase in NFFO per share compared to Q2 2024 [22] - Net debt to EBITDA improved to 3.7 times at the end of the second quarter, down from 4.5 times on March 31 [10][23] - The company raised its full year 2025 NFFO per share guidance to a range of $1.64 to $1.68, up from a previous range of $1.58 to $1.64 [24] Business Line Data and Key Metrics Changes - Total same store NOI growth for the portfolio was 13.9% year-over-year, with Trilogy showing 18.3% growth and SHOP showing 23% growth [8][12][15] - Average daily rates across all payors in Trilogy grew by 7.8% year-over-year, while RevPOR in SHOP accelerated with a growth of 6.6% compared to the same quarter last year [12][15] - The SHOP segment's same store occupancy was above 87.5% at the end of Q2, with significant move-in activity observed [15][70] Market Data and Key Metrics Changes - Medicare Advantage now accounts for 7.2% of resident days, up from 5.8% a year ago, indicating a shift towards higher reimbursement sources [13][56] - The company anticipates continued favorable operating fundamentals due to high demand and low supply growth in the long-term care market [16] Company Strategy and Development Direction - The company emphasizes a commitment to quality resident care and high-quality health outcomes, believing this focus will drive strong financial results [7] - The acquisition strategy remains focused on high-quality long-term care assets under a RIDEA structure, with over $300 million in awarded deals in the pipeline [10][20] - The company aims to optimize its operating platform capabilities and leverage expertise across operators to enhance performance [15] Management's Comments on Operating Environment and Future Outlook - Management believes the company is in the early stages of a multi-year trend of improving operating metrics, with expectations for rising occupancies and margins [7][16] - The company is optimistic about the outpatient medical portfolio, expecting improvements in occupancy and earnings starting in Q4 [75][78] - Management noted that the demand for long-term care will continue to grow due to demographic trends, particularly as baby boomers age [28] Other Important Information - The company has been awarded the Great Place to Work certification, reflecting its commitment to employee satisfaction and quality care [10] - The company closed approximately $255 million in acquisitions year-to-date, with a robust pipeline of over $300 million in investments expected to close by year-end [19][20] Q&A Session Summary Question: What is the peak occupancy expected for the Trilogy and SHOP portfolios? - Management indicated that they believe mid-90s occupancy is achievable, with a focus on maintaining disciplined pricing strategies [31][32] Question: Can you elaborate on the recent acquisitions and pipeline? - The company is focusing on larger, newer, and higher-quality assets, with a significant portion of the pipeline being SHOP assets [35][36] Question: How will the recent ADR growth impact future performance? - The growth is attributed to an improved quality mix and management's focus on higher-paying contracts, particularly in Medicare Advantage [46][50] Question: What is the outlook for the outpatient medical portfolio? - Management expects a slight drop in occupancy in Q3 but anticipates improvements starting in Q4, with a more optimistic outlook than in previous years [75][78] Question: Is there seasonality in Medicare Advantage contract renewals? - There is no significant seasonality, but annual increases based on CMS rates occur every October [81] Question: How does the company select new operators? - The selection process is thorough, focusing on operators that align with the company's growth strategy and have a proven track record [101][104]