Medical Properties Trust(MPW) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a GAAP net loss of $0.07 and normalized FFO of $0.48 per diluted share for Q2 2023, with a revised guidance range for 2023 normalized FFO between $1.53 and $1.57 per share [115][141] - The leverage ratio increased to nearly 7 times, indicating a rise in debt levels compared to the previous quarter [53] Business Line Data and Key Metrics Changes - Steward's EBITDARM coverage is currently at 2.9 times, showing strong operational performance [6] - The managed care business is on track to meet revenue and EBITDA targets, with plans for a monetization event in 2024 [7] Market Data and Key Metrics Changes - Hospital services are projected to continue growing, making up approximately 31% of total healthcare spending in 2023, equating to about $1.5 trillion [107] - The acute care sector improved from 2.6 times in Q4 2022 to 2.8 times in Q1 2023, indicating a positive trend in performance [114] Company Strategy and Development Direction - The company is focusing on debt reduction, with expected cash proceeds from asset sales, including approximately $800 million from Australian hospitals and $100 million from Prime portfolios [119] - The restructuring of U.K. assets under a REIT regime is expected to provide a tax benefit of around $160 million, contributing to cost reduction efforts [116] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the hospital sector's recovery post-COVID, with ongoing improvements in performance and operational metrics [4][9] - The company is continuously evaluating its deleveraging and investment strategies in response to market conditions [98] Other Important Information - The company completed the sale of seven hospitals in Australia, resulting in a repayment of approximately A$730 million in debt [118] - A ransomware attack affected Prospect, but patient care was minimally impacted due to effective downtime procedures [111] Q&A Session Summary Question: What was the need for the Steward ABL participation? - The company participated in the Steward ABL due to dislocation in the lending market, as traditional banks were not providing these types of loans [25][38] Question: How much California income is included in the guidance? - Approximately $10 million of rent from California is included in the back half of the year guidance [34] Question: Is there a plan to sell more assets to refinance debt? - The company has levers to pull, including asset sales and joint ventures, to manage upcoming debt maturities [47] Question: Has the Board considered a dividend cut? - The Board is constantly evaluating all options, including the potential for a dividend cut to improve the balance sheet [53] Question: What is the current status of Steward's restructuring efforts? - Steward is benefiting from cost restructuring, with positive EBITDA expected in 2022 and continued improvement in 2023 and 2024 [46]